Company's Provision of Internet Services Not Taxable Telecommunications Services in Tennessee

Thursday, October 3rd, 2013


The Tennessee Court of Appeals recently ruled that a company's dial-up and broadband internet services were not taxable telecommunications services.

The taxpayer provided two internet services. Internet Service Providers (ISPs) bought these services to enable end users to access the internet. The taxpayer used telecommunications services to provide its internet access services. The taxpayer had collected sales tax on its charges for internet access services and later filed for a refund.

Tennessee taxes services that are specifically identified as taxable, including telecommunications services. "Telecommunication" is communication be electric or electronic transmission of impulses and includes transmission by or through any media such as wires, cables, microwaves, radio waves, or light waves. "Basic" telecommunications services are subject to tax. "Enhanced" services are not. Tennessee considers the provision of internet access an enhanced service.

The Court of Appeals ruled that the taxpayer's provision of internet access was not subject to tax. Although the taxpayer used telecommunications services to provide internet access, the primary purpose of the service was to provide internet access. Because the provision of internet access was an "enhanced" service, it was not taxable. The taxpayer's charges were therefore not taxable.

About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at or call 866.578.8193.

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