Warranty or Service Contract Covering Repair or Maintenance of Tangible Personal Property — Computer Software Maintenance Contracts

1. Law
2. Tennessee Code
3. Taxes and Licenses
4. Sales and Use Taxes
5. Taxes Imposed
6. Warranty or Service Contract Covering Repair or Maintenance of Tangible Personal Property — Computer Software Maintenance Contracts

1. The retail sale of, use of, or subscription to a warranty or service contract covering the repair or maintenance of tangible personal property shall be subject to the tax levied by this chapter. The tax shall be levied on the sales price or purchase price of the warranty or service contract at a rate equal to the rate of tax levied on the sale of tangible personal property at retail by § 67-6-202.
2. The retail sale of, use of, or subscription to a computer software maintenance contract shall be subject to the tax levied by this chapter. The tax shall be levied on the sales price of the computer software maintenance contract at a rate equal to the rate of tax levied on the sale of tangible personal property at retail by § 67-6-202.
3. Warranty or service contracts covering the repair and maintenance of tangible personal property and computer software maintenance contracts shall be subject to tax in this state when:
   1. The warranty or service contract is sold as part of or in connection with the sale of tangible personal property that is subject to the tax levied by this chapter, or the computer software maintenance contract is sold as part of or in connection with the sale of computer software that is subject to the tax levied by this chapter;
   2. The warranty or service contract applies to tangible personal property located in this state, or the computer software maintenance contract applies to computer software installed on computers located in this state. If a warranty or service contract applies to tangible personal property located both inside this state and outside this state or a computer software maintenance contract applies to computer software installed on computers located both inside this state and outside this state, dealers or users may allocate to this state a percentage of the sales price or purchase price of the warranty or service contract or computer software maintenance contract that equals the percentage of tangible personal property located in this state or computer software installed on computers located in this state; or
   3. The location of the tangible personal property covered by the warranty or service contract or computer software covered by the computer software maintenance contract is not known to the seller but the purchaser's residential street address or primary business address is in this state.
4. No additional tax shall be due under this chapter on any repairs or maintenance provided pursuant to a warranty or service contract covering the repair and maintenance of tangible personal property that is subject to tax under subsection (a) or on any repairs, modifications, updates, or upgrades provided pursuant to a computer software maintenance contract that is subject to tax under subsection (b), unless the seller makes an additional charge for the repairs, maintenance, modifications, updates, or upgrades.

Download our app to see the most-to-date content.