Self-study online training courses are subject to Tennessee sales and use tax. However, live instructor-led webinars are not subject to tax. The taxpayer selling the online courses and webinars provides professional licensing education and test preparation services.
Self-Study Online Training Courses
Tennessee users access the taxpayer’s web-based platform where the users select and pay for a specific education program. The courses provide the user with the ability to study through computer software via the Internet.
The taxable use of computer software in Tennessee that remains in possession of the dealer requires the access and use of computer software by a customer within the state. As a result, the online training courses are subject to tax when sold to a Tennessee customer because the students pay to remotely access and use the taxpayer’s software.
Live Instructor-Led Webinars
In addition, live instructor-led webinars provided by the taxpayer are not subject to Tennessee sales and use tax. The student does not purchase use of the software, but rather purchases access to a live training class. The software platform is merely incidental to the transaction. Only specific services are subject to tax, and the taxpayer’s training services are not specifically listed as taxable.
Revenue Ruling No. 17-17, Tennessee Department of Revenue, October 31, 2017, ¶401-710
The Tennessee Department of Revenue recently discussed cloud-based services and sales tax.