Should a Tennessee software developer collect Tennessee sales tax on software it installs on a server located in Tennessee if the customer buying the software is located outside Tennessee and only accesses the software via the Internet?

Yes. Custom computer software that is sold by a Tennessee software developer to an out-of-state customer, when the software is transferred to the customer upon installation of the software onto a server located in Tennessee, is subject to sales and use tax in this state.  Title or possession of the computer software is transferred to the customer in Tennessee.  

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