For tax years beginning on and after July 1, 2016, taxpayers with the right to apportion must use market-based sourcing for sourcing sales other than sales of tangible personal property (including rental, lease and license receipts and sales of services). Generally, these sales are sourced to Tennessee if the taxpayer’s market for the sale is in the state (regardless of the location of the taxpayer’s property or payroll determined for the property or payroll factors of the apportionment ratio). For example, the sale of a service is sourced to Tennessee if the service is delivered at a location in Tennessee (the location of the taxpayer’s market or customer for the service provided).
Reference: TENN. COMP. R. & REGS. 1320-06-01-.42.