F&E Apportionment-8 - Apportionment for Certain Sellers of Telecommunication and Similar Services

For tax years beginning on or after July 1, 2016, taxpayers who primarily sell telecommunications, mobile telecommunications, internet access, video programming, or direct-to-home satellite television programming services, and are members of an affiliated group of taxpayers that has incurred more than $150,000,000 in aggregate qualified expenditures or has made sales in excess of $150,000,000 that are subject to Tennessee sales and use tax should source their receipts from other-than-tangible-property sales to Tennessee by averaging two sourcing methods:

  • Cost of performance based on the earnings producing activity
  • Market based sourcing.

These taxpayers should report Tennessee and everywhere receipts for tangible and other-than-tangible sales on Schedule N-Apportionment and maintain detailed records to support their calculations.

Reference: Tenn. Code Ann. §§ 67-4-2012(j); 67-4-2111(j).

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