SUT-178 - Industrial Machinery Exemption - Computer Software Maintenance Contract

A computer software maintenance contract will qualify for the industrial machinery sales tax exemption if the computer software covered by the contract also qualifies for the industrial machinery sales tax exemption. A computer software maintenance contract covers the eventual replacement or modification of existing software. Tennessee law treats the modification or replacement of software as a sale of software. Therefore, for purposes of the industrial machinery sales tax exemption, a sale of a computer maintenance contract that covers software that qualifies for the industrial machinery exemption would be treated as a sale of qualifying software and would also qualify for the industrial machinery exemption.