Tennessee Sales Tax Policy on Service and Repair

Our Service Department gets machines to work on from all over the country, and customers who reside out of state are sometimes surprised when sales tax appears on their bill. This becomes even more confusing when the same customers purchase new equipment from our Sales Department and yet are not charged Tennessee Sales Tax. We want to explain why.

If you are sending in a machine from outside of Tennessee to have it worked on by our Service Department we are required by law to charge Tennessee Sales Tax on both parts installed and labor performed here (TN Sales & Use Tax Code 67-6-102-22-F-iv).  The sales tax rate is currently 9.25%.

But, for some reason, if you are purchasing parts only, then the Tennessee law says Sales Tax does not apply. Sales of new equipment, sales of consignment equipment, and rentals are also non-taxable to customers outside of Tennessee. Service and parts when performed together just are treated differently.

Also, transactions which are for a tax-exempt organization or a non-profit entity obviously do not get charged tax. Just provide us with a copy of your local tax certificate. If you have a Resale Certificate from another state that will also do. Just provide us with a copy of it when you set up your account. We hope this will clear up any confusion!