Are computer consulting services subject to sales/use tax?
In many instances, yes. Consulting services alone are not taxable. However, such services are frequently sold in conjunction with the transfer of software and taxable services. Software is currently taxed as tangible personal property (T.C.A. Section 67-6-102(30)(B)). The “sales price” of software and other tangible personal property includes the total amount for which it is sold, including any services that are a part of the sale (T.C.A. Section 67-6-102(26)). Thus, any charges for services that are performed as part of the sale of software are subject to tax. For example, in Creasy Systems Consultants, Inc. v. Olsen, 716 S.W.2d 35 (Tenn. 1986), the Tennessee Supreme Court held that hourly consulting charges for determining the needs of a client, designing a software program to meet those needs, and then writing the software program were all subject to sales tax. Thus, if consulting services are not provided as additional services separate and optional from the sale of software or tax
