In a ruling involving application of Tennessee sales and use tax where a taxpayer engaged a third-party to migrate its enterprise resource planning (ERP) system to a cloud-based software-as-a-service ERP and customer relationship management system, the Tennessee Department of Revenue held that the costs incurred to provide software customization are taxable and cannot be partially allocated out-of-state because the taxpayer downloads the new system before its employees use it elsewhere.
Source Deloitte
