Applying the “true object” test to software-related services, the Tennessee Department of Revenue determined in a letter ruling that optional services offered in connection with the sale of software would not be subject to sales tax, at least in some circumstances. The taxpayer in this case sells – and charges Tennessee sales tax – on prewritten computer software, software updates/upgrades, and software installation services. The taxpayer also offers optional additional services that are separately invoiced, including training, configuration, project management, data conversion, documentation services, testing, and report writing services. Applying the “true object” test, the Department determined that the additional services generally would not be taxable if provided in isolation. Tennessee’s “true object” test evaluates a transaction involving both taxable and nontaxable components to determine whether the taxable component is the true object or a “crucial,” “essential,” “necessary,” “consequential,” or “integral” element of the transaction. In the Department’s view, if the foregoing is met, then the entire transaction is subject to sales tax, even if the prices of the taxable and nontaxable components are itemized. The Department concluded that the taxability of the additional services would depend on the totality of the circumstances surrounding each client contract. The otherwise nontaxable services could become taxable if provided as a required or integral component of a taxable software installation contract or a software customization contract. Tenn. Letter Ruling No. 14-10 (Oct. 13, 2014).