Tenn. Comp. R. & Regs. 1320-05-01-.121
Free or complimentary dues, fees, or admission charges are taxable when made in connection with a valuable contribution. Tax shall apply only to that portion of the contribution which represents the fair market value of the membership or admission. Where memberships or admissions are purchased at a reduced charge, tax shall apply only to the reduced charge; provided that tax shall also apply to any additional contribution up to the actual fair market value of the membership or admission. The sales and use tax is not imposed on free amusements provided to employees of amusement providers as fringe benefits (e.g., free tans to employees of a tanning bed operator or free membership to employees of a health spa).
Tenn. Comp. R. & Regs. 1320-05-01-.121
Authority: T.C.A. §§ 67-1-102, 67-6-212, and 67-6-402.