United States: Tennessee Enacts Major Legislation Expanding Nexus, Adopting Market-Based Sourcing

On May 20, Tennessee Governor Bill Haslam approved legislation, termed the Revenue Modernization Act, which enacts major amendments concerning excise and franchise taxes, business tax and sales and use taxes.1The Tennessee excise and franchise taxes are amended by adopting a new substantial nexus standard that includes bright-line nexus, a triple-weighted sales factor, market-based sourcing, special sourcing provisions for security dealers and telecommunication companies, and an apportionment election for taxpayers with large distribution sales. Also, the related-party intangible expense provisions are amended. The business tax similarly is amended to adopt a new bright-line nexus standard. Sales and use tax provisions are amended to adopt click-through nexus and impose tax on cloud computing and video game digital products. Unless otherwise noted, the legislation is effective for tax years beginning on or after January 1, 2016.

Excise and Franchise Taxes

Tennessee has a unique system for taxing businesses. The excise and franchise taxes are imposed on the privilege of doing business in Tennessee.2 Although these are two separate taxes, they are treated as part of the same taxing system. The excise tax is based on net earnings or income for the tax year. The franchise tax is based on the greater of net worth or the book value of real or tangible personal property owned or used in Tennessee. In contrast, the state business tax, which is discussed below, is imposed on the privilege of engaging in certain listed vocations, occupations, businesses or business activities.3 A taxpayer's dominant business activity is taxed, but the tax rate and base vary according to the type of activity. In addition to the state business tax, local governments are authorized to impose a municipal business tax. State and municipal business taxes are administered by the Tennessee Department of Revenue, but taxpayers located in a municipality that has approved a business tax must file two separate returns. If a taxpayer engages in a listed activity in Tennessee without establishing a physical location,4 it is subject to the state business tax but is not subject to a municipal business tax.

Bright-Line Nexus

The legislation provides that Tennessee excise and franchise taxes are imposed on persons "doing business in this state and having a substantial nexus in this state."5 The addition of the words "having a substantial nexus in this state" is intended to include any connection to Tennessee sufficient under the U.S. Constitution to require the taxpayer to remit tax.6 The connection includes, but is not limited to, the following: (i) the taxpayer is organized or commercially domiciled in Tennessee; (ii) the taxpayer owns or uses its capital in Tennessee; (iii) the taxpayer has systematic and continuous business activity in Tennessee that has produced gross receipts attributable to customers in Tennessee; (iv) the taxpayer licenses intangible property for use by another party in Tennessee and derives income from that use in Tennessee; or (v) the taxpayer has bright-line presence in Tennessee. A person has bright-line presence in Tennessee if any of the following applies:

  • The taxpayer's total receipts in Tennessee during the tax period exceed the lesser of $500,000 or 25 percent of total receipts everywhere during the tax period;
  • The average value of the taxpayer's real and tangible personal property owned or rented and used in Tennessee during the tax period exceeds $50,000 or 25 percent of the average value of the taxpayer's total real and tangible personal property; or
  • The total amount the taxpayer pays in Tennessee during the tax period for compensation exceeds the lesser of $50,000 or 25 percent of the total compensation paid by the taxpayer.7

A company treated as a foreign corporation under the Internal Revenue Code (IRC) and that has no income effectively connected with a U.S. trade or business is not considered to have "substantial nexus in this state."8 To the extent a company that is treated as a foreign corporation under the IRC has income effectively connected with a U.S. trade or business, the company's net earnings and net worth are its net earnings and net worth connected with its U.S. trade or business. Only property used in, payroll attributable to, and receipts effectively connected with the company's U.S. trade or business are considered in calculating the apportionment fraction.

Triple-Weighted Sales Factor

For tax years beginning on or after July 1, 2016, all net earnings are apportioned to Tennessee for excise tax purposes by using a triple-weighted sales factor.9 For previous tax years, Tennessee uses a double-weighted sales factor.10 Corresponding changes are made for apportioning the net earnings of a captive real estate investment trust (REIT) affiliated group11 and for apportioning net worth for franchise tax purposes.12

Market-Based Sourcing

For tax years beginning on or after July 1, 2016, Tennessee replaces the cost of performance (COP) method for sourcing sales other than sales of tangible personal property with a market-based sourcing method.13 Specifically, these sales are sourced to the location of the taxpayer's market for the sale:14

  • The sale of a service is sourced to Tennessee to the extent the service is delivered to a location in Tennessee.15
  • The sale, rental, lease or license of real property is sourced to Tennessee to the extent the property is located in Tennessee.16
  • The rental, lease or license of tangible personal property is sourced to Tennessee to the extent the property is located in the state.17
  • The rental, lease or license of intangible property generally is sourced to Tennessee to the extent it is used in the state.18
  • The sale of intangible property generally is sourced to Tennessee to the extent the property is used in the state.19

If the state or states of assignment cannot be determined using the above methods, a reasonable approximation must be made.20 If the state or states of assignment cannot be reasonably approximated, the sale must be excluded from the sales factor.21 If the application of market-based sourcing to a tax year results in a lower apportionment factor than under the COP method, a taxpayer may elect to apply the COP method.22 However, the election must result in a higher apportionment factor for the tax year, and the taxpayer must have net earnings, rather than a net loss, for that tax year.

Sourcing for Security Dealers

For tax years beginning on or after July 1, 2016, the legislation adds special sourcing provisions for security dealers.23 Receipts equal to the net gain or income from the sale of a security made by a security dealer24 are sourced to Tennessee if the customer is located in Tennessee. A customer that is an individual, trust or estate is in Tennessee if it is a resident of the state. Other customers with a Tennessee commercial domicile are also treated as being located in Tennessee. Unless the dealer has actual knowledge of the customer's residence or commercial domicile during the tax year, the customer is deemed to be located in Tennessee if its billing address, as shown in the dealer's records, is in the state.

Sourcing for Telecommunications Companies

For tax years beginning on or after July 1, 2016, a special sourcing provision applies to certain qualified telecommunications companies that are members of a qualified group.25 Specifically, total receipts in Tennessee equal the receipts from all sales of tangible personal property sourced to the state under the standard apportionment provisions plus the average of the receipts from all sales other than tangible personal property that are in Tennessee determined under each of the following alternative methods: (i) all sales sourced to Tennessee under the new market-based sourcing provisions; and (ii) all sales sourced to Tennessee based on COP.26

This special provision applies to a qualified group member that is principally engaged in the sale of telecommunications, mobile telecommunications service, Internet access service, video programming service, direct-to-home satellite television programming service, or a combination of services, as each term is used or defined for sales and use tax purposes.27 "Qualified group" means an affiliated group that meets both of the following criteria: (i) one or more of the members of the group is a qualified member; and (ii) the members of the group either (a) incur aggregate, qualified expenditures28 exceeding $150 million; or (b) make sales that are subject to sales and use tax in excess of $150 million.29

Apportionment Election for Taxpayers with Large Distribution Sales

A special apportionment election is available for major taxpayers that move large amounts of goods through distribution centers in Tennessee.30 If the election is made, the taxpayer apportions net earnings and net worth in the standard manner, but the total amount from certified distribution sales31 is excluded from the numerator of the receipts factor.32 In exchange for this benefit, the taxpayer must pay an annual excise tax on the total amount of excluded certified distribution sales.33 Depending on the amount of excluded sales, the tax rate varies from 0.5 percent if no more than $2 billion in sales are excluded to 0.125 percent if more than $4 billion in sales are excluded.34 To qualify for the election, the taxpayer must have: (i) more than $1 billion of sales of tangible personal property in Tennessee to all distributors; and (ii) a receipts factor over 10 percent.

Related-Party Intangible Expenses

Tennessee law generally provides that an intangible expense paid, accrued or incurred in connection with a transaction with one or more affiliates must be added to a taxpayer's net earnings or losses when computing excise tax liability.35 Under current law, any related-party intangible expense may be subtracted if the Revenue Commissioner determines, upon application by the taxpayer, that the expense did not have the avoidance of tax as its principal purpose.36 As amended, for tax years beginning on or after July 1, 2016, any related-party intangible expense may be subtracted if the expense has been disclosed and either of the following conditions is met: (i) the related party is registered for and paying excise tax; or (ii) the expense was paid to an affiliate in a foreign nation that is a signatory to a comprehensive tax treaty with the U.S. or to an affiliate that is otherwise not required to be registered for or to pay excise tax.37 Under the legislation, taxpayers must disclose related-party expenses on a form prescribed by the Commissioner.38 Any taxpayer that fails to disclose the intangible expenses or fails to add the expenses is subject to a negligence penalty.

Business Tax

Similar to the excise and franchise tax nexus standards, nexus for purposes of the business tax is expanded to include all persons with a substantial nexus in the state.39 Also, similar to the provisions added to the excise and franchise taxes, a new provision is added to the business tax that defines "substantial nexus in this state" and includes bright-line presence.40 However, unlike the definition for excise and franchise taxes, the definition does not include a taxpayer that licenses intangible property for use by another party in the state and derives income from that use of intangible property in the state.41 Also, a deduction is provided for the sale of any service that is delivered outside the state.42

Sales and Use Tax

Click-Through Nexus

Effective July 1, 2015, Tennessee enacts a rebuttable click-through nexus provision. Specifically, a dealer is presumed to have substantial nexus with Tennessee if the dealer enters into an agreement with one or more persons located in the state under which the person, for a commission or other consideration, directly or indirectly refers potential customers to the dealer, whether by a link on an Internet Web site or any other means.43 The dealer's cumulative gross receipts from these transactions in the state must exceed $10,000 during the preceding 12 months. Also, effective May 20, 2015, a new statute provides it is the legislative intent to impose sales and use tax to the fullest extent allowed under the U.S. and Tennessee Constitutions.44

Computer Software

Under current law, the retail sale, lease, licensing or use of computer software in Tennessee is subject to sales and use tax.45 Effective July 1, 2015, "use of computer software" includes the access and use of software that remains in the possession of the dealer who provides the software or in the possession of a third party on behalf of the dealer.46 An exemption currently is provided for the fabrication of software by a person or direct employee for a person's own use or consumption.47 The exemption is expanded to include the access and use of software that remains in the possession of the dealer who provides the software or in the possession of a third party on behalf of the dealer, where the access and use of the software is solely by the person or direct employee for the exclusive purpose of fabricating software that is both: (i) owned by that person; and (ii) for that person's own use and consumption.48 Also, current law exempts the use of computer software that is developed and fabricated by an affiliated company.49 This exemption now is provided regardless of how the software is accessed, used or delivered.

Video Game Digital Products Subject to Tax

Effective July 1, 2015, video game digital products are subject to sales and use tax.50 "Video game digital product" means the right to access and use computer software that facilitates human interaction with a user interface to generate visual feedback for amusement purposes, when possession of the computer software is maintained by the seller or a third party, regardless of whether the charge for the service is on a per use, per user, per license, subscription or some other basis.51

Commentary

This legislation is significant and contains a variety of nexus and apportionment provisions. Tennessee is the latest state to adopt a bright-line presence test that may be used to determine nexus for purposes of a corporate tax in lieu of physical presence.52 The new bright-line presence test in the Tennessee statutes is similar to the Multistate Tax Commission's factor presence nexus standard model statute that was approved in 2002. This standard has been approved in administrative decisions in Ohio53 and Washington,54 but still has not been considered by higher-level courts. Interestingly, special provisions apply to foreign corporations, and the determination of whether such corporations have effectively connected income for federal income tax purposes takes on added importance for Tennessee. To the extent that such corporations ultimately have excise or franchise tax nexus in Tennessee, the lack of an ability to include all of their worldwide property, payroll and receipts in their apportionment factor denominators could unexpectedly raise their overall apportionment factor percentages and increase potential excise and franchise tax liability. Also, click-through nexus has been adopted for sales and use tax purposes. Under these nexus provisions, out-of-state taxpayers may suddenly have a new tax obligation to Tennessee. Note that the bright-line nexus provisions are effective for tax years beginning on or after January 1, 2016, but most of the other excise and franchise tax provisions are effective for tax years beginning on or after July 1, 2016.

The legislation also includes important income apportionment provisions. Tennessee is the latest state to follow the trend of adopting market-based sourcing for sales other than sales of tangible personal property.55 This is particularly interesting because the Revenue Commissioner has been issuing variances requiring the use of market-based sourcing rather than the statutory COP method.56 Thus, the Commissioner seemed to have unofficially adopted market-based sourcing for certain types of taxpayers. This legislation clarifies that Tennessee is a market-based sourcing state. The Tennessee market-based sourcing provisions differ from the statutes in other states because they allow taxpayers to elect to use the COP method if it results in a higher apportionment factor than market-based sourcing. Also, the double-weighted sales factor is changing to a triple-weighted sales factor. Some of the apportionment provisions such as the sourcing for certain telecommunications companies and the election for taxpayers with large distribution sales in the state appear to be incentives targeted at a very limited number of taxpayers.

The related-party expense provisions have been amended to allow a subtraction if the taxpayer makes a disclosure and meets certain other requirements. Thus, taxpayers are no longer required to apply to the Commissioner for a subtraction. However, the situations where the taxpayer is allowed the subtraction are narrower than under previous law. For example, the subtraction is no longer allowed when the affiliate has paid a portion of the expenses to an entity this is not an affiliate.

It also is noteworthy that sales and use tax now applies to the use of computer software retained by the dealer (cloud computing services) as well as video game digital products.

Footnotes

1 H.B. 644, Laws 2015.

2 TENN. CODE ANN. §§ 67-4-2001 et seq; 67-4-2101 et seq. See Franchise and Excise Tax Guide, Tennessee Department of Revenue, Nov. 2014.

3 TENN. CODE ANN. §§ 67-4-701 et seq. See Tennessee Business Tax Guide, Tennessee Department of Revenue, Jan. 2015. 4 As discussed below, this is expanded to include taxpayers that have substantial nexus with Tennessee.

5 TENN. CODE ANN. §§ 67-4-2007(a); 67-4-2105(a).

6 TENN. CODE ANN. § 67-4-2004.

7 Id.

8 Id.

9 TENN. CODE ANN. § 67-4-2012(a)(2). 10 TENN. CODE ANN. § 67-4-2012(a)(1).

11 TENN. CODE ANN. § 67-4-2013(d).

12 TENN. CODE ANN. § 67-4-2111(a).

13 TENN. CODE ANN. §§ 67-4-2012(i); 67-4-2111(i).

14 TENN. CODE ANN. §§ 67-4-2012(i)(1); 67-4-2111(i)(1).

15 TENN. CODE ANN. §§ 67-4-2012(i)(1)(C); 67-4-2111(i)(1)(C).

16 TENN. CODE ANN. §§ 67-4-2012(i)(1)(A); 67-4-2111(i)(1)(A).

17 TENN. CODE ANN. §§ 67-4-2012(i)(1)(B); 67-4-2111(i)(1)(B).

18 TENN. CODE ANN. §§ 67-4-2012(i)(1)(D)(i); 67-4-2111(i)(1)(D)(i). Intangible property used in marketing a good or service to a consumer is considered to be used in Tennessee if that good or service is purchased by a consumer who is in the state.

19 TENN. CODE ANN. §§ 67-4-2012(i)(1)(D)(ii); 67-4-2111(i)(1)(D)(ii). A contract right, government license or similar intangible property that authorizes the holder to conduct a business activity in a specific geographic area is considered to be used in Tennessee if the geographic area includes all or a part of the state. Receipts from intangible property sales that are contingent on the productivity, use or disposition of the property are treated as receipts from the rental, lease or licensing of the property. All other receipts are excluded from the receipts factor.

20 TENN. CODE ANN. §§ 67-4-2012(i)(2); 67-4-2111(i)(2).

21 TENN. CODE ANN. §§ 67-4-2012(i)(3); 67-4-2111(i)(3).

22 TENN. CODE ANN. §§ 67-4-2012(i)(4); 67-4-2111(i)(4). Note that there appears to be a technical defect in the legislation. Market-based sourcing is effective for tax years beginning on or after July 1, 2016, but the election provision specifically mentions the apportionment method that was in effect prior to January 1, 2016. 23 TENN. CODE ANN. §§ 67-4-2013(b)(3)(H); 67-4-2118(c)(8).

24 As defined by IRC § 475.

25 TENN. CODE ANN. §§ 67-4-2012(j); 67-4-2111(j).

26 TENN. CODE ANN. §§ 67-4-2012(j)(1); 67-4-2111(j)(1).

27 TENN. CODE ANN. §§ 67-4-2012(j)(2)(C); 67-4-2111(j)(2)(C).

28 These are outside expenditures for the following: (i) purchasing tangible personal property placed in service in Tennessee by a member of the qualified group; and (ii) payroll for employees employed by a member of the qualified group in Tennessee. TENN. CODE ANN. §§ 67-4-2012(j)(2)(A); 67-4- 2111(j)(2)(A).

29 TENN. CODE ANN. §§ 67-4-2012(j)(2)(B); 67-4-2111(j)(2)(B). 30 H.B. 644, § 14.

31 These are sales of tangible personal property made in Tennessee by the taxpayer to any distributor, whether or not affiliated with the taxpayer, which is resold for ultimate use or consumption outside the state. The distributor must certify that the property has been resold for ultimate use or consumption outside Tennessee. H.B. 644, § 14(b)(3).

32 H.B. 644, § 14(c)(1).

33 H.B. 644, § 14(c)(2).

34 For taxpayers excluding more than $2 billion but no more than $3 billion of certified distribution sales, the amount of tax is 0.375 percent of sales in excess of $2 billion plus $10 million. For taxpayers excluding more than $3 billion but no more than $4 billion of certified distribution sales, the amount of tax is 0.25 percent of sales in excess of $3 billion plus $13,750,000. For taxpayers excluding more than $4 billion of certified distribution sales, the amount of tax is 0.125 percent of sales in excess of $4 billion plus $16,250,000.

35 TENN. CODE ANN. § 67-4-2006(b)(1)(K).

36 TENN. CODE ANN. § 67-4-2006(b)(2)(N).

37 Id.

38 TENN. CODE ANN. § 67-4-2006(d). 39 TENN. CODE ANN. § 67-4-717(a)(1).

40 TENN. CODE ANN. § 67-4-702(a).

41 Id.

42 TENN. CODE ANN. § 67-4-711(a)(6). Prior to amendment, the deduction was for sales of services that are received by customers located outside the state.

43 H.B. 644, § 27.

44 H.B. 644, § 26.

45 TENN. CODE ANN. § 67-6-231(a)(1).

46 TENN. CODE ANN. § 67-6-231(a)(2).

47 TENN. CODE ANN. § 67-6-387(a).

48 TENN. CODE ANN. § 67-6-387(b). 49 TENN. CODE ANN. § 67-6-395(a).

50 TENN. CODE ANN. § 67-6-233.

51 TENN. CODE ANN. § 67-6-102.

52 Several states now apply bright-line presence nexus standards for purposes of corporate-level taxes. For example, Ohio uses a bright-line presence standard for purposes of the commercial activity tax (CAT). OHIO REV. CODE ANN. § 5751.01. In 2009, California enacted a bright-line presence standard for its corporation franchise tax that is effective for tax years beginning on or after January 1, 2011. CAL. REV. & TAX CODE § 23101. In 2010, bright-line nexus standards were adopted for Colorado's corporate income tax (1 COLO. CODE REGS. § 39-22-301.1) and Washington's business and occupation (B&O) tax for purposes of service and royalty income (WASH. REV. CODE §§ 82.04.066; 82.04.067). In 2014, New York enacted an economic nexus standard for purposes of the corporation franchise tax and the metropolitan tax (MTA) surcharge for tax years beginning on or after January 1, 2015 (N.Y. TAX LAW §§ 209.1(b); 209-B.1(a)).

53 Newegg, Inc. v. Testa, Ohio Board of Tax Appeals, No. 2012-234, Feb. 26, 2015; Crutchfield, Inc. v. Testa, Ohio Board of Tax Appeals, Nos. 2012-926, 2012-3068, 2013-2021, Feb. 26, 2015. For a discussion of these decisions, see GT SALT Alert: Ohio Board of Tax Appeals Holds Out-of-StateRetailers with Significant Gross Receipts Have Substantial Nexus for CAT.

54 Determination No. 14-0342, Washington Department of Revenue, Oct. 30, 2014 (released Apr. 30, 2015). For a discussion of this decision, see GT SALT Alert: Washington Department of Revenue Rules on Application of Economic Nexus to B&O Tax.

55 For example, the following jurisdictions have adopted market-based sourcing fairly recently: Alabama, California, District of Columbia, Illinois, Maine, Massachusetts, Michigan, Nebraska, New York, Oklahoma, Pennsylvania, Rhode Island, Utah and Wisconsin.

56 See Vodafone Americas Holdings Inc. v. Roberts, Tennessee Court of Appeals, No. M2013-00947- COA-R3-CV, June 23, 2014; leave to appeal granted, Tennessee Supreme Court, Nov. 20, 2014. For a discussion of this case, see GT SALT: Tennessee Court of Appeals Affirms Variance Requiring Telecommunications Company to Use Market-Based Sourcing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.