$1.2 Billion Business Tax Refund and Repeal in Tennessee – What You Need To Know?

Tennessee Department of Revenue Commissioner Discusses Business Property Tax Repeal and Refund

According to The Center Square, the Tennessee Legislature is set to vote on a substantial refund for businesses in the form of a franchise tax, totaling around $1.2 billion and following a detailed presentation in the Senate Finance Ways and Means Subcommittee. This proposed refund could potentially cost the state up to $1.5 billion and resulting in a significant decrease of $410 million in annual franchise tax revenue. The refund’s approval would depend on the repeal of the property portion of the franchise tax and subsequent reimbursement to businesses for payments made between 2020 and 2023.

According to Tennessee Department of Revenue Commissioner David Gerregano, Tennessee stands out among states by taxing business property and the establishment of the refund aims to preempt potential litigation over the tax’s constitutionality. Under the proposed amendment described by Sen. Jack Johnson, eligible businesses would need to have reported their property by January 1, 2021 and would have until February 3, 2025 to file for reimbursement. Gerregano emphasized that the current tax structure dissuades businesses operating across multiple states from holding property in Tennessee.

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$1.2 Billion Business Tax Refund and Repeal in Tennessee – What You Need To Know?( PHOTO: getty images)

Entrepreneurship & Innovation Council Report Addresses Tennessee’s Distinctive Tax Structure

A report from Beacon Center’s Entrepreneurship & Innovation Council highlighted Tennessee’s unique tax landscape, noting the state’s status as one of 16 with a franchise tax and ranking it fourth in the nation for the tax’s rate regardless of a company’s profitability. By removing the property measure from the tax calculation and the proposed bill signifies a significant shift in tax policy. Despite concerns voiced by Sen. Jeff Yarbro regarding historical precedent in refunding franchise taxes, proponents argue that the legislation aims to mitigate risks and provide clarity through legislative action rather than judicial intervention.

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