Republicans Simplify Franchise Tax and Return Money to Taxpayers
The House Finance, Ways and Means Subcommittee this week advanced legislation to cut $400 million in taxes by simplifying the state’s franchise tax, which is a tax on a business's net worth. This adjustment will offer relief to taxpayers, modernize the way the tax is calculated, and manage newly discovered legal risks.
“Smart, conservative budgeting over the last decade has put our state in a strong fiscal position to offer equitable relief for businesses and modernize the way our tax structure is calculated,” said bill sponsor House Majority Leader William Lamberth, R-Portland. “This legislation will align Tennessee’s franchise tax with surrounding states. This amendment respects and upholds the public’s right to know by adding transparency about any rebates that may occur.”
House Bill 1893 will restructure Tennessee’s franchise tax to remove the property measure and authorize the Department of Revenue to issue refunds to taxpayers who have paid the franchise tax based on property located in the state.
A House amendment adds a requirement for any refunds distributed in accordance with this bill to be made public. It also allows companies who wish to stay under the current tax structure for the tax period ending before Dec. 31, 2023 to do so. If a business applying for a refund has also received economic credits or incentives from the Tennessee Department of Community Development, the credit amount would be applied to the refund first.
The refund eligibility window is now for tax periods that ended on or after March 31, 2022 and refund claims must be filed by Feb 3, 2025. For a business that received economic incentives or credits from the state through the Tennessee Department of Community Development, the credit received would apply toward the refund.
House Bill 1893 is expected to be heard for consideration in the full House Finance, Ways, and Means Committee on April 2. |
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