Note: Information in the following article was accurate as of the time of publication. The status of legislation can change frequently. For the most up-to-date information on current legislation, please visit https://www.capitol.tn.gov/legislation/.
On Jan. 9, the members of the 113th Tennessee General Assembly returned to the Capitol, and TSCPA’s lobbying team immediately began reviewing proposed legislation, meeting with members and planning for session. Initial conversations around the legislative chambers focused on three primary topics: the governor’s effort to expand school vouchers, the tight budget and how the General Assembly can address public safety concerns.
Since its introduction on Jan. 22, 2024, TSCPA has been closely monitoring the legislation filed by Gov. Bill Lee’s administration. House Bill 1893 and Senate Bill 2103 aim to address potential constitutional issues with the Tennessee franchise tax. The proposed legislation would repeal the franchise tax alternative measure based on real and tangible personal property. Most notably, the proposed legislation authorizes the commissioner of the Tennessee Department of Revenue to issue refunds for the difference between the actual tax paid using the real and tangible property basis and tax due under the apportioned net worth base.
In his Feb. 5, 2024, State of the State address, Gov. Lee referenced the reasons for the franchise tax overhaul, stating, “We became aware of a need to change the law, which has been in place for almost 90 years. So, we crafted a solution that resolves the issue now so that we can move forward now. And this is the best strategy to ensure we do right by Tennessee taxpayers. Because we have budgeted wisely through years of extraordinary revenue growth, Tennessee is now equipped to resolve this tax issue and make Tennessee an even better place to live, work and raise a family.”
CPAs and business owners should continue to monitor this legislation and begin evaluating the impacts of the proposed change on the calculation of estimated tax payments or extension payments. Regarding the refund process, if enacted, refund claims must be submitted on a form prescribed by the commissioner of the Department of Revenue. Further, it should be noted that as of the time of publication, there was a proposed amendment that would require all refund claims to be filed between May 1 and Nov. 30, 2024. Although the legislation is not final, taxpayers should begin determining the potential for possible refunds now to be prepared to file the refund claims once the prescribed form is made available. TSCPA’s understanding is that the Department of Revenue will require 2023 returns to be filed under current law and then subsequently amended and the refund claim filed.
This proposed legislation presents a massive overhaul to the administration of the franchise tax and a major operational challenge for the Department of Revenue. TSCPA will continue to follow this legislation and engage with the appropriate legislative and regulatory bodies to provide input and guidance on the implementation of processes to handle the proposed changes and resulting refunds.
Taxes and budgets are not the only topics being discussed within the walls of the Capitol. As in years past, occupational licensing legislation continues to be prevalent in state houses across the United States. Tennessee is not exempt from this legislation, as shown by the introduction of Senate Bill 1915 and House Bill 1859, occupational licensing for individuals with a criminal record. This bill would prohibit certain licensing authorities from automatically barring an individual from licensure because of the individual’s criminal record. It requires the licensing authority to provide individualized consideration of an individual’s criminal record and circumstances and specifies which convictions a licensing authority may consider in deciding for licensure. It would also make other changes related to licensure determinations and criminal records, including not using a vague term in its consideration and its notice or decision, including good moral character, moral turpitude, or character and fitness. TSCPA’s lobbying team has met with the bill sponsor and is working on an amendment that would exempt the licensing of CPAs from this legislation.
TSCPA is honored to advocate for the CPA profession and is committed to protecting the CPA license and engaging with lawmakers to create effective and efficient tax laws and processes. For a full list of bills currently being tracked on behalf of TSCPA members, please visit http://www.tscpa.com/1261-legislative-update-february-2024.
This article was originally published in the March/April 2024 Tennessee CPA Journal.
