Tennessee Business Tax Law Changes for 2014

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By Chuck Randolph

Tennessee state law allows for the assessment a privilege tax (also referred to as business tax) that is imposed on all business that sells tangible personal property, either wholesale or retail, and to some business who render services. The law allows local governments, via local ordinance or resolution, to levy this tax. The state of Tennessee is responsible for processing the tax returns, tax payments, auditing the tax returns and collection of the tax.

On April 15, 2013 the Tennessee General Assembly passed the Uniformity and Small Business Relief Act of 2013. This Act made changes made to business tax license filing and payment. The changes are identified below.

  • Businesses in a county or municipality with less than $10,000 in annual sales do not have to file a business tax return. However, businesses with annual sales between $3,000 and $10,000 must pay $15 each year to get a “minimal activity license” from the local clerk. This minimal license fee will be paid to the local clerk instead of the state of Tennessee.
  • It converts the county business tax into a state level tax using the same revenue distribution formula that was applied under prior law.
  • A business tax filing period will now coincide with its fiscal year, rather than the arbitrary dates set under prior law. The business return will now be due the 15th day of the 4th month following the end of the business fiscal year-end.  This will result in a filing due date of April 15th for calendar year businesses. To transition the current business tax filing period to the new filing period, some businesses will have to file either short or long period business tax returns during 2014. Please see this link for a Transition Chart in order to assist in determining the filing date and period covered by the transition return.  For some businesses, the new filing period will end after the current business license is set to expire. During 2014 all business licenses will deemed automatically extended until 30 days after the taxpayer new tax return due date.
  • Calendar year 2014 will be the transition period where taxpayers will match their business tax to other state and federal tax filings.
  • Taxpayers must file their business tax returns and pay electronically. A request can be made to the Department of Revenue to file a paper return if electronic filing the return creates a hardship on the taxpayer. The DOR will not mail paper business tax returns to taxpayers after January 1, 2014.
  • Business tax will now be imposed in all 95 counties in the state. Prior to the 2013 Act only 92 counties collected business taxes.

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