The Tennessee General Assembly has picked up the pace in the past few weeks passing four tax bills that have been signed into law by Governor Bill Haslam. Based on reports from the legislature, it appears that the new administration will not continue the trend of introducing an omnibus “Technical Corrections Bill” late in the legislative session containing the bulk of the proposed tax laws. The new tax laws are summarized as follows:  

Public Chapter 72 (Senate Bill 1520), Effective Dates for “Streamlined Sales Tax Act”; Revision to Headquarters Relocation Tax Credit; and Extension of Filing Date for State Tax Returns. Public Chapter 72 delays the effective date of the Streamlined Sales Tax Act provisions for an additional two years, from July 1, 2011 to July 1, 2013.

The Public Act also amends the headquarters relocation tax credit, Tenn. Code Ann. § 67-4- 2109(h), to provide that if a “headquarters staff employee position” is not filled in Tennessee during the investment period or does not remain filled in Tennessee for a period of at least five years, the taxpayer previously receiving the credit will be subject to an assessment in the amount of the credit or refund taken for such position, plus interest when the due date occurs on a legal holiday. This change was precipitated by the Internal Revenue Service’s decision to move the 2011 federal tax filing deadline to April 18 in observance of Emancipation Day in the District of Columbia.  

Public Chapter 76 (Senate Bill 636), Telecommunications Tax Reduction Refund. This Public Chapter amends Tenn. Code Ann. § 67-6-222 to eliminate carryovers of the shortfall in ad valorem tax equity payments made to telecommunications service providers. The Public Act further provides that it applies to carryovers accrued as of the effective date of the act, April 14, 2011, and applies retroactively. The telecommunications tax reduction fund was enacted in 2001 to address perceived inequities in the assessment rate of public utility property as well as industrial and commercial property.

Public Chapter 77 (Senate Bill 638), Property Tax Payments During Appeal. This Public Chapter amends Tenn. Code Ann. § 67-5-1512 to revise the provisions governing a taxpayer’s obligation to pay property taxes during an appeal of the taxpayer’s property tax assessment and the accrual of penalty and interest.

Public Chapter 17 (Senate Bill 462), Property Tax Relief Amendments. This Public Act amends Tenn. Code Ann. § 67-5-701(d)(2) and revises the deadlines for filing applications for property tax refunds or presentments of credit vouchers by taxpayers who qualify as elderly low-income homeowners, disabled homeowners, and disabled veterans. The Public Act also revises Tenn. Code Ann. § 67-5-701(g)(2) to clarify that repayment of property tax relief payments made in error is not required if a governmental entity determined that a person was eligible for property tax relief, but later determined that the person was ineligible. These amendments apply to pending claims for the 2011 tax year and thereafter.

Other Bills of Interest:

Senate Bill 1614, House Bill 1914, “Tennessee Small Business Protection Act.” Legislation that would have required combined reporting for unitary businesses and would have also made other changes to the definition of business earnings under Tennessee’s excise tax failed to make it out of the House and Senate tax subcommittees.

Senate Bill 1489, House Bill 1912, “Out of State Sales Tax Act.” A bill similar to the New York bill known as the Amazon.com bill has again been introduced in Tennessee. It proposes to establish a rebuttal presumption that out-of-state internet retailers are subject to Tennessee’s sales tax jurisdiction if the retailer receives potential customer referrals from Tennessee residents, whether by a link on an Internet website or otherwise, and the retailer’s cumulative gross receipts through such referrals are in excess of $4,800 for four consecutive quarterly periods. This type of bill has been introduced in previous legislative sessions, but has yet to gain traction.