Chapter 1
General Provisions
Part 1
Miscellaneous Provisions
67-1-101. Liberal construction of title — Incidental powers of commissioner — Chapter definitions.
- It is declared to be the legislative intent that this title be liberally construed in favor of the jurisdiction and powers conferred upon the commissioner of revenue.
- The commissioner shall have and exercise all such incidental powers as may be necessary to carry out and effectuate the objects and purposes of this title.
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As used in this chapter, unless the context otherwise requires:
- “Commissioner” means the commissioner of revenue; and
- “Department” means the department of revenue.
Acts 1919, ch. 1, § 16; 1921, ch. 113, § 20; impl. am. Acts 1923, ch. 7, §§ 2, 19, 24, 25; Shan. Supp., § 809a27; mod. Code 1932, § 1462; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; Acts 1978, ch. 599, § 3; T.C.A. (orig. ed.), § 67-107.
Cross-References. Rulemaking by commissioner, § 67-1-1439.
Law Reviews.
Re-examining the Constitutionality of an Income Tax in Tennessee (Robert E. Cooper Jr.), 28 Tenn. B.J. 14 (1992).
Statutory Tax Penalties and Equitable Relief: The Common Law Breaks Down, 22 Mem. St. U.L. Rev. 755 (1992).
Comparative Legislation. General taxation provisions:
Ala. Code § 40-1-1 et seq.
Ark. Code § 26-1-101 et seq.
Ga. O.C.G.A. § 48-1-1 et seq.
Ky. Rev. Stat. Ann. § 131.010 et seq.
Miss. Code Ann. § 27-1-1 et seq., § 27-3-1 et seq.
Mo. Rev. Stat. § 136.010 et seq.
N.C. Gen. Stat. § 105-1 et seq.
Va. Code § 58.1-1 et seq.
Cited: Southern R. Co. v. Clement, 57 Tenn. App. 54, 415 S.W.2d 146, 1966 Tenn. App. LEXIS 199 (Tenn. Ct. App. 1966); State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).
Collateral References. 71 Am. Jur. 2d State and Local Taxation § 1 et seq.
84 C.J.S. Taxation § 7 et seq.
Taxation 371
67-1-102. Powers and duties of commissioner and department of revenue.
- The commissioner has the powers and shall perform the duties conferred and imposed in this chapter in addition to such other powers and duties as may be conferred and imposed upon the commissioner by law. The commissioner is vested with power to prescribe rules and regulations not inconsistent with law and to prepare such forms as the commissioner may deem proper for the administration of the duties of the commissioner's office.
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The department has the power to:
- Administer the assessment and collection of all state taxes, except those for which responsibility is expressly conferred by statute upon some other officer or agency;
- Administer the assessment and collection of privilege taxes;
- Receive state revenues collected by county officials and make and retain records of such receipts;
- Investigate the tax systems of other states, and formulate and recommend to the governor such legislation as may be deemed expedient to prevent evasion of taxes, secure just and equitable taxation and improve the system of taxation in the state;
- Examine, at any and all times, the accounts of any private corporation, institution, association or board receiving appropriations from the general assembly;
- Require a complete record of the officers, assistants and employees appointed by the commissioners of the various departments, and require their salaries to be in conformity with the scale authorized;
- Procure from any department or agency of the state, or any of its political subdivisions, a copy of the complete record maintained by it of any convictions for violation of any criminal laws by any person who has made application to the department for employment, for the exclusive use of the department in screening the applicant to determine suitability for an appointment in the department;
- Compromise tax liabilities upon such terms as, in the commissioner's opinion, may seem to be in the best interests of the state; provided, that either the comptroller of the treasury or the attorney general and reporter may require that such compromises or any class of such compromises be subject to the comptroller's or attorney general's prior review and written approval. The commissioner may enter into agreements in connection with the compromises as may be necessary to effectuate the purposes of this subsection (b);
- Issue letter and revenue rulings at its discretion. A reasonable fee, not to exceed ten thousand dollars ($10,000) for expedited rulings requested pursuant to § 67-1-109(d) and not to exceed five hundred dollars ($500) for all other rulings, may be set and prescribed by the commissioner for issuing revenue and letter rulings; and
- Enter into a contract to participate in the multistate tax commission joint audit program.
- If a taxpayer challenges an assessment of taxes levied by local government that has been paid to the department, the commissioner shall notify the appropriate agencies of local government of such challenge, if the local amount in dispute exceeds twenty-five thousand dollars ($25,000) per county or city.
Acts 1921, ch. 113, § 2; 1923, ch. 7, §§ 12, 19, 24; 1923, ch. 106, § 1; Shan. Supp., §§ 373a44, 373a56, 809a8; Code 1932, §§ 269, 1478; Acts 1933, ch. 92, § 1; 1937, ch. 33, §§ 50, 51; 1937, ch. 291, § 1; 1945, ch. 57, § 1; 1947, ch. 17, § 3; C. Supp. 1950, §§ 255.50, 255.51 (Williams, §§ 255.53, 255.54, 269); modified; impl. am. Acts 1959, ch. 9, § 14; Acts 1965, ch. 5, § 1; 1965, ch. 154, § 1; 1970, ch. 500, § 2; 1970, ch. 559, § 4; 1973, ch. 151, § 1; 1973, ch. 368, § 1; 1973, ch. 373, § 1; 1977, ch. 106, § 1; 1978, ch. 531, § 1; 1978, ch. 599, § 1; 1980, ch. 460, § 1; 1981, ch. 34, § 1; 1983, ch. 148, § 1; T.C.A. (orig. ed.), §§ 4-305, 4-306, 67-101, 4-3-1903; Acts 1985, ch. 214, § 1; 1988, ch. 562, § 3; 1989, ch. 273, § 1; 2009, ch. 530, § 95; 2011, ch. 449, § 1; 2014, ch. 854, § 1.
Amendments. The 2014 amendment, effective January 1, 2015, rewrote the first sentence of (b)(8) which read: “Compromise tax liabilities, with the written approval of the comptroller of the treasury and the attorney general and reporter, upon such terms as, in their opinion, may seem to be in the best interests of the state.”
Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.
Cross-References. Applicability of administrative procedures provisions to commissioner of revenue, § 4-5-106.
Department of revenue, organization, title 4, ch. 3, part 19.
Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 963.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Cited: Holiday Inns, Inc. v. Olsen, 692 S.W.2d 850, 1985 Tenn. LEXIS 603 (Tenn. 1985).
NOTES TO DECISIONS
1. Scope of Section.
The commissioner cannot enlarge the scope of a taxing statute by regulation, and rules contrary to the express directives of a taxing statute are void. Covington Pike Toyota, Inc. v. Cardwell, 829 S.W.2d 132, 1992 Tenn. LEXIS 221 (Tenn. 1992), superseded by statute as stated in, Reimann v. Huddleston, 883 S.W.2d 135, 1993 Tenn. App. LEXIS 756 (Tenn. Ct. App. 1993).
2. Rules and Regulations.
The commissioner was empowered under T.C.A. § 67-1-102 to promulgate a rule to regulate the payment of taxes. Dacco, Inc. v. Huddleston, 891 S.W.2d 920, 1994 Tenn. App. LEXIS 523 (Tenn. Ct. App. 1994).
67-1-103. Study of tax laws — Report.
- The commissioner shall make a careful study and investigation of the tax laws of other states.
- It is the commissioner's duty to prepare and transmit to the general assembly on the first day of its organizational session a report of the commissioner's work and the work of the state board of equalization, and to make such recommendations as the commissioner deems best for the interest of the state.
Acts 1921, ch. 113, § 2; impl. am. Acts 1923, ch. 7, §§ 19, 24; Acts 1923, ch. 106, § 1; Shan. Supp., § 809a8; Code 1932, § 1478; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; Acts 1965, ch. 5, § 1; 1965, ch. 154, § 1; 1970, ch. 500, § 2; 1970, ch. 559, § 4; 1973, ch. 151, § 1; 1973, ch. 368, § 1; 1973, ch. 373, § 1; 1977, ch. 106, § 1; 1978, ch. 599, § 1; 1980, ch. 460, § 1; 1981, ch. 34, § 1; 1983, ch. 148, § 1; T.C.A. (orig. ed.), § 67-101; Acts 1984, ch. 832, § 1.
67-1-104. Tax administration fund.
- There is created, in the offices of the commissioner and the state treasurer, a special fund to be designated as the tax administration fund, to be kept separate and apart and used to defray the expenses incurred under the tax laws designated in this chapter.
- All special appropriations and/or allowances for administration set out in §§ 4-7-112, 67-2-117, 67-2-118, 67-4-1025, 67-8-210, 67-8-401, and 67-8-403 and all other tax laws, the administration of which is entrusted to the commissioner, unless otherwise specifically provided, shall be paid, when and as capable of identification, into the tax administration fund, without deductions for any purpose whatsoever. All provisions of §§ 4-7-112, 67-2-117, 67-2-118, 67-4-1025, 67-8-210, 67-8-401, and 67-8-403 in conflict with the provisions of this section shall yield to this section.
- The expenses arising out of the enforcement of any such tax law, the administration allowance for which has been paid into the tax administration fund, shall be paid from the fund, and no part of such expense shall be paid out of the general fund, unless and until earmarked tax administration funds have been exhausted.
- No funds earmarked by this section shall be used except in accordance with the limitations and stipulations of the general appropriations act, unless the governor, state treasurer and comptroller of the treasury certify that an emergency exists and define the exact amount necessary to meet the emergency. The governor, state treasurer and comptroller of the treasury have the right to pass such funds to the general fund whenever they see fit and proper.
Acts 1933, ch. 75, §§ 1-4; mod. C. Supp. 1950, §§ 1811.1-1811.5; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), §§ 67-108 — 67-111.
67-1-105. Hearings by commissioner.
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- In the absence of any other provisions, and except as may otherwise be provided by law, whenever any person is aggrieved and desires a hearing with respect to the final resolution of any issue or question involved in connection with either an application for and entitlement to the issuance of, or the proposed revocation of, any certificate, license, permit, privilege or right, or relating to the confiscation of any property, or any other adverse action proposed or taken to implement any revenue regulatory or registration law administered by the commissioner, not including those laws relating to assessments or levies of taxes, fees, fines, penalties, interest, or the waiver of penalties, such person shall, upon written request made within ten (10) days of the action complained of, be afforded an opportunity for a formal hearing before the commissioner.
- Such hearing shall be scheduled within a reasonable time following such request and shall be held after reasonable notice is given in writing by the commissioner to the person aggrieved and requesting such hearing, and such notice shall include a statement of the time, place and nature of the hearing.
- Any person afforded such a hearing may respond in person or by attorney, may submit appropriate responsive pleadings, and may present evidence and argument on all issues or questions involved.
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- The commissioner may personally hold such hearings as the commissioner may deem proper.
- In addition to holding hearings, the commissioner is authorized to designate a hearing officer who may hold such hearings in the place of and in the absence of the commissioner. This authority to designate a hearing officer is also extended to include the conduct of any hearing authorized to be held under any other law. Such hearing officer shall be deemed to be and have the same authority as assistants to the commissioner as provided in § 4-3-1901.
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- The commissioner, or any hearing officer designated by the commissioner, may utilize prehearing conferences to simplify or clarify the issues or questions involved and to expedite disposition of a contested denial or revocation of any certificate, license, permit, privilege or right, or any other adverse action or determination of the department, except such as may be specifically excepted from review in this manner.
- Unless otherwise precluded by law, informal disposition may be made of any contested action, issue or question by an agreed settlement or consent order.
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- At the conclusion of any formal hearing or prehearing conference, or within a reasonable time thereafter, the commissioner shall issue such orders as, in the commissioner's discretion, the pleadings, evidence and argument justify.
- If a formal hearing is held by a hearing officer, as authorized in this section, the hearing officer shall make findings of fact, conclusions of law and proposed settlements or orders based thereon for submission to the commissioner within a reasonable time thereafter. If a prehearing conference is held by a hearing officer, as authorized in this section, the hearing officer may make such findings, conclusions and proposed settlements or orders if the circumstances warrant. If the commissioner concurs, the commissioner shall issue the same finding, conclusion, proposed settlement or order made by the hearing officer; or the commissioner may, upon review of the record, make such findings and conclusions and issue such orders as, in the commissioner's discretion, the record justifies.
Acts 1921, ch. 113, § 2; impl. am. Acts 1923, ch. 7, §§ 19, 24; Acts 1923, ch. 106, § 1; Shan. Supp., § 809a8; Code 1932, § 1478; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; Acts 1965, ch. 5, § 1; 1965, ch. 154, § 1; 1970, ch. 500, § 2; 1970, ch. 559, § 4; 1973, ch. 151, § 1; 1973, ch. 368, § 1; 1973, ch. 373, § 1; 1977, ch. 106, § 1; 1978, ch. 599, § 1; 1980, ch. 460, § 1; 1981, ch. 34, § 1; 1983, ch. 148, § 1; T.C.A. (orig. ed.), § 67-101.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
Attorney General Opinions. If a contested case is heard by an administrative judge or hearing officer appointed by the commissioner of revenue under the authority of T.C.A. § 67-1-105(b)(2), the conduct of the contested case is governed by the provisions of the Uniform Administrative Procedures Act applicable to proceedings conducted by an administrative judge or hearing officer sitting alone; in those cases, the hearing officer is required to issue an initial order, which is reviewable by the commissioner, OAG 02-071 (5/29/02).
T.C.A. §§ 4-5-301(a)(1) and 4-5-314(a) do not apply when the commissioner elects to appoint an administrative judge or hearing officer to hold a contested case hearing sitting alone and in the absence of the commissioner, OAG 02-071 (5/29/02).
67-1-106. Optional reporting periods.
- Upon written request, the commissioner has the discretion to authorize a person to file tax returns and pay taxes collectible by the department on an optional reporting period that is either shorter or not more than seven (7) days longer than the regular statutory reporting period provided by law. An optional reporting period must conform to the accounting period used by the taxpayer in the taxpayer's books of account.
- A tax return and payment for an optional reporting period shall become delinquent if not filed or paid before that date that is the same number of days after the close of the optional reporting period as the regular statutory delinquency date is after the close of the regular reporting period. If an optional reporting period tax return or payment becomes delinquent, penalty and interest calculated under the regular statutory methods and rates shall be payable from the date of delinquency.
- A person authorized to use an optional reporting period shall continue on that basis until such person notifies the commissioner of an intention to revert to the regular statutory reporting period, or receives authorization from the commissioner to use a different optional reporting period. A person who elects to file tax returns and make payments on an optional reporting basis period shall be required to use that period for reporting and paying all taxes collectible from such person by the department.
Acts 1978, ch. 772, § 1; T.C.A., § 67-113.
67-1-107. Mailed tax papers or payments — Determination of filing date.
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Any tax report, claim, appeal, return, statement, remittance or other tax document required or authorized to be filed with or any payment made to the state or to any political subdivision of the state, that is:
- Transmitted through the United States mail or any alternative delivery service as authorized by § 7502 of the Internal Revenue Code, codified in 26 U.S.C. § 7502, shall be deemed filed and received by the state or political subdivision on the date shown by the post office cancellation mark stamped on the envelope or other appropriate wrapper containing it;
- Mailed but not received by the state or political subdivision, or where received and the cancellation mark is illegible, erroneous or omitted, shall be deemed filed and received on the date it was mailed, if the sender establishes by competent evidence that the tax report, claim, appeal, return, statement, remittance or other tax document was deposited in the United States mail; provided, that in cases of such nonreceipt of a tax report, claim, appeal, return, statement, remittance or other tax document required by law to be filed, the sender files with the state or political subdivision a duplicate thereof within ten (10) days after written notification is given to the sender by the state or political subdivision of the nonreceipt of such tax report, claim, appeal, return, statement, remittance, or other tax document; or
- Transmitted as provided in subdivision (a)(1) to the state or political subdivision and postmarked or delivered no more than twenty-four (24) hours subsequent to the last date for the timely filing of such document or payment, shall not be considered delinquent and shall preserve any rights otherwise dependent on timely filing; however, any such document or payment, transmitted as provided in subdivision (a)(1) to the state or political subdivision and postmarked or delivered more than twenty-four (24) hours subsequent to the last date for timely filing, shall be subject to any late charges, penalty or interest otherwise chargeable without regard to the twenty-four-hour grace period as provided in this subdivision (a)(3).
- When any tax report, claim, return, statement, remittance or other tax document is sent by United States registered mail, certified mail or certificate of mailing, a record authenticated by the United States postal service of such registration, certification or certificate shall be considered competent evidence, for the purposes of subdivision (a)(2), that the tax report, claim, return, statement, remittance or other tax document was mailed on the date of registration, certification or the certificate of mailing, if such record is accompanied by other competent evidence that the original of the duplicate furnished was contained in the envelope or other appropriate wrapper that is identified in the record so authenticated.
Acts 1969, ch. 202, §§ 1, 2; 1979, ch. 279, § 1; T.C.A., §§ 67-1716, 67-1717; Acts 1999, ch. 491, § 11; 2008, ch. 1106, § 1.
Compiler's Notes. Acts 2008, ch 1106, § 69 provided that § 1 of the act, which amended subsection (a), shall apply to matters under appeal on June 5, 2008.
Cross-References. Certified mail in lieu of registered mail, § 1-3-111.
67-1-108. Applicability of taxability policy changes.
If the commissioner changes the policy of the department as to the taxability of any privilege, such policy change shall be applied to the exercise of such privileges occurring after the date of such policy change only, unless otherwise provided by law.
Acts 1986, ch. 552, § 1.
Cited: Volunteer Val-Pak v. Celauro, 767 S.W.2d 635, 1989 Tenn. LEXIS 124 (Tenn. 1989).
NOTES TO DECISIONS
1. Legislative Intent.
Nothing in the provisions of Acts 1986, ch. 552 enacting T.C.A. § 67-1-108 indicated that the general assembly intended it to apply retroactively, and it was the legislative intent to retain the provisions of prior laws for taxes paid before March 6, 1986. Illinois C. G. Railroad v. State, 805 S.W.2d 746, 1991 Tenn. LEXIS 80 (Tenn. 1991).
67-1-109. Revenue and letter rulings.
- The commissioner has the power to issue revenue and letter rulings, at the commissioner's discretion.
- Revenue rulings shall be statements regarding the substantive application of law and statements of procedure that affect the rights and duties of taxpayers and other members of the public. Revenue rulings shall be advisory in nature and shall not be binding upon the department.
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- Letter rulings shall interpret and apply the tax law to a specific set of existing facts furnished by a particular taxpayer. These rulings shall be binding upon the department and are applicable only to the individual taxpayer being addressed.
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Letter rulings can be revoked or modified by the commissioner at any time. Such revocation or modification shall be effective retroactively, unless the following conditions are met, in which case the revocation shall be prospective only:
- The taxpayer must not have misstated or omitted material facts involved in the transaction;
- Facts that develop later must not be materially different from the facts upon which the ruling was based;
- The applicable law must not have been changed or amended;
- The ruling must have been issued originally with respect to a prospective or proposed transaction; and
- The taxpayer directly involved must have acted in good faith in relying upon the ruling, and a retroactive revocation of the ruling must inure to the taxpayer's detriment.
- When prompt consideration of an issue is needed, a party can request an expedited letter or revenue ruling by expressly requesting an expedited ruling and by submitting the fee required to receive an expedited ruling, as such fee is established by the commissioner. When an expedited letter or revenue ruling is requested as provided in this subsection (d), the commissioner shall either issue a ruling within sixty (60) days of the date on which the request for an expedited ruling was submitted or deny the request and return the fee to the requesting party within seven (7) days of the date on which the request was submitted.
- Requests for revenue and letter rulings shall be submitted in the form and manner prescribed by regulations issued by the commissioner.
- A reasonable fee may be set and prescribed by the commissioner for issuing revenue and letter rulings. The fee shall not exceed ten thousand dollars ($10,000) for expedited revenue or letter rulings requested pursuant to subsection (d) and shall not exceed five hundred dollars ($500) for all other revenue and letter rulings.
Acts 1988, ch. 562, § 1; 2011, ch. 449, § 2.
Cross-References. Administrative procedures chapter inapplicable to revenue rulings and letter rulings, § 4-5-106.
Powers of commissioner and department of revenue, § 67-1-102.
67-1-110. Taxpayer bill of rights.
- This section shall be known and may be cited as the “Tennessee Taxpayer Bill of Rights.”
- The commissioner shall promulgate rules, regulations and adopt policies which would inform and advise taxpayers of their rights and would guarantee Tennessee taxpayers are treated with fairness, courtesy and common sense.
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The rules, regulations, and policies shall be known as the “Tennessee Taxpayer Bill of Rights,” shall be consistent with existing law and shall include, but not be limited to, the following provisions:
As a taxpayer of Tennessee, you have a right to:
- Receive fair and courteous treatment from all the department's employees;
- Receive tax forms and information written in plain language;
- Receive prompt and accurate responses to all questions and requests for tax assistance;
- Request public records;
- Be assured that the department will keep confidential the financial information you give it;
- Know the department's policies with respect to use and retention of personally identifiable information;
- Receive tax notices that provide an explanation of the amount being billed;
- Receive a clear set of rules and procedures to resolve tax problems that arise from the interpretation and administration of Tennessee's tax laws;
- Dispute any proposed assessment by filing a timely request for an informal conference;
- Know that the department's employees are not paid or promoted as a result of money billed to or collected from taxpayers;
- Suggest ideas about how the department can better serve you;
- Prompt notification by the department of any refund to which you are entitled;
- Attend annual meetings held by the department in convenient locations to voice your suggestions;
- A ten-day notice before a levy on assets is enforced;
- A thirty-day notice before seized assets are liquidated;
- A speedy, informal, and inexpensive review of a proposed assessment in an informal conference with an impartial representative of the department and to be represented by an attorney, certified public accountant, or other representative; and
- Any other rights the commissioner deems necessary and appropriate.
- This section only applies to the state government of Tennessee.
Acts 1992, ch. 857, §§ 1, 3, 6; 2004, ch. 959, § 49; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 54; 2014, ch. 854, § 2.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 46, as amended by Acts 2005, ch. 311, was repealed in its entirety, effective June 28, 2007.
Amendments. The 2014 amendment, effective January 1, 2015, in (c)(9) substituted “proposed assessment” for “tax liability” and “an informal conference” for “a hearing” and rewrote (c)(16) which read: “A speedy, informal and inexpensive appeal of any tax dispute before an impartial hearing officer from the department and to be represented by an attorney, certified public accountant or other representative; and”.
Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.
Cross-References. Confidentiality of public records, § 10-7-504.
67-1-111. Statewide uniformity of harvest or severance taxes.
The rate of any tax levied on the activity of harvesting or severing from the ground row crops, timber or other plants shall be equal and uniform in every county in the state. However, any such tax levied by private act or otherwise prior to July 30, 1997, shall remain valid and in effect, but the rate of tax shall not be increased by private act after July 30, 1997. No such tax shall be levied by any city or county after July 30, 1997, unless authorized by general law.
Acts 1997, ch. 561, § 1.
Attorney General Opinions. Tax on privilege of timber processing, OAG 98-006 (1/9/98).
67-1-112. Business tax — Taxes invoiced to customers to be included in tax base.
The business tax is a privilege tax imposed upon persons engaged in various businesses and activities in the state. If a dealer invoices the business tax as a separate item and passes it on to the dealer's customers, then the tax shall be added to the gross receipts and be used in determining the tax base for both business tax and sales and use tax purposes.
Acts 1997, ch. 561, § 2.
67-1-113. Keeping and maintenance of records — Access to records — Penalties for noncompliance.
- All persons and entities subject to any tax administered by the commissioner shall keep and preserve suitable records from which the taxpayer and the commissioner can determine the Tennessee tax liability, if any. All such records shall be open to examination at all reasonable hours by the commissioner or any authorized agents of the commissioner. If the taxpayer maintains any such records in an electronic format, the taxpayer shall comply with reasonable requests by the commissioner or the commissioner's authorized agents to provide those electronic records in a standard record format.
- Any taxpayer who fails to comply with this section shall be assessed taxes, plus any applicable penalty and interest based on the best information available to the department; and the burden shall be on the taxpayer to show by clear and cogent evidence that the assessment is incorrect.
Acts 2002, ch. 599, § 1.
67-1-114. Extension of due date for certain tax returns.
- With respect to taxes imposed under chapter 2 of this title, under chapter 4, part 20 or 21 of this title, or under chapter 8, part 1 of this title, whenever the due date for filing the return occurs on a legal holiday as defined under 26 U.S.C. § 7503, the commissioner is authorized, in the commissioner's discretion, to extend the due date of such return to the next succeeding day that is not a Saturday, Sunday or legal holiday.
- With respect to taxes administered and collected by the commissioner of revenue, whenever the internal revenue service generally extends for all taxpayers the due date of a federal return or extends the due date of such return for a specified group of taxpayers such as, but not limited to, those affected by a federally declared disaster, the commissioner of revenue is authorized, in the commissioner's discretion, to extend the due date for the filing of specified returns to a date that shall not be later than the last day of the extension period specified by the internal revenue service.
- For purposes of this section, “return” shall be deemed to include any remittance or other tax document, including, but not limited to, quarterly estimated payments and extension requests.
Acts 2011, ch. 72, § 17; 2011, ch. 467, § 10; 2012, ch. 842, § 7.
Compiler's Notes. Acts 2011, ch. 467, § 12 provided that § 10 of the act, which added the last sentence (now subsection (c)), shall apply to any return, remittance, or other tax document due on or after April 15, 2011.
Acts 2012, ch. 842, § 9 provided that the act, which amended this section, shall apply to returns with due dates on or after April 1, 2012.
67-1-115. Electronic submission of documents and payments.
- The commissioner is authorized to require that any return, report, claim, statement, application, or other document filed with the department, including any payment or remittance that accompanies such document, be submitted electronically in a manner approved by the commissioner beginning no sooner than ninety (90) days after the commissioner has certified that a system is in place for the electronic submission of such document or payment. Such certification shall be accomplished by the commissioner prominently posting a notice on the department's web site.
- If an electronic filing requirement imposed pursuant to the authority granted in subsection (a) creates a hardship upon the person subject to the requirement, such person shall be permitted to file the applicable document in paper form. The commissioner is authorized to require that any such paper filing be accompanied by a manual handling fee, not to exceed twenty-five dollars ($25.00), that is reasonably calculated by the department to account for the additional cost of preparing, printing, receiving, reviewing and processing any paper filing so permitted.
- This section shall apply to any tax, regulatory, or other law administered by the department of revenue under this or any other title. This section shall not, however, be construed to supersede or otherwise affect any electronic filing or payment requirement already provided by law on January 1, 2012, including any penalty or waiver provisions connected therewith, and shall not require the certification of any system already in place before January 1, 2012.
- Notwithstanding any law to the contrary, the cumulative total of manual handling fees charged to any one (1) taxpayer for all tax filings in any twelve-month period shall not exceed fifty dollars ($50.00).
- The department shall notify each taxpayer that the cumulative total of all manual handling fees for all paper returns, reports, claims, statements, applications, or other documents filed with the department, including any payments or remittances that accompany such documents, shall not exceed fifty dollars ($50.00) for all such filings in any twelve-month period. The department shall include such notice in any one (1) regularly scheduled communication between the department and the taxpayer.
Acts 2012, ch. 657, § 1.
67-1-116. Fees for processing of documents and payments.
Notwithstanding any law to the contrary, the commissioner is authorized to deduct and retain from the proceeds of any tax administered and collected by the commissioner an amount necessary to offset the fee paid to a third party for the processing of documents and payments that are submitted electronically to the department.
Acts 2012, ch. 657, § 2.
67-1-117. Commissioner's authority to permit filing, submission or retention of documents in digital format.
Notwithstanding any provision to the contrary, when any provision administered by the commissioner requires that any document be filed, submitted, or retained in paper, microfiche, or any other nondigital format, the commissioner is authorized to permit the filing, submission, or retention of such document in a digital format.
Acts 2012, ch. 657, § 3.
67-1-118. Review and report concerning credits found in §§ 67-4-2009, 67-4-2109, and 67-6-224.
The commissioner of economic and community development, in consultation with the commissioner of revenue, shall conduct a review of the credits found in §§ 67-4-2009, 67-4-2109, and 67-6-224. The review shall evaluate the previous four (4) fiscal years and may include an evaluation of the purpose of the credit, foregone revenue to the state as a result of the credit, any benefits provided to the state as a result of the credit, and the estimated indirect economic impact of the tax credit, where applicable. The report shall include a recommendation to modify, discontinue, or take no action with respect to each credit. The departments shall prepare a report of their findings and recommendations and shall deliver such report to the governor, the speakers of both houses, the finance, ways and means committees of both houses, and the office of legislative budget analysis no later than January 15, 2017. The review required by this section shall be conducted by the departments, and the report delivered to the governor, the speakers of both houses, the finance, ways and means committees of both houses, and the office of legislative budget analysis, each four (4) years thereafter.
Acts 2015, ch. 504, § 1.
Compiler's Notes. Acts 2015, ch. 504, § 22 provided that the act, which enacted this section, shall apply to tax years ending on or after July 1, 2015.
Effective Dates. Acts 2015, ch. 504, § 22. July 1, 2015.
Part 2
Division of Property Assessments
67-1-201. Creation — Director — Assistants — Expenses.
- There is created in the office of the comptroller of the treasury a division of property assessments.
- The comptroller of the treasury is authorized, with the approval of the state board of equalization, to appoint a director, who shall be the head of the division.
- The division of property assessments is authorized to employ such assistants as are deemed necessary by the comptroller of the treasury to enable the division to efficiently and thoroughly perform its duties.
- All expenses of the division, including salaries of its director and other employees, shall be paid out of moneys appropriated by the general assembly and made available to the comptroller of the treasury by law.
Acts 1973, ch. 226, § 2; T.C.A., § 67-231.
Collateral References. Taxation 371
67-1-202. Powers and duties.
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The division of property assessments, under the supervision of the comptroller of the treasury, and subject to such policies, rules and regulations as may be adopted by the state board of equalization, has and shall perform the following duties, to:
- Supervise and direct all reappraisals and revaluation programs to the cost of which the state of Tennessee contributes;
- Prescribe rules and regulations approved by the comptroller of the treasury and not otherwise reserved for the state board of equalization and not inconsistent with laws that relate to the administration of the duties of assessors of property;
- Prepare, furnish and require the use by assessors of such forms as may be required for the administration of the duties of assessors of property, and approve all forms, schedules and reports used by assessors and sent to taxpayers for reporting real or personal property;
- Obtain evidence, information and statistics relative to the value of property to be assessed and equalized;
- Require assessors to furnish reports under oath, giving specific information relating to assessments and other facts concerning properties and facts pertaining to the administration of the duties of the office of assessor;
- Effect the assessment of all property in the state in accordance with the state constitution and all statutory provisions. The comptroller of the treasury shall exercise all powers conferred upon the comptroller of the treasury by law to the end that assessments in every taxing jurisdiction may be in accordance with the law;
- Make an annual report, approved by the comptroller of the treasury, to the state board of equalization, with an appropriate summary of the work accomplished by the division, and make such recommendations to the state board of equalization as it may deem appropriate;
- Assist the state board of equalization in the preparation of an assessment manual or manuals for the appraisal, classification and assessment of property for use by local assessors in making their assessments of particular classes or parcels of property, including the assessment of various kinds of personal property owned and used by corporations, partnerships and individuals engaged in business or professions for profit;
- Assist the state board of equalization in conducting the educational and training courses for state and local assessing officials approved by the state board of equalization;
- Require that counties or other taxing jurisdictions take whatever steps deemed necessary by the state board of equalization to assure that reappraisal and revaluation programs are maintained and updated in accordance with instructions, policies, rules and regulations as adopted by the state board of equalization;
- At the direction of the state board of equalization, provide assessment services for any municipality which lies within the boundaries of two (2) or more counties and which has contracted for such services with the state board of equalization under § 67-1-307(a) and (b); and
- At the direction of the state board of equalization, provide for the appraisal of leasehold interests, mineral interests, or other fractional interest in any county which has petitioned for such assistance to the state board of equalization under § 67-1-307(a) and (b).
- The division of property assessments has the authority to go upon land in order to obtain information for the assessment of such property. If the landowner refuses or objects to entry upon the landowner's land, the division may petition the circuit or chancery court for an order allowing entry at a specified time for purposes of appraising the land and improvements for assessment purposes.
- The division of property assessments shall have the unconditional right to intervene in any contested case before the state board of equalization and shall have standing and be recognized as a party under the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. This unconditional right to intervene shall be liberally construed in favor of the division of property assessments and the intervention and participation in any contested case before the state board of equalization shall not be limited in any manner except as otherwise agreed to by the division of property assessments.
Acts 1973, ch. 226, § 2; 1974, ch. 467, § 1; 1974, ch. 771, § 4; 1983, ch. 236, §§ 3, 4; T.C.A., § 67-232; Acts 1988, ch. 633, § 1; 2009, ch. 256, § 1.
Compiler's Notes. Acts 2009, ch. 256, § 3, which added §§ 67-1-202(c) and 67-5-1514(e)(2), provided that the act shall apply to any and all appeals currently pending before the state board of equalization.
Cited: State by Webster v. Word, 508 S.W.2d 539, 1974 Tenn. LEXIS 421 (Tenn. 1974).
67-1-203. Duties of commissioner not duplicated.
Nothing in §§ 67-1-201 — 67-1-204 shall be construed to diminish or to duplicate the duties of the commissioner with respect to assessment and collection of privilege taxes.
Acts 1973, ch. 226, § 2; T.C.A., § 67-233.
67-1-204. Liberal construction.
It is declared to be the legislative intent that §§ 67-1-201 — 67-1-204 be liberally construed in favor of jurisdiction and powers conferred upon the division of property assessments, the comptroller of the treasury and the state board of equalization, and they and each of them have and shall exercise all such incidental powers as may be necessary to carry out and effectuate the objectives and purposes of §§ 67-1-201 — 67-1-204, and to equalize the assessment of all property subject to taxation as provided by law.
Acts 1973, ch. 226, § 2; T.C.A., § 67-234.
67-1-205. Development of assessment procedures — Rules and regulations.
- It is the duty of the division of property assessments, under the direction and supervision of the state board of equalization, to undertake the development of methods and procedures to assist and guide local assessors of property and boards of equalization in officially administering the annual assessment process and in maintenance of assessments through a process of updating valuations, property ownership records and other information and records required by sound assessment practices.
- The board may promulgate rules and regulations to provide for such a system of assessments and to prescribe the participation in the system of assessments of local assessors of property and boards of equalization.
Acts 1973, ch. 226, § 2; T.C.A., § 67-235.
67-1-206. Information and records required.
- The board may require that local assessors of local property and boards of equalization submit to the division of property assessments such information as may be necessary to provide for the analysis of assessments and the continued maintenance of ownership, appraisal, classification, and assessment information.
- Based upon the information provided by local assessors of property and boards of equalization, the division of property assessments shall provide to such local taxing jurisdictions, as may be determined by the state board of equalization, the continued maintenance of ownership index cards, property record cards, assessment rolls, tax rolls, tax bills, tax receipts, and such other information as may be required by the state board of equalization.
Acts 1973, ch. 226, § 2; T.C.A., § 67-236.
Part 3
State Board of Equalization
67-1-301. Meetings — Notice.
- The state board of equalization shall meet in Nashville annually on the second Monday in August to set dates and places for its hearings of appeals from actions of local boards of equalization, and to consider such other matters as may come before the board.
- A majority of the board shall constitute a quorum for the transaction of business.
- It is the duty of the board to sit for a portion of its allotted time in the western division of the state and in the eastern division of the state, in addition to its sessions at Nashville, the time and place of the sessions to be held at other points than Nashville to be designated by the board, and publication of such time and place or times and places to be made through the press.
- Taxpayers and property owners, without further notice than this section and due publication of the times and places of the meetings of the board as required by this section, are charged with notice of the sessions.
- Such sessions shall continue from time to time and day to day until the equalization of all assessments is completed.
-
- In addition to the annual meeting required in subsection (a), the board shall meet at other times and places as the board may find necessary to carry out its duties and responsibilities.
- Such meetings may be held upon the call of the chair or vice chair when the public business so requires.
- A majority of the board shall constitute a quorum for the transaction of business.
Acts 1973, ch. 226, § 2; T.C.A., § 67-201.
Cross-References. Assessment review by state board of equalization, title 67, ch. 5, part 15.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 38.
Attorney General Opinions. Determining the value of real property by using the income approach is a commonly-used, appropriate method for valuing income-producing property for purposes of ad valorem taxation. The use of this approach does not result in the assessment of an income tax. Use of the income approach to value mineral interests likewise does not result in the assessment of an unauthorized severance tax. OAG 14-103, 2014 Tenn. AG LEXIS 106 (12/2/14).
NOTES TO DECISIONS
Decisions Under Prior Law
1. Quorum.
The taxing authority, as representative of all other taxpayers, as well as the taxpayer, was entitled to a hearing by a quorum of the state board. Polk County v. State Board of Equalization, 484 S.W.2d 49, 1972 Tenn. App. LEXIS 344 (Tenn. Ct. App. 1972).
Collateral References.
Adjournment or closing of books, power or duty of tax review or equalization board to act after date for. 105 A.L.R. 624.
Evidence as to assessable value, power of board of tax review to receive, without notice to taxpayer. 113 A.L.R. 990.
Taxation 371
67-1-302. Expenses.
- All necessary and proper expenses incurred by the board in the performance of its duties imposed under this title shall be paid out of the funds appropriated to the division of property assessments.
- All reimbursement for travel expenses shall be in accordance with the comprehensive travel regulations as promulgated by the department of finance and administration and approved by the attorney general and reporter.
Acts 1973, ch. 226, § 2; 1976, ch. 806, § 1(21); T.C.A., § 67-202.
67-1-303. Oath of board members — Compensation.
- It is the duty of the members to discharge the duties of the board without compensation, except those expenses provided for in § 67-1-302 and except as provided in subsection (b), but before entering upon the discharge of such duties, the members shall take and subscribe to an oath that the members will fairly and impartially perform the duties imposed upon them by the laws of the state of Tennessee. The oath shall be taken before some person authorized by law to administer an oath and be filed in the office of the secretary of state for preservation.
-
- Persons who are not officials of the state of Tennessee and who may, from time to time, serve as members of the state board of equalization shall be paid at the rate of fifty dollars ($50.00) per day for each day or part of a day in attendance at meetings of the state board of equalization.
- Such members who are not state officials shall be reimbursed necessary travel and per diem expenses as prescribed in the comprehensive travel regulations by the commissioner of finance and administration for employees of the state of Tennessee, during such service on the state board of equalization, or travel to or from a meeting of the state board of equalization.
Acts 1973, ch. 226, § 2; T.C.A., § 67-203.
67-1-304. Vice chair.
The board shall elect one (1) of its members to serve as vice chair, who shall preside in the absence of the chair.
Acts 1973, ch. 226, § 2; T.C.A., § 67-204.
67-1-305. Powers of board.
-
The board is vested with the power to:
- Make such rules and regulations and prepare such forms as it may deem proper for its use;
- Obtain such evidence, information and statistics as may be deemed material as to the values, classifications and assessments of properties to be equalized;
- Regulate and prescribe the method of taking evidence before the board, whether by affidavit, deposition or otherwise;
- Send for papers and witnesses;
- Compel the attendance of witnesses and administer oaths to witnesses; and
- Do and perform all such acts as may be proper or necessary to accomplish the purpose of its creation.
- The board may issue subpoenas for witnesses, and place them in the hands of any executive officer of any county in this state whose duty it shall be to immediately execute them, and make due returns of the subpoenas.
Acts 1973, ch. 226, § 2; T.C.A., § 67-205.
NOTES TO DECISIONS
1. Rules and Regulations.
The board has the authority, pursuant to T.C.A. § 4-3-5103(1) and T.C.A. § 67-1-305(a)(1), to promulgate rules and manuals to aid in the appraisal, classification and assessment of property, and while the board could define the term “religious institution” by promulgating a rule, it is not required to do so as a condition to exercising its responsibility to hear and determine appeals concerning the exemption of property from taxation. The choice between using a rule-making proceeding and an adjudicatory proceeding is within the agency's discretion. Kopsombut-Myint Buddhist Center v. State Bd. of Equalization, 728 S.W.2d 327, 1986 Tenn. App. LEXIS 3607 (Tenn. Ct. App. 1986).
Decisions Under Prior Law
1. In General.
The board is a quasi-judicial agency, a creature of statute, duty bound to do justice by due process in the adjustment of tax assessments. Polk County v. State Board of Equalization, 484 S.W.2d 49, 1972 Tenn. App. LEXIS 344 (Tenn. Ct. App. 1972).
2. Rules and Regulations.
This statute was not interpreted to mean that the board was granted unlimited rule-making power nor the power to deprive any citizen or group of citizens of his or its right to justice by due process. Polk County v. State Board of Equalization, 484 S.W.2d 49, 1972 Tenn. App. LEXIS 344 (Tenn. Ct. App. 1972).
67-1-306. Agents and assistants — Fees for witnesses, service of process.
- All the agents and assistants appointed by the board have full power to administer oaths, take affidavits and depositions, and otherwise exercise all powers necessary to gather evidence by compelling the attendance of witnesses, the production of books and papers, and exercising all the powers of commissioners or clerks of courts in taking depositions.
- The agents and assistants appointed by the board may issue subpoenas for witnesses and place them in the hands of any executive officer of any county whose duty it shall be to immediately execute the subpoenas and make due return of the subpoenas.
- Any assistant appointed by the board to gather such evidence shall not receive any fee or emolument other than the assistant's agreed salary and actual necessary expenses.
- Witnesses and sheriffs or constables executing process shall receive the same compensation as is fixed by law for like service in a court of record.
Acts 1973, ch. 226, § 2; T.C.A., § 67-206.
67-1-307. Technical assistance to counties.
-
- The board is authorized to contract with the governing body of any county, or the governing body of any incorporated city or town, to furnish to any county or incorporated city or town such personnel, supplies, funds and technical assistance as may be needed to carry out a program of assessment, reassessment or equalization of property taxes.
- Upon the petition by a municipality that lies within the boundaries of two (2) or more counties, the board may enter into a contract with such municipality to provide the assessment services allowed under § 67-1-513.
- No contracts authorized by this section shall be entered into after January 1, 1974, by the board with any governing body other than those of counties, except that the board may enter into contracts with municipalities that lie within the boundaries of two (2) or more counties and who petition for assessment services allowed under § 67-1-513.
- The board shall establish rules and regulations that shall constitute a part of every contract of assistance. Such rules and regulations shall provide that the over-all cost incurred by the board shall be repaid to the board and shall state the terms and conditions on which such assistance shall be rendered including the interest charge, if any, on loans made, and such other rules and regulations as will adequately ensure the satisfactory completion of such programs.
- All funds appropriated to the board for the purpose of carrying out this section shall be kept in a special account by the board from which assistance shall be rendered, and funds repaid to the board under any contract shall be credited to the account and applied to any lawful obligation of the account.
- In the event of a default by a county, town or city in the payment or repayment of funds due under a contract, the board shall notify the comptroller of the treasury of the default and the amount of the default; it shall then be the duty of the comptroller of the treasury to have paid over to the board out of any state-shared taxes due the defaulting county, city or town sums sufficient to pay the amount in arrears under the contract.
- The assistance authorized by this section shall be supplemental to and administered separately from that authorized by title 4, chapter 3, part 51.
Acts 1973, ch. 226, § 2; impl. am. Acts 1978, ch. 934, §§ 7, 36; Acts 1983, ch. 236, § 2; T.C.A., §§ 67-207 — 67-211; Acts 1984, ch. 832, § 3.
Cited: State by Webster v. Word, 508 S.W.2d 539, 1974 Tenn. LEXIS 421 (Tenn. 1974).
67-1-308. Computer services available to localities.
The board may provide the use of computer facilities and services reasonably available from the state of Tennessee to such local taxing jurisdictions as the board determines do not have available adequate computer or similar services, and shall make a charge for the reasonable cost of the computer facilities and services to such local taxing jurisdictions in accordance with services rendered.
Acts 1973, ch. 226, § 2; T.C.A., § 67-212.
Part 4
County Boards of Equalization
67-1-401. Composition of boards.
-
The county legislative body of each county shall, at the April session of each even year, from the different sections of the county, elect, for a term of two (2) years, five (5) freeholders and taxpayers who shall constitute a county board of equalization.
- In any county having a population greater than nine hundred thousand (900,000), according to the 2010 federal census or any subsequent federal census, the county board of equalization shall be appointed for a term of two (2) years, consisting of thirteen (13) freeholders and taxpayers, of which three (3) members shall be appointed by the county commission or governing board, four (4) members shall be appointed by the city council or governing board of the largest municipality, and one (1) member each shall be appointed by the city councils or governing boards of each of the six (6) largest remaining cities having a population greater than ten thousand (10,000).
- In counties having one (1) or more cities with a population exceeding sixty thousand (60,000), according to the federal census of 1970 or any subsequent federal census, two (2) of the members of the board shall be appointed by the governing body of the largest city.
- In counties having one (1) or more cities with a population of not less than ten thousand (10,000) nor more than sixty thousand (60,000), one (1) member of the board shall be appointed by the city council or governing body of each of the two (2) largest cities with a population in excess of ten thousand (10,000), within the county.
- In counties that have no city with a population of ten thousand (10,000) or more, one (1) member of the board shall be appointed by the city council or governing board of the largest city or town in the counties.
-
- In a county with a metropolitan form of government, the charter for the metropolitan government may provide for the creation of a metropolitan board of equalization consisting of either five (5) or seven (7) members. Appointments to such board shall include members selected from minorities, as well as members of the sex that historically has been under-represented on the board of equalization. This subdivision (a)(5)(A) shall not apply to such counties having a population of less than ten thousand (10,000), according to the 1980 federal census or any subsequent federal census.
- If a county with a metropolitan form of government having a population of not less than four hundred seventy thousand (470,000) nor more than five hundred thousand (500,000), according to the 1980 federal census or any subsequent federal census, creates a board of equalization consisting of seven (7) members, at least two (2) of the members of the board shall be appointed consistent with subdivision (a)(5)(A).
- If the county legislative body fails to elect, the county mayor shall appoint the members of the board and shall also fill such vacancies as the vacancies occur.
-
- Magistrates or state, municipal or county legislative or executive officials or employees shall all be ineligible for positions on a county board of equalization, but this prohibition does not apply to persons who receive only compensation in lieu of expenses or a per diem payment for services. No member of any county board of equalization shall represent any taxpayer in an assessment appeal. This subsection (c) does not apply to municipal officials or employees whose city, located in a county with a population of eight hundred thousand (800,000) or more, according to the 1990 federal census or any subsequent federal census, is not eligible to appoint a member to the board.
-
- Notwithstanding other provisions of this subsection (c), except in counties having a population of more than eighty-five thousand (85,000) but less than eighty-six thousand (86,000), according to the 1990 federal census or any subsequent federal census, state employees may be appointed to the county board of equalization, if their employment responsibilities do not include property assessments, except that in counties having a population of more than eight hundred thousand (800,000), according to the 1990 federal census or any subsequent federal census, state employees shall not be appointed to the county board of equalization.
- No state employee serving on the county board of equalization shall be compensated by the state for time served on the county board, except that an otherwise eligible employee may use accumulated annual leave to serve on the county board with approval of the employee's supervisor.
- In addition to its regular appointments under this section, an appointing authority may designate one (1) or more alternates, and the board of equalization chair may call upon an alternate to sit for a regular member who becomes unavailable for a particular hearing due to disqualification or other reason. A duly appointed alternate shall be sworn in the same manner as regular members, and any action taken by a duly appointed alternate shall be as effective as if taken by the unavailable individual.
Acts 1973, ch. 226, § 2; impl. am. Acts 1978, ch. 934, §§ 7, 16, 36; Acts 1982, ch. 832, § 1; T.C.A., § 67-251; Acts 1985, ch. 115, § 1; 1988, ch. 793, § 1; 1991, ch. 419, § 1; 1992, ch. 866, § 1; 1997, ch. 419, § 1; 2000, ch. 957, §§ 1, 2; 2003, ch. 90, § 2; 2003, ch. 363, § 1; 2006, ch. 734, § 1; 2013, ch. 209, §§ 1, 2; 2017, ch. 231, § 1.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Amendments. The 2013 amendment rewrote (a)(2) which read: “In cities of a population of sixty thousand (60,000) or over, according to the federal census of 1970 or any subsequent federal census, two (2) members of the board shall be appointed by the city council or existing governing board of such taxing district.”; and added (d).
The 2017 amendment, in (a)(1), substituted “greater than nine hundred thousand (900,000), according to the 2010 federal census” for “greater than eight hundred thousand (800,000), according to the 1990 federal census”, substituted “of thirteen (13) freeholders” for “of nine (9) freeholders”, substituted “four (4) members” for “three (3) members” and substituted “six (6) largest remaining cities” for “three (3) largest remaining cities”.
Effective Dates. Acts 2013, ch. 209, § 17. April 23, 2013.
Acts 2017, ch. 231, § 2. April 28, 2017.
Cross-References. Assessment review by county board of equalization, title 67, ch. 5, part 14.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 37.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem St. U.L. Rev. 707 (1978).
Collateral References. Taxation 371
67-1-402. Oath of members.
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Each member of the county board of equalization, before entering upon the discharge of the duties of office, shall, before the county mayor or other official authorized by law to administer oaths, take and subscribe to the following oath, to be filed with the county clerk, viz:
“State of Tennessee,
County.
I, , member of the board of equalization of such county do hereby solemnly swear (or affirm) that I will carefully examine, compare and equalize the assessments of such county in accordance with the constitution and the laws of the state of Tennessee; and that to the best of my knowledge and ability I will faithfully, honestly and impartially perform all duties imposed upon me as a member of the board by the laws of the state of Tennessee.
Signed Board member
Sworn to before me, this the day of , .”
- On request of the state board of equalization, the county clerk shall make certified copies of such oaths and forward the copies to the state board of equalization. It is unlawful for any member of a county board to enter upon or undertake to discharge the duties of office without first taking, before entering upon the duties of office, the oath provided in subsection (a).
Acts 1973, ch. 226, § 2; impl. am. Acts 1978, ch. 934, §§ 16, 22, 36; T.C.A., § 67-252; Acts 2003, ch. 90, § 2; 2013, ch. 209, § 3.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
Amendments. The 2013 amendment inserted “or other official authorized by law to administer oaths” in (a).
Effective Dates. Acts 2013, ch. 209, § 17. April 23, 2013.
67-1-403. Officers — Quorum — Record of daily transactions — Compensation — Training.
- Each county board of equalization shall elect one (1) of its members chair and one (1) secretary of the board.
- A majority of the board shall constitute a quorum for the transaction of business.
- The board shall keep a daily record of its transactions, and sign the record.
- Board members shall be paid by the county a compensation for their services. The county legislative body shall by resolution establish the compensation of the members and the chair of the county board of equalization.
-
- The county mayor shall require board members and county board hearing officers to complete annual continuing education and training on duties and responsibilities of their office as a condition of appointment or continued service.
- The county legislative body shall by resolution establish the minimum of at least four (4) hours of training for board members to complete annually and minimum recordkeeping requirements related to members' certificates of attendance.
- The subjects for the training and continuing education shall include board governance, open meetings requirements, and other topics reasonably related to the duties of the members of the county board of equalization.
- Any association or organization with appropriate knowledge and experience may prepare a training and continuing education curriculum for county boards of equalization covering the subjects set forth in subdivision (e)(3) to be submitted to the comptroller of the treasury for review and approval prior to use.
- Mandatory annual continuing education and training is only required under this subsection (e) to the extent that such education and training is provided by the comptroller of the treasury free of charge.
Acts 1973, ch. 226, § 2; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A., § 67-253; Acts 1997, ch. 168, § 1; 2014, ch. 691, § 1; 2017, ch. 13, § 1.
Amendments. The 2014 amendment added (e).
The 2017 amendment, in (e)(1), substituted “The county mayor shall” for “The county mayor may” at the beginning, and inserted “annual continuing education and”; and added (e)(2)-(5).
Effective Dates. Acts 2014, ch. 691, § 5. April 15, 2014.
Acts 2017, ch. 13, § 2. March 24, 2017.
NOTES TO DECISIONS
Decisions Under Prior Law
1. Status of Board.
County board is a quasi-court of the actions of which a taxpayer must keep advised. Mossy Creek Bank v. Jefferson County, 153 Tenn. 332, 284 S.W. 64, 1925 Tenn. LEXIS 30 (1925).
2. Appeal to Board.
Where only validity of the tax statute is attacked, the board is without authority to grant relief. No appeal to the board is necessary. First Nat'l Bank v. Sevier County, 161 Tenn. 676, 30 S.W.2d 243, 1929 Tenn. LEXIS 68 (1929).
67-1-404. Sessions.
- The county board of equalization and the board of equalization of any metropolitan government organized and existing pursuant to title 7, chapters 1-3 shall, on June 1 each year, meet and sit in regular session as necessity may require until the equalization has been completed; provided, that in any county having a population of not less than twenty-six thousand (26,000) nor more than twenty-six thousand one hundred (26,100), according to the 1970 federal census or any subsequent federal census, the county legislative body may by resolution or ordinance set an earlier date for such board's initial meeting.
-
-
The board shall not sit longer than:
- Six (6) days in counties having a population of ten thousand (10,000) or less, according to the 1970 federal census or any subsequent federal census;
- Ten (10) days in counties having a population of over ten thousand (10,000) and under twenty thousand (20,000), according to the 1970 federal census or any subsequent federal census;
- Fifteen (15) days in counties having a population of over twenty thousand (20,000) and under thirty-five thousand (35,000), according to the 1970 federal census or any subsequent federal census; and
- For a number of days fixed by the respective county legislative bodies, but not in excess of thirty (30) days, in counties having a population of over thirty-five thousand (35,000), according to the 1970 federal census or any subsequent federal census.
- The county mayor, when the county legislative body cannot act, may extend the time or may call the board in special session at any time, if in the county mayor's judgment the public welfare requires it.
-
The board shall not sit longer than:
- Any county board of equalization, having jurisdiction over a municipality with a beginning tax due date different from that of the county, shall meet as required by the county legislative body, but at least one (1) month prior to the applicable beginning tax due date.
Acts 1973, ch. 226, § 2; impl. am. Acts 1978, ch. 934, §§ 7, 16, 36; Acts 1980, ch. 856, § 1; T.C.A., § 67-254; Acts 2003, ch. 90, § 2.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Attorney General Opinions. Authority to terminate funding for regular and special sessions of county boards of equalization, OAG 96-094 (7/29/96).
NOTES TO DECISIONS
1. Taxpayer Contests.
The taxpayer may contest assessments as often as they are made. In re Washington Mfg. Co., 120 B.R. 918, 1990 Bankr. LEXIS 2348 (Bankr. M.D. Tenn. 1990).
Part 5
Assessors of Property
67-1-501. Construction.
It is declared to be the legislative intent that §§ 67-1-502 and 67-1-508 — 67-1-513 be liberally construed in favor of jurisdiction and powers conferred upon the division of property assessments and the state board of equalization; and the division and the board and each of the entities shall have and exercise all such incidental powers as may be necessary to carry out and effectuate the objectives and purposes of §§ 67-1-502 and 67-1-508 — 67-1-513, and to equalize the assessment of all property subject to taxation as provided by law.
Acts 1973, ch. 226, § 3; T.C.A., § 67-339.
Law Reviews.
Tax Delinquency in Tennessee — Legislative Aspects (Charles P. White), 12 Tenn. L. Rev. 71 (1934).
Cited: Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998).
Collateral References. Taxation 371
67-1-502. Election of assessor — Term.
An assessor of property shall be elected by the qualified voters of each county and shall hold office for a term of four (4) years and until the assessor's successor is elected and qualified.
Acts 1973, ch. 226, § 3; 1978, ch. 934, § 25; T.C.A., § 67-301.
Cross-References. Assessors and equalizers generally, title 67, ch. 5, part 3.
Time of election, § 2-3-202.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 29.
Cited: Blackwell v. Miller, 493 S.W.2d 88, 1973 Tenn. LEXIS 500 (Tenn. 1973); Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998).
67-1-503. County legislative body members ineligible.
No member of the county legislative body shall be eligible to hold the office of assessor.
Acts 1973, ch. 226, § 3; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A., § 67-302.
Attorney General Opinions. This section does not prohibit a county election commission from qualifying a county legislative body member to have his or her name placed on the ballot to seek the office of assessor of property, OAG 03-111 (9/8/03).
Cited: Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998).
67-1-504. Vacancies.
- In cases of vacancies, the county legislative body, at its first session after the vacancy occurs shall elect an assessor who shall hold office until the September 1 following the next regular August election.
- The assessor shall be elected by the qualified voters at the first regular August election coming after the vacancy, and shall hold office from the following September 1 to the close of the term for which the predecessor was elected.
- If the office of the assessor becomes vacant due to death, resignation or removal, the duties of the assessor shall be temporarily discharged by the chief deputy, or deputy designated as temporary successor by the assessor of property in writing, until a successor assessor is elected or appointed and qualified according to law.
Acts 1973, ch. 226, § 3; 1978, ch. 934, § 26; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A., § 67-303; Acts 1993, ch. 315, § 20.
Cited: Blackwell v. Miller, 493 S.W.2d 88, 1973 Tenn. LEXIS 500 (Tenn. 1973).
67-1-505. Surety bond.
- Each county assessor, before entering into the duties of office, shall enter into an official bond prepared in accordance with title 8, chapter 19, payable to the state of Tennessee, in the sum of fifty thousand dollars ($50,000), to be approved by the county mayor, conditioned in such manner as required by § 8-19-111. The bond shall be approved by the county legislative body, recorded in the office of the county register of deeds and transmitted to the office of the county clerk for safekeeping.
- Each county assessor of the state shall, on or before the January 1 following election, execute and enter into a new bond in the amounts provided by law and conditioned as directed in subsection (a), and it is unlawful after that date for any assessor to perform the duties of assessor without giving such bond. If such bond is not made by that date, that office shall become vacant and shall be filled as may be provided by law.
Acts 1973, ch. 226, § 3; 1976, ch. 616, § 2; 1977, ch. 270, § 22; 1978, ch. 689, §§ 11, 12; impl. am. Acts 1978, ch. 934, §§ 7, 16, 22, 36; T.C.A., §§ 67-304 — 67-306; Acts 1989, ch. 591, §§ 1, 6; 1998, ch. 677, § 19; 2003, ch. 90, § 2; 2012, ch. 974, §§ 3, 4.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
Acts 2012, ch. 974, § 6, which amended subdivision (a)(1), and deleted subdivision (a)(2) and subsection (c), provided that the act shall apply to the renewal or obtaining of an official bond for any bonding after May 10, 2012.
Cited: Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998).
67-1-506. Deputy assessors and secretaries.
-
- In order to assure that each county assessor of property shall have a minimum staff to assist the county assessor in carrying out the duties and responsibilities required by law, the assessor is authorized to appoint at least one (1) deputy assessor for each four thousand five hundred (4,500) parcels of property, as determined by the division of property assessments, over and above the first four thousand five hundred (4,500) parcels of property within the assessor's taxing jurisdiction.
- Each deputy assessor shall have the same power, duties and liability of the assessor of property with respect to the appraisal, classification, and assessment of property.
-
- In any county where the assessor does not qualify for a deputy assessor under this section, the assessor is authorized, with the approval of the county legislative body, to employ or appoint a secretary to assist the assessor in the operation of the assessor's office. The compensation of such secretary shall be fixed by the county legislative body and paid out of county funds.
- The assessor shall employ such additional staff as the assessor deems necessary and establish rates of compensation for all employees within the appropriation established for the assessor's office by the county legislative body.
- The assessor of property shall be liable for any malfeasance, misfeasance, or nonfeasance of the assessor's deputy.
Acts 1973, ch. 226, § 3; 1974, ch. 480, § 1; 1974, ch. 771, § 15; 1976, ch. 719, § 1; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A., §§ 67-321, 67-322.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 29.
Attorney General Opinions. Authority of county assessor of property to determine the number and compensation of the employees in his or her office. OAG 15-41, 2015 Tenn. AG LEXIS 37 (4/24/15).
NOTES TO DECISIONS
1. Staff.
Since the assessor has the authority to appoint personnel to assist him or her, the assessor must also be authorized to make all employment decisions concerning them. Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998).
67-1-507. Oath of office.
-
Each assessor shall take and subscribe to the following oath of office, before the county mayor or other official authorized by law to administer oaths, which oath shall be attached to and filed with the bond of the assessor in the office of the county clerk, viz:
“I, , assessor of property (or deputy assessor) of the county of , state of Tennessee, do solemnly swear (or affirm) that I will appraise, classify, and assess all taxable property of the county of , according to the Constitution of Tennessee and the laws of the state; that I will truly report all persons who fail or refuse to list their taxable property or who have to my knowledge returned a fraudulent list; and that I will faithfully, impartially and honestly discharge my duties as assessor of property according to the law, to the best of my knowledge and ability, without fear, favor or affection, so help me God.
Signed Assessor of Property
Subscribed to and sworn before me this day of , 20 .”
- Each deputy assessor shall likewise take the oath and file the oath with the county clerk before entering upon the discharge of duties.
Acts 1973, ch. 226, § 3; 1981, ch. 305, § 1; T.C.A., § 67-331; Acts 2003, ch. 90, § 2; 2013, ch. 209, § 4.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
Amendments. The 2013 amendment inserted “or other official authorized by law to administer oaths” in (a).
Effective Dates. Acts 2013, ch. 209, § 17. April 23, 2013.
Cited: Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998).
67-1-508. Compensation.
- The assessor of property of each county or metropolitan government shall receive as compensation an annual salary as established by § 8-24-102.
- The legislative or governing bodies of counties and metropolitan governments may from time to time fix the compensation of assessors as may, in their judgment, be necessary and proper in order to attract or retain the service of assessors of professional competence, technical skills and needed administrative abilities, any private acts, charter provisions or other legal restrictions to the contrary notwithstanding.
-
- Out of funds available to the state board of equalization or division of property assessments, the state board may provide grants to counties to fund incentive increases of compensation for those assessors and their deputies who successfully complete certain courses of study and field training, and attain certain levels of increased competence and technical skills as prescribed and provided by the state board of equalization. Grants made pursuant to this subsection (c) shall be used only as a cash salary bonus supplement to the assessor or deputy, and shall not be used to supplant existing salaries or other incentives or as substitutes for normal salary increases periodically due to assessors or their deputies.
- Any assessor or deputy assessor who has completed the necessary courses of study and training and has been designated by the International Association of Assessing Officers as a certified assessment evaluator shall receive additional compensation of not less than seven hundred fifty dollars ($750) per annum or ten percent (10%) of the assessor's or deputy assessor's normal annual salary otherwise provided by law, but not to exceed one thousand five hundred dollars ($1,500) per annum under rules established by the state board of equalization.
- Any assessor or deputy assessor who has completed the necessary courses of study and training and has been designated by the Tennessee Certified Assessor's Program as a “Tennessee Master Assessor” shall receive additional compensation of one thousand dollars ($1,000) per annum.
- Any assessor or deputy assessor who has completed the necessary courses of study and training and either been designated by the Tennessee Certified Assessor's Program as a Tennessee certified assessor, or has been designated by the International Association of Assessing Officers as a residential evaluation specialist shall receive additional compensation of seven hundred fifty dollars ($750) per annum.
Acts 1973, ch. 226, § 3; 1982, ch. 708, § 1; T.C.A., § 67-332; Acts 1984, ch. 674, § 1; 1996, ch. 936, § 1; 2006, ch. 901, § 1; 2007, ch. 602, § 50.
Compiler's Notes. This section may be affected by § 9-1-116, concerning entitlement to funds, absent appropriation.
For the fiscal year county officials salary schedule, see the County Technical Assistance Service web site at http://www.ctas.tennessee.edu
Attorney General Opinions. County assessor of properties as a fee office, OAG 06-031 (2/14/06).
Cited: Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998); Sneyd v. Washington County, 387 S.W.3d 1, 2012 Tenn. App. LEXIS 437 (Tenn. Ct. App. June 28, 2012).
NOTES TO DECISIONS
Decisions Under Prior Law
1. Construction.
Since the office of county tax assessor (now assessor of property) is not a constitutional office but a creature of the legislature, the creator can fix and amend the incidents of the office at will so long as it does so by acts that are in form not subject to constitutional objection and so long as the constitutional rights of individuals are not curtailed. Tenpenny v. Cannon County, 180 Tenn. 618, 177 S.W.2d 817, 1944 Tenn. LEXIS 329 (1944).
67-1-509. Qualifications — Confidentiality of examinations.
- To assure that the assessment functions will be performed in a professional manner by competent assessors, meeting clearly specified professional qualifications, the state board of equalization is authorized and directed to prescribe educational and training courses to be taken by assessors and their deputies, and to specify qualification requirements for certification of anyone who is to be engaged to appraise and assess property for the purpose of taxation. Such educational and training courses shall include information on the assessment of conservation and scenic easements and other instruments that limit or restrict the use, management, alteration, demolition or transfer of property for the purpose of preserving property that is of historical, architectural, archaeological or cultural value.
- The state board of equalization may authorize the division of property assessments to administer this function under the control and supervision of the state board, to specify the certification requirements of persons who are to be certificated as qualified as local assessors of property, and to prescribe qualifications of those who are to be certified as qualified to act as deputy assessors.
- Any specifications or qualifications that shall be determined upon as a prerequisite to receiving and holding a certificate from the state board as qualified to be an assessor or a deputy assessor of property shall be approved and promulgated by the state board of equalization.
- It is the legislative intent that this section shall not serve to prevent any duly elected or appointed assessor of property from assuming such office or performing the assessor's legally specified duties.
- Notwithstanding § 4-19-101, all examinations administered by the comptroller of the treasury as part of the assessment certification and education program, including, but not limited to, the total bank of questions from which the tests are developed, the answers, and the answer sheets of individual test takers, shall be confidential and shall not be public records or state records open for public inspection pursuant to § 10-7-503.
Acts 1973, ch. 226, § 3; T.C.A., § 67-333; Acts 1988, ch. 531, § 1; 2015, ch. 211, § 1.
Amendments. The 2015 amendment added (e).
Effective Dates. Acts 2015, ch. 211, § 3. April 20, 2015.
Cross-References. Confidentiality of public records, § 10-7-504.
Cited: Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998).
67-1-510. Certification and identification of assessors and deputies.
- The state board of equalization has the power and the duty to prescribe the educational and training courses to be taken by assessors and their deputies, with a long-range view of gradually raising the professional standards and qualifications required, and has the power and duty to issue certificates to those it has found to be qualified to be assessors and deputy assessors on the basis of their successful completion of such educational and training courses.
- The state board shall issue identification cards to all assessors and their deputies. Such identification card shall identify the holder as an assessor or the assessor's deputy. Furthermore, the state board shall issue identification decals for the motor vehicles used by an assessor or the assessor's deputy. Such decal shall identify the motor vehicle as one used by an assessor or the assessor's deputy in the performance of the assessor's or deputy assessor's official duties.
Acts 1973, ch. 226, § 3; 1978, ch. 624, § 1; T.C.A., § 67-334.
67-1-511. Revocation of certificate.
The state board of equalization, subject to proper rules and regulations to be published and furnished to every assessing official, has the power to invalidate the certificate of any assessor or deputy assessor who willfully fails or refuses to perform such person's duties faithfully in accordance with the rules, regulations and instructions promulgated and issued by the state board of equalization, its manuals of assessment and the laws of the state governing the assessment of property and the duties of each assessor and deputy assessor.
Acts 1973, ch. 226, § 3; T.C.A., § 67-335.
67-1-512. Schools and field training courses.
The state board, out of funds available to it by appropriation, may enter into contracts with educational or professional institutions or organizations conducting schools and field training courses for all Tennessee assessors and their deputies in keeping with standards and qualifications adopted or to be adopted.
Acts 1973, ch. 226, § 3; T.C.A., § 67-336.
67-1-513. Office consolidation.
-
- As soon as practicable, and in no event later than January 1 next following completion of countywide reappraisal of property in a county, and establishment of an effective plan of updating of assessments for that county certified by the state board of equalization, all municipal and other assessment offices in that county shall be consolidated with the office of the county assessor and thereafter there shall be only one (1) assessment office in that county, and a single roll shall be furnished at the cost of reproduction for use by all taxing jurisdictions within that county.
- However, any municipality that lies within the boundaries of two (2) or more counties may maintain an assessment office separate from the assessment offices of the counties in which such municipality lies, or may contract with the state board of equalization for assessment services for the municipality pursuant to § 67-1-307.
-
- Upon the consolidation of all municipal and other assessment offices within any county with the office of the county assessor of property, all local boards of equalization shall be consolidated with the county board of equalization, and thereafter there shall be only one (1) local board of equalization in the county.
- However, if any municipality lying within the boundaries of two (2) or more counties maintains an assessment office separate from the assessment offices of the county in which such municipality lies, or if such municipality contracts with the state board of equalization for the provision of assessment services under § 67-1-307, such municipality shall have a city board of equalization separate from the local boards of equalization of such counties.
Acts 1973, ch. 226, § 3; 1976, ch. 609, §§ 1, 2; 1983, ch. 236, § 1; T.C.A., § 67-337.
67-1-514. Changes in record-keeping systems.
Whenever the county legislative body has inaugurated, set up or approved any system of keeping records in the office of the assessor of property of such county, when such system has been approved by the comptroller of the treasury, such system may not be changed, altered, or abolished without approval of the comptroller of the treasury.
Acts 1973, ch. 226, § 3; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A., § 67-338; Acts 2008, ch. 971, § 1.
Compiler's Notes. Acts 2008, ch. 971, § 1 provided that the code commission is directed to change all references to “tax assessor”, wherever such references appear, to “assessor of property”, as such sections are amended or volumes are replaced. See § 1-1-116.
Part 6
General Revenue Authority of Counties
67-1-601. Counties may impose taxes.
A county legislative body may impose taxes for county purposes, and fix the rate of taxation, at its first session every year; and, if the legislative body omits such duty at the first session, it shall perform it at any subsequent quarterly session.
Code 1858, § 489 (deriv. Acts 1837-1838, ch. 135, § 2); Shan., § 649; Code 1932, § 1048; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A. (orig. ed.), § 67-1005.
Cross-References. Establishment of county tax rate, § 67-5-510.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 5.
Law Reviews.
Tax Limitations of Counties and Municipalities (M. P. O'Connor), 12 Tenn. L. Rev. 174 (1934).
NOTES TO DECISIONS
1. Time of Levy.
A tax levy for the preceding year may be made at a quarterly session during the succeeding year for general purposes; and a void assessment for the preceding year may be ratified by action of the county equivalent to a new levy at the same rate. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873); Southern R. Co. v. Hamblen County, 117 Tenn. 327, 97 S.W. 455, 1906 Tenn. LEXIS 50 (1906).
The term at which taxes are levied does not affect the validity of the tax. Bright v. Halloman, 75 Tenn. 309, 1881 Tenn. LEXIS 121 (1881).
A special tax levied for the current year may be modified by amendment, or a new levy may be made, at the succeeding January session, and the tax may be collected for the year of the original levy. Southern R. Co. v. Hamblen County, 117 Tenn. 327, 97 S.W. 455, 1906 Tenn. LEXIS 50 (1906).
A county may make a levy for special purposes which it has failed to make at a previous term, or which it made at such previous term in an irregular or illegal way. Southern R. Co. v. Hamblen County, 117 Tenn. 327, 97 S.W. 455, 1906 Tenn. LEXIS 50 (1906).
Collateral References. Taxation 371
67-1-602. Limit on county taxation — Equal and uniform taxation.
A county legislative body shall not levy any higher pro rata of taxes on any species of property or privilege than that fixed for the state, but the percentage of such levy, as compared with the state tax, shall be equal and uniform.
Acts 1869-1870, ch. 81, § 9; Shan., § 652; mod. Code 1932, § 1051; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A. (orig. ed.), § 67-1006.
Cross-References. Establishment of county tax rate, § 67-5-510.
Privilege tax, levy by counties and cities, §§ 67-4-501, 67-4-502.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, §§ 5, 8.
Law Reviews.
Tax Limitations of Counties and Municipalities (M. P. O'Connor), 12 Tenn. L. Rev. 174 (1934).
Attorney General Opinions. County wheel tax not limited by this section, OAG 97-109 (8/06/97).
Cited: Bright v. Halloman, 75 Tenn. 309, 1881 Tenn. LEXIS 121 (1881); Treadwell Realty Co. v. City of Memphis, 173 Tenn. 168, 116 S.W.2d 997, 1937 Tenn. LEXIS 23 (1937).
NOTES TO DECISIONS
1. Constitutionality.
Under § 67-1-602 and Tenn. Const., art. II, §§ 28 and 29, the general assembly had authority to impose upon the counties the restrictions contained in this section, and the county must observe the principle of equality and uniformity in levying privilege taxes. The slightest discrimination against any privilege tax will, as to the excess, be oppressive and unlawful. Stern v. Lewis, 2 Shan. 51 (1876).
2. Exemptions.
The county courts (now county legislative bodies) must levy “an equal and uniform” tax on all taxable property in their respective counties, and they can exempt no property from taxation for county purposes that is not also exempt from taxation by the state. Nashville & K. R. Co. v. Wilson County, 89 Tenn. 597, 15 S.W. 446, 1890 Tenn. LEXIS 84 (1891).
67-1-603. Revenue used to discharge debt — Special funds.
- All counties that levy and collect taxes for special purposes or to pay off any bonded indebtedness are empowered, through the county legislative bodies, to appropriate and use the funds levied and collected for such purposes to discharge any outstanding bonded indebtedness of the counties.
- Such counties have the authority, through the county legislative bodies, to place all the funds levied and collected for special purposes in one (1) fund, to be known as the special fund of the counties, and to appropriate and use the money for the purpose of discharging any bonded indebtedness of the counties.
Acts 1907, ch. 573, §§ 1, 2; Shan., §§ 648a1, 648a2; Code 1932, §§ 1046, 1047; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A. (orig. ed.), §§ 67-1002, 67-1003.
Cross-References. Levy for payment of bonds issued under cash basis law, § 9-11-112.
Tax for retirement of school bonds, § 49-3-1005.
Taxation by county, § 67-5-102.
Law Reviews.
Tax Limitations of Counties and Municipalities (M. P. O'Connor), 12 Tenn. L. Rev. 174 (1934).
Part 7
Collection and Enforcement Generally
67-1-701. When taxes payable.
- All taxes, state, county, and municipal, to be collected under this part, parts 10, 15 and 16 of this chapter, and chapter 5, parts 18-20 of this title shall be payable the first Monday in October in each year, except taxes of municipal corporations that, under existing laws, are authorized to collect their own taxes on property and privileges; provided, that, whenever, under any plan or program of consolidation of governmental functions of county offices with comparable facilities provided under any municipal charter, it is expedient to fix different due dates than those established in this subsection (a), in order to avoid the destruction of existing municipal fiscal policies, the county trustee of any county, by and with the consent of a majority of the members of the county legislative body of the county, may establish due dates other than those set forth in this subsection (a).
- County revenue shall be collected by the officers at the time and in the manner prescribed for the collection of the state revenue.
- All municipal taxes collectible by the county trustee shall become due and delinquent at the same time as state and county taxes; provided, that, whenever, under any plan or program of consolidation of governmental functions of county offices with comparable facilities provided under any municipal charter, it is expedient to fix different due dates than those established in subsection (a), in order to avoid the destruction of existing municipal fiscal policies, the county trustee of any county, by and with the consent of a majority of the members of the county legislative body of the county trustee's county, may establish due dates other than those set forth in subsection (a).
Code 1858, § 491; Shan., §§ 651, 773, 865; mod. Code 1932, §§ 1050, 1350, 1545; Acts 1907, ch. 602, § 41; 1909, ch. 542, § 1; 1961, ch. 312, § 1; 1961, ch. 314, § 1; impl. am. Acts 1978, ch. 934, §§ 7, 36; modified; Acts 1982, ch. 819, § 1; T.C.A. (orig. ed.), §§ 67-1101(a), 67-1102, 67-1103.
Cross-References. Inapplicability of section to real property tax deferral, § 7-64-204.
Payment to trustee, § 67-1-702.
Public building authorities, municipal tax for lease, loan agreement or sale contract payments, § 12-10-115.
Law Reviews.
Tax Limitations of Counties and Municipalities (M. P. O'Connor), 12 Tenn. L. Rev. 174 (1934).
Cited: Marlowe v. Kingdom Hall of Jehovah's Witnesses, 541 S.W.2d 121, 1976 Tenn. LEXIS 532 (Tenn. 1976).
NOTES TO DECISIONS
1. General Consideration.
“Due date” to which T.C.A. § 67-1-701(a) is referring must be the first Monday in October. Multiple Tennessee Attorney General Opinions state that property taxes are both “due and payable” on the first Monday in October; it is clear that Tennessee tax collectors, courts, and attorneys general have long interpreted Tennessee law to mean that property taxes are “due” on the first Monday in October. In re Goody's Family Clothing, Inc., 443 B.R. 5, 2010 Bankr. LEXIS 4120 (3rd Cir. Dec. 1, 2010).
Collateral References. Taxation 371
67-1-702. Payment to trustee.
- Every taxpayer shall pay state, county, municipal, highway, school and all of such taxpayer's property taxes to the county trustee, except when otherwise provided by law, and such taxes shall be due and payable on the first Monday in October of each year.
- Notwithstanding any law to the contrary, upon adoption of a resolution by the county legislative body, the county trustee may accept property taxes at any time after July 10, prior to the first Monday in October established by § 67-1-701, on which date trustees are required to accept property tax payments, and after the tax rates are finally set, the trustee's tax rolls are received and the trustee's receipts are prepared. County trustees may begin accepting tax relief applications on the same date on which the trustee accepts property tax payments.
Acts 1907, ch. 602, § 48; Shan., § 865a2; Acts 1923, ch. 77, § 1; mod. Code 1932, § 1547; Acts 1971, ch. 380, § 1; 1976, ch. 429, § 1; modified; Acts 1982, ch. 883, §§ 1-3; 1983, ch. 62, §§ 1, 2; 1983, ch. 430, § 2; T.C.A. (orig. ed.), § 67-1105; Acts 1988, ch. 795, § 20; 1989, ch. 291, § 5; 1989, ch. 550, §§ 5, 23; 1996, ch. 717, § 1; 1997, ch. 313, § 1.
Compiler's Notes. Acts 1989, ch. 550, §§ 8-21 were deemed local by the code commission and not codified in this code.
Attorney General Opinions. Duty of county trustee to collect municipal property taxes, OAG 99-183 (9/17/99).
67-1-703. Payment to state — Form — Time.
-
- The commissioner of revenue is empowered to accept, in payment of all taxes collected by the department, evidence satisfactory to the commissioner that the amount due for the tax has been deposited in a state depository designated pursuant to § 9-4-107, which has been approved by the state treasurer, to the credit of the state of Tennessee.
- Evidence of the deposit must be furnished to the commissioner on or before the due date of the tax as established by law, and no taxpayer paying taxes in such manner shall be relieved of any penalty for delinquency upon failure of such evidence to be seasonably furnished, except as provided in § 67-1-803.
- The commissioner may require that any person owing ten thousand dollars ($10,000) or more in connection with any return, report or other document to be filed with the department, or owing one thousand dollars ($1,000) or more in connection with any return, report or other document to be filed with the department under chapter 6 of this title or chapter 4, part 7 of this title, or owing two thousand five hundred dollars ($2,500) or more in connection with any quarterly estimated payment due under § 67-4-2015(b), shall pay any such tax liability to the state no later than the date the payment is required by law to be made in funds that are immediately available to the state on the date of payment. Payment in immediately available funds may be made by wire transfers of funds through the federal reserve system or by any other means established by the commissioner, with the approval of the state treasurer, that ensures the availability of such funds to the state on the date of payment. Evidence of such payment shall be furnished to the commissioner on or before the due date of the tax as established by law. Failure to timely make such payment in immediately available funds, or failure to provide such evidence of payment in a timely manner, shall subject the taxpayer to penalty and interest as provided by law for delinquent or deficient tax payments. If payment is timely made in other than immediately available funds, penalty and interest shall be added to the amount of tax due from the due date of the tax payment to the date that funds from the tax payment become available to the state.
- The commissioner is specifically authorized to establish, by rule, periodic filing and payment dates that are subsequent to the dates otherwise established by law for any taxes collected by the department in those instances where the commissioner deems it to be in the best interest of the state to do so. Such alternative date shall not, however, be later than the last day of the month in which the tax was otherwise due.
- The commissioner, in the commissioner's discretion, may require taxpayers who are required to electronically transfer any payment of twenty thousand dollars ($20,000) or more to the department of revenue to also electronically file the return, report or other document with which such electronically transferred payment is associated or on which credit for the payment electronically transferred is taken. In extenuating circumstances, the commissioner has discretionary authority to waive this requirement with respect to any taxpayer. To obtain a waiver, the taxpayer shall demonstrate in writing to the department that such circumstances exist. Any return or tax information, as defined by § 67-1-1701, electronically transferred under this subsection (d) shall constitute confidential information, the disclosure of which shall be subject to part 17 of this chapter.
- The commissioner is authorized to prescribe all rules necessary for the administration of this section.
-
- The commissioner is authorized, but not required, to accept credit cards, debit cards, or other similar financial transaction cards in payment of all taxes or other amounts collected by the department. The commissioner may adopt reasonable policies and rules governing the manner of acceptance of such cards.
- The commissioner may enter into appropriate agreements with card issuers or other appropriate parties as needed to facilitate the acceptance of payments authorized by this subsection (f). The commissioner may impose a surcharge or convenience fee upon persons making payment by credit card, debit card, or other similar financial transaction cards to wholly or partially offset, in the aggregate, any discount or administrative fees charged to the department on such payments.
- The commissioner also may enter into appropriate agreements with third-party service providers for the acceptance and processing of credit card, debit card, or other similar financial transaction card payments on the commissioner's behalf. Such agreements may authorize the third-party service provider to impose a surcharge or convenience fee upon persons making such payments.
- When a person elects to make a payment to the department by credit card, debit card, or other similar financial transaction card and a surcharge or convenience fee is imposed as authorized by this subsection (f), the payment of the surcharge or convenience fee shall be deemed voluntary and shall not be refundable. No person making any payment to the department by credit card, debit card, or other similar financial transaction card shall be relieved from liability for the underlying obligation, except to the extent that the department realizes final payment of the underlying obligation in cash or the equivalent. If final payment is not made by the card issuer or other guarantor of payment, then the underlying obligation shall survive and the department shall retain all remedies for enforcement that would have applied if the transaction had not occurred.
Acts 1921, ch. 113, § 2; impl. am. Acts 1923, ch. 7, §§ 19, 24; Acts 1923, ch. 106, § 1; Shan. Supp., § 809a8; Code 1932, § 1478; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; Acts 1965, ch. 5, § 1; 1965, ch. 154, § 1; 1970, ch. 500, § 2; 1970, ch. 559, § 4; 1973, ch. 151, § 1; 1973, ch. 368, § 1; 1973, ch. 373, § 1; 1977, ch. 106, § 1; 1978, ch. 599, § 1; 1980, ch. 460, § 1; 1981, ch. 34, § 1; 1983, ch. 148, § 1; T.C.A. (orig. ed.), § 67-101(3); Acts 1986, ch. 923, § 5; 1989, ch. 332, §§ 1, 2; 1995, ch. 274, § 1; 1998, ch. 657, § 1; 2004, ch. 786, § 1; 2005, ch. 131, § 1; 2007, ch. 602, § 30; 2009, ch. 530, § 94; 2011, ch. 467, § 7.
Code Commission Notes.
Acts 1998, ch. 657, which added (c), provided in § 2 that, prior to January 1, 2000, the provisions of the act shall not apply to any return, report or other document to be filed with the department under the provisions of chapter 4, parts 8 and 9 [repealed] of this title when the taxpayer is required to apportion such taxes.
Cross-References. Confidentiality of public records, § 10-7-504.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 52.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
NOTES TO DECISIONS
1. Bank Depository Method of Payment.
Where a taxpayer pays his sales tax pursuant to the bank depository method authorized by this section, the bank acts as the agent of the depositor rather than the agent of the state. Electric Power Bd. v. Woods, 558 S.W.2d 821, 1977 Tenn. LEXIS 660 (Tenn. 1977).
Where sales tax was timely delivered to the bank by a taxpayer utilizing the bank depository method of payment authorized by this section, but where the actual deposit of such sales tax was not made by the bank before the date the tax was due, the mere delivery of the tax payment to the bank was not an actual and constructive payment of the tax to the state, hence the payment was delinquent and it was proper to disallow vendor's compensation and to assess interest and penalties. Electric Power Bd. v. Woods, 558 S.W.2d 821, 1977 Tenn. LEXIS 660 (Tenn. 1977).
67-1-704. Payment to county — Form and receipt.
-
The trustee shall receive, in discharge of public taxes and other dues to the state, besides the constitutional and lawful currency of the United States:
- Warrants on the state treasury legally outstanding in the hands of each person to whom issued and unpaid;
- Coins of the United States;
- United States legal tender notes;
- Federal reserve notes; and
- In those counties having a population, according to the 1990 federal census or any subsequent federal census, of not less than thirty-four thousand eight hundred fifty (34,850) nor more than thirty-five thousand (35,000), payment by credit card or debit card.
-
- The trustee shall provide to each taxpayer a receipt printed or written in ink or indelible pencil, for all the taxes paid by the taxpayer.
-
If a portion of the tax notice is to be retained by the taxpayer, in lieu of the trustee mailing a separate receipt of the payment to the taxpayer, the tax notice shall:
- Clearly state such fact; and
- Inform the taxpayer that, if the taxpayer desires the trustee to mail a separate receipt of the payment to the taxpayer, the taxpayer must include a self-addressed, stamped envelope when the taxes are paid.
- If the trustee provides a separate receipt of all taxes paid by the taxpayer, such receipt shall be numbered and dated.
-
- The trustee, on the payment of all state and county taxes, shall issue to the taxpayers a receipt showing the aggregate of state taxes and the aggregate of county taxes paid by the taxpayers, and each amount so separated and distinguished from the other amount in the receipt that the taxpayer may know, on reading the receipt, the taxes paid to the state and the taxes paid to the county. All tax receipts shall be so printed that, on the margin of the receipt at one (1) end, shall appear the separate levies composing the county rate and the purposes for which levied, and on the margin of the other end shall appear the separate levies composing the state rate and all purposes for which levied; provided, that, where it is impracticable literally to comply with the specific provisions of this subdivision (c)(1) with respect to the separation of state and county taxes, for any cause appearing to the commissioner of revenue, the commissioner is authorized to order such different arrangement of the tax receipt as will substantially comply with the requirements for the separation of the state and county taxes on the receipt.
- In counties where the tax assessing and tax collecting authorities use mechanical devices for the printing of assessments and tax receipts, the trustee may omit from such receipts the listing of the several levies composing the county rate and the purposes for which levied and statements with regard to any state levies; provided, that any taxpayer requesting such statement with regard to the levies shall be furnished a statement by the trustee.
- It is the duty of the county legislative body of each county to furnish the county trustee of the county with a sufficient number of tax receipts printed in duplicate and in a blank form in a book or books numbered from one (1) up, consecutively, and shall have the year for which the taxes are due printed in large figures, not less than one inch (1") deep, on the face of each receipt. The trustee shall be charged with these receipts, and must, in the trustee's final settlement, account for each blank receipt so received by the trustee. No payment to the trustee of any tax shall be legal and binding unless paid upon the regular tax receipt specified in this subsection (d), and duplicate receipts shall be preserved in the book or books, to be submitted to the county legislative body by the trustee whenever required to do so. The receipt book of duplicates, when filled, shall be filed in the office of the county clerk for reference, and shall be receipted for by the clerk and carefully preserved in the clerk's office as a record for the protection of taxpayers who have paid their taxes and lost or misplaced their receipts.
- Any trustee that properly collects state and county taxes by credit or debit card is authorized to collect a fee for processing any payment by credit or debit card; provided, that the fee shall not exceed the amount that the card issuer charges the trustee in connection with honoring the credit or debit card payment.
-
As used in this section, unless the context otherwise requires:
- “Credit card” has the same meaning as set forth in § 39-14-102;
- “Debit card” has the same meaning as set forth in § 39-14-102; and
- “Issuer” has the same meaning as set forth in § 39-14-102.
- If a payment by credit or debit card is not honored by the issuer, the trustee may collect a service charge from the person who owes the public taxes. The service charge is in addition to the public taxes for which the credit or debit card was used and the original processing fee. The amount of the service charge shall be the same amount as the fee charged by the trustee for the collection of a check drawn on an account with insufficient funds.
Code 1858, § 603; Acts 1869-1870, ch. 81, § 2; 1879, ch. 139, § 4; 1889, ch. 200, § 1; integrated in Shan., §§ 871-873; mod. Code 1932, §§ 1550-1553; modified; Acts 1907, ch. 602, § 42; 1925, ch. 135, § 2; 1937, ch. 46, § 1; C. Supp. 1950, § 1551; Acts 1957, ch. 147, § 1; impl. am. Acts 1959, ch. 9, § 14; impl. am. Acts 1978, ch. 934, §§ 7, 22, 36; T.C.A. (orig. ed.), §§ 67-1108 — 67-1111; Acts 1999, ch. 474, §§ 1, 2; 2004, ch. 682, § 1.
Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
NOTES TO DECISIONS
1. Notes of Bank of Tennessee.
Taxpayer was entitled to pay taxes with notes issued by The Bank of Tennessee where bank charter stipulated that notes issued by bank should be received by all tax collectors in payment of taxes. Furman v. Nichol, 75 U.S. 44, 19 L. Ed. 370, 1868 U.S. LEXIS 1082 (1869).
2. Presumption of Performance of Duty.
It is presumed the trustee will do his duty in making out a slip to taxpayers so as to show division of public school funds. State ex rel. Cope v. Davidson County, 198 Tenn. 24, 277 S.W.2d 396, 1955 Tenn. LEXIS 340 (1955).
67-1-705. Collection fees.
No clerk, or other officer, shall make any charge for any statement, certificate, or receipt for taxes, except as provided in § 67-5-2007. Nothing in this section shall be construed to limit the ability of the trustee to request the taxpayer to include a self-addressed, stamped envelope if the taxpayer desires the trustee to mail a separate receipt of the payment of taxes to the taxpayer pursuant to § 67-1-704(b)(2)(B).
Acts 1881, ch. 163, § 1; Shan., § 874; mod. Code 1932, § 1563; T.C.A. (orig. ed.), § 67-1119; Acts 2004, ch. 682, § 2.
67-1-706. Collection of excessive tax prohibited.
It is a Class C misdemeanor for a collector of taxes to collect, under the color or pretense of office, more money, in the name of taxes, than is directed by law.
Code 1858, § 605; Shan., § 875; Code 1932, § 1564; T.C.A. (orig. ed.), § 67-1120; Acts 1989, ch. 591, § 113.
Cross-References. Penalty for Class C misdemeanor, § 40-35-111.
67-1-707. Adjustments and refunds.
- The county clerks of the various counties are also authorized and empowered to settle and adjust with taxpayers all errors and double assessments of county taxes erroneously or illegally collected by them and to direct the refunding of the taxes. Any claim for such refund by the county of taxes or revenue alleged to have been erroneously or illegally paid shall be filed with the county clerk, supported by proper proof within one (1) year from the date of payment; otherwise, the taxpayer shall not be entitled to a refund and the claim for refund shall be barred.
- Subsection (a) also applies to municipalities and municipal taxpayers; provided, however, that in the case of claims made for refund of municipal taxes, the duties, obligations, and responsibilities of the county clerk described in subsection (a) shall be performed by the city recorder, city clerk, or director of finance of the municipality acting under the direction and authority of the mayor or city manager.
Acts 1923, ch. 66, § 1; Shan. Supp., § 373a45; Acts 1927, ch. 89, § 18; mod. Code 1932, § 270; Acts 1935, ch. 167, § 1; 1937, ch. 108, art. 3, § 15; 1949, ch. 260, § 1; mod. C. Supp. 1950, §§ 270, 270.1; (Williams, §§ 270, 270.1, 270.2, 1248.142i); Acts 1951, ch. 215, § 1; 1951, ch. 264, § 2; 1955, ch. 184, § 1; impl. am. Acts 1959, ch. 9, § 14; Acts 1965, ch. 7, § 1; 1969, ch. 142, § 1; 1972, ch. 461, §§ 1, 2; modified; 1974, ch. 566, § 1; 1978, ch. 646, § 1; impl. am. Acts 1978, ch. 934, §§ 22, 36; Acts 1983, ch. 264, § 1; T.C.A. (orig. ed.), §§ 67-2301, 67-2302; Acts 1984, ch. 724, § 1; 1986, ch. 749, § 4; 2004, ch. 420, § 1.
Cross-References. Authority for refunds and settlements in metropolitan government areas, § 7-4-108.
Penalties and interest, § 67-1-801.
Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 970.
Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 71.
Law Reviews.
A Revolution in Tennessee Tax Procedure (S. Gale Graham), 22, Tenn. B.J. 13 (1986).
Cited: Fentress County Bank v. Holt, 535 S.W.2d 854, 1976 Tenn. LEXIS 586 (Tenn. 1976); Stroop v. Rutherford County, 567 S.W.2d 753, 1978 Tenn. LEXIS 605 (Tenn. 1978); Federal Express Corp. v. Woods, 569 S.W.2d 408, 1978 Tenn. LEXIS 617 (Tenn. 1978); McDowell Dev. Corp. v. Ferguson, 579 S.W.2d 863, 1978 Tenn. App. LEXIS 341 (Tenn. Ct. App. 1978).
NOTES TO DECISIONS
1. In General.
In suit for tax refund mandamus did not lie since this section empowers and directs the commissioner to make refunds only in those cases where he has the approval of the attorney-general and reporter to do so. Seagle—Paddock Pools, Inc. v. Benson, 503 S.W.2d 93, 1973 Tenn. LEXIS 431 (Tenn. 1973).
To recover under this chapter, plaintiff must show that the taxing statute, in terms, imposes the tax upon him and creates obligations owing by him to the taxing authority; it is not enough to show that in the course of business the economic burden of the tax was passed on to plaintiff by the true taxpayer. Brodbine v. Torrence, 545 S.W.2d 743, 1977 Tenn. LEXIS 608 (Tenn. 1977).
2. Remedies.
Taxpayer has two remedies for the recovery of county taxes, namely: (1) The administrative procedure provided under this section; and (2) Payment under protest and a common law suit for recovery, such suit being in the nature of an action of assumpsit for money had and received and governed by a six-year statute of limitation. Holloway v. Putnam County, 534 S.W.2d 292, 1976 Tenn. LEXIS 591 (Tenn. 1976); Bill's Institutional Commissary Corp. v. Shelby County, 584 S.W.2d 805, 1979 Tenn. App. LEXIS 321 (Tenn. Ct. App. 1979).
The legislature intended § 67-4-713 to be a separate procedure from that set out in this chapter. Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982).
Payment under protest under this chapter is not a prerequisite to recovery of taxes from a city under § 67-4-713. Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982).
The remedy afforded by this section was permissive, not mandatory, was final, and not subject to judicial review. Hertz Corp. v. County of Shelby, 667 S.W.2d 66, 1984 Tenn. LEXIS 772 (Tenn. 1984).
3. Judicial Review.
The action of the commissioner of revenue denying a claim for refund of sales and use taxes paid is not subject to judicial review under title 4, chapter 5. Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982).
Collateral References.
Amending claim for refund of taxes after time for filing has expired. 113 A.L.R. 1291.
Bankruptcy trustee's right to claim against government for tax refund. 102 A.L.R. 168.
Barred claim of government against taxpayer as available to defeat or diminish claim of taxpayer against government, or vice versa. 109 A.L.R. 1354, 130 A.L.R. 838, 154 A.L.R. 1052, 12 A.L.R.2d 815.
Conclusiveness of tax receipt. 73 A.L.R. 152.
Constitutionality of statute providing for refund of taxes illegally or erroneously exacted. 98 A.L.R. 284.
Corporation which paid tax wrongfully exacted upon shares of its stock as proper party to maintain action for its recovery. 84 A.L.R. 107.
Excessive assessments as within contemplation of statute providing for refunding of taxes, “erroneously or illegally charged.” 110 A.L.R. 670.
Judicial decision denying power of state to levy tax as supporting recovery of taxes paid at time when power of state to levy tax had been judicially upheld. 115 A.L.R. 641.
Limitation period for filing applications for refund, when begins to run. 175 A.L.R. 1100.
Mandatory or permissive character of legislation in relation to refund of taxes illegally exacted. 103 A.L.R. 817.
Propriety of class action in state courts to recover taxes. 10 A.L.R.4th 655.
Right to interest on tax refund or credit in absence of specific controlling statute. 88 A.L.R.2d 823.
Right to refund or recovery back of taxes paid on property not owned by taxpayer. 165 A.L.R. 879.
Suit against officer to recover tax upon ground of unconstitutionality of statute as suit against state. 43 A.L.R. 408.
Tax illegally exacted, judgment in favor of taxpayer for recovery of, as subject to provisions of statute regarding substance and form, manner of collection, or enforcement of judgment against municipality. 101 A.L.R. 800.
Time for claiming refund where tax is paid in instalments. 94 A.L.R. 978.
Unconstitutional statute or ordinance, recovery of tax paid under. 48 A.L.R. 1381, 74 A.L.R. 1301.
Who as between grantor and grantee, immediate or remote, is entitled to refund of tax. 105 A.L.R. 698.
67-1-708. Waiver of enforcement and collection.
The commissioner may waive enforcement and collection of any tax imposed under any revenue laws administered by the commissioner, in any case of deficiency, if:
- The amount of such deficiency is the lesser of ten dollars ($10.00) or ten percent (10%) of the total tax due;
- The commissioner determines that the cost to the department to collect such deficiency would be equal to or greater than the tax collected; and
- The commissioner determines that the deficiency does not result from fraud or an intention to avoid payment.
Acts 1985, ch. 297, § 1.
Part 8
Penalties and Interest
67-1-801. Rate of penalty and interest.
-
-
When any person liable to pay any tax that is collected or administered by the commissioner of revenue fails to pay the tax, or any portion of the tax, on or before the date when such tax shall be required to be paid, interest shall be added to the amount of tax due, in addition to any penalty provided by law, at a rate to be determined by the commissioner in the manner provided in this subsection (a).
- The rate of interest determined by the commissioner shall be the formula rate of interest last published in the Tennessee Administrative Register, pursuant to title 47, chapter 14.
- The commissioner shall determine the rate of interest by causing notice of such rate to be filed with the secretary of state on July 1 each year, for publication in the Tennessee Administrative Register.
- The rate of interest determined by the commissioner shall become effective on July 1 of each year, and shall apply to all assessments of interest on and after July 1 of each year, until July 1 of the following year when the rate of interest shall be redetermined by the commissioner.
- The determination of the commissioner of the rate of interest on delinquent and deficient tax payments and the filing of notice thereof, as provided for in this chapter shall not constitute a rule under the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
- All delinquent or deficient payments of taxes, either administered or collected by the commissioner, shall accrue interest from the date delinquent or deficient until paid. For periods prior to the date of final assessment, interest shall accrue at the prevailing rate in effect on the date of the final assessment, regardless of the taxable period involved. For periods subsequent to the date of final assessment, interest shall accrue at the prevailing rate in effect on the date of the accrual of such interest.
- Any interest imposed on delinquent or deficient tax payments shall be considered part of such delinquent or deficient taxes and shall be payable to and collectible by the commissioner in the same manner as the tax is paid and collected.
-
In any case where the commissioner, in the commissioner's discretion, agrees to permit a taxpayer to pay a tax liability to the department in installments over an extended period, the interest payable on the liability shall be computed at the time the taxpayer executes an agreement to do so.
- The interest shall be computed at a rate not to exceed the highest rate allowable by law in Tennessee on short-term business loans and upon the basis of the total tax, penalty and interest owed by the taxpayer at the time the agreement is made.
- If the taxpayer makes all of the monthly installment payments on a timely basis, no additional interest shall be computed on the liability covered by the agreement.
- If an installment payment is delinquent, additional interest shall be computed on the delinquency at the stated rate, and penalty shall be computed only if allowed by any other law.
- Any change in the interest rate shall be effective only after a notice of the change has been filed with the secretary of state. This notice shall not constitute a rule under the Uniform Administrative Procedures Act.
- Tax returns filed prior to the due date shall be deemed to be filed on the due date, rather than on the date actually filed.
- Notwithstanding the provisions of this section or any law to the contrary, no interest shall be imposed on delinquent or deficient payments of litigation taxes to be collected by the clerk of the appellate courts.
-
When any person liable to pay any tax that is collected or administered by the commissioner of revenue fails to pay the tax, or any portion of the tax, on or before the date when such tax shall be required to be paid, interest shall be added to the amount of tax due, in addition to any penalty provided by law, at a rate to be determined by the commissioner in the manner provided in this subsection (a).
-
- When it is determined by administrative review that a person is entitled to a refund or credit of any tax collected or administered by the commissioner, and such person is not a debtor as defined in § 67-1-1808, interest shall be added to the amount of refund or credit due, beginning forty-five (45) days from the date the commissioner receives proper proof to verify that the refund or credit is due and payable. In the case of a taxpayer who is a debtor as defined in § 67-1-1808, when it is determined by administrative review that such taxpayer is entitled to a refund or credit of any tax collected or administered by the commissioner, interest shall be added to the amount of refund or credit due, beginning ninety (90) days from the date the commissioner receives proper proof to verify that the refund or credit is due and payable.
-
When it is determined by court order that a person is entitled to a refund or credit of any tax collected or administered by the commissioner, interest shall be added to the amount of refund or credit due, beginning:
- Forty-five (45) days from the date of filing a claim for refund, pursuant to § 67-1-1802(a);
- Forty-five (45) days from the date of waiver by the commissioner, pursuant to § 67-1-1802(c)(3);
- On the date of payment, in the case of any tax collected after suit was filed under § 67-1-1801; or
- Ninety (90) days from the date of filing a claim for refund in the case of a taxpayer who is a debtor as defined in § 67-1-1808.
- The rate of interest to be paid pursuant to this subsection (b) shall be determined as provided in subsection (a).
- Except for taxes collected after suit is filed under § 67-1-1801, no interest shall be added to any refund made, or credit given, by the commissioner for which no claim for refund or application for credit is made by the taxpayer, pursuant to § 67-1-1802(a), or for which the requirement that the taxpayer file a claim for refund is waived by the commissioner, pursuant to § 67-1-1802(c)(3).
- Notwithstanding the provisions of this section, interest added to highway user fuel tax due or interest added to refunds of such taxes shall be computed in accordance with § 67-3-710 [repealed].
Acts 1907, ch. 602, §§ 48, 73; Shan., §§ 865a2, 865a3; Acts 1923, ch. 77, § 1; mod. Code 1932, §§ 1547, 1548; Acts 1971, ch. 380, § 1; 1974, ch. 693, § 1; 1976, ch. 429, § 1; 1978, ch. 802, § 1; 1980, ch. 885, § 1; modified; Acts 1982, ch. 883, §§ 1-3; 1983, ch. 62, §§ 1, 2; 1983, ch. 238, §§ 3, 4; 1983, ch. 430, § 2; T.C.A. (orig. ed.), §§ 67-112, 67-1105(b), 67-1106; Acts 1984, ch. 580, § 1; 1985, ch. 203, §§ 1, 2; 1986, ch. 749, § 3; 1986, ch. 851, § 1; 1987, ch. 2, §§ 1, 2; 1988, ch. 526, § 5; 1988, ch. 795, §§ 17, 18; 1989, ch. 291, § 4; 1989, ch. 550, § 4; 1993, ch. 142, § 15; 2002, ch. 559, § 3; 2005, ch. 499, § 28; 2010, ch. 1113, §§ 2, 3; 2014, ch. 854, § 3.
Code Commission Notes.
Acts 1988, ch. 526, § 45 provided that the amendment by that act shall apply to all assessments of penalty made on or after January 1, 1989.
Compiler's Notes. Section 67-3-710, referred to in this section, was repealed by Acts 1997, ch. 316, § 1, effective January 1, 1998. For new provisions concerning highway user fuel tax, see §§ 67-3-1201 — 67-3-1210.
Acts 2010, ch. 1113, § 8 provided that any claimant may promulgate rules to effectuate the provisions of the act relating to internal procedures for reporting debts and conducting administrative hearings. The department of revenue may promulgate such other rules to carry out the remaining provisions of the act.
Acts 2010, ch. 1113, § 9 provided that the act, which amended subsection (b), shall apply to any claim for refund filed with the department of revenue on or after July 1, 2009, that has not been finally determined.
Amendments. The 2014 amendment, effective January 1, 2015, substituted “final assessment” for “tax assessment” twice in the second sentence and once in the last sentence of (a)(2).
Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.
Cross-References. Delinquent property taxes, title 67, ch. 5, part 20.
Effect of appeal or reappraisal on payment of interest and penalties on delinquent taxes, § 67-5-1512.
Penalty and costs, § 67-1-1008.
Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), §§ 944, 963.
Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 49.
Law Reviews.
A Revolution in Tennessee Tax Procedure (S. Gale Graham), 22 Tenn. B.J. 13 (1986).
Taxing Tennessee: New Business Taxes for 1999 (J. Leigh Griffith), 35 Tenn. B.J. 12 (1999).
Cited: Cummings v. Shipp, 156 Tenn. 595, 3 S.W.2d 1062, 1928 Tenn. LEXIS 241 (1928); Esch v. Wilcox, 181 Tenn. 165, 178 S.W.2d 770, 1944 Tenn. LEXIS 355 (1944); Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964); Genesco, Inc. v. Woods, 578 S.W.2d 639, 1979 Tenn. LEXIS 419 (Tenn. 1979); James v. Huddleston, 795 S.W.2d 661, 1990 Tenn. LEXIS 308 (Tenn. 1990).
NOTES TO DECISIONS
1. Extension of Time.
Any extension of time of payment must have uniform application to all counties. Shipp v. Cummings, 158 Tenn. 526, 14 S.W.2d 747, 1928 Tenn. LEXIS 183 (Tenn. Mar. 18, 1929).
2. Penalties.
Railroad company which secured injunction of tax assessment and court decree that assessment was illegal was liable for penalty and interest on payment of subsequent valid assessment. Illinois Cent. R.R. v. Garner, 190 Tenn. 694, 231 S.W.2d 352, 1950 Tenn. LEXIS 536 (1950).
3. Expenses of Administration.
Interest paid on Tennessee inheritance taxes and federal estate taxes is an expense of administration and is deductible for purposes of the Tennessee inheritance tax. Cleveland Bank & Trust Co. v. Olsen, 682 S.W.2d 200, 1984 Tenn. LEXIS 904 (Tenn. 1984).
4. Interest on Delinquencies.
An uncodified provision that the 1980 amendments to T.C.A. § 67-1-801 should be operative upon all assessments of interest made on or after July 1, 1980, without regard to the taxable period involved, does not change the unambiguous language of subdivision (a)(2) (as it existed prior to amendment in 1986) that interest shall accrue on delinquencies at the rate of interest in effect at the time the payment became due. Combustion Engineering, Inc. v. Jackson, 705 S.W.2d 655, 1986 Tenn. LEXIS 826 (Tenn. 1986).
5. Proper Proof.
First amended estate tax return did not constitute the proof necessary to verify the entitlement to and amount of inheritance and estate tax refunds due to the estate under T.C.A. § 67-1-801(b) since: (1) The first amended return included the order from the underlying legal dispute over the amount of wife's marital share and stated that the wife's share (and, consequently, the amount of the estate's inheritance tax refund) was contingent upon the federal tax treatment of the additional claimed deductions; (2) Without any documentation regarding the Internal Revenue Service's (IRS) treatment of the additional deductions claimed by the estate, it would have been impossible to determine the amount of inheritance tax refund; (3) The order linked the federal government's treatment of the claimed deductions to the inheritance tax refund due; and (4) The IRS's response to the Commissioner of the Tennessee Department of Revenue's inquiry was necessary for a determination of the refund from the first amended return. Boote v. Roberts, — S.W.3d —, 2013 Tenn. App. LEXIS 222 (Tenn. Ct. App. Mar. 28, 2013).
Second amended estate tax return did not constitute the proof necessary to verify the entitlement to and amount of an inheritance and estate tax refunds due to the estate under T.C.A. § 67-1-801(b) since: (1) The refund was dependent on the final determination from the Internal Revenue Service (IRS) of the federal estate tax; (2) The estate indicated that the estate tax refund was requested as a part of the amended inheritance tax return; (3) Even though the inheritance tax refund might not have been affected by the IRS determination of the federal estate tax, the estate tax refund could not be determined until the IRS issued a final determination; (4) The final determination was not provided to the Commissioner of the Tennessee Department of Revenue until April 1, 2011; and (5) Proper proof to verify the entire refund on the second amended return was not provided to the Commissioner until that date. Boote v. Roberts, — S.W.3d —, 2013 Tenn. App. LEXIS 222 (Tenn. Ct. App. Mar. 28, 2013).
Trial court did not err in finding that proper proof was not supplied until March 14, 2014 because the data originally provided was not sufficient for the Commissioner of Revenue to conduct the review of the refund claim; the review process was uniquely within the purview of the Commissioner and his auditing staff, as the trial court was ill equipped to conduct such an audit and conclude that a refund was or was not due. Mobility II LLC v. Roberts, — S.W.3d —, 2016 Tenn. App. LEXIS 743 (Tenn. Ct. App. Sept. 30, 2016), appeal denied, AT&T Mobility II, LLC v. Roberts, — S.W.3d —, 2017 Tenn. LEXIS 121 (Tenn. Feb. 15, 2017).
6. Interest on Refund.
Because no action by or order of the trial court resolved the taxpayer's refund claim, subsection (b)(2) did not apply; the Commissioner of Revenue granted the refund after an extensive review, the claim was resolved through the administrative process, and by operation of subsection (b)(1), interest on the refund was calculated from the date the taxpayer provided proper proof of the claim to the Commissioner. Mobility II LLC v. Roberts, — S.W.3d —, 2016 Tenn. App. LEXIS 743 (Tenn. Ct. App. Sept. 30, 2016), appeal denied, AT&T Mobility II, LLC v. Roberts, — S.W.3d —, 2017 Tenn. LEXIS 121 (Tenn. Feb. 15, 2017).
Decisions Under Prior Law
1. Penalties.
Amount of taxes due against life tenant is deductible from amount due remaindermen from partition sale but remaindermen are not liable for penalties, since duty to pay taxes is on the life tenant. Hadley v. Hadley, 114 Tenn. 156, 87 S.W. 250, 1904 Tenn. LEXIS 79 (1905).
2. Tax Paid Under Protest.
Taxpayer was not entitled to recover amount paid on illegal assessed tax where he paid same on day before tax became delinquent in order to avoid penalties and interest in the absence of a demand for payment even though receipt contained notation that tax was paid under protest. Cincinnati, N.O. & T.P.R.R. v. Hamilton County, 120 Tenn. 1, 113 S.W. 361, 1907 Tenn. LEXIS 35 (1907).
Collateral References.
Constitutional provision against imprisonment for debt as applicable to nonpayment of tax. 48 A.L.R.3d 1324.
Contest in good faith of validity of tax as affecting liability to penalty for failure to pay tax. 96 A.L.R. 925, 147 A.L.R. 142.
Declaratory judgment as to tax penalty. 132 A.L.R. 1145, 11 A.L.R.2d 359.
Doubt as to liability for, or as to person to whom to pay, tax, as affecting liability for penalties and interest. 137 A.L.R. 306.
Executor, administrator, or trustee, penalties or interest incurred by, as a charge against him personally or against the estate. 47 A.L.R.3d 507.
Injunction against assessment or collection of tax, applicability of statute denying remedy by, in case of attempt to collect penalties and coercive exactions. 108 A.L.R. 209.
Judgment for taxes, provisions in, as regards future penalties. 93 A.L.R. 793.
Notice to taxpayer, lack of, as affecting penalty for nonpayment of taxes when due. 102 A.L.R. 405.
Retroactive effect of statutes relating to interest on delinquent taxes. 77 A.L.R. 1034.
Time of mailing or time of receipt as determinative of liability for penalty or additional amount for failure to pay tax within prescribed time. 158 A.L.R. 370.
Voluntary character of payment of tax made to avoid penalty. 64 A.L.R. 42, 84 A.L.R. 294.
Taxation 371
67-1-802. Abatement or waiver of penalty.
The commissioner is authorized to abate, in whole or in part, any statutory penalty imposed under any revenue laws administered by the commissioner in any case of deficiency tax collection made by the department in connection with an audit conducted by it, if the commissioner determines that the payment by a taxpayer of a tax in an amount less than that due under the applicable laws and rules and regulations relates to a taxable period covered by a timely filed return and is not the result of:
- Negligence or intentional disregard of the tax law or rules and regulations; or
- Fraudulent underpayment of the tax.
Acts 1921, ch. 113, § 2; impl. am. Acts 1923, ch. 7, §§ 19, 24; Acts 1923, ch. 106, § 1; Shan. Supp., § 809a8; Code 1932, § 1478; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; Acts 1965, ch. 5, § 1; 1965, ch. 154, § 1; 1970, ch. 500, § 2; 1970, ch. 559, § 4; 1973, ch. 151, § 1; 1973, ch. 368, § 1; 1973, ch. 373, § 1; 1977, ch. 106, § 1; 1978, ch. 599, § 1; 1980, ch. 460, § 1; 1981, ch. 34, § 1; 1983, ch. 148, § 1; T.C.A. (orig. ed.), § 67-101(4); Acts 1988, ch. 526, § 7.
Code Commission Notes.
Acts 1988, ch. 526, § 45 provided that the amendment by that act shall apply to all assessments of penalty made on or after January 1, 1989.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
67-1-803. Waiver of penalty.
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- The commissioner is authorized to waive, in whole or in part, any statutory penalty imposed under any revenue laws administered by the commissioner in any case of deficiency or delinquency tax collection made by the department, if the commissioner determines that the payment by a taxpayer of a tax in an amount less than that due under the applicable laws and regulations, or that the failure of a taxpayer to pay any tax by the due date is the result of one (1) or more of the good and reasonable causes enumerated in subsection (c) and is not a result of gross negligence or willful disregard of the law.
- Under no circumstances, however, shall this authority be deemed to extend to any interest payable under the law in connection with any case of tax deficiency or delinquency.
- The commissioner shall prescribe and publish rules and regulations governing the manner in which applications for a waiver of penalty shall be accepted and processed.
- Initial receipt, review and recommendation for approval or disapproval of each application for waiver of penalty, as authorized in subsection (a), shall be made by the director, or the director's delegate, of the division or agency within the department charged by the commissioner with the enforcement of the tax involved. The commissioner or the commissioner's delegate shall thereafter review and approve or disapprove each application for waiver of penalty, as the commissioner or the commissioner's delegate may deem proper, and such determination by the commissioner or the commissioner's delegate shall constitute the determinative and final decision on the application.
-
-
In the case of a tax deficiency, that is constituted by a failure to pay the full amount of tax due under the law, the following specific causes, if clearly established by the taxpayer, shall be acceptable as good and reasonable cause for the waiver of penalty:
- The taxpayer incurred the deficiency as a result of having been misled by erroneous advice or action, that was not clearly in contravention of the law, on the part of officials charged with the enforcement of this state's tax statutes;
- The taxpayer incurred the deficiency as a result of legal misadvice that was not clearly in contravention of the law, from an ostensibly competent and financially independent lawyer or accountant;
- The provisions of the pertinent law or regulation were, at the time the deficiency was incurred, unsettled, unclear, and misleading to a reasonable person; and the taxpayer acted in good faith on a reasonable, though mistaken, application of such law or regulation, with the result that the tax deficiency in question was incurred;
- The deficiency resulted from reliance by the taxpayer upon factual, but not legal, misrepresentations made by persons with whom the taxpayer dealt in the course of the taxpayer's business, other than the taxpayer's own agents or employees, the taxpayer having no reason to doubt or question such misrepresentations; or
- The deficiency resulted from a mistake of fact on the part of the taxpayer, who thereafter voluntarily and without any kind of demand upon the part of the officials charged with the enforcement of the law, tenders the amount of the deficiency, plus accrued interest.
- If the cause for the deficiency does not comport with any of the causes provided for in subdivision (c)(1), a determination may be made, nevertheless, as to whether the statement of facts submitted by the taxpayer, or known to the commissioner, establishes a good and reasonable cause. Any cause for a deficiency may be accepted as a good and reasonable cause that appears to the commissioner to justify a conclusion by the commissioner that the taxpayer has done everything the taxpayer could reasonably be expected to do as an ordinarily intelligent and reasonably prudent business person and that clearly negates either a willful disregard of the law or gross negligence.
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In the case of a tax deficiency, that is constituted by a failure to pay the full amount of tax due under the law, the following specific causes, if clearly established by the taxpayer, shall be acceptable as good and reasonable cause for the waiver of penalty:
-
-
In the case of a tax delinquency of not more than thirty (30) days, which is constituted by a failure to file a return and pay the tax within not more than thirty (30) days after the time prescribed by law, the following specific causes, if clearly established by the taxpayer, shall be acceptable as good and reasonable cause for the waiver of penalty:
- Return was timely mailed, but for reasons either known or unknown was not timely received or not received at all, and the taxpayer satisfactorily explains noncompliance within § 67-1-107;
- Delinquency was due to erroneous information given the taxpayer by an official charged with the enforcement of this state's tax statutes;
- Delinquency was attributable to an intervening providential cause, such as, but not limited to, the occurrence of a disabling injury, illness, or death of the taxpayer, or a member of the taxpayer's immediate family, or of a person upon whom the taxpayer has heretofore exclusively relied for the preparation of the taxpayer's returns, and such intervening cause occurred prior to the date on which the required return and payment would otherwise be deemed delinquent;
- Delinquency was caused by unavoidable absence of the taxpayer or a person upon whom the taxpayer has heretofore exclusively relied for the preparation of the taxpayer's returns;
- Delinquency was caused by the destruction by fire or other casualty of the taxpayer's place of business or business records;
- The taxpayer proves that the taxpayer made timely application to the department for the proper tax forms, and these were not furnished the taxpayer in sufficient time to permit the executed return to be filed on or before the due date;
- The taxpayer proves that the taxpayer personally visited an office of the department before the expiration of the time within which to file the required return for the purpose of securing information or aid to properly make out the taxpayer's return and, through no fault of the taxpayer, was unable to secure such information or aid;
- Delinquency was a result of the taxpayer's failure to enclose a negotiable instrument, as defined by the Uniform Commercial Code, compiled in title 47, with the taxpayer's timely filed return, and the taxpayer promptly responds to a request for payment upon notification thereof, and satisfactorily demonstrates such failure was due to an inadvertent oversight or error; or
- Delinquency becomes apparent when the taxpayer voluntarily pays the tax but, for any legal reason, the department would be unable to enforce collection, such as the collection would be barred by the statute of limitations, the lack of jurisdiction or other similar reason.
- If the cause for the delinquency does not comport with any of the causes provided for in subdivision (d)(1), or if the delinquency is of more than thirty (30) days' duration, a determination may be made, nevertheless, as to whether the statement of facts submitted by the taxpayer, or known to the commissioner, establishes a good and reasonable cause. Any cause for a delinquency may be accepted as a good and reasonable cause that appears to the commissioner to justify a conclusion by the commissioner that the taxpayer has done everything the taxpayer could reasonably be expected to do as an ordinarily intelligent and reasonably prudent business person, and that clearly negates either a willful disregard of the law or gross negligence.
- Notwithstanding subdivisions (d)(1) and (2), the commissioner may accept as good and reasonable cause for waiver of a delinquency penalty the fact that the taxpayer has timely filed and paid such tax for a period of at least two (2) years next preceding the due date of the delinquent return and payment, if the specific cause for the delinquency does not constitute a willful disregard of the law or gross negligence. If the taxpayer has filed estimated payments of franchise and excise taxes by the due date as required by § 67-4-2015 for a period of at least two (2) years, but the estimated payments resulted in an underpayment for which penalties and interest accrued, the commissioner may consider such estimated payments to be filed in a timely manner for purposes of establishing good and reasonable cause under this subdivision (d)(3).
-
In the case of a tax delinquency of not more than thirty (30) days, which is constituted by a failure to file a return and pay the tax within not more than thirty (30) days after the time prescribed by law, the following specific causes, if clearly established by the taxpayer, shall be acceptable as good and reasonable cause for the waiver of penalty:
-
- There shall be no judicial review of the commissioner's action upon applications for waiver of penalty as authorized in subsection (a) otherwise than as provided in part 9 of this chapter.
- The commissioner's action upon all applications for waiver of penalty made under this section shall be deemed final.
- Prior determinations of the attorney general and reporter as to what constitutes good and reasonable cause for a deficiency shall serve as a guide and standard of reference for future decisions whenever those determinations may be applicable to the specific cause established.
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- The commissioner is authorized, in the commissioner's discretion, to designate subordinate officials in the department to waive, on the commissioner's behalf, penalties in amounts of five thousand dollars ($5,000) or less.
- The commissioner is authorized, in the commissioner's discretion, to waive penalties in amounts of fifteen thousand dollars ($15,000) or less.
- The commissioner is authorized, in the commissioner's discretion, to waive penalties in amounts of more than fifteen thousand dollars ($15,000); provided, that the attorney general and reporter may require that such waivers or any class of such waivers be subject to the attorney general and reporter's prior review and approval.
Acts 1921, ch. 113, § 2; impl. am. Acts 1923, ch. 7, §§ 19, 24; Acts 1923, ch. 106, § 1; Shan. Supp., § 809a8; Code 1932, § 1478; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; Acts 1965, ch. 5, § 1; 1965, ch. 154, § 1; 1970, ch. 500, § 2; 1970, ch. 559, § 4; 1973, ch. 151, § 1; 1973, ch. 368, § 1; 1973, ch. 373, § 1; 1977, ch. 106, § 1; 1978, ch. 599, § 1; 1980, ch. 460, § 1; 1981, ch. 34, § 1; 1983, ch. 148, § 1; T.C.A. (orig. ed.), § 67-101(5); Acts 1984, ch. 550, § 1; 1984, ch. 832, § 2; 1988, ch. 526, § 8; 1992, ch. 626, § 1; 2011, ch. 467, § 9; 2015, ch. 514, § 2; 2016, ch. 881, § 1.
Compiler's Notes. Acts 2015, ch. 514, § 1 provided that the act shall be known and may be cited as the “Revenue Modernization Act”.
For the Preamble to the act concerning the need to modernize the sales and use taxes, franchise and excise taxes and business tax in the state to address the engagement in business within the state by out-of-state companies, see Acts 2015, ch. 514.
Acts 2016, ch. 881, § 8 provided that the act, which amended (d)(3), shall apply to tax years beginning on or after January 1, 2016.
Amendments. The 2015 amendment, effective July 1, 2016, rewrote (a)(2), which read: “(2) Under no circumstances, however, shall this authority be deemed to extend to: (A) Any case in which a person fails to procure a license required by law, except when such failure is the result of having been misled by erroneous advice or action on the part of officials charged with the enforcement of this state's tax statutes, and such can be shown by the person by a clear preponderance of documentary evidence; or (B) Any interest payable under the law in connection with any case of tax deficiency or delinquency.”
The 2016 amendment added the last sentence in (d)(3).
Effective Dates. Acts 2015, ch. 514, § 31. July 1, 2016.
Acts 2016, ch. 881, § 8. April 27, 2016.
67-1-804. Delinquency — Negligence — Fraud — Dishonor of check — Exceptions.
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- When any person fails to timely make any return or report or fails to timely pay any taxes shown to be due on the return or report, there shall be imposed against that person a penalty in the amount of five percent (5%) of the unpaid tax amount for each thirty (30) days or fraction thereof that the tax remains unpaid subsequent to the delinquency date, up to a maximum of twenty-five percent (25%) of the unpaid amount. Where a return or report is delinquent, the minimum penalty shall be fifteen dollars ($15.00), regardless of the amount of tax due or whether there is any tax due.
- A return, report, or payment shall be considered untimely if not made on or before the delinquency date under the applicable statutes, including any extensions of time granted. In the case of an untimely return, report, or payment, the penalty shall be calculated as of the original delinquency date, without reference to any extensions granted.
- In the case of quarterly tax payments made pursuant to § 67-4-308, the penalty shall be calculated as provided by that section.
- In the case of quarterly estimated tax payments made pursuant to § 67-4-2015, the penalty shall be calculated as provided by that section.
- In the case of an extension of time granted under § 67-4-2015, the penalty shall be calculated as provided by that section.
-
- When any person fails to report and pay the total amount of taxes determined to be due by the commissioner, if such failure is determined by the commissioner to be due to negligence, there shall be imposed a penalty in the amount of ten percent (10%) of the underpayment.
- When any person, upon the initial filing of the person’s franchise and excise tax return, fails to comply with the requirements described in § 67-4-2006(d) or (e) and such failure is determined by the commissioner to be due to negligence, there shall be imposed a penalty equal to the greater of ten thousand dollars ($10,000) or fifty percent (50%) of any adjustment to the initially filed return made under § 67-4-2006(b)(1)(K) or (e). The commissioner is authorized to waive the penalty, in whole or in part, for good and reasonable cause under § 67-1-803. Any penalty imposed under this subdivision (b)(2) shall be disregarded for purposes of determining the taxpayer’s filing record under subdivision (d)(3).
- When any person fails to pay the tax required by § 67-4-2007(f), if such failure is determined by the commissioner to be due to negligence, there shall be imposed a penalty in the amount of fifty percent (50%) of the underpayment.
- For the purpose of this section, “negligence” includes, but is not limited to, any failure to make a reasonable attempt to comply with any law relating to any tax collected or administered by the commissioner.
- A determination by the commissioner that a taxpayer has been negligent shall be deemed presumptively correct. Such determination may be rebutted only if the taxpayer makes a showing of due care. For purposes of this subdivision (b)(5), “due care” means that care that an ordinarily prudent business person would have exercised under the circumstances.
- This penalty is in addition to all other penalties provided by law, except as provided in subsection (c).
-
- When any person fails to report and pay the total amount of taxes determined to be due by the commissioner, if such failure is determined by the commissioner to be due to fraud, there shall be imposed against the taxpayer a penalty in the amount of one hundred percent (100%) of the underpayment.
- For the purpose of this subsection (c), “fraud” includes any deceitful practice or willful device resorted to with intent to evade the tax.
- A failure to pay the tax by one who charges or passes on the tax to others constitutes a presumption of fraud. Such presumption may be rebutted only if the taxpayer makes an affirmative showing of intent to pay the tax and comply with all other requirements of the taxing statute.
- Imposition of this penalty shall be in lieu of all other penalties imposed by the commissioner, except those provided in subsection (d) and part 14 of this chapter.
-
- If any check, money order, or electronic funds transfer in payment of any amount receivable under any law administered by the commissioner is dishonored, there shall be imposed a penalty upon the taxpayer in an amount equal to one percent (1%) of the amount of such check, money order, or electronic funds transfer; provided, that the penalty imposed shall be in an amount equal to ten percent (10%) of the amount of such check, money order, or electronic funds transfer for each dishonored check, money order, or electronic funds transfer in excess of two (2) issued by any one (1) person within one (1) calendar year. The minimum amount of the penalty imposed under this subdivision (d)(1) shall be fifteen dollars ($15.00). This subdivision (d)(1) does not apply if the person tendered such check, money order, or electronic funds transfer in good faith and with reasonable cause to believe that it would be duly paid.
- This penalty shall be in addition to all other penalties provided by law.
- For all purposes, the penalties imposed by any law administered by the commissioner shall be considered a part of the tax imposed.
- In no event shall judicial review of the commissioner's imposition of any penalty be other than as provided in part 18 of this chapter.
- This section shall apply to all taxes administered or collected by the commissioner, except that subsection (a) shall not apply to the tax imposed in § 67-4-409(b).
- Notwithstanding the provisions of this section, the penalty added to delinquent highway user fuel tax due shall be computed in accordance with § 67-3-1208.
- Subdivision (a)(1) shall not apply to litigation taxes to be collected by the clerk of the appellate courts.
Acts 1988, ch. 526, § 4; 1993, ch. 142, § 16; 2002, ch. 559, § 4; 2004, ch. 786, § 4; 2009, ch. 530, § 31; 2010, ch. 1134, § 21; 2012, ch. 842, § 5; 2014, ch. 764, § 1.
Compiler’s Notes. Acts 2009, ch. 530, § 133 provided that § 31 of the act, which rewrote subdivision (b)(2), shall apply to any tax period beginning on or after January 1, 2009.
Acts 2012, ch. 842, § 9 provided that the act, which amended subdivision (b)(2), shall apply to all tax years ending on or after July 1, 2012.
Amendments. The 2014 amendment substituted “check, money order, or electronic funds transfer” for “check or money order” in the first sentence of (d)(1) and substituted “check, money order, or electronic funds transfer” for “check” four times in (d)(1).
Effective Dates. Acts 2014, ch. 764, § 4. April 24, 2014.
Law Reviews.
Statutory Tax Penalties and Equitable Relief: The Common Law Breaks Down, 22 Mem. St. U.L. Rev. 755 (1992).
Taxing Tennessee: New Business Taxes for 1999 (J. Leigh Griffith), 35 Tenn. B.J. 12 (1999).
Attorney General Opinions. The penalty provisions of T.C.A. § 67-1-804(b) and (c) do not apply to the collection of litigation taxes because T.C.A. § 67-1-804 applies only to taxpayers who fail to both report and pay taxes due; however, the penalty provisions of T.C.A. § 67-1-804(a) and (d) do apply to the collection of litigation taxes, OAG 01-154 (10/1/01).
NOTES TO DECISIONS
1. Construction.
The penalty provisions of T.C.A. § 67-1-804 are to be construed strictly against the state and liberally in favor of the taxpayer, since penalties are odious and not favored by the law. James v. Huddleston, 795 S.W.2d 661, 1990 Tenn. LEXIS 308 (Tenn. 1990).
2. Equitable Relief from Penalties.
A court of equity, hearing a controversy between the state and a taxpayer who has been assessed a penalty, has the power of remitting the penalties imposed upon the taxpayer when the equities of the case demand. Such equitable remission of penalties, however, can only be granted upon a showing of good and reasonable cause. James v. Huddleston, 795 S.W.2d 661, 1990 Tenn. LEXIS 308 (Tenn. 1990).
Failure to make correct returns due to errors, oversights and honest mistakes is not grounds for equitable relief from penalties. James v. Huddleston, 795 S.W.2d 661, 1990 Tenn. LEXIS 308 (Tenn. 1990).
Part 9
Payment of Tax Under Protest
67-1-901. Payment under protest, involuntarily or under duress.
- In all cases where not otherwise provided in which an officer, charged by law with the collection of revenue due the state, shall institute any proceeding, or take any steps for the collection of the sum alleged or claimed to be due by the officer from any citizen, the person against whom the proceeding or step is taken shall, if that person conceives the same to be unjust or illegal, or against any statute or clause of the constitution of the state, pay the revenue under protest.
- This section shall not apply to any tax collected or administered by the commissioner of revenue when such tax is paid on or after January 1, 1986. Notwithstanding any other law to the contrary, it is the intent of the general assembly that it shall not be a condition precedent to any claim or suit for recovery of any taxes collected or administered by the commissioner when such taxes were paid on or after January 1, 1986, that the taxes were paid under protest, involuntarily, or under duress.
Acts 1873, ch. 44, § 1; Shan., § 1059; Code 1932, § 1790; T.C.A. (orig. ed.), § 67-2303; Acts 1986, ch. 749, § 12; 1987, ch. 92, § 2.
Cross-References. Claims commission, exclusive jurisdiction over claims for recovery of taxes collected or administered by state, § 9-8-307.
Payment of tax under protest, § 9-8-402.
Payment under protest, involuntarily, or under duress not prerequisite for suit after January 1, 1986, § 67-1-1807.
Taxpayer remedies for disputed taxes, title 67, ch. 1, part 18.
Taxpayer's bond pending appeal of levy, § 67-1-1411.
Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 970.
Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 17; 23 Tenn. Juris., Taxation, §§ 48, 75; 24 Tenn. Juris., Unemployment Compensation, § 4.
Law Reviews.
A Revolution in Tennessee Tax Procedure (S. Gale Graham), 22 Tenn. B.J. 13 (1986).
Cited: Taylor v. Louisville & N. R. Co., 88 F. 350, 1898 U.S. App. LEXIS 2089 (6th Cir. 1898); Humphries v. Carter, 172 Tenn. 392, 112 S.W.2d 833, 1937 Tenn. LEXIS 87 (1937); Gilmore Holding Corp. v. Stokes, 177 Tenn. 561, 151 S.W.2d 1079, 1940 Tenn. LEXIS 54 (1940); Wolfe v. Bryant, 181 Tenn. 357, 181 S.W.2d 343, 1944 Tenn. LEXIS 380 (1944); Southern Coal Co. v. McCanless, 183 Tenn. 457, 192 S.W.2d 1003, 1946 Tenn. LEXIS 225 (1946); Carbide & Carbon Chems. Corp. v. Carson, 192 Tenn. 150, 239 S.W.2d 27, 1951 Tenn. LEXIS 392 (1951); City of Memphis v. W.M.S. Co., 46 Tenn. App. 153, 326 S.W.2d 828, 1959 Tenn. App. LEXIS 91 (1959); General Electric Co. v. Butler, 211 Tenn. 196, 364 S.W.2d 361, 1962 Tenn. LEXIS 356 (1962); Memphis Peabody Corp. v. MacFarland, 211 Tenn. 384, 365 S.W.2d 40, 1963 Tenn. LEXIS 357 (1963); Benson v. United States Steel Corp., 225 Tenn. 164, 465 S.W.2d 124, 1971 Tenn. LEXIS 290 (1971); Burnett v. Benson, 483 S.W.2d 437, 1972 Tenn. LEXIS 365 (Tenn. 1972); Pidgeon-Thomas Iron Co. v. Garner, 495 S.W.2d 826, 1973 Tenn. LEXIS 496 (Tenn. 1973); Tidwell v. Goodyear Tire & Rubber Co., 520 S.W.2d 721, 1975 Tenn. LEXIS 702 (Tenn. 1975); Parkridge Hospital, Inc. v. Woods, 561 S.W.2d 754, 1978 Tenn. LEXIS 579 (Tenn. 1978); Stroop v. Rutherford County, 567 S.W.2d 753, 1978 Tenn. LEXIS 605 (Tenn. 1978); McDowell Dev. Corp. v. Ferguson, 579 S.W.2d 863, 1978 Tenn. App. LEXIS 341 (Tenn. Ct. App. 1978); Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982); Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Executone of Memphis, Inc. v. Garner, 650 S.W.2d 734, 1983 Tenn. LEXIS 659 (Tenn. 1983); Barret v. Olsen, 656 S.W.2d 373, 1983 Tenn. LEXIS 717 (Tenn. 1983); Daniel v. Metropolitan Government of Nashville & Davidson County, 696 S.W.2d 8, 1985 Tenn. App. LEXIS 2835 (Tenn. Ct. App. 1985); Angel v. Jackson, 724 S.W.2d 736, 1987 Tenn. LEXIS 822 (Tenn. 1987); Tennessee Farmers' Cooperative v. State, 736 S.W.2d 87, 1987 Tenn. LEXIS 960 (Tenn. 1987); Roberts v. Sullivan County (In re Penking Trust), 196 B.R. 389, 1996 Bankr. LEXIS 658 (Bankr. E.D. Tenn. 1996).
NOTES TO DECISIONS
1. Legislative Intent.
The 1986 amendment was not intended to reopen claims for taxes not paid under protest in earlier years. Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).
General Assembly intended to maintain the payment-under-protest requirement for municipal taxes; to the extent that Admiralty Suites & Inns v. Shelby County, 138 S.W.3d 233, 2003 Tenn. App. LEXIS 835 (Tenn. Ct. App. 2003)and Decatur County v. Vulcan Materials Co. , No. 2001-00858-COA-R3-CV, 2002 WL 31786985 (Tenn. Ct. App. Dec. 12, 2002) are inconsistent with this conclusion, the supreme court overrules these decisions. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
Legislature, by enacting T.C.A. §§ 67-1-1807 and 67-1-901(b), specifically removed the payment-under-protest requirement for disputed state taxes collected by the commissioner of revenue but did not eliminate this requirement for municipal taxes, and it enacted these statutes together as part of the same statutory scheme; under the doctrine of in pari materia, the supreme court reads these provisions together to give the intended effect to the entire statutory scheme. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
Supreme court presumes that the requirement of payment under protest in T.C.A. § 67-1-901(a), applicable to municipalities through T.C.A. § 67-1-911, has meaning and purpose and should be given full effect; supreme court is not free to add the language § 67-1-901(b) to expand the scope of T.C.A. §§ 67-1-1801 et seq., restrict the scope of T.C.A. §§ 67-1-901 et seq., or substitute its judgment for that of the Legislature. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
2. Application and Scope.
The statute relates only to revenue due the state. Saunders v. Russell, 78 Tenn. 293, 1882 Tenn. LEXIS 179 (1882); Mayor of Nashville v. Smith, 86 Tenn. 213, 6 S.W. 273, 1887 Tenn. LEXIS 40 (1887); Railroad v. Williams, 101 Tenn. 146, 46 S.W. 448, 1898 Tenn. LEXIS 44 (1898); State Nat'l Bank v. Memphis, 116 Tenn. 641, 94 S.W. 606, 1906 Tenn. LEXIS 17, 7 L.R.A. (n.s.) 663 (1906).
As to state taxes, the taxpayers' remedy is to pay them under protest and then sue for their recovery. Mayor of Nashville v. Smith, 86 Tenn. 213, 6 S.W. 273, 1887 Tenn. LEXIS 40 (1887).
Where the state fiscal agents make an erroneous or illegal charge and require the taxpayer to pay more than the law authorizes them to collect, this section supplies the remedy. Bank of Commerce & Trust Co. v. Senter, 149 Tenn. 569, 260 S.W. 144, 1923 Tenn. LEXIS 115 (1923).
This and the following sections provide a remedy for the taxpayer confronted by an unjust or illegal claim for taxes. The state cannot be postponed in the collection of its revenue, and the taxpayer must pay the tax under the conditions prescribed, as a condition precedent to contesting the liability for the tax or any part thereof. Bank of Commerce & Trust Co. v. Senter, 149 Tenn. 569, 260 S.W. 144, 1923 Tenn. LEXIS 115 (1923).
Procedure for recovery of taxes paid under protest by taxpayer does not apply to county taxes. Bell v. Clay County, 168 Tenn. 6, 73 S.W.2d 685, 1933 Tenn. LEXIS 76 (1933).
The provisions for payment under protest are applicable in every case, even though in particular instances they may work a hardship. Fort v. Dixie Oil Co., 170 Tenn. 183, 93 S.W.2d 1260, 1935 Tenn. LEXIS 124 (1935), cert. denied, Dixie Oil Co. v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 436, 1936 U.S. LEXIS 362 (1936); Fort v. Dixie Oil Co., 170 Tenn. 464, 95 S.W.2d 931, 1936 Tenn. LEXIS 16 (1936); Lyons v. Lay, 179 Tenn. 388, 166 S.W.2d 778, 1942 Tenn. LEXIS 35 (1942); Illinois C. R. Co. v. Garner, 193 Tenn. 91, 241 S.W.2d 926, 1951 Tenn. LEXIS 327 (1951), appeal dismissed, Illinois C. R. Co. v. Garner, 342 U.S. 900, 72 S. Ct. 295, 96 L. Ed. 674, 1952 U.S. LEXIS 2581 (1952).
This and the following sections afford the taxpayer an opportunity for a legal hearing in all cases where there is an attempt to collect revenue illegally and meet the requirements of due process. Bergeda v. State, 179 Tenn. 460, 167 S.W.2d 338, 1942 Tenn. LEXIS 43, 144 A.L.R. 696 (1942).
Where complainants have not paid a disputed tax, a suit to test its validity cannot be maintained and no right to a declaratory judgment arises. Complainants are limited as to remedy and procedure by this part. American Can Co. v. McCanless, 183 Tenn. 491, 193 S.W.2d 86, 1946 Tenn. LEXIS 229 (1946).
Where salaries of county officers were payable from taxes levied for general county purposes, and budget adopted by county included additional special levy for salaries, statute requiring payment of tax under protest did not govern, because revenue produced by void special levy was due the county, and statute was applicable only to revenue due the state. State ex rel. Anderson County v. Aycock, 193 Tenn. 157, 245 S.W.2d 182, 1951 Tenn. LEXIS 341 (1951).
This section permits a taxpayer to pay disputed taxes under protest and sue for their recovery but only in all cases where a remedy is not otherwise provided. Bracey v. Woods, 571 S.W.2d 828, 1978 Tenn. LEXIS 651 (Tenn. 1978).
With respect to taxpayers, this part provides an exclusive remedy (other than an administrative remedy set forth in § 67-1-707). That remedy is payment of the tax under protest and suit for recovery. Dominion Nat'l Bank v. Olsen, 651 S.W.2d 215, 1983 Tenn. LEXIS 778 (Tenn. 1983).
Where decedent's attorneys were pursuing tax assessment grievances through administrative remedy as required by law, the proper procedure was not the payment of assessment under protest and the bringing of an action for a refund. Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983).
The provisions of the 1986 amendment dispensing with the requirement of payment under protest do not apply to taxes paid prior to January 1, 1986. Aluminum Co. of Am. v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).
“Taxes paid on or after January 1, 1986” does not include an overpayment applied to 1984 taxes; T.C.A. § 67-1-901 specifically applies to taxes paid after January 1, 1986. GMC v. Taylor, 811 S.W.2d 897, 1991 Tenn. LEXIS 251 (Tenn. 1991), aff'd sub nom. Comdata Network, Inc. v. State Dep't of Revenue, 852 S.W.2d 223, 1993 Tenn. LEXIS 112 (Tenn. 1993).
In order to invoke the jurisdiction of a court to hear a claim that collection of a tax would be unjust or illegal, the taxpayer must first pay the tax, and a party is not excused from the requirement of the statute based on the nature of the party's challenge to the tax or the manner in which the unjustness or illegality of the tax is raised; there is no language in any of the remaining statutes which could be read to suggest that the requirement is dependent on the nature of the challenge. Nashville Metro Gov't v. New Orleans Manor, Inc., — S.W.3d —, 2014 Tenn. App. LEXIS 415 (Tenn. Ct. App. July 16, 2014), appeal denied, — S.W.3d —, 2014 Tenn. LEXIS 994 (Tenn. Nov. 19, 2014).
3. Effect of Other Statutes.
Acts 1949, ch. 235, providing for refund of inspection fees paid by butane and propane gas companies, which were not legally liable therefor, was constitutional and such companies were entitled to such refunds even though payment was not under protest and even though suit was not filed within 30 days after payment as provided in this part. Watauga Valley Gas Co. v. Evans, 192 Tenn. 413, 241 S.W.2d 511, 1951 Tenn. LEXIS 422 (1951).
Title 50, together with the procedures of this part, provides plaintiffs an adequate, speedy, and efficient method for determining whether the state's unemployment tax has been assessed in violation of their constitutional rights. Therefore, court was without jurisdiction to grant a plaintiff's request for injunctive relief. Independent Baptist Church v. Tennessee, 468 F. Supp. 71, 1978 U.S. Dist. LEXIS 14258 (E.D. Tenn. 1978).
4. Strict Compliance — Necessity.
The payment of taxes under protest and the institution of suit for their recovery must be made in strict pursuance of the provisions of the statute, or the bar of the statute against the right of the taxpayer to sue at all may be interposed by the state. Phillips v. Lewis, 3 Shannon's Cases 230 (1877).
This part provides an exclusive remedy for the taxpayer who seeks recovery of taxes wrongfully collected. He is forbidden to delay the collection even of illegal taxes by resort to extraordinary processes of certiorari, prohibition, and injunction. As between the taxing authority and the taxpayer, the latter is forced to pay the tax and sue for its recovery. The taxing authority is given the use of the money ad interim. Southern Coal Co. v. McCanless, 183 Tenn. 457, 192 S.W.2d 1003, 1946 Tenn. LEXIS 225 (1946).
5. Institution of Proceedings.
6. —Standing to Bring Action.
A nontaxpayer cannot maintain an action against a taxing authority for the recovery of state taxes even though he may bear the economic burden of those taxes. Beare Co. v. Olsen, 711 S.W.2d 603, 1986 Tenn. LEXIS 663 (Tenn. 1986).
7. —Tax Books as Process.
After delinquency, and not before, the tax books are process equivalent to an execution in the hands of the officer. Bright v. Halloman, 75 Tenn. 309, 1881 Tenn. LEXIS 121 (1881); Alexander v. Henderson, 105 Tenn. 431, 58 S.W. 648, 1900 Tenn. LEXIS 87 (1900); State Nat'l Bank v. Memphis, 116 Tenn. 641, 94 S.W. 606, 1906 Tenn. LEXIS 17, 7 L.R.A. (n.s.) 663 (1906); Cincinnati, N.O. & T.P.R.R. v. Hamilton County, 120 Tenn. 1, 113 S.W. 361, 1907 Tenn. LEXIS 35 (1907). See also Nashville, C. & St. L. Ry. v. Marion County, 120 Tenn. 347, 108 S.W. 1058, 1907 Tenn. LEXIS 52 (1907).
8. —Memorandum Not Process.
A deputy collector's levy for taxes is void, when it is made, not by virtue of a certified list from the county trustee as required by statute, but under a mere memorandum from the trustee of the amount of taxes due, which is not, and does not purport to be, a writ, execution, warrant, or other instrument known to the law, and does not command anything to be done. Alexander v. Henderson, 105 Tenn. 431, 58 S.W. 648, 1900 Tenn. LEXIS 87 (1900).
9. Voluntary Payments.
Payment, under protest, of taxes alleged to be illegal, before the same have become delinquent and without any demand or threat to levy, merely to prevent the imposition of a penalty and interest which would accrue, is a voluntary payment and the taxes so paid cannot be recovered. Cincinnati, N.O. & T.P.R.R. v. Hamilton County, 120 Tenn. 1, 113 S.W. 361, 1907 Tenn. LEXIS 35 (1907).
An overpayment of taxes due to a mistake of the law or its application is, nevertheless, a voluntary payment and cannot be recovered. Hertz Corp. v. County of Shelby, 667 S.W.2d 66, 1984 Tenn. LEXIS 772 (Tenn. 1984).
Where plaintiff voluntarily paid tax prior to January 1, 1986, right to recover taxes from commissioner of revenue was gone forever. Northern Telecom, Inc. v. Taylor, 781 S.W.2d 837, 1989 Tenn. LEXIS 526 (Tenn. 1989), cert. denied, Northern Telecom, Inc. v. Taylor, 496 U.S. 905, 110 S. Ct. 2587, 110 L. Ed. 2d 268, 1990 U.S. LEXIS 2907 (1990).
10. Payments to Protect Taxpayer's Interest.
Taxpayer was not entitled to recover privilege taxes paid to state where officer in charge of collection of state taxes had made no attempt to collect same even though such payment was made to ensure that proper privilege taxes had been paid in order that his right to sue on contract would be protected, but was entitled to recover county taxes paid for the same purpose. Bell v. Clay County, 168 Tenn. 6, 73 S.W.2d 685, 1933 Tenn. LEXIS 76 (1933).
11. Payment Under Protest.
Payment of taxes by a bank is not voluntary, so as to preclude their recovery by the bank, when an agreement was entered into between the city and the bank that the latter was permitted to pay its taxes under protest, the agreement reciting that a distress warrant was about to issue and that the taxes were paid in view of that fact, the city agreeing that it would not insist that such payment was voluntary. State Nat'l Bank v. Memphis, 116 Tenn. 641, 94 S.W. 606, 1906 Tenn. LEXIS 17, 7 L.R.A. (n.s.) 663 (1906).
To make a payment of taxes involuntary, it must appear that the officer authorized to collect the same, and to whom payment was made, had in his hands process authorizing the seizure of the person or property of the taxpayer, that such seizure of one or the other was imminent, and that there was no legal means of protecting the person or property except by payment. Under such circumstances, payment under protest will save the rights of the taxpayer to recover, if the tax should be illegal. Mere protest is not sufficient. Mere unwillingness to pay is not sufficient. Nashville, C. & St. L. Ry. v. Marion County, 120 Tenn. 347, 108 S.W. 1058, 1907 Tenn. LEXIS 52 (1907); Atlas Powder Co. v. Goodloe, 131 Tenn. 490, 175 S.W. 547, 1914 Tenn. LEXIS 123 (1914).
Payment, by a foreign corporation, of a franchise tax before the time limit for paying the same had expired, but under protest and with written notice that it reserved the right to sue for the recovery of the amount exacted, when failure to pay would have required the corporation's factory to remain idle and would have rendered its contract void, is made under duress and is not voluntary. Atlas Powder Co. v. Goodloe, 131 Tenn. 490, 175 S.W. 547, 1914 Tenn. LEXIS 123 (1914).
Payment of tax under protest, after taxbook became process, was not voluntary, but was made under duress, since the personal property could be seized immediately and the real property within a short time, and in the meantime the taxpayer could have been subjected to interest and penalties, if unsuccessful in his attack on the tax. St. Louis Basket & Box Co. v. Lauderdale County, 146 Tenn. 413, 241 S.W. 99, 1922 Tenn. LEXIS 6 (1922).
Uncontradicted statements in a letter to a collecting officer stating that the tax is being paid under protest, a check being inclosed to cover the tax demanded, which facts are corroborated by the action of the taxing official in sending a receipt carrying the endorsement that the tax was paid under protest, are sufficient evidence to protect the rights of the taxpayer. Quick Serv. Tire Co. v. Smith, 156 Tenn. 96, 299 S.W. 807, 1927 Tenn. LEXIS 89 (1927).
A taxpayer was allowed to recover a sales tax refund even though he had not paid the tax under protest as required by this section where the taxpayer could not have protested at the time of the original payment because the conditional sales contract was not cancelled and the goods were not returned until after the remittance. Tidwell v. RCA Corp., 528 S.W.2d 179, 1975 Tenn. LEXIS 620 (Tenn. 1975).
Banking institutions seeking to challenge assessment of local taxes on the outstanding capital stock of the banks had no access to the courts without first either paying the taxes under protest and then filing suit for their refund or going through local and state board of equalization for administrative review of the assessment without first paying the disputed taxes. Fentress County Bank v. Holt, 535 S.W.2d 854, 1976 Tenn. LEXIS 586 (Tenn. 1976).
Allowing taxes to become delinquent does not preclude payment of taxes under protest and suit for recovery. Vanderbilt Univ. v. Ferguson, 554 S.W.2d 128, 1976 Tenn. App. LEXIS 265 (Tenn. Ct. App. 1976).
Letters stating that taxes were being paid under protest fully met the requirement of this section. Lunceford v. King, 633 S.W.2d 761, 1982 Tenn. LEXIS 410 (Tenn. 1982).
If a taxpayer pays an illegal tax demand, with full knowledge of all the facts which render such demand illegal, without an immediate and urgent necessity for making such payment at the time, such a payment must be deemed to be voluntary, and cannot be recovered back, and absent specific proof of the pendency of a sale, a plaintiff taxpayer has not satisfied the requirement of an “immediate and urgent necessity for making such payment at the time …” by a bare showing that it was done in order to clear title for the purpose of transferring the property. Dixon v. King, 655 S.W.2d 900, 1983 Tenn. LEXIS 666 (Tenn. 1983).
Plaintiff need not have incurred penalties by waiting until a deficiency was assessed to insure a finding that its payment of use taxes was under protest. Service Merchandise Co. v. Jackson, 735 S.W.2d 443, 1987 Tenn. LEXIS 1071 (Tenn. 1987).
Since taxes were not paid under protest and were not actually paid after January 1, 1986, suit was properly dismissed. Comdata Network, Inc. v. State Dep't of Revenue, 852 S.W.2d 223, 1993 Tenn. LEXIS 112 (Tenn. 1993).
Trial court properly granted a city summary judgment because the trial court lacked jurisdiction to hear taxpayers' challenge; the taxpayers failed to pay the tax under protest as required by the statute. Nashville Metro Gov't v. New Orleans Manor, Inc., — S.W.3d —, 2014 Tenn. App. LEXIS 415 (Tenn. Ct. App. July 16, 2014), appeal denied, — S.W.3d —, 2014 Tenn. LEXIS 994 (Tenn. Nov. 19, 2014).
Court of appeals erred in affirming an order awarding retailers a judgment for overpayments they made to a municipality for alcoholic beverage inspection fees because the retailers did not pay the municipal taxes under protest before filing suit, and thus, they were not entitled to recover the overpayments; under subsection (a) a taxpayer must pay under protest disputed municipal taxes before filing suit for a refund. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
T.C.A. §§ 67-1-901 et seq., rather than T.C.A. §§ 67-1-1801 et seq., applies to a suit to recover municipal taxes; T.C.A. §§ 67-1-901 et seq. governs actions to recover disputed municipal taxes, and under T.C.A. § 67-1-901(a), a taxpayer must pay under protest disputed municipal taxes before filing suit for a refund. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
Provision in T.C.A. § 67-1-1807(a) that removed the requirement of payment under protest for state taxes is self-limiting; “as set out in this part” necessarily references a claim for refund under T.C.A. §§ 67-1-1801 to 67-1-1808, not a claim for refund under T.C.A. §§ 67-1-901 to 67-1-912, and because there is no conflict between § 67-1-1807 and T.C.A. § 67-1-901 et seq., § 67-1-1807 does not supersede the payment-under-protest requirement of § 67-1-901(a). Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
Before January 1, 1986, under T.C.A. § 67-1-901, a taxpayer was required to pay under protest both state and municipal taxes before filing suit for a refund, and on or after January 1, 1986, under T.C.A. §§ 67-1-901(b) and 67-1-1807(b)(1), a taxpayer is not required to pay under protest disputed state taxes collected or administered by the commissioner of revenue before filing suit for a refund. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
Statutory changes in T.C.A. §§ 67-1-901(b) and 67-1-1807(b) do not eliminate the requirement of payment under protest in § 67-1-901(a) for disputed municipal taxes; the 1986 enactments of § 67-1-901(b) and T.C.A. §§ 67-1-1801 et seq., that removed the requirement of payment under protest reference only taxes collected by the commissioner of revenue, and there is no mention of taxes collected by a municipality. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
12. —Partial Payment.
There is no authority for a taxpayer to pay only a portion of the tax liability assessed against him and then maintain a suit to litigate the entire assessment. Griffith Motors, Inc. v. King, 641 S.W.2d 200, 1982 Tenn. LEXIS 361 (Tenn. 1982).
13. Not Shown.
Excess mineral severance taxes previously paid to a county were not recoverable by taxpayers because the payments were not made involuntarily and under protest. Hoover, Inc. v. Rutherford County, 885 S.W.2d 67, 1994 Tenn. App. LEXIS 152 (Tenn. Ct. App. 1994).
Excess municipal inspection fees paid on the wholesale purchase of liquor were not recoverable by taxpayers because the payments were not made involuntarily and under protest. Lebanon Liquors, Inc. v. City of Lebanon, 885 S.W.2d 63, 1994 Tenn. App. LEXIS 82 (Tenn. Ct. App. 1994).
Even though a municipal ordinance covering the collection of inspection fees on the wholesale purchase of liquor contained a criminal penalty for noncompliance, the sanction fell upon the wholesalers and not the retailers, and it did not create a sense of immediacy for payment by the latter sufficient to justify a claim that payments were made under protest. Lebanon Liquors, Inc. v. City of Lebanon, 885 S.W.2d 63, 1994 Tenn. App. LEXIS 82 (Tenn. Ct. App. 1994).
14. Other Remedies.
There is no statutory predicate for a suit for forgiveness of taxes, penalty, or interest. Taxpayers must pay taxes under protest before they are entitled to evoke chancery court's equitable powers to relieve against forfeiture and penalty. State v. Delinquent Taxpayers, 526 S.W.2d 453, 1975 Tenn. LEXIS 597 (Tenn. 1975).
Appeal to the state board of equalization for obtaining a determination of tax exempt classification is not an exclusive remedy, and plaintiff is not prevented from paying the tax under protest pursuant to this section and suing in chancery court for a refund under § 67-1-903. Vanderbilt Univ. v. Ferguson, 554 S.W.2d 128, 1976 Tenn. App. LEXIS 265 (Tenn. Ct. App. 1976).
T.C.A. § 67-8-116 does not require the exhaustion of administrative remedies before a taxpayer can pay his taxes under protest and bring suit under title 67, ch. 1, part 9. Reeves v. Olsen, 691 S.W.2d 527, 1985 Tenn. LEXIS 599 (Tenn. 1985).
15. Time for Bringing Suit.
Where a suit for recovery of city taxes was brought almost one year after payment under protest, such suit was barred under this part and was accordingly dismissed. Holloway v. Putnam County, 534 S.W.2d 292, 1976 Tenn. LEXIS 591 (1976).
16. Payment of Tax by Third Party.
So long as the assessment is properly paid under protest, the fact that the assessed party is not the party who actually paid the tax is irrelevant. Austin Co. v. Woods, 620 S.W.2d 73, 1981 Tenn. LEXIS 471 (Tenn. 1981).
Company which pursuant to a provision in its contract with a second company paid sales and use taxes incurred by the second party had standing to contest assessment of tax against second company. Austin Co. v. Woods, 620 S.W.2d 73, 1981 Tenn. LEXIS 471 (Tenn. 1981).
17. Jury Trial.
Jury trials are not available in suits for the recovery of taxes paid the state of Tennessee pursuant to title 67, ch. 1, part 9. Only an express grant by the general assembly can create that right. Jernigan v. Jackson, 704 S.W.2d 308, 1986 Tenn. LEXIS 649 (Tenn. 1986).
Collateral References.
Construction and operation of statutory time limit for filing claim for state tax refund. 14 A.L.R.6th 119.
Grounds stated in protest against payment of property tax as a limitation of grounds upon which recovery back of tax may be claimed. 113 A.L.R. 1479.
67-1-902. Notice.
Upon the person's making such payment, the officer or collector shall pay such revenue into the state treasury, giving notice at the time of payment to the commissioner of revenue that the payment was paid under protest.
Acts 1873, ch. 44, § 1; Shan., § 1060; Code 1932, § 1791; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), § 67-2304.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Cited: Fort v. Dixie Oil Co., 170 Tenn. 183, 93 S.W.2d 1260, 1935 Tenn. LEXIS 124 (1936); Lyons v. Lay, 179 Tenn. 388, 166 S.W.2d 778, 1942 Tenn. LEXIS 35 (1942); Third Nat'l Bank v. King, 215 Tenn. 528, 387 S.W.2d 800, 1965 Tenn. LEXIS 630 (Tenn. Mar. 4, 1965); R.C. Owen Co. v. Butler, 215 Tenn. 599, 387 S.W.2d 830, 1965 Tenn. LEXIS 670 (Tenn. Mar. 4, 1965); Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983).
67-1-903. Action against collecting officer.
- The person paying the revenue may, at any time within six (6) months after making the payment, but not thereafter, sue the officer who collected the sum, for the recovery thereof.
- This section shall not apply after January 1, 1986, to any tax collected or administered by the commissioner of revenue.
Acts 1873, ch. 44, § 1; Shan., § 1061; Code 1932, § 1792; Acts 1968, ch. 588, § 1; T.C.A. (orig. ed.), § 67-2305; Acts 1984, ch. 972, § 19; 1986, ch. 749, § 13; 1987, ch. 92, § 3.
Cross-References. Division of claims and risk management, title 9, ch. 8, part 4.
Jurisdiction of Tennessee claims commission, § 9-8-307.
Taxpayer remedies for disputed taxes, title 67, ch. 1, part 18.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 17; 23 Tenn. Juris., Taxation, § 50.
Law Reviews.
Claims Against the State in Tennessee — The Board of Claims, 4 Vand. L. Rev. 875 (1951).
Cited: Quick Serv. Tire Co. v. Smith, 156 Tenn. 96, 299 S.W. 807, 1927 Tenn. LEXIS 89 (1927); Fort v. Dixie Oil Co., 170 Tenn. 183, 93 S.W.2d 1260, 1935 Tenn. LEXIS 124 (1936); Bergeda v. State, 179 Tenn. 460, 167 S.W.2d 338, 1942 Tenn. LEXIS 43, 144 A.L.R. 696 (1942); Brent v. Greeneville, 203 Tenn. 60, 309 S.W.2d 121, 1957 Tenn. LEXIS 464 (1957); Jack Cole Co. v. MacFarland, 206 Tenn. 694, 337 S.W.2d 453, 1960 Tenn. LEXIS 421 (1960); Memphis Peabody Corp. v. MacFarland, 211 Tenn. 384, 365 S.W.2d 40, 1963 Tenn. LEXIS 357 (1963); Seagle—Paddock Pools, Inc. v. Benson, 503 S.W.2d 93, 1973 Tenn. LEXIS 431 (Tenn. 1973); Electric Power Bd. v. Woods, 558 S.W.2d 821, 1977 Tenn. LEXIS 660 (Tenn. 1977); Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982); Lunceford v. King, 633 S.W.2d 761, 1982 Tenn. LEXIS 410 (Tenn. 1982); Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Dixon v. King, 655 S.W.2d 900, 1983 Tenn. LEXIS 666 (Tenn. 1983); Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983); Reeves v. Olsen, 691 S.W.2d 527, 1985 Tenn. LEXIS 599 (Tenn. 1985); Jack Daniel Distillery, Lem Motlow Prop., Inc. v. Olsen, 716 S.W.2d 496, 1986 Tenn. LEXIS 787 (Tenn. 1986); Comdata Network, Inc. v. State Dep't of Revenue, 852 S.W.2d 223, 1993 Tenn. LEXIS 112 (Tenn. 1993).
NOTES TO DECISIONS
1. Application.
Where a tax is levied in excess of the limit allowed by law and such excess is easily ascertainable, the entire tax is not void and only the illegal excess may be recovered. Bright v. Halloman, 75 Tenn. 309, 1881 Tenn. LEXIS 121 (1881).
This section is not a limitation upon suits to recover county taxes. Swift & Co. v. State, 165 Tenn. 256, 55 S.W.2d 267, 1932 Tenn. LEXIS 43 (1932).
This section read in conjunction with § 67-1-911 establishes the time limit for filing suit for taxes paid under protest to a municipality as well as the state government. Woods v. Equity Servs., Inc., 536 S.W.2d 333, 1976 Tenn. LEXIS 626 (Tenn. 1976).
The legislative intent was to require payment of the whole tax liability asserted before an action may be instituted for collection of the refund. Griffith Motors, Inc. v. King, 641 S.W.2d 200, 1982 Tenn. LEXIS 361 (Tenn. 1982).
In order to properly request a refund of taxes paid under protest to a county or municipality, an action for recovery must be instituted within six months of the payment. Roberts v. Sullivan County (In re Penking Trust), 196 B.R. 389, 1996 Bankr. LEXIS 658 (Bankr. E.D. Tenn. 1996).
In order to invoke the jurisdiction of a court to hear a claim that collection of a tax would be unjust or illegal, the taxpayer must first pay the tax, and a party is not excused from the requirement of T.C.A. § 67-1-901 based on the nature of the party's challenge or the manner in which the unjustness or illegality of the tax is raised; there is no language in any of the remaining statutes which could be read to suggest that the requirement is dependent on the nature of the challenge. Nashville Metro Gov't v. New Orleans Manor, Inc., — S.W.3d —, 2014 Tenn. App. LEXIS 415 (Tenn. Ct. App. July 16, 2014), appeal denied, — S.W.3d —, 2014 Tenn. LEXIS 994 (Tenn. Nov. 19, 2014).
Taxpayers' recovery was not limited by the statute because T.C.A. § 67-1-1807 applied, and thus, T.C.A. § 67-1-1801 et seq., governed the taxpayers' action seeking a refund of inspection fees a city erroneously calculated. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).
2. Nature of Suit.
A suit to recover an allegedly illegal state tax although nominally brought against the collecting officer is a suit against the state. Automobile Sales Co. v. Johnson, 174 Tenn. 38, 122 S.W.2d 453, 1938 Tenn. LEXIS 61, 120 A.L.R. 370 (1938).
A tax suit against a collecting officer, though nominally against the officer, is a suit against the state and can be maintained only in the manner and form consented to by the state. Lyons v. Lay, 179 Tenn. 388, 166 S.W.2d 778, 1942 Tenn. LEXIS 35 (1942).
3. Sufficiency of Remedy.
This statute affords the taxpayer a sufficient remedy. Tennessee v. Sneed, 96 U.S. 69, 24 L. Ed. 610, 1877 U.S. LEXIS 1627 (1877).
4. Remedy Independent of Statute.
The payment of illegal taxes, under protest, entitles the taxpayer to sue for so much as was illegal, independent of this statute. Bright v. Halloman, 75 Tenn. 309, 1881 Tenn. LEXIS 121 (1881); Alexander v. Henderson, 105 Tenn. 431, 58 S.W. 648, 1900 Tenn. LEXIS 87 (1900). See State Nat'l Bank v. Memphis, 116 Tenn. 641, 94 S.W. 606, 1906 Tenn. LEXIS 17, 7 L.R.A. (n.s.) 663 (1906).
A tax that is illegal in the sense of being unauthorized by any law, if exacted and paid under protest and to save seizure of property, may, upon common law principles, be recovered back by the taxpayer, and the 30 day [now six month] limit will not apply in such case. The taxes recovered under the general principle stated were the county and city taxes. Railroad v. Williams, 101 Tenn. 146, 46 S.W. 448, 1898 Tenn. LEXIS 44 (1898); State Nat'l Bank v. Memphis, 116 Tenn. 641, 94 S.W. 606, 1906 Tenn. LEXIS 17, 7 L.R.A. (n.s.) 663 (1906); Cincinnati, N.O. & T.P.R.R. v. Hamilton County, 120 Tenn. 1, 113 S.W. 361, 1907 Tenn. LEXIS 35 (1907).
5. Complaint Before Board of Equalization as Prerequisite to Suit.
When, by a valid statute, a board of assessors or equalizers is created with power to act, a taxpayer who fails to make application to such board for release when it has power to act cannot pay under protest, and then recover the tax so paid in an action for that purpose. Ward v. Alsup, 100 Tenn. 619, 46 S.W. 573, 1898 Tenn. LEXIS 25 (1898).
Where the assessment is void or fraudulent, as having been made without authority of law, and not merely irregular or informal, a taxpayer who has paid his taxes under protest can maintain an action to recover the same, although he has not applied to the board of equalization for relief. Union & Planters' Bank v. Memphis, 107 Tenn. 66, 64 S.W. 13, 1901 Tenn. LEXIS 59 (1901). See Railroad v. Harris, 99 Tenn. 684, 43 S.W. 115, 1897 Tenn. LEXIS 81, 53 L.R.A. 921 (1897), appeal dismissed, Knoxville & O. R. Co. v. Harris, 20 S. Ct. 1026, 44 L. Ed. 1221 (1900); Southern Express Co. v. Patterson, 122 Tenn. 279, 123 S.W. 353, 1909 Tenn. LEXIS 23 (1909).
Appeal to the state board of equalization for obtaining a determination of tax exempt classification is not an exclusive remedy, and plaintiff is not prevented from paying the tax under protest and suing in chancery court for a refund under this section. Vanderbilt Univ. v. Ferguson, 554 S.W.2d 128, 1976 Tenn. App. LEXIS 265 (Tenn. Ct. App. 1976).
6. Voluntary Payments — Right to Recovery.
Unconstitutionally assessed taxes voluntarily paid are not recoverable, especially after the collector has paid over the same. Dickins v. Jones, 14 Tenn. 483, 1834 Tenn. LEXIS 121, 27 Am. Dec. 488 (1834); Friedman Bros. v. Mathes, 55 Tenn. 488, 1872 Tenn. LEXIS 113 (1872). See Cauvin & Duprez v. Mayor of Nashville, 62 Tenn. 453, 1874 Tenn. LEXIS 78 (1874); Galbraith v. State, 78 Tenn. 568, 1882 Tenn. LEXIS 225 (1882); Franklin County v. Nashville, C. & St. L. Ry., 80 Tenn. 521, 1883 Tenn. LEXIS 206 (1883).
While illegal taxes, voluntarily paid under threats of litigation or apprehension of the levy of distress warrants, will not make the payment compulsory, so as to entitle the taxpayer to recover the same, yet the certificates of indebtedness, issued by a city upon its own ordinance to repay such illegal taxes so collected, are valid and binding upon it. Lea v. City of Memphis, 68 Tenn. 103, 1877 Tenn. LEXIS 3 (1877); State Nat'l Bank v. Memphis, 116 Tenn. 641, 94 S.W. 606, 1906 Tenn. LEXIS 17, 7 L.R.A. (n.s.) 663 (1906); Cincinnati, N.O. & T.P.R.R. v. Hamilton County, 120 Tenn. 1, 113 S.W. 361, 1907 Tenn. LEXIS 35 (1907).
A taxpayer's payment of a special county tax illegally levied and assessed, made to the county trustee the day before it became delinquent, and without demand therefor by the county trustee, was voluntary and without duress, and cannot be recovered by such taxpayer, though the tax was paid under protest, in order to avoid the imposition of the penalty and interest, which would accrue unless the tax was paid prior to its delinquency, and in order to avoid the cost and expense incident to any attempt that the proper authorities might make under the law to collect the tax, by levy and sale of the taxpayer's property. Cincinnati, N.O. & T.P.R.R. v. Hamilton County, 120 Tenn. 1, 113 S.W. 361, 1907 Tenn. LEXIS 35 (1907); Nashville, C. & St. L. Ry. v. Marion County, 120 Tenn. 347, 108 S.W. 1058, 1907 Tenn. LEXIS 52 (1907).
The payment of taxes to the county trustee, previous to the time when he is authorized by statute to distrain for the nonpayment thereof, is not a payment under duress, and illegal taxes so paid cannot be recovered by the taxpayer, merely because he paid the same under protest and took a receipt so showing. The question whether the payment was made under duress or protest is a question of law, arising upon proved facts, and its solution does not depend upon the county trustee's receipt. Nashville, C. & St. L. Ry. v. Marion County, 120 Tenn. 347, 108 S.W. 1058, 1907 Tenn. LEXIS 52 (1907).
Taxes and license fees voluntarily paid under unconstitutional statutes or invalid ordinances cannot be recovered. Carr v. City of Memphis, 22 F.2d 678, 1927 U.S. App. LEXIS 3424 (6th Cir. 1927).
Where plaintiff voluntarily paid tax prior to January 1, 1986, right to recover taxes from commissioner of revenue was gone forever. Northern Telecom, Inc. v. Taylor, 781 S.W.2d 837, 1989 Tenn. LEXIS 526 (Tenn. 1989), cert. denied, Northern Telecom, Inc. v. Taylor, 496 U.S. 905, 110 S. Ct. 2587, 110 L. Ed. 2d 268, 1990 U.S. LEXIS 2907 (1990).
7. Payment Under Protest — Right to Recovery.
One paying taxes illegally assessed under protest may recover, in one and the same action, state, county and city taxes. Railroad v. Williams, 101 Tenn. 146, 46 S.W. 448, 1898 Tenn. LEXIS 44 (1898).
Where a streetcar company pays, under protest and to prevent a levy of a distress warrant upon its property, the privilege tax imposed upon its lessees as an advertising company, and files a bill to recover the same, it is entitled to recover such taxes so unlawfully required to be paid, for the statutory provision making the lessor liable for the privilege tax imposed on the lessee is unconstitutional. Knoxville Traction Co. v. McMillan, 111 Tenn. 521, 77 S.W. 665, 1903 Tenn. LEXIS 42, 65 L.R.A. 296 (1903).
8. Bank Paying Tax on Stock — Right to Sue.
A bank may properly pay the taxes assessed against its stock in the hands of its stockholders, and if the payment is made under protest, it can sue for and recover such taxes, if illegally collected, and may maintain the suit in its own name, without the joinder of the stockholders therein. State Nat'l Bank v. Memphis, 116 Tenn. 641, 94 S.W. 606, 1906 Tenn. LEXIS 17, 7 L.R.A. (n.s.) 663 (1906).
9. Double Tax Paid Without Levy — Recovery.
Where a claim in issue in a civil action was resisted on the ground that it arose from the exercise of a taxable privilege for which plaintiff had not paid the tax due the state and the county, and where, to avoid such obstacles to the claim in suit, plaintiff paid double the tax and penalties, with knowledge that the county had not levied such a tax, and was making no demand therefor, and plaintiff sued to recover such payment within 30 days after payment, a suit for recovery of the state's part of the payment could not be maintained against the state officers, but recovery could be had against the county for its part of the payment, where the county clerk knew the circumstances of the payment. Bell v. Clay County, 168 Tenn. 6, 73 S.W.2d 685, 1933 Tenn. LEXIS 76 (1933).
10. Parties and Venue.
Except in those cases arising under the income tax law or under the General Revenue Law, all cases for recovery of taxes under the provisions of these sections must be brought against the commissioner of revenue in the courts of Davidson County. Lyons v. Lay, 179 Tenn. 388, 166 S.W.2d 778, 1942 Tenn. LEXIS 35 (1942).
Suit by resident of Campbell County against commissioner and against the sheriff of such county and his deputy who had executed distress warrant placed in the hands of the sheriff by the commissioner was improperly instituted in Campbell County and should have been commenced in Davidson County. Lyons v. Lay, 179 Tenn. 388, 166 S.W.2d 778, 1942 Tenn. LEXIS 35 (1942).
In a suit by a taxpayer to recover tobacco tax paid under protest, sheriff and deputy who simply executed distress warrant issued by the commissioner were neither necessary nor proper parties to the case. Lyons v. Lay, 179 Tenn. 388, 166 S.W.2d 778, 1942 Tenn. LEXIS 35 (1942).
11. When Limitations Period Begins.
Where payment is made by the state taking money due the taxpayer and applying it against a state claimed tax deficiency, the period of limitation begins to run when the taxpayer knows or reasonably should know of the state's action. Jack Daniel Distillery v. Jackson, 740 S.W.2d 413, 1987 Tenn. LEXIS 1014 (Tenn. 1987).
The triggering event for the statute of limitations is the payment of taxes, not the time of assessment. Jack Daniel Distillery v. Jackson, 740 S.W.2d 413, 1987 Tenn. LEXIS 1014 (Tenn. 1987).
12. Actions Time-Barred.
Action to recover certain taxes held time-barred. Jack Daniel Distillery v. Jackson, 740 S.W.2d 413, 1987 Tenn. LEXIS 1014 (Tenn. 1987).
13. Sufficiency of Complaint.
A complaint alleging payment of taxes collected under an unconstitutional act, in ignorance of such unconstitutionality, is insufficient. Carr v. City of Memphis, 22 F.2d 678, 1927 U.S. App. LEXIS 3424 (6th Cir. 1927).
14. —Subsequent Assessments.
The filing of a complaint attacking the legality of tax rates within six months of the first payment of the tax made under protest is not sufficient to recover all subsequent assessments paid under protest. Jack Daniel Distillery, Lem Motlow Prop., Inc. v. Olsen, 716 S.W.2d 496, 1986 Tenn. LEXIS 787 (Tenn. 1986).
15. Death of Trustee Defendant — Effect on Action.
An action against a county trustee to recover state taxes collected by such officer does not abate with his death but is properly revived against his successor in office. Tamble v. Pullman Co., 207 F. 30, 1913 U.S. App. LEXIS 1599 (6th Cir. 1913).
16. Dismissal of Suit — Effect.
Where a suit to recover gasoline taxes paid under protest was brought within the 30-day (now six month) period allowed by this section but was dismissed without prejudice, the taxpayer was not entitled to invoke the provisions of § 28-1-105 so as to be allowed to bring another suit after the expiration of the 30-day period since § 28-1-105 only has application to statutes of limitation of a general nature which relate to remedy only while this section provides a condition precedent which is essential in order to confer jurisdiction and for this reason affects the right as well as the remedy. Automobile Sales Co. v. Johnson, 174 Tenn. 38, 122 S.W.2d 453, 1938 Tenn. LEXIS 61, 120 A.L.R. 370 (1938).
17. Sales Tax.
A taxpayer was allowed to recover a sales tax refund even though he had not commenced his action within six months as required by this section where the action was commenced within six months after the right to refund accrued. Tidwell v. RCA Corp., 528 S.W.2d 179, 1975 Tenn. LEXIS 620 (Tenn. 1975).
67-1-904. Jurisdiction of suit — Certification and repayment.
- The suit may be tried in any court in the county of the taxpayer's residence or in the county of the location of the defendant having jurisdiction of the amount and parties, and if it be determined that the tax was wrongfully collected as not being due from the party to the state, for any reason going to the merits of the tax, then the court trying the case may certify of record that the tax was wrongfully paid and ought to be refunded, together with such interest as the court may determine to be proper, not exceeding the legal rate, and thereupon the commissioner of finance and administration shall issue a warrant for the refund, which shall be paid in preference to other claims on the state treasury.
- For the purpose of suits brought under this chapter, the commissioner of revenue shall be considered a resident of each of the several counties of the state.
- This section shall not apply after January 1, 1986, to any tax collected or administered by the commissioner of revenue.
- Notwithstanding any other provisions of this section, suits to recover ad valorem taxes wrongfully collected by a city or county must be tried in the county wherein the taxes are collected.
Acts 1873, ch. 44, § 1; Shan., § 1062; Code 1932, § 1793; impl. am. Acts 1937, ch. 33, §§ 24, 29; Acts 1937, ch. 197, § 1; C. Supp. 1950, § 1793; impl. am. Acts 1959, ch. 9, § 3; impl. am. Acts 1961, ch. 97, § 3; Acts 1971, ch. 44, §§ 1, 2; T.C.A. (orig. ed.), § 67-2306; Acts 1984, ch. 972, § 19; 1986, ch. 749, § 14; 1987, ch. 92, § 4; 2002, ch. 680, § 1.
Cross-References. Division of claims and risk management, title 9, ch. 8, part 4.
Jurisdiction of Tennessee claims commission, § 9-8-307.
Taxpayer remedies for disputed taxes, title 67, ch. 1, part 18.
Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 970.
Law Reviews.
Claims Against the State in Tennessee — The Board of Claims, 4 Vand. L. Rev. 875 (1951).
Cited: Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983); Reeves v. Olsen, 691 S.W.2d 527, 1985 Tenn. LEXIS 599 (Tenn. 1985).
NOTES TO DECISIONS
1. Right of Recovery.
It is not required that the entire amount demanded be paid before suit can be brought. Any sum wrongfully exacted may be recovered, after payment thereof. Fort v. Dixie Oil Co., 170 Tenn. 464, 95 S.W.2d 931, 1936 Tenn. LEXIS 16 (1936), cert. denied, Dixie Oil Co. v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 362 (1936).
2. Taxes Comprehended.
T.C.A. §§ 67-1-904, 67-1-908 and 67-1-909 make no distinction between excise tax and ad valorem taxes. Illinois C. R. Co. v. Garner, 193 Tenn. 91, 241 S.W.2d 926, 1951 Tenn. LEXIS 327 (1951), appeal dismissed, Illinois C. R. Co. v. Garner, 342 U.S. 900, 72 S. Ct. 295, 96 L. Ed. 674, 1952 U.S. LEXIS 2581 (1952).
3. Allowance of Interest.
The matter of allowing interest on the amount of unemployment compensation taxes paid under protest from the date of their payment is left to the sound discretion of the chancellor or judge. Wolfe v. Bryant, 181 Tenn. 357, 181 S.W.2d 343, 1944 Tenn. LEXIS 380 (1944).
4. —Decision Prior to 1937 Amendment.
In a suit by a taxpayer to recover taxes paid under protest, interest on such payments could not be recovered in absence of statutory provisions so providing. New England Mut. Life Ins. Co. v. Reece, 169 Tenn. 84, 83 S.W.2d 238, 1935 Tenn. LEXIS 19 (1935).
5. Courts.
Circuit and chancery courts have concurrent jurisdiction under T.C.A. § 67-1-904. Tidwell v. Goodyear Tire & Rubber Co., 520 S.W.2d 721, 1975 Tenn. LEXIS 702 (Tenn. 1975).
Circuit court is authorized to apply equitable principles and remedies to relieve against penalties under the sales and use tax act. Tidwell v. Goodyear Tire & Rubber Co., 520 S.W.2d 721, 1975 Tenn. LEXIS 702 (Tenn. 1975).
A claim for refund may be heard in chancery or circuit court, and is thus appealable through the state process through the state supreme court and thereafter, if constitutional issues are involved, to the United States supreme court. Independent Baptist Church v. Tennessee, 468 F. Supp. 71, 1978 U.S. Dist. LEXIS 14258 (E.D. Tenn. 1978).
67-1-905. Costs paid by state.
- In all such cases, if the court shall certify of record in the cause that it appears from the evidence before the court that the officer against whom the suit is brought has acted in good faith and has defended the suit with proper diligence and care, the necessary cost of the cause shall be taxed as provided by law in criminal cases, and be paid by the state.
- This section shall not apply after January 1, 1986, to any tax collected or administered by the commissioner of revenue.
Acts 1873, ch. 44, § 3; Shan., § 1065; Code 1932, § 1796; T.C.A. (orig. ed.), § 67-2307; Acts 1984, ch. 972, § 19; 1986, ch. 749, § 15; 1987, ch. 92, § 5.
Cross-References. Division of claims and risk management, title 9, ch. 8, part 4.
Jurisdiction of Tennessee claims commission, § 9-8-307.
Taxpayer remedies for disputed taxes, title 67, ch. 1, part 18.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 50.
Cited: Independent Baptist Church v. Tennessee, 468 F. Supp. 71, 1978 U.S. Dist. LEXIS 14258 (E.D. Tenn. 1978); Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983); Reeves v. Olsen, 691 S.W.2d 527, 1985 Tenn. LEXIS 599 (Tenn. 1985).
67-1-906. [Repealed.]
Compiler's Notes. Former § 67-1-906 (Acts 1873, ch. 44, § 4; Shan., §§ 1066, 1067; Code 1932, §§ 1797, 1798; T.C.A. (orig. ed.), §§ 67-2308, 67-2309), concerning the district attorney general representing collectors, and his fee, was repealed by Acts 1984, ch. 832, § 36, effective July 1, 1984.
67-1-907. [Repealed.]
Compiler's Notes. Former § 67-1-907 (Acts 1873, ch. 44, § 4; Shan., §§ 1066, 1067; Code 1932, §§ 1797, 1798; T.C.A. (orig. ed.), §§ 67-2308, 67-2309), concerning the district attorney general representing collectors, and his fee, was repealed by Acts 1984, ch. 832, § 36, effective July 1, 1984.
67-1-908. Remedy exclusive.
- There shall be no other remedy in any case of the collection of revenue, or attempt to collect revenue illegally, or attempt to collect revenue in funds only receivable by the officer under the law, the same being other or different funds than such as the taxpayer may tender, or claim the right to pay, than that provided by this part.
- Subsection (a) shall not apply after January 1, 1986, to any tax collected or administered by the commissioner of revenue.
Acts 1873, ch. 44, § 2; Shan., § 1063; Code 1932, § 1794; T.C.A. (orig. ed.), § 67-2310; Acts 1984, ch. 972, § 19; 1986, ch. 749, § 16; 1987, ch. 92, § 6.
Cross-References. Division of claims and risk management, title 9, ch. 8, part 4.
Jurisdiction of Tennessee claims commission, § 9-8-307.
Taxpayer remedies for disputed taxes, title 67, ch. 1, part 18.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 17.
Law Reviews.
Claims Against the State in Tennessee — The Board of Claims, 4 Vand. L. Rev. 875 (1951).
Cited: Bergeda v. State, 179 Tenn. 460, 167 S.W.2d 338, 1942 Tenn. LEXIS 43, 144 A.L.R. 696 (1942); Southern Coal Co. v. McCanless, 183 Tenn. 457, 192 S.W.2d 1003, 1946 Tenn. LEXIS 225 (1946); Seagle—Paddock Pools, Inc. v. Benson, 503 S.W.2d 93, 1973 Tenn. LEXIS 431 (Tenn. 1973); Independent Baptist Church v. Tennessee, 468 F. Supp. 71, 1978 U.S. Dist. LEXIS 14258 (E.D. Tenn. 1978); Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982); Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Griffith Motors, Inc. v. King, 641 S.W.2d 200, 1982 Tenn. LEXIS 361 (Tenn. 1982); Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983); Beare Co. v. Olsen, 711 S.W.2d 603, 1986 Tenn. LEXIS 663 (Tenn. 1986); Jack Daniel Distillery, Lem Motlow Prop., Inc. v. Olsen, 716 S.W.2d 496, 1986 Tenn. LEXIS 787 (Tenn. 1986); Angel v. Jackson, 724 S.W.2d 736, 1987 Tenn. LEXIS 822 (Tenn. 1987); Roberts v. Sullivan County (In re Penking Trust), 196 B.R. 389, 1996 Bankr. LEXIS 658 (Bankr. E.D. Tenn. 1996).
NOTES TO DECISIONS
1. Constitutionality.
This section and § 67-1-909 providing exclusive remedy for taxes wrongfully or illegally collected are not unconstitutional since such sections afford the taxpayer an adequate remedy to protect his rights. Fort v. Dixie Oil Co., 170 Tenn. 183, 93 S.W.2d 1260, 1935 Tenn. LEXIS 124 (1935), cert. denied, Dixie Oil Co. v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 362 (1936); Fort v. Hudson, 170 Tenn. 192, 93 S.W.2d 1263, 1935 Tenn. LEXIS 125 (1935), cert. denied, Hudson v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 363 (1936).
2. Legislative Intent.
The 1986 amendment was not intended to reopen claims for taxes not paid under protest in earlier years. Aluminum Co. of Am. v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).
3. Applicability.
The provisions of the 1986 amendment dispensing with the requirement of payment under protest do not apply to taxes paid prior to January 1, 1986. Aluminum Co. of Am. v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).
4. Sufficiency of Remedy.
This part affords an ample remedy for the citizen who conceives himself wronged by an improper exercise of the taxing power. Louisville & N.R.R. v. State, 55 Tenn. 663, 1875 Tenn. LEXIS 5 (1874), aff'd, American Airways v. Wallace, 287 U.S. 565, 53 S. Ct. 15, 77 L. Ed. 498, 1932 U.S. LEXIS 40 (1932). But see Mayor of Chattanooga v. Nashville, C. & St. L.R.R., 75 Tenn. 561, 1881 Tenn. LEXIS 153 (1881). See also Tennessee v. Sneed, 96 U.S. 69, 24 L. Ed. 610, 1877 U.S. LEXIS 1627 (1877).
Where the commissioner has issued a distress warrant against the property of an oil company for gasoline tax alleged to be due and unpaid by the company, which the oil company asserts is illegal and void, the chancery court of the state has no authority to prohibit the collection of such taxes by the commissioner, since the complainant has an adequate remedy provided by this section and § 67-1-909. Fort v. Dixie Oil Co., 170 Tenn. 183, 93 S.W.2d 1260, 1935 Tenn. LEXIS 124 (1935), cert. denied, Dixie Oil Co. v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 362 (1936).
5. Exclusiveness of Remedy.
The remedy provided the taxpayer by this section is exclusive. Shelton v. Platt, 139 U.S. 591, 11 S. Ct. 646, 35 L. Ed. 273, 1891 U.S. LEXIS 2411 (1891).
The owner of a motel operated by others under a lease was not the operator required to collect a privilege tax levied by a private act and was thus a person other than taxpayer under T.C.A. § 67-1-1434. Oxford Invest., Inc. v. Mashburn, 729 S.W.2d 96, 1985 Tenn. App. LEXIS 2949 (Tenn. Ct. App. 1985).
6. Construction.
In order to invoke the jurisdiction of a court to hear a claim that collection of a tax would be unjust or illegal, the taxpayer must first pay the tax, and a party is not excused from the requirement of T.C.A. § 67-1-901 based on the nature of the party's challenge or the manner in which the unjustness or illegality of the tax is raised; there is no language in any of the remaining statutes which could be read to suggest that the requirement is dependent on the nature of the challenge. Nashville Metro Gov't v. New Orleans Manor, Inc., — S.W.3d —, 2014 Tenn. App. LEXIS 415 (Tenn. Ct. App. July 16, 2014), appeal denied, — S.W.3d —, 2014 Tenn. LEXIS 994 (Tenn. Nov. 19, 2014).
67-1-909. Writs to prevent collection of tax prohibited.
- No writ for the prevention of the collection of any revenue claimed, or to hinder and delay the collection of revenue, shall by either injunction, supersedeas, prohibition, or any other writ or process whatsoever; but in all cases in which, for any reason, any person shall claim that the tax so collected was wrongfully or illegally collected, the remedy for the party shall be as provided in § 67-1-908, and in no other manner.
- This section shall not apply after January 1, 1986, to any tax collected or administered by the commissioner of revenue.
Acts 1873, ch. 44, § 2; Shan., § 1064; Code 1932, § 1795; T.C.A. (orig. ed.), § 67-2311; Acts 1986, ch. 749, § 17.
Cross-References. Division of claims and risk management, title 9, ch. 8, part 4.
Jurisdiction of Tennessee claims commission, § 9-8-307.
Taxpayer remedies for disputed taxes, title 67, ch. 1, part 18.
Textbooks. Gibson's Suits in Chancery (7th ed., Inman), § 587.
Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 17; 23 Tenn. Juris., Taxation, § 53.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Cited: Taylor v. Louisville & N. R. Co., 88 F. 350, 1898 U.S. App. LEXIS 2089 (6th Cir. 1898); Bergeda v. State, 179 Tenn. 460, 167 S.W.2d 338, 1942 Tenn. LEXIS 43, 144 A.L.R. 696 (1942); Southern Coal Co. v. McCanless, 183 Tenn. 457, 192 S.W.2d 1003, 1946 Tenn. LEXIS 225 (1946); Seagle—Paddock Pools, Inc. v. Benson, 503 S.W.2d 93, 1973 Tenn. LEXIS 431 (Tenn. 1973); Independent Baptist Church v. Tennessee, 468 F. Supp. 71, 1978 U.S. Dist. LEXIS 14258 (E.D. Tenn. 1978); Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982); Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Griffith Motors, Inc. v. King, 641 S.W.2d 200, 1982 Tenn. LEXIS 361 (Tenn. 1982); Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).
NOTES TO DECISIONS
1. Constitutionality.
The provisions prohibiting the use of writs of certiorari and supersedeas to stay collection of any tax is not violative of the constitution. Louisville & N.R.R. v. State, 55 Tenn. 663, 1875 Tenn. LEXIS 5 (1875). But see Mayor of Chattanooga v. Nashville, C. & St. L.R.R., 75 Tenn. 561, 1881 Tenn. LEXIS 153 (1881); Mayor of Nashville v. Smith, 86 Tenn. 213, 6 S.W. 273, 1887 Tenn. LEXIS 40 (1887); American Airways, Inc. v. Wallace, 57 F.2d 877, 1932 U.S. Dist. LEXIS 1156 (M.D. Tenn. 1932), aff'd, American Airways v. Wallace, 287 U.S. 565, 53 S. Ct. 15, 77 L. Ed. 498, 1932 U.S. LEXIS 40 (1932).This section and § 67-1-908 providing exclusive remedy for taxes wrongfully or illegally collected are not unconstitutional since such sections afford the taxpayer an adequate remedy to protect his rights. Fort v. Dixie Oil Co., 170 Tenn. 183, 93 S.W.2d 1260, 1935 Tenn. LEXIS 124 (1935), cert. denied, Dixie Oil Co. v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 362 (1936); Fort v. Hudson, 170 Tenn. 192, 93 S.W.2d 1263, 1935 Tenn. LEXIS 125 (1935), cert. denied, Hudson v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 363 (1936).
2. Remedies Not Available to Taxpayer.
The state courts have no power, by injunction or supersedeas, to stay the collection of taxes due the state, where the taxpayers' contention is that the tax levy is excessive. Fort v. Dixie Oil Co., 170 Tenn. 183, 93 S.W.2d 1260, 1935 Tenn. LEXIS 124 (1935), cert. denied, Dixie Oil Co. v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 362 (1936).
State courts could not issue injunction to arrest levy of distress warrant for collection of privilege tax even though the amount of such tax might exceed the value of the property. Fort v. Hudson, 170 Tenn. 192, 93 S.W.2d 1263, 1935 Tenn. LEXIS 125 (1935), cert. denied, Hudson v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 363 (1936).
Averment by taxpayer that it was not in fact engaged in the distribution of gasoline so as to be subject to gasoline tax did not entitle such taxpayer to writs of certiorari and supersedeas to stay levy of distress warrant to collect such tax but merely raised an issue of fact between the taxpayer and the commissioner which could be litigated only after the tax was paid. Fort v. Hammett Oil Co., 170 Tenn. 195, 93 S.W.2d 1264, 1935 Tenn. LEXIS 126 (1935).
A writ of injunction will not be issued to prevent the levy of a distress warrant for the seizure of chattels for nonpayment by defendant of gasoline taxes, since such seizure will not work an irreparable injury to the taxpayer, where the taxpayer has a simple remedy by single suit to recover the value of the property so taken under a distress warrant. Fort v. Dixie Oil Co., 170 Tenn. 464, 95 S.W.2d 931, 1936 Tenn. LEXIS 16 (1936), cert. denied, Dixie Oil Co. v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 362 (1936).
Collection officer of state cannot be enjoined from collection of taxes. American Can Co. v. McCanless, 183 Tenn. 491, 193 S.W.2d 86, 1946 Tenn. LEXIS 229 (1946).
With respect to taxpayers, this part provides an exclusive remedy (other than an administrative remedy set forth in § 67-1-707). That remedy is payment of the tax under protest and suit for recovery. Dominion Nat'l Bank v. Olsen, 651 S.W.2d 215, 1983 Tenn. LEXIS 778 (Tenn. 1983).
3. Inadequate Legal Remedy — Right to Injunction.
The collection of an illegal and void tax may be enjoined when the taxpayer has no remedy at law. Elgin v. Hessen, 282 F. 281, 1921 U.S. Dist. LEXIS 1596 (W.D. Tenn. 1921).
A court of equity has jurisdiction to enjoin collection of a tax alleged to be illegal, where plaintiff has not a full, free, complete, and adequate remedy at law. American Airways, Inc. v. Wallace, 57 F.2d 877, 1932 U.S. Dist. LEXIS 1156 (M.D. Tenn. 1932), aff'd, American Airways v. Wallace, 287 U.S. 565, 53 S. Ct. 15, 77 L. Ed. 498, 1932 U.S. LEXIS 40 (1932).
4. Matters Determining Right to Injunction.
A court, in determining whether it will entertain a suit in equity to enjoin collection of a tax, must look to the probable consequences or damages resulting to plaintiff if the injunction is not granted. American Airways, Inc. v. Wallace, 57 F.2d 877, 1932 U.S. Dist. LEXIS 1156 (M.D. Tenn. 1932), aff'd, American Airways v. Wallace, 287 U.S. 565, 53 S. Ct. 15, 77 L. Ed. 498, 1932 U.S. LEXIS 40 (1932).
The courts of Tennessee have authority to grant injunctions prohibiting the illegal assessment of taxes, as it is one of the primary duties of the judiciary to check other branches of the government (here the revenue commissioner) when they exceed their constitutional or statutory authority. Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983).
5. Matters Not Warranting Preventive Process.
No writ of injunction, certiorari and supersedeas, prohibition, or other process can lawfully issue for the prevention of the collection of revenue claimed to be due the state. The only remedy is to pay the same under protest, and then sue for the recovery. Mayor of Nashville v. Smith, 86 Tenn. 213, 6 S.W. 273, 1887 Tenn. LEXIS 40 (1887); Railroad v. Williams, 101 Tenn. 146, 46 S.W. 448, 1898 Tenn. LEXIS 44 (1898); Briscoe v. McMillan, 117 Tenn. 115, 100 S.W. 111, 1906 Tenn. LEXIS 36 (1906).
A suit in equity will not lie to restrain collection of a tax on the sole ground that the tax is illegal, but there must exist, in addition, special circumstances bringing the case under some recognized head of equity jurisdiction. Shelton v. Platt, 139 U.S. 591, 11 S. Ct. 646, 35 L. Ed. 273, 1891 U.S. LEXIS 2411 (1891). To same effect, Allen v. Pullman's Palace Car Co., 139 U.S. 658, 11 S. Ct. 682, 35 L. Ed. 303, 1891 U.S. LEXIS 2421 (1891).
The fact that a tax law may be unconstitutional does not give a court of equity jurisdiction to restrain its collection. Shelton v. Platt, 139 U.S. 591, 11 S. Ct. 646, 35 L. Ed. 273, 1891 U.S. LEXIS 2411 (1891).
The fact that property is used in conducting interstate commerce does not, in itself, give equity jurisdiction to restrain collection of a tax levied thereon which is alleged to be illegal. Shelton v. Platt, 139 U.S. 591, 11 S. Ct. 646, 35 L. Ed. 273, 1891 U.S. LEXIS 2411 (1891).
6. Time for Objection to Equity Jurisdiction.
Ordinarily the objection of adequacy of remedy at law should be taken at the earliest opportunity and before defendant enters upon a full defense, but if the court, in looking at the proof, find none of the matters which would make it a proper case for equity, a decree for equitable relief may be reversed, although the objection is taken for the first time on appeal. Allen v. Pullman's Palace Car Co., 139 U.S. 658, 11 S. Ct. 682, 35 L. Ed. 303, 1891 U.S. LEXIS 2421 (1891).
7. Enjoining Void Assessments and Proceedings.
Injunction lies against void process for the collection of state and county taxes, although there may also be a remedy at law by certiorari. Alexander v. Henderson, 105 Tenn. 431, 58 S.W. 648, 1900 Tenn. LEXIS 87 (1900); Briscoe v. McMillan, 117 Tenn. 115, 100 S.W. 111, 1906 Tenn. LEXIS 36 (1906).
The statute does not prevent maintenance of a bill in equity to restrain the assessment and collection of taxes on an assessment equalized by the state board of equalization, where it is claimed that the acts of the board were absolutely void. Briscoe v. McMillan, 117 Tenn. 115, 100 S.W. 111, 1906 Tenn. LEXIS 36 (1906).
Suit by citizens and taxpayers of a county against county and city officers within the county, to enjoin such officers from assessing and collecting taxes on property on a basis of assessments made by the state board of equalization on the theory that such assessments were illegal and absolutely void, is not a suit against this state. Briscoe v. McMillan, 117 Tenn. 115, 100 S.W. 111, 1906 Tenn. LEXIS 36 (1906).
Where the decision of the state board of equalization, in a proceeding for the reassessment of property for taxation, is void, because there was no quorum present to hear the appeal before such board, a bill is maintainable to enjoin the enforcement of such judgment and to enjoin the county trustee from collecting the taxes. Smoky Mt. Land, Lumber & Imp. Co. v. Lattimore, 119 Tenn. 620, 105 S.W. 1028, 1907 Tenn. LEXIS 26 (1907).
Void proceedings for back assessment may be perpetually enjoined by property owner. Southern Express Co. v. Patterson, 122 Tenn. 279, 123 S.W. 353, 1909 Tenn. LEXIS 23 (1909).
A bill will lie to enjoin the enforcement of a void assessment and the collection of taxes levied thereunder. Southeastern Greyhound Lines v. City of Knoxville, 181 Tenn. 622, 184 S.W.2d 4, 1944 Tenn. LEXIS 284 (1944).
8. Enjoining Certification of Assessment.
This statute applies to the collection of state taxes only, and does not prevent the maintenance of a bill to declare the action of the state board of equalization to be illegal and void, and to enjoin the certification of its action in the assessment. Briscoe v. McMillan, 117 Tenn. 115, 100 S.W. 111, 1906 Tenn. LEXIS 36 (1906); Smoky Mt. Land, Lumber & Imp. Co. v. Lattimore, 119 Tenn. 620, 105 S.W. 1028, 1907 Tenn. LEXIS 26 (1907); Southern Express Co. v. Patterson, 122 Tenn. 279, 123 S.W. 353, 1909 Tenn. LEXIS 23 (1909); Tennessee Fertilizer Co. v. McFall, 128 Tenn. 645, 163 S.W. 806, 1913 Tenn. LEXIS 78 (1913).
The action of the state board of equalization, in the assessment of taxes, within its jurisdiction and without fraud, is not subject to collateral attack by a bill in chancery to restrain the certification of the assessment and extension of taxes according to its action, for irregularities in the modes of procedure or for not hearing any evidence, but for such irregularity in procedure, the remedy is by certiorari in a court of law. Briscoe v. McMillan, 117 Tenn. 115, 100 S.W. 111, 1906 Tenn. LEXIS 36 (1906); Smoky Mt. Land, Lumber & Imp. Co. v. Lattimore, 119 Tenn. 620, 105 S.W. 1028, 1907 Tenn. LEXIS 26 (1907).
9. County and City Taxes — Restraining Collection.
Writs of certiorari and supersedeas may be used to test the validity of county and city taxes, and to restrain their collection until the judicial determination of their validity. Mayor of Nashville v. Smith, 86 Tenn. 213, 6 S.W. 273, 1887 Tenn. LEXIS 40 (1887); Railroad v. Williams, 101 Tenn. 146, 46 S.W. 448, 1898 Tenn. LEXIS 44 (1898).
Bill which sought to obtain a decree that city ordinance imposing tax on buses operated on streets of city was in the nature of a bill for declaratory judgment, but even if construed to be a bill for injunction of void tax it was proper since bill was filed prior to the time the tax became due. Southeastern Greyhound Lines v. City of Knoxville, 181 Tenn. 622, 184 S.W.2d 4, 1944 Tenn. LEXIS 284 (1944).
10. Federal Equity Jurisdiction.
The illegality or unconstitutionality of a tax imposed by a state is, standing alone, insufficient ground for equitable relief in a federal court; other circumstances must be shown which bring the case under some recognized head of equity jurisdiction and show an inadequate remedy at law. Pullman Co. v. Tamble, 173 F. 200, 1909 U.S. App. LEXIS 5870 (M.D. Tenn. 1909).
Collateral References.
Financial hardship or inability to pay taxes as rendering inapplicable statutes denying remedy by injunction against assessment or collection of tax. 65 A.L.R.2d 550.
67-1-910. Refusal of unrecognized money.
Nothing in this part shall be construed to subject any officer of the state to any suit for a refusal on the officer's part to accept, in payment of revenue of the state, any kind or description of funds or securities or papers other than such as the officer may be authorized and required to receive for the time being by law.
Acts 1873, ch. 44, § 5; Shan., § 1068; Code 1932, § 1799; T.C.A. (orig. ed.), § 67-2312.
Cross-References. Types of money receivable, § 67-1-704.
Cited: Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983).
67-1-911. Provisions applicable to municipal taxes.
- Sections §§ 67-1-901 — 67-1-905 and 67-1-908 — 67-1-910 apply to the recovery of all taxes collected by any of the municipalities of this state.
-
In order to carry out the legislative intent that all of such sections, which now apply to the recovery of state taxes erroneously paid, be conformed to apply also to the recovery of taxes erroneously paid to municipalities, the following provisions are added:
- The municipal officer collecting any municipal taxes paid under protest shall pay such revenue into the municipal treasury and, at the time of payment, shall give notice to the mayor and board of commissioners or other governing body of such municipality that the taxes were paid under protest;
- If it be finally determined by any court having jurisdiction of any suit brought within thirty (30) days after such payment under protest against the municipality to recover such taxes that the taxes were wrongfully collected as not being due from the party to the municipality, the municipality shall refund such taxes with such interest as the court may determine to be proper, not exceeding the legal rate, and shall pay the costs of the cause; and
- The city attorney or other legal officer of such municipality shall conduct the defense of such suit.
Acts 1959, ch. 324, § 1; T.C.A., § 67-2313.
Cross-References. Applicability to metropolitan government areas, § 7-4-108.
Textbooks. Tennessee Jurisprudence, 19 Tenn. Juris., Municipal Corporations, § 95.
Law Reviews.
Recovering Erroneously Paid Property Taxes in Tennessee: An Epic Journey, 10 Mem. St. U.L. Rev. 279 (1980).
Cited: Woods v. Equity Servs., Inc., 536 S.W.2d 333, 1976 Tenn. LEXIS 626 (Tenn. 1976); McDowell Dev. Corp. v. Ferguson, 579 S.W.2d 863, 1978 Tenn. App. LEXIS 341 (Tenn. Ct. App. 1978); Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982); Lebanon Liquors v. City of Lebanon, 885 S.W.2d 63, 1994 Tenn. App. LEXIS 82 (Tenn. Ct. App. 1994); Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009).
NOTES TO DECISIONS
1. Application and Scope.
Excess municipal inspection fees paid on the wholesale purchase of liquor were not recoverable by taxpayers because the payments were not made involuntarily and under protest. Lebanon Liquors, Inc. v. City of Lebanon, 885 S.W.2d 63, 1994 Tenn. App. LEXIS 82 (Tenn. Ct. App. 1994).
2. Court Review.
The court, acting under this section, could not review the finding of value by the Memphis board of equalization. Goldsmith's Div. v. City of Memphis, 484 S.W.2d 538, 1972 Tenn. LEXIS 379 (Tenn. 1972).
Banking institutions seeking to challenge assessment of local taxes on the outstanding capital stock of the banks had no access to the courts without first either paying the taxes under protest and then filing suit for their refund or going through local and state boards of equalization for administrative review of the assessment without first paying the disputed taxes. Fentress County Bank v. Holt, 535 S.W.2d 854, 1976 Tenn. LEXIS 586 (Tenn. 1976).
3. Limitation of Actions.
Where a suit for recovery of city taxes was brought almost one year after payment under protest, such suit was barred under this section and also under § 67-1-903. Holloway v. Putnam County, 534 S.W.2d 292, 1976 Tenn. LEXIS 591 (Tenn. 1976).
Since § 67-1-903 is by express language made part of this section, a taxpayer who pays municipal taxes under protest has six months in which to file suit for recovery of such taxes. Woods v. Equity Servs., Inc., 536 S.W.2d 333, 1976 Tenn. LEXIS 626 (Tenn. 1976).
In order to properly request a refund of taxes paid under protest to a municipality, an action for recovery must be instituted within six months of the payment. Roberts v. Sullivan County (In re Penking Trust), 196 B.R. 389, 1996 Bankr. LEXIS 658 (Bankr. E.D. Tenn. 1996).
4. Effect of Other Statutes.
Title 50, together with the procedures of this part, provide plaintiffs an adequate, speedy, and efficient method for determining whether the state's unemployment tax has been assessed in violation of their constitutional rights. Therefore, court was without jurisdiction to grant plaintiffs' request for injunctive relief. Independent Baptist Church v. Tennessee, 468 F. Supp. 71, 1978 U.S. Dist. LEXIS 14258 (E.D. Tenn. 1978).
5. Payment Under Protest.
Even though a municipal ordinance covering the collection of inspection fees on the wholesale purchase of liquor contained a criminal penalty for noncompliance, the sanction fell upon the wholesalers and not the retailers, and it did not create a sense of immediacy for payment by the latter sufficient to justify a claim that payments were made under protest. Lebanon Liquors, Inc. v. City of Lebanon, 885 S.W.2d 63, 1994 Tenn. App. LEXIS 82 (Tenn. Ct. App. 1994).
A bankruptcy trustee could make a “proper request” for a refund of city and county real property taxes paid postpetition under protest, even though he did not exhaust his administrative remedies. Roberts v. Sullivan County (In re Penking Trust), 196 B.R. 389, 1996 Bankr. LEXIS 658 (Bankr. E.D. Tenn. 1996).
Trial court had jurisdiction to determine the constitutionality of an occupancy tax under T.C.A. § 67-4-1425, because several taxpayers were not required to pay the tax “under protest” before filing a challenge. Admiralty Suites & Inns, LLC v. Shelby County, 138 S.W.3d 233, 2003 Tenn. App. LEXIS 835 (Tenn. Ct. App. Nov. 24, 2003), appeal denied, — S.W.3d —, 2004 Tenn. LEXIS 406 (Tenn. May 10, 2004).
Supreme court presumes that the requirement of payment under protest in T.C.A. § 67-1-901(a), applicable to municipalities through T.C.A. § 67-1-911, has meaning and purpose and should be given full effect; supreme court is not free to add the language § 67-1-901(b) to expand the scope of T.C.A. §§ 67-1-1801 et seq., restrict the scope of T.C.A. §§ 67-1-901 et seq., or substitute its judgment for that of the Legislature. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
Legislature, by enacting T.C.A. §§ 67-1-1807 and 67-1-901(b), specifically removed the payment-under-protest requirement for disputed state taxes collected by the commissioner of revenue but did not eliminate this requirement for municipal taxes, and it enacted these statutes together as part of the same statutory scheme; under the doctrine of in pari materia, the supreme court reads these provisions together to give the intended effect to the entire statutory scheme. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
67-1-912. Provisions applicable to county taxes.
- Sections 67-1-901 — 67-1-905 and 67-1-908 — 67-1-910 apply to the recovery of all taxes collected by any of the counties of this state.
-
- The county officer collecting any county taxes paid under protest shall pay such revenue into the county treasury and, at the time of payment, shall give notice to the county mayor and board of commissioners, or other governing body of a county, that the same were paid under protest.
- If it be finally determined by any court having jurisdiction of any suit brought within six (6) months after such payment under protest against the county to recover such taxes that the same were wrongfully collected, as not being due from a party to the county, the county shall refund such taxes with such interest as the court may determine to be proper, not exceeding the legal rate, and shall pay the costs of the cause.
Acts 1981, ch. 274, § 1; T.C.A., § 67-2314; Acts 2003, ch. 90, § 2.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
Cited: Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983).
NOTES TO DECISIONS
1. Application and Scope.
Excess mineral severance taxes previously paid to a county were not recoverable by taxpayers because the payments were not made involuntarily and under protest. Hoover, Inc. v. Rutherford County, 885 S.W.2d 67, 1994 Tenn. App. LEXIS 152 (Tenn. Ct. App. 1994).
2. Limitation of Actions.
Any action to recover taxes paid under protest to a county must be brought within six months of the payment. Roberts v. Sullivan County (In re Penking Trust), 196 B.R. 389, 1996 Bankr. LEXIS 658 (Bankr. E.D. Tenn. 1996).
3. Payment Under Protest.
A bankruptcy trustee could make a “proper request” for a refund of city and county real property taxes paid postpetition under protest, even though he did not exhaust his administrative remedies. Roberts v. Sullivan County (In re Penking Trust), 196 B.R. 389, 1996 Bankr. LEXIS 658 (Bankr. E.D. Tenn. 1996).
Part 10
Back Assessment and Reassessment Generally
67-1-1001. Part definitions.
-
As used in this part, unless the context otherwise requires:
- “Back assessment” means the assessment of property, including land or improvements not identified or included in the valuation of the property, that has been omitted from or totally escaped taxation; and
- “Reassessment” means the assessment of property that has been assessed at less than its actual cash value by reason of connivance, fraud, deception, misrepresentation, misstatement, or omission of the property owner or the owner's agent.
- This section shall not be construed to affect in any manner the operation of § 67-1-1004, relative to the protection of a bona fide purchaser.
Acts 1907, ch. 602, § 30; Shan., § 822a1; Code 1932, § 1496; modified; Acts 1982, ch. 774, § 3; T.C.A. (orig. ed.), § 67-1201(b); Acts 1988, ch. 723, §§ 1, 2.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 36.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
Cited: Burress v. Woodward, 665 S.W.2d 707, 1984 Tenn. LEXIS 743 (Tenn. 1984).
NOTES TO DECISIONS
1. Connivance.
Where property had been assessed below its actual cash value by the regularly constituted assessing authorities, failure of the taxpayer to report such underassessment even though grossly underassessed did not constitute connivance within the meaning of this section or former § 67-1-1003 nor afford a basis of back assessment. Garner v. Rhea Realty Corp., 494 S.W.2d 783, 1971 Tenn. App. LEXIS 239 (Tenn. Ct. App. 1971).
Under this section and former § 67-1-1003 “connivance” means conduct by the taxpayer similar to but short of actual fraud which caused or induced the low assessment. Garner v. Rhea Realty Corp., 494 S.W.2d 783, 1971 Tenn. App. LEXIS 239 (Tenn. Ct. App. 1971).
Collateral References. Taxation 371
67-1-1002. Grounds.
-
Any property or properties included in this part or chapter 5 of this title shall be back assessed or reassessed for the period provided by law, viz.:
- When the property or properties have been omitted from or escaped taxation;
- When the property or properties have been assessed by the assessor or computed by the board of equalization at less than actual cash value by reason of any fraud, deception, misrepresentation, misstatement, or omission of full statements of the owner of the property or the owner's agent or attorney; or
- When the owner of the property connives at or fraudulently procures or induces an assessment to be made by the assessor or computed by the board of equalization at less than its actual cash value; provided, that in all cases where there is a grossly inadequate assessment, fraud shall be presumed.
- In all cases where any taxes or assessments may be set aside or declared void by any court by reason of any irregularity or neglect to comply with the law in the proceedings; by reason of the illegality of the act constituting the power or authority to assess and levy such taxes or assessments; for want of authority in the board or authority acting in lieu of the county legislative bodies or the duly authorized and legally constituted authorities of the state, for state and county purposes; and such other purposes as may be authorized by law, and the taxes still remain unpaid, the county legislative body of any county, whenever such taxes or assessments have been made or attempted to be made, shall have the power to reassess back taxes upon any lot or parcel of lots or parcels of land subject to or chargeable with taxes for state and county purposes, and relevy the lots or parcels, and the reassessment and levies for such purposes shall be and remain liens upon the lots or parcels of land, with interest from the date when the taxes were properly leviable and assessable where such original assessments remain due and unpaid.
Acts 1873, ch. 40, § 1; 1907, ch. 602, § 30; Shan., §§ 820a1, 822a1; Code 1932, §§ 1493, 1496; modified; impl. am. Acts 1978, ch. 934, §§ 7, 36; Acts 1982, ch. 774, § 3; T.C.A. (orig. ed.), §§ 67-1201(a), 67-1220.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 36.
Cited: Book Agents of Methodist Episcopal Church, South v. State Board of Equalization, 513 S.W.2d 514, 1974 Tenn. LEXIS 467 (Tenn. 1974).
NOTES TO DECISIONS
1. Back Assessment Provision Is Exclusive.
This is the only law for the back assessment of any property covered by it, and property cannot be back assessed under Acts 1903, ch. 258. Nashville R. & L. Co. v. Norvell, 122 Tenn. 613, 124 S.W. 613, 1909 Tenn. LEXIS 34 (1910).
2. Rebuttable Presumption of Fraud.
The presumption of fraud, declared by the statute to arise from a grossly inadequate assessment, is not conclusive, but rebuttable. Eastland v. Sneed, 134 Tenn. 599, 185 S.W. 717, 1915 Tenn. LEXIS 180 (1915).
3. Omitted Property.
Acts 1907, ch. 602, in so far as it provides for the back assessment of taxes, merely undertakes to provide a new remedy for the collection of taxes already delinquent at the time of its passage, and hence taxes on omitted property accruing prior to the adoption of the Act were recoverable thereunder. Tennessee Fertilizer Co. v. McFall, 128 Tenn. 645, 163 S.W. 806, 1913 Tenn. LEXIS 78 (1913).
4. Decedents' Estates.
Administrator of estate is liable for back taxes assessed against estate notwithstanding compromise with county attorney where county attorney had no authority to compromise. Hamilton Nat'l Bank v. Richardson, 42 Tenn. App. 486, 304 S.W.2d 504, 1957 Tenn. App. LEXIS 93 (Tenn. Ct. App. 1957).
5. Reassessment Where Void Tax.
Where taxes have been declared void by any court, by reason of the illegality of the legislative act authorizing them, they may be relevied and reassessed by the county, under the statute compiled in this section. Boyd, Mosby & Co. v. Hunt, 81 Tenn. 252, 1884 Tenn. LEXIS 33 (1884).
6. Special Appeal.
The court of appeals could not consider the relevancy and application of this section on the record before it where the city prayed a special appeal from the chancellor's decree only calling in question that part of the decree which denied recovery of interest and penalties on the taxes which he allowed. City of Bristol v. Delinquent Taxpayers, 179 Tenn. 604, 168 S.W.2d 782, 1942 Tenn. LEXIS 60 (1942).
7. Notification.
County does not have to notify each individual taxpayer before making reassessments under this section. Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964).
8. Standards.
This section does not define the method by which assessments are to be made by the county nor does it establish standards by which the purposes of the statute may be accomplished by the county. Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964).
9. Reassessment of Entire County.
County acting under this section was not only authorized to make individual reassessments but to provide an entire assessment roll for the county. Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964).
10. Contracts for Reassessment.
County acting in capacity of tax assessor (now assessor of property) under this section may contract with individuals, firms or corporations for advice and assistance as provided by statute. Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964).
11. Questions on Appeal.
Taxpayers, who honestly undertook to raise question of validity of assessment under this section but who did not raise question of whether penalty provided by § 67-1-801 would apply to assessment, could not raise the question of right to be relieved therefrom on appeal but court of appeals in affirming decree of chancellor that assessment was valid would do so without prejudice to right of taxpayers to subsequently raise such question. Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964).
67-1-1003. Qualifying municipalities for reassessments — Appeals by owners.
- Any municipality that lies within the boundaries of two (2) or more counties and maintains an assessment office separate from the assessment offices of the counties in which the municipality lies may make back assessments and reassessments upon property located within the municipality and subject to municipal taxation through the offices of the municipal assessor in the manner otherwise provided in this part.
- A property owner whose property has been assessed under subsection (a) and who disputes the assessment, or who claims exemption from the tax, may appeal the assessment to the municipal board of equalization within thirty (30) days of receipt of notice of the assessment. The municipal board of equalization shall hear the appeal within fifteen (15) days and issue a written decision within five (5) days of the hearing. If the board does not issue a decision within five (5) days of the hearing, the appeal may be taken to the state board of equalization. A decision of the municipal board of equalization may be appealed by the property owner or the municipality to the state board of equalization in the same manner as other appeals from action of the county boards of equalization.
Acts 1915, ch. 124, § 1; 1917, ch. 98, § 1; Shan., § 822a2; Code 1932, § 1497; Acts 1983, ch. 298, § 1; T.C.A. (orig. ed.), § 67-1202; Acts 2001, ch. 176, § 1.
Textbooks. Tennessee Jurisprudence, 18 Tenn. Juris., Mandamus, § 7.
NOTES TO DECISIONS
Decisions Under Prior Law
1. Constitutionality.
This statute does not violate the constitutional provision in Tenn. Const., art. II, § 28, requiring all property to be taxed according to its value, to be ascertained as the legislature shall direct, so that taxes shall be equal and uniform. Swift & Co. v. Haley, 142 Tenn. 382, 219 S.W. 1039, 1919 Tenn. LEXIS 66 (1919).
2. Construction.
The words “any property” appearing in this section are sufficiently broad in meaning to cover any character of property subject to taxation under our laws. State ex rel. Woolen v. Pearson, 137 Tenn. 253, 192 S.W. 164, 1917 Tenn. LEXIS 159 (1917).
This statute, before its amendment in 1917, was held to allow reassessment and taxation of property only where it had entirely escaped assessment and taxation. State ex rel. Woolen v. Pearson, 137 Tenn. 253, 192 S.W. 164, 1917 Tenn. LEXIS 159 (1917).
The prohibition imposed by this section is upon the taxing officials. McCord v. Southern R. Co., 187 Tenn. 247, 213 S.W.2d 184, 1948 Tenn. LEXIS 428 (1948).
3. Application.
Where a suit was commenced before this statute, to compel, by mandamus, a back assessment or reassessment of property previously assessed, upon the ground that it was inadequately assessed and the issuance of a peremptory writ of mandamus was decreed, and thereafter, before final relief, the statute in this section was enacted, which stands as a clear inhibition of the back assessment or reassessment of such property, the supreme court denied the relief sought by such peremptory writ of mandamus. State ex rel. Woolen v. Pearson, 137 Tenn. 253, 192 S.W. 164, 1917 Tenn. LEXIS 159 (1917).
This statute is not limited to taxes assessed by the county tax assessor (now assessor of property), but applies also to the ad valorem taxes on merchants' capital which are assessed as well as collected by the county clerk. Swift & Co. v. Haley, 142 Tenn. 382, 219 S.W. 1039, 1919 Tenn. LEXIS 66 (1919).
4. Connivance.
Under § 67-1-1001 and this section, “connivance” means conduct by the taxpayer similar to but short of actual fraud which caused or induced the low assessment. Garner v. Rhea Realty Corp., 494 S.W.2d 783, 1971 Tenn. App. LEXIS 239 (Tenn. Ct. App. 1971).
Under this section, where property had been assessed below its actual cash value by the regularly constituted assessing authorities, failure of the taxpayer to report such underassessment did not constitute connivance within the meaning of the statute. Garner v. Rhea Realty Corp., 494 S.W.2d 783, 1971 Tenn. App. LEXIS 239 (Tenn. Ct. App. 1971).
Collateral References.
Construction and application of statute prohibiting or restricting reassessment after assessment and payment of taxes. 85 A.L.R. 107.
67-1-1004. Ineffective against bona fide purchaser.
- In no case shall the back assessment or reassessment of real estate constitute a lien on the real estate that has, by bona fide sale, passed into the hands of innocent purchasers, but shall be a liability against the person owning the real estate at the time of the inadequate assessment.
- The burden of proving a bona fide sale shall be upon the person owning such real estate at the time of such back assessment or reassessment.
- Subsection (a) shall not apply to property that has wholly escaped taxation.
Acts 1907, ch. 602, § 30; Shan., § 822a3; Code 1932, § 1498; T.C.A. (orig. ed.), § 67-1203.
67-1-1005. Duty to back assess or reassess — Citation.
- A back assessment or reassessment must be initiated on or before September 1 of the year following the tax year for which the original assessment was made, unless the omission or underassessment resulted from failure of the taxpayer to file the reporting schedule required by law, from actual fraud or fraudulent misrepresentation of the property owner or the property owner's agent, or from collusion between the property owner or the property owner's agent and the assessor. In the latter cases, a back assessment or reassessment must be initiated on or before three (3) years from September 1 of the tax year for which the original assessment was made. Additional taxes due as the result of a back assessment or reassessment shall not be deemed delinquent until sixty (60) days after the date notice of taxes arising from the back assessment or reassessment is sent to the taxpayer, unless the back assessment or reassessment resulted from failure of the taxpayer to file the reporting schedule required by law, from actual fraud or fraudulent misrepresentation of the property owner or the property owner's agent, or from collusion between the property owner or the property owner's agent and the assessor. In the latter cases, such taxes shall become delinquent as of the date of delinquency of the original assessment.
- A back assessment or reassessment may be initiated by certification of the assessor of property to the appropriate collecting officials identifying the property and stating the basis of the back assessment or reassessment and the tax years and amount of any additional assessment for which the owner or taxpayer is responsible. The assessor shall send a copy of the certification to the owner or taxpayer. The collecting official shall then send a notice of taxes due based on the back assessment and reassessment. Any person aggrieved by a back assessment or reassessment may appeal directly to the state board of equalization within sixty (60) days from the date that a copy of the certification is sent to the taxpayer, in the manner provided in § 67-5-1412, and such person may be assisted or represented in the appeal as provided in § 67-5-1514. Accrual of delinquency penalty and interest otherwise applicable is suspended while the appeal is pending; but, during such period, simple interest shall accrue in the amount provided in § 67-5-1512.
- A back assessment or reassessment for merchants' taxes and delinquent privilege taxes pursuant to this part may be initiated by a chief administrative officer of a tax jurisdiction to which the tax is payable, any citizen of such jurisdiction, or by the department of revenue. The back assessment or reassessment shall be initiated by the filing of a sworn, written complaint to the county clerk stating the basis of the complaint. The clerk may require a complainant, other than a public official acting in the official's capacity, to post a reasonable bond for payment of costs of the proceeding if the back assessment or reassessment is unsuccessful. An aggrieved party may appeal the clerk's disposition of the complaint to the department.
- Notwithstanding the deadline in this section for initiating a back assessment or reassessment, the issuance of a notice of tangible personal property audit by the assessor tolls the running of the deadline during the period of the audit from the issuance of the notice until issuance of the audit findings.
Acts 1879, ch. 79, § 1; 1883, ch. 181, § 1; 1885, ch. 23, § 1; 1907, ch. 602, § 30; Shan., §§ 814, 823, 823a1; Code 1932, §§ 1486, 1499, 1500; modified; impl. am. Acts 1978, ch. 934, §§ 7, 16, 22, 36; T.C.A. (orig. ed.), §§ 67-1204, 67-1205, 67-1213; Acts 1990, ch. 898, § 2; 1990, ch. 1052, § 1; 1993, ch. 315, § 12; 2000, ch. 934, § 1; 2002, ch. 752, §§ 1-3; 2007, ch. 132, § 1.
Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 789.
Tennessee Jurisprudence, 18 Tenn. Juris., Limitations of Actions, § 3; 23 Tenn. Juris., Taxation, § 36.
Law Reviews.
The Tennessee Court Systems — Prosecution, 8 Mem. St. U.L. Rev. 477 (1978).
Cited: Garner v. Rhea Realty Corp., 494 S.W.2d 783, 1971 Tenn. App. LEXIS 239 (Tenn. Ct. App. 1971); Roberts v. State Board of Equalization, 557 S.W.2d 502, 1977 Tenn. LEXIS 677 (Tenn. 1977).
NOTES TO DECISIONS
1. Constitutionality.
Statutes concerning the assessment and collection of back taxes have been held constitutional. Grundy County v. Tennessee C., I. & R.R., 94 Tenn. 295, 29 S.W. 116, 1894 Tenn. LEXIS 46 (1895); Tennessee Fertilizer Co. v. McFall, 128 Tenn. 645, 163 S.W. 806, 1913 Tenn. LEXIS 78 (1913).
2. Due Process.
Where defendants got notice of a reassessment of their property in 1980 or 1981 and were served with process in 1986, they had two chances to protest and challenge the reassessment; and such notice and opportunity to be heard complied with the due process requirements of the state and federal constitutions. State v. Delinquent Taxpayers, 785 S.W.2d 819, 1989 Tenn. App. LEXIS 732 (Tenn. Ct. App. 1989).
3. Strict Construction.
The Act of 1882 providing for the collection of back taxes was construed as giving a special remedy which had to be strictly followed, and a purchaser at a sale made under the act was entitled to be relieved of his purchase unless the requirements of the act were pursued. State v. Woodruff, 79 Tenn. 300, 1883 Tenn. LEXIS 63 (1883).
4. “Collector” Defined.
The word “collector” includes any person entrusted with the collection of public revenue. State v. Memphis & C. R.R., 82 Tenn. 56, 1884 Tenn. LEXIS 105 (1884); State v. Railroad, 96 Tenn. 385, 34 S.W. 1023, 1895 Tenn. LEXIS 41 (1895).
The word “collector” includes a county trustee. McHenderson v. Anderson County, 105 Tenn. 591, 59 S.W. 1016, 1900 Tenn. LEXIS 110 (1900).
5. Back Assessment of Privilege Taxes.
Under Acts 1903, ch. 258, relative to privilege taxes, the word “assess” meant simply the listing of names of persons exercising privileges, with the designation of the privilege; it might or might not include an extension of the amount fixed by statute for exercising such privilege; in this sense the county clerk might “back assess or reassess” privilege taxes that had escaped listing and collection. Foppiano v. Speed, 113 Tenn. 167, 82 S.W. 222, 1904 Tenn. LEXIS 11 (1904), aff'd, 199 U.S. 501, 26 S. Ct. 138, 50 L. Ed. 288, 1905 U.S. LEXIS 994 (1905), aff'd, Foppiano v. Speed, 199 U.S. 501, 26 S. Ct. 138, 50 L. Ed. 288, 1905 U.S. LEXIS 994 (1905).
It is not necessary that there should be a back assessment or reassessment of privilege taxes where the statute fixes the amount and makes it the duty of all persons exercising privileges to come forward and obtain a license from the clerk, and pay therefor the amount fixed by law. Foppiano v. Speed, 113 Tenn. 167, 82 S.W. 222, 1904 Tenn. LEXIS 11 (1904), aff'd, 199 U.S. 501, 26 S. Ct. 138, 50 L. Ed. 288, 1905 U.S. LEXIS 994 (1905), aff'd, Foppiano v. Speed, 199 U.S. 501, 26 S. Ct. 138, 50 L. Ed. 288, 1905 U.S. LEXIS 994 (1905).
6. Reassessment.
The fact that property has been regularly assessed in the first instance, the assessments passed upon by the county board of equalization, in turn, by the state board, and by the latter certified back to the county and taxes paid by complainant will not prevent a reassessment in a proper case. Smoky Mt. Land, Lumber & Imp. Co. v. Lattimore, 119 Tenn. 620, 105 S.W. 1028, 1907 Tenn. LEXIS 26 (1907).
7. Review.
While Acts 1879, ch. 79, originally covered only the back assessment of property that had been omitted from assessment and gave the taxpayer a right of appeal from such back assessment to the chairman of the county court (now county mayor), its provisions concerning appeals have been so extended by subsequent legislation as to include taxpayers whose property has been reassessed upon the ground that it was originally assessed for an inadequate valuation. Warner Iron Co. v. Pace, 89 Tenn. 707, 15 S.W. 1077, 1890 Tenn. LEXIS 93 (1891).
Where circuit court upon certiorari determined that action of city board of equalization was illegal this section had no bearing with regard to remandment of proceeding to board for proper hearing. Cox v. Bristol, 28 Tenn. App. 136, 187 S.W.2d 637, 1944 Tenn. App. LEXIS 73 (Tenn. Ct. App. 1944).
Tennessee State Board of Equalization's (Board) back assessment was affirmed because (1) the taxpayer was timely notified of the assessment but did not timely appeal, (2) the assessment was not time-barred, as the taxpayer's failure to file a required annual reporting schedule gave the Board three years to initiate the assessment, which the Board did, and (3) an official's statement based on partial information that the taxpayer would owe no taxes for that year did not justify reliance and nonpayment. Volunteer Princess Cruises, LLC v. Tenn. State Bd. of Equalization, — S.W.3d —, 2016 Tenn. App. LEXIS 820 (Tenn. Ct. App. Oct. 31, 2016).
8. Jurisdiction of Trustee.
Where a county trustee possesses jurisdiction of a proceeding for the back assessment or reassessment of property, and declines to take jurisdiction and refuses to hear such proceeding because of the alleged want of jurisdiction, a writ of mandamus will lie to compel such trustee to take jurisdiction of the proceeding and to hear the same, and to render some judgment on the merits. State ex rel. Bond v. Taylor, 119 Tenn. 229, 104 S.W. 242, 1907 Tenn. LEXIS 7 (Tenn. Sep. 1907).
9. Injunction Proceedings.
Where the proceeding pending before the trustee for the back assessment or reassessment of the intangible property of a foreign corporation lawfully doing business in this state, with its domicile in another state, is void, because there is no statute fixing the situs of such property in this state, or because there is no statute providing for ascertaining the value and assessment of such property, for taxation in this state, such corporation may invoke the jurisdiction of the chancery court to have the same enjoined. Southern Express Co. v. Patterson, 122 Tenn. 279, 123 S.W. 353, 1909 Tenn. LEXIS 23 (1909); Tennessee Fertilizer Co. v. McFall, 128 Tenn. 645, 163 S.W. 806, 1913 Tenn. LEXIS 78 (1913). See Briscoe v. McMillan, 117 Tenn. 115, 100 S.W. 111, 1906 Tenn. LEXIS 36 (Tenn. Sep. 1906).
Fact that other taxpayers along with complainant had been purposely omitted from taxation in the past and that suit was now being brought against complainant alone was not grounds for an injunction against trustee to prevent back assessment of tax on personal property as an alleged failure of taxing officers to perform their duty in the past cannot now be used to prevent present trustee from proceeding as the law requires since any question of inequality is for the board of equalization. Siegel v. Holland, 171 Tenn. 327, 102 S.W.2d 1028, 1936 Tenn. LEXIS 94 (Tenn. Mar. 27, 1937).
Injunction will not lie to restrain trustee from making back assessment of taxes on omitted personalty on grounds that it was intention of trustee to assess exempt property manufactured from the produce of the state where the citation showed no such intent on the part of the trustee as the court will entertain no presumption that there is to be an assessment on exempt property. Siegel v. Holland, 171 Tenn. 327, 102 S.W.2d 1028, 1936 Tenn. LEXIS 94 (Tenn. Mar. 27, 1937).
Where citation by trustee for back assessment of personalty showed no intent by trustee to levy on personalty exempt from such taxation as being manufactured from produce of the state the question was prematurely raised on an appeal from the dismissal of an injunction which had been sought on such basis and the proper place for such question to be brought up on appeal is before the board of equalization after hearing before the trustee. Siegel v. Holland, 171 Tenn. 327, 102 S.W.2d 1028, 1936 Tenn. LEXIS 94 (Tenn. Mar. 27, 1937).
10. Form of Citation.
Citation by county trustee substantially in the form prescribed in this section was not insufficient for failure to describe omitted personal property which was to be back assessed. Siegel v. Holland, 171 Tenn. 327, 102 S.W.2d 1028, 1936 Tenn. LEXIS 94 (Tenn. Mar. 27, 1937).
11. Notice.
The notice required to be given to a taxpayer is sufficient, and not in violation of U.S. Const., amend. 14. The taxpayer knows what property he owns, and its value, and should come prepared to prove the same. Tennessee Fertilizer Co. v. McFall, 128 Tenn. 645, 163 S.W. 806, 1913 Tenn. LEXIS 78 (1913).
Where the property owner actually participated in the back assessment proceedings against his property omitted from assessment, he cannot thereafter complain that the statute did not provide for a sufficient notice of the proceedings. Tennessee Fertilizer Co. v. McFall, 128 Tenn. 645, 163 S.W. 806, 1913 Tenn. LEXIS 78 (1913).
67-1-1006. Obtaining evidence.
- The officials having power to back assess or reassess property are vested with full authority to administer oaths, send for and examine witnesses, and take such steps as may be deemed necessary or material to obtain information and evidence as to the value of the property.
- Such witnesses, when properly summoned, shall be amenable to existing laws for nonattendance or failure to give evidence that is in their knowledge.
Acts 1907, ch. 602, § 30; Shan., §§ 823a2, 823a3; Code 1932, §§ 1501, 1502; T.C.A. (orig. ed.), §§ 67-1206, 67-1207.
67-1-1007. Authority for back assessment or reassessment — Finality.
- The officials vested with the power to make back assessments or reassess have full authority, in a proceeding to back assess or reassess such property, to make proper, correct, and adequate assessment of the property at its actual cash value, which, when entered upon the tax book or filed in writing with the authorized tax collecting authority, shall become a final and valid assessment of the property and collectible as such as fully and amply as if originally entered upon the assessment roll.
- The assessment, when made by the official authorized to make the assessment, shall have the force and effect of a judgment against the person liable for the taxes for the year for which the reassessment is made.
Acts 1907, ch. 602, § 30; Shan., § 823a4; Code 1932, § 1503; T.C.A. (orig. ed.), § 67-1208.
Cited: Roberts v. State Board of Equalization, 557 S.W.2d 502, 1977 Tenn. LEXIS 677 (Tenn. 1977).
67-1-1008. Penalty and costs.
If the back assessment or reassessment is sustained, the cost of the proceeding shall be added to the taxes and collectible as such. If the back assessment or reassessment is set aside, the cost shall be paid by the jurisdiction to which the taxes would have been payable, or by the complainant if the board determines the complaint was filed or prosecuted by the complainant without good cause. In a case of connivance, fraud, deception, misrepresentation, or failure to file a personal property schedule, the board may impose a penalty not to exceed fifteen percent (15%) of the taxes due, which shall be added to the taxes due and be collectible as such.
Acts 1907, ch. 602, § 30; Shan., §§ 823a5, 823a6; Code 1932, §§ 1504, 1505; T.C.A. (orig. ed.), §§ 67-1209, 67-1210; Acts 1993, ch. 315, § 13.
Cross-References. Duty to back assess or reassess, § 67-1-1005.
Rate of penalty and interest, § 67-1-801.
NOTES TO DECISIONS
1. Disallowance of Penalty.
In a taxpayer's suit to enjoin the collection of the county trustee's judgment in a back assessment proceeding assessing intangible personalty, evidence of which is physically held or located in another state, but which belonged to a deceased resident of this state, the chancery court's disallowance of this statutory penalty allowed by the trustee, in the back assessment proceedings, is erroneous, and will be corrected by the supreme court. McKennon v. McFall, 127 Tenn. 393, 155 S.W. 158, 1912 Tenn. LEXIS 38 (1912).
2. Aggrieved Parties.
A county trustee is not an “aggrieved” party so as to entitle him, independently of the county, to maintain a petition to review the final action of the state board of equalization equalizing back-assessments made by the trustee. Roberts v. State Board of Equalization, 557 S.W.2d 502, 1977 Tenn. LEXIS 677 (Tenn. 1977).
3. Review of Back Assessments.
Fact that provisions for appeal to state board of equalization from back assessment of taxes provides that such hearing shall be from the record as made up from the hearing before the trustee does not deprive the taxpayer of his constitutional right of trial by an impartial tribunal since the taxpayer is entitled to file any and all evidence he may desire and the fact that a hearing on oral evidence is not provided before the board does not deprive him of a hearing de novo since all the evidence is before the board and oral testimony is not an essential element of a hearing de novo. Siegel v. Holland, 171 Tenn. 327, 102 S.W.2d 1028, 1936 Tenn. LEXIS 94 (Tenn. Mar. 27, 1937).
Where citation by trustee for back assessment of personalty showed no intent by trustee to levy on personalty exempt from such taxation as being manufactured from produce of the state the question was prematurely raised on an appeal from the dismissal of an injunction which had been sought on such basis and the proper place for such question to be brought up on appeal is before the board of equalization after a hearing before the trustee. Siegel v. Holland, 171 Tenn. 327, 102 S.W.2d 1028, 1936 Tenn. LEXIS 94 (Tenn. Mar. 27, 1937).
67-1-1009. Estates — Examination of inventories and reports.
It is the duty of the county clerk to examine and compare the assessment rolls of the county with the inventories or reports of administrators and executors as soon as filed with the county clerk, for the purpose of ascertaining whether any personal property of any estate is subject under this chapter to back assessment or reassessment. In case such examination shows any personalty subject to such back assessment or reassessment, the clerk shall so report to the county trustee, who shall back assess or reassess the personalty under this part, and add the penalty previously designated.
Acts 1907, ch. 602, § 30; Shan., § 823a7; Code 1932, § 1506; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A. (orig. ed.), § 67-1211.
Cited: Hamilton Nat'l Bank v. Richardson, 42 Tenn. App. 486, 304 S.W.2d 504, 1957 Tenn. App. LEXIS 93 (Tenn. Ct. App. 1957).
67-1-1010. Failure or refusal of clerk or trustee to perform duties.
In case the county clerk or county trustee fails or refuses to perform the duty imposed, such clerk or trustee shall become liable on the clerk's or trustee's official bond for the amount of taxes that might have been recovered had the duty been properly performed, together with the penalty of fifteen percent (15%) added to the taxes, the liability and penalty to be recovered in any court of record or before any general sessions court, at the instance of any district attorney general or proper agent of the state, by suit or by motion, on five (5) days' notice.
Acts 1907, ch. 602, § 30; Shan., § 823a8; mod. Code 1932, § 1507; modified; impl. am. Acts 1978, ch. 934, §§ 22, 36; impl. am. Acts 1979, ch. 68, § 3; T.C.A. (orig. ed.), § 67-1212.
67-1-1011. Records and reports.
- Every collector of taxes, making assessments and collecting taxes under this chapter, shall keep a book upon which the collector shall enter all property assessed by the collector, giving a description of the property so assessed, the amount of taxes so collected and, upon the collector's final settlement with the commissioner and with the county legislative body, shall file a copy of the settlement, under oath, stating that the copy contains a true and a perfect list of all taxes so collected by the collector.
-
Should the property in any district or ward, or any part of the district or ward, escape assessment or fail in any manner to be assessed, the trustee is required to assess the property at its actual cash value, and report the amount of the taxes collected on the property to the county legislative body as “picked up” taxes at the same time the trustee reports lists of errors, etc., giving a description of the property, district, or ward in which located.
- The county clerk is required to certify copies of the report to the officers with whom the trustee is required by law to settle.
- The trustee shall account for the property in making final settlements of the trustee's various accounts, but no assessment authorized by this part shall be made for any other years than for the years in which the assessments shall be made and for three (3) years preceding the assessment.
Acts 1879, ch. 79, § 5; 1907, ch. 602, § 38; Shan., §§ 819, 820; Code 1932, §§ 1491, 1492; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; impl. am. Acts 1978, ch. 934, §§ 7, 22, 36; T.C.A. (orig. ed.), §§ 67-1218, 67-1219.
Part 11
Challenges to Back Assessments or Reassessments [Repealed]
67-1-1101 — 67-1-1104. [Repealed.]
Compiler's Notes. Former title 67, ch. 1, part 11, §§ 67-1-1101 — 67-1-1104 (Acts 1879, ch. 79, §§ 1-4; 1883, ch. 181, § 1; 1885, ch. 23, § 2; Shan. §§ 815-818; Code 1932, §§ 1487-1490; T.C.A. (orig. ed.) §§ 67-1214 — 67-1217), concerning taxpayer challenges to back assessments or reassessments, was repealed by Acts 1993, ch. 315, § 14, effective May 17, 1993.
Part 12
Enforcement by Distress Warrant
67-1-1201. Issuance of warrant.
- An officer charged with the duty of collecting state revenues is empowered and authorized to issue a distress warrant for the collection of any state taxes, fees, fines, interest, penalties or other revenues, whenever in the officer's discretion the collecting officer deems it necessary to issue a distress warrant to safeguard the revenues of the state.
- The distress warrant may be addressed and delivered to the sheriff, any deputy sheriff or constable of the county in which the taxpayer has the taxpayer's office or principal place of business, or to the sheriff or any deputy sheriff or constable of any county in which the collecting officer has reason to believe property of such taxpayer may be found.
Acts 1941, ch. 36, § 1; C. Supp. 1950, § 1613.6 (Williams, § 1613.11); T.C.A. (orig. ed.), § 67-2201.
Cross-References. Distress tax on gift sales, § 67-8-113.
Distress warrant on income taxes, § 67-2-116.
Distress warrant on property taxes, § 67-5-1333.
Tax Enforcement Procedures Act, title 67, ch. 1, part 14.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
NOTES TO DECISIONS
1. Exceptions.
There is no exception in T.C.A. § 67-1-1201 or § 67-1-1202 that would exempt indigent persons from execution of a distress warrant; however, a different case may be presented if the distress warrant was facially invalid or otherwise illegal. Fletcher v. State, 9 S.W.3d 103, 1999 Tenn. LEXIS 678 (Tenn. 1999).
Decisions Under Prior Law
1. Withdrawal of Process.
The comptroller of the state having placed a distress warrant in the hands of a sheriff, may withdraw it before a levy is made, and the sheriff is not entitled to commissions on the amount paid by the taxpayer under protest. Hill v. Allen, 39 S.W. 892, 1896 Tenn. Ch. App. LEXIS 100 (Tenn. Ch. App. Dec. 19, 1896).
Collateral References.
Enforcement against tax exempt property of tax on nonexempt property or on owner of tax exempt property. 159 A.L.R. 461.
Sale under distress warrant, right of officer conducting, to refuse to accept best bid because inadequate. 110 A.L.R. 1077.
Taxation 371
67-1-1202. Execution of warrant.
- The sheriff, any deputy sheriff or constable into whose hands such warrant may come may execute it by distraint and sale of personal property belonging to the taxpayer. The proceedings with respect to the sale shall be the same as are provided by law for proceedings under an execution at law from a court of record. The executing officer shall be entitled to the same fees, commissions, and necessary expenses of removing and keeping the property distrained as in the case of an execution from a court of record.
- It is the duty of the sheriff, any deputy sheriff or constable into whose hands such distress warrant may come, to make a return on the distress warrant within thirty (30) days from the date received. In the event any such officer fails to make the return as required by this section, the officer and the officer's bondspersons shall be personally liable for the amount set forth in the distress warrant.
Acts 1941, ch. 36, § 2; C. Supp. 1950, § 1613.7 (Williams, § 1613.12); T.C.A. (orig. ed.), § 67-2202.
NOTES TO DECISIONS
1. Exceptions.
There is no exception in T.C.A. § 67-1-1201 or § 67-1-1202 that would exempt indigent persons from execution of a distress warrant; however, a different case may be presented if the distress warrant were facially invalid or otherwise illegal. Fletcher v. State, 9 S.W.3d 103, 1999 Tenn. LEXIS 678 (Tenn. 1999).
67-1-1203. Garnishments.
Garnishments may be issued and executed by the sheriff, any deputy sheriff or constable in the same manner as garnishments are issued and executed on executions at law. Before issuing a garnishment, the sheriff, any deputy sheriff or constable shall cause such distress warrant to be entered on the docket of any court of general sessions or circuit court of the county, and the procedure in the execution of such garnishment shall be the same as now provided by the statute for the execution of garnishments in civil cases.
Acts 1941, ch. 36, § 2; C. Supp. 1950, § 1613.7 (Williams, § 1613.12); impl. am. Acts 1979, ch. 68, § 3; T.C.A. (orig. ed.), § 67-2203.
Cross-References. Attachment by garnishment, title 29, ch. 7.
Execution, garnishment, title 26, ch. 2.
Garnishment to collect delinquent taxes, §§ 67-5-2003, 67-5-2004.
67-1-1204. Levy on real estate.
If the officer cannot find personal property to satisfy the distress warrant, the officer may levy the distress warrant upon any real estate in the officer's county belonging to the taxpayer. If levying on land, the distress warrant, together with the officers' return on the distress warrant, shall be returned to the circuit court of the county in which the land lies, and the land shall be condemned and sold under the orders of the circuit court in the same manner as in the case of the levy on land of an execution issued by a general sessions court.
Acts 1941, ch. 36, § 3; C. Supp. 1950, § 1613.8 (Williams, § 1613.13); impl. am. Acts 1979, ch. 68, § 3; T.C.A. (orig. ed.), § 67-2204.
Cross-References. Levy of execution, title 26, ch. 3.
Tax Enforcement Procedures Act, title 67, ch. 1, part 14.
Law Reviews.
The Tennessee Court System — Circuit Court (Frederic S. Le Clercq), 8 Mem. St. U.L. Rev. 241 (1978).
67-1-1205. Levy on equitable interest.
- If the officer cannot find personal or real property belonging to the taxpayer to satisfy the distress warrant, the officer shall levy the distress warrant upon any equitable interest owned by the taxpayer in either personal or real property in the officer's county, the levy to be made on the equitable interest owned in personal property first and on the equitable interest owned in real property last.
- The officer shall serve a copy of the distress warrant levied upon the equitable interest, together with the officer's return on the distress warrant, on the holder of the legal title and the secured creditor of record, which may be done by registered mail, notifying them of the intention to request an order of sale by the chancery court. Thereafter, the officer shall return the distress warrant, which shall show notice to the legal title holder and to the secured creditor of record of the levy and intent to return, to the chancery court of the county in which the equitable interest was levied upon, and the equitable interest or the property, whichever is deemed necessary by the court, shall be sold under the orders of that court for the satisfaction of any indebtedness that is a prior lien on the property and for the satisfaction of the distress warrant.
- The distress warrant and return, together with any reply to the warrant, shall be heard before the chancellor after the second rule day after the distress warrant has been returned, the hearing on the distress warrant, which shall be subject to review by appeal, to have precedence over all other causes except those affecting state revenue. At the hearing, such orders of reference or of sale or otherwise, as may be necessary, shall be made to the end that the creditor's right shall be protected and the tax due the state may be collected as expeditiously as possible. The legality of the tax cannot be inquired into in this proceeding for any reason, the remedy of the taxpayer being expressly limited to that afforded under part 9 of this chapter.
- Nothing in this part shall allow a levy on estates held in realty by a husband and wife as tenants by the entireties, unless liability for the tax is joint with the husband and wife.
Acts 1949, ch. 186, § 1; C. Supp. 1950, § 1613.9 (Williams, § 1613.13a); T.C.A. (orig. ed.), § 67-2205.
Cross-References. Certified mail in lieu of registered mail, § 1-3-111.
67-1-1206. Remedy supplemental.
The remedy and procedure prescribed in this part is cumulative to any other remedies or procedures now prescribed with reference to any particular state taxes, fees, fines, penalties, interest and revenues. No other remedy prescribed by any particular taxing statute shall be held to be exclusive or to prevent the collecting officer from proceeding with the collection of the revenues under this part.
Acts 1941, ch. 36, § 4; C. Supp. 1950, § 1613.10 (Williams, § 1613.14); T.C.A. (orig. ed.), § 67-2206.
Part 13
General Powers to Obtain Evidence
67-1-1301. Power of commissioner and comptroller of the treasury to determine correctness of taxes and fees.
For the purpose of ascertaining the correctness of any tax return, making an assessment where no tax return has been made, determining the liability of any person, firm or corporation for any taxes or fees of any nature whatsoever that may be due or owing to the state of Tennessee, or for determining the liability at law or in equity of any transferee or fiduciary of any person, firm or corporation with respect of any taxes or fees due or owing to the state of Tennessee, or collecting any such liability, the commissioner of revenue, the comptroller of the treasury, or their duly authorized representatives, are authorized to:
- Examine any books, papers, records or other data that may be relevant or material to such inquiry;
- Summon the person, firm or corporation liable for taxes or fees or any officer or employee of such person, firm or corporation, or any person, firm or corporation having possession, custody or care of books of account containing entries relating to the business of the person, firm or corporation liable for taxes or fees, or any other person, firm or corporation the commissioner, the comptroller of the treasury, or their duly authorized representatives, may deem proper, to appear before the commissioner, comptroller of the treasury, or their duly authorized representatives, at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry; and
- Take such testimony of the person, firm or corporation concerned, under oath, as may be relevant to such inquiry.
Acts 1963, ch. 90, § 1; T.C.A., § 67-5501.
Cross-References. Obtaining evidence, § 67-1-1437.
Law Reviews.
Administrative Subpoenas and the Grand Jury: Converging Streams of Criminal and Civil Compulsory Process (Graham Hughes), 47 Vand. L. Rev. 573 (1994).
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
NOTES TO DECISIONS
1. Construction with Other Law.
T.C.A. §§ 67-1-1301, 67-1-1302 and 67-1-1437 are less specific and less restrictive than title 45, ch. 10, and thus have been impliedly amended by that chapter. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).
2. Form of Summons.
Tennessee Const., art. VI, § 12 does not require that an investigative summons be signed by a clerk of an issuing court. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).
3. Unreasonable Demands.
Whether issued pursuant to T.C.A. § 67-1-1301, § 67-1-1302, § 67-1-1437 or title 45, ch. 10, if the subpoenaed party is of the opinion the requests contained in the demand are unreasonable, he can refuse to comply with the demand and raise the issue as a defense to any action brought by the issuer to enforce compliance, and where contested, the production of documents pursuant to an administrative subpoena cannot be compelled without approval of the chancellor. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).
Collateral References. Taxation 371
67-1-1302. Persons subject to subpoena power.
It is the declared intent of this part that all persons, firms or corporations whatsoever having any knowledge pertaining to liabilities for taxes or fees due the state of Tennessee, and any books, papers, records or other data pertaining to liabilities for taxes or fees due the state of Tennessee, shall be subject to the subpoena power granted under this part.
Acts 1963, ch. 90, § 2; T.C.A., § 67-5502.
Law Reviews.
Administrative Subpoenas and the Grand Jury: Converging Streams of Criminal and Civil Compulsory Process (Graham Hughes), 47 Vand. L. Rev. 573 (1994).
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
NOTES TO DECISIONS
1. Construction with Other Law.
T.C.A. §§ 67-1-1301, 67-1-1302, and 67-1-1437 are less specific and less restrictive than title 45, ch. 10, and thus have been impliedly amended by that chapter. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).
2. Unreasonable Demands.
Whether issued pursuant to T.C.A. § 67-1-1301, § 67-1-1302, § 67-1-1437 or title 45, ch. 10, if the subpoenaed party is of the opinion the requests contained in the demand are unreasonable, he can refuse to comply with the demand and raise the issue as a defense to any action brought by the issuer to enforce compliance, and where contested, the production of documents pursuant to an administrative subpoena cannot be compelled without approval of the chancellor. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).
67-1-1303. Failure to appear when subpoenaed — Penalty.
Failure of any person, firm or corporation so subpoenaed to attend shall be certified by the commissioner of revenue or the comptroller of the treasury to the chancery court in whose judicial district such person, firm or corporation resides, and such chancery court shall exercise authority granted by law in the treating of contempt of court matters, including those powers granted in §§ 29-9-103 — 29-9-105; all to the end that the person, firm or corporation shall be compelled to appear at a time and place to be named by the chancery court.
Acts 1963, ch. 90, § 3; T.C.A., § 67-5503.
Cross-References. Failure of witness to honor comptroller of the treasury's subpoena, § 8-4-204.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1304. Failure to testify when subpoenaed — Penalty.
Any person, firm or corporation who appears as summoned, but upon appearance refuses to testify on matters not privileged by law, shall be punished as prescribed in § 67-1-1303.
Acts 1963, ch. 90, § 4; T.C.A., § 67-5504.
Cross-References. Failure of witness to testify for comptroller of the treasury § 8-4-205.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1305. Compensation of witness.
Any persons, firms or corporations so subpoenaed shall be reimbursed necessary traveling expenses from their homes to the place of hearing and other necessary expenses, as determined by the commissioner or the comptroller of the treasury, and those persons, firms or corporations not employees of the state shall be paid at the rate of five dollars ($5.00) per day for each day or portion of a day in attendance at such hearings.
Acts 1963, ch. 90, § 5; T.C.A., § 67-5505.
Cross-References. Witness' traveling expenses and compensation when subpoenaed by comptroller of the treasury, § 8-4-206.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
NOTES TO DECISIONS
1. Construction with Other Law.
The provisions of T.C.A. § 67-1-1305 and § 45-10-109, relating to bearing expenses of the production of records subject to a subpoena, are not necessarily inconsistent. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).
Part 14
Tax Enforcement Procedures Act
67-1-1401. Short title.
This part shall be known and may be cited as the “Tax Enforcement Procedures Act.”
Acts 1972, ch. 762, § 1; T.C.A., § 67-6001.
Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 961.
Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 53.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Attorney General Opinions. Enforcement of Kingsport hotel/motel tax. OAG 13-97, 2013 Tenn. AG LEXIS 98 (11/27/13).
Cited: Brown Oil Co. v. Johnson, 689 S.W.2d 149, 1985 Tenn. LEXIS 509 (Tenn. 1985); Soloff v. Dollahite, 779 S.W.2d 57, 1989 Tenn. App. LEXIS 499 (Tenn. Ct. App. 1989).
NOTES TO DECISIONS
1. Purpose of Chapter.
The Tax Enforcement Procedures Act, § 67-1-1401 et seq., was designed to reorganize, modernize and make systematic procedures for the collection of state taxes and the enforcement of liens. Barrow v. Tennessee Dep't of Revenue, 647 S.W.2d 232, 1983 Tenn. LEXIS 628 (Tenn. 1983).
2. Construction with Other Law.
To the extent that the procedures for obtaining financial records from a financial institution are more exacting and restrictive, title 45, ch. 10 impliedly amends this previously enacted part, regardless of T.C.A. § 67-1-1402. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).
Title 45, ch. 10, has more specific and restrictive requirements for issuing subpoenas than title 67, ch. 1, part 14. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).
Collateral References. Taxation 371
67-1-1402. Application and construction.
- This part shall apply to every public tax, license or fee, and/or any penalty or interest payable thereon, levied under any existing or later enacted law that is codified in this or any other title and is collectible by the commissioner of revenue.
- The purpose of this part is to supplement and clarify existing provisions of the general law relating to the enforcement of state taxes and to compile in a single part the principal enforcement procedures previously enacted and codified in numerous other chapters of this title.
- In the event of any conflict between the provisions of this part and those of any other specific statutory provisions contained elsewhere in this title or in any other title, it is declared to be the legislative intent that, to the extent such other specific provisions are inconsistent with or different from this part, the provisions of this part shall prevail. There shall be preserved and prevail over this part such other provisions of this title or of any other title that govern, restrict, or confer special authority or powers upon the commissioner or the commissioner's delegate in the exercise of each of their responsibilities to enforce the collection of public taxes and that are not inconsistent with the provisions of this part, such as, but not limited to, such other provisions relating to confiscation and/or seizure and sale of contraband beer and/or other such beverages and tobacco products as set forth in title 57, chapter 2, and chapter 4, part 10 of this title.
Acts 1972, ch. 762, § 1; T.C.A., § 67-6002.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Cited: Oxford Invest., Inc. v. Mashburn, 729 S.W.2d 96, 1985 Tenn. App. LEXIS 2949 (Tenn. Ct. App. 1985); Soloff v. Dollahite, 779 S.W.2d 57, 1989 Tenn. App. LEXIS 499 (Tenn. Ct. App. 1989).
NOTES TO DECISIONS
1. Construction with Other Law.
To the extent that the procedures for obtaining financial records from a financial institution are more exacting and restrictive, title 45, ch. 10 impliedly amends this part, regardless of T.C.A. § 67-1-1402. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).
67-1-1403. Lien for taxes in favor of state.
- If any person liable to pay any state tax or fee administered by the commissioner of revenue neglects or refuses to pay the tax or fee, the amount, including additionally incurred taxes, fees, penalties, interest, and costs, shall be a lien in favor of the state. Such lien shall arise at the time an initial proposed assessment of any liability is made, and it shall continue until the amounts of the original proposed assessment and any subsequent assessments of liability for taxes, fees, penalties, interest, or costs are fully paid. The lien shall attach to all interests in property, either real or personal, tangible or intangible, in this state then owned or subsequently acquired by the person against whom the proposed assessment is made. For purposes of this section, the definition of “assessment” is as provided in this part and the rules promulgated pursuant to this part.
- The commissioner shall cause a notice of such lien to be recorded in the office of the county register of deeds in the county or counties in which the taxpayer's business or residence is located, or in any county in which the taxpayer has an interest in property, and such notice shall be recorded in the same manner as liens are recorded in that office. There shall be no fees collected by the county register at the time such a notice is recorded, but the county register shall extend credit to the department for such fees as are chargeable, and submit the county register's bill at the end of each month to the department in order to obtain payment. Such recordation shall constitute notice of both the original proposed assessment and all subsequent assessments of liability against the same taxpayer. Upon request, the department shall disclose the specific amount of liability at a given date to any interested party legally entitled to such information.
-
The lien of the state of Tennessee for taxes or fees, or both, shall be superior to all liens and security interests created under Tennessee law except:
- County and municipal ad valorem taxes;
- Deeds of trust that are recorded prior to the recordation of notice of the state lien;
- Security interests created pursuant to Article 9 of the Uniform Commercial Code, compiled in title 47, chapter 9, that require filing for perfection and that are properly filed prior to recordation of the notice of the state lien;
- Security interests perfected under the Uniform Commercial Code without filing, as provided in title 47, chapter 9, that are properly perfected prior to recordation of the notice of the state lien; and
- Vendors' liens on real estate provided for in title 66, chapter 10 that are recorded prior to the recordation of notice of the state lien.
- Notwithstanding any other law to the contrary, the lien for taxes imposed by chapter 8, parts 2-5 of this title shall arise at the date of death, and the lien for taxes imposed by chapter 8, part 1 of this title shall arise at the date of gift and shall attach to any interest in property transferred and to any interest in property acquired in exchange or substitution for any property transferred.
- Nothing in this section shall be interpreted to give the state priority over any deed of trust or any security interest perfected under the Uniform Commercial Code, compiled in title 47, that is filed prior to the filing of the notice of state tax lien, regardless of when such taxes are assessed.
-
- The notice of lien required to be filed under subsection (b), or any renewal of the lien, shall be effective for ten (10) years from the date of filing. Any such notice of lien that has remained on file for more than ten (10) years, without renewal, shall be null and void against all persons.
- The commissioner may cause a renewal of such notice of lien to be filed prior to the expiration of ten (10) years from the filing of the original notice, if a lien in favor of the state under subsection (a) continues to exist against the taxpayer. If such renewal is filed prior to the expiration of the ten-year period, the priority of the state lien for taxes covered by the notice shall continue to be determined under subsection (c), based on the date of filing of the original notice of lien.
- Any right to redemption referred to in this part shall not be affected by subsection (f).
Acts 1978, ch. 686, § 1; T.C.A., § 67-6046; Acts 1984, ch. 781, § 1; 1985, ch. 453, § 7; 1994, ch. 640, § 1; 2000, ch. 846, § 30; 2014, ch. 854, § 4.
Compiler's Notes. Acts 1994, ch. 640, § 3 provided that the amendment by that act, which added (f) and (g), is applicable to all liens existing on and after March 21, 1994.
Amendments. The 2014 amendment, effective January 1, 2015, inserted “proposed” between “initial” and “assessment” and between “original” and “assessment” in the second sentence of subsection (a); inserted “proposed” between “the” and “assessment” in the third sentence of subsection (a); and inserted “proposed” between “original” and “assessment” in the third sentence of subsection (b).
Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.
Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 982.
Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 45.
Law Reviews.
1985 Tennessee Survey: Selected Developments in Tennessee Law, 53 Tenn. L. Rev. 389 (1986).
Cited: Barrow v. Tennessee Dep't of Revenue, 647 S.W.2d 232, 1983 Tenn. LEXIS 628 (Tenn. 1983); Wicker v. Comm'r, Tenn. Dep't of Revenue, 342 S.W.3d 35, 2010 Tenn. App. LEXIS 397 (Tenn. Ct. App. June 23, 2010).
NOTES TO DECISIONS
1. Construction.
Although a wife who signed an assumption of liability agreement assuming liability for her husband's business debts was not a “dealer” as defined in T.C.A. § 67-6-102, she was a “person liable to pay any state tax” within the meaning of T.C.A. § 67-1-1403(a). Brown Oil Co. v. Johnson, 689 S.W.2d 149, 1985 Tenn. LEXIS 509 (Tenn. 1985).
2. Applicability.
The description in T.C.A. § 67-1-1403(c) of the interests that will be defeated by a state tax lien does not include the interest of a holder in due course of a negotiable instrument. Soloff v. Dollahite, 779 S.W.2d 57, 1989 Tenn. App. LEXIS 499 (Tenn. Ct. App. 1989).
3. Priority.
Local filing of notice of a tax lien under T.C.A. § 67-1-1403 defeats a bankruptcy trustee's power under 11 U.S.C. § 545(2). Newport v. Tennessee Dep't of Revenue (In re Boat Land Co.), 169 B.R. 47, 1994 Bankr. LEXIS 943 (Bankr. M.D. Tenn. 1994).
67-1-1404. “Levy” defined.
“Levy,” as used in this title, includes the power of distraint and seizure by any means.
Acts 1972, ch. 762, § 1; 1981, ch. 65, § 2; T.C.A., § 67-6004(a).
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 53.
Cited: Wicker v. Comm'r, Tenn. Dep't of Revenue, 342 S.W.3d 35, 2010 Tenn. App. LEXIS 397 (Tenn. Ct. App. June 23, 2010).
67-1-1405. Collection by levy authorized.
If any person liable to pay any tax neglects or refuses to pay the tax within ten (10) days after notice and demand, it shall be lawful for the commissioner or the commissioner's delegate to collect the tax, and any further sum as shall be sufficient to cover the expenses of the levy, by levy upon all property, and rights to property, belonging to the person or on which there is a lien provided by law for the payment of the tax.
Acts 1972, ch. 762, § 1; 1981, ch. 65, § 1; T.C.A., § 67-6003.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 53.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Attorney General Opinions. Enforcement of Kingsport hotel/motel tax. OAG 13-97, 2013 Tenn. AG LEXIS 98 (11/27/13).
67-1-1406. Notice and demand.
- If the commissioner or the commissioner's delegate makes a finding that the collection of such tax is in jeopardy, notice and demand for immediate payment of such tax may be made by the commissioner or the commissioner's delegate, and, upon failure or refusal to pay such tax, collection of the tax by levy shall be lawful without regard to the ten-day period provided in § 67-1-1405.
- Before a levy is made under § 67-1-1405 upon the salary or wages of a person with respect to any unpaid tax, the commissioner or the commissioner's delegate shall notify the person in writing of an intention to do so. The notice shall be given not less than ten (10) days before the date of the levy by delivering it in person, or by leaving it at the dwelling or usual place of business of the person, or by mailing it to the person's last known address.
- The ten-day period provided for in subsection (b) does not apply to a levy, if the commissioner or the commissioner's delegate has made a finding pursuant to subsection (a) that the collection of the tax is in jeopardy.
Acts 1972, ch. 762, § 1; 1981, ch. 65, §§ 1, 2; T.C.A., §§ 67-6003, 67-6004(b)(1), (c).
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1407. Property subject to levy — Exemptions.
- A levy shall extend only to property possessed and obligations existing at the time of the levy. In any case in which the commissioner or the commissioner's delegate may levy upon property or rights to property, the commissioner or the commissioner's delegate may seize and sell such property or rights to property, whether real or personal, tangible or intangible. Personal property exemptions provided in title 26, chapter 2 shall not be applicable.
-
-
Enumeration. There shall be exempt from levy:
- Wearing Apparel and School Books. Such items of wearing apparel and such school books as are necessary for the taxpayer or for members of the taxpayer's family;
- Fuels, Provisions, Furniture, and Personal Effects. If the taxpayer is the head of the family, so much of the fuel, provisions, furniture, and personal effects in the taxpayer's household, and of the arms for personal use, livestock, and poultry of the taxpayer, as does not exceed five hundred dollars ($500) in value;
- Books and Tools of a Trade, Business, or Profession. So many of the books and tools necessary for the trade, business or profession of the taxpayer as do not exceed in the aggregate two hundred fifty dollars ($250) in value; and
- Unemployment Benefits. Any amount payable to an individual with respect to the individual's unemployment, including any portion of the amount payable with respect to dependents, under the unemployment compensation law of the state of Tennessee.
- Appraisal. The officer seizing property of the type described in subdivision (b)(1) shall appraise and set aside to the owner the amount of such property declared to be exempt. If the taxpayer objects at the time of the seizure to the valuation fixed by the officer making the seizure, the commissioner or the commissioner's delegate shall summon three (3) disinterested individuals who shall make the valuation.
- No Other Property Exempt. Notwithstanding any other law of the state of Tennessee, no property or rights to property shall be exempt from levy other than the property specifically made exempt by subdivision (b)(1).
-
Enumeration. There shall be exempt from levy:
Acts 1972, ch. 762, §§ 1, 2; 1981, ch. 65, § 2; T.C.A., § 67-6004(a), 67-6007.
Cross-References. Homestead Act, title 7, ch. 66.
Employment security law, title 50, ch. 7.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1408. Levy on pay — Duration, release, and renewal.
- The effect of a levy on salary or wages payable to or receivable by a taxpayer shall be continuous from the date a levy is made until the liability out of which the levy arose is satisfied or becomes unenforceable by reason of lapse of time, or until the expiration of the employer's payroll period that ends immediately prior to three (3) calendar months after the levy is made, whichever occurs first.
- With respect to a levy made under this section, the commissioner or the commissioner's delegate shall promptly release the levy when the liability out of which it arose is satisfied or becomes unenforceable by reason of lapse of time, and shall promptly notify the person upon whom the levy was made that it has been released.
- If, pursuant to subsection (a), the period of effectiveness for a levy expires prior to the time the liability out of which the levy arose is satisfied or becomes unenforceable by reason of lapse of time, the commissioner or the commissioner's delegate may subsequently proceed to levy on salary or wages in like manner as often as may be necessary until the liability out of which the levy arose is fully satisfied or becomes unenforceable by reason of lapse of time.
Acts 1972, ch. 762, § 1; 1981, ch. 65, § 2; T.C.A., § 67-6004(b)(2)-(b)(4).
67-1-1409. Successive seizures under levy.
Whenever any property or right to property upon which levy has been made by virtue of § 67-1-1405 is not sufficient to satisfy the claim of the state for which levy is made, the commissioner or the commissioner's delegate may, thereafter, as often as may be necessary, proceed to levy in like manner upon any other property liable to levy of the person against whom such claims exist, until the amount due from the taxpayer, together with all expenses, is fully paid.
Acts 1972, ch. 762, § 1; T.C.A., § 67-6005.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1410. Levy — Padlocking premises.
- If the commissioner or the commissioner's delegate, at the time of the levy, shall determine that it is in the best interest of both the state and taxpayer, the commissioner or the commissioner's delegate may place padlocks on the doors of any business enterprise that is delinquent in filing and/or paying state taxes. The commissioner or the commissioner's delegate shall also post notices of levy and distraint on each of the doors so padlocked.
- If, within three (3) working days, the tax deficiency has not been satisfied or satisfactory arrangements for payment made, the commissioner or the commissioner's delegate shall obtain written permission from the owner of the premises, or remove the property levied upon from the premises.
- It is a Class C misdemeanor for anyone to enter the padlocked premises without prior approval of the commissioner or the commissioner's delegate.
Acts 1972, ch. 762, § 1; T.C.A., § 67-6006; Acts 1989, ch. 591, § 113.
Cross-References. Penalty for Class C misdemeanor, § 40-35-111.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1411. Levy — Taxpayer's bond pending appeal.
In the event the person against whom the levy and distraint, as provided in this part, has appealed the ruling of the commissioner on the tax sought to be collected or a suit contesting the collection of the subject tax is pending in a court of competent jurisdiction, the person shall have the right to post bond equaling the amount of the tax liability in lieu of payment until the appeal or suit is finalized. Further, if the taxpayer is successful in the taxpayer's appeal, then the state shall pay the taxpayer interest at the rate of six percent (6%) per annum on the amount of tax liability in question.
Acts 1972, ch. 762, § 1; T.C.A., § 67-6008.
Cross-References. Payment of tax under protest, title 67, ch. 1, part 9.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
NOTES TO DECISIONS
1. Remedy Not Exclusive.
Court rejected contention only remedy taxpayer had to avoid levy was to pay tax under protest or post bond under this section while taxpayer was exhausting his administrative remedies. Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983).
67-1-1412. Levy — Surrender of property required.
- Requirement. Any person in possession of, or obligated with respect to, property or rights to property subject to levy upon which a levy has been made shall, upon demand of the commissioner or the commissioner's delegate, surrender such property or rights, or discharge such obligation, to the commissioner or the commissioner's delegate, except such part of the property or rights as is, at the time of such demand, subject to an attachment or execution under any judicial process.
-
Enforcement of Levy.
- Extent of Personal Liability. Any person who fails or refuses to surrender any property or rights to property, subject to levy, upon demand by the commissioner or the commissioner's delegate, shall be liable in that person's own person and estate to the state in a sum equal to the value of the property or rights not so surrendered, but not exceeding the amount of taxes for the collection of which such levy has been made, together with costs and interest on such sum at the rate of six percent (6%) per annum from the date of such levy. Any amount other than costs recovered under this subdivision (b)(1) shall be credited against the tax liability for the collection of which such levy was made.
- Penalty for Violation. In addition to the personal liability imposed by subdivision (b)(1), if any person required to surrender property or rights to property fails or refuses to surrender such property or rights to property without reasonable cause, such person shall be liable for a penalty equal to fifty percent (50%) of the amount recoverable under subdivision (b)(1). No part of such penalty shall be credited against the tax liability for the collection of which such levy was made. Such amount shall be paid into the general fund.
- Effect of Honoring Levy. Any person in possession of, or obligated with respect to, property or rights to property subject to levy upon which a levy has been made who, upon demand by the commissioner or the commissioner's delegate, surrenders such property or rights to property or discharges such obligation to the commissioner or the commissioner's delegate or who pays a liability under subdivision (b)(1) shall be discharged from any obligation or liability to the delinquent taxpayer with respect to such property or rights to property arising from such surrender or payment. In the case of a levy that is satisfied pursuant to subsection (b), such person shall also be discharged from any obligation or liability to any beneficiary arising from such surrender or payment.
- “Person” Defined. “Person,” as used in subsection (a), includes an officer or employee of a corporation or a member or employee of a partnership who, as such officer, employee or member, is under a duty to surrender the property or rights to property, or to discharge the obligation.
Acts 1972, ch. 762, § 2; T.C.A., § 67-6009.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1413. Levy — Production of books.
If a levy has been made or is about to be made on any property or right to property, any person having custody or control of any books or records, containing evidence or statements relating to the property or right to property subject to levy shall, upon demand of the commissioner or the commissioner's delegate, exhibit such books or records to the commissioner or the commissioner's delegate.
Acts 1972, ch. 762, § 3; T.C.A., § 67-6010.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1414. Notice of seizure.
As soon as practicable after seizure of property, notice in writing shall be given by the commissioner or the commissioner's delegate to the owner of the property, or, in the case of personal property, the possessor of the personal property, or shall be left at the owner's or possessor's usual place of abode or business if the owner or possessor has such within the state. If the owner cannot be readily located, or has no dwelling or place of business within the state, the notice may be mailed to the owner's last known address. Such notice shall specify the sum demanded and shall contain, in the case of personal property, an account of the property seized and, in the case of real property, a description, with reasonable certainty, of the property seized.
Acts 1972, ch. 762, § 4; T.C.A., § 67-6011.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 53.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1415. Notice of sale.
The commissioner or the commissioner's delegate shall, as soon as practicable after the seizure of the property, give notice to the owner, in the manner prescribed in § 67-1-1414. The notice shall be given not less than thirty (30) days before the date the property seized is sold, and cause a notification to be published in some newspaper published or generally circulated within the county in which such seizure is made, or if there is no newspaper published or generally circulated in such county, post such notice at the county courthouse, and in not less than two (2) other public places. Such notice shall specify the property to be sold, and the time, place, manner and conditions of the sale of the property. Whenever levy is made without regard to the ten-day period provided in § 67-1-1405, public notice of sale of the property seized shall not be made within such ten-day period unless § 67-1-1419, relating to sale of perishable goods, is applicable.
Acts 1972, ch. 762, § 4; T.C.A., § 67-6012; Acts 1992, ch. 857, § 4.
Compiler's Notes. Acts 1992, ch. 857, § 6 provided that the amendment by that act, in the first sentence, requiring notice be given not less than 30 days before the date the property seized is sold, applies only to the state government of Tennessee.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 53.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1416. Sale of indivisible property.
If any property liable to levy is not divisible so as to enable the commissioner or the commissioner's delegate by sale of a part of the property to raise the whole amount of the tax and expenses, the whole of such property shall be sold.
Acts 1972, ch. 762, § 4; T.C.A., § 67-6013.
67-1-1417. Time and place of sale.
The time of sale shall not be less than ten (10) days nor more than forty (40) days from the time of giving public notice under § 67-1-1415. The place of sale shall be within the county in which the property is seized, except by special order of the commissioner or the commissioner's delegate.
Acts 1972, ch. 762, § 4; T.C.A., § 67-6014.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1418. Manner and conditions of sale.
- Minimum Price. Before the sale, the commissioner or the commissioner's delegate shall determine a minimum price for which the property shall be sold, and if no person offers for such property at the sale the amount of the minimum price, the property shall be declared to be purchased at such price for the state; otherwise, the property shall be declared to be sold to the highest bidder. In determining the minimum price, the commissioner or the commissioner's delegate shall take into account the expense of making the levy and sale.
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Additional Rules Applicable to Sale. The commissioner shall by regulations prescribe the manner and other conditions of the sale of property seized by levy. If one (1) or more alternative methods or conditions are permitted by regulations, the commissioner or the commissioner's delegate shall select the alternatives applicable to the sale. Such regulations shall provide:
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That the sale shall not be conducted in any manner other than:
- By public auction;
- By public Internet auction; or
- By public sale under sealed bids;
- In the case of the seizure of several items of property, whether such items shall be offered separately, in groups, or in the aggregate; and whether, those items shall be sold under whichever method produces the highest aggregate amount;
- Whether the announcement of the minimum price determined by the commissioner or the commissioner's delegate may be delayed until the receipt of the highest bid;
- Whether payment in full shall be required at the time of acceptance of a bid, or whether a part of such payment may be deferred for such period, not to exceed one (1) month, as may be determined by the commissioner or the commissioner's delegate to be appropriate;
- The extent to which methods, including advertising, in addition to those prescribed in § 67-1-1415, may be used in giving notice of the sale; and
- Under what circumstances the commissioner or the commissioner's delegate may adjourn the sale from time to time, but such adjournments shall not be for a period to exceed in total one (1) month.
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That the sale shall not be conducted in any manner other than:
- Payment of Amount Bid. If payment in full is required at the time of acceptance of a bid and is not then and there paid, the commissioner or the commissioner's delegate shall forthwith proceed to again sell the property in the manner provided in this section. If the conditions of the sale permit part of the payment to be deferred, and if such part is not paid within the prescribed period, suit may be instituted against the purchaser for the purchase price of such part of the purchase price as has not been paid, together with interest at the rate of six percent (6%) per annum from the date of the sale; or, in the discretion of the commissioner or the commissioner's delegate, the sale may be declared by the commissioner or the commissioner's delegate to be null and void for failure to make full payment of the purchase price, and the property may again be advertised and sold as provided in §§ 67-1-1415, 67-1-1416 and this section. In the event of such readvertisement and sale, any new purchaser shall receive such property, or rights to property, free and clear of any claim or right of the former defaulting purchaser, of any nature whatsoever, and the amount paid upon the bid price by such defaulting purchaser shall be forfeited.
Acts 1972, ch. 762, § 4; T.C.A., § 67-6015; Acts 2005, ch. 499, § 9.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1419. Appraisal and disposition of perishable property.
If the commissioner or the commissioner's delegate determines that any property seized is liable to perish or become greatly reduced in price or value by keeping, or that such property cannot be kept without great expense, the commissioner or the commissioner's delegate shall appraise the value of such property and:
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Return to Owner. If the owner of the property can be readily found, the commissioner or the commissioner's delegate shall give such owner notice of such determination of the appraised value of the property. The property shall be returned to the owner if, within such time as may be specified in the notice, the owner:
- Pays to the commissioner or the commissioner's delegate an amount equal to the appraised value; or
- Gives bond in such form with such sureties, and, in such amount as the commissioner or the commissioner's delegate shall prescribe, to pay the appraised amount at such time as the commissioner or the commissioner's delegate determines to be appropriate in the circumstances.
- Immediate Sale. If the owner does not pay such amount or furnish such bond in accordance with this section, the commissioner or the commissioner's delegate shall as soon as practicable make public sale of the property in accordance with such regulations as may be prescribed by the commissioner.
Acts 1972, ch. 762, § 5; T.C.A., § 67-6016.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1420. Sale — Redemption of property.
- Before Sale. Any person whose property has been levied upon shall have the right to pay the amount due, together with the expenses of the proceeding, if any, to the commissioner or the commissioner's delegate at any time prior to the sale of the property, and, upon such payment, the commissioner or the commissioner's delegate shall restore such property to the person, and all further proceedings in connection with the levy on such property shall cease from the time of such payment.
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Redemption of Real Estate After Sale.
- Period. The owners of any real property sold as provided in §§ 67-1-1414 — 67-1-1418, their heirs, executors or administrators, or any person having any interest in the property, or a lien on the property, or any person in their behalf, shall be permitted to redeem the property sold, or any particular tract of such property, at any time within one hundred twenty (120) days after the sale of the property.
- Price. Such property or tract of property shall be permitted to be redeemed upon payment to the purchaser, or in case the purchaser cannot be found in the county in which the property to be redeemed is situated, then to the commissioner or the commissioner's delegate, for the use of the purchaser, the purchaser's heirs, or assigns, the amount paid by such purchaser and interest on the amount paid at the current composite prime rate as published by the federal reserve board as of the date of purchase.
- Record. When any lands sold are redeemed as provided in this section, the commissioner or the commissioner's delegate shall cause entry of the fact to be made upon the record provided for in § 67-1-1424, and such entry shall be evidence of such redemption.
Acts 1972, ch. 762, § 6; 1983, ch. 182, § 4; T.C.A., § 67-6017.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1421. Certificate of sale.
- In the case of property sold as provided in §§ 67-1-1414 — 67-1-1418, the commissioner or the commissioner's delegate shall give to the purchaser a certificate of sale upon payment in full of the purchase price. In the case of real property, such certificate shall set forth the real property purchased, for those taxes the property was sold, the name of the purchaser, and the price paid for the property.
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In all cases of sale pursuant to §§ 67-1-1414 — 67-1-1418 of property other than real property, the certificate of such sale:
- As Evidence. Shall be prima facie evidence of the right of the officer to make such sale and conclusive evidence of the regularity of the officer's proceedings in making the sale;
- As Conveyances. Shall transfer to the purchaser all right, title, and interest of the party delinquent in and to the property sold;
- As Authority for Transfer of Corporate Stock. If such property consists of stocks, shall be notice, when received, to any corporation, company, or association of such transfer, and shall be authority to such corporation, company, or association to record the transfer on its books and records in the same manner as if the stocks were transferred or assigned by the party holding the same, in lieu of any original or prior certificate, which shall be void, whether cancelled or not;
- As Receipts. If the subject of sale is securities or other evidences of debt, it shall be a good and valid receipt to the person holding the same, as against any person holding or claiming to hold possession of such securities or other evidences of debt; and
- As Authority for Transfer of Title to Motor Vehicle. If such property consists of a motor vehicle, shall be notice, when received, to any public official charged with the registration of title to motor vehicles, of such transfer and shall be authority to such official to record the transfer on the official's books and records in the same manner as if the certificate of title to such motor vehicle were transferred or assigned by the party holding the registration of title, in lieu of any original or prior certificate, which shall be void, whether cancelled or not.
Acts 1972, ch. 762, §§ 7, 8; T.C.A., §§ 67-6018, 67-6019.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1422. Sale of real property — Deed.
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- In the case of any real property sold as provided in §§ 67-1-1414 — 67-1-1418 and not redeemed in the manner and within the time provided in § 67-1-1420, the commissioner or the commissioner's delegate shall execute to the purchaser of such real property at such sale, upon the purchaser's surrender of the certificate of sale, a deed of the real property so purchased by the purchaser, reciting the facts set forth in the certificate.
- If real property is declared purchased by the state at a sale pursuant to §§ 67-1-1414 — 67-1-1418, the commissioner or the commissioner's delegate shall at the proper time execute a deed for the property and without delay cause such deed to be duly recorded in the proper registry of deeds.
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In the case of the sale of real property pursuant to §§ 67-1-1414 — 67-1-1418, the deed of such sale:
- As Evidence. The deed of sale given pursuant to subsection (a) shall be prima facie evidence of the facts stated in the deed; and
- As Conveyance of Title. If the proceedings of the commissioner or the commissioner's delegate as set forth have been substantially in accordance with the provisions of law, such deed shall be considered and operate as a conveyance of all the right, title, and interest the party delinquent had in and to the real property thus sold at the time the lien of the state attached to the property.
Acts 1972, ch. 762, §§ 7, 8; T.C.A., §§ 67-6020, 67-6021.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 61.
67-1-1423. Effect of certificate or deed on junior encumbrances.
A certificate of sale of personal property given or a deed to real property executed pursuant to § 67-1-1421 or § 67-1-1422 shall discharge such property from all liens, encumbrances, and titles over which the lien of the state with respect to which the levy was made had priority.
Acts 1972, ch. 762, § 8; T.C.A., § 67-6022.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1424. Records of sales and redemptions.
- Requirement. The commissioner or the commissioner's delegate shall keep a record of all sales of real property under §§ 67-1-1414 — 67-1-1418 and of redemptions of such property. The record shall set forth the tax for which any such sale was made, the dates of seizure and sale, the name of the party assessed and all proceedings in making such sale, the amount of expenses, the names of the purchasers, and the date of the deed.
- Copy as Evidence. A copy of such record, or any part of the record, certified by the commissioner or the commissioner's delegate shall be evidence in any court of the truth of the facts stated in the record.
Acts 1972, ch. 762, § 9; T.C.A., § 67-6023.
67-1-1425. Expenses of levy and sale.
The commissioner or the commissioner's delegate shall determine the expenses to be allowed in all cases of levy and sale.
Acts 1972, ch. 762, § 10; T.C.A., § 67-6024.
67-1-1426. Application of proceeds of levy and sale.
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Collection of Liability. Any money realized by proceedings under this chapter, whether by seizure, by surrender under § 67-1-1412, except pursuant to § 67-1-1412(b)(2), or by sale of seized property, or by sale of property redeemed by the state, if the interest of the state in such property was a lien arising under this title, shall be applied as follows:
- Expense of Levy and Sale. The expenses of the proceedings should be deducted from the money received first;
- Specific Tax Liability on Seized Property. If the property seized and sold is subject to a tax imposed by any revenue law that has not been paid, the amount remaining after applying subdivision (a)(1) shall then be applied against such tax liability and, if such tax was not previously assessed, a notice of proposed assessment shall then be issued; and
- Liability of Delinquent Taxpayer. The amount, if any, remaining after applying subdivisions (a)(1) and (2) shall then be applied against the liability with respect to which the levy was made or the sale was conducted.
- Surplus Proceeds. Any surplus proceeds remaining after the application of subsection (a) shall, upon application and satisfactory proof in support of a surplus, be credited or refunded by the commissioner or the commissioner's delegate to the person or persons legally entitled to the surplus.
Acts 1972, ch. 762, § 11; T.C.A., § 67-6025; Acts 2014, ch. 854, § 5.
Amendments. The 2014 amendment, effective January 1, 2015, substituted “a notice of proposed assessment shall then be issued; and” for “it shall then be assessed; and” at the end of (a)(2).
Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1427. Release of levy.
It is lawful for the commissioner or the commissioner's delegate under regulations prescribed by the commissioner, to release the levy upon all or part of the property or rights to property levied upon where the commissioner or the commissioner's delegate determines that such action will facilitate the collection of the liability, but such release shall not operate to prevent any subsequent levy.
Acts 1972, ch. 762, § 12; T.C.A., § 67-6026.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1428. Return of wrongfully levied property.
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If the commissioner or the commissioner's delegate determines that property has been wrongfully levied upon, it shall be lawful for the commissioner or the commissioner's delegate to return:
- The specific property levied upon;
- An amount of money equal to the amount levied upon; or
- An amount of money equal to the amount of money received by the state from a sale of such property.
- An amount equal to the amount of money levied upon or received from such sale may be returned at any time before the expiration of nine (9) months from the date of such levy. For purposes of subdivision (a)(3), if property is declared purchased by the state at a sale pursuant to § 67-1-1418(a), relating to manner and conditions of sale, the state shall be treated as having received an amount of money equal to the minimum price determined pursuant to such section or, if larger, the amount received by the state from the resale of such property.
Acts 1972, ch. 762, § 12; T.C.A., § 67-6027.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1429. Time limit for making levy — Release of lien.
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Length of Period.
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Where the assessment of any tax imposed by this or any other title has been made within the applicable period of limitation, such tax may be collected by levy or by a proceeding in court, but only if the levy is made or the proceeding begun:
- Within six (6) years after the assessment of the tax becomes final; or
- Prior to the expiration of any period for collection agreed upon in writing by the commissioner or the commissioner's delegate and the taxpayer before the expiration of such six-year period; or, if there is a release of levy under § 67-1-1427 after such six-year period, then before such release. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the previously agreed upon period.
- The period provided by this subsection (a) during which a tax may be collected by levy shall not be extended or curtailed by reason of a judgment against the taxpayer.
- The period for collection provided in subdivision (a)(1)(A) shall not apply if the tax liability has been reduced to judgment in a suit begun within such period. Such tax may be collected at any time subsequent to assessment without limitation after such judgment.
- Nothing in this section shall apply to the collection of ad valorem taxes assessed against real or personal property by any county or municipality in this state.
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Where the assessment of any tax imposed by this or any other title has been made within the applicable period of limitation, such tax may be collected by levy or by a proceeding in court, but only if the levy is made or the proceeding begun:
- Date When Levy Is Considered Made. The date on which a levy on property or rights is made shall be the date on which the notice of seizure provided in § 67-1-1414 is given.
- Release of Lien. At any time after the expiration of the period specified in subsection (a), the person holding title to the property on which the lien is placed may request the department to release the lien. If the department does not release the lien within sixty (60) days of the request, it shall be liable for court costs in any action to remove the lien.
Acts 1972, ch. 762, § 13; 1973, ch. 368, § 3; 1974, ch. 484, § 3; T.C.A., § 67-6028; Acts 1986, ch. 799, § 2; 1999, ch. 162, § 2; 2014, ch. 854, § 6.
Compiler's Notes. Acts 1999, ch. 162, § 1 provided that the general assembly declares that the statute of limitations for collection of ad valorem taxes assessed against real or personal property by any county or municipality in Tennessee is and heretofore has been, since the date of original enactment of such statute, as set forth in § 67-5-1806, and that the purpose of Acts 1999, ch. 162, adding §§ 67-1-1429(a)(4) and 67-1-1501(d), was to clarify this intent.
Amendments. The 2014 amendment, effective January 1, 2015, substituted “the assessment of the tax becomes final” for “assessment of the tax” at the end of (a)(1)(A).
Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.
Cross-References. Venue for action against state concerning real property lien, § 20-13-110.
Textbooks. Pritchard on Wills and Administration of Estates (4th ed. Phillips and Robinson), § 962.
Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 54.
Law Reviews.
Selected Tennessee Legislation of 1986, 54 Tenn. L. Rev. 457 (1987).
NOTES TO DECISIONS
1. Tax Action Not Barred.
Because the Tennessee Department of Revenue obtained a judgment against a corporation for the unpaid franchise and excise taxes, thus establishing that such judgment could be collected at any time pursuant to T.C.A. § 67-1-1429(a)(3), and because T.C.A. §§ 67-4-2016 and 67-4-2117 permitted collection from a stockholder, the Department's lawsuit against a former stockholder was not barred by T.C.A. § 67-1-1429(a)(1)(A). Bookstaff v. Gerregano, — S.W.3d —, 2017 Tenn. App. LEXIS 821 (Tenn. Ct. App. Dec. 20, 2017).
67-1-1430. [Repealed.]
Compiler's Notes. Former § 67-1-1430 (Acts 1972, ch. 762, § 14; T.C.A., § 67-6029), concerning paying tax with a bad check, was repealed by Acts 1988, ch. 526, § 20.
67-1-1431. Action where tax in jeopardy.
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State Tax in Jeopardy.
- In General. If the commissioner or the commissioner's delegate finds that a taxpayer designs to depart quickly from the state or to remove the taxpayer's property from the state, or to conceal the taxpayer or the taxpayer's property in the state, or to do any other act tending to prejudice or to render wholly or partly ineffectual proceedings to collect the state tax for the current or the preceding taxable periods unless such proceedings be brought without delay, the commissioner or the commissioner's delegate shall declare the taxable period for such taxpayer immediately terminated, and shall cause notice of such finding and declaration to be given the taxpayer, together with a demand for immediate payment of the tax for the taxable period so declared terminated and of the tax for the preceding taxable period or so much of such tax as is unpaid, whether or not the time otherwise allowed by law for filing return and paying the tax has expired; and such taxes shall then become immediately due and payable. In any proceeding in court brought to enforce payment of taxes made due and payable by virtue of this section, the finding of the commissioner or the commissioner's delegate, made as provided in this section, whether made after notice to the taxpayer or not, shall be for all purposes presumptive evidence of jeopardy.
- Corporation in Liquidation. If the commissioner or the commissioner's delegate finds that the collection of the tax of a corporation for the current or the preceding taxable period will be jeopardized by the distribution of all or a portion of the assets of such corporation in the liquidation of the whole or any part of its capital stock, the commissioner or the commissioner's delegate shall declare the taxable period for such taxpayer immediately terminated and shall cause notice of such finding and declaration to be given the taxpayer, together with a demand for immediate payment of the tax for the taxable period so declared terminated and of the tax for the preceding taxable period or so much of such tax as is unpaid, whether or not the time otherwise allowed by law for filing a return and paying the tax has expired. Such taxes shall then become immediately due and payable.
- Reopening of Taxable Period. Notwithstanding the termination of the taxable period of the taxpayer by the commissioner or the commissioner's delegate, as provided in subsection (a), the commissioner or the commissioner's delegate may reopen such taxable period each time the taxpayer is found by the commissioner or the commissioner's delegate to have a taxable occurrence within the taxable period since a termination of the period under subsection (a). A taxable period so terminated by the commissioner or the commissioner's delegate may be reopened by the taxpayer if the taxpayer files with the commissioner or the commissioner's delegate a true and accurate return for such taxable period, together with such other information as the commissioner may by regulation prescribe.
- Furnishing of Bond Where Taxable Period Is Closed by the Commissioner or the Commissioner's Delegate. Payment of taxes shall not be enforced by any proceedings under this section prior to the expiration of the time otherwise allowed for paying such taxes if the taxpayer furnishes, under regulations prescribed by the commissioner, a bond to ensure the timely making of returns with respect to, and payment of, such taxes.
- Jeopardy Assessments. If the commissioner or the commissioner's delegate believes that the collection of any tax under any provision of this or any other title will be jeopardized by delay, the commissioner or the commissioner's delegate shall, whether or not the time otherwise prescribed by law for making return and paying such tax has expired, immediately assess such tax, together with all interest, penalties, and any other additions to the tax provided for by law. Such tax, interest, penalties and additions to the tax shall then become immediately due and payable, and immediate notice and demand shall be made by the commissioner or the commissioner's delegate for the payment thereof.
Acts 1972, ch. 762, §§ 15, 16; T.C.A., §§ 67-6030, 67-6031.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1432. Civil action — Assertion of state's lien.
- Filing. In any case where there has been a refusal or neglect to pay any tax, or to discharge any liability with respect to any tax, whether or not levy has been made, the attorney general and reporter or the attorney general and reporter's delegate, or the staff attorney of the department of revenue or the staff attorney's delegate, at the request of the commissioner or the commissioner's delegate, may direct a civil action to be filed in chancery court to enforce the lien of the state under this title with respect to such tax or liability or to subject any property, of whatever nature, of the delinquent, or in which the delinquent has any right, title, or interest, to the payment of such tax or liability.
- Parties. All persons having liens upon or claiming any interest in the property involved in such action shall be made parties to the case.
- Adjudication and Decree. The court shall, after the parties have been duly notified of the action, proceed to adjudicate all matters involved in the action and finally determine the merits of all claims to and liens upon the property, and, in all cases where a claim or interest of the state in the action is established, may decree a sale of such property, by the proper officer of the court, and a distribution of the proceeds of such sale according to the findings of the court with respect to the interests of the parties and of the state. If the property is sold to satisfy a first lien held by the state, the state may bid at the sale such sum, not exceeding the amount of such lien with expenses of sale, as the commissioner or the commissioner's delegate directs.
- Receivership. In any such proceeding, at the instance of the state, the court may appoint a receiver to enforce the lien or, upon certification by the commissioner or the commissioner's delegate during the pendency of such proceedings that it is in the public interest, may appoint a receiver with all the powers of a receiver in equity.
- Intervention by State. If the state is not a party to a civil action or suit, the state may intervene in such action or suit to assert any lien arising under this title on the property that is the subject of such action or suit. In any case in which the application of the state to intervene is denied, the adjudication in such action or suit shall have no effect upon such lien.
Acts 1972, ch. 762, §§ 17, 18; T.C.A., §§ 67-6032, 67-6033.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-1-1433. Enforcement of other liens.
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If the state is not joined as a party, a judgment in any civil action or suit, or a judicial sale pursuant to such a judgment, with respect to property on which the state has or claims a lien under this title:
- Shall be made subject to and without disturbing the lien of the state, if notice of such lien has been filed in the place provided by law for such filing at the time such action or suit is commenced; or
- If a judicial sale of property pursuant to a judgment in any civil action or suit to which the state is not a party discharges a lien of the state arising under this title, the state may claim, with the same priority as its lien had against the property sold, the proceeds, exclusive of costs, of such sale at any time before the distribution of such proceeds is ordered.
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- Notwithstanding subsection (a), a sale of property on which the state has or claims a lien, or a title derived from enforcement of a lien, under this title, made pursuant to an instrument creating a lien on such property, pursuant to a confession of judgment on the obligation secured by such an instrument, or pursuant to a nonjudicial sale under a statutory lien on such property shall, except as otherwise provided, be made subject to and without disturbing such lien or title, if notice of such lien was filed or such title recorded in the place provided by law for such filing or recording more than thirty (30) days before such sale, and the state is not given notice of such sale in the manner prescribed in subdivision (b)(2).
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Special Rules.
- Notice of Sale. Notice of a sale to which subdivision (b)(1) applies shall be given, in accordance with regulations prescribed by the commissioner, in writing, by registered or certified mail or by personal service, not less than twenty-five (25) days prior to such sale, to the commissioner or the commissioner's delegate.
- Consent to Sale. Notwithstanding the notice requirement of this subsection (b), a sale described in subdivision (b)(1) of property shall discharge or divest such property of the lien or title of the state, if the state consents to the sale of such property free of such lien or title.
- Sale of Perishable Goods. Notwithstanding the notice requirement of this section, a sale described in subdivision (b)(1) of property liable to perish or become greatly reduced in price or value by keeping, or that cannot be kept without great expense, shall discharge or divest such property of the lien or title of the state if notice of such sale is given, in accordance with regulations prescribed by the commissioner, in writing, by registered or certified mail or by personal service, to the commissioner or the commissioner's delegate before such sale. The proceeds, exclusive of costs, of such sale shall be held as a fund subject to the liens and claims of the state, in the same manner and with the same priority as such liens and claims had with respect to the property sold, for not less than thirty (30) days after the date of such sale.
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- Right to Redeem. In the case of a sale of real property to which subdivision (b)(1) applies, to satisfy a lien prior to that of the state, the commissioner or the commissioner's delegate may redeem such property within the period allowable for redemption under law, as provided in § 67-1-1420.
- Amount to Be Paid. In any case in which the state redeems real property pursuant to subdivision (c)(1), the amount to be paid for such property shall be the amount paid by the purchaser, plus six percent (6%) interest per annum.
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Certificate of Redemption.
- In General. In any case in which real property is redeemed by the state pursuant to this subsection (c), the commissioner or the commissioner's delegate shall execute a certificate of redemption for the property.
- Filing. The commissioner or the commissioner's delegate shall, without delay, cause such certificate to be duly recorded in the proper registry of deeds.
- Effect. A certificate of redemption executed by the commissioner or the commissioner's delegate shall constitute prima facie evidence of the regularity of such redemption and shall, when recorded, transfer to the state all the rights, title, and interest in and to such property acquired by the person from whom the state redeems such property by virtue of the sale of such property.
Acts 1972, ch. 762, § 19; T.C.A., §§ 67-6034 — 67-6036; Acts 1994, ch. 640, § 2.
Cross-References. Advertisement or notice, § 35-5-104.
Certified mail in lieu of registered mail, § 1- 3-111.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 46.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Simple Real Estate Foreclosures Made Complex: The Byzantine Tennessee Process (John A. Walker, Jr.), 62 Tenn. L. Rev. 231 (1995).
NOTES TO DECISIONS
1. Effect of Failure to Give Notice.
A state tax lien is not extinguished or disturbed by the foreclosure of prior recorded deeds of trust when notice by the foreclosing creditors is not given to the state as required by this section. Barrow v. Tennessee Dep't of Revenue, 647 S.W.2d 232, 1983 Tenn. LEXIS 628 (Tenn. 1983).
2. Tax Lien as Junior Lien.
The fact that a state tax lien was junior did not relieve the senior creditor from complying with the notice requirements of this section. Barrow v. Tennessee Dep't of Revenue, 647 S.W.2d 232, 1983 Tenn. LEXIS 628 (Tenn. 1983).
67-1-1434. Civil action by person other than taxpayer.
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Actions Permitted.
- Wrongful Levy. If a levy has been made on property, or property has been sold pursuant to a levy, any person, other than the person against whom is assessed the tax out of which such levy arose, who claims an interest in or lien on such property and that such property was wrongfully levied upon may file a claim with the state board of claims.
- Surplus Proceeds. If property has been sold pursuant to a levy, any person, other than the person against whom is assessed the tax out of which such levy arose, who claims an interest in or lien on such property junior to that of the state and to be legally entitled to the surplus proceeds of such sale may bring a civil action against the commissioner in chancery court.
- Substituted Sale Proceeds. If property has been sold pursuant to an agreement whereby the commissioner has released that property from the liens and claims of the state of Tennessee in return for liens and claims of the same priority against the proceeds of the sale of the released property, any person who claims to be legally entitled to all or any amount of such substituted sale proceeds held as a fund pursuant to such agreement may bring a civil action against the commissioner in the chancery court.
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Adjudication. The chancery court shall have jurisdiction to grant only such of the following forms of relief as may be appropriate in the circumstances:
- Injunction. If a levy or sale would irreparably injure rights in property that the court determines to be superior to rights of the state in such property, the court may grant an injunction to prohibit the enforcement of such levy or to prohibit such sale;
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Recovery of Property.
-
If the court determines that such property has been wrongfully levied upon, the court may:
- Order the return of specific property, if the state is in possession of such property;
- Grant a judgment for the amount of money levied upon; or
- Grant a judgment for an amount not exceeding the amount received by the state from the sale of such property;
- For purposes of subdivision (b)(2)(A)(iii), if the property was declared purchased by the state at a sale pursuant to § 67-1-1418(a), relating to manner and conditions of sale, the state shall be treated as having received an amount equal to the minimum price determined pursuant to such section or, if larger, the amount received by the state from the resale of such property;
-
If the court determines that such property has been wrongfully levied upon, the court may:
- Surplus Proceeds. If the court determines that the interest or lien of any party to an action under this section was transferred to the proceeds of a sale of such property, the court may grant a judgment in an amount equal to all or any part of the amount of the surplus proceeds of such sale; or
- Substituted Sale Proceeds. If the court determines that a party has an interest in or lien on the amount held as a fund pursuant to an agreement, the court may grant a judgment in an amount equal to all or any part of the amount of such fund.
- Validity of Assessment. For purpose of an adjudication under this section, the assessment of tax upon which the interest or lien of the state is based shall be conclusively presumed to be valid.
- Limitation on Rights of Action. No action may be maintained against any officer or employee of the state, or former officer or employee, or the officer's or employee's personal representative with respect to any acts for which an action could be maintained under this section.
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Requirements for Beginning or Proceeding with Action.
- No suit or proceeding under this section shall be begun unless a request is made by certified mail, within nine (9) months of the date of the levy, for the return of money or property pursuant to § 67-1-1428.
- No suit or proceeding under this section shall be begun after twelve (12) months from the date of filing the request required under subdivision (e)(1) or after six (6) months from the date of mailing, by certified mail, of a notice to the person making the request, of disallowance by the commissioner or the commissioner's delegate, whichever period ends sooner.
Acts 1972, ch. 762, § 20; 1981, ch. 65, § 3; T.C.A., § 67-6037.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
NOTES TO DECISIONS
1. In General.
The owner of a motel operated by others under a lease was not the operator required to collect a privilege tax levied by a private act and was thus a person other than the taxpayer under T.C.A. § 67-1-1434. Oxford Invest., Inc. v. Mashburn, 729 S.W.2d 96, 1985 Tenn. App. LEXIS 2949 (Tenn. Ct. App. 1985).
67-1-1435. Sale of personal property by state.
Any personal property acquired by the state in payment of or as security for debts arising under any provision of this or any other title may be sold by the commissioner or the commissioner's delegate in accordance with regulations as may be prescribed by the commissioner.
Acts 1972, ch. 762, § 21; T.C.A., § 67-6038.
Collateral References. Actions to enforce lien on personal property 371.599.
67-1-1436. Administration of real estate acquired by state.
The commissioner or the commissioner's delegate shall have charge of all real estate that is or shall become the property of the state by judgment of forfeiture under any provision of this or any other title, or that has been or shall be assigned, set off, or conveyed by purchase or otherwise to the state in payment of debts or penalties arising thereunder, or that has been or shall be vested in the state by mortgage or other security for the payment of such debts, or that has been redeemed by the state, and of all trusts created for the use of the state in payment of such debts due them.
Acts 1972, ch. 762, § 22; T.C.A., § 67-6039.
67-1-1437. Obtaining evidence.
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Examination of Books and Witnesses. For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any amount under this or any other title, the commissioner or the commissioner's delegate is authorized to:
- Examine any books, papers, records, or other data that may be relevant or material to such inquiry;
- Summon the person liable for tax or required to perform the act, or any officer or employee of such person, or any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for tax or required to perform the act, or any other person the commissioner or the commissioner's delegate may deem proper, to appear before the commissioner or the commissioner's delegate at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry; and
- Take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry.
-
Summons.
- Service. A summons issued under subdivision (a)(2) shall be served by the commissioner or the commissioner's delegate by an attested copy delivered in hand to the person to whom it is directed or left at that person's last and usual place of abode; and the certificate of service signed by the person serving the summons shall be evidence of the facts it states on the hearing of an application for the enforcement of the summons. When the summons requires the production of books, papers, records or other data, it shall be sufficient if such books, papers, records or other data are described with reasonable certainty.
- Time and Place. The time and place of examination shall be such as may be fixed by the commissioner or the commissioner's delegate and as are reasonable under the circumstances. In no event shall the time be less than ten (10) days to appear to testify, or to produce books, papers, records or other data. The chancery court for the district in which such person resides or is found shall have jurisdiction by appropriate process to compel such attendance, testimony, or production of books, papers, records or other data.
- Enforcement. Whenever any person summoned under subdivision (a)(2) neglects or refuses to obey such summons, or to produce books, papers, records or other data, or to give testimony, as required, the commissioner or the commissioner's delegate may apply to the judge of the chancery court for the judicial district within which the person so summoned resides or is found for an attachment against that person as for a contempt. It is the duty of the chancellor to hear the application, and, if satisfactory proof is made, to issue an attachment, directed to some proper officer, for the arrest of such person, and upon such person being brought before the chancellor to proceed to a hearing of the case. Upon such hearing, the chancellor shall have the power to make such order as the chancellor deems proper, not inconsistent with the law for the punishment of contempt, to enforce obedience to the requirements of the summons and to punish such person for that person's default or disobedience.
- Oaths. Every officer or employee of the department designated by the commissioner for that purpose is authorized to administer such oaths or affirmations and to certify to such papers as may be necessary under this or any other title or any regulations made under this or any other title.
Acts 1972, ch. 762, §§ 23-25; T.C.A., §§ 67-6040 — 67-6042.
Cross-References. General powers to obtain evidence, title 67, ch. 1, part 13.
Law Reviews.
Administrative Subpoenas and the Grand Jury: Converging Streams of Criminal and Civil Compulsory Process (Graham Hughes), 47 Vand. L. Rev. 573 (1994).
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Cited: L.L. Bean, Inc. v. Bracey, 817 S.W.2d 292, 1991 Tenn. LEXIS 346 (Tenn. 1991).
NOTES TO DECISIONS
1. Construction with Other Law.
T.C.A. §§ 67-1-1301, 67-1-1302 and 67-1-1437 are less specific and less restrictive than title 45, ch. 10, and thus have been impliedly amended by that chapter. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).
To the extent that the procedures for obtaining financial records from a financial institution are more protective, exacting and restrictive than T.C.A. § 67-1-1437, the Financial Records Privacy Act, compiled in title 45, ch. 10, impliedly amends the previously enacted Tax Enforcement Procedures Act, regardless of T.C.A. § 67-1-1402. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).
2. Form of Summons.
Tennessee Const., art. VI, § 12 does not require that an investigative summons be signed by a clerk of an issuing court. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).
3. Unreasonable Demands.
Whether issued pursuant to T.C.A. § 67-1-1301, § 67-1-1302, § 67-1-1437, or title 45, ch. 10, if the subpoenaed party is of the opinion the requests contained in the demand are unreasonable, he can refuse to comply with the demand and raise the issue as a defense to any action brought by the issuer to enforce compliance, and where contested, the production of documents pursuant to an administrative subpoena cannot be compelled without approval of the chancellor. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).
67-1-1438. Assessments by commissioner.
- When the commissioner determines that any person has failed to pay the correct amount of any tax administered by the commissioner under this or any other title, the commissioner shall promptly issue to such taxpayer a notice of proposed assessment, together with notice that the taxpayer shall have the right to an informal conference with the commissioner or the commissioner's designee as set forth in subsection (b) and that the proposed assessment shall become a final assessment as set forth herein. The notice shall also state that, upon an assessment becoming final, the taxpayer shall have the right, as set forth in § 67-1-1801, to file suit to challenge the final assessment and collection of the tax in the appropriate chancery court of this state within ninety (90) days from the date such assessment becomes final. The commissioner may authorize any division, unit, or official within the department to issue notices of proposed assessment on the commissioner's behalf.
- Any taxpayer to whom a notice of proposed assessment is issued shall have the right to an informal conference with the commissioner or the commissioner's designee to discuss the proposed assessment and to present such matters as may be relevant to the proposed assessment; provided, that written request for such conference is made within thirty (30) days after the date of the notice of proposed assessment. If a timely request for a conference is made, the commissioner or the commissioner's designee shall set a time and place for the conference within ten (10) days from the date of the request and shall give the taxpayer written notice of the conference. Upon written request by the taxpayer, the commissioner or the commissioner's designee may grant, in the commissioner's or designee's discretion, a continuation of the conference in writing for a period of time reasonably necessary for the taxpayer to provide additional information or documentation relevant to the proposed assessment. A continuation may be granted either before or after the conference is held, and the conference shall not be deemed to be concluded until the expiration of any such period of continuation. Within ten (10) days after the conclusion of the conference, the commissioner or the commissioner's designee shall give the taxpayer written notification of the commissioner's decision. If the commissioner's decision does not result in an adjustment to the proposed assessment, the proposed assessment shall become a final assessment as of the date of such decision. If the commissioner's decision results in an adjustment to the proposed assessment, the commissioner shall issue to the taxpayer a written determination setting forth the amount of tax that is due, if any, and such amount shall be a final assessment.
- If the taxpayer does not request an informal conference within the time period prescribed in subsection (b), the proposed assessment shall become a final assessment on the thirty-first day after the date of the notice of proposed assessment. In addition, any taxpayer that has requested a conference as provided in subsection (b) may cancel the request, in writing, at any time before, during, or after such conference; in which case the proposed assessment shall become a final assessment on the date of the written notification by the taxpayer of such cancellation or on the thirty-first day after the date of the notice of proposed assessment, whichever is later.
- Except as provided in subsection (c), the taxpayer shall not be prejudiced in any manner by either seeking or failing to seek an informal conference. The informal conference shall not be considered to be an administrative remedy and shall not constitute a contested case subject to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. The commissioner shall not be prejudiced in any manner as a result of such conference, including any failure to issue a final assessment within the ten-day period prescribed in subsection (b); provided, however, that no interest shall accrue on any deficiency during the period beginning on the eleventh day after conclusion of the conference and ending upon issuance of the final assessment.
-
The informal conference process shall have all of the following characteristics:
- Personnel conducting informal conferences shall exercise independent judgment with the objective of resolving disputed proposed assessments without litigation;
- Informal conferences shall be conducted in an informal manner either by telephone or in person, at the taxpayer's option;
- The taxpayer may participate in an informal conference without representation; may be represented by an officer, employee, partner, or member of the taxpayer; or may be represented by a third party of the taxpayer's choice;
- Informal conference personnel shall make determinations regarding individual issues based on the facts and the law;
- Informal conference personnel shall consider arguments as to the applicability of the tax laws and any new evidence presented; provided, that if the new evidence is substantial and should have been presented at the time of audit, the informal conference personnel may request the audit division to examine the evidence and to make a recommendation as to the effect of the evidence on the relevant issue;
- The taxpayer shall have the right to bring witnesses to an in-person conference;
- Informal conference personnel shall not engage in ex parte communications with audit division personnel regarding the issue under review; provided, however, that informal conference personnel may, on an ex parte basis, ask questions that involve ministerial, administrative, or procedural matters and that do not address the substance of the issues or the positions taken in the audit;
- Informal conference decisions shall not be considered as precedent; and
- Informal conference personnel may recommend to the commissioner that the department compromise a proposed assessment in accordance with § 67-1-102(b)(8).
- When an assessment becomes final by operation of subsection (b) or (c), the taxpayer shall have the rights and remedies provided in part 18 of this chapter.
- The commissioner or the commissioner's designee, in such person's discretion, may hold an informal conference with a taxpayer to discuss an assessment that has become final by operation of subsection (c) or to discuss the denial or deemed denial of a claim for refund under § 67-1-1802. Any such conference shall not toll any period of limitation or otherwise affect any remedy provided in part 18 of this chapter.
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The commissioner may publish or otherwise publicize guidance to taxpayers, practitioners, and departmental personnel resulting from conference decisions; provided, however, that nothing in this subsection (h) shall be construed as authorizing the disclosure of return or tax information as defined in § 67-1-1701 and provided further that no conference decision shall be referenced or cited as:
- Precedence in any instance; or
- Guidance unless such guidance has been published or publicized as provided in this subsection (h).
Acts 1972, ch. 762, § 26; 1974, ch. 484, § 4; T.C.A., § 67-6043; Acts 2003, ch. 418, § 9; 2014, ch. 854, § 7.
Compiler's Notes. Acts 2003, ch. 418, § 16(c) provided that § 9 of the act shall apply to all currently pending or future suits except for those currently pending suits in which a challenge to the assessment based on the department's recording procedures was specifically alleged in either the plaintiff's complaint, interrogatories, requests for production of documents, or requests for admissions prior to May 1, 2003.
Amendments. The 2014 amendment, effective January 1, 2015, rewrote the section which read: “(a) When any person shall fail to file any statement, report or return required to be filed with the commissioner by any law levying a public tax, license or fee, after being given written notice of the assessment, the commissioner is authorized to determine that liability of such person from whatever source of information may be available to the commissioner. An assessment made by the commissioner pursuant to this authority shall be binding as if made upon the sworn statement, report or return of the person liable for the payment of any such tax, license or fee. Any such assessment that is lawfully made against such person shall be presumed accurate, unless records are submitted evidencing otherwise.“(b) An assessment of any tax by the commissioner shall be deemed to be made by recording the liability of the taxpayer in the office of the department in accordance with existing procedures of the department or as such may be established by rules and regulations prescribed by the commissioner. No claim, cause of action or other proceeding to challenge an assessment or seek a refund shall arise based on the department's procedures for signing or recording the liability of the taxpayer in the office of the department under this section, regulations promulgated by the commissioner, or bulletins issued by the commissioner.”
Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 29.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Cited: James v. Huddleston, 795 S.W.2d 661, 1990 Tenn. LEXIS 308 (Tenn. 1990).
NOTES TO DECISIONS
1. Exhaustion of Remedies.
Where a city alleged that Internet travel companies (ITCs) purchased rooms from hotels which paid the hotel occupancy tax based on the wholesale rates charged to the ITCs, but resold the rooms to consumers and collected the tax based on the retail rate paid by the consumers without remitting the taxes to the city, exhaustion of administrative remedies by actually assessing the taxes was not required since the ITCs challenged whether they were required to pay any tax as a matter of law, and a determination of the precise amount the city claimed was owed would not resolve the disputed issue. City of Goodlettsville v. Priceline Com, Inc., 605 F. Supp. 2d 982, 2009 U.S. Dist. LEXIS 28302 (M.D. Tenn. Mar. 31, 2009).
67-1-1439. Rulemaking by commissioner.
The commissioner is authorized to prescribe all rules and regulations necessary for the administration of this chapter. Rules and regulations not inconsistent with this chapter shall have the force and effect of law when promulgated by the commissioner and approved by the attorney general and reporter. A copy of all such rules and regulations, in printed form, shall be furnished every collector of state taxes and shall be furnished to any other person upon request.
Acts 1972, ch. 762, § 27; T.C.A., § 67-6044.
Cross-References. Powers of commissioner, §§ 67-1-101, 67-1-102.
67-1-1440. Crimes against revenue officers.
- It is a Class E felony for any person to assault any officer or employee of the department while performing duties as such officer or employee, or to assault any such officer or employee or a member of such officer's or employee's immediate family at any other time, if it is shown that such assault was by reason of the fact that such officer or employee had at some time performed an official duty as an officer or employee of the department with respect to any person. Any violation of this subsection (a) committed by any person with a pistol or other deadly weapon is a Class C felony. Each act done in violation of this subsection (a) is a separate offense.
- It is a Class E felony for any person to corruptly obstruct, delay, hinder, impede or intimidate, or to attempt to corruptly obstruct, delay, hinder, impede or intimidate, any officer or employee of the department from performing the officer's or employee's duty while acting in an official capacity under this part or any other laws of this state. It is also a Class E felony for any person in any other way to corruptly obstruct, delay, hinder or impede the administration of this part or any other revenue laws of this state. Each act done in violation of this subsection (b) is a separate offense.
- It is a Class C misdemeanor for any person to rescue or cause to be rescued, either forcibly or by any unlawful manner, any property after it shall have been seized under this part or any other revenue laws of this state, or to attempt or endeavor so to do. Each act done in violation of this subsection (c) is a separate offense.
- It is a Class E felony for any person to delay, hamper, hinder, impede, obstruct or thwart the state of Tennessee in the collection of any of its lawful revenue, or to deprive the state of the realization of such revenue at the time it is lawfully entitled thereto by any artifice, design, false weight or measure, stratagem, or by the falsification of any record, report or return required by law. Each act done in violation of this subsection (d) is a separate offense.
- It is a Class E felony for any two (2) persons to conspire to delay, hamper, hinder, impede, obstruct or thwart the state of Tennessee in the collection of any of its lawful revenue, or to deprive the state of the realization of such revenue at the time it is lawfully entitled thereto by any artifice, design, false weight or measure, stratagem, or by the falsification of any record, report or return required by law. Each act done in violation of this subsection (e) is a separate offense.
- It is a Class E felony for any person to falsely, corruptly, or knowingly misrepresent any material statement of fact while testifying under oath as a witness at any hearing held by the commissioner or the commissioner's delegate while acting in an official capacity under this part or any other laws of this state. Each act done in violation of this subsection (f) is a separate offense.
- It is a Class E felony for any person willfully to attempt in any manner to evade or defeat any tax due the state of Tennessee; provided, that if use tax of less than five hundred dollars ($500) is involved, the offense is a Class A misdemeanor. Each act done in violation of this subsection (g) is a separate offense.
Acts 1973, ch. 368, § 4; T.C.A., § 67-6045(a)-(f); Acts 1984, ch. 734, § 2; 1989, ch. 591, §§ 90-94, 113; 1999, ch. 406, § 6; 2000, ch. 982, § 44.
Cross-References. Penalties for Class A and C misdemeanors, § 40-35-111.
Penalties for Class C and E felonies, § 40-35-111.
Law Reviews.
Amendments to the Tax Revision and Reform Act (J. Leigh Griffith), 36 Tenn. B.J. 23 (2000).
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Cited: Sanders v. Freeman, 221 F.3d 846, 2000 FED App. 237P, 2000 U.S. App. LEXIS 17307 (6th Cir. Tenn. 2000), cert. denied, 531 U.S. 1014, 121 S. Ct. 571, 148 L. Ed. 2d 489, 2000 U.S. LEXIS 7843, (2000).
NOTES TO DECISIONS
1. Violation.
Sales of gold and silver coins and bullion were subject to sales tax and failure of defendant to collect and remit tax on those sales violated T.C.A. § 67-1-1440. State v. Sanders, 923 S.W.2d 540, 1996 Tenn. LEXIS 358 (Tenn. May 28, 1996).
67-1-1441. Revenue officers — Weapons — Execution of search warrants.
- Inspectors, agents, representatives or officers appointed by the commissioner shall be cloaked with and have the duty, power, and authority as sheriffs, police officers and other peace officers to enforce this part.
- Any duly authorized officer or employee of the department who has been specifically designated by the commissioner to enforce this part is authorized and empowered to go armed or carry a pistol while on active duty engaged in enforcing this part. Any such person is also authorized and empowered to execute search warrants and to do all acts incident to search warrants, in the same manner as search warrants may be executed by sheriffs, police officers and other peace officers.
-
- Any duly authorized agent or officer of the department of revenue who retires after twenty-five (25) years of honorable armed service shall be issued a retired commission card by the department, which shall identify the agent or officer and the fact that the agent or officer is retired. Cards issued under this subdivision (c)(1) shall bear the inscription, in print of equal or larger size than the rest of the printing on the card, the words “Not a handgun permit.” After twenty-five (25) years of honorable armed service by an authorized agent or officer of the department, the department shall authorize such agent or officer, upon retirement, to retain the agent or officer's service weapon and badge, in recognition of the agent or officer's many years of good and faithful public service.
- Any authorized agent or officer of the department, who is issued a retired commission card pursuant to this subsection (c) but who has not completed twenty-five (25) years of honorable armed service, may retain the agent or officer's service weapon and badge in recognition of the agent or officer's years of good and faithful public service; provided, that the agent or officer reimburses the department for the cost of the service weapon and badge.
- This subsection (c) shall be retroactive to include officers from the department of safety that were transferred to the department of revenue effective July 1, 2006.
Acts 1973, ch. 368, § 4; T.C.A., § 67-6045(g); Acts 2005, ch. 499, § 8; 2013, ch. 434, § 1.
Amendments. The 2013 amendment added (c).
Effective Dates. Acts 2013, ch. 434, § 2. May 16, 2013.
67-1-1442. Continuation of business to satisfy delinquent tax liability.
When a taxpayer is engaged in business as a sole proprietor, a partnership, or as a corporation, and that taxpayer is delinquent in paying a liability to the state for any tax or fee, then the commissioner or the commissioner's designee may permit the business taxpayer to continue in operation in order to pay to the state any tax or fee owed to the state. Such an arrangement shall be pursuant to rules and regulations promulgated by the commissioner. The commissioner or the commissioner's designee may permit such continued operation of a business, unless such designee finds there is a danger of the taxpayer doing any act to prejudice or render wholly or partly ineffectual the collection of the tax or fee due to the state.
Acts 1986, ch. 907, § 1.
67-1-1443. Failure to pay taxes collected from taxpayer's customers.
- Any person required to collect, truthfully account for, and pay over any tax collected from customers of any taxpayer, who willfully fails to truthfully account for and pay over any such tax collected, or who willfully attempts in any manner to evade or defeat any such tax or the payment of those taxes, shall, in addition to other penalties provided by law, be liable for the total amount of the tax evaded, or not accounted for and paid over, along with penalties and interest.
-
As used in this section:
- “Person” includes an officer or employee of a corporation, who, as such officer or employee, is under a duty to perform the act with respect to which the violation occurs; and
- “Willfully” is limited to material and informed participation in the diversion of such collected funds to a source other than to the state.
- The liability imposed by this section shall be collected as otherwise provided in this chapter.
Acts 1988, ch. 614, § 1; 1996, ch. 563, § 1.
Law Reviews.
1996 Real Estate Legislation: What You Don't Know Can Hurt You (William R. Bruce), 32 Tenn. B.J. 12 (1996).
NOTES TO DECISIONS
1. Liability.
A bankruptcy debtor, a full-time medical doctor, was not responsible for the payment of delinquent sales taxes owed by a restaurant where he had nothing to do with the company except a financial investment. In re Young, 215 B.R. 366, 1997 Bankr. LEXIS 1946 (Bankr. W.D. Tenn. 1997).
67-1-1444. Collection of tax debt from transferee — Liability of transferee.
- When assets are conveyed or obligations are created by a person owing taxes to the state, on or after the date any such taxes are incurred, and such conveyance of assets or creation of obligations is in violation of title 66, chapter 3, then the commissioner may proceed to collect such tax debt from the transferee, pursuant to this part, in the same manner as the commissioner otherwise could have collected such debt from the transferor.
- The liability of any such transferee shall be limited to the fair market value of the assets conveyed at the time of the transfer from the original taxpayer or the amount of any such obligation at the time the obligation is created.
Acts 1988, ch. 829, § 1.
67-1-1445. Collection of tax debt outside state.
- The commissioner may contract with any debt collection agency or attorney to collect unpaid taxes, licenses, fees and/or interest and penalty, or any other amount otherwise collectible by the commissioner.
- Any amounts collected pursuant to the contract shall be remitted to the state of Tennessee; provided, that the contract may provide for amounts to be received by the contractor as compensation for collection services. The amount of such compensation shall be added to the unpaid amount due from the taxpayer and shall be collectible in the same manner as taxes under this part.
- The commissioner shall require a bond from any person contracting under this section in an amount not in excess of one hundred thousand dollars ($100,000) guaranteeing compliance with the terms of the contract and all applicable laws.
- All persons seeking to contract under this section shall demonstrate, to the satisfaction of the commissioner, their good moral character and ability to perform effectively the terms of the contract. In addition to the specific requirements of this section, the commissioner may impose additional requirements tending to ensure the good moral character and effective performance of persons contracting under this section.
- This section shall only apply after the department has completed all administrative notices and actions under this part and the taxpayer has exhausted or not exercised the taxpayer's rights under part 18 of this chapter.
Acts 1991, ch. 79, § 1; 2003, ch. 118, §§ 1, 2.
Attorney General Opinions. Governmental entity's authority to contract with private firm to audit, assess, or collect taxes, OAG 05-181 (12/20/05).
No specific statutory authority exists that would authorize local or state governments to outsource non-delinquent revenue administration beyond the statutes discussed in Opinion No. 05-181, OAG 06-039 (2/23/06).
Part 15
Statute of Limitations
67-1-1501. Limitation on assessment and collection of taxes.
- Locally Collected Privilege Taxes. All state, county or municipal privilege taxes, including, but not limited to, business, litigation, real estate transfer and mortgage taxes collected by the state or by local officials for the benefit of cities, counties or the state, shall be barred, and any lien for such taxes shall be cancelled and extinguished, unless the liens are collected or suits for the collection shall have been instituted within six (6) years from January 1 of the year for which such taxes accrued.
-
State Taxes Requiring the Filing of Returns — Assessment. Notwithstanding subsection (a), the amount of any tax imposed under any title, in which the filing of a return is required by the state, shall be assessed within three (3) years from December 31 of the year in which the return was filed, and no levy or other proceeding to enforce the collection of such tax without assessment shall be made or begun after expiration of such period; provided, that:
- In the case of a failure to file a return, the tax may be assessed or a levy or other proceeding to enforce the collection of such tax may be begun, with or without assessment, at any time;
- In the case of a false or fraudulent return with the intent to evade the tax, the tax may be assessed or a levy or other proceeding to enforce collection of such tax may be begun, with or without assessment, at any time;
- In the case of a redetermination of net income by the internal revenue service resulting in a taxpayer owing the state additional franchise or excise tax, the statutory period for the assessment of additional franchise or excise tax resulting from such revision shall not expire prior to the expiration of two (2) years from the date the commissioner or the commissioner's delegate is notified in writing by the taxpayer of such revision;
- In the case of a revision of any federal estate tax resulting from an examination by the internal revenue service that results in an estate owing the state additional estate or inheritance tax, the statutory period for the assessment of additional estate or inheritance tax resulting from such revision shall not expire prior to the expiration of two (2) years from the date the commissioner or the commissioner's delegate is notified in writing by the taxpayer of such revisions; and
- In the case of an agreement in writing entered into by the commissioner or the commissioner's delegate and the taxpayer within the time prescribed in this subsection (b) for assessment, consenting to an assessment after such time, the tax may be assessed or a levy or other proceeding to enforce collection of such tax may be made or begun with or without assessment at any time within the agreed upon period. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the previously agreed upon period.
- State Taxes Requiring the Filing of Returns — Collection. The amount of any tax assessed as prescribed by subsection (b) may be collected within the period of limitation provided in § 67-1-1429.
- Non-applicable to ad valorem taxes. Nothing in this section shall apply to the collection of ad valorem taxes assessed against real or personal property by any county or municipality in this state.
- For purposes of this section, the term “assessed” or “assessment” shall be deemed to include any notice of proposed assessment issued by the commissioner or any other authorized person under § 67-1-1438, and the time periods set forth in subsection (b) are met if the commissioner issues a notice of proposed assessment within the period of time prescribed for an assessment.
Acts 1885, ch. 24, § 1; Shan., § 821; mod. Code 1932, § 1494; Acts 1949, ch. 229, § 1; impl. am. Acts 1949, ch. 236, § 1; C. Supp. 1950, § 1494; Acts 1972, ch. 492, § 1; 1973, ch. 368, § 3; 1974, ch. 484, § 2; T.C.A. (orig. ed.), § 67-1323; Acts 1985, ch. 373, § 1; 1988, ch. 526, § 1; 1999, ch. 162, § 3; 1999, ch. 406, § 7; 2008, ch. 1106, § 33; 2014, ch. 854, § 8.
Compiler's Notes. Acts 1999, ch. 162, § 1 provided that the general assembly hereby declares that the statute of limitations for collection of ad valorem taxes assessed against real or personal property by any county or municipality in Tennessee is and heretofore has been, since the date of original enactment of such statute, as set forth in § 67-5-1806, and that the purpose of Acts 1999, ch. 162, adding § 67-1-1429(a)(4) and (d), was to clarify this intent.
Amendments. The 2014 amendment, effective January 1, 2015, added (e).
Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.
Cross-References. Bar to collection after ten years, § 67-5-1806.
Refunds and adjustments, § 67-1-707.
Suspension of statute of limitations for inheritance tax assessment and collection extension, § 67-8-419.
Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 962.
Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 22; 18 Tenn. Juris., Limitations of Actions, §§ 3, 31; 22 Tenn. Juris., Special Assessments, § 9; 23 Tenn. Juris., Taxation, §§ 28, 30, 54.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Cited: Knoxville v. Gervin, 169 Tenn. 532, 89 S.W.2d 348, 1935 Tenn. LEXIS 80, 103 A.L.R. 877 (1936); Williams v. Williams, 25 Tenn. App. 290, 156 S.W.2d 363, 1941 Tenn. App. LEXIS 108 (Tenn. Ct. App. 1941).
NOTES TO DECISIONS
1. Construction.
This statute being in derogation of sovereignty will be construed in favor of the state. Hake v. Warren, 184 Tenn. 372, 199 S.W.2d 102, 1947 Tenn. LEXIS 389 (1947), superseded by statute as stated in, Griggs v. Peerless Ins. Co., 528 S.W.2d 182, 1975 Tenn. LEXIS 621 (Tenn. 1975).
A law imposing a statute of limitation on the collection of taxes is liberally construed in favor of the state's right to collect the tax. R.J. Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, 1948 Tenn. LEXIS 422 (1948), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
2. Prescriptive Period.
The right to collect the tax is extinguished, as is also the lien, after six years. State v. Collier, 160 Tenn. 403, 23 S.W.2d 897, 1929 Tenn. LEXIS 120 (1930), superseded by statute as stated in, Toler by Lack v. City of Cookeville, 952 S.W.2d 831, 1997 Tenn. App. LEXIS 89 (Tenn. Ct. App. 1997).
The excise tax imposed upon corporations is subject to the general limitation of six years provided by this section and not to the three-year limitation provided by § 67-1-1101 (repealed). Memphis Natural Gas Co. v. Pope, 178 Tenn. 580, 161 S.W.2d 211, 1940 Tenn. LEXIS 71 (1941), aff'd, Memphis Natural Gas Co. v. Beeler, 315 U.S. 649, 62 S. Ct. 857, 86 L. Ed. 1090, 1942 U.S. LEXIS 782 (1942), aff'd sub nom. Memphis Natural Gas Co. v. Beeler, 315 U.S. 649, 62 S. Ct. 857, 86 L. Ed. 1090, 1942 U.S. LEXIS 782 (1942).
In suit by state against estate of surety for bond to cover taxes accruing from wholesaling malt beverages, it was held that this was a privilege tax governed by six-year statute of limitations. In re Estate of Darwin, 503 S.W.2d 511, 1973 Tenn. LEXIS 443 (Tenn. 1973).
Where the ad valorem taxes ranged from 10 to 30 years overdue, evidencing gross laches on the part of county, such taxes were barred by this section. Holloway v. Putnam County, 534 S.W.2d 292, 1976 Tenn. LEXIS 591 (Tenn. 1976).
3. Taxes Not Covered.
This section does not apply to inheritance taxes. Miller v. Wolfe, 115 Tenn. 234, 89 S.W. 398, 1905 Tenn. LEXIS 56 (1905).
Paving assessments levied on abutting property, under Acts 1905, ch. 278, are not taxes under this section barring collection of taxes after six years. City of Knoxville v. Lee, 159 Tenn. 619, 21 S.W.2d 628, 1929 Tenn. LEXIS 20 (1929).
Six-year period for collection of property, privilege, and poll taxes does not include unemployment compensation taxes, since so-called taxes are not for support of government but for special purpose to wit unemployment relief, and are not considered taxes but contributions, and furthermore the general assembly did not write into the Unemployment Compensation Act any limitation of time as a bar to an action by the commissioner to recover contributions. Hake v. Warren, 184 Tenn. 372, 199 S.W.2d 102, 1947 Tenn. LEXIS 389 (1947), superseded by statute as stated in, Griggs v. Peerless Ins. Co., 528 S.W.2d 182, 1975 Tenn. LEXIS 621 (Tenn. 1975).
This section does not apply to a claim for delinquent contributions made by the commissioner of the department of employment security against the employer's surety. Griggs v. Peerless Ins. Co., 528 S.W.2d 182, 1975 Tenn. LEXIS 621 (Tenn. 1975).
Only state taxes must meet the three-year statute of limitations on assessment under this section. Business taxes which fall under classification 1-3 of T.C.A. § 67-4-708 are not state taxes, but are instead local privilege taxes which each county and/or municipality is permitted to levy. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).
4. Running of Statute.
The statute runs from the time taxes become delinquent. Grant Bond & Mortg. Co. v. Ogle, 17 Tenn. App. 112, 65 S.W.2d 1091, 1933 Tenn. App. LEXIS 49 (Tenn. Ct. App. 1933); Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).
Suit by city of Knoxville to foreclose lien on unpaid paving assessments levied under Private Acts 1925, ch. 348 was not governed by this section, since paving assessments are not taxes, and cause of action did not start running until 30 days after confirmation of assessment, though special act providing that assessment was lien from the time of the first reading. Knoxville v. Keith, 182 Tenn. 48, 184 S.W.2d 162, 1944 Tenn. LEXIS 299 (1944).
Where, for period of time between commencement of suit for collection of delinquent taxes and filing of subsequent bill joining subsequent owner, a tax moratorium was in effect, and where suit was instituted within three years of tax delinquency of record owner, suit was not barred by six-year statute of limitations. State ex rel. City of Chattanooga v. Bayless, 30 Tenn. App. 621, 209 S.W.2d 504, 1947 Tenn. App. LEXIS 116 (1947).
Six-year limitation period did not bar assessment on November 18, 1946 of franchise and excise taxes against corporation due July 1, 1941, as limitation period did not start to run until January 1, 1941. R.J. Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, 1948 Tenn. LEXIS 422 (1948), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
Where answer in ejectment suit showed that complainant failed to get title at illegal tax sale, subrogation to liens securing taxes paid by complainant could have been granted as general relief so that amendment of complaint after remand claiming subrogation related back to time of filing bill for ejectment and running of statute of limitations respecting subrogation was suspended. Williams v. Cravens, 31 Tenn. App. 246, 214 S.W.2d 57, 1948 Tenn. App. LEXIS 88 (Tenn. Ct. App. 1948).
Tax suits are proceedings in rem so that the filing of such suits can toll the running of the period of limitation even in absence of personal service. Moore v. City of Chattanooga, 52 Tenn. App. 76, 371 S.W.2d 815, 1963 Tenn. App. LEXIS 91 (1963).
The 1973 amendment reducing the time for institution of proceedings to three years was not retrospective. Woods v. TRW, Inc., 557 S.W.2d 274, 1977 Tenn. LEXIS 671 (Tenn. 1977).
The statute of limitations in this section, as to classification 2 business taxes, did not begin to run when the taxes were payable under § 67-4-714, but rather on January 1 of the year in which they became delinquent, which for 1972 taxes was March 1, 1973, the last date the taxpayer was permitted to file a return under § 67-4-715. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).
The statute of limitations begins to run only after the accrual of a complete right of action, which generally accrues when the complainant can bring suit to recover a sum of money alleged to be due and unpaid. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).
Collateral References.
Application of general statute of limitations to real estate tax lien foreclosure action. 59 A.L.R.2d 1144.
Taxation 371
67-1-1502. Dismissal of action after expiration of limitation.
It is the duty of the court in which proceedings concerning the collection of taxes may be brought, where the collection of taxes shall be claimed to be barred under § 67-1-1501, when this statute is pleaded, and the truth of the plea appears to the satisfaction of the court, to dismiss the cause, and order that the officer having the respective tax books in charge, enter on the tax books, opposite the name of the taxpayer, a memorandum of the judgment of the court.
Acts 1885, ch. 24, § 2; Shan., § 822; Code 1932, § 1495; T.C.A. (orig. ed.), § 67-1324.
Textbooks. Tennessee Jurisprudence, 18 Tenn. Juris., Limitations of Actions, § 3.
Law Reviews.
Trial, 4 Mem. St. U.L. Rev. 335 (1974).
Part 16
Officers Charged with Delinquent Taxes
67-1-1601. Commissions disallowed on failure to settle or pay over.
Commissions shall not be allowed any collecting officer for collecting and paying over any public money, unless the officer makes settlement and payment as required by law.
Code 1858, § 668; Shan., § 961; Code 1932, § 1671; T.C.A. (orig. ed.), § 67-1424.
Cross-References. Interest and damages, § 67-1-1610.
Penalty for failure to pay over taxes, § 67-1-1616.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 52.
NOTES TO DECISIONS
1. Construction.
This statute is not so explicit as to require all commissions to be absolutely disallowed, and it would be a harsh construction to disallow all commissions where the tax collector correctly discharged his duties for the greater part of his term, and, according to law, paid over the greater part of the money, but failed to pay a small part, or in some respect failed to settle according to law. Where the lower court has allowed the commissions, or the comptroller of the treasury has done so though the lower court disallowed the commissions, the supreme court will allow the commissions. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).
Collateral References. Taxation 371
67-1-1602. Action against collector for failure to settle or pay over.
- For any neglect or refusal to settle the collector's accounts, the commissioner and county mayor shall proceed against the collector and the collector's sureties, by motion, which shall not be abated, quashed, or delayed by any want of form or informality in prosecuting the accounts.
- Any officer concerned in the collection of revenue who has failed to collect, make returns or settlement, or pay over moneys of the state received by such officer, at the time and in the manner required by law, may be proceeded against summarily, on motion, in the circuit court, by the proper law officer of the state, pursuant to the instructions of the commissioner.
Code 1858, §§ 670, 730 (deriv. Acts 1835-1836, ch. 12, § 20; 1839-1840, ch. 160, § 7); Shan., §§ 963, 1043; Code 1932, §§ 1672, 1772; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; impl. am. Acts 1978, ch. 934, §§ 16, 36; T.C.A. (orig. ed.), §§ 67-1425, 67-1601; Acts 2003, ch. 90, § 2.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 52.
Law Reviews.
The Tennessee Court System — Circuit Court (Frederic S. Le Clercq), 8 Mem. St. U.L. Rev. 241 (1978).
NOTES TO DECISIONS
1. Construction.
Laws relative to the bonds of tax collectors and their sureties should be strictly enforced. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).
By whatever name the officer may be called, he and his sureties fall within the law, if he be “concerned in the collection of revenue.” Such a general law applies to officers subsequently created as well as to those in existence; therefore, the county trustee, upon whom the duty of collecting revenue was imposed, is included. Derrick v. State, 71 Tenn. 396, 1879 Tenn. LEXIS 96 (1879).
The term “revenue” includes not only money raised by some of the modes of taxation, but in one sense all moneys belonging to the state. Donelson v. State, 71 Tenn. 692, 1879 Tenn. LEXIS 132 (1879).
2. Motions.
The county judge or chair (now county mayor) is the proper officer to make the motion for county revenue, in the name of the state of Tennessee, for the use of the county. Dulaney v. Dunlap, 43 Tenn. 306, 1866 Tenn. LEXIS 56 (1866); Waters v. Edmondson, 55 Tenn. 384, 1874 Tenn. LEXIS 5 (1874).
The failure of the county clerk to keep a revenue docket, as required by law, does not affect the right of the county to proceed, by motion, upon other evidence. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).
The motion should be made “on behalf of the state of Tennessee” for state revenue, but the omission of this phrase is not fatal to the proceeding. Carlton v. State, 55 Tenn. 16, 1873 Tenn. LEXIS 2 (1873).
The comptroller of the treasury's statement constitutes the basis for the motion. State v. Ballentine, 2 Shan. 140 (1876); State v. Harkreader, 80 Tenn. 456, 1883 Tenn. LEXIS 196 (1883).
A motion by the state against the clerk of a criminal court and his sureties, for failure to pay over revenue, may be properly made in the circuit court. Donelson v. State, 71 Tenn. 692, 1879 Tenn. LEXIS 132 (1879).
A motion may be maintained in the name of the state, for the use of a county, to recover of a delinquent trustee school moneys collected by him. Jernegan v. Gray, 82 Tenn. 536, 1884 Tenn. LEXIS 156 (1884); State use of Anderson County v. Hays, 99 Tenn. 542, 42 S.W. 266, 1897 Tenn. LEXIS 66 (1897).
3. Necessary Parties.
The school children of a county are not necessary parties to an action on the official bond of the county trustee to recover the school tax for which he has failed to account. State use of Anderson County v. Hays, 99 Tenn. 542, 42 S.W. 266, 1897 Tenn. LEXIS 66 (1897).
4. Credits.
The revenue collector is not entitled to credit for payment to state treasurer, unless the payment is made as required by law. Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873).
5. Right of State Revenue Agent to Intervene.
The state revenue agent has no authority, under this section, to intervene, except by direction of the comptroller of the treasury, and where the application filed fails to aver that the revenue agent has been directed by the comptroller to intervene, it is properly denied. Fidelity Trust Co. v. Tennessee Charcoal Iron Co., 3 F.2d 857, 1925 U.S. App. LEXIS 3818 (6th Cir. 1925) (decision prior to Acts 1937, ch. 33 transferring duties to commissioner of revenue and taxation).
67-1-1603. Entry of motion against delinquent.
On receipt of the commissioner's statement, under the commissioner's official seal, of the sum claimed by the state against the delinquent, in cases in which a statement can be made out, or of the delinquent's official bond, accompanied by the commissioner's instructions, the district attorney general or county auditor shall move the court for judgment against the delinquent.
Code 1858, § 731 (deriv. Acts 1835-1836, ch. 12, § 20; 1839-1840, ch. 160, § 7); Acts 1907, ch. 602, § 77; integrated in Shan., § 1044; Acts 1923, ch. 109, § 8; mod. Code 1932, § 1773; impl. am. Acts 1937, ch. 33, § 50; modified; T.C.A. (orig. ed.), § 67-1602.
67-1-1604. Time of trial.
If the motion is made at a term requiring notice, and the notice is served five (5) days before the sitting of the court, the cause shall stand for trial at the first term.
Code 1858, § 737; Shan., § 1050; Code 1932, § 1779; T.C.A. (orig. ed.), § 67-1603.
NOTES TO DECISIONS
1. Service of Notice.
The service of notice from the attorney general and reporter must be considered in the nature of the service of leading process and the institution of a suit; and if, after the service of such notice and before the entry of the motion, the delinquent pays the amount in default, the state is entitled to a judgment for full costs against the defendants. State v. Dail, 50 Tenn. 272, 1871 Tenn. LEXIS 95 (1871).
2. Sufficiency of Notice.
Notice specifying the court in which the nature of the demand and the time and place that the motion would be made against the clerk of the circuit court, for jail fees due plaintiff, is sufficient. Young v. Hare, 30 Tenn. 303, 1850 Tenn. LEXIS 119 (1850).
The notice of the motion, specifying the term of court, but not the day of the term on which the motion will be made, is sufficient. State v. Allison, 55 Tenn. 1, 1872 Tenn. LEXIS 111 (1872).
Notice that “I will move the circuit court for judgment against you and your securities for state revenue due the state of Tennessee,” when addressed to the delinquent collector, sufficiently describes the cause of action. Brown v. State, 55 Tenn. 871, 1874 Tenn. LEXIS 14 (1874).
Notice that a motion will be made before the circuit judge holding the circuit court of Lewis County, stating the time of the motion, is not defective for failing to specify the place of holding the court. Brown v. State, 55 Tenn. 871, 1874 Tenn. LEXIS 14 (1874). See Curry v. Munford, 52 Tenn. 61, 1871 Tenn. LEXIS 233 (1871).
3. Motion.
The motion must be made and entered of record, on the day designated in the notice, or at the term specified, if the day be not specified; and such motion cannot be made afterwards, without a new notice, unless the want of notice is cured by the appearance of the parties. Cheatham v. Howell, 14 Tenn. 310, 14 Tenn. 311, 1834 Tenn. LEXIS 81 (1834); State v. Allison, 55 Tenn. 1, 1872 Tenn. LEXIS 111 (1872).
General appearance and defense to a motion cures any defects therein, or waives objections thereto or absence thereof. Young v. Hare, 30 Tenn. 303, 1850 Tenn. LEXIS 119 (1850); Watkins v. Barnes, 33 Tenn. 201, 1853 Tenn. LEXIS 30 (1853); Chaffin v. Crutcher, 34 Tenn. 360, 1854 Tenn. LEXIS 53 (1854); State v. Allison, 55 Tenn. 1, 1872 Tenn. LEXIS 111 (1872); Shepherd v. Hamilton County, 55 Tenn. 380, 1874 Tenn. LEXIS 4 (1874); Brown v. State, 55 Tenn. 871, 1874 Tenn. LEXIS 14 (1874).
67-1-1605. Precedence on docket.
In all cases, motions or suits in favor of the state shall have precedence over other causes on the docket of any of the courts.
Code 1858, § 738; Shan., § 1051; Code 1932, § 1780; T.C.A. (orig. ed.), § 67-1604.
67-1-1606. Commissioner's statement as evidence — Copy of bond.
The statement of the commissioner of the amount due the state from any delinquent shall be prima facie evidence of such amount and a copy of the delinquent's bond, from the commissioner's office, shall be received as evidence of the facts appearing on its face, unless, for sufficient reason, suggested on oath, the court require the production of the original.
Code 1858, § 732 (deriv. Acts 1839-1840, ch. 160, § 7; 1843-1844, ch. 103, § 7); Shan., § 1045; Code 1932, § 1774; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), § 67-1605.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 52.
NOTES TO DECISIONS
1. Statement as Evidence.
The comptroller of the treasury's statement is only prima facie evidence upon the trial of a motion against a defaulting revenue collector. Anderson v. State, 55 Tenn. 13, 1873 Tenn. LEXIS 1 (1872); Carlton v. State, 55 Tenn. 16, 1873 Tenn. LEXIS 2 (1873); McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873); Allison v. State, 55 Tenn. 312, 1873 Tenn. LEXIS 4 (1873); Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873); Wood v. State, 55 Tenn. 329, 1873 Tenn. LEXIS 6 (1873); Chadwell v. State, 55 Tenn. 340, 1874 Tenn. LEXIS 3 (1874); Chandler v. State, 69 Tenn. 296, 1878 Tenn. LEXIS 89 (1878).
Such construction does not interfere with the constitutional functions of the comptroller of the treasury, while the contrary construction, giving conclusiveness to the comptroller's statement, would materially interfere with the constitutional functions of the courts. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873). See Anderson v. State, 55 Tenn. 13, 1873 Tenn. LEXIS 1 (1872).
2. Authentication of Statement.
Objection to the admissibility of the comptroller of the treasury's statement, without pointing out the specific ground of objection, does not enable the defendant to assign for error, in the supreme court, that the certificate to the statement was not given under the official seal of the comptroller. Carlton v. State, 55 Tenn. 16, 1873 Tenn. LEXIS 2 (1873).
67-1-1607. Judgment against collector.
The court shall render judgment against the delinquent and the delinquent's sureties for the amount appearing due from the statement of the commissioner, or for the penalty of the bond, where there is no statement.
Code 1858, § 733; Shan., § 1046; Code 1932, § 1775; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), § 67-1606.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 52.
NOTES TO DECISIONS
1. Motion Against Collector.
Judgment rendered on motion against a revenue collector and part only of his living sureties is a nullity. Fry v. Britton, 49 Tenn. 606, 1871 Tenn. LEXIS 50 (1871).
Motion against a delinquent revenue collector, with the required notice thereof given to him, but without notice to his sureties, carries with it the right to judgment against both him and his sureties appearing on his bond. Brown v. State, 55 Tenn. 871, 1874 Tenn. LEXIS 14 (1874); State v. Ballentine, 2 Shan. 140 (1876).
2. Amount of Judgment.
The judgment shall be for the amount of the comptroller of the treasury's statement, in the absence of other satisfactory rebutting evidence, and sufficient evidence may prevent the rendition of the judgment on the comptroller's statement. Anderson v. State, 55 Tenn. 13, 1873 Tenn. LEXIS 1 (1872); McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873); Chandler v. State, 69 Tenn. 296, 1878 Tenn. LEXIS 89 (1878).
67-1-1608. Amount of judgment in absence of commissioner's statement.
If there be no statement of the commissioner, a judgment nisi shall be rendered for the penalty of the bond, and the defendant may have an issue made up to prove the amount due, and judgment final shall be given for such amount.
Code 1858, § 734 (deriv. Acts 1843-1844, ch. 103, § 7); Shan., § 1047; Code 1932, § 1776; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), § 67-1607.
NOTES TO DECISIONS
1. Credit for Payments.
The notice of motion is a leading process, and its service is the beginning of a suit; and if, after notice and before the motion, the delinquent pays the amount in default, the state is entitled to a judgment for full costs against the defendants. State v. Dail, 50 Tenn. 272, 1871 Tenn. LEXIS 95 (1871).
The receipts of the state treasurer or of an authorized state depository for revenue, as a defense to a motion against a delinquent revenue collector, must show the year for which the payments were made, which must be for the proper year. Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873).
A revenue collector is not entitled to credit for payment made to the state treasurer, where he fails to comply with the requirements of the law that he must settle with the comptroller of the treasury, and upon his receivable warrant pay the money to the state treasurer, and take his receipt in duplicate, retaining one, and filing the other with the comptroller, for money paid to the treasurer otherwise than in the manner required by law is in his hands as an individual, and not as state treasurer, and is, therefore, at the risk of the revenue collector. Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873); Wood v. State, 55 Tenn. 329, 1873 Tenn. LEXIS 6 (1873); State v. Rust, 3 Cooper's Tenn. Ch. 718 (1878).
2. Evidence of Payment.
Certified transcripts from the records of the county legislative body, allowing the revenue collector releases of taxes for the proper year, are admissible for the allowance of credits in a motion against the collector. Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873).
The state treasurer's receipt to the revenue collector is the statutory evidence of the payment of the money, and parol evidence of the payment cannot be received, without accounting, in the regular way, for the absence of the receipt. Wood v. State, 55 Tenn. 329, 1873 Tenn. LEXIS 6 (1873).
Oral evidence of the results of the examination of the tax books and vouchers, showing the amount of taxes charged against the collector, without the production of such books and vouchers, is not admissible on the trial of a motion against the revenue collector and his sureties, for his alleged default, because such books and papers, or copies thereof, are the best evidence. Shepherd v. Hamilton County, 55 Tenn. 380, 1874 Tenn. LEXIS 4 (1874).
3. Evidence of Admissions.
As against the surety objecting to evidence of admissions of his principal, the admissions were held prima facie evidence. Young v. Hare, 30 Tenn. 303, 1850 Tenn. LEXIS 119 (1850); Montgomery v. Coldwell, 82 Tenn. 29, 1884 Tenn. LEXIS 100 (1884).
In an action brought against a surety on a sheriff's official bond, to which the sheriff is not a party, for money collected on an execution and not paid over, the sheriff's admission after the return day of the execution, “that he had not paid over to plaintiff the money he had collected on the execution,” is not admissible because it was not a part of the res gestae. Trousdale ex rel. McNickol v. Philips, 32 Tenn. 384, 1852 Tenn. LEXIS 88 (1852); White v. German Nat'l Bank, 56 Tenn. 475, 1872 Tenn. LEXIS 163 (1872).
In an action against a notary public and his sureties on his official bond, his sworn statements as a witness in another lawsuit are not admissible against his sureties. Wheeler v. State, 56 Tenn. 393, 1872 Tenn. LEXIS 152 (1872).
4. Evidence on Appeal.
Where the motion against a revenue collector for his alleged default is tried by the circuit judge, without the intervention of a jury, the supreme court is bound to assume that the trial judge considered all the relevant evidence offered, unless the contrary distinctly appears from the bill of exceptions, and a mere statement that he excluded certain evidence does not import that he did not consider the evidence, and such statement constitutes no ground of reversal if there be any ground upon which such exclusion might be proper. Carlton v. State, 55 Tenn. 16, 1873 Tenn. LEXIS 2 (1873).
An offer by the defendant revenue collector, made on the trial, to prove “some” receipts for “some” payments of the amount specified in the comptroller of the treasury's statement, and to read the tax book, is not such an offer as will enable him to assign error for the refusal of the trial court to hear such evidence, where the statement of the comptroller merely shows the balance due, and the bill of exceptions shows neither the dates nor the amounts of the receipts. Carlton v. State, 55 Tenn. 16, 1873 Tenn. LEXIS 2 (1873).
It will be presumed that certified transcripts of the records of the county, offered as evidence to show the releases of taxes, were legally rejected, where the record does not show the ground of the action of the trial court. Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873).
67-1-1609. Judgment against surviving principal and sureties.
If the delinquent, or either of the delinquent's sureties, has died before the motion is made, the court shall give judgment against the sureties alone, in case of the death of the principal, or against the principal and surviving sureties on the bond, in case of the death of either of the sureties.
Code 1858, § 735 (deriv. Acts 1839-1840, ch. 160, § 13); Shan., § 1048; Code 1932, § 1777; T.C.A. (orig. ed.), § 67-1608.
NOTES TO DECISIONS
1. Nature of Remedy.
The legislature intended to take the bonds of revenue collectors out of the ordinary rule, and to give the state the summary remedy in all contingencies. Derrick v. State, 71 Tenn. 396, 1879 Tenn. LEXIS 96 (1879).
2. Scope of Remedy.
Notice of motion against a revenue collector for judgment on his bond for one year, with appearance and defense, will sustain a judgment on his bond of another year. Shepherd v. Hamilton County, 55 Tenn. 380, 1874 Tenn. LEXIS 4 (1874).
3. Judgment Against Principal and Sureties.
A judgment by motion, rendered against a revenue collector and only part of his living sureties, is void and the sheriff and attorney for the state may be enjoined from collecting the judgment. The state cannot prosecute a writ of error in the injunction suit, where it is not a party. Such judgment interposes no bar to such new proceeding as the state may institute. Fry v. Britton, 49 Tenn. 606, 1871 Tenn. LEXIS 50 (1871); State v. Ballentine, 2 Shan. 140 (1876).
Where a motion is made against a revenue collector and his sureties, and one of the sureties dies pending the motion, it is optional whether the motion be revived against the personal representative of the decedent, or dismissed as to him; and if no revivor, judgment may be rendered against the principal and the surviving sureties. Shepherd v. Hamilton County, 55 Tenn. 380, 1874 Tenn. LEXIS 4 (1874).
For the official default of a county trustee as collector, the motion for official default lies against the sureties alone, though the trustee died before the motion was made or notice of default was given. Derrick v. State, 71 Tenn. 396, 1879 Tenn. LEXIS 96 (1879).
4. Determination by Supreme Court.
Upon reversal in these motion cases, a proper judgment, such as the circuit judge should have rendered, will be rendered in the supreme court without remand of the case, where the record is in a condition to authorize such judgment. Lay v. State, 37 Tenn. 604, 1858 Tenn. LEXIS 73 (1858); State v. Dail, 50 Tenn. 272, 1871 Tenn. LEXIS 95 (1871).
Upon reversal, the supreme court cannot render final judgment without remand, where the collector's official bond, the comptroller of the treasury's authenticated statement of the collector's account, the other documentary evidence, and the oral testimony are not properly made a part of the record by bill of exceptions. State v. Allison, 55 Tenn. 1, 1872 Tenn. LEXIS 111 (1872); Allison v. State, 55 Tenn. 312, 1873 Tenn. LEXIS 4 (1873); Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873).
In cases tried by the judge, without the intervention of a jury, the supreme court is bound to presume that he considered all the relevant evidence offered, unless the contrary distinctly appears from the bill of exceptions, and a mere statement that he excluded certain evidence does not import that he did not consider such evidence, and is not a ground of reversal, if there be any ground on which such evidence could have been properly excluded. Carlton v. State, 55 Tenn. 16, 1873 Tenn. LEXIS 2 (1873).
Where, in action against officer, lower court rejected as evidence, certified transcripts of record of county allowing releases of taxes as evidence and there was nothing in record to show that circuit judge was in error, the grounds of his action not being shown, the supreme court will presume in favor of the correctness of his action. Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873).
67-1-1610. Interest and damages.
In taking judgment against a delinquent officer, interest at the rate of six percent (6%) on the amount that the delinquent officer has failed to pay over shall be added, and twelve and one-half percent (12.5%) damages on the delinquency.
Code 1858, § 736 (deriv. Acts 1835-1836, ch. 15, §§ 14, 15; 1843-1844, ch. 103, § 5); Shan., § 1049; Code 1932, § 1778; T.C.A. (orig. ed.), § 67-1609.
Cross-References. Commissions disallowed on failure to settle or pay over, § 67-1-1601.
Penalty for failure to pay over taxes, § 67-1-1616.
NOTES TO DECISIONS
1. Application.
This section relates to judgments on motion in circuit court against officers who have collected state revenue and have failed to account for it and is without application to a suit by the state against a county trustee and his surety for the balance due the county at the expiration of his term. State v. Miner, 176 Tenn. 158, 138 S.W.2d 766, 1938 Tenn. LEXIS 148 (1940).
2. Damages.
The damages are given as an incident to the judgment, and need not be demanded in express terms in the entry of the motion of record; and where, after the motion was entered, the sum with which the delinquent revenue collector was properly chargeable is paid, the damages are still recoverable on that sum. Newman v. Thompson, 25 Tenn. 24, 1845 Tenn. LEXIS 5 (1845).
The recovery shall be for the amount not paid over, with the interest accrued on the delinquency, and the damages calculated on this gross amount, and all costs, against both the delinquent principal and his sureties. Newman v. Thompson, 25 Tenn. 24, 1845 Tenn. LEXIS 5 (1845); Lay v. State, 37 Tenn. 604, 1858 Tenn. LEXIS 73 (1858); McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).
67-1-1611. Credit for claims due collector.
Where a judgment has been obtained against a delinquent officer, all bona fide claims due the delinquent officer, properly authenticated, shall be allowed by the commissioner upon settlement of the judgment.
Code 1858, § 742 (deriv. Acts 1843-1844, ch. 168, § 1); Shan., § 1052; Code 1932, § 1784; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), § 67-1610.
NOTES TO DECISIONS
1. Claims Covered by Section.
The provisions of this section have reference to such claims as have arisen since the rendition of the judgment, and not to claims that existed before, of which latter claims, the judgment is conclusive. State v. Allison, 55 Tenn. 1, 1872 Tenn. LEXIS 111 (1872); Anderson v. State, 55 Tenn. 13, 1873 Tenn. LEXIS 1 (1872).
It was intended by this section to provide for just credits being afterwards obtained, where, for any reason, the collector failed to obtain them upon the trial. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).
67-1-1612. Receipt of revenues due state.
No district attorney general, either before or after suit is brought or judgment rendered, shall receive any money due the state. The clerk of the circuit court alone shall, for the clerk's county, receive moneys due the state from delinquent revenue collectors.
Code 1858, §§ 739, 740 (deriv. Acts 1843-1844, ch. 103, §§ 8, 9); Shan., §§ 1051a1, 1051a2; Code 1932, §§ 1781, 1782; modified; T.C.A. (orig. ed.), § 67-1611.
NOTES TO DECISIONS
1. Commission of Clerk.
It was held that where, after the motion was made, but before judgment, the amount of the defalcation was paid to the comptroller of the treasury and the case abandoned by the state, the clerk was not entitled to commissions on the same. State v. Harkreader, 80 Tenn. 456, 1883 Tenn. LEXIS 196 (1883).
2. Commission of Supreme Court Clerk.
The clerk of the supreme court was not entitled to this commission on moneys received by him from delinquent collectors and reported to the comptroller of the treasury and paid into the treasury. Baxter v. Comptroller of State, 82 Tenn. 122, 1884 Tenn. LEXIS 113 (1884).
67-1-1613. Report and deposit of revenues by clerk of court.
The clerk of the circuit court, immediately after receiving any money due to the state from delinquent collectors of revenue, shall report the amount, and from whom and when received, and immediately deposit the money in the state treasury.
Code 1858, § 743 (deriv. Acts 1843-1844, ch. 103, § 9); Shan., § 1052a1; Code 1932, § 1785; T.C.A. (orig. ed.), § 67-1612.
67-1-1614. Clerk's commission.
The clerk's commission upon all moneys received by the clerk from delinquent collectors, and reported to the commissioner and paid into the state treasury, shall be six percent (6%).
Code 1858, § 741; Shan., § 1051a3; Code 1932, § 1783; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), § 67-1613.
67-1-1615. Penalties for violations paid into school fund.
Any and all officers entrusted with the collection and disbursement of public funds or revenues violating this part, parts 7, 10 or 15 of this chapter, chapter 5, parts 4, 18, 19 or 20 of this title, or § 67-1-107, § 67-5-301, § 67-5-302, § 67-5-306, § 67-5-507 or § 67-5-513, upon whom no penalty has been imposed for so doing, commits a Class C misdemeanor, the fine portion of which shall be placed in the state treasury for the benefit of the public school fund.
Acts 1907, ch. 602, § 71; Shan., § 928; Code 1932, § 1634; T.C.A. (orig. ed.), § 67-1614; Acts 1989, ch. 591, § 113.
Cross-References. Penalty for Class C misdemeanor, § 40-35-111.
67-1-1616. Monthly penalty for failure to pay over taxes — Forfeiture of office.
Where such trustee or other officer, whose duty it is to collect any taxes under this part, part 7, 10 or 15 of this chapter, chapter 5, parts 4, 18, 19 or 20 of this title, or § 67-1-107, § 67-5-301, § 67-5-302, § 67-5-306, § 67-5-507 or § 67-5-513, fails to account for any and all taxes that the trustee or officer has collected to the proper officer, in addition to the penalty in § 67-1-1615, the trustee or officer shall be liable to a penalty of two percent (2%) per month on the taxes from the time the taxes should have been paid, which is in addition to the attorney's fees provided for in § 67-1-1619, none of which shall in any way be remitted after the matter is placed in the hands of the attorney; and the trustee or officer shall, in addition, forfeit the trustee's or officer's respective office.
Acts 1907, ch. 602, § 71; Shan., § 928a1; mod. Code 1932, § 1635; Acts 1933, ch. 95, § 1; C. Supp. 1950, § 1635; T.C.A. (orig. ed.), § 67-1615.
Cross-References. Commission disallowed on failure to settle or pay over, § 67-1-1601.
Interest and damages, § 67-1-1610.
Liability of collectors to city, § 6-55-101.
NOTES TO DECISIONS
1. Construction.
As originally enacted, this section and § 67-1-1623 conferred on state revenue agents power to investigate the condition of any trustee's official account, whether in office or not, for the purpose of ascertaining whether he had duly collected and accounted for state and county revenue. State ex rel. Stewart v. Follis, 140 Tenn. 513, 205 S.W. 444, 1917 Tenn. LEXIS 157 (1918).
2. Determination of Penalty.
Where there was a difference of opinion over the commissions properly allowable to the county trustee and the question of whether or not the trustee had properly accounted for revenue in his hands could not be determined until the controversy was settled, the penalty provided by this section could only be applied after the ascertainment of the amount due from the trustee and under such circumstances such drastic penalty ought not to be applied. State v. Miner, 176 Tenn. 158, 138 S.W.2d 766, 1938 Tenn. LEXIS 148 (1940).
Where there was a controversy between the county trustee and the county as to the amount of money due the county, the surety of the trustee was not liable for the two percent penalty until the controversy was settled as there could be no proper demand until that time. State v. Miner, 176 Tenn. 158, 138 S.W.2d 766, 1938 Tenn. LEXIS 148 (1940).
67-1-1617. Action on collector's bond.
- A motion or suit lies in favor of the state, county, or municipality against the trustee and sureties on the trustee's official bonds for any moneys, in the trustee's hands officially, not paid over or accounted for according to law or for failure to collect.
- No surety on the bond of any trustee or other officer shall be liable for any penalty or attorney's fees until after demand has been made on the surety or sureties, and the surety or sureties have failed or refused to perform the duties required by law of the surety's or sureties' principal, or have failed or refused to pay over the sums of money due from such trustee or other officer.
- Where a judgment has been obtained against any collector of revenue or other such officer, either alone or with a part of such collector's or officer's sureties, a similar motion may be made against the sureties against whom no judgment has been obtained, whether the suretyship appears in the same or another bond.
- The person moved against shall have five (5) days' notice of the motion; provided, that this applies only to cumulative bonds, or where two (2) or more bonds have been given to secure the same object, and only to bonds already executed.
Acts 1875, ch. 86, §§ 1, 2; 1907, ch. 602, § 71; Shan., §§ 928a1, 928a2, 965, 966; mod. Code 1932, §§ 1635, 1636, 1674, 1675; Acts 1933, ch. 95, § 1; C. Supp. 1950, § 1635; T.C.A. (orig. ed.), §§ 67-1615, 67-1616, 67-1622, 67-1623.
Cross-References. Rights of collector's sureties, § 67-1-1629.
NOTES TO DECISIONS
1. Suit upon Resolution of County.
Where suit on official bond is authorized by resolution of the county, it may properly be brought in the name of state for use of county, notwithstanding statute authorizing suits to be brought against delinquent officers by the county judge or chair (now county mayor), or by the commissioner of finance (now commissioner of finance and administration) under prescribed conditions. State use of Giles County v. Abernathy, 159 Tenn. 175, 17 S.W.2d 17, 1928 Tenn. LEXIS 73 (1929).
2. Time of Notice.
This notice is not required to be given five days before the first day of the term at which the motion is made, but only five days before the motion is to be entered, and the cause stands for trial at the term of citation. Gray v. State, 95 Tenn. 317, 32 S.W. 201, 1895 Tenn. LEXIS 90 (1895).
3. Scope of Judgment.
In a proceeding by motion for a judgment against the trustee and the sureties on his official bond, the judgment must be limited to the liability for the year specified in the notice. Gray v. State, 95 Tenn. 317, 32 S.W. 201, 1895 Tenn. LEXIS 90 (1895).
67-1-1618. Officials by whom suit brought.
- The motion or suit in favor of the state may be in the name of the state, and shall be brought by the county auditors or by the district attorney general of the district where it is instituted upon the request of the county auditors made upon direction of the commissioner and state treasurer.
- The motion or suit by the county may be brought in the name of the state, for the use of the county, by the district attorney general or by counsel employed for that purpose.
- A motion or suit in favor of the municipality may be in the name of the state for the use of such municipality by the mayor of the city or the city attorney.
Acts 1907, ch. 602, § 71; Shan., §§ 928a3-928a5; Code 1932, §§ 1637-1639; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; modified; T.C.A. (orig. ed.), § 67-1617.
Law Reviews.
The Tennessee Court Systems — Prosecution, 8 Mem. St. U.L. Rev. 477 (1978).
67-1-1619. Attorney's fee.
In each case, the counsel making the motion and conducting the suit shall be allowed ten percent (10%) on the recovery as compensation as fixed by § 67-1-1620, to be added to and become a part of the judgment; provided, that no such attorney's fee shall be chargeable to any surety on the bond of any such trustee or other officer whose duty it is to collect taxes under this title, until after demand has been made on such surety or sureties, and the surety or sureties have failed or refused to perform the duties required by law of the surety's or sureties' principal, or have failed or refused to pay over the sums of money due from such trustee or other officer.
Acts 1907, ch. 602, § 71; Shan., § 928a6; mod. Code 1932, § 1640; Acts 1933, ch. 95, § 1; C. Supp. 1950, § 1640; T.C.A. (orig. ed.), § 67-1618.
67-1-1620. Collection and accounting for attorney's and auditor's fees.
- The fees allowed to the counsel for the state shall be collected by the county auditor and reported and accounted for as provided in subsections (b) and (c).
- The fees allowed to the counsel or county auditor for the county shall be collected by the counsel or county auditor and reported to the county mayor.
- The fees allowed to the city attorney shall be collected by the city attorney and reported to the mayor of the city or other chief official.
Acts 1907, ch. 602, § 71; Shan., §§ 928a7-928a9; Code 1932, §§ 1641-1643; impl. am. Acts 1978, ch. 934, §§ 16, 36; T.C.A. (orig. ed.), § 67-1619; Acts 2003, ch. 90, § 2.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
67-1-1621. Taxpayer's action against collector.
- In case the county mayor refuses to make the motion or bring the suit, after the written request of any taxpayer to do so, then any taxpayer of the county may make such motion or bring suit in the name of the state, for the use of the county, and employ counsel to conduct the cause; provided, however, that before making such motion or bringing suit, the taxpayer shall obtain leave of the judge of the court in which the motion is to be made or the suit brought to do so. The taxpayer shall make such application in writing, stating fully the grounds for the application, of which application the county mayor shall have five (5) days' written notice, stating the time and place of application.
- The judge shall hear the application at chambers or in term time, and may adjudge the costs of the application against the applicant, against the county mayor, or against the county as the judge shall deem just, and the judge shall enter judgment upon the record of the judge's court accordingly.
Acts 1907, ch. 602, § 71; Shan., § 928a10; Code 1932, § 1644; impl. am. Acts 1978, ch. 934, §§ 36; T.C.A. (orig. ed.), § 67-1620; Acts 2003, ch. 90, § 2.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
67-1-1622. Release of collector's liability prohibited.
No power shall exist, either in the court or in any other official, to release any officer charged with the collection of revenue or the officer's sureties from the payment of any revenue, penalties or fees for which the officer or the officer's sureties may be liable.
Acts 1907, ch. 602, § 71; Shan., § 928a11; Code 1932, § 1645; T.C.A. (orig. ed.), § 67-1621.
NOTES TO DECISIONS
1. Release by County.
County's release of any further liability against trustee, whose books were audited and the auditor's report of which was approved, was probably of no effect. State use of Giles County v. Abernathy, 159 Tenn. 175, 17 S.W.2d 17, 1928 Tenn. LEXIS 73 (1929).
67-1-1623. Actions against state officers.
- The district attorney general or state agent may move the circuit court for judgment against the state treasurer, or other state officer, for any neglect, default, misprision, misfeasance, or malfeasance in office, for which such officer and the officer's sureties, or either of them, might be sued upon any bond or other obligation executed for the due and lawful discharge of the duties of the officer's office.
- The motion shall be in writing, shall be signed by the district attorney general or state agent and shall be in the name of the state.
- A copy of the motion left at the dwelling house of the defendant, or the defendant's last usual place of residence, or place of abode or place of doing business, five (5) days previous to the motion, shall be sufficient service of notice of the motion.
- The court shall hear and determine the case without any declaration, or the formality of regular pleadings, according to the right of the case, and give judgment against the officer and the officer's sureties, and award execution as effectually as may be done by regular suit at law.
Code 1858, §§ 744-747; integrated in Acts 1907, ch. 602, § 77; Shan., §§ 1053-1056; Acts 1923, ch. 109, § 8; mod. Code 1932, §§ 1786-1789; modified; T.C.A. (orig. ed.), §§ 67-1624 — 67-1627.
Law Reviews.
The Tennessee Court Systems — Prosecution, 8 Mem. St. U.L. Rev. 477 (1978).
NOTES TO DECISIONS
1. Construction.
This section and § 67-1-1616 as originally enacted conferred on state revenue agents' power of investigating the condition of any trustee's official account, whether in office or out, for the purpose of ascertaining whether he had duly collected and accounted for state and county revenue. State ex rel. Stewart v. Follis, 140 Tenn. 513, 205 S.W. 444, 1917 Tenn. LEXIS 157 (1918).
2. Scope of Bond.
The bond covers taxes collected where no assessments have been made, commonly designated as “picked up” taxes. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).
3. Blank Bond.
A blank bond, signed and sealed, and afterwards filled up as an official bond, without consent, acknowledgment, or redelivery, is not binding upon the parties so signing. Wynne v. Governor, 9 Tenn. 149, 1829 Tenn. LEXIS 30 (1829); Gilbert v. Anthony, 9 Tenn. 69, 1821 Tenn. LEXIS 13, 24 Am. Dec. 439 (1823); Mosby v. Arkansas, 36 Tenn. 324, 1857 Tenn. LEXIS 3 (1857).
4. Date of Bond.
The collector's bond is binding only from the date of its execution, unless it be retrospective in its terms. Galbraith v. State, 78 Tenn. 568, 1882 Tenn. LEXIS 225 (1882); State v. Polk, 82 Tenn. 1, 1884 Tenn. LEXIS 95 (1884).
Additional bonds bind the sureties for the official term in its entirety. Longmire v. Fain, 89 Tenn. 393, 18 S.W. 70, 1890 Tenn. LEXIS 61 (1890).
5. Motions on Bonds.
Motions can be made and maintained on common law bonds, since the distinction between statutory and common law bonds in this respect was abolished by statute. Lay v. State, 37 Tenn. 604, 1858 Tenn. LEXIS 73 (1858); McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).
6. Sufficiency of Bond.
A bond omitting a word that may be supplied to make the bond comply with the law is sufficient. Kincannon v. Carroll, 17 Tenn. 11, 1836 Tenn. LEXIS 3, 30 Am. Dec. 391 (1836).
A bond conditioned to pay over the revenue at a time later than that fixed by law will sustain a motion, for the error is in favor of the obligors. Kincannon v. Carroll, 17 Tenn. 11, 1836 Tenn. LEXIS 3, 30 Am. Dec. 391 (1836). But see Mallory v. Miller, 10 Tenn. 113, 1825 Tenn. LEXIS 8 (1825).
A bond given for less than the penalty required by law, where the penalty is to be fixed by estimate and computation, is good for the penalty named. Mabry v. Tarver, 20 Tenn. 94, 1839 Tenn. LEXIS 23 (1839).
Bond for two years, the official term, is good, for such bond covers the entire term, even though the statute provides for a separate bond for each year; and one that is given for the second year of the term covers that year, and the sureties on each bond will be jointly liable for any default occurring during the second year. Mabry v. Tarver, 20 Tenn. 94, 1839 Tenn. LEXIS 23 (1839); Nevill & Secs. v. Day, 22 Tenn. 37, 1842 Tenn. LEXIS 17 (1842); Governor v. Porter & Surs., 24 Tenn. 165, 1844 Tenn. LEXIS 51 (1844); McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873); Allison v. State, 55 Tenn. 312, 1873 Tenn. LEXIS 4 (1873).
A bond that does not appear to have been taken by and before the county legislative body, acknowledged, approved, and recorded, is sufficient and will sustain a motion, since this is a matter of defense that must be shown negatively not to have been done. Miller v. Moore, 21 Tenn. 421, 1841 Tenn. LEXIS 34 (1841).
A bond which does not state to whom the payment of taxes is to be made is sufficient, for the law designates to whom they shall be paid. Miller v. Moore, 21 Tenn. 421, 1841 Tenn. LEXIS 34 (1841); Governor v. Porter & Surs., 24 Tenn. 165, 1844 Tenn. LEXIS 51 (1844); Kincannon v. Carroll, 17 Tenn. 11, 1836 Tenn. LEXIS 3, 30 Am. Dec. 391 (1836).
A bond executed at a term subsequent to that prescribed by law is sufficient. Lay v. State, 37 Tenn. 604, 1858 Tenn. LEXIS 73 (1858).
A bond taken by the county commissioners acting in lieu of the county legislative body, under an unconstitutional act, is sufficient to maintain a motion against collectors and their sureties. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873); Waters v. Edmondson, 55 Tenn. 384, 1874 Tenn. LEXIS 5 (1874); Huffaker v. State, 2 Shan. 342 (1877).
Where a bond is given for the entire official term of two years, after which the legislature grants an extension of time for the payment of the taxes of the first year and requires this bond to be reacknowledged, or a new bond to be made for the taxes of that year, and, in default of such reacknowledgment, a new bond is made as required for the taxes of the first year, the sureties on the first bond are liable for the taxes of the second year, since they were not affected by the legislative act extending the time of payment as to the first year. Chandler v. State, 69 Tenn. 296, 1878 Tenn. LEXIS 89 (1878); Mayor of Nashville v. Knight, 80 Tenn. 700, 1883 Tenn. LEXIS 232 (1883).
In such case, where the second bond is made for both years, judgment may be rendered against both sets of sureties for a default occurring during the second year. Mayor of Nashville v. Knight, 80 Tenn. 700, 1883 Tenn. LEXIS 232 (1883).
7. Liability of Collector and Sureties.
The revenue collector and his sureties are liable for his failure to collect taxes, and for receipts given for taxes, without in fact making the collection. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).
A statute fixing a limit of time for the delivery of the tax books to the revenue collector is not an extension of time to him, and does not release his sureties from liability. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).
The collector and his sureties are liable, on motion, for taxes collected under an unconstitutional statute. Phillips v. Lewis, 3 Shan. 230 (1877).
Collector and his sureties are liable on motion for taxes and penalties imposed and collected under a repealed or illegal statute, where collections were made without protest from taxpayers. Chandler v. State, 69 Tenn. 296, 1878 Tenn. LEXIS 89 (1878); Galbraith v. State, 78 Tenn. 568, 1882 Tenn. LEXIS 225 (1882); State use of Anderson County v. Hays, 99 Tenn. 542, 42 S.W. 266, 1897 Tenn. LEXIS 66 (1897).
8. Judgment.
Judgments upon motion are sufficient where they assume the existence of all the facts necessary to give the courts jurisdiction of the motions, and are regular in every respect. Carlton v. State, 55 Tenn. 16, 1873 Tenn. LEXIS 2 (1873).
A judgment upon motion reciting that “the district attorney produced the statement of the comptroller of the treasury, showing the amount due and not paid into the treasury of the state, and it appearing that Milton D. Brown was elected revenue collector for 1868, and that he entered into bond (which is set out), and it further appearing that Milton D. Brown, as such revenue collector, failed to pay over or account for $687.25, due the state of Tennessee, as taxes for the year 1868,” sufficiently recites every jurisdictional fact, and leaves no ambiguity or uncertainty as to any fact necessary to be stated. Brown v. State, 55 Tenn. 871, 1874 Tenn. LEXIS 14 (1874).
67-1-1624. Willful failure of county clerk to perform duties — Assumption of duties by commissioner.
- Whenever the commissioner has reason to believe that any county clerk or the county clerk's agent or employee has failed, neglected or refused to perform any duty enjoined upon the county clerk by law relative to the collection, accounting for or paying over of any state revenue with the collection of which the county clerk is charged by law, the commissioner shall so notify the comptroller of the treasury and request in writing that an audit be made of such clerk's accounts, whereupon the comptroller of the treasury shall cause such audit to proceed within thirty (30) days.
- When any audit made by the comptroller of the treasury, whether under this section or otherwise, shall reveal willful failure upon the part of a county clerk to collect lawful state revenue, or to account for or pay over such revenue within the time allowed by law, the comptroller of the treasury shall certify such fact to the commissioner. Thereupon, the commissioner may issue to such clerk a citation by registered mail to appear within ten (10) days before the commissioner and show cause why the county clerk should not be relieved of the duties of collecting, reporting and paying over of such revenue, and all emoluments flowing from those duties.
- The commissioner is empowered to compel the appearance of witnesses and their testimony, and all parties to such proceeding shall have the right to have issued subpoenas for that purpose. All testimony and exhibits shall be preserved. Witnesses shall be allowed the same fees for attendance and travel as are allowed for witnesses before the circuit court. The commissioner shall provide a transcript of the proceedings before the commissioner in such cases.
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- In the event that it is determined by the commissioner that a county clerk has willfully failed to collect, account for or pay over any such revenue, the commissioner may issue an order divesting such clerk of any or all duties respecting the handling of such revenue during such time as the office of county clerk may be held by such person, together with all emoluments appertaining to the office of county clerk. A copy of such order shall be posted in a conspicuous place in the courthouse of the county served by such clerk, and published for four (4) consecutive weeks in a newspaper of general circulation in such county.
- Such order of the commissioner shall be reviewable de novo within ten (10) days upon a petition for statutory certiorari addressed to the chancery court of the county where such county clerk resides, and shall not be superseded pending judicial review.
- Upon delivery of such order, the clerk shall immediately deliver to the commissioner or the commissioner's agent all state property, moneys, records, reports, forms and the like in the clerk's possession. Failure to do so is a Class C misdemeanor. Each day of such refusal is a separate offense.
- Following such order, the commissioner shall proceed through the commissioner's own agents and employees to collect state revenues formerly collected by the county clerk, to issue licenses, registrations and the like, and to be solely accountable therefor, as in the case of revenues collectible solely by the commissioner. All statutory fees and emoluments ordinarily inuring to the clerk shall be retained by the commissioner as expendable receipts and used to defray the expenses of collecting state revenues ordinarily collectible by county clerks, and providing public services incidental thereto.
Acts 1963, ch. 95, § 1; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A., §§ 67-1628 — 67-1632; Acts 1989, ch. 591, § 113.
Cross-References. Certified mail in lieu of registered mail, § 1-3-111.
Penalty for Class C misdemeanor, § 40-35-111.
Law Reviews.
Criminal Law and Procedure — 1963 Tennessee Survey (Robert E. Kendrick), 17 Vand. L. Rev. 977 (1964).
67-1-1625. Willful failure of collector to pay over — Felony.
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- Any tax collector who willfully fails or refuses to pay into the state treasury the revenue that the tax collector has collected commits a Class E felony.
- It is the duty of the district attorney general of the district in which such defaulting revenue collector may reside to prosecute such collector for such offense.
- Such tax collector shall be imprisoned in the state penitentiary for a period of not less than five (5) nor more than twenty (20) years.
- “Tax collector,” as used in this section, includes and embraces all persons entrusted with the collection of the public revenue.
Acts 1867-1868, ch. 79, § 14; Shan., § 964; Code 1932, § 1673; modified; T.C.A. (orig. ed.), § 67-1426; Acts 1989, ch. 591, §§ 1, 6.
Cross-References. Penalty for Class E felony, § 40-35-111.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 52.
NOTES TO DECISIONS
1. Nature of Offense.
The offense is one of the will, and its commission is to be ascertained from the action or conduct of the accused in failing to pay the revenue by him collected into the state treasury, within a reasonable time. Gibbs v. State, 50 Tenn. 72, 1871 Tenn. LEXIS 66 (1871).
The offense is included in the offense of embezzlement, and although it requires more evidence to convict of embezzlement, when the money collected has been lent or invested contrary to law, than it does to convict of the offense of failing or refusing to pay over, yet the conversion of the fund, by the collector, to his own use, is, when it is not paid into the treasury, under either statute, a felony; and, although the evidence of the collection and failure to pay into the state treasury would support an indictment under this section, and might not be sufficient to embrace a case of lending and investing without authority of law, the offense is, in law, the same felony under either statute, when there is a conversion. State v. Cameron, 50 Tenn. 78, 1871 Tenn. LEXIS 67 (1871).
2. Venue of Offense.
The venue of the felony in failing and refusing to pay revenue into the state treasury is in the county in which the defaulting collector resides, and not in the county in which the state treasurer is required by law to keep his office. Gibbs v. State, 50 Tenn. 72, 1871 Tenn. LEXIS 66 (1871).
3. Indictment.
It may well be doubted, whether, even under the curative provisions of the code, the indictment is not defective in not charging that the failure or refusal to pay over the money was “feloniously” done. State v. Cameron, 50 Tenn. 78, 1871 Tenn. LEXIS 67 (1871).
4. Defenses.
The acquittal of embezzlement of state revenue is a bar to a subsequent indictment for failing to pay over the same moneys, under this section. State v. Cameron, 50 Tenn. 78, 1871 Tenn. LEXIS 67 (1871).
5. Evidence.
Failing and refusing to pay over the money, when unexplained, is evidence of a conversion to the collector's own use, and if proved, will establish conversion to his own use. State v. Leonard, 46 Tenn. 307, 1869 Tenn. LEXIS 59 (1869); State v. Cameron, 50 Tenn. 78, 1871 Tenn. LEXIS 67 (1871).
67-1-1626. Refund to collector on proof of deficiencies in collections.
When the collector has duly accounted with the commissioner or county mayor for the full amount of the year's revenue, and paid it into the treasury, without obtaining a credit for insolvencies or deficiencies of payment, and the collector afterwards, in the manner and within the time prescribed by law, procures the proper evidence to authorize the commissioner or county mayor to credit the collector with the evidence, such officers shall respectively issue to the collector a warrant for the amount of such insolvencies or deficiencies of payment.
Code 1858, § 656; Shan., § 934; Code 1932, § 1649; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; impl. am. Acts 1978, ch. 934, §§ 16, 36; T.C.A. (orig. ed.), § 67-1427; Acts 2003, ch. 90, § 2.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
67-1-1627. Collector's action for reimbursement of tax paid by collector.
Any tax collector who has failed to collect any tax, but who has paid the tax to the state, county, or municipality to which the tax was due and payable, shall, in addition to the remedies provided by law, have a right to sue a defaulting taxpayer for the amount of the tax, as upon an account for money paid to the collector's use, and recover judgment for the tax, together with six percent (6%) interest per annum on the judgment for the time the tax should have been paid; provided, that the suit is brought within one (1) year after the collector has paid the tax.
Acts 1875, ch. 88, § 1; Shan., § 958; Code 1932, § 1668; T.C.A. (orig. ed.), § 67-1501.
67-1-1628. Powers of collector after expiration of term.
Revenue collectors whose terms of office have expired, and whose successors have been elected, and who have not collected the taxes due for the time during which they held such office, shall, whenever they have paid into the treasury the amount charged against them on account of state and county revenue, have the same privileges, and be subject to the same laws, in the collection of the uncollected taxes, that are applicable to other revenue collectors.
Acts 1873, ch. 6, § 1; Shan., § 953; Code 1932, § 1662; T.C.A. (orig. ed.), § 67-1502.
NOTES TO DECISIONS
1. Relation of Section to Limitations.
The time of two years given to tax collectors and their sureties in which to collect the arrearages of taxes was merely an extension of official existence, and was not a repeal or modification of the statutes of limitation, so as to require all suits, growing out of their responsibilities and liabilities, to be commenced within that time. Deberry v. Brown, 3 Shan. 465 (1875).
Decisions Under Prior Law
1. Relation of Section to Limitations.
The statute did not interfere with the operation of any of the statutes of limitation; and, therefore, did not warrant the revenue collector's collection of any unpaid taxes, which would have been barred in the courts by any statutes of limitation then in force. Brown v. Porter, 26 Tenn. 373, 1846 Tenn. LEXIS 140 (1846).
67-1-1629. Rights of collector's sureties.
- If a collector leaves the state without accounting for the county and state taxes, whereby the collector's sureties become liable for the taxes, or dies shortly before or during the time appointed for the collection of public taxes, so that a successor cannot be appointed in time to collect the taxes, it is lawful for the sureties of such collector to go before the county legislative body of the county for which their principal was elected, and prove to the court the existence of such absence or death of their principal. It shall then be the duty of the county legislative body to make a record of such proof, and upon it to make an order authorizing the sureties of such dead or absent collector to collect all arrearages of taxes not collected by their principal, and that it was the principal's duty to collect. Such order, when made, shall be made ample authority for such sureties to collect all such arrearages of taxes; and for this purpose the order shall vest them with all rights and powers to distrain and sell the property, whether real or personal, of those in arrears for taxes, the same as their principal could have done, if the principal had not been absent or died; and they shall have all the powers, authorities, privileges, and emoluments in and for the receipt and collection of the public taxes that the absent or deceased collector possessed and enjoyed.
- In case of such death or absence, as is contemplated in subsection (a), it shall and may be competent for the sureties of such dead or absent principal, or, in case of the death of any of the sureties, then their representatives, to go before the county legislative body and agree for any one (1) of such sureties to be appointed to collect such arrearages of taxes, and upon such agreement, it shall be competent for the county legislative body to appoint such surety so agreed upon to collect such arrearages of taxes, and a record shall be made of such agreement and choice, which appointment shall be as ample power to that surety as if all were authorized to collect them; but nothing in subsection (a) or this subsection (b) shall have the effect to release any of such sureties or their representatives from liability as such.
- If any person liable to pay such taxes fails to pay them to such designated surety, they may make distress and sale for such arrears in the same manner as the collector could have done. But no such distress or sale shall be made until public notice be first given in the manner prescribed in former § 67-5-1801 and § 67-5-2005.
- The sureties of such defaulting collectors, or the authorized agents of such sureties, in all cases where they have paid the amount charged against such defaulting collectors, may sue for the collection of such delinquent taxes in the name of the state for their use, and in all cases where they have not paid, but have become liable for, such uncollected revenue, they may sue in their names, or the names of their duly authorized agents, for the use of the state, county, or municipality, to enforce the collection of such uncollected revenue or any revenues due the state, county, or municipality for which they, in any way, may have become liable.
- When a collector is deprived of the power of office, and suspended from acting as collector, on account of the collector's failure or refusal to give sureties in place of sureties discharged, the sureties may receive and collect all taxes not already paid to their principal that the principal was bound to collect; and, for such purpose, they shall have all the powers, authorities, privileges and emoluments that belong officially to the collector so suspended.
- Sureties, or the duly authorized agents of sureties of revenue collectors whose terms of office have expired, and whose successors in office have been elected, or, where two (2) years or more have elapsed after the expiration of the terms of office of such collectors, leaving uncollected taxes due the state, county, or municipality for the time during which such trustees held such office, whenever the trustees have paid into the treasury the amount charged against such collectors, on account of the state, county, or municipal revenue, or have become liable for the amount because of the collector's default, shall have the same privileges and rights in enforcing the collection of such uncollected revenue that are applicable by law to revenue collectors.
Code 1858, §§ 663-667 (deriv. Acts 1770, ch. 6, § 2; 1815, ch. 14, § 2); Acts 1859-1860, ch. 17, §§ 1, 2; 1875, ch. 135, §§ 1, 2; Shan., §§ 954-957, 957a1, 959, 960; Code 1932, §§ 1663-1667, 1669, 1670; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A. (orig. ed.), §§ 67-1503 — 67-1508.
Compiler's Notes. The public notice provisions of § 67-5-1801, referred to in this section, were deleted by Acts 1984, ch. 346, § 1, which deleted former § 67-5-1801 in its entirety and replaced it with current version of § 67-5-1801.
Law Reviews.
Tax Delinquency in Tennessee — Legislative Aspects (Charles P. White), 12 Tenn. L. Rev. 71 (1934).
NOTES TO DECISIONS
1. Running of Limitation Period.
The right of action by the sureties against the defaulting taxpayer accrued at the date of payment of the judgment of the state against them for the principal's failure to make collection, and the statute of limitations did not begin to run against them until then. Deberry v. Brown, 3 Shan. 465 (1875).
Part 17
Disclosure of Tax Returns and Tax Information
67-1-1701. Part definitions.
As used in this part, unless the context otherwise requires:
- “Commissioner” means the commissioner of revenue;
- “Department” means the department of revenue;
- “Officer or employee” includes former officers and employees;
- “Person” means every individual, firm, association, joint-stock company, syndicate, partnership, corporation, or state or federal agency;
- “Return” means any tax or information return, declaration of estimated tax, claim for refund, or petition for waiver of penalty required by, or provided for, or permitted under, any law, that is filed with or submitted to the commissioner by, on behalf of, or with respect to, any person, and any amendment or supplement thereto, including supporting schedules, attachments, or lists which are supplemental to, or part of, any return so filed or submitted;
- “Tax administration” means the administration, management, conduct, direction, and supervision of the execution and application of the state tax laws, rules, or related statutes or rules and reciprocity agreements with the several states or federal government to which the state of Tennessee is a party. “Tax administration” also means the development and formulation of state tax policy relating to existing or proposed tax laws, related statutes and reciprocity agreements and includes assessments, collection, enforcement, litigation, publication, and statistical gathering functions under such laws, statutes, rules or reciprocity agreements;
- “Tax administration information” means criteria or standards used or to be used for the selection of returns or persons for audit or examination, or data used or to be used for determining such criteria or standards; audit procedures; and any other information relating to tax administration;
- “Tax information” means a taxpayer's identity, the nature, source, or amount of the taxpayer's income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax collected, deficiencies, overassessments, or tax payments, whether the taxpayer's return was, is being, or will be, examined or subject to other investigation or processing, or any other data, received by, recorded by, prepared by, furnished to, or collected by, the commissioner with respect to a return or with respect to the determination of the existence, or possible existence, of liability, or the amount of the liability, of any person for any tax, penalty, interest, fine, forfeiture, or other penalty, imposition or offense, administered by or collected by the commissioner, either directly or indirectly. “Tax information” does not include data in a form that cannot, either directly or indirectly, be associated with, or otherwise be used to identify, directly or indirectly, a particular taxpayer;
- “Taxpayer identity” means the name of a person subject to a tax collected or administered by the commissioner, the person's mailing address, the person's taxpayer identifying number or account number, or a combination thereof; and
- “Unit of local government” means any county enumerated in § 5-1-101, any incorporated municipality, or any consolidated unit of any such counties and municipalities.
Acts 1977, ch. 152, § 1; T.C.A., § 67-131; Acts 2000, ch. 982, § 39.
Attorney General Opinions. Identifying numbers obtained by the state, county, or city for reporting and enforcing the business tax, including federal employer identification numbers, social security numbers, or state sales tax numbers, are not considered public information, OAG 01-165 (11/15/01).
Confidentiality of hotel/motel and gross receipts tax information. OAG 12-20, 2012 Tenn. AG LEXIS 20 (2/22/12).
Disclosure of Returns and Tax Information to Officials of Local Government. OAG 15-44, 2015 Tenn. AG LEXIS 44 (5/6/15).
Cited: Coleman v. Kisber, 338 S.W.3d 895, 2010 Tenn. App. LEXIS 619 (Tenn. Ct. App. Oct. 4, 2010).
Collateral References. Taxation 371
67-1-1702. Confidentiality.
- Notwithstanding any law to the contrary, returns, tax information and tax administration information shall be confidential and, except as authorized by this part, no officer or employee of the department or of any office of a district attorney general or any state or local law enforcement agency, and no other person, or officer or employee of the state, who has or had access to such information shall disclose any such information obtained by such officer or employee in any manner in connection with such officer's or employee's service as an officer or employee, or obtained pursuant to this part, or obtained otherwise.
- Notwithstanding any other law to the contrary, the confidentiality and disclosure of any record or document pertaining to a motor vehicle registration or motor vehicle title for which the department has responsibility under title 55, chapters 1-6, title 65, chapter 15, or any other applicable statute shall be controlled by title 55, chapter 25.
- This part does not apply to any record, document, or other information pertaining to a tax on the privilege of occupancy in a hotel imposed by a city, town, or county pursuant to an ordinance, resolution, or private act.
Acts 1977, ch. 152, § 1; T.C.A., § 67-132; Acts 2000, ch. 982, § 40; 2007, ch. 484, § 110; 2013, ch. 400, § 1; 2016, ch. 796, § 5.
Amendments. The 2013 amendment inserted “or of any office of a district attorney general or any state or local law enforcement agency,” in the middle of the first sentence of (a).
The 2016 amendment added (c).
Effective Dates. Acts 2013, ch. 400, § 3. May 6, 2013.
Acts 2016, ch. 796, § 6. April 14, 2016.
Cross-References. Confidentiality of public records, § 10-7-504.
Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), §§ 944, 975.
Tennessee Law of Evidence (2nd ed., Cohen, Paine and Sheppeard), § 501.21.
Attorney General Opinions. Disclosure of Returns and Tax Information to Officials of Local Government. OAG 15-44, 2015 Tenn. AG LEXIS 44 (5/6/15).
In general, a district attorney turning over information to defense counsel pursuant to a mandate from the court will not be liable for the disclosure of confidential or privileged information. OAG 18-01, 2018 Tenn. AG LEXIS 1 (1/4/2018).
Cited: Pfizer, Inc. v. Farr, — S.W.3d —, 2012 Tenn. App. LEXIS 416 (Tenn. Ct. App. June 22, 2012).
NOTES TO DECISIONS
1. Access Denied.
Citizen's petition for access to public records relative to the selection process of candidates for a special business tax credit under a program to encourage business organizations to locate in Tennessee was properly denied because the records constituted tax administration and tax information which, pursuant to T.C.A. § 67-1-1702 were not subject to disclosure under the Tennessee Public Records Act, T.C.A. § 10-7-503 et seq.Coleman v. Kisber, 338 S.W.3d 895, 2010 Tenn. App. LEXIS 619 (Tenn. Ct. App. Oct. 4, 2010), review or rehearing denied, — S.W.3d —, 2011 Tenn. LEXIS 422 (Tenn. Apr. 14, 2011).
“Assessments, collection, enforcement, litigation, publication, and statistical gathering” language represents a part of the larger whole denoted by “the development and formulation of state tax policy relating to existing or proposed tax laws, related statutes and reciprocity agreements,” and the word “includes” is not limiting; therefore, a public records request for tax study documents was denied because the definition of “tax administration” encompassed the documents at issue and made them confidential. Moreover, this interpretation did not extend the definition beyond the executive function of administration of tax laws into the legislative function; the department of revenue could formulate and recommend laws to the governor. Carter v. Martin, — S.W.3d —, 2016 Tenn. App. LEXIS 175 (Tenn. Ct. App. Mar. 3, 2016).
67-1-1703. Disclosure to taxpayer or fiduciary.
- The commissioner shall, subject to such requirements and conditions as may be prescribed by rules, disclose the return of any taxpayer, or tax information with respect to such taxpayer, to such person or persons as the taxpayer may designate in a written request for or consent to such disclosure, or to any other person at the taxpayer's request to the extent necessary to comply with a request for information or assistance made by the taxpayer to such other person. Tax information shall not, however, be disclosed to such person or persons if the commissioner determines that such disclosure would be seriously burdensome to tax administration.
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The return of a person shall, upon written request, be open to inspection by or disclosure to:
- In the case of the return of an individual, that individual;
- In the case of the return of a partnership, any person who was a member of such partnership during any part of the period covered by the return;
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In the case of the return of a corporation or a subsidiary of a corporation:
- Any person designated by resolution of its board of directors or other similar governing body;
- Any officer or employee of such corporation upon written request signed by any principal officer and attested to by the secretary or other appropriate officer; or
- If the corporation has been dissolved, any person authorized by applicable state law to act for the corporation or any person who the commissioner finds to have a material interest that will be affected by information contained in the return;
- In the case of the return of an estate, the administrator, executor, or trustee of such estate; and
- In the case of the return of a trust, the trustee or trustees, jointly or separately.
- If an individual described in subdivision (b)(1) is legally incompetent, the applicable return shall, upon written request, be open to inspection by or disclosure to the guardian of the individual's estate.
- The return of a decedent shall, upon written request, be open to inspection by or disclosure to an administrator, executor, trustee or beneficiary of the decedent's estate. However, in order to obtain the return, a beneficiary must submit a sworn affidavit stating that: the affiant was a beneficiary of the estate who received a distribution of assets from the estate in kind; the affiant needs the return to accurately determine the federal income tax basis of such assets; and the affiant has requested the return from the personal representative who could not or would not provide it.
- If substantially all of the property of the person with respect to whom the return is filed is in the hands of a trustee in bankruptcy or receiver, such person's return or returns for prior years, upon written request, shall be open to inspection by or disclosure to such trustee or receiver, but only if the commissioner finds that such trustee or receiver, in the trustee's or receiver's fiduciary capacity, has a material interest that will be affected by information contained in the return.
- Any return to which this subsection (b) applies shall, upon written request, also be open to inspection by or disclosure to the attorney in fact or at law duly authorized in writing by any of the persons described in subdivisions (b)(1)-(4), who are themselves entitled to the return, to inspect the return or receive the information on their behalf, subject to the conditions provided in subdivisions (b)(1)-(4).
- Tax information with respect to any taxpayer that may otherwise be open to inspection by or disclosure to any person authorized by this subsection (b) to inspect any return of such taxpayer shall not be disclosed if the commissioner determines that such disclosure would seriously impair tax administration.
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The return of a person shall, upon written request, be open to inspection by or disclosure to:
Acts 1977, ch. 152, § 1; T.C.A., § 67-133; Acts 1997, ch. 269, § 1.
Textbooks. Tennessee Law of Evidence (2nd ed., Cohen, Paine and Sheppeard), § 501.21.
Cited: Coleman v. Kisber, 338 S.W.3d 895, 2010 Tenn. App. LEXIS 619 (Tenn. Ct. App. Oct. 4, 2010).
67-1-1704. Disclosure for administrative purposes — Tax collection.
- Returns and tax information shall, without written request, be open to inspection by or disclosure to officers and employees of the department whose official duties require such inspection or disclosure for tax administration purposes.
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A return or tax information may be disclosed in a federal or state judicial or administrative proceeding pertaining to tax administration, but only if:
- The taxpayer is a party to such proceeding;
- The treatment of an item reflected on such return is directly related to the resolution of an issue in the proceedings; or
- Such return or tax information directly relates to a transactional relationship between a person who is a party to the proceeding and the taxpayer that directly affects the resolution of an issue in the proceeding.
- Such return or tax information shall not be disclosed as provided in subsections (a) and (b) and in §§ 67-1-1705(a) and 67-1-1707(a), however, if the commissioner determines that such disclosure would identify a confidential informant or seriously impair a civil or criminal tax investigation.
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A return or tax information may be disclosed in a federal or state judicial or administrative proceeding pertaining to tax administration, but only if:
- Returns and tax information may be disclosed to any person to the extent necessary in connection with the processing, storage, transmission, and reproduction of returns and tax information, and the programming, maintenance, repair, testing and procurement of equipment and software, for purposes of tax administration.
- Upon request in writing, returns and tax information may be disclosed to duly authorized officials of a unit of local government of this state for the purpose of ascertaining whether proper local taxes or the tax imposed by § 67-4-704 is being paid. Upon written request, tax information may also be disclosed to duly authorized officials of a unit of local government of this state to the extent necessary to ascertain whether allocations from state levied taxes are being distributed to the correct unit of local government; provided, that such information shall not include the taxpayer's returns, receipts, income, tax liability, tax payments, or other financial information. For purposes of ascertaining whether proper local severance taxes are being paid pursuant to chapter 7, part 2 of this title, “authorized officials of a unit of local government” means the county mayor or a member of the county governing body. No unit of local government nor any official or employee of a unit of local government who receives returns or tax information under this subsection (d) shall disclose such information to any person other than the person to whom it relates, except as otherwise may be authorized by law. Any official or employee of a unit of local government who has or has had, at any time, access to any return or tax information under this subsection (d) shall be subject to all of the penalties and restrictions applicable to an officer or employee of the state under § 67-1-1709.
- A unit of local government receiving tax information under subsection (d) may disclose to a contractor or consultant the name, address, and situs of one (1) or more taxpayers for the purpose of ascertaining whether allocations of state and local taxes are being distributed to the correct unit of local government. Such information shall not include the taxpayer's returns, receipts, income, tax liability, tax payments, or other financial information. No consultant or contractor of a unit of local government who receives tax information under this subsection (e) shall disclose such information to any other person. Any consultant or contractor of a unit of local government who has or has had, at any time, access to any tax information under this subsection (e) shall be subject to all the penalties and restrictions applicable to an officer or employee of the state under § 67-1-1709.
- Returns and tax information may be disclosed for the purposes of tax administration to either house of the general assembly, or to any committee or subcommittee of the general assembly, but only upon a lawfully executed subpoena being served on the commissioner who demands such returns or information.
- Returns and tax information shall be open to inspection by, and/or disclosure to, any person contracting for the collection of unpaid taxes under part 14 of this chapter. This disclosure is authorized only to the extent necessary for the collection of unpaid taxes by that person. Any person receiving returns and/or tax information under this section shall be subject to the confidentiality provisions, including penalties, provided by this part.
- Returns, tax information and tax administration information may, in the commissioner's discretion, be disclosed for the exclusive purpose of participating in the multistate tax commission joint audit program. Any person receiving returns, tax information or tax administration information under this subsection (h) shall be subject to the confidentiality provisions, including penalties, set out in this part; and the commissioner is authorized to take such actions as deemed necessary to ensure that any such persons receiving returns, tax information or tax administration information shall maintain the confidentiality provisions set out in this part.
- Tax information may, in such form and manner as prescribed by the commissioner, be disclosed to the extent reasonably necessary to facilitate accurate reporting by entities required to file duplicate information returns pursuant to § 67-6-411. Such tax information shall not be used by the recipient for any purpose other than producing and filing duplicate information returns pursuant to § 67-6-411. Any person who receives such tax information under this subsection (i) is prohibited from disclosing such information and shall be subject to the confidentiality provisions, including penalties, set out in this part. The commissioner is authorized to take such actions as deemed necessary to ensure that any persons receiving such tax information shall maintain the confidentiality provisions set out in this part.
Acts 1977, ch. 152, § 1; T.C.A., § 67-134; Acts 1991, ch. 79, § 2; 2006, ch. 553, § 1; 2009, ch. 530, § 96; 2014, ch. 764, § 3; 2015, ch. 273, § 1; 2015, ch. 342, § 5; 2016, ch. 705, § 1; 2018, ch. 1011, § 3.
Amendments. The 2014 amendment substituted “or the tax imposed by § 67-4-704 is being paid” for “are being paid” in the first sentence in (d).
The 2015 amendment, by ch. 273 added “and software” after “equipment” in (c).
The 2015 amendment by ch. 342 added (h).
The 2016 amendment added the present second sentence in (d).
The 2018 amendment added present (e) and redesignated former (e) through (h) as present (f) through (i).
Effective Dates. Acts 2014, ch. 764, § 4. April 24, 2014.
Acts 2015, ch. 273, § 7. April 28, 2015.
Acts 2015, ch. 342, § 6. May 4, 2015.
Acts 2016, ch. 705, § 2. April 6, 2016.
Acts 2018, ch. 1011, § 5. May 21, 2018.
Cross-References. Confidentiality of public records, § 10-7-504.
Textbooks. Tennessee Law of Evidence (2nd ed., Cohen, Paine and Sheppeard), § 501.21.
Attorney General Opinions. Disclosure of Returns and Tax Information to Officials of Local Government. OAG 15-44, 2015 Tenn. AG LEXIS 44 (5/6/15).
NOTES TO DECISIONS
1. Confidentiality of Tax Information.
Where Tennessee's Commissioner of Revenue moved under Tenn. Sup. Ct. R. 19 to allow an out-of-state attorney to assist him in a tax appeal, the prospect that counsel would reveal confidential information learned during the litigation was not grounds to disqualify him or deny him permission to appear pro hac vice, as the court was obliged to assume, unless shown otherwise, that counsel would comply with T.C.A. § 67-1-1704, Tenn. Sup. Ct. R. Prof. Conduct 8, and any protective orders the court issued. Pfizer, Inc. v. Farr, — S.W.3d —, 2012 Tenn. App. LEXIS 416 (Tenn. Ct. App. June 22, 2012).
67-1-1705. Disclosure for tax enforcement.
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A return or tax information shall be open to inspection by or disclosure to the attorney general and reporter, and to any of the several district attorneys general, when officially engaged in, and solely for their use in, preparation for any proceeding, or investigation that may result in such a proceeding, before a grand jury or any court of law or equity in a civil or criminal matter involving tax administration, collection or prosecution for violation of the state tax laws, but only if:
- The taxpayer is or may be a party to such proceeding;
- The treatment of an item reflected on such return is or may be related to the resolution of an issue in the proceeding or investigation; or
- Such return or tax information relates or may relate to a transactional relationship between a person who is or may be a party to the proceeding and the taxpayer that affects, or may affect, the resolution of an issue in such proceeding or investigation.
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An officer or employee of the department may, in connection with the officer's or employee's official duties relating to an audit, collection activity, or civil or criminal tax investigation or the investigation of any offense or matter under the tax laws of this state, disclose tax information to the extent that such disclosure is necessary in obtaining information, that is not otherwise reasonably available, with respect to the correct determination of tax, liability for tax, or the amount to be collected. Such officer or employee may also disclose tax information when disclosure is required to assure compliance with the tax laws of this state through:
- The release of specific tax information; or
- Publishing of a bulletin or list identifying persons recognized by the department as qualified sellers, limited users, dealers, and distributors qualified to receive taxable substances, indicating the extent to which they are bonded, or listing similar categories of persons and kinds of data.
- Investigative records of the special investigations unit of the department relating to potential criminal prosecutions of persons for violation of the tax laws of this state are confidential and may not be disclosed to any person, notwithstanding any provision of this part to the contrary, except in the exercise of the discretion of the commissioner so as not to seriously impair tax administration.
Acts 1977, ch. 152, § 1; T.C.A., § 67-135.
Cross-References. Confidentiality of public records, § 10-7-504.
Textbooks. Tennessee Law of Evidence (2nd ed., Cohen, Paine and Sheppeard), § 501.21.
67-1-1706. Disclosure to parties in interest.
- If a notice of lien has been filed pursuant to law, the amount of the outstanding obligation secured by such lien may be disclosed to any person or that person's agent who has a right in the property subject to such lien or intends to obtain a right in such property.
- If any taxpayer is required to submit a bond to secure the payment of any taxes that may be due to the department, the amount of the outstanding obligation of the taxpayer may be disclosed to any person who stands as surety on the bond for such taxpayer.
Acts 1977, ch. 152, § 1; T.C.A., § 67-136.
Textbooks. Tennessee Law of Evidence (2nd ed., Cohen, Paine and Sheppeard), § 501.21.
67-1-1707. Disclosure for miscellaneous purposes.
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Returns and tax information shall, without written request, be open to inspection by or disclosure to the comptroller of the treasury or the comptroller's designated representative for purposes of audit.
- Such disclosure shall only be applicable to state tax returns and state tax information.
- Disclosure of federal tax returns and federal tax information may be made if permitted by federal law or any prohibition of disclosure is waived by the appropriate federal agency.
- A return or tax information may be disclosed to a competent authority of another state or the federal government that agrees to disclose returns or tax information to this state.
- Upon request in writing, the commissioner may, in the commissioner's discretion, furnish tax information to officers and employees of an agency of this state or of the federal government engaged in tax or economic analysis, if such tax information is relevant to the functions and duties of the requesting agency; but no agency, or officer or employee of the agency, who receives tax information under this subsection (c) shall disclose such information to any person other than the person to whom it relates, except in a form that cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer.
- Returns and tax information may be disclosed to any person to whom the department is authorized to provide such returns and information by any other law.
- Nothing in this part shall restrict the disclosure of tax returns or tax information by a private firm engaged in the business of tax return preparation; provided, that such disclosure is in connection with the purchase or sale of a firm engaged in the business of tax return preparation or in connection with the review of such a firm by an affiliated firm or in connection with the offering of services to individual taxpayers.
- Nothing in this part shall restrict the public disclosure of the name and address of an owner of a business tax license under chapter 4, part 7 of this title.
- Upon request in writing, the commissioner may, in the commissioner's discretion, furnish tax information to officers or employees of an agency of this state, if such tax information is relevant to the functions and duties of the requesting agency. No agency or employee of the agency who receives tax information under this subsection (g) shall disclose such information to any person other than the person to whom it relates, except as otherwise may be authorized by law.
- The commissioner may provide tax information to an official of any state agency or other state entity, for the purpose of ensuring compliance with title 12, chapter 4, part 1, requiring that persons contracting with the state or other state entities register themselves and their affiliates to collect and remit taxes. No agency or employee of the agency who receives tax information under this subsection (h) shall disclose such information to any person other than the person to whom it relates, except as otherwise may be authorized by law.
- A return or tax information may be disclosed in response to a subpoena that is duly authorized and properly served under the Federal Rules of Criminal Procedure or the Tennessee Rules of Criminal Procedure.
- The commissioner shall, without written request, provide tax information to officers or employees of a claimant as defined in § 67-1-1808, if such tax information is necessary to accomplish and effectuate the purposes of § 67-1-1808. No officer or employee who receives tax information under this subsection (j) shall disclose such information to any person other than the person to whom it relates, except as otherwise may be authorized by law.
- The commissioner may, in the commissioner's discretion, disclose tax information to a unit of local government of this state for purposes of effectuating distributions of tax revenues under the Border Region Retail Tourism Development District Act, compiled in title 7, chapter 40. No unit of local government that receives tax information under this subsection (k) shall disclose the information to any person. However, nothing in this part shall prohibit the unit of local government from making payment or reimbursement to a private party out of distributions received under the Border Region Retail Tourism Development District Act, even if the funds are derived from sales and use taxes collected from a single parcel of property, and such payment or reimbursement shall not be a violation of this part.
Acts 1977, ch. 152, §§ 1, 2; 1980, ch. 769, § 1; T.C.A., § 67-137; Acts 1988, ch. 882, § 3; 2000, ch. 982, § 43; 2002, ch. 614, § 1; 2010, ch. 1113, § 4; 2015, ch. 405, § 4.
Compiler's Notes. Acts 2010, ch. 1113, § 8 provided that any claimant may promulgate rules to effectuate the provisions of the act relating to internal procedures for reporting debts and conducting administrative hearings. The department of revenue may promulgate such other rules to carry out the remaining provisions of the act.
Acts 2010, ch. 1113, § 9 provided that the act, which added subsection (j), shall apply to any claim for refund filed with the department of revenue on or after July 1, 2009, that has not been finally determined.
Amendments. The 2015 amendment added (k).
Effective Dates. Acts 2015, ch. 405, § 5. May 8, 2015.
Textbooks. Tennessee Law of Evidence (2nd ed., Cohen, Paine and Sheppeard), § 501.21.
67-1-1708. Manner of disclosure — Legal effect.
- Requests for the inspection or disclosure of a return or tax information and such inspection or disclosure shall be made in such manner and at such time and place as shall be prescribed by the commissioner.
- A reproduction or certified reproduction of a return shall, upon written request, be furnished to any person to whom disclosure or inspection of such return is authorized by law. A reasonable fee may be prescribed by the commissioner for furnishing such reproduction or certified reproduction.
- Tax information disclosed to any person under the provisions of law may be provided in the form of written documents, reproductions of such documents, films or photo impressions, or electronically produced tapes, discs or records, or by any other mode or means which the commissioner determines is necessary or appropriate. A reasonable fee may be prescribed by the commissioner for furnishing such tax information.
- Any reproduction of any return, document or other material made in accordance with this section shall have the same legal status as the original, and any such reproduction shall, if properly authenticated, be admissible in evidence in any judicial or administrative proceeding as if it were the original, whether or not the original is in existence.
Acts 1977, ch. 152, § 1; T.C.A., § 67-138.
67-1-1709. Violations — Penalties.
- It is a Class E felony for any person who has, or had at any time, access to any return or tax information to disclose to any person, except as authorized by law, any such return or tax information. If such offense is committed by any officer or employee of the state or any other officer or employee described in § 67-1-1702(a), the officer or employee shall, in addition to any other punishment, be dismissed from office or discharged from employment upon conviction for such offense.
- It is a Class E felony for any person to offer any item of material value in exchange for any return or tax information and to receive as a result of such solicitation any such return or tax information.
- It is a Class E felony for any employee of the department willfully to inspect any return or tax information, except when the employee has a good faith and objectively reasonable basis for believing such inspection is in furtherance of the employee's duties or responsibilities.
Acts 1977, ch. 152, § 1; T.C.A., § 67-139; Acts 2000, ch. 982, § 41; 2013, ch. 400, § 2.
Amendments. The 2013 amendment inserted “or any other officer or employee described in § 67-1-1702(a)” in the last sentence of (a).
Effective Dates. Acts 2013, ch. 400, § 3. May 6, 2013.
Cross-References. Penalty for Class E felony, § 40-35-111.
Attorney General Opinions. Disclosure of Returns and Tax Information to Officials of Local Government. OAG 15-44, 2015 Tenn. AG LEXIS 44 (5/6/15).
Cited: Coleman v. Kisber, 338 S.W.3d 895, 2010 Tenn. App. LEXIS 619 (Tenn. Ct. App. Oct. 4, 2010).
67-1-1710. Confidentiality of attorney-client communications.
- In determining taxpayer liability of any professional practitioner licensed by the state of Tennessee, the commissioner shall have no authority to obtain access to legally privileged information, as provided for in § 23-3-105 or to confidential client information, as provided for in statute or professional rules, including the rules of the Tennessee supreme court. Confidential client information includes, but is not limited to, the identity of a client, the nature of the matter for which representation was sought, or any information obtained by counsel in the course of the client's representation.
- When the provisions of subsection (a) are asserted, the disclosure of any information shall be made only after a court order compelling disclosure of such information is final. In an action to compel such disclosure, the client affected by the disclosure has the right to intervene anonymously; any examination of the information shall be conducted in camera; and the commissioner shall have the burden of proof to show, by clear and convincing evidence, that the information sought is not privileged or confidential client information.
Acts 1999, ch. 406, § 16.
Cross-References. Confidentiality of public records, § 10-7-504.
67-1-1711. Disclosure by commissioner.
The commissioner is authorized to disclose tax administration information, other than returns and tax information, if the commissioner determines that such disclosure is in the best interests of the state; provided, that no law shall be construed to require disclosure of criteria or standards used or to be used for the selection of returns or persons for audit or examination, or data used or to be used for determining such criteria or standards, if the commissioner determines that such disclosure will impair assessment, collection, or enforcement under state tax laws.
Acts 2000, ch. 982, § 42.
Cited: Coleman v. Kisber, 338 S.W.3d 895, 2010 Tenn. App. LEXIS 619 (Tenn. Ct. App. Oct. 4, 2010).
67-1-1712. Certified service provider.
- A certified service provider and the department shall comply with the privacy policy of the Streamlined Sales and Use Tax Agreement, and the policy is enforceable by the attorney general and reporter.
- Returns and tax information of a Model 1 seller may be disclosed to the seller's certified service provider.
Acts 2003, ch. 357, § 1; 2004, ch. 959, §§ 50, 68; 2005, ch. 311, §§ 1, 2; 2007, ch. 602, §§ 51, 55.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 1, as amended by Acts 2004, ch. 959, §§ 50 and 68, as amended by Acts 2005, ch. 311, §§ 1 and 2, was repealed in its entirety, effective June 28, 2007.
Cross-References. Definition of Model 1 seller, § 67-6-102.
Part 18
Taxpayer Remedies for Disputed Taxes
67-1-1801. Enumeration of remedies.
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In all cases in which any officer, charged by law with the authority to assess taxes that are collected or administered by the commissioner of revenue, shall finally assess a tax alleged or claimed to be due, if the taxpayer against whom the final assessment is made believes the final assessment to be unjust, illegal or incorrect, the taxpayer's remedies shall be as follows:
- The taxpayer may pay the tax and file a claim for refund of the tax and proceed as provided in this part; or
- The taxpayer may file suit against the commissioner in chancery court in the appropriate county in this state, challenging all or any portion of the final assessment of such tax, including any interest and penalty associated with the tax. Until the earlier of the expiration of ninety (90) days after an assessment becomes final, or the filing of a suit by the taxpayer as provided in subsection (b), no levy as defined in § 67-1-1404 shall be made, begun or prosecuted by the commissioner. The commissioner may, however, initiate and pursue any other action to collect an assessed deficiency under part 14 of this chapter or otherwise, including, but not limited to, the filing of a notice of lien as provided in § 67-1-1403 and the collection of a jeopardy assessment.
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Subdivision (a)(1)(B) shall not apply to those cases where the final assessment is based on:
- Bad checks;
- Debit memos based on mathematical errors caused by the taxpayer's own figures; and
- Delinquent partial payment agreements.
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In all cases in which any officer, charged by law with the authority to assess taxes that are collected or administered by the commissioner of revenue, shall finally assess a tax alleged or claimed to be due, if the taxpayer against whom the final assessment is made believes the final assessment to be unjust, illegal or incorrect, the taxpayer's remedies shall be as follows:
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A suit challenging the final assessment of a tax or seeking a stay of collection of an inheritance or gift tax deficiency pending a final determination of a timely proceeding for review of an appraisal filed by the taxpayer before the appropriate board must be:
- Filed within ninety (90) days from the date the assessment becomes final, with a copy of the notice of proposed assessment issued pursuant to § 67-1-1438 attached to the notice as an exhibit; and
- Signed by the taxpayer under the penalties of perjury, affirming that the taxpayer or affiant believes that the final assessment, or the portion of the final assessment being challenged, is unjust, illegal or incorrect and that the suit is brought in good faith and not solely for the purpose of delay.
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A suit filed by a taxpayer under subsection (b) shall operate to continue the stay of collection of the tax, or portion of the tax challenged, as provided in subdivision (a)(1)(B), except as otherwise provided in subsection (d), until dismissal or final determination of the tax, if the taxpayer also files with the taxpayer's suit one (1) of the following:
- A corporate surety bond or an irrevocable letter of credit, in the form prescribed by regulations issued by the commissioner, issued by a qualified surety company or bank, in a principal amount equal to one hundred fifty percent (150%) of the amount of the final assessment or portion of the final assessment that is challenged by the suit;
- A pledge or collateral assignment of assets in an amount and form satisfactory to the commissioner as evidenced by the commissioner's written consent to the pledge or collateral assignment; or
-
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An affidavit executed by or on behalf of the taxpayer, which lists and describes with particularity:
- All of the taxpayer's assets, the respective fair market values and present location of those assets, all of the liabilities and the amount of the liabilities, and the person's or persons' address to whom such liability is owing, that are an encumbrance or lien against such assets; and
- All transfers and assignments of the taxpayer's assets, whether such transfer was by gift, as collateral security, or otherwise, within the one-year period preceding the date of the final assessment, together with a description of the asset, its value, and the name and address of the transferee or assignee of the asset, except those transfers or assignments that were bona fide, arm's length sales or pledges of noninventory assets of a value of less than one thousand dollars ($1,000), or sales from inventory occurring in the ordinary course of a taxpayer's trade or business, and for which the taxpayer received full and adequate consideration in money or money's worth; and
- A certified copy of each notice of lien, in the form prescribed by regulations issued by the commissioner, required to be filed herein. A notice of lien in favor of the commissioner on all of the taxpayer's real property, wherever situated, shall be filed in the office of the secretary of state and in the office of the register of deeds in the county of the taxpayer's domicile or principal place of business in this state. A notice of lien in favor of the commissioner shall also be filed in other states, in the county in which the taxpayer's real estate is situated.
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An affidavit executed by or on behalf of the taxpayer, which lists and describes with particularity:
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For purposes of this subsection (c):
- In the case of a corporate taxpayer, no distribution to a shareholder of the corporation by way of a dividend, redemption, liquidation or partial liquidation, nor principal repayment of a debt by the corporate taxpayer to the shareholder shall be deemed as having been made for full and adequate consideration;
- A corporate surety company shall be qualified to issue a surety bond, if it is authorized by the commissioner of commerce and insurance to engage in the surety insurance business in this state, and a bank shall be qualified to issue its irrevocable letter of credit if it has been designated by the state treasurer as an authorized depository bank for the deposit of state funds, unless it has been determined by the commissioner to be not qualified for this purpose, based on reasonable standards uniformly applied;
- An asset of a taxpayer may include property assigned to the taxpayer for the limited purpose of having such asset pledged, collaterally assigned, or subjected to the lien in favor of the commissioner;
- A notice of lien filed as provided in subsection (b) constitutes a lien against taxpayer's property, including after-acquired property and replacement property, to the extent of the amount of the final assessment or portion of the final assessment challenged by the taxpayer's suit, including all penalties and interest associated with the final assessment or imposed by the court, and shall have priority over all subsequent liens filed and perfected against the taxpayer's property, and may be collected and enforced by the commissioner in the same manner as a judicial lien or judgment, or in accordance with part 14 of this chapter; and
- A notice of lien, whether filed by the commissioner under § 67-1-1403 or filed by the taxpayer under this subsection (c), against any inventory, stock in trade, or trade receivables of the taxpayer shall not operate to or be construed so as to preclude the sale of such inventory or stock in trade by the taxpayer to customers in the ordinary course of the taxpayer's trade or business, nor to prevent the taxpayer from using the proceeds from the sale of inventory or stock in trade to customers in the ordinary course of the taxpayer's trade or business, and the proceeds from collection of trade receivables for the ordinary and necessary conduct and continuation of the taxpayer's trade or business.
- [Deleted by 2014 amendment, effective January 1, 2015.]
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A suit filed by a taxpayer under subsection (b) shall operate to continue the stay of collection of the tax, or portion of the tax challenged, as provided in subdivision (a)(1)(B), except as otherwise provided in subsection (d), until dismissal or final determination of the tax, if the taxpayer also files with the taxpayer's suit one (1) of the following:
- If the taxpayer has filed a qualified corporate surety bond or bank irrevocable letter of credit in the amount equal to one hundred fifty percent (150%) of the amount of the final assessment or portion of the final assessment that is challenged by the suit, or has entered into a pledge or collateral assignment of assets in an amount and form satisfactory with the commissioner as evidenced by the commissioner's written consent to the pledge or collateral assignment, or has filed certified copies of notices of liens on all of the taxpayer's property, or on unencumbered property of the taxpayer located in this state equal in value to at least one hundred fifty percent (150%) of the amount of the final assessment, or the portion of the final assessment challenged by the suit, proceedings or actions for the collection of the assessed tax or challenged portion of the assessed tax, including an action to enforce the lien in favor of the commissioner under part 14 of this chapter, shall be stayed pending final determination of the suit; provided, that, unless the taxpayer has filed a qualified corporate surety bond or bank irrevocable letter of credit in the amount provided in this subsection (d), the commissioner shall not be prohibited or stayed from taking action to enforce or collect a jeopardy assessment as provided in §§ 67-1-1406 and 67-1-1431. In the event the suit is withdrawn or dismissed, or final judgment on the suit is rendered in favor of the commissioner as to all or any portion of the challenged assessment, the commissioner shall be entitled to collect the amount of the final assessment, interest accrued on the final assessment, and any penalty assessed against the taxpayer, by enforcement of the bond, the letter of credit, the pledge or collateral assignment of assets, or the lien.
- In the event the commissioner commences a jeopardy proceeding under §§ 67-1-1406 and 67-1-1431, a taxpayer who has filed suit under this section and who has filed a pledge or collateral assignment of assets in an amount and form acceptable and consented to by the commissioner, or has filed notices of lien on all of such taxpayer's property or on unencumbered property of the taxpayer located in this state, equal in value to at least one hundred fifty percent (150%) of the assessment or portion of the assessment challenged by the suit, shall have the right to seek a stay by the court of such jeopardy proceeding. The court shall not have jurisdiction to issue an ex parte stay or temporary restraining order. A stay or temporary order restraining such jeopardy proceeding may be issued by the court only after a hearing held upon not less than fifteen (15) nor more than thirty (30) days prior notice to the commissioner. At a hearing for stay or temporary order restraining jeopardy proceedings, the commissioner's basis for such proceeding shall be presumed to be correct, and the burden of proof shall be on the taxpayer to establish by clear and convincing evidence that the commissioner does not have a reasonable basis in fact for finding that collection of the tax is in jeopardy.
- If the taxpayer files an amendment to the taxpayer's complaint challenging the final assessment of additional taxes, for purposes of staying action for collection under subsection (d), such amended complaint shall be treated as an original complaint, and no stay of collection shall apply, unless or until an additional qualified corporate surety bond, bank letter of credit, pledge or collateral assignment of assets consented to by the commissioner is filed, or notices of lien are filed on all taxpayer's property or on additional property of the taxpayer located in the United States, to the extent required to equal or exceed one hundred fifty percent (150%) of the amount of additional assessment challenged. The filing of an amendment to a complaint in a pending suit challenging the final assessment of additional taxes shall be deemed to be the filing of a suit as provided in subsection (b).
- The commissioner may at any time file a motion with the court challenging the qualification, sufficiency, or validity and accuracy of any bond, letter of credit, affidavit, or notice of lien filed by a taxpayer. Such motion may also seek to increase the amount of any bond, letter of credit, pledge or collateral assignment of assets, or notice of lien, which shall be granted, if it reasonably appears to the court that the amount is not sufficient to protect the state adequately. The commissioner shall be entitled to discover any and all matters, not privileged, pursuant to the Rules of Civil Procedure. If a bond, letter of credit, or notice of lien is determined, after hearing, to be disqualified or insufficient to stay a levy or action to collect the final assessment, or portion of the final assessment challenged, such stay shall be lifted, unless made qualified or sufficient within the time, not to exceed ten (10) days, prescribed by the court. If the court, after hearing, determines that an affidavit filed by the taxpayer contains material omissions, misrepresentations, overvaluation of assets or understatement of liabilities, the court shall dismiss the taxpayer's suit with prejudice, unless the court also finds, from the preponderance of the evidence, that such omission, misrepresentation, overvaluation or understatement was not intentional and was not made for the purpose of misleading the commissioner or the court, or of concealing or disguising assets, transfer of assets, or the value of those assets.
- The commissioner shall be entitled, upon motion with notice to the transferee or assignee of a taxpayer's assets, to have the court set aside and order restored to the taxpayer for the benefit of the commissioner all transfers and assignments of the taxpayer's assets occurring subsequent to or within one (1) year preceding the filing of suit by the taxpayer challenging an assessment by the commissioner, except those transfers or assignments that were bona fide, arm's length sales or pledges of noninventory assets of a value of less than one thousand dollars ($1,000), or sales from inventory occurring in the ordinary course of the taxpayer's trade or business, and for which the taxpayer received full and adequate consideration in money or money's worth. The commissioner shall be entitled to discover any and all matters, not privileged, pursuant to the Rules of Civil Procedure. The court may order the restored assets sold and liquidated under the procedures established in part 14 of this chapter, and shall apply the net proceeds of the sale to the payment of all amounts assessed by the commissioner against the taxpayer, and shall return the balance of the proceeds, pro rata, to the person or persons from whom the assignment or transfer of such assets was set aside.
- To the extent of any amounts collected by or paid to the commissioner with respect to an assessment, or any portion of the assessment, challenged by suit by the taxpayer, whether such collection was pursuant to a jeopardy proceeding, by application of assets restored to the taxpayer pursuant to subsection (h), or otherwise, the suit shall proceed as a timely suit for refund of taxes paid, as if a timely claim for refund had been filed by the taxpayer and denied by the commissioner.
- Any notice of a proposed or final assessment issued by the department shall include notice that the taxpayer has the right to file suit in the appropriate chancery court of this state in accordance with this section to challenge the final assessment and collection of the tax within ninety (90) days from the date such assessment becomes final.
Acts 1986, ch. 749, § 5; 1987, ch. 91, § 1; 1998, ch. 637, § 1; 1998, ch. 641, § 5; 2014, ch. 854, § 9.
Amendments. The 2014 amendment, effective January 1, 2015, substituted “the final assessment” for “the assessment” wherever it appeared in (a), (b), (c), (d), (f) and (g); inserted “finally” between “shall” and “assess” in (a)(1); substituted “after an assessment becomes final” for “following the mailing of a notice of assessment to the taxpayer” in (a)(1)(B); substituted “the assessment becomes final, with a copy of the notice of proposed assessment issued pursuant to § 67-1-1438 attached” for “of the mailing of the notice of assessment to the taxpayer by the commissioner, with a copy of the notice of assessment attached” in (b)(1); deleted (c)(3) which read: “(3) During the period of running of the ninety-day period for filing suit as provided in subdivision (b)(1), and before suit is filed, the taxpayer shall have the right to an informal conference with the commissioner to discuss the assessment and to present such matters as may be relevant to the assessment; provided, that written request for such conference is made within thirty (30) days from the date of the notice of assessment. If a timely request for a conference is made, the commissioner shall set a time and place for the conference within twenty (20) days from the date of the request, and shall give the taxpayer written notice of the conference. Within ten (10) days after the conference, the commissioner shall give the taxpayer written notification of the commissioner's decision. Upon the filing of a timely request for a conference, the ninety-day period for the filing of suit challenging a tax assessment and the ninety-day period for stay of collection activity as provided in subdivision (a)(1)(B) shall cease running until an informal conference decision is issued. No other provision of this section, nor any other action or inaction by the taxpayer or the commissioner shall be construed to extend or toll the running of the ninety-day period for filing suit, nor shall the taxpayer be prejudiced in any other manner by either seeking or failing to seek or pursue an informal conference. The informal conference provided in this subdivision (c)(3) shall not be considered to be an administrative remedy and shall not constitute a contested case subject to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. The commissioner shall not be prejudiced in any manner by failing to act within the time periods prescribed in this section, except that no interest shall accrue on any deficiency during any period in which the commissioner has not acted within the time limits prescribed in this section, until the earlier of such time as suit is filed by the taxpayer or the ninety-day period for filing suit has expired. At any time prior to the filing of suit by the taxpayer, the commissioner, in the commissioner's discretion, may hold informal conferences with the taxpayer without the requirement of timely written request for the conference.”; and rewrote (j) which read: “(j) Upon assessing a tax, the commissioner shall give prompt written notice of the assessment to the taxpayer, together with notice that the taxpayer has the right to file suit in the appropriate chancery court of this state in accordance with this section to challenge the assessment and collection of such tax within ninety (90) days from the date of such notice, and the right to have an informal conference with the commissioner upon written request made within thirty (30) days from the date of such notice.”
Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.
Law Reviews.
A Revolution in Tennessee Tax Procedure (S. Gale Graham), 22 Tenn. B.J. 13 (1986).
Cited: Angel v. Jackson, 724 S.W.2d 736, 1987 Tenn. LEXIS 822 (Tenn. 1987); Pan Am World Services, Inc. v. Jackson, 754 S.W.2d 53, 1988 Tenn. LEXIS 139 (Tenn. 1988); Nutritional Support Services, Ltd. v. Taylor, 803 S.W.2d 213, 1991 Tenn. LEXIS 48 (Tenn. 1991); GMC v. Taylor, 811 S.W.2d 897, 1991 Tenn. LEXIS 251 (Tenn. 1991); Bloomingdale's by Mail, Ltd. v. Huddleston, 848 S.W.2d 52, 1992 Tenn. LEXIS 703 (Tenn. 1992); Carl Clear Coal Corp. v. Huddleston, 850 S.W.2d 140, 1992 Tenn. App. LEXIS 1027 (Tenn. Ct. App. 1992); Comdata Network, Inc. v. State Dep't of Revenue, 852 S.W.2d 223, 1993 Tenn. LEXIS 112 (Tenn. 1993); Heath v. Creson, 949 S.W.2d 690, 1997 Tenn. App. LEXIS 16 (Tenn. Ct. App. 1997); Colemill Enters. v. Huddleston, 967 S.W.2d 753, 1998 Tenn. LEXIS 192 (Tenn. 1998); Gehl Corp. v. Johnson, 991 S.W.2d 246, 1998 Tenn. App. LEXIS 820 (Tenn. Ct. App. 1998); J.C. Penney Nat. Bank v. Johnson, 19 S.W.3d 831, 1999 Tenn. App. LEXIS 826 (Tenn. Ct. App. 1999); Saturn Corp. v. Johnson, 236 S.W.3d 156, 2007 Tenn. App. LEXIS 66 (Tenn. Ct. App. Jan. 31, 2007); Hilloak Realty Co. v. Chumley, 233 S.W.3d 816, 2007 Tenn. App. LEXIS 170 (Tenn. Ct. App. Mar. 29, 2007); Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009); Scholastic Book Clubs, Inc. v. Farr, 373 S.W.3d 558, 2012 Tenn. App. LEXIS 57 (Tenn. Ct. App. Jan. 27, 2012).
NOTES TO DECISIONS
1. Legislative Intent.
T.C.A. § 67-1-1801 was not intended to reopen claims for taxes not paid under protest in earlier years. Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).
Supreme court presumes that the requirement of payment under protest in T.C.A. § 67-1-901(a), applicable to municipalities through T.C.A. § 67-1-911, has meaning and purpose and should be given full effect; supreme court is not free to add the language § 67-1-901(b) to expand the scope of T.C.A. §§ 67-1-1801 et seq., restrict the scope of T.C.A. §§ 67-1-901 et seq., or substitute its judgment for that of the Legislature. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
2. Applicability.
The provisions of T.C.A. § 67-1-1801 dispensing with the requirement of payment under protest do not apply to taxes paid prior to January 1, 1986. Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).
The exclusive remedy afforded by title 67, ch. 1, part 18 is adequate for purposes of determining any liability taxpayer, a Maine corporation engaged in retail sales, would have for Tennessee sales taxes. In a proceeding brought pursuant to such provisions, taxpayer could raise its constitutional objections to the application to it of T.C.A. § 67-6-102(6)(J) (now § 67-6-102(23)(J)). L.L. Bean, Inc. v. Bracey, 817 S.W.2d 292, 1991 Tenn. LEXIS 346 (Tenn. 1991).
T.C.A. § 67-1-1801(b) specifically limits the time to file suit challenging a tax assessment action; therefore, T.C.A. § 28-1-105, the general savings statute, does not apply in an action against the state. In addition, a general statute does not apply to the state unless the state is specifically named in the statute. Construing the language of the savings statute strictly, it cannot be applied against the state. AMC Mortg. Co. v. Tennessee Dep't of Revenue (In re AMC Mortg. Co.), 213 F.3d 917, 2000 FED App. 175P, 2000 U.S. App. LEXIS 11751 (6th Cir. Tenn. 2000).
Because the Taxpayer Remedies Statute, T.C.A. § 67-1-1801 et seq., required strict construction and did not contemplate the maintenance of a class action, a grant of class certification in taxpayers' suit for a refund of a Drug Tax that was declared unconstitutional was improper. Wicker v. Comm'r, Tenn. Dep't of Revenue, 342 S.W.3d 35, 2010 Tenn. App. LEXIS 397 (Tenn. Ct. App. June 23, 2010), appeal denied, Wicker v. Comm'r, Tenn. Dep't of Revenue, — S.W.3d —, 2010 Tenn. LEXIS 1047 (Tenn. Nov. 15, 2010).
Trial court did not err in granting an attorney fee award because the statute applied to taxpayers' action seeking a refund of inspection fees a city erroneously calculated, and thus, T.C.A. § 67-1-1801 et seq. governed. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).
Taxpayers' recovery was not limited by T.C.A. § 67-1-903 because T.C.A. § 67-1-1807 applied, and thus, T.C.A. § 67-1-1801 et seq., governed the taxpayers' action seeking a refund of inspection fees a city erroneously calculated. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).
T.C.A. §§ 67-1-901 et seq., rather than T.C.A. §§ 67-1-1801 et seq., applies to a suit to recover municipal taxes; T.C.A. §§ 67-1-901 et seq. governs actions to recover disputed municipal taxes, and under T.C.A. § 67-1-901(a), a taxpayer must pay under protest disputed municipal taxes before filing suit for a refund. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
3. Time Limitations.
Taxpayer's due process rights were not violated by the dismissal of his suit seeking a refund for an unauthorized substances tax that had been declared unconstitutional as the suit was time-barred under T.C.A. § 67-1-1802, and both pre-deprivation and post-deprivation processes were available to challenge the tax assessment in that the tax could have been challenged under T.C.A. § 67-1-1801(a)(1), or by filing a timely declaratory judgment action challenging the facial constitutionality of former T.C.A. § 67-4-2801 et. seq. Swafford v. Comm'r of Revenue, — S.W.3d —, 2012 Tenn. App. LEXIS 163 (Tenn. Ct. App. Mar. 13, 2012).
Trial court properly dismissed a taxpayer's suit against the State challenging an assessment for business taxes owed because, the taxpayer did not timely file an assessment challenge within 90 days from the date of mailing of the assessment as required by T.C.A. § 67-1-1801(b)(1). Higdon v. State, 404 S.W.3d 478, 2013 Tenn. App. LEXIS 17 (Tenn. Ct. App. Jan. 11, 2013), appeal denied, — S.W.3d —, 2013 Tenn. LEXIS 450 (Tenn. May 8, 2013).
Collateral References.
What constitutes plain, speedy, and efficient state remedy under Tax Injunction Act (28 U.S.C. § 1341), prohibiting federal district courts from interfering with assessment, levy, or collection of state business taxes. 31 A.L.R. Fed. 2d 237.
Taxation 371
67-1-1802. Refunds — Report of debts.
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- The commissioner of revenue, with the approval of the attorney general and reporter, except as provided in subdivision (a)(4), is empowered and directed to refund to taxpayers all taxes collected or administered by the commissioner that are, on the date of payment, paid in error or paid against any statute, rule, regulation or clause of the constitution of this state or of the United States. Such refunds shall include, but not be limited to, credit carryovers generated after an audit review of returns, reports, or other documents filed by the taxpayer, including amendments to the returns, reports, or other documents. Such refunds do not, however, include credits generated by mechanical processing or mechanical mathematical verification processes. The commissioner is also authorized to automatically issue a credit or refund, without the necessity of the approval processes set out in this subsection (a), for the portion of estimated taxes paid in excess of the actual liability established by the initial and subsequently filed return for the tax period. The authority granted in this subdivision (a)(1)(A) extends only to taxes for which a claim is filed, with the commissioner under penalties of perjury, within three (3) years from December 31 of the year in which the payment was made. The claim must set forth each ground upon which a refund is claimed, the amount of such refund, the tax period, the tax type, and information reasonably sufficient to apprise the commissioner of the general basis for the claim. A refund requested on a franchise and excise tax return, or amended return, properly filed with the commissioner is deemed to comply with those requirements. The entire disputed amount of tax, penalty and interest must be paid before any claim for refund can be filed. Sales or use taxes which were collected from or passed on to customers by the taxpayer shall not be refunded, unless the taxpayer has refunded or credited the sales or use tax to its customers.
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Any taxpayer requesting a refund in the amount of two hundred dollars ($200) or more that is not eligible for automatic credit or refund pursuant to subdivision (a)(1)(A) shall complete and submit a written report of debts owed to a claimant as defined in § 67-1-1808 on a form prescribed by the commissioner to accompany the claim for refund. If a debt is reported and if the claim for refund is approved, any or all of the refund amount shall be subject to offset to recover the amount of such debt, subject to the requirements of § 67-1-1808. Any person who, with intent to deceive, provides false information on such report commits the Class A misdemeanor offense of perjury pursuant to § 39-16-702. Such report shall state whether or not such person owes or does not owe any of the following debts as of the date of the claim:
- State tax liabilities;
- Child support;
- Overpayment of unemployment compensation benefits;
- Overpayment of medical assistance benefits owed the bureau of TennCare;
- Student loan or other obligation due to the Tennessee student assistance corporation;
- Fees, costs or restitution owed to a clerk who serves a court of criminal jurisdiction;
- Costs of incarceration;
- Judgments or liens in favor of a state agency, department, commission, or bureau;
- All other debts owed to any other claimant.
- Each of the debts in subdivision (a)(1)(B)(i) that are listed in the report shall be preceded by the words “Yes” and “No” and a taxpayer shall make a cross mark (X) or other similar mark opposite the debt the taxpayer owes or does not owe. If a taxpayer marks “Yes” for any such debt, the taxpayer shall attach documentation identifying the claimant to whom the debt is owed and the outstanding balance of the debt. The report shall clearly state in bold face type that a person who, with intent to deceive, provides false information on the report is guilty of the Class A misdemeanor offense of perjury. The report required by this subdivision (a)(1)(B) shall be made on a paper writing in substantially the following form:
REPORT OF DEBTS Pursuant to Tennessee Code Annotated §§ 67-1-1802 and 67-1-1808, if you are seeking a refund of $200.00 or more you are required to complete and attach this report to your claim for refund. Make a “X” in the “Yes” box if you owe any of the debts listed below to any state agency, department, bureau, commission or other state authority (“claimant”). For each debt that you report, attach documentation identifying the claimant to whom you owe the debt and the outstanding balance of such debt as of the date you submit the refund claim. If your refund claim is approved, any or all of your refund payment will be subject to offset and reduced by the amount of any debt owed. If you do not owe any of the debts listed below to a claimant, make a “X” in the “No” box. After completion, please read the paragraphs below and provide a signature and date on the lines provided. Any person who, with intent to deceive, provides false information on this report is guilty of the Class A misdemeanor offense of perjury. Yes No State tax liabilities; Yes No Child support; Yes No Overpayment of unemployment compensation benefits; Yes No Overpayment of medical assistance benefits owed the bureau of TennCare; Yes No Student loan or other obligation due to the Tennessee student assistance corporation; Yes No Fees, costs or restitution owed to a clerk who serves a court of criminal jurisdiction; Yes No Costs of incarceration; Yes No Judgments or liens in favor of a state agency, department, commission, or bureau; Yes No Any other debt owed to any other claimant. I certify that the foregoing report is true and correct to the best of my knowledge and understanding. I further acknowledge that providing false information on this report constitutes the offense of perjury under Tennessee Code Annotated § 39-16-702 and is punishable under the laws of the state of Tennessee. Signature of Taxpayer, Officer or Authorized Representative: Date:
Click to view REPORT OF DEBTS
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Any taxpayer requesting a refund in the amount of two hundred dollars ($200) or more that is not eligible for automatic credit or refund pursuant to subdivision (a)(1)(A) shall complete and submit a written report of debts owed to a claimant as defined in § 67-1-1808 on a form prescribed by the commissioner to accompany the claim for refund. If a debt is reported and if the claim for refund is approved, any or all of the refund amount shall be subject to offset to recover the amount of such debt, subject to the requirements of § 67-1-1808. Any person who, with intent to deceive, provides false information on such report commits the Class A misdemeanor offense of perjury pursuant to § 39-16-702. Such report shall state whether or not such person owes or does not owe any of the following debts as of the date of the claim:
- The commissioner is authorized to make refunds without a claim being filed if the commissioner is in possession of proper proof and facts that a refund is due within three (3) years from December 31 of the year in which the payment was made.
- The commissioner is authorized to refund excise taxes due a taxpayer because of a decrease in net income divulged by an examination by the internal revenue service; provided, that a claim is filed with the commissioner, supported by proper proof, within three (3) years from the date of such redetermination of net income by the internal revenue service.
- The commissioner is authorized to refund estate or inheritance taxes due a taxpayer because of a decrease in federal estate tax resulting from an examination by the internal revenue service; provided, that a claim is filed with the commissioner, supported by proper proof, within two (2) years from the date of such redetermination of the estate by the internal revenue service.
- The commissioner is authorized to refund, without the necessity of a claim having been filed, inheritance taxes due a taxpayer because of a decrease in inheritance tax resulting from an examination by the commissioner.
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- The commissioner is authorized and empowered, in the commissioner's discretion, to designate subordinate officials in the department to approve, on the commissioner's behalf, claims for refunds in amounts of five thousand dollars ($5,000) or less. Only one (1) such subordinate official and one (1) alternate subordinate official shall be designated to approve any one (1) class of claims. The commissioner shall notify, in writing, the commissioner of finance and administration and the attorney general and reporter as to the names of any such subordinate officials so designated.
- The commissioner is also authorized and empowered, in the commissioner's discretion, to approve claims for refunds in amounts of more than five thousand dollars ($5,000) but not more than fifteen thousand dollars ($15,000). The commissioner is authorized and empowered to designate, in the commissioner's discretion, subordinate officials in the department to initially review claims for refund. Such subordinate official shall make a finding in regard to each claim recommending either approval or disapproval. This finding shall be reviewed by the legal office of the department of revenue, which shall make its own recommendation approving or disapproving the claim. Both these findings shall be submitted to the commissioner, or the commissioner's designated subordinate official, who shall make a final determination, either approving or disapproving the claim in the commissioner's or the commissioner's designated subordinate official's discretion, based on all information available to the commissioner or the commissioner's designated subordinate official. The findings of the designated subordinate official and legal office shall be advisory only and shall not be construed to limit the discretion of the commissioner in making refunds under this subsection (a). The commissioner is authorized and empowered to designate subordinate officials in the department to approve, on the commissioner's behalf, claims for refund under this subdivision (a)(6)(B).
- The commissioner is also authorized and empowered to approve claims for refunds in amounts of more than fifteen thousand dollars ($15,000); provided, that the attorney general and reporter may require that the refund of such claims or any class of such claims be subject to the attorney general and reporter's prior review and approval.
- A refund which is authorized solely by a final court adjudication shall not be made to any person who is not either a party to such action or a party to another similar action.
- In any case in which the statute of limitations on the assessment of tax is extended by agreement in writing pursuant to § 67-1-1501(b)(5), the periods specified in this subsection (a) which limit the ability of the commissioner to refund taxes may also be extended for an equivalent period of time by agreement in writing entered into by the commissioner or the commissioner's delegate and the taxpayer.
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- All claims for refund filed pursuant to this section shall be finally determined within six (6) months following receipt of the claim. If the claim for refund is denied, the commissioner shall promptly notify the claimant of the denial and the claimant's right to file a suit for refund in the appropriate chancery court of this state within one (1) year from the date that the claim for refund was filed with the commissioner.
- If a claim is not determined within the six-month period following receipt by the commissioner of such claim, the claim shall be deemed to be denied for the purpose of filing suit in chancery court.
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- A suit challenging the denial or deemed denial of a claim for refund shall be filed in the appropriate chancery court of this state within one (1) year from the date that the claim for refund was filed with the commissioner; provided, that a taxpayer and the commissioner or the commissioner's delegate may enter into an agreement in writing within one (1) year from the date the taxpayer filed a claim for refund in which the taxpayer and the commissioner or the commissioner's delegate consent to suit being filed in chancery court beyond the one-year period provided in this subdivision (c)(1) and that, in the case of an agreement, the taxpayer may file suit in the appropriate chancery court challenging the denial or deemed denial of a claim for refund within the agreed upon period.
- In a suit challenging the denial or deemed denial of a claim for refund, the chancery court shall conduct a de novo trial of the suit; provided, that the court shall have no jurisdiction in cases in which the issue is the existence, continued existence, or amount of a debt set off against a tax refund, or in which the issue is the validity of an assessment made pursuant to § 67-1-1808(i). The remedies established in § 67-1-1808 are a taxpayer's sole and exclusive remedies to challenge the existence, continued existence, or amount of a debt set off against a tax refund, or to challenge the validity of an assessment made pursuant to § 67-1-1808(i).
- The commissioner, by written notice promptly delivered to the taxpayer, may waive the requirement that the taxpayer file a claim for refund, in which case the taxpayer may file suit in the appropriate chancery court of this state for a refund within one (1) year following the date of such waiver by the commissioner, and such suit shall proceed in all respects, including for the purpose of determining the date from which interest thereon should be calculated, as if proper and timely claim for refund had been filed by the taxpayer, and either denied or not acted upon by the commissioner within the period specified herein.
- This section is specifically made applicable to a refund arising from the application of § 67-6-507(e)(6). If a certified service provider, as defined in § 67-6-102, has assumed sales and use tax return filing responsibilities of the seller, the provider shall have the right to claim, on behalf of the seller, any bad debt allowance or refund available to the seller under § 67-6-507.
Acts 1986, ch. 749, § 6; 1988, ch. 526, §§ 2, 3; 1989, ch. 127, § 1; 1989, ch. 236, § 6; 1991, ch. 80, § 2; 1992, ch. 626, §§ 2, 3; 1998, ch. 595, § 1; 1999, ch. 406, § 8; 2003, ch. 357, § 2; 2004, ch. 721, § 1; 2004, ch. 959, §§ 51, 68; 2005, ch. 311, §§ 1, 2; 2005, ch. 499, § 27; 2007, ch. 602, §§ 31-33, 51, 56; 2008, ch. 1106, § 34; 2010, ch. 1113, §§ 5, 6; 2011, ch. 343, § 1.
Code Commission Notes.
Former subsection (e), concerning procedures for purchasers and sellers regarding refund requests for sales tax collected by the taxpayer from customers on Internet access charges, was deleted as obsolete by authority of the code commission in 2006.
Compiler's Notes. Acts 1996, ch. 739, § 3 provided that, notwithstanding the provisions of this section, sales or use taxes paid prior to April 12, 1996, on purchases or sales to a contractor whose principal business is the improvement of real property shall not be refunded when based upon the industrial machinery exemption provided by § 67-6-206, the energy fuels, electricity and water reduced rates or exemption provided by § 67-6-206 or the industrial materials exemption provided in § 67-6-102(23)(E) unless a properly documented refund claim is filed within ninety (90) days of April 12, 1996.
Acts 2010, ch. 1113, § 8 provided that any claimant may promulgate rules to effectuate the provisions of the act relating to internal procedures for reporting debts and conducting administrative hearings. The department of revenue may promulgate such other rules to carry out the remaining provisions of the act.
Acts 2010, ch. 1113, § 9 provided that the act, which added subdivision (a)(1)(B) and amended subdivision (c)(1), shall apply to any claim for refund filed with the department of revenue on or after July 1, 2009, that has not been finally determined.
Cross-References. Penalty for Class A misdemeanor, § 40-35-111.
Attorney General Opinions. State statutes and case law make plain that costs associated with researching, applying for, and distributing a tax refund may not be recovered from consumers, OAG 04-169 (11/29/04).
Businesses in Tennessee are liable for the burden of researching, requesting, and distributing tax refunds without the possibility of recovering costs incurred to the extent that refunds to consumers may not be reduced in order to recover such costs, OAG 04-169 (11/29/04).
Constitutionality, application and construction of provisions of proposed SB 603 [HB644/SB603 enacted as 2015 Acts ch. 514]. OAG 15-37, 2015 Tenn. AG LEXIS 38 (4/22/15).
Cited: American Tel. & Tel. Co. v. Cardwell, 798 S.W.2d 761, 1990 Tenn. LEXIS 408 (Tenn. 1990); Southern Ry. Co. v. Taylor, 812 S.W.2d 577, 1991 Tenn. LEXIS 250 (Tenn. 1991); Lowe's Companies, Inc. v. Cardwell, 813 S.W.2d 428, 1991 Tenn. LEXIS 294 (Tenn. 1991); Sherwin-Williams Co. v. Johnson, 989 S.W.2d 710, 1998 Tenn. App. LEXIS 701 (Tenn. App. 1998); Wachovia Bank of N.Carolina, N.A. v. Johnson, 26 S.W.3d 621, 2000 Tenn. App. LEXIS 6 (Tenn. Ct. App. 2000); Suntrust Bank v. Johnson, 46 S.W.3d 216, 2000 Tenn. App. LEXIS 807 (Tenn. Ct. App. 2000); Hollingsworth, Inc. v. Johnson, 138 S.W.3d 863, 2003 Tenn. App. LEXIS 799 (Tenn. Ct. App. 2003)Hilloak Realty Co. v. Chumley, 233 S.W.3d 816, 2007 Tenn. App. LEXIS 170 (Tenn. Ct. App. Mar. 29, 2007); Wicker v. Comm'r, Tenn. Dep't of Revenue, 342 S.W.3d 35, 2010 Tenn. App. LEXIS 397 (Tenn. Ct. App. June 23, 2010); Higdon v. State, 404 S.W.3d 478, 2013 Tenn. App. LEXIS 17 (Tenn. Ct. App. Jan. 11, 2013).
NOTES TO DECISIONS
1. Constitutionality.
The provision of T.C.A. § 67-1-1802 allowing only a taxpayer (the retailer or vendor) to claim a refund and not the consumers who bear the actual burden of the tax did not unconstitutionally deprive consumers of a remedy for the unlawful exaction of the sales tax on warranty contracts. It is the taxpayer who must be afforded the opportunity to challenge the validity or legality of the tax; the consumer's remedy is against the taxpayer, i.e., the vendor of the warranty contracts, to recover the amounts paid. Reimann v. Huddleston, 883 S.W.2d 135, 1993 Tenn. App. LEXIS 756 (Tenn. Ct. App. 1993), cert. denied, 513 U.S. 825, 115 S. Ct. 91, 130 L. Ed. 2d 42, 1994 U.S. LEXIS 5647 (1994).
2. Legislative Intent.
T.C.A. § 67-1-1802 was not intended to reopen claims for taxes not paid under protest in earlier years. Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).
3. Applicability.
The provisions of T.C.A. § 67-1-1802 dispensing with the requirement of payment under protest do not apply to taxes paid prior to January 1, 1986. Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).
4. Taxpayer Suit.
The commissioner's authority to issue tax refunds is limited in cases where the refund claim results from an adverse decision in a lawsuit brought by other taxpayers. Northern Telecom, Inc. v. Taylor, 781 S.W.2d 837, 1989 Tenn. LEXIS 526 (Tenn. 1989), cert. denied, 496 U.S. 905, 110 S. Ct. 2587, 110 L. Ed. 2d 268, 1990 U.S. LEXIS 2907 (1990), cert. denied, Northern Telecom, Inc. v. Taylor, 496 U.S. 905, 110 S. Ct. 2587, 110 L. Ed. 2d 268, 1990 U.S. LEXIS 2907 (1990).
Taxpayers complied with the pre-suit requirements because the city's written notice to the taxpayers of its decision not to refund the overpayment waived the requirement for the taxpayers to file a claim for a refund before filing suit; the statute then permitted the taxpayers to file suit in chancery court, which they timely did. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).
5. Time Limitations.
Taxpayer's due process rights were not violated by the dismissal of his suit seeking a refund for an unauthorized substances tax that had been declared unconstitutional as the suit was time-barred under T.C.A. § 67-1-1802, and both pre-deprivation and post-deprivation processes were available to challenge the tax assessment in that the tax could have been challenged under T.C.A. § 67-1-1801(a)(1), or by filing a timely declaratory judgment action challenging the facial constitutionality of former T.C.A. § 67-4-2801 et. seq. Swafford v. Comm'r of Revenue, — S.W.3d —, 2012 Tenn. App. LEXIS 163 (Tenn. Ct. App. Mar. 13, 2012).
6. Proper Proof.
Trial court did not err in finding that proper proof was not supplied until March 14, 2014 because the data originally provided was not sufficient for the Commissioner of Revenue to conduct the review of the refund claim; the review process was uniquely within the purview of the Commissioner and his auditing staff, as the trial court was ill equipped to conduct such an audit and conclude that a refund was or was not due. Mobility II LLC v. Roberts, — S.W.3d —, 2016 Tenn. App. LEXIS 743 (Tenn. Ct. App. Sept. 30, 2016), appeal denied, AT&T Mobility II, LLC v. Roberts, — S.W.3d —, 2017 Tenn. LEXIS 121 (Tenn. Feb. 15, 2017).
Collateral References.
Recovery of sales taxes paid on bad debts. 38 A.L.R.6th 255.
67-1-1803. Jurisdiction — Certification of refunds — Attorneys' fees — Statute of limitation tolled — Appeals — Expedited proceedings.
- Subject matter jurisdiction shall be, and the venue of suits filed pursuant to this part shall lie, in the chancery court in either Davidson County or in the county in Tennessee of the taxpayer's domicile or in the county in which the taxpayer has the taxpayer's principal place of business in Tennessee.
- If it is determined that the taxes for which a claim for refund was made pursuant to § 67-1-1802, or as to which suit proceeded as a timely suit for refund pursuant to § 67-1-1801(i), were not due from the taxpayer to the commissioner of revenue for any reason going to the merits of the tax, then the court shall certify of record that the tax was wrongfully paid and ought to be refunded, together with interest on the tax calculated forty-five (45) days from the date of filing a claim for refund or date of waiver by the commissioner pursuant to § 67-1-1802(c)(2), or on the date of payment in the case of any tax collected after suit was filed under § 67-1-1801, in accordance with § 67-1-1801(d). Thereupon, the commissioner of finance and administration shall issue such commissioner's warrant for the refund, which shall be paid in preference to all other claims on the state treasury.
- For the purpose of suits brought under this part, the commissioner of revenue shall be considered a resident of each of the several counties of the state.
- The court shall award to the prevailing party reasonable attorneys' fees and expenses of litigation up to twenty percent (20%) of the amount finally assessed or denied, including interest after payment. For purposes of this subsection (d), attorneys' fees shall not exceed fees calculated on the basis of reasonable hourly rates multiplied by a reasonable number of hours expended in the case and shall not be calculated by application of any premium, enhancement, or contingency. For purposes of this subsection (d), the state shall be deemed the prevailing party where the taxpayer is found by a court to be the transferee of assets conveyed in violation of title 66, chapter 3, or the tax, penalty or interest at issue in the case arises from the same underlying activity with respect to which the taxpayer or one of its officers, owners or employees was found to have committed fraud.
- The filing of the suit by the taxpayer tolls all statutes of limitations as to other persons potentially liable to the taxpayer due to the occurrence from which the claim before the court arises until the final determination of the suit.
- Appeals of any decision of the chancery court of suits brought under this part shall be under the Tennessee Rules of Appellate Procedure.
- Hearings and determination of all proceedings brought under this part, shall be expedited to the extent feasible and proper.
Acts 1986, ch. 749, § 7; 1991, ch. 402, § 1; 1992, ch. 952, § 9; 1994, ch. 956, § 1; 2007, ch. 602, § 34; 2008, ch. 1106, § 60; 2009, ch. 530, § 102; 2014, ch. 854, § 10.
Amendments. The 2014 amendment, effective January 1, 2015, inserted “finally” between “amount” and “assessed” in the first sentence in (d).
Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.
Cited: Angel v. Jackson, 724 S.W.2d 736, 1987 Tenn. LEXIS 822 (Tenn. 1987); South Cent. Bell Tel. Co. v. Celauro, 754 S.W.2d 605, 1988 Tenn. LEXIS 141 (Tenn. 1988); Warner-Tamble Co. v. Taylor, 778 S.W.2d 440, 1989 Tenn. LEXIS 456 (Tenn. 1989); Graphic Sys. v. Taylor, 791 S.W.2d 27, 1990 Tenn. LEXIS 214 (Tenn. 1990); James v. Huddleston, 795 S.W.2d 661, 1990 Tenn. LEXIS 308 (Tenn. 1990); Hearthstone, Inc. v. Moyers, 809 S.W.2d 888, 1991 Tenn. LEXIS 136 (Tenn. 1991); GMC v. Taylor, 811 S.W.2d 897, 1991 Tenn. LEXIS 251 (Tenn. 1991); Southern Ry. Co. v. Taylor, 812 S.W.2d 577, 1991 Tenn. LEXIS 250 (Tenn. 1991); Lowe's Companies, Inc. v. Cardwell, 813 S.W.2d 428, 1991 Tenn. LEXIS 294 (Tenn. 1991); SC & T Properties v. Huddleston, 823 S.W.2d 541, 1992 Tenn. LEXIS 25 (Tenn. 1992); Covington Pike Toyota, Inc. v. Cardwell, 829 S.W.2d 132, 1992 Tenn. LEXIS 221 (Tenn. 1992); Eusco, Inc. v. Huddleston, 835 S.W.2d 576, 1992 Tenn. LEXIS 431 (Tenn. 1992); AFG Indus., Inc. v. Cardwell, 835 S.W.2d 583, 1992 Tenn. LEXIS 429 (Tenn. 1992); Nashville Golf & Athletic Club v. Huddleston, 837 S.W.2d 49, 1992 Tenn. LEXIS 487 (Tenn. 1992); Federated Stores Realty, Inc. v. Huddleston, 852 S.W.2d 206, 1992 Tenn. LEXIS 359 (Tenn. 1992); Mast Adv. & Publishing, Inc. v. Moyers, 865 S.W.2d 900, 1993 Tenn. LEXIS 406 (Tenn. 1993); Hutton v. Johnson, 956 S.W.2d 484, 1997 Tenn. LEXIS 569 (Tenn. 1997); Colemill Enters. v. Huddleston, 967 S.W.2d 753, 1998 Tenn. LEXIS 192 (Tenn. 1998); Gehl Corp. v. Johnson, 991 S.W.2d 246, 1998 Tenn. App. LEXIS 820 (Tenn. Ct. App. 1998); J.C. Penney Nat. Bank v. Johnson, 19 S.W.3d 831, 1999 Tenn. App. LEXIS 826 (Tenn. Ct. App. 1999); Nashville Clubhouse Inn v. Johnson, 27 S.W.3d 542, 2000 Tenn. App. LEXIS 163 (Tenn. Ct. App. 2000); Suntrust Bank v. Johnson, 46 S.W.3d 216, 2000 Tenn. App. LEXIS 807 (Tenn. Ct. App. 2000); Hawkins v. Tenn. Dep't of Corr., 127 S.W.3d 749, 2002 Tenn. App. LEXIS 536 (Tenn. Ct. App. 2002); Hardcastle v. Harris, 170 S.W.3d 67, 2004 Tenn. App. LEXIS 827 (Tenn. Ct. App. 2004); Corp. v. Chumley, 190 S.W.3d 652, 2005 Tenn. App. LEXIS 664 (Tenn. Ct. App. 2005); Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009); ADT Sec. Servs. v. Johnson, 329 S.W.3d 769, 2009 Tenn. App. LEXIS 775 (Tenn. Ct. App. Nov. 19, 2009); Cao Holdings, Inc. v. Trost, 333 S.W.3d 73, 2010 Tenn. LEXIS 1149 (Tenn. Dec. 15, 2010); Wicker v. Comm'r, Tenn. Dep't of Revenue, 342 S.W.3d 35, 2010 Tenn. App. LEXIS 397 (Tenn. Ct. App. June 23, 2010); Blue Bell Creameries, LP v. Roberts, 333 S.W.3d 59, 2011 Tenn. LEXIS 6 (Tenn. Jan. 24, 2011); Scholastic Book Clubs, Inc. v. Farr, 373 S.W.3d 558, 2012 Tenn. App. LEXIS 57 (Tenn. Ct. App. Jan. 27, 2012); Boote v. Roberts, — S.W.3d —, 2013 Tenn. App. LEXIS 222 (Tenn. Ct. App. Mar. 28, 2013).
NOTES TO DECISIONS
1. Attorneys' Fees.
The appropriate factors to be used in determining a reasonable attorney's fee in Tennessee are set forth in Connors v. Connors, 594 S.W.2d 672, 1980 Tenn. LEXIS 402 (Tenn. 1980) and DR 2-106 of the Code of Professional Responsibility (now see the Rules of Professional Conduct). Nutritional Support Services, Ltd. v. Taylor, 803 S.W.2d 213, 1991 Tenn. LEXIS 48 (Tenn. 1991).
The trial court incorrectly denied prevailing tax litigant, department of revenue's motion for attorneys' fees and costs of litigation. Carson Creek Vacation Resorts v. Department of Revenue, 865 S.W.2d 1, 1993 Tenn. LEXIS 370 (Tenn. 1993).
Trial court did not err in granting an attorney fee award because the statute applied to taxpayers' action seeking a refund of inspection fees a city erroneously calculated, and thus, T.C.A. § 67-1-1801 et seq. governed. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).
2. —Limitations.
To the extent that T.C.A. § 67-1-1803(d) did not conflict with 42 U.S.C. § 1988, the provisions of T.C.A. § 67-1-1803 were applicable, but the court could not rely on the Tennessee statute to limit the amount of attorneys' fees that would otherwise be awarded under the federal statute. Bloomingdale's by Mail, Ltd. v. Huddleston, 848 S.W.2d 52, 1992 Tenn. LEXIS 703 (Tenn. 1992), rehearing denied, Bloomingdale's by Mail v. Huddleston, — S.W.2d —, 1993 Tenn. LEXIS 52 (Tenn. Feb. 22, 1993), cert. denied, Huddleston v. Bloomingdale's by Mail, 509 U.S. 907, 113 S. Ct. 3002, 125 L. Ed. 2d 694, 1993 U.S. LEXIS 4298 (1993), cert. denied, Huddleston v. Bloomingdale's by Mail, 509 U.S. 907, 113 S. Ct. 3002, 125 L. Ed. 2d 694, 1993 U.S. LEXIS 4298 (1993).
To determine the “reasonableness” of attorney's fees under T.C.A. § 67-1-1803(d), courts are directed to follow the guidelines listed in Tenn. R. Sup. Ct. 8, Code Prof. Resp., D.R. 2-106 (now see the Rules of Professional Conduct). Carson Creek Vacation Resorts v. Department of Revenue, 865 S.W.2d 1, 1993 Tenn. LEXIS 370 (Tenn. 1993).
T.C.A. § 67-5-2103(h) makes clear that T.C.A. § 67-1-1803(d) does not apply in property tax assessment challenges, and therefore § 67-1-1803(d) could not serve as a basis for upholding the trial court's assessment of attorney's fees in this case; as the General Assembly has not enacted a statute expressly authorizing the assessment of attorney's fees against a county in a property tax assessment challenge, the trial court had no authority to assess attorney fees against the county. Zumstein v. Roane Cty. Executive/Mayor, — S.W.3d —, 2017 Tenn. App. LEXIS 573 (Tenn. Ct. App. Aug. 21, 2017).
3. Evidence.
Commissioner of revenue failed to show that the trial court made $50,000 fee award upon inadequate proof by the taxpayer, or that he was denied the opportunity to offer proof in opposition to the fee sought. Nutritional Support Services, Ltd. v. Taylor, 803 S.W.2d 213, 1991 Tenn. LEXIS 48 (Tenn. 1991).
4. Interest After Payment.
Since corporation's capital gains from divestitures were “nonbusiness earnings” under former § 67-4-804(a)(5), and since the parties stipulated that the capital gains could not be “allocated” to Tennessee under former § 67-4-810 if found to be “nonbusiness earnings,” corporation was entitled to a refund of corporate excise taxes plus statutory interest. Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 1993 Tenn. LEXIS 160 (Tenn. 1993).
5. Miscellaneous.
Where Tennessee Department of Revenue (TDOR) levied upon account of the reorganized debtor but district court had determined that the levy was untimely, Chapter 11 trustee's request for damages or sanctions against state taxing authority was denied because no damages or sanctions were warranted under the facts and circumstances of this case and the question of damages for untimely levy was within the sole and exclusive jurisdiction of the Tennessee courts. In re Faye Foods, Inc., — B.R. —, 2017 Bankr. LEXIS 899 (Bankr. W.D. Tenn. Mar. 29, 2017).
67-1-1804. Exclusivity of procedures.
The procedure established by this part is the sole and exclusive jurisdiction for determining liability for all taxes collected or administered by the commissioner of revenue, except that the state board of equalization shall have jurisdiction concurrent with the chancery court in inheritance tax cases in which only issues of valuation are raised, as provided by § 67-8-411, and the board designated in § 67-8-116 shall have jurisdiction concurrent with the chancery court in gift tax cases in which only issues of valuation are raised, as provided by § 67-8-116.
Acts 1986, ch. 749, § 8.
Cited: Bloomingdale's by Mail, Ltd. v. Huddleston, 848 S.W.2d 52, 1992 Tenn. LEXIS 703 (Tenn. 1992); Heath v. Creson, 949 S.W.2d 690, 1997 Tenn. App. LEXIS 16 (Tenn. Ct. App. 1997); Colonial Pipeline Co. v. Morgan, 263 S.W.3d 827, 2008 Tenn. LEXIS 589 (Tenn. Sept. 9, 2008); Wicker v. Comm'r, Tenn. Dep't of Revenue, 342 S.W.3d 35, 2010 Tenn. App. LEXIS 397 (Tenn. Ct. App. June 23, 2010); Swafford v. Comm'r of Revenue, — S.W.3d —, 2012 Tenn. App. LEXIS 163 (Tenn. Ct. App. Mar. 13, 2012).
NOTES TO DECISIONS
1. Jurisdiction.
In addition to case law, the exclusivity provision of T.C.A. § 67-1-1804 establishes an independent basis for holding that the chancery court should not have jurisdiction to issue a declaratory judgment pursuant to T.C.A. § 29-14-102 in an action involving state revenue. L.L. Bean, Inc. v. Bracey, 817 S.W.2d 292, 1991 Tenn. LEXIS 346 (Tenn. 1991).
With respect to judicial determinations that have the effect, directly or indirectly, of determining liability for taxes that are collected by the Department of Revenue, T.C.A. § 67-1-1804 overrides the jurisdiction that a chancery court would otherwise have under T.C.A. § 16-11-103. L.L. Bean, Inc. v. Bracey, 817 S.W.2d 292, 1991 Tenn. LEXIS 346 (Tenn. 1991).
Jurisdiction under 42 U.S.C. § 1983 is not recognized in state courts over a matter that would not be cognizable in federal court on the basis of 42 U.S.C. § 1983. To do otherwise would undermine the exclusive authority provided in T.C.A. § 67-1-1804 for determining liability with respect to taxes collected or administered by the department of revenue. L.L. Bean, Inc. v. Bracey, 817 S.W.2d 292, 1991 Tenn. LEXIS 346 (Tenn. 1991).
Whatever jurisdiction the Davidson County chancery court may have to issue a declaratory judgment regarding the constitutionality of a statute pursuant to former T.C.A. § 4-5-224 (now § 4-5-225), that authority should not be exercised regarding a statute dealing with state tax revenue if such exercise of jurisdiction would be in conflict with, and undermine, the exclusive jurisdiction for determining liability for taxes that is bestowed by T.C.A. § 67-1-1804. L.L. Bean, Inc. v. Bracey, 817 S.W.2d 292, 1991 Tenn. LEXIS 346 (Tenn. 1991).
Where Tennessee Department of Revenue (TDOR) levied upon account of the reorganized debtor but district court had determined that the levy was untimely, Chapter 11 trustee's request for damages or sanctions against state taxing authority was denied because no damages or sanctions were warranted under the facts and circumstances of this case and the question of damages for untimely levy was within the sole and exclusive jurisdiction of the Tennessee courts. In re Faye Foods, Inc., — B.R. —, 2017 Bankr. LEXIS 899 (Bankr. W.D. Tenn. Mar. 29, 2017).
2. Time Limitations.
Trial court properly dismissed a taxpayer's suit against the State challenging an assessment for business taxes owed because, the taxpayer did not timely file an assessment challenge within 90 days from the date of mailing of the assessment as required by T.C.A. § 67-1-1801(b)(1). Higdon v. State, 404 S.W.3d 478, 2013 Tenn. App. LEXIS 17 (Tenn. Ct. App. Jan. 11, 2013), appeal denied, — S.W.3d —, 2013 Tenn. LEXIS 450 (Tenn. May 8, 2013).
3. Refund.
Statute does not vest sole and exclusive jurisdiction over refund claims that have been deemed denied due to the passage of time because the statute is not internally inconsistent and does not operate to divest the Commissioner of Revenue, once suit has been filed, of the authority to continue to review a refund claim. Mobility II LLC v. Roberts, — S.W.3d —, 2016 Tenn. App. LEXIS 743 (Tenn. Ct. App. Sept. 30, 2016), appeal denied, AT&T Mobility II, LLC v. Roberts, — S.W.3d —, 2017 Tenn. LEXIS 121 (Tenn. Feb. 15, 2017).
67-1-1805. [Obsolete.]
Code Commission Notes.
Former § 67-1-1805 (Acts 1986, ch. 749, § 9), concerning transfer of pending actions to chancery court, was removed by the Code Commission in 1998 as obsolete.
67-1-1806. Rules and regulations.
The commissioner of revenue is authorized to promulgate rules and regulations and to prescribe forms to implement this part.
Acts 1986, ch. 749, § 10.
67-1-1807. Applicable laws — Conditions precedent for recovery — Conflicting laws.
- All taxes paid on or after January 1, 1986, shall be governed by the laws regarding refunds and suits for the recovery of taxes as set out in this part.
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- It shall not be a condition precedent for suit for recovery of taxes paid on or after January 1, 1986, that the taxes be paid under protest, involuntarily, or under duress.
- No suit for the recovery of any tax paid prior to January 1, 1986, shall be allowed unless such tax was paid under protest.
- To the extent that this section conflicts with any other law, this section shall control and supersede all such laws.
Acts 1986, ch. 749, § 11; 1987, ch. 92, § 1.
Code Commission Notes.
Former subsections (a) and (c), concerning the laws governing all taxes paid prior to January 1, 1986 and all taxes paid on or after January 1, 1986, but prior to April 15, 1986, and for which suit for the recovery thereof was filed prior to April 15, 1986, were deleted as obsolete by the code commission in 2003.
Cross-References. Payment under protest, involuntarily, or under duress, § 67-1-901.
Cited: Wicker v. Comm'r, Tenn. Dep't of Revenue, 342 S.W.3d 35, 2010 Tenn. App. LEXIS 397 (Tenn. Ct. App. June 23, 2010); Swafford v. Comm'r of Revenue, — S.W.3d —, 2012 Tenn. App. LEXIS 163 (Tenn. Ct. App. Mar. 13, 2012).
NOTES TO DECISIONS
1. Legislative Intent.
T.C.A. § 67-1-1807 was not intended to reopen claims for taxes not paid under protest in earlier years. Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).
Wording of the statute is sufficiently broad to encompass claims involving taxes paid to local entities such as counties and municipalities. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).
Legislature, by enacting T.C.A. §§ 67-1-1807 and 67-1-901(b), specifically removed the payment-under-protest requirement for disputed state taxes collected by the commissioner of revenue but did not eliminate this requirement for municipal taxes, and it enacted these statutes together as part of the same statutory scheme; under the doctrine of in pari materia, the supreme court reads these provisions together to give the intended effect to the entire statutory scheme. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
Provision in T.C.A. § 67-1-1807(a) that removed the requirement of payment under protest for state taxes is self-limiting; “as set out in this part” necessarily references a claim for refund under T.C.A. §§ 67-1-1801 to 67-1-1808, not a claim for refund under T.C.A. §§ 67-1-901 to 67-1-912, and because there is no conflict between § 67-1-1807 and T.C.A. § 67-1-901 et seq., § 67-1-1807 does not supersede the payment-under-protest requirement of § 67-1-901(a). Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
2. Applicability.
The provisions of T.C.A. § 67-1-1807 dispensing with the requirement of payment under protest do not apply to taxes paid prior to January 1, 1986. Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).
Trial court did not err in granting an attorney fee award because the statute applied to taxpayers' action seeking a refund of inspection fees a city erroneously calculated, and thus, T.C.A. § 67-1-1801 et seq. governed. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).
Taxpayers' recovery was not limited by T.C.A. § 67-1-903 because T.C.A. § 67-1-1807 applied, and thus, T.C.A. § 67-1-1801 et seq., governed the taxpayers' action seeking a refund of inspection fees a city erroneously calculated. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).
Statutory changes in T.C.A. §§ 67-1-901(b) and 67-1-1807(b) do not eliminate the requirement of payment under protest in § 67-1-901(a) for disputed municipal taxes; the 1986 enactments of § 67-1-901(b) and T.C.A. §§ 67-1-1801 et seq., that removed the requirement of payment under protest reference only taxes collected by the commissioner of revenue, and there is no mention of taxes collected by a municipality. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
Before January 1, 1986, under T.C.A. § 67-1-901, a taxpayer was required to pay under protest both state and municipal taxes before filing suit for a refund, and on or after January 1, 1986, under T.C.A. §§ 67-1-901(b) and 67-1-1807(b)(1), a taxpayer is not required to pay under protest disputed state taxes collected or administered by the commissioner of revenue before filing suit for a refund. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).
3. Payment Under Protest.
Where payment of corporate excise tax was made after January 1, 1986, as a result of an audit conducted after that date, payment under protest of the tax was not a prerequisite to taxpayer's action to recover taxes paid after that date. GMC v. Taylor, 811 S.W.2d 897, 1991 Tenn. LEXIS 251 (Tenn. 1991), aff'd, Comdata Network, Inc. v. State Dep't of Revenue, 852 S.W.2d 223, 1993 Tenn. LEXIS 112 (Tenn. 1993), aff'd sub nom. Comdata Network, Inc. v. State Dep't of Revenue, 852 S.W.2d 223, 1993 Tenn. LEXIS 112 (Tenn. 1993), rehearing denied, — S.W.2d —, 1993 Tenn. LEXIS 153 (Tenn. Apr. 26, 1993).
Since taxes were not paid under protest and were not actually paid after January 1, 1986, suit was properly dismissed. Comdata Network, Inc. v. State Dep't of Revenue, 852 S.W.2d 223, 1993 Tenn. LEXIS 112 (Tenn. 1993), rehearing denied, — S.W.2d —, 1993 Tenn. LEXIS 153 (Tenn. Apr. 26, 1993).
Trial court had jurisdiction to determine the constitutionality of an occupancy tax under T.C.A. § 67-4-1425, because several taxpayers were not required to pay the tax “under protest” before filing a challenge. Admiralty Suites & Inns, LLC v. Shelby County, 138 S.W.3d 233, 2003 Tenn. App. LEXIS 835 (Tenn. Ct. App. Nov. 24, 2003), appeal denied, — S.W.3d —, 2004 Tenn. LEXIS 406 (Tenn. May 10, 2004).
In taxpayers' action seeking a refund of inspection fees a city erroneously calculated, the trial court did not err by applying the statute because payment under protest was not a condition precedent to a suit for the recovery of a tax paid to a municipality; the tax at issue provided no explicit requirement to pay “under protest” but only provided that the inspection fee was to be paid to a municipality. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).
67-1-1808. Offset of the taxpayer's refund of taxes by the amount of debt owed to a claimant.
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As used in this section, unless the context otherwise requires:
- “Claimant” means any state agency, department, board, bureau, commission, or authority to which a taxpayer owes any debt listed in subsection (d) or that acts on behalf of a person to collect such debt. Such term may also include a clerk who serves a court of criminal jurisdiction, if the clerk has determined to participate in the offset provisions of this section;
- “Debt” means any money, unpaid account, or sum due and owing any claimant by a taxpayer, or any money, unpaid account, or sum that is due and owing any person and is legally enforceable by the claimant;
- “Debtor” means a person owing a debt to a claimant and who files a claim for a tax refund, subject to the further requirements of this section;
- “Offset” or “set off” means the application of all or part of a taxpayer's refund of taxes to pay a taxpayer's debt owed to a claimant; and
- “Person” or “taxpayer” means every individual, firm, partnership, joint venture, association, corporation, limited liability company, cooperative, trust, regulated investment company, receiver, and syndicate.
- Whenever a taxpayer has, on the date of payment, paid taxes in error or paid taxes against any statute, rule, regulation or clause of the constitution of the state or of the United States, and is due a refund pursuant to this part, and the taxpayer reports to be a debtor in the manner provided by § 67-1-1802(a)(1)(B)(ii), the commissioner shall offset the taxpayer's refund of taxes by the amount of the debt as provided in this section.
- This section shall apply to any claim for refund of state taxes filed by any taxpayer in the amount of two hundred dollars ($200) or more that is not eligible for automatic credit or refund pursuant to § 67-1-1802(a)(1)(A). A tax refund shall not be offset to pay the debt of any person who is not the taxpayer due the refund. Whenever a claim for refund is filed by two (2) or more persons, who were jointly and severally liable for the taxes paid, the entire refund amount shall be subject to offset to pay the debt or debts of one (1) or more of the taxpayers.
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The following debts shall be used to offset a refund of taxes:
- State tax liabilities due pursuant to this title;
- Child support due pursuant to title 36, chapters 2, 5, or 6, or pursuant to title 37, chapter 1;
- Amounts owed to the unemployment compensation fund pursuant to title 50, chapter 7;
- Obligations owing to the bureau of TennCare for overpayment of medical assistance benefits pursuant to title 71, chapter 5;
- Student loan or other obligation due to the Tennessee student assistance corporation pursuant to title 49, chapter 4;
- Fees, costs or restitution collected by a clerk who serves a court of criminal jurisdiction, if reported pursuant to subsection (f);
- Costs of incarceration due pursuant to title 41, chapter 21, part 9;
- Judgments and liens in favor of a claimant; and
- All other debts owed to any other claimant.
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In the event that a taxpayer owes debts to several claimants, priority of set off against any refund shall be as follows:
- State tax liabilities;
- Child support;
- Judgments and liens in favor of a claimant in order of the date entered or perfected; and
- All other debts owed to any other claimant in the order in which the debt was incurred.
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When a taxpayer reports that any debt is owed to a claimant in the manner provided by § 67-1-1802(a)(1)(B)(ii), and if the commissioner determines such taxpayer is entitled to a refund, then the commissioner shall notify the treasurer and each claimant identified in the documentation accompanying the claim for refund of the department's intent to issue a refund. Such notification shall also include:
- The name and address of the taxpayer;
- The original tax refund amount;
- The proposed offset amount; and
- The proposed net tax refund amount.
- The notification to the treasurer may include any other information that would assist the treasurer in determining whether the taxpayer may be the owner of unclaimed property held in trust on the owner's behalf. Following receipt of the notification, the treasurer shall verify to the department whether or not the taxpayer is the owner of unclaimed property. The amount of the debt owing to a claimant shall be set off against the amount of the unclaimed property otherwise due the taxpayer.
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Following receipt of the notification provided in subdivision (f)(1) and prior to an offset of a tax refund, a claimant shall provide written notice to the debtor, and to the commissioner of revenue, of the claimant's intent to set off all or part of the tax refund to pay the debt. Such notice shall set forth the:
- Original tax refund amount;
- Proposed offset amount;
- Proposed net tax refund amount;
- Basis for a claim to the debt and set off;
- Taxpayer's right to appeal the proposed offset as provided in subsection (g); and
- A toll-free telephone number or other contact information which the debtor may use in obtaining information from the claimant concerning the debt and the proposed offset action.
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When a taxpayer reports that any debt is owed to a claimant in the manner provided by § 67-1-1802(a)(1)(B)(ii), and if the commissioner determines such taxpayer is entitled to a refund, then the commissioner shall notify the treasurer and each claimant identified in the documentation accompanying the claim for refund of the department's intent to issue a refund. Such notification shall also include:
-
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- If any debt has been previously determined to exist and to be due and owing as a result of a final order issued pursuant to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, or a judgment entered by any court of record, then a debtor shall be afforded an opportunity for a hearing to determine the continued existence of the debt and whether it remains outstanding. No hearing shall be conducted as provided in this subdivision (g)(1)(A) unless the time limits for appealing any prior final order or judgment have expired as provided by law.
- Any debtor who desires a hearing shall submit to the department of revenue a written request for a hearing within twenty (20) days of receipt of the notice provided in subdivision (f)(3). If a hearing is requested, then it shall be held by the commissioner of revenue or the commissioner's designee as provided in the Uniform Administrative Procedures Act. The commissioner may request that an administrative judge or hearing officer employed in the office of the secretary of state conduct the hearing as provided in the Uniform Administrative Procedures Act.
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- If any debt has not been determined to exist, or to be due and owing as a result of a prior final order or judgment, as provided in subdivision (g)(1)(A), then a debtor shall be afforded an opportunity for a hearing, in accordance with subdivision (g)(2)(B), to determine the existence of the debt, and if so, whether the claimed debt asserted as due and owing is correct.
- Any debtor who desires a hearing shall submit to the claimant a written request for a hearing within twenty (20) days of receipt of the notice provided in subdivision (f)(3). The claimant shall notify the department of revenue as to whether the taxpayer filed a timely request for hearing upon the expiration of the twenty-day period for filing such request or receipt of a request for a hearing. If a hearing is requested, then it shall be held by the claimant or the claimant's designee as provided in the Uniform Administrative Procedures Act. If the amount due is incorrect, a proper adjustment shall be made. After entry of a final order following any hearing, the claimant shall send a copy of the final order to the commissioner of revenue.
- All final orders issued pursuant to the Uniform Administrative Procedures Act, as provided in subdivision (g)(1) or (g)(2), shall set forth the amount owed by the taxpayer to the claimant that is subject to set off.
-
-
- The commissioner of revenue shall set off the appropriate amount of a debt against the tax refund if a taxpayer fails to file a timely request for a hearing, or upon receipt of a final order, or as soon thereafter as practicable. Any portion of a tax refund remaining after the offset shall be refunded or credited to a taxpayer, as requested in the claim for refund. The commissioner shall ensure that the appropriate amount of the refund subject to set off is used to satisfy any debts owed by the taxpayer.
- The commissioner of revenue shall notify the taxpayer in writing and provide an accounting of the action taken on any refund whenever the commissioner sets off a taxpayer's refund pursuant to this section.
- The commissioner of revenue may require a claimant to pay a fee to reimburse the department of revenue's costs of collecting the debt on behalf of a claimant; provided, that the fee shall not exceed five dollars ($5.00) per offset action.
-
-
On an annual basis, the department of revenue shall submit to the following claimants a list of taxpayers for the previous year who filed claims for refunds and received such refunds in the amount of two hundred dollars ($200) or more and for which no debts were reported in accordance with § 67-1-1802(a)(1)(B)(i):
- Department of human services;
- Department of labor and workforce development;
- Bureau of TennCare;
- Tennessee student assistance corporation;
- Administrative office of the courts; and
- Attorney general and reporter.
- If any such claimant receiving such list has information in its records verifying that a named taxpayer owed a debt as of the date of the claim for refund, such claimant shall notify the department of revenue of the name of the debtor, the amount of the debt, and the date on which the debt was incurred. The clerk who serves a court of criminal jurisdiction shall notify the department if the clerk has determined to participate in the offset provisions of this section. Notwithstanding any other law to the contrary, the department of revenue shall make an assessment against the taxpayer to recover the amount of the debt that would have otherwise been offset against the refund payment. The procedures established in subsection (g) to challenge a proposed offset shall be the sole and exclusive remedies for challenging an assessment made pursuant to this subsection (i); provided, that the debtor is provided information in the notice of assessment about the procedures for challenging such assessment and the twenty-day period for requesting a hearing shall begin from the date of the notice of assessment. Nothing in this section shall require any state agency or its employees or officers to violate strict standards of confidentiality set forth in applicable federal or state law or regulations.
-
On an annual basis, the department of revenue shall submit to the following claimants a list of taxpayers for the previous year who filed claims for refunds and received such refunds in the amount of two hundred dollars ($200) or more and for which no debts were reported in accordance with § 67-1-1802(a)(1)(B)(i):
- Notwithstanding part 17 of this chapter, or any other law prohibiting disclosure of a taxpayer's identity or tax information, all information exchanged among the department of revenue, the department of treasury, and any claimant necessary to accomplish the purpose of this section is lawful.
Acts 2010, ch. 1113, § 7.
Compiler's Notes. Acts 2010, ch. 1113, § 8 provided that any claimant may promulgate rules to effectuate the provisions of the act relating to internal procedures for reporting debts and conducting administrative hearings. The department of revenue may promulgate such other rules to carry out the remaining provisions of the act.
Acts 2010, ch. 1113, § 9 provided that the act, which added this section, shall apply to any claim for refund filed with the department of revenue on or after July 1, 2009, that has not been finally determined.
Former subsection (k), concerning a performance audit of the implementation and enforcement of Acts 2010, ch. 1113, was deleted as obsolete by authority of the code commission in 2013.
Cross References. Confidentiality of public records, § 10-7-504.
Cross-References. Confidentiality of offsets for refund of taxes of debt owned to claimant, § 67-1-1808.
Chapter 2
Income Taxation
67-2-101. Chapter definitions.
As used in this chapter, unless the context otherwise requires:
-
- “Bond” means all obligations issued by any person, firm, joint-stock company, business trust or corporation organized and doing business under the laws of this state, or any other state, evidenced by an instrument whereby the obligor is bound to pay interest to the obligee regardless of whether the obligor is doing business in this state, or whether the obligation under the terms of which the interest accrues is a mortgage or lien on property located in this state or beyond the jurisdiction of the state;
-
“Bond” does not include:
- Ordinary commercial paper, trade acceptance, etc., maturing in six (6) months or less from the date of issuance; or
- Certificates of deposit, repurchase agreements or similar evidences of indebtedness;
- “Commissioner” means the commissioner of revenue;
- “Corporate property” means the franchise, corporate excess or intangible value of the corporation as well as all other property;
-
“Deficiency” means:
- The amount by which the tax imposed by this chapter exceeds the amount shown as the tax by the taxpayer upon the taxpayer's return; or
- If no amount is shown as the tax by the taxpayer upon the taxpayer's return, or if no return is made, the correct amount of the tax;
- “Person,” “it,” or any other singular pronoun means every natural person, inhabitant, resident, beneficiary of every trust or estate, partnership, joint-stock company, business trust, corporation or any other form of organization in receipt of dividends from corporate stocks and/or interest on bonds as defined in this section, regardless of the sources from which such income is derived, except as otherwise expressly provided. Any person who has a legal domicile in Tennessee shall be subject to the tax imposed; every person who maintains a place of residence in Tennessee for more than six (6) months in the tax year shall be subject to the tax imposed by this chapter, regardless of what place such person may claim as a legal domicile;
- “Stocks” means shares of stock issued by corporations chartered and organized under the laws of the state of Tennessee, or of any other state, or of the United States, or of any foreign government, and all interests in partnerships, associations, or trusts represented by transferable evidence of such interest; and
- “Taxpayer's tax year” means the calendar year, unless a fiscal year is elected by the taxpayer when the first fiscal year return is due to be filed.
Acts 1931 (2nd Ex. Sess.), ch. 20, § 3; 1933, ch. 60, § 1; 1949, ch. 185, § 3; C. Supp. 1950, § 1123.3; Acts 1959, ch. 290, § 1; 1963, ch. 271, § 2; 1967, ch. 176, § 1; 1982, ch. 652, § 1; T.C.A. (orig. ed.), §§ 67-2601, 67-2624; Acts 1985, ch. 58, § 1; 1985, ch. 364, § 1; 1989, ch. 186, § 1.
Compiler's Notes. Former § 67-2-101(1)(B)(ii) was held to be unconstitutional. See casenote under 1. Constitutionality, Notes to Decisions, Dominion Nat'l Bank v. Olsen, 771 F.2d 108 (6th Cir. 1985).
Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 789.
Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 16.
Law Reviews.
Comptroller v. Wynne and the Futile Search for Non-Discriminatory State Taxation, 67 Vand. L. Rev. En Banc 283 (2014).
The Dormant Coordination Clause, 67 Vand. L. Rev. En Banc 269 (2014).
The Personal Income Tax as a Component of State Tax Structure (William F. Fox), 39 Vand. L. Rev. 1081 (1986).
Key Tax Aspects of the Tennessee Limited Liability Company Act (Andrée Sophia Blumstein), 30 Tenn. B.J. 14 (1994).
The Debt-Equity Distinction in a Second-Best World, 53 Vand. L. Rev. 1055 (2000).
Why Wynne [Maryland State Comptroller of the Treasury v. Wynne , 64 A.3d 453 (Md. 2013)], Worries Me, 67 Vand. L. Rev. En Banc 207 (2014).
Why Wynne Should Win, 67 Vand. L. Rev. En Banc 217 (2014).
Wynne: Lose Or Draw?, 67 Vand. L. Rev. En Banc 245 (2014).
Comparative Legislation. Income taxation:
Ala. Code § 40-18-1 et seq.
Ark. Code § 26-51-101 et seq.
Ga. O.C.G.A. § 48-7-1 et seq.
Ky. Rev. Stat. Ann. § 141.010 et seq.
Miss. Code Ann. § 27-7-1 et seq.
Mo. Rev. Stat. § 143.005 et seq.
N.C. Gen. Stat. § 105-130 et seq.
Va. Code § 58.1-300 et seq.
Cited: Tidwell v. Berke, 532 S.W.2d 254, 1975 Tenn. LEXIS 611 (Tenn. 1975); Mote v. Olsen, 648 S.W.2d 942, 1983 Tenn. LEXIS 638 (Tenn. 1983); Boone v. Chumley, 372 S.W.3d 104, 2011 Tenn. App. LEXIS 640 (Tenn. Ct. App. Nov. 30, 2011).
NOTES TO DECISIONS
1. Constitutionality.
Enactment of this chapter was authorized by Tenn. Const., art. II, § 28. Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).
The power to tax incomes is restricted to those referred to in Tenn. Const., art. II, § 28. Gallagher v. Butler, 214 Tenn. 129, 378 S.W.2d 161, 1964 Tenn. LEXIS 457 (1964).
Former § 67-2-101(1)(B)(ii), which had the effect of levying a state tax on the earnings from certificates of deposits issued by out-of-state financial institutions but owned by residents of the state of Tennessee violated the commerce clause. Dominion Nat'l Bank v. Olsen, 771 F.2d 108, 1985 U.S. App. LEXIS 22613 (6th Cir. 1985).
2. Bonds.
By this section the legislature enlarged the meaning of the word “bond” to include all obligations issued by any person, firm, stock company, business trust, or corporation, and such definite and classifying phrase cannot be construed to confine the tax imposed by statute to mere obligations of persons, firms, joint stock companies, business trusts, or corporations contrary to the express provision of § 67-2-102 which includes within its levy interest on bonds of each person, partnership, association, trust and corporation within the state of Tennessee who received or to whom has accrued during any year income from such source. Union & Planters Bank & Trust Co. v. Fort, 170 Tenn. 285, 95 S.W.2d 39, 1935 Tenn. LEXIS 133 (1935).
The six-month maturity requirement for bonds began to run from the date of execution. Shackleford v. Olsen, 675 S.W.2d 171, 1984 Tenn. LEXIS 838 (Tenn. 1984).
Bonds issued by a city and county government containing a “liquidity demand” provision, giving bondholders the right to demand payment earlier than the maturity date, were bonds within the meaning of T.C.A. § 67-2-101, and interest on the bonds was subject to state income tax. Steele v. Industrial Dev. Bd. of the Metro. Gov't, 950 S.W.2d 345, 1997 Tenn. LEXIS 409 (Tenn. 1997).
3. Deposits.
Money on deposit in bank, being subject to ad valorem tax, is not subject to the income tax as from stocks or bonds. Hamilton Nat'l Bank v. Chattanooga, 165 Tenn. 283, 54 S.W.2d 943, 1932 Tenn. LEXIS 47 (1932) (decision under prior law).
A certificate of deposit which matures less than six months from the date of its making escapes taxation altogether. Templeton v. Bartlett, 190 Tenn. 347, 229 S.W.2d 509, 1950 Tenn. LEXIS 491 (1950).
4. Notes.
The mere fact that payment may be demanded on a past due note does not make it a demand note so as to exempt it from taxation under this section. Hamilton Nat'l Bank v. McCanless, 176 Tenn. 570, 144 S.W.2d 768, 1940 Tenn. LEXIS 102 (1940).
5. Stocks.
The stocks referred to in this section do not have to be the stocks of a corporation but may be any stocks so long as the certificates are alienable. Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).
6. Standing.
Three Virginia banks, not qualified to do business in this state and not in fact doing business herein, had no standing to seek declaratory or injunctive relief to have the validity of the tax imposed by this chapter determined, where such banks were not subject to the tax or required to file a return on behalf of their depositors, merely on grounds that they were adversely affected by the tax because Tennessee depositors might remove their funds from out-of-state banks and deposit them in domestic banks to avoid payment of the tax. Dominion Nat'l Bank v. Olsen, 651 S.W.2d 215, 1983 Tenn. LEXIS 778 (Tenn. 1983).
7. Commercial Paper.
A provision for payment 30 days after demand does not alter the character of an instrument from a demand note to a time instrument. Shackleford v. Olsen, 675 S.W.2d 171, 1984 Tenn. LEXIS 838 (Tenn. 1984).
Instruments of indebtedness which paid interest and were payable within 30 days of demand were thus capable of maturity within six months of issuance were not bonds, but rather ordinary commercial paper, and the interest thereon was not taxable. Shackleford v. Olsen, 675 S.W.2d 171, 1984 Tenn. LEXIS 838 (Tenn. 1984).
Collateral References. 71 Am. Jur. 2d State and Local Taxation § 382 et seq.
85 C.J.S. Taxation § 1693 et seq.
Taxation 371
67-2-102. Imposition, rate and collection of tax.
An income tax shall be levied and collected annually on incomes derived by way of dividends from stocks or by way of interest on bonds of each person, partnership, association, trust and corporation in the state of Tennessee who received, or to whom accrued, or to whom was credited during any year income from the sources enumerated in this section, except as otherwise provided in this chapter. The rate of the tax imposed by this chapter shall be:
- For any tax year that begins on or after January 1, 2017, and prior to January 1, 2018, four percent (4%);
- For any tax year that begins on or after January 1, 2018, and prior to January 1, 2019, three percent (3%);
- For any tax year that begins on or after January 1, 2019, and prior to January 1, 2020, two percent (2%);
- For any tax year that begins on or after January 1, 2020, and prior to January 1, 2021, one percent (1%); and
- For any tax year that begins on or after January 1, 2021, and for subsequent tax years, zero percent (0%).
Acts 1931 (2nd Ex. Sess.), ch. 20, § 1; 1937, ch. 117, § 1; 1937, ch. 297, § 1; C. Supp. 1950, § 1123.1; modified; Acts 1967, ch. 176, § 2; T.C.A. (orig. ed.), §§ 67-2602, 67-2603; Acts 1985, ch. 395, § 2; 2016, ch. 1064, § 1; 2017, ch. 181, § 13.
Compiler's Notes. Acts 2016, ch. 1064, § 4, provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2016.
Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Acts 2017, ch. 181, § 38 provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2017.
Amendments. The 2016 amendment substituted “five percent (5%)” for “six percent (6%)” near the beginning of the section.
The 2017 amendment, in the present introductory paragraph, substituted “shall be levied and collected annually” for “in the amount of five percent (5%) per annum shall be levied and collected” in the first sentence, and added the introductory clause; and added (1)-(5).
Effective Dates. Acts 2016, ch. 1064, § 4. May 20, 2016.
Acts 2017, ch. 181, § 38. April 26, 2017.
Cross-References. Receipt and distribution of tax revenues from annexed areas, § 6-51-115.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 16.
Law Reviews.
Comptroller v. Wynne and the Futile Search for Non-Discriminatory State Taxation, 67 Vand. L. Rev. En Banc 283 (2014).
In the Trade or Business of an Isolated Sale of Real Estate (Mark A. Rentenbach and Joseph A. Sowell III), 51 Tenn. L. Rev. 319 (1984).
The Dormant Coordination Clause, 67 Vand. L. Rev. En Banc 269 (2014).
Why Wynne [Maryland State Comptroller of the Treasury v. Wynne , 64 A.3d 453 (Md. 2013)], Worries Me, 67 Vand. L. Rev. En Banc 207 (2014).
Why Wynne Should Win, 67 Vand. L. Rev. En Banc 217 (2014).
Wynne: Lose Or Draw?, 67 Vand. L. Rev. En Banc 245 (2014).
Attorney General Opinions. Inapplicability of Hall Income Tax to withdrawals from IRA's or Keogh plan accounts, OAG 99-136 (7/8/99).
Applicability of Hall income tax to capital gain distributions from investment trusts and mutual funds, OAG 99-164 (8/19/99).
NOTES TO DECISIONS
1. Construction.
This section and § 67-2-104 must be construed in pari materia. Gallagher v. Butler, 214 Tenn. 129, 378 S.W.2d 161, 1964 Tenn. LEXIS 457 (1964).
2. Accrual of Tax.
The tax falls on the stockholder when the dividend is declared by the directors, and the income then accrues to the stockholder individually. Fidelity-Bankers Trust Co. v. McCanless, 181 Tenn. 476, 181 S.W.2d 747, 1944 Tenn. LEXIS 266 (1944).
3. Annuities.
An annuity is a fixed amount payable absolutely and without contingency and is not taxable as income while income as distinguished from annuity represents profits to be earned, the amount of which is not fixed, but is contingent on the amount of earnings realized. Sanborn v. McCanless, 181 Tenn. 150, 178 S.W.2d 765, 1944 Tenn. LEXIS 353 (1944).
4. Bonds.
Trustee who invested funds of trust in purchase of high grade bonds at a premium price was required to pay income tax on interest received from bonds regardless of amount he paid for the bonds. First Nat'l Bank v. McCanless, 186 Tenn. 1, 207 S.W.2d 1007, 1948 Tenn. LEXIS 510 (1948).
5. Certificates of Deposit.
Certificates of deposits which matured more than six months from date were taxable under this chapter, hence were not subject to ad valorem tax by county trustee. Templeton v. Bartlett, 190 Tenn. 347, 229 S.W.2d 509, 1950 Tenn. LEXIS 491 (1950).
6. Dividends.
In determining whether a distribution of funds is taxable, the court will look at the transaction with respect to its substantial and practical effect rather than the form in which it was handled and will give the term “dividends” its ordinary meaning unless the specific terms of the statute require otherwise. Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).
The taxing portion of the statute levies a tax against income derived by way of dividends only and is not applicable to gains realized by stockholders on sales and transfers of their stock. Gallagher v. Butler, 214 Tenn. 129, 378 S.W.2d 161, 1964 Tenn. LEXIS 457 (1964).
Entire distribution was a “dividend” within the meaning of taxing statute which imposes the tax on “incomes derived by way of dividends from stock,” including portion of distribution in excess of corporation's current earned surplus. Dobson v. Huddleston, 863 S.W.2d 392, 1993 Tenn. LEXIS 290 (Tenn. 1993), rehearing denied, — S.W.2d —, 1993 Tenn. LEXIS 347 (Tenn. Oct. 4, 1993).
Tennessee residents who owned stock in South Carolina Sub S corporations could be taxed on dividend distributions under T.C.A. § 67-2-102 and were not entitled to a credit for paying South Carolina income tax under T.C.A. § 67-2-122 because there was no reciprocal agreement between Tennessee and South Carolina. Boone v. Chumley, 372 S.W.3d 104, 2011 Tenn. App. LEXIS 640 (Tenn. Ct. App. Nov. 30, 2011), appeal denied, — S.W.3d —, 2012 Tenn. LEXIS 449 (Tenn. June 20, 2012).
7. Income from Trust.
Where a trust agreement does not impose an absolute duty on the trustee to pay interest to the trustors, the trust agreement itself cannot be classed an interest-bearing obligation or bond. It then becomes necessary to look to the underlying legal obligation by which the interest was derived in order to characterize the income for purposes of this section. Mote v. Olsen, 648 S.W.2d 942, 1983 Tenn. LEXIS 638 (Tenn. 1983).
8. Commercial Paper.
Instruments of indebtedness which paid interest and were payable within 30 days of demand were thus capable of maturity within six months of issuance were not bonds, but rather ordinary commercial paper, and the interest thereon was not taxable. Shackleford v. Olsen, 675 S.W.2d 171, 1984 Tenn. LEXIS 838 (Tenn. 1984).
Decisions Under Prior Law
1. Constitutionality.
Tax on incomes from stocks and bonds not taxed ad valorem is constitutional. Shields v. Williams, 159 Tenn. 349, 19 S.W.2d 261, 1928 Tenn. LEXIS 92 (1929).
The constitutional grant of power to the legislature to levy a tax upon incomes derived from stocks and bonds that are not taxed ad valorem is by way of exception; courts are precluded from curtailing the rule or adding to the exceptions by implication. Evans v. McCabe, 164 Tenn. 672, 52 S.W.2d 159, 1931 Tenn. LEXIS 69 (1931).
2. Beneficiary of Trust.
The tax is imposed on stocks and bonds held by natural persons; the fact that the income is derived through the medium of a trustee is immaterial, since the beneficiary of the income is the one against whom the statute is directed. Ross v. McCabe, 166 Tenn. 314, 61 S.W.2d 479, 1932 Tenn. LEXIS 135 (Tenn. 1932), appeal dismissed, Ross v. Fort, 290 U.S. 603, 54 S. Ct. 347, 78 L. Ed. 529, 1933 U.S. LEXIS 520 (1933), appeal dismissed, Ross v. Fort, 290 U.S. 603, 54 S. Ct. 347, 78 L. Ed. 529, 1933 U.S. LEXIS 520 (1933).
3. Income from Trust.
Statement in this section that the word person should include every natural person, partnership, joint-stock company, business trust, corporation or other form of organization in receipt of taxable income conveys no implication of an intent to exclude executors and administrators. Union Planters Nat'l Bank & Trust Co. v. Beeler, 172 Tenn. 317, 112 S.W.2d 11, 1937 Tenn. LEXIS 81 (1938).
Collateral References.
Corporate earnings returned to stockholding customers in proportion to business transacted. 109 A.L.R. 969.
Distribution by corporation to its stockholders, of stock of other corporation, as taxable income. 56 A.L.R.2d 474.
Distribution on reduction of par value of capital stock as taxable income to stockholder. 173 A.L.R. 688.
Dividends on corporate stock, time when dividends become taxable as income to a taxpayer making his returns on a cash basis. 120 A.L.R. 1280.
Dividends, tax on privilege of declaring and receiving, construction and application of. 146 A.L.R. 1219.
Liquidation of corporation, income tax in respect of amounts received by stockholder upon. 65 A.L.R. 148.
Massachusetts or business trusts. 88 A.L.R.3d 704.
Stock dividend as taxable dividend when received. 105 A.L.R. 784, 130 A.L.R. 408, 143 A.L.R. 230, 144 A.L.R. 1337, 167 A.L.R. 554.
What gains are to be treated as “dividends,” within provisions of the Income Tax Law. 56 A.L.R. 383.
67-2-103. Tax for state purposes only.
Subject to § 67-2-119, the tax provided for in this part is for state purposes only, and no county or municipality shall have power to levy the tax.
Acts 1931 (2nd Ex. Sess.), ch. 20, § 2; mod. C. Supp. 1950, § 1123.2; modified; T.C.A. (orig. ed.), § 67-2604.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 16.
Law Reviews.
Tax Limitations of Counties and Municipalities (M. P. O'Connor), 12 Tenn. L. Rev. 174 (1934).
67-2-104. Exemptions.
- The tax imposed by this chapter does not apply to the first one thousand two hundred fifty dollars ($1,250) for each individual return or two thousand five hundred dollars ($2,500) of combined income for persons who file jointly, of income otherwise taxable under this chapter.
- For tax years beginning January 1, 2000, and thereafter, any person sixty-five (65) years of age or older having a total annual income derived from any and all sources of sixteen thousand two hundred dollars ($16,200) or less, or any persons who file a joint return and either spouse is sixty-five (65) years of age or older having a total annual joint income derived from any and all sources of not more than twenty seven thousand dollars ($27,000), are exempt from the income tax imposed by this chapter upon submission of evidence deemed acceptable by the commissioner to establish the age and income limitations stated in this subsection (b). For tax years beginning January 1, 2012, and thereafter, the income levels specified in the previous sentence in this subsection (b) shall change to twenty-six thousand two hundred dollars ($26,200) for single filers and to thirty-seven thousand dollars ($37,000) for persons filing jointly. For tax years beginning January 1, 2013, and thereafter, the income levels specified in the previous sentence in this subsection (b) shall change to thirty-three thousand dollars ($33,000) for single filers and to fifty-nine thousand dollars ($59,000) for persons filing jointly. For tax years beginning January 1, 2015, and thereafter, the income levels under this subsection (b) shall change to thirty-seven thousand dollars ($37,000) for single filers and to sixty-eight thousand dollars ($68,000) for persons filing jointly.
- The income from stocks and bonds, mortgages, and notes owned and held by blind persons, or by persons certified, in writing, by a medical doctor to be a quadriplegic, and where such income is derived from circumstances resulting in the individual becoming a quadriplegic, are exempt from the tax imposed by this chapter.
- No Tennessee citizen declared by the United States department of defense to be a prisoner of war is liable for payment of the tax provided for by this chapter during the time of such person's capture and imprisonment, nor for sixty (60) days upon such person's release, whenever it should occur.
-
- Nothing contained in this chapter shall be construed or held to authorize the levy of an income tax on obligations of the United States, whether evidenced by bonds or otherwise and/or on shares of stock in corporations that are arms and agencies directly of the United States, insofar as such bonds and stocks are exempt from such taxation by the constitution or laws of the United States; or on the income derived from bonds of the state of Tennessee, or any county or municipality or other political subdivision of the state of Tennessee not subject to ad valorem taxation.
- Nothing contained in this chapter shall be construed or held to authorize the levy of an income tax on dividends from a regulated investment company qualified as such under Subtitle A, chapter 1, subchapter M of the Internal Revenue Code, compiled in 26 U.S.C. § 851 et seq.; provided, that a part of the value of the investments of such regulated investment company shall be in any combination of bonds or securities of the United States government or any agency or instrumentality of the United States government or in bonds of the state of Tennessee, or any county or any municipality or political subdivision of the state of Tennessee, including any agency, board, authority or commission of the United States or the state of Tennessee. Such dividends shall be exempt from the levy of an income tax only in proportion to the income of the regulated investment company attributable to interest on bonds or securities of the United States government or any agency or instrumentality of the United States government or on bonds of the state of Tennessee, or any county or any municipality or political subdivision of the state of Tennessee, including any agency, board, authority or commission of the United States or the state of Tennessee.
- No corporation shall be required to pay any income tax that otherwise would be assessable under this chapter on any stocks and/or bonds that constitute a part of the aggregate of its corporate property on which it is now assessed or shall be assessed for ad valorem taxes; nor when such stocks and/or bonds constitute a part of the assets that determine the value of the shares that are now or shall hereafter be assessed for ad valorem taxes to the stockholder.
- No person shall be assessed with this tax on income from any stock in any corporation where the value of the shares is assessed ad valorem to the stockholder by this state.
- No person shall be assessed with this tax on income from any stock in any corporation licensed to do business in this state as an insurance company.
- No person shall be assessed with this tax on income from any stock in any bank, state or federally chartered, doing business in this state.
- No distribution of capital shall be taxed as income under this chapter, and no distribution of surplus by way of stock dividend shall be taxable in the year such distribution is made; but all other distributions out of earned surplus shall be taxed as income when and in whatever manner made, regardless of when such surplus was earned. Stock dividends issued within one (1) year of liquidation shall be taxable in the year received to the extent made out of earned surplus; provided, that gains over and above the par or original pro rata capital value of original shares held shall be taxed to the shareholder upon any transfer of stock to nonresidents in the year of such transfer, when such transfer occurs within one (1) year prior to liquidation or redemption. There shall, however, be exempt from taxation under this section distribution made pursuant to decrees ordering divestiture of stock in enforcement of antitrust statutes.
- The income from stocks and bonds of educational, religious or other like institutions organized for the general welfare and not for profit or individual gain that are exempt from taxation under the Assessment Act, codified in § 67-5-212, shall be exempt from the taxes imposed by this chapter; provided, that if any educational, religious or other like institution issues stocks or bonds, the income or profit or any part of which goes to private individuals or corporations for profit or gain and not purely for educational, religious or charitable purposes, such income or profit shall be subject to the tax imposed in this chapter.
- The income from stocks and bonds of pension trusts and profit sharing trusts that are exempt from federal income taxation is exempt from the taxes imposed by this chapter.
- The income from stocks and bonds held by a fiduciary and paid to or irrevocably set aside for the benefit of educational, religious, or other like institutions organized for the general welfare and not for profit or individual gain that are exempt from taxation under the Assessment Act, codified in § 67-5-212, is exempt from the taxes imposed by this chapter.
- All income from interest on loans to qualified businesses for improvements, expansions, operations, or real property within an enterprise zone, as defined in title 13, chapter 28, part 2 shall be exempt from tax.
- The income derived from the trust funds in a trust created for the perpetual care of a cemetery pursuant to title 46 shall be exempt from the taxes imposed by this chapter.
- Nothing contained in this chapter shall be construed or held to authorize the levy of any tax on earnings or distributions from an investment fund organized as a unit investment trust taxable as a grantor trust under 26 U.S.C. §§ 671-677, or organized as a limited partnership taxable under 26 U.S.C. §§ 701-761 and registered under the Investment Company Act of 1940, compiled in 15 U.S.C. § 80a-1 et seq.; provided, that a part of the value of the investments of such investment fund shall be in any combination of bonds or securities of the United States government, or any agency or instrumentality of the United States government, or in bonds of the state of Tennessee, or any county or any municipality or political subdivision of the state of Tennessee, including any agency, board, authority or commission of the United States or the state of Tennessee. Such earnings or distributions shall be exempt from the levy of an income tax only in proportion to the income of the investment fund attributable to interest on bonds or securities of the United States government, or any agency or instrumentality of the United States government, or on bonds of the state of Tennessee, or any county or any municipality or political subdivision of the state of Tennessee, including any agency, board, authority or commission of the United States or the state of Tennessee.
- Nothing contained in this chapter shall be construed or held to authorize the levy of any tax on earnings or distributions from an education individual retirement account as defined in § 213 of Public Law 105-34, so long as such earnings or distributions were not subject to federal income tax.
- Nothing contained in this chapter shall be construed or held to authorize the levy of any tax on earnings or distributions from a Roth IRA as defined in Section 302 of Public Law 105-34, so long as such earnings or distributions are not subject to federal income tax.
-
The tax imposed by this chapter does not apply to an entity that satisfies both of the following requirements:
-
It:
- Is classified as a partnership or trust in accordance with 26 U.S.C. § 7701, and the federal regulations and rulings promulgated under 26 U.S.C. § 7701;
- Has elected to be treated as a real estate mortgage investment conduit (REMIC) under 26 U.S.C. § 860D;
- Has elected to be treated as a financial asset securitization investment trust (FASIT) under 26 U.S.C. § 860L; or
- Is a business trust, as defined in § 48-101-202(a), or is classified as a trust under the laws of the state in which it is created and is disregarded for federal income tax under 26 U.S.C. § 7701, and the federal regulations and rulings promulgated under 26 U.S.C. § 7701, when the commercial domicile of the trustee is not in this state; and
-
- The sole purpose of the entity, except for foreclosures and dispositions of the assets of foreclosures, is the asset-backed securitization of debt obligations, such as first or second mortgages, including home equity loans, trade receivables, whether an open account or evidenced by a note or installment or conditional sales contract, obligations substituted for trade receivables, credit card receivables, personal property leases treated as debt for purposes of the Internal Revenue Code of 1986, compiled in 26 U.S.C., home equity loans, automobile loans or similar debt obligations.
- “Trade receivables” as used in subdivision (e)(16)(B)(i) means obligations arising from the sale of inventory in the ordinary course of business.
-
It:
- The income from stock in any publicly traded real estate investment trust, as defined in § 67-4-2004, is exempt from the tax imposed by this chapter.
- The income from stocks and bonds of trusts for perpetual care or improvement of private cemeteries, graves, or burial grounds are exempt from the taxes imposed by this chapter.
- For tax years beginning January 1, 2018, and thereafter, any person one hundred (100) years of age or older, or any persons who file a joint return and either spouse is one hundred (100) years of age or older, are exempt from the income tax imposed by this chapter.
Acts 1931 (2nd Ex. Sess.), ch. 20, §§ 4, 5, 16; 1933, ch. 60, § 2; 1937, ch. 117, § 2; 1949, ch. 221, § 1; mod. C. Supp. 1950, §§ 1123.1, 1123.4, 1123.5, 1123.32; Acts 1953, ch. 199, § 1 (Williams, § 1123.5); 1953, ch. 238, § 1; 1955, ch. 135, § 4; impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 167, § 1; 1963, ch. 271, § 3; 1963, ch. 273, § 1; 1968, ch. 431, § 8; 1972, ch. 484, § 1; 1976, ch. 638, § 1; 1977, ch. 140, § 8; 1977, ch. 347, § 1; 1978, ch. 849, § 1; modified; T.C.A. (orig. ed.), §§ 67-2605 — 67-2607, 67-2609 — 67-2612, 67-2635; Acts 1985, ch. 395, §§ 3, 5; 1987, ch. 378, § 1; 1988, ch. 1008, §§ 1, 2; 1989, ch. 222, § 6; 1989, ch. 524, § 2; 1989, ch. 560, § 18; 1992, ch. 931, §§ 1, 2; 1995, ch. 535, § 1; 1998, ch. 1013, § 1; 1998, ch. 1032, § 1; 1999, ch. 236, § 1; 2006, ch. 1019, § 21; 2008, ch. 1106, § 39; 2011, ch. 396, § 1; 2011, ch. 490, §§ 2, 3; 2012, ch. 667, § 1; 2013, ch. 322, § 1; 2015, ch. 434, § 1; 2017, ch. 453, § 1.
Compiler's Notes. Acts 1989, ch. 222, § 8 provided that subsection (p) shall only apply to trust corporations which have fiscal years ending on or after May 2, 1989.
Acts 1992, ch. 931, § 3 provided that the amendments by that act apply to all income received on or after January 1, 1992.
Acts 1995, ch. 535, § 2 provides that that act shall apply to all Tennessee income tax returns filed for tax years ended after June 13, 1995.
Acts 1999, ch. 236, § 2 provided that subsection (t) shall apply to tax years beginning on or after December 15, 1998.
Public Law 105-34, § 213, referred to in this section, regarding education individual retirement accounts, is codified mainly in 26 U.S.C. § 530.
Public Law 105-34, § 302, referred to in this section, regarding Roth IRAs, is codified mainly in 26 U.S.C. § 408A.
Amendments. The 2013 amendment rewrote (b) which read: “For tax years beginning January 1, 1999, any person sixty-five (65) years of age or older having a total annual income derived from any and all sources of fourteen thousand dollars ($14,000) or less, or any persons who file a joint return and either spouse is sixty-five (65) years of age or older having a total annual joint income derived from any and all sources of not more than twenty-three thousand dollars ($23,000), are exempt from the income tax imposed by this chapter upon submission of evidence deemed acceptable by the commissioner to establish the age and income limitations stated in this subsection (b). For tax years beginning January 1, 2000, and thereafter, the income limitations stated in this subsection (b) shall change to sixteen thousand two hundred dollars ($16,200) for single filers and to twenty-seven thousand dollars ($27,000) for persons filing jointly. For tax years beginning January 1, 2012, and thereafter, the income levels specified in the previous sentence in this subsection (b) shall change to twenty-six thousand two hundred dollars ($26,200) for single filers and to thirty-seven thousand dollars ($37,000) for persons filing jointly.”
The 2015 amendment added the last sentence in (b).
The 2017 amendment added (f).
Effective Dates. Acts 2013, ch. 322, § 2. May 13, 2013.
Acts 2015, ch. 434, § 2. May 18, 2015.
Acts 2017, ch 453, § 2. May 25, 2017.
Cross-References. Nonseverability of certain sections, § 67-5-1208.
Law Reviews.
State and Local Taxation — 1964 Tennessee Survey (Paul J. Hartman), 18 Vand. L. Rev. 1255 (1967).
Attorney General Opinions. Inapplicability of Hall Income Tax to withdrawals from IRA's or Keogh plan accounts, OAG 99-136 (7/8/99).
Cited: Steele v. Industrial Dev. Bd. of the Metro. Gov't, 950 S.W.2d 345, 1997 Tenn. LEXIS 409 (Tenn. 1997); In re Vandeberg, 276 B.R. 581, 2001 Bankr. LEXIS 1870 (Bankr. E.D. Tenn. 2001).
NOTES TO DECISIONS
1. Legislative Intent.
Intent of the general assembly was to provide for assessment and collection of tax upon property which paid no ad valorem tax. First Nat'l Bank v. McCanless, 186 Tenn. 1, 207 S.W.2d 1007, 1948 Tenn. LEXIS 510 (1948); Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).
2. Construction.
This section and § 67-2-102 must be construed in pari materia. Gallagher v. Butler, 214 Tenn. 129, 378 S.W.2d 161, 1964 Tenn. LEXIS 457 (1964).
3. Transfers Not Taxable.
The taxing portion of the statute levies a tax against income derived by way of dividends only and is not applicable to gains realized by stockholders on sales and transfers of their stock. Gallagher v. Butler, 214 Tenn. 129, 378 S.W.2d 161, 1964 Tenn. LEXIS 457 (1964).
4. Capital.
“Capital” means “invested in the corporation by the stockholder.” Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).
5. Dividends.
A dividend is taxable if it is payable out of “reserve” or “accumulated surplus.” Fidelity-Bankers Trust Co. v. McCanless, 181 Tenn. 476, 181 S.W.2d 747, 1944 Tenn. LEXIS 266 (1944).
Resolution of board of directors declaring dividends is prima facie evidence of nature of dividend and the intention of the corporation so declaring it. Fidelity-Bankers Trust Co. v. McCanless, 181 Tenn. 476, 181 S.W.2d 747, 1944 Tenn. LEXIS 266 (1944).
The court will give the term “dividends” its ordinary meaning unless the specific terms of the statute require otherwise. Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).
Whether the distribution made by dividends is from capital or profits is determined from the standpoint of the corporation making the distribution rather than the standpoint of the stockholder receiving the same. Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).
Entire distribution was a “dividend” within the meaning of taxing statute which imposes the tax on “incomes derived by way of dividends from stock,” including portion of distribution in excess of corporation current earned surplus. Dobson v. Huddleston, 863 S.W.2d 392, 1993 Tenn. LEXIS 290 (Tenn. 1993), rehearing denied, — S.W.2d —, 1993 Tenn. LEXIS 347 (Tenn. Oct. 4, 1993).
Tennessee residents who owned stock in South Carolina Sub S corporations could be taxed on dividend distributions under T.C.A. § 67-2-102 and were not entitled to a credit for paying South Carolina income tax under T.C.A. § 67-2-122 because there was no reciprocal agreement between Tennessee and South Carolina. Boone v. Chumley, 372 S.W.3d 104, 2011 Tenn. App. LEXIS 640 (Tenn. Ct. App. Nov. 30, 2011), appeal denied, — S.W.3d —, 2012 Tenn. LEXIS 449 (Tenn. June 20, 2012).
6. Earned Surplus.
“Earned surplus” represents property earned by the corporation as distinguished from property invested therein by the shareholders. Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).
7. Securities of Foreign States and Governments.
One who seeks to recover tax paid under protest has the burden of proof to show that income, received through the medium of a foreign trust was derived from nontaxable sources, such as rents or exempt securities. Ross v. McCabe, 166 Tenn. 314, 61 S.W.2d 479, 1932 Tenn. LEXIS 135 (Tenn. 1932), appeal dismissed, Ross v. Fort, 290 U.S. 603, 54 S. Ct. 347, 78 L. Ed. 529, 1933 U.S. LEXIS 520 (1933), appeal dismissed, Ross v. Fort, 290 U.S. 603, 54 S. Ct. 347, 78 L. Ed. 529, 1933 U.S. LEXIS 520 (1933).
The express enumeration of securities exempt from taxation by this section excludes the idea that the legislature intended to include the taxable securities of foreign states and foreign governments. Union & Planters Bank & Trust Co. v. Fort, 170 Tenn. 285, 95 S.W.2d 39, 1935 Tenn. LEXIS 133 (1935).
8. Burden of Proof.
Exemption in this section is construed in favor of state, and burden of proof is on taxpayer to show that he comes within exemption. Fidelity-Bankers Trust Co. v. McCanless, 181 Tenn. 476, 181 S.W.2d 747, 1944 Tenn. LEXIS 266 (1944).
9. Burden of Tracing Dividends.
Administrators of stocks and bonds do not have burden of tracing dividends to the source. Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).
67-2-105. Back assessments prohibited.
Stocks and bonds upon the income from which a tax is imposed under this chapter shall not be back assessed for taxation by the state or any municipality, county or political subdivision of the state and the state of Tennessee and municipalities, counties and political subdivisions of this state, and the officials and representatives of the state are expressly prohibited from back assessing for ad valorem tax any such stocks and/or bonds for any year or years.
Acts 1931 (2nd Ex. Sess.), ch. 20, § 11; C. Supp. 1950, § 1123.26; T.C.A. (orig. ed.), § 67-2608.
67-2-106. [Repealed.]
Compiler's Notes. Former § 67-2-106 (Acts 1931 (2nd Ex. Sess.), ch. 20, § 5; mod. C. Supp. 1950, § 1123.5; Acts 1955, ch. 135, § 3; T.C.A. (orig. ed.), § 67-2613), concerning lists of stockholders, was repealed by Acts 2010, ch. 1134, § 46, effective June 30, 2010.
67-2-107. Returns generally.
- Every person liable for the tax or taxes imposed by or levied under the authority of this chapter shall on or before the fifteenth day of the fourth month commencing after the end of the taxpayer's tax year make out, on forms prescribed by the commissioner, and file with the commissioner a statement or return setting out, in detail, the stocks and/or bonds for the receipt of income from which the taxpayer is liable for the tax or taxes imposed by this chapter, each security to be set out separately, and listing opposite each such item or security the amount of income received from the item or security during the taxpayer's preceding tax year; and showing the amount of the tax owing by such person to the state of Tennessee; and showing the residence of the taxpayer at the time of the filing of the return, and the residence of such taxpayer as of twelve o'clock (12:00) noon on the last day of the taxpayer's preceding tax year.
-
- Any such statement or report shall be signed and verified by the oath of the president, vice president, treasurer, assistant treasurer or managing agent in this state of the association, trust or corporation making the statement or report.
- Returns filed by individuals shall contain or be verified by a written declaration that the return is made under the penalties of perjury.
- The commissioner has the power to require all such other information from any person filing a return as, in the commissioner's opinion, may be necessary to effectuate the purposes of this chapter.
- It is the duty of the department to provide suitable blanks and forms on which taxpayers, subject to this chapter, shall make their returns for taxation pursuant to this section.
- An extension of six (6) months in which to file the return required by this section, and to pay the tax shown to be due, shall be granted; provided, that a request for extension is made in writing by the taxpayer or the taxpayer's authorized representative on a form prescribed by the commissioner, or by providing a copy of the taxpayer's request for an automatic extension of time to file the federal income tax return for the corresponding tax period. The request shall not be filed on the original due date of the return, but, instead, shall be attached to the return filed on or before the extended due date. Interest, as provided by § 67-1-801(a), shall attach to the unpaid amount due, from the original due date of the return until the date paid. If the taxpayer fails to file the request for extension required by this subsection (e), or if the return is not filed with payment of the tax shown to be due by the extended due date, penalty as provided by § 67-1-804 shall attach as though no extension had been granted.
-
-
As used in this subsection (f), “perfection period” means a period of ten (10) calendar days, beginning with the day after date of the first transmission of an electronic return that is subsequently rejected by the commissioner, for the taxpayer to either:
- Correct any errors in the return that cause it to fail to meet any of the validation criteria set by the commissioner and retransmit it; provided, that the commissioner subsequently accepts the corrected return; or
- File a paper return postmarked on or before the expiration of the ten (10) calendar days; provided, that the taxpayer is not required to electronically file or the commissioner grants the taxpayer permission to file the return on paper.
- A taxpayer's electronically filed return shall be treated as filed on the date of the last transmission prior to the return being accepted by the commissioner, except as provided in subdivision (f)(3). A taxpayer's paper return shall be treated as filed when mailed and postmarked, except as provided in subdivision (f)(3).
- A return that complies with the requirements of the perfection period shall be treated as filed on the date of the first electronic transmission.
-
As used in this subsection (f), “perfection period” means a period of ten (10) calendar days, beginning with the day after date of the first transmission of an electronic return that is subsequently rejected by the commissioner, for the taxpayer to either:
Acts 1931 (2nd Ex. Sess.), ch. 20, § 6; 1949, ch. 185, § 1; mod. C. Supp. 1950, § 1123.6; Acts 1955, ch. 135, § 2; impl. am. Acts 1959, ch. 9, § 14; Acts 1967, ch. 176, § 3; T.C.A. (orig. ed.), § 67-2614; Acts 2005, ch. 499, § 16; 2018, ch. 1048, § 1.
Compiler's Notes. Acts 2005, ch. 499, § 91 provided, in part, that § 16 of the act shall apply to tax periods ending on or after December 31, 2004.
For the Preamble to the act concerning electronic filing of tax returns, please see Acts 2018, ch. 1048.
Acts 2018, ch. 1048, § 3 provided that the act, which amended this section, shall apply to tax returns filed on or after October 1, 2018.
Amendments. The 2018 amendment, effective October 1, 2018, added (f).
Effective Dates. Acts 2018, ch. 1048, § 3. October 1, 2018.
Cited: Anderson v. Security Mills, 175 Tenn. 197, 133 S.W.2d 478, 1939 Tenn. LEXIS 30 (1939).
67-2-108. Confidentiality of returns.
- Except in accordance with proper judicial order or as otherwise required by law, it is unlawful for the commissioner and any deputy, agent, clerk or other officer or employee, to make known in any manner the amount of income or any particular set forth in any report or return required under this chapter, nor shall the information contained in any report filed by any taxpayer under the requirements of this chapter be used by the state or any county or municipality for the purpose of imposing any other or different tax on any such taxpayer; provided, that nothing in this section shall be construed to prohibit the publication of statistics so classified as to prevent the identification of particular reports or returns by legal representatives of the state in any suit or suits for the collection of the tax or any part of the tax or for the penalty and interest imposed by this chapter.
- A violation of any of this section is a Class A misdemeanor.
- The commissioner of revenue may permit the commissioner of the internal revenue service, or the proper officer of any state imposing a tax similar to that imposed by this chapter, or the authorized representative of either such officer, to inspect the tax return of any corporation, or may furnish to such officer or to the officer's authorized representative an abstract of the return of any corporation or supply the officer or representative with information concerning any item contained in any return; but such permission shall be granted or such information furnished to such officer or representative only if the statutes or regulations of the United States or of such other state, as the case may be, grant substantially similar privileges to the governor or the proper officers of this state charged with the administration of this chapter.
- Municipal and county assessors of property shall be permitted by the commissioner and any deputy, agent, clerk, or other officer or employee, to inspect the tax return of any corporation and, upon request of such municipal or county assessors of property, the commissioner and any deputy, agent, clerk, or other officer or employee, shall be required to furnish to such assessor of property or the assessor of property's authorized representative an abstract of the return of any corporation or supply the assessor of property or representative with information concerning any item contained in any return.
Acts 1931 (2nd Ex. Sess.), ch 20, § 12; 1937, ch. 117, § 5; C. Supp. 1950, § 1123.27; impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 271, § 3; T.C.A. (orig. ed.), § 67-2630; Acts 1989, ch. 591, §§ 1, 6; 2008, ch. 971, § 1.
Compiler's Notes Acts 2008, ch. 971, § 1 provided that the code commission is directed to change all references to “tax assessor”, wherever such references appear, to “assessor of property”, as such sections are amended or volumes are replaced. See § 1-1-116.
Cross-References. Confidentiality of public records, § 10-7-504.
Disclosure of tax returns and tax information, title 67, ch. 1, part 17.
Penalty for Class A misdemeanor, § 40-35-111.
Law Reviews.
Evidentiary Privileges Against the Production of Data Within the Control of Executive Departments (William v. Sanford), 3 Vand. L. Rev. 73 (1949).
67-2-109. Brokers — Liability for return and tax.
When and if a broker or commission dealer does not make physical delivery to the broker's or commission dealer's customers of stocks and bonds, income from which is taxable under this chapter, but retains possession or title, or both, in such broker or commission dealer or through a nominee agent depository of such security and receives such income or credit for the stocks and bonds, the broker or commission dealer shall report such income to the commissioner, and pay the tax on the income measured by the dividends or interest credited, or which should be credited, to the accounts of the broker's or commission dealer's customers, unless the broker or commission dealer furnishes to the commissioner a list of the broker's or commission dealer's customers, with the last known address of each, to whom such dividends or interest have been paid or credited and the amount of the dividends or interest.
Acts 1931 (2nd Ex. Sess.), ch. 20, § 13; C. Supp. 1950, § 1123.28; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), § 67-2615.
67-2-110. Fiduciaries — Liability for return and tax.
- Trustees, guardians, administrators, executors, and other persons acting in a fiduciary capacity who receive income taxable under this chapter for the benefit of residents of Tennessee shall be required to make returns under this chapter and to pay the tax levied by this chapter. However, a trustee of a charitable remainder trust, as defined in Internal Revenue Code § 664, codified in 26 U.S.C. § 664, shall not be required to make returns under this chapter nor to pay the tax, but shall report to each resident beneficiary the amount of taxable income distributed to such resident beneficiary, who shall be liable for the tax under this chapter. Additionally, the trustee of a trust, which is treated under 26 U.S.C. §§ 671-678 as owned by one (1) grantor or one (1) other person and which does not obtain a taxpayer identification number, as permitted under the Internal Revenue Code and accompanying regulations, shall not be required to file returns under this chapter nor to pay the tax, but shall report the total amount of income received by the trustee to the resident grantor or other person, who shall file the return and pay the tax levied by this chapter.
- Trustees, guardians, and other persons acting in a fiduciary capacity who are residents of Tennessee, and who receive income on behalf of nonresident beneficiaries, shall not be required to pay tax under this chapter even though such income be derived from stocks or bonds that would otherwise be assessable under this chapter. However, executors or administrators receiving income taxable under this chapter from stocks or bonds that were the property of a decedent who, at the time of death, resided in Tennessee shall pay tax upon the stocks or bonds until the time as such stocks or bonds have been distributed or transferred to distributees or legatees of the decedent.
Acts 1931 (2nd Ex. Sess.), ch. 20, § 14; 1937, ch. 117, § 3; C. Supp. 1950, § 1123.30; T.C.A. (orig. ed.), § 67-2616; Acts 1995, ch. 71, § 1; 2013, ch. 480, § 2.
Amendments. The 2013 amendment added the last sentence in (a).
Effective Dates. Acts 2013, ch. 480, § 3. May 20, 2013.
Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 789.
NOTES TO DECISIONS
1. Income in Hands of Fiduciary.
Since this statute levies an income tax on incomes derived from dividends from stocks or interest on bonds of each person, partnership, association, trust and corporation who received or to whom accrued such income during the year without expressly excluding income derived from stocks and bonds of resident decedents' estates in the hands of administrators and executors and since rules of statutory construction forbid a construction which would by inference exclude a taxable class and since such an exclusion would defeat the broad purpose expressed by the act and render it void as being discriminatory, income of the above type is included by necessary implication within the levy imposed by the statute. Union Planters Nat'l Bank & Trust Co. v. Beeler, 172 Tenn. 317, 112 S.W.2d 11, 1937 Tenn. LEXIS 81 (1938).
Income from stocks and bonds of resident decedent's estate in the hands of the administrator was not exempt from taxation on the grounds that the beneficiaries of the estate were nonresidents since the administrator occupies the same position as decedent in relation to the personal estate while the beneficiaries have only an inchoate right to the surplus assets of the estate after payment of decedent's obligations and are not subject to tax upon income from securities in the hands of the personal representative so that they can claim no exemption for such income. Union Planters Nat'l Bank & Trust Co. v. Beeler, 172 Tenn. 317, 112 S.W.2d 11, 1937 Tenn. LEXIS 81 (1938).
67-2-111. Foreign trust beneficiaries — Liability for return and tax.
- Any resident of Tennessee who receives income from a trust estate located outside the state of Tennessee, any portion of which is invested in securities, the income from which is taxable under this chapter, whether the trust estate be revocable or irrevocable, shall file with the commissioner, as part of the resident's income tax return, a sworn statement of the trustee, executor or other administrator of the trust estate showing what portion of the total income received by such Tennessee resident from such estates was derived from securities, the income from which is taxable under this chapter.
- If such resident fails to file such sworn statement from the trustee, executor or other administrator, then the resident shall report for income taxation in the manner otherwise provided in this chapter the entire amount of income received by the resident from such trust estate.
Acts 1931 (2nd Ex. Sess.), ch. 20, § 14; C. Supp. 1950, § 1123.29; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), § 67-2617.
NOTES TO DECISIONS
1. Annuities Not Taxable as Income.
Where Connecticut will provided that trustee was to pay over to daughter of deceased, a resident of Tennessee, the sum of $2,400 each year for life, the amount received by daughter out of stocks each year was not taxable, since amount received was not income but was an annuity. Sanborn v. McCanless, 181 Tenn. 150, 178 S.W.2d 765, 1944 Tenn. LEXIS 353 (1944).
Decisions Under Prior Law
1. Resident Beneficiaries of Foreign Trust.
The resident beneficiary of a foreign trust is not liable for income tax where same arises from investments in realty or tax exempt securities. Ross v. McCabe, 166 Tenn. 314, 61 S.W.2d 479, 1932 Tenn. LEXIS 135 (Tenn. 1932), appeal dismissed, Ross v. Fort, 290 U.S. 603, 54 S. Ct. 347, 78 L. Ed. 529, 1933 U.S. LEXIS 520 (1933), appeal dismissed, Ross v. Fort, 290 U.S. 603, 54 S. Ct. 347, 78 L. Ed. 529, 1933 U.S. LEXIS 520 (1933).
The statute applies to income received by a resident from a foreign trust where taxpayer did not show that such income was derived from realty or tax exempt securities. Ross v. McCabe, 166 Tenn. 314, 61 S.W.2d 479, 1932 Tenn. LEXIS 135 (Tenn. 1932), appeal dismissed, Ross v. Fort, 290 U.S. 603, 54 S. Ct. 347, 78 L. Ed. 529, 1933 U.S. LEXIS 520 (1933), appeal dismissed, Ross v. Fort, 290 U.S. 603, 54 S. Ct. 347, 78 L. Ed. 529, 1933 U.S. LEXIS 520 (1933).
67-2-112. Date tax due — Member of armed forces serving during period of hostilities.
- The tax or taxes due and payable on account of income received during a taxpayer's tax year shall be paid in full on or before the fifteenth day of the fourth month commencing after the end of the taxpayer's tax year.
-
- No tax owed under this chapter by a person in the armed forces of the United States, or called into active military service of the United States, as defined in § 58-1-102, from a reserve or national guard unit, shall be due until one hundred eighty (180) days following the conclusion of hostilities in which such person is actually engaged outside the United States or one hundred eighty (180) days after such person is transferred from the theater of operations of such hostilities, whichever is sooner.
- A person claiming this delay shall present proof, satisfactory to the commissioner, of such person's deployment and stationing outside the United States during a period of hostilities and proof of such person's return from such deployment.
- This subsection (b) shall expressly apply to personnel stationed outside the United States during Operation Enduring Freedom or other hostilities where the military personnel are entitled to combat compensation as determined by the United States department of defense.
- The estate of any such person who is killed in action in such hostilities shall owe no tax under this chapter, and any liability for any such tax, penalty or interest is forgiven.
Acts 1931 (2nd Ex. Sess.), ch. 20, § 7; 1933, ch. 60, § 3; 1939, ch. 64, § 1; C. Supp. 1950, § 1123.7; Acts 1955, ch. 135, § 1; 1967, ch. 176, § 4; T.C.A. (orig. ed.), § 67-2618; Acts 1991, ch. 397, § 2; 2002, ch. 664, § 3; 2003, ch. 87, § 2; 2004, ch. 800, § 1.
Compiler's Notes. Acts 1991, ch. 397, § 7, provided that the amendment to this section by that act shall be retroactive and apply to all personnel stationed in or about Saudi Arabia during the Desert Shield or Desert Storm operations prior to May 22, 1991.
Acts 2003, ch. 87, § 5 provided that the act shall apply to taxes due and payable during 2003.
Cross-References. Rules and regulations, § 67-4-113.
67-2-113. Powers of commissioner — Assistants.
- The commissioner has full supervision of the administration and enforcement of this chapter and of the collection of all taxes imposed under this chapter.
- The commissioner is empowered to call upon other departments of the state for such information and assistance as the commissioner may deem necessary.
- The commissioner has the power to compel the attendance of witnesses and the production of evidence, by subpoena, to administer oaths and to take testimony in relation to any matter under this chapter.
- The commissioner may designate such deputies, appraisers, agents and other assistants as may be necessary for carrying out the full purpose and intent of this chapter. Such deputies, appraisers, agents and assistants, so designated by the commissioner, shall be empowered to represent the commissioner and to perform such duties as are, by this chapter, required of the commissioner, including the power to issue subpoenas and administer oaths, and shall make bonds for the faithful performance of their duties, such bonds to be in such amounts and with such surety or sureties as the commissioner may prescribe.
- The commissioner is further authorized and empowered to and the commissioner shall make all necessary rules and regulations not inconsistent with the terms of this chapter, which rules and regulations shall have the force and effect of law, for the purpose of fully carrying out, interpreting properly, enforcing, and giving effect to this chapter.
Acts 1931 (2nd Ex. Sess.), ch. 20, § 15; C. Supp. 1950, § 1123.31; impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 271, §§ 2, 3; T.C.A. (orig. ed.), §§ 67-2619, 67-2620, 67-2634.
Cross-References. Appointment of assistants generally, § 4-3-1901.
Law Reviews.
Report on Administrative Law to the Tennessee Law Revision Commission, 20 Vand. L. Rev. 777 (1967).
67-2-114. Interest and penalties — Armed forces exclusion — Assessment or collection of tax or liability.
- In computing the interest and penalty payable under this section, there shall be excluded, in the case of an individual serving in the armed forces of the United States, or serving in support of such armed forces in an area designated by the president of the United States by executive order as a “combat zone,” at any time during the period designated by the president by executive order as the period of combatant activities in such zone, or hospitalized outside the states of the union and the District of Columbia as a result of injury received or disease incurred while serving in such an area during such time, the period of service in such area, plus the period of continuous hospitalization outside the states of the union and the District of Columbia attributable to such injury or disease and the next ninety (90) days thereafter.
- The assessment or collection of any income tax or of any liability to the state of Tennessee with respect to any such tax, or any action or proceeding by or on behalf of the state in connection with the tax, may be made, taken, begun, or prosecuted in accordance with law, without regard to subsection (a), unless prior to such assessment, collection action or proceeding it is ascertained that the individual concerned is entitled to the benefits of subsection (a).
Acts 1963, ch. 271, § 2; 1969, ch. 63, § 1; 1970, ch. 363, § 1; 1980, ch. 885, § 10; T.C.A., § 67-2622; Acts 1985, ch. 396, § 9; 1988, ch. 526, § 21; 2005, ch. 499, § 15.
Compiler's Notes. Acts 2005, ch. 499, § 91 provided, in part, that § 15 of the act shall apply to tax periods ending on or after December 31, 2004.
Cross-References. Determination of interest rates on taxes, § 67-1-801.
67-2-115. Determination of tax by commissioner.
- As soon as practicable after the return required is filed, the commissioner shall examine it and determine the correct amount of the tax. If the required return is not filed on or before the date due, the commissioner shall determine the amount of the tax upon the basis of any information the commissioner may possess or obtain.
- Whenever in the judgment of the commissioner it is deemed necessary, the commissioner may require any person, by notice served upon the person by mail, to render under oath such statements or to reveal such information and records as the commissioner deems sufficient to show whether or not such person is liable for tax under this chapter.
-
- If the commissioner, in determining the correct amount of the tax, determines that there is a deficiency in respect of the tax imposed by this chapter, the commissioner shall send notice of the deficiency to the taxpayer by mail and shall make demand for the amount of the deficiency, which amount shall be paid by the taxpayer.
- The deficiency, regardless of when paid, shall, for purposes of computing interest and penalty on the deficiency, be deemed to have been due on the due date provided in § 67-2-112, that is, the fifteenth day of the fourth month commencing after the end of the taxpayer's tax year.
- Notice of deficiency may be issued for the purpose of making or revising, correcting, and/or increasing assessments and/or returns or reports of persons for the year in which such notice may be issued and/or five (5) years preceding such year, but no longer or otherwise; provided, that in the case of a fraudulent return with intent to evade tax or of a failure to file a return, the statute of limitations will not apply.
Acts 1963, ch. 271, § 2; 1967, ch. 176, § 5; T.C.A., §§ 67-2623, 67-2625, 67-2628.
67-2-116. Distress warrant.
The commissioner may issue a distress warrant for the collection of the tax imposed by this chapter, together with interest and penalty on the tax, in accordance with § 67-4-110(a)-(d).
Acts 1963, ch. 271, § 2; T.C.A., § 67-2626.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
67-2-117. Commissioner — Payment of revenue to comptroller of the treasury.
It is the duty of the commissioner, within thirty (30) days after the receipt by the commissioner of any taxes imposed by the terms of this chapter, to turn over to the comptroller of the treasury the tax or taxes collected in accordance with the terms and provisions of this chapter, less the necessary expenses for the administration of this chapter, which expenses shall not exceed ten percent (10%) of the first two hundred thousand dollars ($200,000), of taxes collected under this chapter during any fiscal year, and five percent (5%) of taxes so received in excess of the sum of two hundred thousand dollars ($200,000). At the time the commissioner turns over such tax to the comptroller of the treasury, the commissioner shall furnish to the comptroller of the treasury a duplicate statement giving the names of the taxpayers, their respective addresses and the amounts paid and dates of payment, and the comptroller of the treasury shall cause such list so furnished to be checked back with the original records in the office of the commissioner, to the end that the statement so furnished to the comptroller of the treasury may be audited and verified.
Acts 1931 (2nd Ex. Sess.), ch. 20, § 9; C. Supp. 1950, § 1123.25; impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 271, § 3; T.C.A. (orig. ed.), § 67-2631.
Cross-References. Payment of allowance into tax administration fund, § 67-1-104.
67-2-118. Disposition of proceeds from penalties.
A sum not to exceed three fifths (3/5) of all penalties collected during the preceding fiscal year may be used for administrative purposes and for the collection of the tax or taxes imposed by this chapter, such sum to be in addition to that authorized by § 67-2-117.
Acts 1931 (2nd Ex. Sess.), ch. 20, § 8; C. Supp. 1950, § 1123.23; Acts 1963, ch. 271, § 3; T.C.A. (orig. ed.), § 67-2632.
Cross-References. Payment of allowance into tax administration fund, § 67-1-104.
Cited: Lyons v. Lay, 179 Tenn. 388, 166 S.W.2d 778, 1942 Tenn. LEXIS 35 (1942).
67-2-119. Disposition of revenue.
- Of the taxes collected under this chapter upon income from stocks and bonds taxable at the rate provided in § 67-2-102 per annum, five-eighths (5/8) shall be paid into the general fund of the state treasury and the remaining three-eighths (3/8) shall be distributed among the cities and counties of the state.
- Where a taxpayer residing within the corporate limits of any municipality pays a tax imposed at the rate provided in § 67-2-102 per annum, then three-eighths (3/8) of the net tax collected from such taxpayer shall be returned to the city within which such taxpayer resides.
- Where a taxpayer residing in a county, but outside the corporate limits of any municipality, pays a tax imposed by this chapter at the rate provided in § 67-2-102 per annum, then three-eighths (3/8) of the net tax collected from such taxpayer shall be returned to the county within which such taxpayer resides.
- In each instance, the payment to cities and counties covering collections made under this section during any fiscal year shall be made on or before July 31 immediately following the close of that year.
Acts 1931 (2nd Ex. Sess.), ch. 20, § 17; 1933, ch. 60, § 5; 1937, ch. 117, § 4; 1937, ch. 297, § 2; mod. C. Supp. 1950, § 1123.33; impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 271, § 3; 1978, ch. 507, § 1; T.C.A. (orig. ed.), § 67-2633; Acts 1985, ch. 395, § 4; 2003, ch. 355, § 32; 2005, ch. 500, § 4; 2006, ch. 989, § 9; 2016, ch. 1064, § 2; 2017, ch. 181, § 14.
Compiler's Notes. Acts 2003, ch. 355, § 66 provided that no expenditure of public funds pursuant to the act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Acts 2003, ch. 355, § 73 provided that there is established within the general fund the state-shared revenue reduction mitigation account. Any amounts in the state-shared revenue reduction mitigation account shall be applied by the commissioner of finance and administration to offset reductions in state-shared revenues allocated to local governments pursuant to the provisions of the act so that such reductions shall not exceed nine percent (9%) of state-shared revenues that otherwise would have been allocated to any such local government. Funds shall be restored on a pro rata basis taking into account the percentage reduction to each local government from each state-shared revenue source.
Acts 2006, ch. 989, § 17 provided that §§ 1-14 of the act shall apply to funds remitted to the department of revenue on or after August 1, 2006.
Acts 2016, ch. 1064, § 4, provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2016.
Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Acts 2017, ch. 181, § 38 provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2017.
Amendments. The 2016 amendment substituted “five percent (5%)” for “six percent (6%)” throughout the section.
The 2017 amendment substituted “at the rate provided in § 67-2-102” for “at the rate of five percent (5%)” throughout the section.
Effective Dates. Acts 2016, ch. 1064, § 4. May 20, 2016.
Acts 2017, ch. 181, § 38. April 26, 2017.
Cross-References. Changes in municipal boundaries, effect upon receipt and distribution of tax revenues, § 6-51-115.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 16.
Law Reviews.
Tax Limitations of Counties and Municipalities (M. P. O'Connor), 12 Tenn. L. Rev. 174 (1934).
Attorney General Opinions. The state can probably continue to distribute state-shared taxes even if the general assembly does not enact a general appropriations act, OAG 00-083 (5/4/00).
Cited: Steele v. Industrial Dev. Bd. of the Metro. Gov't, 950 S.W.2d 345, 1997 Tenn. LEXIS 409 (Tenn. 1997).
NOTES TO DECISIONS
1. Distribution of Proceeds.
The distributive share of the counties in the income tax paid over as provided by the statute is county revenue for use in county purposes so that the county trustee is entitled to a commission under § 8-11-110 as funds received from a collecting officer. State v. Miner, 176 Tenn. 158, 138 S.W.2d 766, 1938 Tenn. LEXIS 148 (1940).
67-2-120. Taxpayer remedies.
Nothing contained in this chapter shall be construed, in any way, to prevent any taxpayer from showing any legal remedy provided by law, and the taxpayer shall have all the remedy, legal and equitable, now allowed any person for the recovery of taxes and revenue improperly collected by paying the tax under protest.
Acts 1931 (2nd Ex. Sess.), ch. 20, §§ 8, 8-A; C. Supp. 1950, §§ 1123.21, 1123.24; impl. am. Acts 1959, ch. 9, §§ 3, 14; impl. am. Acts 1961, ch. 97, § 1; Acts 1963, ch. 271, §§ 2, 3; T.C.A. (orig. ed.), §§ 67-2627, 67-2629; Acts 1984, ch. 832, § 36.
Cited: Mote v. Olsen, 648 S.W.2d 942, 1983 Tenn. LEXIS 638 (Tenn. 1983).
67-2-121. Violations — Criminal penalties.
- Any person failing to file a return, as required by § 67-2-107, or any person violating any rule or regulation that may be promulgated by the commissioner under the authority vested in the commissioner in this chapter, commits a Class C misdemeanor.
- The making of a false return with intent to defeat the tax constitutes a Class E felony.
Acts 1931 (2nd Ex. Sess.), ch. 20, § 16; C. Supp. 1950, § 1123.32; Acts 1955, ch. 135, § 4; impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 271, §§ 2, 3; 1972, ch. 484, § 1; T.C.A. (orig. ed.), §§ 67-2621, 67-2635; Acts 1989, ch. 591, §§ 95, 113; 2010, ch. 1134, § 47.
Cross-References. Penalty for Class C misdemeanor, § 40-35-111.
Penalty for Class E felony, § 40-35-111.
Cited: Shackleford v. Olsen, 675 S.W.2d 171, 1984 Tenn. LEXIS 838 (Tenn. 1984).
67-2-122. Taxes paid on out-of-state shares of Subchapter S corporation.
A resident individual who is a shareholder of a Subchapter S corporation that is incorporated and doing business in another state may deduct from the tax otherwise due under this chapter the tax paid to the other state as a result of such income, distributions or dividends; provided, that there exists a tax credit reciprocity agreement between Tennessee and the other state. In no case shall the credit permitted under this section exceed the tax that would be payable to this state.
Acts 1994, ch. 787, § 1.
Compiler's Notes. “Subchapter S corporation” is defined in § 1361 of the Internal Revenue Code, 26 U.S.C. § 1361. For taxation of such corporations, see 26 U.S.C. §§ 1361 — 1379.
NOTES TO DECISIONS
1. Reciprocity Required.
Tennessee residents who owned stock in South Carolina Sub S corporations could be taxed on dividend distributions under T.C.A. § 67-2-102 and were not entitled to a credit for paying South Carolina income tax under T.C.A. § 67-2-122 because there was no reciprocal agreement between Tennessee and South Carolina. Boone v. Chumley, 372 S.W.3d 104, 2011 Tenn. App. LEXIS 640 (Tenn. Ct. App. Nov. 30, 2011), appeal denied, — S.W.3d —, 2012 Tenn. LEXIS 449 (Tenn. June 20, 2012).
Collateral References.
Protection of out-of-state sellers from state income tax by Public Law 86-272 (15 U.S.C. §§ 381 to 384). 182 A.L.R. Fed. 291.
State income tax treatment of S corporations and their shareholders. 118 A.L.R.5th 597.
67-2-123. Implementation of income tax incentive for participation in college savings plans.
- The department shall assist the board of trustees of the college savings trust fund program in the implementation of an income tax incentive established under § 49-7-805(4) that shall include, but not be limited to, college savings plan incentive inserts in the department's income tax notifications, providing college savings plan incentives information with any web site tax payment form, sending other notifications about college savings incentives by electronic means, and providing information about college savings incentives through any other web-based means.
- For any insert included in the mailing of renewal notices that causes the total postal weight to be over one ounce (1 oz.) as permitted by the United States postal service, the board of trustees of the college savings trust fund program shall pay the increased cost of mailing.
Acts 2014, ch. 910, § 28; 2017, ch. 400, § 12.
Amendments. The 2017 amendment substituted “the board of trustees of the college savings trust fund program” for “the board of trustees of the baccalaureate education system trust fund program” in (a) and (b).
Effective Dates. Acts 2014, ch. 910, § 30. May 13, 2014.
Acts 2017, ch. 400, § 20. July 1, 2017.
67-2-124. Effect of reduction to rate of tax — Annual reduction of tax — Elimination of tax.
- The reduction to the rate of tax made by chapter 1064 of the Public Acts of 2016 shall not be construed to absolve any taxpayer of liability for any tax duly levied by this chapter, during a tax year that began prior to January 1, 2016.
- It is the legislative intent that the tax be reduced by one percent (1%) annually through enactments of general bills beginning with the first annual session of the 110th general assembly.
- The income tax levied by this chapter is eliminated for tax years that begin on or after January 1, 2021; provided, however, that this subsection (c) shall not be construed to absolve any taxpayer of liability for any tax duly levied by this section, during a tax year that began prior to January 1, 2021.
Acts 2016, ch. 1064, § 3; 2017, ch. 181, § 15.
Code Commission Notes.
Acts 2016, ch. 1055, § 1 purported to enact § 67-2-124. Section 67-2-124 was previously enacted by Acts 2016, ch. 1064, § 3; therefore, the enactment by Acts 2016, ch. 1055, § 1 was designated as § 67-2-125 by the code commission.
Compiler’s Notes. Acts 2016, ch. 1064, § 4, provided that the act, which enacted this section, shall apply to tax years beginning on or after January 1, 2016.
Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Acts 2017, ch. 181, § 38 provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2017.
Amendments. The 2017 amendment substituted “January 1, 2021” for “January 1, 2022” twice in (c).
Effective Dates. Acts 2016, ch. 1064, § 4. May 20, 2016.
Acts 2017, ch. 181, § 38. April 26, 2017.
67-2-125. Angel investor tax credit.
-
For tax years beginning January 1, 2017, and thereafter, there shall be allowed a credit of thirty-three percent (33%) of the value of a direct or indirect cash investment by an angel investor against the liability of such angel investor under this chapter in the tax year in which the investment was made. All credits allowed under this subsection (a) are nonrefundable and nontransferable. Any unused credit allowed under this subsection (a) may be carried forward for five (5) years after the tax year in which the credit originated.
-
For purposes of this section, “angel investor” means a natural person who:
- Is an accredited investor as defined in 17 CFR 230.501(a)(5) or (a)(6); and
-
Invests in a company that, at the time of the investment:
- Is an innovative small business with high-growth potential, including, but not limited to, tech-enabled startups and companies in the fields of consumer products, medical devices, life science, or additive manufacturing; or is a company that has received small business innovation research/small business technology transfer (SBIR/STTR) funding; or is commercializing technology developed at a research institution within this state;
- Is not a professional service firm and is not primarily engaged in the provision of goods or services within the following industries: construction, leisure, hospitality, retail, real estate, insurance, banking, lobbying, consulting, alcohol, or gambling;
- Has been in business for five (5) or fewer years;
- Has, based on the prior fiscal year, three million dollars ($3,000,000) or less in gross annual revenue; and
- Has fifty (50) or fewer full-time employees, as defined in § 67-4-2109(f)(1)(A), and at least sixty percent (60%) of those employees perform the majority of their job duties within this state.
- The credit allowed under this subsection (a) shall be limited to fifty thousand dollars ($50,000) per angel investor in any tax year.
- For tax years beginning in 2017, a maximum of three million dollars ($3,000,000) in tax credits may be allowed under this subsection (a). For tax years beginning in 2018, a maximum of four million dollars ($4,000,000) of credits may be allowed under this subsection (a). For tax years beginning January 1, 2019, and thereafter, a maximum of five million dollars ($5,000,000) of credits may be allowed under this subsection (a).
-
- A credit may be allowed under this subsection (a) only if the investment is at least fifteen thousand dollars ($15,000) and represents no more than forty percent (40%) of the capitalization of the company at the time of the investment.
- Within sixty (60) days of the date of the investment, the angel investor shall apply to the Tennessee technology development corporation, in a manner to be determined by the Tennessee technology development corporation, for a certificate of qualification under this section. The angel investor shall affirm that all requirements for qualification under subdivision (a)(1) have been met, and shall provide proof of the investment in a form to be determined by the Tennessee technology development corporation. Certificates of qualification shall be issued by the Tennessee technology development corporation on a first-come, first-served basis. The Tennessee technology development corporation shall ensure that the amount of all certificates of qualification issued under this subdivision (a)(4)(B) does not exceed the maximum annual amounts described in subdivision (a)(3).
- The angel investor shall submit the certificate of qualification described in subdivision (a)(4)(B) to the department of revenue when claiming a credit under this section.
- A qualified angel investor who invests in a company located in a Tier 4 county, as defined in § 67-4-2109(a)(2)(C), shall be allowed a credit of fifty percent (50%) of the value of such investment against the liability of such angel investor under this chapter. The angel investor shall otherwise be subject to all other requirements described in this section.
-
For purposes of this section, “angel investor” means a natural person who:
- A review of the cumulative effectiveness of the credit authorized under this section shall be conducted by the Tennessee technology development corporation by July 1, 2020. Such review shall include, but is not limited to, the number and type of businesses that received angel investments, the number of angel investors and the aggregate amount of cash investments, the current status of each business that received angel investments, and the estimated economic impact to the state of businesses that received an investment under this section. A report containing the findings of the review conducted pursuant to this subsection (b) shall be generated. A copy of the report shall be transmitted to the governor, the speaker of the senate, the speaker of the house of representatives, the chair of the finance, ways and means committee of the senate, the chair of the finance, ways and means committee of the house of representatives, the commissioner of economic and community development, and the commissioner of revenue.
Acts 2016, ch. 1055, § 1; 2018, ch. 892, § 1.
Code Commission Notes.
Acts 2016, ch. 1055, § 1 purported to enact § 67-2-124. Section 67-2-124 was previously enacted by Acts 2016, ch. 1064, § 3; therefore, the enactment by Acts 2016, ch. 1055, § 1 was designated as § 67-2-125 by the code commission.
Compiler's Notes. Acts 2016, ch. 1055, § 2, provided that the act, which enacted this section, shall apply to tax years beginning on or after January 1, 2017.
Acts 2018, ch. 892, § 2 provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2017.
Amendments. The 2018 amendment inserted “direct or indirect” in the first sentence of the introductory paragraph of (a).
Effective Dates. Acts 2016, ch. 1055, § 2. January 1, 2017.
Acts 2018, ch. 892, § 2. May 3, 2018.
Chapter 3
Petroleum Products and Alternative Fuels Tax Law
Part 1
General Provisions
67-3-101. Short title.
This chapter shall be known and may be cited as the “Petroleum Products and Alternative Fuels Tax Law.”
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1201.
Compiler's Notes. Former title 67, chapter 3, parts 1-11, §§ 67-3-101 — 67-3-123, 67-3-201 — 67-3-203, 67-3-301 — 67-3-314, 67-3-401 — 67-3-405, 67-3-501 — 67-3-503, 67-3-601 — 67-3-618, 67-3-701 — 67-3-712, 67-3-801 — 67-3-822, 67-3-901 — 67-3-911, 67-3-1001 — 67-3-1013, 67-3-1101 — 67-3-1116 (Acts 1978, ch. 761, §§ 16-38, 40-114; 1979, ch. 35, § 1; 1979, ch. 277, §§ 1-5; 1980, ch. 528, §§ 1, 2; 1980, ch. 529, §§ 1-3; 1980, ch. 560, § 1; 1980, ch. 734, §§ 1-3; 1980, ch. 786, §§ 6, 9; 1980, ch. 807, § 1; 1980, ch. 816, §§ 1-3; 1981, ch. 37, § 1; 1981, ch. 366, §§ 1-5; 1981, ch. 418, §§ 1-3, 8; 1981, ch. 516, §§ 1-13; 1982, ch. 595, § 1; 1982, ch. 663, §§ 1, 2; 1982, ch. 721, § 1; 1982, ch. 731, §§ 1, 2; 1982, ch. 769, § 2; 1982, ch. 866, §§ 1-13; 1982, ch. 911, §§ 1, 4, 5-10; 1983, ch. 144, §§ 3, 4; 1983, ch. 178, § 1; 1983, ch. 203, §§ 1-19; 1983, ch. 263, §§ 1-5, 7, 8; T.C.A. §§ 67-3301 — 67-3318, 67-3401 — 67-3408, 67-3501 — 3519, 67-3601 — 3604, 67-3611 — 67-3615, 67-3621 — 67-3636, 67-3651, 67-3701 — 67-3718, 67-3801 — 67-3812, 67-6401 — 67-6416, 67-63-101 — 67-63-112; Acts 1984, ch. 562, § 1; 1984, ch. 832, § 17, 1984, ch. 955, § 1; 1985, ch. 157, § 2; 1985, ch. 263, §§ 1, 2; 1985, ch. 418, § 3; 1985, ch. 419, §§ 1, 2, 4, 5; 1985, ch. 454, §§ 1-3; 1986, ch. 598, §§ 3-5; 1986, ch. 694, § 1; 1986, ch. 931, §§ 3-21; 1987, ch. 229, § 1; 1987, ch. 350, §§ 1, 2; 1988, ch. 491, § 1; 1988, ch. 526, §§ 22, 24-27; 1988, ch. 643, § 3; 1988, ch. 693, §§ 1-6; 1988, ch. 704, § 1, 1988, ch. 958, § 5; 1989, ch. 46, §§ 1, 2, 6-8; 1989, ch. 241, §§ 1, 3-5; 1989, ch. 281, §§ 1-3; 1989, ch. 591, §§ 1, 6, 113; 1990, ch. 674, § 1; 1990, ch. 715, § 1; 1991, ch. 68, §§ 3, 4; 1991, ch. 370, § 1; 1991, ch. 453, §§ 1, 2; 1992, ch. 567, §§ 1-3; 1993, ch. 142, §§ 6-14; 1993, ch. 396, §§ 1-8; 1993, ch. 476, § 1; 1994, ch. 681, § 1; 1991, ch. 911, §§ 1, 2; 1994, ch. 592, § 1; 1995, ch. 141, §§ 1, 2; 1995, ch. 161, §§ 1, 2; 1995, ch. 245, §§ 3-13; 1995, ch. 521, § 1), concerning the Administration of Taxes on Petroleum Products Law, was repealed and replaced by Acts 1997, ch. 316 § 1, effective January 1, 1998.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, chapter 3, parts 1-13 in 2003. See the following parallel reference table for the former and new section locations.
Former Section Present Section
67-3-1201 67-3-101
67-3-1202 67-3-102
67-3-1203 67-3-103
67-3-1301 67-3-201
67-3-1302 67-3-203
67-3-1304 67-3-204
67-3-1305 67-3-205
67-3-1306 67-3-206
67-3-1401 67-3-301
67-3-1402 67-3-302
67-3-1403 67-3-303
67-3-1404 67-3-304
67-3-1501 67-3-401
67-3-1502 67-3-402
67-3-1503 67-3-403
67-3-1504 67-3-404
67-3-1505 67-3-405
67-3-1506 67-3-406
67-3-1507 67-3-407
67-3-1508 67-3-408
67-3-1509 67-3-409
67-3-1510 67-3-410
67-3-1511 67-3-411
67-3-1512 67-3-412
67-3-1513 67-3-413
67-3-1514 67-3-414
67-3-1515 67-3-415
67-3-1516 67-3-416
67-3-1517 67-3-417
67-3-1518 67-3-418
67-3-1519 67-3-419
67-3-1520 67-3-420
67-3-1521 67-3-421
67-3-1522 67-3-422
67-3-1601 67-3-501
67-3-1602 67-3-502
67-3-1603 67-3-503
67-3-1604 67-3-504
67-3-1605 67-3-505
67-3-1606 67-3-506
67-3-1607 67-3-507
67-3-1608 67-3-508
67-3-1609 67-3-509
67-3-1610 67-3-510
67-3-1611 67-3-511
67-3-1612 67-3-512
67-3-1613 67-3-513
67-3-1614 67-3-514
67-3-1615 67-3-515
67-3-1701 67-3-601
67-3-1702 67-3-602
67-3-1703 67-3-603
67-3-1704 67-3-604
67-3-1705 67-3-605
67-3-1706 67-3-606
67-3-1707 67-3-607
67-3-1708 67-3-608
67-3-1709 67-3-609
67-3-1710 67-3-610
67-3-1711 67-3-611
67-3-1712 67-3-612
67-3-1713 67-3-613
67-3-1714 67-3-614
67-3-1715 67-3-615
67-3-1716 67-3-616
67-3-1717 67-3-617
67-3-1718 67-3-618
67-3-1719 67-3-619
67-3-1801 67-3-701
67-3-1802 67-3-702
67-3-1803 67-3-703
67-3-1804 67-3-704
67-3-1805 67-3-705
67-3-1806 67-3-706
67-3-1901 67-3-801
67-3-1902 67-3-802
67-3-1903 67-3-803
67-3-1904 67-3-804
67-3-1905 67-3-805
67-3-1906 67-3-806
67-3-1907 67-3-807
67-3-1908 67-3-808
67-3-1909 67-3-809
67-3-1910 67-3-810
67-3-1911 67-3-811
67-3-1912 67-3-812
67-3-1913 67-3-813
67-3-1914 67-3-814
67-3-1915 67-3-815
67-3-1916 67-3-816
67-3-1917 67-3-817
67-3-1918 67-3-818
67-3-1919 67-3-819
67-3-2001 67-3-901
67-3-2002 67-3-902
67-3-2003 67-3-903
67-3-2004 67-3-904
67-3-2005 67-3-905
67-3-2006 67-3-906
67-3-2007 67-3-907
67-3-2008 67-3-908
67-3-2009 67-3-909
67-3-2010 67-3-910
67-3-2011 67-3-911
67-3-2101 67-3-1001
67-3-2102 67-3-1002
67-3-2103 67-3-1003
67-3-2104 67-3-1004
67-3-2105 67-3-1005
67-3-2106 67-3-1006
67-3-2107 67-3-1007
67-3-2108 67-3-1008
67-3-2109 67-3-1009
67-3-2110 67-3-1010
67-3-2111 67-3-1011
67-3-2112 67-3-1012
67-3-2201 67-3-1101
67-3-2202 67-3-1102
67-3-2203 67-3-1103
67-3-2204 67-3-1104
67-3-2205 67-3-1105
67-3-2206 67-3-1106
67-3-2207 67-3-1107
67-3-2208 67-3-1108
67-3-2209 67-3-1109
67-3-2210 67-3-1110
67-3-2211 67-3-1111
67-3-2212 67-3-1112
67-3-2213 67-3-1113
67-3-2214 67-3-1114
67-3-2215 67-3-1115
67-3-2216 67-3-1116
67-3-2217 67-3-1117
67-3-2218 67-3-1118
67-3-2301 67-3-1201
67-3-2302 67-3-1202
67-3-2303 67-3-1203
67-3-2304 67-3-1204
67-3-2305 67-3-1205
67-3-2306 67-3-1206
67-3-2307 67-3-1207
67-3-2308 67-3-1208
67-3-2309 67-3-1209
67-3-2310 67-3-1210
67-3-2401 67-3-1301
67-3-2402 67-3-1302
67-3-2403 67-3-1303
67-3-2404 67-3-1304
67-3-2405 67-3-1305
67-3-2406 67-3-1306
67-3-2407 67-3-1307
67-3-2408 67-3-1308
67-3-2409 67-3-1309
67-3-2410 67-3-1310
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 80.
Law Reviews.
Selected Issues in State Business Taxation (Walter Hellerstein), 39 Vand. L. Rev. 1033 (1986).
Comparative Legislation. Petroleum products taxes:
Ala. Code § 40-17-160 et seq.
Ark. Code § 26-55-101 et seq.
Ga. O.C.G.A. § 48-9-1 et seq.
Ky. Rev. Stat. Ann. § 138.210 et seq.
Miss. Code Ann. § 27-55-1 et seq.
Mo. Rev. Stat. § 142.009 et seq.
N.C. Gen. Stat. § 105-449.60.
Va. Code § 58.1-2200 et seq.
Collateral References. 71 Am. Jur. 2d State and Local Taxation § 550 et seq.
Taxation 371
67-3-102. Purpose of chapter — Construction.
It is the intent of the general assembly in enacting this chapter to:
- Establish an efficient and effective motor fuel tax collection and enforcement system adequate to substantially deter motor fuel tax evasion emanating from sources inside and outside this state;
- Amend prior Tennessee law to change the point of taxation of diesel fuel; and
- Maintain the previously existing system of taxation of petroleum products to the greatest extent possible within the framework of the modifications listed in subdivisions (1) and (2).
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1202.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-103. Chapter definitions.
As used in this chapter, unless the context otherwise requires:
- “Agricultural purposes” means operating tractors or other farm equipment used exclusively, whether for hire or not, in plowing, planting, harvesting, raising or processing of farm products at a farm, nursery or greenhouse; or operating farm irrigation systems; when such vehicles or equipment are not operated upon the public highways of this state;
- “Alternative fuel” means a liquefied petroleum gas or compressed natural gas product used in an internal combustion engine or motor to propel any form of motor vehicle, machine, or mechanical contrivance. “Alternative fuel” includes all forms of fuel commonly known as butane, propane, or compressed natural gas;
- [Deleted by 2007 amendment, effective July 1, 2013.]
- “Blend stock” means any petroleum product component of gasoline, such as naphtha, reformate, or toluene, that can be blended for use in a motor fuel. However, “blend stock” does not include any substance that will be ultimately used for consumer non-motor fuel use and is sold or removed in drum quantities of not more than fifty-five gallons (55 gals.) at the time of the removal or sale;
- “Blended fuel” means a mixture composed of gasoline or diesel fuel and another liquid, other than a minimal amount of a product such as carburetor detergent or oxidation inhibitor, that can be used as a fuel in a highway vehicle;
- “Blender” means any person that produces blended motor fuel outside the bulk transfer/terminal system;
- “Blending” means the mixing of one (1) or more petroleum products, with or without another product, regardless of the original character of the product blended, if the product obtained by the blending is capable of use or otherwise sold for use in the generation of power to propel a motor vehicle, an airplane, a motorboat, or other mechanical contrivance. “Blending” does not include blending that occurs in the process of refining by the original refiner of crude petroleum or the blending of products known as lubricating oil and greases;
- “Bonded importer” means a person with a valid bonded importer's license under § 67-3-606;
- “Bulk end user” means a person who receives into the person's own storage facilities, for the person's own consumption, transport lots of taxable motor fuel;
- “Bulk export” means the movement of petroleum products from a point in Tennessee to another state by means of transport truck, pipeline, marine vessel or rail, including any quantity of petroleum product placed by the manufacturer into the vehicle fuel supply tank of a newly manufactured motor vehicle;
- “Bulk plant” means a motor fuel storage and distribution facility that is not a terminal and from which motor fuel may be removed at a rack;
- “Bulk transfer” means any transfer of a petroleum product within the bulk transfer/terminal system from one location to another by pipeline or marine delivery;
- “Bulk transfer/terminal system” means the motor fuel distribution system consisting of refineries, pipelines, vessels, and terminals. Thus, gasoline in a refinery, pipeline, vessel, or terminal is in the bulk transfer/terminal system. Taxable motor fuel in the fuel supply tank of any engine, or in any tank car, rail car, trailer, truck, or other equipment suitable for ground transportation is not in the bulk transfer/terminal system;
- “Commissioner” means the commissioner of revenue or the commissioner's designated subordinate official;
- “Computer-type pump” means a pump used to dispense fuel, that has meters for registering the total sales price and gallons sold, and displays the price per gallon on the dispenser;
- “Customer-controlled pump” means a pump used for dispensing motor fuel directly to a customer who can access the pump by way of a personal key, an identification number, or a customer card that is assigned to the customer by a licensed wholesaler;
- “Dead storage” means the amount of taxable motor fuel that will not be pumped out of a storage tank because the motor fuel is below the mouth of the draw pipe. For this purpose, a vendor may assume that the amount of motor fuel in dead storage is two hundred gallons (200 gals.) for a tank with a capacity of less than ten thousand gallons (10,000 gals.), and four hundred gallons (400 gals.) for a tank with a capacity of ten thousand gallons (10,000 gals.) or more;
- “Department” means the department of revenue;
- “Destination state” means the state, territory, or foreign country to which petroleum products are directed for resale or use;
- “Diesel fuel” means any liquid that is commonly or commercially known or sold as a fuel that is suitable for use in a diesel-powered highway vehicle. A liquid meets this requirement if, without further processing or blending, the liquid has practical and commercial fitness for use in the propulsion engine of a diesel-powered highway vehicle. “Diesel fuel” does not include jet fuel or kerosene unless sold for use in a diesel-powered highway vehicle or used in such vehicles, in which case the fuel shall be deemed diesel fuel for taxation purposes. With regard to jet fuel, it is further provided that the buyer must be registered to purchase jet fuel subject to federal taxes applicable to jet fuel, and the vendor must obtain certification of such fact satisfactory to the department prior to making the sale;
- “Diesel-powered highway vehicle” means a motor vehicle, propelled by a diesel-powered engine, that is operated, or intended to be operated, on a highway;
- “Distributor report” means the report required under § 67-3-701;
- “Diverted shipment” means any shipment of a petroleum product where the movement of that product by a transporter is changed from the original point of destination to another point of destination;
- “Dyed diesel fuel” means diesel fuel dyed under United States environmental protection agency rules for high sulfur diesel fuel, or dyed under internal revenue service rules for low sulphur fuel, or dyed pursuant to any other requirements subsequently set by the environmental protection agency or internal revenue service, including any invisible marker requirements;
- “Ethanol” means fuel grade ethanol;
- “Export” means to obtain petroleum products in this state for sale, use, or distribution in another state. In applying this definition, the delivery of petroleum products outside Tennessee by or for the vendor constitutes an export by the vendor, and the delivery of petroleum products outside Tennessee by or for the purchaser constitutes an export by the purchaser;
- “Exporter” means any person, other than a supplier, who purchases or otherwise holds title to taxable petroleum products in this state for the purpose of transporting or delivering the products to another state or country;
- “Farm products” means flowers and plants, including cut flowers, flowering plants, potted plants, vegetables and vegetable plants, trees, shrubs, vines, ornamentals, sod, and mushrooms. “Farm products” also means livestock and poultry raised for food, including dairy products;
- “Fuel alcohol” means any alcohol used or intended for use as fuel in a combustion engine or heating oil system;
- “Fuel grade ethanol” means a product that meets the American Society for Testing and Materials (ASTM) standard in effect on January 1, 1995, and any successor rule, as the D-4806 specification for denatured fuel grade ethanol, for blending with gasoline for use as automatic spark-ignition engine fuels;
- “Fuel transportation vehicle” means a vehicle designed for highway use that is also designed or used to transport motor fuels, including transport trucks and tank wagons;
- “Gallon” or “net gallon” means the amount of petroleum product, corrected to a temperature of sixty degrees Fahrenheit (60°F) and a pressure of fourteen and seven tenths pounds per square inch (14.7 p.s.i.), necessary to completely fill a standard United States gallon liquid measure;
- “Gasohol” means a blended fuel composed of gasoline and ethanol;
- “Gasoline” means all products commonly or commercially known or sold as gasoline that are suitable for use as a motor fuel, but does not include any product that is sold as a product other than gasoline and has an ASTM octane number of less than seventy-five (75) as determined by the “motor method”; and does not include aviation gasoline; provided, that the buyer is registered to purchase aviation gasoline free of tax, and the vendor obtains certification of such fact satisfactory to the department prior to making the sale;
- “Governmental agency” means a department of a local, state or federal government, where such department is organized by and accountable to the authority of the executive, legislative, or judicial branch of that government; but does not include a private organization, association, or contractor, whether for profit or not, unless specifically identified in this chapter. For the purpose of this chapter, “governmental agency” includes a rescue squad chartered by the state as a nonprofit corporation or association and that is a member of the Tennessee Association of Rescue Squads, and a volunteer fire department chartered by the state as a nonprofit corporation or association;
- “Gross gallons” means the total measured product, exclusive of any temperature or pressure adjustments, considerations or deductions;
- “Heating oil” means a motor fuel that is burned in a boiler, furnace, or stove for heating or industrial processing purposes;
- “Highway vehicle” means a self-propelled vehicle that is designed for use on a highway;
- “Import” means to bring petroleum products into this state by any means of conveyance other than in the fuel supply tank of a motor vehicle. In applying this definition, the delivery of petroleum products into this state from outside Tennessee by or for the vendor constitutes an import by the vendor, and the delivery of petroleum products into this state from outside Tennessee by or for the purchaser constitutes an import by the purchaser;
- “In this state” means the area inside the boundaries of Tennessee, but does not include the midstream of waterways that border the state;
- “Invoiced gallons” means the gallons actually billed on an invoice from a vendor;
- “K-1 kerosene” means burner fuel designed for unvented space heaters which meets ASTM standard D-3699, in effect on January 1, 1995, and any successor rule, as the specification for K-1 kerosene;
- “Kerosene” has the same meaning as defined by the ASTM standards for kerosene;
- “Liquid” means any substance that is liquid at temperatures in excess of sixty degrees Fahrenheit (60°F) and at a pressure of fourteen and seven-tenths pounds per square inch (14.7 p.s.i.) absolute;
- “Local transit company” means a person that is a scheduled, common carrier, public passenger, land transportation service, serving regular routes within a municipality and the territory adjacent to the municipality, or within a metropolitan government created under title 7, chapters 1-3, and that generates at least sixty percent (60%) of the total passenger fare from such routes; provided, that the operation is supervised, regulated, and controlled as a street railway company, under § 65-16-101 [repealed], and all legislative and statutory provisions applicable thereto;
- “Local transit service” means service furnished by a local transit company;
- “Motor fuel” means gasoline, diesel fuel and blended fuel;
- “Motor fuel transporter” means a person who transports motor fuel by transport truck, railroad tank car, marine vessel or pipeline;
-
“Motor vehicle” means a vehicle that is propelled by an internal combustion engine or motor and is designed to permit the vehicle's use on highways. “Motor vehicle” does not include:
- Farm machinery, including machinery designed for off-road use but capable of movement on roads at low speeds;
- A vehicle operated on rails; or
- Machinery designed principally for off-road use, unless such machinery is licensed to operate on Tennessee highways;
-
“Permissive supplier” means any person who is not subject to the general taxing jurisdiction of this state, but who:
- Is a position holder in a federally qualified terminal located outside this state;
- Is registered under § 4101 of the Internal Revenue Code, codified in 26 U.S.C. § 4101, for transactions in taxable motor fuels in the bulk transfer/terminal distribution system; and
- Acquires product in such out-of-state terminals from position holders in transactions that otherwise qualify as two-party exchanges;
- “Person” means a natural person, partnership, firm, association, corporation, limited liability company, court appointed representative, state, political subdivision or any other entity, group, or syndicate;
- “Petroleum products” means all benzol, gasoline, burning oil, distillate, fuel oil, gas oil, kerosene, naphtha, or any other volatile substance, excluding propane, reflecting a gravity of sixteen degrees (16°) or above on the American Petroleum Institute (API) scale; with the exception of those substances with a kinematic viscosity greater than seventy (70) centistokes at one hundred twenty-two degrees Fahrenheit (122°F) and a flash point greater than one hundred fifty degrees Fahrenheit (150°F); produced from petroleum, natural gas, oil shale or coal, by whatever trade name known, or substitutes therefor, including fuel alcohol, sold or used or stored in this state, separately or in combination, for any purpose whatever, by any user or storer, whether or not manufactured in this state;
- “Position holder” means the person who holds the inventory position in petroleum products in a terminal, as reflected on the records of the terminal operator. A person holds the inventory position in petroleum products when that person has a contract with the operator for the use of storage facilities and terminaling services for petroleum products at the terminal. “Position holder” includes a terminal operator who owns petroleum products in the terminal;
- “Public highway” means the entire width between boundary lines of each public-maintained way in this state, including streets and alleys in cities and towns, when any part of the way is open to the public use for vehicle travel;
- “Qualified terminal” means a qualified terminal as defined under the Internal Revenue Code, regulation and practices, that has been assigned a terminal control number (TCN) by the internal revenue service;
- “Rack” means a mechanism for delivering motor fuel from a refinery, terminal, or bulk plant into a railroad tank car, a transport truck or another means of bulk transfer outside of the bulk transfer/terminal system;
- “Refiner” means a person that owns, operates, or otherwise controls a refinery within the United States;
- “Refinery” means a facility used to produce motor fuel from crude oil, unfinished oils, natural gas liquids, or other hydrocarbons, and from which motor fuel may be removed by pipeline, by marine vessel, or at a rack; provided, that “refinery” also means a facility used to produce fuel alcohol;
- “Removal” means any physical transfer other than by evaporation, loss, or destruction, of petroleum products from a terminal, manufacturing plant, customs custody, pipeline, marine vessel (e.g., barge or tanker), refinery or any receptacle that stores petroleum products;
- “Retail station” means any service station, garage, truck stop or other outlet dispensing motor fuel from a container equipped with a computer-type pump that measures fuel passing through it;
- “Retailer” means a person that engages in the business of selling or distributing petroleum products to the end user within this state through a retail station;
- “State” means the state of Tennessee;
-
-
“Supplier” means a person that meets all the following conditions:
- Is subject to the general taxing jurisdiction of this state;
- Is registered under § 4101 of the Internal Revenue Code, codified in 26 U.S.C. § 4101, for transactions in taxable motor fuels in the bulk transfer/terminal system; and
- Is one (1) of the following:
-
“Supplier” means a person that meets all the following conditions:
- Is the “position holder” in a terminal or refinery in this state, or is one who receives fuel or fuel alcohol from a position holder within a terminal or refinery in this state;
- Imports taxable petroleum products into this state from a foreign country;
- Acquires taxable petroleum products from a terminal or refinery outside this state for import into this state on such person's account;
- Produces fuel alcohol or alcohol derivative substances in this state; or
- Is the receiving supplier on a two-party exchange;
A terminal operator shall not be considered a “supplier” merely because the terminal operator handles taxable petroleum products consigned to it within a terminal. When used in this chapter, other than in this section, “supplier” shall be deemed to also refer to the term “permissive supplier” unless provided otherwise;
“Tank wagon” means a straight truck having multiple compartments designed or used to carry petroleum products;
“Taxable motor fuel” means gasoline, diesel fuel, kerosene, and blends thereof, and any other substance blended with any of these fuels;
“Terminal” means a storage and distribution facility for taxable motor fuel, supplied by pipeline or marine vessel, that is registered as a qualified terminal by the internal revenue service;
“Terminal bulk transfer” means a transfer of petroleum products in any of the following instances:
Marine barge movements of fuel from a refinery or terminal to a refinery or terminal;
Pipeline movements of fuel from a refinery or terminal to a refinery or terminal;
Rail movements of fuel from a refinery or terminal to a refinery or terminal;
Book transfers of product within a terminal between suppliers prior to completion of removal across the rack; or
Two-party exchanges between licensed suppliers within a terminal;
(A) “Terminal operator” means a person that:
Owns, operates, or otherwise controls a terminal; and
Does not use a substantial portion of the taxable motor fuel that is transferred through or stored in the terminal for its own use, i.e., for its own consumption or in the manufacture of products other than motor fuel;
A terminal operator may own the taxable motor fuel that is transferred through or stored in the terminal;
“Transmix” means the buffer or interface between two (2) different products in a pipeline shipment, or a mix of two (2) different products within a refinery or terminal that results in an off-grade mixture;
“Transport truck” means a semi-trailer combination rig or tank wagon designed or used for the purpose of transporting petroleum products over the highways;
“Transporter” means any operator of a pipeline, barge, railroad or transport truck engaged in the business of transporting petroleum products;
“Two-party exchange” means a transaction in which a petroleum product is transferred from one licensed supplier or licensed permissive supplier to another licensed supplier or licensed permissive supplier pursuant to an exchange agreement:
Which transaction includes a transfer from the person that holds the inventory position for taxable motor fuel in the terminal as reflected on the records of the terminal operator; and
The exchange transaction is completed prior to removal of the product from the terminal by the receiving exchange partner;
“Undyed diesel fuel” means diesel fuel not dyed under United States environmental protection agency rules for high sulfur diesel fuel nor dyed under internal revenue service rules for low sulphur fuel, nor pursuant to any other requirements subsequently set by the environmental protection agency or internal revenue service;
“Vehicle fuel supply tank” means any receptacle on a motor vehicle designed to supply fuel for the propulsion of the motor vehicle or from which fuel is supplied for the propulsion of the motor vehicle;
“Vessel” means a barge or other marine conveyance used to transport petroleum products in bulk; and
“Wholesaler” means a person who acquires petroleum products from a supplier, importer or from another wholesaler, for subsequent sale and distribution at wholesale by tank cars, transport trucks or vessels.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1203; Acts 2007, ch. 580, § 1.
Compiler's Notes. Former § 65-16-101, referred to in this section, was repealed by Acts 2003, ch. 19, § 2, effective April 11, 2003.
For the Preamble to the act regarding biodiesel fuel, please refer to Acts 2007, ch. 580.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Amendments. The 2007 amendment, effective from June 1, 2007, until July 1, 2013, added the definition of “biodiesel” which read: “ ‘Biodiesel’ means mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats that meet the registration requirements for fuels and fuel additives established by the environmental protection agency under the Clean Air Act, compiled in 42 U.S.C. § 7401 et seq., and that conform to ASTM D6751 specifications for use in diesel engines. Biodiesel is a clean burning, biodegradable, nontoxic, alternative fuel, produced from domestic, renewable resources, especially agricultural products. Pure biodiesel contains no petroleum, but it can be blended at any level with petroleum diesel to create a biodiesel blend (B%) that can be used in compression-ignition, diesel engines;”.
Effective Dates. Acts 2007, ch. 580, § 3. June 1, 2007, July 1, 2013.
Part 2
Imposition of Taxes and Fees
67-3-201. Gasoline tax.
-
Subject to exemptions provided in part 4 of this chapter, a privilege tax is imposed upon all gasoline, fuel alcohol and substitutes therefor, imported into the state; the tax being levied when the product first comes to rest in the state. The tax shall also be imposed on all gasoline or substitutes therefor refined, manufactured, produced, or compounded in this state, and thereafter sold, stored or distributed in this state. The tax imposed by this section shall be collected and paid at those times, in the manner, and by those persons specified in this chapter. The rate of the tax imposed by this section shall be:
- On or after July 1, 2017, through June 30, 2018, twenty-four cents (24¢) per gallon;
- On or after July 1, 2018, through June 30, 2019, twenty-five cents (25¢) per gallon; and
- On or after July 1, 2019, twenty-six cents (26¢) per gallon.
- No fuel shall be included in the measure of the tax liability under this section unless it shall have previously come to rest within the meaning of the commerce clause of the Constitution of the United States.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1301; Acts 2017, ch. 181, § 16.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Amendments. The 2017 amendment, in the present introductory paragraph of (a), deleted “of twenty cents (20¢) per gallon” following “a privilege tax” in the first sentence, and added the introductory clause at the end; and added (a)(1)-(3).
Effective Dates. Acts 2017, ch. 181, § 38. July 1, 2017.
Attorney General Opinions. Allocating a portion of the state gasoline tax revenue to a private property owners association for the purpose of maintaining private roads that are open to travel by the general public is constitutionally permissible. OAG 13-32, 2013 Tenn. AG LEXIS 33 (4/24/13).
Collateral References. Taxation 371
67-3-202. Diesel tax.
-
Subject to exemptions provided in part 4 of this chapter, and except as provided in subsection (c), a use tax is imposed upon all diesel fuel and all fuel other than gasoline that is suitable for use in a diesel-powered vehicle or that is used or consumed in this state to produce power for propelling motor vehicles; it being the purpose and intent of this section that the taxes being levied on taxable motor fuels under this chapter are in fact a levy and assessment on the consumer, and the levy and assessment on other persons as specified in this chapter are as agents of the state for the collection of such tax. The rate of the tax imposed by this section shall be:
- On or after July 1, 2017, through June 30, 2018, twenty-one cents (21¢) per gallon;
- On or after July 1, 2018, through June 30, 2019, twenty-four cents (24¢) per gallon; and
- On or after July 1, 2019, twenty-seven cents (27¢) per gallon.
- The tax imposed by this section shall be collected and paid at those times, in the manner, and by those persons specified in this chapter.
- Notwithstanding subsection (a), diesel fuel that is indelibly dyed in accordance with internal revenue service regulations and is legal for exempt use only shall not be considered subject to the diesel tax imposed under this section, except when used by a commercial carrier to produce power for a means of transportation, as defined in the Transportation Fuel Equity Act, compiled in part 14 of this chapter, in which case a use tax of seventeen cents (17¢) per gallon is imposed on such fuel.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1302; Acts 2014, ch. 908, § 1; 2017, ch. 181, §§ 17, 18.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Amendments. The 2014 amendment rewrote (c) which read: “With respect to purchases of diesel fuel that is indelibly dyed in accordance with internal revenue service regulations and is legal for exempt use only, such fuel shall not be considered subject to the diesel tax imposed under this section.”
The 2017 amendment, in the present introductory paragraph of (a), substituted “and except as provided in subsection (c), a use tax” for “a use tax of seventeen cents (17¢) per gallon,” in the first sentence, and added the introductory clause at the end; added (a)(1)-(3); and rewrote (c) which read: “(c) Except when used by a commercial carrier to produce power for a means of transportation, as defined in the Transportation Fuel Equity Act, compiled in part 14 of this chapter, diesel fuel that is indelibly dyed in accordance with internal revenue service regulations and is legal for exempt use only shall not be considered subject to the diesel tax imposed under this section.”
Effective Dates. Acts 2014, ch. 908, § 18. July 1, 2014.
Acts 2017, ch. 181, § 38. July 1, 2017.
67-3-203. Special privilege tax.
Subject to exemptions provided in part 4 of this chapter, in addition to the taxes imposed on motor fuels in §§ 67-3-201 and 67-3-202, a special privilege tax of one cent (1¢) per gallon is imposed on all petroleum products. The tax imposed by this section shall be collected and paid at those times, in the manner, and by those persons specified in this chapter.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1303.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-204. Environmental assurance fee.
Subject to exemptions provided in part 4 of this chapter, in addition to the taxes imposed on petroleum products in §§ 67-3-201 — 67-3-203, an environmental assurance fee as provided in § 68-215-110 is imposed on all petroleum products. The fee imposed by this section shall be collected and paid at those times, in the manner, and by those persons specified in this chapter.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1304.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-205. Export tax.
An export tax of one-twentieth of one cent (1/20 of 1¢) per gallon is levied upon all of the petroleum products, subject to the special privilege tax provided at § 67-3-203, which are stored in this state, or have come to rest after shipment in interstate commerce and are stored in this state, and are subsequently exported to points outside of this state. If with respect to these petroleum products the special privilege tax has already been paid, then nineteen-twentieths (19/20) of the special privilege tax may be credited on a monthly return, or in the alternative, refunded.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1305.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-206. Maintenance of funding under highway trust fund.
- Notwithstanding any law to the contrary, if the federal government reduces or eliminates any or all taxes imposed by title 26 of the United States Code and allocated by chapter 98 of that title of the federal highway trust fund, compiled in 26 U.S.C. § 9501 et seq., the existing state tax imposed on the sale and/or use of such products shall be adjusted so as to maintain the amount of funding for the Tennessee department of transportation generated by the federal tax. The adjustment in the state tax shall become effective simultaneously with the reduction in the federal tax. The department of revenue is directed to collect such taxes and allocate such taxes in their entirety, less the appropriate cost of administration, to the state highway trust fund for use by the department of transportation. If the federal government elects to increase any or all taxes imposed by title 26 of the United States Code and allocated by chapter 98 of that title to the federal highway trust fund after it has reduced or eliminated such taxes, the state tax on the sale and/or use of such products is reduced equal to the amount of the increase by the federal government. No amounts of revenue received pursuant to this section shall be pledged specifically to the payment of debt service on any state bond or note.
- [Deleted by 2013 amendment, effective July 1, 2013.]
Acts 1997, ch. 323, § 1; T.C.A., § 67-3-1306; Acts 2006, ch. 1019, § 58; 2008, ch. 1106, § 40; 2013, ch. 164, § 4.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Amendments. The 2013 amendment deleted (b) which read: “This section shall cease to be effective until July 1, 2009, at which time this section shall have full effect of law.”
Effective Dates. Acts 2013, ch. 164, § 6. July 1, 2013.
Attorney General Opinions. Distribution of federal gasoline tax revenues. OAG 14-74, 2014 Tenn. AG LEXIS 77 (8/1/14).
Part 3
Measurement of Tax
67-3-301. Measurement of gasoline tax.
The tax imposed by § 67-3-201 on taxable gallons imported into this state by a licensed importer shall be measured and levied at the time the product first comes to rest in this state. On a product refined, produced, or compounded in this state, the tax shall be measured and levied on any finished product when first placed into storage for sale or use. For a product removed from a qualified terminal or refinery outside this state, destined for this state under a tax pre-collection election provided in § 67-3-503, the tax shall be measured and levied at the time the product is removed across the terminal rack of such out-of-state facility, as if the product were imported and came to rest in Tennessee.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1401.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-302. Measurement of diesel tax.
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The tax imposed by § 67-3-202 shall be measured by taxable gallons removed, other than through a bulk transfer, by a licensed supplier:
- From the bulk transfer/terminal system or from a qualified terminal or refinery within this state;
- From the bulk transfer/terminal system or from a qualified terminal or refinery outside this state for delivery to a location in this state as represented on the shipping papers; provided, that the supplier imports such taxable motor fuel for the supplier's own account, or such supplier has made a tax pre-collection election under § 67-3-503;
- Upon sale in a qualified terminal or refinery in this state to an unlicensed supplier; or
- In other cases in the same manner as the tax imposed by § 4081 of the Internal Revenue Code of 1986, codified in 26 U.S.C. § 4081, or the Code of Federal Regulations.
- With respect to the operator of a terminal in this state, the tax imposed by § 67-3-202 shall be measured and levied annually on taxable motor fuel by the amount by which net gallons lost or unaccounted for, including transmix, within the terminal exceed the sum of net gallon gains, plus one-half of one percent (0.5%) times the number of all net gallons removed from such terminal across the rack or in bulk.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1402.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-303. Measurement of special privilege tax and environmental assurance fee.
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The tax imposed by § 67-3-203 and the fee imposed by § 67-3-204 on petroleum products shall be measured by gallons of petroleum products removed, other than through a bulk transfer, by a licensed supplier:
- From the bulk transfer/terminal system or from a qualified terminal or refinery within this state;
- From the bulk transfer/terminal system or from a qualified terminal or refinery outside this state for delivery to a location in this state as represented on the shipping papers; provided, that the supplier imports such taxable petroleum products for the supplier's own account, or such supplier has made a tax pre-collection election under § 67-3-503;
- Upon sale in qualified terminal or refinery in this state to an unlicensed supplier; or
- In other cases in the same manner as the tax imposed by § 4081 of the Internal Revenue Code of 1986, codified in 26 U.S.C. § 4081, or the Code of Federal Regulations.
- Anything to the contrary notwithstanding, the special privilege tax and the environmental assurance fee on gasoline shall be measured and levied at the time the product first comes to rest in this state.
- With respect to the operator of a terminal in this state, the tax imposed by § 67-3-203 and the fee imposed by § 67-3-204, shall be measured and levied annually on petroleum products other than gasoline by the amount by which net gallons lost or unaccounted for, including transmix, within the terminal exceed the sum of net gallon gains, plus one-half of one percent (0.5%) times the number of all net gallons removed from such terminal across the rack or in bulk.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1403.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-304. Measurement of floorstock tax.
- The taxes and fees imposed by §§ 67-3-202 — 67-3-204, on the date of an increase in the tax rate, shall be applicable to previously taxed petroleum products in inventory held for sale by a wholesaler.
- The tax imposed by § 67-3-201, on the date of an increase in the tax rate, shall be applicable to previously taxed gasoline in inventory held by a supplier, bonded importer, importer or wholesaler, except inventory held at retail.
- The tax imposed by § 67-3-202 shall be applicable to all nonexempt inventory held by any person outside of the bulk transfer/terminal system in this state to the extent such inventory has not previously been subject to the tax imposed by this state under the predecessor motor fuel tax statute; provided, that no tax shall be payable with respect to dyed diesel fuel or fuel held by an exempt user, including governmental agencies described under § 67-3-401.
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Persons in possession of taxable petroleum products subject to this section shall take an inventory at the start of business on the date that the increased tax rate becomes effective and on January 1, 1998, to determine the gallons in storage for purposes of determining the taxes and/or fees; provided, that in determining the amount of taxable petroleum products taxes and fees due under this section:
- The person may exclude the amount of taxable petroleum products in dead storage;
- For the inventory taken on January 1, 1998, the person may exclude gallons on which taxes and fees at the full rate have previously been paid;
- The person may exclude gallons of dyed diesel fuel from the tax imposed by § 67-3-202 only; and
- The person shall report the gallons listed in this section on forms provided by the commissioner.
- Where gallons in taxable inventory have not previously been subject to the predecessor motor fuel tax statute, the amount of the inventory tax is equal to the tax rate times the gallons in storage, as determined under subsection (c). In the case of an increase in the tax rate, the inventory tax is equal to the new tax rate minus the previous tax rate times the number of gallons previously taxed.
- Payment of this floorstock tax shall be made in accordance with § 67-3-511.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1404.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Part 4
Exemptions and Refunds
67-3-401. Governmental agency exemption.
- There shall be exempted from the taxes and fees imposed in part 2 of this chapter any governmental agency that holds an active exemption permit issued by the department.
- Each governmental agency making purchases of petroleum products shall, prior to the purchase of such products, acquire a valid exemption permit issued by the commissioner. The exemption permit shall be numbered and shall entitle such governmental agency to purchase petroleum products tax exempt for a period of four (4) years from the date of issuance. The permittee shall make application for renewal prior to the expiration of the permit.
- If any governmental agency, to which an exemption permit has been issued, loses its status as a governmental agency during the effective period of any such permit, the permit shall be void and shall be immediately surrendered to the department.
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In order to be entitled to the exemption, the governmental agency shall receive, store, handle and use the petroleum products strictly in the following manner:
- Purchase only from a licensed importer, supplier, or wholesaler;
- Store in a storage facility either owned or leased by such agency. In the event the facility is leased, it shall be separate and apart from the commercial storage facilities of any motor fuel vendor, and the storage facility must be kept under the exclusive control of the governmental agency at all times. In order for the leased facility to comply with this subsection (d), a copy of the lease must be filed with and approved by the commissioner;
- Remove from the storage facility in equipment either owned or leased by the governmental agency; and
- Use exclusively for governmental purposes, in equipment either owned or leased by the governmental agency and operated by governmental employees.
- It is unlawful for any person to use petroleum products sold to a governmental agency for any purpose other than governmental.
- For the purposes of this part only, a motor vehicle used exclusively in a driver education program approved by the state board of education shall be considered to have met the requirements of subdivision (d)(4).
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For the purposes of this part only:
- A motor vehicle used exclusively for the purpose of providing mass transportation services, paratransit service to or for the benefit of persons who are elderly or have a disability, or other specialized mass transportation services of a public transportation system or transit authority organized and existing under and by virtue of title 7, chapter 56, and operated by nongovernmental employees, shall be considered to have met the requirements of subdivision (d)(4); and
- Petroleum products stored by the governmental agency in a storage facility or tank leased by the governmental agency on the premises of a person providing the transportation services referred to in subdivision (g)(1), pursuant to contract with such public transportation system or transit authority, shall be considered to have met the requirements of subdivision (d)(2); provided, that such leased storage facility or tank shall be separate and apart from the other commercial storage facilities and tanks on the premises, and the leased storage facility or tank must be kept and maintained for the exclusive use and storage of petroleum products stored by the governmental agency for operation of such mass transportation services, paratransit service to or for the benefit of persons who are elderly or have a disability, or other specialized mass transportation services at all times, and for no other purpose.
- An independent contractor operating a local transit company and providing local transit services is exempt from the petroleum products taxes and fees imposed in part 2 of this chapter, subject to the same restrictions imposed on governmental agencies under this part.
- In lieu of the provisions set out in subdivision (d)(2), petroleum products may be delivered to a governmental agency through a customer-controlled pump. A licensed wholesaler may locate such pump or pumps at a location other than the wholesaler's primary storage location. A customer-controlled pump shall not be located on any retail station island. Such pump or pumps must be connected to a storage tank whose inventory is owned by the licensed wholesaler. Any licensed wholesaler found violating any statute or any rule promulgated by the commissioner relating to a customer-controlled pump shall lose the right to sell from a customer-controlled pump for a period of not less than two (2) years, and shall be subject to all other penalties set forth in the law. A person associated with a retail station shall neither take part in the dispensing or sale of petroleum products from such pumps, nor shall such person possess any key that will activate any meter that may be used for dispensing such products. A customer-controlled pump shall have the ability to identify each customer separately and only that customer shall be allowed to purchase petroleum products through that identity at the pump. One (1) invoice exclusively for sales from a customer-controlled pump shall be issued on the last day of any month in which a tax refund on sales to governmental agencies is claimed. Such invoice shall clearly identify itself as an invoice solely for sales through a customer-controlled pump.
- Notwithstanding any other provision of this part to the contrary, a governmental agency may purchase petroleum products from retail stations free of the taxes imposed in §§ 67-3-201 — 67-3-203, and free of the fee imposed in § 67-3-204. Such purchases may only be made through a fleet credit card or an oil company credit card which has been issued by the oil company to a governmental agency which holds an exemption permit issued by the commissioner pursuant to this part.
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Any governmental agency using, storing, distributing or selling petroleum products in any manner except strictly in accordance with this part:
- Shall be liable for the state petroleum products taxes and fees imposed in part 2 of this chapter. In the event of such liability, the taxes and fees shall be collected in the manner otherwise provided by law; and
- Shall be subject to revocation of its governmental agency exemption permit.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1501; Acts 2003, ch. 418, § 5; 2011, ch. 47, § 73; 2016, ch. 646, §§ 2, 3.
Compiler's Notes. Acts 2011, ch. 47, § 107 provided that nothing in the legislation shall be construed to alter or otherwise affect the eligibility for services or the rights or responsibilities of individuals covered by the provision on the day before the date of enactment of this legislation, which was July 1, 2011.
Acts 2011, ch. 47, § 108 provided that the provisions of the act are declared to be remedial in nature and all provisions of the act shall be liberally construed to effectuate its purposes.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Amendments. The 2016 amendment rewrote (d)(1), which read: “(1) Purchase only from a licensed importer, supplier or wholesaler, and in lots of at least five hundred gallons (500 gals.), except as provided in subsections (i) and (j). Delivery of such fuel shall be completed within seventy-two (72) hours following commencement of the delivery. The five-hundred-gallon requirement may be met by the combined shipment of any petroleum products during the seventy-two-hour period;”, and deleted the former last sentence of (i), which read: “Sales through a customer-controlled pump are not subject to the minimum purchase requirements of this part.”
Effective Dates. Acts 2016, ch. 646, § 4. March 23, 2016.
Attorney General Opinions. Tax-exempt fuel provided by metropolitan airport authority to independent contractor operating local transit service, OAG 03-094(7/28/03).
County board of education may not provide tax-exempt fuel to an independent contractor operating a school bus service for the board, OAG 08-186 (12/12/08).
Collateral References. Taxation 371
67-3-402. Consumer imports exemption.
There shall be exempt from the taxes and fees imposed in part 2 of this chapter, taxable motor fuel acquired by an end user out of state, carried into this state in a vehicle fuel supply tank, and consumed from the same tank in which it was imported.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1502.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-403. Industrial chemicals and solvents exemption.
Industrial chemicals or solvents classified as volatile substances shall not be subject to the taxes or fees imposed in part 2 of this chapter when these industrial chemicals or solvents are neither intended for use nor used as fuels.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1503.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-404. Export exemption.
There shall be exempt from nineteen-twentieths (19/20) of the special privilege tax imposed by § 67-3-203, and from all other taxes and fees imposed in part 2 of this chapter, the following:
- All bulk exports of petroleum products; and
- All exports of petroleum products within the vehicle fuel supply tanks of locomotives and airplanes.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1504.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-405. Suppliers export exemption.
There shall be exempt from the taxes and fees imposed in part 2 of this chapter, with the exception of the export tax imposed by § 67-3-205, taxable petroleum products:
- Exported by a supplier; or
-
Sold by a supplier to a person, who is licensed in this state, for immediate export to a state for which the destination state motor fuel tax has been paid to the supplier;
provided, that the supplier shall be licensed to remit tax to such destination state, and that the supplier shall maintain for inspection by the department satisfactory proof of export in the form of a terminal-issued, destination state shipping paper.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1505.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-406. Refund on exports by licensed exporter.
A licensed exporter shall be entitled to a refund of the taxes and fees previously paid on taxable petroleum products pursuant to part 2 of this chapter, with the exception of the export tax imposed by § 67-3-205, in the following instances:
- Where petroleum products were placed into storage in this state and were subsequently exported by transport truck or tank wagon by or on behalf of such licensed exporter; or
- Where petroleum products were exported by transport truck or tank wagon by or on behalf of such exporter in a diversion across state boundaries properly reported in conformity with § 67-3-806.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1506.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-407. Refund on exports by unlicensed exporter.
An unlicensed exporter shall be entitled to a refund of the taxes and fees previously paid pursuant to part 2 of this chapter, with the exception of the export tax imposed by § 67-3-205, on taxable petroleum products that were acquired by the unlicensed exporter and subsequently exported by transport truck or tank wagon by or on behalf of such exporter.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1507.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-408. Kerosene exemption.
There shall be exempt from the tax imposed in § 67-3-202 all kerosene sold or used in the state for purposes other than in any motor vehicle or equipment operated on the public highways of this state. This includes K-1 kerosene sold at retail through dispensers that have been designed and constructed to prevent delivery directly from the dispenser into a vehicle fuel supply tank, and K-1 kerosene sold at retail through non-barricaded dispensers in quantities of not more than twenty-one gallons (21 gals.) for use other than for highway purposes, under such rules as the department shall reasonably require. Quantities sold at retail stations, other than stated above, are subject to the diesel tax imposed in § 67-3-202.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1508.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-409. Aviation fuel exemption.
There shall be exempt from the taxes imposed in §§ 67-3-201 and 67-3-202 taxable motor fuel sold for use in aircraft; provided, that the buyer must be registered to purchase jet fuel subject to federal taxes applicable to jet fuel, and the vendor must obtain certification of such fact satisfactory to the department prior to making the sale.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1509.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-410. Refinery exemptions.
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None of the laws relating to the inspection of petroleum products as set forth in §§ 60-3-103 — 60-3-114, or the taxes and fees imposed by this chapter upon petroleum products, shall be applicable or collectible in the following cases:
- Upon any of the products while being transported from, inside or outside the state to a petroleum refinery inside the state, for the purpose of there being refined, further refined or processed;
- Upon any of the products while being refined, further refined, processed or stored at a petroleum refinery inside this state. Refinery exemptions are applicable to all petroleum activities, exchanges and transactions that are customarily performed by or engaged in by a refinery, but specifically excluded are exemptions applicable to the storage of petroleum or petroleum products for others, whether by lease or otherwise;
- Upon any of the products while being transported from a refinery inside this state to another petroleum refinery inside this state; and
- Upon any of the products while being transported from a petroleum refinery inside this state to a place outside this state, excluding commercial marine vessels, even though delivery is made in midstream of waterways constituting geographical boundaries of this state. For any product transported from refinery storage via marine vessel as an export, but in fact coming to rest at a nonexempt destination in this state, for which the taxes and fees are not reported and paid by a bonded importer, the refinery shall bear responsibility to this state for the payment of taxes, fees, and applicable interest and penalty.
- All refinery exemptions granted to petroleum refineries shall apply to refiners or manufacturers of fuel alcohol who have a refinery or a manufacturing facility in Tennessee.
- Where gasoline is exchanged or sold within the bulk transfer/terminal system between refiners who hold a bonded importer's license, the first transferee, after the gasoline is imported into this state, shall be primarily liable for the taxes and fees that have accrued pursuant to §§ 67-3-201, 67-3-203 and 67-3-204. With respect to a refinery, gasoline may be exchanged or sold tax free by a refinery within refinery-held storage; however, the transferee shall be liable for taxes and fees on gasoline that crosses the terminal rack; provided, that the refinery is responsible for the taxes and fees on gasoline that crosses the terminal rack that is not otherwise exchanged or sold within the refinery.
- For the purposes of the exemptions provided by this section, an entity, other than a retailer, affiliated with an entity which owns a refinery located in this state, shall be treated as the refinery and shall not be considered as the transferee. As used in this subsection (d), entities are affiliated with one another, if either, directly or indirectly wholly owns the other, or if the entities are directly or indirectly, wholly owned by a common parent.
Acts 1997, ch. 316, § 1; 1999, ch. 419, § 1; T.C.A., § 67-3-1510.
Compiler's Notes. Acts 1999, ch. 419, § 2 provided that the act shall be in effect for all transactions occurring on or after July 1, 1999, the public welfare requiring it; provided, that a refund shall not be available for taxes paid in respect of transactions to which such exemption is extended by this act occurring on or before June 30, 1999. If the provisions of the preceding sentence are declared invalid by a final judicial decision, subsection (d) shall be void as of the effective date of the court's order.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-411. Agricultural use refunds — Gasoline.
- Any person who shall use any taxable gasoline for agricultural purposes as defined in part 1 of this chapter on which the gasoline tax has been paid shall be entitled to a refund of the gasoline tax except one cent (1¢) per gallon; but there shall be no refund of the special privilege tax on gasoline imposed under § 67-3-203 or the environmental assurance fee on gasoline imposed under § 67-3-204.
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No refund under this section shall be authorized, unless:
- A claim is submitted containing a declaration that it is made under the penalty of perjury and also containing all of the information that the commissioner may require, and filed with the commissioner either semiannually or annually, on or before April 15 and October 15 following the end of each semiannual period ending on the immediately preceding December 31 and June 30 respectively, or on April 15 of the following year if filed annually;
- Each purchase made is of fifty gallons (50 gals.) or more; and
- The amount of the refund payable is twenty-five dollars ($25.00) or more for any one (1) claim period.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1511.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-412. Refunds — Exports.
- For petroleum products exported to points outside the state for resale, to obtain a refund, a claim for refund must be filed with the department within three (3) years from December 31 of the year in which the export activity occurred. The claimant is entitled to recover all taxes and fees paid as levied in part 2 of this chapter, excepting the export tax imposed by § 67-3-205. Bonded importers and suppliers, instead of filing a claim, may seek credit on the distributor report; provided, that the credit is supported by automated, terminal-issued shipping papers establishing intent to export. The bonded importer or supplier may take credit for a sale to an export customer where that customer is charged the destination state's tax; provided, that the customer is a licensed exporter in Tennessee.
- For diesel fuel that is exported to points outside the state, in vehicle fuel supply tanks of diesel locomotives or marine tows, where such is consumed in such locomotives or marine tows outside the state, the user may apply for refund of the special privilege tax imposed by § 67-3-203, less the export tax imposed by § 67-3-205, and may apply for refund of the environmental assurance fee, imposed by § 67-3-204, by submitting a claim for refund within ninety (90) days of the last day of the month in which the export was made. If a credit is being claimed for such products exported for consumption, it shall be claimed on a report filed within the same ninety-day period.
- For aviation fuels that are exported to points outside the state, including aviation gasoline and jet fuel that is stored in the state, but is carried outside the state in the vehicle fuel supply tanks of airplanes owned or leased by commercial air carriers, for consumption in such airplanes outside the state, such user may apply for refund of the special privilege tax less the export tax, and may apply for refund of the environmental assurance fee, using the same procedure and time requirements as set forth in subsection (b).
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1512.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-413. Refunds — Governmental — Refund claim filing by vendor.
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- A licensed wholesaler who has paid any taxes and fees due under §§ 67-3-201 — 67-3-204, may apply for a refund of taxes or fees paid on any petroleum products subsequently sold free of tax to a governmental agency holding an exemption permit issued by the commissioner. A licensed supplier or importer may claim a credit on the distributor report for any taxes or fees paid on any petroleum products sold free of tax to a governmental agency, or may in the alternative file for a refund.
- For sales of petroleum products made to governmental agencies from retail stations, the licensed wholesaler, supplier or importer may apply for refund or claim a credit on behalf of a retail vendor.
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- An application for refund or credit shall be filed with the commissioner, on forms prescribed by the commissioner, on or before the last day of the second month following the month in which the exempt sales were made. All sales in any month on which a refund is due shall be included in one (1) application for refund.
- After January 1 and no later than June 30 of any year, a licensed wholesaler, importer or supplier may apply for refund under subsection (a) for any exempt sales made during the previous calendar year on which a claim for refund has not previously been made. Only one (1) such omnibus claim shall be permitted. Such an omnibus claim is designed to allow claimants to secure refunds on items previously omitted on claims filed under subdivision (b)(1). No extension of time to file this omnibus claim shall be allowed.
- Applications for refund or credit shall contain all information as required by the commissioner. In addition, all applications must be accompanied by copies of all invoices for sales on which the licensee is applying for refund or claiming a credit. The invoices submitted with any such application shall each contain the exemption permit number for the governmental agency to which the sales were made. The commissioner may allow computer documentation instead of invoices.
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- Any application for refund submitted to the department that does not comply with any of the provisions set out in subsections (b) and (c) shall not be approved and a refund shall not be granted.
- Licensed wholesalers, importers or suppliers shall not be entitled to a refund on sales made to any person who does not hold a valid governmental agency exemption permit at the time of such sale.
- Applications for refund made pursuant to this section shall not be subject to § 67-1-707.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1513; Acts 2016, ch. 646, § 1.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Amendments. The 2016 amendment substituted “June 30” for “March 31” at the beginning of the first sentence of (b)(2).
Effective Dates. Acts 2016, ch. 646, § 4. March 23, 2016.
67-3-414. Refunds — Auxiliary engines.
- Any person using gasoline or undyed diesel fuel for truck refrigeration or cement mixing, where the gasoline or undyed diesel fuel is delivered into a container or fuel tank that is equipped or designed to supply only the internal combustion engine used exclusively for truck refrigeration or cement mixing, and where tax has been paid, shall be entitled to a refund of the tax imposed under §§ 67-3-201 and 67-3-202 except one cent (1¢) per gallon.
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Any person using fuel for the generation of power to operate a mobile self-propelled rock drill; a motor vehicle and an auxiliary unit used for concrete mixing; for boom, pneumatic, or pump unloading; on which the gasoline tax or diesel tax has been paid, or on which the tax is payable by a limited user, shall be entitled to a refund, or a reduction of taxes imposed according to the following formula:
- For concrete mixers and concrete pumpers, forty percent (40%) of the tax;
- For pneumatic unloaders, ten percent (10%) of the tax;
- For boom unloaders, ten percent (10%) of the tax;
- For pump unloaders, the tax on two and one-half gallons (2.5 gals.) for each unloading where the pump is actually used; and
- For mobile self-propelled rock drills, ninety percent (90%) of the tax.
- No refund shall be authorized unless an application, executed under penalty of perjury and containing such information as the commissioner may require, is filed with the commissioner. No refund shall be authorized unless the amount due in refund is fifty dollars ($50.00) or more in a semiannual period. Refund applications must be filed semiannually and within ninety (90) days following the end of June and December of the semiannual period in which the fuel was used.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1514.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-415. Refunds — Contaminated fuels.
Where taxable diesel fuel has been accidentally contaminated by dye, the owner of the product may file a claim for refund for the diesel tax paid on the undyed fuel.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1515.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-416. Refunds — Casualty losses.
A refund of the tax imposed by §§ 67-3-201 and 67-3-202 covering loss of gallonage due to fire, flood, storm, theft or other causes over which a vendor has no control will be made if the loss is reported to the commissioner within three (3) business days of the date of the loss, except that losses not exceeding one thousand gallons (1,000 gals.) need not be reported. With respect to all losses, the vendor shall file with the commissioner a written claim and statement explaining the occurrence of the loss within sixty (60) days of the time of loss. Negligence or any unlawful act, such as overloading a transport vehicle, excessive speed or other like act by a vendor or such vendor's agent, that is contributory to a loss, shall invalidate the claim.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1516.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-417. Refunds — Fabricating user.
The special privilege tax imposed by § 67-3-203 shall be refundable to the user of such petroleum products as are shown to be used directly in fabricating or processing tangible personal property for resale. There is expressly excluded from this section any use for the purpose of space heating, illumination, or the operation of internal combustion engines. The refund may be claimed on a monthly basis before the expiration of thirty (30) days following the month for which such refund is to be made.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1517.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-418. Refunds — End user — Off highway.
When an end user uses undyed diesel fuel as heating oil or for other non-highway purposes, the end user may apply for a refund of the diesel tax imposed by § 67-3-202. The end user shall not be entitled to a refund, if the end user is a commercial carrier who used the undyed diesel fuel to produce power for a means of transportation or if any other law precludes the end user from applying for a refund. The claim for refund for the diesel tax may be filed at the end of each calendar quarter but no later than one (1) year from the date of last purchase represented in the claim. The minimum amount of such claim is two hundred fifty dollars ($250). Supporting documentation shall be submitted with the claim as the commissioner may require. If the minimum is not met in one (1) quarter then it can be attached to and used in subsequent quarters, but not to exceed two (2) years.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1518; Acts 2014, ch. 908, § 2.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Amendments. The 2014 amendment rewrote the first sentence which read: “Where taxable undyed diesel fuel is used as heating oil or used for other non-highway purposes other than as expressly exempted under another provision, the end user may apply for refund of the diesel tax imposed by § 67-3-202.” and added the second sentence.
Effective Dates. Acts 2014, ch. 908, § 18. July 1, 2014.
67-3-419. Exemption for methanol sold for use in highway or nonhighway vehicles.
There shall be exempt from the taxes imposed in §§ 67-3-201 and 67-3-202 and by chapter 6 of this title methanol sold for use in highway or nonhighway vehicles that is not composed of or blended with gasoline, diesel fuel, or other fuels or petroleum products.
Acts 2018, ch. 924, § 1.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Former § 67-3-1519 (Acts 1997, ch. 316, § 1), concerning refunds, inventory, and special privilege tax and environmental assurance fees, was repealed by it own provisions, effective December 31, 1998.
Effective Dates. Acts 2018, ch. 924, § 2. May 15, 2018.
67-3-420. Refunds — Wholesaler sales to limited users and prepaid users.
- A licensed wholesaler who sells tax-paid motor fuel to a limited user or a prepaid user as defined in § 67-3-1302 shall be entitled to a refund of the tax paid pursuant to § 67-3-202. Any claim for refund filed with the commissioner must be supported by documentation that sets forth the name, address, account number and federal employer identification number or social security number of the customer, together with the invoice or delivery ticket number and number of gallons sold. The claimant may file one (1) claim each month and otherwise be subject to the statute of limitations provided in § 67-3-421.
- The licensed wholesaler's entitlement to a refund is not affected by the status of the customer's limited user permit or prepaid user authorization, unless the wholesaler knows, has been notified by the department, or in the exercise of reasonable care should know, that the customer is not entitled to use the permit or authorization with respect to a particular purchase of fuel.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1520.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-421. Refund claim procedures generally.
- To claim a refund under this part, a person must present to the department a statement that contains a written verification that the claim is made under penalty of perjury and lists the total amount of taxable petroleum products subject to refund. The claim must be filed not more than three (3) years after the date the taxable petroleum products were purchased by the claimant; however, this statute of limitations shall not prevail if a statute of limitations already exists for a particular refund provision. The statement must show that payment for the purchase has been made and the amount of taxes and fees paid on the purchase have been remitted.
- The commissioner has the authority to require the claimant to provide adequate documentation to support the claim. The department may make any investigations it considers necessary before refunding the taxes or fees to a person and in any case may investigate a refund after the refund has been issued and within the time frame for making adjustments to tax under this title.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1521.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-422. Refunds — Manufacturers of pre-mixed engine fuel.
- Any manufacturer who shall use any taxable gasoline, on which the gasoline tax has been paid, in the manufacture of a pre-mixed engine fuel containing gasoline and oil, sold in containers of one gallon (1 gal.) or less and produced for use in two-cycle engines and not for use in the propulsion of an aircraft, vessel or other vehicle, shall be entitled to a refund of gasoline tax paid under § 67-3-201 except one cent (1¢) per gallon; but there shall be no refund of the special privilege tax on gasoline imposed under § 67-3-203 or the environmental assurance fee on gasoline imposed under § 67-3-204.
- The claim for refund filed pursuant to this section may be filed at the end of each calendar quarter but no later than one (1) year from the date of the last purchase represented in the claim. The minimum amount of such claim is two hundred fifty dollars ($250). Supporting documentation shall be submitted with the claim as the commissioner may require. If the minimum is not met in one (1) quarter, then the claim amount can be carried over to and used in subsequent quarters, but not for longer than a total period of two (2) years.
Acts 1998, ch. 694, § 1; T.C.A., § 67-3-1522.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-423. [Repealed.]
Acts 2007, ch. 580, § 2; repealed by Acts 2007, ch. 580, § 3, effective July 1, 2013.
Compiler's Notes. Former § 67-3-423 concerned the biodiesel manufacturers' incentive fund.
Part 5
Payment of Tax
67-3-501. Payment by permissive supplier.
Except as otherwise provided in this part, the taxes imposed by §§ 67-3-201 — 67-3-203, and the fee imposed by § 67-3-204, on taxable petroleum products measured by gallons removed from the terminal rack, shall be paid by the licensed permissive supplier, if the supplier has entered into a blanket pre-collection election as provided in § 67-3-503, or if the supplier has entered into an agreement with a customer whereby Tennessee petroleum products taxes and fees are levied on the sale of fuel to that customer. The taxes and fees are due on or before the twentieth day of the month following the month of removal, unless such day falls on a weekend or state or banking holiday, in which case the taxes and fees are due the next succeeding business day.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1601.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Collateral References. Taxation 371
67-3-502. Payment by bonded importer.
Except as otherwise provided in this part, the taxes and fees imposed by part 2 of this chapter on taxable petroleum products measured by gallons imported from another state shall be paid by the licensed bonded importer who has imported such products. The taxes and fees shall be paid on or before the twentieth day of the month following the month of import, unless such day falls on a weekend or state or banking holiday, in which case the taxes and fees are due the next succeeding business day. However, if the supplier has made a blanket election to pre-collect tax under § 67-3-503, the supplier is jointly and severally liable with the bonded importer for the taxes and fees, and shall remit to the department on behalf of the bonded importer under the same terms as a supplier payment under § 67-3-504.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1602.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-503. Blanket pre-collection election for imports.
- A licensed supplier or licensed permissive supplier may make a blanket election with the department to treat all removals of petroleum products from its out-of-state terminals, with a destination in this state shown on the terminal issued shipping paper, as if such removals of gasoline were imported and came to rest in Tennessee, and removals of petroleum products other than gasoline were removed across the terminal rack in this state, for taxation purposes under part 2 of this chapter.
- This notice of election shall be made on forms provided by the department.
- The department shall release a list of electing suppliers under subsection (b) upon request by any person. Disclosure of this information by the department shall not constitute a violation of any confidentiality requirement imposed by chapter 1, part 17 of this title.
- The absence of an election by a supplier under this section shall not relieve the supplier of responsibility for remitting the taxes and fees imposed by this chapter. However, the responsibility of the supplier shall be limited to the supplier's own imports into this state.
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Any supplier who makes the election provided by this section shall pre-collect the taxes and fees imposed by this chapter on all removals from a qualified out-of-state terminal on its account without regard to:
- The license status of the person acquiring the petroleum product from such supplier;
- The point or terms of sale; or
- The character of delivery.
- Each supplier who elects to pre-collect taxes and fees under this section agrees to waive any defense that the state lacks jurisdiction to require collection on all out-of-state sales by such person, where such person had knowledge that such shipments were destined for this state. Such supplier also agrees to waive any defense to the state's assertion of its general police powers to regulate the movement of petroleum products.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1603.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Cross-References. Confidentiality of public records, § 10-7-504.
67-3-504. Payment by supplier.
- The taxes and fees on petroleum products imposed by §§ 67-3-202 — 67-3-205 shall be collected and remitted to the state by the supplier, as agent for the wholesaler who removes taxable gallons from the terminal racks. The supplier responsible for the tax payment and the wholesaler who removes the taxable fuel from the rack shall be identified in the terminal operator records.
- The supplier who has out-of-state terminals and who has entered into a blanket pre-collection election under § 67-3-503 shall also remit gasoline tax imposed by § 67-3-201 on products originating at out-of-state terminals destined for Tennessee.
- All taxes and fees accrued by the supplier with respect to gallons removed on such supplier's account during a calendar month shall be due and payable on or before the twentieth day of the month following the month of activity, unless such day falls on a weekend or state or banking holiday, in which case the taxes and fees are due the next succeeding business day.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1604.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-505. Terminal operator liability.
-
The terminal operator of a terminal in this state is jointly and severally liable for the taxes and fees imposed under §§ 67-3-202 — 67-3-204, and shall remit payment to the department upon discovery of either of the following conditions:
-
The supplier and/or bonded importer with respect to the taxable petroleum products is a person other than the terminal operator and is not licensed; provided, that the terminal operator shall be relieved of liability if the terminal operator establishes all of the following:
- A valid terminal operator's license issued for the facility from which the petroleum product is withdrawn;
- An unexpired notification certificate from the supplier as required by the department or the internal revenue service; and
- No reason to believe that any information on the certificate is false; or
- In connection with the removal of diesel fuel that is not dyed and marked in accordance with internal revenue service requirements, the terminal operator provides any person with a bill of lading, shipping paper, or similar document indicating that the diesel fuel is dyed and marked in accordance with internal revenue service requirements.
-
The supplier and/or bonded importer with respect to the taxable petroleum products is a person other than the terminal operator and is not licensed; provided, that the terminal operator shall be relieved of liability if the terminal operator establishes all of the following:
- The terminal operator is jointly and severally liable for the taxes and fees imposed under §§ 67-3-202 — 67-3-204 that are not allocable to any licensed supplier, and shall remit the taxes and fees due with the annual report required under § 67-3-702(d); provided, that no taxes and fees shall be due if the terminal operator can establish by evidence acceptable to the commissioner that the gallons lost were diesel fuel dyed prior to receipt by that terminal operator. No collection allowance or deductions shall be allowed with respect to payment of these taxes. In the event the gallons lost or unaccounted for exceed five percent (5%) of the gallons removed from that terminal across the rack, a penalty of one hundred percent (100%) of the taxes and fees otherwise due shall be paid by the terminal operator with the taxes and fees due.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1605.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-506. Supplier to collect tax-deferred payment.
- Each licensed supplier and bonded importer who sells taxable petroleum products shall collect from the purchaser the taxes and fees imposed in part 2 of this chapter.
- At the election of a licensed wholesaler, the licensed supplier or bonded importer may not require payment of taxes and fees imposed in part 2 of this chapter from such wholesaler earlier than the second preceding day prior to the date on which the taxes and fees become finally due and payable to the state. This election shall be further subject to a condition that the supplier or importer may require the wholesaler to make remittances of all amounts of taxes and fees due by electronic funds transfer. The wholesaler's election under this subsection (b) may be terminated by the supplier or importer, if the wholesaler does not make timely payments to the supplier or importer as required by this subsection (b).
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1606.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-507. Bad debt allowance.
- A licensed supplier or bonded importer is entitled to a credit, against taxes payable under this part, for any tax or fee not paid to the supplier or importer by a licensed wholesaler, who has made a valid election under § 67-3-506(b) and whose election, at the time of the delivery of product giving rise to the unpaid tax or fee, had not been terminated by the supplier or importer, by operation of subsection (c), or by the commissioner under subsection (d). The credit must be claimed on the return within sixty (60) days following the failure of the wholesaler to make the required payment to the supplier or importer.
- Not later than fifteen (15) days after the earliest date on which the wholesaler that made the election provided for in § 67-3-506(b) was required to make the payment, the supplier or importer shall notify the department in writing of the default. The notice shall include the name of the defaulting wholesaler, the amount of the default, whether the supplier or importer has terminated the wholesaler's election, and the date of any termination.
- If the wholesaler does not make payment to the supplier or importer within twenty (20) days of the original due date set out in § 67-3-506(b), the wholesaler's election, with respect to the supplier or importer suffering the default, is terminated as of the following day.
- Upon notification from an importer or supplier to the department that a wholesaler has defaulted in payment, the commissioner may terminate the wholesaler's election with respect to all importers and suppliers and notify any and all importers and suppliers of such action.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1607.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-508. Collection administration allowance.
To the extent a supplier, a permissive supplier, or a bonded importer timely remits taxes in accordance with this chapter, such person shall be allowed to retain one-tenth of one percent (0.1%) of the taxes imposed by §§ 67-3-201 and 67-3-202 to cover the costs of administration imposed by this chapter, including reporting, audit compliance, dye injection, and shipping paper preparation.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1608.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-509. Tare allowance.
- A supplier, permissive supplier or bonded importer is entitled to an allowance covering loss of gallonage by evaporation, handling, unloading, shrinkage, and losses resulting from unknown causes, and as reimbursement for expenses incurred on behalf of the state in furnishing a bond, maintaining records, collecting taxes, and preparing reports and remittances in compliance with this part.
- The allowance shall be an amount equivalent to one and five thousand four hundred fifteen ten thousandths percent (1.5415%) of the amount of tax imposed by §§ 67-3-201 and 67-3-202 shown to be due on the monthly report filed with the commissioner. The allowance may be taken as a credit on the monthly report.
- There shall be submitted with the report, in support of the deduction, the certificate of the supplier or bonded importer that, with respect to the gallonage sold or distributed within this state, during the period covered by the report, there was paid or credited to each wholesaler to whom any part of the gallonage was sold or distributed, an amount equivalent to one and five thousand four hundred fifteen ten thousandths percent (1.5415%) of the taxes applicable to the gallonage; and to each retailer to whom any part of the gallonage was sold or distributed, an amount equivalent to one half of one percent (0.5%) of the taxes applicable to the gallonage. If a supplier has made a blanket election to pre-collect the tax under § 67-3-503 and remits the tax on behalf of a bonded importer, then the allowance shall be credited to the bonded importer. If it is determined that a supplier or bonded importer has not credited the proper allowance to another supplier or bonded importer or to the wholesaler or retailer, the tare allowance received by the supplier or importer shall be disallowed.
- Any wholesaler who receives the allowance from a supplier or importer shall credit to the retailer an amount equivalent to one half of one percent (0.5%) of the taxes applicable to the gallonage. If it is determined that a wholesaler has not credited to the retailer the proper allowance, the allowance received by the wholesaler will be disallowed.
- Any person required to pay the taxes shall preserve and make available for inspection by a representative of the department all invoices and credit memoranda reflecting payments or credits to purchasers of the amounts of the allowance provided by this section. These records shall be preserved for a period of not less than three (3) years from December 31 of the year in which issued.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1609.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-510. Backup payment by end user — Joint liability of ultimate vendor.
-
Backup taxes and fees equal to the taxes and fees imposed by part 2 of this chapter are imposed on the end user of taxable petroleum products, and shall be administered in accordance with regulations promulgated by the department. End users, including governmental agencies, the American Red Cross, bus operators, and any other person exempted from the full federal highway tax, unless such person is otherwise exempt under part 4 of this chapter, are liable for the taxes and fees upon the delivery into the fuel supply tank of a highway vehicle:
- Any diesel fuel that contains a dye;
- Any taxable petroleum products on which a claim for refund has been made; or
- Any petroleum products on which taxes and fees have not previously been imposed by this chapter.
- Where taxes and fees imposed by this chapter have not been paid, the wholesaler or end user of taxable petroleum products shall be jointly and severally liable for the backup taxes and fees imposed by subsection (a), if the wholesaler or user knows or has reason to know that the petroleum products are being or will be consumed in a nonexempt use.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1610.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-511. Payment of floorstock tax.
- The floorstock tax report required by § 67-3-304(d)(4) shall be accompanied by payment of the floorstock tax calculated in accordance with § 67-3-304(d) and (e) and payment made on or before the due date of that report. The floorstock tax imposed on inventory held outside of the bulk transfer/terminal system on January 1, 1998, reportable under § 67-3-304 shall be payable in two (2) equal annual installments. The first installment shall be due on or before the twenty-fifth day of the month following the month in which this part becomes effective, and the second installment is due on the same date of the following year.
- For any floorstock tax due following an increase in the tax rate on petroleum products, the floorstock tax imposed on inventory shall be payable within twenty-five (25) days of the end of the month in which the increase becomes effective.
- A supplier, bonded importer, importer, or wholesaler shall, for increases in the gasoline tax, remit tax, pursuant to subsection (a) or (b), based upon all inventory as provided in § 67-3-304(d) held in storage at the start of business on the effective date of the increase. All inventory held at retail stations and by end users shall be exempt from this requirement.
- A supplier, bonded importer, importer or wholesaler shall, for increases in the diesel tax, the special privilege tax or the environmental assurance fee, remit taxes and/or fees, pursuant to subsection (a) or (b), based upon all inventory as provided in § 67-3-304(d) held outside the bulk transport/terminal system at the start of business on the effective date of such increase. All inventory held at retail stations and by end users shall be exempt from this requirement.
- Regardless of any § 67-3-509 allowance already taken with respect to this inventory, an additional § 67-3-509 allowance may be taken.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1611.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-512. Payment of taxes and fees by fuel blenders.
Each person blending untaxed materials, including blendstocks and additives, with taxable petroleum products as to which taxes and fees have already been paid or accrued, shall remit the taxes and fees imposed by this chapter on the previously untaxed volumes. Should the blending process alter the specifications of the blended product according to American Society for Testing and Materials (ASTM) specifications, then applicable taxes and fees shall apply to the altered product.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1612.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-513. Tax on cross-border movements of petroleum products.
- Holders of an exporter's license shall pay or accrue the destination state's tax, if any, to their suppliers. In the event that a licensed exporter diverts taxable petroleum products removed from a terminal in this state from an intended destination outside this state, as shown on the terminal issued shipping papers, to a destination inside this state, such exporter, in addition to compliance with the notification provided for by § 67-3-806, shall notify and pay the taxes and fees imposed under part 2 of this chapter to the department upon the same terms and conditions as if the exporter were a bonded importer without deduction for the allowances provided by §§ 67-3-508 and 67-3-509.
- In the event that an exporter removes from a bulk plant in this state taxable petroleum products as to which the taxes and fees imposed by this chapter have previously been paid or accrued, such exporter may apply for and the state shall issue a refund of such taxes and fees, except the export tax, upon a showing of proof of export satisfactory to the department in conformity with § 67-3-802, net of the allowances provided by § 67-3-509.
- All licensed importers shall otherwise report and pay the taxes and fees, in the manner provided by § 67-3-502, on diversions into this state of imported product; provided, that no § 67-3-509 allowances shall be deducted with respect to diverted shipments.
- In the event of a legal diversion from a destination in this state to another state, § 67-3-804 shall apply, and an unlicensed exporter diverting the product shall first pay taxes and fees on the fuel before exporting such fuel, and may apply for a refund from this state for the taxes and fees paid, less the § 67-3-509 allowance.
- In the event that a state involved in a cross-border shipment has entered into a multi-state compact with this state, the diverter shall pay or seek refund only upon the difference in state taxes with notice to both states upon proof shown of payment to the actual destination state. The department shall establish procedures for making this adjustment and prepare a list of those states that meet these criteria.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1613.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-514. Inclusion of taxes and fees in sales price.
The taxes and fees imposed by this chapter on petroleum products shall be included in the sales price, for the purpose of determining sales price under the Retailers' Sales Tax Act, compiled in chapter 6 of this title, for calculating any applicable sales or use tax, even though the taxes and fees may be separately stated by the vendor.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1614.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-515. Payment by electronic funds transfer.
- The commissioner may require the taxpayer to make payments as provided in this part by means of electronic funds transfer.
- However, anything to the contrary notwithstanding, if the taxpayer reports by electronic data interchange pursuant to § 67-3-706, payment shall be made by means of electronic funds transfer in accordance with § 67-1-703, regardless of the amount of tax owed. Payment shall be by Automated Clearing House Debit (ACH debit) or Automated Clearing House Credit (ACH credit) or by any other means established by the commissioner.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1615.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Part 6
Bonding and Licenses
67-3-601. Supplier's license — Permissive supplier's license.
- A person engaged in business in this state as a supplier as defined in part 1 of this chapter shall first obtain a supplier's license.
- Any person who desires to collect the taxes and fees imposed by this chapter and who meets the definition of a permissive supplier may obtain a permissive supplier's license. Application for or possession of a permissive supplier's license shall not in itself subject the applicant or licensee to the jurisdiction of this state for any purpose other than administration and enforcement of this chapter.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1701.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Collateral References. Taxation 371
67-3-602. Blender's license.
Any person engaged in business in this state as a blender shall first obtain a blender's license.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1702.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-603. Terminal operator's license.
Any person engaged in business in this state as a terminal operator shall first obtain a terminal operator's license for each terminal site.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1703.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-604. Exporter's license.
Persons, other than licensed suppliers or licensed bonded importers, who export petroleum products to another state shall either pay Tennessee petroleum products taxes and fees to their suppliers or obtain a Tennessee exporter's license. Persons who hold a supplier's license or a bonded importer's license shall have the same privileges and responsibilities as those holding an exporter's license.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1704.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-605. Transporter's license.
Any person who is not licensed as a supplier, exporter or importer shall obtain a transporter's license before transporting petroleum products, by whatever manner from a point outside this state to a point inside this state, from a point inside this state to a point outside this state, or from a refinery in this state, if the person is engaged for hire.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1705.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-606. Importer's licenses — Bonded importer's license — Restricted importer's license.
- A person importing taxable petroleum products into this state from outside this state, by transport truck, pipeline, barge or other conveyance, shall first obtain a bonded importer's license or a restricted importer's license, but not both.
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Applicants for a restricted importer's license must meet the following conditions:
- The taxable petroleum products imported must all be the subject of a tax pre-collection agreement with a supplier as provided in § 67-3-501, or a tax pre-collection election as provided in § 67-3-503; and
- The applicant must declare the state or states in which licensed for motor fuel tax purposes and from which the applicant desires to import, and shall declare the terminal source and the supplier. A restricted importer's license shall be limited to petroleum products imported from a state listed on the license application.
- The department shall determine that a particular state has adopted terminal reporting requirements that are adequate to facilitate information exchange on cross-border movements of petroleum products prior to granting restricted importer's licenses to applicants for importation of taxable petroleum products from that state.
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A person desiring to import taxable petroleum products from another state, and who has not obtained a restricted importer's license and has not entered into an agreement to prepay this state's petroleum products taxes and fees to the supplier or permissive supplier with respect to such imports shall:
- Obtain a valid bonded importer's license subject to the bonding requirements of this chapter; and
- Comply with the payment requirements under § 67-3-502.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1706.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-607. Wholesaler's license.
Any person engaged in business in this state as a wholesaler as defined in part 1 of this chapter, who does not hold a license as a supplier or bonded importer, shall first obtain a wholesaler's license. A person who acquires petroleum products from a supplier, importer or from another wholesaler, for the person's own account, may obtain a wholesaler's license; and such person thereby assumes the rights and responsibilities of wholesalers under this chapter.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1707.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-608. License application — Form — Investigation.
- Each application for a license under this part shall be made upon a form prepared and furnished by the department. It shall be subscribed to by the applicant and shall contain such information as the department may reasonably require for the administration of this chapter, including the applicant' s federal employer identification number and, with respect to the applicant for an exporter's license, a copy of the applicant's license to purchase or handle taxable motor fuel in the specified destination state or states for which the export license is to be issued.
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The department may investigate each applicant for a license under this chapter. No license shall be issued if the department determines that any one (1) of the following exists:
- The application is not filed in good faith;
- The applicant is not the real party in interest;
- Any prior license of the real party in interest has been revoked for cause;
- Information on the application has been falsified, is fraudulent, is incomplete or the applicant has in any material way misrepresented the true facts;
- With respect to an exporter's license, the applicant is not licensed in the intended specific state or states of destination;
- The applicant, or any of the applicant's agents, officers or employees, has a prior conviction for motor fuel tax evasion in any state, federal or foreign jurisdiction; or
- Other reasonable cause for non-issuance exists.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1708.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-609. Bond for payment of taxes required — Amount — Combination bonds — Exemptions.
- The application for a license under this part, or a permit under part 11 of this chapter, shall be accompanied by a bond, payable to the state of Tennessee, in the penal amount determined under subsection (b). The bond shall be void if the applicant pays to the commissioner all taxes and fees on petroleum products under this chapter, together with interest and penalties on the taxes and fees that accrue against the applicant.
- The penal amount of the bond shall be not less than the greater of one thousand dollars ($1,000) or three (3) times the amount of the tax required to be paid monthly by the person. The monthly amount shall be determined by averaging the tax over a period of six (6) months immediately preceding the execution of the bond. If a person has not been in business for a period of six (6) months, the penal amount of the bond shall be determined on the average monthly tax during the actual time the person has been engaged in business or on the estimated average monthly tax; however, the bond shall not be less than fifty thousand dollars ($50,000). The commissioner may, at any time, require an increase in the penal amount of the bond, if the commissioner deems such increase necessary to safeguard the revenues of the state, but in no event shall the bond exceed the sum of one million dollars ($1,000,000).
- A person required to execute more than one (1) bond, whether required in order to become a licensee or to be eligible for an exemption or refund under part 4 of this chapter, may combine the total amount of each of the bonds into a single bond, which shall be conditioned upon payment of all petroleum products taxes, fees, penalties and interest that may accrue against the person. The penal amount of any combination bond shall be determined in the manner provided in subsection (b), but shall in no case be less than three thousand dollars ($3,000) nor more than two million dollars ($2,000,000).
- Licensees who seek exemption or refunds under part 4 of this chapter and who do not accrue liability as suppliers and/or importers, instead of the provisions set out in subsection (b), shall post a minimum bond of one thousand dollars ($1,000). The commissioner may, at any time, require additional bond if the commissioner deems such bond necessary to safeguard the revenues of the state. In no event shall the bond exceed the sum of one million dollars ($1,000,000).
- If the required maximum penal amount of the bond in subsection (b) exceeds one hundred thousand dollars ($100,000) or if the required maximum penal amount of the bond in subsection (c) exceeds two hundred thousand dollars ($200,000), the commissioner may agree to reduce the penal amount of a bond, if the commissioner determines that any potential tax liability is otherwise adequately secured or protected, or if the commissioner determines that the past good filing and payment record of the taxpayer indicates that lowering the penal amount of the bond would not result in a substantially increased risk of loss to the state. The required maximum penal amount of the bond in subsection (b) may not, however, be reduced to an amount less than one hundred thousand dollars ($100,000), and the required maximum penal amount of the bond in subsection (c) may not be reduced to an amount less than two hundred thousand dollars ($200,000).
- The bond may be a corporate surety bond or a personal surety bond; and, in either event, it shall be signed by the applicant as principal. If a corporate surety bond is executed, it shall be signed as surety by an authorized surety company licensed to do business in this state.
- Instead of a personal or corporate surety on such bond required in subsection (a), the commissioner may allow the applicant to secure such bond by depositing collateral in the form of a certificate of deposit, or equivalent to a certificate of deposit, as accepted and authorized by the banking laws of Tennessee, that has a face value equal to the amount of the bond. Such collateral may be deposited with any authorized state depository designated by the commissioner.
- An applicant may execute a bond with personal surety approved by the commissioner. The personal surety or sureties shall own real estate within the state, free and unencumbered, and with the assessed value equal to three (3) times the amount of the average monthly tax payment. The bond shall be registered in the register's office of the county in which the property is located, and the taxpayer shall be liable for all registration fees. The state shall have a lien against the property superior to all other liens attaching after the registration, which may be enforced by levy on the property of the taxpayer and the taxpayer's surety, and by sale of the property as now provided by law. A personal surety bond shall be executed on forms furnished by the commissioner and shall contain a sworn certificate of the county trustee showing the assessed valuation of the real estate and that all ad valorem taxes on it are paid. In the event the property is located within an incorporated town or city, the information shall also be furnished by sworn certificate of the proper municipal official. The bond shall also contain an abstract of title of the real estate described in the instrument, showing the exact status of title to the property for the preceding ten (10) years, and the abstract of title shall be signed and sworn to by the county register.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1709.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-610. Bond — Licensed wholesaler.
- No wholesaler tax deferral election under § 67-3-506 is valid unless and until the licensed wholesaler files with the department a surety bond, in a form acceptable to the department, in the amount of two hundred fifty percent (250%) of the greatest monthly taxes and fees paid by the wholesaler through all of its suppliers and importers during the immediately preceding twelve (12) months. If a wholesaler has been in business less than twelve (12) months, the amount of the bond shall be determined in reference to the average monthly tax liability for the time the wholesaler has been engaged in business. The penal amount of the bond under this section shall not be less than fifty thousand dollars ($50,000). The bond shall indemnify the department against credits allowed licensed suppliers and importers under § 67-3-507.
- If the required penal amount of the bond in subsection (a) exceeds two hundred thousand dollars ($200,000), the commissioner may agree to reduce the penal amount of a bond, if the commissioner determines that any potential tax liability is otherwise adequately secured or protected, or if the commissioner determines that the past good filing and payment record of the taxpayer indicate that lowering the penal amount of the bond would not result in a substantially increased risk of loss to the state. The required penal amount of the bond in subsection (a) may not, however, be reduced to an amount less than fifty thousand dollars ($50,000).
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1710.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-611. New bond.
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The commissioner may require a licensee to file a new bond with a satisfactory surety in the same form and amount, if:
- Liability upon the previous bond is discharged or reduced for any reason; or
- The commissioner determines that any surety on the previous bond becomes unsatisfactory.
- If the new bond is unsatisfactory, the commissioner shall cancel the license. If the new bond is satisfactorily furnished, the commissioner shall release, in writing, the surety on the previous bond from any liability accruing after the effective date of the new bond.
- If a licensee has a cash deposit with the commissioner and the deposit is reduced for any reason, the commissioner may require the licensee to make a new deposit equal to the amount of the reduction.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1711.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-612. Bond increase.
- If the commissioner determines that the amount of the existing bond or cash deposit is insufficient to ensure payment to the state of taxes, fees, penalty and interest for which the licensee is or may become liable, the licensee shall, upon written demand from the commissioner, file a new bond or increase the cash deposit. The commissioner shall allow the licensee at least fifteen (15) days to secure the increased bond or cash deposit.
- The new bond or cash deposit must meet the requirements set forth in this chapter.
- If the new bond or cash deposit required under this section is unsatisfactory, the commissioner shall cancel the licensee's certificate.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1712.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-613. Bond replacement.
- If, at any time after the execution of any surety bond, the surety or sureties on the bond become insolvent, the commissioner may require the execution of a new bond with good and solvent surety in the same manner and with the same penalty as the bond being replaced. The bond shall be subject to the approval of the commissioner.
- Any person executing a bond under this part may, at any time prior to default under any existing bond, apply to the commissioner for leave to cancel the existing bond and file a new bond with a new surety.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1713.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-614. Bond release.
- Sixty (60) days after making a written request for release to the commissioner, the surety of a bond furnished by a licensee is released from any liability to the state accruing on the bond after the sixty-day period. The release does not affect any liability accruing before the expiration of the sixty-day period.
- The commissioner shall promptly notify the licensee furnishing the bond that a release has been requested. Unless the licensee obtains a new bond that meets the requirements of this chapter and files with the commissioner the new bond within the sixty-day period, the commissioner shall cancel the license.
- Either the principal or surety may request the commissioner to cause an audit to be made of the books and records of the principal, and the audit shall be commenced within ninety (90) days from the date of the request. Upon completion of the audit, and if no additional taxes, fees, interest or penalty is shown to be due, or the additional sum is paid to the commissioner, then and thereafter, all liability of the surety on the bond shall cease and the surety shall be released. Any collateral deposited as security with the commissioner shall be released and returned to the person entitled to it. Any real estate that has been pledged as security for the bond shall be released by the commissioner by the execution of a release for that purpose, which may be recorded in the same manner as other releases are recorded. The commissioner may require the principal on the bond to furnish the form for a release.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1714.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-615. License transferability.
No license is transferable to another person. For purposes of this part, a transfer of a majority interest in a business association, other than a publicly held corporation, including a corporation, partnership, trust, joint venture, limited liability company and any other business association, shall be deemed a transfer of any license held by such business association, and shall render the license void. Any substantial change in ownership of a business association, other than a publicly held business association, shall be reported to the department under rules prescribed by the department.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1715.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-616. License display.
Each license shall be preserved and conspicuously displayed at the place of business for which it is issued. The department is authorized to waive this requirement for any class of licensee.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1716.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-617. License termination — Notice — Surrender.
Whenever any person licensed to do business under this chapter relocates, discontinues, sells, or transfers the business, the license shall be void, and the licensee shall immediately notify the department in writing of the relocation, discontinuance, sale, or transfer. The notice shall give the date of the event, and if a sale or transfer of the business, the name and address of the purchaser or transferee. The licensee shall be liable for all taxes, fees, interest, and penalties that accrue or may be owing, and any criminal liability for misuse of the license, that occurs prior to issuance of the notice.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1717.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-618. License denial and revocation.
- Before denying an application for a license, the commissioner shall grant the applicant a notice of the proposed denial, including the reasons for such decision. After having the opportunity to cure any defects in the application, an applicant who does not agree with the commissioner's decision may file with the commissioner at Nashville a written claim requesting a hearing. The hearing shall be held under the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. The request shall be made within ten (10) days following date of the commissioner's action.
- The commissioner may suspend or revoke a license for failure to comply with this chapter after at least ten (10) days, notice to the licensee and after a hearing, if requested by the licensee, pursuant to the Uniform Administrative Procedures Act.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1718.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-619. Retailer's license for dyed diesel fuel.
Any person engaged in business in this state as a retailer as defined in part 1 of this chapter, who does not hold a license as a wholesaler, and who is in, or intends to engage in, the business of selling dyed diesel fuel to end users, shall first obtain a retailer's license under this chapter.
Acts 2001, ch. 133, § 1; T.C.A., § 67-3-1719.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Cross-References. Requirements for sale of dyed diesel fuel at retail station, § 67-3-810.
Part 7
Reports
67-3-701. Distributor reports filed by suppliers and bonded importers.
- For the purpose of determining the amount of taxes and fees due on motor fuel imported, sold, refined, or used in the state, every licensed supplier, permissive supplier and bonded importer shall file with the department, on forms prescribed and furnished by the department, a monthly distributor report. The department may require the reporting of any information reasonably necessary to determine the amount of taxes and fees due.
- The reports required by this section shall be filed on or before the twentieth day of the month following the month of activity.
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The distributor report required by this section shall include the following information with respect to billed gallons of taxable petroleum products, with the amounts stated and indicated as net gallons, or stated and indicated as gross gallons if unable to provide net gallons:
- Removal of gallons of petroleum products by the reporting supplier or importer from the bulk transfer/terminal system in this state as to which the taxes and fees imposed by this chapter have been collected or accrued;
- Removal of gallons of diesel fuel or heating oil from terminals in this state by the reporting supplier, tax exempt, as to which dye has been added in accordance with this chapter;
- Removal of gallons of petroleum products from terminals in this state by the reporting supplier or importer, tax exempt, for export from this state by that person where the proper petroleum products tax for the destination state has been collected or accrued at the time of removal from the terminal, sorted by state of destination;
- Removal of gallons of petroleum products from terminals in this state by the reporting supplier or importer, tax exempt or for which credit can be taken on the return, for export, where the proper petroleum products tax for the respective destination state has been collected or accrued at the time of removal from the terminal, sorted by state of destination;
- Total removals in this state;
- Removal of gallons of petroleum products from a terminal in a state other than Tennessee by the reporting supplier or importer, for shipment into Tennessee; and
- Such other information which the department determines is reasonably required to determine the liability under this chapter.
- Every licensed supplier, bonded importer or permissive supplier shall separately identify, in a written statement to the department with the distributor report, any removal from the bulk transfer/terminal system in another state by that supplier or importer to a person, other than a licensed supplier, permissive supplier or bonded importer, of gallons of taxable petroleum products, which gallons are destined for this state, as shown by the terminal issued shipping paper, where the taxes and fees imposed by this chapter have not been collected or accrued by such supplier or importer upon such removal.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1801.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Collateral References. Taxation 371
67-3-702. In-state terminal operator reports.
- Each person operating a terminal in this state shall file monthly with the department a sworn statement of operations of each terminal within this state, including the information set out in subsection (b), on forms prescribed by the department. The department may require the reporting of any information it considers reasonably necessary in addition to that required under subsection (b).
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The monthly terminal report required by this section shall be filed on or before the last day of the month following the month of activity and shall include the following information for each terminal location in this state:
- Terminal code assigned by the internal revenue service;
- Total inventory at the terminal operated by the terminal operator;
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Schedules of receipts by shipment, including:
- Carrier name;
- Carrier federal employer identification number;
- Mode of transportation;
- Date received;
- Document number;
- Net gallons received; and
- Product type; and
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Schedules of removals by shipment, including:
- Carrier name;
- Carrier federal employer identification number;
- Mode of transportation;
- Destination state;
- Supplier responsible for reporting removal;
- Supplier federal employer identification number;
- Date removed from terminal;
- Document number;
- Net gallons; and
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Gross gallons;
provided, that in the event the internal revenue service provides a common system of assigning to carriers alpha-numeric codes instead of names, then this data will be required in lieu of carrier names.
- For purposes of reporting and determining tax liability under this chapter, every licensee shall maintain inventory records as required by the department.
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Each person operating a terminal in this state shall also file an annual report for each terminal within this state on forms provided by the department. The taxes and fees shall be paid and the report shall be filed for each calendar year on or before February 25 of the following year. The report shall include data as follows:
- The amount of monthly gains or losses, in net gallons;
- The total net gallons removed from the terminal in bulk during the calendar year;
- The total net gallons removed across the terminal rack during the calendar year;
- The amount of tax due calculated pursuant to §§ 67-3-302(b) and 67-3-303(c); and
- Such other information as the department considers reasonably necessary to determine the tax liability of the terminal operator under this chapter.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1802.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Collateral References. Gasoline and motor fuel taxes 371.1293-1297.
Accounting, returns, and reports 371.1313.
67-3-703. Exporter reports.
- A person licensed as an exporter shall file monthly reports with the department on forms prescribed and furnished by the department concerning the amount of taxable petroleum products exported from this state. The report shall be filed on or before the twentieth day of the month following the month of activity.
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The report shall contain the following information:
- Each and every shipment of taxable petroleum products acquired free of all states' petroleum products taxes, except the export tax imposed by § 67-3-205, at a terminal in this state for direct delivery outside of this state by the exporter;
- Each and every shipment of taxable petroleum products acquired free of this state's tax and fee at a terminal in this state for direct delivery outside of this state but as to which the destination state's petroleum products tax was paid or accrued to the vendor at the time of removal from the terminal;
- The gallons delivered to taxing jurisdictions outside this state from bulk plant storage, and the means of transport;
- The name and federal employer identification number of the person receiving the exported taxable petroleum products from the exporter;
- The date of each shipment;
- The carrier name, or alpha code, and carrier federal employer identification number; and
- A list of diverted shipments and payments of taxes and fees.
- The department may in addition require the reporting of any other information it considers reasonably necessary to the enforcement of this chapter.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1803.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-704. Transporter reports.
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A person licensed as a transporter in this state shall file monthly reports with the department, on forms prescribed and furnished by the department, reporting the amount of taxable petroleum products transported within or across the borders of this state; provided, that transport truck operations exclusively within the state are not reportable except when transport operations originate at a refinery in this state. The report shall be filed within twenty-five (25) days after the end of the month in which delivery was made. The information shall include the following:
- The quantity imported by the carrier for delivery in this state or transported from a Tennessee refinery by the carrier for delivery in this state;
- The name and address of the supplier;
- The name and address of the customer receiving delivery;
- The date and the point of delivery;
- The description of the product delivered; and
- Any other information that may be required by the commissioner for the proper administration of this chapter.
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- In case of delivery by barge, there shall be furnished, in addition to the information in subsection (a), the name and number of the barge, and the name and port of the towboat delivering the barge.
- In the case of delivery by tank wagon, or other motor vehicle, there shall be furnished, in addition to the information in subsection (a), the vehicle's license number.
- In case of delivery by tank car, there shall be furnished, in addition to the information in subsection (a), the car number and initials, and the capacity of the car.
- A carrier delivering petroleum products or substitutes for petroleum products to any person required to have a license under part 6 of this chapter who is known by the carrier not to have such license, shall immediately notify the department by facsimile of the delivery, if facsimile service is reasonably available; but if not, by the next quickest means available. The department shall furnish to the carriers a list of all persons holding licenses and shall supplement and amend the list periodically as licenses are issued or revoked.
- If a transporter fails to make the reports required by this section, the commissioner may assess a civil penalty of one thousand dollars ($1,000) for each violation.
- This section shall cease to be effective if the commissioner determines that substantially similar data is available from federal government sources, including a federal terminal report.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1804.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-705. Blender's report.
A person licensed as a blender shall file a monthly report with the department, on forms prescribed and furnished by the department, reporting the amount of any untaxed petroleum products, blend stocks, or additives blended in this state, and paying all applicable taxes and fees levied under this chapter which have not been previously paid. The report shall be filed on or before the twentieth day of the month following the month of activity.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1805.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-706. Reports by electronic data interchange.
- The commissioner may require those responsible for filing reports under this part to file such reports by means of electronic data interchange. All payments accompanying these reports shall be remitted by means of electronic funds transfer as required by § 67-3-515.
- In addition to any other penalty provided by law, the commissioner may assess on any person required to file reports by means of electronic data interchange a penalty, not to exceed five hundred dollars ($500), for each instance of reporting by any other means.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1806; Acts 2012, ch. 657, § 4.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Part 8
Enforcement Provisions
67-3-801. Destination state shipping paper to be issued.
- A person operating a refinery, terminal or bulk plant facility in this state shall prepare an automated, machine-generated, shipping paper, and provide it to the driver of every transport truck receiving petroleum products into the vehicle storage tank; provided, that where a bulk plant is not equipped to provide a machine-generated paper, it shall manually prepare the shipping paper required by this section. The department may by regulation require shipping papers to meet tamper-resistant standards, and every manually prepared shipping paper shall contain a stamp indicating that the paper was prepared at the facility at which it was issued.
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Every shipping paper shall set out on its face:
- Identification by address of the terminal or bulk plant from which the petroleum products were removed;
- The date the petroleum products were removed;
- The type and amount of petroleum products removed, actual gallons and net gallons;
- The state of destination as represented to the terminal operator by the transporter, the shipper or the shipper's agent;
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A notation:
- With respect to diesel fuel acquired under claim of exempt use, indicating the fuel is “DYED DIESEL FUEL, NON-TAXABLE USE ONLY, PENALTY FOR TAXABLE USE” for the load or the appropriate portion of the load; or
- With respect to any other taxable petroleum products, indicating: “[supplier name] is responsible for [state name] motor fuel tax,” or any other notation acceptable to the department, that otherwise indicates that the diesel tax imposed by this chapter, or any petroleum products taxes imposed by the destination state other than Tennessee, have been paid to the supplier with respect to the entire load or the appropriate portion of the load; and
- Any other information reasonably required by the department for the enforcement of this chapter.
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Unless the supplier has first directed the terminal or refinery operator to make the statement on the supplier's behalf, no terminal or refinery operator shall imprint any statement on a shipping paper relating to petroleum products to be delivered to this state, indicating:
- Any supplier's liability for payment of the taxes and fees imposed by this chapter; or
- The tax-paid or tax-collected status of any petroleum products.
- A person operating a terminal or refinery, or operating a bulk plant equipped to provide machine-generated shipping papers, may manually prepare shipping papers as a result of extraordinary, unforeseen circumstances, that temporarily interfere with the operator's ability to issue automated, machine-generated, shipping papers; provided, that such operator shall, prior to manually preparing such papers, provide facsimile notice to the department, and the operator's employees shall add to such manually prepared papers, prior to removal of each affected transport load from the facility, a stamp indicating that the document was prepared at the facility. If the interruption has not been cured within twenty-four (24) hours, additional notice to the department shall be made.
- A person operating a refinery, terminal or bulk plant may load petroleum products, a portion of which is destined for sale or use in this state and a portion of which is destined for sale or use in another state or states. However, such split loads shall be documented by the operator by issuing shipping papers designating the state of destination for each portion of the product.
- A person operating a refinery, terminal or bulk plant shall post a conspicuous notice located near the point of receipt of shipping papers by transport truck operators, which notice shall describe in clear and concise terms the duties of the transport operator and retail dealer under §§ 67-3-802 — 67-3-805; provided, that the department may by rule or notice establish the language, type, style and format of the notice.
- The commissioner may assess a civil penalty in an amount equal to the taxes and fees on the product, without regard to any exemption or dye, or one thousand dollars ($1,000), whichever is greater, for each violation, against a person who fails to comply with this section.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1901.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Collateral References. Taxation 371
67-3-802. Shipping paper to be carried on board.
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Each person transporting petroleum products in a transport truck upon the public highways of this state shall:
- Carry on board the shipping paper issued by the refinery operator, the terminal operator or the bulk plant operator of the facility where the petroleum product was obtained, whether within or without this state;
- Show and permit duplication of the shipping paper by any law enforcement officer or representative of the department, upon request, when transporting, holding or off-loading the products described in the shipping paper;
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Deliver products described in the shipping paper to a point or points in the destination state shown on the face of the shipping paper, unless the person or the person's agent does all of the following:
- Notifies the department or its nominee, before the earlier of removal from the state in which the shipment originated or the initiation of delivery, that the person received instructions after the shipping paper was issued to deliver the petroleum product to a different destination state;
- Receives from the commissioner a verification number authorizing the diversion; and
- Writes on the shipping paper the change in destination state and the verification number for the diversion;
- Provide a copy of the shipping paper to the wholesaler, retailer or other person who controls the facility to which the petroleum products are delivered; and
- Meet such other conditions or take such other actions as the department may reasonably require by regulation for the enforcement of this chapter.
- The department may in its discretion provide an advance notification procedure for documentation supporting the import of petroleum products where the importer is unable to obtain terminal-issued shipping papers that comply with this section.
- The commissioner may assess a civil penalty in an amount equal to the taxes and fees on the product, without regard to any exemption or dye, or one thousand dollars ($1,000), whichever is greater, for each violation, against a person who fails to comply with this section.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1902.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-803. Refusal of delivery.
No retail vendor, bulk plant operator, wholesaler or bulk end user shall accept delivery of petroleum products into bulk storage facilities in this state, if that delivery is not accompanied by a shipping paper prepared in accordance with this part. The commissioner may assess a civil penalty in an amount equal to the taxes and fees on the product, without regard to any exemption or dye, or one thousand dollars ($1,000), whichever is greater, for each violation, against a person who fails to comply with this section.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1903.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-804. Diversions.
- A shipment of petroleum products may be diverted from the destination stated on the original shipping paper where the shipping paper is incorrect or where there is a legitimate business need to divert the shipment. Prior to any diversion or change to the shipping paper, the shipper, the transporter, or an agent of either, shall notify the department or its designee and shall manually add the assigned verification number to the shipping paper. Any claim for refund resulting from a diversion under this section shall be made and acted on under the refund provisions of chapter 1, part 18, and chapter 3, part 4, of this title.
- The commissioner may assess a civil penalty in an amount equal to the taxes and fees on the product, without regard to any exemption or dye, or one thousand dollars ($1,000), whichever is greater, for each violation, against any person who diverts a shipment or alters a shipping paper other than as provided for in subsection (a). No civil penalty will be assessed in those cases where the prior notification required in subsection (a) was not accomplished due to error, other than negligence, if within three (3) working days the shipper, the transporter, or the agent of either, notifies the department of the diversion and error.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1904.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-805. Right to rely.
The supplier and the terminal operator shall be entitled to rely for all purposes of this chapter on the representation by the transporter, the shipper or the shipper's agent, as to the shipper's intended state of destination and tax exempt use. The shipper, the importer, the transporter, the shipper's agent and any purchaser, but not the supplier or terminal operator, shall be jointly and severally liable for any taxes and fees otherwise due to the state as a result of an unlawful diversion of the petroleum products from the represented destination state. A terminal operator shall be entitled to rely on the representation of a licensed supplier or bonded importer with respect to the supplier's obligation to collect taxes and fees and the related shipping paper representation as shown on the shipping paper as provided by § 67-3-801.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1905.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-806. Petroleum products and vehicles declared contraband — Confiscation — Procedure for hearing.
- Any petroleum product that is owned or possessed by any person in avoidance, evasion or violation of any provision contained in this part, and any vehicle that is used for storage or transportation of the product, are contraband and may be seized by the commissioner. All products and vehicles seized as contraband shall be delivered promptly to the custody of the department and disposed of under § 67-1-1435. Proceeds of the sale shall be paid to the state treasury for the benefit of the general fund.
- Any person, claiming any property or any interest in property seized under subsection (a), may file with the commissioner at Nashville a written claim, requesting a hearing and stating the person's interest in the product or vehicle seized. The hearing shall be held under the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. The request shall be made within ten (10) days following the confiscation.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1906.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-807. Disposition of seized property — Bond or possession — Exclusive remedy.
- When the ruling of the commissioner, following a hearing provided for under the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, is favorable to the claimant, the commissioner shall deliver to the claimant the petroleum products and other property that were seized.
- When the ruling of the commissioner is adverse to the claimant, and the claimant appeals, the commissioner shall deliver to the claimant the petroleum products and other property so seized; provided, that the claimant shall first post a bond, approved by the commissioner, payable to the state in a sum double the value of the property seized. The condition of the bond shall be that the obligors will pay to the department, the full value of the goods, or property seized, unless upon appeal the decision of the commissioner is reversed and the right of the claimant to the property judicially determined. If the claimant does not post a bond satisfactory to the commissioner, the commissioner shall proceed to sell the contraband goods under § 67-1-1435.
- If no claim is interposed, the petroleum products or other property shall be forfeited without further proceedings and shall be sold as provided in this section.
- The procedures provided for in this section and in § 67-3-808 are the sole remedies of any claimant and no court shall have jurisdiction to interfere with these remedies by replevin, injunction or in any other manner.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1907.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-808. No operation without a license.
- No person shall engage in any business activity in this state as to which a license is required by part 6 of this chapter, unless the person shall have first obtained the license. No person shall export petroleum products from a terminal in this state, unless that person has obtained an exporter's license, a bonded importer's license or a supplier's license, or has paid the applicable Tennessee petroleum products taxes and fees.
- Any carrier delivering petroleum products to any person required by this chapter to have a license to import or sell at wholesale, and known by the carrier not to have a license to import or sell fuel at wholesale, shall immediately notify the department by facsimile of the delivery. A carrier who fails to comply with this subsection (b) is jointly and severally liable to the state for the taxes and fees on the product delivered.
- An end user who exports fuel in a vehicle fuel supply tank incident to interstate transportation shall be exempt from this section.
- The commissioner may assess a civil penalty in an amount equal to the taxes and fees on the product handled, without regard to any exemption or dye, or one thousand dollars ($1,000) per day, whichever is greater, against a person who fails to comply with subsection (a).
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1908.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-809. Unlawful sale and use of dyed fuel.
- No person shall sell or deliver dyed diesel fuel or diesel fuel contaminated with dye when such person knows or has reason to know that the fuel will be used in a motor vehicle on the public highways.
- No person shall introduce dyed diesel fuel or diesel fuel contaminated with dye into the supply tank of any motor vehicle licensed for highway use.
- No person shall use dyed diesel fuel or diesel fuel contaminated with dye in a licensed motor vehicle or in a motor vehicle actually used on the public highways.
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The prohibitions contained in this section do not pertain to:
- Persons operating motor vehicles that have received fuel into their fuel tanks outside of this state in a jurisdiction that permits introduction of dyed diesel fuel of that color and type into the fuel supply tank of highway vehicles;
- Uses of dyed fuel on the highway that are lawful under the Internal Revenue Code, compiled in 26 U.S.C., and regulations, including state and local government vehicles, and buses, unless otherwise prohibited by this chapter; and
- Agricultural vehicles used solely for the purpose of transferring a person's harvested crops from the field to the person's storage facility for the harvested crops; provided, that the distance traveled on the public highways does not exceed five (5) miles.
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- The commissioner may assess a civil penalty of one thousand dollars ($1,000) or ten dollars ($10.00) per gallon of dyed fuel involved, whichever is greater, against a person who violates this section. The capacity of the tank determines the amount of dyed fuel involved, unless otherwise shown by the violator. For subsequent violations, the penalty shall be multiplied by the total number of separate violations by that person.
- The commissioner may waive in whole or in part the civil penalty provided for in subdivision (e)(1), upon the commissioner's determination that such penalty did not result from negligence or willful disregard of the law; provided, that such authority to waive the penalty shall be subject to § 67-1-803(b) and (e).
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1909; Acts 2004, ch. 948, § 1; 2009, ch. 530, § 99.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-810. Requirements for sale of dyed diesel fuel at retail station.
-
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A licensed retailer selling dyed diesel fuel at a retail station shall, in addition to the other requirements of this chapter, dispense the dyed diesel fuel to the end user from a pump or device:
- Located on an island separate from any undyed diesel fuel pump;
- Located no closer than ten feet (10') from any undyed diesel fuel pump or device on the same island; or
- For which there is an attendant stationed and in attendance on the pump island.
- The outside diameter for the dispensing nozzle on any such pump or dispensing device shall not be less than one and three-eighths inches (1 3/8").
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A licensed retailer selling dyed diesel fuel at a retail station shall, in addition to the other requirements of this chapter, dispense the dyed diesel fuel to the end user from a pump or device:
- A licensed wholesaler may sell dyed diesel fuel using a customer-controlled pump located at a retail station, subject to the requirements of § 67-3-401(i), other than the requirement that the customer be a governmental agency.
- All sales of dyed diesel fuel at retail shall be recorded by the seller at or near the time of the sale and the invoice shall contain the date of the purchase and delivery, along with the purchaser's name and address, type of fuel, a notation for dye added, the number of gallons purchased, the amount of state and local tax and the total dollar amount of the sale.
- Notwithstanding any other provision of this chapter, all dyed diesel pumps or devices installed or made operational after January 1, 2001, shall be located no closer than twelve feet (12') from any undyed diesel fuel pump. This requirement does not apply to replacement pumps or devices for those dyed diesel pumps or devices existing as of January 1, 2001, and otherwise compliant with the requirements of this chapter.
Acts 1997, ch. 316, § 1; 2001, ch. 133, § 2; T.C.A., § 67-3-1910.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Cross-References. Retailer's license for dyed diesel fuel, § 67-3-619.
67-3-811. Notice required with respect to dyed diesel fuel.
- A notice stating “DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE” shall be provided by the terminal operator to any person that receives dyed diesel fuel at a terminal rack, and provided by any vendor of dyed diesel fuel to its buyer if the diesel fuel is located outside the bulk transfer/terminal system.
- The form of notice required under subsection (a) shall be provided at the time of the removal or sale and shall appear on all shipping papers, bills of lading, and invoices accompanying the sale or removal of the dyed diesel fuel.
- The commissioner may assess a civil penalty of one hundred dollars ($100) for each violation, against a person who fails to comply with this section.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1911.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-812. Dyed fuel pump display.
- A vendor delivering dyed diesel fuel to consumers through pumps shall be required to prominently display on such pumps the language “Dyed Diesel Fuel — Nontaxable Use Only — Penalty for Taxable Use — Off Highway, Not Legal for Motor Vehicle Use” as presently required by the internal revenue service or environmental protection agency. Such display shall remain a requirement until the general assembly, by statute, changes such requirements, notwithstanding either of such federal agencies altering or removing such requirement from its regulations.
- The commissioner may assess a civil penalty of one hundred dollars ($100) for each month in violation, or portion of a month, against a person who fails to comply with this section.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1912.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-813. Quality assurance.
- No person shall sell or purchase any product for use in the fuel supply tank of a motor vehicle for general highway use that does not meet standards as published in the annual American Society for Testing and Materials Book of Standards and its supplements, unless amended or modified by the department.
- All persons in possession of any product in violation of this section shall have the duty to dispose of it in the manner provided by federal and state law.
- The commissioner may assess a civil penalty of ten dollars ($10.00) per gallon, against a person who fails to comply with this section.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1913.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-814. Prohibition on tampering with meters at retail outlets.
- A person operating petroleum products dispensing equipment accessible by the general public shall provide metering devices for each dispenser, and shall maintain records sufficient to enable the department to determine the volumes dispensed with reasonable accuracy.
- No person shall exchange, replace, roll back or otherwise tamper with any such metering equipment without following procedures provided by the department for legitimate maintenance, repairs and replacement purposes.
- The department has the authority to seal any dispenser meter or totalizer.
- The commissioner may assess a civil penalty in an amount equal to the taxes and fees on the storage capacity of the facility, without regard to any exemption or dye, or one thousand dollars ($1,000), whichever is greater, against a person who fails to comply with this section.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1914.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-815. Records retention.
- All persons subject to this part shall retain records, including, but not limited to, shipping papers, of all petroleum products transactions for a period of three (3) years after December 31 of the year in which the transaction occurred.
- Persons operating terminals, refineries and bulk plants shall retain these records on site for a period of ninety (90) days following the month of the transaction.
- Retail stations shall retain these records on site for a period of thirty (30) days following the month of the transaction.
- The commissioner may revoke the license or licenses of and assess a civil penalty in the amount of five thousand dollars ($5,000) against a person who fails to comply with this section.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1915.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-816. Inspections.
- In addition to any general authority to investigate for violations of this chapter, the commissioner and the commissioner's designees are hereby authorized to inspect any motor vehicle to ascertain whether the fuel supply tank contains dyed diesel fuel or diesel fuel contaminated with dye.
- The commissioner may assess a civil penalty of one thousand dollars ($1,000) against a person who refuses to allow the inspection. For subsequent refusals, the penalty shall be multiplied by the total number of separate refusals by that person.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1916.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-817. Invoices.
- Each supplier, importer and wholesaler selling petroleum products in this state shall, at or near the time of each sale, make out and deliver to the purchaser, a pre-numbered invoice in which the vendor shall enter the name of the vendor, the full name and complete delivery address of the purchaser, the date of delivery, the type of fuel, a notation for dye added, the total dollar amount of the purchase, the amount of state tax, and the number of gallons of product sold.
- The commissioner may assess a civil penalty of five hundred dollars ($500) for each month in violation, or portion of a month, against a person who fails to execute and deliver invoice documents as provided in this section.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1917.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-818. Calibration of storage tanks.
- The commissioner may require the person operating a terminal or refinery to furnish, upon request, two (2) sets of calibration tables on any tank within the bulk terminal/transfer system located in this state, into which petroleum products first come to rest after import. The tanks shall be strapped and the calibrations shall be made by a person qualified and licensed to do this work and recognized for this purpose by the United States government.
- The commissioner may request from the operator calibration tables on any tank that the commissioner may wish to be calibrated. The operator shall furnish the two (2) sets of calibration tables within sixty (60) days from the date of the request, calibrated as required in subsection (a).
- It is unlawful for any person to fail to comply with the request of the commissioner to furnish any calibration table as provided for in either subsection (a) or (b) within a period of sixty (60) days from the date of the request.
- The commissioner may assess a civil penalty of five hundred dollars ($500) against any person who violates this section.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1918.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-819. Criminal violations.
A person who violates any provision of this chapter with the intent to deprive the state of its lawful revenues, or who aids and abets another to do so, commits a Class E felony.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1919.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Cross-References. Penalty for Class E felony, § 40-35-111.
Part 9
General Administrative Provisions
67-3-901. Gasoline tax — Distribution of receipts — Expenses of administration — Utility relocation loan program.
- The commissioner shall apportion for distribution all of the taxes collected pursuant to § 67-3-201, and shall inform the department of finance and administration as to the proper amounts of all distributions to be made from the taxes.
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Revenues from the tax imposed by § 67-3-201 shall be apportioned for distribution in the following order:
- Amounts required to be paid to the debt service fund pursuant to title 9, chapter 9;
- Of the amounts designated in subdivisions (b)(2)-(5) for distribution to the counties, cities and highway fund, one percent (1%) shall be subtracted from the amount designated for cities, one percent (1%) shall be subtracted from the amount designated for counties, and two percent (2%) shall be subtracted from the amount designated for the highway fund for distribution to the general fund for expenses of administration prior to the distribution of the funds to the cities, counties or highway fund;
- Twenty-eight and sixty-eight hundredths percent (28.68%) of total taxes collected to the various counties of the state on the basis set out in § 54-4-103;
- Fourteen and thirty-eight hundredths percent (14.38%) of total taxes collected to the various municipalities, as defined by § 54-4-201, on the basis set out at § 54-4-203; and
- Any funds remaining after the distributions set out in subdivisions (b)(1)-(4) to the highway fund. There shall be accumulated and set apart within the fund such amounts as required, not to exceed one million five hundred thousand dollars ($1,500,000) during each of four (4) succeeding fiscal years, which shall be available for carrying out the utility relocation loan program, established in subsection (j).
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Revenues from the increases in taxes imposed by chapter 49 of the Acts of 1985, and chapter 454 of the Acts of 1985, effective 1985, shall be distributed in accordance with the following formula:
- Two cents (2¢) of such revenues shall be apportioned pursuant to subsection (b); and
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One cent (1¢) of such revenues shall be apportioned as follows:
- Of such amount designated in subdivisions (c)(2)(B) and (C) for distribution to the counties and cities, one percent (1%) shall be subtracted from the amount designated for cities and one percent (1%) shall be subtracted from the amount designated for counties for distribution to the general fund for expenses of administration prior to the distribution of the funds to the cities or counties;
- Sixty-six and two-thirds percent (662/3%) of such revenues collected to the various counties of the state on the basis set out in § 54-4-103; and
- Thirty-three and one-third percent (331/3%) of such revenues collected to the various municipalities, as defined by § 54-4-201, on the basis set out in § 54-4-203.
- Notwithstanding any law to the contrary, a county shall be eligible to receive those revenues to be distributed directly to it from the tax increases imposed by chapter 419 of the Acts of 1985, and chapter 454 of the Acts of 1985, effective 1985, only if it appropriates and allocates funds for road purposes from local revenue sources in an amount not less than the average of the five (5) preceding fiscal years, except bond issues and federal revenue sharing proceeds shall be excluded from the five (5) year average computation. If a county fails after July 1, 1985, to so appropriate and allocate at least such average amount for road purposes, then the amount of revenues that would otherwise be allocable to such county from the revenues derived by former §§ 67-3-603 and 67-3-604 as those statutes existed on July 1, 1985, shall be reduced by the amount of the decrease below such average. The amount of such funds not allocated to such county because of such decrease shall be allocated to the state highway fund, to be used by the department of transportation for the improvement of state highways in such county, and such state funds shall be in addition to the funds otherwise allocated for improvements in such county in that fiscal year.
- Funds apportioned to counties under chapter 419 of the Acts of 1985 shall be used for resurfacing and upgrading county roads, including the paving of gravel roads. Any expenditure for equipment shall be approved by a two-thirds (2/3) vote of the county legislative body, prior to purchase.
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Revenues from the increases in taxes imposed by former §§ 67-3-603 and 67-3-604 as those statutes existed on June 1, 1986, shall be distributed and allocated as follows:
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Revenue from the first three cents (3¢) per gallon of such increases in taxes shall be apportioned as follows:
- Amounts required to be paid to the debt service fund pursuant to title 9, chapter 9;
- Three million dollars ($3,000,000) per annum, beginning on July 1, 1986, to the highway fund for the use and benefit of certain mass transit projects; and
- All other amounts to the highway fund to be used for accelerating the resurfacing of the state system of highways in order to establish a twelve-year cycle of resurfacing with implementation beginning in 1986 and being completed by 1998, and for new construction in the primary system of highways over the period from 1986 to 1999; and
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Revenue from one cent (1¢) of such increases in taxes shall be apportioned as follows:
- Of such amount designated hereafter for distribution to counties and cities, one percent (1%) shall be subtracted from the amount designated for counties, and one percent (1%) shall be subtracted from the amount designated for cities for distribution to the general fund for expenses of administration prior to the distribution of the funds to the counties or cities;
- Sixty-six and two-thirds percent (662/3%) of such revenues collected to the various counties of the state on the basis set out in § 54-4-103; and
- Thirty-three and one-third percent (331/3%) of such revenues collected to the various municipalities, as defined by § 54-4-201, on the basis set out in § 54-4-203.
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Revenue from the first three cents (3¢) per gallon of such increases in taxes shall be apportioned as follows:
- Prior to the apportionment set out in subsections (b), (c), (d) and (f), there shall be apportioned for distribution to the wildlife resources fund an amount equal to five thousand three hundred forty-four ten-thousandths of one percent (0.5344%) of the taxes collected under § 67-3-201, exclusive of tax revenues resulting from the three cents (3¢) per gallon gasoline tax increase imposed by chapter 46 of the Public Acts of 1989 and all tax revenues resulting from the gasoline tax increase imposed by chapter 181 of the Public Acts of 2017.
- All revenues and investment income derived from the increase in the gasoline tax rate imposed by chapter 46 of the Acts of 1989, shall be placed in the state highway fund, and shall not be subject to the apportionment and distribution provisions of subsection (b).
- Revenues from the one cent (1¢) increase in taxes, from nineteen cents (19¢) to twenty cents (20¢), imposed by former §§ 67-3-1703 and 67-3-1704, as those statutes existed under prior Tennessee law immediately after chapter 241 of the Acts 1989 became effective, shall be apportioned as provided in subdivision (f)(2).
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- From the amounts accumulated and set apart pursuant to subdivision (b)(5), there is established a “utility relocation loan program” for loan financing of all costs incurred by any county, town, city, metropolitan government, utility district, authority or not-for-profit business organizations empowered to provide utility services that provide utility services to customers related to relocating, moving or re-installing their utility facilities, without any additions to their utility facilities, when located within rights-of-way of highways on the system of state highways and required because of highway construction projects administered by the department of transportation.
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The utility management review board shall review applications for utility relocation loans. Only applicants that meet all of the following criteria may be recommended to the state funding board for loans:
- Are obligated to relocate, move or re-install its utilities due to a state highway project;
- Have been otherwise unable to obtain financing for such relocation at a reasonable cost on reasonable terms;
- Have established fees and charges for services of the utility to be effective immediately or over time sufficient to provide assurance of financial stability, and to agree to adjust such fees and charges periodically to ensure timely payment of loan payments and costs of operation of the system; and
- Have covenanted to take such actions necessary to be able to pay all loan payments when due.
- As part of its recommendation, the utility management review board shall recommend an estimated amount of the loan and an interest rate for the loan, utilizing an economic index based upon factors that include, but are not limited to, per capita incomes and property values of the applicant. Applicants falling within the lower economic scale on the index shall be eligible for lower interest rates. Loans may be recommended at no interest for terms of five (5) years or less. In determining its recommendations, the board may use any index or regulations promulgated pursuant to § 68-221-1005(b).
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The state funding board is empowered to make and administer loans from the funds and may establish such terms as it determines to be appropriate to carry out the terms of this subsection (j), subject to the following:
- Loans shall be for a term of fifteen (15) years or less, not to exceed the useful life of the relocated utilities, with no prepayment penalties;
- Loans shall be subject to such other terms, not inconsistent with the foregoing, as the board determines to be appropriate; and
- Prior to the start of each fiscal year, the secretary of the state funding board shall certify to the commissioner of finance and administration and the commissioner of transportation, the uncommitted balance in the loan program as of the start of the next fiscal year.
- This subsection (j) shall not be construed to be an appropriation of funds and no funds shall be obligated or expended pursuant to this subsection (j), unless such funds are specifically appropriated through the department of transportation or as a specific amendment by the general appropriations act.
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Notwithstanding § 54-2-103 or any other law to the contrary, a percentage of funds collected and allocated to the state highway fund shall be deposited in the general fund as follows:
- If the statute allocating funds to the state highway fund earmarks two percent (2%) or more of the revenue collected for the general fund, no additional allocation to the general fund shall be made;
- If the statute allocating funds to the state highway fund earmarks less than two percent (2%) of the revenue collected for the general fund, an amount equal to the amount necessary when added to the statutory earmark, if any, equals two percent (2%) of the revenue collected shall be earmarked for the general fund;
- If the additional revenues earmarked for the general fund as provided in subdivision (k)(2) are less than seven million dollars ($7,000,000) in the fiscal year ending June 30, 2001, and in subsequent fiscal years, the earmark for the general fund from the gasoline tax imposed under § 67-3-201 shall be increased in an amount sufficient to provide that the total amount earmarked for the general fund as provided in subdivision (k)(2) and this subdivision (k)(3) shall be seven million dollars ($7,000,000) in the fiscal year ending June 30, 2001, and in subsequent fiscal years;
- The allocation of funds as provided in this subsection (k) shall not have an impact on any scheduled or ongoing construction projects;
- The department of transportation shall submit any proposal for apportionment of costs resulting from the general fund allocation in this subsection (k) to the state building commission for approval prior to implementing such proposal, including, but not limited to, the programs and projects to be affected and the amount proposed to be allocated to each such program or project;
- Except as provided in subdivision (k)(4), it is the legislative intent that the effect of this subsection (k) be allocated on a pro rata basis to any affected program or project; and
- This subsection (k) shall not apply to revenues generated under § 67-3-201 from the increase in the tax imposed by chapter 181 of the Public Acts of 2017.
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Revenues derived under § 67-3-201 from the increase in taxes imposed by chapter 181 of the Public Acts of 2017 shall be apportioned and distributed in the following manner:
- Twenty-five and four-tenths percent (25.4%) to the various counties of the state on the basis set forth in § 54-4-103;
- Twelve and seven-tenths percent (12.7%) to the various municipalities, as defined by § 54-4-201, on the basis set forth in § 54-4-203; and
- Sixty-one and nine-tenths percent (61.9%) to the highway fund.
- Notwithstanding any law to the contrary, a county shall be eligible to receive those revenues to be distributed directly to it from the increase in taxes imposed by chapter 181 of the Public Acts of 2017 only if it appropriates and allocates funds for road purposes from local revenue sources in an amount not less than the average of the five (5) preceding fiscal years, except bond issues and federal revenue sharing proceeds shall be excluded from the five-year average computation. If a county fails after July 1, 2017, to so appropriate and allocate at least such average amount for road purposes, then the amount of revenues that would otherwise be allocable to such county under this section shall be reduced by the amount of the decrease below such average. The amount of such funds not allocated to such county because of such decrease shall be allocated to the state highway fund, to be used by the department of transportation for the improvement of state highways in such county, and such state funds shall be in addition to the funds otherwise allocated for improvements in such county in that fiscal year.
Acts 1997, ch. 316, § 1; 1999, ch. 450, § 6; 2000, ch. 654, § 1; 2000, ch. 983, § 4; 2001, ch. 448, § 2; T.C.A., § 67-3-2001; Acts 2017, ch. 181, §§ 19, 20; 2017, ch. 478, §§ 1, 2.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Former §§ 67-3-1703 and 67-3-1704 were transferred to §§ 67-3-603 and 67-3-604, respectively, in 2003.
Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Amendments. The 2017 amendment by ch. 181 added (k)(7), (l ) and (m).
The 2017 amendment by ch. 478 substituted “Twenty-eight and sixty-eight hundredths percent (28.68%)” for “Twenty-eight and six-tenths percent (28.6%)” in (b)(3); substituted “Fourteen and thirty-eight hundredths percent (14.38%)” for “Fourteen and three-tenths percent (14.3%)” in (b)(4); and in (g), deleted “, for use exclusively in the administration of the Boating Safety Act of 1965, compiled in title 69, chapter 9, part 2,” preceding “an amount”, substituted “five thousand three hundred forty-four ten-thousandths of one percent (0.5344%)” for “one thousand seventy-four ten thousandths of one percent (0.1074%)” following “equal to”, and substituted “Public Acts of 1989 and all tax revenues resulting from the gasoline tax increase imposed by chapter 181 of the Public Acts of 2017” for “Acts of 1989” at the end.
Effective Dates. Acts 2017, ch. 181, § 38. July 1, 2017.
Acts 2017, ch. 478, § 3. July 1, 2017.
Attorney General Opinions. The state can probably continue to distribute state-shared taxes even if the general assembly does not enact a general appropriations act, OAG 00-083 (5/4/00).
Allocating a portion of the state gasoline tax revenue to a private property owners association for the purpose of maintaining private roads that are open to travel by the general public is constitutionally permissible. OAG 13-32, 2013 Tenn. AG LEXIS 33 (4/24/13).
Collateral References. Taxation 371
67-3-902. Investment of idle funds from 1986 gasoline tax increases.
All funds from the increase in taxes imposed by chapter 931 of the Acts of 1986, and allocated to the state highway fund shall be placed in a separate account and, to the extent not required for the projects provided for in chapter 931 of the Acts of 1986, shall be invested pursuant to § 9-4-603, with the investment income credited to the highway fund.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2002.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-903. Specific highway projects benefited by 1986 gasoline tax increases.
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During the 1986-1987 fiscal year, the funds generated under chapter 931 of the Acts of 1986, shall be used only for the projects specified in the March 25, 1986, Proposed Fiscal Year 1986-1987 Transportation Improvement Plan and Additional Construction Projects, and those additional projects listed in chapter 931 of the Acts of 1986. No projects shall be deleted from this plan without the approval of the speaker of the house of representatives and the speaker of the senate. Additional projects shall include the following:
- There shall be included in the Cannon County SR-1 (US-70S) SR-64 to Woodbury bridge construction project described therein the widening of SR-1 to four (4) lanes from Woodbury to the Rutherford County line, and in the Smith County SR-25 Carthage bypass right-of-way project described therein necessary bridge design;
- There shall be included a highway from Columbia, in Maury County, to the intersection of Law Road and Interstate 40 at Exit 140 in Henderson County, this highway to provide access through the counties of Maury, Lewis, Perry, Decatur, and Henderson, among others, and to the cities of Hohenwald, Linden, Parsons, and Lexington, among others; and
- There shall be included the reconstruction of Old Hickory Boulevard (State Highway 251) to four (4) lanes from U.S. Highway 70S to U.S. Highway 70N near Interstate Route 40.
-
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- The projects listed in the memorandum dated April 1, 1986, from Commissioner Dale Kelley to Senator Henry, Senator Darnell, Representative Bragg and Representative Robinson shall constitute and comprise the projects to be completed no later than the end of the 1998-1999 fiscal year, and the provisions of such memorandum are hereby incorporated herein by reference. No project shall be deleted or changed from such memorandum without the approval of the speaker of the house of representatives and the speaker of the senate.
- The reference in such memorandum on page 2 of 2, headed BICENTENNIAL PARKWAY SPECIFIC DESCRIPTIONS, shall include after the language “Interstate 155 Extension” the following: on a route to be determined by the commissioner of transportation after public hearings and feasibility studies through either Dyer, Gibson and Madison counties or through Dyer, Crockett and Madison counties.
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Additional projects shall include:
- The reconstruction of Highway 61 to four (4) lanes from Clinton to Oak Ridge;
- Preplanning of the reconstruction of Highway 46 from Highway 149 to Dickson;
- Improvement of the Austin Peay Highway in Shelby County north from I-240 North at an estimated cost of four million three hundred thousand dollars ($4,300,000); and
- The widening to four (4) lanes of Highway 12 from Ashland City to Clarksville Highway in Davidson County.
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- Nothing in this section shall be interpreted or construed to place any roadway which is the subject of chapter 931 of the Acts of 1986, under the Scenic Highway Act of 1971, compiled in title 54, chapter 17, part 1, or the Tennessee Parkway System Act, complied in title 54, chapter 17, part 2.
- In addition to the projects listed in the “Accelerated Primary Highway Plan” in the memorandum dated April 1, 1986, from Commissioner Dale Kelley to Senator Henry, Senator Darnell, Representative Bragg and Representative Robinson, there is added a project in Memphis described as: The reconstruction of U.S. Route 61, South Third Street, from Shelby Drive to Mitchell Road to provide six (6) traffic lanes.
- The commissioner of transportation may consider a northern route to complement the Bicentennial Parkway project known as Interstate 840. Counties which may be considered by the commissioner for the northern route are Wilson, Montgomery, Robertson, Cheatham, Dickson and Sumner. During the 1993-1994 fiscal year, location and environmental studies shall be undertaken. The commissioner may consider funding sources from all revenues allocated to the department of transportation for highway purposes.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2003.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Cited: Southwest Williamson County Community Ass'n v. Slater, 243 F.3d 270, 2001 FED App. 70P, 2001 U.S. App. LEXIS 3846 (6th Cir. 2001).
67-3-904. Petroleum products tax increases — Participation of disadvantaged or women business enterprises in construction.
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- The department of transportation shall make good faith efforts to obtain participation of either disadvantaged business enterprises or women business enterprises, as such enterprises may be defined by the commissioner of transportation through regulations which the commissioner is authorized to promulgate, in the amount approximating ten percent (10%) of the revenues that are distributed to the state highway fund from the petroleum products tax increases authorized by chapter 46 of the Acts of 1989, and that are let to contract.
- With respect to projects funded wholly or in part with state funds, the department shall make good faith efforts to obtain participation of either disadvantaged business enterprises or women business enterprises, as such enterprises may be defined by the commissioner through regulations that the commissioner is authorized to promulgate, in the amount approximating seven percent (7%) of the revenues that are distributed to the state highway fund from the petroleum products tax increases, effective 1986, and that are let to contract.
- As a condition of disbursement of the funds raised by chapter 241 of the Acts of 1989, any local government receiving such funds shall agree to make good faith efforts to obtain participation of either disadvantaged business enterprises or women business enterprises, as such enterprises may be defined by the commissioner through regulations which the commissioner is hereby authorized to promulgate, in the amount approximating ten percent (10%) of the revenues which are distributed to such governments from the petroleum products tax increases authorized by chapter 241 of the Acts of 1989, and which are let to contract.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2004.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-905. Diesel tax, compressed natural gas, and prepaid user diesel tax — Allocation of proceeds.
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The tax imposed pursuant to §§ 67-3-202, 67-3-1113, and 67-3-1309, shall be allocated and distributed in the following order and manner:
- One and sixty-two hundredths percent (1.62%) to the general fund;
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Twenty-four and seventy-five hundredths percent (24.75%) to the counties of the state to become a part of the county highway fund in the following manner:
- Fifty percent (50%) equally among all counties;
- Twenty-five percent (25%) on the basis of population; and
- Twenty-five percent (25%) on the basis of area;
- Twelve and thirty-eight hundredths percent (12.38%) to municipalities, as defined in § 54-4-201, on the basis set out as § 54-4-203; and
- Sixty-one and twenty-five hundredths percent (61.25%) to the highway fund.
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Revenues from the increases in taxes imposed by chapter 931 of the Acts of 1986, shall be distributed and allocated as follows:
- Amounts required to be paid to the debt service fund pursuant to title 9, chapter 9; and
- All other amounts to the highway fund to be used for accelerating the resurfacing of the state system of highways in order to establish a twelve-year cycle of resurfacing within the period between 1986 and 1998; and for new construction in the primary system of highways over the period from 1986 to 1999.
- All revenues and investment income derived from the increase in the motor vehicle fuel use tax imposed by chapter 46 of the Acts of 1989 shall be placed in the state highway fund, and shall not be subject to the apportionment and distribution provisions of subsections (a) and (b).
- Revenue from the one cent (1¢) increase from sixteen cents (16¢) to seventeen cents (17¢) in the tax imposed by chapter 241 of the Acts of 1989, effective April 1, 1990, and all investment income derived therefrom, shall be placed in the state highway fund and shall not be subject to the apportionment and distribution provisions of subsections (a) and (b).
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Revenues derived under § 67-3-202 from the increase in taxes imposed by chapter 181 of the Public Acts of 2017 shall be apportioned and distributed in the following manner:
- Seventeen and five-tenths percent (17.5%) to the various counties of the state on the basis set forth in § 54-4-103;
- Eight and eight-tenths percent (8.8%) to the various municipalities, as defined by § 54-4-201, on the basis set forth in § 54-4-203; and
- Seventy-three and seven-tenths percent (73.7%) to the highway fund.
- Revenues derived under § 67-3-1113 from the increase in taxes imposed by chapter 181 of the Public Acts of 2017 shall be distributed to the highway fund.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2005; Acts 2017, ch. 181, § 21.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Amendments. The 2017 amendment added (e) and (f).
Effective Dates. Acts 2017, ch. 181, § 38. July 1, 2017.
67-3-906. Special privilege tax and export tax — Disposition of tax proceeds.
- Ninety-eight percent (98%) of the proceeds from the collection of the taxes imposed by §§ 67-3-203 and 67-3-205 shall be allocated to and deposited in the highway fund and two percent (2%) of the proceeds in the general fund for administrative purposes.
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- From the actual proceeds of the taxes, there is established a local government fund in the actual amount of twelve million seventeen thousand dollars ($12,017,000) which shall be distributed to the counties and cities monthly.
- The local government fund shall be used solely for county roads and city streets.
- From the local government fund, a monthly sum of three hundred eighty-one thousand five hundred eighty-three dollars ($381,583) shall be distributed to county highway departments on the basis of county population, and the monthly sum of six hundred nineteen thousand eight hundred thirty-three dollars ($619,833) shall be distributed to cities on the basis of city population.
- Before distributing moneys to cities from the proceeds of the taxes imposed by §§ 67-3-203 and 67-3-205 as provided in this subsection (b), the commissioner of finance and administration shall deduct from the cities' share of the local government fund the sum of ten thousand dollars ($10,000) per month, which shall be allocated to the University of Tennessee for the Center for Government Training for the purpose of supporting in-service training for local government officials and employees.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2006.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
67-3-907. Environmental assurance fee — Disposition of fee proceeds.
- The environmental assurance fee levied and collected pursuant to §§ 67-3-204 and 68-215-110 shall be collected by the department as provided in this chapter, except that the fees collected shall be for the underground storage tanks and solid waste disposal control board, as provided in title 68, chapter 215.
- Any conflicts in the statutes as to the collection of the environmental assurance fee levied in title 68, chapter 215, shall be resolved in favor of this chapter, so as to avoid inconsistency and duplication in the administration of the various statutes which govern the environmental assurance fee.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2007.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Acts 2012, ch. 986, § 34 substituted “underground storage tanks and solid waste disposal control board” for “petroleum underground storage tank board”.
67-3-908. Liquified gas — Distribution of tax.
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The tax imposed by chapter 203 of the Acts of 1983 shall be distributed as follows:
- One and fifty-eight hundredths percent (1.58%) to the general fund;
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Twenty-eight and twenty-eight hundredths percent (28.28%) to the counties to become a part of the county highway fund in the following manner:
- Fifty percent (50%) equally among all counties;
- Twenty-five percent (25%) on the basis of population; and
- Twenty-five percent (25%) on the basis of area;
- Fourteen and fourteen hundredths percent (14.14%) to municipalities, as defined in § 54-4-201, on the basis set out in § 54-4-203; and
- Fifty-six percent (56%) to the highway fund.
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Revenues from the increases in taxes imposed by chapter 931 of the Acts of 1986, shall be distributed and allocated as follows:
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Revenue from the first three cents (3¢) per gallon of such increases in taxes shall be apportioned as follows:
- Amounts required to be paid to the debt service fund pursuant to title 9, chapter 9; and
- All other amounts to the highway fund to be used for accelerating the resurfacing of the state system of highways in order to establish a cycle of resurfacing during the period from 1986 to 1998; and for new construction in the primary system of highways; and
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Revenue from one cent (1¢) of such increases in taxes shall be apportioned as follows:
- Of such amount designated in subdivisions (b)(2)(B) and (C) for distribution to counties and cities, one percent (1%) shall be subtracted from the amount designated for counties and one percent (1%) shall be subtracted from the amount designated for cities for distribution to the general fund for expenses of administration prior to the distribution of the funds to the counties or cities;
- Sixty-six and two-thirds percent (662/3%) of such revenues collected to the various counties of the state on the basis set out in § 54-4-103; and
- Thirty-three and one-third percent (331/3%) of such revenues collected to the various municipalities, as defined by § 54-4-201, on the basis set out in § 54-4-203.
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Revenue from the first three cents (3¢) per gallon of such increases in taxes shall be apportioned as follows:
- All revenues and investment income derived from the increase in the liquified gas tax imposed by chapter 46 of the Acts of 1989 shall be placed in the state highway fund, and shall not be subject to the apportionment and distribution provisions of subsections (a) and (b).
- Revenues derived under § 67-3-1102 from the increase in taxes imposed by chapter 181 of the Public Acts of 2017 shall be distributed to the highway fund.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2008; Acts 2017, ch. 181, § 22.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Amendments. The 2017 amendment added (d).
Effective Dates. Acts 2017, ch. 181, § 38. July 1, 2017.
67-3-909. Commissioner's duty — Receipts and disbursals.
The commissioner shall collect all taxes and fees accruing under this chapter and pay them to the state treasurer.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2009.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-910. Federal reservations — Application of petroleum products and alternative fuels taxes.
- Under the terms of the cession of jurisdiction to the United States by this state, the right is reserved to this state to tax sales of and privileges of dealing in petroleum products and alternative fuels used in the operation of motor vehicles within the limits of the Great Smoky Mountains National Park that is within the boundaries of this state.
- The right is reserved to this state to tax sales of and privileges of dealing in petroleum products and alternative fuels in operation of motor vehicles within limits of any reservation or preserve within the boundaries of this state.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2010.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-911. Lists — Furnishing by the commissioner.
A current list of licensees, with applicable federal employer identification numbers, shall be provided to all licensees, as is deemed necessary by the commissioner. Disclosure of this information by the commissioner shall not constitute a violation of any confidentiality requirement imposed by chapter 1, part 17 of this title.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2011.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Cross-References. Confidentiality of public records, § 10-7-504.
67-3-912. Use of funds generated by 2017 increases.
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It is the intent of the general assembly that all revenues derived from the increased taxes and fees imposed by chapter 181 of the Public Acts of 2017 on petroleum products and alternative fuels under this chapter and motor vehicle registration under title 55, chapter 4, shall be used to:
- Maintain roads and bridges on the state highway system, including the interstate highway system;
- Support economic development and promote the professional development needs of women and minorities through the construction of transportation facilities in accordance with the State Industrial Access Act, compiled in title 54, chapter 5, part 4, and the Local Interstate and Fully Controlled Access Highway Connector Act, compiled in title 54, chapter 5, part 5;
- Maintain public roads and bridges within the boundaries of parks, as defined by § 11-3-101, administered by the department of environment and conservation;
- Support local government investment in transit programs to improve regional transit services across the state and help manage congestion along major highways;
- Assist rural transit providers in improving the efficiency of demand response services;
- Support projects and programs identified in the department of transportation's annual transportation improvement program submitted to the general assembly in support of the department's annual budget and as approved in the annual appropriations acts; and
- Fund the development and construction of the projects listed in subsection (b).
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The projects to be developed and constructed in accordance with this section are identified by county, route number, project description, and project location, including beginning log mile (LM) where applicable, as follows:
- Anderson County, Route 04365, Briar Cliff Avenue bridge over branch, LM 1.470;
- Anderson County, Route 0A276, Old State Circle bridge over Bull Run Creek, LM 0.390;
- Anderson County, Route 0A460, Meadow Street bridge over Right Fork Coal Creek, LM 0.108;
- Anderson County, I-75, ITS instrumentation at SR-61 (Andersonville Highway, Exit 122) interchange;
- Anderson County, SR-170, from SR-9/US-25W (Clinton Highway) to SR-62 (Oak Ridge Highway);
- Anderson County, SR-61, State Highway 61 bridge over Brushy Creek, LM 3.980;
- Anderson County, US-25W (SR-9), bridge over Bull Run Creek, LM 16.100;
- Bedford County, Route 0A048, Roy Moore Road bridge over North Fork Creek, LM 0.379;
- Bedford County, Route 0A122, Gregory Mill Road bridge over Fall Creek, LM 0.892;
- Bedford County, Route 0A170, Kellertown Road bridge over Straight Creek, LM 0.713;
- Bedford County, Route 0A233, Rowesville Church Road bridge over Shippman Creek, LM 0.065;
- Bedford County, Route 0A390, Fosterville Road bridge over Bell Buckle Creek, LM 2.019;
- Bedford County, Route 0A468, Horse Mountain Road bridge over Pannell Creek, LM 4.404;
- Bedford County, Route 0A664, Old Highway 64 bridge over Stokes Branch, LM 0.113;
- Bedford County, SR-269, Normandy to Tullahoma Road bridge over Carr Branch, LM 18.960;
- Bedford County, SR-437, (Shelbyville Bypass) from US-231 (SR-10) to US-41A (SR-16);
- Bedford County, SR-64, Walking Horse Parkway bridge over Sugar Creek, LM 9.450;
- Bedford County, US-41A (SR-16), (Madison Street) from SR-64 East of Shelbyville to Jenkins Road;
- Bedford County, US-41A (SR-16), bridge over Hook Creek, LM 9.540;
- Benton County, Route 00911, Lower Sandy Road bridge over Ramble Creek, LM 15.720;
- Benton County, Route 01753, Sulphur Creek Road bridge over Sulphur Creek, LM 6.870;
- Benton County, Route 0A156, Mt. Zion Church Road bridge over Sulphur Creek, LM 0.084;
- Benton County, Route 0A197, Frazier Street bridge over Charlie Creek, LM 0.215;
- Benton County, Route 0A439, Fern Avenue bridge over Cane Creek, LM 1.264;
- Benton County, I-40, Decatur-Benton county line to SR-191 (Birdsong Road);
- Benton County, I-40, Benton County rest area renovation;
- Benton County, SR-147, Danville Road bridge over Dry Creek, LM 1.830;
- Benton County, US-70 (SR-1), from Camden Bypass to Tennessee River;
- Benton and Houston counties, SR-147, ferry service across the Tennessee River, SR-69A to SR-147;
- Bledsoe County, Route 02174, Old Highway 28 bridge over Swafford Branch, LM 4.390;
- Bledsoe County, Route 0A068, Alvin York Highway bridge over branch, LM 13.012;
- Bledsoe County, Route 0A310, Ray Hixson Road bridge over branch, LM 0.741;
- Blount County, SR-162, (Pellissippi Pkwy.) from SR-33 to SR-73 (US-321);
- Blount County, SR-336, (Montvale Rd.) from Montvale Station Road to SR-73 (Lamar Alexander Parkway);
- Blount County, US-129 (SR-115), (bypass) from SR-73 (Lamar Alexander Parkway) to SR-35;
- Blount County, US-129 (SR-115), (Alcoa Highway) from Pellissippi Parkway (SR-162) to north of Little River;
- Blount County, US-129 (SR-115), (Relocated Alcoa Highway) from Hall Road (SR-35), south of Airport Road to proposed interchange at Tyson Boulevard;
- Blount County, US-129 (SR-115), (Relocated Alcoa Highway) from proposed interchange at Tyson Boulevard to SR-162 (Pellissippi Parkway);
- Blount County, US-129 (SR-115), (Relocated Alcoa Highway) from SR-162 (Pellissippi Parkway) to existing SR-115 at Singleton Station Road;
- Blount and Knox counties, I-140, ITS expansion from I-140 mile marker 2 to SR-115 (US-129, Alcoa Highway, Exit 11);
- Blount and Knox counties, US-129 (SR-115), ITS expansion from I-140 in Blount County to Cherokee Trails in Knox County;
- Blount and Sevier counties, Foothills Parkway, (Missing Link) from US-321 near Walland to US-321 near Wears Valley (joint project with National Parks Service);
- Bradley County, Route 02265, Chatata Valley Road bridge over Chatata Creek, LM 5.420;
- Bradley County, Route 04615, 20th Street N.E. bridge over Little Chatata Creek, LM 0.090;
- Bradley County, Route 0A003, Lead Mine Valley Road bridge over Black Fox Creek, LM 4.752;
- Bradley County, Route 0A062, Brymer Creek Road bridge over Brymer Creek, LM 2.979;
- Bradley County, Route 0A234, Pleasant Grove Place bridge over Candies Creek, LM 0.563;
- Bradley County, Route 0D947, Tunnel Hill Road bridge over Black Fox Creek, LM 6.157;
- Bradley County, Route I-75, Cleveland urban boundary to Bradley-McMinn county line;
- Bradley County, Route I-75, truck climbing lane southbound at White Oak Mountain;
- Bradley County, Route SR-60, (Georgetown Road) from 4-Lane north of I-75 (Westlake Drive) to SR-306;
- Bradley County, SR-60, Georgetown Road N.W. bridge over Candies Creek, LM 18.580;
- Bradley County, Route US-11 (SR-2), from near Anatole Lane to SR-308 in Charleston;
- Bradley, Hamilton, and Meigs counties, SR-60, from SR-306 to SR-58 in Hamilton County;
- Campbell County, Route 01278, Towe String Road bridge over private road, LM 3.770;
- Campbell County, Route 01282, Davis Creek Road bridge over Davis Branch, LM 5.000;
- Campbell County, Route 01282, Davis Creek Road bridge over Davis Branch, LM 5.270;
- Campbell County, Route 02425, Old Highway 63 bridge over Titus Creek, LM 7.970;
- Campbell County, Route 0A080, Old Stinking Creek Road bridge over Stinking Creek, LM 0.785;
- Campbell County, Route 0A247, D.W. Baird Lane bridge over Stinking Creek, LM 0.292;
- Campbell County, Route 0B001, Dossett Lane bridge over CSX Railroad at LM 0.26 in LaFollette, LM 0.200;
- Campbell County, I-75, from Anderson-Campbell county line to SR-9 (Appalachian Highway) right and 2425 Royal Blue Road left;
- Campbell County, I-75, ITS expansion at SR-63 (Howard Baker Road, Exit 141) interchange;
- Campbell County, I-75, implement a fog and severe weather detection system on I-75 over Jellico Mountain;
- Campbell County, I-75, ITS expansion at SR-9/SR-116 (US-25W, Exit 134) interchange;
- Campbell County, SR-63, (Howard Baker Highway) from Scott County line to I-75;
- Campbell County, SR-63, (General Carl W. Stiner Highway) from LaFollette urban boundary to Frontier Road/Woodson Lane;
- Campbell County, SR-63, (General Carl W. Stiner Hwy.) from Frontier Road/Woodson Lane to Claiborne County line;
- Campbell County, Route 0A622, North 11th Street bridge over CSX Railroad in LaFollette, LM 0.270;
- Cannon County, Route 01376, Murfreesboro Road bridge over branch, LM 4.020;
- Cannon County, Route 0A014, McAllister Lane bridge over Sanders Fork Creek, LM 0.016;
- Cannon County, Route 0A021, Marshall Creek Road bridge over Marshall Creek, LM 2.461;
- Cannon County, Route 0A059, Blair Branch Road bridge over Blair Creek, LM 0.772;
- Cannon County, Route 0A090, Tate Road bridge over Connell Creek, LM 0.024;
- Cannon County, Route 0A141, Bullpen Road bridge over Bullpen Creek, LM 1.746;
- Cannon County, Route 0A181, Gilley Hill Road bridge over Brawleys Fork Creek, LM 2.702;
- Cannon County, Route 0A184, Howard Youree Road bridge over Dug Branch, LM 0.057;
- Cannon County, Route 0A293, Jack Barnes Road bridge over Hurricane Creek, LM 0.005;
- Cannon County, Route 0A316, Castle Point bridge over Leach Creek, LM 0.215;
- Cannon County, Route 0A331, Polly Campbell Road bridge over Wilmore Creek, LM 0.010;
- Cannon County, Route 0A332, Curtis George Road bridge over Wilmore Creek, LM 0.010;
- Cannon County, Route 0A354, Ferrell Bridge Lane bridge over East Fork Stones River, LM 0.010;
- Cannon County, US-70S (SR-1), W. Main Street bridge over East Fork Stones River, LM 6.150;
- Cannon County, US-70S (SR-1), (W. Main Street) from west of Woodbury to new SR-1 (US-70S) east of Woodbury;
- Carroll County, Route 0A393, Hollow Rock Branch Road bridge over Hollow Rock Branch, LM 0.344;
- Carroll County, SR-436, Reedy Creek Road bridge over Reedy Creek, LM 0.680;
- Carroll County, US-79 (SR-76), (Broad Street S.) from east of SR-77 to west of Cutlip Lane;
- Carroll County, US-79 (SR-76), (Broad Street N.) from west of Cutlip Lane to west of Sydnor/Winston Road;
- Carter County, Route 01385, Smalling Road bridge over Watauga River, LM 1.990;
- Carter County, Route 02609, Governor Alfred Taylor Road bridge over Buffalo Creek, LM 3.510;
- Carter County, Route 02680, Cove Creek Road bridge over Doe River, LM 0.570;
- Carter County, Route 04833, Southside Road bridge over Gap Creek, LM 1.140;
- Carter County, Route 0A102, Big Sandy Road bridge over Stoney Creek, LM 0.618;
- Carter County, Route 0A250, Reeser Road bridge over Buffalo Creek, LM 0.107;
- Carter County, Route 0A373, Hillside Drive bridge over Doe River, LM 0.020;
- Carter County, Route 0A618, Paul Blevins Road bridge over Tiger Creek, LM 0.030;
- Carter County, Route 0A634, Railroad Grade Road bridge over Bear Gage Road/Doe River, LM 1.757;
- Carter County, Route 0A642, Crabtree Road bridge over George Creek, LM 0.625;
- Carter County, Route 0A656, Sugar Hollow Road bridge over Doe River, LM 0.009;
- Carter County, Route 0A724, Stevens Road bridge over Little Doe River, LM 0.087;
- Carter County, Route 0A746, Old SR-67 bridge over Laurel Fork Creek, LM 0.294;
- Carter County, Route 0A752, Stout Hollow Road bridge over Laurel Fork Creek, LM 0.008;
- Carter County, Route 0A765, Dennis Cove Road bridge over Laurel Fork Creek, LM 4.520;
- Carter County, Route 0A767, Crow Road bridge over Laurel Fork Creek, LM 0.023;
- Carter County, Route 0A869, Earl Williams Road bridge over Stoney Creek, LM 0.561;
- Carter County, Route 0A906, Danner Subdivision Road bridge over Stoney Creek, LM 0.393;
- Carter County, Route 0A961, Ensor Graveyard Road bridge over Stoney Creek, LM 0.018;
- Carter County, Route 0A967, Blevins Hollow Road bridge over Stoney Creek, LM 0.048;
- Carter County, Route 0A972, Estep Hollow Road bridge over Stoney Creek, LM 0.110;
- Carter County, Route 0A974, Estep Loop bridge over Stoney Creek, LM 1.614;
- Carter County, Route 0A984, Big Sandy Road bridge over Stoney Creek, LM 0.058;
- Carter County, Route 0B001, Honeycutt Street bridge over Doe River, LM 0.017;
- Carter County, Route 0B085, Powell Road bridge over Hampton Creek, LM 0.015;
- Carter County, Route OC102, Hopson Road bridge over Little Doe Creek, LM 0.015;
- Carter County, SR-362, Gap Creek Road bridge over Gap Creek, LM 3.845;
- Carter County, US-321 (SR-91), (W. Elk Avenue) from SR-67 (US-321) to SR-37 (US-19E);
- Cheatham County, Route 0A226, Dry Fork Road bridge over Dry Fork Creek, LM 2.401;
- Cheatham County, Route 0A235, Little Marrowbone Road bridge over Marrowbone Creek, LM 0.579;
- Cheatham County, Route 0A372, S. Harpeth Road bridge over Brush Creek, LM 1.267;
- Cheatham County, Route 0A506, Lost Hollow Lane bridge over South Harpeth River, LM 0.010;
- Cheatham County, I-24, truck climbing lane from LM 0.05 - LM 0.57;
- Cheatham County, I-24, Exit 31 ramp improvements;
- Cheatham County, I-40, bridge over Harpeth River (eastbound), LM 4.080;
- Cheatham County, I-40, bridge over Harpeth River (westbound), LM 4.080;
- Cheatham County, I-40, from SR-249 (Luyben Hills Road) to Cheatham-Davidson county line;
- Cheatham County, SR-249, Sams Creek Road bridge over Dry Creek, LM 11.540;
- Cheatham County, SR-249, Jackson Felts Road bridge over New Hope Road/I-24, LM 26.020;
- Cheatham County, SR-49, from SR-12 to I-24 (spot improvements);
- Chester County, Route 01679, Talley Store Road, three bridges over Jacks Creek, LM 2.510;
- Chester County, Route 0A035, Sanford Road bridge over Turkey Creek, LM 0.840;
- Chester County, Route 0A253, Old Jacks Creek Road bridge over Jacks Creek, LM 3.581;
- Chester County, SR-100, bridge over South Fork Forked Deer River, LM 14.160;
- Chester County, SR-100, bridge over Dry Branch, LM 16.030;
- Chester County, SR-100, (W. Main Street) from SR-5 to Church Street (Old US-5) in Henderson;
- Chester, Henderson, and McNairy counties, SR-22, safety improvements from SR-69 in Milledgeville to SR-100 in Chester County;
- Claiborne County, Route 02503, Hoop Creek Road bridge over Hoop Creek, LM 1.580;
- Claiborne County, Route 0A051, Y Hollow Road bridge over Clear Fork, LM 0.057;
- Claiborne County, Route 0A250, Bucklick Lane bridge over Big Sycamore Creek, LM 0.356;
- Claiborne County, Route 0A497, Academy Road bridge over Davis Creek, LM 0.343;
- Claiborne County, SR-33, bridge over South Fork Sycamore Creek, LM 20.560;
- Claiborne County, SR-63, from Campbell County line to Hall Lane;
- Claiborne County, SR-63, from west of Old Town Creek to SR-32 (US-25E);
- Claiborne County, US-25E (SR-32), (Dixie Highway) interchange at SR-345;
- Clay County, Route A053, John Butler Road bridge over Proctor Branch, LM 0.160;
- Clay County, Route 0A210, Wet Mill Creek Road bridge over Mill Creek, LM 7.298;
- Cocke County, Route 01326, Morrell Springs Road bridge over I-40, LM 2.230;
- Cocke County, Route 02513, Briarthicket Road bridge over Knob Creek, LM 2.950;
- Cocke County, Route 02570, Old State Highway 32 bridge over Cosby Creek, LM 0.100;
- Cocke County, Route 0A055, Chemwood Drive bridge over Sinking Creek, LM 0.089;
- Cocke County, Route 0A136, Saint Tide Hollow Road bridge over Clear Creek, LM 0.903;
- Cocke County, Route 0A238, Old Long Creek Road bridge over Long Creek, LM 0.621;
- Cocke County, Route 0A261, Toms Creek Road bridge over Trail Fork Big Creek, LM 3.486;
- Cocke County, Route 0A264, Spicewood Flats Road bridge over Trail Fork Big Creek, LM 0.050;
- Cocke County, Route 0A276, Stokley Cemetery Road bridge over Trail Fork Big Creek, LM 0.008;
- Cocke County, Route 0A277, Sterling Road bridge over Trail Fork Big Creek, LM 0.091;
- Cocke County, Route 0A407, Caney Creek Road bridge over Cosby Creek, LM 0.013;
- Cocke County, Route 0A408, Liberty Road bridge over Cosby Creek, LM 1.207;
- Cocke County, Route 0A445, Middle Creek Road bridge over Cosby Creek, LM 0.029;
- Cocke County, Route 0A447, Ball Park Road bridge over Cosby Creek, LM 0.277;
- Cocke County, Route 0A495, Old SR-35 bridge over Clear Creek, LM 1.140;
- Cocke County, Route 0A909, Briarthicket Road bridge over Nolichucky River, LM 1.113;
- Cocke County, I-40, interchange at O'Neil Road;
- Cocke County, I-40, bridge over Green Corner Road (1321), LM 21.000;
- Cocke County, I-40, bridge over SR-9, LM 1.800;
- Cocke County, I-40, ITS rural development on I-40 to state line;
- Cocke County, I-40, Hartford welcome center renovation;
- Cocke County, SR-160, bridge over Nolichucky River, LM 11.870;
- Cocke County, US-25/70(SR-9), E. Broadway bridge over Pigeon River, LM 6.820;
- Cocke County, US-321 (SR-32), (Cosby Highway) from SR-73 at Cosby to Wilton Springs Road;
- Cocke County, US-321 (SR-35), (Newport Bypass) from US-70 (SR-9) to Saint Tide Hollow Road;
- Coffee County, Route 00918, Wattendorf Memorial Highway bridge over A.E.D.C. Road/I-24, LM 7.670;
- Coffee County, Route 01111, Cat Creek Road bridge over Crumpton Creek, LM 6.990;
- Coffee County, Route 0A049, W. Grundy Street bridge over North Fork Rock Creek, LM 0.174;
- Coffee County, Route 0A409, Norton Branch Road bridge over Norton Branch, LM 0.813;
- Coffee County, Route 0A440, Duncan Road bridge over Perry Creek, LM 0.902;
- Coffee County, Route 0B188, Camp Ground Lane bridge over Duck River (OSFSP), LM 0.030;
- Coffee County, SR-127, Winchester Highway bridge over Bradley Creek, LM 4.660;
- Coffee County, SR-55, (Wilson Avenue) from First Avenue in Tullahoma to SR-16 (US-41A) north of Jackson Street;
- Coffee County, US-41 (SR-2), (Hillsboro Highway) from Joe Hickerson Road to Arnold Center Road;
- Coffee County, US-41 (SR-2), Hillsboro Road bridge over Caney Fork and Western Railroad, LM 14.280;
- Crockett County, Route 0A078, Reynolds Road bridge over Pond Creek, LM 1.082;
- Crockett County, Route 0A081, Beaver Road bridge over branch, LM 2.800;
- Crockett County, Route 0A119, Walter Taylor Road bridge over Rice Creek, LM 2.099;
- Crockett County, Route 0A170, Kenner Road bridge over branch, LM 0.840;
- Crockett County, Route 0A191, Warren Road bridge over branch of Cypress Creek, LM 1.894;
- Crockett County, Route 0A308, County Line Road bridge over branch, LM 0.270;
- Cumberland County, Route 02202, Browntown Road bridge over Pokepatch Creek, LM 3.130;
- Cumberland County, Route 02289, Wightman Road bridge over Duncan Creek, LM 3.590;
- Cumberland County, I-40, Cumberland County rest area renovation;
- Cumberland County, SR-462, (Northwest Connector) from US-127 (SR-28) to SR-298;
- Cumberland County, SR-462, (Northwest Connector) from US-70N (SR-24) to US-127 (SR-28) in Crossville;
- Cumberland County, US-127 (SR-28), from north of I-40 to near Potato Farm Road;
- Cumberland County, US-127 (SR-28), from near Potato Farm Road to near Hollow Lane;
- Cumberland County, US-127 (SR-28), from near Hollow Lane to near Lowe Road;
- Cumberland County, US-70 (SR-1), Sparta Highway bridge over Obed River, LM 12.720;
- Cumberland County, US-70N (SR-24), West Avenue bridge over Obed River, LM 15.370;
- Cumberland and Fentress counties, US-127 (SR-28), (S. York Highway) from Near Lowe Road in Cumberland County to near Little Road in Clarkrange;
- Cumberland and Putnam counties, I-40, ITS expansion at Rockwood Mountain;
- Davidson County, I-24, bridge over Mill Creek, LM 23.360;
- Davidson County, I-24, bridge over North First Street, LM 13.970;
- Davidson County, I-24, bridge (left lanes) over Cumberland River, LM 15.420;
- Davidson County, I-24, bridge over Seven Mile Creek, LM 19.200;
- Davidson County, I-24, bridge (right lanes) over Old Hickory Boulevard, LM 8.510;
- Davidson County, I-24, bridge (left lanes) over Old Hickory Boulevard, LM 8.510;
- Davidson County, I-24, bridge (right lanes) over Cumberland River, LM 15.420;
- Davidson County, I-24, interchange modification at Hickory Hollow Parkway;
- Davidson County, I-24, ramp improvements at Exits 35, 40, 57, 59, and 60;
- Davidson County, I-24, Harding Place interchange re-configuration;
- Davidson County, I-24, from North First Street to Trinity Lane;
- Davidson County, I-24, from Old Hickory Boulevard (SR-45) to I-65, Exit 40 to Exit 44;
- Davidson County, I-40, SR-255 (Donelson Pike) relocation from taxiway bridges over existing Donelson Pike to I-40;
- Davidson County, I-40, Structure 5B bridge over I-24, LM 21.580;
- Davidson County, I-40, Structure 79 bridge over I-65 ramp, LM 18.390;
- Davidson County, I-40, bridge over Nashville and Eastern Railroad, LM 20.050;
- Davidson County, I-40, Structure 80 bridge over I-40 ramp, LM 18.470;
- Davidson County, I-40, bridge over Browns Creek, LM 20.150;
- Davidson County, I-40, bridge over SR-11, SR-1, and Second Avenue South, LM 18.860;
- Davidson County, I-40, Bridge Over Mill Creek, LM 22.350;
- Davidson County, I-40, Structure 13 bridge over I-65 and I-65 ramp, LM 16.140;
- Davidson County, I-40, from McCrory Lane (Exit 192) to just west of SR-1/US-70S (Exit 196);
- Davidson County, I-440, pavement replacement and safety improvements;
- Davidson County, I-65, bridge over abandoned railroad, LM 9.850;
- Davidson County, I-65, bridge over Cumberland River and Cowan Street, LM 10.240;
- Davidson County, SR-11/US-31W, (Dickerson Pike) from Fannin Drive to Old Stone Bridge Road to include the CSX Railroad overpass structure;
- Davidson County, US-31A/41A (SR-11), (Nolensville Pike) from north of Mill Creek to near SR-254 (Old Hickory Boulevard);
- Davidson County, US-31A/41A (SR-11), Nolensville Pike bridge over CSX Railroad, LM 10.240;
- Davidson County, US-31E (SR-6), Ellington Parkway bridge over CSX Railroad, LM 12.320;
- Davidson County, US-31E (SR-6), Gallatin Pike bridge over Mansker Creek, LM 22.840;
- Davidson County, US-41A (SR-112), from SR-12 (Ashland City Highway) to SR-155 (Briley Parkway);
- Davidson County, US-41A (SR-112), Clarksville Pike bridge over Whites Creek, LM 0.550;
- Davidson County, US-431/70/70S (SR-1), (Broadway) bridge over 11th Avenue South and CSX Railroad, LM 17.290;
- Davidson County, US-70 (SR-24), (Charlotte Pike) from White Bridge Road to American Road;
- Davidson County, US-70 (SR-24), (Charlotte Pike) from American Road to I-40;
- Davidson County, US-70 (SR-24), (Charlotte Pike) from I-40 to Old Hickory Boulevard;
- Davidson, Dickson, Cheatham, Williamson, and Wilson counties, I-40, ITS expansion from US-70S (Exit 196) to I-840, and from SR-255 (Donelson Pike, Exit 216) to US-70 (Exit 239);
- Davidson and Rutherford counties, I-24, congestion reduction from I-40 in Davidson County to I-840 in Rutherford County;
- Davidson, Sumner, and Robertson counties, I-65, from Nashville to Kentucky state line;
- Decatur County, Route 0A295, Pete Tucker Loop bridge over Turnbo Creek, LM 0.830;
- DeKalb County, Route 0A095, Holmes Creek Road bridge over Fall Creek, LM 6.060;
- DeKalb County, Route 0A330, Old Dry Creek Road bridge over Dry Creek, LM 3.648;
- DeKalb and Wilson counties, US-70 (SR-26), (Nashville Highway) from west of Wilson County line to near SR-96 in DeKalb County;
- Dickson County, Route 01854, East Piney Road bridge over East Fork Piney River, LM 4.210;
- Dickson County, Route 0A177, Old Highway 47 bridge over Town Branch, LM 0.070;
- Dickson County, I-40, Dickson rest area renovation;
- Dickson County, I-840, from I-40 to SR-96;
- Dickson County, SR-46, Yellow Creek Road bridge over branch, LM 15.740;
- Dickson County, SR-46, Yellow Creek Road bridge over Yellow Creek, LM 19.060;
- Dyer County, Route 01495, Unionville Road bridge over overflow, LM 2.480;
- Dyer County, Route 0A208, Spence Spur Road bridge over drainage ditch, LM 2.370;
- Dyer County, Route 0A230, McGee Road bridge over slough, LM 1.090;
- Dyer County, Route 0A264, Hartsfield Road bridge over branch, LM 0.890;
- Dyer County, Route 0A282, Pace Road bridge over Mulherin Creek, LM 2.159;
- Dyer County, Route 0A333, Blankenship Road bridge over Mulherin Creek, LM 0.950;
- Dyer County, Route 0A493, Earl Carter Road bridge over McBride Creek, LM 1.550;
- Dyer County, Route 0A498, Meadow Road bridge over branch, LM 0.026;
- Dyer County, Route 0A616, Lovejoy Road bridge over drainage ditch, LM 1.000;
- Dyer County, I-155, Dyersburg welcome center renovation;
- Dyer County, SR-104, from US-412 (SR-20) in Dyersburg to east of Don Hurley Road;
- Dyer County, SR-104, from east of Don Hurley Road to Old SR-104 near the Gibson County line;
- Dyer County, SR-211, South Main Avenue bridge over overflow, LM 1.310;
- Dyer County, SR-211, South Main Avenue bridge over North Fork Forked Deer River, LM 1.710;
- Dyer County, SR-211, (West Main Street) from US-412 in Dyersburg to SR-77 in Newbern;
- Fayette County, Route 00840, Old Jackson Road bridge over Big Muddy Creek, LM 6.690;
- Fayette County, Route 01442, La Grange Road bridge over Wolf River overflow, LM 6.220;
- Fayette County, Route 01442, La Grange Road bridge over branch, LM 9.390;
- Fayette County, Route 01454, Raleigh-La Grange Road East bridge over branch, LM 5.260;
- Fayette County, Route 01474, Thorpe Drive bridge over branch, LM 6.740;
- Fayette County, Route 01540, Yager Drive bridge over branch, LM 0.380;
- Fayette County, Route 01553, Old Jackson Road bridge over Bear Creek, LM 2.970;
- Fayette County, Route 02706, McKinstry Road bridge over overflow, LM 8.120;
- Fayette County, Route 0A043, Old Fifty Nine Drive bridge over branch, LM 4.157;
- Fayette County, Route 0A070, Tomlin Road bridge over Treadville Creek, LM 1.421;
- Fayette County, Route 0A091, Old Jackson Road bridge over Little Creek, LM 0.440;
- Fayette County, Route 0A094, Caldwell Drive bridge over London Creek, LM 0.071;
- Fayette County, Route 0A119, Bailey Morrison Drive bridge over Gregg Creek, LM 2.142;
- Fayette County, Route 0A127, Finnie Drive bridge over branch, LM 0.261;
- Fayette County, Route 0A129, Sardis Drive bridge over branch of North Fork Wolf River, LM 2.464;
- Fayette County, Route 0A136, Newcastle Drive bridge over branch of Morrow Creek, LM 1.182;
- Fayette County, Route 0A149, Buford Ellington Road bridge over North Fork Creek, LM 0.295;
- Fayette County, Route 0A204, Hayes Road bridge over Sandy Creek, LM 0.271;
- Fayette County, Route 0A208, Chapel Road bridge over overflow, LM 0.128;
- Fayette County, Route 0A232, Johnson Drive bridge over Hurricane Creek, LM 3.051;
- Fayette County, Route 0A235, Knox Road bridge over branch, LM 2.994;
- Fayette County, Route 0A257, Mebane Road bridge over drainage ditch, LM 1.214;
- Fayette County, Route SR-193, Macon Road bridge over branch, LM 11.480;
- Fayette County, Route SR-460, (Somerville Beltway) from US-64 (SR-15) west of Somerville to US-64 (SR-15) east of Somerville;
- Fentress County, Route 02316, Little Crab Road bridge over Little Crab Creek, LM 9.450;
- Fentress County, Route 0A063, Wolf River Loop bridge over Rotten Fork Wolf River, LM 0.416;
- Fentress County, Route 0A073, Rotten Fork Road bridge over Rotten Fork Wolf River, LM 0.135;
- Fentress County, Route 0A196, Glen Obey Road bridge over Rock Castle Creek, LM 4.066;
- Fentress County, Route 0A198, Gwinn Branch Road bridge over Rock Castle Creek, LM 0.094;
- Fentress County, Route 0A302, Vines Ridge Road bridge over Big Laurel Creek, LM 1.060;
- Fentress County, SR-85, Wilder Road bridge over East Fork Obey River, LM 5.670;
- Fentress County, US-127 (SR-28), (South York Highway) from near Little Road in Clarkrange to near Kilby Road;
- Fentress and Pickett counties, US-127 (SR-28), (South York Highway) spot improvements from north of Jamestown to SR-111;
- Franklin County, Route 0A406, Old Decherd Road bridge over Wagner Creek, LM 0.259;
- Gibson County, Route 00860, Concord-Cades Road bridge over Mays Creek, LM 6.500;
- Gibson County, Route 01401, Keeley Mill Road bridge over overflow, LM 3.350;
- Gibson County, Route 01585, Salem Church Road bridge over overflow, LM 1.360;
- Gibson County, Route 01592, Old Trenton-Eaton Road bridge over Branch Buck Creek, LM 8.300;
- Gibson County, Route 01594, Old Dyersburg Road bridge over drainage ditch, LM 7.230;
- Gibson County, Route 01596, New Bethlehem Road bridge over branch, LM 6.360;
- Gibson County, Route 0A029, Happy Hollow Road bridge over York Branch, LM 0.280;
- Gibson County, Route 0A044, Esquire Green Road bridge over drainage ditch/Cow Creek, LM 0.987;
- Gibson County, Route 0A076, Conover Needham Road bridge over Edmundson Creek, LM 1.664;
- Gibson County, Route 0A077, Saw Mill Lane bridge over Edmundson Creek, LM 0.380;
- Gibson County, Route 0A159, Robert R. Thornton Road bridge over Owen Branch, LM 1.363;
- Gibson County, Route 0A161, Boham Road bridge over branch of Rutherford Fork Obion, LM 2.251;
- Gibson County, Route 0A199, Old Dyer-Yorkville Road bridge over Sand Creek, LM 1.256;
- Gibson County, Route 0A211, Nee Road bridge over Cow Creek, LM 0.371;
- Gibson County, Route 0A215, Shanklin Road bridge over Camp Creek, LM 2.124;
- Gibson County, Route 0A224, Skiff Barton Road bridge over branch of Camp Creek, LM 0.470;
- Gibson County, Route 0A254, Wildcat Lane Road bridge over Locust Grove Creek, LM 1.459;
- Gibson County, Route 0A0262, Peavine Road bridge over overflow, LM 2.050;
- Gibson County, Route 0A323, Idlewild-Holly Leaf Road bridge over branch of Thompson Creek, LM 2.658;
- Gibson County, Route 0A349, Thetford Road bridge over branch of Rutherford Fork, LM 1.390;
- Gibson County, Route 0A364, Powell Road bridge over ditch, LM 1.042;
- Gibson County, Route 0A376, Old SR-104 bridge over overflow, LM 0.097;
- Gibson County, Route 0A380, East Airport Road bridge over branch of North Fork Forked Deer River, LM 0.263;
- Gibson County, Route 0A711, Bob Hazelwood Road bridge over Hog Creek, LM 1.990;
- Gibson County, 0A715, Paul Price Road bridge over Wallsmith Branch, LM 1.128;
- Gibson County, 0A725, Casey Road bridge over Parker Branch, LM 0.604;
- Gibson County, 0A738, Esquire Hunt Road bridge over branch of Barnett Branch, LM 2.047;
- Gibson County, 0A745, Mag Duffy Road bridge over Duffy Branch, LM 1.007;
- Gibson County, Route 0A925, Daisy Donaldson Road bridge over branch, LM 0.795;
- Gibson County, Route 0A960, Quincy Butler Road bridge over branch of Middle Fork Forked Deer, LM 0.219;
- Gibson County, Route 0A978, Gumwoods Road bridge over branch, LM 2.350;
- Gibson County, Route 0A982, Gumwoods Road bridge over branch, LM 1.885;
- Gibson County, Route 0A982, Gumwoods Road bridge over branch, LM 2.420;
- Gibson County, Route 0A994, Bluff Road bridge over branch, LM 1.562;
- Gibson County, Route 0B009, Hicks Street extended bridge over branch of Rutherford Fork Obion River, LM 0.930;
- Gibson County, Route 0B010, Old Rutherford-Kenton Road bridge over branch of Rutherford Fork Obion River, LM 2.591;
- Gibson County, Route 0B011, Northerns Chapel Road bridge over branch, LM 1.659;
- Gibson County, Route 0B112, Salem Street bridge over Roe Creek in Milan, LM 0.680;
- Gibson and Carroll counties, US-79 (SR-76) from west of Cades-Atwood Road to east of SR-77;
- Gibson and Dyer counties, SR-104, (Dyersburg Highway) from Old SR-104 to west of SR-188;
- Giles County, Route 01900, Tarpley Shop Road bridge over Bunker Hill Road/I-65, LM 7.420;
- Giles County, Route 0A068, Waters Smith Road bridge over Big Creek, LM 0.020;
- Giles County, Route 0A177, Newman Road bridge over Indian Creek, LM 0.163;
- Giles County, Route 0A296, Tunnel Road bridge over CSX Railroad, LM 0.624;
- Giles County, Route 0A382, Booth Chapel Road bridge over Husley Creek, LM 1.839;
- Giles County, 0A501, Frankewing Road bridge over Bradshaw Creek, LM 0.850;
- Giles County, SR-166, Wales Road bridge over Richland Creek, LM 15.790;
- Giles County, SR-7, (Main Street) from Union Hill Road to Morrow Road in Ardmore;
- Giles County, US-31 (SR-7), Columbia Highway bridge over CSX Railroad, LM 27.720;
- Giles County, US-31 (SR-7), Columbia Highway bridge over Richland Creek, LM 28.590;
- Giles County, US-31A (SR-11), Lewisburg Highway bridge over Pigeon Roost Creek, LM 23.380;
- Grainger County, Route 02534, Little Valley Road bridge over Richland Creek, LM 0.150;
- Grainger County, Route 02540, Cherry Street bridge over branch, LM 0.910;
- Grainger County, Route 02544, Liberty Hill Road bridge over Williams Branch, LM 0.180;
- Grainger County, Route 0A026, Hogskin Road bridge over Hogskin Creek, LM 2.011;
- Grainger County, Route 0A365, Bluff Road bridge over Richland Creek, LM 0.093;
- Grainger County, Route 0A408, Milligan Lane bridge over Richland Creek, LM 0.686;
- Grainger County, SR-131, bridge over Williams Creek, LM 7.730;
- Grainger County, US-11W (SR-1), from west of Helton Road to Bean Station;
- Grainger County, US-11W (SR-1), from Rutledge to west of Helton Road;
- Grainger County, US-11W (SR-1), bridge over Shields Creek, LM 22.810;
- Grainger County, US-25E (SR-32), (Dixie Highway) off-setting intersection at SR-131;
- Greene County, Route 01346, Blue Springs Parkway bridge over Lick Creek, LM 0.390;
- Greene County, Route 03863, E. Church Street bridge over branch, LM 1.720;
- Greene County, Route 0A682, Paint Mountain Road bridge over Lower Paint Creek, LM 4.987;
- Greene County, Route 0A759, Links Mill Road bridge over Richland Creek, LM 0.033;
- Greene County, I-81, Greene County rest area renovation;
- Greene County, US-11E (SR-34), (Greeneville Bypass) from US-11E west of Greeneville to US-11E east of Greeneville;
- Greene County, US-321(SR-35), (Newport Highway) from north of Cocke County line to north of Nolichucky River (Bright Hope Road);
- Greene County, US-321 (SR-35), (Newport Highway) from north of Nolichucky River near Bright Hope Road to south of SR-349 (Warrensburg Road) near Pates Lane;
- Greene County, US-321 (SR-35), (Newport Highway) from SR-349 (Warrensburg Road) near Pates Lane to SR-34 (US-11E);
- Greene County, US-321 (SR-35), Newport Highway bridge over Nolichucky River, LM 3.070;
- Grundy County, Route 0A430, Stella Scruggs Road bridge over Pepper Hollow Branch, LM 0.092;
- Grundy County, SR-50, (Pelham Road) from mile marker 8.0, 7.5 miles east of I-24 (Exit 127), to mile marker 11.0;
- Hamblen County, Route 0A251, Britt Lane Road bridge over Spring Branch, LM 0.025;
- Hamblen County, Route 0A314, Brights Pike bridge over Spring Creek, LM 0.154;
- Hamblen County, SR-160, Enka Highway bridge over overflow, LM 0.140;
- Hamblen County, US-11E (SR-34), (E. Andrew Johnson Highway) from west of Old Stagecoach Road in Russellville to Steadman Road;
- Hamblen County, US-11E (SR-34), (E. Andrew Johnson Highway) from US-25E (SR-32) in Morristown to near East Morris Boulevard;
- Hamblen County, US-11E (SR-34), (E. Andrew Johnson Highway) from near East Morris Boulevard to west of Old Stagecoach Road in Russellville;
- Hamblen and Hawkins counties, US-11E (SR-34), (Andrew Johnson Highway) from Steadman Road to I-81;
- Hamilton County, I-24, interchange modification of I-24 and SR-2 (Broad Street) / SR-58 (Market Street);
- Hamilton County, I-24, from I-59 to US-27;
- Hamilton County, I-24, bridge over SR-27 (Rossville Boulevard), LM 9.000;
- Hamilton County, I-24, eastbound bridge over SR-2 (Broad Street), LM 8.00;
- Hamilton County, I-24, bridge over I-24 ramp to Central Avenue, LM 8.820;
- Hamilton County, I-24, bridge over Germantown Road (FAU 3577), LM 12.080;
- Hamilton County, I-24, eastbound and westbound bridge over A643 Williams, LM 8.000;
- Hamilton County, I-24, bridge over Southern Railway (abandoned), LM 10.360;
- Hamilton County, I-75, interchange modification at I-24;
- Hamilton County, I-75, interchange modification at Hamilton Place Mall;
- Hamilton County, SR-17, Bonny Oaks Drive bridge over Chickamauga Creek, LM 8.200;
- Hamilton County, SR-317, (Bonny Oaks Drive) from SR-17 to Industry Drive;
- Hamilton County, SR-317, (Bonny Oaks Drive) from Industry Drive to Adamson Circle;
- Hamilton County, SR-317, (Bonny Oaks Drive) from Adamson Circle to west of Bonnyshire Drive;
- Hamilton County, SR-317, (Bonny Oaks Drive) from west of Bonnyshire Drive to I-75;
- Hamilton County, SR-317, from SR-321 (Ooltewah-Ringgold Road) to near Layton Lane;
- Hamilton County, SR-317, from near Layton Lane to East Brainerd Road in Chattanooga;
- Hamilton County, SR-320, from east of Bel-Air Road to SR-321 (Ooltewah-Ringgold Road);
- Hamilton County, SR-320, E. Brainerd Road bridge over CSX Railroad, LM 0.860;
- Hamilton County, SR-321, from SR-317 (Apison Pike) to SR-320 (East Brainerd Road);
- Hamilton County, US-127 (SR-8), from SR-27 Suck Creek Road to north of Palisades Drive (Mountain Road);
- Hamilton and Bradley counties, I-75, from north of US-64 to US-74;
- Hancock County, SR-33, Main Street bridge over Greasy Rock Creek, LM 11.770;
- Hardeman County, Route 00865, Sain Road bridge over Spring Creek, LM 13.070;
- Hardeman County, Route 00869, Powell Chapel Road bridge over Hatchie River, LM 7.920;
- Hardeman County, Route 02320, Old Highway 64 bridge over branch, LM 2.530;
- Hardeman County, Route 0A191, Newstead Drive bridge over branch, LM 0.157;
- Hardeman County, Route 0A230, Kennedy Road bridge over branch, LM 2.590;
- Hardeman County, Route 0A338, Howell Road bridge over Wade Creek, LM 0.104;
- Hardeman County, SR-100, bridge over branch, LM 4.340;
- Hardeman County, SR-125, Silerton Road bridge over branch, LM 29.690;
- Hardeman County, SR-458, (Bolivar Bypass) from US-64 (SR-15) west of Bolivar to east of SR-18;
- Hardeman County, SR-458, (Bolivar Bypass) from east of SR-18 to west of Old Middleton Road;
- Hardeman County, US-64 (SR-15), bridge over overflow, LM 14.590;
- Hardeman County, US-64 (SR-15), bridge over Spring Creek, LM 14.710;
- Hardeman and Madison counties, SR-18, from SR-100 in Hardeman County to north of Medon/Malesus Road;
- Hardin County, Route 01723, Burnt Church Road bridge over Little Turkey Creek, LM 2.220;
- Hardin County, Route 01754, Fellowship Road bridge over Middleton Creek, LM 0.020;
- Hardin County, Route 02702, Big Ivy Road bridge over Whites Creek, LM 0.100;
- Hardin County, Route 05561, Campbell Old Mill Road bridge over Chambers Creek, LM 0.900;
- Hardin County, Route 0A048, Marshall Drive bridge over Chalk Creek, LM 2.206;
- Hardin County, Route 0A081, Hurricane Drive bridge over drainage ditch, LM 0.697;
- Hardin County, Route 0A098, Lebanon Loop bridge over Flats Creek, LM 0.683;
- Hardin County, Route 0A232, Irvin Road bridge over Choate Creek, LM 0.188;
- Hardin County, Route 0A286, Hatley Loop bridge over Hatley Creek, LM 1.127;
- Hardin County, Route 0A292, First Pittsburg Drive bridge over Mud Creek, LM 7.948;
- Hardin County, Route 0A308, Nichols Drive bridge over Horse Creek, LM 0.195;
- Hardin County, SR-128, from SR-226 (Airport Road) to south of One Stop Drive;
- Hardin County, SR-128, from Pyburn Road to SR-226 (Airport Road);
- Hardin County, SR-128, bridge over Tennessee River (Pickwick Dam), LM 0.840;
- Hawkins County, Route 0A005, Old Highway 11W bridge over Cloud Creek, LM 1.876;
- Hawkins County, Route 0A352, AFG Road bridge over Southern Railway, LM 0.447;
- Hawkins County, Route 0A682, Brown Road bridge over Beech Creek, LM 0.017;
- Hawkins County, Route 0A765, Walkers Church Road bridge over Robertson Creek, LM 0.813;
- Hawkins County, Route 0A922, S. Armstrong Road bridge over Crockett Creek, LM 0.265;
- Hawkins County, SR-31, (Flat Gap Road) from Mooresburg to Adams Lane;
- Hawkins County, SR-31, bridge over Poor Valley Creek, LM 4.170;
- Hawkins County, SR-346, E. Main Street bridge over Surgoinsville Creek, LM 3.900;
- Hawkins County, SR-66, from SR-34 in Bulls Gap to south of Speedwell Road / Old Highway 66;
- Hawkins County, SR-70, bridge over Southern Railway, LM 6.190;
- Hawkins County, SR-70, bridge over Caney Creek, LM 8.910;
- Hawkins County, US-11W (SR-1), W. Stone Drive bridge (right lane) over North Fork Holston River, LM 41.300;
- Hawkins County, US-11W (SR-1), W. Stone Drive bridge (left lane) over North Fork Holston River, LM 41.300;
- Haywood County, Route 00857, Mt. Pleasant Road bridge over Richland Creek, LM 0.100;
- Haywood County, Route 01482, Nunn Road bridge over District Branch, LM 0.800;
- Haywood County, Route 0A035, Toulon Road bridge over branch, LM 0.544;
- Haywood County, Route 0A040, Garrett Road bridge over Lost Creek, LM 0.751;
- Haywood County, Route 0A076, Gillispie Road bridge over branch, LM 0.293;
- Haywood County, Route 0A096, Sturdivant Road bridge over branch, LM 0.730;
- Haywood County, Route 0A152, Estanaula Road bridge over branch, LM 3.480;
- Haywood County, Route 0A157, Coburn Road bridge over branch, LM 3.220;
- Haywood County, SR-19, (Brownsville Bypass) from east of SR-87 to west of Windrow Road;
- Haywood County, SR-19, from Lauderdale County line to east of Binford Road;
- Haywood County, SR-19, from east of Binford Road to east of Bobby Mann Road;
- Haywood County, SR-19, from east of Bobby Mann Road to east of SR-87;
- Haywood County, US-70 (SR-1), bridge over branch, LM 2.890;
- Haywood County, US-70 (SR-1), bridge over Muddy Creek, LM 2.130;
- Haywood County, Route 01443, Stanton Koko Road bridge over Prairie Creek, LM 2.540;
- Henderson County, Route 0A238, Wake Forest Road bridge over Big Hurricane Drainage, LM 0.300;
- Henderson County, Route 0A264, Belton Robison Road bridge over Beech River, LM 1.825;
- Henderson County, Route 0A266, Rock Hill Road bridge over Haley Creek, LM 0.406;
- Henderson County, Route 0A327, Dyer Road bridge over Middle Prong Doe Creek, LM 0.338;
- Henderson County, SR-459, (Lexington Bypass) from US-412 (SR-20) west of Lexington to SR-22 south of Lexington;
- Henderson County, SR-459, (Lexington Bypass) from SR-22 south of Lexington to US-412 (SR-20) east of Lexington;
- Henry County, Route 01715, Shady Grove Road bridge over Thompson Creek, LM 2.210;
- Henry County, Route 01715, Shady Grove Road bridge over Holley Fork Creek, LM 7.290;
- Henry County, Route 0A058, Birds Creek Road bridge over Birds Creek, LM 3.091;
- Henry County, Route 0A072, Goldston Springs Road bridge over Clear Creek, LM 1.632;
- Henry County, Route 0A113, Terrapin Creek Road bridge over Sugar Creek, LM 2.574;
- Henry County, Route 0A113, Terrapin Creek Road bridge over branch, LM 3.890;
- Henry County, Route 0A118, Kuykendall Road bridge over Sandy Branch, LM 0.480;
- Henry County, Route 0A210, Red Top Hill Road bridge over Blood River, LM 2.080;
- Henry County, Route 0A434, Hagler Ridge Road bridge over Clendon Creek, LM 1.370;
- Henry County, Route 0A572, Gum Springs Road bridge over Middle Fork Obion River, LM 1.139;
- Henry County, US-641 (SR-54), from near Smith Road to Kentucky state line;
- Hickman County, Route 00942, Cane Creek Road bridge over Cane Creek, LM 3.210;
- Hickman County, Route 00961, Goodrich Road bridge over Bird Creek, LM 6.150;
- Hickman County, Route 00961, Goodrich Road bridge over branch, LM 5.900;
- Hickman County, Route 01846, Tottys Bend Road bridge over Arnold Branch, LM 2.650;
- Hickman County, Route 01846, Tottys Bend Road bridge over Duck River, LM 5.730;
- Hickman County, Route 01848, Grays Bend Road bridge over Haley Creek, LM 1.810;
- Hickman County, Route 0A100, S. Tatum Creek Road bridge over Tatum Creek, LM 0.136;
- Hickman County, Route 0A104, Tom Patton Road bridge over Jones Creek, LM 2.883;
- Hickman County, Route 0A128, Friendship Lane bridge over Mill Creek, LM 0.909;
- Hickman County, Route 0A170, Washer Road bridge over Mill Creek, LM 0.010;
- Hickman County, Route 0A176, Baker Hollow Road bridge over Little Spring Creek, LM 1.539;
- Hickman County, Route 0A270, Ugly Creek Road bridge over Blue Buck Creek, LM 5.142;
- Hickman County, Route 0A325, W. Beaverdam Road bridge over Beaver Dam Creek, LM 4.360;
- Hickman County, Route 0A325, W. Beaverdam Road bridge over Wades Branch, LM 4.135;
- Hickman County, Route 0A330, Spring Road bridge over Indian Creek, LM 0.060;
- Hickman County, Route 0A366, E. Plunders Creek Road bridge over Piney River, LM 2.157;
- Hickman County, Route 0A542, Briar Pond Road bridge over Blowing Springs, LM 7.487;
- Hickman County, Route 0A756, Barnhill Lane bridge over Haley Creek, LM 0.040;
- Hickman County, Route 0A802, Yates Lane bridge over Garner Creek, LM 0.080;
- Hickman County, SR-100, SR-48 intersection improvements;
- Hickman and Dickson counties, SR-46, from I-40 to the intersection of SR-100 and SR-7;
- Hickman County, SR-50, bridge over Duck River, LM 30.550;
- Hickman County, SR-50, Minnie Pearl Memorial Highway bridge over Duck River, LM 17.180;
- Houston County, Route 01783, Tank Hill Road bridge over Erin Branch, LM 8.390;
- Houston County, Route 0A018, Hurricane Landing Road bridge over Hurricane Creek, LM 1.107;
- Houston County, Route 0A410, Carl Norfleet Lane bridge over Pollard Branch, LM 0.090;
- Houston County, SR-49, safety improvements from SR-13 to SR-46;
- Houston County, SR-49, E. Main Street bridge over Wells Creek, LM 5.870;
- Humphreys County, Route 00910, Bakerville Road bridge over Duck River, LM 15.710;
- Humphreys County, Route 01779, Indian Creek Road bridge over Hurricane Creek, LM 7.430;
- Humphreys County, Route 01794, Cuba Landing Road bridge over North Fork Blue Creek, LM 0.100;
- Humphreys County, Route 0A058, Hemby Cemetery Lane bridge over Hemby Branch, LM 0.075;
- Humphreys County, Route 0A124, Patrick Road bridge over White Oak Creek, LM 0.034;
- Humphreys County, Route 0A144, Dry Hollow Road bridge over branch, LM 1.647;
- Humphreys County, Route 0A171, Smith Branch Road bridge over White Oak Creek, LM 0.036;
- Humphreys County, Route 0A223, Lee Lane bridge over Indian Creek, LM 0.052;
- Humphreys County, Route 0A239, Tumbling Creek Road bridge over Tumbling Creek, LM 2.020;
- Humphreys County, Route 0A239, Tumbling Creek Road bridge over Tumbling Creek, LM 3.142;
- Humphreys County, Route 0A276, Tatem Lane bridge over Blue Creek, LM 0.092;
- Humphreys County, Route 0A279, Weed Lane bridge over Blue Creek, LM 0.170;
- Humphreys County, Route 0A281, Crockett Murphree Lane bridge over I-40, LM 0.031;
- Humphreys County, Route 0A341, Cedar Grove Road bridge over Hurricane Creek, LM 0.492;
- Humphreys County, I-40, bridge (left lanes) over Buffalo River, LM 6.260;
- Humphreys County, I-40, bridge (right lanes) over Buffalo River, LM 6.260;
- Humphreys County, SR-13, from the Perry County line to I-40;
- Humphreys County, SR-13, N. Church Street bridge over SR-13 / Trace Creek, LM 19.350;
- Humphreys County, SR-13, bridge over Black Branch, LM 3.540;
- Jackson County, Route 0A021, Cox Hollow Road bridge over Wartrace Creek, LM 0.500;
- Jackson and Putnam counties, SR-96, (Martin Creek Rd.) from SR-53 to US-70N (SR-24) (spot improvements; safety improvements);
- Jefferson County, Route 01430, Spring Creek Road bridge over Long Creek, LM 0.180;
- Jefferson County, Route 02453, Lost Creek Road bridge over Lewis Creek, LM 7.540;
- Jefferson County, Route 02457, Witt Road bridge over Long Creek, LM 0.130;
- Jefferson County, Route 02500, Zirkle Road bridge over Koontz Creek, LM 1.390;
- Jefferson County, Route 02510, Mine Road bridge over Lost Creek, LM 0.100;
- Jefferson County, Route 02510, Mine Road bridge over Lost Creek, LM 1.880;
- Jefferson County, Route 02516, Bell Road bridge over Carter Creek, LM 1.370;
- Jefferson County, Route 0A082, Day Road bridge over Lost Creek, LM 1.870;
- Jefferson County, Route 0A482, Hebron Church Road bridge over Dumplin Creek, LM 0.032;
- Jefferson County, Route 0A579, Carmichael Road bridge over Long Creek, LM 0.362;
- Jefferson County, Route 0A897, Seahorn Road bridge over Lost Creek, LM 0.046;
- Jefferson County, I-40, bridge over French Broad River, LM 14.700;
- Jefferson County, I-81, I-40 to SR-341 Roy Messer Highway;
- Jefferson County, I-81, bridge over ramp to I-40 (right lane only), LM 0.270;
- Jefferson County, US-25W (SR-9), E. Meeting Street bridge over Rimmer Creek, LM 13.230;
- Jefferson County, US-25W (SR-9), bridge over Koontz Creek, LM 14.240;
- Johnson County, Route 0A064, Stage Coach Loop bridge over Doe Creek, LM 0.103;
- Johnson County, Route 0A296, Forge Creek Circle bridge over Forge Creek, LM 0.240;
- Johnson County, Route 0A375, Slimp Branch Road bridge over Roan Creek, LM 0.336;
- Johnson County, Route 0A409, Little Dry Run Road bridge over Roan Creek, LM 4.350;
- Johnson County, SR-91, from near Cold Springs Road to the Virginia state line;
- Knox County, Route 0C899, Jackson Avenue bridges over ramp to Gay Street / Ground at LM 0.24 and LM 0.26 in Knoxville, LM 0.240;
- Knox County, I-275, bridge over Elm Street, LM 0.390;
- Knox County, I-40, interchange with I-275 (I-40 westbound approach);
- Knox County, I-40, bridge over Wesley Road, LM 12.850;
- Knox County, I-40, bridge (left lanes) over 17th Street, LM 18.300;
- Knox County, I-75, interchange at I-640/275 (Sharps Gap);
- Knox County, I-75, from Emory Road (SR-131) to Raccoon Valley Road (SR-170);
- Knox County, I-75, ITS expansion from mile marker 109.6 to just before SR-61 (Exit 122);
- Knox County, SR-1/SR-332, (Kingston Pike) intersection with SR-332 (Northshore Drive);
- Knox County, SR-131, (E. Emory Road) from SR-331 to SR-33;
- Knox County, SR-162, (Pellissippi Parkway) interchange at SR-62 (Oak Ridge Highway) in Solway;
- Knox County, SR-332, S. Northshore Drive bridge over Sinking Creek, LM 2.190;
- Knox County, SR-62, (Oak Ridge Highway) from Schaad Road to SR-131;
- Knox County, US-129 (SR-115), (Alcoa Highway) from north of Little River to north of Maloney Road;
- Knox County, US-129 (SR-115), (Alcoa Highway) from Woodson Drive to Cherokee Trail interchange;
- Knox, Blount, and Sevier counties, SR-71/US-441, (Chapman Highway) Blount Avenue to SR-338 (Boyds Creek Highway) in Seymour, operations and safety improvements (multiple locations);
- Knox and Sevier counties, I-40, ITS expansion from Strawberry Plains Pike (Exit 398) interchange to SR-66 (Sevierville, Exit 407) interchange;
- Lake County, Route 02155, Free Bridge Road bridge over Running Reelfoot Bayou, LM 5.930;
- Lake and Obion counties, SR-21, from SR-78 to SR-22;
- Lauderdale County, Route 00821, Twin Rivers Road bridge over overflow, LM 2.320;
- Lauderdale County, Route 00821, Twin Rivers Road bridge over overflow, LM 2.660;
- Lauderdale County, Route 00823, Lawrence Road bridge over Sumrow Creek, LM 2.300;
- Lauderdale County, Route 04495, Unionville Road bridge over Chambers Branch, LM 2.280;
- Lauderdale County, Route 0A064, Faye Barfield Road bridge over branch of Hatchie River, LM 0.718;
- Lauderdale County, Route 0A081, Chisholm Lake Road bridge over Cold Creek, LM 4.630;
- Lauderdale County, Route 0A094, Sutton Road bridge over branch, LM 1.076;
- Lauderdale County, Route 0A099, Dr. Lewis Road bridge over branch, LM 2.631;
- Lauderdale County, Route 0A110, Turkey Hill Road bridge over branch, LM 1.757;
- Lauderdale County, Route 0A121, Dee Webb Road bridge over Knob Creek, LM 3.812;
- Lauderdale County, Route 0A140, Olds Road bridge over branch, LM 1.909;
- Lauderdale County, Route 0A142, Key Corner Road bridge over branch, LM 1.915;
- Lauderdale County, Route 0A257, Coon Dance Road bridge over branch, LM 0.393;
- Lauderdale County, Route 0A257, Coon Dance Road bridge over branch, LM 0.440;
- Lauderdale County, Route 0A291, Parchman Road bridge over branch, LM 0.627;
- Lauderdale County, Route 0A291, Parchman Road bridge over branch, LM 1.557;
- Lauderdale County, Route 0A316, John Moorer Road bridge over branch, LM 4.540;
- Lauderdale County, Route 0A316, John Moorer Road bridge over overflow, LM 4.410;
- Lauderdale County, Route 0A523, Old Brownsville Road bridge over branch, LM 1.417;
- Lauderdale County, I-69, from south of SR-87 to south of SR-19;
- Lauderdale County, I-69, from south of SR-19 to south of Coffee Shop Road;
- Lauderdale County, I-69, from south of Coffee Shop Road to south of Dry Hill Road;
- Lauderdale County, I-69, from south of Dry Hill Road to north of SR-88;
- Lauderdale County, SR-19, from east of Eastland Avenue to Haywood County line;
- Lauderdale County, SR-87, bridge over overflow, LM 3.880;
- Lauderdale County, Route 0A164, Kellar Avenue bridge over Hyde Creek in Ripley, LM 1.070;
- Lauderdale and Tipton counties, I-69, from Leigh's Chapel Road to south of SR-87;
- Lawrence County, Route 01426, Busby Road bridge over Shoal Creek, LM 6.240;
- Lawrence County, Route 0A197, Pleasant Valley Road bridge over Dry Weakley Creek, LM 1.073;
- Lewis County, Route 0A098, Sickler Road bridge over Buffalo River, LM 0.331;
- Lincoln County, Route 01967, Wells Lee Road bridge over Big Huckleberry Creek, LM 4.670;
- Lincoln County, Route 0A001, Steelman Road bridge over East Fork Mulberry Creek, LM 0.275;
- Lincoln County, Route 0A165, Providence Road bridge over branch, LM 0.059;
- Lincoln County, Route 0A187, Providence Road bridge over Mulberry Creek, LM 3.200;
- Lincoln County, Route 0A405, Kidd Lane bridge over Elk River, LM 2.000;
- Lincoln County, US-231/431 (SR-10), (Huntsville Highway) from south of Elk River to the intersection of SR-110;
- Loudon County, Route 01251, Sugar Limb Road bridge over I-75, LM 7.860;
- Loudon County, Route 0A808, Elm Street bridge over Bacon Creek, LM 0.169;
- Loudon County, I-40, bridge over I-75 (northbound lanes), LM 4.510;
- Loudon County, I-75, from Pond Creek Road (SR-323) to the I-40/I-75 junction;
- Macon County, Route 02087, Sycamore Valley Road bridge over branch, LM 1.100;
- Macon County, SR-56, various safety projects;
- Madison County, Route 00868, Mifflin Road bridge over branch, LM 3.840;
- Madison County, Route 00870, Collins Road bridge over Cobb Creek, LM 2.120;
- Madison County, Route 03043, Airways Boulevard bridge over branch, LM 1.050;
- Madison County, Route 03058, Jackson Street bridge over West Tennessee Railroad, LM 0.290;
- Madison County, Route 0A092, Turner Loop bridge over branch, LM 0.646;
- Madison County, Route 0A166, George Anderson Road bridge over overflow, LM 3.286;
- Madison County, Route 0A224, Walter Helms Cut-Off Road bridge over branch, LM 0.999;
- Madison County, Route 0A310, John Brown Road bridge over branch, LM 0.418;
- Madison County, Route 0A364, Agins Road bridge over overflow, LM 0.178;
- Madison County, Route 0A386, Vinson Road bridge over overflow, LM 0.640;
- Madison County, Route 0A538, Hicks Avenue bridge over Bond Creek, LM 0.033;
- Madison County, Route 0A603, First Street bridge over Anderson Branch, LM 0.260;
- Madison County, Route 0A980, Westover Road bridge over Anderson Branch, LM 0.522;
- Madison County, Route 0A980, Westover Road bridge over overflow, LM 0.338;
- Madison County, Route 0A980, Westover Road bridge over overflow, LM 0.623;
- Madison County, Route 0A980, Westover Road bridge over overflow, LM 0.728;
- Madison County, I-40, from east of SR-5 (US-45) to SR-1 (US-70) in Jackson;
- Madison County, I-40, from west of US-412 (SR-20, Hollywood Drive) to west of US-45 Bypass (SR-186);
- Madison County, I-40, ITS expansion in the Jackson area;
- Madison County, SR-152, Law Road bridge over I-40, LM 7.830;
- Madison County, SR-18, (Bolivar Highway) from north of Medon/Malesus Road to US-45 (SR-5) in Jackson;
- Madison County, Route SR-223, Shady Grove Road bridge over branch, LM 2.280;
- Madison County, US-45 Bypass (SR-186), (Southern Bypass) SR-186 from SR-1 (Airways Boulevard) to SR-5 (South Highland Avenue) in Jackson;
- Marion County, Route 02153, Orme Road bridge over Dry Creek, LM 0.580;
- Marion County, SR-156, approximately one mile west of Cedar Avenue in South Pittsburg to approximately 1.7 miles west;
- Marion County, US-64/72 (SR-2), from Kimball to Jasper;
- Marshall County, Route 0A273, E. Hill Avenue bridge over CSX Railroad, LM 0.408;
- Marshall County, SR-130, High Street bridge over Cane Creek, LM 0.040;
- Marshall County, US-31A (SR-11), Nashville Highway bridge over Rock Creek, LM 13.180;
- Marshall County, Route 0A261, Hatchett Road bridge over Hatchett River in Cornersville, LM 0.120;
- Maury County, Route 01897, Howard Bridge Road bridge over Duck River, LM 2.530;
- Maury County, Route 01916, Bigbyville Road bridge over Little Bigby Creek, LM 0.090;
- Maury County, Route 01924, Seavy Hight Road bridge over Fountain Creek, LM 1.070;
- Maury County, Route 02733, Lawrenceburg Highway bridge over Rattlesnake Falls Branch, LM 2.090;
- Maury County, Route 02733, Lawrenceburg Highway bridge over Tennessee Southern Railway, LM 3.180;
- Maury County, Route 03194, N. James M. Campbell Boulevard bridge over Tennessee Southern Railway, LM 0.890;
- Maury County, Route, 04624, Mt. Olivet Road bridge over Bear Creek, LM 0.050;
- Maury County, Route 0A048, Vestal Hollow Road bridge over Leipers Creek, LM 0.036;
- Maury County, Route 0A051, Martin Ervin Road bridge over Leipers Creek, LM 0.123;
- Maury County, Route 0A064, Roberts Bend Lane bridge over Knob Creek, LM 7.383;
- Maury County, Route 0A064, Roberts Bend Road bridge over Duck River, LM 3.760;
- Maury County, Route 0A068, Algie Sewell Road bridge over Leipers Creek, LM 1.191;
- Maury County, Route 0A161, Cranford Hollow Road bridge over branch, LM 0.318;
- Maury County, Route 0A163, Martin Drive bridge over Lytle Creek, LM 0.721;
- Maury County, Route 0A177, Carpenter Bridge Road bridge over Pumpkin Creek, LM 0.415;
- Maury County, Route 0A189, Daimwood Road bridge over Cedar Creek, LM 0.297;
- Maury County, Route 0A326, Martin Hollow Road bridge over Campbell Station Branch, LM 1.132;
- Maury County, Route 0A326, Martin Hollow Road bridge over South Fork Fountain Creek, LM 0.038;
- Maury County, Route 0A358, Old Highway 43 bridge over Big Bigby Branch, LM 0.423;
- Maury County, Route 0A381, Arrow Mines Road bridge over Sugar Creek, LM 0.101;
- Maury County, Route 0A408, Ashwood Road bridge over Big Bigby Creek, LM 1.311;
- Maury County, Route 0A412, Roy Thompson Road bridge over Dog Branch, LM 0.756;
- Maury County, Route 0A424, Curry Branch Road bridge over Baptist Creek, LM 2.148;
- Maury County, Route 0A570, Old Sowell Mill Pike bridge over Duck River, LM 1.050;
- Maury County, Route 0B021, Craig Bridge Road bridge over Duck River, LM 0.739;
- Maury County, Route 0B310, Old Sowell Mill Pike bridge over Cedar Creek, LM 1.567;
- Maury County, Route 0B561, John Lunn Road bridge over Aenon Creek, LM 0.566;
- Maury County, Route 0B625, Jones Valley Road bridge over branch, LM 0.010;
- Maury County, I-65, US-412 (SR-99) interchange modification;
- Maury County, SR-243, N. Main Street bridge over Sugar Creek, LM 2.060;
- Maury County, SR-247, Snow Creek Road bridge over Leipers Creek, LM 1.050;
- Maury and Lewis counties, SR-166, from west of US-43 (SR-6) to US-412 (SR-99) at Lewis County line;
- Maury and Williamson counties, US-31 (SR-6), (Main Street / Columbia Pike) from Duplex Road in Spring Hill to I-840 in Thompson's Station;
- McMinn County, I-75, interchange improvements at SR-30 and SR-305 (ramp terminals and signals);
- McMinn County, SR-163, Etowah Road bridge over Conasauga Creek, LM 13.710;
- McMinn County, SR-39, bridge over Middle Creek, LM 13.350;
- McNairy County, Route 01657, Butler Chapel Road bridge over Indian Creek, LM 6.490;
- McNairy County, Route 0A658, Mt. Vinson Road bridge over Clear Creek, LM 1.820;
- McNairy County, SR-57, bridge over overflow, LM 8.500;
- McNairy County, SR-57, bridge over branch, LM 8.850;
- McNairy County, US-64 (SR-15), Court Avenue bridge over Cypress Creek, LM 11.630;
- Meigs County, Route 0A022, Big Sewee Road bridge over Sewee Creek, LM 1.058;
- Meigs County, Route 0A733, W. Memorial Drive bridge over Decatur Branch, LM 0.370;
- Monroe County, Route 01139, Mt. Pleasant Road bridge over Mulberry Creek, LM 10.000;
- Monroe County, Route 02344, Povo Road bridge over North Fork Notchy Creek, LM 1.890;
- Monroe County, Route 02344, Povo Road bridge over North Fork Notchy Creek, LM 2.570;
- Monroe County, SR-322, (Sweetwater Vonore Road) from Sweetwater-Vonore Road to Sheppard Road;
- Monroe County, SR-322, (Sweetwater Vonore Road) from Sheppard Road to SR-72;
- Monroe County, US-11 (SR-2), S. Main Street bridge over Sweetwater Creek, LM 2.280;
- Montgomery County, Route 00975, Dotsonville Road bridge over Cummings Creek, LM 7.900;
- Montgomery County, Route 01861, Budds Creek Road bridge over Budds Creek, LM 2.800;
- Montgomery County, Route 01863, Cooper Creek Road bridge over branch, LM 1.800;
- Montgomery County, Route 01888, Shady Grove Road bridge over McAdoo Creek, LM 6.670;
- Montgomery County, Route 03148, Dunbar Cave Road bridge over branch, LM 1.270;
- Montgomery County, Route 0A009, Sulphur Springs Road bridge over Sulphur Branch, LM 1.568;
- Montgomery County, Route 0A089, Ringgold Road bridge over Illinois Central Railroad (removed), LM 1.023;
- Montgomery County, Route 0A394, Akin Road bridge over Louise Creek, LM 1.294;
- Montgomery County, I-24, from Tennessee-Kentucky state line to SR-76 (Exit 11);
- Montgomery County, I-24, Clarksville welcome center renovation;
- Montgomery County, SR-13, Kraft Street bridge over Illinois Central Railroad (removed), LM 19.890;
- Montgomery County, SR-149/374, from Dotsonville Road to SR-149, SR-149 from SR-374 to River Road;
- Montgomery County, SR-374, from Dotsonville Road to US-79 (SR-76);
- Montgomery County, SR-48, (Trenton Road) from SR-374 to I-24;
- Moore County, Route 0A083, Turkey Creek Loop bridge over Turkey Creek, LM 0.522;
- Moore County, SR-55, from intersection of Goodbranch Road to Moore County High School;
- Moore County, SR-55, (Lynchburg Highway) passing lane from the intersection at Riddle Road to the Five Points Road intersection;
- Morgan County, Route 02378, Camp Austin Road bridge over Hall Branch, LM 8.610;
- Morgan County, Route 0A019, Sexton Loop bridge over Whiteoak Creek, LM 1.882;
- Morgan County, Route 0A153, Hebbertburg Road bridge over Island Creek, LM 5.888;
- Morgan County, Route 0A253, Macedonia Road bridge over Emory River, LM 7.800;
- Morgan County, Route 0A409, Wildlife Management Area Road bridge over Island Creek, LM 10.271;
- Morgan County, Route 0A413, Frozen Head State Park Road bridge over Flat Fork Creek, LM 0.006;
- Morgan County, SR-116, Petros Highway bridge over Stockstill Creek, LM 2.260;
- Morgan County, SR-116, Petros Highway bridge over Stockstill Creek, LM 2.600;
- Morgan County, SR-298, Genesis Road bridge over Clear Creek, LM 6.050;
- Morgan County, SR-62, (Knoxville Highway) from Oliver Springs to near Petit Lane;
- Morgan County, US-27 (SR-29), from north of SR-328 to north of Ray Cross Road / Mossy Grove Road (formerly Westminster Road);
- Morgan County, US-27 (SR-29), from north of Ray Cross Road / Mossy Grove Road (formerly Westminster Road) to SR-62 in Wartburg;
- Morgan County, US-27 (SR-29), Morgan County Highway bridge over Massingale Creek, LM 26.140;
- Obion County, Route 01433, S. Bluff Road bridge over Browns Creek, LM 4.275;
- Obion County, Route 01524, W. Black Lane Road bridge over Mill Creek, LM 1.230;
- Obion County, Route 01525, Simmons Road bridge over overflow, LM 2.210;
- Obion County, Route 01528, Phesbus Road bridge over Davidson Creek, LM 0.500;
- Obion County, Route 02122, Old Turnpike Road bridge over Old Obion River Bed, LM 5.190;
- Obion County, Route 0A047, Pate Road bridge over Davidson Creek, LM 0.670;
- Obion County, Route 0A057, Cherry Road bridge over branch, LM 0.210;
- Obion County, Route 0A283, Town and Country Road bridge over branch, LM 0.520;
- Obion County, Route 0A578, W. Middle Trimble Road bridge over branch, LM 3.012;
- Obion County, Route 0A815, College Street bridge over Harris Fork Creek, LM 0.232;
- Obion County, I-69, from 1.2 miles south of SR-183 to south of SR-21 (Troy-Rives Road);
- Obion County, I-69, from south of SR-21 (Troy-Rives Road) to south of US-51;
- Obion County, I-69, from south of SR-3 to south of SR-5;
- Obion County, I-69, from south of SR-5 to west of SR-21;
- Obion County, I-69, from west of SR-21 to US-51 near Mayberry Road;
- Obion County, I-69, from Rogers Road in Kentucky to SR-3 (US-45W and US-51) in Obion County;
- Obion County, US-45W (SR-5), from Allie Campbell Road to US-51 (SR-3) in Union City;
- Obion County, US-45W (SR-5), from Troy Station Road to Allie Campbell Road;
- Obion County, US-51 (SR-3), bridge over branch, LM 15.390;
- Overton County, Route 01205, Windle Community Road bridge over Roaring River, LM 5.170;
- Overton County, Route 01506, Old SR-42 / Rickman Road bridge over Carr Creek, LM 9.060;
- Overton County, Route 0A255, Big Laurel Creek Road bridge over Big Laurel Creek, LM 0.021;
- Overton County, SR-52, (Jamestown Highway) from SR-52/85, west of Alpine to west of Pickett County line;
- Perry County, Route 00921, S. Mill Street bridge over Buffalo River, LM 0.220;
- Perry County, Route 0A008, Mousetail Landing Road bridge over Spring Creek, LM 0.049;
- Perry County, Route 0A202, Culps Bend Road bridge over Whiteoak Creek, LM 0.051;
- Perry County, SR-13, three spot improvements at locations E, H, and K from SR-20 to south of the Humphreys County line;
- Perry County, SR-13, four spot improvements at locations B, C, D, and F from SR-20 to south of the Humphreys County line;
- Polk County, Route 02268, Easley Ford Road bridge over Conasauga River, LM 1.530;
- Polk County, Route 02309, Reynolds Bridge Road bridge over Ocoee River, LM 1.940;
- Polk County, Route 0A207, Boanerges Church Road bridge over Old Fort Creek, LM 3.290;
- Polk County, Route 0A317, Columbus Road bridge over CSX Railroad, LM 1.130;
- Polk County, SR-68, bridge over SR-40, LM 18.390;
- Polk County, SR-68, Ocoee Street bridge over Davis Mill Creek, LM 21.010;
- Polk County, US-64/74 (SR-40), Ocoee River Gorge Bypass, Appalachia Corridor “K” (Phase 1);
- Polk County, US-64/74 (SR-40), Ocoee River Gorge Bypass, Appalachia Corridor “K” (Phase 3);
- Polk County, US-64/74 (SR-40), bridge over North Potato Creek, LM 26.930;
- Polk County, US-64/74 (SR-40), bridge over Ocoee River, LM 3.120;
- Putnam County, SR-135, (N. Willow Avenue) from West Broad Street to West 12th Street;
- Putnam County, SR-136, (S. Jefferson Avenue) from I-40 to SR-111;
- Rhea County, Route 0A024, Harrison Avenue bridge over Roaring Creek, LM 0.722;
- Rhea County, SR-30, (Old Washington Highway) from US-27 (SR-29) to west of the Tennessee River bridge;
- Roane County, Route 01226, Pansy Hill Drive bridge over Emory River, LM 0.280;
- Roane County, Route 01425, Caney Creek Road bridge over Caney Creek, LM 3.940;
- Roane County, Route 02374, Poplar Creek Road bridge over Poplar Creek, LM 9.240;
- Roane County, Route 0A448, Scenic Drive bridge over I-40, LM 1.198;
- Roane County, Route 0B076, Main Street bridge over Indian Creek, LM 0.048;
- Roane County, I-40, bridge over Clinch River and NFA A774, LM 11.150;
- Roane County, US-27 (SR-29), S. Roane Street bridge over Emory River, LM 7.480;
- Roane County, US-27 (SR-29), bridge over SR-29/SR-61, LM 12.100;
- Roane County, US-70 (SR-1), from SR-382 to Midtown (SR-29);
- Robertson County, Route 01021, Cross Plains Road bridge over Empson Branch, LM 8.920;
- Robertson County, Route 05353, Experiment Station Road bridge over Wartrace Creek, LM 0.610;
- Robertson County, Route 0A480, Kinneys School Road bridge over Sulphur Fork Creek, LM 1.233;
- Robertson County, I-24, ramp improvements at Exits 19 and 24;
- Robertson County, I-65, weigh station;
- Robertson County, SR-49, bridge over Calebs Creek, LM 4.930;
- Robertson County, SR-76, bridge over Sulphur Fork Creek, LM 0.210;
- Robertson County, SR-76, from Charles Drive to New Hall Road;
- Rutherford County, I-24, interchange improvements at Exits 74, 78, and 80;
- Rutherford County, I-24, ramp improvements at Exits 66, 70, 81, 84, and 89;
- Rutherford County, SR-266, (W. Jefferson Pike) from SR-102 to east of I-840;
- Rutherford County, SR-268, (N. Thompson Lane) from US-41/70S (SR-1) to SR-10;
- Rutherford County, SR-96, Franklin Road bridge over branch, LM 4.560;
- Rutherford County, SR-99, (New Salem Highway) from Cason Lane to I-24 in Murfreesboro;
- Rutherford County, SR-99, (New Salem Highway) from I-24 to SR-96 (Old Fort Parkway) in Murfreesboro;
- Rutherford County, SR-99, (New Salem Highway) from SW Loop Road to Cason Lane;
- Rutherford County, SR-99, (Bradyville Pike) from US-41 (SR-2, SE Broad Street) to Rutherford Boulevard in Murfreesboro;
- Rutherford County, SR-99, Bradyville Pike bridge over Murray Creek, LM 28.660;
- Rutherford County, US-231 (SR-10), S. Church Street bridge over CSX Railroad, LM 12.630;
- Rutherford County, US-41A (SR-16), S. Main Street bridge over Kelly Creek, LM 4.790;
- Scott County, Route 02400, Niggs Creek Road bridge over Southern Railway, LM 0.020;
- Scott County, Route 0A008, Grave Hill Ridge Road bridge over Puncheoncamp Creek, LM 1.831;
- Scott County, Route 0A040, O and W Road bridge over Pine Creek, LM 4.818;
- Scott County, Route 0A137, Angel Valley Road bridge over Jellico Creek, LM 0.006;
- Scott County, Route 0A209, Black Creek Road bridge over branch, LM 1.754;
- Scott County, Route 0A450, Stanley Creek Road bridge over Stanley Creek, LM 0.315;
- Scott County, SR-52, (Rugby Highway) from Morgan County line to SR-29 (US-27);
- Scott County, US-27 (SR-29), (Lon Foust Highway) from north of Wolf Creek Road to Old US-27 at Robbins;
- Scott County, US-27 (SR-29), (Oneida Bypass) from 5-lane section north of Oneida to 5-lane section south of Oneida;
- Sequatchie and Bledsoe counties, SR-28, from Dunlap to Pikeville;
- Sevier County, Route 0A852, Spruce Lane bridge over Roaring Fork Creek, LM 0.107;
- Sevier County, SR-449 Ext., (Veterans Boulevard) from SR-35 to Robert Henderson Road;
- Sevier County, SR-XXX, (Jake Thomas Connector) from SR-449 to SR-73 (US-321/441);
- Sevier County, US-321 (SR-73), (East Parkway) from Buckhorn Road to SR-416 (Phase 2);
- Sevier County, US-321/421 (SR-71), Parkway bridge over West Fork Little Pigeon River, LM 21.040;
- Sevier and Jefferson counties, US-411 (SR-35), (Newport Highway) from Sims Road in Sevier County to SR-92 (Dickey Road) in Jefferson County;
- Shelby County, I-240, from I-55 to I-40 near Midtown;
- Shelby County, I-240, interchange at Airways Boulevard;
- Shelby County, I-40, from SR-177 (Germantown Road) to 1.0 mile east of Canada Road;
- Shelby County, I-40, from 1.0 mile east of Canada Road to SR-205 (Collierville-Arlington Road);
- Shelby County, SR-14, (Austin Peay Highway) from east of Kerrville-Rosemark Road to Tipton County line;
- Shelby County, SR-14, (Austin Peay Highway) from SR-385 (Paul Barrett Parkway) to east of Kerrville-Rosemark Road;
- Shelby County, SR-14, Jackson Avenue bridge over Harrison Creek, LM 19.120;
- Shelby County, US-51 (SR-3), (Elvis Presley Boulevard) from Craft Road to Shelby Drive;
- Shelby County, US-51 (SR-3), Thomas Street bridge over overflow, LM 15.690;
- Shelby County, US-51 (SR-3), Thomas Street bridge over Canadian National/Illinois Central Railroad, LM 16.440;
- Shelby County, US-64/70/79 (SR-1), (Summer Avenue) from I-40 to 0.1 mile north of Sycamore View Road;
- Shelby County, US-64/70/79 (SR-1), (Summer Avenue) from 0.1 mile north of Sycamore View Road to 0.1 mile north of Elmore Road;
- Shelby County, US-70/79 (SR-1), bridge over Clear Creek, LM 25.610;
- Shelby County, US-72 (SR-57), Poplar Avenue bridge over Cypress Creek, LM 2.720;
- Shelby County, US-78 (SR-4), (Lamar Avenue) from Mississippi state line to south of Shelby Drive;
- Shelby County, US-78 (SR-4), (Lamar Avenue) from south of Shelby Drive to Raines/Perkins Road interchange;
- Shelby County, US-78 (SR-4), (Lamar Avenue) from Raines Road/Perkins Road interchange to Getwell Road (SR-176);
- Shelby County, US-78 (SR-4), Lamar Avenue bridge over ramps from I-240 and SR-4, LM 7.490;
- Shelby and Fayette counties, I-269, ITS expansion from I-40 southward to the Mississippi state line;
- Shelby and Fayette counties, SR-385, ITS expansion from mile marker 7 to mile marker 15;
- Smith County, Route 01068, Brush Creek Road bridge over Brush Creek, LM 1.020;
- Smith County, Route 02076, Webster Road bridge over Little Indian Creek, LM 0.860;
- Smith County, Route 02084, Gladice Road bridge over branch, LM 4.030;
- Smith County, Route 0A028, Old Kemp Hollow Lane bridge over Peyton Creek, LM 0.025;
- Smith County, Route 0A039, Friendship Hollow Lane S. bridge over Lankford Branch, LM 2.996;
- Smith County, Route 0A039, Friendship Hollow Lane S. bridge over Lankford Branch, LM 3.411;
- Smith County, Route 0A039, Friendship Hollow Lane S. bridge over Lankford Branch, LM 2.873;
- Smith County, I-40, bridge over Caney Fork River, LM 15.440;
- Smith County, I-40, bridge over Hickman Creek and NFA A156, LM 10.460;
- Smith County, I-40, Caney Fork River welcome center renovation;
- Smith County, SR-141, Grant Highway bridge over SR-141/I-40, LM 5.450;
- Smith County, US-70N (SR-24), rock fall mitigation (near Cordell Hull Bridge);
- Stewart County, Route 00945, Bumpus Mills Road bridge over Morgan Branch, LM 6.700;
- Stewart County, Route 01797, Pleasant Hill Road bridge over Blue Creek, LM 2.420;
- Stewart County, Route 0A335, E. Fork Leatherwood Road bridge over Harris Branch, LM 3.600;
- Stewart County, Route 0A380, Upper Standing Rock Road bridge over Terrapin Run Branch, LM 2.472;
- Stewart County, Route 0A467, Cox Hollow Road bridge over Standing Rock Creek, LM 0.535;
- Sullivan County, Route 01375, Muddy Creek Road bridge over Booher Creek, LM 0.220;
- Sullivan County, Route 01392, Old SR-37 bridge over Indian Creek, LM 1.240;
- Sullivan County, Route 02599, Devault Bridge Road bridge over Muddy Creek, LM 0.310;
- Sullivan County, Route 02640, Fordtown Road bridge over CSX Railroad, LM 3.670;
- Sullivan County, Route 03899, Fort Robinson Drive bridge over Dry Branch in Kingsport, LM 0.390;
- Sullivan County, Route 03930, State Street bridge over Beaver Creek, LM 0.170;
- Sullivan County, Route 0A353, Old Carden Hollow Road bridge over Back Creek, LM 0.445;
- Sullivan County, Route 0A456, Eighth Street bridge over Beaver Creek, LM 0.048;
- Sullivan County, Route 0A839, Wyatt Hollow Road bridge over Harpers Creek, LM 8.630;
- Sullivan County, Route 0B419, Old Blair Gap Road bridge over Walker Fort Creek, LM 2.980;
- Sullivan County, Route 0C473, Reedy Creek Lane bridge over Reedy Creek, LM 0.028;
- Sullivan County, Route 0C534, Meadow Brooke Lane bridge over Reedy Creek, LM 0.011;
- Sullivan County, Route 0C835, Henry Road bridge over Muddy Creek, LM 0.040;
- Sullivan County, I-81, ITS expansion between I-26 (Exit 57) interchange and Virginia state line;
- Sullivan County, SR-126, (Memorial Boulevard) from East Center Street in Kingsport to east of Cooks Valley Road;
- Sullivan County, SR-126, (Memorial Boulevard) from east of Cooks Valley Road to I-81 in Kingsport;
- Sullivan County, SR-355, Industry Drive bridge over Reedy Creek, LM 1.910;
- Sullivan County, SR-36, Ft. Henry Drive bridge (right lanes) over South Holston River, LM 5.020;
- Sullivan County, SR-36, Ft. Henry Drive bridge (left lanes) over South Holston River, LM 5.030;
- Sullivan County, SR-44, Dry Branch Road bridge over branch, LM 5.030;
- Sullivan County, SR-93, (Sullivan Gardens Parkway) from south of Horse Creek to north of Derby Drive (spot improvements);
- Sullivan County, SR-93, John B. Dennis Highway bridge over CSX Railroad, LM 8.440;
- Sullivan County, SR-XXX, from US-11E (SR-34) near Bristol Motor Speedway to US-11W (SR-1) near Pinnacle Parkway;
- Sullivan and Washington counties, SR-93, (Sullivan Gardens Parkway) from Morgan Lane in Washington County to south of Baileyton Road in Sullivan County (spot improvement);
- Sumner County, SR-109, (proposed SR-109 Portland Bypass) from SR-52 west of Portland to existing SR-109 north of Portland;
- Sumner County, SR-109, (proposed SR-109 Portland Bypass) from existing SR-109 south of Portland to SR-52 west of Portland;
- Sumner County, SR-174, Old US-31 E. bridge over Little Trammel Creek, LM 39.410;
- Sumner County, SR-386, interchange at Forest Retreat Road;
- Sumner County, SR-386, (Vietnam Veterans Parkway) transit managed lanes and widening from I-65 to US-31E (Phase 1);
- Sumner County, US-31E (SR-6), Nashville Pike bridge over East Fork Station Camp Creek, LM 11.910;
- Sumner County, US-31E (SR-6), Nashville Pike bridge over West Fork Station Camp Creek, LM 9.84;
- Sumner County, US-31E (SR-6), (Broadway) from East Broadway to Dobbins Pike (SR-174);
- Sumner and Davidson counties, Route 0B375, Old Shiloh Road bridge over Mansker Creek, LM 0.010;
- Tipton County, Route 00808, Bride Road bridge over Mathis Creek, LM 5.070;
- Tipton County, Route 00808, Bride Road bridge over Rocky Branch, LM 5.010;
- Tipton County, Route 01459, Dunlap Orphanage Road bridge over branch, LM 0.410;
- Tipton County, Route 01473, Old Memphis Road bridge over branch, LM 2.715;
- Tipton County, Route 05447, Maple Drive bridge over Big Branch Creek, LM 2.740;
- Tipton County, Route 0A090, Antioch-Cotton Lake Road bridge over Richland Creek, LM 1.158;
- Tipton County, Route 0A118, Salem Road bridge over Branch Creek, LM 1.050;
- Tipton County, Route 0A169, S. Terry Lane Road bridge over Hall Creek, LM 0.761;
- Tipton County, Route 0A188, McLennan Road bridge over Kelly Branch, LM 0.319;
- Tipton County, SR-14, from north of SR-384 to SR-59;
- Trousdale County, SR-141, from Hartsville Pike / Cedar Bluff intersection to north of SR-10;
- Trousdale and Macon counties, SR-10, (Hartsville Road) safety improvements from Lafayette to Hartsville;
- Unicoi County, Route 0A048, Hensley Road bridge over South Indian Creek, LM 0.008;
- Unicoi County, Route 0A051, Tumbling Creek Road bridge over Spivey Creek, LM 0.224;
- Unicoi County, Route 0A0481, Carver Road bridge over Dry Creek, LM 0.010;
- Unicoi County, Route 0A601, Locust Lane bridge over South Indian Creek, LM 0.039;
- Unicoi County, SR-107, Unicoi Drive bridge over Indian Creek, LM 5.370;
- Union County, Route 01345, Edwards Hollow Road bridge over Little Barren Creek, LM 0.030;
- Union County, Route 0A122, Bower Hollow Road bridge over Bull Run Creek, LM 2.129;
- Union County, Route 0A128, Little Tater Valley Road bridge over Bull Run Creek, LM 0.070;
- Union County, Route 0A137, S. Front Street bridge over Flat Creek, LM 2.030;
- Union County, Route 0A156, Johnson Road bridge over North Fork Bull Run Creek, LM 1.387;
- Union County, Route 0A156, Beard Valley Road bridge over Raccoon Creek, LM 5.325;
- Union County, SR-33, from Knox County line to south of SR-144 (Left);
- Union County, SR-61, from Maynardville to Luttrell north city limit;
- Van Buren County, Route 0A090, Park Road bridge over Fall Creek Falls Dam overflow, LM 2.720;
- Warren County, Route 01100, Shelbyville Road bridge over Small Branch, LM 0.590;
- Washington County, Route 01335, Glendale Road bridge over branch, LM 4.470;
- Washington County, Route 01352, Bowmantown Road bridge over Carson Creek, LM 0.930;
- Washington County, Route 02575, Telford-New Victory Road bridge over Little Limestone Creek, LM 0.140;
- Washington County, Route 03960, Milligan Highway bridge over CSX Railroad, LM 0.060;
- Washington County, Route 0A674, New Street bridge over Brush Creek, LM 0.535;
- Washington County, Route 0A873, Garland Road bridge over Limestone Creek, LM 0.534;
- Washington County, Route 0A918, Jarrett Road bridge over branch, LM 1.651;
- Washington County, Route 0A970, Mill Street bridge over Little Limestone Creek, LM 0.031;
- Washington County, Route 0B099, Little Cassi Creek Road bridge over Cassi Creek, LM 0.769;
- Washington County, Route 0B181, Tommy Campbell Road bridge over Little Cherokee Creek, LM 0.098;
- Washington County, Route 0B435, Magnolia Extension bridge over CSX Railroad, LM 0.048;
- Washington County, Route 0C900, Austin Springs Road bridge over Watauga River, LM 3.537;
- Washington County, I-26, interchange at SR-354 (Exit 17);
- Washington County, SR-353, Old SR-34 bridge over Little Limestone Creek, LM 11.720;
- Washington County, SR-93, (Sullivan Gardens Parkway) from north of Davis Road to north of Fire Hall Road (spot improvement);
- Washington County, SR-XXX (06040), (Knob Creek Road) from SR-354 (Boones Creek Road) to Mizpah Hills Drive;
- Washington County, US-11E/321 (SR-34), W. Market Street bridge over CSX Railroad, LM 15.530;
- Washington and Sullivan counties, SR-36, (Fort Henry Drive) from SR-75 to I-81;
- Wayne County, Route 01767, Hurricane Creek Road bridge over Hurricane Creek, LM 16.160;
- Wayne County, Route 0A141, Simmons Branch Road bridge over Simmons Branch, LM 1.672;
- Wayne County, Route 0A280, Hill Parkway bridge over Butler Creek, LM 0.225;
- Wayne County, Route 0A303, Rocky Ford Road bridge over Holly Branch, LM 0.140;
- Wayne County, Route 0A312, Wright Ridge Road bridge over Cypress Creek, LM 0.099;
- Wayne County, Route 0A387, Cromwell Ridge Road bridge over Bear Creek, LM 0.062;
- Weakley County, Route 00815, Ralston Road bridge over North Fork Obion River, LM 6.100;
- Weakley County, Route 00859, Old Highway 22 bridge over Middle Fork of the Obion River, LM 10.310;
- Weakley County, Route 00859, Evergreen Street bridge over overflow, LM 10.480;
- Weakley County, Route 00859, Evergreen Street bridge over overflow, LM 10.650;
- Weakley County, Route 01610, Lower Sharon Road bridge over Terrell Branch, LM 2.890;
- Weakley County, Route 01616, Oliver Road bridge over Cane Creek, LM 1.780;
- Weakley County, Route 0A060, Chestnut Glade Road bridge over Richland Creek, LM 1.271;
- Weakley County, Route 0A235, Thompson Creek Road bridge over Thompson Creek, LM 0.230;
- Weakley County, Route 0A666, Ryan Road bridge over Cypress Creek, LM 0.385;
- Weakley County, SR-54, bridge over branch, LM 5.250;
- White County, Route 0A966, Old SR-42 bridge over Falling Water River, LM 6.740;
- White County, Route 0A966, Roberts-Matthews Highway bridge over Post Oak Creek, LM 5.300;
- White County, SR-111, (Spencer Highway) grade separation at Taft Church Road in Sparta;
- Williamson County, I-65, interchange at SR-441 (Moores Lane) reconstruction;
- Williamson County, SR-100, (Fairview Boulevard) from Bowie Lake Road to I-840;
- Williamson County, SR-397, (Mack C. Hatcher Memorial Parkway) from south of SR-96 to US-431 (SR-106) (northwest quadrant);
- Williamson County, SR-397, (Mack C. Hatcher Memorial Parkway) from SR-96 east of Franklin to US-31 (SR-6, Columbia Pike) south of Franklin (southeast quadrant);
- Williamson County, SR-96, from east of Arno Road to east of SR-252 (Wilson Pike);
- Williamson County, SR-96, from east of SR-252 (Wilson Pike) to I-840;
- Williamson County, SR-96, (Franklin Road) Murfreesboro Road bridge over Mayes Creek, LM 16.760;
- Williamson County, SR-96, (Franklin Road) Third Avenue S. bridge over Harpeth River, LM 10.740;
- Williamson County, US-31 (SR-6), (Columbia Pike) from I-840 in Thompson's Station to Mack Hatcher Parkway in Franklin;
- Williamson County, US-31 (SR-6), (Columbia Pike) from Fowlkes Street to SR-397 (Mack Hatcher Parkway);
- Williamson County, US-31 (SR-6), E. Main Street bridge over Harpeth River, LM 12.510;
- Williamson County, US-31 (SR-6), Columbia Pike bridge over CSX Railroad, LM 8.890;
- Williamson County, US-31 (SR-6), Columbia Pike bridge over West Harpeth River, LM 5.720;
- Williamson County, US-31A/41A (SR-11), Horton Highway bridge over branch, LM 4.580;
- Williamson County, US-31A/41A (SR-11), Horton Highway bridge over Harpeth River, LM 3.500;
- Williamson County, US-31A/41A (SR-11), Nolensville Road bridge over branch, LM 16.230;
- Williamson County, US-31A/41A (SR-11), Nolensville Road bridge over Mill Creek, LM 14.780;
- Williamson County, US-31A/41A (SR-11), Nolensville Road bridge over McCanless Branch, LM 9.460;
- Williamson and Davidson counties, US-31A/41A (SR-11), (Nolensville Pike) from south of Burkitt Road to north of Mill Creek;
- Williamson and Rutherford counties, SR-96, from I-840 in Williamson County to Veterans Parkway;
- Wilson County, I-40, from SR-109 to I-840;
- Wilson County, I-40, from I-840 to US-70 (SR-26);
- Wilson County, I-40, new interchange at Central Pike (SR-265);
- Wilson County, SR-109, from north of US-70 (SR-24) to south of Dry Fork Creek;
- Wilson County, SR-141, (Hartsville Pike) from north of Lovers Lane to US-70 (SR-26);
- Wilson County, SR-141, (Hartsville Pike) from south of Spring Creek to north of Lovers Lane;
- Wilson County, SR-171, (Mt. Juliet Road) from Central Pike (SR-265) to Providence Way;
- Wilson County, US-70 (SR-24) (Lebanon Road) from Park Glen Drive to Bender's Ferry Road; and
- Wilson and Davidson counties, SR-265, (Central Pike) from Old Hickory Boulevard (SR-45) to Mt. Juliet Road (SR-171).
- The department of transportation may make recommendations in its annual transportation improvement program that projects be deleted from, added to, or modified in the list of projects identified in subsection (b).
-
On or before July 1, 2018, and on or before each July 1 occurring thereafter, the department of transportation shall submit a report to the general assembly on the status of the projects listed in subsection (b), including at a minimum the following information for each project:
- The date on which engineering activities began, or are anticipated to begin, if known;
- The date on which right-of-way acquisition activities began, or are anticipated to begin, if known;
- The date on which construction activities began, or are anticipated to begin, if known; and
- The date on which construction was completed, as applicable.
- The report required under subsection (d) shall be supplemental to, and not in place of, any other report the department of transportation is required to submit to the general assembly on the status of highway projects.
Acts 2017, ch. 181, § 23.
Compiler's Notes. Acts 2017, ch. 181, § 1 provided that the act, which enacted this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Effective Dates. Acts 2017, ch. 181, § 38. July 1, 2017.
Part 10
Gasoline Tax for Local Transportation Funding [Repealed]
67-3-1001. [Repealed.]
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2101, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.
Compiler's Notes. Former title 67, ch. 3, part 10, §§ 67-3-100 – 67-3-1012 concerned gasoline tax for local transportation funding.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Acts 2017, ch. 181, § 1 provided that the act, which repealed this part, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
67-3-1002. Tax additional. [Repealed.]
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2102, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1004; T.C.A., §§ 67-3-2101-67-3-2107, 67-3-2109-67-3-2112, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.
Compiler's Notes. Former title 67, ch. 3, part 10, §§ 67-3-100 – 67-3-1012 concerned gasoline tax for local transportation funding.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1003. Applicability to governmental agencies. [Repealed.]
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2103, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1004; T.C.A., §§ 67-3-2101-67-3-2107, 67-3-2109-67-3-2112, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.
Compiler's Notes. Former title 67, ch. 3, part 10, §§ 67-3-100 – 67-3-1012 concerned gasoline tax for local transportation funding.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1004. Tax authorized.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2104, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1004; T.C.A., §§ 67-3-2101-67-3-2107, 67-3-2109-67-3-2112, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.
Compiler's Notes. Former title 67, ch. 3, part 10, §§ 67-3-100 – 67-3-1012 concerned gasoline tax for local transportation funding.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1005. County levy precludes municipal levy. [Repealed.]
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2105, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1004; T.C.A., §§ 67-3-2101-67-3-2107, 67-3-2109-67-3-2112, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.
Compiler's Notes. Former title 67, ch. 3, part 10, §§ 67-3-100 – 67-3-1012 concerned gasoline tax for local transportation funding.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1006. Exemptions. [Repealed.]
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2106, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1004; T.C.A., §§ 67-3-2101-67-3-2107, 67-3-2109-67-3-2112, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.
Compiler's Notes. Former title 67, ch. 3, part 10, §§ 67-3-100 – 67-3-1012 concerned gasoline tax for local transportation funding.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1007. Referendum. [Repealed.]
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2107, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1004; T.C.A., §§ 67-3-2101-67-3-2107, 67-3-2109-67-3-2112, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.
Compiler's Notes. Former title 67, ch. 3, part 10, §§ 67-3-100 – 67-3-1012 concerned gasoline tax for local transportation funding.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1008. Petition for tax. [Repealed.]
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1004, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1004; T.C.A., §§ 67-3-2101-67-3-2107, 67-3-2109-67-3-2112, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.
Compiler's Notes. Former title 67, ch. 3, part 10, §§ 67-3-100 – 67-3-1012 concerned gasoline tax for local transportation funding.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1009. Repeal of tax. [Repealed.]
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2109, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1004; T.C.A., §§ 67-3-2101-67-3-2107, 67-3-2109-67-3-2112, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.
Compiler's Notes. Former title 67, ch. 3, part 10, §§ 67-3-100 – 67-3-1012 concerned gasoline tax for local transportation funding.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1010. Collection of tax. [Repealed.]
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2110, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1004; T.C.A., §§ 67-3-2101-67-3-2107, 67-3-2109-67-3-2112, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.
Compiler's Notes. Former title 67, ch. 3, part 10, §§ 67-3-100 – 67-3-1012 concerned gasoline tax for local transportation funding.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1011. Accounting for funds. [Repealed.]
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2111, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1004; T.C.A., §§ 67-3-2101-67-3-2107, 67-3-2109-67-3-2112, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.
Compiler's Notes. Former title 67, ch. 3, part 10, §§ 67-3-100 – 67-3-1012 concerned gasoline tax for local transportation funding.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1012. Apportionment and use of tax. [Repealed.]
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2112, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.Acts 1997, ch. 316, § 1; T.C.A., § 67-3-1004; T.C.A., §§ 67-3-2101-67-3-2107, 67-3-2109-67-3-2112, repealed by Acts 2017, ch. 181, § 24, effective July 1, 2017.
Compiler's Notes. Former title 67, ch. 3, part 10, §§ 67-3-100 – 67-3-1012 concerned gasoline tax for local transportation funding.
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Part 11
Alternative Fuels
67-3-1101. Alternative fuels — Part definitions.
As used in this part, unless the context otherwise requires:
- “Commercial purposes” means use in a trade or business;
-
“Dealer” means an entity or person who:
- Is the operator of a retail station or other retail outlet and who delivers liquified gas into the fuel supply tanks of motor vehicles;
- Delivers liquified gas into a dispenser capable of fueling motor vehicles; or
- Dispenses compressed natural gas to the public;
- “Liquified gas” means all combustible gases that exist in the gaseous state at sixty degrees Fahrenheit (60°F) and at a pressure of fourteen and seven-tenths pounds per square inch (14.7 p.s.i.) absolute, but does not include gasoline or diesel fuel or compressed natural gas;
- “Motor vehicle” means a self-propelled vehicle licensed for highway use;
- “Passenger car” means a motor vehicle designed for carrying ten (10) or fewer passengers and used for the transportation of persons;
- “Taxable sales or deliveries” means the delivery in Tennessee of liquified gas or compressed natural gas into the fuel supply tank of a motor vehicle that does not have affixed a current user permit; and
- “User” means a person who operates a motor vehicle in this state that is propelled by liquified gas or compressed natural gas.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2201; Acts 2012, ch. 822, § 1.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Cross-References. Kerosene and motor fuels quality inspection, title 47, ch. 18, part 13.
Collateral References. Taxation 371
67-3-1102. Liquified gas — Rate of tax.
-
A use tax is imposed on liquified gas used for the propulsion of motor vehicles on the public highways of this state. For the purpose of determining the tax on liquified gas, a diesel gallon equivalent factor of six and six one-hundredths pounds (6.06 lbs.) per gallon shall be used. The rate of the tax imposed by this section shall be:
- On or after July 1, 2017, through June 30, 2018, seventeen cents (17¢) per gallon;
- On or after July 1, 2018, through June 30, 2019, nineteen cents (19¢) per gallon; and
- On or after July 1, 2019, twenty-two cents (22¢) per gallon.
- Governmental agencies are exempt from the liquified gas tax imposed by subsection (a).
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2202; Acts 2014, ch. 772, § 1; 2017, ch. 181, § 25.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Amendments. The 2014 amendment added the second sentence to (a).
The 2017 amendment, in the present introductory paragraph of (a), deleted “at the rate of fourteen cents (14¢) a gallon” following “public highways of this state” in the first sentence, and added the introductory clause at the end; and added (a)(1)-(3).
Effective Dates. Acts 2014, ch. 772, § 3. April 24, 2014.
Acts 2017, ch. 181, § 38. July 1, 2017.
67-3-1103. Liquified gas — Time of payment of tax.
- A person using a liquified gas propelled motor vehicle, including a motor vehicle equipped to use liquified gas interchangeably with another motor fuel, that is required to be licensed in Tennessee for use on the public highways, shall prepay the tax imposed in § 67-3-1102 to the commissioner on an annual basis.
- An out-of-state user shall pay the liquified gas tax on delivery of the liquified gas into the fuel supply tank of a motor vehicle.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2203.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1104. Liquified gas — Dealer permits.
- A dealer who sells taxable liquified gas, or a user whose motor vehicle is licensed in this state, shall file an application with the commissioner for the kind and class of permit required by this part, which is not assignable.
- An application for a permit must be filed on a form provided by the commissioner showing the kind and class of permit desired, the odometer reading of the motor vehicle for which application is made, and other information required by the commissioner.
- A dealer permit shall be posted in a conspicuous place or kept available for inspection at the principal place of business of the permittee. A dealer permittee shall reproduce the permit and display it in a conspicuous place at each additional place of business from which liquified gas is sold, delivered or used in motor vehicles. A user permit shall be affixed in the upper right corner of the front windshield on the passenger side of the vehicle.
- A dealer permit authorizes a dealer to collect and remit taxes on liquified gas delivered into the fuel supply tanks of motor vehicles that do not have affixed a user permit.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2204.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1105. Liquified gas — Bond.
Application for a dealer permit shall be accompanied by a bond, payable to the state of Tennessee, as provided in part 6 of this chapter.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2205.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1106. [Repealed.]
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2206; repealed by Acts 2014, ch. 772, § 2, effective April 24, 2014.
Compiler's Notes. Former § 67-3-1106 concerned liquefied gas and the tax on vehicles.
67-3-1107. Liquified gas — Duration of permits.
- A dealer permit is permanent and valid as long as the permittee furnishes timely reports and remits the taxes when due, or until surrendered by the holder or cancelled by the commissioner.
- A user permit shall be issued annually and is valid from the date of issuance through June 30 of each year, unless a motor vehicle for which the tax is prepaid is sold or no longer used on the public highways. Application must be made each year for a current user permit.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2207.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1108. Liquified gas — Liability of dealer for sale to unauthorized users.
- A dealer who makes a sale or delivery of liquified gas into a fuel supply tank of a motor vehicle that does not have a user permit affixed is liable to the state for the tax imposed and shall report and pay the tax in the manner required by this part.
- A dealer may make a sale or delivery of liquified gas into a fuel supply tank of a motor vehicle that does not have a user permit affixed if the dealer is shown a copy of the application for a user permit for the motor vehicle made within thirty (30) days of the sale or delivery. However, if the user permit is not granted, the dealer shall be liable to the state for the tax imposed.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2208.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1109. Liquified gas — Records and invoices.
- A dealer shall keep for four (4) years, open to inspection at all times by the department and the attorney general and reporter, a complete record of all liquified gas received or purchased, sold, or delivered.
-
A user dealer operating a vehicle used for commercial purposes shall keep for four (4) years, open to inspection at all times by the commissioner and the attorney general and reporter, a record of:
- The total miles traveled in all states by all the user's motor vehicles traveling into or from Tennessee and the total quantity of liquified gas used in the motor vehicles; and
- The total miles traveled in Tennessee and the total quantity of liquified gas delivered into the fuel supply tanks of motor vehicles.
-
Each sale or delivery of liquified gas into the fuel supply tanks of a motor vehicle shall be evidenced by an invoice. The pre-numbered invoice must be printed and contain:
- The pre-printed or stamped name and address of the dealer;
- The date;
- The number of gallons delivered;
- The name and address of the person taking delivery;
- The number of the user permit or if the vehicle does not have a permit, the state of registration and the license number; and
- The amount of tax paid or accounted for stated separately from the selling price.
- A user required to report ending odometer readings may deduct the miles traveled outside Tennessee from the total miles traveled.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2209.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1110. Liquified gas — Reports — Payment of tax — Computation of tax.
- A dealer, on or before the twenty-fifth day of the month following the end of each calendar quarter, shall file a report and remit the tax due. A dealer who has made no taxable deliveries during the reporting period shall file a report.
- A user operating a vehicle used for commercial purposes shall be required to submit a report on or before July 25 of each year, for the previous permitted year and shall remit the tax due. The report must state the ending odometer reading, the number of miles traveled in Tennessee, the number of miles traveled outside Tennessee, and other information required by the commissioner. In the absence of an ending odometer reading, the previous year's mileage shall be presumed to be forty thousand (40,000) miles. A report shall be filed even if no tax is due. Failure to file this report shall result in the tax being assessed based upon the presumption that the vehicle traveled forty thousand (40,000) miles.
-
- In computing the tax to be remitted, a user required to report ending odometer readings shall divide the total miles traveled in Tennessee by the mileage allowance for the applicable class. The resulting number of gallons used shall be multiplied by the tax rate imposed, to obtain the tax due. The cost of the permit shall be deducted from the tax due to obtain the tax to be remitted with the annual report.
-
The number of gallons used shall be computed using the following mileage allowances:
Passenger cars — 19 miles per gallon;
Class 1 — 14 miles per gallon;
Class 2 — 14 miles per gallon;
Class 3 — 8 miles per gallon;
Class 4 — 8 miles per gallon; and
Class 5 — 5 miles per gallon.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2210.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1111. Liquified gas — Transfer, destruction, or modification of motor vehicle — Refunds of tax.
- When a motor vehicle bearing a permit is sold or transferred, the seller and purchaser shall notify the commissioner within ten (10) days of the sale or transfer and a new permit shall be issued in the new owner's name.
- When a motor vehicle bearing a permit is destroyed or the liquified gas carburetor system removed, the user shall be refunded that portion of the prepaid tax that corresponds to the number of complete months remaining in the permitted year, beginning with the month following the date on which the vehicle or carburetor was no longer utilized. No refund shall be made if the use of the vehicle ceased in June. The user shall submit to the commissioner an affidavit identifying the vehicle, the permit number, the circumstances that entitle a refund, and other information required by the commissioner. On receipt of the affidavit and when satisfied as to the circumstances, the commissioner shall make refund.
- A user is entitled to a refund of the amount of the Tennessee liquified gas tax paid on each gallon of liquified gas used outside this state. On verification by the commissioner that the report was complete and timely filed, the refund shall be paid if ten dollars ($10.00) or more is due the user. No refund less than ten dollars ($10.00) shall be paid. No refund shall be granted if the report is not timely filed.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2211.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1112. Liquified gas — Penalties for violations.
- If any permittee fails to make the reports or pay the taxes at the time required, the commissioner may, upon compliance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, suspend the permit until such time as either the reports are submitted or the taxes are paid, or both of them are done.
- If any owner of a liquified gas propelled motor vehicle that is required to be licensed in Tennessee for use on the public highways fails to prepay the tax as required in § 67-3-1106 [repealed], the commissioner shall proceed to assess and collect the amount due to be paid, together with a penalty of one hundred dollars ($100).
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2212.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Section 67-3-1106, referred to in (b), was repealed by Acts 2014, ch. 772, § 2, effective April 24, 2014.
67-3-1113. Compressed natural gas — Rate of tax.
-
A use tax is imposed on compressed natural gas used for the propulsion of motor vehicles on the public highways of this state. For the purpose of determining the tax on compressed natural gas, a gallon equivalent factor of five and sixty-six one-hundredths pounds (5.66 lbs.) per gallon shall be used. The rate of the tax imposed by this section shall be:
- On or after July 1, 2017, through June 30, 2018, sixteen cents (16¢) per gallon;
- On or after July 1, 2018, through June 30, 2019, eighteen cents (18¢) per gallon; and
- On or after July 1, 2019, twenty-one cents (21¢) per gallon.
- Governmental agencies are exempt from the compressed natural gas tax imposed by subsection (a).
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2213; Acts 2017, ch. 181, § 26.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Amendments. The 2017 amendment, in the present introductory paragraph of (a), deleted “at the rate of thirteen cents (13¢) a gallon” following “public highways of this state” in the first sentence, and added the introductory clause at the end; and added (a)(1)-(3).
Effective Dates. Acts 2017, ch. 181, § 38. July 1, 2017.
67-3-1114. Compressed natural gas — User's permits.
- A user of compressed natural gas shall apply to and obtain from the commissioner a compressed natural gas user permit, unless the user purchases compressed natural gas from a dealer defined in § 67-3-1101.
- A compressed natural gas user's permit shall be issued by the commissioner to a person who uses compressed natural gas in a licensed motor vehicle in this state. To procure a permit, each person shall file with the commissioner an application and meet the bonding provisions of part 6 of this chapter.
- A holder of a compressed natural gas user's permit shall provide written notice to the commissioner of intent to terminate the permit. Such permit shall be terminated effective on the date of the notice.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2214; Acts 2012, ch. 822, § 4.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1115. Compressed natural gas — Reports.
- For the purpose of determining the amount of tax imposed by § 67-3-1113, each permittee shall file with the commissioner, on a form prescribed by the commissioner, a monthly report on or before the twenty-fifth day of the month following the month of activity, whether or not fuel is used. The report shall be executed under a declaration of penalty of perjury and shall state the total number of gallons of compressed natural gas used by the permittee within the state.
- A permittee who consumes compressed natural gas in motor vehicles for highway use shall report each vehicle and the fuel used. Odometer readings of motor vehicles at the beginning and the end of the month shall be furnished, together with other information as required by the commissioner. The permittee shall keep odometers on all the motor vehicles in good working order at all times. The permittee need not provide odometer readings, if excused by the commissioner for good cause shown.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2215.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1116. Compressed natural gas — Records.
A user shall keep for four (4) years, open to inspection at all times by the department and the attorney general and reporter, a complete record of all compressed natural gas received and used.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2216.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1117. Compressed natural gas — Penalty for unauthorized highway usage.
The commissioner may assess a civil penalty of five hundred dollars ($500) against a person who uses compressed natural gas in a motor vehicle on the public highways without possessing a valid compressed natural gas user's permit.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2217.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1118. Compressed natural gas — Sale or transfer of motor vehicle.
When a compressed natural gas motor vehicle is sold or transferred, the seller and the purchaser shall notify the commissioner within ten (10) days of the sale or transfer, and the purchaser shall register with the department.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2218.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1119. Nonassignable compressed natural gas dealer permit.
- A dealer shall file an application with the commissioner for a compressed natural gas dealer permit, which is not assignable.
- An application for a permit shall be filed on a form provided by the commissioner.
- The permit shall be posted in a conspicuous place or kept available for inspection at the principal place of business of the permittee. A dealer permittee shall reproduce the permit and display it in a conspicuous place at each additional place of business from which natural gas is sold, delivered or used in motor vehicles.
- Application for a permit shall be accompanied by a bond, payable to this state, as provided in part 6 of this chapter.
- A permit is permanent and valid as long as the permittee furnishes timely reports and remits the taxes when due, or until surrendered by the holder or cancelled by the commissioner.
Acts 2012, ch. 822, § 2.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1120. Definition of “qualified natural gas dispenser” — Collection, remittance and reporting of taxes — Keeping of records — Inspections.
- “Qualified natural gas dispenser” means a dispenser that measures the amount dispensed by means of a National Type Evaluation Program (NTEP) certified fuel meter.
- A natural gas dealer permit authorizes a dealer to collect and remit taxes on compressed natural gas delivered into the fuel supply tanks of motor vehicles by means of a qualified natural gas dispenser with meter capability. When compressed natural gas is delivered by a dealer to a customer's vehicle by means of a qualified natural gas dispenser, user permits under this part are not required.
- Dealers shall be legally responsible for collecting the tax imposed by § 67-3-1113 at the time of delivery to a vehicle.
- For the purpose of reporting the amount of tax imposed by § 67-3-1113 on metered compressed natural gas, each dealer shall file with the commissioner, on a form prescribed by the commissioner, a monthly report on or before the twenty-fifth day of the month following the month of activity, whether or not fuel is used or sold, and remit the tax due and collected. The report shall be executed under a declaration of penalty of perjury and shall state the total amount of compressed natural gas dispensed by the permittee within the state.
- A dealer shall keep for four (4) years, open to inspection at all times by the department and the attorney general and reporter, a complete record of all metered compressed natural gas received and used or sold.
- Meters and qualified natural gas dispensers are subject to inspection and verification by the department of agriculture's weights and measures in accordance with title 47, chapter 26, part 9 and such part's enforcement provisions.
Acts 2012, ch. 822, § 3.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Part 12
Highway User Fuel Tax
67-3-1201. Part definitions.
As used in this part, unless the context otherwise requires:
- “Alternative fuels tax” means the per gallon tax on liquified gas and compressed natural gas imposed by part 11 of this chapter;
- “Diesel tax” means the per gallon tax on motor fuel imposed by part 2 of this chapter;
- “Freight motor vehicle” has the same meaning as “qualified motor vehicle” defined in subdivision (8);
- “Gasoline tax” means the per gallon tax imposed on gasoline by part 2 of this chapter;
- “Highway user fuel tax” means the gasoline tax, diesel tax, and/or alternative fuels tax as defined in this part at the rates set forth and in the amount determined under § 67-3-1204;
- “Licensee” means any person who holds an uncancelled license authorized by the international fuel tax agreement and issued by a state of the United States, the District of Columbia, or a province or territory of Canada;
- “Permittee” means any person who is the holder of a permit authorized to be issued under § 67-3-1202(a) and (b), and who is subject to the tax imposed by §§ 67-3-1203 and 67-3-1204;
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“Qualified motor vehicle” means a motor vehicle used, designed or maintained for transportation of persons or property and:
- Having two (2) axles and a gross vehicle weight or registered gross vehicle weight exceeding twenty-six thousand pounds (26,000 lbs.); or
- Having three (3) or more axles regardless of weight; or
- Is used in combination, when the weight of such combination exceeds twenty-six thousand pounds (26,000 lbs.) gross vehicle weight; and
- “Qualified motor vehicle” does not include recreational vehicles;
- “Recreational vehicle” means vehicles such as motor homes, pickup trucks with attached campers, and buses when used exclusively for personal pleasure by an individual. In order to qualify as a recreational vehicle, the vehicle shall not be used in connection with any business endeavor;
- “Revoke” or “revocation” means withdrawal of a permit or license and the privileges related to the permit or license by the jurisdiction issuing the permit or license; and
- “Suspend” or “suspension” means temporary removal of privileges granted to the permittee or licensee by the jurisdiction issuing the permit or license.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2301.
Compiler's Notes. For transfer of authority for registration of commercial motor vehicles from the department of revenue to the department of safety, see Executive Order No. 16 (June 25, 1998).
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Collateral References. Taxation 371
67-3-1202. Permits and licenses.
- Prior to operation in this state or entry into this state of any qualified motor vehicle engaged in the transportation of property in interstate commerce in or through this state, the owners or operators of such vehicle shall make application to the department for a permit or license for each such qualified motor vehicle to be operated upon the highways of this state. The application shall be upon forms furnished by the department.
- The permit or license shall be issued by the commissioner when it is determined that lawful requirements have been met by the applicant.
- A permit or license issued by the department for operation of a qualified motor vehicle shall be in the form as may be prescribed by the commissioner.
- If any qualified motor vehicle enters this state and operates upon the highways of the state without a permit or license described in subsection (c) and identification as may be prescribed by the commissioner, the owner and operator of the vehicle shall be liable for and may be required to pay all of the freight motor vehicle registration fees, licenses and taxes assessable by law.
- Notwithstanding subsection (d), a lessor who is regularly engaged in the business of leasing or renting motor vehicles without drivers for compensation to permittees or licensees or other lessees may be deemed to be the permittee or licensee, and such lessor may be issued a license if an application has been properly filed and approved by the base jurisdiction.
- In the case of a carrier using independent contractors under long-term leases, that is, a lease longer than thirty (30) days, the lessor and lessee will be given the option of designating which party will report and pay fuel use tax. If the lessee carrier assumes responsibility for reporting and paying motor fuel taxes and alternative fuel taxes, the base jurisdiction shall be the base jurisdiction of the lessee, regardless of the jurisdiction in which the qualified motor vehicle is registered for vehicle registration purposes by the lessor.
- For motor vehicle leases of thirty (30) days or less, the fuels use/miles or kilometers permit or license holder for the motor vehicle under lease will be liable.
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The department may, in its sole discretion, contract with any business entity that maintains a fleet of two hundred (200) or more motor vehicles to allow the business entity to provide any specific service, or all services, normally performed by the department relative to issuance of a permit or license authorized by this part that would have otherwise been provided by the department for each qualified motor vehicle in its fleet to be operated upon the highways of this state. The existence of such a contract shall not be interpreted to diminish, restrict, or limit the authority of the department to administer or enforce applicable provisions of any law with which a motor vehicle within the contracting business entity's fleet is not in compliance.
- Contracts with business entities entered into by the department under this subsection (h) shall set forth in detail the duties and responsibilities of each party, shall require compliance with all applicable federal and state laws, shall not contain provisions that are contrary to any federal or state statute, and shall comply with the Federal Drivers' Privacy Protection Act, compiled in 18 U.S.C. § 2721 et seq., and the Uniform Motor Vehicle Records Disclosure Act, compiled in title 55, chapter 25.
- A contract entered into under the authority of this subsection (h) shall be at no cost to the department except for the cost of decals, forms and administrative costs that the department would normally incur in issuing any permit or license authorized by this part for motor vehicles within the contracting business entity's fleet were it not for the contract.
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A contract entered into under the authority of this subsection (h) shall, in addition to all other requirements included in the contract, require the contracting business entity to:
- Keep all records, inventories, copies and other related paperwork that the department would keep if it were issuing any permit or license authorized by this part for qualified motor vehicles within the contracting business entity's fleet;
- Forward to the department, no later than the tenth day of each month, copies of all applications, permits, licenses and other related documents, completed forms, or other paperwork that the department requires and that have been issued, completed or processed by the contracting business entity during the prior month;
- No later than the tenth day of each month, remit to the department all fees and other moneys related to issuance of permits and licenses authorized by this part for qualified motor vehicles within the contracting business entity's fleet that would have been required to be collected during the prior month were it not for the contract entered into under this subsection (h); and
- Timely make all reports that the department requires, including all applicable reports that a county clerk would be required to make if the clerk were issuing permits or licenses authorized by this part for qualified motor vehicles within the contracting business entity's fleet.
- A delinquency in forwarding to the department any remittance, report, application, document, form or paperwork required of the contracting entity by law or by contract shall result in a penalty of five percent (5%) of the delinquent remittance, or the remittance associated with the delinquent report, application, document, form or paperwork, as the case may be, for each thirty (30) days or fraction of the thirty (30) days that the delinquency continues; provided, however, that the penalty may be waived by the commissioner upon the showing of good and reasonable cause. In no case shall the penalty provided for in this subdivision (h)(4) exceed twenty five percent (25%) of the remittance base.
- If the department enters into a contract with a business entity under this subsection (h) and the business entity fails to strictly comply with any requirement or provision of the contract, the contract may be rescinded in its entirety and canceled at the discretion of the commissioner; provided, however, that the effective date of the cancellation shall be thirty (30) business days after the date the department gives notice by certified mail to the business entity that the contract is being rescinded and canceled.
Acts 1997, ch. 316, § 1; 2001, ch. 166, § 2; T.C.A., § 67-3-2302; Acts 2007, ch. 484, § 106; 2008, ch. 1007, § 9.
Compiler's Notes. For transfer of authority for registration of commercial motor vehicles from the department of revenue to the department of safety, see Executive Order No. 16 (June 25, 1998).
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1203. Bond.
- In the event the commissioner determines that a bond is needed to protect state revenue, the application for a permit or license shall be accompanied by a bond, the form of which shall be prescribed by the department. The bond shall be at least twice the estimated average quarterly, or annually, if the user is filing annual, tax liability of the user.
- The required bond shall be conditioned upon quarterly, or annual, in the case of annual filers, payment on or before the due date, of the highway user fuel tax imposed per each gallon of gasoline, motor fuel or alternative fuel, used in the operation of a qualified motor vehicle on the highways of Tennessee. Instead of a personal or corporate surety on such bond, the commissioner may allow the bond to be secured by deposit of collateral, having a face value equal to the bond amount, in the form of a certificate of deposit, or equivalent to a certificate of deposit, as accepted and authorized by the banking laws of this state. Such collateral may be deposited with any authorized state depository designated by the commissioner.
Acts 1997, ch. 316, § 1; 2001, ch. 166, § 3; T.C.A., § 67-3-2303; Acts 2007, ch. 484, § 107.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Attorney General Opinions. Tax-exempt fuel provided by metropolitan airport authority to independent contractor operating local transit service, OAG 03-094(7/28/03).
67-3-1204. Amount of tax — Formula.
The amount of tax payable to the state is determined by dividing the total number of miles traveled in the state during the quarter or annual reporting period, as the case may be, by the average number of miles of motor vehicle travel per gallon of gasoline or diesel fuel, or the per gallon equivalents of alternative fuels, and multiplying the result by the rates of the tax per gallon as imposed in parts 2 and 11 of this chapter.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2304.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1205. Waiver of provisions — Temporary and restricted use fuel permits.
- The commissioner may waive this part for a freight motor vehicle carrying products of the farm during the seasonal harvest seasons to such an extent as is practical in order to encourage the bringing of farm products to Tennessee plants and mills. The commissioner is vested with authority to issue rules for the enforcement of this exception.
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- The requirements of this part may be waived with respect to a freight motor vehicle operated over the highways of this state on an occasional or infrequent basis upon the owner or operator obtaining a temporary fuel permit for the vehicle from the department.
- The temporary fuel permit may be issued for a period of time not to exceed seven (7) consecutive days and shall be valid only for the particular vehicle for which it has been issued.
- The department may furnish temporary fuel permits in bulk for issuance by the department or by private wire services and like companies pursuant to contract.
- The fee for any temporary fuel permit shall be thirty dollars ($30.00).
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- The requirements of this part shall be waived with respect to a freight motor vehicle operated over the highways of this state on an occasional or infrequent basis for the purpose of transporting horses, cattle, or other livestock, for exhibition or breeding within this state; provided, that the owner or operator obtains a restricted use fuel permit for the vehicle from the department.
- Such restricted use fuel permit shall be issued for a period of time of not less than one (1) month nor more than one (1) year, at the discretion of the owner or operator, and shall be valid only for the particular vehicle for which it has been issued and only when such vehicle is transporting horses, cattle, or other livestock, for exhibition or breeding within this state.
- The fee for such restricted use fuel permit shall be calculated at the rate of ten dollars ($10.00) for each month, and fraction of a month, during which such permit will remain valid.
- The commissioner is vested with authority to promulgate rules for the implementation and enforcement of this exception.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2305; Acts 2007, ch. 484, § 108.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1206. Annual and quarterly reports — Payments — Penalty.
- Licensees whose operations, other than in the base jurisdiction, total five thousand (5,000) miles in all international fuel tax agreement member jurisdictions may request to report on an annual basis. This will be based upon filing history. Should any licensee wish to report annually, the licensee must petition the base jurisdiction to do so. If the base jurisdiction agrees to permit annual reporting and no other jurisdiction objects, and the commissioner of revenue of this state does not object, annual reporting shall be allowed.
- Each permittee or licensee shall file a quarterly report, or annual report, if applicable, on forms prescribed by the department, showing the total number of qualified motor vehicle miles of operation in this state and any other information as may be required by the commissioner. The report shall reflect activity during the preceding calendar quarter or annual reporting period, as the case may be, and shall be due on the last day of the month following the close of the calendar quarter or annual reporting period for which the report is submitted.
- The full amount of the gasoline tax, motor fuel tax, or alternative fuel tax, imposed by this state shall be paid at the same time as the report is transmitted on or before each quarterly or annual due date set forth in subsection (b). The commissioner has the authority to require a permittee or licensee to make such payments in cash or by money order, certified check, or cashier's check.
- Failure by a permittee or licensee to file a proper quarterly or annual report, as the case may be, or to pay the proper tax may be considered by the commissioner as a basis to require such permittee or licensee to secure a bond pursuant to § 67-3-1203, or if such bond has already been secured, such failure shall cause any such bond to be forfeited.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2306; Acts 2004, ch. 566, § 1.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1207. Tax credit for purchases in state — Refund of taxes.
- Each permittee or licensee is entitled to a credit on the highway user fuel tax equivalent to the tax paid on all gasoline, motor fuel, or alternative fuel, purchased by such permittee or licensee within this state and used in its operations outside Tennessee. Evidence of payment of the tax shall be furnished by the permittee or licensee claiming the credit and such evidence shall be in the form required by, or satisfactory to, the commissioner.
- When the amount of the credit to which any permittee or licensee is entitled for any quarter, or any annual reporting period, as the case may be, exceeds the amount of the highway user fuel tax for which the permittee or licensee is liable for the same quarter, or annual reporting period, the excess may be allowed as a credit on the tax for which the permittee or licensee would otherwise be liable for another quarter or annual reporting period. Approved credit carryovers may be applied against a permittee's or licensee's highway user fuel tax liability only if claimed on a report filed for any one (1) of the eight (8) quarters succeeding the quarter in which the excess credit accrued, or in the case of annual filers, on a report filed for any one (1) of the two (2) years succeeding the year in which the excess credit accrued.
- Upon application within two (2) years from the end of any quarterly reporting period, or annual reporting period, as the case may be, duly verified and supported by evidence as may be satisfactory to the commissioner, the excess referred to in subsection (b) may be refunded. The refund may be made if it appears that the permittee or licensee has paid to another state, under a lawful requirement of that state, a tax similar in effect to the tax provided on the use or consumption in such state of gasoline, motor fuel, or alternative fuel, purchased in Tennessee. The refund shall not be made at a rate other than the Tennessee rate in effect at the time of purchase.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2307.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1208. Violations — Penalty — Interest — Refunds.
- It is unlawful for any owner or operator of a qualified motor vehicle to permit it to be operated over any highway of this state without complying with this part. A violation of this subsection (a) is a Class C misdemeanor.
- A penalty of fifty dollars ($50.00) or ten percent (10%) of the delinquent taxes, whichever is greater, shall be assessed for failure to file a report, or for filing a late report, or for underpayment of taxes.
- Interest at the rate of one percent (1%) per month, calculated from the date tax was due for each month or fraction of a month, until paid, shall be assessed on all delinquent or deficient taxes.
- Refunds determined to be properly due shall be made within ninety (90) days after receipt of a request for payment, with proper documentation, from a permittee or licensee. If the refund is not made within this time period, interest shall accrue at the rate of one percent (1%) per month calculated for each month or major fraction of a month, in excess of the time in which the refund should have been made.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2308.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Cross-References. Penalty for Class C misdemeanor, § 40-35-111.
67-3-1209. Reciprocal agreements.
- The commissioner is authorized to enter into reciprocal agreements on behalf of the state of Tennessee with the duly authorized representatives of other jurisdictions providing for the fuel use tax registration of vehicles, establishing periodic fuel use reporting and fuel use tax payment requirements from owners of such vehicles, and disbursement of funds collected due to other jurisdictions based on mileage traveled and fuel used in those jurisdictions.
- Notwithstanding any statute contrary to the provisions of any reciprocal agreement entered into by the commissioner as authorized by this section, the provisions of the reciprocal agreement shall govern and apply to all matters relating to administration and enforcement of the highway user fuel tax. In the event the language of any reciprocal agreement entered into by the commissioner, as authorized by this section, is later amended so that it conflicts with or is contrary to any statute, the commissioner shall consider the amended language of the reciprocal agreement controlling and shall administer and enforce the highway user fuel tax in accordance with the amended language of the reciprocal agreement.
- The commissioner may likewise enter into reciprocal agreements or arrangements with the duly authorized representatives of other jurisdictions to allow persons with properly registered vehicles of not less than twenty-six thousand pounds (26,000 lbs.) gross weight, or having three (3) axles that are periodically engaged in the transportation of property in or through this state, to operate such vehicles in other jurisdictions without the purchase of temporary fuel permits in such jurisdictions when used in transporting properly registered antique vehicles or antique farm equipment to and from shows or exhibitions of such vehicles or equipment. Such agreement or arrangement does not apply to any for-hire carrier.
- The commissioner may adopt and promulgate such rules and regulations as may be necessary to effectuate and administer this section.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2309.
Compiler's Notes. For transfer of authority for registration of commercial motor vehicles from the department of revenue to the department of safety, see Executive Order No. 16 (June 25, 1998).
Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1210. Delinquency of payment of taxes or fees — Suspension of permit or license — Collection.
- In the event a permittee or licensee becomes delinquent in the payment of any taxes or fees, or fails to file any report required by § 67-3-1206 by the due date, the commissioner may suspend the permit or license held by the permittee or licensee.
- Should any of the delinquencies referenced in subsection (a) continue for a period of thirty (30) days, the commissioner may revoke the permit or license held by the permittee or licensee.
- Any permittee or licensee whose permit or license has been suspended or revoked under subsection (a) or (b) may, upon payment of the required taxes or fees, plus any penalty and interest, and filing the required reports, petition the commissioner for reinstatement of the permit or license that has been suspended or revoked. Upon receipt of a reinstatement fee of one hundred dollars ($100), the commissioner shall reinstate the permit or license.
- The commissioner may require the reinstatement fee of one hundred dollars ($100) for any permit or license to be made in cash or by money order, certified check or cashier's check in any case where any two (2) checks issued by the permittee or licensee within one (1) calendar year have been dishonored.
Acts 1997, ch. 316, § 1; 2001, ch. 166, § 4; T.C.A., § 67-3-2310; Acts 2007, ch. 484, § 109.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Part 13
Special Provisions Applicable to Limited Users and Prepaid Users
67-3-1301. Purpose of this part.
The purpose of this part is to adopt special provisions applicable to limited users and prepaid users of diesel fuel. Anything to the contrary notwithstanding, limited users and prepaid users of diesel fuel are subject to all other provisions of this chapter to the extent otherwise applicable, except as provided by this part.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2401.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Collateral References. Taxation 371
67-3-1302. Part definitions.
As used in this part, unless the context otherwise requires:
- “Authorization” means an uncancelled diesel tax prepaid user authorization issued by the commissioner;
- “J Class” refers to combined farm and limited private trucks, as defined by the department;
- “Limited user” means a person who consumes diesel fuel within this state for both licensed motor vehicles and other purposes, and who is the qualified holder of an uncancelled limited user permit issued by the commissioner; and
- “Prepaid user” means a person who is the qualified holder of an uncancelled diesel tax prepaid user authorization issued by the commissioner.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2402.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1303. Limited user permits — Generally.
- Except as otherwise provided in this chapter, no purchases of undyed diesel fuel are permitted tax-free and all purchasers of diesel fuel will be required to purchase either undyed, tax-paid diesel fuel, or dyed, tax-free diesel fuel.
- An uncancelled limited user permit entitles the permittee to purchase from a licensed wholesaler or supplier undyed diesel fuel tax-free at the time of purchase, subject to the permitee's obligation to report and pay tax as provided in § 67-3-1304.
- All uncancelled permits under the prior law that are held by limited users on December 31, 1997, where the permittee made taxable use of no more than three thousand six hundred gallons (3,600 gals.) of diesel fuel during the calendar year 1997, shall remain effective on January 1, 1998, and until otherwise revoked, cancelled or terminated as further provided by this section.
- All other permits held by limited users under the prior law are revoked effective January 1, 1998.
- A holder of a permit, that has been made effective on January 1, 1998, pursuant to subsection (c), may continue to purchase undyed diesel fuel free of tax during each successive calendar year and until such holder's purchases of undyed taxable diesel fuel exceeds three thousand six hundred gallons (3,600 gals.) during a particular year.
- A holder whose purchases of undyed taxable diesel fuel exceed three thousand six hundred gallons (3,600 gals.) during a particular year shall notify the commissioner of such fact, and the commissioner shall revoke the permit.
- Upon revocation of a holder's permit, the commissioner shall notify each of holder's suppliers of the revocation.
- Purchasers of tax-paid undyed diesel fuel who have used such fuel in a tax-exempt manner may obtain refunds pursuant to part 4 of this chapter.
- No new permits shall be issued by the commissioner on or after January 1, 1998.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2403.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1304. Annual returns by limited user — Equipment reports.
- For the purpose of determining the amount of tax imposed by part 2 of this chapter, each limited user shall file with the commissioner, on a form prescribed by the commissioner, an annual return which shall include the total number of gallons of dyed and the total number of gallons of undyed fuel used by the limited user within the state during the preceding calendar year. Annual returns and remittances thereon shall be filed not later than March 31 following the close of the preceding calendar year. Returns shall be executed under a declaration of penalty of perjury and shall be filed each year whether or not any dyed or undyed fuel was used in the preceding calendar year.
- A limited user who uses undyed fuel in any diesel-powered highway vehicle shall report each piece of equipment in which it is consumed. Under no circumstances may a limited user use dyed diesel fuel in a diesel-powered highway vehicle. Odometer readings of equipment at both the beginning and the end of the month shall be furnished, together with other information as required by the commissioner. The limited user shall keep the odometers on all highway vehicles in good working order at all times. The limited user need not provide odometer readings if excused by the commissioner for good cause shown.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2404.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1305. Cancellation of permit — Revocation of permit.
- A limited user may cancel the permit by giving written notice to the department. The cancellation is effective as of the date of the notice.
- The commissioner may suspend or revoke a permit for failure to comply with this chapter after at least ten (10) days' notice to the permittee and a hearing, should such be requested, pursuant to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2405.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1306. Prepaid user authorization — Grandfather provisions.
- All holders of uncancelled prepaid user authorizations valid under prior law on December 31, 1997, are entitled to renew their authorizations for 1998, and for each successive annual authorization period, upon payment of the applicable tax stated in § 67-3-1309, on or before January 1 of the renewal period. An uncancelled prepaid user authorization entitles the holder to purchase from a wholesaler undyed diesel fuel, tax-free at the time of purchase, subject to the holder's obligation to prepay tax pursuant to § 67-3-1309.
- No new authorizations will be issued by the commissioner. Authorizations issued by the commissioner on or after January 1, 1998, shall only be renewals of previously effective authorizations as provided in subsection (a) and § 67-3-1307.
-
- The following class of persons is eligible to receive an uncancelled authorization from a holder of such authorization by gift or will: husband, wife, son, daughter, lineal ancestor, lineal descendant, brother, sister, stepchild, son-in-law or daughter-in-law of the holder. For purposes of this section, a person who is related to the holder as a result of legal adoption shall be considered to have the same relationship as a natural lineal ancestor, lineal descendant, brother, sister or stepchild.
-
The holder may effectuate the transfer of an uncancelled authorization such holder holds by the following methods:
- By noting on holder's annual authorization renewal form, that a gift has been made, including the effective date of the gift, the donee's name, social security number, address, and the relationship of the donee to the holder; or
- By provision in a probated will, stating the beneficiary's name, social security number, address, and the relationship of the beneficiary to the decedent.
- When a transfer of an uncancelled authorization under subdivision (c)(2) becomes effective, the transferor's previous authorization shall be revoked. No refund will be issued as a result of such transfer.
- Upon expiration of the time period specified in subsection (a) without a renewal of the prior year's authorization and prepayment of the applicable tax, the authorization will lapse and is not subject to renewal.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2406.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1307. Prepaid user authorization — Renewals.
The commissioner shall renew a prepaid user authorization when an application in proper form has been accepted for filing, and the other conditions and requirements of this part have been met. An authorization shall be valid from the date of its issuance through December 31 of the calendar year, or until cancelled as provided in this part. A prepaid user must make application for an authorization renewal each calendar year. The sale of a motor vehicle voids the authorization with respect to the vehicle.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2407.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1308. Prepaid user authorization — Cancellation and refund.
A prepaid user may cancel the authorization by giving written notice to the department. The cancellation is effective as of the date of the notice. The department shall refund such portion of the prepaid tax attributable to the remaining portion of the calendar year.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2408.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
67-3-1309. Diesel tax prepaid user authorization for certain farmers.
-
A farmer whose use of diesel fuel is predominately for agricultural purposes and non-highway use, and who owns or operates one (1) or more passenger cars or trucks in the weight class shown in this section, may apply for a diesel tax prepaid user authorization. Such authorization requires the holder to prepay an annual tax on the diesel fuel purchased from a wholesaler for the holder's own consumption. Prepayment of tax is at the rate prescribed for each motor vehicle based on the class of registered gross weight. The tax paid pursuant to a prepaid user authorization shall be paid on a calendar year basis. A farmer whose purchases of diesel fuel are predominately for non-agricultural purposes or highway use does not qualify for a diesel tax prepaid user authorization.
MAXIMUM WEIGHT
CLASS (LBS.) FEE
Passenger Car $56.00
J Class 1 9,000 67.50
J Class 2 16,000 67.50
J Class 3 20,000 79.00
J Class 4 26,000 84.00
J Class 5 32,000 90.00
J Class 6 38,000 95.50
J Class 7 44,000 104.00
J Class 8 56,000 135.00
J Class 9 66,000 140.50
J Class 10 74,000 149.00
J Class 11 80,000 159.00
- Whenever the holder of a diesel tax prepaid user authorization ceases to farm within this state, the authorization is void, and the prepaid user shall notify the commissioner in writing within fifteen (15) days after discontinuance. The commissioner shall refund such portion of the prepaid tax attributable to the remaining portion of the calendar year.
Acts 1997, ch. 316, § 1; T.C.A., § 67-3-2409.
Compiler's Notes. Former title 67, ch. 3, parts 12-24 were transferred to title 67, ch. 3, parts 1-13 in 2003. See the parallel reference table for former and new section locations in § 67-3-101.
Part 14
Transportation Fuel Equity Act
67-3-1401. Short title.
This part shall be known and may be cited as the “Transportation Fuel Equity Act.”
Acts 2014, ch. 908, § 4.
Effective Dates. Acts 2014, ch. 908, § 18. July 1, 2014.
67-3-1402. Legislative intent.
The use of diesel fuel by commercial carriers has significant and unique impacts on the state, and the nature of the transportation industry raises significant challenges in the administration and enforcement of fuel taxes; therefore, this general assembly enacts this part to tax persons engaging in the activity of using diesel fuels to transport passengers or goods for a fee.
Acts 2014, ch. 908, § 5.
Effective Dates. Acts 2014, ch. 908, § 18. July 1, 2014.
NOTES TO DECISIONS
1. Discrimination.
Preliminary injunctive relief to preclude imposition of a diesel fuel tax upon railroad companies was properly denied since the railroads failed to show reasonable cause to believe that the tax, which was imposed on any commercial carrier that used diesel fuel in a diesel-powered vehicle, discriminated against the railroads in violation of federal law. BNSF Ry. Co. v. Tenn. Dep't of Revenue, 800 F.3d 262, 2015 U.S. App. LEXIS 15202, 2015 FED App. 212P (6th Cir. Aug. 28, 2015).
67-3-1403. Part definitions.
Unless specifically defined in this part, all terms used in this part have the same meaning as they have elsewhere in this chapter. As used in this part:
- “Commercial carrier” means any individual, person, entity, or organization that contracts to transport passengers or goods for a fee;
- “Diesel tax” means the tax imposed by § 67-3-202;
- “Dyed diesel” means any diesel fuel that is indelibly dyed in accordance with internal revenue service regulations; and
- “Means of transportation” means any vehicle or other device employed by a commercial carrier for the purpose of transporting passengers or goods for a fee, including, but not limited to, motor vehicles, trains, and aircraft; provided, that “means of transportation” does not include any marine vessels, boats, barges, or other craft operated on waterways.
Acts 2014, ch. 908, § 6.
Effective Dates. Acts 2014, ch. 908, § 18. July 1, 2014.
67-3-1404. All diesel fuel subject to diesel tax.
All diesel fuel, whether undyed or dyed, that is used in this state by a commercial carrier to produce power for a means of transportation is subject to the diesel tax. This section prevails over any other provision of this chapter.
Acts 2014, ch. 908, § 7.
Effective Dates. Acts 2014, ch. 908, § 18. July 1, 2014.
67-3-1405. Reporting of dyed diesel usage — Due date for tax payment.
- Each commercial carrier who uses dyed diesel to produce power for a means of transportation within this state shall be subject to the tax imposed by § 67-3-202 on all such fuel so used within this state and shall register with the department and file reports on forms prescribed by the department showing the total number of gallons of dyed diesel used within this state and any other information as may be reasonably required by the commissioner. Each report shall be filed on the twentieth day of the month following the close of each calendar quarter and shall include all activities occurring during such quarter.
- The full amount of the diesel tax imposed by this state on dyed diesel shall be paid at the same time that the commercial carrier transmits the report and no later than the quarterly due date set forth in subsection (a).
Acts 2014, ch. 908, § 8.
Effective Dates. Acts 2014, ch. 908, § 18. July 1, 2014.
67-3-1406. Determination of diesel tax payable on dyed diesel — Credit for sales tax paid to another state.
- The amount of diesel tax payable to this state on dyed diesel pursuant to this part is determined by multiplying the rate of the diesel tax by the number of gallons of dyed diesel used in this state by the commercial carrier to produce power for a means of transportation.
- There shall be allowed a credit against the amount determined under subsection (a) equal to the amount, if any, of sales tax properly paid to another state upon the dyed diesel used in this state by the commercial carrier to produce power for a means of transportation.
Acts 2014, ch. 908, § 9.
Effective Dates. Acts 2014, ch. 908, § 18. July 1, 2014.
67-3-1407. Moneys collected to be deposited in the transportation equity trust fund.
All moneys collected pursuant to this part shall be deposited by the commissioner in the separate account known as the transportation equity trust fund created by § 9-4-207(a) and shall be used in the manner prescribed by § 9-4-207(b). This section prevails over any other provision of this chapter.
Acts 2014, ch. 908, § 10.
Effective Dates. Acts 2014, ch. 908, § 18. July 1, 2014.
Chapter 4
Privilege and Excise Taxes
Part 1
Collection and Licenses Generally
67-4-101. Privileges taxable — License required.
The occupations, businesses and business transactions deemed privileges are to be taxed, and not pursued without license, and shall be such as are declared by this code or by legislative acts that are not to be deemed repealed by the enactment of this code.
Code 1858, § 550; Shan., § 692; mod. Code 1932, § 1124; T.C.A. (orig. ed.), § 67-5301.
Cross-References. Professional boxing, sparring or wrestling match gross receipts tax, § 68-115-208.
Textbooks. Tennessee Jurisprudence, 15 Tenn. Juris., Insurance, § 6; 17 Tenn. Juris., Licenses, § 3.
Law Reviews.
State and Local Taxation of Financial Institutions: An Opportunity for Reform (C. James Judson & Susan G. Duffy), 39 Vand. L. Rev. 1057 (1986).
Comparative Legislation. Privilege and excise taxes:
Ala. Code § 40-12-1 et seq.
Ark. Code § 26-76-101 et seq.
Ga. O.C.G.A. § 48-13-2 et seq.
Miss. Code Ann. § 27-15-1 et seq.
Mo. Rev. Stat. § 150.010 et seq.
N.C. Gen. Stat. § 105-33 et seq.
Va. Code § 58.1-3700 et seq.
NOTES TO DECISIONS
1. Constitutionality.
Where an act provided for payment to the state of a prescribed tax by foreign insurance companies for the privilege of doing business in the state “which shall be in lieu of all other taxes,” and a subsequent law levied an additional tax for the benefit of the taxing district, the latter law was not unconstitutional on the theory that it repealed the quoted provision without reciting in its caption or otherwise the title or substance of the law repealed. Home Ins. Co. v. Taxing Dist., 72 Tenn. 644, 1880 Tenn. LEXIS 73 (1880).
A statute that requires a citizen of Tennessee or a citizen of a foreign state, who has his chief office out of the state, to pay a $100 annual privilege tax in order to engage in railway construction work, but imposing a privilege tax of only $25.00 on domestic and foreign corporations having their chief office in Tennessee, is unconstitutional because of its discrimination against nonresidents. Chalker v. Birmingham & N.W. Ry., 249 U.S. 522, 39 S. Ct. 366, 63 L. Ed. 748, 1919 U.S. LEXIS 2070 (1919).
In holding that tax on stores was not oppressive although it practically equalled the profits earned, the court stated that the power to tax privileges is not subject to the rule of uniformity (Tenn. Const., art. II, § 28), and a court cannot restrain collection on the ground of discrimination, confiscation or oppression. H.G. Hill Co. v. Whitice, 149 Tenn. 168, 258 S.W. 407, 1923 Tenn. LEXIS 89 (1923).
2. Construction.
The safe and sound rule of construction of revenue laws is to hold, in the absence of express words disclosing a different intent, that they are not intended to subject the same property to be twice charged for the same tax, nor the same business to be twice taxed for the exercise of the same privilege. Bell v. Watson & Bro., 71 Tenn. 328, 1879 Tenn. LEXIS 85 (1879); The Druggist Cases., 85 Tenn. 449, 3 S.W. 490, 1886 Tenn. LEXIS 70 (1886).
A license tax upon the privilege of keeping a theater, opera house, or concert hall where theatrical entertainments are given, includes entertainment given by companies hired by the proprietors or lessees, and such companies are not liable to an additional tax. Taxing Dist. v. Emerson, 72 Tenn. 312, 1880 Tenn. LEXIS 18 (1880).
A person exercising a privilege in different counties is, unless otherwise provided, liable for the tax in each county. R.G. Dun & Co. v. Cullen, 81 Tenn. 202, 1884 Tenn. LEXIS 25 (1884).
Statutes creating privileges will be construed so as not to impose double taxation unless such construction is required by the express word or by necessary implication. Gulf Refining Co. v. Chattanooga, 136 Tenn. 505, 190 S.W. 463, 1916 Tenn. LEXIS 155 (1916); State ex rel. Stewart v. Louisville & N. R. Co., 139 Tenn. 406, 201 S.W. 738, 1917 Tenn. LEXIS 117 (1917).
Where license issued under a privilege tax is not levied merely for revenue, state or city is not estopped or precluded from carving out of the broader privilege a distinct privilege. McMillan v. City of Knoxville, 139 Tenn. 319, 202 S.W. 65, 1917 Tenn. LEXIS 108 (1917).
3. Definitions.
The exercise of an occupation or business which requires a license from some proper authority, designated by a general law, and not open to all or anyone without such license, is a privilege within the meaning of the constitution. State v. Schlier, 55 Tenn. 455, 1871 Tenn. LEXIS 419 (1871).
A privilege is whatever occupation or business the general assembly chooses to declare and tax as such. Burke v. Memphis, 94 Tenn. 692, 30 S.W. 742, 1895 Tenn. LEXIS 54 (1895).
4. Legislative Power.
The legislature alone has power to create privileges and forbid their exercise without a license, and unless this has been done by the general assembly, a municipal corporation cannot create a privilege and tax it as such. Mayor of Columbia v. Guest, 40 Tenn. 413, 1859 Tenn. LEXIS 115 (1859); Nashville v. Althrop, 45 Tenn. 554, 1868 Tenn. LEXIS 46 (1868); Vosse v. City of Memphis, 77 Tenn. 294, 1882 Tenn. LEXIS 52 (1882).
The power of the legislature to create privileges for purposes of taxation does not depend upon its police power to prohibit the business or occupation taxed. Jenkins v. Ewin, 55 Tenn. 456, 1872 Tenn. LEXIS 112 (1871).
Power of legislature, under the constitution, to tax merchants, peddlers, and privileges is an exception to constitutional requirement of equality of taxation; and the courts may not curtail the rule nor add to the exceptions. Jenkins v. Ewin, 55 Tenn. 456, 1872 Tenn. LEXIS 112 (1871); Friedman Bros. v. Mathes, 55 Tenn. 488, 1872 Tenn. LEXIS 113 (1872).
A positive prohibition by law of the exercise of an occupation or business, or the power to prohibit, is not essential to create it a privilege; the requirement of a license is itself a prohibition to act without it. Burke v. Memphis, 94 Tenn. 692, 30 S.W. 742, 1895 Tenn. LEXIS 54 (1895).
The general assembly may exact two or more privilege taxes against the same person. Camden Fire Ins. Ass'n v. Haston, 153 Tenn. 675, 284 S.W. 905, 1925 Tenn. LEXIS 53 (1925); Home Bldg. & Loan Ass'n v. Graham, 155 Tenn. 524, 296 S.W. 10, 1926 Tenn. LEXIS 76 (1926).
5. —Rate of Taxation.
The rate of taxation on a privilege may be changed by the general assembly pending the period for which a license is issued, and the tax must be paid according to the rate fixed by law for any given time. The license is not a contract binding on the state. Kelly & McCaden v. Dwyer, 75 Tenn. 180, 1881 Tenn. LEXIS 93 (1881).
6. —Withdrawal of Privilege License.
The grant of a privilege license may be withdrawn at the discretion of the general assembly. State v. Burgoyne, 75 Tenn. 173, 1881 Tenn. LEXIS 92, 40 Am. Rep. 60 (1881).
7. —Effect of Interstate Commerce.
A law levying a privilege tax on steamboat agents and the agents of railroad companies, other than the proper officers of railroads terminating at a taxing district, is not violative of the federal constitution, not being regulatory of commerce between the states. Lightburne v. Taxing Dist., 72 Tenn. 219, 1880 Tenn. LEXIS 1 (1880).
A state cannot levy a tax to impose any other restriction upon the citizens or inhabitants of other states for selling or seeking to sell their goods in such state before they are introduced therein. Robbins v. Shelby County Taxing Dist., 120 U.S. 489, 7 S. Ct. 592, 30 L. Ed. 694, 1887 U.S. LEXIS 1993 (1887).
Interstate commerce cannot be taxed at all, even though the same amount of tax should be levied on domestic commerce, or that which is carried on solely within the state. Robbins v. Shelby County Taxing Dist., 120 U.S. 489, 7 S. Ct. 592, 30 L. Ed. 694, 1887 U.S. LEXIS 1993 (1887).
A state may tax trades, professions, and occupations, in the absence of prohibition in the state constitution in that regard, and where a resident citizen engages in a general business subject to a particular tax, the fact that the business happens to consist, for the time being, wholly or partly in negotiating sales, between resident and nonresident merchants, of goods situated in another state, does not necessarily involve the taxation of interstate commerce. Ficklen v. Shelby County Taxing Dist., 145 U.S. 1, 12 S. Ct. 810, 36 L. Ed. 601, 1892 U.S. LEXIS 2119 (1892).
When the tax is applied to an individual within the state of Tennessee engaged exclusively in selling the goods of his principal, who is a nonresident of the state, it is in effect a tax upon interstate commerce, and that fact is not in anywise altered by calling the tax one upon the occupation of the individual residing within the state while acting as agent of a nonresident principal. Stockard v. Morgan, 185 U.S. 27, 22 S. Ct. 576, 46 L. Ed. 785, 1902 U.S. LEXIS 2236 (1902). See also Robbins v. Shelby County Taxing Dist., 120 U.S. 489, 7 S. Ct. 592, 30 L. Ed. 694, 1887 U.S. LEXIS 1993 (1887).
Where barrels of oil are involved in a bargain of sale that required interstate commerce to consummate, the barrels being offered along with oil and received as a part of a transaction commercially continuous, the placing of oil in barrels was but an incident to delivery under the first act of transportation, and the transaction was within the protection of the commerce clause as it relates to local taxation. Western Oil Ref. Co. v. Dalton, 131 Tenn. 329, 174 S.W. 1138, 1914 Tenn. LEXIS 110 (1914), rev'd, Western Oil Ref. Co. v. Lipscomb, 244 U.S. 346, 37 S. Ct. 623, 61 L. Ed. 1181, 1917 U.S. LEXIS 1644 (1917), reversed on other grounds in Western Oil Ref. Co. v. Lipscomb, 244 U.S. 346, 37 S. Ct. 623, 61 L. Ed. 1181, 1917 U.S. LEXIS 1644 (1917).
Owing to the interstate character of the business, a state cannot impose a privilege tax upon the business of soliciting mail orders for intoxicating liquor from persons in other states, and the delivery for interstate shipment to a carrier within the state in fulfillment of such orders from an existing stock of liquor on hand in the state. Heyman v. Hays, 236 U.S. 178, 35 S. Ct. 403, 59 L. Ed. 527, 1915 U.S. LEXIS 1747 (1915).
A shipment, by a foreign corporation, of a tank car containing just the quantity of oil and the number of barrels necessary to fill orders taken by traveling salesmen in two towns in Tennessee, the car being first sent to one town at which orders for that place were filled, whereupon the car was rebilled to the other town and orders from that place filled, cannot be subjected to a privilege tax without violating the commerce clause of the federal constitution. Western Oil Ref. Co. v. Lipscomb, 244 U.S. 346, 37 S. Ct. 623, 61 L. Ed. 1181, 1917 U.S. LEXIS 1644 (1917).
A state may not lay a tax on the privilege of engaging in interstate commerce as such. Interstate Transit, Inc. v. Lindsey, 283 U.S. 183, 51 S. Ct. 380, 75 L. Ed. 953, 1931 U.S. LEXIS 138 (1931).
8. —Effect on Criminal Law.
A criminal law is not repealed by implication by a statute declaring the violation thereof a privilege, and taxing it as such. Palmer v. State, 88 Tenn. 553, 13 S.W. 233, 1889 Tenn. LEXIS 76, 8 L.R.A. 280 (1889).
9. —Effect of Repeal.
The repeal of a statute levying a privilege tax will not affect the liability of a person against whom the tax had accrued. State v. Nashville Sav. Bank, 84 Tenn. 111, 1885 Tenn. LEXIS 121 (1885).
10. Legislative Classification.
The general assembly may classify merchants for purposes of taxation, and tax each class, and if a merchant of one class paying a tax as such, adds to the occupation another though kindred business, which is additionally taxed, he must pay the additional tax. Kelly & McCaden v. Dwyer, 75 Tenn. 180, 1881 Tenn. LEXIS 93 (1881); Eastman v. Jackson, 78 Tenn. 162, 1882 Tenn. LEXIS 157 (1882).
The general assembly may classify taxpayers, and, in doing so, use as bases: the advantages of a particular location of a licensee, difference in population, the character of the business, and income derived. The general assembly may also graduate the tax applicable to each class, and such classification will not be disturbed by the courts if any reason may be conceived to justify it. Marion County, Tenn., River Transp. Co. v. Stokes, 173 Tenn. 347, 117 S.W.2d 740, 1937 Tenn. LEXIS 32 (1937).
11. Taxable Privileges.
Exhibition of circus or menagerie was taxable as a privilege since exhibition was restricted to persons having a license for that purpose and was not open to all. Robertson & Eldred v. Heneger, 37 Tenn. 257, 1857 Tenn. LEXIS 118 (1857).
A merchant tailor or his agent who sells by sample, taking measurements and sending the clothing from another state, may be made subject to a privilege tax. Singleton v. Fritsch, 72 Tenn. 93, 1879 Tenn. LEXIS 9 (1879); Murray v. State, 79 Tenn. 218, 1883 Tenn. LEXIS 46 (1883); Robbins v. Taxing Dist., 81 Tenn. 303, 1884 Tenn. LEXIS 42 (1884), rev'd, 120 U.S. 489, 7 S. Ct. 592, 30 L. Ed. 694, 1887 U.S. LEXIS 1993 (1887).
Statute taxing “keeping of dogs” as a privilege is invalid, since it is a tax on ownership or harboring of dogs, and is not a tax on use of dogs for profit. Phillips v. Lewis, 3 Shan. 230 (1877).
Dealers in futures may be made subject to a privilege tax. Memphis Brokerage Ass'n v. Cullen, 79 Tenn. 75, 1883 Tenn. LEXIS 15 (1883).
A mutual insurance company may be made subject to a privilege tax although its charter declares its object to be “the general good and not individual profit.” Co-operative Fire Ins. Order v. Lewis, 80 Tenn. 136, 1883 Tenn. LEXIS 150 (1883).
Commercial agencies may be made subject to a privilege tax. R.G. Dun & Co. v. Cullen, 81 Tenn. 202, 1884 Tenn. LEXIS 25 (1884).
Savings banks may be liable for a privilege tax and may be required to pay the same even though they have earned no surplus. State v. Lincoln Sav. Bank, 82 Tenn. 42, 1884 Tenn. LEXIS 102 (1884).
A broker within privilege tax laws, is an agent who negotiates sales between parties for a commission, and consequently a person who sells only stocks and bonds bought by him is not a broker. State v. Duncan, 84 Tenn. 75, 1885 Tenn. LEXIS 116 (1885).
Under a law levying a privilege tax upon “fire and all other insurance corporations or companies of states and foreign countries, except life insurance corporations or companies,” insurance companies writing fidelity bonds are subject to such tax. American Surety Co. v. Folk, 124 Tenn. 139, 135 S.W. 778, 1910 Tenn. LEXIS 48 (1911).
A privilege tax law which makes each person, firm, or corporation selling electric apparatus of electric power and light companies and radio dealers, liable for the tax therein specified, except those expressly exempted, renders all persons other than those expressly excepted subject to the tax. Sheely v. McLemore, 153 Tenn. 498, 284 S.W. 61, 1926 Tenn. LEXIS 9 (1926).
The general assembly may declare the business of selling the direct products of the soil a privilege. Seven Springs Water Co. v. Kennedy, 156 Tenn. 1, 299 S.W. 792, 1927 Tenn. LEXIS 79, 56 A.L.R. 496 (1927).
Automobile buses may be made subject to a privilege tax. Johnson City Traction Corp. v. Sells, 163 Tenn. 552, 44 S.W.2d 312, 1931 Tenn. LEXIS 148 (1931).
12. Nature of License.
A license to carry on a business includes all necessary or essential parts of that business. Bell v. Watson & Bro., 71 Tenn. 328, 1879 Tenn. LEXIS 85 (1879); Taxing Dist. v. Emerson, 72 Tenn. 312, 1880 Tenn. LEXIS 18 (1880).
License does not include such parts of a business as might be useful, convenient, or profitable, and not essential. Bell v. Watson & Bro., 71 Tenn. 328, 1879 Tenn. LEXIS 85 (1879); Memphis & L.R.R.R. v. State, 77 Tenn. 218, 1882 Tenn. LEXIS 39 (1882); Knoxville v. Sanford, 81 Tenn. 545, 1884 Tenn. LEXIS 67 (1884).
A license in its truer sense is issued under the police power while a license may be issued on the payment of an occupation tax, levied under the taxing power embodied in the constitution, revenue being its primary object, though regulation may be in mind as an incident. The two charges and licenses are distinct things and the general assembly may provide a regulatory license for and also an occupation tax upon the same business. McMillan v. City of Knoxville, 139 Tenn. 319, 202 S.W. 65, 1917 Tenn. LEXIS 108 (1917).
13. Enforcement of Tax.
Action of a tax collector in seizing property by distress warrant is both judicial and ministerial, and writs of certiorari and supersedeas are the proper means by which to test the validity of the warrant, or the right to issue it in the particular case. Saunders v. Russell, 78 Tenn. 293, 1882 Tenn. LEXIS 179 (1882).
A distress warrant issued by a county court clerk (now county clerk) to another county to collect a tax for exercising a privilege in the county from which the warrant is issued, without a license, is void, if not authorized by statute, or if it commands the officer to levy a larger amount than the law allows, and on realty as well as personalty. Saunders v. Russell, 78 Tenn. 293, 1882 Tenn. LEXIS 179 (1882).
A privilege tax may be sued for as a debt in any court having jurisdiction thereof. State v. Nashville Sav. Bank, 84 Tenn. 111, 1885 Tenn. LEXIS 121 (1885); The Druggist Cases., 85 Tenn. 449, 3 S.W. 490, 1886 Tenn. LEXIS 70 (1886).
Penalties imposed by law upon persons exercising any privilege, without obtaining license, cannot be enforced in equity, but only by strict pursuance of the statutory remedy, by distress warrant. The Druggist Cases., 85 Tenn. 449, 3 S.W. 490, 1886 Tenn. LEXIS 70 (1886).
A privilege tax creates a debt and may be sued on as such. State ex rel. Bonner v. Andrews, 131 Tenn. 554, 175 S.W. 563, 1914 Tenn. LEXIS 127 (1914).
Where a purchaser of a truck paid part cash and executed conditional sale notes for the remainder of the purchase price, and before the notes were paid, a distress warrant was levied on the truck for payment of a privilege tax for selling produce without a license, the holder of the conditional sale notes has the right to replevy the truck held under the distress warrant, since the purchaser at sale under the distress warrant takes no better title than the purchaser of the truck under conditional sale contract, which was merely a right of possession. Hill-Summers Chevrolet Co. v. Gouge, 166 Tenn. 634, 64 S.W.2d 199, 1933 Tenn. LEXIS 129 (1933).
14. Municipal Tax.
In imposing the privilege tax, a municipal corporation may proceed upon a different principle, or in a different mode from that adopted or established by the general assembly in respect to state privilege taxation, and may levy a greater privilege tax than the state, unless restricted by the general assembly in the charter of incorporation, or by some general law of the state; provided, that the inequality be not such as to make it oppressive on a particular class or business. Columbia v. Beasly, 20 Tenn. 232, 1839 Tenn. LEXIS 42 (1839); Adams v. Mayor of Somerville, 39 Tenn. 363, 1859 Tenn. LEXIS 226 (Tenn. Apr. 1859); Nashville v. Althrop, 45 Tenn. 554, 1868 Tenn. LEXIS 46 (1868); Vosse v. City of Memphis, 77 Tenn. 294, 1882 Tenn. LEXIS 52 (1882); Rutledge v. Brown, 82 Tenn. 124, 1884 Tenn. LEXIS 114 (1884).
A municipal corporation cannot discriminate between persons exercising the same privilege, by imposing a tax upon one class, at a higher rate, or in a different mode, or upon other principles, than are applied to the exercise of the same privilege by others. Nashville v. Althrop, 45 Tenn. 554, 1868 Tenn. LEXIS 46 (1868).
Counties and municipalities have no power to tax privileges where a tax is assessed in favor of the state, “in lieu of all other taxes.” Home Bldg. & Loan Ass'n v. Graham, 155 Tenn. 524, 296 S.W. 10, 1926 Tenn. LEXIS 76 (1926).
Collateral References.
Single or isolated transactions as falling within provisions of commercial or occupational licensing requirements. 93 A.L.R.2d 90.
Taxation 371
67-4-102. Exemptions from privilege taxes.
- Such citizens of this state as are in indigent circumstances, and destitute of visible means of support, unable to procure a livelihood by manual labor, or disabled from labor by bodily injury of any description, may sell taxable articles without paying a tax.
- The county legislative body, a majority of the members being present, may, in its discretion, grant to any such person the privilege of hawking or peddling in the county without paying the tax, if the members are of the opinion the applicant ought to have the privilege.
- Before the license is issued to such applicant, the applicant shall take an oath, before the county clerk, that the applicant is a citizen of the state, and, if of foreign birth, produce to the county legislative body a copy of the record showing that the applicant has been naturalized, and further swear that the applicant will not, directly or indirectly, vend the goods of any other person, and that the articles to be sold by the applicant shall be exclusively the applicant's own.
- All persons living within the state, who are totally blind and who are exempted from paying county privilege and license taxes by the county legislative bodies of the counties in which such persons reside and do business, shall be relieved from all license and privilege taxes due the state for such businesses as such persons shall be engaged in for and during the time for which such persons shall have been relieved of such taxes by the county legislative bodies.
-
- The state, county and district business agents of all agricultural associations organized and incorporated in the state for the advancement and upbuilding of agricultural industry, who are employed by such associations to dispose of the farm products of this state and to buy agricultural implements and other supplies for farmers, without profit, such agents each charging only a sufficient amount on sales and purchase to pay the salary and necessary expenses of their respective agencies, shall not be liable for any license or privilege tax to the state, or any county or municipality of the state, but the same are exempt from such taxation.
- Subdivision (e)(1) shall not be construed to exempt from taxation any union cooperative stores, or any persons who sell or buy with the view or purpose of making a profit, or any agents of agricultural associations who buy or sell for a percent beyond the actual expense of agents' salaries and other incidental expenses necessary to conduct the business of the state, county, and district business agencies appointed by these agricultural associations to dispose of their produce and buy their supplies.
Code 1858, §§ 547-549 (deriv. Acts 1837-1838, ch. 25, § 1; 1853-1854, ch. 75, §§ 1, 2); Acts 1889, ch. 182, §§ 1, 2; 1901, ch. 87, § 1; Shan., §§ 696-698, 701a2, 702, 703; mod. Code 1932, §§ 1250-1252, 1254-1256; impl. am. Acts 1978, ch. 934, §§ 7, 22, 36; T.C.A. (orig. ed.), §§ 67-5201 — 67-5203, 67-5205, 67-5207, 67-5208.
Cross-References. Tax on renting or providing space to transient dealers or vendors, §§ 67-6-201, 67-6-213.
Textbooks. Tennessee Jurisprudence, 14 Tenn. Juris., Hawkers and Peddlers, § 1; 17 Tenn. Juris., Licenses, §§ 3, 15.
NOTES TO DECISIONS
1. Persons Not Exempt.
The word “destitute” is not applicable to the operation of a mercantile establishment retailing tobacco without a license. Love v. State, 166 Tenn. 619, 64 S.W.2d 195, 1933 Tenn. LEXIS 126 (1933).
Peddling does not include a salesman sent out on a regular trip by a wholesale produce merchant who takes orders for goods to be delivered on his next regular trip. L.L. Davidson Estate v. Weeks, 167 Tenn. 502, 71 S.W.2d 689, 1934 Tenn. LEXIS 8 (1934).
2. Activities Not Exempt.
This section, releasing blind persons from the payment of privileges and licenses, does not release such persons from the duty of complying with other kindred provisions of the law, such as affixing stamps to tobacco offered for sale. Forrest v. State, 154 Tenn. 13, 285 S.W. 589, 1926 Tenn. LEXIS 98 (1926).
67-4-103. Collection of privilege taxes by county clerk.
The county clerks shall collect all taxes on merchants, persons, companies, firms, corporations, agents, or traders, and all privileges, unless otherwise provided; and shall be subject to all the fines and penalties for failure to pay such taxes over to the commissioner of revenue, county trustee and municipal authorities that are provided for in this code in cases of county trustees.
Acts 1883, ch. 29, § 1; 1907, ch. 602, §§ 29, 47; Shan., § 869; mod. Code 1932, § 1549; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A. (orig. ed.), § 67-1107.
Cross-References. County clerk collects taxes, § 67-4-209.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 19.
67-4-104. Issuance of license.
- Licenses for exercising all privileges for which license provisions are not otherwise made shall be issued on the applicant's paying to the clerk or other proper officer the specific tax laid on the license and the fees.
- Except as otherwise specifically provided, it is lawful for county clerks to issue licenses by the quarter for the exercise of any privilege.
Code 1858, § 702 (deriv. Acts 1847-1848, ch. 161, § 20); Acts 1883, ch. 29, § 1; Shan., §§ 1001, 1003; mod. Code 1932, §§ 1729, 1731; modified; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A. (orig. ed.), §§ 67-5302, 67-5303.
NOTES TO DECISIONS
1. Discontinuance of Business Within Year.
Where a merchant takes out a license for a year, and ceases to do business within the year, the license and tax should be cut down to the period of actual business, counting by quarters. Eastman v. Litterer, 81 Tenn. 723, 1884 Tenn. LEXIS 92 (1884).
67-4-105. Application for license.
- Every person, partnership or corporation engaged in any mercantile or other business requiring a license to engage in business shall, in order to obtain such license, make application for license in writing to the county clerk, the application to be signed by each and every member of any copartnership or association; and, when such application is made by an individual doing business under a trade name, the applicant shall sign the applicant's name to the application as the owner of such business, such application to be retained by the clerk in a book kept for that purpose, which shall be open to inspection to all parties desiring to inspect it.
- No license shall be issued by the clerk to any person, copartnership or corporation to engage in the mercantile or other business until application has been made for the license, as provided in this section and § 67-4-104.
Acts 1919, ch. 74, §§ 1, 2; Shan. Supp., §§ 1006a1, 1006a2; Code 1932, §§ 1732, 1733; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A. (orig. ed.), §§ 67-5304, 67-5305.
67-4-106. Partnership license.
- If any two (2) or more persons shall associate in any partnership or company, except incorporated companies, to engage in any mercantile or other business requiring a license, it shall be necessary, in order to obtain such license, to have the names of each and every member of the partnership or company written on the face of such license, a copy of which shall be retained by the clerk, in a book kept for that purpose, which shall be open to all persons desiring to inspect it.
- Any company or copartnership, except incorporated companies, that is engaged in any mercantile or other such business, shall, in order to have such license renewed, have the names of each and every member of such company or copartnership written on the face of such renewed license, a copy of which shall be retained by the clerk for inspection, as provided in subsection (a).
Acts 1879, ch. 132, §§ 1-3; Shan., §§ 975, 976; Code 1932, §§ 1692, 1693; T.C.A. (orig. ed.), §§ 67-5306, 67-5307.
67-4-107. Transfer of license.
-
The right to sell goods or to exercise a privilege in any county for one (1) year, conferred upon the grantee of a license from the county clerk, may be used by the grantee in another county, or by a purchaser of the grantee's stock or trade of the grantee's business, or by a new firm formed by the death, withdrawal, or addition of a member of a licensed firm, in the following manner:
- In case of a sale of the stock or business, the person making the sale shall immediately go before the county clerk, and make affidavit of the amount on which the person making the sale is then bound to pay taxes, and pay the tax, and surrender the original license; the purchaser of the stock or business, unless the purchaser is a person already licensed, shall at the same time make a statement, on oath, of the amount, if any, that has been added by the purchaser to the stock or business, and pay the amount due on the stock or business, and take out a license as an original applicant;
- In case of removal to another county, the grantee of the license shall go before the clerk who issued the license, and make a statement, on oath, of the amount of taxes the grantee is then bound to pay, and pay the tax, and surrender the original license, and take from the clerk a certificate of the fact. Upon presenting such certificate to the clerk of the county to which the grantee has removed, and making affidavit before the clerk of the amount added to the stock or business, if any, and paying the taxes on the stock or business, a license shall be issued to the grantee as an original applicant; and
- In case a member or members die, retire from or are added to a licensed firm, the surviving or remaining partners or new firm shall immediately appear before the county clerk, and surrender the original license, pay the revenue then accrued on the license, and take out a new license as an original applicant.
- Whenever the ownership of a business on which a privilege tax is levied shall become changed by sale or otherwise, the purchaser of the business shall be required to notify the county clerk of the county in which such business is located of such transfer and receive a transfer of the privilege tax, if assignable, in the purchaser's name, for which the purchaser shall pay a fee of one dollar ($1.00) to the state and a fee of fifty cents (50¢) to the county clerk for making such transfer.
Code 1858, § 703 (deriv. Acts 1847-1848, ch. 146, §§ 1-3); Shan., § 1002; Code 1932, § 1730; Acts 1945, ch. 7, § 1; C. Supp. 1950, § 1125.1 (Williams, § 1248.142n); impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A. (orig. ed.), §§ 67-5308, 67-5309.
67-4-108. Reporting persons liable for tax.
- It is the duty of the assessor to make a return to the county clerk of the name of each person engaged in any business liable in any way to pay a privilege tax, in each district or ward under the provisions of the law.
- It is the duty of the county mayor and of the county clerk to examine the list of names so returned, and compare the list with the list of persons paying privileges, and report the result to the county legislative body at the July term following the assessment. The report shall be read in a full meeting of the county legislative body and entered upon the minutes of the county legislative body.
Acts 1895, ch. 120, § 66; 1907, ch. 602, § 45; Shan., § 694; Code 1932, § 1125; impl. am. Acts 1978, ch. 934, §§ 7, 16, 22, 36; T.C.A. (orig. ed.), § 67-5310; Acts 2003, ch. 90, § 2.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
67-4-109. Action by county against business in violation.
- If any person presumes to sell goods or to exercise any privilege without obtaining the license prescribed, the clerk shall issue to the sheriff, or to any constable, a distress warrant commanding the sheriff or constable to levy, in case of a privilege, a tax double the highest tax imposed upon such privilege, together with costs and charges, by distraining and selling so much of the delinquent's goods and chattels as shall be sufficient for the purpose; or suit for such double tax may be brought in the circuit or chancery court.
- Certiorari and supersedeas against an invalid distress warrant lies in the circuit or chancery court.
- The officer, to whose hands the warrant shall come, shall immediately execute the warrant on pain of such officer also being held liable, on motion by the clerk in the circuit court, for the double tax, costs and charges lost by the officer's delay.
- The officer having seized the goods and chattels of the delinquent shall give ten (10) days' notice of the time and place of sale, which the officer shall make at the time specified, unless the owner at or before the time of sale produces the clerk's receipt for the tax, costs, and charges; in which case the officer shall redeliver the goods to the owner.
- In all cases in which the penalty prescribed against breaches of the revenue laws in relation to licenses is recovered, double fees shall be allowed to the clerk or attorney prosecuting the case, but any fee allowed a district attorney general shall inure to the state.
Code 1858, §§ 704-707 (deriv. Acts 1847-1848, ch. 161, §§ 23-25; 1849-1850, ch. 122); Shan., §§ 1007-1010; mod. Code 1932, §§ 1734-1738; modified; T.C.A. (orig. ed.), §§ 67-5311 — 67-5315.
Law Reviews.
The Tennessee Court System — Circuit Court (Frederic S. Le Clercq), 8 Mem. St. L. Rev. 241.
Attorney General Opinions. Sheriffs, deputy sheriffs, constables, and the commissioner of revenue have the authority to serve and execute distress warrants for unpaid business taxes, OAG 02-053 (4/26/02).
NOTES TO DECISIONS
1. Penalty.
The heavy penalty prescribed by the law was designed for the protection of the revenue, and to deter men from the violation of the law. Cate v. State, 35 Tenn. 120, 1855 Tenn. LEXIS 26 (1855).
Failure to take out license is not a misdemeanor if a penalty is imposed for such failure, unless the statute itself declares such failure to be a misdemeanor. State v. Manz, 46 Tenn. 557, 1869 Tenn. LEXIS 98 (1869).
Persons associating themselves as real estate brokers are liable for the penalty prescribed in this section if they fail to take out a license. Blackford & Co. v. State, 55 Tenn. 538, 1873 Tenn. LEXIS 12 (1873).
2. Distress Warrant.
3. —Compliance with Statute.
The penalties imposed upon persons exercising any privilege, without obtaining a license, cannot be enforced in equity, but only by strict pursuance of the statutory remedy by distress warrant. The Druggist Cases., 85 Tenn. 449, 3 S.W. 490, 1886 Tenn. LEXIS 70 (1886).
4. —Application.
The remedy by distress warrant for double the privilege taxes, against a person who presumes to exercise a privilege, without a license, is applicable to privileges declared by amendatory acts, as well as to privileges mentioned in the code. State v. Manz, 46 Tenn. 557, 1869 Tenn. LEXIS 98 (1869).
The tax is against the person, not property. The right of a conditional sale seller, or the indorsee of note given for purchase price, is superior to the right of the state as mere levying creditor attempting to collect produce dealer's privilege tax. The motive of seller in bringing replevin and selling the property levied on by the state is immaterial. Hill-Summers Chevrolet Co. v. Gouge, 166 Tenn. 634, 64 S.W.2d 199, 1933 Tenn. LEXIS 129 (1933).
5. —Amount of Tax.
Distress warrant cannot be issued, except for the specific tax fixed by the statute; and it cannot be issued where the amount is uncertain and unascertained, and depends upon the amount of capital employed in the business. Young v. Governor, 30 Tenn. 147, 1850 Tenn. LEXIS 78 (1850).
6. —Validity of Warrant.
A distress warrant issued by the clerk to a county other than the one in which the privilege was exercised, or that commands the officer to distrain and sell the “lands and tenements” as well as the “goods and chattels” of the delinquent, or that claims double fees for both the clerk and attorney, where only double fees to the clerk “or” attorney prosecuting the case are authorized by the statute, is void upon its face, and, upon writs of certiorari and supersedeas, it may be quashed by the circuit court of the county to which it was issued, especially where the state tax has been paid. Saunders v. Russell, 78 Tenn. 293, 1882 Tenn. LEXIS 179 (1882).
The action of a revenue collector in seizing property by a distress warrant for the collection of a privilege tax is both judicial and ministerial, and the court has jurisdiction to bring before it, by means of the writs of certiorari and supersedeas, the proceedings touching the collection of taxes other than those claimed by the state, and thereby to test the validity of the distress warrant, or the right to issue it in the particular case. Saunders v. Russell, 78 Tenn. 293, 1882 Tenn. LEXIS 179 (1882); Shelby Co. v. Mississippi & T. R. Co., 84 Tenn. 401, 1 S.W. 32, 1886 Tenn. LEXIS 115 (1886); Mayor of Nashville v. Smith, 86 Tenn. 213, 6 S.W. 273, 1887 Tenn. LEXIS 40 (1887).
7. —Remedy of Taxpayer.
Writs of certiorari and supersedeas cannot be used to prevent the collection of taxes due the state. The remedy is to pay the taxes claimed by it, under protest, and to sue for their recovery. Mayor of Nashville v. Smith, 86 Tenn. 213, 6 S.W. 273, 1887 Tenn. LEXIS 40 (1887); Smith v. Mayor of Nashville, 88 Tenn. 464, 12 S.W. 924, 1889 Tenn. LEXIS 67, 7 L.R.A. 469 (1890); Railroad v. Williams, 101 Tenn. 146, 46 S.W. 448, 1898 Tenn. LEXIS 44 (1898).
8. —Certiorari.
If the object of the certiorari is to revise the judicial act of the official in the issuance of the distress warrant, the jurisdiction is in the circuit court of the county in which the act of such issuance was done. Saunders v. Russell, 78 Tenn. 293, 1882 Tenn. LEXIS 179 (1882).
9. Notice.
It is not necessary for the officer to give a nonresident notice of the sale through the newspapers, for the 10 days' notice or advertisement required by the statute is all that is necessary. Singleton v. Fritsch, 72 Tenn. 93, 1879 Tenn. LEXIS 9 (1879).
67-4-110. Action by commissioner against business in violation.
- The commissioner is authorized, and it is the commissioner's duty, to issue a distress warrant for the collection of the tax, interest and penalty due from each taxpayer who is delinquent in payment of privilege taxes, collectible by the commissioner. Distress warrants may be addressed and delivered to the sheriff of the county in which such delinquent taxpayer has an office or principal place of business, or to the sheriff of any county in which the commissioner has reason to believe property of such delinquent taxpayer may be found.
- The sheriff into whose hands such warrant may come, or the sheriff's deputy, may execute the warrant by distraint and sale of personal property belonging to such delinquent taxpayer, and the proceedings in respect to the warrant shall be the same as are provided by law for proceedings under an execution at law from a court of record; and the executing officer shall be entitled to the same fees, commissions, and necessary expenses of removing and keeping property distrained as in case of an execution from a court of record.
- If the officer cannot find personal property to satisfy the distress warrant, the officer may levy the warrant upon any real estate in the officer's county belonging to such delinquent taxpayer; and if levied on land, the distress warrant, together with the officer's return on the distress warrant, shall be returned to the circuit court of the county in which the land lies, and the land shall be condemned and sold under the orders of the circuit court in the same manner as in case of the levy on land of an execution issued by a general sessions court.
- The remedy or procedure prescribed in subsections (a)-(c) is cumulative to any other remedies or procedures now prescribed with reference to any particular privilege tax or taxes. No other remedy prescribed by any particular taxing statute shall be held to be exclusive or to prevent the commissioner from proceeding with the collection of the privilege tax under subsections (a)-(c).
- Distress warrants issued under subsection (a) for the collection of state taxes, interest or penalty due from a taxpayer may, in the discretion of the commissioner, be addressed to and delivered to an employee or representative of the department for purposes of execution, who shall first make the same amount and kind of bond now required of deputy sheriffs, and such employee or representative shall have the same powers and authority as a sheriff under chapter 1, part 12 of this title and subsections (b)-(d) for purposes of levying and executing such distress warrants. Such employee or representative shall be entitled to the same fees and costs as would accrue to a sheriff for such services, which fees and costs shall be paid to the department and deposited in the general fund of the state treasury.
Acts 1937, ch. 200, §§ 1-4; C. Supp. 1950, §§ 1613.2-1613.5 (Williams, §§ 1613.7-1613.10); Acts 1955, ch. 317, § 1; impl. am. Acts 1959, ch. 9, § 14; impl. am. Acts 1979, ch. 68, § 3; T.C.A. (orig. ed.), §§ 67-5316 — 67-5319, 67-5321.
Attorney General Opinions. Sheriffs, deputy sheriffs, constables, and the commissioner of revenue have the authority to serve and execute distress warrants for unpaid business taxes, OAG 02-053 (4/26/02).
NOTES TO DECISIONS
1. Construction with Other Statutes.
This section must be construed in pari materia with inheritance tax laws. Bergeda v. State, 179 Tenn. 460, 167 S.W.2d 338, 1942 Tenn. LEXIS 43, 144 A.L.R. 696 (1942).
67-4-111. Collection from itinerant business.
It is the duty of every constable of a district to demand to see the receipt for state and county privilege taxes of every manager of a circus, menagerie, sideshow, sleight of hand or legerdemain, or any other exhibition for profit, of persons selling patent rights, and of every peddler of any article whatever, whether on foot, in vehicle, or on horseback; and, if the tax receipt is not produced, the constable shall collect the state and county privilege taxes, and shall, within one (1) week after such collection, notify the county clerk, by mail or otherwise, that the constable has collected the tax, and so much tax, and pay the tax to the clerk within one (1) month after such collection. If the constable fails to turn the tax over to the county clerk, the constable shall be proceeded against and the constable's office declared vacant.
Acts 1879, ch. 162, § 6; Shan., § 659; Code 1932, § 1058; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A. (orig. ed.), § 67-5320.
Cross-References. Constable defined, § 1-3-105.
67-4-112. Actions on license bonds.
- The county clerks are required to turn over to the county attorney, or, if no county attorney, then to an attorney to be selected by the county mayor or a county auditor, all privilege and license bonds due and unpaid within thirty (30) days after such bonds become due and payable, taking duplicate receipts for the bonds, specifying the amount due on the bonds, as nearly as can be ascertained, one (1) of which receipts shall be forwarded to the commissioner and the other entered on record in the county legislative body.
- Whereupon, the attorney or clerk or county auditor shall forthwith give five (5) days' notice to the principal and surety on such bonds to appear before the general sessions judge of the county in which such bond is due and show cause, if they have any, why judgment should not be rendered against them for the amount of revenue due on such bonds, which judgment shall in no case be less than the amount of the ad valorem and privilege taxes fixed by law and by the county legislative body, with six percent (6%) interest and a penalty of one percent (1%) for each day such revenue is delinquent after thirty (30) days from the date of such notice, and an attorney's fee of five dollars ($5.00) on each bond.
- Jurisdiction is conferred on the courts of general sessions to try and determine such cases, to render judgment, issue execution, and do all things necessary to enforce the collection of this revenue, and the notice so given may be returnable to any Monday of the court of general sessions before the judge of the general sessions court; provided, that five (5) days' notice is given.
- Upon failure of the principal or surety to appear, the attorney, county auditor or clerk shall move for judgment, and the judge shall render and have entered a judgment for the amount of the taxes, interest, penalties, as provided in subsection (b), with costs.
- The clerk shall be allowed the fees for such services as in the circuit courts. The state, county, and municipality shall in no event pay any cost in these proceedings, but the costs shall be taxed against delinquents.
- Such suits shall not interfere with the right of the clerk at any time to issue a distress warrant to collect such taxes, if in the clerk's judgment property can be found on which to levy the warrant.
Acts 1907, ch. 602, § 28; Shan., §§ 982-986a1; impl. am. Acts 1923, ch. 109, § 8; mod. Code 1932, §§ 1706-1711; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; impl. am. Acts 1978, §§ 7, 16, 22, 36; T.C.A. (orig. ed.), §§ 67-5401 — 67-5406; Acts 2003, ch. 90, § 2.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
Cross-References. Bond for certain foreign businesses, § 67-4-707.
Cited: Knox v. Emerson, 123 Tenn. 409, 131 S.W. 972, 1910 Tenn. LEXIS 14 (1910).
67-4-113. Rules and regulations — Military personnel.
The commissioner is authorized to promulgate rules and regulations in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, to implement §§ 67-2-112(b), 67-4-1703(c) and 67-5-2011. The commissioner shall make reasonable effort to provide notice detailing which taxes are delayed, the time limitations proposed by §§ 67-2-112(b), 67-4-1703(c) and 67-5-2011 for paying such taxes, and the type of proof that must be presented prior to the due date of the applicable tax. Notice may be made, in addition to other methods, through releases issued by the department to the media or to branches of the armed services in which such taxpayers may serve.
Acts 1991, ch. 397, § 6; 2001, ch. 167, § 2; 2002, ch. 664, § 2; 2003, ch. 87, § 4.
Compiler's Notes. Acts 1991, ch. 397, § 7 provided that this section shall be retroactive and apply to all personnel stationed in or about Saudi Arabia during the Desert Shield or Desert Storm operations prior to May 22, 1991.
Acts 2003, ch. 87, § 5 provided that the act apply to taxes due and payable during 2003.
67-4-114. Credit for beer or ale rendered unsalable as a result of flooding.
Notwithstanding any rule or law to the contrary, no tax shall be due under § 57-5-201 for any beer or ale that has been rendered unsalable and subsequently destroyed as a result of flooding occurring between May 1, 2010, and May 8, 2010. Any tax previously paid under § 57-5-201 by the wholesaler on any such beer or ale that is unsalable and destroyed as a result of such flooding occurring between May 1, 2010, and May 8, 2010, shall be allowed as a credit against the tax levied by § 57-5-201 on the subsequent purchase of beer or ale by such wholesaler. However, this section shall not apply unless such flooding resulted in the destruction of at least fifty (50) barrels, or liquid volume equivalent, of beer or ale and satisfactory proof of such destruction is submitted to the department.
Acts 2010, ch. 1134, § 61.
Part 2
General Revenue Law — General Provisions
67-4-201. Definitions — Applicability.
- The definitions and general provisions in this part apply in all cases, unless otherwise provided in special cases, but the general provisions shall not be deemed to control specific provisions to the contrary in any particular taxing item.
-
As used in parts 2-6 of this chapter:
- “Annual tax,” when referring to a privilege tax, means a privilege tax obtained for or renewed for a period of not more nor less than one (1) year;
- “Collector” means every tax officer or employee of the state, county, or city authorized to collect the tax;
- “Per annum” designates the amount of the tax to be paid for exercising the privilege for twelve (12) months, and is to be read into every taxing item where the specific context does not indicate the contrary;
- “Person” includes every individual, partnership, firm, corporation or any other association of any kind; and
- “Taxpayer” includes every individual, partnership, firm, corporation or any other association of any kind.
Acts 1937, ch. 108, art. 1, § 1; C. Supp. 1950, § 1248.1; T.C.A. (orig. ed.), § 67-4001; Acts 1984, ch. 832, § 36.
Cross-References. Additional definitions, § 67-4-301.
Cited: Saverio v. Carson, 186 Tenn. 166, 208 S.W.2d 1018, 1948 Tenn. LEXIS 531 (1948); Bush Bldg. Co. v. Manchester, 189 Tenn. 203, 225 S.W.2d 31, 1949 Tenn. LEXIS 415 (1949); Jackson County Bank v. Ford Motor Credit Co., 488 F. Supp. 1001, 1980 U.S. Dist. LEXIS 10271 (M.D. Tenn. 1980); American City Bank v. Western Auto Supply Co., 631 S.W.2d 410, 1981 Tenn. App. LEXIS 591 (Tenn. Ct. App. 1981); Getter v. Shuptrine, 655 S.W.2d 150, 1983 Tenn. App. LEXIS 587 (Tenn. Ct. App. 1983).
Collateral References. Taxation 371
67-4-202. Engaging in business without compliance a public nuisance.
The engaging in any business declared in parts 2-6 of this chapter to be a taxable privilege without compliance with such parts is declared to be a public nuisance.
Acts 1937, ch. 108, art. 3, § 9; C. Supp. 1950, § 1248.12 (Williams, § 1248.142c); T.C.A. (orig. ed.), § 67-4329.
NOTES TO DECISIONS
Decisions Under Prior Law
1. Nuisance Provision.
The declaration that the conducting of business in the state without payment of taxes shall constitute a nuisance is intended to be in aid of the state's collection of its revenue. State v. Family Loan Co., 167 Tenn. 654, 73 S.W.2d 167, 1933 Tenn. LEXIS 74 (1934).
2. Forfeiture of Corporate Franchise.
The charge that a foreign, domesticated corporation has not paid taxes due the state and county, and that its conduct of business in the state without paying such taxes constitutes a nuisance, presents no ground for forfeiture of the corporate franchise, or banishment of the corporation from the state. State v. Family Loan Co., 167 Tenn. 654, 73 S.W.2d 167, 1933 Tenn. LEXIS 74 (1934).
67-4-203. Administration by commissioner.
-
- The authority to administer parts 2-6 of this chapter and the various laws of this state imposing taxes upon the privilege of litigation in the various courts of this state, and the authority to collect the taxes thereby imposed, is vested in the commissioner of revenue under the provisions of this part.
- Any reference in this part to the commissioner shall be deemed a reference to the commissioner of revenue.
- The commissioner is authorized to prescribe all rules necessary for the administration of parts 2-6 of this chapter, and for the administration of the various laws of this state imposing taxes upon the privilege of litigation in the various courts of this state, and for the collection of the taxes thereby imposed.
Acts 1937, ch. 108, art. 3, § 1; C. Supp. 1950, § 1248.4 (Williams, § 1248.137); impl. am. Acts 1959, ch. 9, § 14; Acts 1978, ch. 839, §§ 10, 11; T.C.A. (orig. ed.), §§ 67-4301, 67-4302.
Textbooks. Tennessee Jurisprudence, 14 Tenn. Juris., Hawkers and Peddlers, § 1.
Cited: Tidwell v. Servomation-Willoughby Co., 483 S.W.2d 98, 1972 Tenn. LEXIS 363 (Tenn. 1972); Jackson County Bank v. Ford Motor Credit Co., 488 F. Supp. 1001, 1980 U.S. Dist. LEXIS 10271 (M.D. Tenn. 1980); American City Bank v. Western Auto Supply Co., 631 S.W.2d 410, 1981 Tenn. App. LEXIS 591 (Tenn. Ct. App. 1981).
67-4-204. Tax additional to other privilege taxes.
Any tax imposed by parts 2-6 of this chapter shall not be held to supersede any other privilege tax imposed upon such taxpayer or occupation by any other section of the code.
Acts 1937, ch. 108, art. 1, § 1; C. Supp. 1950, § 1248.1 (Williams, § 1248.7); T.C.A. (orig. ed.), § 67-4008.
67-4-205. [Repealed.]
Compiler's Notes. Former § 67-4-205 (Acts 1937, ch. 108, art. 1, § 1; C. Supp. 1950, § 1248.1 (Williams, § 1248.6); T.C.A. (orig. ed.), § 67-4003), concerning a separate tax for each place of business, was repealed by Acts 1984, ch. 832, § 36, effective July 1, 1984.
67-4-206. Payment — Penalty and interest.
- Each taxpayer shall pay promptly, when due, the taxes imposed by parts 2-6 of this chapter and, in addition, any tax imposed by any law of this state on the privilege of litigation in the courts of this state.
- Except as otherwise provided in this section, if the tax is not paid within thirty (30) days of its due date, it shall be considered delinquent.
- If the privilege tax on litigation is not paid within forty-five (45) days of its due date, it shall be considered delinquent.
- The commissioner may waive, under § 67-1-803, any penalties imposed with regard to the taxes provided by this section, but no other collector may waive or excuse these penalties.
Acts 1937, ch. 108, art. 1, § 1; 1937, ch. 108, art. 3, § 19; mod. C. Supp. 1950, §§ 1248.1, 1248.20 (Williams, §§ 1248.2, 1248.142m); impl. am. Acts 1959, ch. 9, § 14; Acts 1978, ch. 839, § 12; 1979, ch. 300, § 1; 1981, ch. 488, § 2; T.C.A. (orig. ed.), §§ 67-4009, 67-4303; Acts 1984, ch. 832, § 36; 1988, ch. 526, § 28.
Law Reviews.
The Tennessee Recording Tax Statute and Its Effect on Perfection of Security Interests (George T. Lewis, III & Mary Aronov), 52 Tenn. L. Rev. 355 (1985).
Cited: In re Ken Gardner Ford Sales, Inc., 10 B.R. 632, 1981 Bankr. LEXIS 3928 (Bankr. E.D. Tenn. 1981).
67-4-207. [Repealed.]
Compiler's Notes. Former § 67-4-207 (Acts 1937, ch. 108, art. 1, § 1; C. Supp. 1950, § 1248.1 (Williams, § 1248.5); T.C.A. (orig. ed.), § 67-4002), concerning a tax in rural areas, was repealed by Acts 1984, ch. 832, § 36, effective July 1, 1984.
67-4-208. Liability of transferees and fiduciaries.
- Any successor by purchase, or otherwise, of any business subject to tax shall be liable for and shall pay the tax imposed against such business before such successor can obtain a license to do any of the acts declared to be taxable by statute.
- Any person acting as agent, trustee, guardian, administrator, executor, assignee or receiver doing any of the acts declared to be a privilege is subject to the tax imposed on that privilege.
Acts 1937, ch. 108, art. 3, § 3; 1941, ch. 51, § 23; C. Supp. 1950, § 1248.6 (Williams, § 1248.139); T.C.A. (orig. ed.), § 67-4012.
67-4-209. Tax collection by clerks.
- Unless some other collector is indicated, the county clerk shall collect the taxes imposed by parts 2-6 of this chapter.
- The clerks of the several courts of this state shall collect any tax imposed in the court for which they serve as clerk by any law of this state upon the privilege of litigation in that court.
- A collector of the taxes, as defined by this part, shall report the collector's collections to the commissioner and shall pay over all state taxes collected by the collector to the department.
Acts 1937, ch. 108, art. 1, § 1; C. Supp. 1950, § 1248.1 (Williams, § 1248.3); impl. am. Acts 1959, ch. 9, § 14; Acts 1978, ch. 839, § 7; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A. (orig. ed.), § 67-4010.
Cross-References. Collection of privilege taxes by county clerks, § 67-4-103.
67-4-210. Duty to collect taxes.
- The various collectors, as defined by this part, charged with the duty of collecting revenue or taxes under any law of this state shall diligently see to it that the revenues are collected. It is the duty of each local collector to ascertain the name of every person within the collector's jurisdiction liable for the payment of any tax that is collectible by the collector, and it is the collector's further duty to use every means at the collector's command to collect the tax when due.
- Any local collector failing or refusing to collect and pay over any taxes that the collector is legally charged to collect and pay over to the department shall be liable for such taxes, and the collector's official bondsman shall be liable also for those unpaid taxes. The commissioner may collect the amount from the local collector or the collector's official bondsman under chapter 1, part 14 of this title.
- It is the duty of each collector promptly to collect all privilege and ad valorem taxes collectible by the collector when they become due. In no case shall any collector or collector's deputy agree to give, permit or allow any extension of time for the payment of such taxes or any part of those taxes.
Acts 1937, ch. 108, art. 3, §§ 6, 10; C. Supp. 1950, §§ 1248.9, 1248.13 (Williams, §§ 1248.142, 1248.142d); impl. am. Acts 1959, ch. 9, § 14; Acts 1978, ch. 839, § 14; 1981, ch. 488, § 16; T.C.A. (orig. ed.), §§ 67-4307, 67-4308.
67-4-211. Failure of collector to enforce law — Penalty.
- Any county clerk or other collecting officer who willfully or negligently fails to carry out parts 2-6 of this chapter or any law imposing a tax on the privilege of litigation in the various courts of this state by making an incorrect assessment, or failing in any way, either in person or by agent, to faithfully enforce such parts shall forfeit in each case the sum of two hundred fifty dollars ($250) to the state of Tennessee, and shall be subject to ouster proceedings.
- On complaint of the commissioner, this section shall be enforced by the attorney general and reporter in any manner permitted by law.
Acts 1937, ch. 108, art. 3, § 12; C. Supp. 1950, § 1248.15 (Williams, § 1248.142f); impl. am. Acts 1959, ch. 9, § 14; Acts 1978, ch. 839, § 15; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A. (orig. ed.), § 67-4309.
Cross-References. Penalties for miscellaneous violations of general revenue law, § 67-4-220.
Records and reports, § 67-4-213.
67-4-212. Collection of taxes by commissioner.
When a local collector fails to collect a state tax that should be collected by that collector and paid over to the department, the commissioner may collect the tax under chapter 1, part 14 of this title.
Acts 1937, ch. 108, art. 3, § 5; C. Supp. 1950, § 1248.8 (Williams, § 1248.141); impl. am. Acts 1959, ch. 9, §§ 3, 14; impl. am. Acts 1972, ch. 829, § 7; Acts 1978, ch. 839, § 19; T.C.A. (orig. ed.), § 67-4324.
67-4-213. Records and reports.
- It is the duty of every official, agent or deputy charged with collecting, reporting and paying over state and county taxes, or other special revenues and privilege licenses, including fees, fines, forfeitures, costs, interests, or penalties, as now or may be later prescribed by the laws of this state, to keep a complete record of such collections on books and forms prescribed by the commissioner. These officials, agents or deputies shall report such collections, if it is state revenue, to the proper state officials, and if it is county revenue, to the county mayor, on forms prescribed and approved as provided in this section or shall later be prescribed by the laws of this state.
- Each local collector, except the clerks of the several courts of the state, shall make a report each month to the commissioner, giving the name of each delinquent taxpayer in the collector's jurisdiction and the amount of taxes due from the taxpayer and the collector's reason for not having collected it. The clerks of the several courts of the state shall make a report each month to the commissioner, giving the name of each taxpayer, delinquent in the payment of the privilege tax on litigation, against whom an execution or distress warrant for such taxes has been issued, and which execution or distress warrant has been returned nulla bona, and giving the amount of such tax still owing.
- Every report of local collectors to the commissioner shall be on a form prescribed by the commissioner and shall contain the information deemed necessary by the commissioner.
- The collector shall make these reports within fifteen (15) days after the last day of each calendar month to the commissioner, if it is for state revenue, and to the county mayor, if it is for county revenue, and shall pay the amount shown to be due at the time of making the report.
- If such reports are not filed as received and payments not made as specified in this section, there shall be, in addition to the penalties provided in chapter 1, part 8 of this title, a forfeiture of all commissions on the delinquent amount.
Acts 1937, ch. 108, art. 3, §§ 4, 10; C. Supp. 1950, §§ 1248.7, 1248.13 (Williams, §§ 1248.140, 1248.142d); impl. am. Acts 1959, ch. 9, § 14; impl. am. Acts 1978, ch. 934, §§ 16, 36; Acts 1978, ch. 839, §§ 14, 17; 1981, ch. 488, § 16; T.C.A. (orig. ed.), §§ 67-4307, 67-4310 — 67-4313; Acts 1988, ch. 526, § 29; 2003, ch. 90, § 2.
Compiler's Notes. Acts 1988, ch. 526, § 45 provided that the amendment by that act shall apply to all assessments of penalty made on or after January 1, 1989.
Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
Cross-References. Penalty for failure of collector to enforce law, § 67-4-211.
Penalties for miscellaneous violations of general revenue law, § 67-4-220.
67-4-214. [Repealed.]
Compiler's Notes. Former § 67-4-214 (Acts 1937, ch. 108, art. 1, § 1; C. Supp. 1950, § 1248.1 (Williams, § 1248.4); Acts 1965, ch. 89, § 1; T.C.A. (orig. ed.), § 67-4011), concerning the clerk's license as evidence of compliance, was repealed by Acts 1984, ch. 832, § 36, effective July 1, 1984.
67-4-215. Distress warrants.
- A local collector has the power to issue a distress warrant for taxes collectible by the local collector.
-
Prior to the issuance of a distress warrant, the local collector shall give not less than ten (10) days' written notice to the taxpayer by either:
- Delivering such notice in person;
- Leaving such notice at the dwelling place or usual place of business of the taxpayer; or
- By mailing such notice to the taxpayer's last known address.
-
- The sheriff into whose hands such distress warrant may come, or the sheriff's deputy, may execute the distress warrant by distraint and sale of personal property belonging to such delinquent taxpayer, and the proceedings in respect to the distress warrant shall be the same as are provided by law for proceedings under execution at law from a court of record; and the executing officer shall be entitled to the same fees, commissions and the necessary expense of removing and keeping property distrained as in case of an execution from a court of record.
- If the officer cannot find personal property to satisfy the distress warrant, the officer may levy the distress warrant upon any real estate in the officer's county belonging to such delinquent taxpayer. If levied on land, the distress warrant, together with the officer's return on the warrant, shall be returned to the circuit court of the county in which the land lies, and the land shall be condemned and sold under the orders of the circuit court, in the same manner as in case of a levy on land of an execution issued by a general sessions court. Suit or suits may be brought, if necessary.
- If any sheriff willfully fails, refuses or neglects to execute any distress warrant directed to the sheriff within the time provided in this part, the official bond of such sheriff shall be liable for the tax, penalty, interest, and cost due by the taxpayer, and, on complaint of any proper officer, this penalty shall be enforced by the attorney general and reporter in any manner permitted by law.
- A distress warrant issued by a municipal tax collector may be executed within the boundaries of a municipality by the chief of police or a police officer of the municipality who is granted the authority expressed in this section to serve distress warrants.
Acts 1937, ch. 108, art. 3, §§ 5, 13; C. Supp. 1950, §§ 1248.8, 1248.16 (Williams, §§ 1248.141, 1248.142g); Acts 1978, ch. 839, § 20; impl. am. Acts 1979, ch. 68, § 3; T.C.A. (orig. ed.), §§ 67-4325 — 67-4327; Acts 1987, ch. 346, § 2; 2009, ch. 480, § 1.
Cross-References. Personal property sales, withholding proceeds for personal property tax satisfaction; liability for failure to withhold, § 67-5-2003.
Law Reviews.
The Tennessee Court System — Circuit Court (Frederic S. Le Clercq), 8 Mem. St. L. Rev. 241.
Attorney General Opinions. Sheriffs, deputy sheriffs, constables, and the commissioner of revenue have the authority to serve and execute distress warrants for unpaid business taxes, OAG 02-053 (4/26/02).
67-4-216. Injunctions.
- In addition to the other remedies provided by this part for the collection of the taxes imposed, the commissioner is authorized to certify to the attorney general and reporter the failure of any person to make any report or to pay any tax required by parts 2-6 of this chapter. Thereupon, the attorney general and reporter shall forthwith file a bill in a court of proper jurisdiction to enjoin such person from continuing to exercise the privilege, which injunction shall remain in force so long as such person is in default.
- Upon the payment of such delinquent privilege tax as may be due with interest and penalty, and upon compliance with parts 2-6 of this chapter, the attorney general and reporter shall be authorized to dismiss the bill upon the payment of costs by the defendant.
Acts 1937, ch. 108, art. 3, § 9; C. Supp. 1950, § 1248.12 (Williams, § 1248.142c); T.C.A. (orig. ed.), § 67-4329.
67-4-217. Contracts by unlicensed persons.
No contract previously made, or later made, by persons engaged in a business or occupation subject to a license or privilege tax, under parts 2-6 of this chapter or any other act, shall be invalid or unenforceable in the courts because of the failure of such persons to have paid such license tax at the time such contract was made or was performed; provided, that such persons shall, prior to the date of adjudication in the court of original jurisdiction, pay double the tax due at the time the contract was made and, in addition, the penalty prescribed by law.
Acts 1937, ch. 108, art. 3, § 14; C. Supp. 1950, § 1248.17 (Williams, § 1248.142h); T.C.A. (orig. ed.), § 67-4015.
Law Reviews.
The Tennessee Recording Tax Statute and Its Effect on Perfection of Security Interests (George T. Lewis, III & Mary Aronov), 52 Tenn. L. Rev. 355 (1985).
Cited: Krasner v. Moore, 32 Tenn. App. 306, 222 S.W.2d 623, 1949 Tenn. App. LEXIS 145 (1949); Pickett v. Green's Garage, 35 Tenn. App. 290, 245 S.W.2d 415, 1951 Tenn. App. LEXIS 121 (1951); Farmer v. Farmer, 528 S.W.2d 539, 1975 Tenn. LEXIS 625 (Tenn. 1975); Jackson County Bank v. Ford Motor Credit Co., 488 F. Supp. 1001, 1980 U.S. Dist. LEXIS 10271 (M.D. Tenn. 1980).
NOTES TO DECISIONS
1. In General.
This section deals not with the time of perfection but with whether otherwise valid rights are enforceable. In re Ken Gardner Ford Sales, Inc., 10 B.R. 632, 1981 Bankr. LEXIS 3928 (Bankr. E.D. Tenn. 1981), aff'd, 23 B.R. 743, 1982 U.S. Dist. LEXIS 16663 (E.D. Tenn. 1982), aff'd, In re Ken Gardner Ford Sales, Inc., 23 B.R. 743, 1982 U.S. Dist. LEXIS 16663 (E.D. Tenn. 1982).
2. Effect of Petition in Bankruptcy.
Payment of the penalty tax under this section after the petition in bankruptcy has been filed is of no effect. In re Ken Gardner Ford Sales, Inc., 23 B.R. 743, 1982 U.S. Dist. LEXIS 16663 (E.D. Tenn. 1982).
3. Relation Back.
This section did not purport to create a special relation back period to extend perfection for security interests; the statute did not address perfection or priorities of security interests and could not be used to elevate the priority of a creditor unsecured on the date of the petition. In re Johnson, 39 B.R. 358, 1984 B.R. LEXIS 5952 (Bankr. M.D. Tenn. Apr. 4, 1984).
4. Remedying Noncompliance.
This section did not allow the late payment of taxes and statutory penalties to remedy previous noncompliance and protect otherwise valid security interests. In re Johnson, 39 B.R. 358, 1984 B.R. LEXIS 5952 (Bankr. M.D. Tenn. Apr. 4, 1984).
Decisions Under Prior Law
1. Construction.
A suit by a ticket broker against picture show owner for breach of contract for failure to furnish tickets was not affected by former provision, since such a contract would not be in pursuance of the business of selling tickets, but was a sale only on the part of the owner. Petway v. Loew's Nashville & Knoxville Corp., 22 Tenn. App. 59, 117 S.W.2d 975, 1938 Tenn. App. LEXIS 5 (Tenn. Ct. App. 1938).
2. Pleading.
The defense provided by former provision cannot be considered unless pleaded and proven. Petway v. Loew's Nashville & Knoxville Corp., 22 Tenn. App. 59, 117 S.W.2d 975, 1938 Tenn. App. LEXIS 5 (Tenn. Ct. App. 1938).
3. Invalidity of Contract.
Sewage project contractor was not entitled to recover balance due on contract from town as result of certain changes requested by town engineer where it failed to pay privilege tax to town until after consummation of contract, since failure to pay privilege tax made the construction contract illegal. Bush Bldg. Co. v. Manchester, 189 Tenn. 203, 225 S.W.2d 31, 1949 Tenn. LEXIS 415 (1949).
67-4-218. [Repealed.]
Compiler's Notes. Former § 67-4-218 (Acts 1937, ch. 108, art. 3, §§ 7, 16, 17; C. Supp. 1950, §§ 1248.10, 1248.18, 1248.19 (Williams, §§ 1248.142a, 1248.142k, 1248.142j); T.C.A. (orig. ed.), §§ 67-4016, 67-4328, 67-4330), concerning unlawful businesses and investigations, was repealed by Acts 1984, ch. 832, § 36, effective July 1, 1984.
67-4-219. [Repealed.]
Compiler's Notes. Former § 67-4-219 (Acts 1937, ch. 108, art. 3, §§ 7, 16, 17; C. Supp. 1950, §§ 1248.10, 1248.18, 1248.19 (Williams, §§ 1248.142a, 1248.142k, 1248.142j); T.C.A. (orig. ed.), §§ 67-4016, 67-4328, 67-4330), concerning unlawful businesses and investigations, was repealed by Acts 1984, ch. 832, § 36, effective July 1, 1984.
67-4-220. Miscellaneous violations — Penalties.
- It is unlawful for any person to exercise any of the privileges made taxable by parts 2-6 of this chapter before complying with this chapter. It is unlawful for anyone to exercise any of these privileges without first paying the tax or without complying with this chapter.
- It is unlawful for any person to aid, abet, direct, cause or procure any of such person's officers, agents, or employees to violate any of the provisions of parts 2-6 of this chapter.
- It is unlawful for any person subject to parts 2-6 of this chapter to willfully fail, refuse, or neglect to make out, file or deliver any reports or blanks, as required by parts 2-6 of this chapter, or to answer any question propounded in the reports or blanks, or knowingly and willfully to give a false answer to any such question in which the fact inquired of is within the person's knowledge, or, upon proper demand, to exhibit to the collector or any person duly authorized by the collector any book, paper, account, record, or memorandum of such person, in such person's possession or under such person's control, or to willfully fail, refuse or neglect to furnish any other information in such person's possession or under such person's control that may be required by any collector, as defined in this part, or such collector's duly authorized agents and employees.
- A violation of this section is a Class C misdemeanor.
- Every day during which any person subject to parts 2-6 of this chapter, or any officer, agent, or employee thereof willfully fails, refuses or neglects to observe and comply with any order, direction, or mandate of the commissioner or to perform any duty enjoined by parts 2-6 of this chapter, constitutes a separate and distinct offense.
Acts 1937, ch. 108, art. 3, §§ 3, 8; 1941, ch. 51, §§ 23, 24; C. Supp. 1950, §§ 1248.6, 1248.11 (Williams, §§ 1248.139, 1248.142b); impl. am. Acts 1959, ch. 9, § 14; Acts 1978, ch. 839, § 13; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A. (orig. ed.), §§ 67-4012 — 67-4014, 67-4305, 67-4306; Acts 1984, ch. 832, § 36; 1989, ch. 591, § 113.
Cross-References. Penalty for Class C misdemeanor, § 40-35-111.
Penalty for failure of collector to enforce law, § 67-4-211.
Records and reports, § 67-4-213.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
Cited: Jackson County Bank v. Ford Motor Credit Co., 488 F. Supp. 1001, 1980 U.S. Dist. LEXIS 10271 (M.D. Tenn. 1980); In re Ken Gardner Ford Sales, Inc., 10 B.R. 632, 1981 Bankr. LEXIS 3928 (Bankr. E.D. Tenn. 1981).
NOTES TO DECISIONS
1. Burden of Proof.
Proof of an act characteristic of the privilege, or commonly incident to the conduct of a business declared to be a privilege, is prima facie evidence that the actor was exercising the privilege, and casts upon him the burden of proving that he was not in fact doing so. Anderson v. Sanderson, 25 Tenn. App. 425, 158 S.W.2d 374, 1941 Tenn. App. LEXIS 126 (1941).
2. Effect of Failure to Pay Tax.
One engaged in a business taxed as a privilege who fails to pay a tax cannot maintain a suit on a cause of action arising out of such business. Anderson v. Sanderson, 25 Tenn. App. 425, 158 S.W.2d 374, 1941 Tenn. App. LEXIS 126 (1941).
3. When Perfection Occurs.
Perfection occurs at the time of the payment of the privilege tax and penalties and does not relate back to the initial filing. In re Ken Gardner Ford Sales, Inc., 23 B.R. 743, 1982 U.S. Dist. LEXIS 16663 (E.D. Tenn. 1982).
Part 3
General Revenue Law — Administration of Gross Receipts Taxes
67-4-301. Part definitions.
As used in this part, unless the context otherwise requires:
- “Commissioner” means the commissioner of revenue;
- “Department” means the department of revenue;
-
- “Gross receipts,” for the purpose of taxes administered under this part, means total receipts before anything is deducted, but does not include receipts from incidental business, when such incidental business, if separately carried on, would not be subject to a tax measured by gross receipts under parts 2-6 of this chapter;
- “Gross receipts” does not include state and local sales and other taxes collected from customers and remitted to the respective taxing authorities by utilities; and
- “Incidental business” means a business carried on separately and not a part of the business made the subject of privilege taxation.
Acts 1937, ch. 108, art. 3, § 2; C. Supp. 1950, § 1248.5 (Williams, § 1248.138); Acts 1959, ch. 299, § 1; T.C.A. (orig. ed.), § 67-4316; Acts 1985, ch. 414, § 1; 1988, ch. 898, § 1.
Cross-References. Definitions for general revenue law, § 67-4-201.
Cited: Tennessee Natural Gas Lines v. King, 635 S.W.2d 95, 1982 Tenn. LEXIS 414 (Tenn. 1982); South Cent. Bell Tel. Co. v. Olsen, 669 S.W.2d 649, 1984 Tenn. LEXIS 779 (Tenn. 1984); Sherwin-Williams Co. v. Johnson, 989 S.W.2d 710, 1998 Tenn. App. LEXIS 701 (Tenn. App. 1998).
Collateral References. Taxation 371
67-4-302. Reports.
Every person exercising any privilege declared taxable by a section providing for administration under this part shall annually, on or before August 1, make and deliver to the commissioner, upon such forms and blanks as may be required by the commissioner, a statement, verified by the official or agent making such report and statement, containing the following information as of July 1 of the current calendar year:
- The total gross receipts of the taxpayer for the taxpayer's most recently completed fiscal year from business inside and outside the state;
- The total gross receipts of the taxpayer for the same period from such business inside the state; and
- Such other and further information as may be deemed necessary by the commissioner for the assessment of the taxes administered under this part and as may be required by the forms and blanks prescribed by the commissioner.
Acts 1937, ch. 108, art. 3, § 2; C. Supp. 1950, § 1248.5 (Williams, § 1248.138); impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 269, § 1; 1973, ch. 20, § 2; T.C.A. (orig. ed.), § 67-4315.
67-4-303. [Repealed.]
Compiler's Notes. Former § 67-4-303 (Acts 1937, ch. 108, art. 3, § 2; C. Supp. 1950, § 1248.5 (Williams, § 1248.138); T.C.A. (orig. ed.), § 67-4322), concerning assessment in absence of report, was repealed by Acts 1984, ch. 832, § 36, effective July 1, 1984.
67-4-304. Liability for ad valorem taxes retained.
Businesses exercising any privilege declared taxable by a section providing for administration under this part shall be required to pay to the counties and municipalities in this state all ad valorem taxes of every kind and character, including merchants' ad valorem taxes now authorized or that may later be authorized by law, and nothing in this part shall be construed as a denial to the various counties and municipalities in this state to collect such ad valorem taxes, including merchants' ad valorem taxes, from such businesses.
Acts 1937, ch. 108, art. 3, § 2; C. Supp. 1950, § 1248.5 (Williams, § 1248.138); impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 269, § 1; 1973, ch. 20, § 2; T.C.A. (orig. ed.), § 67-4315.
Cited: Tennessee Natural Gas Lines v. King, 635 S.W.2d 95, 1982 Tenn. LEXIS 414 (Tenn. 1982).
67-4-305. Credits for franchise and excise taxes.
Notwithstanding any other provisions of either part 4, 5 or 6 of this chapter, any person paying gross receipts privilege taxes under provisions of either part 4, 5 or 6 of this chapter, and who is entitled to credit against such taxes for franchise and excise taxes paid, shall be allowed such credit when final annual reports of both gross receipts taxes and franchise and excise taxes have been filed covering the corresponding tax base period; provided, that a taxpayer who has obtained an extension of time beyond August 1, within which to file the franchise and excise tax return for the taxpayer's most recently completed fiscal year ended prior to July 1, shall be allowed credit for all payments of franchise and excise taxes made for such corresponding tax base period.
Acts 1937, ch. 108, art. 3, § 2; C. Supp. 1950, § 1248.5 (Williams, § 1248.138); impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 269, § 1; 1973, ch. 20, § 2; T.C.A. (orig. ed.), § 67-4315.
67-4-306. Period covered by tax — Refund.
- The taxes levied by sections providing for administration under this part are declared to be imposed for the privilege of engaging in business for the year beginning on July 1, even though such tax is made payable on the following August 1, and even though such tax is measured by gross receipts for the preceding fiscal or calendar year.
- Whenever the operation of a business ceases during the privilege tax year, the business is entitled to a prorated refund of tax for the portion of such year during which it did not operate; provided, that the refund amount exceeds ten dollars ($10.00). This subsection (b) does not apply, however, to transfers of existing businesses.
Acts 1937, ch. 192, § 14; C. Supp. 1950, § 1248.5 (Williams, § 1248.138); T.C.A. (orig. ed.), § 67-4317; Acts 1988, ch. 833, § 1.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 6.
Law Reviews.
Business Associations — 1961 Tennessee Survey (Kenneth L. Roberts), 14 Vand. L. Rev. 1141 (1961).
Cited: Automatic Merchandising Co. v. Atkins, 205 Tenn. 547, 327 S.W.2d 328, 1959 Tenn. LEXIS 392 (1959); Tidwell v. Servomation-Willoughby Co., 483 S.W.2d 98, 1972 Tenn. LEXIS 363 (Tenn. 1972); Tennessee Natural Gas Lines v. King, 635 S.W.2d 95, 1982 Tenn. LEXIS 414 (Tenn. 1982).
67-4-307. [Repealed.]
Compiler's Notes. Former § 67-4-307 (Acts 1937, ch. 108, art. 3, § 2; C. Supp. 1950, § 1248.5; Acts 1951, ch. 265, § 1; Williams, § 1248.138; 1980, ch. 885, § 14; T.C.A. (orig. ed.), § 67-4318), concerning date tax due, penalty and interest, was repealed by Acts 1988, ch. 526, § 30.
67-4-308. Quarterly payments.
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Any person subject to the gross receipts tax imposed by parts 2-6 of this chapter has the option of paying tax on a quarterly installment basis by paying one fourth (¼) of the tax that may be due on each of November 1, February 1 and May 1.
- Any person so exercising this option shall be required to pay interest on any payment after August 1 under the provisions of this part.
- When any person fails to pay the appropriate installment of this tax when it shall become due, there shall be imposed against that person a penalty in the amount of five percent (5%) of the installment for each thirty (30) days or fraction thereof, that the installment remains unpaid subsequent to the due date, up to a maximum of twenty-five percent (25%).
- Whenever the ownership of a business subject to the gross receipts tax, the owner of which business has elected to pay the tax in quarterly installments as provided in subsection (a), is transferred during the year in which such quarterly payments are being made, the transferee shall become liable for any quarterly installments or installment, together with penalties, if any have accrued, and interest that remains unpaid at the time of such transfer; provided, that the transferee shall not be liable for any further gross receipts taxes for the year in which the transfer is made. It is declared to be the legislative intent that only one (1) gross receipts tax be paid on account of the operation of a business during any one (1) year.
Acts 1937, ch. 108, art. 3, § 2; C. Supp. 1950, § 1248.5 (Williams, § 1248.138); Acts 1951, ch. 265, § 1; 1953, ch. 185, § 1; 1980, ch. 885, § 14; T.C.A. (orig. ed.), §§ 67-4318, 67-4319; Acts 1988, ch. 526, § 9.
Compiler's Notes. Acts 1988, ch. 526, § 45 provided that the amendment by that act shall apply to all assessments of penalty made on or after January 1, 1989.
Cross-References. Liability of person engaged in business less than one year, § 67-4-309.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 6.
Law Reviews.
State and Local Taxation — 1961 Tennessee Survey (Paul J. Hartman), 14 Vand. L. Rev. 1401 (1961).
Cited: United Inter-Mountain Tel. Co. v. Moyers, 221 Tenn. 246, 426 S.W.2d 177, 1968 Tenn. LEXIS 460 (1968); Tennessee Natural Gas Lines v. King, 635 S.W.2d 95, 1982 Tenn. LEXIS 414 (Tenn. 1982).
NOTES TO DECISIONS
1. Application and Scope.
The transferee of a business for which a tax was being paid in quarterly installments was liable for the unpaid installments notwithstanding such transferee was engaged in a similar business and had paid a tax on such business. Automatic Merchandising Co. v. Atkins, 205 Tenn. 547, 327 S.W.2d 328, 1959 Tenn. LEXIS 392 (1959); General Tel. Co. v. Boyd, 208 Tenn. 24, 343 S.W.2d 872, 1961 Tenn. LEXIS 390 (1960).
The limitation on liability of a transferee for the privilege tax only applies to a transferee whose transferor has elected at the beginning of the fiscal year to pay its tax in quarterly installments and does not extend to that situation where the transferor has paid the tax for the entire year on or before its due date. General Tel. Co. v. Boyd, 208 Tenn. 24, 343 S.W.2d 872, 1961 Tenn. LEXIS 390 (1960).
2. Construction.
The proviso in this section that it is the legislative intent that only one gross receipt tax be paid during any one year was enacted to make it clear that the transferee of a business on which installments of tax were still due would not, after the payment of such installments, also be required to pay the monthly tax as provided in § 67-4-309. Automatic Merchandising Co. v. Atkins, 205 Tenn. 547, 327 S.W.2d 328, 1959 Tenn. LEXIS 392 (1959).
Where corporation which had paid tax for the year became a transferee of a similar business for which the tax had been paid in installments and two installments were still unpaid the provision in this section declaring that only one tax should be paid had no application to such remaining installments, and such transferee was liable for such unpaid installments. Automatic Merchandising Co. v. Atkins, 205 Tenn. 547, 327 S.W.2d 328, 1959 Tenn. LEXIS 392 (1959).
3. Transferees.
Where business was transferred to another and within two weeks transferred from such other company to defendant, the negotiations of both transfers being carried on simultaneously, defendant was a transferee of the original owner's business within the meaning of this section. Automatic Merchandising Co. v. Atkins, 205 Tenn. 547, 327 S.W.2d 328, 1959 Tenn. LEXIS 392 (1959).
4. Time for Payment.
The entire amount of the tax was due and payable on August 1 unless the taxpayer exercised the option to pay quarterly by paying one-fourth of the annual tax on or before August 1 of the taxable year. Tidwell v. Servomation-Willoughby Co., 483 S.W.2d 98, 1972 Tenn. LEXIS 363 (Tenn. 1972).
The only payment that could be made after August 1 of the taxable year by a taxpayer who had failed to make any payment on August 1 was the entire tax plus a penalty of 10 percent and interest of six percent on the total amount of tax and penalty. Tidwell v. Servomation-Willoughby Co., 483 S.W.2d 98, 1972 Tenn. LEXIS 363 (Tenn. 1972).
5. —Default on Quarterly Payments.
A taxpayer who had exercised the option to pay on a quarterly basis by paying the first installment on August 1 was required to pay interest on the remaining three installments when due and, on default of any remaining installment when due, a penalty of 10 percent in addition to interest of six percent on the tax and penalty. Tidwell v. Servomation-Willoughby Co., 483 S.W.2d 98, 1972 Tenn. LEXIS 363 (Tenn. 1972).
67-4-309. Liability of person engaged in business less than one year.
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Any person, except as provided elsewhere in this part, who shall have engaged in business for less than a full year on July 1, shall, for the ensuing year, pay as follows:
- The measure of the tax shall be ascertained by multiplying such person's gross receipts by the ratio that the period during which the person has engaged in business bears to an entire year; and
- Any person who first commences business on or after July 1, 1937, shall, at the conclusion of each month, report to the commissioner that person's gross receipts for such month and shall pay tax, measured by such monthly gross receipts, at the rate specified in the appropriate taxing section. This tax shall be paid not later than the tenth day of the following month. On August 1 following the date when such person entered business, the person shall pay the annual tax for the year commencing on the next prior July 1, computed according to subdivision (a)(1), but the person shall not later make monthly payments.
- Whenever the ownership of a business subject to the gross receipts tax, the owner of which has paid the tax on an annual basis in accordance with this part on or before August 1 of any year, is transferred during the year after payment, the transferee shall not be liable for any further gross receipts taxes for the year in which the transfer is made. It is declared to be the legislative intent that only one (1) gross receipt tax be paid on account of the operation of a business during any one (1) year.
Acts 1937, ch. 192, § 14; C. Supp. 1950, § 1248.5 (Williams, § 1248.138); impl. am. Acts 1959, ch. 9, § 14; Acts 1967, ch. 393, §§ 1, 2; 1973, ch. 20, § 3; T.C.A. (orig. ed.), § 67-4320.
Cross-References. Quarterly payments, § 67-4-308.
Law Reviews.
Business Associations — 1961 Tennessee Survey (Kenneth L. Roberts), 14 Vand. L. Rev. 1141 (1961).
Cited: United Inter-Mountain Tel. Co. v. Moyers, 221 Tenn. 246, 426 S.W.2d 177, 1968 Tenn. LEXIS 460 (1968); Tennessee Natural Gas Lines v. King, 635 S.W.2d 95, 1982 Tenn. LEXIS 414 (Tenn. 1982); United Canners, Inc. v. King, 696 S.W.2d 525, 1985 Tenn. LEXIS 533 (Tenn. 1985).
NOTES TO DECISIONS
1. Merger of Corporations.
Surviving corporation in consolidation was not excused from payment of privilege tax for remainder of year on monthly basis because former corporation paid tax for entire year on or before due date and prior to the consolidation. General Tel. Co. v. Boyd, 208 Tenn. 24, 343 S.W.2d 872, 1961 Tenn. LEXIS 390 (1960).
2. Out-of-State Corporation with Subsidiary in State.
Where an out-of-state corporation conducting a canning business in Tennessee created a Tennessee corporation and put it into the business of marketing its canning production, but did not transfer to it any incident of ownership of the original canning business, there were two taxable entities doing a canning business from the facility, and both were subject to the tax imposed by T.C.A. § 67-4-402; the second entity was not entitled to the exemption in T.C.A. § 67-4-309(b) because it was not the transfer of the ownership of a business. United Canners, Inc. v. King, 696 S.W.2d 525, 1985 Tenn. LEXIS 533 (Tenn. 1985).
67-4-310. Transfer of vending machine business.
- Notwithstanding § 67-4-309(b), the transferee of a vending machine business upon which the transferor has paid tax on an annual basis under § 67-4-506, desiring to continue to operate under the option as afforded by such section, shall, within thirty (30) days after the date of transfer, or the next following July 1, whichever is sooner, notify the department of its intent and also register the new business and each transferred vending machine with the department in the name of the transferee. In connection with the transfer, the transferee shall pay such costs and fees as provided in § 67-4-506, but no additional gross receipts tax shall be due for any remaining period for which the transferor has paid applicable gross receipts taxes. However, when any such transferee desiring to continue to exercise the option afforded in § 67-4-506 shall fail to notify the department and to register, as required, the transferee shall not be permitted to exercise such option prior to the next following July 1, until and unless there shall have been paid, in addition to the costs and fees provided in § 67-4-506, a specific penalty in the amount of one dollar ($1.00) for each transferred vending machine for each month, or any fractional part thereof, during which such failure continues following expiration of the thirty (30) days after the transfer. Furthermore, if the option to pay the tax under § 67-4-506 is not exercised as provided prior to the next July 1 following the transfer, then such transferee shall be required to pay the sales tax as provided by law for a period of not less than twelve (12) months.
- The transferee of a vending machine business taxable under § 67-4-506, shall notify the department of the transfer and also register each transferred vending machine with the department under § 67-4-506 as set out in subsection (a), whether or not the transferor of such machines was operating under the option referred to in subsection (a). Such notification and registration shall be made within the period specified in subsection (a), and the operation of any transferred machine beyond such period without compliance with these requirements is unlawful and the transferee shall be subject to the imposition of penalties otherwise provided for in § 67-4-220.
Acts 1937, ch. 192, § 14; C. Supp. 1950, § 1248.5 (Williams, § 1248.138); impl. am. Acts 1959, ch. 9, § 14; Acts 1967, ch. 393, §§ 1, 2; 1973, ch. 20, § 3; T.C.A. (orig. ed.), § 67-4320; Acts 2007, ch. 602, § 22.
67-4-311. Obtaining evidence.
The commissioner is authorized to examine any book, paper, record, or other data belonging to a person, including a local collector of a tax due the state under any law of this state, under chapter 1, part 14 of this title, in order to ascertain the liability of a person, including a local collector of a tax due the state, under any law of this state, for any taxes due the state.
Acts 1937, ch. 108, art. 3, § 2; C. Supp. 1950, § 1248.5 (Williams, § 1248.138); Acts 1978, ch. 839, § 18; T.C.A. (orig. ed.), § 67-4321.
Law Reviews.
Report on Administrative Law to the Tennessee Law Revision Commission, 20 Vand. L. Rev. 777 (1967).
Cited: Tennessee Natural Gas Lines v. King, 635 S.W.2d 95, 1982 Tenn. LEXIS 414 (Tenn. 1982).
67-4-312. [Repealed.]
Compiler's Notes. Former § 67-4-312 (Acts 1937, ch. 108, art. 2, § 3; C. Supp. 1950, § 1248.5 (Williams, § 1248.138); T.C.A. (orig. ed.), § 67-4322), concerning additional remedies, was repealed by Acts 1984, ch. 832, § 36, effective July 1, 1984.
Part 4
General Revenue Law — Privileges Taxable by State Only
67-4-401. Generally.
Engaging in the various businesses mentioned in this part is declared to be a privilege for state purposes and taxable by the state alone, and any person so engaged shall pay to the commissioner of revenue, unless otherwise provided, the tax stated in this part. No county or municipality may impose any tax upon the privileges mentioned in this part, except license fees upon motor vehicles that might be imposed in the absence of this part.
Acts 1937, ch. 108, art. 2, § 2; C. Supp. 1950, § 1248.3 (Williams, § 1248.119); impl. am. Acts 1959, ch. 9, § 14; Acts 1981, ch. 488, § 7; T.C.A. (orig. ed.), § 67-4101.
Cross-References. Definitions for general revenue law, § 67-4-201.
Privilege tax for criminal injuries compensation fund, § 40-24-107.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Cited: Stroop v. Rutherford County, 567 S.W.2d 753, 1978 Tenn. LEXIS 605 (Tenn. 1978); In re Ken Gardner Ford Sales, Inc., 10 B.R. 632, 1981 Bankr. LEXIS 3928 (Bankr. E.D. Tenn. 1981); American City Bank v. Western Auto Supply Co., 631 S.W.2d 410, 1981 Tenn. App. LEXIS 591 (Tenn. Ct. App. 1981).
NOTES TO DECISIONS
1. Right to Impose Tax.
The general assembly cannot tax a single act per se as a privilege, inasmuch as such act, in the nature of things, cannot in and of itself constitute a business avocation or pursuit; hence it is a matter of importance whether they make a business of it or not, since, if they do not, there is no privilege to be subjected to taxation, but the proof of a single act, which is characteristic of any of the privileges created by the general assembly is by no means unimportant, because evidence of such act necessarily casts the burden of proof upon the defendant to show that he is not in fact exercising the privilege. Trentham v. Moore, 111 Tenn. 346, 76 S.W. 904, 1903 Tenn. LEXIS 29 (1903); Wilder v. Williamson, 22 Tenn. App. 692, 126 S.W.2d 341, 1938 Tenn. App. LEXIS 71 (1938).
Telecommunications company's rights-of-way for its telephone lines through defendant city's property was granted by state law, so, although pursuant to its police power, the city could charge a fee reasonably related to the cost to the city for the use and maintenance of the rights-of-way, the city could not tax the telecommunications company for the use of the rights-of-way; however, the record indicated that the revenue derived from the alleged fee was allocated to different city functions and apparently bore no relation to the cost to the city in supervising and regulating the use of the rights-of-way, so the appellate court found that the ordinance enacted was invalid as contrary to the state statutes and reversed the chancery court's contrary decision. Bellsouth Telcoms., Inc. v. City of Memphis, 160 S.W.3d 901, 2004 Tenn. App. LEXIS 442 (Tenn. Ct. App. 2004), appeal denied, Bellsouth Telecomms., Inc. v. City of Memphis, — S.W.3d —, 2005 Tenn. LEXIS 3 (Tenn. Jan. 4, 2005).
Collateral References. Taxation 371
67-4-402. Bottlers and manufacturers of soft drinks. [Contingent repeal date. See subdivision (b)(2).]
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Definitions. As used in this section, unless the context otherwise requires:
- “Bottled soft drinks” includes any and all nonalcoholic beverages, whether carbonated or not, such as soda water, cola drinks, orangeade, grapeade, gingerale and the like, and all bottled preparations commonly referred to as soft drinks of whatever kind or description that are closed and sealed in glass, paper, metal, plastic, or any type of container or bottle, whether manufactured with or without the use of syrup. Fluid milk with or without flavoring, natural undiluted fruit juice or vegetable juice, cider, and pure fruit juice concentrate to which no additive has been made, with only water being necessary to be added to restore the juice to its natural state, are exempted from this section; and
- “Nonalcoholic beverages” means all beverages containing less than one half of one percent (0.5%) alcohol by volume.
-
- Imposition of Tax. A person manufacturing or producing and selling within this state any bottled soft drinks and a person importing or causing to be imported bottled soft drinks into this state from outside the state and selling such imported bottled soft drinks within this state shall, for the privilege of engaging in such business, pay to the state for state purposes an amount equal to one and nine-tenths percent (1.9%) of the person's gross receipts derived from such business; provided, that the rate shall be reduced by four-tenths of one percent (0.4%) on July 1 of any year following the enactment of any state or federal law that imposes mandatory deposits by consumers on beverage containers sold in this state or on July 1, 2022, whichever occurs first.
- Notwithstanding any provision of this section or law to the contrary, any revenue generated from the increase in tax rates from one and one-half percent (1.5%) to one and nine-tenths percent (1.9%) shall be allocated to the highway fund for the purpose of funding programs for the prevention and collection of litter and trash and matters related to the programs. No later than March 31 of each year, the department of transportation shall transmit to the governor, the speaker of the house of representatives and the speaker of the senate a report listing the programs receiving funds generated by this subsection (b), the amount of funds received by each program, and the purpose for which the funds were spent. This subdivision (b)(2) shall be repealed on July 1 of any year following the enactment of any state or federal law that imposes mandatory deposits by consumers on beverage containers sold in this state or on July 1, 2022, whichever occurs first.
- A person located outside this state who distributes bottled soft drinks in this state shall, for the privilege of engaging in such business, pay the tax on gross receipts derived from bottled soft drinks distributed by the person in this state in the same manner as does a person located in this state.
- A person importing or causing to be imported bottled soft drinks into this state from outside the state and selling such imported soft drinks within this state is not required to pay the tax, if the person's out-of-state supplier of bottled soft drinks has paid the tax as stated in subdivision (b)(3).
- The tax shall be administered and collected by the commissioner under chapter 1, part 14 of this title and parts 2 and 3 of this chapter.
- Exemptions. A person who is subject to and pays this tax is not liable for the tax on gross receipts derived from the person's sales of bottled soft drinks outside this state.
-
Any taxes paid pursuant to parts 20 and 21 of this chapter on the business taxed by this section shall be a credit against the tax imposed by this section.
- The credit taken on any return shall not, however, exceed seventy-eight and ninety-five hundredths percent (78.95%) of the tax liability shown on any tax return.
- No credit shall be taken on any return for taxes paid pursuant to parts 20 and 21 of this chapter, unless such taxes are paid for the corresponding tax base period on which the tax levied by this section is based; provided, that the credit allowed under this subsection (d) shall be for taxes only, and no credit shall be allowed for penalty and interest.
Acts 1937, ch. 108, art. 2, § 2, Item A; 1941, ch. 51, § 17; 1947, ch. 170, § 1; 1949, ch. 219, § 1; C. Supp. 1950, § 1248.3, Item B (Williams, § 1248.120); Acts 1955, ch. 309, §§ 1, 2; 1957, ch. 227, §§ 1, 2; 1957, ch. 385, § 1; 1957, ch. 393, § 1; impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 35, §§ 1, 2; 1972, ch. 476, § 1; 1973, ch. 20, § 1; 1978, ch. 510, §§ 1-3; 1981, ch. 307, §§ 3, 4; T.C.A. (orig. ed.), § 67-4102, Item B; Acts 1984, ch. 769, § 1; 1987, ch. 33, § 1; 1988, ch. 573, § 1; 1991, ch. 30, § 1; 1995, ch. 2, § 1; 1999, ch. 81, § 2; 1999, ch. 406, § 9; 2005, ch. 86, § 1; 2010, ch. 616, § 1; 2016, ch. 704, §§ 3, 4.
Compiler's Notes. Acts 1995, ch. 2, § 1, effective June 1, 1995, provided that the provisions of this section and § 57-5-201, containing the tax increases imposed by Acts 1981, ch. 307, and extended by Acts 1984, ch. 769 and Acts 1987, ch. 33, and Acts 1991, ch. 30, shall continue in effect until June 30, 1999, or until June 30 of any year following the enactment of any state or federal law which imposes mandatory deposits by consumers on beverage containers sold in Tennessee, notwithstanding any other provision of law to the contrary.
Acts 1995, ch. 2, § 2 provided that § 1 of that act applies to all returns for taxes filed on or after June 1, 1995.
Acts 1999, ch. 81, § 1, effective June 1, 1999, provided that the provisions of this section and § 57-5-201, containing the tax increases imposed by Acts 1981, ch. 307, and extended by Acts 1984, ch. 769, Acts 1987, Acts 1987, ch. 33, Acts 1991, ch. 30, and Acts 1995, ch. 2 shall continue in effect until June 30, 2005, or until June 30 of any year following the enactment of any state or federal law which imposes mandatory deposits by consumers on beverage containers sold in Tennessee, notwithstanding any other provision of law to the contrary.
Acts 1999, ch. 81, § 3 provided that the amendment by that act, adding the last sentence in (b)(1), and extending the operation of this section and § 57-5-201 to June 30, 2005, shall apply to all tax returns filed on or after June 1, 1999.
Acts 2005, ch. 86, § 1, effective June 1, 2005, provided that the provisions of this section and § 57-5-201(a)(2), containing the tax increases imposed by Acts 1981 ch. 307, and extended by Acts 1984, ch. 769, Acts 1987, ch. 33, Acts 1991, ch. 30, Acts 1995, ch. 2, and Acts 1999, ch 81 shall continue in effect until June 30, 2010, or until June 30 of any year following the enactment of any state or federal law which imposes mandatory deposits by consumers on beverage containers sold in Tennessee, notwithstanding any other provision of law to the contrary, and shall apply to all tax returns filed on or after June 1, 2005.
Acts 2005, ch. 86, § 2 provided that § 1 of that act applies to all tax returns filed on or after June 1, 2005.
Acts 2010, ch. 616, § 1, effective June 1, 2010, provided that the provisions of this section and § 57-5-201, containing the tax increases imposed by Acts 1981, ch. 307, and extended by Acts 1984, ch. 769, Acts 1987, ch. 33, Acts 1991, ch. 30, Acts 1995, ch. 2, Acts 1999, ch. 81 and Acts 2005, ch. 86, shall continue in effect until June 30, 2016, or until June 30 of any year following the enactment of any state or federal law which imposes mandatory deposits by consumers on beverage containers sold in Tennessee, notwithstanding any other provision of law to the contrary; and Acts 2010, ch. 616, § 2 provided that the act shall apply to all tax returns filed on or after June 1, 2010.
Acts 2016, ch. 704, § 5 provided that it is the legislative intent that the temporary taxes contained in §§ 57-5-201 and 67-4-402, and first imposed by Acts 1981, ch. 307, are reenacted and extended in accordance with the act which amended this section.
Acts 2016, ch. 704, § 6 provided that the act, which amended this section, shall apply to all tax returns filed on or after June 1, 2016.
Amendments. The 2016 amendment, in (b)(1), added the proviso at the end of the paragraph, and added the last sentence of (b)(2).
Effective Dates. Acts 2016, ch. 704, § 6. June 1, 2016.
Cross-References. Privilege tax on beer, § 57-5-201.
Textbooks. Tennessee Jurisprudence, 14 Tenn. Juris., Hawkers and Peddlers, § 1; 16 Tenn. Juris., Intoxicating Liquors, § 7; 17 Tenn. Juris., Licenses, § 3; 23 Tenn. Juris., Taxation, § 80.
Law Reviews.
Creation, Perfection, and Enforcement of Security Interest Under the “Tennessee” Commercial Code (John A. Walker, Jr.), 48 Tenn. L. Rev. 819 (1981).
Attorney General Opinions. Bottled water falls within the definition of “bottled soft drinks,” OAG 00-177 (11/20/00).
Cited: Commerce Union Bank v. Possum Holler, Inc., 620 S.W.2d 487, 1981 Tenn. LEXIS 476 (Tenn. 1981).
NOTES TO DECISIONS
1. Constitutionality.
Flexibility of the bottler's tax, T.C.A. § 67-4-402, with regard to out-of-state and in-state manufacturers has some relevance to its objective of avoiding double taxation. Accordingly, to the extent the bottler's tax imposes differential treatment of out-of-state and in-state manufacturers, it does not violate the Equal Protection Clauses of U.S Const. amend. XIV or Tenn. Const. arts. I, § 8 and XI, § 8. Dr. Pepper Pepsi-Cola Bottling Co. v. Farr, 393 S.W.3d 201, 2011 Tenn. App. LEXIS 615 (Tenn. Ct. App. Nov. 16, 2011), appeal denied, Dr. Pepper Pepsi-Cola Bottling Co., of Dyersburg LLC v. Farr, — S.W.3d —, 2012 Tenn. LEXIS 231 (Tenn. Apr. 12, 2012).
2. Legislative Intent.
The general assembly intended to exact from importers or dealers the same tax which would have been paid by out-of-state bottlers or manufacturers if those businesses had been subject to the state's taxing power. Kroger Co. v. Tollett, 608 S.W.2d 846, 1980 Tenn. LEXIS 512 (Tenn. 1980).
Plain and ordinary meaning of T.C.A. § 67-4-402 is that the business taxed is the entity whose activities subject it to the taxes referenced. The statutory reference to “any tax return” does not imply an ability to utilize another entity's franchise and excise credit, but instead it simply acknowledges that all bottler's tax payors are entitled to the credit, notwithstanding the type of return being made. Dr. Pepper Pepsi-Cola Bottling Co. v. Farr, 393 S.W.3d 201, 2011 Tenn. App. LEXIS 615 (Tenn. Ct. App. Nov. 16, 2011), appeal denied, Dr. Pepper Pepsi-Cola Bottling Co., of Dyersburg LLC v. Farr, — S.W.3d —, 2012 Tenn. LEXIS 231 (Tenn. Apr. 12, 2012).
3. Credits.
The credit against franchise and excise taxes is available to a dealer or importer. Kroger Co. v. Tollett, 608 S.W.2d 846, 1980 Tenn. LEXIS 512 (Tenn. 1980).
In provisions imposing a privilege tax on soft drink bottlers, word “any” means “all,” and section allows a bottler a credit for all franchise and excise taxes regardless of the source of revenue. Roddy Mfg. Co. v. Olsen, 661 S.W.2d 868, 1983 Tenn. LEXIS 797 (Tenn. 1983).
In-state bottled soft drink manufacturer bore the bottler's tax burden under T.C.A. § 67-4-402(b), and was not entitled to utilize an in-state distributor's franchise and excise tax credit because § 67-4-402(b), read as a whole, did not permit an in-state distributor to pay the bottler's tax when it imported from an in-state manufacturer. Dr. Pepper Pepsi-Cola Bottling Co. v. Farr, 393 S.W.3d 201, 2011 Tenn. App. LEXIS 615 (Tenn. Ct. App. Nov. 16, 2011), appeal denied, Dr. Pepper Pepsi-Cola Bottling Co., of Dyersburg LLC v. Farr, — S.W.3d —, 2012 Tenn. LEXIS 231 (Tenn. Apr. 12, 2012).
4. “Substitutes.”
The words “and substitutes therefor” in a former catchline to this section did not refer to products but to the identity of taxpayers. Kroger Co. v. Tollett, 608 S.W.2d 846, 1980 Tenn. LEXIS 512 (Tenn. 1980).
If out-of-state bottlers or manufacturers voluntarily paid the tax, then the dealer or distributor was not liable therefor, but in the event the former did not pay the tax, it was imposed upon the dealer or distributor selling the products within the state; and in either case the tax is measured by the gross receipts of the out-of-state bottler or manufacturer who was given the privilege of paying “in the same manner as local bottlers and manufacturers.” Kroger Co. v. Tollett, 608 S.W.2d 846, 1980 Tenn. LEXIS 512 (Tenn. 1980).
5. Bottled Water.
Appellate court did not find a clear legislative intent that T.C.A. § 67-4-402 imposed a tax on bottled water; because the production, bottling and sale of bottled water were not subject to taxation under § 67-4-402, the trial court erred in granting summary judgment in favor of the commissioner of revenue by finding that the commissioner correctly assessed a privilege tax against the water bottling company. English Mt. Spring Water Co. v. Chumley, 196 S.W.3d 144, 2005 Tenn. App. LEXIS 667 (Tenn. Ct. App. 2005), appeal denied, — S.W.3d —, 2006 Tenn. LEXIS 328 (Tenn. 2006).
6. Out-of-State Corporation with in-State Subsidiary.
Where an out-of-state corporation conducting a canning business in Tennessee created a Tennessee corporation and put it into the business of marketing its canning production, but did not transfer to it any incident of ownership of the original canning business, there were two taxable entities doing a canning business from the facility, and both were subject to the tax imposed by T.C.A. § 67-4-402; the second entity was not entitled to the exemption in T.C.A. § 67-4-309(b) because it was not the transfer of the ownership of a business. United Canners, Inc. v. King, 696 S.W.2d 525, 1985 Tenn. LEXIS 533 (Tenn. 1985).
67-4-403. [Repealed.]
Compiler's Notes. Former § 67-4-403 (Acts 1937, ch. 108, art. 2, § 2, Item D; C. Supp. 1950, § 1248.3, Items D and E (Williams, § 1248.123); T.C.A. (orig. ed.), § 67-4102, Items D and E; Acts 1983, ch. 189, § 5), concerning building and loan associations and corporate filing fees, was repealed by Acts 1984, ch. 832, § 36, effective July 1, 1984.
67-4-404. [Repealed.]
Compiler's Notes. Former § 67-4-404 (Acts 1937, ch. 108, art. 2, § 2, Item D; C. Supp. 1950, § 1248.3, Items D and E (Williams, § 1248.123); T.C.A. (orig. ed.), § 67-4102, Items D and E; Acts 1983, ch. 189, § 5), concerning building and loan associations and corporate filing fees, was repealed by Acts 1984, ch. 832, § 36, effective July 1, 1984.
67-4-405. Gas, water and electric companies.
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- Each person engaged in the business of furnishing or distributing gas, water, or electric current, whether to a dealer, consumer, municipality or other customer shall, for the privilege of doing such business, pay to the state for state purposes an amount equal to three percent (3%) of the gross receipts derived from intrastate business in the state.
- Persons engaged in the business of manufacturing gas or of distributing manufactured gas or natural gas shall, in lieu of subsection (a), pay an amount equal to one and one-half percent (1.5%) of the gross receipts derived from intrastate business in this state, which payment shall be subject to the same provisions, restrictions and credits otherwise provided in this section.
- This tax does not apply to cities or other political subdivisions of the state owning and operating gas companies, water companies or power plants, nor does it apply to persons having not-for-profit status owning and operating water companies, nor does it apply to persons meeting the criteria of exempt wholesale generators or FERC certified wholesale power marketers under the Federal Power Act of 1992, compiled in 16 U.S.C. § 791(a) et seq., nor does it apply to any governmental agency of the United States.
- It is the intention of this section to levy a tax for the privilege of engaging in intrastate commerce carried on wholly within this state and not a part of interstate commerce.
- There shall be credited upon the tax imposed by this section any taxes paid by the owner of such business on any gas, water or electric company businesses under the Excise Tax Law, compiled in part 20 of this chapter, and the Franchise Tax Law, compiled in part 21 of this chapter, during the calendar year in which the tax levied becomes due.
- Each person engaged in the business of furnishing or distributing electric current or water shall be exempt from the tax imposed by this section upon gross receipts up to the amount of five thousand dollars ($5,000), but shall be liable to the state tax upon all gross receipts in excess of five thousand dollars ($5,000).
- The taxes imposed in this section should be administered and collected in accordance with part 3 of this chapter.
Acts 1937, ch. 108, art. 2, § 2, Item G; 1937, ch. 192, §§ 19, 20-A; 1939, ch. 21, § 31; 1941, ch. 51, § 19; 1943, ch. 112, § 1; C. Supp. 1950, § 1248.3, Item H (Williams, § 1248.126); T.C.A. (orig. ed.), § 67-4102, Item H; Acts 1999, ch. 406, § 10; 1999, ch. 407, § 1; 2011, ch. 404, § 1.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 80.
Cited: Tennessee Natural Gas Lines v. Federal Power Comm'n, 221 F.2d 531, 1954 U.S. App. LEXIS 3322 (D.C. Cir. 1954).
NOTES TO DECISIONS
1. Joint Enterprise of Pipeline and Local Distributor.
Where an interstate pipeline company engaged in a joint enterprise with a local distributor in the delivery of natural gas to local consumers so that it was engaged in the distribution of natural gas within the meaning of this section but where the local distributor paid the gross receipts tax on such enterprise there was only one tax due on the entity pursuing the activity and the pipeline company was not liable for tax on gross receipts on which the local distributor had already paid such a tax. Memphis Natural Gas Co. v. McCanless, 180 Tenn. 688, 1944 Tenn. LEXIS 337, 177 S.W.2d 841 (Tenn. Feb. 5, 1944), cert. denied, 323 U.S. 785, 65 S. Ct. 275, 89 L. Ed. 626 (1944), cert. denied, Memphis Natural Gas Co. v. McCanless, 323 U.S. 785, 65 S. Ct. 275, 89 L. Ed. 626 (1944).
Where pipeline company delivered gas from out of state to local distributors over whom the pipeline company had no control and such local distributors in turn delivered the gas to local consumers, the pipeline company was not engaged in distributing natural gas within the meaning of this section and was not subject to the gross receipts tax imposed thereby. Memphis Natural Gas Co. v. McCanless, 180 Tenn. 688, 1944 Tenn. LEXIS 337, 177 S.W.2d 841 (Tenn. Feb. 5, 1944), cert. denied, 323 U.S. 785, 65 S. Ct. 275, 89 L. Ed. 626 (1944), cert. denied, Memphis Natural Gas Co. v. McCanless, 323 U.S. 785, 65 S. Ct. 275, 89 L. Ed. 626 (1944).
2. Isolated Sale.
An isolated sale of natural gas to a local consumer by a pipeline company engaged in interstate delivery of such gas does not make such company subject to the tax imposed by this section. Memphis Natural Gas Co. v. McCanless, 180 Tenn. 688, 1944 Tenn. LEXIS 337, 177 S.W.2d 841 (Tenn. Feb. 5, 1944), cert. denied, 323 U.S. 785, 65 S. Ct. 275, 89 L. Ed. 626 (1944), cert. denied, Memphis Natural Gas Co. v. McCanless, 323 U.S. 785, 65 S. Ct. 275, 89 L. Ed. 626 (1944).
3. Contract with City to Pay Five Percent of Gross Receipts.
Provisions of Acts 1939, ch. 21, § 31 to the effect that persons, firms or corporations engaged in the business of manufacturing gas or distributing manufactured gas which were required by municipal ordinance or franchise to pay a gross receipts tax, privilege, franchise or license tax to any county or municipality in the state would not be entitled to the reduction of one and a half percent but were to pay an amount equal to three percent of gross receipts to the state but that they were thereby to be relieved of payment of the tax to the county or municipality, did not relieve a gas company of a contractual obligation to pay five percent of its gross receipts to the city as such payments did not amount to a payment of a “tax” within the meaning of the general revenue statute. Nashville Gas & Heating Co. v. Nashville, 177 Tenn. 590, 152 S.W.2d 229, 1940 Tenn. LEXIS 59 (1941).
4. Interstate Commerce.
Where gas company operated entirely within state, buying gas from interstate carrier, transmitting the gas through its own lines and reselling such gas to a large industrial user and to a subsidiary corporation which subsidiary in turn sold gas to local customers within the state, such gas company was not engaged in interstate commerce so as to be exempt from taxation under this section. Tennessee Natural-Gas Lines v. Atkins, 199 Tenn. 468, 287 S.W.2d 67, 1956 Tenn. LEXIS 345 (1956).
67-4-406. Miscellaneous public utilities.
- Each public utility, other than those specifically enumerated and taxed under another section of this part, shall for the privilege of doing business pay to the state for state purposes an amount equal to three percent (3%) of the gross receipts in this state.
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- There shall be credited upon the tax imposed any taxes paid under the Excise Tax Law, compiled in part 20 of this chapter, and the Franchise Tax Law, compiled in part 21 of this chapter, during the calendar year in which the tax levied becomes due.
- In order for a person to qualify for the credits authorized by subdivision (b)(1), such person must be subject to the taxes imposed by parts 20 and 21 of this chapter.
- This tax does not apply to persons meeting the criteria of exempt wholesale generators or FERC certified wholesale power marketers under the Federal Power Act of 1992, compiled in 16 U.S.C. § 791a et seq.
- The tax imposed shall be administered and collected in accordance with part 3 of this chapter.
Acts 1937, ch. 108, art. 2, § 2, Item J; C. Supp. 1950, § 1248.3, Item N (Williams, § 1248.129); T.C.A. (orig. ed.), § 67-4102, Item N; Acts 1999, ch. 406, § 11; 1999, ch. 407, § 2.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 80.
NOTES TO DECISIONS
1. Gross Receipts.
Amounts collected by telephone companies as retail sales taxes were includable as gross receipts. South Cent. Bell Tel. Co. v. Olsen, 669 S.W.2d 649, 1984 Tenn. LEXIS 779 (Tenn. 1984).
2. What Entity May Tax.
Telecommunications company's rights-of-way for its telephone lines through defendant city's property was granted by state law, so, although pursuant to its police power, the city could charge a fee reasonably related to the cost to the city for the use and maintenance of the rights-of-way, the city could not tax the telecommunications company for the use of the rights-of-way; however, the record indicated that the revenue derived from the alleged fee was allocated to different city functions and apparently bore no relation to the cost to the city in supervising and regulating the use of the rights-of-way, so the appellate court found that the ordinance enacted was invalid as contrary to the state statutes and reversed the chancery court's contrary decision. Bellsouth Telcoms., Inc. v. City of Memphis, 160 S.W.3d 901, 2004 Tenn. App. LEXIS 442 (Tenn. Ct. App. 2004), appeal denied, Bellsouth Telecomms., Inc. v. City of Memphis, — S.W.3d —, 2005 Tenn. LEXIS 3 (Tenn. Jan. 4, 2005).
Collateral References.
Constitutionality, construction, and application of state and local public-utility-gross-receipts-tax statutes — Modern cases. 58 A.L.R.5th 187.
67-4-407. [Repealed.]
Compiler's Notes. Former § 67-4-407 (Acts 1937, ch. 108, art. 2, § 2, Item M; 1937 (3rd Ex. Sess.), ch. 12, § 1; 1939, ch. 51, § 20; C. Supp. 1950, § 1248.3, Item Q (Williams, § 1248.132); Acts 1961, ch. 61, § 1; T.C.A. (orig. ed.), § 67-4102, Item Q), concerning telephone and telegraph companies, was repealed by Acts 1989, ch. 312, § 9, effective May 16, 1989.
Acts 1989, ch. 312, § 13 provided that the repeal of this section by that act shall apply to the exercise of the privilege of operating a telephone business, operating the apparatus necessary to communicate by telephone, operating a telegraph company, or operating the apparatus necessary to communicate by telegraph on or after July 1, 1989.
67-4-408. [Repealed.]
Compiler's Notes. Former § 67-4-408 (Acts 1937, ch. 108, art. 2, § 2, Item N; 1939, ch. 21, § 13; 1939, ch. 186, § 8; 1941, ch. 51, § 21; 1949, ch. 268, §§ 1-3; mod. C. Supp. 1950, § 1248.3, Item R (Williams, § 1248.133); Acts 1953, ch. 200, §§ 1, 2; 1959, ch. 128, § 1; 1961, ch. 153, § 1; 1963, ch. 269, § 3; 1965, ch. 286, § 1; T.C.A. (orig. ed.), § 67-4102, Item R), concerning privilege taxes on operators of theaters, motion pictures and shows, was repealed by Acts 1984 (1st Ex. Sess.), ch. 12, § 1.
67-4-409. Recordation tax.
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Transfers of Realty. On all transfers of realty, whether by deed, court deed, decree, partition deed, or other instrument evidencing transfer of any interest in real estate, there shall be paid for the privilege of having the same recorded a tax, for state purposes only, of thirty-seven cents (37¢) per one hundred dollars ($100), as follows:
- On the transfer of a freehold estate, the tax shall be based on the consideration for the transfer, or the value of the property, whichever is greater. “Value of the property,” as used in this section, means the amount that the property transferred would command at a fair and voluntary sale, and no other value;
- No transfer tax shall be due or paid on the transfer of a leasehold estate;
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No such tax shall be levied on the transfer of any real estate where such:
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Is creation or dissolution of a tenancy by the entirety:
- By the conveyance from one (1) spouse to the other;
- By the conveyance from one (1) spouse or both spouses to the original grantor or grantors in the instrument and the original grantor's spouse; or
- By the conveyance from one (1) spouse or both spouses to a trustee and immediate reconveyance by the trustee in the same instrument as tenants in common, tenants in common with right of survivorship, joint tenants or joint tenants with right of survivorship;
- Are deeds of division in kind of realty formerly held by tenants in common;
- Is release of a life estate to the beneficiaries of the remainder interest;
- Are deeds executed by an executor to implement a testamentary devise;
- Are domestic settlement decrees and/or domestic decrees and/or deeds that are an adjustment of property rights between divorcing parties;
- Are transfers by a transferor of real estate to a revocable living trust created by the same transferor or by a spouse of the transferor, or transfers by the trustee of a revocable living trust back to the same transferor or to the transferor’s spouse;
- Are deeds executed by the trustee of a revocable living trust to implement a testamentary devise by the trustor of the trust; or
- Are deeds executed by the trustee of a testamentary trust or revocable living trust to implement the distribution of the real property to a trust beneficiary or beneficiaries;
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Is creation or dissolution of a tenancy by the entirety:
- In the case of quitclaim deeds, the tax shall be based only on the actual consideration given for that conveyance;
- No oath of value shall be required in any transaction that is exempt from tax;
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This tax shall be paid by the grantee or transferee of the interest in real estate, as shown on the instrument evidencing the transfer of such interest; and it shall be collected by the register of the county in which the instrument is offered for recordation;
- The grantee, the grantee's agent, or a trustee acting for the grantee shall be required to state under oath upon the face of the instrument offered for record in the presence of the register, or before an officer authorized to administer oaths, the actual consideration or value, whichever is greater, for the transfer of a freehold estate;
- The making under oath of any false statement known to be false respecting the consideration or value of property transferred shall be punishable as perjury;
- A person who obtains several deeds or other instruments of conveyance for the same transfer of one and the same tract or parcel of real estate shall pay only one (1) state tax with respect to such transfer;
- The register is forbidden to record the transfer until this tax has been paid; and
- No tax is due under this subsection (a) until the title to the property is transferred by deed.
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Mortgages, Deeds of Trust and Other Instruments. Prior to the public recordation of any instrument evidencing an indebtedness, including, but not limited to, mortgages, deeds of trust, conditional sales contracts, financing statements contemplated by the Uniform Commercial Code, compiled in title 47, and liens on personalty, other than on motor vehicles, there shall be paid a tax, for state purposes only, of eleven and one half cents (11.5¢) on each one hundred dollars ($100) of the indebtedness so evidenced.
- The tax shall not be required for the recordation of judgment liens, contractors' liens, subcontractors' liens, furnishers' liens, laborers' liens, mechanics' and materialmen's liens, financing statements filed pursuant to the Uniform Commercial Code, compiled in title 47, that secure an interest solely in investment property, as defined in § 47-9-102(a), as amended by chapter 846, § 1 of the Acts of 2000, and mortgages or deeds of trust issued under the Home Equity Conversion Mortgage Act, as compiled in title 47, chapter 30, and that are labeled on the face under such chapter.
- In any case where the consideration or stipulation of indebtedness does not appear on the face of the instrument being offered for record, the recording official shall require a separate statement, to be made under oath, indicating the amount of the indebtedness so secured.
- This tax shall be paid to and collected by county registers, the secretary of state, and any other official who may receive any instrument other than for liens on motor vehicles in accordance with the motor vehicle title law of this state, for recordation in accordance with the laws of this state, and registration is forbidden until such tax has been paid.
- The incidence of the tax provided by this section is declared to be upon the mortgagor, grantor or debtor, evidenced by the instrument offered for recordation. It shall not, however, apply with respect to the first two thousand dollars ($2,000) of the indebtedness.
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- As used in this section, “indebtedness” means the principal debt or obligation which is reasonably contemplated by the parties to be included within the terms of the agreement. “Indebtedness” does not include any amount of interest, collection expense including, but not limited to, attorney's fees and expenses incurred in preserving, protecting, improving, or insuring property which serves as collateral for the indebtedness, or any other amount, other than the principal debt or obligation, for which a debtor becomes liable unless such amount is added to the principal debt or obligation, and is used to calculate additional interest pursuant to refinancing, reamortization, amendment or similar transaction or occurrence.
- If the instrument is given to secure the performance by the mortgagor, grantor, debtor or any other person of an obligation other than the payment of a specific sum of money, and a maximum amount secured is not expressed in the instrument, such instrument shall be taxable upon the value of the property covered by the instrument, which value shall be deemed to be the indebtedness secured by such instrument for such purposes. Such instrument shall not be recorded, unless, at the time of presenting the instrument, there is filed a sworn statement by the owner of the property covered thereby of the value of the property. Such amount shall be the basis of assessing the tax imposed under this subsection (b). No subsequent change in the value of the property shall result in the imposition of additional tax.
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- Every recorded instrument evidencing an indebtedness must contain, either on the face of the instrument or in an attached sworn statement, the following language: “Maximum principal indebtedness for Tennessee recording tax purposes is $ .” The holder of the indebtedness shall state the amount of the indebtedness, and that amount shall be the basis of assessing the tax imposed by this subsection (b). Such statement may be relied upon only by the department of revenue and by the receiving official charged with the duty of recordation and collection of tax, and such statement shall not constitute notice of any kind to any other party of the amount of indebtedness secured by the instrument.
- Notwithstanding subdivision (b)(5)(C)(i), an instrument described in subdivision (b)(5)(B) shall instead contain, either on the face of the instrument or in an attached sworn statement, the following language: “Secures obligation other than payment of specific sum — valuation statement submitted herewith.”
- Notwithstanding any other law to the contrary, an official charged with the collection of the tax imposed by this subsection (b) shall not record any instrument evidencing an indebtedness, unless it contains the statement required by this subdivision (b)(5)(C) and tax is properly paid, based upon the amount contained in that statement or in the valuation statement, as appropriate.
- When the instrument being offered for registration, recording, or filing secures, or evidences the securing of, a line of credit or other indebtedness arising from more than one (1) advance or extension of credit, the amount of which will, or may, vary from time to time, the tax shall be computed and paid on the maximum amount of the indebtedness as stated in the instrument or the accompanying sworn statement, and the reduction or subsequent increasing of the amount of the indebtedness within such limits shall not result in additional tax.
- Imposition of a transfer tax as levied under subsection (a) with respect to an instrument evidencing an indebtedness shall not operate to exonerate such instrument from the tax levied under this subsection (b), if such tax would otherwise be appropriate. Furthermore, an instrument evidencing transfer of any interest in real estate that is subject to the transfer tax shall, nevertheless, be subject to the tax levied under this subsection (b) also, when such instrument evidences an indebtedness either by showing in the instrument that a vendor's lien is retained, or by referring in the instrument to such a lien being evidenced by another instrument not being offered for public recordation.
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value of Tennessee collateral / value of total collateral = % xindebtedness = taxable Tennessee indebtedness
- If some of the property securing the payment of the indebtedness is located in Tennessee and some is located outside of Tennessee, as an optional method of computing the tax, the tax may be apportioned and paid on the basis of the ratio of the value of the Tennessee collateral to the value of all collateral, by applying the following mathematical formula:
- If the tax is apportioned pursuant to this subdivision (b)(7), no evidence of the calculation or statement of tax shall be required in addition to the statement required by subdivision (b)(5)(C), which shall be completed with the amount resulting from the calculation made pursuant to subdivision (b)(7)(A)(i).
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For purposes of the apportionment calculation allowed in subdivision (b)(7)(A)(i):
- “Collateral” means any real property or personal property securing the indebtedness evidenced by the instrument to be filed or recorded;
- “Mobile goods” means goods that are mobile and that are of a type normally used in more than one (1) jurisdiction, such as trailers, rolling stock, airplanes, shipping containers, road building and construction machinery, commercial harvesting machinery and the like;
- “Taxable Tennessee indebtedness” means the amount of indebtedness on which tax is to be calculated as provided in subdivision (b)(4), with the two-thousand-dollar ($2,000) exemption to be applied to the taxable Tennessee indebtedness;
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“Tennessee collateral” means all collateral in which a security interest, deed of trust, mortgage lien or other consensual lien is perfected by filing or recording one or more instruments in the state of Tennessee or by other methods where the laws of the state of Tennessee govern perfection; provided, however, that the Tennessee collateral of a debtor that is located in Tennessee, as determined pursuant to § 47-9-307, does not include such debtor's interests in:
- Any personal property physically located outside the state of Tennessee, including goods, other than mobile goods, and any property that is of a type in which a security interest could be perfected by possession under Tennessee law if such property were located in Tennessee, such as certificated securities, chattel paper, documents, instruments and money; or
- Any intangible property and mobile goods, unless such debtor's chief executive office is also located in the state of Tennessee. Any subsequent change in the location of the debtor or any collateral, in the facts supporting the categorization of any particular collateral, or in the relative quantities or values of collateral shall not in itself result in the imposition of additional tax;
- “Total collateral” means all collateral, including the Tennessee collateral; and
- “Value” of collateral means the value that the collateral would command at a fair and voluntary sale.
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- In the event of an increase in the indebtedness beyond the amount stated subsequent to the filing or recordation of the instrument, the holder of the indebtedness shall pay the tax on the amount of the increase. Such a payment shall be due on the date the increase occurs, but may be made without penalty if made within sixty (60) days after the increase occurs. Thereafter, such payment may be made only upon payment of the penalty provided in subdivision (b)(12) based on the amount of the increase in the indebtedness.
- Sections 67-4-206 and 67-4-217 shall not apply to the tax imposed by this subsection (b).
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- Nonpayment or underpayment of tax on an indebtedness, or failure timely to pay tax on an increase in indebtedness, shall not affect or impair the effectiveness, validity, priority, or enforceability of the security interest or lien created or evidenced by the instrument, it being declared the legislative intent that the effectiveness, validity, priority, and enforceability of security interest and liens are governed solely by law applicable to security interests and liens, and not by this title.
- Such nonpayment, underpayment, or failure to pay, until cured, shall result in the imposition of a tax lien, in the amount of any tax and penalties unpaid and owing under this subsection (b), in favor of the department of revenue as described in subdivision (b)(11), shall subject the holder of the indebtedness to a penalty as described in subdivision (b)(12), and shall subject the holder of the indebtedness to the disability described in subdivision (b)(13).
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The tax lien described in subdivision (b)(10) shall arise at the time the tax is due and shall at that time attach to any property, either real or personal, tangible or intangible, subject to the instrument until:
- The lien or security interest of the instrument is released with respect to any property; or
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Any property is transferred in settlement or realization of the lien or security interest, whereupon the tax lien shall automatically be released from such property and attach to any proceeds thereof. The department may not levy upon or sell any property subject to the tax lien until notice of the tax lien has been recorded pursuant to § 67-1-1403, but notwithstanding such section, the department otherwise shall not be required to record any notice of the tax lien. The tax lien shall be superior to all liens and security interest under Tennessee law, except:
- Those enumerated in § 67-1-1403(c)(2)-(4) that were recorded, filed or perfected, respectively, prior to attachment of the tax lien; and
- County and municipal ad valorem taxes.
- It is the duty of every holder of an indebtedness, including an individual, business entity of any organizational structure, or governmental entity, to collect the tax imposed by this subsection (b) from the debtor and to remit the tax as required by this subsection (b). Except as provided in subdivision (b)(8), if the holder of the indebtedness fails to pay or underpays the tax imposed by this subsection (b), the holder of the indebtedness shall be liable for a penalty, in addition to the tax, in the amount of two hundred fifty dollars ($250) or double the unpaid tax due, whichever is greater.
- The holder of an indebtedness evidenced or secured by an instrument upon the recording or filing of which tax is owing under this section may not maintain an action on such indebtedness, other than an action limited to the enforcement of the holder's security interest or lien, against the debtor until such nonpayment is cured. If such an action is commenced and a cure is not effected within a time limit set by the court, the debtor may obtain a dismissal of such action, without prejudice to refiling in the event of a subsequent cure of nonpayment. Notwithstanding the terms of the instrument, if a cure is not effected until after the filing of a motion or pleading in which the holder's noncompliance with this subsection (b) is raised, the holder may not thereafter charge the debtor with the costs of curing such noncompliance.
- Any oath required in subsections (a) and (b) shall not be introduced as evidence in any proceeding conducted in connection with any condemnation action for the purpose of indicating the value of such real property.
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Reports and Payment of Tax to the Commissioner.
- The county register and other officials charged with the collection of taxes imposed under this section shall report all collections to the department on forms prescribed by the commissioner, in the same manner and under the same conditions as county clerks collect and report revenue under parts 2-6 of this chapter.
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- For collecting and reporting taxes levied under this section, county registers shall be entitled to retain as commission five percent (5%) of the taxes so collected.
- Notwithstanding subdivision (d)(2)(A) or any other law to the contrary, fifty-two percent (52%) of the five percent (5%) commission provided by subdivision (d)(2)(A) shall be remitted to the state treasurer and credited to the general fund of the state.
- The county registers shall also be entitled to receive as a fee for issuing each receipt for taxes imposed in this section the sum of one dollar ($1.00), to be paid when the tax receipt is issued. The fee, however, shall not be applicable nor collectible by any state officials charged with the collection of taxes imposed under this section.
- Instruments made pursuant to mergers, consolidations, sales or transfers of substantially all of the assets in this state of corporations, pursuant to plans of reorganization, are exempt from this section.
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- The recording and rerecording of all transfers of realty in which a municipality is the grantee or transferee and all instruments evidencing an indebtedness in which a municipality is the holder or owner of the indebtedness shall be exempt from this section. The recording and rerecording of all instruments evidencing an indebtedness of any health and educational facility corporation formed pursuant to title 48, chapter 101, part 3 shall also be exempt from this section.
- For the purposes of this subsection (f), “municipality” means the state of Tennessee or any county or incorporated city or town, utility district, school district, power district, sanitary district, or other municipal, quasi-municipal, or governmental body or political subdivision in this state, and any agency, authority, branch, bureau, commission, corporation, department or instrumentality thereof now or later authorized to be created.
- The recording or rerecording of any transfer of realty to or from any municipality and any evidence of indebtedness of or to any municipality, as defined in subsection (a), prior to May 11, 1971, and otherwise validly made, is declared to be valid and effective, notwithstanding any failure to pay the tax formerly imposed by this section, and any such recording or rerecording is ratified, approved and confirmed, and no tax shall be imposed or collected on account of any such recording or rerecording.
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Wetland Acquisition Fund.
- Three and one fourth cents (3.25¢) of the tax levied by subsection (a) shall be credited to a special agency account in the state general fund known as the 1986 wetland acquisition fund; provided, that such funds shall not be obligated or expended to acquire any interest in real property through condemnation or the power of eminent domain. Expenditures from such fund shall only be made to implement and effectuate the purposes of title 11, chapter 14, part 4. The fund may be expended to maintain and enhance state-owned property that is under the agency's jurisdiction. Funds deposited in such fund shall not revert at the end of any fiscal year, and all interest accruing on investments and deposits of the fund not otherwise expended shall be returned to and made a part of the fund.
- Notwithstanding any provision of this section to the contrary, the commissioner of finance and administration, with the written approval of the executive director of the Tennessee wildlife resources agency, is authorized, subject to legislative appropriation, to transfer funds from the 1986 wetland acquisition fund to the Tennessee heritage conservation trust fund, created in title 11, chapter 7, part 1. For the purposes of § 11-7-103(h), “other available sources” also shall not include any funds transferred to the Tennessee heritage conservation trust fund from the 1986 wetland acquisition fund pursuant to this subdivision (g)(2).
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Exception for Certain Facilities.
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With respect to any facility as defined in subdivision (h)(2)(A):
- The taxes paid under subsection (a) shall not exceed one hundred thousand dollars ($100,000) in the aggregate; and
- The taxes paid under subsection (b) shall not exceed five hundred thousand dollars ($500,000) in the aggregate.
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- As used in this subsection (h), “facility” means any real or personal property that is constructed, acquired or developed for the principal purpose of manufacturing, processing, fabricating or assembling any manufactured products and includes, but is not limited to, all or any part of or any interest in any land and building, including office, administration or other buildings, any improvement to the facilities and all real and personal properties, including, but is not limited to, equipment and machinery deemed necessary in connection with the facility, whether or not now in existence.
- As used in this subsection (h), “related indebtedness” means indebtedness relating to or incurred to finance a portion of or otherwise in connection with a facility, which shall be evidenced by instruments, including, but not limited to, mortgages, deeds of trust, conditional sales contracts, financing statements contemplated by the Uniform Commercial Code, compiled in title 47, and liens on personalty, notwithstanding the fact that portions of such indebtedness may be held by different holders, owners, trustees or other secured parties (holders) of indebtedness or portions of indebtedness relating to the facility.
- In order to qualify for the exception provided under this subsection (h), prior to the public recordation of any instrument evidencing a transfer of an interest in realty or of any instrument evidencing a related indebtedness under this section, the grantee or transferee of the interest in such realty or the holder of related indebtedness must submit a sworn statement declaring the amount of tax paid for recording instruments by or on behalf of the person, corporation, or other entity that owns, leases or otherwise operates the facility, referred to in this subsection (h) as the taxpayer, under both subsection (a), with respect to the transfer of realty pertaining to the facility, and subsection (b), with respect to related indebtedness, and a copy of each receipt for the taxes paid for recording such instruments or other evidence of such payments. No tax will be due, if the taxes paid by or on behalf of the taxpayer for recording such instruments pursuant to subsections (a) and (b) relating to the facility and any related indebtedness equal an aggregate amount of one hundred thousand dollars ($100,000) or five hundred thousand dollars ($500,000), as the case may be. If less than the aggregate amount of one hundred thousand dollars ($100,000) or five hundred thousand dollars ($500,000), as the case may be, in taxes for recording instruments pursuant to subsections (a) and (b) relating to the facility and any related indebtedness has been paid by or on behalf of the taxpayer prior to the proposed recordation of any instrument evidencing a transfer of an interest in realty or related indebtedness, the grantee or transferee of an interest in such realty or the holder of related indebtedness must pay or cause to be paid the amount of tax due, calculated in accordance with this section, which amount shall be no more than the difference between one hundred thousand dollars ($100,000) or five hundred thousand dollars ($500,000), and the aggregate amount of such taxes paid by or on behalf of the taxpayer for recording instruments pertaining to the facility and any related indebtedness pursuant to subsections (a) and (b). In no event, however, shall the aggregate amount of taxes paid for recording instruments relating to transfers of an interest in realty under subsection (a) and related indebtedness under subsection (b) exceed one hundred thousand dollars ($100,000) or five hundred thousand dollars ($500,000) by or on behalf of the taxpayer.
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With respect to any facility as defined in subdivision (h)(2)(A):
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Local Parks Land Acquisition Fund.
- One and three fourths cents (1.75¢) of the tax levied by subsection (a) shall be credited to a special agency account in the state general fund known as the local parks land acquisition fund. The moneys in this fund shall be used only for grants to county and municipal governments to implement and carry out the purposes set forth in subdivision (i)(3); provided, that the commissioner of environment and conservation may allocate not more than three and one-half percent (3.5%) of the moneys in this fund for the administration of the fund. Funds deposited in such fund shall not revert at the end of any fiscal year, and all interest accruing on investments and deposits of the fund not otherwise expended shall be returned to and made a part of the fund.
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- The commissioner of environment and conservation, the commissioner of agriculture and the director of the wildlife resources agency shall jointly establish priorities for the appropriate allocation of funds, deposited in the local parks land acquisition fund. No project shall receive any such funds unless each such official has approved such expenditure. Such officials shall consider applications from county and municipal governments throughout the state.
- At least sixty percent (60%) of the funds allocated annually shall go to municipal governments.
- County and municipal governments may use the funds allocated under this section for the purchase of land for parks, natural areas, greenways, and for the purchase of land for recreation facilities. Such funds may also be used for trail development and capital projects in parks, natural areas, and greenways.
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- Any county or municipal government that receives a grant under this section must match the grant with an equal amount of money for each project. The matching money provided by the local government may be used to purchase additional land or to develop facilities on the land that is purchased with the grant. Rather than providing matching money, the local government may provide as its match a tract of land not previously used for park or recreational purposes that will be dedicated entirely for park or recreational purposes after receipt of the grant and that is independently appraised as having the same, or greater, value as the amount of the state grant.
- Rather than providing matching money, the local government may also provide as all or part of its match volunteer services, materials, and equipment that are donated to the local government by a third party at the time the state grant is made, that are used for trail construction or other development on the tract of land for which the state grant is sought, and that are valued in a manner specified by the department.
- If an application from a county or municipal government has been submitted for a grant from the local parks land acquisition fund and the county or municipal government subsequently purchases the land or constructs the trail for which the grant was sought before the grant is acted upon, the grant may still be awarded as a reimbursement; provided, that the application was submitted by the local government no more than twelve (12) months prior to the award of the grant.
- The commissioner of environment and conservation, the commissioner of agriculture and the director of the wildlife resources agency may promulgate regulations to implement this subsection (i).
- No funds deposited in the local parks land acquisition fund from the tax levied by subsection (a) shall be obligated or expended to acquire any interest in real property through condemnation or the power of eminent domain.
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State Lands Acquisition Fund.
- One and one half cents (1.5¢) of the tax levied by subsection (a) shall be credited to a special agency account in the state general fund known as the state lands acquisition fund. Expenditures from such fund shall be made only to implement and carry out the purposes set forth in subdivision (j)(2). Funds deposited in such fund shall not revert at the end of any fiscal year, and all interest accruing on investments and deposits of the fund not otherwise expended shall be returned to and made a part of the fund.
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- The commissioner of environment and conservation shall expend the funds which are deposited in the state lands acquisition fund only for the acquisition of land for any area designated as an historic place as evidenced by its inclusion on the National Register of Historic Places, state historic areas or sites, state parks, state forests, state natural areas, boundary areas along state scenic rivers, the state trails system, and for the acquisition of easements to protect any of the foregoing state areas. Such funds may also be used for trail development in the foregoing areas. Such funds may also be used for the redevelopment, renovation and restoration of historic theaters owned by a governmental entity or a not-for-profit corporation or its controlled affiliate and listed on the National Register of Historic Places. Such funds may also be used for capital projects, including improvements and maintenance, at state parks.
- No funds deposited in the state lands acquisition fund from the tax levied by subsection (a) shall be obligated or expended to acquire any interest in real property through condemnation or the power of eminent domain.
- The first three hundred thousand dollars ($300,000) deposited in the state lands acquisition fund shall be transferred and credited to the compensation fund created under § 11-14-406. Following the procedure set forth in that section, the commissioner of finance and administration shall annually reimburse each city and county the amount of lost property tax revenue resulting from any purchase of land by the department of environment and conservation which renders such land tax exempt. The next two hundred fifty thousand dollars ($250,000) deposited in the state lands acquisition fund in each fiscal year shall be transferred and credited to the Tennessee Civil War or War Between the States site preservation fund created under § 4-11-112. Funds allocated to the preservation fund shall be used exclusively as provided in § 4-11-112.
- The commissioner of environment and conservation, the commissioner of agriculture and the director of the wildlife resources agency shall jointly establish priorities for the appropriate allocation of funds deposited in the state lands acquisition fund. No project shall receive any such funds unless each such official has approved such expenditure. The commissioner of environment and conservation, the commissioner of agriculture and the director of the wildlife resources agency may promulgate regulations to implement this subsection (j).
- Acquisition pursuant to this subsection (j) of property classified under chapter 5, part 10 of this title, shall not constitute a change in the use of the property, and no rollback taxes shall become due solely as a result of such acquisition.
- Notwithstanding any provision of this section to the contrary, the commissioner of finance and administration, with the written approval of the commissioner of environment and conservation, is authorized, subject to legislative appropriation, to transfer funds from the state lands acquisition fund to the Tennessee heritage conservation trust fund, created in title 11, chapter 7, part 1. For the purposes of § 11-7-103(h), “other available sources” also shall not include any funds transferred to the Tennessee heritage conservation trust fund from the state lands acquisition fund pursuant to this subdivision (j)(6).
- Revenue Stream. The moneys deposited in the 1986 wetlands acquisition fund and the moneys deposited in the state lands acquisition fund may be used as the revenue stream to pay the principal of and interest on revenue bonds that are sold by the state of Tennessee to generate funds to fulfill the purposes for which the moneys deposited in each of these funds may be used.
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Agricultural Resources Conservation Fund.
- One and one half cents (1.5¢) of the tax levied by subsection (a) shall be credited to a special agency account in the state general fund known as the agricultural resources conservation fund. Expenditures from such fund shall be made only to implement and carry out the purposes set forth in subdivision (l )(2). Funds deposited in such fund shall not revert at the end of any fiscal year, and all interest accruing on investments and deposits of the funds not otherwise expended shall be returned to and made a part of the fund.
- The commissioner of agriculture shall expend the funds that are deposited in the agricultural resources fund for purposes of landowner assistance, to address point and nonpoint source water quality issues, as well as nuisance problems, including, but not limited to, odor, noise, dust and similar concerns. The commissioner of environment and conservation, commissioner of agriculture and the director of the wildlife resources agency shall jointly establish priorities for the appropriate allocation of funds deposited in the agricultural resources conservation fund. No project shall receive any such funds unless each such official has approved such expenditure. The commissioner of agriculture may promulgate regulations to implement this subsection (l ).
- Expenditures from the agricultural resources conservation fund shall be made for the promotion and implementation of agricultural management practices that conserve and protect natural resources associated with agricultural production, including, but not limited to, soil, water, air, plants and animals. The commissioner of agriculture may spend up to five percent (5%) of the annual appropriations from this fund on education of landowners, producers and managers concerning conservation and protection practices. No more than ten percent (10%) of the annual appropriation from this fund may be used for management costs associated with technical assistance to accomplish the purposes of the fund and/or the administration of the fund. It is the intent of the general assembly that the highest priority of the agricultural resources conservation fund is to abate and prevent nonpoint source water pollution that may be associated with agricultural production; therefore, the commissioner of agriculture may spend no more than fifteen percent (15%) of the annual appropriations from the fund for the combined purposes of preventing or remedying air, noise, dust, and odor pollution, or similar nuisance type environmental problems associated with agricultural production. The commissioner of agriculture may expend agricultural resources conservation funds as matching dollars to secure additional funding to fulfill the purposes for which the fund was established.
- The commissioner of agriculture shall seek advice from the commissioner of environment and conservation in determining the most effective ways to abate nonpoint pollution from agricultural activities.
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Transfers to Other Funds. Beginning in fiscal year 2015-2016 and in each subsequent fiscal year, fifty percent (50%) of the total growth in collections of the tax levied by subsection (a) over the previous fiscal year and deposited to the funds enumerated in subsections (g), (i), (j), and (l ) shall be transferred and credited as follows:
- Sixty-four percent (64%) of the growth funds shall be transferred and credited to the Tennessee Civil War or War Between the States site preservation fund created by § 4-11-112, to be used exclusively as provided in § 4-11-112; and
- Thirty-six percent (36%) of the growth funds shall be transferred and credited to historic property land acquisition fund created by § 4-11-113, to be used exclusively as provided in § 4-11-113.
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Reports of Expenditures.
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- By February 1 of every odd-numbered year, the commissioner of environment and conservation shall file with the energy, agriculture and natural resources committee of the senate and the agriculture and natural resources committee of the house of representatives a report detailing expenditures made from the state lands acquisition fund and grants made to local governments from the local parks land acquisition fund.
- By February 1 of every odd-numbered year, the fish and wildlife commission shall file with the energy, agriculture and natural resources committee of the senate and the agriculture and natural resources committee of the house of representatives a report detailing expenditures made from the wetlands acquisition fund.
- By February 1 of every odd-numbered year, the commissioner of agriculture shall file with the energy, agriculture and natural resources committee of the senate and the agriculture and natural resources committee of the house of representatives a report detailing expenditures made from the agricultural resources conservation fund.
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- Once every five (5) years, beginning in 1996, the commissioner of environment and conservation and the fish and wildlife commission shall reevaluate their land acquisition goals and priorities and shall incorporate their findings and conclusions into a written plan. This plan shall be submitted to the energy, agriculture and natural resources committee of the senate and the agriculture and natural resources committee of the house of representatives, which shall conduct public hearings on the plan.
- Once every five (5) years, beginning in 2002, the commissioner of agriculture shall reevaluate the progress and accomplishments of the agricultural resources conservation fund and shall incorporate the conclusions and recommendations of such reevaluation into a written plan. This plan shall be submitted to the energy, agriculture and natural resources committee of the senate and the agriculture and natural resources committee of the house of representatives, which shall hold public hearings on the plan.
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- Management Policies. The commissioner of environment and conservation and the fish and wildlife commission shall establish policies for the management of land acquired with funds from the state lands acquisition fund and the wetlands acquisition fund, which policies shall be designed to foster a good relationship with nearby private landowners and to prevent adverse impacts on adjoining property. These policies shall be publicized to nearby private landowners.
Code 1858, § 673 (deriv. Acts 1805, ch. 61, § 2); Shan., § 968; Code 1932, § 1677; Acts 1937, ch. 108, art. 2, § 1; Item 96; 1937, ch. 192, § 13; 1937 (2nd Ex. Sess.), ch. 11, § 1; 1947, ch. 212, § 19; mod. C. Supp. 1950, § 1248.3, Item S (Williams, § 1248.108); Acts 1957, ch. 22, § 8; 1967, ch. 178, § 1; 1968, ch. 483, §§ 1-3; 1971, ch. 190, §§ 1, 2; 1971, ch. 430, § 1; 1974, ch. 632, §§ 1, 2; 1976, ch. 492, § 1; 1977, ch. 148, § 1; 1977, ch. 323, § 1; 1978, ch. 908, § 1; impl. am. Acts 1978, ch. 934, §§ 22, 36; Acts 1981, ch. 149, § 1; 1982, ch. 817, §§ 1-3; 1983, ch. 149, § 1; T.C.A. (orig. ed.), § 67-4102, Item S; Acts 1986, ch. 598, § 2; 1986, ch. 604, § 1; 1986, ch. 833, §§ 6, 7; 1987, ch. 275, §§ 1-4; 1988, ch. 900, § 13; 1989, ch. 112, § 1; 1989, ch. 461, §§ 2-4; 1989, ch. 474, § 1; 1991, ch. 211, §§ 3, 4; 1991, ch. 256, §§ 2-9; 1993, ch. 410, § 19; 1994, ch. 721, § 1; 1995, ch. 100, § 1; 1997, ch. 526, § 1; 1997, ch. 542, § 4; 1998, ch. 604, § 1; 1998, ch. 605, §§ 4-8; 1998, ch. 673, §§ 1-5; 2000, ch. 846, § 31; 2000, ch. 907, § 1; 2000, ch. 943, § 1; 2000, ch. 983, § 5; 2000, ch. 998, § 1; 2002, ch. 678, § 1; 2003, ch. 355, §§ 33-36; 2003, ch. 386, § 1; 2005, ch. 99, § 13; 2006, ch. 673, § 1; 2006, ch. 989, § 3; 2007, ch. 79, § 1; 2007, ch. 153, § 2; 2007, ch. 180, § 1; 2007, ch. 602, §§ 183-186; 2008, ch. 1106, §§ 64-67; 2010, ch. 1134, §§ 49, 60, 62, 63; 2011, ch. 321, § 1; 2012, ch. 604, §§ 17, 18; 2012, ch. 792, §§ 1, 2; 2012, ch. 993, § 7; 2013, ch. 236, § 76; 2015, ch. 425, §§ 3, 5; 2016, ch. 1027, § 4; 2016, ch. 1059, § 3; 2019, ch. 197, § 7.
Code Commission Notes.
Acts 1991, ch. 211 made the tax in (a) permanent. Acts 1991, ch. 256 increased the existing tax four cents (4¢). Section 10 of ch. 256 provided that it was the intention of the amendments by that act to increase the tax in (a) to provide funding for programs pursuant to the provision of that act. It was not the intention of the act to reduce or affect any other increase in such tax which may be enacted during the 1991 session.
Compiler's Notes. Acts 1989, ch. 461, § 4 deleted the repeal of provisions in this section by Acts 1986, ch. 833, § 9.
Section 11-14-401(a) provided that the provisions of title 11, ch. 14, part 4 and § 67-4-409(g) shall be known and may be cited as the “V.A. Moore Wetlands Acquisition Act.”
Acts 2003, ch. 355, § 66 provided that no expenditure of public funds pursuant to the act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Acts 2003, ch. 355, § 73 provided that there is established within the general fund the state-shared revenue reduction mitigation account. Any amounts in the state-shared revenue reduction mitigation account shall be applied by the commissioner of finance and administration to offset reductions in state-shared revenues allocated to local governments pursuant to the provisions of the act so that such reductions shall not exceed nine percent (9%) of state-shared revenues that otherwise would have been allocated to any such local government. Funds shall be restored on a pro rata basis taking into account the percentage reduction to each local government from each state-shared revenue source.
Acts 2006, ch. 989, § 17 provided that §§ 1-14 of the act shall apply to funds remitted to the department of revenue on or after August 1, 2006.
Acts 2011, ch. 321, § 2 provided that it is the declared intent of the general assembly that the act, which amended subdivision (b)(12), is remedial in nature and a clarification of the duties imposed under current law.
Amendments. The 2013 amendment, in (m) [now (o)], substituted “the energy, agriculture and natural resources committee of the senate and the agriculture and natural resources committee of the house of representatives” for “the energy and environment committee of the senate and the conservation and environment committee of the house of representatives” in (1)(A), (1)(B) and (2)(A), and substituted “the energy, agriculture and natural resources committee of the senate and the agriculture and natural resources committee of the house of representatives” for “the energy and environment and commerce, labor and agriculture committees of the senate and the agriculture and conservation and environment committees of the house of representatives” in (1)(C) and (2)(B).
The 2015 amendment added the last sentence of (j)(2)(A) and the last two sentences of (j)(3).
The 2016 amendment by ch. 1027 rewrote the third sentence in (g)(1) which read: “The fund may be expended to maintain property purchased pursuant to such part.”
The 2016 amendment by ch. 1059 added (m) and redesignated former (m) and (n) as present (n) and (o), respectively.
The 2019 amendment added (a)(3)(H).
Effective Dates. Acts 2013, ch. 236, § 94. April 19, 2013.
Acts 2015, ch. 425, § 7. May 15, 2015.
Acts 2016, ch. 1027, § 5. July 1, 2016.
Acts 2016, ch. 1059, § 5. April 28, 2016.
Acts 2019, ch. 197, § 8. April 25, 2019.
Cross-References. Compensation fund to effectuate purposes of wetlands and bottomland hardwood forests law, § 11-14-406.
Textbooks. Tennessee Forms (Robinson, Ramsey and Harwell), Nos. 8-201, 8-202, 8-206, 8-207, 8-209, 8-212, 8-216 — 8-220, 8-222, 9-401 — 9-403, 9-601.
Tennessee Jurisprudence, 4 Tenn. Juris., Bankruptcy, §§ 6, 7; 23 Tenn. Juris., Taxation, § 80.
Law Reviews.
1987 Legislation Affecting Tennessee Real Estate Practice (William R. Bruce), 23 Tenn. B.J. 21 (1987).
Attorney General Opinions. Taxation of recordation of mortgage assumption agreements, OAG 99-018 (2/2/99).
The amendment of T.C.A. § 67-4-409(j)(2) which inserted the phrase “the operation of state parks,” after the phrase “state trails system,” made funds available to the commissioner of environment and conservation to use for the operation of state parks, but does not require that the commissioner must use such funds to operate state parks, OAG 00-130 (8/15/00).
Greenbelt rollback tax liability on land purchased through the wetlands acquisition fund. OAG 12-51, 2012 Tenn. AG LEXIS 50 (5/9/12).
Cited: Tidwell v. Berke, 532 S.W.2d 254, 1975 Tenn. LEXIS 611 (Tenn. 1975); Stroop v. Rutherford County, 567 S.W.2d 753, 1978 Tenn. LEXIS 605 (Tenn. 1978); In re Ken Gardner Ford Sales, Inc., 23 B.R. 743, 1982 U.S. Dist. LEXIS 16663 (E.D. Tenn. 1982); In re Davis, 43 B.R. 629, 1984 Bankr. LEXIS 4755 (Bankr. M.D. Tenn. 1984); In re Bubba's of Tennessee, Inc., 45 B.R. 82, 1984 B.R. LEXIS 4564 (Bankr. E.D. Tenn. 1984); State ex rel. Department of Transp. v. Harvey, 680 S.W.2d 792, 1984 Tenn. App. LEXIS 3069 (Tenn. Ct. App. 1984); In re Cox, 57 B.R. 290, 1986 Bankr. LEXIS 6802 (Bankr. E.D. Tenn. 1986); Kile v. Federal Deposit Ins. Corp., 641 F. Supp. 723, 1986 U.S. Dist. LEXIS 21370 (E.D. Tenn. 1986); Stinson v. Brand, 738 S.W.2d 186, 1987 Tenn. LEXIS 986 (Tenn. 1987); In re Williams, 247 B.R. 449, 2000 Bankr. LEXIS 410 (Bankr. E.D. Tenn. 2000).
NOTES TO DECISIONS
1. Constitutionality.
This section was not void under Tenn. Const., art. XI, § 8 as establishing arbitrary and capricious classifications for failure to impose tax on financing statements of motor vehicles while applying the tax to farm equipment. International Harvester Co. v. Carr, 225 Tenn. 244, 466 S.W.2d 207, 1971 Tenn. LEXIS 299 (1971).
Subsection (b), relating to recordation of instruments evidencing indebtedness, was not void as being vague and uncertain in its terms or as imposing double taxation. International Harvester Co. v. Carr, 225 Tenn. 244, 466 S.W.2d 207, 1971 Tenn. LEXIS 299 (1971).
2. Construed with Other Law.
T.C.A. § 47-9-403 was amended to agree with T.C.A. § 67-4-409 which imposes monetary penalties for failure to pay tax rather than treating the financing statement as ineffective and the security interest as unperfected. In re Village Import Enterprises, Inc., 126 B.R. 307, 1991 Bankr. LEXIS 558 (Bankr. E.D. Tenn. 1991).
3. Tax on Land Acquired by Railroad.
A railroad corporation acquiring the property of another corporation was liable for the tax imposed by Acts 1915, ch. 101, § 8, upon all transfers of realty, although the railroad property was merely incidental to its use or function as a highway. State ex rel. Stewart v. Louisville & N. R. Co., 139 Tenn. 406, 201 S.W. 738, 1917 Tenn. LEXIS 117 (1917).
Transfer tax on a railroad is a state tax. The tax may be paid by the railroad, upon its property extending through several counties, to the clerk of the county in which the deed involved is first registered, and the clerk will attach his certificate so stating, and this will authorize registration in other counties. State ex rel. Stewart v. Louisville & N. R. Co., 139 Tenn. 406, 201 S.W. 738, 1917 Tenn. LEXIS 117 (1917).
4. Liability of Vendee for Tax.
The purchaser of land is required to pay the tax imposed on sales thereof, when there is no contract as to who shall pay it. Guthrie v. South W. Iron Co., 55 Tenn. 826, 1871 Tenn. LEXIS 420 (1871).
5. Bill to Collect Tax.
A bill to collect the transfer tax upon realty which alleged that the property was mortgaged for a certain sum, and that it was worth a great deal more than that sum, was not insufficient, because not stating the true value of the property, which may be ascertained by the proof under such allegation. State ex rel. Stewart v. Louisville & N. R. Co., 139 Tenn. 406, 201 S.W. 738, 1917 Tenn. LEXIS 117 (1917).
Under a bill to collect the transfer tax, the value of the property stated in the deed is only prima facie evidence of its true value, and any value stated in the bill is subject to be controverted by the proof. State ex rel. Stewart v. Louisville & N. R. Co., 139 Tenn. 406, 201 S.W. 738, 1917 Tenn. LEXIS 117 (1917).
6. “Financing Statements” Defined.
The financing statements which are referred to in subsection (b) as those contemplated by the Uniform Commercial Code, compiled in title 47, and which are subject to privilege tax upon recordation related to those security interests in personal property created by contract and covered by §§ 47-9-102, 47-9-401 and 47-9-402 and include continuation statements referred to in § 47-9-403. International Harvester Co. v. Carr, 225 Tenn. 244, 466 S.W.2d 207, 1971 Tenn. LEXIS 299 (1971).
7. Evidence.
Subsection (c) forbids the introduction of evidence of the contents of affidavits of consideration or value required by that statute, whether by way of direct evidence or cross examination. Love v. Smith, 566 S.W.2d 876, 1978 Tenn. LEXIS 566 (Tenn. 1978).
8. Nature of Tax.
The tax privilege in subsection (b) is filing financing statements, not making secured loans. In re Ken Gardner Ford Sales, Inc., 10 B.R. 632, 1981 Bankr. LEXIS 3928 (Bankr. E.D. Tenn. 1981), aff'd, 23 B.R. 743, 1982 U.S. Dist. LEXIS 16663 (E.D. Tenn. 1982), aff'd, In re Ken Gardner Ford Sales, Inc., 23 B.R. 743, 1982 U.S. Dist. LEXIS 16663 (E.D. Tenn. 1982).
T.C.A. § 67-4-409 intended to tax the entire obligation upon which a party seeks secured status, which includes the principal amount of the indebtedness and accumulated interest, attorney's fees and other amounts secured under the security agreement. In re Premiere Property Invest., Ltd., 49 B.R. 686, 1985 B.R. LEXIS 6506 (Bankr. M.D. Tenn. 1985).
9. Effect of Failure to Pay Tax.
Failure to pay the filing tax in subsection (b) would not affect the contract between the parties but only the filing, the perfection of the security interest against third parties. In re Ken Gardner Ford Sales, Inc., 10 B.R. 632, 1981 Bankr. LEXIS 3928 (Bankr. E.D. Tenn. 1981), aff'd, 23 B.R. 743, 1982 U.S. Dist. LEXIS 16663 (E.D. Tenn. 1982), aff'd, In re Ken Gardner Ford Sales, Inc., 23 B.R. 743, 1982 U.S. Dist. LEXIS 16663 (E.D. Tenn. 1982).
Where a bankruptcy debtor asserted that lenders which recorded quit claim deeds falsely recited that the consideration for the deeds was zero and failed to pay recording taxes, since the deeds were not invalid since there was no private right of action under T.C.A. § 67-4-409, and neither failure to pay the recording taxes or misstating the consideration affected the validity of the recorded deeds. Webb Mtn, LLC v. Exec. Realty P'ship, L.P. (in re Webb Mtn, LLC), 414 B.R. 308, 2009 Bankr. LEXIS 399 (Bankr. E.D. Tenn. Feb. 11, 2009).
10. Amount of Indebtedness Taxed.
The appropriate tax must be paid on the maximum indebtedness which under any contingency may be secured by the filing. American City Bank v. Western Auto Supply Co., 631 S.W.2d 410, 1981 Tenn. App. LEXIS 591 (Tenn. Ct. App. 1981), superseded by statute as stated in, Higdon v. Regions Bank, — S.W.3d —, 2010 Tenn. App. LEXIS 331 (Tenn. Ct. App. May 13, 2010).
11. Security Interest Limited to Tax Paid.
No one may claim to be perfected by the filing of a security interest for any amount in excess of the privilege tax paid upon that filing. American City Bank v. Western Auto Supply Co., 631 S.W.2d 410, 1981 Tenn. App. LEXIS 591 (Tenn. Ct. App. 1981), superseded by statute as stated in, Higdon v. Regions Bank, — S.W.3d —, 2010 Tenn. App. LEXIS 331 (Tenn. Ct. App. May 13, 2010).
12. —Exception.
If the facts established that a party made a good faith effort to comply with the indebtedness tax statute, then its security interest would not be limited to the amount of tax paid. In re Premiere Property Invest., Ltd., 49 B.R. 686, 1985 B.R. LEXIS 6506 (Bankr. M.D. Tenn. 1985).
13. Future Advance Clauses.
The taxing statute was not designed to place such an insurmountable barrier on the utilization of future advance clauses by secured parties. In re Bates, 35 B.R. 475, 1983 B.R. LEXIS 5333 (Bankr. M.D. Tenn. 1983), superseded by statute as stated in, Willie v. First Am. Nat'l Bank, 157 B.R. 623, 1993 Bankr. LEXIS 1190 (Bankr. M.D. Tenn. 1993).
14. Remedying Noncompliance.
The late payment of taxes and statutory penalties under § 67-4-217 did not remedy previous noncompliance or protect otherwise valid security interests. In re Johnson, 39 B.R. 358, 1984 B.R. LEXIS 5952 (Bankr. M.D. Tenn. Apr. 4, 1984).
15. Assignment of Interest.
A health and educational facility corporation which assigned its interest in a lien, securing a bonded indebtedness for which it was primarily responsible, to a trustee for the benefit of the bondholders did not shift the debt from the corporation to a third party, and the corporation was entitled to the exemption from transfer tax provisions of this section. Health & Educational Facilities Bd. v. King, 678 S.W.2d 14, 1984 Tenn. LEXIS 834 (Tenn. 1984).
16. Recording Instruments.
The recording of more than one instrument evidencing the same indebtedness does not result in the imposition of a transfer tax on each instrument. Health & Educational Facilities Bd. v. King, 678 S.W.2d 14, 1984 Tenn. LEXIS 834 (Tenn. 1984).
17. Taxpayer Options.
T.C.A. § 67-4-409 provides a taxpayer with the option of either paying mortgage tax upon the full value of its collateral in Tennessee pursuant to subdivision (b)(5) or paying mortgage tax only upon the amount determined by the proration formula of tax under subdivision (b)(7). Connecticut Bank & Trust Co. v. Tennessee Dep't of Revenue, 769 S.W.2d 205, 1989 Tenn. LEXIS 128 (Tenn. 1989).
67-4-410. Establishments selling mixed drinks or setups.
-
As used in this section, unless the context otherwise requires:
- “Gross receipts” means and includes the total receipts from the sale of any item included in subdivision (a)(2), without any deductions for any cost of sales, expense, or any other charge whatsoever. “Gross receipts” also includes all receipts of a person liable for tax imposed by this section, except where a person can and does show to the satisfaction of the commissioner what receipts, other than from sales of alcoholic beverages, mixed drinks and/or setups are included in the total gross receipts, and that they are accounted for and maintained separately on the books and records of such person;
- “Mixed drinks and/or setups for mixed drinks” means and includes any sales of beverages containing any alcoholic content, other than beer, and includes sales of water, soft drinks, ice or any item capable of being used to prepare a mixed drink at a place of business of a person liable for the tax imposed by this section; and
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“Person selling mixed drinks and/or setups for mixed drinks” means and includes any person deriving receipts from the sale of mixed drinks and/or setups for mixed drinks or alcoholic beverages whether or not consumed on the premises, and includes any country club, night club or private club in the nature of any social, dinner, athletic, or sporting club or organization, and any fraternal society, order, or association making sales and charges for any of these items:
- Sales of mixed drinks taxed under chapter 211 of the Acts of 1967 and sales of alcoholic beverages made by persons licensed under §§ 57-3-203 and 57-3-205 shall not be taxed under this section; and
- The term does not include sales of setups by cafes, cafeterias, and restaurants where such sales are merely incidental to the principal business and where no bar, lounge, or separate facility is maintained for the purpose of serving or selling mixed drinks and/or setups for mixed drinks.
- Each person selling mixed drinks and/or setups for mixed drinks, as defined in subdivision (a)(3), which sale of setups for mixed drinks is declared to be lawful in localities where the sale of packaged alcoholic beverages is lawful, shall, for the privilege of doing such business, pay to the state for state purposes an amount equal to fifteen percent (15%) of the gross receipts, as defined in subdivision (a)(1), in this state. This section also includes the sale of setups for mixed drinks for consumption by persons supplying alcoholic beverages from their own bottle or other container on the premises of persons holding licenses under title 57, chapter 4 to dispense alcoholic beverages for consumption on the premises.
-
The tax imposed shall be administered and collected on a monthly basis and shall be paid on or before the twentieth day of the month following each month in which the taxpayer's gross receipts are derived. The tax levied by this section shall be deemed to be for the privilege of making sales for the month or part of the month in which such privilege was exercised. Every person exercising this privilege shall monthly, on or before the twentieth day of the following month, make and deliver to the commissioner, upon such forms as the commissioner may prescribe, a statement verified by such person, or agent making such report and statement, which statement shall contain the following information:
- The total gross receipts of the taxpayer from sales for the preceding month; and
- Such further information as the commissioner may require.
- In no case shall any collector or the collector's deputy fail or refuse to collect the tax imposed under this section because of the collector's doubt with reference to the legality of the business engaged in, but the case of the legality of such business shall be determined by the proper judicial authorities.
- Any person required under this section to pay any tax or required by law or regulations made under authority thereof to make a return, keep any records or supply any information for the purpose of the computation, assessment or collection of any tax imposed by this section, who willfully fails to pay such tax, make such return, keep such records or supply such information at the time or times required by law or regulations, or who willfully attempts in any manner to evade or defeat any tax imposed by this section or the payment of the tax, in addition to the other penalties provided by law, commits a Class A misdemeanor.
Acts 1967, ch. 296, § 1; 1969, ch. 273, § 1; 1970, ch. 354, § 1; T.C.A., § 67-4102, Item U; Acts 1988, ch. 526, § 31; 1989, ch. 591, §§ 1, 6.
Compiler's Notes. Acts 1988, ch. 526, § 45 provided that the amendment by that act shall apply to all assessments of penalty made on or after January 1, 1989.
Cross-References. Penalty for Class A misdemeanor, § 40-35-111.
Textbooks. Tennessee Jurisprudence, 16 Tenn. Juris., Intoxicating Liquors, § 7.
Cited: Angel v. Jackson, 724 S.W.2d 736, 1987 Tenn. LEXIS 822 (Tenn. 1987).
NOTES TO DECISIONS
1. Separate Operations.
Where taxpayer operated a cafe and lounge in same building with setups being sold in both places but food sales were primarily made in the cafe although food would be sold in lounge if requested, a cover charge was charged in lounge on certain nights when band was present, receipts were intermingled but approximately 50 percent of setup receipts came from each place and receipts for overall operation showed that food and beer sales far outweighed setup sales, evidence sustained finding that taxpayer in effect operated two places and that sale of setups in lounge was taxable. Hound's Tooth of Am., Inc. v. Benson, 223 Tenn. 340, 444 S.W.2d 283, 1969 Tenn. LEXIS 419 (1969).
2. Knowledge of Buyer's Purpose Unnecessary.
Where lounge sold water and soft drinks, it was subject to tax for selling setups notwithstanding that lounge discouraged brownbagging of liquor by patrons and asked them to leave if discovered as there was evidence that it did occur, since it was not necessary to show the seller knew the buyer's purpose to use the setup to make a mixed drink. Woods v. Holiday Inn, 581 S.W.2d 648, 1979 Tenn. LEXIS 439 (Tenn. 1979).
3. Liquor Store Exemption.
The defendants engaged in illegal activity because they were licensed to sell packaged beer for off premises consumption but were not licensed to sell sealed bottles of liquor, which fall within the meaning of “mixed drinks and/or setups for mixed drinks;” since they were not a licensed retail liquor store, they do not fall under the tax exemption contained in T.C.A. § 67-4-410(a)(3)(A). Herald v. Johnson, 19 S.W.3d 241, 2000 Tenn. App. LEXIS 23 (Tenn. Ct. App. 2000).
67-4-411. Marriage licenses — Funding for family violence shelter and services.
- In addition to the privilege tax on marriage licenses under § 67-4-505, the county clerk shall collect and forward to the commissioner of revenue a tax of fifteen dollars ($15.00) for each marriage license issued.
- Funding for family violence shelters and shelter services shall be as provided by the general appropriations act in each year.
Acts 1984, ch. 930, § 7; 1990, ch. 846, §§ 1, 2.
Cross-References. Domestic abuse, title 36, ch. 3, part 6.
Domestic violence state coordinating council, title 38, chapter 12.
Family violence shelters and child abuse prevention services, title 71, ch. 6, part 2.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 80.
67-4-412. [Repealed.]
Compiler's Notes. Former § 67-4-412 (Acts 1992, ch. 529, § 6; 1994, ch. 854, § 1), concerning documents filed with secretary of state, was repealed by Acts 1998, ch. 784, § 3, effective April 22, 1998, and by ch. 890, § 10, effective May 6, 1998.
Part 5
General Revenue Law — Privileges Taxable by State and Local Governments
67-4-501. Taxable privilege, generally.
- The engaging in any vocation, occupation or business named in this part is declared to be a privilege and the rate of tax on such privilege shall be as fixed by this part, which privilege tax shall be paid to the county clerk, as provided by law for the collection of such revenue, unless otherwise expressly provided in this part.
- The tax imposed by this part on each occupation, vocation or business is for the privilege of pursuing it for one (1) calendar year, subject to § 67-4-206, except as otherwise provided by this part.
Acts 1937, ch. 108, art. 1, § 1; 1937, ch. 108, art. 2, § 1; C. Supp. 1950, §§ 1248.1, 1248.2 (Williams, §§ 1248.8, 1248.11); Acts 1978, ch. 835, § 2; T.C.A. (orig. ed.), §§ 67-4201, 67-4202.
Cross-References. Definitions for general revenue law, § 67-4-201.
Hotel occupancy, limitations on levy of tax, § 67-4-1425.
Limit on county taxation, § 67-1-602.
Merchants and motor vehicle privilege tax, § 5-8-102.
Municipal privilege taxes, title 6, ch. 55.
Privilege tax for criminal injuries compensation fund, § 40-24-107.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 5; 23 Tenn. Juris., Taxation, § 80.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Cited: McGill & Daugherty v. Kefauver, 175 Tenn. 667, 137 S.W.2d 279, 1939 Tenn. LEXIS 90 (1939); Lyons v. Lay, 179 Tenn. 388, 166 S.W.2d 778, 1942 Tenn. LEXIS 35 (1942); Nashville v. State Bd. of Equalization, 210 Tenn. 587, 360 S.W.2d 458, 1962 Tenn. LEXIS 319 (1962); Dun & Bradstreet, Inc. v. Worrall, 211 Tenn. 558, 366 S.W.2d 752, 1963 Tenn. LEXIS 380 (1963); Price v. Tennessee Products & Chemical Corp., 53 Tenn. App. 624, 385 S.W.2d 301, 1964 Tenn. App. LEXIS 128 (Tenn. Ct. App. 1964); Jackson County Bank v. Ford Motor Credit Co., 488 F. Supp. 1001, 1980 U.S. Dist. LEXIS 10271 (M.D. Tenn. 1980); American City Bank v. Western Auto Supply Co., 631 S.W.2d 410, 1981 Tenn. App. LEXIS 591 (Tenn. Ct. App. 1981); S & P Enterprises, Inc. v. Memphis, 672 S.W.2d 213, 1983 Tenn. App. LEXIS 720 (Tenn. Ct. App. 1983).
NOTES TO DECISIONS
1. Construction.
Where a taxing statute is vague or doubtful it must be construed liberally in favor to the taxpayer but where the legislative intent is plain, full effect must be given to it. Dun & Bradstreet, Inc. v. Worrall, 211 Tenn. 558, 366 S.W.2d 752, 1963 Tenn. LEXIS 380 (1963).
Collateral References.
State, classification made by, or its failure to classify, as affecting power of municipality to classify for purposes of license taxation. 110 A.L.R. 1203.
Taxation 371
67-4-502. Authorization to levy privilege tax.
Each county and incorporated city is authorized and empowered to levy a privilege tax upon merchants and other vocations, occupations or businesses declared in this part to be privileges, to be levied in the same manner and not to exceed in amount the tax levied by the state, except as otherwise stated in the code.
Acts 1937, ch. 108, art. 1, § 1; 1937, ch. 108, art. 2, § 1; C. Supp. 1950, §§ 1248.1, 1248.2 (Williams, §§ 1248.8, 1248.11); Acts 1978, ch. 835, § 2; T.C.A. (orig. ed.), §§ 67-4201, 67-4202, 67-4-501.
Compiler's Notes. Former § 67-4-502 was transferred to § 67-4-505 in 1989.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 80.
Attorney General Opinions. A county has no power or authority to impose a “workplace privilege tax” on persons who work in that county, OAG 03-114 (9/9/03).
67-4-503. Multiple taxation of same privilege.
- Notwithstanding any law to the contrary, except where specifically authorized by general law, when any county has pursuant to private act levied a tax on a privilege, no municipality within that county shall later levy a tax on the same privilege, and when any municipality has previously levied a tax on a privilege pursuant to general law or private act, the county in which such municipality is located shall not levy a tax on the same privilege. Any municipality with a population of five thousand (5,000) or more, according to the 1980 federal census or any subsequent federal census, located partly in one (1) county having a metropolitan form of government and partly in another county, may levy a hotel/motel tax, even if either of the counties in which the municipality with a population of five thousand (5,000) or more, according to the 1980 federal census or any subsequent federal census, is located levies such tax.
- This section does not apply to any city that has constructed a qualifying project or projects under the Convention Center and Tourism Development Financing Act of 1998, compiled in title 7, chapter 88, as it relates to the authority of such city to levy an occupancy tax.
Acts 1937, ch. 108, art. 1, § 1; 1937, ch. 108, art. 2, § 1; C. Supp. 1950, §§ 1248.1, 1248.2 (Williams, §§ 1248.8, 1248.11); Acts 1978, ch. 835, § 2; T.C.A. (orig. ed.), §§ 67-4201, 67-4202, 67-4-501; Acts 1990, ch. 636, § 5; 2002, ch. 718, § 2.
Compiler's Notes. Former § 67-4-503 was transferred to § 67-4-506 in 1989.
For tables of populations of Tennessee municipalities see Volume 13 and its supplement.
Cross-References. Tourist accommodation tax definitions, § 7-4-101.
Limitations on levy of privilege taxes by local governments, § 67-4-1425.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 16; 23 Tenn. Juris., Taxation, § 80.
Attorney General Opinions. Levy of hotel-motel tax by home rule municipality located in county which has previously imposed such a tax by private act, OAG 03-062 (5/14/03).
67-4-504. Authority to levy and impose private act privilege taxes in municipality with two premier type tourist resort municipalities in the same county.
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Notwithstanding any other law to the contrary, any municipality located within a tourist resort county as defined in § 42-1-301(3) that also has two (2) premiere type tourist resort municipalities as defined in § 67-6-103(a)(3)(B)(i) in such county, is authorized to levy and impose the following taxes currently levied and imposed by private act by other municipalities located within such county:
- A privilege tax not to exceed two percent (2%) of the consideration charged by restaurants, cafes, cafeterias, caterers and other similar establishments located in such municipality; and
- A privilege tax not to exceed three percent (3%) upon the privilege of a consumer paying consideration for admission into or for an amusement within the corporate limits of the municipality levying the tax.
- The privilege tax levied pursuant to subdivision (a)(1) shall not apply to food prepared to be served at churches, senior citizen centers, nursing homes and at boarding houses where the cost of food is included in the rental rate. In addition such tax shall not apply to the sale of alcoholic beverages in any form, manner, time or place.
- Any such tax may be levied upon the adoption of an ordinance by a two-thirds (2/3) vote of the municipal governing body to which this section applies. The ordinance shall specify the privileges to which such taxes apply and the manner of payment and collection of such taxes.
- Such taxes shall be levied on the same privileges, in the same manner and to the same extent as such taxes are levied pursuant to the private acts which impose such taxes.
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- In administering and enforcing this section, the tax collection official shall have as additional powers, those powers and duties with respect to collecting taxes as provided in this title or otherwise provided by law for county clerks.
- Upon any claim of illegal assessment and collection, the taxpayer has the remedies provided in this title; it is the intent of this section that law which applies to the recovery of state taxes illegally assessed and collected shall also apply to the tax or taxes levied under the authority of this section. Section 67-1-707 shall be applicable to adjustments and refunds of such tax or taxes.
- With respect to the adjustment and settlement with taxpayers, all errors of city taxes collected by the tax collection official under authority of this section shall be refunded by the tax collection official.
- Notice of any tax paid under protest shall be given to the tax collection official and the ordinance authorizing the levy of the tax shall designate a municipal officer against whom suit may be brought for recovery.
- Such taxes shall be in addition to any other taxes levied or authorized to be levied on such privileges.
- Seventy-five percent (75%) of the proceeds collected from any tax imposed pursuant to this section shall be used for tourism promotion; tourism infrastructure, including but not limited to, municipally owned or operated event centers and golf courses; and tourism advertising.
Acts 2013, ch. 108, § 1.
Effective Dates. Acts 2013, ch. 108, § 2. April 8, 2013.
67-4-505. Marriage licenses.
The privilege tax on marriage licenses shall be five dollars ($5.00) each and the tax is to be kept in the county for school purposes.
Acts 1937, ch. 108, art. 2, § 1, Item 57; C. Supp. 1950, § 1248.2, Item 62 (Williams, § 1248.70); modified; Acts 1981, ch. 69, § 1; T.C.A. (orig. ed.), §§ 67-4203, Item 62, 67-4-502.
Cross-References. Additional tax on marriage licenses, § 67-4-411.
County administration of education, title 49, ch. 2, part 3.
Education Finance Act, title 49, ch. 3, part 3.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 80.
Law Reviews.
Recent Developments — Domestic Relations — Divorce — Due Process for Indigent Plaintiffs, 47 Tenn. L. Rev. 845 (1980).
Cited: In re Ken Gardner Ford Sales, Inc., 10 B.R. 632, 1981 Bankr. LEXIS 3928 (Bankr. E.D. Tenn. 1981).
67-4-506. Vending machines benefiting charities.
-
- Each person operating any vending machine for the benefit of a charitable nonprofit organization, by which merchandise of the market value of the coin deposited not exceeding twenty-five cents (25¢) is sold or delivered to customers, shall have the privilege and option of registration with the department of revenue, reporting gross receipts vended through such machines, and paying tax on such gross receipts, in lieu of sales tax, at the rate of one and one-half percent (1.5%) of the gross receipts from the machines, except that the percentage shall be two and one-half percent (2.5%) of the gross receipts of all tobacco items from the machines, in the same manner, with the same privileges and exemptions, and under the same regulation and administration as the tax codified in § 67-4-402.
- For purposes of this section, “vending machine” means any machine built such that only a fixed, predetermined price can be paid for the item dispensed by such machine, the machine cannot return or make change, and the machine cannot be adjusted, mechanically, electronically or otherwise, to change the price charged for the item.
- Gross receipts taxed under this section shall be exempt from the sales and use tax levied by chapter 6 of this title.
- To comply with the option in subsection (a), the name and address of the owner, and, if different from the owner, the name and address of the charitable nonprofit organization must appear upon each vending machine, and each vending machine must have a permanent registration on forms provided by the department, at a cost for which the department may charge one dollar ($1.00) each, plus a fee of two dollars ($2.00) for each individual company so permanently registering.
- Any person, firm or corporation engaged in this business shall immediately notify the department of its options to pay under this chapter, and, failing to notify the department, shall pay sales tax as provided by law.
Acts 2003, ch. 358, § 1.
Compiler's Notes. Former § 67-4-506 (Acts 1937, ch. 108, art. 2, § 1, Item 60; 1937, ch. 192, § 172; 1937 (2nd Ex. Sess.), ch. 13, § 6; 1941, ch. 51, § 10; 1947, ch. 77, § 1; C. Supp. 1950, § 1248.2, Item 65 (Williams, § 1248.73); Acts 1951, ch. 68, § 1; modified; Acts 1955, ch. 191, § 1; impl. am. Acts 1959, ch. 9, § 14; Acts 1961, ch. 175, § 1; 1967, ch. 98, § 5; Acts 1971, ch. 387, § 25; T.C.A. (orig. ed.), § 67-4203, Item 65; Acts 1984, ch. 832, § 35; T.C.A., § 67-4-503; Acts 1999, ch. 414, § 1), concerning vending machines, was repealed by Acts 2002, ch. 856, § 5(a), effective July 15, 2002.
67-4-507. [Repealed.]
Compiler's Notes. Former § 67-4-507 (Acts 1983, ch. 321, § 1; T.C.A., § 67-4203, Item 113; Acts 1984, ch. 542, § 1; 1984, ch. 973, § 1; 1985, ch. 459, §§ 1-4; 1986, ch. 858, § 1; 1987, ch. 447, § 1; 1988, ch. 526, § 32; T.C.A. § 67-4-504), concerning coin-operated amusement devices, was repealed by Acts 2002, ch. 856, § 2(a), effective September 1, 2002. For present comparable provisions, see title 67, ch. 4, part 22.
Part 6
General Revenue Law — Litigation Tax
67-4-601. Rights of local governments preserved — Amount of tax — Liability — Application — Scott County pilot project — Substance abuse prevention programs — Facilities.
- It is the expressed intent of the general assembly that counties and municipalities shall continue to have the authority to levy a local litigation tax and that no provision of chapter 488 of the Acts of 1981 shall be construed to limit or repeal such authority.
-
- Notwithstanding any other law to the contrary, each county by resolution of its legislative body, adopted by two-thirds (2/3) majority vote, may levy a privilege tax on litigation in all civil and criminal cases instituted in the county, other than those instituted in municipal courts, in addition to all other such privilege taxes authorized by law. Any tax levy adopted under this subsection (b) shall not exceed ten dollars ($10.00) per case; and the proceeds shall be used exclusively for the purposes of jail or workhouse construction, reconstruction or upgrading, or to retire debt, including principal and interest and related expenses, on such construction, reconstruction or upgrading or for courthouse renovation.
- Any tax levy adopted under this subsection (b) shall only be effective until such time as all expenses of the construction, reconstruction, upgrading or renovation project have been paid, or until such time as the debt for such project has been retired. For the purposes of this subsection (b), debt includes principal, interest, origination costs and related expenses, as well as any debt issued for the purposes of refinancing the original indebtedness.
- Notwithstanding any other law to the contrary, the state shall not be liable for or pay the tax levied under this subsection (b) in any civil or criminal case on behalf of any individual because such individual is indigent.
- Notwithstanding any law to the contrary, this subsection (b) shall not apply to any publicly owned hospital in any county having a population of not less than seventy-three thousand six hundred (73,600) and not more than seventy-three thousand nine hundred (73,900), if the county commission for such county by majority vote provides that any such hospital shall be exempt.
- Notwithstanding any law to the contrary, upon the adoption of a resolution by a two-thirds (2/3) majority vote of a county legislative body, a privilege tax on litigation in all civil and criminal cases may be levied in an amount not to exceed twenty-five dollars ($25.00) per case.
- Notwithstanding any law to the contrary, upon the adoption of a resolution by a two-thirds (2/3) majority vote of a county legislative body, a privilege tax on litigation in all civil and criminal cases may be levied in an amount not to exceed twenty-five dollars ($25.00) per case, to be used exclusively for court house security, in addition to those purposes identified in subdivision (b)(1).
-
- Notwithstanding any other law to the contrary, a county may adopt the privilege tax in subdivision (b)(5) or (b)(6), or both.
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- Notwithstanding the exclusive use restriction in subdivision (b)(6), a county that adopts the privilege tax in subdivision (b)(5) or (b)(6), or both, may also adopt a resolution by a two-thirds (2/3) majority vote of the legislative body, to use those funds, in addition to other purposes as permitted under this section, for the purpose of obtaining and maintaining software and hardware associated with collecting, receiving and maintaining records for law enforcement agencies, including county sheriff offices, jails and municipal or metropolitan police departments. This project may include computerizing agency operations, replacing existing systems with high technology systems that collect and share data on criminal activity and historical data with other law enforcement agencies, including fusion centers, and collecting and sharing biometric information for positive criminal or inmate identification. New or replacement systems shall incorporate modern software concepts and architecture, which shall include n-tier architecture, source code compliant with object-oriented programming concepts, and the use of a relational database management system for data storage.
- Any use of a privilege tax for purposes under this subdivision (b)(7)(B) shall only be permitted until such time as all expenses for the purchase, installation, training, maintenance and associated costs for the project as described under subdivision (b)(7)(B)(i) have been paid, or until such time as the debt for that project has been retired.
- For purposes of this subdivision (b)(7)(B), “debt” includes principal, interest, origination costs and related expenses, as well as any debt issued for the purposes of refinancing the original indebtedness.
- Any legislative body that had adopted a resolution by a two-thirds (2/3) vote under subdivision (b)(5) or (b)(6) prior to August 27, 2008, shall not be required to adopt another resolution for this section to continue to apply in such county.
- Notwithstanding any law to the contrary, in any county having a population of not less than sixteen thousand eight hundred (16,800) nor more than sixteen thousand nine hundred (16,900), according to the 2000 federal census or any subsequent federal census, upon the adoption of a resolution by two-thirds (2/3) majority vote of the county legislative body, a privilege tax on litigation in all civil and criminal cases may be levied in an amount not to exceed twenty-five dollars ($25.00) per case to be used for equipment and personnel costs of the county sheriff's department or for those purposes identified in subdivision (b)(1).
- Notwithstanding any law to the contrary, in any county having a population of not less than one hundred eighty-three thousand one hundred (183,100) nor more than one hundred eighty-three thousand two hundred (183,200), according to the 2010 federal census or any subsequent federal census, upon the adoption of a resolution by a two-thirds (2/3) majority vote of the county legislative body, a privilege tax on litigation in all civil cases in that county may be levied in an amount not to exceed twenty-five dollars ($25.00) per case. A civil case shall not include any original proceedings brought in juvenile court where the court is exercising jurisdiction granted under title 37, chapter 1. The revenue collected from this subdivision (b)(10) shall be used exclusively for personnel for and operating costs of the circuit court.
-
- Notwithstanding any law to the contrary, a pilot project concerning drug testing in public schools may be conducted in accordance with this subsection (c).
- For the purposes of such pilot project, Scott County, or any municipality within such county, is authorized, by a two-thirds (2/3) vote of its legislative body, to levy an additional litigation tax per case, to be set by the county commission or municipal legislative body, as applicable, and to be denominated as part of the court costs, in matters before the local general sessions, juvenile, and municipal courts.
- Any revenue generated by Scott County, or a municipality within such county, pursuant to subdivision (c)(2), shall be used exclusively to support local nonprofit drug testing programs authorized to operate in the public school system, and shall be distributed on a monthly basis by the county or municipality to such authorized local nonprofit drug testing program.
- The taxes levied by this subsection (c) shall be in addition to any other taxes levied on litigation.
- The department of education is authorized to request information from Scott County on the results of the pilot project, and to recommend to the general assembly, or other local education agency, any element of the pilot project which may have statewide applicability.
- Notwithstanding any other law to the contrary, any county having a population of not less than sixteen thousand six hundred (16,600) nor more than sixteen thousand seven hundred (16,700), according to the 2000 federal census or any subsequent federal census, may, by a two-thirds (2/3) vote of its legislative body, levy an additional litigation tax of twenty-five dollars ($25.00) in all criminal cases instituted in the county. Such tax is in addition to all other such privilege taxes authorized by law. Any revenue collected pursuant to this subsection (d) shall be deposited in the county general fund for the sole purpose of providing grants for services in support of physically and sexually abused children.
- Notwithstanding any other law to the contrary, any county having a population of not less than thirty nine thousand fifty (39,050) nor more than thirty nine thousand one hundred fifty (39,150), according to the 2000 federal census or any subsequent federal census, may, by a two-thirds (2/3) vote of its legislative body, levy an additional litigation tax of five dollars ($5.00) in all civil and criminal cases instituted in the county. Such tax is in addition to all other such privilege taxes authorized by law. Any revenue collected pursuant to this subsection (e) shall be deposited in the county general fund for the sole purpose of providing grants for services to children provided by the Tennessee Court Appointed Special Advocates Association (CASA).
-
- In addition to any other tax imposed pursuant to this chapter, there is levied a privilege tax on litigation in all civil and criminal cases instituted in the general sessions court in any county having a population of not less than thirty-five thousand six hundred (35,600) nor more than thirty-five thousand seven hundred (35,700), according to the 2010 federal census or any subsequent federal census, in an amount not to exceed four dollars seventy-five cents ($4.75) and upon the adoption of a resolution by a two-thirds (2/3) majority vote of the county legislative body.
- Notwithstanding the apportionment provisions of § 67-4-606, any revenue collected pursuant to this subsection (f) shall be deposited in the county general fund, with the proceeds to be used exclusively for the funding of the general sessions court, and for ensuring compliance with fire codes for the existing courthouse justice center facilities. No proceeds derived from the tax shall be used to increase or decrease the salary of the general sessions judge during such judge's term in office. All expenditures made for courthouse justice center facilities in accordance with this subsection (f) shall be administered by the county sheriff, subject to the appropriation of funds for such purposes by the county legislative body.
- No privilege tax shall be levied on litigation in accordance with this subsection (f) on or after July 1, 2020; provided, however, that this subdivision (f)(3) shall not be construed to absolve any person of liability for any litigation tax duly imposed by this subsection (f) prior to July 1, 2020.
-
- In addition to any other tax imposed pursuant to this chapter, by resolution adopted by a two-thirds (2/3) majority vote of the county legislative body, a privilege tax may be levied on litigation in all criminal court, fourth circuit court, and general sessions court-criminal division cases, in any county having a population of not less than four hundred thirty-two thousand two hundred (432,200) nor more than four hundred thirty-two thousand three hundred (432,300), according to the 2010 federal census or any subsequent federal census, in an amount not to exceed five dollars ($5.00).
- Notwithstanding the apportionment provisions of § 67-4-606, any revenue collected pursuant to this subsection (g) shall be retained by the clerk, with the proceeds to be used exclusively by the clerk of the fourth circuit court.
- Notwithstanding the apportionment provisions of § 67-4-606 or this section, upon the adoption of a resolution by a two-thirds (2/3) majority vote of a county legislative body, any amounts collected pursuant to this section may be used by the county legislative body for substance abuse prevention purposes in addition to other purposes identified by this section.
- Notwithstanding any law to the contrary, any county having a population of not less than two hundred sixty-two thousand six hundred (262,600) nor more than two hundred sixty-two thousand seven hundred (262,700), according to the 2010 federal census or any subsequent federal census, may, upon the adoption of a resolution by two-thirds (2/3) majority vote of the county legislative body, levy an additional privilege tax on litigation in all civil and criminal cases in an amount not to exceed fifty dollars ($50.00) per case, to be used for jail construction and maintenance, workhouse construction and maintenance, juvenile detention center construction and maintenance, or courthouse construction and maintenance, or to retire debt, including principal and interest and related expenses, on such jail, workhouse, juvenile detention center, and courthouse construction and maintenance projects.
- Notwithstanding any law to the contrary, any county having a population of not less than eighty-nine thousand eight hundred (89,800) nor more than eighty-nine thousand nine hundred (89,900) according to the 2010 federal census or any subsequent federal census, may, upon the adoption of a resolution by two-thirds (2/3) majority vote of the county legislative body, levy an additional privilege tax on litigation in all civil and criminal cases in an amount not to exceed one hundred dollars ($100.00) per case, to be used for the construction of a building, separate from the courthouse, that would house legal proceedings and offices directly involved with the court system, and to renovate the county courthouse, or to retire debt, including principal and interest and related expenses, on such building and courthouse construction and maintenance projects.
Acts 1937, ch. 108, art. 2, § 2; C. Supp. 1950, § 1248.3 (Williams, § 1248.119); impl. am. Acts 1959, ch. 9, § 14; Acts 1981, ch. 488, § 7; T.C.A. (orig. ed.), § 67-4101; Acts 2000, ch. 886, §§ 1, 2; 2001, ch. 225, §§ 1, 2; 2004, ch. 861, § 1; 2004, ch. 945, § 1; 2006, ch. 958, §§ 1-15; 2007, ch. 146, §§ 1-3; 2008, ch. 692, §§ 1-3; 2008, ch. 870, §§ 1, 2; 2008, ch. 961, §§ 1, 2; 2008, ch. 1187, § 1; 2011, ch. 496, § 1; 2012, ch. 659, § 1; 2013, ch. 450, § 1; 2015, ch. 327, § 1; 2016, ch. 661, § 1; 2016, ch. 897, § 1; 2016, ch. 945, § 1; 2018, ch. 797, § 1.
Compiler's Notes. Acts 2008, ch. 692, §§ 1-3, effective April 7, 2008, deleted “not less than 16,800, nor more than 16,900”, and added “not less than 182,000, nor more than 182,100” in the table in subdivision (b)(5), and added subdivision (b)(7), which was later redesignated as present subdivision (b)(9). Effective April 7, 2008, subdivision (b)(5) read as follows:
“Notwithstanding any provision of law to the contrary, in counties having a population of:
not less than nor more than
11,300 11,368
11,700 11,800
15,500 15,600
17,600 17,675
17,800 17,875
17,900 18,000
19,780 19,850
22,200 22,300
24,600 24,700
25,450 25,550
25,575 25,650
28,100 28,200
28,800 28,900
29,400 29,450
29,460 29,550
33,525 33,600
35,900 36,000
37,200 37,300
38,200 38,300
38,900 39,000
39,050 39,150
39,800 39,875
39,900 40,000
43,100 43,200
44,200 44,300
51,200 51,300
51,900 52,000
153,000 153,100
182,000 182,100
according to the 2000 federal census or any subsequent federal census, a privilege tax on litigation in all civil and criminal cases may be levied in an amount not to exceed twenty-five dollars ($25.00) per case.
Acts 2008, ch. 870, §§ 1 and 2, effective July 1, 2008, inserted “not less than 38,900, nor more than 39,000”, and inserted “not less than 39,050, nor more than 39,150” in subdivision (b)(5). Acts 2008, ch. 961, § 2, also effective July 1, 2008, inserted “not less than 33,525, nor more than 33,600” in subdivision (b)(5) and rewrote (b)(6). Effective July 1, 2008, subdivisions (b)(5) and (6) read as follows:
“(5) Notwithstanding any provision of law to the contrary, in counties having a population of:
not less than nor more than
11,300 11,368
11,700 11,800
15,500 15,600
17,600 17,675
17,800 17,875
17,900 18,000
19,780 19,850
22,200 22,300
24,600 24,700
25,450 25,550
25,575 25,650
28,100 28,200
28,800 28,900
29,400 29,450
29,460 29,550
33,525 33,600
35,900 36,000
37,200 37,300
38,200 38,300
38,900 39,000
39,050 39,150
39,800 39,875
39,900 40,000
43,100 43,200
44,200 44,300
51,200 51,300
51,900 52,000
153,000 153,100
182,000 182,100
according to the 2000 federal census or any subsequent federal census, a privilege tax on litigation in all civil and criminal cases may be levied in an amount not to exceed twenty-five dollars ($25.00) per case.
“(6) Notwithstanding any law to the contrary, upon the adoption of a resolution by a two-thirds majority vote of the county legislative body, a privilege tax on litigation in all civil and criminal cases may be levied in an amount not to exceed twenty-five dollars ($25.00) per case, to be used exclusively for court house security, in addition to those purposes identified in subdivision (b)(1), in counties having a population, according to the 2000 federal census or any subsequent federal census, of:
not less than nor more than
62,900 63,000
71,300 71,400
182,000 182,1000
Acts 2008, ch. 1187, § 1, effective August 27, 2008, rewrote subdivisions (b)(5) and (6) as amended by Acts 2008, ch. 692, effective April 7, 2008, and chs. 870 and 961, effective July 1, 2008, and added subdivisions (b)(7) and (8). As a result of the addition of subdivisions (b)(7) and (8) by ch. 1187, subdivision (b)(7) as added by ch. 692 was redesignated as subdivision (b)(9).
Acts 2011, ch. 496, § 2 provided that the act, which added subsection (e), applies to all such civil or criminal cases instituted on or after July 1, 2011.
For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Acts 2016, ch. 945, § 2 provided that the act, which added (b)(10), shall apply to all civil cases filed on or after July 1, 2016.
Amendments. The 2013 amendment added (f).
The 2015 amendment added (g).
The 2016 amendment by ch. 661 added (h).
The 2016 amendment by ch. 897 added (i).
The 2016 amendment by ch. 945 added (b)(10).
The 2018 amendment added (j).
Effective Dates. Acts 2013, ch. 450, § 2. May 16, 2013.
Acts 2015, ch. 327, § 2. April 28, 2015.
Acts 2016, ch. 661, § 2. March 29, 2016.
Acts 2016, ch. 897, § 2. April 27, 2016.
Acts 2016, ch. 945, § 2. July 1, 2016.
Acts 2018, ch. 797, § 2. July 1, 2018.
Cross-References. Definitions for general revenue law, § 67-4-201.
General sessions courts, litigation tax for counties, § 16-15-5006.
Statewide automated victim information and notification system, title 40, ch. 38, part 5.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 80.
Attorney General Opinions. Constitutionality of litigation tax on criminal actions in a single county, OAG 99-104 (5/10/99).
A county must embark on an actual jail or workhouse construction project before the county is authorized to levy a local litigation tax pursuant to T.C.A. § 67-4-601(b), OAG 00-187 (12/14/00).
A county is not necessarily required to fund a jail or workhouse construction project through the use of capital outlay notes; however, if a county chooses to issue and sell capital outlay notes to fund such a project for which the county is levying a local litigation tax pursuant to T.C.A. § 67-4-601(b), the county should use the litigation tax proceeds to retire the capital outlay notes as the notes fall due, OAG 00-187 (12/14/00).
Scope of county litigation tax. OAG 12-13, 2012 Tenn. AG LEXIS 13 (2/10/12).
Tenn. Code Ann. § 67-4-601(b)(1) authorizes a county to levy a $10 litigation privilege tax in addition to all other such privilege taxes authorized by law. OAG 16-10, 2016 Tenn. AG LEXIS 10 (3/10/2016).
Collateral References. Taxation 371
67-4-602. Tax imposed.
- There is levied a privilege tax on litigation instituted in this state, of twenty-nine dollars and fifty cents ($29.50) on all criminal charges, upon conviction or by order.
- There is levied a privilege tax on litigation of twenty-three dollars and seventy-five cents ($23.75) in all civil cases in this state in chancery court, circuit court, probate court, general sessions court when exercising state court jurisdiction, or in any other court exercising state court jurisdiction in a civil case in this state other than the court of appeals or the supreme court. When a general sessions court is exercising state court jurisdiction, except with regard to cases in juvenile court, there is levied an additional privilege tax of one dollar ($1.00).
- There is levied a privilege tax on litigation of seventeen dollars and seventy-five cents ($17.75) in all civil cases in this state in general sessions court, when not exercising state court jurisdiction.
- There is levied a privilege tax on litigation of thirteen dollars and seventy-five cents ($13.75) in all civil cases in this state in the court of appeals or the supreme court.
- In all civil cases in municipal courts in this state, the clerk of the court shall collect a litigation tax in accordance with § 16-18-305. When a municipal court is exercising general sessions jurisdiction, the clerk of the court shall collect a privilege tax on litigation in those cases that is the same as the tax collected by other general sessions courts in comparable cases.
-
- In addition to any other tax imposed by this chapter, there is levied a privilege tax on litigation of three dollars ($3.00) on all criminal charges, upon conviction or by order, instituted in the general sessions court in any county having a population of not less than three hundred nineteen thousand six hundred twenty-five (319,625), nor more than three hundred nineteen thousand seven hundred twenty-five (319,725), according to the 1980 federal census or any subsequent federal census. Notwithstanding the apportionment provisions of § 67-4-606, each levy of this tax shall be paid into the office of the county clerk of such county, with the proceeds to be credited to a separate reserve account in the county fund. The proceeds shall be disbursed to expand the use of the appropriate law enforcement officers for walking patrols within public housing subdivisions, and in localities within such county that traditionally experience greater incidence of crime. The proceeds may also be used by the respective police department to fund police cadet programs conducted by such department, in localities within such county that traditionally experience greater incidence of crime.
- Five percent (5%) of the proceeds collected under subdivision (f)(1) shall be retained by the office of the county clerk collecting the tax, for the purpose of effectuating this subsection (f).
-
- In addition to any other tax levied by this chapter, there is levied an additional privilege tax on litigation of one dollar ($1.00) on all criminal charges, upon conviction or by order, instituted in any state or county court, for any violation of title 55, chapter 8, or for a violation of any ordinance governing use of public parking space.
- Notwithstanding the provisions of this chapter or any private act or resolution of a county legislative body to the contrary, no litigation taxes shall apply to any charge prosecuted for an offense under § 55-8-188.
-
- There is imposed an additional privilege tax on litigation of one dollar ($1.00) on all criminal charges, upon conviction or by order, instituted in any state or general sessions court. Effective July 1, 2012, the privilege tax on litigation imposed by this subdivision (h)(1) is increased in the amount of two dollars ($2.00), for a total of three dollars ($3.00), which shall be deposited to the statewide automated victim information and notification system fund created by subdivision (h)(2).
-
- There is created a special account in the state treasury to be known as the statewide automated victim information and notification system fund, referred to as the victim notification fund in this section.
- Notwithstanding the apportionment of revenue formula in § 67-4-606, proceeds from the privilege tax on litigation imposed by subdivision (h)(1) must be deposited in the victim notification fund.
- Moneys in the victim notification fund may be invested by the state treasurer in accordance with § 9-4-603.
- Notwithstanding any law to the contrary, interest accruing on investments and deposits of the victim notification fund shall be credited to the fund, shall not revert to the general fund and shall be carried forward into the subsequent fiscal year.
- Any balance remaining unexpended at the end of a fiscal year in the victim notification fund shall not revert to the general fund but shall be carried forward into the subsequent fiscal year.
- Money in the victim notification fund may be expended only in accordance with annual appropriations approved by the general assembly and in accordance with § 40-38-505.
- The privilege taxes imposed by § 40-24-107 are deemed litigation taxes, collectible by the respective court clerks as otherwise provided in § 67-4-603, and subject to apportionment according to § 67-4-606; however, the designation of these taxes as litigation taxes shall not change the clerk's fee provided for in § 40-24-107, nor shall the designation of the taxes as litigation taxes alter the priority of collection or distribution of monies collected by the clerk in cases where these taxes are levied.
- The privilege tax imposed by § 39-13-708, after deduction for administrative costs under § 39-13-708(c)(1), is deemed a litigation tax, collectible by the respective court clerks, as otherwise provided in § 67-4-603, and subject to apportionment according to § 67-4-606; however, the designation of these taxes as litigation taxes shall not change the clerk's fee provided for in § 39-13-708(c)(1), nor shall the designation of the taxes as litigation taxes alter the priority of collection or distribution of monies collected by the clerk in cases where these taxes are levied.
-
- In addition to any other tax imposed by this chapter, there is levied a privilege tax on litigation of two dollars ($2.00) on all criminal charges, upon conviction or by order, instituted in the general sessions court of any county served by a judicial commissioner.
-
- There is created a special account in the state treasury to be known as the judicial commissioner continuing education account, referred to as the judicial commissioner fund in this subsection (k).
- Notwithstanding the apportionment of revenue formula in § 67-4-606, there shall be deposited in the judicial commissioner fund proceeds from the two-dollar privilege tax on litigation imposed by subdivision (k)(1).
- Moneys in the judicial commissioner fund may be invested by the state treasurer in accordance with § 9-4-603.
- Notwithstanding any law to the contrary, interest accruing on investments and deposits of the judicial commissioner fund shall be credited to the fund, shall not revert to the general fund and shall be carried forward into the subsequent fiscal year.
- Any balance remaining unexpended at the end of a fiscal year in the judicial commissioner fund shall not revert to the general fund but shall be carried forward into the subsequent fiscal year.
- Moneys in the judicial commissioner fund may be expended only in accordance with annual appropriations approved by the general assembly for the purposes described in § 40-1-111(f)(7).
- Every person from whom the clerks of the various courts are required to collect the tax imposed by this section shall be liable for the tax imposed by this section.
- [Deleted by 2016 amendment.]
Acts 1981, ch. 488, § 1; 1982, ch. 725, § 1; 1983, ch. 426, § 1; 1983, ch. 449, §§ 1, 2, 4; T.C.A., § 67-4102, Item J; Acts 1986, ch. 873, § 1; 1988, ch. 1024, § 1; 1989, ch. 546, §§ 1, 2; 1992, ch. 529, § 7; 1995, ch. 550, § 1; 1998, ch. 901, § 1; 1999, ch. 502, § 1; 2000, ch. 770, § 1; 2000, ch. 845, § 1; 2001, ch. 454, §§ 5-8; 2004, ch. 914, § 6(g); 2005, ch. 429, § 24; 2006, ch. 1019, §§ 46, 47; 2009, ch. 488, § 1; 2012, ch. 1052, §§ 2, 3; 2012, ch. 1056, § 1; 2016, ch. 531, § 1; 2019, ch. 261, § 2.
Compiler's Notes. Acts 2000, ch. 770, which added (h), provided in § 3 that the act applies to all violations of § 55-8-188 that occur on or after May 21, 2000, or are pending on May 21, 2000.
For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Amendments. The 2016 amendment deleted (m), which read: “Subsections (k) and (l) shall not apply in counties having a population of not less than sixty-six thousand two hundred (66,200) nor more than sixty-six thousand three hundred (66,300), according to the 2010 federal census or any subsequent federal census.”
The 2019 amendment rewrote (h)(2)(B) which read: “(B) Notwithstanding the apportionment of revenue formula in § 67-4-606, there shall be deposited in the victim notification fund proceeds from the one-dollar ($1.00) privilege tax on litigation imposed by subdivision (h)(1).”
Effective Dates. Acts 2016, ch. 531, § 4. February 1, 2016.
Acts 2019, ch. 261, § 3. April 30, 2019.
Cross-References. General sessions courts, litigation tax for counties, § 16-15-5006.
Suspension of court costs and litigation tax for indigent defendants, § 40-25-123.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
Attorney General Opinions. Litigation taxes excepted from discharge in bankruptcy, OAG 94-147 (12/29/94).
Levy of litigation tax for multiple criminal offenses, OAG 99-056 (3/9/99).
Constitutionality of litigation tax on criminal actions in a single county, OAG 99-104 (5/10/99).
The privilege tax on litigation may be levied against a person for each charge involving a single individual and incident with multiple charges, if each charge is put on a separate warrant and filed under a separate docket number, OAG 01-068 (5/2/01).
The privilege tax on litigation may not be levied against a person for each count on an indictment involving a single incident with multiple counts against one person that were filed on the same day, OAG 01-068 (5/2/01).
Authority to impose litigation tax on parking tickets, OAG 04-049 (3/23/04).
Cited: Fletcher v. State, 9 S.W.3d 103, 1999 Tenn. LEXIS 678 (Tenn. 1999).
67-4-603. Collection.
-
The clerks of the various courts shall collect the various privilege taxes imposed by § 67-4-602 in the following manner:
- Upon the commencement of an original civil action, from the plaintiff, except when such action is brought pursuant to a pauper's oath;
- Upon a finding of guilt, plea of guilty, or submission to fine in a criminal action from the defendant;
- Upon the filing in any civil action of an appeal, or of an appeal in the nature of a writ of error or certiorari, from one court to another, from the appellant, except when such appeal is brought pursuant to a pauper's oath;
- Upon judgment against the defendant in any original civil action brought by a city or county of the state of Tennessee or by the state of Tennessee from the defendant; or
- Upon judgment or final decree against the appellee in any action on an appeal or on an appeal in the nature of a writ of error or certiorari, where the appellant is a city or county of the state of Tennessee or the state of Tennessee from the appellee.
-
- When any defendant in a criminal action is liable to pay the applicable privilege tax, the clerk of the court shall certify to the commissioner of correction, the county sheriff or the board of workhouse commissioners, as applicable, whether payment of the tax has been made. Such certification shall be in such form as the commissioner, the county sheriff or the board of workhouse commissioners, as applicable, shall direct. The commissioner, the county sheriff, or the board of workhouse commissioners, as applicable, shall then cause any amount owing to be collected from the inmate during the inmate's period of confinement by the department or at the county jail or county workhouse, as applicable. The commissioner, the county sheriff and the board shall retain all records relating to amounts collected for the payment of the privilege tax on litigation for a period of four (4) years. Such records may be examined by the commissioner of revenue or the commissioner's delegate, pursuant to chapter 1, part 14 of this title.
- The commissioner of correction, the county sheriff, or the board of workhouse commissioners shall collect and pay over to the clerk of the court in which the defendant was convicted any amount collected, and the clerk of the court shall apply such amount to reducing the liability of the defendant for the privilege tax on litigation, and shall report and pay over this amount to the department of revenue in the same manner as the clerk of the court is required to collect and pay over taxes to the department of revenue as provided for in parts 2 and 3 of this chapter.
- The tax imposed by § 67-4-602 shall be paid out of the first moneys collected in each case, and may be collected in the same manner as costs are collected, but the tax imposed by § 67-4-602 shall not be deemed to be costs.
- Any moneys collected by the clerk of the court pursuant to subsection (a) for the payment of the privilege tax on litigation imposed pursuant to § 67-4-602, or pursuant to § 40-24-107 shall be equally divided between the two (2) privilege taxes and paid and reported to the department of revenue in such manner. At such time as the amount owed for either tax is fully paid, any additional money collected shall be paid and reported for the purpose of extinguishing the remaining tax on litigation.
- For purposes of subdivision (a)(3), the time of filing in any civil action of an appeal shall be deemed to be the time of the docketing of the appeal in the appellate court. The litigation taxes to be collected under this section in any appeal to the court of appeals or the supreme court shall be collected by the clerk of the appellate courts upon the docketing of the appeal in the appellate court.
- The clerks of the various courts shall collect and remit the various privilege taxes on litigation, as well as the various fines, fees and court costs that are remitted to the state, and shall report them on forms prescribed by the commissioner.
Acts 1981, ch. 488, § 1; 1982, ch. 725, § 1; 1983, ch. 426, § 1; 1983, ch. 449, §§ 1, 2, 4; T.C.A., § 67-4102, Item J; Acts 1994, ch. 967, § 2; 2002, ch. 559, §§ 1, 2; 2005, ch. 429, § 25.
Cross-References. General sessions courts, litigation tax for counties, § 16-15-5006.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
Attorney General Opinions. Payment allocation where defendant indigent only as to costs or fines, OAG 98-099 (5/27/98).
Levy of litigation tax for multiple criminal offenses, OAG 99-056 (3/9/99).
In most appeals of civil cases, the clerk of the appellate court is required to collect the litigation tax from the appellant upon the filing of the appeal; then, if the appellant succeeds on appeal and is awarded costs, the clerk should collect the litigation tax from the appellee when the clerk collects costs and should reimburse the appellant for the tax, OAG 00-188 (12/14/00).
In civil and criminal cases where the appellant is a city, a county, or the state, the clerk of the appellate court is not authorized to collect a litigation tax from the appellant and is authorized to collect a litigation tax only if the city, county, or state prevails on appeal; in that event, the clerk should collect the litigation tax from the appellee upon the appellate court's entry of a judgment against the appellee, OAG 00-188 (12/14/00).
The clerk of the appellate court is not authorized to collect a litigation tax in appeals of criminal cases where the appellant is the defendant, OAG 00-188 (12/14/00).
The collection of the litigation tax is not a condition precedent to the appellate court's consideration of an appeal, OAG 00-188 (12/14/00).
Although the juvenile court clerk is not authorized to collect the litigation tax in original proceedings in juvenile court where the court exercises the jurisdiction granted by title 37, chapter 1, the clerk of the appellate court is required to collect the litigation tax in civil appeals from juvenile court, OAG 00-188 (12/14/00).
A circuit court clerk or other appropriate official may accept payment for litigation taxes, fines, court costs, and other fees in one criminal case if the litigation taxes in other cases against the same criminal defendant have not been paid. OAG 01-058 (4/11/01).
The event that triggers responsibility for collecting the litigation tax, in most cases, is the filing of the appeal and, therefore, the litigation tax should be collected by the clerk of the court in which the notice of appeal, application for appeal, or petition for review is filed, OAG 01-131 (8/20/01).
Litigation taxes paid by a plaintiff at the filing of a lawsuit may not be included as costs and may not be recovered at the conclusion of a lawsuit against an unsuccessful defendant absent a court order to the contrary, OAG 02-072 (6/3/02).
NOTES TO DECISIONS
1. Applicability.
T.C.A. § 67-4-603(b)(1) did not apply where appellant was not challenging litigation taxes assessed against appellant originating from the original criminal conviction. Fletcher v. State, 9 S.W.3d 103, 1999 Tenn. LEXIS 678 (Tenn. 1999).
67-4-604. Courts to which tax applies.
-
The privilege tax levied by § 67-4-602 shall be applicable to the supreme court and to the following courts, except as stated in subsection (b):
- Court of appeals;
- Chancery court;
- Circuit court;
- Criminal court;
- Probate court;
- Court of law and equity;
- County court;
- Court of general sessions;
- Trial justice court;
- Magistrate court;
- City court; and
- Any other inferior court as the general assembly shall from time to time ordain and establish, either presently in existence or created later; provided, however, that, notwithstanding any provision of this section, this part or any other law to the contrary, privilege taxes levied by § 67-4-602, shall not be applicable to a proceeding in any municipal court, unless, and only to the extent that, the proceeding necessitates exercise of the court's duly conferred concurrent general sessions jurisdiction.
-
The privilege tax levied by § 67-4-602 shall not be due in any of the following proceedings:
- Any original proceeding in a juvenile court, as such court is defined in § 37-1-102, when such court exercises the jurisdiction granted by title 37, chapter 1; provided, that no proceeding in a court, which court exercises the jurisdiction granted by title 37, chapter 1, shall be exempt when the proceeding is brought pursuant to any jurisdiction other than that granted by title 37, chapter 1; or
- Any hearing before the Tennessee board of judicial conduct.
Acts 1981, ch. 488, § 1; 1982, ch. 725, § 1; 1983, ch. 426, § 1; 1983, ch. 449, §§ 1, 2, 4; T.C.A., § 67-4102, Item J; Acts 1999, ch. 502, § 2; 2004, ch. 914, § 6(h); 2012, ch. 819, § 4.
Compiler's Notes.
Acts 2012, ch. 819, § 5, which amended subdivision (b)(2), provided that, in order to carry out its functions, duties, and responsibilities maintained under this chapter, the court of the judiciary shall retain and have the authority to exercise any and all of its powers and duties existing under title 17 prior to enactment of this act, including, but not limited to, the power to subpoena, the power to take evidence, and the power to examine. Upon the termination of the court of the judiciary, the board of judicial conduct is expressly granted the same powers and duties as set forth above for the court of the judiciary in order to carry out its responsibilities established this chapter. The board of judicial conduct also is expressly authorized to continue any preliminary investigations, full investigations, and/or trials scheduled or in progress by the court of the judiciary at the time of termination of the court of the judiciary. This authorization includes the right to use any evidence obtained or taken by the court of the judiciary without the need to obtain again or retake any such evidence, including, but not limited to, prior issued subpoenas.
Acts 2012, ch. 819, § 6, which amended subdivision (b)(2), provided that: (a) All rules of the court of the judiciary in effect on July 1, 2012, of this section shall remain in full force and effect as rules of the board of judicial conduct until modified or repealed by the board of judicial conduct.
The initial rules adopted by the board of judicial conduct shall serve as the temporary rules of the board. The temporary rules shall remain in effect until such time as approved or not approved by the general assembly, with the board's chairperson presenting the rules, during the first session of the One Hundred Eighth General Assembly using the same procedure set out in § 16-3-404 for rules of court. If approved, the rules shall become the permanent rules of the board. All subsequent modifications or additions to such rules shall be approved by the general assembly in accordance with the procedures set forth in § 16-3-404.
Cross-References. General sessions courts, litigation tax for state, § 16-15-5007.
67-4-605. Liability of clerks for uncollected taxes.
-
- Any privilege tax imposed by § 67-4-602 that the clerk of the court fails to collect and pay over to the department of revenue shall be a debt of the clerk.
- Any privilege tax imposed by § 67-4-602 that the clerk of any city court fails to collect and pay over to the department shall be a debt of the clerk.
- The failure of the clerk of the supreme court or the clerk of the court of appeals to collect and pay over to the department any privilege tax imposed by § 67-4-602 shall not be a debt of the county.
- Any clerk of the court failing or refusing to collect and pay over to the department the tax imposed by § 67-4-602 shall be liable for the tax and the clerk's official bondsman shall also be liable for the tax and the commissioner or the commissioner's delegate may collect the amount of the tax from the clerk or the clerk's official bondsman pursuant to chapter 1, part 14 of this title.
- If the judge of any court suspends, releases, waives, remits or orders the clerk of the court not to collect any privilege tax on litigation, or in any other manner releases any party from liability for any privilege tax on litigation, the clerk of the court shall immediately report such suspension, release, waiver, remission, or order to not collect such tax, to the department in such manner as shall be prescribed by the department, and the commissioner or the commissioner's delegate shall immediately, upon receipt of such a report from any clerk of a court, present such information to the board of judicial conduct, which court shall take appropriate action pursuant to title 17, chapter 5. The commissioner or the commissioner's delegate shall also report such information to the council on pensions and insurance.
Acts 1981, ch. 488, § 1; 1982, ch. 725, § 1; 1983, ch. 426, § 1; 1983, ch. 449, §§ 1, 2, 4; T.C.A., § 67-4102, Item J; Acts 2012, ch. 819, § 4.
Compiler's Notes.
Acts 2012, ch. 819, § 5, which amended subsection (c), provided that, in order to carry out its functions, duties, and responsibilities maintained under this chapter, the court of the judiciary shall retain and have the authority to exercise any and all of its powers and duties existing under title 17 prior to enactment of this act, including, but not limited to, the power to subpoena, the power to take evidence, and the power to examine. Upon the termination of the court of the judiciary, the board of judicial conduct is expressly granted the same powers and duties as set forth above for the court of the judiciary in order to carry out its responsibilities established this chapter. The board of judicial conduct also is expressly authorized to continue any preliminary investigations, full investigations, and/or trials scheduled or in progress by the court of the judiciary at the time of termination of the court of the judiciary. This authorization includes the right to use any evidence obtained or taken by the court of the judiciary without the need to obtain again or retake any such evidence, including, but not limited to, prior issued subpoenas.
Acts 2012, ch. 819, § 6, which amended subsection (c), provided that: (a) All rules of the court of the judiciary in effect on July 1, 2012, of this section shall remain in full force and effect as rules of the board of judicial conduct until modified or repealed by the board of judicial conduct.
The initial rules adopted by the board of judicial conduct shall serve as the temporary rules of the board. The temporary rules shall remain in effect until such time as approved or not approved by the general assembly, with the board's chairperson presenting the rules, during the first session of the One Hundred Eighth General Assembly using the same procedure set out in § 16-3-404 for rules of court. If approved, the rules shall become the permanent rules of the board. All subsequent modifications or additions to such rules shall be approved by the general assembly in accordance with the procedures set forth in § 16-3-404.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
Attorney General Opinions. A general sessions court clerk need not make an immediate report to the department of revenue and the department, in turn, to the court of the judiciary (now Tennessee board of judicial conduct) whenever a general sessions judge suspends litigation taxes for an indigent criminal defendant in accordance with statute, OAG 02-063 (5/16/02).
T.C.A. § 67-4-605(b), which makes a clerk personally liable for failing or refusing to collect and pay over litigation taxes, has no application to a clerk who fails to comply with T.C.A. § 67-4-605(c), OAG 02-063 (5/16/02).
67-4-606. Apportionment of revenue.
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The privilege tax collected under this part shall be paid into the state treasury and the proceeds shall be divided as follows:
- Three hundred twenty ten thousandths percent (0.0320%) of the proceeds shall be deposited in a fund established for the operation of the Tennessee corrections institute. This amount shall not revert to the state general fund and shall not be subject to impoundment or allotment reserve, but shall be managed on a revolving non-quarter basis;
-
Four and four thousand four hundred thirty ten thousandths percent (4.4430%) of the proceeds shall be credited to a separate reserve account in the general fund, to be used only by the departments of education and safety to promote and expand driver education through the public schools of this state, and to promote safety on the highways, subject to the general law with respect to the allocation of funds by the commissioner of finance and administration as follows:
- Seventy-five percent (75%) of the amount provided for in this subdivision (a)(2) shall be allocated to the department of education to be used only for the purposes as set forth in this subdivision (a)(2); and
- Twenty-five percent (25%) of the amount provided for in this subdivision (a)(2) shall be allocated to the department of safety to be used only for the purposes as set forth in this subdivision (a)(2);
- Thirty-two and one thousand five hundred two ten thousandths percent (32.1502%) of the proceeds shall be allocated to the general fund;
- Six thousand five hundred fifty-three ten thousandths percent (0.6553%) of the proceeds shall be held in the state treasury and disbursed only upon request of the administrative director of the courts and used only for the purpose of funding the state court clerks' conference established in § 18-1-501. No state funds shall be obligated or expended pursuant to this section for the purpose of funding the state court clerk's conference, unless such meeting is held in a state facility when practical. In the event it is not practical to hold such meeting in a state park, the reasons and cost therefor must be set forth in writing by the affected agency head and shall be forwarded to the commissioner of finance and administration;
- Eight thousand four hundred six ten thousandths percent (0.8406%) of the proceeds shall be allocated to the victims of crime assistance fund, created pursuant to § 9-4-205;
- Twenty-four and twenty ten thousandths percent (24.0020%) of the proceeds shall be allocated to the criminal injuries compensation fund;
- One and three thousand seven hundred fifty-five ten thousandths percent (1.3755%) of the proceeds shall be allocated to the victims of drunk drivers compensation fund;
- Three and seven thousand six hundred fifty-three ten thousandths percent (3.7653%) of the proceeds shall be transferred to the state treasury and used entirely to fund § 40-14-207;
- Five thousand five hundred twenty-nine ten thousandths percent (0.5529%) of the proceeds shall be credited to the account of the administrative director of the courts, to be used to defray the expenses of serving the general sessions courts and the Tennessee general sessions judges' conference;
- Nineteen and two thousand nine hundred two ten thousandths percent (19.2902%) of the proceeds shall be transferred to the state treasurer, who shall credit that amount to the public defender program;
- Seven and four thousand seven hundred one ten thousandths percent (7.4701%) of the proceeds shall be credited to the civil legal representation of indigents fund, authorized and created under § 16-3-808;
- Two and three thousand fifty-six ten thousandths percent (2.3056%) of the proceeds shall be deposited in the state general fund and earmarked for grants to local governments for the purchase and maintenance of and line charges for electronic fingerprint imaging systems. These grants shall be awarded and administered by the office of criminal justice in the department of finance and administration. The general assembly may appropriate a portion of the earmarked funds derived from this subdivision (a)(12) to the Tennessee bureau of investigation for the purchase, installation, maintenance, and line charges for electronic fingerprint imaging systems. Prior to the purchase of any electronic fingerprint imaging system, a law enforcement agency or local government shall obtain certification from the Tennessee bureau of investigation that such equipment is compatible with the Tennessee bureau of investigation's and the federal bureau of investigation's integrated automated fingerprint identification system;
- Three thousand four hundred twenty-six ten thousandths percent (0.3426%) of the proceeds shall be credited to the sex offender treatment fund, created pursuant to § 39-13-708; and
- Two and seven thousand seven hundred forty-seven ten thousandths percent (2.7747%) of the proceeds shall be credited to a separate reserve account in the general fund, to be used only by the department of education to promote and expand driver education through the public schools of this state.
- Notwithstanding any provision of this section to the contrary, the total amount allocated to a fund or program for any fiscal year pursuant to subsection (a), except the general fund, shall not be less than the amount allocated to such fund or program during the fiscal year ending June 30, 2005; provided, that, if the statewide amount of litigation tax collected during such fiscal year is less than the amount collected during the fiscal year ending June 30, 2005, then the total amount allocated to a fund or program for that fiscal year shall be reduced by a percentage equal to the percentage reduction in statewide litigation tax collections for that fiscal year.
Acts 1981, ch. 488, § 1; 1982, ch. 725, § 1; 1983, ch. 426, § 1; 1983, ch. 449, §§ 1, 2, 4; T.C.A., § 67-4102, Item J; Acts 1986, ch. 880, § 4; 1987, ch. 54, § 16; 1987, ch. 110, § 5; 1992, ch. 761, §§ 7, 8; 1993, ch. 66, § 73; 1998, ch. 946, §§ 1, 2; 2000, ch. 983, § 6; 2005, ch. 429, § 26; 2006, ch. 989, §§ 4, 5; 2007, ch. 234, §§ 1, 2.
Compiler's Notes. Acts 2006, ch. 989, § 17 provided that §§ 1-14 of the act shall apply to funds remitted to the department of revenue on or after August 1, 2006.
Acts 2007, ch. 234, § 3 provided that the act shall apply to funds remitted to the department of revenue on or after August 1, 2007.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
Part 7
Business Tax Act
67-4-701. Short title — Nature of tax — Legislative intent.
- This part shall be known and may be cited as the “Business Tax Act” and the taxes imposed by this part shall be in addition to all other privilege taxes.
- It is the legislative intent that the taxes imposed by this part shall be in lieu of any or all ad valorem taxes on the inventories of merchandise held for sale or exchange by persons taxable under this part.
- It is the legislative intent, within the framework of this part, to recognize that there are limitations upon state taxation imposed by the constitutions of the United States and of this state and not to impose the tax where prohibited by the constitutions; but it is intended to impose that tax to the extent permitted under such constitutions and the words of imposition used in this section.
Acts 1971, ch. 387, §§ 1, 21; 1972, ch. 850, § 1; T.C.A., §§ 67-5801, 67-5820; Acts 1984, ch. 832, § 26.
Cross-References. Insurance taxes, title 56, ch. 4, part 2.
Professional boxing, sparring or wrestling match gross receipt tax, § 68-115-208.
Textbooks. Tennessee Jurisprudence, 16 Tenn. Juris., Intoxicating Liquors, § 7; 17 Tenn. Juris., Licenses, § 4; 23 Tenn. Juris., Taxation, § 77.
Law Reviews.
Selected Issues in State Business Taxation (Walter Hellerstein), 39 Vand. L. Rev. 1033 (1986).
Attorney General Opinions. Municipality's imposition of permit fees on flea market operators and dealers, OAG 97-057 (4/28/97).
Application of Business Tax Act to jewelry and apparel show promoter and vendors, OAG 97-108 (8/01/97).
Cited: Brentwood Liquors Corp. v. Fox, 496 S.W.2d 454, 1973 Tenn. LEXIS 469 (Tenn. 1973); Worrall v. Kroger Co., 545 S.W.2d 736, 1977 Tenn. LEXIS 606 (Tenn. 1977); State ex rel. Polin v. Hill, 547 S.W.2d 916, 1977 Tenn. LEXIS 570 (Tenn. 1977); Town of Algood v. Mid-South Pavers, Inc., 569 S.W.2d 848, 1978 Tenn. App. LEXIS 297 (Tenn. Ct. App. 1978); Art Pancake's United Rent-All v. Ferguson, 601 S.W.2d 926, 1979 Tenn. App. LEXIS 396 (Tenn. Ct. App. 1979); Smith v. Pigeon Forge, 600 S.W.2d 231, 1980 Tenn. LEXIS 465, 1980 Tenn. LEXIS 466 (Tenn. 1980); Arkansas-Best Freight System, Inc. v. Cochran, 546 F. Supp. 915, 1982 U.S. Dist. LEXIS 18281 (M.D. Tenn. 1982); CSX Transp., Inc. v. Tennessee State Bd. of Equalization, 964 F.2d 548, 1992 U.S. App. LEXIS 10646 (6th Cir. 1992).
NOTES TO DECISIONS
1. Authority to Tax.
A state may not lay a tax on the privilege of engaging in interstate commerce under the commerce clause; however, a state may impose a tax if there is a sufficient local incident on which to base the tax. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).
A number of United States supreme court decisions have addressed constitutional limitations on state taxation of the privilege of engaging in businesses which make sales with interstate aspects, and these decisions are relevant in determining legislative intent regarding the extent to which the Business Tax Act can reach transactions that have interstate elements. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).
2. Construction with Other Sections.
Section 67-5-901 and this section must be read in pari materia as they are written pari materia. Dixie Rents, Inc. v. City of Memphis, 594 S.W.2d 397, 1979 Tenn. App. LEXIS 376 (Tenn. Ct. App. 1979); Coble Systems, Inc. v. Armstrong, 660 S.W.2d 802, 1983 Tenn. App. LEXIS 628 (Tenn. Ct. App. 1983).
3. Liberal Construction.
In determining whether one is included within or excluded from the ambit of a tax statute, doubt should be resolved in favor of the taxpayer and against the taxing authority. Hermitage Mem. Gardens Mausoleum & Mem. Chapel, Inc. v. Dunn, 541 S.W.2d 147, 1976 Tenn. LEXIS 538 (Tenn. 1976).
4. Alcoholic Beverages.
This section does not repeal § 57-3-501 by implication since § 57-3-501 is a fee while this is an ad valorem tax. Memphis Retail Liquor Dealers' Asso. v. Memphis, 547 S.W.2d 244, 1977 Tenn. LEXIS 555 (Tenn. 1977).
Although § 57-3-504 provides that no municipality shall impose any other inspection fee or similar tax upon the sale of alcohol, the general assembly was not prevented from subsequently imposing a privilege tax on the same activity as provided for in § 67-4-708. Memphis Retail Liquor Dealers' Asso. v. Memphis, 547 S.W.2d 244, 1977 Tenn. LEXIS 555 (Tenn. 1977).
5. Double Taxation.
The legislature clearly stated that the privilege tax authorized under the Business Tax Act “shall be in addition to all other privilege taxes,” and thereby expressed its intent to allow double taxation by those counties and municipalities which elected to tax under the Business Tax Act and under other constitutionally permissible acts. Stalcup v. City of Gatlinburg, 577 S.W.2d 439, 1978 Tenn. LEXIS 696 (Tenn. 1978).
In enforcing taxation of gross receipts tax under Private Acts 1955, ch. 328, the city was enforcing permissible double taxation on the privilege of doing business in that city. Stalcup v. City of Gatlinburg, 577 S.W.2d 439, 1978 Tenn. LEXIS 696 (Tenn. 1978).
The clear meaning of the language of this section and § 67-4-704 is that a city or county may levy a privilege tax under the Business Tax Act not in excess of the rates therein established, and a tax so levied shall be in addition to all other constitutionally permissible privilege taxes levied by that city or county under any other act. Stalcup v. City of Gatlinburg, 577 S.W.2d 439, 1978 Tenn. LEXIS 696 (Tenn. 1978).
6. Constitutional Amendment of 1973.
One of the purposes of the constitutional amendment of 1973 was to prevent repressive taxation whereby unsold inventories of merchants, who most likely had to borrow funds at substantial interest rates to obtain those inventories, would be taxed on an ad valorem basis while such inventories remained unsold in these merchants' hands and also taxed again by a gross receipts tax when sold. Dixie Rents, Inc. v. City of Memphis, 594 S.W.2d 397, 1979 Tenn. App. LEXIS 376 (Tenn. Ct. App. 1979).
7. Inventories Held by Rental Merchants.
The constitutional and statutory intent of Tenn. Const., art. II, § 28 is to substitute the gross receipts tax of the Business Tax Act for the Property Tax Act's ad valorem tax on inventories of merchandise; and there is no basis for discrimination between inventories of merchandise held by rental merchants and those held by other retail merchants. Dixie Rents, Inc. v. City of Memphis, 594 S.W.2d 397, 1979 Tenn. App. LEXIS 376 (Tenn. Ct. App. 1979); Eastman Kodak Co. v. Garrett, 671 S.W.2d 474, 1983 Tenn. App. LEXIS 684 (Tenn. Ct. App. 1983).
The holding in Dixie Rents, Inc. v. City of Memphis 594 S.W.2d 397, 1979 Tenn. App. LEXIS 376 (Tenn. Ct. App. 1979), that a merchant taxable under the Business Tax Act (§ 67-4-701 et seq.) may not also be subjected to ad valorem property taxes, with respect to leased property of the merchant, applied not only to property in possession of the lessor, but also to property in the possession of the lessee. Eastman Kodak Co. v. Garrett, 671 S.W.2d 474, 1983 Tenn. App. LEXIS 684 (Tenn. Ct. App. 1983).
8. Exemption from Personal Property Ad Valorem Tax.
Where party was subject to business tax under this section, its inventory which was used for rental purposes was exempt from personal property ad valorem tax levied by the county or municipality. Art Pancake's United Rent-All v. Ferguson, 601 S.W.2d 926, 1979 Tenn. App. LEXIS 396 (Tenn. Ct. App. 1979).
When a lessor has paid business taxes on lease income, the lessor is exempt from property taxes on the value of the leased goods. IBM Credit Corp. v. County of Hamilton, 830 S.W.2d 77, 1992 Tenn. App. LEXIS 65 (Tenn. Ct. App. 1992).
9. Situs of Taxation.
Leased personal property located in one city and/or county cannot be subjected to personal property ad valorem taxes in that city and/or county, when the rental receipts from this leased property have been included in computing the business tax paid by the owner in another city and/or county. Coble Systems, Inc. v. Armstrong, 660 S.W.2d 802, 1983 Tenn. App. LEXIS 628 (Tenn. Ct. App. 1983).
Collateral References. Taxation 371
67-4-702. Part definitions.
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As used in this part, unless the context otherwise requires:
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“Affiliated business entity” means a business entity:
- In which the taxpayer, directly or indirectly, has more than fifty percent (50%) ownership interest;
- That, directly or indirectly, has more than fifty percent (50%) ownership interest in the taxpayer; or
- In which a person described in subdivision (a)(1)(B) directly or indirectly has more than fifty percent (50%) ownership interest. For purposes of this subdivision (a)(1)(C), a noncorporate entity is more than fifty-percent owned if upon liquidation more than fifty percent (50%) of the assets of the noncorporate entity directly or indirectly accrue to the entity having the ownership interest;
- “Business” includes any activity engaged in by any person, or caused to be engaged in by the person, with the object of gain, benefit, or advantage, either direct or indirect. “Business” does not include occasional and isolated sales or transactions by a person not routinely engaged in business. “Business” does not include an individual property owner who utilizes a property management company to manage a vacation lodging for overnight rentals; provided, however, that “business” shall include any other activity of such individual property owner that is subject to any tax levied by this part;
- “Commissioner” means the commissioner of revenue or the commissioner's duly authorized assistants, except as otherwise provided in this part;
- “Department” means the department of revenue, except as otherwise provided in this part;
- “Dominant business activity” means the business activity that is the major and principal source of taxable gross sales of the business;
- “Fabricating or processing tangible personal property for resale” includes only tangible personal property that is fabricated or processed for ultimate use or consumption off the premises of the one engaging in such fabricating or processing;
- “Gross sales” means the sum total of all sales under this part as defined in this section, without any deduction whatsoever of any kind or character, except as provided in this part;
- “Individual property owner” means a person who owns a vacation lodging;
- “Inventories of merchandise held for sale or exchange” includes tangible personal property held by a merchant or business for lease or rental, but does not include such property in the possession of a lessee;
- “Lease or rental” means the leasing or renting of tangible personal property and the possession or use of the property by the lessee or renter for a consideration, without transfer of the title of such property;
- “Natural gas marketer” means any business that is not regulated as to rates and services by the Tennessee public utility commission; that provides natural gas to customers located within this state through the procurement and shipping or transportation of such natural gas, and any ancillary services thereto; and that is required by the Federal Energy Regulatory Commission to take title to the natural gas, pursuant to Federal Energy Regulatory Commission Order No. 636-A, 57 Fed. Reg. 36128 (1992), in connection with the sale of such gas to its customers;
- “Overnight rentals” means rental of a vacation lodging to one (1) or more individuals for temporary human lodging not to exceed a period of one hundred eighty (180) consecutive days; provided, however, that a tenancy or lease to an individual who has no other place of residence or abode during the lease period to which such individual may return after the lease terminates is not “overnight rentals”;
- “Person” includes any individual, firm, partnership, joint venture, association, corporation, estate, trust, business trust, receiver, syndicate, or other group or combination acting as a unit, and the plural as well as the singular number;
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“Property management company ” means a person who, for consideration, manages a vacation lodging for an individual property owner that provides such lodging for a rental fee to consumers;
(15 ) “Resale” means a subsequent, bona fide sale of the property, services or taxable item by the purchaser. “Sale for resale” means the sale of the property, services, or taxable item intended for subsequent resale by the purchaser. Any sales for resale shall, however, be in strict compliance with rules and regulations promulgated by the commissioner. Sales of tangible personal property or taxable services made by a dealer to an out-of-state vendor who directs that the dealer act as the out-of-state vendor's agent to deliver or ship tangible personal property or taxable services to the out-of-state vendor's customer, who is a user or consumer, are sales for resale;
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“Sale” does not include the transfer of tangible personal property from a wholesaler to another wholesaler or from a retailer to another retailer where the amount paid by the transferee to the transferor does not exceed the transferor's cost including freight in and storage costs, and transportation costs incurred in the transfer from the transferor to the transferee;
“Sales price” means the total amount for which tangible personal property or services rendered is sold, including any services that are a part of the sale, valued in money, whether paid in money or otherwise, and includes any amount for which credit is given to the purchaser by the seller, without any deduction from the price on account of the cost of the property sold, the cost of materials used, labor or service cost, losses, or any other expense whatsoever; provided, that “sales price” does not include any additional consideration given by the purchaser for the privilege of making deferred payments, regardless of whether such additional consideration shall be known as interest, time price differential on conditional sales contracts, carrying charges or any other name by which it shall be known, and does not include any additional consideration received by a motor vehicle dealer from a lender for the sale or assignment to the lender of a chattel lease or conditional sales contract. “Sales price” for services rendered by a person for an affiliated business entity does not include any amount that is accounted for as a reasonable allocation of cost incurred in providing the service. “Sales price” does not include any advertising cost paid by a seller to an auctioneer for the purpose of advertising an auction, when no portion of such payment is retained as profit by the auctioneer, and when such payment has been placed in an escrow or a trust account by the auctioneers on behalf of the seller;
(A) “Seller” means every consignee, bailee, factor or auctioneer having either actual or constructive possession of tangible personal property, or having possession of the documents of title to tangible personal property, with power to sell such tangible personal property in the consignee's, bailee's, factor's or auctioneer's own name and actually so selling, is deemed the seller of such tangible personal property within the meaning of this part; and further, the consignor, bailor, principal or owner is deemed the seller of such tangible personal property to the consignee, bailee, factor or auctioneer;
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The burden shall be upon the taxpayer in every case to establish the fact that the taxpayer is not engaged in the business of selling tangible personal property, but is acting merely as broker or agent in promoting sales for a principal. Such claim will be allowed only when the taxpayer's accounting records are kept in such manner as the commissioner shall by regulation provide;
“Services” means and includes every activity, function or work engaged in by a person for profit or monetary gain, except as otherwise provided in this part. Services for profit or monetary gain does not include services rendered by a person for an affiliated business entity; provided, that the services are accounted for as allocations of cost incurred in providing the service without any markup whatsoever. “Services” does not include sales of tangible personal property;
(A) “Substantial nexus in this state” means any direct or indirect connection of the taxpayer to this state such that the taxpayer can be required under the Constitution of the United States to remit the tax imposed under this part. Such connection includes, but is not limited to, any of the following:
- The taxpayer is organized or commercially domiciled in this state;
- The taxpayer owns or uses its capital in this state;
- The taxpayer has systematic and continuous business activity in this state that has produced gross receipts attributable to customers in this state; or
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The taxpayer has bright-line presence in this state. A person has bright-line presence in this state for a tax period if any of the following applies:
- The taxpayer's total receipts in this state during the tax period, as determined consistent with § 67-4-2012, exceed the lesser of five hundred thousand dollars ($500,000) or twenty-five percent (25%) of the taxpayer's total receipts everywhere during the tax period;
- The average value of the taxpayer's real and tangible personal property owned or rented and used in this state during the tax period, as determined consistent with § 67-4-2012, exceeds the lesser of fifty thousand dollars ($50,000) or twenty-five percent (25%) of the average value of all the taxpayer's total real and tangible personal property; or
- The total amount paid in this state during the tax period by the taxpayer for compensation, as determined consistent with § 67-4-2012, exceeds the lesser of fifty thousand dollars ($50,000) or twenty-five percent (25%) of the total compensation paid by the taxpayer;
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Notwithstanding subdivision (a)(22)(A), no company that is treated as a foreign corporation under the Internal Revenue Code and that has no income effectively connected with a United States trade or business shall be considered to have a “substantial nexus in this state.” For these purposes, whether a company has income effectively connected with a United States trade or business shall be determined in accordance with the Internal Revenue Code;
“Tangible personal property” means and includes personal property that may be seen, weighed, measured, felt or touched, or is in any other manner perceptible to the senses. “Tangible personal property” does not include stocks, bonds, notes, insurance or other obligations or securities, nor does it include any materials, substances or other items of any nature inserted or affixed to the human body by duly licensed physicians or dentists or otherwise dispensed by them in the treatment of patients;
“Transient vendor” means any person who brings into temporary premises and exhibits stocks of merchandise to the public for the purpose of selling or offering to sell the merchandise to the public. “Transient vendor” does not include any person selling goods by sample, brochure or sales catalog for future delivery; or to sales resulting from the prior invitation to the seller by the owner or occupant of a residence. For purposes of this definition, “merchandise” means any consumer item that is or is represented to be new or not previously owned by a consumer, and “temporary premises” means any public or quasi-public place, including a hotel, rooming house, storeroom, building or part of a building, tent, vacant lot, railroad car or motor vehicle that is temporarily occupied for the purpose of exhibiting stocks of merchandise to the public. Premises are not temporary if the same person has conducted business at those premises for more than six (6) consecutive months or has occupied the premises as the person's permanent residence for more than six (6) consecutive months;
(A) “Wholesale sale” or “sale at wholesale” means any sale to a retailer for resale;
“Vacation lodging” means real property, other than the primary and regular residence or abode of an individual property owner, that is utilized, or can be utilized, for overnight rentals in the absence of the individual property owner;
- “Wholesale sale” or “sale at wholesale” includes the sale of industrial materials for future processing, manufacture or conversion into articles of tangible personal property for resale where the industrial materials become a component part of the finished product. This subdivision (a)(26)(B) shall not apply to raw or unprocessed agricultural products;
- “Wholesale sale” or “sale at wholesale” includes the sale by a wholesaler of tangible personal property to the state of Tennessee or any county or municipality or subdivision thereof, or the sale to any religious, educational or charitable institution as defined in § 67-6-322; and
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“Wholesale sale” or “sale at wholesale” includes the sale by a franchised motor vehicle dealer to a manufacturer or distributor of motor vehicles or an obligor under an extended service contract of parts or repair services, or both, necessary for repairs performed by the dealer under the manufacturer's, distributor's or obligor's warranty, and also includes predelivery inspection charges paid to a franchised motor vehicle dealer by a manufacturer or distributor of the motor vehicle; and
“Wholesaler” means any person primarily engaged in the business of making wholesale sales. For purposes of this subdivision (a)(26), “primarily” means that more than fifty percent (50%) of the taxable gross sales of the business are wholesale sales.
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“Sale” does not include the transfer of tangible personal property from a wholesaler to another wholesaler or from a retailer to another retailer where the amount paid by the transferee to the transferor does not exceed the transferor's cost including freight in and storage costs, and transportation costs incurred in the transfer from the transferor to the transferee;
-
“Affiliated business entity” means a business entity:
- In any county where a metropolitan government prevails, the general services district constitutes the county and the urban services district, as well as any incorporated towns therein, constitutes the municipalities insofar as this part is concerned.
“Retail sale” or “sale at retail” means any sale other than a wholesale sale;
“Retailer” means any person primarily engaged in the business of making retail sales. For purposes of this subdivision (a)(17), “primarily” means that at least fifty percent (50%) of the taxable gross sales of the business are retail sales;
(A) (i) “Sale” means any transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise, in any manner or by any means whatsoever of tangible personal property for a consideration, and includes the fabrication of tangible personal property for consumers who furnish, either directly or indirectly, the materials used in fabrication work, and the furnishing, repairing or servicing for a consideration of any tangible personal property consumed on the premises of the person furnishing, preparing or serving such tangible personal property;
A transaction whereby the possession of property is transferred but the seller retains title as security for the payment of the price is deemed a sale;
“Sale” includes the furnishing of any of the things or services taxable under this part;
Acts 1971, ch. 387, §§ 2, 4, 22; 1972, ch. 850, §§ 2, 4; 1982, ch. 844, § 1; 1983, ch. 386, § 7; 1983, ch. 466, §§ 3-7; T.C.A., §§ 67-5802, 67-5804, 67-5821; Acts 1984, ch. 563, § 1; 1986, ch. 699, § 1; 1988, ch. 726, § 1; 1988, ch. 941, §§ 1, 3; 1990, ch. 1075, §§ 4, 5; 2000, ch. 920, § 1; 2001, ch. 224, §§ 1, 2; 2001, ch. 386, § 1; 2004, ch. 592, §§ 11, 12; 2004, ch. 924, §§ 8, 15; 2009, ch. 530, § 69; 2014, ch. 942, § 1; 2015, ch. 514 § 3; 2017, ch. 94, § 82.
Compiler's Notes. Acts 2000, ch. 920, § 2 provided that (a)(19)(D) (now (a)(24)(D)) shall apply to all taxes imposed pursuant to this part, but not collected on July 1, 2000.
Acts 2001, ch. 386, § 2, provided that the amendment of (a)(13) (now (a)(18)) is declaratory of existing law in the state of Tennessee and merely codified the existing policies.
Acts 2004, ch. 924, § 19 provided that the amendment by §§ 8, 9, and 15 of that act shall apply to all tax periods for which returns were required to be filed on or after January 1, 2001.
Acts 2014, ch. 942, § 8 provided that the act shall apply to tax periods that begin on or after July 1, 2014.
Acts 2015, ch. 514, § 1 provided that the act shall be known and may be cited as the “Revenue Modernization Act”.
For the Preamble to the act concerning the need to modernize the sales and use taxes, franchise and excise taxes and business tax in the state to address the engagement in business within the state by out-of-state companies, see Acts 2015, ch. 514.
Acts 2015, ch. 514, § 31 provided that the act, which amended (a), shall apply to all tax years beginning on or after January 1, 2016.
Amendments. The 2014 amendment added the definition of “natural gas marketer”.
The 2015 amendment added the definition of “Substantial nexus in this state”.
The 2017 amendment substituted “Tennessee public utility commission” for “Tennessee regulatory authority” in the definition of “natural gas marketer”.
Effective Dates. Acts 2014, ch. 942, § 8. July 1, 2014.
Acts 2015, ch. 514, § 31. January 1, 2016.
Acts 2017, ch. 94, § 83. April 4, 2017.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, §§ 4, 5.
Attorney General Opinions. Constitutionality, OAG 89-89 (5/30/89).
Licensing and taxation of hotels selling alcohol for consumption on the premises. OAG 16-05, 2016 Tenn. AG LEXIS 3 (2/9/2016).
Cited: Garaci v. City of Memphis, 379 F. Supp. 1393, 1974 U.S. Dist. LEXIS 8913 (W.D. Tenn. 1974); Hermitage Mem. Gardens Mausoleum & Mem. Chapel, Inc. v. Dunn, 541 S.W.2d 147, 1976 Tenn. LEXIS 538 (Tenn. 1976); Art Pancake's United Rent-All v. Ferguson, 601 S.W.2d 926, 1979 Tenn. App. LEXIS 396 (Tenn. Ct. App. 1979); Bartlett v. Sanders, 832 S.W.2d 546, 1991 Tenn. App. LEXIS 872 (Tenn. Ct. App. 1991); State v. Royston, — S.W.3d —, 2011 Tenn. Crim. App. LEXIS 910 (Tenn. Crim. App. Dec. 13, 2011).
NOTES TO DECISIONS
1. Sale.
In a tax refund case, the appellate court agreed with a taxpayer that its dominant business activity was as a seller of glass. Because the majority of gross sales for the taxpayer were attributable to sales of glass, as opposed to sales of services, the chancery court did not err in concluding that Classification 1(B), which included persons making sales of glass, rather than Classification 3(C), was appropriate. Auto Glass Co. of Memphis v. Gerregano, — S.W.3d —, 2019 Tenn. App. LEXIS 156 (Tenn. Ct. App. Mar. 25, 2019).
2. —Transfer of Title.
Although this section defines a sale as including a transfer of title, it does not place any significance on the place of the transfer of title, and there is no explicit language in this section or the remainder of the act limiting the tax to transfers of title within the state. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).
3. Retail Sale.
Sales to the contractors that installed equipment purchased from the seller into homes and businesses as a component part of those structures constituted “retail sales,” that were taxable under the Business Tax Act, T.C.A. §§ 67-4-701 to 97-4-730, because the contractors did not process the equipment further, but merely installed it. Sec. Equip. Supply, Inc. v. Roberts, 520 S.W.3d 18, 2016 Tenn. App. LEXIS 889 (Tenn. Ct. App. Nov. 28, 2016).
67-4-703. Authority of commissioner — Rights and remedies of persons subject to taxes — Discretion of commissioner to transition administration of part from local to state level.
- The commissioner is authorized to collect and administer the taxes levied by this part. In collecting and administering these taxes, the commissioner shall have all of the powers and duties specified in § 67-1-102 and in chapter 1, parts 13 and 14 of this title.
- Any person subject to the taxes collected and administered by the commissioner under this part shall be entitled to the rights and remedies set out in § 67-1-110 and in chapter 1, part 18 of this title.
- For the period July 1, 2013, through December 31, 2014, the commissioner shall have broad discretion to transition the administration of this part from the local to the state level.
Acts 1971, ch. 387, §§ 17, 23; T.C.A., §§ 67-5817, 67-5822; Acts 2009, ch. 530, § 70; 2013, ch. 313, § 2.
Compiler's Notes. Acts 2013, ch. 313, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended this section, shall apply to tax periods that begin on or after January 1, 2014.
Amendments. The 2013 amendment, effective January 1, 2014, rewrote the first sentence and deleted the second sentence in (a) which read: “Except as otherwise specifically provided, the commissioner is authorized to collect and administer the tax levied by any county or incorporated municipality, or both, under this part. The commissioner is likewise authorized to collect and administer any tax levied by the state under this part.”; and substituted “July 1, 2013, through December 31, 2014,” for “July 1, 2009, through October 1, 2010,” at the beginning of (c).
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
Cited: Town of Algood v. Mid-South Pavers, Inc., 569 S.W.2d 848, 1978 Tenn. App. LEXIS 297 (Tenn. Ct. App. 1978).
67-4-704. Levy of state sales tax for privilege of making sales by engaging in any vocation, occupation, business or business activity — Tax on receipts from sales by direct-to-home satellite television programming services exempt.
- Except as otherwise provided in § 67-4-710, the making of sales by engaging in any vocation, occupation, business, or business activity enumerated, described, or referred to in § 67-4-708(1)-(5) is declared to be a privilege upon which a state tax is levied at the rates fixed and provided in § 67-4-709.
- Notwithstanding subsection (a) or any other provision to the contrary, the tax provided for in this section shall not be imposed on receipts from sales of any services or tangible personal property made by a provider of direct-to-home satellite television programming services.
Acts 1971, ch. 387, § 2; 1972, ch. 850, § 2; 1983, ch. 386, § 7; 1983, ch. 466, §§ 3-7; T.C.A., § 67-5802; Acts 2009, ch. 530, § 71; 2013, ch. 313, § 3.
Compiler's Notes. Acts 2013, ch. 313, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended this section, shall apply to tax periods that begin on or after January 1, 2014.
Amendments. The 2013 amendment, effective January 1, 2014, rewrote the section which read: “The making of sales by engaging in any vocation, occupation, business or business activity enumerated, described or referred to in § 67-4-708(1)-(4) or § 67-4-710 is declared to be a privilege upon which each county or incorporated municipality, or both, in which the business, business activity, vocation or occupation is carried on may levy a privilege tax in an amount not to exceed the rates fixed and provided in this part.”
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, §§ 4, 5.
Attorney General Opinions. Municipality's imposition of permit fees on flea market operators and dealers, OAG 97-057 (4/28/97).
Those cities and counties which have no business tax or which have levied the business tax at a rate less than the new maximum rate may later levy a business tax or increase the rate in accordance with the statute, so long as the rate imposed does not exceed the new maximum rate; the amounts collected under such a new levy which would have been collected under a levy at the same fraction of the old maximum rate must be distributed as they would have been under the old law, with 15 percent to be paid to the state and the remainder retained by the locality, and any additional amounts collected because of the new rates must be paid entirely to the state, OAG 02-084 (8/2/02).
A municipality and the county in which it is located may each levy the business tax at the maximum statutory rate without running afoul of any prohibition against double taxation, OAG 03-103 (8/19/03).
It is permissible for the legislature to allocate to the state a portion of the revenues from business taxes imposed by cities and counties, with the result that from businesses located within a city the state receives revenues based on both city and county business tax rates, while from businesses located outside any municipality the state receives revenues based on only the county business tax rate, OAG 04-017 (2/09/04).
Cited: Town of Algood v. Mid-South Pavers, Inc., 569 S.W.2d 848, 1978 Tenn. App. LEXIS 297 (Tenn. Ct. App. 1978); Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982); Hermitage Mem. Gardens Mausoleum & Mem. Chapel, Inc. v. Dunn, 541 S.W.2d 147, 1976 Tenn. LEXIS 538 (Tenn. 1976); Bartlett v. Sanders, 832 S.W.2d 546, 1991 Tenn. App. LEXIS 872 (Tenn. Ct. App. 1991).
NOTES TO DECISIONS
1. Construction.
The clear meaning of the language of § 67-4-701 and this section is that a city or county may levy a privilege tax under the Business Tax Act not in excess of the rates therein established, and a tax so levied shall be in addition to all other constitutionally permissible privilege taxes levied by that city or county under any other act. Stalcup v. City of Gatlinburg, 577 S.W.2d 439, 1978 Tenn. LEXIS 696 (Tenn. 1978).
The business of making sales of tangible personal property is a taxable privilege under this section and § 67-4-708 construed together. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).
2. Sales.
3. —Transfer of Title.
Although § 67-4-702 defines a sale as including a transfer of title, it does not place any significance on the place of the transfer of title, and there is no explicit language in § 67-4-702 or the remainder of the act limiting the tax to transfers of title within the state. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).
4. Leases.
Trial court properly granted summary judgment in favor of the Department of Revenue because, while the statutory term “sales of services” was ambiguous, the Department properly assessed a lessor for taxes on its gross receipts where the lessor's income was derived solely from its leases of trucks and trailers to a public-utility lessee, the applicable regulations, read in pari materia with the statutory phrase “sales of services” showed that the Legislature intended only to exempt those lessors providing services, not sales, and the lessor's business activity simply did not constitute a service. Najo Equip. Leasing, LLC v. Comm'r of Revenue, 477 S.W.3d 763, 2015 Tenn. App. LEXIS 240 (Tenn. Ct. App. Apr. 23, 2015), appeal denied, Najo Equip. Leasing, Inc. v. Comm'r of Revenue, — S.W.3d —, 2015 Tenn. LEXIS 890 (Tenn. Oct. 16, 2015).
67-4-705. Levy of local privilege tax for making sales by engaging in any vocation, occupation, business or business activity — Election to continue imposition of tax — Levy of tax by ordinance — Tax on receipts from sales by direct-to-home satellite television programming services exempt.
- The making of sales by engaging in any vocation, occupation, business, or business activity enumerated, described, or referred to in § 67-4-708(1)-(4) is declared to be a privilege upon which each incorporated municipality in which the vocation, occupation, business, or business activity is carried on, by ordinance of its governing body, may levy a privilege tax at the rates fixed and provided in § 67-4-709. The tax imposed by this subsection (a) shall be collected by the commissioner in the same manner as the tax imposed by § 67-4-704.
- Notwithstanding subsection (a) or any other provision to the contrary, every incorporated municipality levying such tax as of January 1, 2014, shall be deemed to have made an effective election to continue the imposition of such tax at the same rate that was in effect on such date and shall not be required to pass any additional ordinance. Any incorporated municipality that elects after January 1, 2014, to levy the tax authorized by this section, or elects to change the rate of tax imposed by the municipality, must levy such tax at the rates fixed and provided in § 67-4-709. Every municipality that levies the tax described in subsection (a) is authorized to repeal such tax by ordinance of its governing body.
- The making of sales by engaging in any vocation, occupation, business, or business activity enumerated, described, or referred to in § 67-4-710 is declared to be a privilege upon which each county or incorporated municipality, or both, in which the business, business activity, vocation, or occupation is carried on, by ordinance of its governing body, may levy a privilege tax at the rates fixed and provided in § 67-4-710.
- Notwithstanding subsection (a) or any other provision to the contrary, no incorporated municipality shall impose the tax provided for in this section on receipts from sales of any services or tangible personal property made by a provider of direct-to-home satellite television programming services.
Acts 1971, ch. 387, § 3; 1972, ch. 850, § 3; T.C.A., § 67-5803; Acts 2013, ch. 313, § 4.
Compiler's Notes. Acts 2013, ch. 313, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended this section, shall apply to tax periods that begin on or after January 1, 2014.
Amendments. The 2013 amendment, effective January 1, 2014, rewrote the section which read: “The engaging in any business, business activity, vocation or occupation in this part named, enumerated, described, or referred to in § 67-4-708(5), is declared to be a privilege for state purposes and taxable by the state alone.”
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 14.
Cited: National Gas Distrib., Inc. v. State, 804 S.W.2d 66, 1991 Tenn. LEXIS 67 (Tenn. 1991).
67-4-706. Registration of persons subject to taxes for purposes of filing returns and paying taxes — Designation of entity responsible for registrations.
- For purposes of filing the returns required by § 67-4-715 and paying the taxes levied by §§ 67-4-704 and 67-4-705, every person taxable under §§ 67-4-704 and 67-4-705 shall, prior to engaging in business as defined in § 67-4-702, register with the commissioner or the county clerk, in the case of businesses located within the county, and with the commissioner or the appropriate city official, in the case of businesses located within the incorporated municipality. Any person that is subject to the tax levied by § 67-4-704 but has no established physical location, outlet, or other place of business in the state shall register with the commissioner for purposes of this section.
- Any metropolitan government that has levied the taxes authorized by this part may, by resolution of its legislative body, designate the county clerk as the entity responsible for the registration of businesses for the entire metropolitan area.
- Subsection (a) notwithstanding, every person described in § 67-4-708(5) and taxable under § 67-4-709(5) shall, prior to engaging in business as defined in § 67-4-702, register with the commissioner in a manner prescribed by the commissioner.
Acts 1971, ch. 387, § 2; 1972, ch. 850, § 2; 1983, ch. 386, § 7; 1983, ch. 466, §§ 3-7; T.C.A., § 67-5802; Acts 1990, ch. 962, § 2; 2009, ch. 530, § 72; 2013, ch. 313, § 5.
Compiler's Notes. Acts 2013, ch. 313, § 1 provided that the act, which amended subsections (a) and (c), shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended subsections (a) and (c), shall apply to tax periods that begin on or after January 1, 2014.
Amendments. The 2013 amendment, effective January 1, 2014, rewrote (a) which read: “Every person taxable under this part shall, prior to engaging in business as defined in § 67-4-702, register with the county clerk, in the case of businesses located within the county, and with the city official designated as the register by city charter or ordinance, in the case of businesses located within the municipality.”; and substituted “described in § 67-4-708(5) and taxable under § 67-4-709(5)” for “taxable under §§ 67-4-705 and 67-4-709(5)” in (c).
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 4.
Cited: Bartlett v. Sanders, 832 S.W.2d 546, 1991 Tenn. App. LEXIS 872 (Tenn. Ct. App. 1991).
67-4-707. Bond for certain foreign businesses.
- Persons described in § 67-4-708(4)(A) who are domiciled in a state other than the state of Tennessee shall, upon making application for a business tax license, execute and file a bond to, or establish an escrow account with, the county or municipality. Such bond shall be executed by two (2) good and sufficient sureties, approved by the county or municipal clerk, or by a surety company duly authorized to do business in this state. Such bond or escrow account shall be in an amount sufficient to pay such person's anticipated business tax liability for the balance of the tax period for which such license applies, such liability to be determined by the county or municipal clerk, and may be called by the state in the event of failure by such person to pay such tax as may be due.
- Notwithstanding subsection (a), any county or municipality may, but shall not be required to, enter an agreement with the commissioner pursuant to which the bond or escrow account required by subsection (a) will be filed with the commissioner rather than the county or municipality.
Acts 1971, ch. 387, § 6; 1972, ch. 850, § 6; 1977, ch. 328, §§ 1, 2; 1978, ch. 714, § 4; 1978, ch. 781, § 1; 1979, ch. 325, § 1; 1981, ch. 308, § 1; 1983, ch. 394, § 3; 1983, ch. 415, § 1; T.C.A., § 67-5806; Acts 2009, ch. 530, § 73; 2013, ch. 313, § 6.
Compiler's Notes. Acts 2013, ch. 313, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended this section, shall apply to tax periods that begin on or after January 1, 2014.
Amendments. The 2013 amendment, effective January 1, 2014, added (b).
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
Cross-References. Actions on license bonds, § 67-4-112.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
67-4-708. Classifications.
Businesses, vocations and occupations that are taxable are set forth in the following classifications; provided, that each person shall be classified according to the dominant business activity:
-
Classification 1. Each person engaged in the business of making sales of the following:
- Food and/or beer as defined in § 57-6-102, generally destined for home preparation and consumption, except persons engaged in the business of selling delicatessens and candy at retail; and services performed by food brokers;
- Lumber, building materials, tools, builders' hardware, paint and glass, electrical supplies, roofing materials, farm equipment, plumbing, heating and air conditioning equipment, and other basic lines of hardware; and sales of tangible personal property by persons operating service stations, except sales covered by subdivision (1)(D);
- Hay, grain, feed, fertilizer, seeds, bulbs, nursery stock and other farm, lawn and garden supplies and tools;
- Gasoline, diesel fuel and motor oils sold at retail; or
- Gasoline and diesel fuel sold at wholesale.
-
Classification 2. Each person engaged in the business of making sales of the following:
- New or used motor vehicles, parts and accessories, tires, batteries, motor boats and other watercraft, marine supplies, outboard motors, mobile homes and campers, motorcycles and go-carts;
- Clothing, shoes, hats, underwear, and related articles for personal wear and adornment, except persons engaged in the business of selling at retail clothing to individual order;
- Home furnishings, including persons engaged in the business of selling at retail, radios, television sets, record players, high-fidelity and sound reproducing equipment, musical instruments, phonograph records, pianos and sheet music. This classification includes household furniture, floor coverings and related products, draperies, curtains, upholstery, china, glassware and metalware for kitchen and table use, miscellaneous home furnishings, such as brooms, brushes, lamps and shades, electric and gas refrigerators, stoves and other household appliances;
- Prescription drugs and patent medicines;
- Coal, wood, ice, fuel oil and liquefied petroleum gas;
- Tangible personal property not specifically enumerated or described elsewhere in this part;
- Prepared food and drinks, including alcoholic beverages, for consumption on and/or off the premises;
- Cut flowers and growing plants; or
- Advertising specialties;
-
Classification 3.
-
Each person engaged in the business of making sales of the following:
- Delicatessens and candy;
- Clothing made to individual order;
- Antique furniture, furnishings and objects of art;
- Books and magazines, stationery, accounting and legal forms, office forms and supplies, pens and pencils, school supplies and writing supplies;
- Sporting goods and equipment, bicycles, and bicycle parts and accessories;
- Any combination of the lines of jewelry, such as diamonds and other precious stones mounted in precious materials, as rings, bracelets and brooches, sterling and plated silverware, watches and clocks;
- Cigars, cigarettes, tobacco and smokers supplies;
- Toys, games, and hobby kits and supplies;
- Cameras, films, and other photographic supplies and equipment;
- Gift and novelty merchandise, souvenirs, and miscellaneous small art goods, such as greeting cards and holiday decorations; or
- Architectural supplies, artists' paints and supplies, artificial flowers, awnings, baby carriages, bait, banners, binoculars, coins, electric razors, fireworks, flags, gemstones, hearing aids, leather goods, luggage, optical supplies except for prescription eye-ware, including eyeglasses, contact lenses and other related tangible personal property, dispensed by an ophthalmologist or optometrist in conjunction with professional services rendered to patients, orthopedic and artificial limbs, pet foods, pets, piers and floats, rock and stone specimens, rubber stamps, stamps, swimming pools, telescopes, tents, theatre programs, trophies, trunks, typewriters, toupees, wiglets and wigs;
- Each person making sales from the operation of pawn shops;
-
Each person making sales of services or engaging in the business of furnishing or rendering services, except those described in subdivisions (3)(C)(i)-(xvi). It is the legislative intent that the exceptions in subdivisions (3)(C)(i)-(xvi) shall include the sales of services by those businesses or establishments so described in the Standard Industrial Classification Index of 1972, including all supplements and amendments prepared by the bureau of the budget of the federal government, except where otherwise provided:
- Medical, dental, and allied health services to human beings, including sanitorium, convalescent and rest home care, but excluding services by persons engaged in the business of making dentures and artificial teeth;
- Legal services;
- Educational services offered by elementary and secondary schools, colleges, universities, professional schools and junior colleges, library and information centers, correspondence schools, vocational schools and specialized nondegree granting schools;
- Services rendered by nonprofit membership organizations operating on a nonprofit membership basis for the promotion of the interest of the members;
- Domestic service performed in private households;
- Services furnished by nonprofit educational and research agencies;
- Services by religious and charitable organizations;
- Accounting, auditing and bookkeeping services;
- Public utilities as defined in § 65-4-101;
- Services furnished by institutions that are engaged in deposit banking or closely related functions, including fiduciary activities, services furnished by persons engaged in extending credit or lending money except persons taxable under subdivision (5); services furnished by establishments engaged in the underwriting, purchase, sale or brokerage of securities on their own account or on the account of others; services furnished by exchanges, exchange clearing houses and other services allied with the exchange of securities and commodities; services furnished by investment trusts, investment companies, holding companies, and commodity trading companies;
- Insurance carriers or insurance agents of any type selling or furnishing necessary services related to insurance and insurance adjustors;
- Operators of residential and nonresidential buildings except hotels, motels and rooming houses;
- Lessors of the following properties: agricultural, airport, forest, mining, oil, and public utility;
- Services furnished by persons engaged in the practice of veterinary medicine, dentistry or surgery, including services involving the boarding and lodging of animals;
- Services furnished by persons engaged in the practice of architecture, engineering or land surveying; or
- Farmers providing services to other farmers for the planting or harvesting of agricultural products or for the preparation, improvement, or maintenance of land used in the production of agricultural products;
-
Each person engaged in the business of making sales of the following:
-
Classification 4. Each person engaged or continuing in this state in the business of contracting or performing a contract or engaging in any of the activities, or similar activities, listed in subdivisions (4)(A) and (B) for a price, commission, fee or wage:
- This classification includes persons receiving compensation from rendering exterminating services, from installing personal property, from constructing, building, erecting, repairing, grading, excavating, drilling, exploring, testing, or adding to any building, highway, street, sidewalk, bridge, culvert, sewer, irrigation or water system, drainage, or dredging system, levee or levee system or any part thereof, railway, reservoir, dam, power plant, electrical system, air conditioning system, heating system, transmission line, pipeline, tower, dock, storage tank, wharf, excavation, grading, water well, any other improvement or structure or any part thereof;
- Each person engaged in the business of selling livestock, poultry or other farm products not exempted under § 67-4-712; provided, that the tax imposed in § 67-4-709(4) shall apply to all commissions, fees, margins or other charges received from such sales; and
-
Classification 5.
- Industrial loan and thrift companies required to obtain a certificate and a license under title 45, chapter 5.
- Each person engaged in the business of making sales as a natural gas marketer.
Acts 1971, ch. 387, § 5; modified; 1972, ch. 850, § 5; 1977, ch. 313, § 1; 1977, ch. 321, § 1; 1979, ch. 28, § 6; 1981, ch. 321, § 1; 1983, ch. 394, §§ 1, 2; T.C.A., § 67-5805; Acts 1987, ch. 410, § 1; 2006, ch. 583, §§ 1, 2; 2006, ch. 583, §§ 1, 2; 2009, ch. 530, § 74; 2010, ch. 1134, § 43; 2013, ch. 313, § 7; 2014, ch. 942, § 2.
Compiler's Notes. Acts 2013, ch. 313, § 1 provided that the act, which amended subdivision (1), shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended subdivision (1), shall apply to tax periods that begin on or after January 1, 2014.
Acts 2014, ch. 942, § 8 provided that the act shall apply to tax periods that begin on or after July 1, 2014.
Amendments. The 2013 amendment, effective January 1, 2014, in (1), deleted “gasoline and diesel fuel sold at wholesale;” preceding “and sales of tangible” in (B) and added (E).
The 2014 amendment added (5)(B).
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
Acts 2014, ch. 942, § 8. July 1, 2014.
Cross-References. Exemption for radio and television stations for rental of films, transcriptions and recordings, § 67-6-309.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 14; 23 Tenn. Juris., Taxation, § 77.
Attorney General Opinions. Juvenile group homes subject to tax, OAG 94-098 (9/7/94).
Application of Business Tax Act to jewelry and apparel show promoter and vendorsnd vendors, OAG 97-108 (8/01/97).
Sales of hearing aids by audiologists are subject to the business tax, OAG 06-020 (3/28/06).
Licensing and taxation of hotels selling alcohol for consumption on the premises. OAG 16-05, 2016 Tenn. AG LEXIS 3 (2/9/2016).
Cited: Garaci v. City of Memphis, 379 F. Supp. 1393, 1974 U.S. Dist. LEXIS 8913 (W.D. Tenn. 1974); White v. Roden Electrical Supply Co., 536 S.W.2d 346, 1976 Tenn. LEXIS 630 (Tenn. 1976); Worrall v. Kroger Co., 545 S.W.2d 736, 1977 Tenn. LEXIS 606 (Tenn. 1977); Memphis Retail Liquor Dealers' Asso. v. Memphis, 547 S.W.2d 244, 1977 Tenn. LEXIS 555 (Tenn. 1977); Town of Algood v. Mid-South Pavers, Inc., 569 S.W.2d 848, 1978 Tenn. App. LEXIS 297 (Tenn. Ct. App. 1978); National Gas Distrib., Inc. v. State, 804 S.W.2d 66, 1991 Tenn. LEXIS 67 (Tenn. 1991); Bartlett v. Sanders, 832 S.W.2d 546, 1991 Tenn. App. LEXIS 872 (Tenn. Ct. App. 1991).
NOTES TO DECISIONS
1. Application.
Since there is no language limiting the incidence of the tax to those entities whose dominant business activity is one of the activities enumerated in this section and no language excluding entities whose dominant business activity is one not enumerated in this section, all entities who make sales by engaging in any of the business activities enumerated in this section are subject to the tax. The dominant business activity of a taxpayer is relevant only in determining which of the classifications specified in this section applies to him, which, in turn, determines the rate of tax applicable to him and the particular due date of the tax. Hermitage Mem. Gardens Mausoleum & Mem. Chapel, Inc. v. Dunn, 541 S.W.2d 147, 1976 Tenn. LEXIS 538 (Tenn. 1976).
The business of making sales of tangible personal property is a taxable privilege under § 67-4-704 and this section construed together. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).
Trial court properly granted summary judgment in favor of the Department of Revenue because, while the statutory term “sales of services” was ambiguous, the Department properly assessed a lessor for taxes on its gross receipts where the lessor's income was derived solely from its leases of trucks and trailers to a public-utility lessee, the applicable regulations, read in pari materia with the statutory phrase “sales of services” showed that the Legislature intended only to exempt those lessors providing services, not sales, and the lessor's business activity simply did not constitute a service. Najo Equip. Leasing, LLC v. Comm'r of Revenue, 477 S.W.3d 763, 2015 Tenn. App. LEXIS 240 (Tenn. Ct. App. Apr. 23, 2015), appeal denied, Najo Equip. Leasing, Inc. v. Comm'r of Revenue, — S.W.3d —, 2015 Tenn. LEXIS 890 (Tenn. Oct. 16, 2015).
In a tax refund case, the appellate court agreed with a taxpayer that its dominant business activity was as a seller of glass. Because the majority of gross sales for the taxpayer were attributable to sales of glass, as opposed to sales of services, the chancery court did not err in concluding that Classification 1(B), which included persons making sales of glass, rather than Classification 3(C), was appropriate. Auto Glass Co. of Memphis v. Gerregano, — S.W.3d —, 2019 Tenn. App. LEXIS 156 (Tenn. Ct. App. Mar. 25, 2019).
2. Place of Transfer of Title.
Although § 67-4-702 defines a sale as including a transfer of title, it does not place any significance on the place of the transfer of title, and there is no explicit language in § 67-4-702 or the remainder of the act limiting the tax to transfers of title within the state. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).
3. Statute of Limitation.
Only state taxes must meet the three-year statute of limitations on assessment under § 67-1-1501. Business taxes which fall under classifications 1-3 of this section are not state taxes, but are instead local privilege taxes which each county and/or municipality is permitted to levy. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).
The statute of limitations in § 67-1-1501, as to classification 2 business taxes, did not begin to run when the taxes were payable under § 67-4-714, but rather on January 1 of the year in which they became delinquent, which for 1972 taxes was March 1, 1973, the last date the taxpayer was permitted to file a return under § 67-4-715. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).
4. Jurisdiction.
Where taxpayer failed to pay the tax under protest as required by T.C.A. § 67-1-901, the trial court lacked jurisdiction over taxpayer's action seeking a declaratory judgment that he did not provide a taxable service under T.C.A. § 67-4-708(3)(C). Heath v. Creson, 949 S.W.2d 690, 1997 Tenn. App. LEXIS 16 (Tenn. Ct. App. 1997).
Collateral References.
State income tax treatment of intangible holding companies. 11 A.L.R.6th 543.
67-4-709. Tax rates.
For the exercise of the privileges described, enumerated, or referred to in § 67-4-708, every person shall pay the taxes imposed by §§ 67-4-704 and 67-4-705 according to the dominant business activity of the person as follows:
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CLASSIFICATION 1 as described in § 67-4-708(1):
- One tenth of one percent (1/10 of 1%) of all sales by a retailer classified under § 67-4-708(1)(A), (1)(B) or (1)(C);
- One fortieth of one percent (1/40 of 1%) of all sales by a wholesaler classified under § 67-4-708(1)(A);
- Three eightieths of one percent (3/80 of 1%) of all sales by a wholesaler classified under § 67-4-708(1)(B) or (1)(C);
- One twentieth of one percent (1/20 of 1%) of all sales by a retailer classified under § 67-4-708(1)(D); and
- One thirty-second of one percent (1/32 of 1%) of all sales by a wholesaler classified under § 67-4-708(1)(E);
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CLASSIFICATION 2 as described in § 67-4-708(2):
- Three twentieths of one percent (3/20 of 1%) of all sales by a retailer; and
- Three eightieths of one percent (3/80 of 1%) of all sales by a wholesaler;
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CLASSIFICATION 3 as described in § 67-4-708(3):
- Three sixteenths of one percent (3/16 of 1%) of all sales by a retailer; and
- Three eightieths of one percent (3/80 of 1%) of all sales by a wholesaler;
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CLASSIFICATION 4 as described in § 67-4-708(4):
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One tenth of one percent (1/10 of 1%) of the compensation entitled to under the contract, whether in the form of a contract price, commission, fee or wage, by the persons enumerated in § 67-4-708(4)(A);
- Persons who, during any taxable period, receive more than fifty thousand dollars ($50,000) of compensation from contracts in a county or incorporated municipality, or both, other than the county or incorporated municipality where domiciled or located, shall be deemed to have a location in the county or municipality, or both, where the work was performed and a business tax return shall be filed for that location for the period in question. Gross receipts reported on a deemed location return shall not be reported on the return of the business's permanent domicile;
- In computing the measure of the tax, except as provided by this part, no deduction will be allowed on account of the cost of tangible property sold, the cost of materials used, labor cost, reimbursed cost, interest, discount, delivery cost, taxes, or no other expense whatsoever paid or accrued and without any deduction on account of losses; and
- One tenth of one percent (1/10 of 1%) of the gross commissions, margins, fees or other charges by the persons enumerated in § 67-4-708(4)(B); and
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One tenth of one percent (1/10 of 1%) of the compensation entitled to under the contract, whether in the form of a contract price, commission, fee or wage, by the persons enumerated in § 67-4-708(4)(A);
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CLASSIFICATION 5 as described in § 67-4-708(5):
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- Three tenths of one percent (3/10 of 1%) of the gross income of a business classified under § 67-4-708(5)(A); and
- “Gross income of the business” means all interest income, earned discounts, earned lease rentals, commission fees exclusive of insurance commissions, past due charges, contract earnings or charges, collection charges, loan service fees, late fee income and all other income, without any deduction except as provided by this part;
- One fiftieth of one percent (1/50 of 1%) of all sales within the state of a person classified under § 67-4-708(5)(B).
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Acts 1971, ch. 387, § 6; 1972, ch. 850, § 6; 1977, ch. 328, §§ 1, 2; 1978, ch. 714, § 4; 1978, ch. 781, § 1; 1979, ch. 325, § 1; 1981, ch. 308, § 1; 1983, ch. 394, § 3; 1983, ch. 415, § 1; T.C.A., § 67-5806; Acts 1984, ch. 832, § 27; 1986, ch. 699, §§ 2, 3; 1988, ch. 572, § 3; 1988, ch. 767, § 1; 1994, ch. 766, § 1; 1999, ch. 424, § 1; 2002, ch. 856, § 9a; 2003, ch. 418, § 3; 2004, ch. 924, § 9; 2009, ch. 530, § 75; 2013, ch. 313, §§ 8, 9; 2014, ch. 942, § 3.
Compiler's Notes. Acts 1981, ch. 308, § 2 provided that the 1981 amendment should not take effect unless approved by a two-thirds vote of the county legislative body of any county to which it might apply. It was approved by the county legislative body of Blount County on June 1, 1981, and therefore is in effect in that county.
Acts 2002 ch. 856 § 14(i) provided that the 2002 amendment by § 9 of that act shall apply to tax years ending on or after September 1, 2002.
Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to that act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Acts 2004, ch. 924, § 19 provided that the amendment by §§ 8, 9, and 15 of that act shall apply to all tax periods for which returns were required to be filed on or after January 1, 2001.
Acts 2013, ch. 313, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended this section, shall apply to tax periods that begin on or after January 1, 2014.
Acts 2014, ch. 942, § 8 provided that the act shall apply to tax periods that begin on or after July 1, 2014.
Amendments. The 2013 amendment, effective January 1, 2014, rewrote the introductory paragraph which read: “For the exercise of the privileges described or enumerated in § 67-4-708, persons shall pay a tax, according to the dominant business activity of the persons as follows:”; and added (1)(E).
The 2014 amendment rewrote (5) which read: “(5) CLASSIFICATION 5 as described in § 67-4-708(5):“(A) Three tenths of one percent (3/10 of 1%) of the gross income of the business; and“(B) “Gross income of the business” means all interest income, earned discounts, earned lease rentals, commission fees exclusive of insurance commissions, past due charges, contract earnings or charges, collection charges, loan service fees, late fee income and all other income, without any deduction except as provided by this part.”
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
Acts 2014, ch. 942, § 8. July 1, 2014.
Law Reviews.
Building a House of Cards: A Policy Evaluation of Tennessee's Tax Reform Act of 2002 with Emphasis on Fairness to the Poor (Robert F. Parsley), 70 Tenn. L. Rev. 1177 (2003).
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
Attorney General Opinions. In cities and counties that imposed the business tax at the maximum rate specified by the statute, the current business tax rates for those localities are the new maximum rates pursuant to Chapter 859 of the Public Acts of 2002; in jurisdictions that have imposed the business tax at a stated fraction of the maximum rates provided by the statute, the current rates for those jurisdictions are that same fraction of the new maximum rates, OAG 02-084 (8/2/02).
Cited: Worrall v. Kroger Co., 545 S.W.2d 736, 1977 Tenn. LEXIS 606 (Tenn. 1977); Memphis Retail Liquor Dealers' Asso. v. Memphis, 547 S.W.2d 244, 1977 Tenn. LEXIS 555 (Tenn. 1977).
NOTES TO DECISIONS
Decisions Under Prior Law
1. Constitutionality.
The former provision in this section requiring flea market operations and others to collect and remit a daily fee is constitutional and was not an unconstitutional delegation of taxing authority to a private individual, was not a discriminatory classification, was not double taxation, did not constitute involuntary servitude, was not unconstitutionally vague, did not constitute the establishment of religion, and did not compel the operator to incriminate himself. Super Flea Market, Inc. v. Olsen, 677 S.W.2d 449, 1984 Tenn. LEXIS 941 (Tenn. 1984).
67-4-710. Fees for the exercise of privileges of antique malls, flea markets, craft shows, antique shows, gun shows, auto shows and transient vendors.
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Any county, by resolution of its county legislative body, or any incorporated municipality, by ordinance of its governing body, is authorized to impose a fee on the exercise of the privileges described or enumerated in this section. Notwithstanding any provision to the contrary, every county and incorporated municipality imposing the fee provided by this section as of January 1, 2014, shall be deemed to have made an effective election to continue the imposition of such fee and shall not be required to pass any additional resolution or ordinance. Persons exercising such privileges shall pay the applicable fee directly to the county clerk, in the case of activities carried on within the county, and to the city official designated as the collector of tax by city charter or ordinance, in the case of activities carried on within the municipality:
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In the case of antique malls, flea markets, craft shows, antique shows, gun shows and auto shows, operated as public facilities for such particular purpose from which business is carried on by two (2) or more retailers of tangible personal property, which includes that set forth in § 67-4-708(3)(A)(iii), the owner, manager, operator or promoter of the facility shall be required to obtain a license and shall collect and submit to local tax officials a one-dollar fee per day per booth from each exhibitor at the promotion location. However, in the case of a flea market, those exhibitors registered pursuant to chapter 6 of this title and those who register annually pursuant to § 67-6-220 shall have the option of either registering and remitting the business tax levied in § 67-4-709, or may remit the one-dollar fee per day per booth to the flea market operator as provided in this subdivision (a)(1)(A). Those exhibitors not registered annually shall pay the one-dollar fee per booth per day to the flea market operators. Those exhibitors electing to register and pay the business tax levied in § 67-4-709 must present evidence of such registration to the operator before conducting business. The first sentence of this subdivision (a)(1)(A) shall not apply to those exhibitors properly licensed at the promotion location prior to July 1, 1983, until such time as that license expires, nor to those promotions conducted by nonprofit associations, corporations or organizations, nor to casual and isolated activities by persons who do not hold themselves out as engaged in business. The fee shall be in lieu of any business tax otherwise provided for by law;
- In the case of an antique mall, flea market, craft show, antique show, gun show or auto show in which the location is not a continuing business, the fees collected by the owner, manager, operator or promoter shall be submitted to local tax officials, together with such supporting documents as the tax collector may require, within seventy-two (72) hours after the closing of the event;
- In the case of an antique mall, flea market, craft show, antique show, gun show or auto show in which the location is a continuing business, the fees levied by this part shall be due and payable monthly, on the first day of each month. For the purpose of preparing such supporting documents as the tax collector may require, it shall be the duty of all owners, managers, operators or promoters on or before the tenth of each month to transmit to the tax collecting official the forms prescribed, prepared and furnished by the official, together with the amount of tax collected during the preceding month. Failure to so remit the tax shall cause the tax to become delinquent;
- This subdivision (a)(1)(A) shall not apply to any business that is primarily engaged in the selling of antiques at least five (5) days each week and that is in a permanent location. In the case of an antique mall primarily engaged in the selling of antiques at least five (5) days a week with a common cash register for all sales, only the mall operator shall be required to obtain a business tax license and pay on all receipts derived from that location. Further, for purposes of this part, individual booths rented at the mall shall not be deemed to be separate places, locations or outlets in the state from which business is carried on;
- “Flea market booth” means any contiguous space leased by a single vendor to sell tangible personal property; and
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In the case of antique malls, flea markets, craft shows, antique shows, gun shows and auto shows, operated as public facilities for such particular purpose from which business is carried on by two (2) or more retailers of tangible personal property, which includes that set forth in § 67-4-708(3)(A)(iii), the owner, manager, operator or promoter of the facility shall be required to obtain a license and shall collect and submit to local tax officials a one-dollar fee per day per booth from each exhibitor at the promotion location. However, in the case of a flea market, those exhibitors registered pursuant to chapter 6 of this title and those who register annually pursuant to § 67-6-220 shall have the option of either registering and remitting the business tax levied in § 67-4-709, or may remit the one-dollar fee per day per booth to the flea market operator as provided in this subdivision (a)(1)(A). Those exhibitors not registered annually shall pay the one-dollar fee per booth per day to the flea market operators. Those exhibitors electing to register and pay the business tax levied in § 67-4-709 must present evidence of such registration to the operator before conducting business. The first sentence of this subdivision (a)(1)(A) shall not apply to those exhibitors properly licensed at the promotion location prior to July 1, 1983, until such time as that license expires, nor to those promotions conducted by nonprofit associations, corporations or organizations, nor to casual and isolated activities by persons who do not hold themselves out as engaged in business. The fee shall be in lieu of any business tax otherwise provided for by law;
- Transient vendors shall pay a fee of fifty dollars ($50.00) for each fourteen-day period in each county or municipality, or both, in which such vendors sell or offer to sell merchandise or for which they are issued a license. Notwithstanding any law to the contrary, the fee shall be paid prior to the first day of engaging in business. Transient vendors shall not be liable for the tax levied under § 67-4-709.
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- [Deleted by 2013 amendment, effective January 1, 2014.]
Acts 2009, ch. 530, § 76; 2013, ch. 313, §§ 10, 11.
Compiler's Notes. Former § 67-4-710 (Acts 1971, ch. 387, § 2; 1972, ch. 850, § 2; 1983, ch. 386, § 7; 1983, ch. 466, §§ 3-7; T.C.A., § 67-5802), concerning the reduction of rates, was repealed by Acts 2002, ch. 856, § 9(b), effective September 1, 2002.
Acts 2013, ch. 313, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended this section, shall apply to tax periods that begin on or after January 1, 2014.
Amendments. The 2013 amendment, effective January 1, 2014, rewrote the introductory paragraph of (a) which read: “For the exercise of the privileges described or enumerated in this section, persons shall pay a fee directly to the county clerk, in the case of activities carried on within the county, and to the city official designated as the collector of tax by city charter or ordinance, in the case of activities carried on within the municipality:”; and deleted (b) which read: “The county clerk and the city official charged with collecting the fees imposed by this section shall report and remit all such collections to the department in a manner prescribed by the commissioner. The collections shall be distributed as provided in § 67-4-724.”
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
67-4-711. Deductions.
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In computing tax, there may be deducted from the measure of tax the following items:
- Cash discounts allowed and taken on sales;
- The proceeds of the sale of goods, wares, or merchandise returned by the customer when the sale price is refunded either in cash or by credit;
- The amount allowed as trade-in value for any article sold;
- Amounts representing the difference between the remaining amount due on the selling price of tangible personal property sold on a security agreement and five hundred dollars ($500), when the wholesaler or retailer actually repossesses the property sold pursuant to the terms of the security agreement;
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- Amounts actually paid during the business tax period by a contractor to a subcontractor holding a business license or who is licensed by the state board for licensing contractors for performing the activities described in § 67-4-708(4)(A). For a contractor to be eligible to claim the deduction, the contractor must provide, on a form prescribed by the commissioner, the name, address and business license or contractor's license number of the subcontractor and the amount subcontracted. The contractor also must maintain in its records a copy of the subcontractor's business license or license issued by the board for licensing contractors;
- This subdivision (a)(5) shall apply only to new contracts issued sixty (60) days after July 1, 2009. Contracts issued before that date shall be subject to this subdivision (a)(5) as it existed immediately prior to July 1, 2009;
- The sale of any service that is delivered to a location outside this state;
- The proceeds of the sale of school supplies and meals to students and school employees on campus by elementary and secondary schools; provided, that the proceeds of all sales of such items by private independent contractors shall not be deducted; and
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A deduction from gross receipts shall be allowed for bad debts arising from receipts on which the tax imposed by this chapter was paid.
- Any deduction taken that is attributed to bad debts shall not include interest.
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For purpose of calculating the deduction, a “bad debt” is as defined in 26 U.S.C. § 166. However, the amount calculated pursuant to 26 U.S.C. § 166 shall be adjusted to exclude:
- Financing charges or interest;
- Sales or use taxes charged on the purchase price;
- Uncollectible amounts on property that remain in the possession of the seller until the full purchase price is paid;
- Expenses incurred in attempting to collect any debt; and
- Repossessed property.
- The deduction provided for by this subdivision (a)(8) shall be deducted on the return for the period during which the bad debt is written off as uncollectible in the claimant's books and records and is eligible to be deducted for federal income tax purposes. For purposes of this subdivision (a)(8), a claimant who is not required to file federal income tax returns may deduct a bad debt on a return filed for the period in which the bad debt is written off as uncollectible in the claimant's books and records and would be eligible for a bad debt deduction for federal income tax purposes if the claimant was required to file a federal income tax return.
- If a deduction is taken for a bad debt and the debt is subsequently collected in whole or in part, the tax on the amount so collected shall be paid and reported on the return filed for the period in which the collection is made.
- When the amount of bad debt exceeds the amount of gross receipts for the period during which the bad debt is written off, the taxpayer may file a refund claim and receive a refund pursuant to § 67-1-1802. The statute of limitations for filing the claim shall be measured from the due date of the return on which the bad debt could first be claimed.
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In computing tax, there may be deducted from the measure of tax the following taxes; provided, that such deductions may be claimed only by the taxpayer who made direct payment to the applicable governmental agency and, in addition, by all subsequent vendees of such taxpayer licensed under this chapter to do business in the state:
- Federal excise taxes imposed on beer, gasoline, motor fuel and tobacco products;
- Tennessee gasoline tax, compiled in chapter 3 of this title;
- Tennessee motor vehicle fuel use tax, compiled in chapter 3 of this title;
- Tennessee tobacco tax, compiled in part 10 of this chapter;
- Tennessee beer taxes, compiled in title 57, chapters 5 and 6;
- Special tax on petroleum products, compiled in chapter 3, part 9 of this title;
- Taxes that are required to be passed on to the consumer by the Retailers' Sales Tax Act, compiled in chapter 6 of this title, or by the provisions of title 57, chapter 4, relative to sale of alcohol for on-premises consumption, should be excluded from the gross sales reported on the business tax return, but such taxes passed on to the consumer may be deducted from the gross sales reported, if such taxes are included in gross sales on the business tax return;
- Liquefied gas tax, compiled in chapter 3, part 11 of this title; and
- Taxes that are required to be collected by a bail bondsman pursuant to part 8 of this chapter shall be excluded from the gross sales reported on the business tax return, but such taxes collected by the bail bondsman may be deducted from the gross sales reported if such taxes are included in gross sales on the business tax return.
Acts 1971, ch. 387, § 10; 1972, ch. 850, § 9; 1979, ch. 4, § 1; 1979, ch. 325, § 2; 1981, ch. 201, § 1; T.C.A., § 67-5810; Acts 1984, ch. 761, § 1; 1986, ch. 782, § 1; 1991, ch. 38, § 2; 1992, ch. 662, § 1; 2009, ch. 530, § 77; 2013, ch. 313, § 12; 2015, ch. 514, § 4; 2017, ch. 236, § 1.
Compiler's Notes. Acts 1991, ch. 38, § 3 provided that the amendment to this section by that act shall apply to business tax returns filed for tax periods ending on or after July 1, 1991.
Acts 1992, ch. 662, § 2 provided that the amendment by that act applies to tax periods beginning on or after October 1, 1991.
Acts 2013, ch. 313, § 1 provided that the act, which amended subdivision (a)(6), shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended subdivision (a)(6), shall apply to tax periods that begin on or after January 1, 2014.
Acts 2015, ch. 514, § 1 provided that the act shall be known and may be cited as the “Revenue Modernization Act”.
For the Preamble to the act concerning the need to modernize the sales and use taxes, franchise and excise taxes and business tax in the state to address the engagement in business within the state by out-of-state companies, see Acts 2015, ch. 514.
Acts 2015, ch. 514, § 31 provided that the act, which amended (a)(6), shall apply to all tax years beginning on or after January 1, 2016.
Amendments. The 2013 amendment, effective January 1, 2014, rewrote (a)(6) which read: “Sales of service substantially performed in other states;”.
The 2015 amendment rewrote (a)(6), which read: “Sales of services that are received by customers located outside the state;”.
The 2017 amendment added (b)(9).
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
Acts 2015, ch. 514, § 31. January 1, 2016.
Acts 2017, ch. 236, § 2. April 28, 2017.
67-4-712. Exemptions.
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- Each person being unable to see by reason of total blindness, owning less than two thousand five hundred dollars ($2,500) of property above encumbrances on the property and doing business with a capital not exceeding two thousand five hundred dollars ($2,500), residing in and being a citizen of Tennessee and of the county in which the exemption shall be claimed, and being the sole beneficiary of the business, shall be exempt from the payment of the taxes payable by persons taxable under § 67-4-708(1)-(4). Any institution for the blind engaged in the training and employment of the blind of the state likewise shall be exempt from the payment of the privilege taxes imposed, without regard to property qualifications.
- Any disabled former uniformed member of the armed forces who is a veteran of any armed conflict in which the United States has engaged, or any peacetime uniformed member of the armed forces who was disabled while in regular service, owning less than five thousand dollars ($5,000) of property above encumbrances on the property and doing business with a capital stock of not exceeding five thousand dollars ($5,000), residing in and being a citizen of the state of Tennessee and of the county in which the exemption shall be claimed, and being the sole beneficiary of the business, shall be exempt from the payment of the taxes imposed upon persons in § 67-4-708(1)-(4). Only one (1) exemption may be claimed by any one (1) person under this subsection (a), and any business for which the exemption is claimed shall be conducted by such former member personally or a member of such member's immediate family who may be assisted by not more than one (1) person not a member of the family. With respect to former members operating as peddlers, one (1) vehicle shall be considered as one (1) place of business.
- The proper collectors shall require the applicant who wishes to seek the benefits of the exemptions under this subsection (a) to make an affidavit setting out the applicant's disability and the applicant's financial condition and the source of the applicant's income before the license shall be issued, and any person making a false affidavit and procuring a free privilege license commits perjury and shall be punished under the law.
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This part shall not apply to the following persons in the circumstances indicated:
- Any person in respect to that person's employment in the capacity of an employee or servant as distinguished from that of an independent contractor;
- Any person primarily engaged in the manufacture of goods, wares, merchandise or other articles of value from a location or outlet subject to ad valorem taxation under chapter 5, part 5 of this title;
- Any person taxable under part 4 of this chapter with respect to receipts taxable under such provisions;
- Newspaper route carriers and newspaper peddlers;
- Any institution operated for religious or charitable purposes, with respect to any profits that are earned from the sale of items contributed to the institution or articles produced by the institution from such contributed items;
- Persons conducting shows, displays, or exhibits sponsored by any nonprofit organization of gun collectors; provided, that any person who regularly engages in business as a dealer in guns or who sells guns for future delivery shall not be exempt under this subsection (b); and
- Any person residing or located in this state whose only taxable business activity during the tax period is conducted at the Tennessee state fair or at only one (1) county fair, and any governmental entity, nonprofit corporation, institution or organization which has received a determination of exemption from the internal revenue service pursuant to 26 U.S.C. § 501(c)(3) or (c)(4), and is currently operating under it, and whose only taxable business activity during the tax period is conducted at the Tennessee state fair, county fairs and their affiliates.
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- The gross sales made in this state of livestock, horses, poultry, nursery stock and other farm products direct from the farm are exempt from the tax levied by this part; provided, that such sales are made directly by the producer, breeder, or trainer. When sales of livestock, horses, poultry, or other farm products are made by any person other than the producer, breeder or trainer, they shall be classed and taxed under § 67-4-708(4).
- No provision of this part shall apply to catfish farmers.
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- Any person having sales of less than ten thousand dollars ($10,000) within a county shall be exempt from the tax and licensing provisions in §§ 67-4-704 and 67-4-723(a) with respect to the sales sourced to that county as provided in § 67-4-717(b).
- Any person having sales of less than ten thousand dollars ($10,000) within an incorporated municipality shall be exempt from the tax and licensing provisions in §§ 67-4-705 and 67-4-723(a) with respect to the sales sourced to that municipality as provided in § 67-4-717(c).
- Any person subject to the tax imposed by this chapter due to the operation of § 67-4-717(a) and having sales of less than ten thousand dollars ($10,000) within a county shall be exempt from the taxing provision in § 67-4-704 with respect to the sales occurring in that county.
- Gross proceeds derived from admissions to amusement or recreational activities conducted, produced, or provided by not-for-profit museums, not-for-profit entities that operate historical sites and not-for-profit historical societies, organizations or associations by organizations that have received and currently hold a determination of exemption from the internal revenue service pursuant to 26 U.S.C. § 501(c), or by organizations listed in Major Group No. 86 of the Standard Industrial Classification Manual of 1972, prepared by the office of management and budget of the federal government; provided, that this exemption shall not apply unless such entities, societies, associations or organizations promote, produce, and control the entire production or function.
- The tax imposed by this part shall not apply to a qualified business doing business from a location within an enterprise zone. The tax exemption provided by this subsection (f) shall only be allowed, however, to a qualified business for five (5) years from the date such business is originally certified as a qualified business.
Acts 1971, ch. 387, §§ 11-13; 1972, ch. 850, §§ 6, 10-12, 25; modified; Acts 1977, ch. 345, § 1; 1978, ch. 832, § 2; 1981, ch. 275, § 1; T.C.A., §§ 67-5811 — 67-5813, 67-5828, 67-5829; Acts 1986, ch. 672, §§ 1, 2; 1986, ch. 929, § 1; 1989, ch. 16, § 7; 1989, ch. 465, § 1; 1989, ch. 560, § 20; 2013, ch. 313, § 13.
Code Commission Notes.
Former subdivision (b)(3), concerning receipts taxable under the provisions of former § 67-4-506, was deleted as obsolete by the code commission in 2003.
Compiler's Notes. Acts 1986, ch. 672, § 2 provided that the 1986 amendment by that act was enacted for remedial and clarification purposes and to avoid undue hardships and oppressiveness resulting from possible prior misinterpretation of subdivision (b)(8). Section 2 also provided that the 1986 amendment by that act was declared to be retroactive as the same relates to any executory claims by the involved taxing authorities for the collection of taxes for prior years.
Acts 1986, ch. 929, § 2 provided that subsection (e) applies to all proceeds that may have been subject to tax during a period of seven years preceding April 29, 1986.
Acts 1989, ch. 465, § 2 provided that the amendment by that act take effect June 2, 1989, and apply to all affected transactions occurring since January 1, 1982.
Acts 2013, ch. 313, § 1 provided that the act, which amended subsection (d), shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended subsection (d), shall apply to tax periods that begin on or after January 1, 2014.
Amendments. The 2013 amendment, effective January 1, 2014, rewrote (d) which read: “The provisions for taxation contained in this part shall not be deemed applicable to any business in this state having a total value of sales of less than three thousand dollars ($3,000) per year.”
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
Cross-References. Perjury, title 39, ch. 16, part 7.
“Total blindness” defined, § 1-3-112.
NOTES TO DECISIONS
1. Application.
Taxpayer is entitled to the exemption set out in subdivision (b)(2) as long as the outlet from which the articles are sold is subject to the ad valorem tax on other items of its property, even if the articles sold by the taxpayer are exempt from ad valorem taxation. Town of Algood v. Mid-South Pavers, Inc., 569 S.W.2d 848, 1978 Tenn. App. LEXIS 297 (Tenn. Ct. App. 1978).
67-4-713. Credits.
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The following credits may be taken by persons filing and paying the tax imposed by this part:
- For persons filing returns and paying taxes due under this part, the pro rata portion of any privilege tax paid under any provisions of title 56, chapter 4, part 4, title 57, chapter 5, or parts 4 and 5 of this chapter, extending past June 1, 1971, and repealed as of that date;
-
Except as provided in subdivision (a)(3), personal property taxes properly paid pursuant to chapter 5, part 5 or part 13 of this title;
- Personal property taxes are allowable as a credit only to the extent that the property is located at the place of business covered by the return required by this part and the property is taxed by the same city or county that receives the allocation of tax under § 67-4-724;
- Personal property taxes are allowable as a credit only for taxes paid either during the tax period covered by the return or prior to the due date of the return;
- Personal property taxes assessed pursuant to audit and subsequently paid may be taken as a credit either on the business tax return filed for the year in which the additional personal property tax was paid or on the return covering the immediately previous year. If the credit is taken in the previous year, an amended business tax return must be filed for that year;
- Notwithstanding subdivision (a)(2)(A), providers of video programming services, as defined in § 67-6-102, shall be allowed the credit provided by this subdivision (a)(2) to the extent that the property is located in a jurisdiction to which the taxpayer's receipts are sourced in accordance with § 67-4-717 and the property is taxed by that jurisdiction;
- In cases where a lease or rental agreement provides specifically for payment of personal property taxes by the lessee or renter to the lessor or owner, personal property taxes paid by the lessee or renter to the lessor or owner covering any period of time extending beyond June 1, 1971, arising from assessments referred to in subdivision (a)(2) and made against the lessor or owner. The credit authorized in this subdivision (a)(3) to the lessee or renter may not be taken by the lessor or owner;
- Personal property taxes paid pursuant to a special school district tax levied by public or private act. The credit established by this subdivision (a)(4) shall only apply in any county having a population of not less than twenty-eight thousand two hundred fifty (28,250) nor more than twenty-eight thousand three hundred (28,300), or not less than forty-nine thousand four hundred (49,400) nor more than forty-nine thousand five hundred (49,500), according to the 1980 federal census or any subsequent federal census; and
-
The amount of personal property taxes that would be due and owing pursuant to chapter 5, part 5 of this title, but for the fact that pursuant to a lawful agreement between the person and a local governmental unit or instrumentality the person's personal property has been transferred to a governmental unit or instrumentality; provided, that:
- The person shall be eligible for such credit only to the extent of the tax generated from its receipts for services rendered by such person to an affiliated person;
- Either person directly owns or controls eighty percent (80%) or more of the other, or eighty percent (80%) or more of both persons is directly or indirectly owned or controlled by a common parent;
- This subdivision (a)(5) is not affirmatively rejected by a two-thirds (2/3) vote of the legislative body of the county or municipality, whichever is appropriate, exercising jurisdiction over the governmental unit or instrumentality; and
- Subdivision (a)(5)(C) shall be retroactive to tax years beginning on or after January 1, 1999, with respect to agreements in effect on that date.
- In no case shall the total credits provided in this section be used to offset more than fifty percent (50%) of the taxpayer's liability as calculated in § 67-4-709.
Acts 1971, ch. 387, § 14; 1972, ch. 850, § 13; 1973, ch. 208, § 4; 1973, ch. 242, §§ 1, 2; 1973, ch. 260, § 1; 1975, ch. 257, § 1; 1983, ch. 136, § 1; T.C.A., § 67-5814; Acts 1984, ch. 832, § 31; 1985, ch. 392, §§ 1, 2; 1990, ch. 898, § 4; 1990, ch. 1093, § 1; 1997, ch. 383, § 1; 1999, ch. 454, § 1; 2001, ch. 273, §§ 1, 2; 2002, ch. 856, § 9c; 2009, ch. 530, §§ 78-81; 2010, ch. 1134, § 44; 2013, ch. 313, §§ 14, 15.
Code Commission Notes.
Former subdivision (a)(7), concerning credit for real estate taxes attributable to an underground storage tank, was deleted as obsolete by authority of the code commission in 2006.
Compiler's Notes. Acts 1999, ch. 454, § 2 provided that subdivision (a)(7) applies to tax years beginning after January 1, 1999.
Acts 2002, ch. 856 § 14(i) provided that the 2002 amendment by § 9 of that act shall apply to tax years ending on or after September 1, 2002.
Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to that act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Acts 2013, ch. 313, § 1 provided that the act, which amended subdivision (a)(2), shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended subdivision (a)(2), shall apply to tax periods that begin on or after January 1, 2014.
For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Amendments. The 2013 amendment, effective January 1, 2014, in (a)(2), substituted “receives the allocation of tax under§ 67-4-724” for “levied the tax under this part” at the end of (A) and added (D).
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 77.
Law Reviews.
Building a House of Cards: A Policy Evaluation of Tennessee's Tax Reform Act of 2002 with Emphasis on Fairness to the Poor (Robert F. Parsley), 70 Tenn. L. Rev. 1177 (2003).
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
Cited: Arkansas-Best Freight System, Inc. v. Cochran, 546 F. Supp. 915, 1982 U.S. Dist. LEXIS 18281 (M.D. Tenn. 1982); IBM Credit Corp. v. County of Hamilton, 830 S.W.2d 77, 1992 Tenn. App. LEXIS 65 (Tenn. Ct. App. 1992).
NOTES TO DECISIONS
1. In General.
This section has to do only with credits, not exemptions. Coble Systems, Inc. v. Armstrong, 660 S.W.2d 802, 1983 Tenn. App. LEXIS 628 (Tenn. Ct. App. 1983).
2. Construction with Other Statutes.
The general assembly intended this section to be a separate procedure from that set out in chapter 1, part 9 of this title. Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982).
3. Effect of Delinquent Filing.
Where taxpayer filed his business tax return 13 days after the due date, the delinquent filing did not operate to forfeit a personal property tax credit to which the taxpayer would otherwise have been entitled. White v. Roden Electrical Supply Co., 536 S.W.2d 346, 1976 Tenn. LEXIS 630 (Tenn. 1976).
4. Carryover Period.
Although a personal property tax credit would be allowed on the taxpayer's delinquent business tax return, the delinquent filing did not extend the carryover period for such tax credit. White v. Roden Electrical Supply Co., 536 S.W.2d 346, 1976 Tenn. LEXIS 630 (Tenn. 1976).
5. Credit for Personal Property Tax.
This section allows credit on the business tax for all personal property taxes, and a retail grocery store chain was allowed a credit for personal property taxes paid on its distribution center as well as on its retail outlets. Worrall v. Kroger Co., 545 S.W.2d 736, 1977 Tenn. LEXIS 606 (Tenn. 1977).
6. Payment Under Protest Not Prerequisite.
Payment under protest according to statute is not a prerequisite to recovery of taxes from a city under this section. Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982).
Common-law payment under protest is not a prerequisite to recovery of taxes from a county. Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982).
The procedure for refund of business tax credits “allowable but not permitted or allowed” is a “permissive and alternative administrative remedy” to payment under protest and suit for recovery; it is not “mandatory or exclusive.” Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982).
7. Situs of Taxation.
Leased personal property located in one city and/or county cannot be subjected to personal property ad valorem taxes in that city and/or county, when the rental receipts from this leased property have been included in computing the business tax paid by the owner in another city and/or county. Coble Systems, Inc. v. Armstrong, 660 S.W.2d 802, 1983 Tenn. App. LEXIS 628 (Tenn. Ct. App. 1983).
67-4-714. Inactive or terminated taxable entities not relieved from filing a return and paying business tax.
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The minimum business tax payable under this part by any person subject to the tax levied in this part shall be as follows:
- Notwithstanding § 67-4-709(1)-(4) for taxpayers included in classifications (1)-(4) in § 67-4-708, the minimum business tax shall be twenty-two dollars ($22.00) per annum per location after applying all deductions and credits set forth in §§ 67-4-711 and 67-4-713. Any person subject to tax under this part that has no established physical location, outlet, or other place of business in the state shall be subject to a single minimum tax as provided in this subdivision (a)(1) for all activity within the state. In the case of coin-operated machines, only the principal place of business shall be subject to the minimum tax;
- Notwithstanding § 67-4-709(5)(A) for taxpayers included in classification (5)(A) in § 67-4-708, the minimum tax payable shall be four hundred fifty dollars ($450) per annum after applying all deductions and credits set forth in §§ 67-4-711 and 67-4-713; however, under no circumstances shall the tax payable under § 67-4-709(5)(A) be more than one thousand five hundred dollars ($1,500) per annum after applying all deductions and credits set forth in §§ 67-4-711 and 67-4-713.
- A taxable entity that is incorporated, domesticated, qualified or otherwise registered to do business in this state, but is, or has become, inactive in this state, or whose charter, domestication, qualification or other registration is forfeited, revoked or suspended without the entity being properly dissolved, surrendered, withdrawn, cancelled or otherwise properly terminated, shall not be relieved from filing a return and paying the business tax, which shall be no less than the minimum tax established in subsection (a).
Acts 1971, ch. 387, § 7; modified; Acts 1972, ch. 850, § 7; 1973, ch. 172, § 1; 1973, ch. 208, §§ 1, 2; 1977, ch. 314, § 1; T.C.A., § 67-5807; Acts 1984, ch. 832, §§ 28, 29; 2009, ch. 530, § 82; 2010, ch. 1134, § 45; 2013, ch. 313, § 16; 2014, ch. 942, § 4.
Compiler's Notes. Acts 2013, ch. 313, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended this section, shall apply to tax periods that begin on or after January 1, 2014.
Acts 2014, ch. 942, § 8 provided that the act shall apply to tax periods that begin on or after July 1, 2014.
Amendments. The 2013 amendment, effective January 1, 2014, in (a)(1), inserted “per location” in the first sentence and added the second sentence.
The 2014 amendment substituted “classification (5)(A)” for “classification (5)” once and substituted “§ 67-4-709(5)(A)” for “§ 67-4-709(5)” twice in (a)(2).
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
Acts 2014, ch. 942, § 8. July 1, 2014.
Cited: Worrall v. Kroger Co., 545 S.W.2d 736, 1977 Tenn. LEXIS 606 (Tenn. 1977); Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982).
NOTES TO DECISIONS
1. Statutes of Limitation.
The statute of limitations in § 67-1-1501, as to classification 2 business taxes, did not begin to run when the taxes were payable under this section, but rather on January 1 of the year in which they became delinquent, which for 1972 taxes was March 1, 1973, the last date the taxpayer was permitted to file a return under § 67-4-715. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).
67-4-715. When taxes due and payable — Transmission of returns — Due dates of returns — Consolidating taxes.
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The taxes levied by this part that are collected and administered by the commissioner shall be due and payable annually on the following dates:
- December 31 for persons taxable under § 67-4-708(1);
- March 31 for persons taxable under § 67-4-708(2);
- June 30 for persons taxable under § 67-4-708(3);
- September 30 for persons taxable under § 67-4-708(4); and
- December 31 for persons taxable under § 67-4-708(5).
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For the purpose of ascertaining the amount of tax payable under this part, it shall be the duty of all persons to transmit to the commissioner, on forms prescribed by the commissioner, a return for each county, in the case of taxes levied by the state, and a return for each city, in the case of taxes levied by the city, showing the gross receipts arising from all sales taxable under this part during the period covered by each return. The return shall also include the applicable deductions or credits specifically allowed under this part and any other information required by the commissioner to determine the amount of tax properly due. The returns shall be transmitted to the commissioner on or before the following dates:
- February 28 for persons taxable under § 67-4-708(1);
- May 31 for persons taxable under § 67-4-708(2);
- August 31 for persons taxable under § 67-4-708(3);
- November 30 for persons taxable under § 67-4-708(4); and
- February 28 for persons taxable under § 67-4-708(5).
- At the time of transmitting to the commissioner the return required by this part, the person shall remit to the commissioner with the return the amount of tax due under the applicable provisions of this part, and failure to so remit the tax shall cause the tax to become delinquent.
-
- Any taxpayer that is required to file its sales and use tax returns electronically under § 67-6-504 is likewise required to file the returns required by this section electronically, and remit the tax electronically, using a method approved by the commissioner.
- In addition, when a taxpayer is required to remit payments electronically as set forth in § 67-1-703(b) because the taxpayer's liability under this part is one thousand dollars ($1,000) or more, then all returns required by this chapter that are associated with such payments shall be filed electronically using a method approved by the commissioner. When any taxpayer is required to file returns and remit payments electronically for any one (1) outlet, location or other place of business, the commissioner may require the taxpayer to file returns and remit payments electronically for each place of business of the taxpayer. The requirement to file electronically shall continue thereafter until such time as the commissioner advises the taxpayer to file by another method.
- In addition to any other penalty provided by law, the commissioner is authorized to assess any taxpayer required to file returns by electronic means under this subsection (d) a penalty, not to exceed five hundred dollars ($500), for each instance of filing a return by any other means. The penalty shall be subject to waiver under § 67-1-803. In extenuating circumstances, the commissioner is authorized to waive the electronic payment and filing requirements under this subsection (d) and permit the taxpayer to file the return in paper form. The commissioner is authorized to require that any such paper filing be accompanied by a manual handling fee, not to exceed twenty-five dollars ($25.00), that is reasonably calculated by the department to account for the additional cost of preparing, printing, receiving, reviewing and processing any paper filing so permitted.
- Each taxpayer who operates more than one (1) place of business in a city or county may apply to the commissioner for permission to file a consolidated tax return for all business locations in a single taxing jurisdiction.
- The failure of any person to secure the forms mentioned in this section shall not relieve the person from the payment of the tax at the time and in the manner provided in this section.
- Notwithstanding any provision of this section to the contrary, the commissioner is authorized to change the tax period established by this part to correspond to the taxpayer's fiscal year and change the due date of the associated tax return to a date that is not less than two (2) calendar months following the end of such tax period. Such change is authorized to occur no sooner than ninety (90) days after the commissioner has certified that a system is in place for the electronic submission of such returns. Such certification shall be accomplished by the commissioner prominently posting a notice on the department's web site. The commissioner shall allow the submission of a single, electronic filing that includes all of the information required by the commissioner to determine the amount of tax, if any, that is properly due under this part and allocated to each jurisdiction. Nothing in this subsection (g) shall be construed to either increase or decrease the amount of tax otherwise due under this part.
Acts 1971, ch. 387, § 7; modified; Acts 1972, ch. 850, § 7; 1973, ch. 172, § 1; 1973, ch. 208, §§ 1, 2; 1977, ch. 314, § 1; T.C.A., § 67-5807; Acts 2004, ch. 924, § 10; 2009, ch. 530, § 83; 2011, ch. 467, § 8; 2012, ch. 657, §§ 5, 6; 2013, ch. 313, § 17.
Compiler's Notes. Acts 2013, ch. 313, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended this section, shall apply to tax periods that begin on or after January 1, 2014.
Amendments. The 2013 amendment, effective January 1, 2014, substituted “taxes levied by the state” for “taxes levied by the county” in the first sentence of the introductory paragraph of (b); and rewrote (g) which read: “Notwithstanding subsections (a) and (b), the commissioner is authorized to change the tax period established by this part to correspond to the taxpayer's fiscal year. The commissioner is further authorized to change the due date of the associated tax return to a date that is not less than two (2) calendar months following the end of such tax period. Such change is authorized to occur no sooner than ninety (90) days after the commissioner has certified that a system is in place for the electronic submission of all tax returns required by this part. Such certification shall be accomplished by the commissioner prominently posting a notice on the department's web site.”
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
NOTES TO DECISIONS
1. Statutes of Limitation.
The statute of limitations in § 67-1-1501, as to classification 2 business taxes, did not begin to run when the taxes were payable under § 67-4-714, but rather on January 1 of the year in which they became delinquent, which for 1972 taxes was March 1, 1973, the last date the taxpayer was permitted to file a return under this section. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).
67-4-716. Applicability of parts of chapter 1 of this title.
Chapter 1, parts 8, 13, 14, 15, 17 and 18 of this title shall apply to all taxes collected and administered by the commissioner under this part.
Acts 1971, ch. 387, § 7; modified; Acts 1972, ch. 850, § 7; 1973, ch. 172, § 1; 1973, ch. 208, §§ 1, 2; 1977, ch. 314, § 1; T.C.A., § 67-5807; Acts 2009, ch. 530, § 84.
67-4-717. State and local privilege tax imposition for persons with a substantial nexus in the state and engaged in any vocation, occupation, business or business activity — Distributing state and local business tax.
-
-
Except as otherwise provided in this part, all persons with a substantial nexus in this state during the tax period and engaged in this state in any vocation, occupation, business, or business activity set forth as taxable under § 67-4-708(1)-(5), with or without establishing a physical location, outlet, or other place of business in the state, shall be subject to the tax levied by § 67-4-704. For purposes of this section, the phrase “engaged in this state” shall include, but not be limited to, any of the following:
- The sale of tangible personal property that is shipped or delivered to a location in this state;
- The sale of a service that is delivered to a location in this state;
- The leasing of tangible personal property that is located in this state; or
- Making sales as a natural gas marketer to customers located within this state through the presence in this state of the seller's property, through the holding of pipeline capacity by the seller on pipelines located in this state, or through the presence in this state of the seller's employees, agents, independent contractors, or other representatives acting on behalf of the seller to solicit orders, provide customer service, or conduct other activities in furtherance of such sales. For purposes of this subdivision (a)(1)(D), the phrase “presence in this state of the seller's property” shall include property owned by the seller in this state during delivery to the customer, whether in a pipeline or otherwise.
- All persons that are subject to the tax levied by § 67-4-704 and have a physical location, outlet, or other place of business within a municipality in this state shall be subject to the tax levied by § 67-4-705. Persons that do not have a physical location, outlet, or other place of business within a municipality in this state shall not be subject to the tax levied by § 67-4-705.
-
Except as otherwise provided in this part, all persons with a substantial nexus in this state during the tax period and engaged in this state in any vocation, occupation, business, or business activity set forth as taxable under § 67-4-708(1)-(5), with or without establishing a physical location, outlet, or other place of business in the state, shall be subject to the tax levied by § 67-4-704. For purposes of this section, the phrase “engaged in this state” shall include, but not be limited to, any of the following:
-
- For purposes of distributing the state business tax as provided in § 67-4-724(a), receipts from sales made by a person subject to the tax levied by § 67-4-704 shall be sourced to the county in which the person's established physical location, outlet, or other place of business is located. Receipts from sales made by persons operating from an established physical location, outlet, or other place of business in one (1) county who extend their operations into other counties without establishing a physical location, outlet, or other place of business therein shall be sourced to the county in which the person's established physical location, outlet, or other place of business is located. If the person has no established physical location, outlet, or other place of business in the state, then such receipts shall be sourced to the state and the taxes shall be earmarked and allocated to the state's general fund in accordance with § 67-4-724(a)(5).
- Notwithstanding subdivision (b)(1), receipts from all taxable sales of any services or tangible personal property by a provider of video programming services, as defined in § 67-6-102, shall be sourced to the county where the property or service is received by the customer, regardless of whether the provider has a physical location, outlet, or other place of business in that county.
- Notwithstanding subdivision (b)(1), compensation of more than fifty thousand dollars ($50,000) from contracts performed in one (1) county by a person described in § 67-4-708(4)(A) shall be sourced to that county as provided in § 67-4-709(4)(A)(i) and the tax on such compensation shall be distributed to that county pursuant to § 67-4-724(a). Compensation of fifty thousand dollars ($50,000) or less from contracts performed in one (1) county by a person described in § 67-4-708(4)(A) shall be sourced to the county of such person's domicile or location. If such person does not have a domicile or location in the state, such compensation shall be earmarked and allocated to the state's general fund in accordance with § 67-4-724(a)(5).
-
- For purposes of levying the tax set forth in § 67-4-705, receipts from sales made by a person subject to the tax levied by § 67-4-705 shall be sourced to the incorporated municipality in which the person's established physical location, outlet, or other place of business is located and shall be subject to the tax, if any, that is levied by such incorporated municipality. Receipts from sales made by persons operating from an established physical location, outlet, or other place of business in one (1) incorporated municipality who extend their operations outside the boundaries of the incorporated municipality that levied the tax without establishing a physical location, outlet, or other place of business outside such incorporated municipality shall be sourced to the incorporated municipality in which the person's established physical location, outlet, or other place of business is located and shall be subject to the tax, if any, that is levied by such incorporated municipality. If the person has no established physical location, outlet, or other place of business in the state, then such receipts shall not be subject to tax under § 67-4-705.
- Notwithstanding subdivision (c)(1), receipts from all taxable sales of any services or tangible personal property by a provider of video programming services, as defined in § 67-6-102, shall be sourced to the incorporated municipality where the property or service is received by the customer, regardless of whether the provider has a physical location, outlet, or other place of business in that incorporated municipality.
- Notwithstanding subdivision (c)(1), compensation of more than fifty thousand dollars ($50,000) from contracts performed in one (1) incorporated municipality by a person described in § 67-4-708(4)(A) shall be sourced to that incorporated municipality as provided in § 67-4-709(4)(A)(i) and such compensation shall be subject to the tax, if any, that is levied by such incorporated municipality. Compensation of fifty thousand dollars ($50,000) or less from contracts performed in one (1) incorporated municipality by a person described in § 67-4-708(4)(A) shall be sourced to the incorporated municipality of such person's domicile or location; provided, if such person does not have a domicile or location in the state, such compensation shall not be subject to tax under § 67-4-705.
Acts 2013, ch. 313, § 18; 2014, ch. 942, § 5; 2015, ch. 514, § 5.
Compiler's Notes. Former § 67-4-717 (Acts 1971, ch. 387, § 7; modified; Acts 1972, ch. 850, § 7; 1973, ch. 172, § 1; 1973, ch. 208, §§ 1, 2; 1977, ch. 314, § 1; T.C.A., § 67-5807; Acts 1989, ch. 16, § 1), concerning fees for collecting or recording taxes, was repealed by Acts 2009, ch. 530, § 85, effective July 1, 2009.
Acts 2013, ch. 313, § 1 provided that the act, which enacted this section, shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which enacted this section, shall apply to tax periods that begin on or after January 1, 2014.
Acts 2014, ch. 942, § 8 provided that the act shall apply to tax periods that begin on or after July 1, 2014.
Acts 2015, ch. 514, § 1 provided that the act shall be known and may be cited as the “Revenue Modernization Act”.
For the Preamble to the act concerning the need to modernize the sales and use taxes, franchise and excise taxes and business tax in the state to address the engagement in business within the state by out-of-state companies, see Acts 2015, ch. 514.
Acts 2015, ch. 514, § 31 provided that the act, which rewrote (a), shall apply to all tax years beginning on or after January 1, 2016.
Amendments. The 2014 amendment in the first sentence of (a) substituted “§ 67-4-708(1)-(5)” for “§ 67-4-708(1)-(4)” and added (a)(5).
The 2015 amendment rewrote (a), which read: “(a) Any person engaged in this state in any vocation, occupation, business, or business activity enumerated, described, or referred to in § 67-4-708(1)-(5) without establishing a physical location, outlet, or other place of business in the state shall be subject to the tax levied by § 67-4-704 and shall be exempt from the tax levied by § 67-4-705. For purposes of this section, the term "engaged in this state" shall be limited to the following activities:“(1) Performing any service in this state, to the extent such service is received by a customer located in the state;“(2) Leasing tangible personal property that is located in this state;“(3) Delivering tangible personal property to a buyer in this state, when delivered by the seller in the seller's own vehicle;“(4) Purchasing and subsequently selling tangible personal property in this state in a wholly in-state transaction, where the purchase and subsequent sale are accomplished through the presence in this state of the seller's employees, agents, or independent contractors acting on behalf of the seller; and“(5) Making sales as a natural gas marketer to customers located within this state through the presence in this state of the seller's property, the holding of pipeline capacity by the seller on pipelines located in this state, or through the presence in this state of the seller's employees, agents, independent contractors, or other representatives acting on behalf of the seller to solicit orders, provide customer service, or conduct other activities in furtherance of such sales. For purposes of this subdivision (a)(5), the phrase “presence in this state of the seller's property” shall include property owned by the seller in this state during delivery to the customer, whether in a pipeline or otherwise.”
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
Acts 2014, ch. 942, § 8. July 1, 2014.
Acts 2015, ch. 514, § 31. January 1, 2016.
67-4-718. Extension of time for filing or payment.
- The commissioner may, for good cause shown, grant not more than one (1) extension of time, not to exceed thirty (30) days, for a person liable for the business tax to file that person's tax return and pay the tax shown to be due.
- Requests for such extensions must be made in writing, stating why the extension is desired, signed, and be submitted before the delinquent date of the return and tax.
- Interest as provided in § 67-1-801 shall be added to the amount of tax due beginning from the regular statutory due date until the date the tax is paid. No penalty shall be assessed if the return is made and the full amount of taxes are paid on or before the extended due date. Any return and payment made subsequent to the extended due date shall, however, be subject to penalty without regard to the period allowed by the extension.
Acts 1981, ch. 77, § 1; T.C.A., § 67-5827; Acts 2009, ch. 530, § 86.
67-4-719. Authority of commissioner to enter contract for collection of delinquent taxes.
The commissioner is authorized, in the commissioner's sole discretion, to enter into a contract with the county clerk, in the case of business taxes levied by the state, or the appropriate city official, in the case of business taxes levied by a municipality, for the collection of taxes that have become delinquent under this part. The contract may delegate to the county or city official any or all of the powers otherwise exercised by the commissioner under chapter 1, part 14 of this title. The contract shall also specify that the county or city official and any employees of the official are subject to chapter 1, part 17 of this title.
Acts 1971, ch. 387, § 8; modified; 1972, ch. 850, § 8; 1973, ch. 208, § 3; 1977, ch. 314, § 2; 1978, ch. 714, § 1; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A., § 67-5808; Acts 1984, ch. 832, § 30; 1987, ch. 346, § 1; 1995, ch. 401, § 1; 2002, ch. 555, § 1; 2008, ch. 1100, § 1; 2009, ch. 530, § 87; 2013, ch. 313, § 19.
Compiler's Notes. Acts 2013, ch. 313, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended this section, shall apply to tax periods that begin on or after January 1, 2014.
Amendments. The 2013 amendment, effective January 1, 2014, substituted “levied by the state” for “levied by a county” in the first sentence.
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
Attorney General Opinions. Governmental entity's authority to contract with private firm to audit, assess, or collect taxes, OAG 05-181 (12/20/05).
No specific statutory authority exists that would authorize local or state governments to outsource non-delinquent revenue administration beyond the statutes discussed in Opinion No. 05-181, OAG 06-039 (2/23/06).
Cited: Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984).
NOTES TO DECISIONS
1. Effect of Delinquent Filing.
Where taxpayer filed his business tax return 13 days after the due date, the delinquent filing did not operate to forfeit a personal property tax credit to which the taxpayer would otherwise have been entitled. White v. Roden Electrical Supply Co., 536 S.W.2d 346, 1976 Tenn. LEXIS 630 (Tenn. 1976).
2. Carryover Period.
Although a personal property tax credit would be allowed on taxpayer's delinquent business tax return, the delinquent filing did not extend the carryover period for such tax credit. White v. Roden Electrical Supply Co., 536 S.W.2d 346, 1976 Tenn. LEXIS 630 (Tenn. 1976).
67-4-720. [Repealed. ]
Compiler's Notes. Former § 67-4-720 (Acts 1971, ch. 387, § 9; 1980, ch. 885, § 15; T.C.A., § 67-5809; Acts 1984, ch. 605, § 1; 1988, ch. 526, § 33), concerning waiver of penalty payments, was repealed by Acts 2009, ch. 530, § 88, effective July 1, 2009.
67-4-721. Settlement upon selling or quitting business.
- If any person liable for tax, interest or penalty levied under this part sells out the person's business or stock of goods, or quits the business, the person shall make a final return and payment within fifteen (15) days after the date of selling or quitting the business.
- The person's successor, successors or assigns, if any, shall withhold sufficient of the purchase money to cover the amount of the taxes, interest, and penalties due and unpaid until the former owner produces a receipt from the commissioner showing that they have been paid or a certificate stating that no taxes, interest or penalties are due.
-
- If the purchaser of a business or stock of goods fails to withhold the purchase money as provided in subsection (b), the purchaser shall be personally liable for the payment of the taxes, interest and penalties accruing and unpaid on account of the operation of the business by any former owner, owners or assigns.
- The amount of the purchaser's liability for payment of the taxes, interest and penalties shall not exceed the amount of the purchase money paid by the purchaser to the seller in good faith and for full and adequate consideration in money or money's worth. “Purchase money,” as used in this subsection (c), includes cash paid, purchase money notes given by purchaser to seller, the cancellation of the seller's indebtedness to the purchaser, the fair market value of property or other consideration given by purchaser to seller, and does not include indebtedness of the seller either taken or assumed by the purchaser when a tax lien has not been filed.
- The purchaser shall have no liability for the taxes, interest or penalties, if the department releases the former owner, owners or assigns from the original liability for the taxes, interest or penalty through payment of the amount due and settlement with the department.
- A purchaser who, in good faith and without knowledge of any false statement in the affidavit, receives from the seller at the time of the purchase an affidavit stating under oath of the penalties of perjury the amount of the taxes, interest and penalty due and unpaid by the seller to the department through the date of the purchase, or a statement that there are no due and unpaid taxes, interest and penalty, who in good faith withholds and sets aside from the purchase money to be paid to the seller an amount sufficient to pay the amount of the taxes, interest and penalty shown to be due and unpaid in the seller's affidavit, and who tenders a copy of the seller's affidavit by registered or certified mail or by personal service to the tax enforcement division of the department, shall be entitled to a release from the commissioner from any liability, in excess of that shown on the affidavit, for the payment of the taxes, interest and penalty accrued and unpaid on account of the operation of the business by any former owner or assigns, unless the commissioner notifies the purchaser of the correct tax liability at the return address provided by the purchaser within fifteen (15) days of receipt of the affidavit.
-
- Nothing in this section shall apply to any licensee transferring a business from one location to another, within the same municipality, on a one-time basis during any annual taxable period.
- In this event a licensee shall notify the county clerk, in the case of a business located in a county, or the appropriate city official, in the case of a business located in a municipality, at least five (5) days prior to the last day of business at the old location, submitting information for the new location and payment of the fee set out in § 8-21-701.
- Succeeding transfers by the same licensee, within the same annual taxable period, shall submit a final return and payment within fifteen (15) days to the commissioner. In addition, the licensee shall be required to obtain a new business license for the new location as set forth in § 67-4-723.
Acts 1971, ch. 387, § 15; impl. am. Acts 1978, ch. 934, §§ 22, 36; Acts 1981, ch. 304, § 1; T.C.A., § 67-5815; Acts 2008, ch. 924, § 3; 2009, ch. 530, § 89.
Cross-References. Certified mail in lieu of registered mail, § 1-3-111.
67-4-722. Taxpayer's records.
- It is the duty of every person required to pay a tax under this part to keep and preserve records showing the gross amount of sales tax owed to the state, and the amount of such person's gross receipts taxable under this part; and such other books of account as may be necessary to determine the amount of tax due under this part, and all such books and records shall be open to inspection at all reasonable hours to the commissioner or the commissioner's duly authorized agents.
- All such books and records shall be maintained by the taxpayer for a period of three (3) years from December 31 of the year in which the associated return required by this part was filed.
- Except as provided in subsection (d), all returns, tax information, and tax administration information under this part shall be subject to chapter 1, part 17 of this title.
- Notwithstanding any other law to the contrary, the name and address of any present or former owner or operator of any trade or business as appearing on any business or occupation license or application for a license is a public record open for public inspection within the meaning of the Public Records Act, compiled in title 10, chapter 7, and such record is not confidential information.
Acts 1971, ch. 387, § 16; modified; 1972, ch. 850, § 15; T.C.A., § 67-5816; Acts 1989, ch. 591, §§ 1, 6; 1992, ch. 861, § 1; 2009, ch. 530, § 90.
Cross-References. Confidentiality of public records, § 10-7-504.
Disclosure of tax returns and tax information, title 67, ch. 1, part 17.
Attorney General Opinions. The business name, business owner's name, and business address stated on an application routinely made to a county clerk or a municipal tax collector for the purpose of collecting the business tax may be released as public information, but the telephone number or numbers listed on such an application for the purpose of obtaining a business license do not become public information, OAG 01-165 (11/15/01).
Identifying numbers obtained by the state, county, or city for reporting and enforcing the business tax, including federal employer identification numbers, social security numbers, or state sales tax numbers, are not considered public information, OAG 01-165 (11/15/01).
67-4-723. License — Issuance and renewal — Duty to exhibit license — Use of collected funds.
-
- Upon receipt of the prescribed application and payment of fifteen dollars ($15.00), together with any other information reasonably required, it shall be the duty of the county clerk, in the case of taxpayers located within the county, and the appropriate city official, in the case of taxpayers located within the incorporated municipality, to issue a license to the taxpayer. If a taxpayer has more than one (1) location within the county or incorporated municipality, a separate license, including payment of the fifteen-dollar fee required by this subsection (a), shall be required for each location. In the case of the county clerk, three dollars ($3.00) of the fifteen-dollar fee shall be earmarked for computer hardware purchases or replacement, but may be used for other usual and necessary computer-related expenses at the discretion of the county clerk. The earmarked amount shall be preserved for these purposes and shall not revert to the general fund at the end of a budget year if unexpended.
- In addition to the initial license issued under subdivision (a)(1), the issuing official shall renew the license upon notification from the department that the taxpayer has filed the return required under § 67-4-715 and remitted the amount shown to be due on the return. There shall be no fee charged for the renewal of a license issued under this subsection (a).
- Each license issued under this subsection (a) shall expire thirty (30) days after the date that the taxpayer's return is due under § 67-4-715.
- No person shall conduct business in this state without first acquiring the license required by this subsection (a).
- Notwithstanding subdivisions (a)(1) and (2), any county or municipality may, but shall not be required to, enter an agreement with the commissioner pursuant to which the department will issue or renew, or both, the license required by this subsection (a) on behalf of the county or municipality.
- Persons described in § 67-4-708(5) and taxable under § 67-4-709(5) shall not be required to obtain a license under this subsection (a).
-
- Notwithstanding any provision to the contrary, any incorporated municipality that imposes the tax authorized by § 67-4-705(a) and every county shall issue a minimal activity license to any person that is exempt from taxation and licensing pursuant to § 67-4-712(d), provided that such person has sales of more than three thousand dollars ($3,000) but less than ten thousand dollars ($10,000) per year within the jurisdiction. Such license shall be issued upon receipt of an application, to be prescribed by the department, and payment of fifteen dollars ($15.00). The application shall require the applicant to attest that the applicant is engaged in business within such county or incorporated municipality but has sales of less than ten thousand dollars ($10,000) per year within such county or incorporated municipality. No person with sales of more than three thousand dollars ($3,000) but less than ten thousand dollars ($10,000) per year within such county or incorporated municipality shall conduct business in such county or incorporated municipality without first acquiring the license required by this subsection (b). If a person has more than one (1) location within the county or incorporated municipality, a separate minimal activity license, including payment of the fifteen-dollar fee required by this subsection (b), shall be required for each location. Every county or incorporated municipality that issues minimal activity licenses pursuant to this subsection (b) shall provide the department, if requested, with the identity of each licensee and any other information reasonably required by the department to verify the licensee's compliance with this part.
- Persons with sales of three thousand dollars ($3,000) or less per year in any incorporated municipality or county may, but do not have to, apply for a minimal activity license, as provided for in this subsection (b).
- Each minimal activity license issued under this subsection (b) shall expire thirty (30) days after the dates set forth in § 67-4-715 as if the person were filing a return.
- This subsection (b) shall not operate to exempt any person from filing a tax return pursuant to § 67-4-715 in the event that the person's sales exceed ten thousand dollars ($10,000) during their tax year as otherwise provided in § 67-4-715.
- Notwithstanding subdivision (b)(1), any county or municipality may, but shall not be required to, enter an agreement with the commissioner pursuant to which the department will issue or renew, or both, the license required by this subsection (b) on behalf of the county or municipality.
- It shall be the duty of each taxpayer that receives a license under this section to exhibit such license.
- An amount equal to three dollars ($3.00) per minimal activity license shall be retained by the county clerk or city official that issues such license. In the case of a county clerk, such amount shall be earmarked for computer hardware purchases or replacement but may be used for other usual and necessary computer-related expenses at the discretion of the county clerk. The amount shall be preserved for these purposes and shall not revert to the general fund at the end of a budget year if unexpended. Notwithstanding § 8-21-701, no additional fee shall be charged to any person for the filing of the application or issuance of the license provided for in this section.
- Licenses already in effect as of January 1, 2014, continue to be valid until their original renewal date.
Acts 1971, ch. 387, § 20; T.C.A., § 67-5819; Acts 2009, ch. 530, § 91; 2013, ch. 313, § 20; 2014, ch. 942, § 6; 2018, ch. 756, § 1.
Compiler's Notes. Acts 2013, ch. 313, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended this section, shall apply to tax periods that begin on or after January 1, 2014.
Acts 2014, ch. 942, § 8 provided that the act shall apply to tax periods that begin on or after July 1, 2014.
Amendments. The 2013 amendment, effective January 1, 2014, rewrote the section which read: “(a) Upon receipt of the prescribed application and payment of fifteen dollars ($15.00), together with any other information reasonably required, it shall be the duty of the county clerk, in the case of taxpayers located within the county, and the appropriate city official, in the case of taxpayers located within a municipality, to issue a license to the taxpayer. The license shall be issued at the time of registration under § 67-4-706.“(b) In addition to the initial license issued under subsection (a), the issuing official shall renew the license upon notification from the department that the taxpayer has filed the return required under § 67-4-715 and remitted the amount shown to be due on the return. There shall be no fee charged for the renewal of an existing license.“(c) Notwithstanding § 8-21-701, no additional fee shall be charged to the taxpayer for the filing of the application or issuance of the license provided for in this section.“(d) It shall be the duty of each taxpayer to exhibit the license so received.”
The 2014 amendment added (a)(6).
The 2018 amendment added the last two sentences in (a)(1).
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
Acts 2014, ch. 942, § 8. July 1, 2014.
Acts 2018, ch. 756, § 2. April 18, 2018.
Attorney General Opinions. City recorder's discretion in determining whether to issue a business license, OAG 97-045 (4/14/97).
NOTES TO DECISIONS
1. Conditions Precedent to Issuance of License.
The only condition precedent to the issuance of the license is payment of the tax and no grounds are provided for upon which to predicate a refusal to issue the license. State ex rel. Polin v. Hill, 547 S.W.2d 916, 1977 Tenn. LEXIS 570 (Tenn. 1977).
2. Refusal to Issue License.
Municipal ordinances cannot be used to deny realtors the right to procure a license required by the business tax act, a state law of general application. State ex rel. Polin v. Hill, 547 S.W.2d 916, 1977 Tenn. LEXIS 570 (Tenn. 1977).
67-4-724. Distribution of taxes — Retention by state in general fund of taxes, interest and penalties assessed due to audit.
-
The tax levied by the state under § 67-4-704, including any associated interest and penalties, shall be distributed as follows:
- An amount equal to seven dollars ($7.00) per return shall be paid to the county clerk with respect to each tax return filed under § 67-4-715 by a taxpayer that is either located within the county or otherwise obtains a license under § 67-4-723(a). Of that amount, three dollars ($3.00) shall be earmarked for computer hardware purchases or replacement, but may be used for other usual and necessary computer-related expenses at the discretion of the county clerk. The amount shall be preserved for these purposes and shall not revert to the general fund at the end of a budget year if unexpended;
- After the distribution provided in subdivision (a)(1), an amount equal to five percent (5%) of the remaining proceeds of the tax shall be paid to the county clerk in the case of returns filed under § 67-4-715 by taxpayers located or otherwise licensed under § 67-4-723(a) within the county;
- After the distributions provided in subdivisions (a)(1) and (2), forty-three percent (43%) of the remaining proceeds of the tax shall be earmarked and allocated specifically and exclusively to the state's general fund;
- After the distributions provided in subdivisions (a)(1)-(3), an administration fee of one and one hundred twenty-five thousandths percent (1.125%) of the remaining proceeds of the tax shall be allocated to the department to cover the expenses of administration and collection;
- After the distributions provided in subdivisions (a)(1)-(4), the remaining proceeds of the tax collected under § 67-4-704 shall be distributed to the county in which the taxpayer has established a physical location, outlet, or other place of business from which the sales are made;
-
The tax levied by an incorporated municipality under § 67-4-705, including any associated interest and penalties, shall be distributed as follows:
- An amount equal to seven dollars ($7.00) per return shall be paid to the appropriate city official with respect to each tax return filed under § 67-4-715 by a taxpayer that is either located within the municipality or otherwise obtains a license under § 67-4-723(a);
- After the distribution provided in subdivision (b)(1), an amount equal to five percent (5%) of the remaining proceeds of the tax shall be paid to the appropriate city official in the case of returns filed under § 67-4-715 by taxpayers located or otherwise licensed under § 67-4-723(a) within the municipality;
- After the distributions provided in subdivisions (b)(1) and (2), forty-three percent (43%) of the remaining proceeds of the tax shall be allocated to the general fund of the state. Any allocation or distribution of amounts from the general fund for local purposes shall be deemed first derived from the proceeds directed into the general fund under this subdivision (b)(3);
- After the distributions provided in subdivisions (b)(1)-(3), an administration fee of one and one hundred twenty-five thousandths percent (1.125%) of the remaining proceeds of the tax shall be allocated to the department to cover the expenses of administration and collection;
- After the distributions provided in subdivisions (b)(1)-(4), the remaining proceeds of the tax collected by the commissioner under § 67-4-705 shall be distributed to the municipality that levied the tax.
- Notwithstanding subsections (a) and (b), one hundred percent (100%) of the tax, interest, and penalty collected from a taxpayer that does not have either a license under § 67-4-723(a) or an established physical location, outlet, or other place of business in any county or incorporated municipality in the state shall be earmarked and allocated specifically and exclusively to the state's general fund. In addition, one hundred percent (100%) of the amount of any tax, interest, and penalty assessed by the commissioner pursuant to § 67-4-704 or § 67-4-705 as a result of an audit of the taxpayer's books and records shall be earmarked and allocated specifically and exclusively to the state's general fund. In addition, one hundred percent (100%) of the tax, interest, and penalty collected from any person described in § 67-4-708(5) and taxable under § 67-4-709(5) shall be earmarked and allocated specifically and exclusively to the state's general fund.
- The fee levied by a county or incorporated municipality under § 67-4-710, including any associated interest and penalties, shall be retained by the county or incorporated municipality that levied the fee. Notwithstanding the preceding sentence, an amount equal to five percent (5%) of the proceeds of the fee shall be paid to the county clerk, in the case of fees collected under § 67-4-710 by a county, and to the appropriate city official, in the case of fees collected under § 67-4-710 by a municipality.
Acts 1972, ch. 850, §§ 15-18; 1978, ch. 714, §§ 2, 3; 1980, ch. 885, § 16; T.C.A., §§ 67-5823 — 67-5826; Acts 1984, ch. 832, §§ 32, 33; 1988, ch. 526, § 34; 1989, ch. 340, § 1; 2002, ch. 856, § 9d; 2009, ch. 530, § 92; 2013, ch. 313, § 21; 2014, ch. 764, § 2; 2014, ch. 942, § 7; 2019, ch. 404, § 1.
Compiler's Notes. Acts 1988, ch. 526, § 45 provided that the amendment by that act shall apply to all assessments of penalty made on or after January 1, 1989.
Acts 2002, ch. 856 § 14(i) provided that the 2002 amendment by § 9 of that act shall apply to tax years ending on or after September 1, 2002.
Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to that act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Acts 2013, ch. 313, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Uniformity and Small Business Relief Act of 2013.”
Acts 2013, ch. 313, § 23 provided that the act, which amended this section, shall apply to tax periods that begin on or after January 1, 2014.
Acts 2014, ch. 942, § 8 provided that the act shall apply to tax periods that begin on or after July 1, 2014.
Acts 2019, ch. 404, § 3 provided that act section 1, which amended this section, shall apply to tax years beginning on or after July 1, 2014.
Amendments. The 2013 amendment, effective January 1, 2014, rewrote the section which read: “(a) Except as otherwise provided in this section, all taxes collected by the commissioner under this part, including any associated interest and penalties, together with all amounts remitted to the department under § 67-4-710, shall be distributed as follows:“(1) An amount equal to seven dollars ($7.00) per return shall be paid to the county clerk with respect to each tax return filed under § 67-4-715 by a taxpayer located within the county. Of that amount, two dollars ($2.00) shall be earmarked for computer hardware purchases or replacement, but may be used for other usual and necessary computer-related expenses at the discretion of the county clerk. The amount shall be preserved for these purposes and shall not revert to the general fund at the end of a budget year if unexpended;“(2) An amount equal to seven dollars ($7.00) per return shall be paid to the appropriate city official with respect to each tax return filed under § 67-4-715 by a taxpayer located within the city;“(3) After the distributions provided in subdivisions (a)(1) and (2), an amount equal to five percent (5%) of the remaining proceeds of the tax collected by the commissioner shall be paid to the county clerk, in the case of taxes levied under this part by a county, and the appropriate city official, in the case of taxes levied under this part by a municipality;“(4) After the distributions provided in subdivisions (a)(1)-(3), fifty-seven percent (57%) of the remaining proceeds of the tax collected by the commissioner under this part, less a reasonable administration fee as set forth in § 67-6-710(b)(2), shall be distributed to the county or municipality that levied the tax under this part and forty-three percent (43%) shall be retained by the state and shall be earmarked and allocated specifically and exclusively to the state's general fund.”“(b) Notwithstanding subsection (a), one hundred percent (100%) of the amount of any tax, interest, and penalty assessed by the commissioner as a result of an audit of the taxpayer's books and records shall be retained by the state and shall be earmarked and allocated specifically and exclusively to the state's general fund.”
The 2014 amendment by ch. 942 added the third sentence in (c).
The 2014 amendment by ch. 764 inserted “or § 67-4-705” between “67-4-704” and “as a result” in the second sentence of (c).
The 2019 amendment by ch. 404, applicable to tax years beginning on or after July 1, 2014, in (b)(3), substituted “allocated to the general fund of the state. Any allocation or distribution of amounts from the general fund for local purposes shall be deemed first derived from the proceeds directed into the general fund under this subdivision (b)(3);” for “earmarked and allocated specifically to a fund held by the state to be used for purposes of the municipality that levied the tax. The fund shall be preserved for these purposes and shall not revert to the general fund at the end of a budget year if unexpended;”.
Effective Dates. Acts 2013, ch. 313, § 23. January 1, 2014.
Acts 2014, ch. 764, § 4. April 24, 2014.
Acts 2014, ch. 942, § 8. July 1, 2014.
Acts 2019, ch. 404, § 3. May 17, 2019.
Law Reviews.
Building a House of Cards: A Policy Evaluation of Tennessee's Tax Reform Act of 2002 with Emphasis on Fairness to the Poor (Robert F. Parsley), 70 Tenn. L. Rev. 1177 (2003).
NOTES TO DECISIONS
1. Exclusive Penalty.
In that this section provided the sole penalty for a delinquent filing of a business tax return, the taxpayer, which filed its business tax return 13 days after the due date, did not forfeit a personal property tax credit to which it would otherwise have been entitled. White v. Roden Electrical Supply Co., 536 S.W.2d 346, 1976 Tenn. LEXIS 630 (Tenn. 1976).
67-4-725. [Repealed.]
Acts 1971, ch. 387, § 19; modified; T.C.A., § 67-5818; repealed by Acts 2013, ch. 313, § 22, effective January 1, 2014.
Compiler's Notes. Former § 67-4-725 concerned disposition of state revenue.
67-4-726. [Repealed.]
Compiler’s Notes. Former § 67-4-726 (Acts 1972, ch. 850, § 21; T.C.A., §§ 67-5827, 67-5828; Acts 1984, ch. 832, § 34), concerning localities designating department as collector, was repealed by Acts 2009, ch. 530, § 93, effective July 1, 2009.
67-4-727. Municipal airports outside municipal boundaries.
- Where there exists an airport or any other navigation facility, as defined in § 42-4-103 or § 42-5-102, that is located outside the territorial limits of the creating municipality or the municipality that controls or operates the airport or air navigation facility, the creating municipality or municipality that controls or operates the airport or air navigation facility may levy and collect a privilege tax, in the same manner authorized by this part, upon any vocation, occupation, business or business activity enumerated, described, or referred to in § 67-4-708 that is conducted or located upon the premises, grounds, and/or property of such airport or air navigation facility, and the municipality may levy and collect such privilege tax in the same manner and to the same extent as if the airport or air navigation facility were within the territorial limits of the municipality.
-
-
This section shall not apply to any county having a population, according to the 1980 federal census or any subsequent federal census, of:
not less than nor more than
100,000 200,000
285,000 290,000
450,000 550,000
600,001
- This section shall not apply to any county having a metropolitan form of government.
- This section shall not apply to any municipality or county creating, controlling, or operating, in part, an airport or air navigation facility created, controlled, or operated, in part, by at least four (4) political subdivisions of this state and a political subdivision of an adjacent state, which airport is located outside the territorial limits of such municipality or county.
-
This section shall not apply to any county having a population, according to the 1980 federal census or any subsequent federal census, of:
Acts 1971, ch. 387, § 2; 1972, ch. 850, § 2; 1983, ch. 386, § 7; 1983, ch. 466, §§ 3-7; T.C.A., § 67-5802.
Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 4.
67-4-728. Fee or tax on beer.
No county, municipal, or metropolitan government shall have the authority to levy any regulatory fee, inspection fee, or special tax or fee of any type or kind on beer as defined in § 57-6-102, at either wholesale or retail, except as authorized by this part and by chapter 6 of this title, providing for city and county retail sales tax, and in §§ 57-5-105 and 57-5-108.
Acts 1971, ch. 387, § 2; 1972, ch. 850, § 2; 1983, ch. 386, § 7; 1983, ch. 466, §§ 3-7; T.C.A., § 67-5802.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 4.
67-4-729. Traveling photographers.
- As used in this section, “traveling photographer” means a photographer who makes or causes to be made studio type photographs or portraits and sells such photographs or portraits or enlargements of those photographs or portraits, and who does not have an established studio or place of business in the trade area in which such photographs are taken, but does not include a photographer who makes photographs incidental to and to be placed upon identification cards or other articles of identification.
-
- Before any traveling photographer may do any business in a community in which such photographer has no established studio or place of business, such photographer shall first register with the sheriff of the county or chief of police of any metropolitan government in which such photographer proposes to conduct business temporarily.
- Such photographer shall list the photographer's full name and address, the name and address of any other person working with such photographer, and the name and address of the employer or business firm with which such photographer is connected, and shall furnish proof that the photographer has deposited with the county clerk the amount of one hundred dollars ($100) and a like amount with the proper municipal tax collector, against whatever amount or amounts of business taxes such photographer may owe on account of business done in the county or municipality, or both, as the case may be.
- Any such deposit or deposits shall be a credit on the amount of business taxes for which such photographer may be liable to any such county or municipality and when such taxes are paid, any balance remaining to the photographer's credit with the respective taxing jurisdictions shall be refunded.
- A violation of this section is a Class C misdemeanor.
Acts 1973, ch. 407, §§ 1-3; T.C.A., §§ 67-5829, 67-5830; Acts 1989, ch. 591, § 113.
Cross-References. Penalty for Class C misdemeanor, § 40-35-111.
67-4-730. Property management companies.
A property management company shall owe its business tax based on its gross proceeds from overnight rentals and gross proceeds from any other source subject to the business tax levied by this part.
Acts 2001, ch. 224, § 3.
Compiler's Notes. Former § 67-4-730 (Acts 1979, ch. 28, § 7; 1980, ch. 777, § 1; T.C.A., §§ 67-5830, 67-5831), concerning gross receipt tax on professional boxing, sparring or wrestling matches, was repealed by Acts 1984, ch. 974, § 9. For similar provisions, see § 68-115-211.
Part 8
Bail Bond Tax
67-4-801. Power to levy tax.
The tax imposed by this part is a state tax for state purposes only and no county or municipality or taxing district shall have power to levy any like tax.
Acts 2001, ch. 456, § 2.
Compiler's Notes. Former § 67-4-801 (Acts 1976, ch. 537, § 26; T.C.A., § 67-2701), concerning the short title of the part, was repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999. For new law, see § 67-4-2001.
Cited: Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009).
Collateral References. Taxation 371
67-4-802. Supervision and collection of tax — Forms.
The supervision and collection of the tax imposed by this part is under the direction of the department of revenue. The department has the authority and power to prescribe forms upon which individuals and entities required to collect and remit the tax imposed shall make reports of such facts and information as will enable the commissioner to ascertain the correctness of the amount reported and paid by such individuals and entities.
Acts 2001, ch. 456, § 3.
Compiler's Notes. Former § 67-4-802 (Acts 1976, ch. 537, § 30; T.C.A., § 67-2705), concerning the authority to levy the tax, was repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999. For new law, see § 67-4-2002.
67-4-803. Amount of tax.
A tax is imposed on all bail bonds in this state, as provided in title 40, chapter 11, in the amount of twelve dollars ($12.00) per bail bond. For purposes of this part, an increase or decrease in the amount of an existing bail bond shall not constitute a new bail bond; provided, that the tax imposed by this section per bail bond shall be collected by bail bondsmen and shall include all charges against a defendant that are based on the same conduct and arising from the same criminal episode committed as a part of a single course of conduct leading to the arrest and charges at the time; and the tax imposed on bail bonds shall not be construed to be a separate tax on each charge arising from incidents in a single course of conduct and the same criminal episode, but for the purposes of this section shall be construed as one bail bond.
Acts 2001, ch. 456, § 4; 2002, ch. 775, § 1.
Compiler's Notes. Former § 67-4-803 (Acts 1976, ch. 537, § 52; T.C.A., § 67-2727; Acts 1988, ch. 780, § 1), concerning administration by the department of revenue and forms and reports, was repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999. For new law, see § 67-4-2003.
67-4-804. Additional tax imposed — Continuation of previous bond.
If a bail bond is sought pending appeal of a conviction, an additional tax in the amount of twelve dollars ($12.00) shall be imposed, even if the bond is a continuation of a previous bond.
Acts 2001, ch. 456, § 5.
Compiler's Notes. Former § 67-4-804 (Acts 1976, ch. 537, § 28; T.C.A., § 67-2703; Acts 1990, ch. 1087, § 2; 1991, ch. 37, § 1; 1993, ch. 282, §§ 1, 2; 1995, ch. 174, § 1; 1998, ch. 1092, § 1), concerning definitions, was repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999. For new law, see § 67-4-2004.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
Cited: Corp. v. Chumley, 190 S.W.3d 652, 2005 Tenn. App. LEXIS 664 (Tenn. Ct. App. 2005).
67-4-805. Effect of nonpayment on validity and issuance of bond.
Payment of the tax imposed by this part shall be a condition precedent to the validity of any bail bond under title 40, chapter 11. No bond shall issue unless the tax has been paid.
Acts 2001, ch. 456, § 6.
Compiler's Notes. Former § 67-4-805 (Acts 1976, ch. 537, § 29; 1978, ch. 841, §§ 1, 2; 1982, ch. 886, §§ 1, 2; 1982, ch. 952, § 1; 1983, ch. 190, § 1; 1983, ch. 227, § 2; T.C.A., § 67-2704; Acts 1985, ch. 385, § 1; 1987, ch. 265, § 1; 1987, ch. 418, § 1; 1988, ch. 780, § 2; 1991, ch. 37, §§ 2, 3; 1991, ch. 503, §§ 4, 7; 1992, ch. 979, § 1; 1996, ch. 681, § 1; 1997, ch. 173, § 1), concerning the definition of net earnings, was repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999. For new law, see § 67-4-2006.
Cited: Hollingsworth, Inc. v. Johnson, 138 S.W.3d 863, 2003 Tenn. App. LEXIS 799 (Tenn. Ct. App. 2003); Hilloak Realty Co. v. Chumley, 233 S.W.3d 816, 2007 Tenn. App. LEXIS 170 (Tenn. Ct. App. Mar. 29, 2007).
67-4-806. Duty of bail bondsman to collect tax — Disposition of collections.
It shall be the duty of the bail bondsman to collect the tax imposed by this part and to remit the tax to the department in such manner as the department may determine. A special account shall be created by the department into which all taxes collected under this part shall be deposited. All remitted revenues shall be maintained in such segregated account within the department until distributed or deposited, as required in this section, into the civil legal representation of indigents fund authorized and created by § 16-3-808. Such funds derived from the tax imposed and collected pursuant to this part shall be expended or distributed as follows:
- Four percent (4%) shall be distributed to underwrite costs associated with development and provision of continuing education courses mandated by title 40, chapter 11, part 4; and
- The remainder shall be used to provide legal representation to low-income Tennesseans in civil matters in such manner as determined by the supreme court as described in § 16-3-808(c); provided, that one-fourth (¼) of this remainder shall be allocated to an appropriate statewide nonprofit organization capable of providing continuing legal education, technology support, planning assistance, resource development and other support to organizations delivering civil legal representation to indigents. The remainder shall be distributed to organizations delivering direct assistance to clients with Legal Services Corporation funding as referenced in the Tennessee State Plan for Civil Legal Justice approved in March, 2001, by the Legal Services Corporation.
Acts 2001, ch. 456, § 7.
Compiler's Notes. Former § 67-4-806 (Acts 1976, ch. 537, § 27; T.C.A., § 67-2702; Acts 1984, ch. 558, § 3; 1990, ch. 1087, § 3; 1991, ch. 37, § 4), concerning imposition of tax, was repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999. For new law, see § 67-4-2007.
Law Reviews.
Winding Back Wayfair: Retaining the Physical Presence Rule for State Income Taxation, 72 Vand. L. Rev. 1391 (May 2019).
Cited: Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009).
67-4-807. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
67-4-808. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
67-4-809. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
67-4-810. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
67-4-811. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
67-4-812. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
67-4-813. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
67-4-814. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
67-4-815. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
67-4-816. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
67-4-817. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
67-4-818. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
67-4-819. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
67-4-820. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
67-4-821. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
67-4-822. [Repealed.]
Compiler's Notes. Former §§ 67-4-807 — 67-4-822 (Acts 1976, ch. 537, §§ 27, 31-51, 53-55; 1977, ch. 333, § 1; 1978, ch. 600, §§ 1, 2; 1980, ch. 869, § 1; 1980, ch. 885, § 11; 1981, ch. 230, § 1; T.C.A., §§ 67-2702, 67-2706-67-2726, 67-2728, 67-2730, 67-2733; Acts 1983, ch. 227, §§ 3, 4; 1985, ch. 385, § 2; 1985, ch. 396, § 4, 8; 1986, ch. 859, § 2; 1987, ch. 67, § 1; 1987, ch. 265, § 2; 1989, ch. 379, § 3; 1989, ch. 464, § 1; 1989, ch. 524, § 3; 1989, ch. 560, §§ 14, 15, 19; 1990, ch. 595, § 3; 1990, ch. 1087, §§ 6-8; 1991, ch. 37, § 7; 1991, ch. 397, § 4; 1992, ch. 740, § 1; 1990, ch. 999, §§ 3, 5-7; 1990, ch. 1087, §§ 4, 5; 1991, ch. 37, §§ 5, 6; 1991, ch. 503, § 5; 1994, ch. 762, § 1; 1994, ch. 885, §§ 2, 4; 1995, ch. 66, §§ 1-3; 1995, ch. 174, §§ 2-4; 1995, ch. 305, § 119; 1996, ch. 681, § 2; 1996, ch. 867, § 1; 1997, ch. 508, § 2), concerning bail bond tax, were repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999.
Part 9
Fantasy Sports Tax Act
67-4-901. Short title.
This part shall be known and may be cited as the “Fantasy Sports Tax Act”.
Acts 2016, ch. 978, § 4.
Code Commission Notes.
Acts 2016, ch. 978, § 4 enacted a new part 32, but the part has been redesignated as part 9, by authority of the Code Commission.
Compiler's Notes. Former title 67, ch. 4, part 9, §§ 67-4-901 — 67-4-921 (Acts 1976, ch. 537, §§ 1-25; 1976, ch. 743, § 1; 1977, ch. 332, §§ 1, 2; 1981, ch. 231, § 1; 1981, ch. 257, § 1; 1981, ch. 507, § 1; T.C.A., §§ 67-2901-67-2925; Acts 1984 (Ex. Sess.), ch. 2, §§ 1, 2; 1985, ch. 396, § 7; 1986, ch. 598, § 11; 1987, ch. 67, § 2; 1988, ch. 526, § 10; 1989, ch. 379, §§ 1, 2; 1989, ch. 464, § 2; 1989, ch. 524, § 4; 1990, ch. 1087, §§ 9-12; 1990, ch. 1091, §§ 1, 2; 1991, ch. 37, §§ 8-11; 1991, ch. 397, § 5; 1991, ch. 503, § 1; 1993, ch. 392, § 1; 1994, ch. 761, § 1; 1994, ch. 885, §§ 3, 4; 1995, ch. 174, § 5; 1995, ch. 305, § 120; 1995, ch. 544, §§ 1, 2; 1996, ch. 867, § 2; 1996, ch. 1026, § 1; 1997, ch. 223, § 1; 1997, ch. 508, § 3; 1998, ch. 801, §§ 1, 2), concerning franchise tax law, was repealed by Acts 1999, ch. 406, § 2, effective July 1, 1999. For new law, see §§ 67-4-2101 — 67-4-2118.
For Preamble to act relative to online simulated competition, see Acts 2016, ch. 978.
Effective Dates. Acts 2016, ch. 978, § 6. July 1, 2016; provided that for the purposes of promulgating rules and for purposes of §§ 39-17-501 and 47-18-1611, the act took effect April 27, 2016.
Cross-References. Fantasy Sports Act, § 47-18-1601 et seq.
67-4-902. Part definitions.
For purposes of this part:
- “Adjusted revenues” means, for each fantasy sports contest, the amount equal to the total entry fees collected from all participants entering the fantasy sports contest less winnings paid to participants in the contest, multiplied by the resident percentage;
- “Commissioner” means the commissioner of revenue;
- “Entry fees” has the same meaning as defined in § 47-18-1602;
- “Fantasy sports contest” has the same meaning as defined in § 47-18-1602;
- “Fantasy sports operator” has the same meaning as defined in § 47-18-1602;
- “Player” has the same meaning as defined in § 47-18-1602;
- “Resident percentage” means, for each fantasy sports contest, the percentage, rounded to the nearest tenth of a percent (0.1%), of the total entry fees collected from Tennessee consumers divided by the total entry fees collected from all players, regardless of the players' location, of the fantasy sports contest; and
- “Tennessee consumer” has the same meaning as defined in § 47-18-1602.
Acts 2016, ch. 978, § 4.
Code Commission Notes.
Acts 2016, ch. 978, § 4 enacted a new part 32, but the part has been redesignated as part 9, by authority of the Code Commission.
Compiler's Notes. For Preamble to act relative to online simulated competition, see Acts 2016, ch. 978.
Effective Dates. Acts 2016, ch. 978, § 6. July 1, 2016; provided that for the purposes of promulgating rules and for purposes of §§ 39-17-501 and 47-18-1611, the act shall take effect April 27, 2016.
67-4-903. Tax on adjusted revenues of fantasy sports contest.
- It is a privilege taxable by this state to offer or provide to Tennessee consumers fantasy sports contests.
- A tax is imposed at the rate of six percent (6%) on all adjusted revenues of a fantasy sports contest offered by a fantasy sports operator to Tennessee consumers and is in addition to any other taxes levied pursuant to this title.
- The tax imposed by this part shall be collected and administered by the commissioner.
Acts 2016, ch. 978, § 4.
Code Commission Notes.
Acts 2016, ch. 978, § 4 enacted a new part 32, but the part has been redesignated as part 9, by authority of the Code Commission.
Compiler's Notes. For Preamble to act relative to online simulated competition, see Acts 2016, ch. 978.
Effective Dates. Acts 2016, ch. 978, § 6. July 1, 2016; provided that for the purposes of promulgating rules and for purposes of §§ 39-17-501 and 47-18-1611, the act shall take effect April 27, 2016.
Law Reviews.
Winding Back Wayfair: Retaining the Physical Presence Rule for State Income Taxation, 72 Vand. L. Rev. 1391 (May 2019).
67-4-904. Payment of tax.
The tax levied under this part shall be due and payable quarterly. For the purpose of ascertaining the amount of tax payable under this part, it shall be the duty of each fantasy sports operator, on or before the twentieth day immediately following the end of each calendar quarter, to transmit to the commissioner, upon forms prescribed by the commissioner, returns, showing all receipts derived from offering or providing consumers with any of the privileges taxable under this part during the preceding calendar quarter and other necessary information, as determined by the commissioner, to determine the adjusted revenues of a fantasy sports contest offered by a fantasy sports operator.
Acts 2016, ch. 978, § 4.
Code Commission Notes.
Acts 2016, ch. 978, § 4 enacted a new part 32, but the part has been redesignated as part 9, by authority of the Code Commission.
Compiler's Notes. For Preamble to act relative to online simulated competition, see Acts 2016, ch. 978.
Effective Dates. Acts 2016, ch. 978, § 6. July 1, 2016; provided that for the purposes of promulgating rules and for purposes of §§ 39-17-501 and 47-18-1611, the act shall take effect April 27, 2016.
67-4-905. Distribution of taxes.
Of the taxes, including all penalties and interest, received by the commissioner under this part, the distribution shall be as follows:
-
- From July 1, 2016, to June 30, 2017, sixty percent (60%) shall be allocated to the general fund; and
- Beginning July 1, 2017, and thereafter, sixty-eight percent (68%) shall be allocated to the general fund;
- Twenty percent (20%) shall be allocated among the counties of the state in the proportion that the population of each bears to the aggregate population of the state according to the most recent federal census and other censuses authorized by law;
- Ten percent (10%) shall be allocated to the fantasy sports fund established by § 47-18-1607; and
-
- From July 1, 2016, to June 30, 2017, ten percent (10%) shall be allocated to the department of revenue for administration of this part; and
- Beginning July 1, 2017, and thereafter, two percent (2%) shall be allocated to the department of revenue for administration of this part.
Acts 2016, ch. 978, § 4.
Code Commission Notes.
Acts 2016, ch. 978, § 4 enacted a new part 32, but the part has been redesignated as part 9, by authority of the Code Commission.
Compiler's Notes. For Preamble to act relative to online simulated competition, see Acts 2016, ch. 978.
Effective Dates. Acts 2016, ch. 978, § 6. July 1, 2016; provided that for the purposes of promulgating rules and for purposes of §§ 39-17-501 and 47-18-1611, the act shall take effect April 27, 2016.
Part 10
Tobacco Tax Law
67-4-1001. Part definitions.
As used in this part, unless the context otherwise requires:
- “Cigar” or “cigars” includes any roll of tobacco, for smoking, irrespective of the tobacco being flavored or adulterated, or mixed with other ingredients, where such a roll has a wrapper made chiefly of tobacco, except “cigar” or “cigars” does not include rolls of tobacco for smoking defined in this section as “cigarettes”;
-
- “Cigarette” or “cigarettes” means and includes all rolled, shredded, or cut tobacco, or any substitute therefor, wrapped in paper, or substitute therefor, and all rolled, shredded or cut tobacco, or any substitute therefor, wrapped in homogenized tobacco wrapper, and being within customary cigarette sizes and marketed in cigarette type packages;
- “Cigarette” includes any cigarette produced by a cigarette rolling machine at a retail establishment;
-
- “Cigarette rolling machine” means a machine at a retail establishment that enables any person to process at that establishment tobacco or any product that is made or derived from tobacco into a roll or tube;
- “Cigarette rolling machine” does not mean any hand-held, manually operated cigarette rolling machine, equipment, or device, if such machine, equipment, or device is held by the retail establishment solely for the sale to consumers for off-premises use in making cigarettes for personal consumption;
- “Cigarette rolling machine operator” means a person that purchases or leases for use, or controls, possesses or maintains, a cigarette rolling machine at a retail establishment that enables any person to process at that establishment tobacco or any product that is made or derived from tobacco into a roll or tube. A cigarette rolling machine operator is deemed to be a tobacco distributor for purposes of this part;
- “Commissioner” means the commissioner of revenue;
- “Consumer” means an individual who is not a cigarette retail dealer or a licensed cigarette distributor. “Consumer” includes any person, including a cigarette retailer or licensed distributor, who purchases cigarettes for personal consumption;
- “Dealer” or “distributor” has the exact same meaning as “person” as defined in this section;
-
-
“Delivery sale” means any sale of cigarettes to a consumer in this state when either:
- The purchaser submits the order for such sale by means of a telephonic or other method of voice transaction, the mails, or any other delivery service, or the Internet or other online service; or
- The cigarettes are delivered by use of the mails or other delivery service;
- A sale of cigarettes shall be a delivery sale regardless of whether the seller is located within or without the state;
-
“Delivery sale” means any sale of cigarettes to a consumer in this state when either:
- “Delivery service” means any person who is engaged in the commercial delivery of letters, packages, or other containers and is not a seller, dealer or distributor;
- “Department” means the department of revenue;
- “Drop shipment plan or system” means any device whereunder a manufacturer or sales agency or drop shipment depot ships tobacco products to points in the state to be billed or collected for by some person other than the manufacturer or sales agency, or drop shipment depot, or person shipping such products;
- “Loose tobacco” means tobacco that is not contained in rolls or tubes and that has been removed from its original packaging;
- “Manufacturing distributor” means any person, with a plant located in this state, engaged in the business of manufacturing or processing consumable tobacco products, taxed by this part;
- “Nonresident” means any person who is not a bona fide domiciliary of this state and/or who maintains no plant, warehouse, or other tobacco products storage facility in this state;
- “Person” means and includes every individual, firm, association, joint-stock company, syndicate and corporation;
- “Possess” means to have in one's actual and physical control, or to have the exclusive detention and control of, to own or be entitled to, or to have responsibility for the storage of in the capacity of a warehouseman;
- “Resident agent” means a resident of this state, designated in writing by the commissioner to either sell unaffixed or to affix revenue stamps to tobacco products as provided for in this part;
- “Retail dealer” means each tobacco vending machine, place, store, booth, concession, truck or vehicle, or person that in any way sells or makes available tobacco products directly to the ultimate consumer;
- “Sale” means, in addition to its usual meaning, any sale, use, transfer, exchange, barter, gift, or offer for sale and distribution, in any manner or by any means whatsoever;
- “Stamp” means the impression, device, stamp, label or print manufactured, printed or made as prescribed by the commissioner;
- “Tobacco distributor” means any person who receives, purchases, sells or otherwise handles tobacco products as a secondary wholesaler and who acquires all that person's tobacco products on which, prior to receipt by the person, the tobacco tax required by Tennessee and any other state has been previously paid by a Tennessee wholesaler that is also a Tennessee appointed and bonded affixing agent, and who sells or otherwise makes available such tobacco products to retailers in this and perhaps other states at a wholesale price for the purpose of resale to the consumer;
- “Tobacco manufacturer's warehouse” means any warehouse, building or structure or space therein, whether publicly or privately owned, leased or rented, where any tobacco products are stored as a function of the distribution of such products, but are maintained separate from the manufacturer's operation, and where title to and control of distribution of the tobacco products stored therein remain with the manufacturer or processor;
- “Tobacco products” means cigars, cigarettes, manufactured tobacco and snuff, but not tobacco produced and processed by the grower for the grower's own use and not for sale;
- “Vending machine” means any money-in-the-slot device used for the automatic merchandising of tobacco products, and each such machine shall be considered as a separate retail dealer;
- “Wholesale cost price” means the manufacturers' and/or processors' actual sales price of any tobacco product, delivered to Tennessee dealers, exclusive of any discounts, rebates, allowances, or the privilege tax imposed by this part; and
- “Wholesale dealer and jobber” means any person who maintains wholesale facilities in one (1) or more permanent locations, and engages in the business of receiving, storing, purchasing, selling at wholesale only, importing unstamped tobacco products, and otherwise handling tobacco products for resale at a wholesale price only to other licensed wholesale dealers and jobbers, or tobacco distributors or retail dealers as defined in this section, but does not sell tobacco products directly to the ultimate consumer.
Acts 1937, ch. 133, §§ 1, 8; 1941, ch. 126, § 1; C. Supp. 1950, §§ 1233.1, 1238.5 (Williams, §§ 1213.1, 1213.6, 1213.8); modified; Acts 1965, ch. 118, § 1; 1968, ch. 623, § 1; 1972, ch. 447, § 1; 1976, ch. 440, § 1; T.C.A. (orig. ed.), §§ 67-3101, 67-3110; Acts 1984, ch. 536, § 1; 2005, ch. 388, § 1; 2012, ch. 1066, §§ 1, 2.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, §§ 3, 14.
NOTES TO DECISIONS
1. Constitutionality.
Provision in definition of wholesale dealer limiting it to those who sell at wholesale “only” does not render the law unconstitutional. White Stores, Inc. v. Atkins, 202 Tenn. 180, 303 S.W.2d 720, 1957 Tenn. LEXIS 378 (1957).
2. Construction.
Chain store system operating wholesale establishment for purpose of supplying its retail stores was not a “wholesale dealer” within the meaning of the definition in this section. White Stores, Inc. v. Atkins, 202 Tenn. 180, 303 S.W.2d 720, 1957 Tenn. LEXIS 378 (1957).
The definition of wholesaler in the Unfair Retailer's Cigarette Sales Law (title 47, ch. 25, part 3) may not be used to enlarge the definition of wholesale dealer under this part. White Stores, Inc. v. Atkins, 202 Tenn. 180, 303 S.W.2d 720, 1957 Tenn. LEXIS 378 (1957).
Collateral References.
Specific tax imposed on goods in stock of dealer as excise tax. 173 A.L.R. 1324.
Taxation 371
67-4-1002. Tax imposed.
Every dealer or distributor of tobacco products defined in this part shall pay to the department for exclusive state purposes, taxes in addition to all other taxes or fees, for the privilege of selling cigarettes and tobacco products in this state.
Acts 1937, ch. 133, § 4; 1937, ch. 201, § 1; 1937, ch. 295, § 1; 1937 (3rd Ex. Sess.), ch. 7, § 1; 1939, ch. 63, § 1; 1939, ch. 202, § 1; mod. C. Supp. 1950, § 1238.1 (Williams, § 1213.4); Acts 1951, ch. 60, § 1 (Williams, § 1213.4b); modified; impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 34, § 1; 1965, ch. 118, § 2; 1967, ch. 98, § 2; 1969, ch. 250, §§ 1, 2, 5; 1971, ch. 58, § 1; 1972, ch. 457, § 1; 1976, ch. 440, § 2; T.C.A. (orig. ed.), § 67-3102; Acts 1985, ch. 179, § 5.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 80.
Cited: Coleman v. Kisber, 338 S.W.3d 895, 2010 Tenn. App. LEXIS 619 (Tenn. Ct. App. Oct. 4, 2010).
67-4-1003. Tax levied on consumer.
- The tobacco tax is declared to be a levy on the consumer, and the consumer shall be liable for the tax and subject to the incidence of the tax.
- The distributors shall add the amount of tobacco taxes levied to the price of cigarettes or other tobacco products, and the distributor may state the amount of the taxes separately from the price of such cigarettes or other tobacco products on all price display signs, sales or delivery slips, bills and statements that advertise or indicate the price of such cigarettes or tobacco products.
- This section shall in no way affect the method of collection of cigarette or tobacco taxes as now provided by existing law.
Acts 1947, ch. 168, § 2; mod. C. Supp. 1950, § 1233.2 (Williams, § 1213.4a); T.C.A. (orig. ed.), § 67-3103.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 80.
67-4-1004. Rate on cigarettes — Enforcement and administration fee — Expired tax stamps.
- The rate shall be three cents (3¢) on each cigarette.
- In addition to the tax provided in subsection (a), every dealer or distributor of tobacco products defined in this part shall pay an enforcement and administration fee to the department of five hundredths of a cent (0.05¢) per pack of cigarettes for sale in Tennessee. The fee shall be collected from each dealer or distributor upon the purchase of tobacco tax stamps from the commissioner.
- Any wholesale dealers, jobbers, tobacco distributors, and retail dealers having cigarette tax stamps, affixed and unaffixed, in their possession on July 1, 2007, shall not be required to pay the additional cigarette tax on the stamps resulting from the increase in the tax rate from ten (10) mills to three cents (3¢) on cigarettes bearing the stamps.
-
- In addition to the tax provided in subsection (a), there shall be levied an additional one-tenth of one cent (0.1¢) on each cigarette.
- Any wholesale dealers, jobbers, tobacco distributors, and retail dealers having cigarette tax stamps, affixed and unaffixed, in their possession on July 1, 2007, shall not be required to pay the additional cigarette tax on the stamps resulting from the increase in the tax rate of one-tenth of one cent (0.1¢) on cigarettes bearing the stamps.
Acts 1937, ch. 133, § 4; 1937, ch. 201, § 1; 1937, ch. 295, § 1; 1937 (3rd Ex. Sess.), ch. 7, § 1; 1939, ch. 63, § 1; 1939, ch. 202, § 1; mod. C. Supp. 1950, § 1238.1 (Williams, § 1213.4); Acts 1951, ch. 60, § 1 (Williams, § 1213.4b); modified; impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 34, § 1; 1965, ch. 118, § 2; 1967, ch. 98, § 2; 1969, ch. 250, §§ 1, 2, 5; 1971, ch. 58, § 1; 1972, ch. 457, § 1; 1976, ch. 440, § 2; T.C.A. (orig. ed.), § 67-3102; Acts 1985, ch. 179, § 6; 2002, ch. 856, §§ 1e, 1f; 2003, ch. 418, § 1; 2007, ch. 368, §§ 1, 2, 4.
Compiler's Notes. Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to that act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Cross-References. Compensation or discount inapplicable to enforcement and administration fee, § 67-4-1009.
Disposition of enforcement and administration fee, § 67-4-1025.
Law Reviews.
Building a House of Cards: A Policy Evaluation of Tennessee's Tax Reform Act of 2002 with Emphasis on Fairness to the Poor (Robert F. Parsley), 70 Tenn. L. Rev. 1177 (2003).
67-4-1005. Rate on other tobacco products.
The rate on all other tobacco products, including, but not limited to, cigars, cheroots, stogies, beedies, bidis, manufactured tobacco and snuff of all descriptions whether made of tobacco or any substitute for tobacco, shall be six and six-tenths percent (6.6%) of the wholesale cost price.
Acts 1937, ch. 133, § 4; 1937, ch. 201, § 1; 1937, ch. 295, § 1; 1937, (3rd Ex. Sess.), ch. 7, § 1; 1939, ch. 63, § 1; 1939, ch. 202, § 1; mod. C. Supp. 1950, § 1238.1 (Williams, § 1213.4); Acts 1951, ch. 60, § 1 (Williams, § 1213.4b); modified; impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 34, § 1; 1965, ch. 118, § 2; 1967, ch. 98, § 2; 1969, ch. 250, §§ 1, 2, 5; 1971, ch. 58, § 1; 1972, ch. 457, § 1; 1976, ch. 440, § 2; T.C.A. (orig. ed.), § 67-3102; Acts 2002, ch. 856, § 1g; 2003, ch. 418, § 2.
Compiler's Notes. Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to that act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Law Reviews.
Building a House of Cards: A Policy Evaluation of Tennessee's Tax Reform Act of 2002 with Emphasis on Fairness to the Poor (Robert F. Parsley), 70 Tenn. L. Rev. 1177 (2003).
67-4-1006. Sale of stamps — Agents.
-
- The tax imposed by this part shall be paid by the purchase of stamps from the commissioner of such design or denomination as may be prescribed by the commissioner, except that reconciliation payments of taxes on cigarettes made by cigarette rolling machine operators shall be paid in the time and manner prescribed by § 67-4-1031.
- In lieu of tax stamps, the commissioner may, at the commissioner’s discretion, provide other means by which the tax applicable to products other than cigarettes may be paid.
-
- The commissioner is empowered to appoint agents to sell unaffixed stamps, and manufacturing distributors, wholesale dealers and jobbers as agents to affix and sell tax stamps as required by this section.
- Agents appointed to sell revenue stamps may be required to execute a bond with a solvent surety company, qualified to do business in the state, as surety on the bond, payable to the state and conditioned to faithfully perform the duties imposed upon them, and to faithfully account for and promptly pay to the state any and all sums due the state by virtue of their appointment, and such other reasonable conditions as the commissioner may require.
- Agents appointed to affix stamps and those persons authorized to pay tax by some means other than through the purchase of stamps shall be required to execute a bond in such amount as may be determined by the commissioner.
- Any agent appointed by the commissioner to affix revenue stamps shall be permitted to purchase revenue stamps by executing a bond with a solvent surety company qualified to do business in this state, in an amount of one hundred ten percent (110%) of the agent’s estimated tax liability for thirty (30) days, but not less than two thousand dollars ($2,000), and conditioned upon such agent paying all taxes due the state arising from this part. This form of payment is in lieu of cash or its equivalent. Payment for each month’s liability shall be due on or before the twenty-fifth day of each month, including Sundays and holidays. Default in the bonding and payment provisions by any agent may result in the revocation of the agent’s privilege to purchase revenue stamps, except for cash, for a period up to twelve (12) months, in the discretion of the commissioner.
- Agents for affixing revenue stamps are in no way authorized to sell stamps not affixed to tobacco products.
- A violation of this section may result in suspension or revocation of the agency appointment. The procedure for suspension or revocation shall be upon a show cause petition, the procedure to be as set out in § 67-4-1021.
Acts 1937, ch. 133, § 5; C. Supp. 1950, § 1238.2 (Williams, § 1213.5); Acts 1965, ch. 118, § 3; 1967, ch. 98, § 3; 1972, ch. 457, § 2; T.C.A. (orig. ed.), § 67-3104; Acts 2012, ch. 1066, § 3.
Amendments. The 2012 amendment, effective October 1, 2013, added “, except that reconciliation payments of taxes on cigarettes made by cigarette rolling machine operators shall be paid in the time and manner prescribed by § 67-4-1031” to the end of (a)(1).
Effective Dates. Acts 2012, ch. 1066, § 10. October 1, 2013.
67-4-1007. Counterfeiting and misuse of stamps.
Any person who shall falsely and fraudulently make, forge, alter or counterfeit a stamp or stamps so prescribed by the commissioner, or who shall cause or procure to be falsely or fraudulently made, forged, altered, or counterfeited such stamps, or make, cause to be made, or attempt to procure a counterfeit stamp, device or equipment that may be used alone, or in conjunction with some other device or equipment, for the purpose of fraudulently making a counterfeit stamp or tax indicia, or who shall knowingly and willfully utter, publish, pass or tender as true, any false, altered, forged, or counterfeited stamps prescribed by this part, or who shall reuse any stamp previously affixed, commits a Class E felony.
Acts 1937, ch. 133, § 12; C. Supp. 1950, § 1238.9 (Williams, § 1213.12); 1970, ch. 407, § 2; T.C.A. (orig. ed.), § 67-3107; Acts 1989, ch. 591, § 96.
Cross-References. Penalty for Class E felony, § 40-35-111.
67-4-1008. Refunds for unused stamps.
The commissioner is empowered to allow and make refunds for tobacco tax revenue stamps purchased from the commissioner or the commissioner's agent, upon submission of a written claim substantiated by such evidence as the commissioner may require to establish that:
- The revenue stamps have been returned to the department and are unused; or
- The stamps have been cancelled by an agent appointed by the commissioner on unused or unsalable products and returned to the manufacturers.
Acts 1965, ch. 118, § 7; T.C.A., § 67-3125.
67-4-1009. Distributors or dealers — Compensation.
- For the purpose of compensating the dealer or distributor of tobacco products other than cigarettes in accounting for and remitting the tax and for the risk of loss and other expenses involved, the dealer shall be allowed two percent (2%) of the tax as the dealer's compensation, if the tax is not delinquent or deficient when paid.
- The commissioner is empowered to allow any manufacturing distributor or wholesale dealer and jobber, as defined in this part, a discount of an amount not to exceed four and fifteen hundredths percent (4.15%) of the value of the stamps as compensation for selling and affixing the stamps to tobacco products.
- The compensation and/or discount provided for in subsections (a) and (b) shall not apply to the fee imposed by § 67-4-1004(b).
Acts 1937, ch. 133, §§ 4, 6; 1937, ch. 201, § 1; 1937, ch. 295, § 1; 1937 (3rd Ex. Sess.), ch. 7, § 1; 1939, ch. 63, § 1; 1939, ch. 202, § 1; 1941, ch. 126, § 1; 1949, ch. 191, § 1; mod. C. Supp. 1950, §§ 1238.1, 1238.3 (Williams, §§ 1213.4, 1213.6); Acts 1951, ch. 60, § 1 (Williams, § 1213.4b); modified; impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 34, §§ 1, 2; 1965, ch. 118, §§ 2, 5; 1967, ch. 98, § 2; 1969, ch. 250, §§ 1, 2, 5; 1971, ch. 58, § 1; 1972, ch. 457, § 1; 1976, ch. 440, § 2; T.C.A. (orig. ed.), §§ 67-3102, 67-3106; Acts 1985, ch. 179, § 7.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 14.
NOTES TO DECISIONS
1. Application to Chain Store.
Although the provisions of this section empowering the commissioner to allow wholesale dealers and jobbers a discount as compensation for selling and affixing stamps to tobacco products may work an inequality as to a chain store selling such products at both wholesale and retail, such effect of the statute is insufficient to render it invalid. Great Atl. & Pac. Tea Co. v. McCanless, 178 Tenn. 354, 157 S.W.2d 843, 1941 Tenn. LEXIS 65 (1941).
A chain store system operating a wholesale establishment for purpose of supplying its retail stores was not within the definition of “wholesale dealer” as defined in this part and was not entitled to the compensation allowed by this section. White Stores, Inc. v. Atkins, 202 Tenn. 180, 303 S.W.2d 720, 1957 Tenn. LEXIS 378 (1957).
67-4-1010. Administration by department and commissioner.
- The supervision and collection of the tax imposed by this part shall be under the direction of the department.
- The commissioner is granted full power and authority to adopt such reasonable rules and regulations not in conflict with this part, or other statute, as the commissioner may deem necessary to enforce the collection of the tax levied by this part. Such rules and regulations, before being effective, shall be approved by the attorney general and reporter.
- In enforcing this part, the commissioner shall consider the cost and effectiveness of administration, and endeavor to administer this part in the most cost efficient manner.
Acts 1937, ch. 133, § 9; C. Supp. 1950, § 1238.6 (Williams, § 1213.9); T.C.A. (orig. ed.), § 67-3108; Acts 1988, ch. 958, § 3.
67-4-1011. Records and reports.
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- The commissioner is authorized and empowered to prescribe the methods to be used by dealers and distributors in recording purchases and sales of tobacco products and purchases and consumption of tobacco tax stamps.
- The commissioner is further authorized and empowered to require persons selling, distributing, or dealing in tobacco products to file such reports with the department in the manner and at such times as the commissioner may deem necessary in carrying out this part.
- In any case where a person cannot produce evidence of sufficient stamps purchased or other payment of the tax imposed to cover all of any tobacco products received, it may be assumed that such products were disposed of without having either the proper stamps affixed or the tax paid on the tobacco products.
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- Every common carrier transporting cigars, cigarettes, manufactured tobacco or snuff in this state shall keep a complete record of all tobacco products handled in each transaction, separately, and shall show the transportation of such tobacco products, both interstate and intrastate.
- Every common carrier in this state shall give and permit the commissioner free access to such books and records, and furnish such information and reports as the commissioner may require.
- Any person violating this subsection (c) commits a Class A misdemeanor.
- A cigarette rolling machine operator must keep records both of tobacco sold for use in the operator's cigarette rolling machine and of any cigarettes made from such tobacco through use of the cigarette rolling machine.
Acts 1937, ch. 133, §§ 9, 10; C. Supp. 1950, §§ 1238.6, 1238.7 (Williams, §§ 1213.9, 1213.10); Acts 1968, ch. 623, § 3; 1970, ch. 407, § 3; 1977, ch. 352, § 2; T.C.A. (orig. ed.), §§ 67-3109, 67-3112; Acts 1988, ch. 526, § 36; 1989, ch. 591, §§ 1, 6; 2012, ch. 1066, § 4.
Cross-References. Penalty for Class A misdemeanor, § 40-35-111.
67-4-1012. Distributors and dealers — Inspection of premises and records.
- Every distributor or dealer shall permit the commissioner or the commissioner's authorized agent or representative to inspect at any time all tobacco products, invoices, books, papers and memoranda, including the general books, both operating and proprietary ledgers, and other records, as may be deemed necessary by the commissioner in ascertaining whether or not the tax levied under this part has been paid, or in determining the amount of such tax due. Every cigarette rolling machine operator shall permit the commissioner or the commissioner's authorized agent to inspect the operator's cigarette rolling machine at any time.
- No licensed distributor or dealer shall be permitted to claim any part of the premises whereon the distributor or dealer is engaged in business, to be exempt from inspection, as being the distributor's or dealer's dwelling or home, the distributor's or dealer's application for license under this part being declared an express waiver of such claim.
- All persons failing to permit the examination of tobacco products, invoices, books and other memoranda, including the general books, both operating and proprietary ledgers, and other records, or interfering with the orderly inspection or examination thereof, or failing to file such reports as may be required by the commissioner, commit a Class A misdemeanor.
Acts 1937, ch. 133, § 9; C. Supp. 1950, § 1238.6 (Williams, § 1213.9); Acts 1963, ch. 327, § 2; modified; T.C.A. (orig. ed.), § 67-3111; Acts 1989, ch. 591, §§ 1, 6; 2012, ch. 1066, § 5.
Cross-References. Penalty for Class A misdemeanor, § 40-35-111.
67-4-1013. Search warrants.
Any duly authorized representative, agent or employee of the department who has been designated by the commissioner to enforce this part is authorized and empowered to execute search warrants and do all acts incident to the search warrant, in the same manner as search warrants may be levied by sheriffs and other peace officers.
Acts 1937, ch. 133, § 9; C. Supp. 1950, § 1238.6 (Williams, § 1213.9); Acts 1963, ch. 327, § 2; modified; T.C.A. (orig. ed.), § 67-3111.
67-4-1014. Enforcement officers.
- Inspectors, agents, representatives or officers appointed by the commissioner shall be cloaked with and have the duty, power and authority as police officers to enforce this part and in the illegal traffic of unstamped tobacco products.
- The highway patrol shall likewise have concurrent authority to assist in the enforcement of this part and in the illegal traffic of unstamped tobacco products.
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- Any duly authorized representative or employee of the department who has been specifically designated by the commissioner to enforce §§ 67-4-1019 — 67-4-1021, is authorized and empowered to go armed, or carry a pistol while on active duty engaged in enforcing §§ 67-4-1019 — 67-4-1021.
- Any such duly authorized representative or employee of the department who has been designated by the commissioner to enforce this part is authorized and empowered to execute search warrants and do all acts incident to the search warrant, in the same manner as search warrants may be levied by sheriffs and other peace officers.
Acts 1937, ch. 133, § 9; C. Supp. 1950, § 1238.6 (Williams, § 1213.9); Acts 1963, ch. 327, § 2; modified; 1971, ch. 288, § 2; T.C.A. (orig. ed.), §§ 67-3111, 67-3126.
67-4-1015. Licenses — Penalties for unlicensed operation.
- Before engaging in the business of selling, distributing or handling tobacco products in this state, every person required to be licensed by this part shall obtain a license authorizing the person to engage in that business prior to the commencement of business. All persons currently engaged in the business of selling, distributing, or handling tobacco products in this state, and required to be licensed by this part, shall apply for a renewal of the license on or before May 31 of each year.
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The application for license shall be made on blanks furnished by the commissioner. The application blanks shall show the following:
- Name of applicant;
- Street address and telephone number of applicant;
- City or town in which the applicant's place of business is to be located;
- Kind or nature of business to be conducted;
- Sufficient information to demonstrate that the applicant has complied with all pertinent registration and tax statutes, as provided by law, including, but not limited to, the sales and use, business, franchise and excise taxes. The form and content of the information required by this subdivision (b)(5) shall be specified by the commissioner;
- Such other and further information as the commissioner may require;
- Name, address and telephone number of the resident agent, as defined by § 67-4-1001; and
- Name, address and telephone number of a registered agent.
-
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Application for licenses shall be accompanied by the following fees:
- Manufacturing distributor—Two hundred dollars ($200) for each plant or processing location;
- Tobacco manufacturer's warehouse—Two hundred dollars ($200) for each storage warehouse;
- Wholesale dealer and jobber—Two hundred dollars ($200) for each separate sale warehouse;
- Tobacco distributor—One hundred dollars ($100) for each secondary wholesale location where tobacco products are received or ordered for delivery to other than the ultimate consumer; and
- Cigarette rolling machine operator — Five hundred dollars ($500) for each cigarette rolling machine purchased or leased for use, or controlled, possessed or maintained by the cigarette machine operator.
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Upon receipt of the application referenced in subsection (b), together with the fee imposed by this subsection (c), the commissioner, upon the commissioner's approval of the application, shall issue within a reasonable time to the applicant the necessary licenses to engage in the business named in the application.
- The licenses shall expire on May 31 of each year.
- If the license is mutilated, lost, or destroyed, a duplicate will be issued upon application, accompanied by a fee of twenty-five dollars ($25.00).
- Applications for renewal of a license may be denied for failure of the licensee to pay the tax or taxes imposed by this part or for the violation of any provision of this part or any rule or regulation promulgated by the commissioner under the authority vested in the commissioner.
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Application for licenses shall be accompanied by the following fees:
- Any person who engages in any business or activity for which a license is required under this part without obtaining a license to do so, or who fails to file an application for renewal of a license before expiration of the current license, is subject to a specific penalty in the amount of the license fee for each month or part of a month during which the activity or failure continues. In addition to this specific penalty, the commissioner may impose a penalty of no more than two hundred fifty dollars ($250) a day for each day during which the activity or failure occurs or continues. This discretionary penalty may also be imposed upon a person to whom a license has been issued, if the person continues to engage in the business or activity after receiving notice the license is revoked or suspended by the commissioner.
- Persons duly and properly licensed to sell tobacco products in this state may not knowingly sell, lend, or exchange such products to, with or from any person required to be licensed who is not so licensed, or who is improperly licensed.
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- Except as provided in subdivision (f)(2), the commissioner shall require all applicants for license, as required by subsections (a) and (b), including, but not limited to, persons licensed to engage in the business of a tobacco manufacturer's warehouse as defined by this part, to execute a bond with a surety company qualified to do business in this state as surety on the bond, payable to the state of Tennessee and conditioned upon the licensee paying the tax and affixing tax stamps to all packages or parcels of tobacco products used, sold, distributed or handled by such licensee and/or accounting for the distribution of such foreign stamped or other unstamped products authorized to be possessed under this part.
- In lieu of a corporate surety on the bond required by this subsection (f), the commissioner may allow the wholesale dealer and jobber to secure such bond by depositing collateral in the form of a certificate of deposit as accepted and authorized by the banking laws of the state of Tennessee that has a face value equal to the amount of the bond. Such collateral may be deposited with any authorized state depository designated by the commissioner. Interest on any deposited certificate of deposit shall be payable to such wholesaler and jobber who has deposited it as collateral, or to such person as the wholesaler and jobber or the certificate may direct.
- No license so issued shall be transferable and a separate license shall be required for each separate place of business and shall be prominently displayed in the place of business operated by the person to whom such license is issued.
- Nonresidents selling and/or delivering tobacco products in Tennessee shall be privileged to obtain licenses, purchase and affix tobacco stamps, pay tax, obtain statutory discounts and perform all other acts relating to selling and/or delivering tobacco products in a like manner and under the same conditions as Tennessee resident licensees; provided, that similar privileges are afforded to residents of this state in the applicant's state of domicile.
- Every person making application for license pursuant to this section shall designate, in writing, on forms provided by the commissioner, a resident agent. The resident agent shall be the dealer's agent for any of the acts authorized pursuant to § 67-4-1006. The designated resident agent shall be required, whether or not the dealer maintains a warehouse or other place of business in this state.
- All information provided by licensees pursuant to subsection (b) shall remain current. Licensees shall notify the commissioner, in writing, within ten (10) days of any change in the information.
Acts 1937, ch. 133, § 2; 1939, ch. 201, § 1; 1941, ch. 78, § 1; C. Supp. 1950, § 1233.3 (Williams, § 1213.2); Acts 1965, ch. 118, § 6; 1968, ch. 623, § 4; 1971, ch. 91, § 1; 1972, ch. 457, § 4; 1973, ch. 236, §§ 2, 3; 1976, ch. 440, § 3; 1977, ch. 352, § 3; T.C.A. (orig. ed.), §§ 67-3113 — 67-3116; Acts 1984, ch. 536, § 2; 1985, ch. 314, § 1; 1988, ch. 676, § 1; 2008, ch. 1090, §§ 1-9; 2012, ch. 1066, § 6.
67-4-1016. License revocation or suspension.
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- The commissioner may revoke any license issued under this part upon the failure of the licensee to pay the tax or taxes imposed by this part, or for the violation of any provision of this part or any rule or regulation promulgated by the commissioner under the authority vested in the commissioner.
- The commissioner shall, before revoking any license, notify the licensee, by letter addressed and mailed to the last known address of the licensee, and shall afford the licensee an opportunity to be heard in person or by counsel in reference to the license. This notice shall be mailed at least ten (10) days prior to a date set for hearing.
- Pending final determination of the notice or hearing, the licensee may continue to buy, sell and distribute tobacco products. The commissioner may require bond with good and solvent surety in such amount as may be deemed necessary to protect the state's interest.
- The commissioner has the power to issue subpoenas as provided in § 67-4-1017.
- The hearing authorized under this subsection (a) shall be held and conducted in accordance with the procedure as outlined under § 67-4-1021.
-
- At such time and place of the hearing so designated, or at any time and/or place to which the commissioner, or the commissioner's duly authorized agent, representative or employee, may adjourn such hearing, the matters under consideration shall be gone into, and, after a full hearing the commissioner, or the commissioner's duly authorized agent, representative and/or employee, shall make such finding as, in the commissioner's opinion, the facts may warrant, and if the commissioner determines that the licensee has failed to pay the tax or taxes imposed by the terms of this part when due, or has violated any rule or regulation promulgated by the commissioner under the authority vested in the commissioner by the terms of this part, or has been guilty of a violation of any of the provisions of this part, as charged, the license of such licensee shall be revoked; otherwise, the charges shall be dismissed, and the license shall continue in force unimpaired. If the commissioner finds that the licensee is guilty of the delinquency charged, but further finds that such violation by the licensee was unintentional or inadvertent, the commissioner, or the commissioner's duly authorized agent, representative or employee, may suspend the license of the licensee for a period not exceeding thirty (30) days; or may, if the licensee shall not previously have been found guilty of any delinquency by the commissioner under this part, or the dereliction charged be remedied by the licensee at or prior to the time of the hearing, dismiss the proceeding and charges against the licensee upon the payment by the licensee of all costs and fees incurred in holding and having the hearing.
- The hearing authorized under this subsection (b) shall be held and conducted in accordance with the procedure as outlined under § 67-4-1021.
- The ruling or order issued by the commissioner with reference to the revocation or suspension of any tobacco license may only be reviewed in the manner and in accordance with the procedure authorized under § 67-4-1021.
Acts 1929 (Ex. Sess.), ch. 22, § 1; Code 1932, § 1236; Acts 1937, ch. 133, § 3; C. Supp. 1950, § 1233.4 (Williams, § 1213.3); modified; impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 327, §§ 3-5; 1968, ch. 623, § 5; T.C.A. (orig. ed.), §§ 67-3117, 67-3119, 67-3121.
67-4-1017. License proceedings — Witnesses.
- The commissioner has the power to issue subpoenas in the name of the state of Tennessee requiring the attendance of such witnesses as may be designated in the subpoena at the place or places, at either the office of the commissioner at Nashville, or at any place in the county in which the licensee has the licensee's place of business, and at such time or times as may be designated in such subpoena.
- The licensee has the right to require the commissioner to issue any such subpoena requiring the attendance of any such witnesses as may be desired by the licensee.
- All such subpoenas shall be served by the sheriff or any deputy of the county where the subpoena is directed, and such sheriff or deputy shall be entitled to the same fees for serving such subpoenas as in the case of serving subpoenas in civil cases from any court of record.
- The commissioner, or any authorized agent, representative or employee, is empowered to administer oaths to any person so summoned or to any person giving evidence at the hearing.
- Any person so summoned shall give all such evidence relevant to the matter under investigation as may be required by the commissioner or the commissioner's authorized agent, representative or employee, or as may be required by the licensee.
- The usual fees and mileage expenses allowed witnesses in cases in a court of record shall be allowed any witnesses so summoned.
Acts 1929 (Ex. Sess.), ch. 22, § 1; Code 1932, §§ 1234-1236; T.C.A. (orig. ed.), § 67-3118.
67-4-1018. License proceedings — Costs.
- All witness fees, mileage expenses and all fees of sheriffs for serving any notices or subpoenas shall be taxed as costs by the commissioner, the commissioner's authorized agent, representative or employee.
- All costs and fees for witnesses and/or sheriffs shall be advanced or collected as provided in the case of witnesses attending upon cases in courts of record, and the service of subpoenas requiring their attendance and testimony.
- If, upon the hearing, the licensee shall be found by the commissioner, or the commissioner's authorized agent, representative or employee, to be guilty of the delinquency charged, all of the costs in this section shall be taxed and charged against the licensee, but if the charge against such licensee shall be dismissed, then such costs shall be paid by the commissioner out of the funds in the commissioner's hands collected under this part, after approval by the commissioner, and shall be and constitute lawful expenditures under this section.
Acts 1929 (Ex. Sess.), ch. 22, § 1; Code 1932, §§ 1237, 1238; impl. am. Acts 1937, ch. 133, § 3; T.C.A. (orig. ed.), § 67-3120.
67-4-1019. Unstamped tobacco products — Confiscation — Exceptions.
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- Except as otherwise provided in this part, any tobacco products that are required to have Tennessee revenue stamps affixed to the products, and that are found any place in this state without the proper stamps affixed to the tobacco products, or without applicable Tennessee tobacco tax having been paid, as required by this part, unless such products shall be in the possession of a person or firm currently licensed, qualified and authorized to possess such tobacco products, or unless they shall be in course of transit from and consigned to a person or firm currently licensed, qualified and authorized to possess such tobacco products, or in the possession of a common carrier complying with this part, are declared to be contraband goods, and may be seized by the commissioner, the commissioner's agents or employees, or by any peace officer of this state authorized by the commissioner to do so.
- Duly licensed wholesale dealers and jobbers not appointed affixing agents who in their normal course of business receive from out of state untaxed tobacco products may, upon written authorization from the commissioner, have such untaxed tobacco products in their possession for a period not to exceed twenty-four (24) hours, exclusive of Saturdays, Sundays and legal holidays, before being required to have proper stamps affixed to those tobacco products, or applicable Tennessee tobacco tax paid on those tobacco products by an authorized tobacco tax affixing agent.
- Under no condition may such tobacco products be sold, used or otherwise disposed of before having tax stamps affixed on those tobacco products or applicable tobacco tax paid on those tobacco products by an authorized tobacco tax affixing agent.
- All such tobacco products requiring tax to be paid on the tobacco products and found in the possession of any person shall be presumed to have been held by the person for more than twenty-four (24) hours, unless proof can be shown to the contrary.
- This section shall not apply to persons possessing no more than twenty (20) packages of twenty (20) cigarettes each, or cigars in an amount not exceeding fifty (50) cigars, or other tobacco products with retail value of not more than two dollars ($2.00) that have been brought into the state by the person; and in all instances of possession in excess of the limited quantities enumerated, the foregoing provision for exception of any cigarettes, cigars or other tobacco products shall not be applicable and any and all such products, including those quantities excepted on which the applicable Tennessee tobacco tax has not been paid, shall be deemed to be contraband and may be seized as provided in this section.
-
- Every person who transports within this state cigarettes not bearing Tennessee revenue stamps or any other tobacco products upon which the Tennessee tax imposed by this part has not been paid shall be presumed to be transporting such products in violation of this part, and such products and any vehicles used to transport them shall be deemed contraband. Such products shall be confiscated and disposed of as provided for in this part. Such vehicles may likewise, in the discretion of the commissioner, be confiscated and disposed of as provided for in this part.
- This presumption may be rebutted by the person transporting the tobacco products; provided, that the person has in the person's actual possession invoices or delivery tickets for such products that shall show the true name and exact address of the consignor or seller, the true name and exact address of the consignee or purchaser, and the quantity and brands of such products so transported.
- If the tobacco products are consigned to or purchased by any person in Tennessee, such purchaser or consignee must be a person who is authorized by this part to possess such tobacco products in this state; and if the invoice or delivery ticket specifies that the tobacco products are to be delivered to any person in any other state or jurisdiction, such person must be authorized by the laws of such other state or jurisdiction to receive or possess tobacco products on which the taxes imposed by such other state or jurisdiction have not been paid.
- The presumption provided for in this subsection (b) may not be overcome if the invoice or delivery ticket is false, or if the purchaser, as indicated by the name and/or address shown on the invoice or delivery ticket, is not authorized by the laws of the receiving state to possess such tobacco products.
- The commissioner or the commissioner's duly authorized agent is authorized to take custody and retain any such products and any vehicle being used to transport them until the correctness of any invoices or delivery tickets provided for in this subsection (b) can be determined by the commissioner, either before or at a hearing, as provided for in this part.
- In addition to any other penalties provided for in this part, any person unlawfully transporting or unlawfully in possession of cigarettes or other tobacco products shall, in the discretion of the commissioner, be liable for a penalty of not more than twenty-five dollars ($25.00) for each individual carton of cigarettes and not more than fifty dollars ($50.00) for each individual box or carton of other tobacco products so transported or possessed by the person, the penalty to be collected as other tax and penalties.
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- After qualifying with and receiving authorization from the commissioner, wholesale dealers and jobbers and manufacturing distributors licensed under this part may have in their possession tobacco products on which the Tennessee tax has not been paid to fulfill ordinary export requirements and to provide for their sale to armed forces installations, and veterans administration hospitals, where such products are sold only to patients registered and admitted to veterans administration hospitals.
- To provide for its ordinary export requirements, and after qualifying and receiving authorization from the commissioner, a Tennessee licensed wholesaler dealer and jobber or tobacco distributor servicing stores, vending machines or other retail businesses located in another state may possess, in storage warehouses in this state or in vehicles in the process of transporting, foreign stamped or other such tobacco products in an amount authorized by the commissioner, if acquired from a Tennessee appointed and bonded affixing agent and that bear, if required by the commissioner, the tax stamps of the state in which the product is to be sold.
- The commissioner is empowered, if the commissioner deems it necessary, to limit such authorizations by designating only a state or specified states from which these licensees may possess such foreign stamped or other unstamped products, and in what maximum quantity.
- Also, upon qualifying and receiving permission from the commissioner, any tobacco dealer licensed and domiciled in another state may obtain from a Tennessee appointed affixing agent foreign stamped or other unstamped tobacco products and transport them to the dealer's business location in the foreign state, but such dealer must have in the dealer's possession an invoice showing the true name and exact address of the consignor or seller, the true name and exact address of the consignee or purchaser, the quantity and brands of the cigars or cigarettes transported, and any other information that the commissioner may require.
- A person licensed to engage in the business of a tobacco manufacturer's warehouse, as defined by this part, is authorized to have in the person's possession foreign stamped or other unstamped tobacco products for the purpose of supplying properly licensed Tennessee wholesale dealers and jobbers or for export purposes.
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- Every person, as defined by this part, specifically including, but not limited to, persons licensed to engage in the business of a tobacco manufacturer's warehouse as defined by this part, authorized by this part to possess foreign stamped or other unstamped tobacco products, may be required to account for the distribution of such foreign or other unstamped products, and shall be unconditionally liable for the tax imposed by this part for each and every foreign or other unstamped tobacco product removed from inventory and not sold as above defined or exported from the state of Tennessee.
- Every person authorized by this part to possess foreign stamped or other unstamped tobacco products may, however, be permitted to reduce the person's inventory by the amount of any unstamped tobacco product loss due to theft occurring in connection with a breaking and entering upon the person's premises without being subjected to tax on such amount, if acceptable proof is supplied to the department, as soon as possible after the loss occurs reflecting that the theft was promptly reported to the proper law enforcement agency.
- The amount of inventory reduction acknowledged by the department as being supported by proof of loss satisfactory to the commissioner shall be evidenced by a certificate furnished to such person following receipt of required proof, and such certificate shall be retained by the person as authorization for the inventory reduction.
Acts 1937, ch. 133, § 6; C. Supp. 1950, § 1238.3 (Williams, § 1213.6); Acts 1963, ch. 327, § 1; 1965, ch. 118, § 4; 1967, ch. 98, § 4; 1968, ch. 623, § 2; 1970, ch. 407, § 1; 1972, ch. 447, §§ 2, 3; 1972, ch. 457, § 3; 1973, ch. 236, § 1; 1977, ch. 352, § 1; T.C.A. (orig. ed.), § 67-3105; Acts 1985, ch. 314, § 2; 1986, ch. 598, § 1; 1990, ch. 962, § 1.
Cross-References. Procedure for seizing contraband in cases of seizure of tobacco products, §§ 67-4-1020, 67-4-1021.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 14; 23 Tenn. Juris., Taxation, § 80.
NOTES TO DECISIONS
1. Payment of Claim by Insurer.
The requirement of this section that the insurer who insured the goods pay a claim for the loss before a taxpayer can claim an inventory reduction for stolen tobacco was not applied literally to bar such a reduction, where the taxpayer carried liability insurance which was inapplicable because the taxpayer was not liable for the theft, and where the owner of the goods carried first party insurance that covered only losses greater than those involved. Under such circumstances, there was the equivalent of payment by a commercial insurance carrier sufficient to entitle the taxpayer to the benefit of this remedial statute even though the insurers did not literally pay a claim either to the warehouse or to the owners. The owners, who were self-insured to the extent of their policy deductible, represented the equivalent of an “insurer who insured the goods.” Tennessee Commercial Warehouse, Inc. v. Woods, 603 S.W.2d 130, 1980 Tenn. LEXIS 477 (Tenn. 1980).
In the provisions of this section permitting warehousemen to reduce their inventory by the amount of property losses due to theft, the requirements that a claim be reported to proper law enforcement officials and that some part of the loss be paid by an insurance carrier were inserted to insure authenticity of the theft loss and to relieve the department of revenue from having to make an investigation into disputed or doubtful claims. Tennessee Commercial Warehouse, Inc. v. Woods, 603 S.W.2d 130, 1980 Tenn. LEXIS 477 (Tenn. 1980).
67-4-1020. Property deemed contraband — Seizure.
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- All manufactured tobacco products upon which all applicable tobacco taxes have not been paid and that are or shall be owned or possessed by any person in avoidance, evasion or violation of any of the provisions of this part, are declared to be contraband goods and may be seized by the commissioner, or any duly authorized representative, agent or employee of the department, without a warrant, and such goods shall be delivered to the department for sale at public auction to the highest bidder after due advertisement.
- The department, before delivering any of such goods so seized, shall require the purchaser to affix the proper amount of stamps to any cigarettes and pay the applicable tax on any other tobacco products so seized.
- Proceeds of all such seizures shall be paid by the commissioner into the state treasury, and ten percent (10%) of such proceeds shall be set aside as expenses for the administration of this section.
- Any vehicle that may be used for transporting, for the purposes of distribution, gift or sale, any unstamped tobacco products shall likewise be subject to confiscation and sale in the same manner as provided in subsection (a), unless such vehicle is being used to transport such products in a manner deemed lawful as otherwise provided in this part. Any unstamped tobacco products found in any vehicle, except vehicles lawfully engaged in transporting such unstamped products, shall be prima facie evidence that such were intended to be used for gift, sale or distribution.
- This section shall likewise apply to any coin-operated vending machine in which any tobacco products are found, stored or possessed with the tobacco products bearing a counterfeit or bogus tobacco tax stamp or any unstamped tobacco products, such vending machine and tobacco products are declared to be contraband property and shall be subject to confiscation and sale as provided for in this part. Any such vending machine found containing such tobacco products with counterfeit or bogus stamps or containing any unstamped tobacco in such vending machine shall be prima facie evidence that it was there for gift, sale or distribution.
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- Any tobacco products found, owned, stored or possessed by any person bearing a counterfeit or bogus tobacco tax stamp are likewise declared to be contraband property, and shall be subject to confiscation and sale as provided by this section. Any such tobacco products shall be prima facie evidence that they were owned, stored or possessed for gift, sale or distribution.
- Likewise, any unstamped tobacco products found, owned, stored or possessed at the same place or at the same time with any other tobacco products bearing counterfeit or bogus tax stamps are likewise declared to be contraband property and shall be subject to confiscation and sale as provided by this section. Such unstamped tobacco products shall be prima facie evidence that they were owned, stored or possessed for gift, sale or distribution.
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- The possession of any counterfeit or bogus stamps, including any article, device, meter, mechanical or otherwise, that is used for the purpose of or in connection with the counterfeiting of tobacco tax stamps on tobacco products, or the unauthorized possession of a tobacco or cigarette stamp tax machine, meter, or ink that has been approved by the department for the use with the lawful tobacco tax stamps, is declared to be contraband property.
- The unstamped tobacco products shall be subject to seizure and confiscation, and sale in the manner as other property provided by this section.
- Any person violating this subsection (e) shall, upon conviction, be punished in accordance with the penalty prescribed under § 67-4-1007.
- Any money or coins found or recovered in any cigarette or tobacco vending machine, which machine has been ordered forfeited to the state of Tennessee under this part, shall likewise be forfeited to the state of Tennessee and the money paid into the state treasury by the commissioner.
- If, incidental to a confiscation of contraband as defined by this section, there is discovered any intoxicating liquor deemed to be held or transported illegally within the purview of § 57-3-411, § 57-9-201 or § 57-9-202, the confiscating officer is empowered and required to seize such liquor, notwithstanding the fact that such officer may not otherwise be empowered to take such action under § 57-3-411, § 57-9-201 or § 57-9-202. Any intoxicating liquor seized pursuant to this subsection (g) shall be delivered promptly as provided by § 57-3-411, § 57-9-201 or § 57-9-202, as may be appropriate, to the alcoholic beverage commission for sale or disposition as contraband in accordance with title 57.
Acts 1937, ch. 133, § 7; 1937, ch. 311, §§ 1, 2; mod. C. Supp. 1950, § 1238.4 (Williams, § 1213.7); Acts 1963, ch. 327, § 6; 1970, ch. 407, § 5; 1972, ch. 457, § 5; 1973, ch. 68, § 4; 1973, ch. 84, § 4; T.C.A. (orig. ed.), § 67-3123.
NOTES TO DECISIONS
Decisions Under Prior Law
1. Constitutionality.
Acts 1933, ch. 58 and Acts 1935 (Ex. Sess.), ch. 46 which provided for seizure of tobacco as contraband goods where revenue stamps were not affixed to such goods but which did not provide any method of hearing on such seizure and to which no provisions of any other statute with reference to hearings were applicable were unconstitutional as denying due process by not providing for a hearing at some stage of the proceedings. Stockton v. Morris & Pierce, 172 Tenn. 197, 110 S.W.2d 480, 1937 Tenn. LEXIS 70 (1937).
A replevin action by a wholesale tobacco dealer against employees of the state department of finance and taxation to recover tobacco seized as contraband goods under Acts 1933, ch. 58 and Acts 1935 (Ex. Sess.), ch. 46, on grounds that the acts under which the goods were seized were unconstitutional was not a suit against the state in the sense that it would be barred by the constitution and statutes since an official acting under an unconstitutional act is not acting by the authority of the state. Stockton v. Morris & Pierce, 172 Tenn. 197, 110 S.W.2d 480, 1937 Tenn. LEXIS 70 (1937).
2. Construction.
Where employees of the state department of finance and taxation seized tobacco as contraband goods under the provisions of Acts 1933, ch. 58 and Acts 1935 (Ex. Sess.), ch. 46, this was an action under a revenue measure since it was provided that the provisions for the sale of such goods was to be paid into the state treasury and since the sale of stamps provided for under such statutes was merely a method of collecting taxes so that statutory provisions of which excepted revenue measures would not apply. Stockton v. Morris & Pierce, 172 Tenn. 197, 110 S.W.2d 480, 1937 Tenn. LEXIS 70 (1937).
67-4-1021. Contraband — Procedure after seizure.
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In all cases of seizure of any tobacco products or other property subject to forfeiture under this part, the officer or other person making the seizure shall proceed as follows:
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Upon confiscation, or as soon thereafter as practicable, written notice shall be given by the department to the person from whom the confiscation was made, and to all others with a legal interest in the property confiscated who are either made known to the department or who, by a reasonable examination of public records of titles and liens, should have been discovered;
- The notice shall state a description of the property confiscated, the reason for confiscation, the method for seeking recovery, the time limit for seeking recovery, and the result of failure to seek or obtain recovery by the designated method;
- Such notice may be by personal delivery or by mail, either of which may be made to the last known address of the interested party;
- All such property seized and confiscated under this part shall be sold at public sale by the department of general services, when the property has been turned over to it by the commissioner of revenue, as authorized by law under title 12, chapter 2, part 2;
- In the case of any contraband property seized by any law enforcement officer of any incorporated municipality or of any county and turned over to the department of revenue for confiscation, there shall be paid to the municipality or to the county served by such officer fifty percent (50%) of the net proceeds thereof; and
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Any person claiming any property so seized as contraband goods may, within ten (10) days from the date of seizure, and after executing a bond for costs with one (1) or more good and solvent sureties in the sum of two hundred fifty dollars ($250), made payable to the state of Tennessee, or upon executing a pauper's oath as required by law, file with the commissioner at Nashville a claim in writing, requesting a hearing and stating the person's interest in the articles seized;
- The commissioner shall set a date for a hearing within ten (10) days from the day the claim is filed;
- The commissioner is empowered to subpoena witnesses and compel their attendance at hearings authorized under this subdivision (a)(4);
- All parties to the proceeding, including the person claiming such property, shall have the right to have subpoenas issued by the commissioner to compel the attendance of all witnesses deemed by such parties to be necessary for a full and complete hearing;
- All witnesses shall be entitled to the witness fees and mileage provided by law for legal witnesses, which fees and mileage shall be paid as a part of the costs of such proceeding.
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Upon confiscation, or as soon thereafter as practicable, written notice shall be given by the department to the person from whom the confiscation was made, and to all others with a legal interest in the property confiscated who are either made known to the department or who, by a reasonable examination of public records of titles and liens, should have been discovered;
- In any hearing convened upon proper petition of an interested party, the initial burden shall be upon the state to show by a preponderance of the evidence that the property in question was of such nature or was used in such manner as to be declared as contraband. Upon meeting this burden, the property shall be forfeited as provided by law, unless the claimant shall prove that the claimant is nevertheless qualified under this part, or otherwise, to recover the property in question.
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- In the event the ruling of the commissioner is favorable to the claimant, the commissioner shall deliver to the claimant the tobacco products or property so seized.
- If the ruling of the commissioner is adverse to the claimant, the sale of such contraband goods shall be by the department of general services as provided by subsection (a).
- The expenses of storage, transportation, and other costs shall be adjudged as a part of the cost of the proceeding in such manner as the commissioner shall fix.
- Pending any proceeding to recover any tobacco product, vending machine, vehicle, aircraft or boat seized under this part, the commissioner may order delivery of such item to any claimant who shall establish the claimant's right to immediate possession of the tobacco product, vending machine, vehicle, aircraft or boat, and who shall execute, with one (1) or more sureties approved by the commissioner, and deliver to the commissioner, a bond in favor of the state of Tennessee for the payment of a sum double the appraised value of the tobacco product, vending machine, vehicle, aircraft or boat as of the time of the hearing; and conditioned further, that if the tobacco product, vending machine, vehicle, aircraft or boat is not returned at the time of hearing, the bond shall stand in lieu of and be forfeited in the same manner as such tobacco product, vending machine, vehicle, aircraft or boat.
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- The commissioner may personally hold such hearings as the commissioner may deem proper.
- In addition to a personally held hearing, the commissioner is authorized to designate a hearing officer who may hold such hearings in the place of and in the absence of the commissioner.
- Such hearing officer shall make findings of fact, conclusions of law and proposed order based on the hearing. If the commissioner concurs, the commissioner shall issue the order; or the commissioner may, upon review of the record, make such findings, conclusions and issue such order as in the commissioner's discretion the record justifies.
- At all hearings provided for in this section, the commissioner shall provide a stenographer or court reporter to take a stenographic record of the evidence adduced at such hearing. The claimant or protestant shall be entitled to a copy of the stenographic record, upon application for the record, and upon paying the reasonable cost of the record to be fixed by the commissioner.
- The action of the commissioner may be reviewed by petition for common law writ of certiorari, addressed to the chancery or circuit court of Davidson County, which petition shall be filed within ten (10) days from the date the order of the commissioner is made.
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- Immediately upon the grant of the writ of certiorari, the commissioner shall cause to be made, certified and forwarded to the court a complete transcript of the proceedings in the cause, which shall contain all the proof submitted before the commissioner.
- All defendants named in the petition desiring to make defense shall answer or otherwise plead to the petition within ten (10) days from the date of the filing of the transcript, unless the time be extended by the court.
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- The decision of the commissioner shall be reviewed by the circuit court solely upon the pleadings and the transcript of the proceedings before the commissioner, and neither party shall be entitled to introduce any additional evidence in the circuit court.
- The confiscated goods shall not be sold pending such review, but shall be stored by the department until the final disposition of the case, unless bond has been posted as elsewhere provided in subsection (a).
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- Within the discretion of the commissioner, the claimant may be awarded possession of the confiscated goods pending the decision of the circuit court under the petition of certiorari; provided, that the claimant shall be required to execute a bond payable to the state of Tennessee in an amount double the value of the property seized, the sureties to be approved by the commissioner.
- The condition of the bond shall be that the obligors shall pay to the state, through the department, the full value of the goods or property seized, unless upon certiorari the decision of the commissioner shall be reversed and the property awarded to the claimant.
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- Either party dissatisfied with the judgment or decree of the circuit court may, upon giving bond as required in other suits, appeal and have a reexamination, in the appellate court, of the whole matter of law and fact appearing in the record.
- When any such appeal is made, the clerk of the circuit court in which such suit was pending shall include as a part of the record the original certified transcript of the proceedings had before the commissioner when identified by the trial judge instead of a bill of exceptions, which need not be made and filed.
- The appeal shall be advanced upon the docket of the appellate court as one of such precedence, and heard as promptly as practicable.
- If no claim is interposed, such tobacco products or other property shall be forfeited without further proceedings and the property shall be sold as provided in this section.
- The procedure in subsection (j) is the sole remedy of any claimant, and no court shall have jurisdiction to interfere with the remedy by replevin, injunction, supersedeas or in any other manner.
-
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Whenever, in any proceeding under this section, a claim is filed for any vending machine, vehicle, aircraft or boat seized, as provided in this section, by an owner or other person asserting the interest of the owner, the commissioner shall not allow the claim, unless and until the claimant proves that:
- The claimant has an interest in such property that the claimant acquired in good faith; and
- The claimant had at no time any knowledge or reason to believe that the seized item was being or would be used in the violation of the laws of the United States or of the state of Tennessee relating to tobacco products.
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Whenever, in any proceeding under this section, a claim is filed for any property seized, as provided in this section, by a person who is the holder of a security interest or other claim arising out of a contract or agreement, the commissioner shall not allow the claim, unless and until the claimant proves that the claimant has an interest in such property that the claimant acquired in good faith. An interest that is acquired in the ordinary course of business shall be presumed to be in good faith, unless the commissioner receives evidence that the holder of the security interest had knowledge, at the time the interest attached, of the intended illegal use of the vehicle or was a co-conspirator in furtherance of the illegal activity. A holder of a security interest that is other than a natural person shall be considered a co-conspirator for purposes of this section, if evidence shows that an officer, employee or agent of the holder acting within the scope of employment is a co-conspirator, and the holder either:
- Has actual knowledge of the illegal activities of the officer, employee or agent from an individual other than the officer, employee or agent and fails to take appropriate action; or
- Has failed to reasonably supervise or monitor the activities of the holder's officer, employee or agent.
- In the event the interest of the owner is forfeited as provided in subdivision (m)(1) and the interest of the holder of a security interest is not forfeited as provided in subdivision (m)(2), the commissioner may, at the request of the holder of such interest, return the property to the holder for disposition in accordance with the applicable security agreement or other contract. If the commissioner does not return the property to the holder, the forfeiture shall be subject to the holder's interest.
- An owner whose interest is forfeited after being arrested for or charged with any felony shall be ineligible to purchase the property from, or to bid at any sale of the property by, the commissioner or any seizing agency. The owner whose interest is forfeited after being arrested for or charged with any felony shall also be ineligible to redeem the property from, or to bid at any sale of the property by, any holder of a security interest acting pursuant to the agreement contract or title 47, chapter 9.
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Whenever, in any proceeding under this section, a claim is filed for any vending machine, vehicle, aircraft or boat seized, as provided in this section, by an owner or other person asserting the interest of the owner, the commissioner shall not allow the claim, unless and until the claimant proves that:
Acts 1937, ch. 133, § 7; 1937, ch. 311, §§ 1, 2; mod. C. Supp. 1950, § 1238.4 (Williams, § 1213.7); Acts 1963, ch. 327, § 6; 1970, ch. 407, § 5; 1972, ch. 457, § 5; 1973, ch. 68, § 4; 1973, ch. 84, § 4; T.C.A. (orig. ed.), § 67-3123; Acts 1989, ch. 147, § 7; 1990, ch. 1037, § 3; 1998, ch. 594, § 1.
Cross-References. Procedure for confiscation of property in cases of seizure of narcotic drugs or marijuana, § 53-11-201.
Procedure for seizing contraband property in cases of seizure of alcoholic beverages, § 57-9-202.
Law Reviews.
The Tennessee Department of Revenue and the Uniform Administrative Procedures Act (Mike Norton), 6 Mem. St. U.L. Rev. 303 (1976).
67-4-1022. Drop shipments — Procedure.
Every person engaged in the activity within this state of billing, collecting for, distributing or selling tobacco products through the device, plan, scheme, or artifice commonly known as the “drop shipment plan or system” shall make a complete and itemized report, giving the name and address of the purchaser within twenty-four (24) hours of the receipt or taking of the order, and shall pay the tax and affix the stamps on the tobacco products before delivery.
Acts 1937, ch. 133, § 8; C. Supp. 1950, § 1238.5 (Williams, § 1213.8); T.C.A. (orig. ed.), § 67-3110.
67-4-1023. Liability for undelivered goods.
Any common carrier transporting tobacco products to a point within this state who, for whatever reason, does not deliver to the consignee all of the tobacco products indicated on the bill of lading shall be liable for the tax imposed under this part on all nondelivered products, unless proof deemed satisfactory to the commissioner is furnished showing that the products were not sold or consumed in this state.
Acts 1971, ch. 150, § 1; 1976, ch. 440, § 4; T.C.A., § 67-3127.
67-4-1024. Violations — Criminal penalties.
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- It is unlawful for any person to engage in the business of selling, distributing or handling tobacco products without the license required by this part, or after the license required by this part has been revoked, or for any person to violate any rule or regulation promulgated or prescribed by the commissioner under the authority vested in the commissioner by this part.
- A violation of subdivision (a)(1) is a Class B misdemeanor.
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- It is unlawful for any person to sell or to possess for the purpose of sale, gift, use or consumption, or to transport in violation of this part, any tobacco products to which the tax stamps are not affixed, where such stamps are required to be affixed under this part, and any other tobacco products upon which tax has not been paid in a manner other than through the affixation of tax stamps where, under this part, it is provided that it shall be paid in such other manner.
- A violation of subdivision (b)(1) is a Class B misdemeanor.
- Any person unlawfully having in such person's possession over twenty-five (25) cartons of unstamped cigarettes or over ten (10) boxes of cigars of fifty (50) cigars each in violation of any provisions of this part commits a Class E felony.
Acts 1937, ch. 133, § 11; mod. C. Supp. 1950, § 1238.8 (Williams, § 1213.11); Acts 1970, ch. 407, § 4; T.C.A. (orig. ed.), § 67-3122; Acts 1989, ch. 591, §§ 97, 112.
Cross-References. Penalty for Class B misdemeanor, § 40-35-111.
Penalty for Class E felony, § 40-35-111.
NOTES TO DECISIONS
Decisions Under Prior Law
1. Prima Facie Case.
That an unlicensed defendant was operating a restaurant and displaying cigarettes and other tobacco products was sufficient to establish a prima facie case in a prosecution for retailing tobacco without license though no specific sale was charged. Love v. State, 166 Tenn. 619, 64 S.W.2d 195, 1933 Tenn. LEXIS 126 (1933).
In a prosecution for selling cigarettes and other manufactured tobacco without a license, evidence that defendant displayed such manufactured tobacco in a showcase in his restaurant made a case of prima facie guilt, since the jury could draw the inference that defendant was engaged in selling such tobacco without a license. Love v. State, 166 Tenn. 619, 64 S.W.2d 195, 1933 Tenn. LEXIS 126 (1933).
2. Temporary Permit.
In the prosecution of a restaurant operator for displaying in a showcase in the restaurant cigarettes and other manufactured products of tobacco, without having obtained a license therefor, the burden was on defendant to show that he was operating under a temporary permit, if he desired to make such defense. Love v. State, 166 Tenn. 619, 64 S.W.2d 195, 1933 Tenn. LEXIS 126 (1933).
3. Violation by “Destitute” Person.
In a prosecution for displaying cigarettes and other products of tobacco in a showcase in defendant's restaurant, without a license to sell the same, the statute authorizing sale of such products by “destitute” persons without a license was held not applicable. Love v. State, 166 Tenn. 619, 64 S.W.2d 195, 1933 Tenn. LEXIS 126 (1933).
67-4-1025. Distribution of revenue.
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All of the taxes on tobacco products collected under this part shall be applied in the following manner:
- Four percent (4%) of the amount so collected shall be allowed as the expense for carrying out this part;
- The amount of eighty-two thousand five hundred dollars ($82,500) shall be used annually to provide the special sinking fund to pay the principal and interest on the Tennessee rural public school building and repair bonds;
- The amount of two hundred twenty-five thousand dollars ($225,000) shall be used annually to provide the special sinking fund for the payment of the principal and interest of the University of Tennessee building bonds; and
- The remainder shall be applied to and become a part of the general state school fund created by title 49, chapter 3.
- The revenue from the tax on cigarettes shall be used exclusively for public education, grades one through twelve (1-12), the provisions of subsection (a) to the contrary notwithstanding. All revenue collected under this part shall be distributed to the respective public school systems of the state for use in grades one through twelve (1-12) in accordance with the distribution formula governing public school systems, grades one through twelve (1-12).
- The revenues collected from the fee levied in § 67-4-1004(b) shall be allocated to the department for the enforcement and administration of the “Unfair Retailer's Cigarette Sales Law,” compiled in title 47, chapter 25, part 3.
- Notwithstanding the provisions of subsections (a) and (b) to the contrary, all cigarette tax revenue generated from the increase in the tax rate from ten (10) mills to three cents (3¢) on each cigarette shall be deposited in the education trust fund created by title 49, chapter 3; provided, that an amount of twenty-one million dollars ($21,000,000) of that cigarette tax revenue shall be allocated to the department of agriculture's Tennessee agriculture enhancement program; provided, however, that in the fiscal year beginning July 1, 2009, the amount of sixteen million three hundred thousand dollars ($16,300,000) or a larger amount not exceeding twenty-one million dollars ($21,000,000) annually shall be allocated to the Tennessee agriculture enhancement program, such amount to be specified in the annual general appropriations act; and provided, further, that in the fiscal year beginning July 1, 2010, the amount of ten million dollars ($10,000,000) or a larger amount not exceeding twenty-one million dollars ($21,000,000) annually shall be allocated to the Tennessee agriculture enhancement program, such amount to be specified in the annual general appropriations act.
- Notwithstanding the provisions of subsections (a) and (b) to the contrary, all cigarette tax revenue generated from the additional tax rate of one-tenth of one cent (0.1¢) on each cigarette imposed by § 67-4-1004(d) shall be deposited in the trauma system fund created by the Tennessee Trauma Center Funding Law of 2007, compiled in title 68, chapter 59. Those funds shall be distributed as required by title 68, chapter 59.
Acts 1937, ch. 133, §§ 4, 13; 1937, ch. 201, § 1; 1937, ch. 295, § 1; 1937 (3rd Ex. Sess.), ch. 7, § 1; 1939, ch. 63, § 1; 1939, ch. 202, § 1; mod. C. Supp. 1950, §§ 1238.1, 1238.10 (Williams, §§ 1213.4, 1213.13); Acts 1951, ch. 60, §§ 1, 2 (Williams, § 1213.4b); modified; impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 34, § 1; 1965, ch. 118, § 2; 1967, ch. 98, § 2; 1969, ch. 250, §§ 1, 2, 5; 1971, ch. 58, § 1; 1972, ch. 457, § 1; 1976, ch. 440, § 2; T.C.A. (orig. ed.), §§ 67-3102, 67-3124; Acts 1984, ch. 832, § 16; 1985, ch. 179, § 8; 2007, ch. 368, §§ 3, 5; 2009, ch. 531, § 11; 2010, ch. 1134, § 64.
Compiler's Notes. For the Preamble to the act concerning the operation and funding of state government and to fund the state budget for the fiscal years beginning on July 1, 2008, and July 1, 2009, please refer to Acts 2009, ch. 531.
67-4-1026. Packaging to comply with federal laws and regulations.
- For the purposes of this section, “package” means a pack, carton, or container of any kind in which cigarettes are offered for sale, sold, or otherwise distributed, or intended for distribution, to consumers.
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No stamp may be affixed to, or made upon, any package of cigarettes, if:
- The package differs in any respect with the requirements of the Federal Cigarette Labeling and Advertising Act, compiled in 15 U.S.C. § 1331 et seq., for the placement of labels, warnings, or any other information upon a package of cigarettes that is to be sold within the United States;
- The package is labeled “For Export Only,” “U.S. Tax Exempt,” “For Use Outside U.S.,” or similar wording indicating that the manufacturer did not intend that the product be sold in the United States;
- The package, or a package containing individually stamped packages, has been altered by adding or deleting the wording, labels, or warnings described in subdivision (b)(1) or (b)(2);
- The package has been imported into the United States after January 1, 2000, in violation of 26 U.S.C. § 5754; or
- The package in any way violates federal trademark or copyright laws.
- Any person who sells or possesses for the purpose of sale a cigarette package to which is affixed a tax stamp in violation of subsection (b) commits a Class E felony.
- Notwithstanding any other law, the commissioner shall revoke any license issued under this part to any person who sells or holds for sale a cigarette package to which is affixed a tax stamp in violation of subsection (b).
- Notwithstanding any other law, the commissioner shall seize and destroy, or sell to the manufacturer, only for export, packages that do not comply with subsection (b).
- A violation of subsection (b) is an unfair and deceptive act or practice under the Consumer Protection Act, § 47-18-104.
Acts 1999, ch. 280, § 1.
Cross-References. Penalty for Class E felony, § 40-35-111.
67-4-1027. Request for information about cigarette units — Penalty for noncompliance.
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- The commissioner of revenue may issue to any tobacco distributor or wholesaler licensed pursuant to § 67-4-1015 a request for information about cigarette units sold in Tennessee.
- Any tobacco distributor or wholesaler licensed pursuant to § 67-4-1015 shall comply with a request for information issued by the commissioner of revenue pursuant to subdivision (a)(1) within thirty (30) days of receipt.
- “Cigarette” has the same meaning as ascribed in § 47-31-102.
- “Units sold” has the same meaning as ascribed in § 47-31-102.
- The commissioner of revenue may, after providing notice and an opportunity for a hearing under § 67-1-105, suspend or revoke the license of any tobacco distributor or wholesaler or impose a civil penalty or other sanctions for failure to comply with this section. The commissioner may attempt to resolve proposed sanctions through an informal conference before a hearing is held under § 67-1-105.
- The commissioner of revenue may from time to time make, promulgate, amend and rescind such rules as are necessary to carry out this section. All rules provided for in this part shall be adopted, promulgated and contested as provided in the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
Acts 2001, ch. 113, § 1.
Cross-References. Definition of cigarette, § 67-4-1001.
67-4-1028. Disclosure of information relevant to enforcement of Tobacco Manufacturer's Escrow Fund Act.
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Notwithstanding any law to the contrary, the commissioner shall, upon request, disclose to the attorney general and reporter, or any attorney working under the attorney general and reporter's supervision and control, information obtained by the commissioner that is relevant to the enforcement of the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999, compiled in title 47, chapter 31. The commissioner, the attorney general and reporter, or any attorney working under the attorney general and reporter's supervision and control, may disclose information provided under this section that may otherwise be confidential:
- In discharge of the duty to enforce or defend the provisions of this part or the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999;
- In the course of any litigation, arbitration, or proceeding related to the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999, the Tobacco Master Settlement Agreement, or the NPM Adjustment Settlement Agreement; or
- In complying with provisions in the NPM Adjustment Settlement Agreement related to a data clearinghouse.
- Any tobacco sales data provided by another state, a tobacco product manufacturer, or other person or entity to a data clearinghouse pursuant to the NPM Adjustment Settlement Agreement that is also provided to the commissioner pursuant to that agreement, shall be treated as confidential tax information as defined in § 67-1-1701. This subsection (b) only applies to information received by the commissioner solely as a result of the NPM Adjustment Settlement Agreement.
Acts 2002, ch. 551, § 1; 2008, ch. 763, § 1; 2014, ch. 749, § 5.
Compiler's Notes. Pursuant to Article III, Section 18 of the Constitution of Tennessee, Acts 2014, ch. 749 took effect on April 21, 2014.
Amendments. The 2014 amendment rewrote the section which read: “Notwithstanding any law to the contrary, the commissioner shall, upon request, disclose to the attorney general and reporter, or any attorney working under the attorney general and reporter's supervision and control, information obtained by the commissioner that is relevant to the enforcement of the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999, compiled in title 47, chapter 31. The attorney general and reporter, or any attorney working under the attorney general and reporter's supervision and control, may disclose information provided under this section that may otherwise be confidential, in discharge of the duty to enforce or defend the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999, or in the course of any litigation, arbitration, or proceeding related to the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999 or the Tobacco Master Settlement Agreement.”
Effective Dates. Acts 2014, ch. 749, § 13. April 21, 2014. [See the Compiler's Note.]
Cross-References. Confidentiality of public records, § 10-7-504.
67-4-1029. Delivery sales of cigarettes — Enforcement.
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As used in this section:
- “Cigarette” has the same meaning as in § 47-31-102; and
- “Person” means and includes every individual, partnership, firm, association, corporation, limited liability company, joint-stock company, state, political subdivision, Native American tribe, tribal government or subdivision, or any other entity, group, or syndicate.
- Except for sales to licensed wholesale dealers and jobbers, it is unlawful for any person to cause cigarettes either ordered by or through or purchased by or through the mail, a delivery service, the Internet, telephone, or some other electronic method to be shipped or transported to any person in this state without such products having the appropriate Tennessee tax paid by a licensed wholesale dealer and jobber pursuant to the rates set forth in §§ 67-4-1004 and 67-4-1005.
- After becoming a licensed wholesale dealer and jobber pursuant to § 67-4-1015, the wholesale dealer and jobber may sell cigarettes to state retail dealers after applying the appropriate tax stamp to all packs of cigarettes sold, and after paying the appropriate tobacco tax on roll your own tobacco products.
- It is unlawful for a wholesale dealer and jobber or a distributor to sell cigarettes directly to a consumer located within the state.
- Retail dealers may receive and sell directly to state consumers cigarettes, including roll your own tobacco products, provided that a wholesale dealer and jobber has paid the Tennessee tobacco tax on the products.
- In addition to any act that may be taken by the commissioner to enforce this section, the attorney general and reporter may bring an action to prevent or restrain violations of this section by any person, or any person controlling such person. Such action may be brought in Davidson County circuit or chancery court or any competent jurisdiction in the county where the alleged violation of this part took place or is about to take place, or in a county in which such person resides, conducts, transacts or has transacted business, or in the county in which such person can be found.
-
In addition to other remedies available pursuant to law, regulation, or rule, the attorney general and reporter may also seek the following:
- Orders and statutory injunctions to prevent violations of this section. Such orders and injunctions shall be issued without bond being given by the state, and shall be statutory injunctions requiring a substantial showing that the non-moving party is violating or has violated this section. In seeking such orders and injunctions, the attorney general and reporter is not required to show a likelihood of irreparable harm;
- An order temporarily or permanently revoking a license or certificate authorizing the person to engage in business in this state;
- A civil penalty of up to five thousand dollars ($5,000) for each violation of this section. For purposes of this subdivision (g)(3), each shipment or transport of cigarettes constitutes a separate violation; or
- A civil penalty of up to ten thousand dollars ($10,000) for each and every knowing violation of the terms of an injunction or order issued under this section.
-
When considering the amount of civil penalties to be awarded under this section, the court should give weight and consideration to the following factors:
- Whether the violation is intentional;
- The good or bad faith of the violator;
- Whether the person engaged in the prohibited act has violated any laws, regulations or rules relating to tobacco;
- The violator's ability to pay;
- The amount, number, volume, weight, cost, or other measure of cigarettes involved in the violation;
- The number of packages or mailings involved in the violation;
- Whether the violation is an isolated act or part of a sequence or series of violations;
- The potential injury to the public;
- The public's interest in eliminating the benefits derived by the violators from the violations; and
- The need to deter future violations.
- In any successful action initiated by the attorney general and reporter, the court shall order reimbursement to the attorney general and reporter for the reasonable costs and expenses of investigation and prosecution of actions under this section, including attorneys' fees.
- Nothing in this section shall be construed to directly or indirectly modify or amend any aspect of any provisions of the Tennessee Tobacco Manufacturers Escrow Fund Act of 1999, compiled in title 47, chapter 31, the related provisions regarding the tobacco settlement funds, compiled in part 26 of this chapter, or any provisions related to civil penalties not contained in this section.
- Unless otherwise expressly provided herein, the remedies and penalties provided by this section are cumulative and supplemental to each other and to the remedies and penalties available under any other laws, regulations or rules.
Acts 2005, ch. 388, §§ 2-4; 2014, ch. 749, § 6.
Compiler's Notes. Pursuant to Article III, Section 18 of the Constitution of Tennessee, Acts 2014, ch. 749 took effect on April 21, 2014.
Amendments. The 2014 amendment rewrote the section which read: “(a)(1) Each seller, dealer or distributor of cigarettes who mails, ships, or otherwise delivers cigarettes in connection with a delivery sale shall provide a prominent and clearly legible statement on a web site or other literature to each prospective consumer that:“(A) Cigarette sales to consumers who are younger than the legal minimum purchase age are illegal;“(B) Sales of cigarettes are restricted to those consumers who provide verifiable proof of age in accordance with subdivision (b)(2)(B); and“(C) Cigarette sales are subject to tax under § 67-4-1004. Such statement shall include an explanation of how such tax has been, or is to be, paid with respect to such delivery sale.“(b) Each seller, dealer or distributor of cigarettes who mails, ships, or otherwise delivers cigarettes in connection with a delivery sale shall:“(1) Include a clear and conspicuous statement on the package, as follows: "Cigarettes: Tennessee Law Prohibits Shipping to Individuals Under Age Eighteen, and requires the payment of all Applicable Taxes";“(2) Use a method of mailing, shipping, or delivery that obligates the delivery service to:“(A) Require the consumer placing the purchase order for the delivery sale, or another adult of legal minimum purchase age, to sign to accept delivery of the shipping container; and“(B) Restrict delivery to an adult of legal minimum purchase age.“(c)(1) Not later than the tenth day of each calendar month, a seller, dealer or distributor of cigarettes who mails, ships, or otherwise delivers cigarettes in connection with a delivery sale during the previous calendar month shall file with the department a memorandum or a copy of the invoice that provides for each and every such delivery sale:“(A) The name and address of the consumer to whom such delivery sale was made;“(B) The brand or brands of the cigarettes that were sold in such delivery sale; and“(C) The quantity of cigarettes that were sold in such delivery sale.“(2) Any person who satisfies the requirements of 15 U.S.C. § 376 shall be deemed to satisfy the requirements of this subsection (c).“(d)(1) If a seller, dealer or distributor of cigarettes who mails, ships, or otherwise delivers cigarettes in connection with a delivery sale commits a first violation of any provision of this section, then the seller, dealer or distributor shall be subject to a fine of one thousand dollars ($1,000) or five (5) times the retail value of the cigarettes involved, whichever is greater. If the seller, dealer or distributor commits a second or subsequent violation of any provision of this section, then the seller, dealer, or distributor shall be subject to a fine of five thousand dollars ($5,000) or five (5) times the retail value of the cigarettes involved, whichever is greater.“(2) If a seller, dealer or distributor of cigarettes who mails, ships or otherwise delivers cigarettes in connection with a delivery sale complies with all requirements imposed by subsection (b), and if the delivery service fails to comply with the obligations imposed pursuant to subdivision (b)(2) in connection with such delivery sale, then the delivery service shall be subject to a fine of five hundred dollars ($500).“(3)(A) Any cigarettes sold or attempted to be sold in a delivery sale that does not meet the requirements of this section shall be forfeited to the state and destroyed.“(B) All fixtures, equipment, and all other materials and personal property on the premise of any person who, with the intent to defraud the state, violates any of the requirements of this section shall be forfeited to the state.“(e) The attorney general and reporter or the attorney general and reporter's designee, or any person who holds a valid permit under 26 U.S.C. § 5712, may bring an action in the appropriate court in the state to prevent or restrain violations of this section by any person, or any person controlling such person.“(f) Each person accepting a purchase order for a delivery sale shall collect and remit to the department of revenue all cigarette taxes imposed by law with respect to such delivery sale, except that such collection and remission shall not be required to the extent such person has obtained proof, in the form of the presence of applicable tax stamps or otherwise, that such taxes have already been paid to the state.“(g) Nothing in this section shall be construed to directly or indirectly modify or amend any aspect of any provision of the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999, compiled in title 47, chapter 31, or the related provisions regarding the tobacco settlement funds, compiled in part 26 of this chapter.”
Effective Dates. Acts 2014, ch. 749, § 13. April 21, 2014. [See the Compiler's Note.]
67-4-1030. Refund of eligible bad debt credit.
- The commissioner is empowered and directed to refund the amount of any eligible bad debt credit incurred by a manufacturing distributor or wholesale dealer and jobber of tobacco products. No amount shall be refunded unless the debt has been found to be worthless and actually charged off for federal income tax purposes. If the taxpayer receives a refund pursuant to this section arising from any bad debt so charged off that is thereafter in whole or in part paid to the manufacturing distributor or wholesale dealer and jobber, the amount so paid shall be included in the first return filed after the collection and the tax paid accordingly.
- For purposes of this section, “eligible bad debt credit” means the taxes attributable to any portion of a debt arising from a sale of tobacco products subject to tax under this part that is not otherwise deductible or excludable, that has become worthless or uncollectible, and that has been actually charged off for federal income tax purposes. A bad debt shall not include any interest on the wholesale price of a tobacco product, uncollectible amounts of property that remain in the possession of the manufacturing distributor or the wholesale dealer and jobber until the full purchase price is paid, expenses incurred in attempting to collect any account receivable or any portion of the debt recovered, accounts receivable that have been sold to a third party, or repossessed property.
-
Any claim for an eligible bad debt credit under this section shall be submitted as a claim for refund supported by the following:
- A copy of the original invoice;
- Evidence that the tobacco products described in the invoice were delivered to the person who ordered them;
- Evidence that the person who ordered and received the tobacco products did not pay the manufacturing distributor or the wholesale dealer and jobber for the tobacco products and that the manufacturing distributor or the wholesale dealer and jobber used reasonable collection practices in attempting to collect the debt; and
- Evidence that the debt was written off for federal tax purposes.
Acts 2006, ch. 1019, § 48.
Compiler's Notes. Acts 2006, ch. 1019, § 70 provided that this section shall apply to bad debts arising from invoices dated on or after July 1, 2006.
67-4-1031. Reconciliation of tax on cigarettes produced by cigarette rolling machines.
A tax shall be levied on the consumer of cigarettes produced through the use of a cigarette rolling machine at the rate imposed by § 67-4-1004, except that § 67-4-1004(b) shall not apply to such cigarettes. Such tax shall be reduced by the amount of state excise tax paid by the cigarette rolling machine operator pursuant to § 67-4-1005 for the purchase of tobacco products used to produce such cigarettes. A cigarette rolling machine operator shall calculate the amount of tax applicable to the cigarettes produced through the use of a cigarette rolling machine and shall remit such amount to the department with the requisite tax forms.
Acts 2012, ch. 1066, § 7.
Effective Dates. Acts 2012, ch. 1066, § 10. October 1, 2013.
67-4-1032. Cigarette rolling machine operators.
-
On and after October 1, 2013, no cigarette rolling machine operator shall:
- Use, offer for use, or allow to be used in its cigarette rolling machines any tobacco other than roll-your-own tobacco that is currently listed on the directory maintained by the commissioner pursuant to § 67-4-2602;
- Possess any loose tobacco other than roll-your-own tobacco that is currently listed on the directory maintained by the commissioner pursuant to § 67-4-2602;
- Possess more than sixteen ounces (16 oz.) per cigarette rolling machine of loose tobacco of any brand within a directory-approved roll-your-own brand family at any given time; or
- Accept or allow the operator's cigarette rolling machine to be used to process cigarettes with tobacco that was not first purchased or obtained from the cigarette rolling machine operator.
-
-
Any cigarette rolling machine purchased or leased for use, or controlled, possessed or maintained by a cigarette rolling machine operator must contain a secure meter that:
- Counts the number of cigarettes made, manufactured, or fabricated by the machine; and
- Cannot be altered by the cigarette rolling machine operator.
- Upon request by the commissioner, a cigarette rolling machine operator shall provide the information contained on the secure meter. The cigarette rolling machine operator shall maintain the information contained on the secure meter for a period of seven (7) years from the date of each transaction.
-
Any cigarette rolling machine purchased or leased for use, or controlled, possessed or maintained by a cigarette rolling machine operator must contain a secure meter that:
-
In addition to or in lieu of any other civil or criminal remedy provided by law:
- The commissioner may revoke or suspend a license issued to a cigarette rolling machine operator under this part if the cigarette rolling machine operator has violated this section, or any rule adopted pursuant to this section, as provided by § 67-4-1016 and in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5; and
- For each violation of this section, or any rule adopted pursuant to this section, the commissioner may impose a civil penalty in an amount not to exceed the greater of five hundred percent (500%) of the retail value of the tobacco that is sold, offered for sale, or possessed for sale in violation of this section or five thousand dollars ($5,000). Such penalty shall be imposed in the manner provided by § 67-4-1015 and in accordance with the Uniform Administrative Procedures Act.
- Any tobacco that has been sold, offered for sale, or possessed for sale by the cigarette rolling machine operator in violation of this section shall be deemed contraband and is subject to seizure and forfeiture by the commissioner as provided in § 67-4-1020 and § 67-4-1021.
- In lieu of the reporting requirements contained in § 67-4-2604(a), the commissioner may require, upon request, a cigarette rolling machine operator to submit any additional information as is necessary to enable the commissioner to determine whether a cigarette rolling machine operator is in compliance with this part.
Acts 2012, ch. 1066, § 8.
67-4-1033. Required notice to prospective purchaser, lessor or user of cigarette rolling machine.
-
Prior to October 1, 2013, it is an offense for any person selling, leasing, or otherwise providing for use a cigarette rolling machine to fail to provide notice prior to the sale of the machine to the prospective purchaser, lessor, or user of such machine on a separate, written disclosure form the current status of the federal excise tax rate on tobacco products, including, but not limited to, pipe tobacco, and that, on and after October 1, 2013, pursuant to chapter 1066 of the Public Acts of 2012:
-
The products produced by the machine:
- Will be cigarettes for the purposes of this part; and
- Will be taxed as provided in chapter 1066 of the Public Acts of 2012; and
- Only tobacco included on the directory established pursuant to § 67-4-2602 will be permitted to be used in such machine.
-
The products produced by the machine:
- The department shall require an applicant for a cigarette rolling machine operator license under § 67-4-1015(c)(1) to disclose whether the applicant received the notice required by subsection (a).
- A violation of subsection (a) is a Class A misdemeanor punishable by a fine only. Each failure to provide notice shall constitute a separate violation.
Acts 2012, ch. 1066, § 8.
Cross-References. Penalty for Class A misdemeanor, § 40-35-111.
Part 11
Production of Special Nuclear Material
67-4-1101. Part definitions.
As used in this part, unless the context otherwise requires:
- “Commissioner” means the commissioner of revenue;
- “Department” means the department of revenue;
-
“Person” includes:
- Any private individual, corporation, partnership, firm, association, trust, estate, or other entity, but does not include any foreign, federal, state, or local government, or political subdivision, or any agent or agency of government; and
- Any legal successor, representative, agent, or agency of the entities included within the definition of “person” in subdivision (3)(A);
-
“Produce” means to:
- Manufacture, make, produce, or refine special nuclear material;
- Separate special nuclear material from other substances in which such material may be contained; or
- Make or to produce new special nuclear material;
- “Separative work units” means the measure of effort expended to separate a given quantity of uranium, feed material, into two (2) fractions, one a product fraction containing a higher concentration of U-235 than the feed material, and the other a tails fraction, containing a lower concentration of U-235; and
-
“Special nuclear material” means:
- Plutonium, uranium enriched in the isotope 233 or 235, and any other material that is now or subsequently determined to be special nuclear material by the atomic energy commission or any successor agency of the United States government pursuant to the Atomic Energy Act of 1954, compiled in 42 U.S.C. § 2011 et seq., but does not include “source material,” as defined in that act; or
- Any material artificially enriched by any of the isotopes in subdivision (6)(A), but does not include “source material,” as defined in the Atomic Energy Act of 1954.
Acts 1981, ch. 206, § 2; T.C.A., § 67-6201.
Compiler's Notes. Portions of title 67, ch. 4, part 11 have been held unconstitutional. See under Notes to Decisions, 1. Constitutionality of Part, United States v. Tennessee, 531 F. Supp. 62 (E.D. Tenn. 1981), aff'd, United States v. Tennessee, 709 F.2d 1511 (6th Cir. 1983).
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 80.
NOTES TO DECISIONS
1. Constitutionality of Part.
The tax imposed by title 67, ch. 4, part 11 on the production of enriched uranium is unconstitutional as applied to a federal government contractor where the contractor is producing special nuclear material as directed by congress, and is burdened with a tax which no other entity in the state must pay, in violation of the supremacy clause of the United States Constitution. United States v. Tennessee, 531 F. Supp. 62, 1981 U.S. Dist. LEXIS 10073 (E.D. Tenn. 1981), aff'd without opinion, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983), aff'd, UNITED STATES v. SWANSON, 709 F.2d 1511, 1983 U.S. App. LEXIS 13159 (6th Cir. 1983), aff'd, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983).
Collateral References. Taxation 371
67-4-1102. Taxable privilege.
- The production by any person in connection with any business for profit, regardless of the form of such profit, of special nuclear material is declared to be a taxable privilege upon which each county and/or municipality in which the special nuclear material is produced may levy such privilege tax by resolution or ordinance of the legislative body in accordance with this part.
- Every person exercising such privilege shall be liable for the tax, whether such person's possession of such special nuclear material for purposes of production is by virtue of such person's ownership of the material or is pursuant to a lease, contract, license, loan or otherwise.
Acts 1981, ch. 206, § 3; T.C.A., § 67-6202.
Compiler's Notes. Portions of title 67, ch. 4, part 11 have been held unconstitutional. See under Notes to Decisions, 1. Constitutionality of Part, United States v. Tennessee, 531 F. Supp. 62 (E.D. Tenn. 1981), aff'd, United States v. Tennessee, 709 F.2d 1511 (6th Cir. 1983).
NOTES TO DECISIONS
1. Constitutionality of Part.
The tax imposed by title 67, ch. 4, part 11 on the production of enriched uranium is unconstitutional as applied to a federal government contractor where the contractor is producing special nuclear material as directed by congress, and is burdened with a tax which no other entity in the state must pay, in violation of the supremacy clause of the United States Constitution. United States v. Tennessee, 531 F. Supp. 62, 1981 U.S. Dist. LEXIS 10073 (E.D. Tenn. 1981), aff'd without opinion, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983), aff'd, UNITED STATES v. SWANSON, 709 F.2d 1511, 1983 U.S. App. LEXIS 13159 (6th Cir. 1983), aff'd, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983).
67-4-1103. Tax supplementary.
The tax levied by this part shall be in addition to all other taxes, whether levied in the form of excise, license, or privilege taxes, and shall be in addition to all other fees and taxes levied.
Acts 1981, ch. 206, § 8; T.C.A., § 67-6207.
Compiler's Notes. Portions of title 67, ch. 4, part 11 have been held unconstitutional. See under Notes to Decisions, 1. Constitutionality of Part, United States v. Tennessee, 531 F. Supp. 62 (E.D. Tenn. 1981), aff'd, United States v. Tennessee, 709 F.2d 1511 (6th Cir. 1983)
NOTES TO DECISIONS
1. Constitutionality of Part.
The tax imposed by title 67, ch. 4, part 11 on the production of enriched uranium is unconstitutional as applied to a federal government contractor where the contractor is producing special nuclear material as directed by congress, and is burdened with a tax which no other entity in the state must pay, in violation of the supremacy clause of the United States Constitution. United States v. Tennessee, 531 F. Supp. 62, 1981 U.S. Dist. LEXIS 10073 (E.D. Tenn. 1981), aff'd without opinion, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983), aff'd, UNITED STATES v. SWANSON, 709 F.2d 1511, 1983 U.S. App. LEXIS 13159 (6th Cir. 1983), aff'd, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983).
67-4-1104. Administration by department of revenue.
- Administration and collection of the tax shall be by the department in the same manner as other taxes are collected by the state for and on behalf of municipal and county governments.
- The commissioner may promulgate rules and regulations necessary and reasonable for the administration of this part.
Acts 1981, ch. 206, § 5; T.C.A., § 67-6204.
Compiler's Notes. Portions of title 67, ch. 4, part 11 have been held unconstitutional. See under Notes to Decisions, 1. Constitutionality of Part, United States v. Tennessee, 531 F. Supp. 62 (E.D. Tenn. 1981), aff'd, United States v. Tennessee, 709 F.2d 1511 (6th Cir. 1983)
NOTES TO DECISIONS
1. Constitutionality of Part.
The tax imposed by title 67, ch. 4, part 11 on the production of enriched uranium is unconstitutional as applied to a federal government contractor where the contractor is producing special nuclear material as directed by congress, and is burdened with a tax which no other entity in the state must pay, in violation of the supremacy clause of the United States Constitution. United States v. Tennessee, 531 F. Supp. 62, 1981 U.S. Dist. LEXIS 10073 (E.D. Tenn. 1981), aff'd without opinion, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983), aff'd, UNITED STATES v. SWANSON, 709 F.2d 1511, 1983 U.S. App. LEXIS 13159 (6th Cir. 1983), aff'd, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983).
67-4-1105. Tax rate.
The rate of the tax levied pursuant to § 67-4-1102 shall be as follows:
- The production of special nuclear material shall be taxed in the amount of thirty cents (30¢) for every separative work unit expended within a county of this state;
- In addition to the amount of tax computed in subdivision (1), the production of special nuclear material shall be taxed in the amount of one dollar ($1.00) for every separative work unit expended within a municipality of this state.
Acts 1981, ch. 206, § 4; T.C.A., § 67-6203.
Compiler's Notes. Portions of title 67, ch. 4, part 11 have been held unconstitutional. See under Notes to Decisions, 1. Constitutionality of Part, United States v. Tennessee, 531 F. Supp. 62 (E.D. Tenn. 1981), aff'd, United States v. Tennessee, 709 F.2d 1511 (6th Cir. 1983)
NOTES TO DECISIONS
1. Constitutionality of Part.
The tax imposed by title 67, ch. 4, part 11 on the production of enriched uranium is unconstitutional as applied to a federal government contractor where the contractor is producing special nuclear material as directed by congress, and is burdened with a tax which no other entity in the state must pay, in violation of the supremacy clause of the United States Constitution. United States v. Tennessee, 531 F. Supp. 62, 1981 U.S. Dist. LEXIS 10073 (E.D. Tenn. 1981), aff'd without opinion, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983), aff'd, UNITED STATES v. SWANSON, 709 F.2d 1511, 1983 U.S. App. LEXIS 13159 (6th Cir. 1983), aff'd, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983).
67-4-1106. Tax return and payment.
- The tax imposed by this part shall be due and payable monthly on the first day of the month next succeeding the month in which the tax accrues.
-
- For the purpose of ascertaining the amount of tax payable, it shall be the duty of each person liable for the tax to transmit to the commissioner a return or returns, as applicable, upon forms provided by the commissioner.
- Such return or returns shall be transmitted so that they are received by the commissioner on or before the fifteenth day of the month next succeeding the month in which the tax accrues.
- A separate return shall be filed for each county and, additionally, for each municipality within such county in which special nuclear materials are produced during the reporting period.
- Each return shall indicate whether it is being filed with respect to the tax computation under § 67-4-1105(1) or (2), and shall designate the county or municipality with respect to which such computation is made.
- Each return shall show the month covered by that return, the county and municipality in which the special nuclear material with respect to which the return is filed was produced, the number of separative work units expended within such county or municipality, the amount of tax owed under this part, and such other information as the commissioner may require.
- The return shall be accompanied by a remittance covering the amount of tax due as computed by the taxpayer.
Acts 1981, ch. 206, § 5; T.C.A., § 67-6204.
Compiler's Notes. Portions of title 67, ch. 4, part 11 have been held unconstitutional. See under Notes to Decisions, 1. Constitutionality of Part, United States v. Tennessee, 531 F. Supp. 62 (E.D. Tenn. 1981), aff'd, United States v. Tennessee, 709 F.2d 1511 (6th Cir. 1983)
NOTES TO DECISIONS
1. Constitutionality of Part.
The tax imposed by title 67, ch. 4, part 11 on the production of enriched uranium is unconstitutional as applied to a federal government contractor where the contractor is producing special nuclear material as directed by congress, and is burdened with a tax which no other entity in the state must pay, in violation of the supremacy clause of the United States Constitution. United States v. Tennessee, 531 F. Supp. 62, 1981 U.S. Dist. LEXIS 10073 (E.D. Tenn. 1981), aff'd without opinion, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983), aff'd, UNITED STATES v. SWANSON, 709 F.2d 1511, 1983 U.S. App. LEXIS 13159 (6th Cir. 1983), aff'd, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983).
67-4-1107. Delinquency or other violations — Penalties.
- The tax shall become delinquent on the sixteenth day of the month next succeeding the month in which the tax accrues.
-
- Any person liable for the tax who, before the delinquency date, fails to make any return required by this part and pay the full amount of the tax due and payable under this part, shall be liable for a specific penalty in the amount of ten percent (10%) of the tax due, which penalty shall be in addition to other penalties provided in this section.
- A further penalty of fifty percent (50%) of the amount of the tax remaining due and unpaid on such delinquency date may be added, if, in the opinion of the commissioner based on reasonable evidence, the nonpayment of the tax or any portion of the tax is due to an intent to evade payment of the tax.
- If the nonpayment of the tax is due to an intent to evade payment of the tax, the person liable for the tax under this part may be restrained and enjoined by any court of competent jurisdiction from producing and distributing special nuclear materials in the county or municipality in which the production or distribution with respect to which the tax liability or use took place. Such proceeding shall be instituted in the name of the state by the attorney general and reporter upon the request of the commissioner.
- There shall be added to the amounts of tax and penalty due under this part interest in accordance with § 67-1-801.
- All such penalties and interest imposed under this part shall be payable to and collectible by the commissioner in the same manner as if they were a part of the tax imposed under this part.
- Any person required by this part to make a return, pay a tax, keep records, or furnish information deemed necessary by the commissioner for the computation, assessment, or collection of the tax imposed under this part, and who fails to make the return, pay the tax, keep the records, or furnish the information at the time required by this part, or rules and regulations promulgated by the commissioner under this part, commits a Class B misdemeanor, in addition to other penalties provided by law.
- Any person, or any officer, employee, or, in the case of a partnership, member of a partnership, who willfully and fraudulently makes and signs a return that such person, officer, employee or member does not reasonably believe to be true and correct as to every material fact commits a felony and is subject to the penalties prescribed for perjury under the laws of this state.
Acts 1981, ch. 206, § 6; T.C.A., § 67-6205; Acts 1989, ch. 591, § 112.
Compiler's Notes. Portions of title 67, ch. 4, part 11 have been held unconstitutional. See under Notes to Decisions, 1. Constitutionality of Part, United States v. Tennessee, 531 F. Supp. 62 (E.D. Tenn. 1981), aff'd, United States v. Tennessee, 709 F.2d 1511 (6th Cir. 1983)
Cross-References. Classification of and penalties for felonies, §§ 39-11-113, 40-35-110, 40-35-111.
Penalty for Class B misdemeanor, § 40-35-111.
Perjury, title 39, ch. 16, part 7.
NOTES TO DECISIONS
1. Constitutionality of Part.
The tax imposed by title 67, ch. 4, part 11 on the production of enriched uranium is unconstitutional as applied to a federal government contractor where the contractor is producing special nuclear material as directed by congress, and is burdened with a tax which no other entity in the state must pay, in violation of the supremacy clause of the United States Constitution. United States v. Tennessee, 531 F. Supp. 62, 1981 U.S. Dist. LEXIS 10073 (E.D. Tenn. 1981), aff'd without opinion, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983), aff'd, UNITED STATES v. SWANSON, 709 F.2d 1511, 1983 U.S. App. LEXIS 13159 (6th Cir. 1983), aff'd, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983).
67-4-1108. Distribution of revenue.
All revenues collected from each taxpayer under this part shall be allocated in the following manner:
- Two percent (2%) of the tax collected from each taxpayer shall be retained by the department and credited to its current service revenue to cover the expenses of administration and collection of the tax and penalties and interest on the tax; and
- The remainder shall be remitted to the county and municipality designated on the return filed together with the tax payment, pursuant to § 67-4-1106, or, if the taxpayer fails to follow the provisions of this part, the county or municipality that would have been so designated had the taxpayer acted according to the provisions of this part.
Acts 1981, ch. 206, § 7; T.C.A., § 67-6206.
Compiler's Notes. Portions of title 67, ch. 4, part 1 have been held unconstitutional. See under Notes to Decisions, 1. Constitutionality of Part, United States v. Tennessee, 531 F. Supp. 62 (E.D. Tenn. 1981), aff'd, United States v. Tennessee, 709 F.2d 1511 (6th Cir. 1983)
NOTES TO DECISIONS
1. Constitutionality of Part.
The tax imposed by title 67, ch. 4, part 11 on the production of enriched uranium is unconstitutional as applied to a federal government contractor where the contractor is producing special nuclear material as directed by congress, and is burdened with a tax which no other entity in the state must pay, in violation of the supremacy clause of the United States Constitution. United States v. Tennessee, 531 F. Supp. 62, 1981 U.S. Dist. LEXIS 10073 (E.D. Tenn. 1981), aff'd without opinion, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983), aff'd, UNITED STATES v. SWANSON, 709 F.2d 1511, 1983 U.S. App. LEXIS 13159 (6th Cir. 1983), aff'd, United States v. Tennesee, 709 F.2d 1511 (6th Cir. Tenn. 1983).
Part 12
Adult Entertainment
67-4-1201. Part definitions.
As used in this part:
-
“Adult performance business” means a business that:
- Is an adult cabaret or other adult-oriented establishment, as defined in § 7-51-1102 or § 7-51-1401;
- Provides live nude entertainment or live nude performances for an audience of two (2) or more individuals; and
- Permits the consumption of beer, wine, liquor, or other alcoholic beverages on the premises;
- “Department” means the department of revenue; and
-
“Nude” means:
- Entirely unclothed; or
- Clothed in a manner that exposes to public view, at any time, the bare female breast below a point immediately above the top of the areola, human genitals, pubic region, or buttocks, even if partially covered by opaque material or completely covered by translucent material, including swim suits, lingerie, or latex covering.
Acts 2018, ch. 764, § 1.
Compiler's Notes. Former title 67, ch. 4, part 12 was transferred to title 56, ch. 4, part 3 in 1984.
Effective Dates. Acts 2018, ch. 764, § 2. July 1, 2018.
67-4-1202. Entry tax authorized for customers admitted to adult performance business. [Effective until July 1, 2021.]
- A two-dollar privilege tax, for state purposes only, is imposed for each entry by each customer admitted to an adult performance business. This tax is in addition to all other taxes imposed on the business.
- Each adult performance business shall record daily in the manner required by the department the number of customers admitted to the business. The business shall maintain the records for the period required by the department and make the records available for inspection and audit on request by the department.
- This section does not require an adult performance business to impose a tax on a customer of the business. A business has discretion to determine the manner in which the business derives the money required to pay the tax imposed under this section.
- All revenue collected from the tax imposed by this section shall be allocated to the general fund. It is the intent of the general assembly that an amount equal to the revenue collected from the tax be allocated to programs for victims of sex trafficking, subject to inclusion in the general appropriations act.
- This section is repealed on July 1, 2021, and no privilege tax shall be levied under this section on or after that date. This subsection (e) does not absolve any taxpayer of liability for any tax levied under this section prior to July 1, 2021.
Acts 2018, ch. 764, § 1.
Compiler's Notes. Former title 67, ch. 4, part 12 was transferred to title 56, ch. 4, part 3 in 1984.
Effective Dates. Acts 2018, ch. 764, § 2. July 1, 2018.
Part 13
Production Credit Associations [Transferred]
67-4-1301 — 67-4-1306. [Transferred.]
Compiler's Notes. Former title 67, ch. 4, part 13 was transferred to title 56, ch. 4, part 4 in 1984.
Part 14
Accommodations for Transients — Hotel Occupancy
67-4-1401. Part definitions. [Effective until January 1, 2021. See version effective January 1, 2021.]
As used in this part, unless the context otherwise requires:
- “Consideration” means the consideration charged, whether or not received, for the occupancy in a hotel valued in money, whether to be received in money, goods, labor or otherwise, including all receipts, cash, credits, property and services of any kind or nature without any deduction therefrom whatsoever. Nothing in this definition shall be construed to imply that consideration is charged when the space provided to the person is complimentary from the operator and no consideration is charged to or received from any person;
- “Hotel” means any structure or space, or any portion thereof, that is occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes, and includes any hotel, inn, tourist camp, tourist court, tourist cabin, motel or any place in which rooms, lodgings or accommodations are furnished to transients for consideration;
- “Municipality” means an incorporated city that has adopted home rule in accordance with the Constitution of Tennessee, article XI, § 9;
- “Occupancy” means the use or possession, or the right to the use or possession, of any room, lodgings or accommodations in any hotel;
- “Operator” means the person operating the hotel, whether as owner, lessee or otherwise;
- “Person” means any individual, or group of individuals, that occupies the same room; and
- “Transient” means any person who exercises occupancy or is entitled to occupancy of any rooms, lodgings or accommodations in a hotel for a period of less than thirty (30) continuous days.
Acts 1988, ch. 982, § 2; 2015, ch. 395, § 1.
Compiler's Notes. Acts 2015, ch. 395, § 2 provided that the Tennessee advisory commission on intergovernmental relations is directed to study, using existing resources, the effect of hotel occupancy taxes on the economy and their effect on tourism and the hospitality industry. The study shall include a comparison of this state's hotel occupancy tax structure with other states and any recommendations on whether hotel occupancy taxes should be levied on the municipal, county, or state level to best preserve the state's economy and encourage the continued growth of tourism in this state. The study shall consider methods to require public input and consideration prior to the adoption of such taxes by any governmental entity. The one-time study shall be submitted to the local government committee of the house of representatives and the state and local government committee of the senate by February 15, 2016.
Amendments. The 2015 amendment rewrote the definition of “Person,” which read: “‘Person’ means any individual, firm, partnership, joint venture, association, social club, fraternal organization, joint stock company, corporation, estate, trust, business trust, receiver, trustee, syndicate or any other group or combination acting as a unit”.
Effective Dates. Acts 2015, ch. 395, § 3. May 8, 2015.
Attorney General Opinions. Constitutionality of the Beneficial Use Tax Act of 1990, OAG 90-78 (8/16/90).
Levy of hotel-motel tax by home rule municipality located in county that has previously imposed such a tax by private act, OAG 03-062 (5/14/03).
Sales tax is due on short-term rentals of homes, apartments, and rooms in Tennessee that are arranged through websites. These rentals qualify as “hotels” subject to a hotel occupancy privilege tax. The property owner is ultimately responsible for collecting and paying the taxes. OAG 15-78, 2015 Tenn. AG LEXIS 79 (12/1/2015).
Collateral References. Taxation 371
67-4-1401. Part definitions. [Effective January 1, 2021. See version effective until January 1, 2021.]
As used in this part, unless the context otherwise requires:
- “Consideration” means the consideration charged, whether or not received, for the occupancy in a hotel valued in money, whether to be received in money, goods, labor or otherwise, including all receipts, cash, credits, property and services of any kind or nature without any deduction therefrom whatsoever. Nothing in this definition shall be construed to imply that consideration is charged when the space provided to the person is complimentary from the operator and no consideration is charged to or received from any person;
- “Hotel” means any structure or space, or any portion thereof, that is occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes, and includes any hotel, inn, tourist camp, tourist court, tourist cabin, motel, short-term rental unit or any place in which rooms, lodgings or accommodations are furnished to transients for consideration;
- “Municipality” means an incorporated city that has adopted home rule in accordance with the Constitution of Tennessee, article XI, § 9;
- “Occupancy” means the use or possession, or the right to the use or possession, of any room, lodgings or accommodations in any hotel;
- “Operator” means the person operating the hotel, whether as owner, lessee or otherwise;
- “Person” means any individual, or group of individuals, that occupies the same room;
- “Residential dwelling” means a cabin, house, or structure used or designed to be used as an abode or home of a person, family, or household, and includes a single-family dwelling, a portion of a single-family dwelling, or an individual residential dwelling in a multi-dwelling building, such as an apartment building, condominium, cooperative, or timeshare;
- “Short-term rental unit” means a residential dwelling that is rented wholly or partially for a fee for a period of less than thirty (30) continuous days and does not include a hotel as defined in § 68-14-302 or a bed and breakfast establishment or a bed and breakfast homestay as those terms are defined in § 68-14-502;
- “Short-term rental unit marketplace” means any person or entity that provides a platform for compensation, through which a third party offers to rent a short-term rental unit to an occupant; and
- “Transient” means any person who exercises occupancy or is entitled to occupancy of any rooms, lodgings or accommodations in a hotel for a period of less than thirty (30) continuous days.
Acts 1988, ch. 982, § 2; 2015, ch. 395, § 1; 2020, ch. 787, §§ 6, 7.
Compiler's Notes. Acts 2015, ch. 395, § 2 provided that the Tennessee advisory commission on intergovernmental relations is directed to study, using existing resources, the effect of hotel occupancy taxes on the economy and their effect on tourism and the hospitality industry. The study shall include a comparison of this state's hotel occupancy tax structure with other states and any recommendations on whether hotel occupancy taxes should be levied on the municipal, county, or state level to best preserve the state's economy and encourage the continued growth of tourism in this state. The study shall consider methods to require public input and consideration prior to the adoption of such taxes by any governmental entity. The one-time study shall be submitted to the local government committee of the house of representatives and the state and local government committee of the senate by February 15, 2016.
Amendments. The 2015 amendment rewrote the definition of “Person,” which read: “‘Person’ means any individual, firm, partnership, joint venture, association, social club, fraternal organization, joint stock company, corporation, estate, trust, business trust, receiver, trustee, syndicate or any other group or combination acting as a unit”.
The 2020 amendment, effective January 1, 2021, inserted “, short-term rental unit” in the definition of “hotel”; and added the definitions of “residential dwelling”, “short-term rental unit”, and “short-term rental unit marketplace”.
Effective Dates. Acts 2015, ch. 395, § 3. May 8, 2015.
Acts 2020, ch. 787, § 12. January 1, 2021.
Attorney General Opinions. Constitutionality of the Beneficial Use Tax Act of 1990, OAG 90-78 (8/16/90).
Levy of hotel-motel tax by home rule municipality located in county that has previously imposed such a tax by private act, OAG 03-062 (5/14/03).
Sales tax is due on short-term rentals of homes, apartments, and rooms in Tennessee that are arranged through websites. These rentals qualify as “hotels” subject to a hotel occupancy privilege tax. The property owner is ultimately responsible for collecting and paying the taxes. OAG 15-78, 2015 Tenn. AG LEXIS 79 (12/1/2015).
Collateral References. Taxation 371
67-4-1402. Levy of tax authorized — Delinquent notice by publication.
-
- Each municipality in this state is authorized to levy by ordinance a privilege tax upon the privilege of occupancy in any hotel of each transient in an amount not to exceed five percent (5%) of the consideration charged by the operator.
- Notwithstanding subdivision (a)(1), a municipality with a population of more than six hundred ten thousand (610,000), according to the 2010 federal census or any subsequent federal census, is authorized to levy by one (1) or more ordinances a privilege tax upon the privilege of occupancy in any hotel of each transient in an amount not to exceed an aggregate of five percent (5%) of the consideration charged by the operator.
-
- No ordinance authorizing such privilege tax shall take effect unless it is approved by a two-thirds (2/3) vote of the municipal legislative body at two (2) consecutive, regularly scheduled meetings, or unless it is approved by a majority of the number of qualified voters of the municipality voting in an election on the question of whether or not the tax should be levied.
- If there is a petition of ten percent (10%) of the qualified voters who voted in the municipality in the last gubernatorial election that is filed with the county election commission within thirty (30) days of final approval of such ordinance by the municipal legislative body, then the county election commission shall call an election on the question of whether or not the tax should be levied in accordance with this section.
- The municipal legislative body shall direct the county election commission to call such election, to be held in a regular election or in a special election for the purpose of approving or rejecting such tax levy. The municipality shall pay the cost of any special election.
- The ballots used in such election shall have printed on them the substance of such ordinance and the voters shall vote for or against its approval.
- The votes cast on the question shall be canvassed and the results proclaimed by the county election commission and certified by it to the municipal legislative body.
- The qualifications of voters voting on the question shall be the same as those required for participation in general elections.
- All laws applicable to general elections shall apply to the determination of the approval or rejection of this tax levy.
-
-
Except as provided in subdivision (c)(5), as a preliminary step toward pursuing any remedy available to the authorized collector by law to collect any taxes due or delinquent under an ordinance imposing a tax on the privilege of occupancy in a hotel, the authorized collector may publish a notice in accordance with subdivision (c)(2) that lists the name of each operator who has failed to collect or remit the tax due or delinquent and the amount of the tax due or delinquent, if:
- The amount of the tax due or delinquent exceeds ten thousand dollars ($10,000) and has been due or delinquent for one hundred twenty (120) days or more; or
- The amount of the tax due or delinquent exceeds fifty thousand dollars ($50,000).
- Any municipality that elects to publish a notice as authorized by subdivision (c)(1) shall cause the notice to be inserted, once a week for two (2) consecutive weeks in the month of January, in a newspaper of general circulation as defined in § 2-1-104 or one (1) or more newspapers published or widely distributed in the municipality; provided, that if no newspaper is published in the municipality, the notice shall be posted on the courthouse door.
- The cost of publication shall be paid by the municipality.
- To the extent there is a conflict between this subsection (c) and any ordinance that imposes a tax on the privilege of occupancy in a hotel, this subsection (c) shall govern. The legislative body of any municipality, by ordinance, is authorized to modify the provisions of any ordinance enacted prior to April 14, 2016, that conflict with this subsection (c).
- An operator's name and amount of tax due or delinquent shall not be listed on any notice published pursuant to subdivision (c)(1) if all or any portion of the tax is at issue in a suit filed by the operator challenging the collection or assessment of the tax.
-
Except as provided in subdivision (c)(5), as a preliminary step toward pursuing any remedy available to the authorized collector by law to collect any taxes due or delinquent under an ordinance imposing a tax on the privilege of occupancy in a hotel, the authorized collector may publish a notice in accordance with subdivision (c)(2) that lists the name of each operator who has failed to collect or remit the tax due or delinquent and the amount of the tax due or delinquent, if:
Acts 1988, ch. 982, § 3; 2016, ch. 796, § 2; 2017, ch. 291, § 1.
Compiler's Notes. For tables of populations of Tennessee municipalities see Volume 13.
Amendments. The 2016 amendment added (c).
The 2017 amendment added (a)(2).
Effective Dates. Acts 2016, ch. 796, § 6. April 14, 2016.
Acts 2017, ch. 291, § 2. May 4, 2017.
Attorney General Opinions. Sales tax is due on short-term rentals of homes, apartments, and rooms in Tennessee that are arranged through websites. These rentals qualify as “hotels” subject to a hotel occupancy privilege tax. The property owner is ultimately responsible for collecting and paying the taxes. OAG 15-78, 2015 Tenn. AG LEXIS 79 (12/1/2015).
67-4-1403. Disposition of proceeds.
The proceeds received by the municipality from the tax shall be designated and used for purposes authorized in the ordinance levying the tax.
Acts 1988, ch. 982, § 4.
67-4-1404. Collection — Refund.
-
- The tax shall be added by each operator to each invoice that the operator prepares and gives directly, or transmits, to the transient for the occupancy of the operator's hotel.
- The tax so invoiced shall be collected from the transient by the operator and remitted to the municipality.
- When a person has maintained occupancy for thirty (30) continuous days, that person shall receive from the operator a refund or credit for the tax previously collected from or charged to that person, and the operator shall receive credit for the amount of such tax if previously paid or reported to the municipality.
Acts 1988, ch. 982, § 5.
Attorney General Opinions. Sales tax is due on short-term rentals of homes, apartments, and rooms in Tennessee that are arranged through websites. These rentals qualify as “hotels” subject to a hotel occupancy privilege tax. The property owner is ultimately responsible for collecting and paying the taxes. OAG 15-78, 2015 Tenn. AG LEXIS 79 (12/1/2015).
67-4-1405. Remittance of tax. [Effective until January 1, 2021. See version effective January 1, 2021.]
- The tax levied shall be remitted by all operators who lease, rent or charge for rooms or spaces in hotels within the municipality, to such officer as may by the ordinance be charged with the duty of collection of that tax, the tax to be remitted to such officer not later than the twentieth day of each month for the preceding month. The operator is required to collect the tax from the transient at the time of the presentation of the invoice for occupancy as may be the custom of the operator, and if credit is granted by the operator to the transient, then the obligation to the municipality entitled to such tax shall be that of the operator.
- For the purpose of compensating the operator in accounting for remitting the tax levied pursuant to this part, the operator shall be allowed two percent (2%) of the amount of the tax due and accounted for and remitted to the officer in the form of a deduction in submitting the operator's report and paying the amount due by such operator; provided, that the amount due was not delinquent at the time of payment.
Acts 1988, ch. 982, § 6.
Attorney General Opinions. Sales tax is due on short-term rentals of homes, apartments, and rooms in Tennessee that are arranged through websites. These rentals qualify as “hotels” subject to a hotel occupancy privilege tax. The property owner is ultimately responsible for collecting and paying the taxes. OAG 15-78, 2015 Tenn. AG LEXIS 79 (12/1/2015).
67-4-1405. Remittance of tax. [Effective January 1, 2021. See version effective until January 1, 2021.]
- The tax levied shall be remitted by all operators who lease, rent or charge for rooms or spaces in hotels within the municipality, to such officer as may by the ordinance be charged with the duty of collection of that tax, the tax to be remitted to such officer not later than the twentieth day of each month for the preceding month. The operator is required to collect the tax from the transient at the time of the presentation of the invoice for occupancy as may be the custom of the operator, and if credit is granted by the operator to the transient, then the obligation to the municipality entitled to such tax shall be that of the operator.
- For the purpose of compensating the operator in accounting for remitting the tax levied pursuant to this part, the operator shall be allowed two percent (2%) of the amount of the tax due and accounted for and remitted to the officer in the form of a deduction in submitting the operator's report and paying the amount due by such operator; provided, that the amount due was not delinquent at the time of payment.
- Notwithstanding this part to the contrary, on or after January 1, 2021, the tax levied pursuant to this part, when levied upon the occupancy of a short-term rental unit secured through a short-term rental unit marketplace, must be collected and remitted in accordance with chapter 4, part 15 of this title.
Acts 1988, ch. 982, § 6; 2020, ch. 787, § 8.
Amendments. The 2020 amendment, effective January 1, 2021, added (c).
Effective Dates. Acts 2020, ch. 787, § 12. January 1, 2021.
Attorney General Opinions. Sales tax is due on short-term rentals of homes, apartments, and rooms in Tennessee that are arranged through websites. These rentals qualify as “hotels” subject to a hotel occupancy privilege tax. The property owner is ultimately responsible for collecting and paying the taxes. OAG 15-78, 2015 Tenn. AG LEXIS 79 (12/1/2015).
67-4-1406. Monthly tax return — Annual audit.
-
- The authorized collector of the tax shall be responsible for the collection of such tax and shall place the proceeds of such tax in accounts for the purposes stated in this part.
- A monthly tax return shall be filed under oath with the authorized collector by the operator with such number of copies of the return as such collector may reasonably require for the collection of such tax.
- The report of the operator shall include such facts and information as may be deemed reasonable for the verification of the tax due. The form of such report shall be developed by the authorized collector and approved by the municipal legislative body prior to use.
- The collector shall audit each operator in the municipality at least once per year and shall report on the audits made on a quarterly basis to the municipal legislative body.
- The municipal legislative body is authorized to adopt reasonable rules and regulations for the implementation of this part, including the form for such reports.
Acts 1988, ch. 982, § 7.
67-4-1407. No advertising of rebates.
No operator of a hotel shall advertise or state in any manner, whether directly or indirectly, that the tax or any part of the tax will be assumed or absorbed by the operator or that it will not be added to the rent, or that if added, any part will be refunded.
Acts 1988, ch. 982, § 8.
67-4-1408. Delinquent taxes — Interest and penalty.
- Taxes collected by an operator that are not remitted to the authorized collector on or before the due dates shall be delinquent.
- An operator shall be liable for interest on such delinquent taxes from the due date at the rate of twelve percent (12%) per annum, and in addition, for the penalty of one percent (1%) for each month or fraction thereof such taxes are delinquent. Such interest and penalty shall become a part of the tax required to be remitted under this part.
- Each occurrence of knowing refusal of an operator to collect or remit the tax or knowing refusal of a transient to pay the tax imposed is a Class A misdemeanor, punishable upon conviction by a fine to be imposed separately for each offense, not in excess of fifty dollars ($50.00). Each occurrence shall constitute a separate offense. As used in this subsection (c), “each occurrence” means each day.
- Nothing in this section shall be construed to prevent the authorized collector of the tax from pursuing any civil remedy available to the collector by law, including issuing distress warrants and the seizure of assets, to collect any taxes due or delinquent under this part.
Acts 1988, ch. 982, § 9; 1989, ch. 591, §§ 1, 6; 2003, ch. 322, §§ 1, 2.
Cross-References. Penalty for Class A misdemeanor, § 40-35-111.
67-4-1409. Records — Inspection.
It is the duty of every operator liable for the collection of and payment to the municipality of any tax imposed by this part to keep and preserve for a period of three (3) years all records as may be necessary to determine the amount of such tax for which the operator may have been liable for the collection of and payment to the municipality, which records the authorized collector shall have the right to inspect at all reasonable times.
Acts 1988, ch. 982, § 10.
67-4-1410. Administration and enforcement — Remedies of taxpayers.
- The authorized collector, in administering and enforcing this part, has, as additional powers, those powers and duties with respect to collecting taxes as provided in this title or otherwise provided by law for the county clerks; provided, that chapter 1, part 17 of this title does not apply to any record, document, or other information pertaining to a tax on the privilege of occupancy in a hotel imposed by a municipality pursuant to this part.
- Upon any claim of illegal assessment and collection, the taxpayer shall have the remedies provided in this title, it being the intent of this part that the provisions of law that apply to the recovery of state taxes illegally assessed and collected also apply to taxes illegally assessed and collected under the authority of this part; provided, that the authorized collector shall possess those powers and duties as provided in § 67-1-707 for the county clerks.
- With respect to the adjustment and settlement with taxpayers, all errors of taxes collected by the authorized collector under the authority of this part shall be refunded by the authorized collector.
- Notice of any tax paid under protest shall be given to the authorized collector and the ordinance authorizing levy of the tax shall designate a municipal officer against whom suit may be brought for recovery.
Acts 1988, ch. 982, § 11; 2016, ch. 796, § 3.
Compiler's Notes. Former § 67-4-1412 (Acts 1988, ch. 982, § 14), concerning the applicability of §§ 67-4-1401 -- 67-4-1411, was repealed by Acts 1991, ch. 413, § 2, effective July 1, 1991.
Amendments. The 2016 amendment added the proviso at the end of (a).
Effective Dates. Acts 2016, ch. 796, § 6. April 14, 2016.
67-4-1411. Deposit of funds.
The proceeds of the tax authorized by this part shall be allocated to and placed in the general fund or other fund of the municipality to be used for the purposes stated in § 67-4-1403.
Acts 1988, ch. 982, § 12.
67-4-1412. Delinquent tax notice by publication.
- This section applies to any city, town, or county in this state, including any county having a metropolitan form of government.
-
Except as provided in subsection (f), as a preliminary step toward pursuing any remedy available to a city, town, or county by law to collect any taxes due or delinquent under an ordinance, resolution, or private act imposing a tax on the privilege of occupancy in a hotel, the tax collector for the city, town, or county may publish a notice in accordance with subsection (c) that lists the name of each operator who has failed to collect or remit the tax due or delinquent and the amount of the tax due or delinquent, if:
- The amount of the tax due or delinquent exceeds ten thousand dollars ($10,000) and has been due or delinquent for one hundred twenty (120) days or more; or
- The amount of the tax due or delinquent exceeds fifty thousand dollars ($50,000).
- Any city, town, or county that elects to publish a notice as authorized by subsection (b) shall cause the notice to be inserted, once a week for two (2) consecutive weeks in the month of January, in a newspaper of general circulation as defined in § 2-1-104 or one (1) or more newspapers published or widely distributed in the city, town, or county; provided, that if no newspaper is published in the city, town, or county, the notice shall be posted on the courthouse door.
- The cost of publication shall be paid by the city, town, or county.
- To the extent there is a conflict between this section and any private act, resolution, or ordinance that imposes a tax on the privilege of occupancy in a hotel, this section shall govern. The legislative body of any city or town, by ordinance, or county, by resolution, is authorized to modify the provisions of any ordinance or resolution enacted prior to April 14, 2016, that conflict with this section.
- An operator's name and amount of tax due or delinquent shall not be listed on any notice published pursuant to subsection (b) if all or any portion of the tax is at issue in a suit filed by the operator challenging the collection or assessment of the tax.
Acts 2016, ch. 796, § 1.
Compiler's Notes. Former § 67-4-1412 (Acts 1988, ch. 982, § 14), concerning the applicability of §§ 67-4-1401 — 67-4-1411, was repealed by Acts 1991, ch. 413, § 2, effective July 1, 1991.
Effective Dates. Acts 2016, ch. 796, § 6. April 14, 2016.
67-4-1413. Collection and remittance of tax on short-term rental unit. [Effective January 1, 2021.]
Notwithstanding any law to the contrary, on or after January 1, 2021, tax levied upon the privilege of occupancy of a short-term rental unit secured through a short-term rental unit marketplace, pursuant to any private act, must be collected and remitted in accordance with title 67, chapter 4, part 15.
Acts 2020, ch. 787, § 9.
Code Commission Notes.
Acts 2020, ch. 787, § 9 enacted this section as § 67-4-1426 but the section has been redesignated as § 67-4-1413 by authority of the Code Commission.
Effective Dates. Acts 2020, ch. 787, § 12. January 1, 2021.
67-4-1414 — 67-4-1424. [Reserved.]
-
After May 12, 1988, any private act that authorizes a city or county to levy a tax on the privilege of occupancy of a hotel shall limit the application of such tax as follows:
- A city shall only levy such tax on occupancy of hotels located within its municipal boundaries;
- A city shall not be authorized to levy such tax on occupancy of hotels if the county in which such city is located has levied such tax prior to the adoption of the tax by the city; and
- A county shall only levy such tax on occupancy of hotels located within its boundaries but outside the boundaries of any municipality that has levied a tax on such occupancy prior to the adoption of such tax by the county.
- This section shall be applied prospectively only and all private acts levying taxes on the privilege of occupancy of hotels enacted prior to May 12, 1988, shall remain in full force and effect. For the purposes of this section, “enacted” means passed by both houses of the general assembly and signed by the governor and approved in accordance with the Constitution of Tennessee, article XI, § 9.
-
This section does not apply in any county, excluding any county with a metropolitan form of government, that:
- Contains or borders a county that contains an airport designated as a regular commercial service airport in the international civil aviation organization (ICAO) regional air navigation plan; and
- Contains a government-owned convention center of at least fifty thousand square feet (50,000 sq. ft.) with an attached, adjoining, or adjacent hotel or motel facility; or
-
Contains an airport with regularly scheduled commercial passenger service, and the creating municipality of the metropolitan airport authority for the airport is not located within such county. The tax levied on occupancy of hotels by cities located within such a county may only be used for tourism as defined by § 7-4-101;
provided, however, that a municipality located in any county to which this subsection (c) applies shall not be authorized to levy a privilege tax upon the privilege of occupancy in any hotel of each transient in an amount exceeding five percent (5%) of the consideration charged by the operator; provided, further, that, if a municipality located in such county is incorporated under the general law, then such municipality is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel of each transient in an amount not to exceed five percent (5%) of the consideration charged by the operator. Such ordinance shall set forth the manner of collection and administration of such privilege tax.
- This section shall not apply in any county having a population of not less than eighty thousand (80,000) nor more than eighty-three thousand (83,000), in any county having a population of not less than thirty-five thousand fifty (35,050) nor more than thirty-five thousand seventy (35,070), nor in any county having a population of not less than one hundred eighteen thousand four hundred (118,400) nor more than one hundred eighteen thousand seven hundred (118,700), according to the 1990 federal census or any subsequent federal census.
- This section does not apply to any city that has constructed a qualifying project or projects under the Convention Center and Tourism Development Financing Act of 1998, compiled in title 7, chapter 88. Further, § 67-4-503 shall not be applicable to such cities as it relates to the authority to levy an occupancy tax.
- This section shall not apply in any county having a population of not less than twenty-five thousand five hundred seventy-five (25,575) nor more than twenty-five thousand eight hundred fifty (25,850), according to the 2000 federal census or any subsequent federal census.
- This section shall not apply in any municipality that is located within the boundaries of all of the following three (3) counties: a county having a population of not less than seventy-one thousand three hundred (71,300) nor more than seventy-one thousand four hundred (71,400), a county having a population of not less than nineteen thousand five hundred (19,500) nor more than nineteen thousand seven hundred seventy-five (19,775), and a county having a population of not less than fifty-one thousand nine hundred (51,900) nor more than fifty-two thousand (52,000), all according to the 2000 federal census or any subsequent federal census; provided, that the municipality is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the municipality of each transient in an amount not to exceed five percent (5%) of the consideration charged by the operator. The ordinance shall set forth the manner of collection and administration of the privilege tax.
- This section shall not apply in any municipality having a population of not less than five thousand two hundred (5,200) nor more than five thousand three hundred (5,300), according to the 2000 federal census or any subsequent federal census, that is located within a county having a population of not less than fifty-one thousand nine hundred (51,900) nor more than fifty-two thousand (52,000), according to the 2000 federal census or any subsequent federal census; provided, that the municipality is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the municipality of each transient in an amount not to exceed five percent (5%) of the consideration charged by the operator. The ordinance shall set forth the manner of collection and administration of the privilege tax.
- This section shall not apply in any municipality having a population of not less than seven thousand three hundred fifty (7,350) nor more than seven thousand four hundred and ten (7,410), according to the 2000 federal census of population or any subsequent federal census located within a county having a population of not less than twenty-five thousand four hundred and fifty (24,450) nor more than twenty-five thousand five hundred and fifty (25,550), according to the 2000 federal census of population or any subsequent federal census. Any such municipality shall be authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the municipality of each transient in an amount of the consideration charged by the operator as set by ordinance of the governing body. All proceeds received by the municipality from such tax shall be dedicated solely for tourism development. The ordinance shall further set forth the manner of collection and administration of the privilege tax.
- This section shall not apply in any city having a population of not less than six thousand nine hundred (6,900) nor more than seven thousand (7,000), according to the 2010 federal census or any subsequent federal census, that is located within a county having a population of not less than thirty-five thousand six hundred (35,600) nor more than thirty-five thousand seven hundred (35,700), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed five percent (5%) of the consideration charged by the operator. All proceeds received by the city from such tax shall be dedicated solely for tourism development. The ordinance shall set forth the manner of collection and administration of the privilege tax.
- This section shall not apply in any city having a population of not less than thirty-four thousand six hundred (34,600) nor more than thirty-four thousand seven hundred (34,700), according to the 2010 federal census or any subsequent federal census, that is located within any county having a population of not less than eighty thousand nine hundred (80,900) nor more than eighty-one thousand (81,000), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized, after notice and a public hearing, to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed five percent (5%) of the consideration charged by the operator. The public shall have not less than thirty (30) days to comment on the levying of the tax after receiving notice from the city and before the public hearing. All proceeds received by the city from the tax shall be dedicated solely for tourism development in Maury County. The ordinance shall set forth the manner of collection and administration of the privilege tax.
- This section shall not apply in any city having a population of not less than six thousand eight hundred twenty (6,820) nor more than six thousand eight hundred thirty (6,830), according to the 2010 federal census or any subsequent federal census, that is located within any county having a population of not less than thirty-three thousand three hundred (33,300) nor more than thirty-three thousand four hundred (33,400), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized, after notice and public hearing, to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed five percent (5%) of the consideration charged by the operator. The public shall have not less than thirty (30) days to comment on the levying of the tax after receiving notice from the city and before the public hearing. All proceeds received by the city from the tax shall be used for tourism development purposes. The ordinance shall set forth the manner of collection and administration of the privilege tax.
- This section shall not apply in any county having a population of not less than thirteen thousand seven hundred (13,700) nor more than thirteen thousand seven hundred fifty (13,750), according to the 2010 federal census or any subsequent federal census; provided, that the county is authorized to levy a privilege tax by resolution adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel of each transient in an amount not to exceed five percent (5%) of the consideration charged by the operator. The resolution shall set forth the manner of collection and administration of the privilege tax.
- Notwithstanding this part to the contrary, by ordinance adopted by a two-thirds (2/3) vote of its legislative body, any municipality having a population of not less than sixty-three thousand (63,000) nor more than sixty-three thousand five hundred (63,500), according to the 2010 federal census or any subsequent federal census, is authorized to adjust the rate of the municipality's privilege tax upon the privilege of occupancy in any hotel located within the municipality of each transient; provided, however, any adjustment shall be made one (1) time only and shall not exceed two percent (2%) of the consideration charged to the transient by the operator. Any proceeds received by the municipality from any adjustment in the rate shall be used solely for tourism.
- This section shall not apply in any city having a population of not less than twenty-nine thousand thirty (29,030) nor more than twenty-nine thousand forty (29,040), which is located within any county having a population of not less than one hundred eighty-three thousand one hundred (183,100) nor more than one hundred eighty-three thousand two hundred (183,200), or which is located within any county having a population of not less than eighty thousand nine hundred (80,900) nor more than eighty-one thousand (81,000), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed three percent (3%) of the consideration charged by the operator. The proceeds from such tax shall be deposited in a special revenue fund, separate from the general fund, and used solely for tourism development purposes. The ordinance shall set forth the manner of collection and administration of the privilege tax.
- This section shall not apply in any city having a population of not less than two thousand eight hundred (2,800) nor more than three thousand (3,000) that is located within any county having a population of not less than fifty-one thousand four hundred (51,400) nor more than fifty-one thousand five hundred (51,500), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed two percent (2%) of the consideration charged by the operator. All proceeds received by the city from the tax shall be used solely to promote tourism in the city and for no other purpose. The ordinance shall set forth the manner of collection and administration of the privilege tax.
- This section shall not apply in any city having a population of not less than six thousand four hundred forty (6,440) nor more than six thousand four hundred forty-nine (6,449), located within two counties, one of which having a population of not less than sixty-six thousand two hundred (66,200) nor more than sixty-six thousand three hundred (66,300) and the other having a population of not less than one hundred sixty thousand six hundred (160,600) nor more than one hundred sixty thousand seven hundred (160,700), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized, after notice and public hearing, to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed two and one-half percent (2.5%) of the consideration charged by the operator. All proceeds received by the city from the tax shall be used solely for tourism development purposes. The ordinance shall set forth the manner of collection and administration of the privilege tax.
- This section shall not apply in any city having a population of not less than thirteen thousand six hundred (13,600) nor more than thirteen thousand six hundred nine (13,609), according to the 2010 federal census or any subsequent federal census, that is located within any county having a population of not less than thirty-nine thousand eight hundred (39,800) nor more than thirty-nine thousand nine hundred (39,900), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed five percent (5%) of the consideration charged by the operator. All proceeds received by the city from the tax shall be used solely for tourism development purposes. The ordinance shall set forth the manner of collection and administration of the privilege tax.
- This section shall not apply in any city having a population of not less than two thousand seven hundred fifty (2,750) nor more than two thousand seven hundred fifty-nine (2,759) that is located within any county having a population of not less than thirty-nine thousand one hundred (39,100) nor more than thirty-nine thousand two hundred (39,200), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed two and one-half percent (2.5%) of the consideration charged by the operator. All proceeds received by the city from the tax shall be used solely to promote tourism and economic development in the city and for no other purpose. The ordinance shall set forth the manner of collection and administration of the privilege tax.
- This section shall not apply in any city that is situated in two (2) or more counties and having a population of not less than eleven thousand four hundred eighty (11,480) nor more than eleven thousand four hundred eighty-nine (11,489), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed two and one-half percent (2.5%) of the consideration charged by the operator. All proceeds received by the city from such tax shall be dedicated solely for tourism development. The ordinance shall set forth the manner of collection and administration of the privilege tax.
- This section does not apply in any city that is situated in two (2) or more counties and having a population of not less than twenty thousand six hundred (20,600) nor more than twenty thousand seven hundred (20,700), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed four percent (4%) of the consideration charged by the operator. All proceeds received by the city from the tax must be used solely for tourism development. The ordinance must set forth the manner of collection and administration of the privilege tax.
- This section shall not apply in any city having a population of not less than four thousand one hundred forty (4,140) nor more than four thousand one hundred forty-nine (4,149) that is located within any county having a population of not less than thirty-nine thousand one hundred (39,100) nor more than thirty-nine thousand two hundred (39,200), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed five percent (5%) of the consideration charged by the operator. All proceeds received by the city from the tax shall be used solely to promote tourism and economic development in the city and for no other purpose. The ordinance shall set forth the manner of collection and administration of the privilege tax.
- This section does not apply to any city having a population of not less than fifty-one thousand (51,000) nor more than fifty-two thousand (52,000), according to the 2010 federal census or any subsequent federal census, located in a county with a population of not less than one hundred sixty thousand six hundred (160,600) nor more than one hundred sixty thousand seven hundred (160,700), according to the 2010 federal census or any subsequent census; provided, that the city may, after notice and a public hearing, levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed two and three-fourths percent (2.75%) of the consideration charged by the operator. All proceeds received by the city from the tax must be used solely for tourism development purposes. The ordinance must set forth the manner of collection and administration of the privilege tax.
- This section shall not apply in any city having a population of not less than thirty thousand (30,000) nor more than thirty thousand five hundred (30,500) that is located in a county having a population of not less than one hundred sixty thousand six hundred (160,600) nor more than one hundred sixty thousand seven hundred (160,700), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed five percent (5%) of the consideration charged by the operator. All proceeds received by the city from such tax shall be dedicated solely for tourism development. The ordinance shall set forth the manner of collection and administration of the privilege tax.
- This section shall not apply in any city having a population of not less than ten thousand seven hundred (10,700) nor more than ten thousand eight hundred (10,800) that is located within any county having a population of not less than fifty-six thousand (56,000) nor more than fifty-six thousand one hundred (56,100), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed two percent (2%) of the consideration charged by the operator. All proceeds received by the city from the tax shall be used solely to promote tourism and economic development in the city and for no other purpose. The ordinance shall set forth the manner of collection and administration of the privilege tax.
- This section does not apply in any county having a population of not less than fifty-two thousand seven hundred (52,700) nor more than fifty-two thousand eight hundred (52,800), according to the 2010 federal census or any subsequent federal census; provided, that the county is authorized to levy a privilege tax by resolution adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel or motel of each transient in an amount not to exceed two and one-half percent (2.5%) of the consideration charged by the operator. The revenue generated by this privilege tax must be used to support local tourism and economic development. The resolution must set forth the manner of collection and administration of the privilege tax.
This section does not apply in any city having a population of not less than six thousand ninety (6,090) nor more than six thousand one hundred (6,100) that is located within any county having a population of not less than eighteen thousand three hundred one (18,301) nor more than eighteen thousand four hundred (18,400), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed two and a half percent (2.5%) of the consideration charged by the operator. All proceeds received by the city from the tax must be used solely to promote tourism and economic development in the city and for no other purpose. The ordinance must set forth the manner of collection and administration of the privilege tax.
This section does not apply in any city having a population of not less than four thousand five hundred forty (4,540) nor more than four thousand five hundred forty-nine (4,549) that is located within any county having a population of not less than thirty-nine thousand one hundred (39,100) nor more than thirty-nine thousand two hundred (39,200), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city on each transient in an amount not to exceed two and one-half percent (2.5%) of the consideration charged by the operator. All proceeds received by the city from the tax must be used solely to promote tourism and economic development in the city and for no other purpose. The ordinance must set forth the manner of collection and administration of the privilege tax.
This section does not apply in any city having a population of not less than thirty thousand four hundred thirty (30,430) nor more than thirty thousand four hundred thirty-nine (30,439) that is located within any county having a population of not less than seventy-two thousand three hundred (72,300) and not more than seventy-two thousand four hundred (72,400), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city on each transient in an amount not to exceed three percent (3%) of the consideration charged by the operator. All proceeds received by the city from the tax must be used solely to promote tourism and economic development in the city and for no other purpose. The ordinance must set forth the manner of collection and administration of the privilege tax.
This section shall not apply in any city having a population of not less than two thousand one hundred ninety (2,190) nor more than two thousand one hundred ninety-nine (2,199) that is located inside a county having a population of not less than fifty-one thousand four hundred (51,400) nor more than fifty-one thousand five hundred (51,500), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city of each transient in an amount not to exceed three and one-half percent (3.5%) of the consideration charged by the operator. All proceeds received by the city from the tax shall be used solely to promote tourism and economic development in the city and for no other purpose. The ordinance shall set forth the manner of collection and administration of the privilege tax.
This section does not apply in any city having a population of not less than one thousand four hundred eighty (1,480) nor more than one thousand four hundred eighty-nine (1,489) that is located within a county having a population of not less than thirteen thousand seven hundred (13,700) nor more than thirteen thousand seven hundred fifty (13,750), according to the 2010 federal census or any subsequent federal census; provided, that the city is authorized to levy a privilege tax by ordinance adopted by a two-thirds (2/3) vote of its governing body upon the privilege of occupancy in any hotel located within the city on each transient in an amount not to exceed five percent (5%) of the consideration charged by the operator. All proceeds received by the city from the tax must be used solely to promote tourism development in the city and for no other purpose. The ordinance must set forth the manner of collection and administration of the privilege tax.
Acts 1988, ch. 1000, §§ 1-3; 1991, ch. 413, § 3; 1996, ch. 1082, § 1; 1999, ch. 538, § 1; 2001, ch. 324, § 1; 2002, ch. 718, § 1; 2003, ch. 370, § 1; 2005, ch. 162, § 1; 2007, ch. 156, §§ 1, 2; 2011, ch. 303, § 1; 2012, ch. 975, § 1; 2015, ch. 384, § 1; 2015, ch. 400, § 1; 2015, ch. 412, § 1; 2015, ch. 432, § 1; 2016, ch. 890, § 1; 2016, ch. 933, § 1; 2017, ch. 14, § 1; 2017, ch. 165, § 1; 2017, ch. 250, § 1; 2017, ch. 436, § 1; 2018, ch. 700, § 1; 2018, ch. 776, § 1; 2018, ch. 781, § 1; 2018, ch. 796, § 1; 2018, ch. 814, § 1; 2018, ch. 1065, § 1; 2019, ch. 198, § 1; 2019, ch. 241, § 1; 2019, ch. 282, § 1; 2019, ch. 348, § 1; 2019, ch. 349, § 1; 2020, ch. 701, § 1.
Compiler's Notes. For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Amendments. The 2015 amendment by ch. 384, effective May 8, 2015, added (l ).
The 2015 amendment by ch. 400, effective May 8, 2015, added (m).
The 2015 amendment by ch. 412, effective May 8, 2015, added (n).
The 2015 amendment by ch. 432, effective May 18, 2015, added (k).
The 2016 amendment by ch. 890 added (o).
The 2016 amendment by ch. 933 added (p).
The 2017 amendment by ch. 14 added (q).
The 2017 amendment by ch. 165 added (r).
The 2017 amendment by ch. 250 added (s).
The 2017 amendment by ch. 436 added (t).
The 2018 amendment by ch. 700 added (u).
The 2018 amendment by ch. 776 added (v).
The 2018 amendment by ch. 781 added (w).
The 2018 amendment by ch. 796 substituted “five percent (5%)” for “two and one-half percent (2.5%)” in (r).
The 2018 amendment by ch. 814 added (x).
The 2018 amendment by ch. 1065 added (y).
The 2019 amendment by ch. 198 added (z).
The 2019 amendment by ch. 241 added (aa).
The 2019 amendment by ch. 282 added (bb).
The 2019 amendment by ch. 348 added (cc).
The 2019 amendment by ch. 349 added (dd).
The 2020 amendment added (ee).
Effective Dates. Acts 2015, ch. 384, § 2. May 8, 2015.
Acts 2015, ch. 400, § 2. May 8, 2015.
Acts 2015, ch. 412, § 2. May 8, 2015.
Acts 2015, ch. 432, § 2. May 18, 2015.
Acts 2016, ch. 890, § 2. April 27, 2016.
Acts 2016, ch. 933, § 2. April 27, 2016.
Acts 2017, ch. 14, § 2. March 24, 2017.
Acts 2017, ch. 165, § 2. April 24, 2017.
Acts 2017, ch. 250, § 2. May 2, 2017.
Acts 2017, ch. 436, § 2. May 17, 2017.
Acts 2018, ch. 700, § 2. April 12, 2018.
Acts 2018, ch. 776, § 2. April 19, 2018.
Acts 2018, ch. 781, § 2. April 19, 2018.
Acts 2018, ch. 796, § 2. April 20, 2018.
Acts 2018, ch. 814, § 2. April 27, 2018.
Acts 2018, ch. 1065, § 2. May 21, 2018.
Acts 2019, ch. 198, § 2. April 25, 2019.
Acts 2019, ch. 241, § 2. May 2, 2019.
Acts 2019, ch. 282, § 2. May 8, 2019.
Acts 2019, ch. 348, § 2. May 10, 2019.
Acts 2019, ch. 349, § 2. May 10, 2019.
Acts 2020, ch. 701, § 2. June 22, 2020.
Cross-References. Privileges taxable by state and local governments, generally, § 67-4-503.
Attorney General Opinions. The statute does not interfere with the ability of the general assembly to authorize a city to increase its hotel/motel tax, OAG 01-141 (9/4/01).
Levy of hotel-motel tax by home rule municipality located in county which has previously imposed such a tax by private act, OAG 03-062 (5/14/03).
Increase in the professional privilege tax is not a decrease in a judge's compensation, OAG 03-081 (6/24/03).
The language of the 2003 amendment of T.C.A. § 67-4-1425(c) is constitutional, OAG 03-134 (10/08/03).
A convention center owned by a nonprofit organization that is created by a government entity is considered a “government-owned convention center” within the meaning of T.C.A. § 67-4-1425(c)(2). OAG 14-04, 2014 Tenn. AG LEXIS 3 (1/9/14).
The General Assembly may provide by private act that no proceeds from Bradley County's tourist accommodation tax may be distributed to or on behalf of any city located in the county. OAG 16-04, 2016 Tenn. AG LEXIS 6 (2/5/2016).
Proposed legislation intended to exempt Obion County from the operation of T.C.A. § 67-4-1425 by means of a narrow population bracket would raise significant constitutional concerns. OAG 18-18, 2018 Tenn. AG LEXIS 17 (4/4/2018).
HB 2919/SB 2925, 111th Tenn. Gen. Assem. (2020), which is intended to exempt the city of Athens from the operation of TCA § 67-4-1425(a) by means of a narrow population bracket, raises constitutional concerns. Both article I, section 8 and article XI, section 8 of the Tennessee Constitution require that a population bracket designed to exempt a particular county or municipality from a tax law be supported by some rational basis related directly to the size of the bracketed population. Because there does not appear to be such a rational basis for creating a narrow population-bracket exception from TCA § 67-4-1425 for the city of Athens, the proposed legislation raises significant constitutional concerns. OAG 20-12, 2020 Tenn. AG LEXIS 16 (6/12/2020).
NOTES TO DECISIONS
1. Constitutionality.
Exclusion of several counties in T.C.A. § 67-4-1425(c) and (d) is constitutional under equal protection, because the growth of the counties provided a rational basis for excluding them from the prohibition against double taxation by an occupancy tax. Admiralty Suites & Inns, LLC v. Shelby County, 138 S.W.3d 233, 2003 Tenn. App. LEXIS 835 (Tenn. Ct. App. Nov. 24, 2003), appeal denied, — S.W.3d —, 2004 Tenn. LEXIS 406 (Tenn. May 10, 2004).
Trial court had jurisdiction to determine the constitutionality of an occupancy tax under T.C.A. § 67-4-1425, because several taxpayers were not required to pay the tax “under protest” before filing a challenge. Admiralty Suites & Inns, LLC v. Shelby County, 138 S.W.3d 233, 2003 Tenn. App. LEXIS 835 (Tenn. Ct. App. Nov. 24, 2003), appeal denied, — S.W.3d —, 2004 Tenn. LEXIS 406 (Tenn. May 10, 2004).
Part 15
Short-Term Rental Unit Marketplace Tax
67-4-1501. Part definitions. [Effective January 1, 2021.]
As used in this part:
- “Consideration” means the consideration charged, whether or not received, for the occupancy in a short-term rental unit valued in money, whether to be received in money, goods, labor or otherwise, including all receipts, cash, credits, property, and services of any kind or nature without any deduction therefrom whatsoever. Nothing in this definition implies that consideration is charged when the space provided to the person is complimentary from the operator and no consideration is charged to or received from any person;
- “Department” means the department of revenue;
- “Occupancy” means the use or possession, or the right to the use or possession, of any room, lodgings, or accommodations in a short-term rental unit;
- “Residential dwelling” means a cabin, house, or structure used or designed to be used as an abode or home of a person, family, or household, and includes a single-family dwelling, a portion of a single-family dwelling, or an individual residential dwelling in a multi-dwelling building, such as an apartment building, condominium, cooperative, or timeshare;
- “Short-term rental unit” means a residential dwelling that is rented wholly or partially for a fee for a period of less than thirty (30) continuous days and does not include a hotel as defined in § 68-14-302 or a bed and breakfast establishment or a bed and breakfast homestay as those terms are defined in § 68-14-502;
- “Short-term rental unit marketplace” means any person or entity operating in this state that provides a platform for compensation, through which a third party offers to rent a short-term rental unit to an occupant;
- “Short-term rental unit provider” means any person or entity engaged in renting any short-term rental unit offered through a short-term rental unit marketplace;
- “Short-term rental unit transaction” means any transaction in which there is a charge to an occupant by a short-term rental unit provider for the occupancy of a short-term rental unit; and
- “Transient” means any person who exercises occupancy or is entitled to occupancy of any short-term rental unit for a period of less than thirty (30) continuous days.
Acts 2020, ch. 787, § 10.
Code Commission Notes.
Acts 2020, ch. 787, § 10 enacted a new part 33, §§ 67-4-3301 — 67-4-3309, but the part has been redesignated as part 15, §§ 67-4-1501 — 67-4-1509, by authority of the Code Commission.
Compiler's Notes. Former title 67, part 4, part 15, §§ 67-4-1501 — 67-4-1508 (Acts 1990, ch. 1016, §§ 2-8, 11), concerning the Beneficial Use Tax Act of 1990, was repealed by Acts 1992, ch. 811, § 1, effective April 29, 1992.
Effective Dates. Acts 2020, ch. 787, § 12. January 1, 2021.
67-4-1502. Registration of short-term rental unit marketplace — Collection and remittance of tax. [Effective January 1, 2021.]
-
A short-term rental unit marketplace shall register with the department for the collection and remittance of all the following taxes with respect to the consideration charged for the occupancy of a short-term rental unit:
- The privilege tax imposed pursuant to title 7, chapter 4, part 1;
- The privilege tax imposed pursuant to title 7, chapter 4, part 2;
- The privilege tax imposed pursuant to title 67, chapter 4, part 14; and
- Any privilege tax on the occupancy of a room provided by any hotel, motel, or similar establishment to a transient for a consideration, where the tax is imposed pursuant to a private act.
- Any tax collected pursuant to subsection (a) must be collected by the short-term rental unit marketplace and remitted to the department, in the same manner as provided by chapter 6 of this title with respect to sales and use tax. The tax collected pursuant to subsection (a) must be collected at the rate adopted by the city, county, or metropolitan government.
Acts 2020, ch. 787, § 10.
Code Commission Notes.
Acts 2020, ch. 787, § 10 enacted a new part 33, §§ 67-4-3301 — 67-4-3309, but the part has been redesignated as part 15, §§ 67-4-1501 — 67-4-1509, by authority of the Code Commission.
Compiler's Notes. Former title 67, part 4, part 15, §§ 67-4-1501 — 67-4-1508 (Acts 1990, ch. 1016, §§ 2-8, 11), concerning the Beneficial Use Tax Act of 1990, was repealed by Acts 1992, ch. 811, § 1, effective April 29, 1992.
Effective Dates. Acts 2020, ch. 787, § 12. January 1, 2021.
67-4-1503. Collection and remittance of tax — Monthly report and remittance — Audits — Confidentiality of information. [Effective January 1, 2021.]
For purposes of this part:
- A short-term rental unit marketplace shall, with respect to each short-term rental unit transaction facilitated by the short-term rental unit marketplace, collect and remit the taxes set out in § 67-4-1502(a), even if the transaction is occasional or isolated as contemplated in § 67-6-102(8)(B);
- A short-term rental unit marketplace shall report its taxes collected pursuant to § 67-4-1502(a) on a monthly basis and remit the aggregate total amounts for each respective jurisdiction for each month;
- Taxes payable by a short-term rental unit marketplace in accordance with § 67-4-1502(a) are subject to audit only by the department at the commissioner's sole discretion. Audits of a short-term rental unit marketplace must be conducted solely on the basis of the tax identification number associated with each short-term rental unit marketplace and shall not be conducted directly or indirectly on any individual short-term rental unit provider or any transient to whom short-term rental units are furnished. An audit described in this subdivision (3) must be conducted on the basis of returns filed by the short-term rental unit marketplace with the department, and if requested by the short-term rental unit marketplace, must include all tax types for which the short-term rental unit marketplace is required to collect and remit pursuant to § 67-4-1502(a); and
- If a short-term rental unit marketplace is required to disclose any personally identifiable information relating to any short-term rental unit provider or transient to whom a short-term rental unit is furnished, such information is confidential pursuant to § 67-1-1702.
Acts 2020, ch. 787, § 10.
Code Commission Notes.
Acts 2020, ch. 787, § 10 enacted a new part 33, §§ 67-4-3301 — 67-4-3309, but the part has been redesignated as part 15, §§ 67-4-1501 — 67-4-1509, by authority of the Code Commission.
Compiler's Notes. Former title 67, part 4, part 15, §§ 67-4-1501 — 67-4-1508 (Acts 1990, ch. 1016, §§ 2-8, 11), concerning the Beneficial Use Tax Act of 1990, was repealed by Acts 1992, ch. 811, § 1, effective April 29, 1992.
Effective Dates. Acts 2020, ch. 787, § 12. January 1, 2021.
67-4-1504. Prohibited advertising and statements relating to tax. [Effective January 1, 2021.]
A short-term rental unit marketplace shall not advertise or state in any manner, whether directly or indirectly, that any tax set out in § 67-4-1502(a)(1)-(4), in whole or in part, will be assumed or absorbed by the short-term rental unit provider, not be added to the occupancy, or be refunded.
Acts 2020, ch. 787, § 10.
Code Commission Notes.
Acts 2020, ch. 787, § 10 enacted a new part 33, §§ 67-4-3301 — 67-4-3309, but the part has been redesignated as part 15, §§ 67-4-1501 — 67-4-1509, by authority of the Code Commission.
Compiler's Notes. Former title 67, part 4, part 15, §§ 67-4-1501 — 67-4-1508 (Acts 1990, ch. 1016, §§ 2-8, 11), concerning the Beneficial Use Tax Act of 1990, was repealed by Acts 1992, ch. 811, § 1, effective April 29, 1992.
Effective Dates. Acts 2020, ch. 787, § 12. January 1, 2021.
67-4-1505. Applicable administrative and enforcements provisions. [Effective January 1, 2021.]
A short-term rental unit marketplace that collects the taxes set out in § 67-4-1502(a) is subject to the administration and enforcement provisions in chapter 6, parts 4 and 5 of this title.
Acts 2020, ch. 787, § 10.
Code Commission Notes.
Acts 2020, ch. 787, § 10 enacted a new part 33, §§ 67-4-3301 — 67-4-3309, but the part has been redesignated as part 15, §§ 67-4-1501 — 67-4-1509, by authority of the Code Commission.
Compiler's Notes. Former title 67, part 4, part 15, §§ 67-4-1501 — 67-4-1508 (Acts 1990, ch. 1016, §§ 2-8, 11), concerning the Beneficial Use Tax Act of 1990, was repealed by Acts 1992, ch. 811, § 1, effective April 29, 1992.
Effective Dates. Acts 2020, ch. 787, § 12. January 1, 2021.
67-4-1506. Monthly distribution of collected taxes — Deduction of administrative fee. [Effective January 1, 2021.]
The department shall distribute the taxes collected pursuant to this part on a monthly basis to the applicable local governing body in which the short-term rental unit was located and for which the tax was collected. The department may deduct an administration fee of one and one hundred twenty-five thousandths percent (1.125%) of the collected tax to cover its expenses of administering the collection and distribution of the tax.
Acts 2020, ch. 787, § 10.
Code Commission Notes.
Acts 2020, ch. 787, § 10 enacted a new part 33, §§ 67-4-3301 — 67-4-3309, but the part has been redesignated as part 15, §§ 67-4-1501 — 67-4-1509, by authority of the Code Commission.
Compiler's Notes. Former title 67, part 4, part 15, §§ 67-4-1501 — 67-4-1508 (Acts 1990, ch. 1016, §§ 2-8, 11), concerning the Beneficial Use Tax Act of 1990, was repealed by Acts 1992, ch. 811, § 1, effective April 29, 1992.
Effective Dates. Acts 2020, ch. 787, § 12. January 1, 2021.
67-4-1507. Promulgation of rules. [Effective January 1, 2021.]
The department may promulgate rules in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, not inconsistent with this chapter, other laws, or the constitution of this state or the United States, for the enforcement of this chapter and the collection of revenues under this chapter.
Acts 2020, ch. 787, § 10.
Code Commission Notes.
Acts 2020, ch. 787, § 10 enacted a new part 33, §§ 67-4-3301 — 67-4-3309, but the part has been redesignated as part 15, §§ 67-4-1501 — 67-4-1509, by authority of the Code Commission.
Compiler's Notes. Former title 67, part 4, part 15, §§ 67-4-1501 — 67-4-1508 (Acts 1990, ch. 1016, §§ 2-8, 11), concerning the Beneficial Use Tax Act of 1990, was repealed by Acts 1992, ch. 811, § 1, effective April 29, 1992.
Effective Dates. Acts 2020, ch. 787, § 12. January 1, 2021.
67-4-1508. Inapplicability of part — Applicability of section. [Effective January 1, 2021.]
This part is not applicable when, upon January 1, 2021, a local governing body is a party to a valid contract that includes terms related to the collection and remittance of the taxes set out in § 67-4-1502(a), with a short-term rental unit marketplace. This section applies only while the contract, or any successor agreement, remains valid and effective. If the contract terminates and no successor agreement is executed, then the taxes must be collected and remitted in accordance with this part.
Acts 2020, ch. 787, § 10.
Code Commission Notes.
Acts 2020, ch. 787, § 10 enacted a new part 33, §§ 67-4-3301 — 67-4-3309, but the part has been redesignated as part 15, §§ 67-4-1501 — 67-4-1509, by authority of the Code Commission.
Compiler's Notes. Former title 67, part 4, part 15, §§ 67-4-1501 — 67-4-1508 (Acts 1990, ch. 1016, §§ 2-8, 11), concerning the Beneficial Use Tax Act of 1990, was repealed by Acts 1992, ch. 811, § 1, effective April 29, 1992.
Effective Dates. Acts 2020, ch. 787, § 12. January 1, 2021.
67-4-1509. Report on tax rate imposed by local government. [Effective January 1, 2021.]
Annually, on a date determined by the department and on a form created and provided by the department, every local government that imposes a tax set out in § 67-4-1502(a)(1)-(4) shall certify and report to the department the tax rate imposed by the local government. In the event of changes to the rate, the local government shall notify the department, in the manner prescribed by the department. The department shall collect the rate information and make the information accessible to the public.
Acts 2020, ch. 787, § 10.
Code Commission Notes.
Acts 2020, ch. 787, § 10 enacted a new part 33, §§ 67-4-3301 — 67-4-3309, but the part has been redesignated as part 15, §§ 67-4-1501 — 67-4-1509, by authority of the Code Commission.
Compiler's Notes. Former title 67, part 4, part 15, §§ 67-4-1501 — 67-4-1508 (Acts 1990, ch. 1016, §§ 2-8, 11), concerning the Beneficial Use Tax Act of 1990, was repealed by Acts 1992, ch. 811, § 1, effective April 29, 1992.
Effective Dates. Acts 2020, ch. 787, § 12. January 1, 2021.
Part 16
Pre-Disposal Fee
67-4-1601. Administration and collection.
The pre-disposal fee imposed by this part shall be in addition to all privilege taxes elsewhere imposed. The fee imposed by this part shall be administered and collected by the commissioner of revenue.
Acts 1991, ch. 451, § 88.
Collateral References. Taxation 371
67-4-1602. Part definitions.
As used in this part, unless the context otherwise requires:
- “Commissioner” means the commissioner of revenue;
- “Dealer” means every person engaged in the sale of new tires in this state, including persons making sales by mail or common carrier into Tennessee and having a constitutional nexus with Tennessee for sales tax purposes;
- “Department” means the department of revenue;
- “Motor vehicle” means any vehicle used in the transportation of persons or property on streets or highways, including automobiles, motorcycles, trucks, trailers, semi-trailers and truck/semi-trailer combinations, and also including farm tractors, trailers and machinery, but not including vehicles propelled solely by human muscular power, such as bicycles;
- “New tire” means a tire that has not previously been used in the regular operation of a motor vehicle and does not include a tire that has been recapped or retreaded;
- “Retail sale” means every sale of new tires for any purpose other than resale;
- “Sale” means any transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise, in any manner or by any means whatsoever, of new tires, but does not include the sale of new tires as a component part of a new or used motor vehicle;
- “Sale for resale” means every sale for the purpose of resale and not for use and consumption that is properly supported by a sales tax resale certificate; and
- “Tire” means a continuous solid or pneumatic rubber covering encircling the wheel of a motor vehicle.
Acts 1991, ch. 451, § 88.
67-4-1603. Amount of fee — Tires sold for delivery outside of Tennessee.
- A pre-disposal fee in the amount of one dollar and thirty-five cents ($1.35) per tire is imposed on each person exercising the privilege of making retail sales of new tires in this state.
- A person who is subject to and pays this fee is not liable for the fee for tires sold for delivery outside of this state.
Acts 1991, ch. 451, § 88; 2007, ch. 602, § 23.
Attorney General Opinions. A county may not refuse to accept waste tires based on the failure of the tire dealer to pay the one dollar pre-disposal fee assessed upon the retail sale of the tire when it was new, OAG 00-154 (10/10/00).
67-4-1604. Special disposal fee or surcharge — Imposition by counties prohibited — Applicable fees and surcharges.
Notwithstanding any provision of title 5, a county may not impose any special disposal fee or surcharge on tires in addition to the fee imposed by § 67-4-1603. Tires shall be subject to the same tipping fee and other surcharges authorized by § 68-211-835 as are imposed on other wastes.
Acts 1991, ch. 451, § 88.
67-4-1605. Retail sale of new tires — Registration.
Every person desiring to engage in the retail sale of new tires shall register for each place of business with the commissioner upon forms prescribed and furnished by the commissioner.
Acts 1991, ch. 451, § 88; 2007, ch. 602, § 24.
67-4-1606. Fee payable for quarterly periods — Quarterly returns — Fee credits — Failure to file return and/or pay fee.
-
The fee imposed by this part shall be payable for quarterly periods as follows:
- January 1 through March 31;
- April 1 through June 30;
- July 1 through September 30; and
- October 1 through December 31.
- It is the duty of all dealers, on or before the twenty-fifth day of the month immediately following the close of the periods set out in subdivisions (a)(1)-(4), to transmit to the commissioner, upon forms prescribed and furnished by the commissioner, returns showing the gross number of new tires sold at retail during the preceding quarter. A separate return shall be filed for each separate location or place of business.
- The return shall be accompanied by payment of all fees due.
- Failure to file the return or pay the fee, or both, due under this part prior to the date provided by this section shall cause the fee to become subject to interest as provided in § 67-1-801. When any dealer fails to timely file the return required by this section or fails to timely pay any amount shown to be due on the return, the penalty provided in § 67-1-804(a) shall apply. Notwithstanding § 67-1-804(b) or any other law to the contrary, when any dealer fails to report and pay the total amount of the fee determined to be due by the commissioner, there shall be imposed a penalty in the amount of fifty percent (50%) of the unpaid amount. If the failure is determined by the commissioner to be due to fraud, the penalty provided in § 67-1-804(c) shall apply. The penalty imposed by this subsection (d) shall be subject to the waiver provisions provided in § 67-1-803.
Acts 1991, ch. 451, § 88; 2007, ch. 602, §§ 25, 26.
67-4-1607. Fee credit for returned tires.
Each dealer shall be allowed a credit against the fee for tires that are returned and the purchase price fully refunded; provided, that the fee imposed by this part was previously remitted on the sale.
Acts 1991, ch. 451, § 88.
67-4-1608. New tires for resale — Use and consumption by dealer.
Any dealer purchasing new tires for resale without the payment of the fee, and subsequently withdrawing the tires from inventory for such dealer's own use and consumption, must remit the fee on the tires on such dealer's own return.
Acts 1991, ch. 451, § 88.
67-4-1609. Motor vehicle leasing companies.
A motor vehicle leasing company, when purchasing new tires for resale in the form of a lease, must remit the fee on the tires when the tires are first put to use in this state.
Acts 1991, ch. 451, § 88.
67-4-1610. Fee deduction — Amount.
- For the purpose of compensating the dealer in accounting for and remitting the fee, a dealer shall be allowed a deduction of the fee due, reported and paid to the department in the amount of ten cents (10¢) per tire reported on the return. No deduction from the fee shall be allowed if any such report or payment of the surcharge is delinquent.
-
-
Notwithstanding Chapter 994 of the Public Acts of 2000, or any other law to the contrary, the remaining amount of the fee levied by § 67-4-1603 that is not retained by the dealer pursuant to subsection (a) shall be allocated as follows:
- If a county does not have a tire grant contract with the department of environment and conservation pursuant to the tire grant program administered under § 68-211-867, one dollar ($1.00) per tire sold in that county shall be sent directly by the commissioner of revenue to such county to be used for beneficial end use of waste tires in accordance with § 68-211-867 and not used for any other purposes. The remaining balance of the fee shall be allocated to the solid waste management fund established by § 68-211-821. The county shall include in its annual progress report to the department of environment and conservation pursuant to § 68-211-814(a) data on how many waste tires it manages and what is done with them; or
- If a county has a tire grant contract with the department of environment and conservation pursuant to the tire grant program administered under § 68-211-867, or had such a tire grant contract that was in effect at the time the fee was imposed, the remainder of the fee per tire sold in that county shall be allocated to the solid waste management fund established by § 68-211-821. The department of environment and conservation shall return a minimum of one dollar ($1.00) per tire sold in such counties to the county under its grant contract. If the grant contract either does not allow the department of environment and conservation to return a minimum of one dollar ($1.00) per tire sold in a county to such county, or would require repayment of any such funds, the department of environment and conservation shall return a minimum of one dollar ($1.00) per tire sold in such county to the county through additional grants, unrelated to the tire grant contract, for beneficial end use of waste tires in accordance with § 68-211-867 and not used for any other purposes. Such counties are not required to submit any additional workplan, budget, or other similar document. Any such additional grants shall be based on one dollar ($1.00) per tire sold in the county minus any amounts returned under the tire grant contract. The county shall include in its annual progress report to the department of environment and conservation pursuant to § 68-211-814(a) data on how many waste tires it manages and what is done with them.
- It is the purpose of this subsection (b) to require that a minimum of one dollar ($1.00) of the one dollar and thirty-five cents ($1.35) per tire pre-disposal fee be returned to the county in which the fee was imposed regardless of whether the county has a tire grant contract with the department of environment and conservation.
-
Notwithstanding Chapter 994 of the Public Acts of 2000, or any other law to the contrary, the remaining amount of the fee levied by § 67-4-1603 that is not retained by the dealer pursuant to subsection (a) shall be allocated as follows:
Acts 1991, ch. 451, § 88; 2007, ch. 602, § 27; 2013, ch. 457, §§ 1, 2.
Compiler's Notes. Acts 2013, ch. 457, § 3 provided that the act, which added subsection (b), shall apply to any pre-disposal fee received by the commissioner of revenue or the department of environment and conservation after July 1, 2014, regardless of when the fee was imposed.
Amendments. The 2013 amendment, effective July 1, 2014, added (b).
Effective Dates. Acts 2013, ch. 457, § 3. July 1, 2014.
67-4-1611. Severability.
If any provision of this part or the application of this part to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the part that can be given effect without the invalid provision or application, and to that end this part is declared to be severable.
Acts 1991, ch. 451, § 88.
67-4-1612. Rules.
The commissioner is authorized to promulgate rules to administer the fee provided by this part. All such rules shall be promulgated in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
Acts 1991, ch. 451, § 88.
Part 17
Occupation Tax
67-4-1701. Privilege tax established — Collection.
The engaging in any vocation, profession, business or occupation named in this part is declared to be a privilege taxable by the state alone. The privilege tax established in this part shall be collected by the commissioner of revenue and deposited into the state general fund, except as otherwise provided for in this part.
Acts 1992, ch. 529, § 8; 2009, ch. 530, § 66.
Law Reviews.
Professional Responsibilities of Lobbyists (William R. Bruce), 23 Mem. St. U.L. 547 (1993).
Attorney General Opinions. Authority of state agencies to pay professional privilege tax for employees, OAG 95-061 (5/26/95).
NOTES TO DECISIONS
1. Constitutionality.
The privilege tax, as applied to lawyers, does not violate the separation of powers and grant of judicial powers provisions of the Constitution of Tennessee. Cox v. Huddleston, 914 S.W.2d 501, 1995 Tenn. App. LEXIS 297 (Tenn. Ct. App. 1995).
Collateral References. Taxation 371
67-4-1702. Occupations subject to tax.
There is levied a tax on the privilege of engaging in the following vocations, professions, businesses, or occupations:
- Persons registered as lobbyists pursuant to § 3-6-302;
-
Persons licensed or registered under title 48, chapter 1 as:
- Agents;
- Broker-dealers; and
- Investment advisers;
-
Persons licensed or registered under title 63 as:
- Osteopathic physicians; and
- Physicians; and
- Persons licensed as attorneys by the supreme court of Tennessee.
Acts 1992, ch. 529, § 8; 1996, ch. 999, § 2; 2001, ch. 342, §§ 2, 3; 2009, ch. 530, § 64; 2014, ch. 760, §§ 1, 3; 2019, ch. 478, § 1.
Compiler's Notes. Acts 2014, ch. 760, § 5 provided that any privilege taxes that are due or owing by persons employed as players on any franchise of the NBA prior to June 1, 2016, shall be collected and distributed pursuant to the law in effect on May 30, 2016.
Acts 2016, ch. 1024, § 1 provided that: “(a) The Tennessee advisory commission on intergovernmental relations (TACIR) is directed to study and make recommendations relative to the professional privilege tax. TACIR shall study the application of this tax, or its nonapplication as the case may be, to various occupations, businesses, and professions, whether or not listed in Tennessee Code Annotated, § 67-4-1702, and the application of this tax on both residents of this state and nonresidents. TACIR shall also study this bill as introduced (Senate Bill 556 / House Bill 678) and the following two (2) additional bills, as introduced and as amended, if applicable: Senate Bill 1919/House Bill 1951 and Senate Bill 167/House Bill 601.
“(b) The department of revenue and all other appropriate state agencies shall provide assistance to TACIR upon the request of the executive director of TACIR.
“(c) The study shall examine:
“(1) The history of the professional privilege tax in this state;
“(2) The intent of the professional privilege tax;
“(3) Other states' laws imposing a professional privilege tax or similar tax; and
“(4) Alternatives for eliminating or phasing out the professional privilege tax.
“(d) On or before January 1, 2017, TACIR shall provide its recommendations and report regarding the professional privilege tax to the speakers of the senate and the house of representatives and the chairs of the finance, ways and means committees of the senate and the house of representatives.
“(e) It is the legislative intent that this study be conducted within TACIR's existing resources.”
Acts 2019, ch. 478, § 1 provided that the act, which amended this section, shall apply to privilege taxes due and payable after May 31, 2020.
Amendments. The 2014 amendment by ch. 760, § 1, effective April 24, 2014, deleted “or National Hockey League (NHL)” following “National Basketball Association (NBA)”; “or NHL” following “NBA” and substituted “fifteen (15)” for “ten (10)” in the first sentence of (a)(7).
The 2014 amendment by ch. 760, § 3, effective June 30, 2016, deleted (a)(7) which read: “Persons employed as players on any franchise of the National Basketball Association (NBA) for more than fifteen (15) days in the tax period who are on the roster for any NBA regular season game within the boundaries of the state. For purposes of this subdivision (a)(7), “roster” means the list of players present in this state and eligible to participate in games, regardless of whether the player actually participates in the game.”
The 2019 amendment rewrote the section which read: “(a) There is levied a tax on the privilege of engaging in the following vocations, professions, businesses or occupations:“(1) Persons registered as lobbyists pursuant to § 3-6-302;“(2) Persons licensed or registered under title 48, chapter 1 as:“(A) Agents;“(B) Broker-dealers; and“(C) Investment advisers;“(3) Persons licensed or registered under title 62 as:“(A) Accountants;“(B) Architects;“(C) Brokers, as defined in § 62-13-102;“(D) Engineers; and“(E) Landscape architects.“(4) Persons licensed or registered under title 63 as:“(A) Audiologists;“(B) Chiropractors;“(C) Dentists;“(D) Optometrists;“(E) Osteopathic physicians;“(F) Pharmacists;“(G) Physicians;“(H) Podiatrists;“(I) Psychologists;“(J) Speech pathologists; and“(K) Veterinarians;“(5) Persons licensed as attorneys by the supreme court of Tennessee;“(6) Persons registered as athlete agents pursuant to title 49, chapter 7, part 21; and“(7) [Deleted by 2014 amendment, effective June 1, 2016.]“(b) The tax levied by this section does not apply to any accountant, engineer, architect, landscape architect, or real estate broker who presents to the appropriate board a certified affidavit attesting to such person's inactive status in the practice of such profession.“(c) The tax levied by this section does not apply to any pharmacist who presents to the Tennessee board of pharmacy a certified affidavit attesting to such person's inactive status in the practice of such profession.”
Effective Dates. Acts 2014, ch. 760, § 5. April 24, 2014 (sections 1 and 2); June 30, 2016 (sections 3 and 4).
Acts 2019, ch. 478, § 2. May 24, 2019.
Attorney General Opinions. Because judges maintain active law licenses, they are subject to the professional privilege tax, OAG 03-081 (6/24/03).
The Professional Privilege Tax levied does not violate the due process or equal protection provisions of the United States or Tennessee constitutions by including within the tax's scope audiologists and speech pathologists while excluding more highly paid healthcare professionals, OAG 04-154 (10/11/04).
NOTES TO DECISIONS
1. Practice of Law.
The practice of law is a privilege and is subject to taxation along with the exercise of any other privileges and occupations as determined by the legislature. Cox v. Huddleston, 914 S.W.2d 501, 1995 Tenn. App. LEXIS 297 (Tenn. Ct. App. 1995).
67-4-1703. Amount of tax — When due and payable.
- The privilege tax established by this part is four hundred dollars ($400) annually. The privilege tax is due and payable on June 1 of each year. Taxes paid after June 1 are delinquent.
- Any person who is licensed or registered for two (2) or more professions taxed pursuant to this part shall not be required to pay more than one (1) tax in the amount of four hundred dollars ($400).
-
- No tax owed under this part by a person in the armed forces of the United States, or called into active military service of the United States, as defined in § 58-1-102, from a reserve or national guard unit, shall be due until one hundred eighty (180) days following the conclusion of hostilities in which such person is actually engaged outside the United States or one hundred eighty (180) days after such person is transferred from the theater of operations of such hostilities, whichever is sooner.
- A person claiming this delay shall present proof, satisfactory to the commissioner, of such person's deployment and stationing outside the United States during a period of hostilities and proof of such person's return from such deployment.
- This subsection (c) shall expressly apply to personnel stationed outside the United States during Operation Enduring Freedom or other hostilities where the military personnel are entitled to combat compensation as determined by the United States department of defense.
- [Deleted by 2014 amendment, effective June 1, 2016.]
- [Deleted by 2014 amendment, effective June 1, 2016.]
- Nothing in this section shall be construed as creating a payroll tax.
Acts 1992, ch. 529, § 8; 2002, ch. 856, § 7a; 2003, ch. 87, § 3; 2004, ch. 800, § 2; 2009, ch. 530, § 65; 2014, ch. 760, §§ 2, 4.
Compiler's Notes. Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to that act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Acts 2003, ch. 87, § 5 provided that the act shall apply to taxes due and payable during 2003.
Acts 2014, ch. 760, § 5 provided that any privilege taxes that are due or owing by persons employed as players on any franchise of the NBA prior to June 1, 2016, shall be collected and distributed pursuant to the law in effect on May 30, 2016.
Amendments. The 2014 amendment by Acts 2014, ch. 760 § 2, effective April 24, 2014, deleted “or National Hockey League (NHL) player” following “National Basketball Association (NBA) player” in the first sentence of (e).
The 2014 amendment by Acts 2014, ch. 760 § 4, effective June 1, 2016, deleted (d) and (e) which read: “(d) Notwithstanding subsection (a) or (b), the annual privilege tax established by this part payable by any player defined in § 67-4-1702(a)(7) in any tax year shall be two thousand five hundred dollars ($2,500) per game with a three (3) game annual cap. For purposes of this subsection (d), “tax year” means June 1 through May 30, and the privilege tax is due and payable on June 1 following the end of the tax year. Taxes paid after June 1 are delinquent.“(e) All privilege taxes collected by the commissioner pursuant to § 67-4-1702(a)(7) from any National Basketball Association (NBA) player shall be deposited into a municipal government fund located in the same municipality as the indoor sports facility in which the game was played. For counties with metropolitan forms of government, the funds shall be held for the exclusive use of currently existing entities attached to committees provided for in § 7-4-202(d). For all other municipalities, the funds shall be held for the exclusive use of the convention and visitors bureau in the municipality. Amounts allocated pursuant to this subsection (e) shall be used exclusively for the payment of, or the reimbursement of, as directed by the facility manager, expenses associated with securing current, expanded or new events for indoor sports facilities owned by a municipal agency formally designated by the municipality, in accordance with the Sports Authorities Act of 1993, compiled in title 7, chapter 67.”
Effective Dates. Acts 2014, ch 760, § 5. April 24, 2014 (sections 1 and 2); June 30, 2016 (sections 3 and 4).
Cross-References. Applicability, § 67-4-1708.
Law Reviews.
Building a House of Cards: A Policy Evaluation of Tennessee's Tax Reform Act of 2002 with Emphasis on Fairness to the Poor (Robert F. Parsley), 70 Tenn. L. Rev. 1177 (2003).
Professional Responsibilities of Lobbyists (William R. Bruce), 23 Mem. St. U.L. 547 (1993).
67-4-1704. Penalties and interest.
- Penalties and interest shall be assessed and collected by the commissioner of revenue on delinquent or deficient taxes in accordance with chapter 1 of this title.
- At the time the department of revenue assesses the tax liability, including any applicable penalty and interest, the department shall notify the taxpayer in writing that the failure to cure the tax delinquency or deficiency prior to the renewal date of the license or registration may result in the appropriate licensing board or agency holding the taxpayer's application for renewal of the license or registration in abeyance.
-
For purposes of this section, “cure” means:
- Payment in full of the tax delinquency or deficiency, including any accrued penalty and interest;
- Entering into an agreement with the department to pay the tax liability in installments over an extended period, or other agreement acceptable to the department and the taxpayer; or
- The abatement of the tax liability by the department as required by law.
- The commissioner of revenue shall on a monthly basis compile and transmit to the appropriate licensing board or agency a list of taxpayers who are delinquent ninety (90) days or more from the due date of the tax and have either not pursued a remedy under § 67-1-1801 or remain liable for such tax at the conclusion of such remedy; provided, however, that such list shall not include any taxpayer who has made all installment payments due and payable under an agreement with the department to pay the tax liability in installments over an extended period. The appropriate licensing board or agency shall not process and shall hold in abeyance the application for renewal of the license or registration of any taxpayer appearing on the list.
- Any taxpayer whose application for renewal of the license or registration is held in abeyance under subsection (d) may, upon curing the tax delinquency or deficiency as defined in subsection (c), obtain a tax clearance from the department. Upon receipt of the tax clearance, the appropriate licensing board or agency shall resume processing the taxpayer's application for the renewal of the license or registration in accordance with applicable rules and regulations.
- The Supreme Court has established rules to suspend the license of an attorney who fails to pay the privilege tax. The Supreme Court is encouraged to establish additional rules, as the court may determine necessary, to further promote the timely payment of the tax by licensed attorneys.
Acts 1992, ch. 529, § 8; 1999, ch. 267, § 1; 2014, ch. 763, § 1.
Amendments. The 2014 amendment rewrote the section which read: “Penalties and interest shall be assessed and collected by the commissioner of revenue on delinquent taxes in accordance with chapter 1 of this title. Failure to pay the privilege tax pursuant to this part shall result in a warning letter from the commissioner of revenue to the delinquent professional. A second nonpayment shall be grounds for suspension of any license or registration by the appropriate licensing board. A third or subsequent nonpayment shall be grounds for revocation of any license or registration by the appropriate licensing board. The commissioner of revenue is authorized to compile and transmit an annual list of delinquent professionals to the appropriate licensing board. The supreme court of Tennessee is encouraged to establish guidelines to suspend the license of an attorney who fails to comply with the requirements of this part.”
Effective Dates. Acts 2014, ch. 763, § 2. April 24, 2014.
Attorney General Opinions. Constitutionality of proposed tax on privilege of doing business in Tennessee, OAG 99-060 (3/10/99).
Cited: Cox v. Huddleston, 914 S.W.2d 501, 1995 Tenn. App. LEXIS 297 (Tenn. Ct. App. 1995).
67-4-1705. Tax not a regulatory fee.
The taxes levied by this part shall not be construed to be a regulatory fee.
Acts 1992, ch. 529, § 8.
Attorney General Opinions. Constitutionality of proposed tax on privilege of doing business in Tennessee, OAG 99-060 (3/10/99).
Cited: Cox v. Huddleston, 914 S.W.2d 501, 1995 Tenn. App. LEXIS 297 (Tenn. Ct. App. 1995).
67-4-1706. Additional tax.
The taxes levied by this part are in addition to all other taxes and fees levied by law.
Acts 1992, ch. 529, § 8.
67-4-1707. Rules and regulations.
The commissioner of revenue is authorized to promulgate rules and regulations in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, to implement, administer and enforce this part.
Acts 1992, ch. 529, § 8.
Cited: Abdur'Rahman v. Bredesen, 181 S.W.3d 292, 2005 Tenn. LEXIS 828 (Tenn. 2005).
67-4-1708. Applicability.
- The privilege tax levied by this part upon the privilege of engaging in certain occupations requiring registration or a license do not apply to a person so registered or licensed, if the person is inactive or retired pursuant to the regulations of the appropriate licensing board.
- Notwithstanding any provisions of this part to the contrary, any professional fee levied by this part upon persons licensed as real estate brokers shall be levied only upon such licensees who act as principal brokers pursuant to § 62-13-309.
- Notwithstanding any provision of this part or any other law to the contrary, the privilege tax levied by this part does not apply to any person who is in the armed forces of the United States, or is called into active military service of the United States, as defined in § 58-1-102, from a reserve or national guard unit, for more than one hundred eighty (180) days during the three hundred sixty five (365) days prior to the due date of the tax set forth in § 67-4-1703(a).
Acts 1992, ch. 529, §§ 16, 17; 2002, ch. 856, § 7b; 2003, ch. 355, § 52; 2003, ch. 418, § 7; 2004, ch. 592, § 7; 2005, ch. 494, § 1; 2006, ch. 1019, § 49.
Code Commission Notes.
This section was amended twice in 2003, first by ch. 355, effective June 16, 2003, then by ch. 418, effective June 24, 2003, both repealed effective September 1, 2003, neither act referring to the other. The amendments conflict in former subsection (c), which is set out in the Compiler's Notes to reflect the amendment by ch. 418. The amendment by ch. 355 would have amended former subsection (c) to read:
“All persons who were licensed or registered to engage in a vocation, profession, business, or occupation subject to this tax on June 1, 2003, but who were exempt from the tax on that date because of the operation of the provision on Section 7(b) of Chapter 856 of the Public Acts of 2002, and who continue to hold such license or registration on June 30, 2003 are hereby declared to be liable for the tax imposed by this part, which shall be payable on June 30, 2003.”
Compiler's Notes. Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to the act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Acts 2003, ch. 355, § 66 provided that no expenditure of public funds pursuant to the act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Acts 2003, ch. 355, § 73 provided that there is established within the general fund the state-shared revenue reduction mitigation account. Any amounts in the state-shared revenue reduction mitigation account shall be applied by the commissioner of finance and administration to offset reductions in state-shared revenues allocated to local governments pursuant to the provisions of the act so that such reductions shall not exceed nine percent (9%) of state-shared revenues that otherwise would have been allocated to any such local government. Funds shall be restored on a pro rata basis taking into account the percentage reduction to each local government from each state-shared revenue source.
Cross-References. Amount of tax — When due and payable, § 67-4-1703.
Law Reviews.
Building a House of Cards: A Policy Evaluation of Tennessee's Tax Reform Act of 2002 with Emphasis on Fairness to the Poor (Robert F. Parsley), 70 Tenn. L. Rev. 1177 (2003).
Attorney General Opinions. Amendments to the Professional Privilege Tax statutes by 2003 Pub. Acts 418, §§ 7 and 8, did not violate the constitutional doctrine of intergovernmental tax immunity, and the tax validly applied to those professionals who had previously been exempted but who were licensed on June 1, 2003, OAG 03-100 (8/19/03).
67-4-1709. Liability for tax by certain individuals — Employer's option to remit.
- Each individual licensed or registered to engage in a vocation, profession, business, or occupation listed in § 67-4-1702(a) shall be liable for the tax. Any employer, including any governmental entity, may choose to remit the tax imposed by this part on behalf of persons subject to the tax who are employed by such employer.
- State agencies, including without limitation the University of Tennessee and the state university and community college system, are authorized to pay the privilege tax levied in this part on behalf of full-time state employees who are subject to the tax and who use the certification in their job duties, if an appropriation for such purpose is made in the general appropriations act. The payment by a state department or agency is subject to approval by the department or agency head and to this part.
Acts 1993, ch. 485, §§ 1, 2; 2003, ch. 138, §§ 1, 2; 2003, ch. 355, § 53; 2003, ch. 418, § 8; 2013, ch. 454, § 18.
Code Commission Notes.
This section was amended three times in 2003, first by ch. 138, §§ 1 and 2, effective May 19, 2003; then by ch. 355, § 53, effective June 16, 2003; and finally by ch. 418, § 8, effective June 24, 2003, none of the acts referring to the others. The section as set out above reflects the amendment by ch. 355. The amendment by ch. 138 would have amended the section to read:
“(a) Any municipal or county government is authorized to pay the tax imposed by this part on behalf of the professionals subject to the tax who are employed by such governmental entity.
“(b) As used in this section, ‘municipal and county governments’ includes quasi-governmental entities such as developmental districts, utility districts, and other agencies performing governmental or proprietary functions on behalf of municipalities and counties, and associations composed of such quasi-government entities.
“(c) This section only applies to those municipalities and counties that adopt its provisions by a majority vote of the municipal or county legislative body.”
The 2003 amendment by ch. 418 purported to amend this section with provisions that are identical to those of ch. 355 and was given no effect.
Compiler's Notes. Acts 2003, ch. 355, § 66 provided that no expenditure of public funds pursuant to the act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Acts 2003, ch. 355, § 73 provided that there is established within the general fund the state-shared revenue reduction mitigation account. Any amounts in the state-shared revenue reduction mitigation account shall be applied by the commissioner of finance and administration to offset reductions in state-shared revenues allocated to local governments pursuant to the provisions of the act so that such reductions shall not exceed nine percent (9%) of state-shared revenues that otherwise would have been allocated to any such local government. Funds shall be restored on a pro rata basis taking into account the percentage reduction to each local government from each state-shared revenue source.
Amendments. The 2013 amendment added (b).
Effective Dates. Acts 2013, ch. 454, § 44. May 16, 2013.
Attorney General Opinions. Increase in the professional privilege tax is not a decrease in a judge's compensation, OAG 03-081 (6/24/03).
Payment of the professional privilege tax on behalf of judges by the judicial branch would constitute increased compensation and violate Tenn. Const., art. VI, § 7, OAG 03-081 (6/24/03).
Amendments to the Professional Privilege Tax statutes by 2003 Pub. Acts 418, §§ 7 and 8, did not violate the constitutional doctrine of intergovernmental tax immunity, and the tax validly applied to those professionals who had previously been exempted but who were licensed on June 1, 2003, OAG 03-100 (8/19/03).
Payment of judges’ professional privilege tax by the judicial branch, OAG 05-090 (5/25/05).
The judicial branch of the state government, as employer, may remit the professional privilege tax, as permitted under T.C.A. § 67-4-1709, on behalf of judges employed by the State. Such a payment by the employer is not an “increase” in a judge’s compensation within the meaning of article VI, section 7 of the Tennessee Constitution. OAG 18-27, 2018 Tenn. AG LEXIS 25 (6/29/2018).
67-4-1710. Exemption for medical practitioners issued a special volunteer license for practice at a free health clinic.
A medical practitioner who has been issued a special volunteer license for practice at a free health clinic, as such terms are defined in title 63, chapter 1, part 2, shall be exempt from the tax imposed by this part.
Acts 2004, ch. 579, § 10.
67-4-1711. Implementation of professional privilege tax incentive for participation in college savings plans.
- The department shall assist the board of trustees of the college savings trust fund program in the implementation a professional privilege tax incentive established under § 49-7-805(4) that shall include, but not be limited to, college savings plan inserts in the department's professional privilege tax notifications, providing college savings plan incentives information with any web site tax payment form, sending other notifications about college savings incentives by electronic means, and providing information about college savings incentives through any other web-based means.
- For any insert included in the mailing of renewal notices that causes the total postal weight to be over one ounce (1 oz.) as permitted by the United States postal service, the board of trustees of the college savings trust fund program shall pay the increased cost of mailing.
Acts 2014, ch. 910, § 29; 2017, ch. 400, § 13.
Amendments. The 2017 amendment substituted “college savings trust fund program” for “baccalaureate education system trust fund program” in (a) and (b).
Effective Dates. Acts 2014, ch. 910, § 30. May 13, 2014.
Acts 2017, ch. 400, § 20. July 1, 2017.
67-4-1712. Notification regarding annual privilege tax.
On or before May 1 of each year, the department shall notify each person subject to the annual privilege tax levied by this part of the amount owed, the due date, and any requirement for electronic filing or payment. The notification shall be in writing and may be sent by e-mail or United States mail. The appropriate licensing board or agency shall not be required to provide this or any similar notification.
Acts 2016, ch. 1010, § 1.
Compiler's Notes. Acts 2016, ch. 1010, § 2 provided that the act, which enacted this section, shall apply to tax years beginning on or after July 1, 2016.
Effective Dates. Acts 2016, ch. 1010, § 2. July 1, 2016.
Part 18
Services Tax [Expired]
67-4-1801 — 67-4-1817. [Expired.]
Code Commission Notes.
Former title 67, ch. 4, part 18, §§ 67-4-1816, 67-4-1817 (Acts 1992, ch. 492, §§ 3, 5) were deemed expired by authority of the code commission in 2006.
Compiler's Notes. Former §§ 67-4-1801 — 67-4-1815 (Acts 1992, ch. 913, §§ 3, 10-12, 16, 20; 1993, ch. 492, §§ 1-3, 5), concerning the services tax, expired on December 31, 1993, by the terms of Acts 1992, ch. 913, § 18 and Acts 1993, ch. 492, §§ 1-3.
Acts 1992, ch. 913, § 18, as amended by Acts 1993, ch. 492, § 1, effective May 31, 1993, provided that the provisions of Acts 1992, ch. 913, with the exception of §§ 1, 2, 8, 9, 14, 17, and 19, shall terminate on March 31, 1994, unless extended by the general assembly through subsequent legislation; upon termination, all provisions of the Tennessee Code Annotated amended by those sections terminated under § 18, to the extent amended, shall revert back to the language of those provisions as they existed prior to the enactment of Acts 1992, ch. 913, the public welfare requiring it. Notwithstanding the immediately preceding sentence, the provisions of Acts 1992, ch. 913, with the exceptions of §§ 1, 2, 8, 9, 14, 17, and 19 shall terminate on December 31, 1993, if the state of Tennessee receives, by December 30, 1993, a federal medicaid waiver pursuant to § 1115(a) of the Federal Social Security Act, as amended [42 U.S.C. § 1315(a)]; upon termination, all provisions of the Tennessee Code Annotated amended by those sections terminated under § 18 to the extent amended, shall revert back to the language of those provisions as they existed prior to the enactment of Acts 1992, ch. 913.
Acts 1992, ch. 913, § 21 provided that with respect to services that are regularly billed on a monthly basis, the services tax imposed by § 3 of that act, and not the state sales tax, shall apply to services billed on or after July 1, 1992, regardless of when such services were performed. All other services and amusement services performed prior to July 1, 1992 shall be subject to the sales tax and not the services tax imposed by § 3 of that act.
Acts 1992, ch. 913, § 21, as amended by Acts 1993, ch. 492, § 2, provided that, if not already terminated under the provisions of § 18 of that act, all of the sections under that act, with the exception of §§ 1, 2, 8, 9, 14, 17 and 19 (which amended, repealed or enacted §§ 68-11-216(d)(8), 33-2-506(b)(3), 67-6-214, 67-6-215, 68-11-216(d)(5), 68-11-1102 and 71-1-126 respectively), if not already terminated under the provisions of § 18 of that act, shall be repealed as of October 1, 1995, and all code provisions amended by those repealed sections of that act, to the extent amended by those sections, shall then revert to the language of those provisions as they existed prior to July 1, 1992.
Acts 1993, ch. 492, § 3 provided that, notwithstanding Acts 1992, ch. 913, § 18 or any other provisions of law to the contrary, the services tax established by Acts 1992, ch. 913 and codified in this part and §§ 67-6-205, 67-6-212, 67-6-702, and 71-1-125 shall expire on December 31, 1993; provided, that the state of Tennessee has received a federal medicaid waiver pursuant to § 1115(a) of the Federal Social Security Act [42 U.S.C. § 1315(a)]. Should the state of Tennessee not receive, by December 30, 1993, a federal medicaid waiver pursuant to § 1115(a) of the Federal Social Security Act, the services tax established by Acts 1992, ch. 913 shall expire as provided in Acts 1992, ch. 913, § 18. Upon expiration of the services tax established by Acts 1992, ch. 913, all provisions of the Tennessee Code Annotated amended by the sections of Acts 1992, ch. 913 that terminate shall, to the extent amended, revert back to the language of those provisions as they existed prior to the enactment of Acts 1992, ch. 913.
Acts 1993, ch. 492, § 5 provided: “(a) The commissioner of revenue is authorized to promulgate all rules necessary to implement the termination of the services tax established by Acts 1992, ch. 913, including rules to handle the refunding of unused credits pursuant to subsection (b). Notwithstanding any other provision of law, the commissioner is authorized to promulgate such rules as public necessity rules (now emergency rules) pursuant to § 4-5-209 [now § 4-5-208].
“(b) Notwithstanding the provisions of § 67-6-507, the commissioner has the authority to refund unused credits to any dealer who paid taxes imposed by the provisions of Acts 1992, ch. 913 on accounts found to be worthless.
“(c) With respect to services that are regularly billed on a monthly basis, the state sales tax and not the services tax imposed by Acts 1992, ch. 913 shall apply to services billed on or after the effective date of the expiration of the services tax regardless of when the services were performed. All other services and amusement services performed prior to the effective date of the expiration of the services tax shall be subject to the services tax and not the state sales tax.”
Part 19
Rental Car Tax
67-4-1901. Collection and remittance of surcharge or tax — Definition.
- Businesses engaged in the rental of motor vehicles shall collect and remit a three percent (3%) surcharge or tax on charges for the retail rental of any private passenger motor vehicle or a vehicle with a maximum gross weight rating classification of Class Four (4) or under as defined by § 55-4-113 or trailers as defined in § 55-1-105 for periods of thirty-one (31) days or less when the vehicle is delivered to the renter in this state. The surcharge or tax shall apply to the gross proceeds from the rental agreement, excluding any sales taxes imposed by chapter 6 of this title. The surcharge or tax as applied in this subsection (a) does not apply to entities or shared vehicle owners engaged in peer-to-peer car sharing or to any gross proceeds from peer-to-peer car sharing.
- Any charges related to the rental, including gas, insurance, and other related charges shall be included in the gross proceeds subject to the surcharge or tax, whether or not set out in a separate contract. The surcharge or tax shall not be included in the tax base for purposes of taxes imposed by chapter 6 of this title.
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As used in this part:
- “Commissioner” means the commissioner of revenue;
- “Peer-to-peer car sharing” means the authorized use of a vehicle by an individual other than the vehicle's owner through a peer-to-peer car sharing program;
- “Peer-to-peer car sharing program” means a business platform that connects motor vehicle owners with drivers to enable the sharing of motor vehicles for financial consideration; and
- “Shared vehicle owner” has the same meaning as defined in § 55-12-301.
- Notwithstanding Section 2 of Chapter 325 of the Public Acts of 2001, on or after April 14, 2016, the department of revenue shall not be required to submit a report to the finance, ways and means committees of the house of representatives and the senate concerning the revenue effects of the amendments made to this section by Chapter 325 of the Public Acts of 2001.
Acts 1993, ch. 437, § 1; 1998, ch. 967, § 1; 2001, ch. 325, § 1; 2016, ch. 797, § 14; 2020, ch. 796, §§ 1, 2.
Compiler's Notes. Acts 2001, ch. 325, § 2 provided that the department of revenue shall report in writing to the house of representatives and senate finance, ways and means committees not later than September 1 of each year for the fiscal year ending June 30 concerning the revenue effects of this act.
Amendments. The 2016 amendment added (d).
The 2020 amendment added the last sentence in (a); and rewrote (c), which read: “As used in this part, ‘commissioner’ means the commissioner of revenue.”
Effective Dates. Acts 2016, ch. 797, § 19. April 14, 2016.
Acts 2020, ch. 796, § 8. July 15, 2020.
Cross-References. Peer-to-peer car sharing programs, § 55-12-301 et seq.
Collateral References. Taxation 371
67-4-1902. Filing of quarterly returns and remittances.
Quarterly returns and remittances shall be filed by each business with the commissioner on or before the fifteenth day of the month following the close of the quarter, upon forms prescribed, prepared and furnished by the commissioner.
Acts 1993, ch. 437, § 1.
67-4-1903. Credit against surcharge or tax.
A credit shall be allowed against the surcharge or tax collected for county wheel taxes, municipal fees and fees for registration, title, data processing and transaction and clerk's fees for issuance of documents. The credit shall be calculated on an annual basis for all county wheel taxes, municipal fees and fees for registration, title, data processing and transaction and clerk's fees for issuance of documents paid for vehicles registered in Tennessee by the business.
Acts 1993, ch. 437, § 1; 1997, ch. 530, § 1; 1998, ch. 967, § 2.
67-4-1904. Regulations.
The commissioner shall promulgate those regulations necessary to implement this part.
Acts 1993, ch. 437, § 1.
67-4-1905. Disposition of revenues.
- All revenue received by the commissioner from this surcharge or tax shall be deposited into the state general fund, except as provided in subsection (b).
- In each fiscal year, one and one-half million dollars ($1,500,000) shall be allocated to the department of safety to be used exclusively to train, equip, and pay members of the Tennessee highway patrol.
Acts 1993, ch. 437, § 1; 1997, ch. 530, § 2.
Cross-References. Highway patrol, title 4, ch. 7.
67-4-1906. Exemptions.
This part does not apply to the rental of motor vehicles to a church, or the rental of motor vehicles to a nonprofit religious organization that has received a determination of exemption from the internal revenue service under § 501(c)(3) of the Internal Revenue Code, codified in 26 U.S.C. § 501(c)(3), and is currently operating under it; provided, that the church or nonprofit religious organization holds a current certificate of sales or use tax exemption from the department of revenue pursuant to § 67-6-322.
Acts 1994, ch. 835, § 1.
67-4-1907. Local tax.
- In addition to the state tax provided in § 67-4-1901, any county that meets the requirements of subsection (d) is authorized to levy a surcharge or tax of two percent (2%) of the gross proceeds derived from the lease or rental of any passenger motor vehicle, truck or trailer for periods of thirty-one (31) days or less; provided, that such surcharge or tax shall not apply to an automobile rented by an insurance company as a replacement vehicle for a policy holder or by a business that rents a truck or trailer for the purpose of transporting goods, or by any individual or business that rents a vehicle as a replacement while the renter's vehicle is being repaired, replaced or serviced; provided, further, that the individual presents to the renter upon return of the rented vehicle a copy of the repair or service invoice or signs a statement under penalty of perjury that the lease or rental of the vehicle is used as a replacement for a vehicle that is being repaired, replaced, or serviced. The surcharge or tax shall not apply to any vehicle rental transaction in which an entity whose principal business activity is the sale and service of new and used motor vehicles is a party. This surcharge or tax shall apply to the gross proceeds from the rental agreement, excluding any sales taxes imposed by chapter 6 of this title. The surcharge or tax shall be subject to the exemptions provided in § 67-4-1906. The surcharge or tax shall not be subject to the credit provided in § 67-4-1903 and shall be implemented consistent with the existing tax policies and procedures of the department of revenue.
- This tax or surcharge shall be in addition to any tax, fee or license imposed directly or indirectly.
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- The tax shall be collected from the customer at the time of the presentation of the invoice for the rental, whether prior to delivery or after return of the vehicle.
- Monthly returns and remittances shall be filed by each business with the county clerk not later than the twentieth day of each month for the preceding month upon forms prescribed, prepared and furnished by the county.
- The county clerk in administering and enforcing the surcharge or tax shall additionally have those powers and duties with respect to collecting taxes as provided in this title, including, but not limited to, the collection of interest and penalties on businesses to the same extent and manner provided in § 67-4-1408 with respect to the hotel occupancy tax, or as otherwise provided by law.
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All revenue received by the county from this surcharge or tax shall be deposited into a county fund entitled the NBA arena fund which shall be used for the purpose of paying the costs incurred in modification or construction of an arena facility for a National Basketball Association (NBA) member professional basketball team. In the event that a city within the county participates jointly with the county in the contribution of capital expenditures for construction of such an arena facility, the revenue from this surcharge or tax shall be applied and allocated as follows:
- The revenue from such tax shall first be applied to payment of bonded indebtedness, principal and interest, including expenses of the bond sale or sales, incurred by both the county and the city, or by either of them, for construction of such facilities and such revenue shall be allocated between the county and the city in such amounts necessary to meet the fiscal debt service requirements each year of both if there are sufficient funds. Such allocation shall be based upon actual bonded indebtedness incurred for such purpose, without deduction or offset due to any grant, credit or benefit that either government entity may be entitled by law to receive in connection with, or as a result of, such capital expenditures, such as any grant, credit or benefit accruing under the federal housing and urban renewal statutes.
- Beginning on June 30 of the first full year of collection of this tax and on the same date of each year thereafter, the county shall calculate and pay over to the city that amount due such city from the proceeds of this surcharge or tax during the fiscal year then ending. Revenue derived from the levy of this tax during the first year in which the tax is levied shall be carried over for use in the next ensuing fiscal year in the payment of the allocable amounts to the county and the city.
- If, at the close of any fiscal year, the revenue from such tax shall not be sufficient to meet the total debt service of both the county and the city for bonded indebtedness incurred for construction of such arena facility, the available revenue from this tax shall be allocated between the county and the city in the same direct proportion as such bonded indebtedness of each bears to the total of such bonded indebtedness of both, calculated upon the basis of the total principal amount of all such bonds that have been issued by the county and the city at any time prior to the close of that fiscal year; provided, that the balance, if any, of such debt service of either the county or the city not paid by revenue of this tax at the end of each fiscal year shall be accumulated by each in a separate deficit account that shall bear simple interest at the same rate as the bonds issued by each such governmental entity for construction of such facilities.
- If the revenue from such tax in any fiscal year exceeds the total of such debt service requirements for that year, such surplus revenue thus accruing may be retained by the county as a sinking fund for such future debt service requirements or such surplus may be applied to the reduction of the deficit accounts of the county and the city in the same proportion as provided in subdivision (d)(3).
- In the event the total bonded indebtedness incurred for construction of such arena facility by either the county or the municipality shall be paid in full as to bond principal and interest, including expenses of the bond sale or sales, and some portion of such bonded indebtedness of one (1) governmental entity remains unpaid, then that governmental entity whose bonded indebtedness has been satisfied in full shall cease, for the time being, to share in the revenue of this tax, and the total revenue from this tax shall be applied toward payment of such outstanding bonded indebtedness of the other governmental entity. For purposes of this subdivision (d)(5) only, the bonded indebtedness of either the county or the city shall be considered paid in full whenever the bonded indebtedness obligation to the holders of such obligation shall have been satisfied in full, even though such obligations may have been paid in part from sources other than the revenue from this tax.
- Upon the total of such bonded indebtedness of both the county and the city being paid in full, including principal and interest, and including expenses of the bond sale or sales, then the revenue from this surcharge or tax, together with any surplus revenue accumulated in accordance with subdivision (d)(4), shall next be applied to the county and the city's accumulated deficit accounts as provided in subdivision (d)(3). For purposes of this subsection (e) only, the revenue and surplus, if any, shall be allocated between the county and the city in the same direct proportion that such deficit account of each bears to the total of such deficit accounts of both governmental entities. Upon one (1) of such governmental entities being reimbursed in full, including principal and interest on such deficit account, with a balance of the deficit account of the other governmental entity remaining unreimbursed, then the total revenue from this surcharge or tax shall, for the time being, be applied to reimbursement of the deficit account of that governmental entity whose account remains unpaid.
- When both the county and the municipality shall have been reimbursed in full for principal and interest for such deficit accounts, in accordance with subsection (e), then the revenue from this tax shall next be applied to reimburse both the county and the city for capital expenditures for construction of such facilities made from sources other than the proceeds of bonded indebtedness, including, but not limited to, capital expenditures made from general revenues, sinking funds for capital improvements, and contributions in-kind of real or personal property. For purposes of this subsection (f) only, the revenue from this tax or surcharge, together with and including any surplus in the NBA arena fund, shall be allocated fifty percent (50%) to the county and fifty percent (50%) to the city. When either of such governmental entities shall be reimbursed in full for all such capital expenditures for construction of such facilities, then the total revenue from this tax or surcharge shall be applied to reimbursement of the other governmental entity for such capital expenditures. Upon both the county and the municipality being reimbursed in full for capital expenditures for construction of such facilities, the county's taxing resolution shall be repealed and this surcharge or tax shall no longer be levied; provided, that any funds remaining in the NBA arena fund, after all obligations imposed under this section shall have been fulfilled, shall be paid over to any governmental board or agency responsible for operation of the arena facility for use by it in the promotion and advertisement of the auditorium convention center facilities.
- Notwithstanding any other provision of this section to the contrary, in the event that the county and a city within the county shall create or have created a sports authority pursuant to title 7, chapter 67, and such sports authority issues bonds, including refunding bonds, for the purpose of paying the costs incurred in the modification or construction of an arena facility for an NBA member professional basketball team, then all revenues received by the county from the surcharge or tax deposited into the NBA arena fund shall be transferred no less than monthly to a fund of the sports authority to be applied to the punctual payment of the principal and interest on such bonds, required reserves, administrative costs, and capital repair or improvement costs payable by the sports authority in connection with the arena facilities. In the event the revenue from such tax deposited with the sports authority in any fiscal year exceeds the payment of principal and interest on such bonds, required reserves, administrative costs and capital repair or improvement costs payable by the sports authority in such year, then such surplus revenue shall be deposited with the sports authority to be held in a fund to be applied to such future costs of the sports authority. In the event the total bonded indebtedness incurred for the construction of such arena facility by the sports authority shall be paid in full as to bond principal and interest, including expenses of the bond sale or sales and other remaining costs payable by the sports authority in connection with such arena facility, then the total revenue from this tax shall be applied in the manner set forth in subsection (d), and shall terminate at the time set forth in subsection (f). For purposes of this subsection (g) only, the bonded indebtedness of the sports authority shall be considered paid in full whenever the bonded indebtedness obligation to the holders of such obligation shall have been satisfied in full, even though such obligation may have been paid in part from sources other than the revenue of this tax.
Acts 2001, ch. 344, § 1; 2002, ch. 492, §§ 1, 2.
67-4-1908. Local tax for the convention center fund.
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- In addition to the state tax provided in § 67-4-1901, a metropolitan government having a population in excess of five hundred thousand (500,000), according to the 2000 federal census or any subsequent federal census, is authorized to levy a surcharge or tax of one percent (1%) of the gross proceeds derived from the lease or rental of any passenger motor vehicle, truck, or trailer for a period of five (5) days or less; provided, that the surcharge or tax shall not apply to any automobile rented as a replacement vehicle, the cost of which is covered by insurance or by a business that rents a truck or trailer for the purpose of transporting goods, or by any individual or business that rents a vehicle as a replacement while the renter’s vehicle is being repaired, replaced, or serviced; provided, further, that the individual presents to the renter upon return of the rented vehicle a copy of the repair or service invoice or signs a statement under penalty of perjury that the lease or rental of the vehicle is used as a replacement for a vehicle that is being repaired, replaced, or serviced. The surcharge or tax shall not apply to any vehicle rental transaction in which an entity whose principal business activity is the sale and service of new and used motor vehicles is the renter. This surcharge or tax shall apply to the gross proceeds from the rental agreement, excluding any sales tax imposed by chapter 6 of this title. The surcharge or tax shall be subject to the exemptions provided by § 67-4-1906. The surcharge or tax shall not be subject to the credit provided in § 67-4-1903 and shall be implemented consistent with the existing tax policies and procedures of the department of revenue and of the remainder of this chapter.
- The surcharge or tax in subdivision (a)(1) shall only be effective upon the adoption of an ordinance by the metropolitan council to impose the surcharge or tax.
- All revenue received by the metropolitan government from the surcharge or tax in subsection (a) shall be deposited into a metropolitan fund entitled “the convention center fund,” which shall be used for the purpose of paying costs incurred in modification or construction of a publicly owned convention center in excess of four hundred million dollars ($400,000,000) of cost within the territory of the metropolitan government. If the revenue from the surcharge or tax in any fiscal year exceeds the total of the debt service requirements for that year, the surplus revenue thus accruing shall be retained by the metropolitan government as a reserve fund for future debt service requirements.
- In the event the total bonded indebtedness incurred for the construction of the convention center facility by the metropolitan government shall be paid in full as to bond principal and interest, including expenses of the bond sale or sales, the metropolitan government’s taxing resolution shall be repealed and this surcharge or tax shall no longer be levied; provided, however, that any funds remaining in the reserve fund after all obligations imposed under this section have been fulfilled, shall be used by the governmental board or agency responsible for operation of the convention center for use by it in the promotion and advertisement of the convention center facilities.
- For the purposes of this section, “convention center” means any land, improvement, structure, building or part of a building comprised of facilities for conventions, public assemblies, conferences, trade exhibitions or other business, social, cultural, scientific and public interest events, along with any associated hotel accommodations; transportation infrastructure; tourism, theatre, retail business and commercial office space facilities; parking facilities or any other structure or facility constructed, leased, equipped, renovated or acquired for any of the purposes set forth in this chapter, and also includes, but is not limited to, parks, greenways, open spaces, roads, streets, highways, curbs, bridges, flood control facilities and utility services, such as water, sanitary sewer, electricity, gas and natural gas and telecommunications that are constructed, leased, equipped, renovated or acquired as a supporting system or facility for any of the purposes set forth in title 7, chapter 89; provided, that any such supporting system or facility is dedicated for public use.
Acts 2007, ch. 422, § 5; 2009, ch. 474, § 8.
Compiler's Notes. For table of populations of Tennessee municipalities see Volume 13 and its supplement.
Cross Reference. The convention center fund, title 7, chapter 4, part 2.
Part 20
Excise Tax Law of 1999
67-4-2001. Short title.
This part shall be known and may be cited as the “Excise Tax Law of 1999.”
Acts 1999, ch. 406, § 3.
Compiler's Notes. Acts 1999, ch. 406, § 13, provided that the commissioner is authorized to promulgate rules and regulations in accordance with the provisions of title 4, chapter 5, to implement and administer the provisions of The Tax Revision and Reform Act of 1999. Such rules, to the extent deemed necessary by the commissioner for timely implementation of this act, shall include public necessity rules (now emergency rules).
Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Cross-References. Insurance taxes, title 56, ch. 4, part 2.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 78.
Law Reviews.
Amendments to the Tax Revision and Reform Act (J. Leigh Griffith), 36 Tenn. B.J. 23 (2000).
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
Taxing Tennessee: New Business Taxes for 1999 (J. Leigh Griffith), 35 Tenn. B.J. 12 (1999).
To Pay or Not to Pay: A Primer on the Federal Unrelated Business Income Tax (UBIT) for Non-tax Lawyers (Sean P. Scally), 37 Tenn. B.J. 12 (2001).
Cited: Hilloak Realty Co. v. Chumley, 233 S.W.3d 816, 2007 Tenn. App. LEXIS 170 (Tenn. Ct. App. Mar. 29, 2007).
NOTES TO DECISIONS
1. Variance.
Variance imposed against the taxpayer under T.C.A. §§ 67-4-2014 and 67-4-2112 was appropriate because the application of the cost of performance formula did not fairly represent the taxpayer's business in Tennessee. The unusual fact situation was that all of the costs of production occurred outside of Tennessee, but the revenue derived from the end product only occurred when the product was distributed in Tennessee, which only then obligated the purchasers to pay the revenue proceeds to the producer for the sale of the advertising. Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009), appeal denied, BellSouth Adver. & Publ. Corp. v. Chumley, — S.W.3d —, 2010 Tenn. LEXIS 343 (Tenn. Mar. 1, 2010).
Decisions Under Prior Law
1. In General.
The general corporate excise and franchise taxes are not property taxes but are taxes laid upon the privilege of doing business in corporate form and of exercising the corporate franchise in Tennessee. Memphis Bank & Trust Co. v. Garner, 624 S.W.2d 551, 1981 Tenn. LEXIS 505 (Tenn. 1981), rev'd, 459 U.S. 392, 103 S. Ct. 692, 74 L. Ed. 2d 562, 1983 U.S. LEXIS 1 (1983); Memphis Bank & Trust Co. v. Garner, 459 U.S. 392, 103 S. Ct. 692, 74 L. Ed. 2d 562, 1983 U.S. LEXIS 1 (1983).
The Tennessee Franchise Tax is imposed on a different tax base than the Corporate Excise Tax, but both expressly provide that the taxes are to be paid “in addition to all other taxes” (§§ 67-4-806, 67-4-903 [see now § 67-4-2007]). The general assembly clearly intends that these taxes be taken in tandem and construed together as one scheme of taxation. First Am. Nat'l Bank v. Olsen, 751 S.W.2d 417, 1987 Tenn. LEXIS 1076 (Tenn. 1987), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988); First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988).
The excise tax is not imposed directly or indirectly on state obligations themselves or on the income earned from them, but rather on the privilege of utilizing the corporate form in Tennessee, regardless of whether a corporation uses that privilege to acquire tax exempt obligations; it does not revoke the tax immunity provided by such statutes as § 9-9-112. Thus, the obligation of the contracts formed at the time of their purchase is not impaired. First Am. Nat'l Bank v. Olsen, 751 S.W.2d 417, 1987 Tenn. LEXIS 1076 (Tenn. 1987), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988); First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988).
Excise taxes are levied upon corporations for the privilege of doing business in this state. Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 1993 Tenn. LEXIS 160 (Tenn. 1993).
2. Applicability.
Interest income earned on obligations issued through Ginnie Mae and Fannie Mae is subject to state excise taxation. First Tenn. Bank v. Olsen, 736 S.W.2d 601, 1987 Tenn. LEXIS 967 (Tenn. 1987).
3. Credits.
A taxpayer is permitted to take a credit for the portion of its excise taxes derived from the same revenue that gave rise to the gross receipts taxed under § 67-4-405. Tennessee Natural Gas Lines v. King, 635 S.W.2d 95, 1982 Tenn. LEXIS 414 (Tenn. 1982).
4. Distinction from Other Taxes.
The gross receipts tax is based upon gross income but the excise tax is based upon net income. Tennessee Natural Gas Lines v. King, 635 S.W.2d 95, 1982 Tenn. LEXIS 414 (Tenn. 1982).
Collateral References. Taxation 371
67-4-2002. Tax for state purposes only.
The tax imposed in this part is a state tax for state purposes only and no county, municipality or taxing district shall have power to levy any like tax.
Acts 1999, ch. 406, § 3.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
67-4-2003. Administration by department of revenue — Forms and reports.
- The supervision and collection of the tax imposed by this part is under the direction of the department of revenue, and such department has the authority and power to prescribe forms upon which entities liable for the tax imposed shall make reports of such facts and information as will enable the commissioner to ascertain the correctness of the amount reported and paid by such entities.
- The commissioner may, within the commissioner's discretion, require any taxpayer to file with its Tennessee excise tax return, a copy of the federal tax forms filed with the internal revenue service for the same tax year.
- All persons subject to the tax imposed by this part shall register with the department of revenue by completing and filing a registration information form prescribed by the department. Such form shall be filed with the department within sixty (60) days after July 1, 1999, or within fifteen (15) days after the date the person becomes subject to the tax, whichever date occurs last; provided, that persons registered under prior law, or who have filed a return under prior law, are not required to register for the tax imposed by this part.
Acts 1999, ch. 406, § 3.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
Attorney General Opinions. Constitutionality, application and construction of provisions of proposed SB 603 [HB644/SB603 enacted as 2015 Acts ch. 514]. OAG 15-37, 2015 Tenn. AG LEXIS 38 (4/22/15).
67-4-2004. Parts 20 and 21 definitions.
As used in parts 20 and 21 of this chapter, unless the context otherwise requires:
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“Affiliate” means any entity:
- In which the taxpayer, directly or indirectly, has more than fifty percent (50%) ownership interest;
- That, directly or indirectly, has more than fifty percent (50%) ownership interest in the taxpayer; or
- In which an entity described in subdivision (1)(A)(ii), directly or indirectly, has more than fifty percent (50%) ownership interest;
- For purposes of this subdivision (1), a noncorporate entity is more than fifty percent (50%) owned, if, upon liquidation, more than fifty percent (50%) of the assets of the noncorporate entity, directly or indirectly, accrue to the entity having the ownership interest;
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For purposes of this subdivision (1), an entity described in subdivision (1)(A)(ii) can include a natural person, and for such purposes, indirect ownership by an individual includes ownership by any family member of the individual, which means, with respect to the individual:
- An ancestor of the individual;
- The spouse or former spouse of the individual;
- A lineal descendant of the individual, of the individual's spouse or former spouse, or of a parent of the individual;
- The spouse or former spouse of any lineal descendant described in subdivision (1)(C)(iii); or
- The estate or trust of a deceased individual who, while living, was as described in any of the subdivisions (1)(C)(i)-(iv);
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“Affiliate” means any entity:
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“Affiliated group” means:
- A taxpayer that, standing alone, is subject to the Tennessee franchise tax;
- All other domestic persons in which the taxpayer, directly or indirectly, has more than fifty percent (50%) ownership interest;
- All other domestic persons that, directly or indirectly, have more than fifty percent (50%) ownership interest in the taxpayer; and
- All other domestic persons in which a person described in subdivision (2)(A)(iii), directly or indirectly, has more than fifty percent (50%) ownership interest, regardless of whether such persons do business in Tennessee;
- For purposes of this subdivision (2), a noncorporate taxable entity is more than fifty percent (50%) owned, if, upon liquidation more than fifty percent (50%) of the assets of the noncorporate taxable entity, directly or indirectly, accrue to a member or members of the affiliated group;
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“Affiliated group” means:
- “Average occupational wage” means the average wage for all industries as reported by the department of labor and workforce development in the most recent annual quarterly census of employment and wages super sector data for the state, aggregate of all ownerships;
- “Business earnings” mean earnings arising from transactions and activity in the regular course of the taxpayer's trade or business or earnings from tangible and intangible property, if the acquisition, use, management or disposition of the property constitutes an integral part of the taxpayer's regular trade or business operations. In essence, earnings that arise from the conduct of the trade or trades or business operations of a taxpayer are “business earnings,” and the taxpayer must show by clear and cogent evidence that particular earnings are classifiable as nonbusiness earnings. A taxpayer may have more than one (1) regular trade or business in determining whether income is “business earnings.” This subdivision (4) expresses the legislative intent to implement and clarify the distinctions between business and nonbusiness earnings, as found in the Uniform Division of Income for Tax Purposes Act, as generally interpreted by states adopting the act;
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“Business of a financial institution” means:
- The business that a regulated financial corporation may be authorized to do under state or federal law or the business that its subsidiary is authorized to do by the proper regulatory authorities;
- The business that any person organized under the authority of the United States or organized under the laws of any other taxing jurisdiction or country does or has authority to do that is substantially similar to the business that a corporation may be created to do under title 45, or any business that a corporation or its subsidiary is authorized to do by title 45;
- Otherwise making, acquiring, selling or servicing loans or extensions of credit, including, but not limited to, the following:
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“Business of a financial institution” means:
- Secured or unsecured consumer loans;
- Installment loans;
- Mortgages or deeds of trust or other secured loans on real or tangible personal property;
- Credit card loans;
- Secured or unsecured commercial loans of any type;
- Letters of credit and acceptance of drafts;
- The holding of participation loans in which more than one (1) lender is a creditor to a common borrower;
- Loans arising in factoring; and
- Any other transactions of a comparable economic effect;
Leasing or acting as an agent, broker or adviser in connection with leasing real and personal property that is the economic equivalent of an extension of credit; or
Operating a credit card business;
Notwithstanding subdivision (5)(A), if the business of a financial institution generates less than fifty percent (50%) of a person's gross income, the person shall not be considered to be a financial institution under subdivision (17). For purposes of this subdivision (5)(B), the computation of gross income of a person does not include income from nonrecurring, extraordinary transactions;
“Campus affiliate” means any person within the footprint of a project site, as determined by the commissioner of revenue, that directly or indirectly owns a material interest in a person that qualifies for, or controls, is owned or controlled by, or under common control with a person that qualifies for the credits provided in § 67-4-2109(b)(2)(B)(i) in connection with a required capital investment in excess of one billion dollars ($1,000,000,000) and the credits provided in § 67-4-2109(m)(3). For such purpose “material interest” means the direct or indirect beneficial ownership, as defined in Rule 13d-3, 17 CFR 240.13d-3, under the Securities Exchange Act of 1934, compiled in 15 U.S.C. § 78a et seq., of voting securities or other voting interests representing at least ten percent (10%) of the outstanding voting power or equity securities or other equity interests representing at least ten percent (10%) of the outstanding equity securities, or equity interests; and “control,” including “controlling”, “controlled by”, and “under common control with,” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract or otherwise, and shall be construed as “control” is used in the rules promulgated under the Securities Act of 1933, compiled in 15 U.S.C. § 77a et seq.;
“Captive real estate investment trust” or “captive REIT” means an entity with an election in effect under § 856(c)(1) of the Internal Revenue Code, codified in 26 U.S.C. § 856(c)(1), in which any other entity or individual, directly or indirectly, has at least eighty percent (80%) ownership interest by value determined in accordance with generally accepted accounting principles and whose shares are not traded on a national stock exchange;
“Captive REIT affiliated group” means a captive REIT and any entity in which the captive REIT, directly or indirectly, has more than fifty percent (50%) ownership interest; provided, however, that a “captive REIT affiliated group” does not include a group in which the captive REIT is owned, directly or indirectly, by a bank, a bank holding company, or a public REIT;
“Certified green energy production facility” means:
A facility certified by the department of environment and conservation as producing electricity for use and consumption off the premises using clean energy technology. For the purposes of this subdivision (9)(A), clean energy technology means technology used to generate energy from geothermal, hydrogen, solar, and wind sources;
A facility certified by the department of environment and conservation as an alternative motor vehicle fueling station that utilizes natural gas in compressed or liquid form for the purpose of fueling motor vehicles and that is projected to displace more than six thousand gallons (6,000 gals.) of petroleum annually; or
A facility which utilizes natural gas in a combined heat and power configuration (CHP) for production of heat and electricity for consumption onsite;
“Commercial domicile” means the principal place from which the trade or business of a business entity is directed or managed;
“Commissioner” means the commissioner of revenue;
“Compensation” means wages, salaries, commissions and any other form of remuneration paid to employees for personal services;
“Department” means the department of revenue;
(A) “Doing business in Tennessee” or “doing business within this state” means any activity purposefully engaged in within Tennessee, by a person with the object of gain, benefit, or advantage, consistent with the intent of the general assembly to subject such persons to the Tennessee franchise/excise tax to the extent permitted by the United States Constitution and the Constitution of Tennessee;
A financial institution shall be presumed, subject to rebuttal, to be doing business in this state, if the sum of its assets and the absolute value of its deposits attributable to sources within this state is five million dollars ($5,000,000) or more. For purposes of this part, tangible assets shall be attributable to this state, if they are located in this state. Intangible assets shall be attributable to this state if the income earned on those assets is attributable to this state pursuant to this part. Deposits shall be attributed to this state, if they are deposits made by this state or any of its agencies, instrumentalities or subdivisions or by any resident of this state, regardless of whether the deposits are accepted or maintained at locations in this state. Additionally, a financial institution shall be deemed to be doing business in this state, if the institution:
Maintains an office in this state;
Has an employee, representative or independent contractor conducting business in this state;
Regularly sells products or services of any kind or nature to customers in this state that receive the product or service in this state;
Regularly solicits business from potential customers in this state;
Regularly performs services outside this state that are consumed in this state;
Regularly engages in transactions with customers in this state that involve intangible property, including loans, and result in receipts flowing to the taxpayer from within this state;
Owns or leases property located in this state; or
Regularly solicits and receives deposits from customers in this state;
Notwithstanding any other law to the contrary, a financial institution is not considered to be conducting the business of a financial institution in this state, if the only activity of the financial institution in this state is the ownership of an interest in one (1) or more of the following types of property, including those activities within this state that are reasonably required to evaluate and complete the acquisition or disposition of the property, the servicing of the property or the income from it, the collection of income from the property, or the acquisition or liquidation of collateral relating to the property:
An interest in a real estate mortgage investment conduit, a real estate investment trust, or a regulated investment company as those terms are defined by the Internal Revenue Code of 1986;
An interest in a loan-backed security representing ownership or participation in a pool of promissory notes or certificates of interest that provide for payments in relation to payments or reasonable projections of payments on the notes or certificates;
An interest in a loan, lease, note or other assets attributed to this state and in which the payment obligations were solicited and entered into by a person that is independent and not acting on behalf of the owner;
An interest in the right to service or collect income from a loan or other asset from which interest on the loan or other asset is attributed to this state and in which the payment obligations were solicited and entered into by a person that is independent and not acting on behalf of the owner;
An interest in demand deposit clearing accounts, federal funds, certificates of deposit and other similar wholesale banking instruments issued by other financial institutions;
An interest in a security; or
An interest of a financial institution in any intangible, tangible, real or personal property acquired in satisfaction, whether in whole or in part, of any asset embodying a payment obligation that is in default, whether secured or unsecured, if the ownership of the interest would be exempt otherwise as provided in subdivisions (14)(C)(i)-(v);
For the purposes of subdivisions (14)(C)(iii) and (iv), an “independent person who is not acting on behalf of the owner” means:
At the time of the acquisition of the assets, the owner of the asset does not directly or indirectly own fifteen percent (15%) or more of the outstanding stock or, in the case of a partnership or limited liability company, fifteen percent (15%) or more of the capital or profits interest, of the entity from which the owner originally acquired the asset. In determining indirect ownership, an owner is deemed to own all of the stock, capital interest or profits interest owned by another person if the owner directly owns fifteen percent (15%) or more of the stock, capital interest or profits interest in that other person. Also, the owner is deemed to own all stock, capital interest and profits interest directly owned by any intermediary parties in the transaction, to the extent a fifteen percent (15%) or more chain of ownership of stock, capital interest or profits interest exists between the owner and any intermediary party;
The entity from which the owner acquired the asset regularly sells, assigns or transfers interest in such assets to three (3) or more persons during the full twelve-month period immediately preceding the month of acquisition; and
The entity from which the owner acquired the asset does not sell, assign or transfer ninety percent (90%) or more of its exempt assets to the owner during the full twelve-month period immediately preceding the month of acquisition;
A person shall not be considered to be “doing business in Tennessee” or “doing business within this state” for purposes of this part or part 21 of this chapter solely because of any one (1) of the following activities:
The presence of employees and/or product samples and/or other promotional materials at one (1) or more trade shows, exhibits, conventions, or similar events in this state for a total of not more than twenty (20) days per calendar year; provided, that the activities of the entity's employees while in Tennessee are limited to maintaining or facilitating the trade show or convention; the purchasing of goods on behalf of their employer; the solicitation of sales; and the gathering of samples, promotional material or other information offered at the event;
Activities by publishers of magazines and books who contract with Tennessee printers for the printing of their magazines or books, when such activities in Tennessee are limited solely to activities having to do with the printing, storage, labeling and/or delivery to the United States mail or common carrier of such magazines or books; or the maintenance of raw materials with respect to such activities; or the maintenance of employees solely in connection with the production and quality control of such printing, storage, labeling and/or delivery; provided, that the publisher and printer are not affiliated with one another. Persons are affiliated with one another, if, either directly or indirectly, one controls the other, or if the persons are directly or indirectly controlled by a common parent;
Physical presence in this state of an out-of-state person's equipment, tooling, inventory, and employees on a temporary basis, when:
The activity in which such items and employees are engaged is not the pursuit, creation or maintenance, by the out-of-state person or any person that is affiliated with it, of a market in this state;
The equipment and tooling are not used, worked on or held in this state by a person that is affiliated with the out-of-state person;
The out-of-state person's employees have no control over the use or work done in this state by the in-state person; and
The extent and value of such items, the number of such employees, and the number of days the employees work in this state, in light of all the facts and circumstances, are qualitatively and quantitatively de minimis. Persons are affiliated with one another, if, either directly or indirectly, one controls the other, or if the persons are directly or indirectly controlled by a common parent; or
The temporary presence in this state of employees solely for the purpose of purchasing goods from vendors in this state for use in the employer's business out-of-state; provided, that the total number of days the employer has one (1) or more employees present in this state does not exceed thirty (30) per calendar year; and provided, further, that the employer does not furnish, directly or indirectly, any office in this state for their use;
“Domestic person” means any person with more than twenty percent (20%) of the average of its property, payroll and receipts factors, as each factor is calculated for a separate entity under § 67-4-2111, in the United States;
“Final return status” means the status of any person or taxpayer that has commenced the process of effecting a surrender of charter, withdrawal of qualification to do business in this state, merger, consolidation, liquidation, complete sale, transfer or distribution of assets, conversion, dissolution, or any similar event that results in, or is intended to result in, the taxpayer ceasing to exist, or no longer being subject to the tax imposed by this part, or no longer having any substantial remaining business or financial activity;
“Financial institution” means a holding company, any regulated financial corporation, a subsidiary of a holding company or a regulated financial corporation, an investment entity that is indirectly more than fifty percent (50%) owned by a holding company or a regulated financial corporation, or any other person that is carrying on the business of a financial institution. However, “financial institution” does not include insurance companies subject to tax under §§ 56-4-201 — 56-4-208, 56-4-209 [repealed], 56-4-210 — 56-4-214;
“Financial institution affiliated group” means any affiliated group in which more than fifty percent (50%) of the group's aggregate gross income, excluding dividends and receipts resulting from transactions between members, is derived from conducting the business of a financial institution as defined in subdivision (5)(A). For purposes of this subdivision (18), the computation of gross income of a member does not include income from nonrecurring, extraordinary transactions;
“General partnership” means a partnership in which all partners, as defined by state law, are fully liable for the debts of, or the claims against, the partnership. For purposes of this subdivision (19), partners may be “fully liable” even though one (1) or more persons or individuals dealing with the partnership have by contract agreed to limit their claims against one (1) or more partners or against the partnership as a whole;
“Gross receipts,” “total gross receipts,” “receipts,” and “total receipts” mean, within the context of the statute in which used, all receipts from whatever sources derived before any deductions, but not including actual sales returns and allowances;
“Holding company” means any corporation defined as a “bank holding company” under 12 U.S.C. § 1841(a) of the Bank Holding Company Act of 1956, compiled in 12 U.S.C. § 1841 et seq., or any corporation defined as a “savings and loan holding company,” “multiple savings and loan holding company,” or “diversified savings and loan holding company,” under 12 U.S.C. § 1467a(a)(1);
“Hospital” has the definition provided at § 68-11-201; provided, that, as used in this part, a “hospital” must be licensed as a hospital by the board of licensing health care facilities pursuant to title 68, chapter 11, part 2; and provided, further, that “hospital” does not include a nursing home, ambulatory surgical treatment center or other health care facility enumerated and defined in title 68, chapter 11, unless operated as a part of and in connection with a “hospital”;
“Hospital company” means a corporation or other entity subject to the taxes imposed under this part and part 21 of this chapter and that qualified before January 1, 1999, with the department as a hospital company as defined under prior law;
(A) “Intangible expense” means an expense related to, or in connection with, the acquisition, use, maintenance, management, ownership, sale, exchange, license, or any other disposition of intangible property, to the extent such amounts are allowed or allowable as deductions or costs in determining federal taxable income on a separate entity basis.
“Intangible expense” also means interest expenses directly or indirectly allowed as deductions or costs in determining federal taxable income on a separate entity basis to the extent such interest expenses are directly or indirectly for, related to, or in connection with the direct or indirect acquisition, use, maintenance, management, ownership, sale, exchange, license, or any other disposition of intangible property;
“Intangible income” means income related to, or in connection with, the acquisition, use, maintenance or management, ownership, sale, exchange, license, or any other disposition of intangible property, to the extent such amounts are included or includable in determining federal taxable income;
“Intangible property” means patents, patent applications, trade names, trademarks, service marks, franchise rights, copyrights, licenses, research, formulas, designs, patterns, processes, formats, and similar types of intangible assets;
[Deleted by 2015 amendment.]
[Deleted by 2015 amendment.]
“Internal Revenue Code” means title 26 of the United States Code as effective during the year in which net earnings are determined under this part;
“Investment entity” means any person that receives more than fifty percent (50%) of its gross income from investment securities and from the business of a financial institution;
“Investment securities” means, for purposes of this section, any note, United States treasury securities, obligations of United States government agencies and corporations, obligations of state and political subdivisions, corporate debt securities, participations in securities backed by mortgages held by the United States or state government agencies, loan-backed securities, bonds, debentures, evidence of indebtedness, and other similar debt investments;
“Key tenant” means any tenant, located within a qualified medical trade center, that leases and occupies a significant portion of the facility and is determined, in the sole discretion of the commissioner of economic and community development and the commissioner of revenue, to be essential to the initial establishment and viability of the trade center;
“Nonbusiness earnings” means all earnings other than business earnings;
“Not-for-profit” means any person described in § 401, § 408, § 408A, § 409, § 501, § 526, § 527, § 528, § 529 or § 530 of the Internal Revenue Code, codified in 26 U.S.C. § 401, § 408, § 408A, § 409, § 501, § 526, § 527, § 528, § 529 or § 530;
“Obligated member” means a member or partner of an obligated member entity that is fully liable for the debts, obligations and liabilities of the entity, as provided in § 67-4-2008(b)-(d), and that has filed appropriate documentation to that effect with the secretary of state;
“Obligated member entity” means a limited liability company, limited partnership or limited liability partnership, all of whose members or partners are fully liable for the debts, obligations and liabilities of the entity, as provided in § 67-4-2008(b)-(d), and that have filed appropriate documentation to that effect with the secretary of state;
“Pass-through entity” means an S corporation, an entity treated as a partnership for federal income tax purposes, an entity treated as a trust for federal income tax purposes or a business entity that has a single owner and that is disregarded as an entity separate from its owner for federal income tax purposes, but not for purposes of this part and part 21 of this chapter;
“Person” or “taxpayer” means every corporation, subchapter S corporation, limited liability company, professional limited liability company, registered limited liability partnership, professional registered limited liability partnership, limited partnership, cooperative, joint-stock association, business trust, regulated investment company, REIT, state-chartered or national bank, or state-chartered or federally chartered savings and loan association;
“Publicly traded real estate investment trust” or “public REIT” means an entity that has an election in effect under § 856(c)(1) of the Internal Revenue Code that files with the securities and exchange commission and whose shares are traded on a securities exchange that is either registered as a national securities exchange with the securities and exchange commission under § 6 of the Securities Exchange Act of 1934, codified in 15 U.S.C. § 78f, or is a national securities exchange of a foreign country and regulated in a substantially similar manner by a foreign financial regulatory authority;
“Qualified commercial financing entity” means a person that qualified for the credit in § 67-6-224 that primarily finances wholesale and retail transactions related to the purchase or lease of industrial equipment, machinery, vehicles, or goods manufactured by its affiliates and is certified for that designation by the commissioner of revenue and the commissioner of economic and community development. Notwithstanding § 47-14-103, a qualified commercial financing entity shall be allowed to charge a rate of interest not to exceed twenty-four percent (24%) per annum;
“Qualified medical trade center” means any facility, located in a county with a metropolitan form of government, that is substantially composed of permanent and temporary show rooms for medical product suppliers as well as educational space and conference facilities for medical trade shows; provided, that such facility is constructed, expanded, or remodeled through an investment of more than two hundred fifty million dollars ($250,000,000) and contains more than one million square feet (1,000,000 sq. ft.) of space upon completion;
“Qualified medical trade center relocation expenses” means those expenses that both the commissioner of revenue and the commissioner of economic and community development determine, in their sole discretion, are necessary to the creation of a permanent show room within a qualified medical trade center in conjunction with the initial establishment of such facility;
“Qualified new or expanded warehouse or distribution facility” means a new or expanded facility for the storage or distribution of finished tangible personal property; provided, that the facility also meets all the qualifications necessary to allow the taxpayer to make purchases of material handling and racking systems exempt from sales and use tax under the definition of “industrial machinery” in § 67-6-102;
“Real estate investment trust (REIT)” means an entity that has an election in effect under § 856(c)(1) of the Internal Revenue Code;
“Regulated financial corporation” means an institution, the deposits, shares, or accounts of which are insured under the Federal Deposit Insurance Act, compiled in 12 U.S.C. § 1811 et seq., or any institution that is a member of a federal home loan bank, any other bank or thrift institution incorporated or organized under the laws of any taxing jurisdiction, or any foreign country that is engaged in the business of receiving deposits, any corporation organized under 12 U.S.C. §§ 611-631, Edge Act corporations, and any agency of a foreign depository as defined in 12 U.S.C. § 3101;
“Sales” means all gross receipts of the taxpayer not allocated under this part;
“Securities” means United States treasury securities, obligations of United States government agencies and corporations, obligations of state and political subdivisions, corporate stock and other securities, participations in securities backed by mortgages held by the United States or state government agencies, loan-backed securities and similar investments;
“State” means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States and any foreign country or political subdivision thereof;
(A) “Substantial nexus in this state” means any direct or indirect connection of the taxpayer to this state such that the taxpayer can be required under the Constitution of the United States to remit the tax imposed under this part and part 21 of this chapter. Such connection includes, but is not limited to, the following:
The taxpayer is organized or commercially domiciled in this state;
The taxpayer owns or uses its capital in this state;
The taxpayer has systematic and continuous business activity in this state that has produced gross receipts attributable to customers in this state;
The taxpayer licenses intangible property for use by another party in this state and derives income from that use of intangible property in this state; or
The taxpayer has bright-line presence in this state. A person has bright-line presence in this state for a tax period if any of the following applies:
The taxpayer's total receipts in this state during the tax period, as determined under § 67-4-2012, exceed the lesser of five hundred thousand dollars ($500,000) or twenty-five percent (25%) of the taxpayer's total receipts everywhere during the tax period;
The average value of the taxpayer's real and tangible personal property owned or rented and used in this state during the tax period, as determined under § 67-4-2012, exceeds the lesser of fifty thousand dollars ($50,000) or twenty-five percent (25%) of the average value of all the taxpayer's total real and tangible personal property; or
The total amount paid in this state during the tax period by the taxpayer for compensation, determined under § 67-4-2012, exceeds the lesser of fifty thousand dollars ($50,000) or twenty-five percent (25%) of the total compensation paid by the taxpayer;
Notwithstanding subdivision (49)(A), no company that is treated as a foreign corporation under the Internal Revenue Code and that has no income effectively connected with a United States trade or business shall be considered to have a “substantial nexus in this state”;
To the extent a company that is treated as a foreign corporation under the Internal Revenue Code has income effectively connected with a United States trade or business, such company's net earnings and net worth for purposes of the taxes imposed by this part and part 21 of this chapter shall be its net earnings and net worth connected with its United States trade or business, and only property used in, payroll attributable to, and receipts effectively connected with such company's United States trade or business shall be considered for purposes of calculating such company's apportionment fraction;
For purposes of subdivisions (49)(B) and (C), whether a company has income effectively connected with a United States trade or business and the amount of its net earnings and net worth connected with its United States trade or business shall be determined in accordance with the provisions of the Internal Revenue Code;
“Taxing jurisdiction” means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico or a territory or possession of the United States;
“Tennessee historic property preservation or rehabilitation entity” means an entity that satisfies all of the following requirements:
The Tennessee historic property preservation or rehabilitation entity must be a corporation or limited liability company organized under the laws of Tennessee, that is directly or indirectly controlled by a not-for-profit entity, as defined in this part. Such not-for-profit entity must directly or indirectly hold not less than fifty-one percent (51%) of the Tennessee historic property preservation or rehabilitation entity's ownership interest and voting control;
The Tennessee historic property preservation or rehabilitation entity must be organized for the purpose of preserving or rehabilitating an historic property listed on the National Register of Historic Places;
The not-for-profit entity must receive approval of its historic certification application—Part 3 by the United States department of the interior national park service; and
The historic property must be used in the performance of the exempt activity or function of the controlling not-for-profit entity; and
“Unitary business” or “unitary group” means business activities or operations of financial institutions that are of mutual benefit, dependent upon, or contributory to one another, individually or as a group, in transacting the business of a financial institution. “Unitary business” may be applied within a single legal entity or between multiple entities. “Unitary business” or “unitary group” includes those entities that are engaged in a unitary business transacted wholly in, or in and out of the state of Tennessee, even if some of the entities would not be subject to tax in this state, if considered apart from their unitary group.
Acts 1999, ch. 406, § 3; 2000, ch. 982, §§ 1-7, 45; 2003, ch. 355, §§ 37, 39-41; 2003, ch. 418, §§ 10, 12-14; 2004, ch. 924, § 1; 2004, ch. 932, § 1; 2005, ch. 499, §§ 2, 29, 75, 86; 2006, ch. 1019, §§ 6, 11, 30, 31; 2007, ch. 602, § 7; 2008, ch. 1106, §§ 35, 45; 2009, ch. 530, §§ 26, 34, 105; 2010, ch. 1134, §§ 5, 6, 20, 24, 38; 2012, ch. 842, § 1; 2013, ch. 321, § 1; 2013, ch. 423, § 5; 2015, ch. 504, §§ 2, 3; 2015, ch. 514 § 6.
Code Commission Notes.
This section was amended by two acts in 2003, first by ch. 355, §§ 37, 39-41, effective June 16, 2003; then by ch. 418, §§ 10, 12-14, effective June 24, 2003, neither of the acts referring to the other. The section as set out above reflects the amendments by ch. 418. Acts 2003, by ch. 355 purported to amend this section with provisions that are identical to those made by ch. 418 and was given no effect.
Compiler's Notes. Former § 56-4-209, referred to in this section, concerning tax on annuity receipts, was repealed by Acts 1985, ch. 415, § 2. For current law on tax on annuity receipts, see § 56-4-220.
Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2000, ch. 982, § 53, which applies to the addition of (27) and (28) (now (28) and (30)) by § 45 of that act, provided that those amendments apply to tax years ending on or after June 28, 2000; provided, that they shall not take effect as to any tax year of an entity that is not subject to the provisions of Acts 1999, ch. 406.
Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998.
The Uniform Division of Income for Tax Purposes Act, referred to in this section, has not been adopted by Tennessee.
Acts 2003, ch. 355, § 66 provided that no expenditure of public funds pursuant to the act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Acts 2003, ch. 355, § 69 provided that the act shall apply to tax years ending on or after June 15, 2003.
Acts 2003, ch. 355, § 73 provided that there is established within the general fund the state-shared revenue reduction mitigation account. Any amounts in the state-shared revenue reduction mitigation account shall be applied by the commissioner of finance and administration to offset reductions in state-shared revenues allocated to local governments pursuant to the provisions of the act so that such reductions shall not exceed nine percent (9%) of state-shared revenues that otherwise would have been allocated to any such local government. Funds shall be restored on a pro rata basis taking into account the percentage reduction to each local government from each state-shared revenue source.
Acts 2003, ch. 418, § 16(d) provided that the act shall apply to the period beginning January 1, 2003.
Acts 2004, ch. 924, § 19 provided that the amendment by §§ 1-5 of that act apply to all tax periods beginning on or after January 1, 2004.
Acts 2004, ch. 932, § 11 provided that the amendment by that act shall apply to all tax years beginning on or after January 1, 2004.
Acts 2006, ch. 1019, § 70 provided that § 6 of the act shall apply to tax years beginning on or after January 1, 2006.
Acts 2008, ch. 1106, § 69 provided that § 35 of the act, which added the definition of “captive real estate investment trust”, shall apply to all tax periods ending on or after July 1, 2008.
Acts 2009, ch. 530, § 133 provided that § 26 of the act, which amended the definition of “integrated supplier” and added the definitions of “campus affiliate” and “integrated customer”, shall apply to all business plans filed on or after July 1, 2009.
Acts 2009, ch. 530, § 133 provided that § 105 of the act, which added the definition of “qualified commercial financing entity”, shall apply to tax years beginning on or after January 1, 2009.
Acts 2010, ch. 1134, § 66, provided that §§ 5, 6 of the act, which amended the definition of “‘captive real estate investment trust’ or ‘captive REIT’” and added the definition of “captive REIT affiliated group”, shall apply to all tax years ending on or after July 1, 2010.
Acts 2012, ch. 842, § 9 provided that the act, which amended the definition of “intangible expense”, shall apply to all tax years ending on or after July 1, 2012.
For the Preamble to the act concerning alternative fuel vehicles and fueling infrastructure, please refer to Acts 2013, ch. 423.
Acts 2013, ch. 423, § 1 provided that the act, which amended the definition of “certified green energy production facility”, shall be known and may be cited as the “Energy Independence Act of 2013.”
Acts 2015, ch. 504, § 22 provided that the act, which deleted the definitions of “Integrated customer” and “Integrated supplier”, shall apply to tax years ending on or after July 1, 2015.
For the Preamble to the act concerning the need to modernize the sales and use taxes, franchise and excise taxes and business tax in the state to address the engagement in business within the state by out-of-state companies, see Acts 2015, ch. 514.
Acts 2015, ch. 514, § 31 provided that the act, which added the definition of “Substantial nexus in this state”, shall apply to all tax years beginning on or after January 1, 2016.
Amendments. The 2013 amendment by ch. 321 added the definition of “final return status”.
The 2013 amendment by ch. 423 rewrote the definition of “certified green energy production facility” which read: “ ‘Certified green energy production facility’ means a facility certified by the department of environment and conservation as producing electricity for use and consumption off the premises using clean energy technology. For the purposes of this subdivision (9), clean energy technology means technology used to generate energy from geothermal, hydrogen, solar, and wind sources;”.
The 2015 amendment by ch. 504 deleted the definitions of “Integrated customer” and “Integrated supplier”, which read: “‘Integrated customer’ means a customer located within the footprint of a project site, as determined by the commissioner of economic and community development and the commissioner of revenue, that purchases materials from a manufacturer that is qualified for the credits provided in § 67-4-2109(b)(2)(B)(i) in connection with a required capital investment in excess of one billion dollars ($1,000,000,000) and the credits provided in § 67-4-2109(m)(3). The materials must be an integral part of the customer's manufacturing process and the customer must be approved for this designation by the commissioner of economic and community development and the commissioner of revenue;”.“‘Integrated supplier’ means a supplier located within the footprint of a project site, as determined by the commissioner of economic and community development and the commissioner of revenue, that provides, from a facility located in the footprint of the project site, goods or services, or both, on the project site primarily for a manufacturer that is qualified for the credits provided in § 67-4-2109(b)(2)(B)(i) in connection with a required capital investment in excess of one billion dollars ($1,000,000,000);”.
The 2015 amendment by ch. 514, effective January 1, 2016, added the definition of “Substantial nexus in this state”.
Effective Dates. Acts 2013, ch. 321, § 1. May 13, 2013.
Acts 2013, ch. 423, § 8. May 16, 2013.
Acts 2015, ch. 504, § 22. July 1, 2015.
Acts 2015, ch. 514, § 31. January 1, 2016.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
Attorney General Opinions. Constitutionality, application and construction of provisions of proposed SB 603 [HB644/SB603 enacted as 2015 Acts ch. 514]. OAG 15-37, 2015 Tenn. AG LEXIS 38 (4/22/15).
NOTES TO DECISIONS
1. Construction.
The purposes of the franchise and excise tax statutes are distinct from those pertaining to transfers of money or property to the benefit of shareholders of a corporation, and they should not be interpreted in pari materia. Wachovia Bank of N.Carolina, N.A. v. Johnson, 26 S.W.3d 621, 2000 Tenn. App. LEXIS 6 (Tenn. Ct. App. 2000), rehearing denied, Wachovia Bank of N.C. v. Johnson, — S.W.3d —, 2000 Tenn. App. LEXIS 93 (Tenn. Ct. App. Feb. 11, 2000).
2. Business Earnings.
Under former T.C.A. § 67-4-804 (now T.C.A. § 67-4-2004), assets deemed sold by a company were an integral part of the company's regular business; accordingly, the gain realized from the sale constituted business earnings subject to apportionment for excise tax purposes. Newell Window Furnishing, Inc. v. Johnson, 311 S.W.3d 441, 2008 Tenn. App. LEXIS 750 (Tenn. Ct. App. Dec. 9, 2008).
Assessment of excise tax on a limited partnership's capital gains from a stock transaction and reorganization between the taxpayer and its holding company was permissible because the taxpayer's capital gains were business earnings pursuant to the functional test provided in T.C.A. § 67-4-2004(1) where the taxpayer's acquisition and sale of the stock contributed materially to the production of business earnings arising from the taxpayer's ice cream business. Blue Bell Creameries, LP v. Roberts, 333 S.W.3d 59, 2011 Tenn. LEXIS 6 (Tenn. Jan. 24, 2011), cert. denied, 180 L. Ed. 2d 889, 564 U.S. 1039, 131 S. Ct. 3068, 180 L. Ed. 2d 889 (U.S. 2011).
Trial court did not err in ruling that a lease required a tenant to pay an assignee's excise tax because the lease provided that the tenant had to pay all taxes incurred pursuant to covenants and restrictions affecting the premises; the taxed earnings originated from the assignee's business activity of entering into a commercial lease, and such a tax arose from and/or was related to the rented premises and fell within the parameters of the net lease provisions. J-Star Holdings, LLC v. Pantry, Inc., — S.W.3d —, 2013 Tenn. App. LEXIS 6 (Tenn. Ct. App. Jan. 2, 2013).
6. Doing Business.
Corporate taxpayer was entitled to apportion its tax liability for certain tax years based on its incorporation in Florida because the taxpayer's incorporation in Florida constituted a sufficient substantial nexus for taxation jurisdiction. Although it appeared from the record that Florida did not actually tax the taxpayer in the tax years at issue, this was of no moment, because Florida had constitutional nexus to tax, and the accompanying risk of taxation could fuel a Commerce Clause challenge with respect to Tennessee's assessments. Popularcategories.com, Inc. v. Gerregano, — S.W.3d —, 2018 Tenn. App. LEXIS 747 (Tenn. Ct. App. Dec. 20, 2018).
Decisions Under Prior Law
1. Construction.
Income from recapture of depreciation may be business or nonbusiness earnings, and is income for excise tax purposes. Tennessee Growers, Inc. v. King, 682 S.W.2d 203, 1984 Tenn. LEXIS 896 (Tenn. 1984).
2. Business Earnings.
Income from short-term securities purchased with operating capital is business income. Holiday Inns, Inc. v. Olsen, 692 S.W.2d 850, 1985 Tenn. LEXIS 603 (Tenn. 1985).
Capital gain from the sale of hospitals. General Care Corp. v. Olsen, 705 S.W.2d 642, 1986 Tenn. LEXIS 654 (Tenn. 1986).
In determining whether corporate income is “business earnings” or “nonbusiness earnings,” a court applies what is referred to as the “transactional test.” Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 1993 Tenn. LEXIS 160 (Tenn. 1993).
3. Nonbusiness Earnings.
Where taxpayer's trade or business during an assessment period could fairly and accurately be described as developing, leasing, and managing regional shopping centers, the sales of those centers pursuant to the corporation's decision to discontinue the business of developing, leasing, and managing shopping centers was not in the regular course of business, and the gains from such sales were, for excise tax purposes, nonbusiness earnings. Federated Stores Realty, Inc. v. Huddleston, 852 S.W.2d 206, 1992 Tenn. LEXIS 359 (Tenn. 1992), rehearing denied, 852 S.W.2d 206, 1993 Tenn. LEXIS 178 (Tenn. May 3, 1993).
Capital gains realized by corporation on its sales of seven lines of business and its corporate headquarters building constituted “nonbusiness earnings,” as opposed to “business earnings,” for corporate excise tax purposes. Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 1993 Tenn. LEXIS 160 (Tenn. 1993).
Prior to the 1993 amendment of this section, the capital gains realized from the sale of a partnership interest by a corporation did not constitute “business earnings” arising in the regular course of a trade or business, but were properly classified as a “nonbusiness earnings.” Associated Partnership I v. Huddleston, 889 S.W.2d 190, 1994 Tenn. LEXIS 306 (Tenn. 1994), rehearing denied, 889 S.W.2d 190, 1994 Tenn. LEXIS 382 (Tenn. 1994), superseded by statute as stated in, Gannett Satellite Info. Network, Inc. v. State, 2009 MT 5, 348 Mont. 333, 201 P.3d 132, 2009 Mont. LEXIS 5 (2009).
4. Commercial Domicile.
Tennessee was not the corporate commercial domicile of a corporation where the evidence clearly showed that its trade or business was not directed or managed from Tennessee; therefore, its nonbusiness earnings were not allocable to the state and were not taxable. Associated Partnership I v. Huddleston, 889 S.W.2d 190, 1994 Tenn. LEXIS 306 (Tenn. 1994), rehearing denied, 889 S.W.2d 190, 1994 Tenn. LEXIS 382 (Tenn. 1994), superseded by statute as stated in, Gannett Satellite Info. Network, Inc. v. State, 2009 MT 5, 348 Mont. 333, 201 P.3d 132, 2009 Mont. LEXIS 5 (2009).
5. Earnings from Nonunitary Activities.
Business earnings of a corporation's bond trading group were not taxable by Tennessee because the activities of that group and the activities of the corporations's commodities groups did not constitute a unitary business. Louis Dreyfus Corp. v. Huddleston, 933 S.W.2d 460, 1996 Tenn. App. LEXIS 335 (Tenn. Ct. App. 1996).
Collateral References.
State income tax treatment of intangible holding companies. 11 A.L.R.6th 543.
67-4-2005. Doing business in state is taxable privilege.
Doing business in Tennessee by any person or taxpayer, and/or exercising the corporate franchise, is declared to be a taxable privilege. The tax is an accrued tax and is imposed for the exercise of the specified privilege during the period that coincides with the tax year covered by the return required.
Acts 1999, ch. 406, § 3.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
To Pay or Not to Pay: A Primer on the Federal Unrelated Business Income Tax (UBIT) for Non-tax Lawyers (Sean P. Scally), 37 Tenn. B.J. 12 (2001).
Cited: Blue Bell Creameries, LP v. Roberts, 333 S.W.3d 59, 2011 Tenn. LEXIS 6 (Tenn. Jan. 24, 2011).
NOTES TO DECISIONS
1. Excise Tax Properly Imposed.
Trial court did not err in ruling that a lease required a tenant to pay an assignee's excise tax because the lease provided that the tenant had to pay all taxes incurred pursuant to covenants and restrictions affecting the premises; the taxed earnings originated from the assignee's business activity of entering into a commercial lease, and such a tax arose from and/or was related to the rented premises and fell within the parameters of the net lease provisions. J-Star Holdings, LLC v. Pantry, Inc., — S.W.3d —, 2013 Tenn. App. LEXIS 6 (Tenn. Ct. App. Jan. 2, 2013).
67-4-2006. “Net earnings” and “net loss” defined.
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- For a corporation or any other taxpayer treated as a corporation for federal tax purposes, including any limited liability company treated as a corporation for federal income tax purposes, or any other taxpayer required to file a federal income tax return on a federal form 1120 or any variation of that form, except for a corporation electing S corporation status under 26 U.S.C. §§ 1361-1363, and except for a unitary business as is defined in § 67-4-2004, “net earnings” or “net loss” is defined as federal taxable income or loss before the operating loss deduction and special deductions provided for in 26 U.S.C. §§ 241, 242 [repealed], 243-247, and as adjusted by subsections (b) and (c).
- For a corporation electing S corporation status under 26 U.S.C. §§ 1361-1363, “net earnings” means federal taxable income calculated as if the corporation had not elected S status, taken before the operating loss deduction and special deductions provided for in 26 U.S.C. §§ 241, 242 [repealed], 243-247 and 249-250, and subject to the adjustments in subsections (b) and (c).
- For financial institutions that form a unitary business, as defined in § 67-4-2004, “net earnings” or “net loss” is defined as the combined net earnings or net loss, as defined in subdivision (a)(1), for all members of the unitary group, with all dividends, receipts and expenses resulting from transactions between members of the unitary group excluded when computing combined net earnings, and subject to the adjustments in subsections (b) and (c) on a combined basis, even if some of the members would not be subject to taxation under this part, if considered apart from their unitary group.
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In the case of a person or taxpayer treated as a partnership for federal tax purposes, or any other person required to file a federal partnership return on a federal form 1065 or any variation of that form, including, but not limited to, limited liability companies, “net earnings” or “net loss” is defined as an amount equal to:
- The amount of ordinary income or loss determined under the applicable provisions of the Internal Revenue Code, including, but not limited to, guaranteed payments to partners and capital gains, which additional items are not already included in ordinary income or loss; less
- The amount subject to self-employment taxes, without regard to any cap, distributable or paid to each partner or member; provided, that this amount shall not create or increase any net loss; less
- The amount contributed to qualified pension or benefit plans, including all plans described in 26 U.S.C. § 401, of any partner or member; provided, however, that this amount shall not create or increase any net loss; and
- As adjusted by subsections (b) and (c).
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- In the case of a person or taxpayer treated as a partnership for federal tax purposes that is directly or indirectly owned by a public REIT, “net earnings” or “net loss” is defined as an amount equal to the amount determined pursuant to subdivision (a)(4), less the amount distributed either directly or indirectly to a public REIT; and
- As adjusted by subsections (b) and (c).
- Any law to the contrary notwithstanding, a single member limited liability company whose single member is a general partnership and that is disregarded for federal income tax purposes shall be subject to the taxes imposed by this part and part 21 of this chapter. The single member limited liability company's “net earnings” or “net loss” for excise tax purposes shall be determined in the same manner as set forth in subdivision (a)(4).
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In the case of a single member limited liability company that is treated as an individual taxpayer for federal income tax purposes, “net earnings” or “net loss” means an amount equal to:
- The amount of net profit or loss from all businesses engaged in by the taxpayer, determined by applicable provisions of the Internal Revenue Code as is reported on federal form 1040 or any variation of that form, and appropriate schedules, including any amount subject to self employment tax, without regard to any cap, and including the amount of any gains or losses from the sale of assets held or used in the business; less
- The amount subject to self-employment taxes; provided, that this amount shall not create or increase any net loss;
- As adjusted by subsections (b) and (c).
- In the case of a business trust, or any other person doing business in Tennessee and not covered in subdivisions (a)(1)-(4), “net earnings” or “net loss” is defined as taxable income or loss determined under applicable provisions of the Internal Revenue Code, excluding any net operating loss deduction or special deductions similar to those provided for in 26 U.S.C. §§ 241, 243-247 and 249, as adjusted by subsections (b) and (c).
- In the case of a captive REIT affiliated group, “net earnings” or “net loss” is defined as the combined net earnings or net loss, as defined in subdivision (a)(1), for all members of the affiliated group, with all dividends, receipts, and expenses resulting from transactions between members of the affiliated group excluded when computing combined net earnings, and subject to the adjustments in subsections (b) and (c) on a combined basis, even if some of the members would not be subject to taxation under this part if considered apart from the affiliated group.
- Effective for tax years beginning on or after January 1, 2020, for purposes of computing “net earnings” or “net loss” under this subsection (a), Section 163(j) of the Internal Revenue Code of 1986, as amended, shall be applied as it existed and applied immediately before the enactment of the Tax Cuts and Jobs Act of 2017, Pub. L. No. 115-97.
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There shall be added to a taxpayer's net earnings or net losses:
- Excise tax imposed by this state to the extent deducted in determining net earnings;
- Interest income from obligations defined in 26 U.S.C. § 103(a), reduced by allowable amortization, including any interest expense disallowed for federal purposes pursuant to 26 U.S.C. §§ 265 and 291;
- Any deduction made pursuant to 26 U.S.C. §§ 611-614, 615 [repealed], 616 and 617, to the extent the deduction, when added with similar deductions in prior years, exceeds the cost of the property;
- The charitable contributions deduction claimed under 26 U.S.C. § 170;
- Any capital loss carrybacks or carryovers, arising in the course of a trade or business and deducted pursuant to 26 U.S.C. § 1212(a);
- Any gross premiums tax deducted in determining net earnings, but taken as a credit against the excise tax under § 67-4-2009(1);
- Any expense or depreciation, permitted as a deduction in computing federal taxable income solely as a result of lease characterizations permitted under § 168 of the Economic Recovery Tax Act of 1981 that would not have been permitted in the absence of such act; it being the legislative intent that excise tax revenue not be reduced due to lease characterizations made for the purpose of transferring investment tax credits and depreciation allowances from one business entity to another;
- Any depreciation that the taxpayer deducted in computing its federal taxable income in excess of that which the taxpayer could have deducted in computing such income, if the taxpayer had computed its depreciation under § 168 of the Internal Revenue Code as it existed and applied immediately prior to the passage of title 1, § 101, of the Job Creation and Worker Assistance Act of 2002;
- Any gain not already included in the taxpayer's net earnings or loss on the sale of an asset distributed by the taxpayer to an entity or individual not otherwise subject to the tax imposed by this part, when such asset is sold within twelve (12) months of the date of distribution. Thus, in such a case, the gain for excise tax purposes is recognized by the taxpayer making the asset distribution rather than the seller. However, if the taxpayer making the asset distribution ceases to exist prior to the sale, the gain shall be reported and tax paid by the seller in accordance with § 67-4-2007(f);
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Any net loss or any item of expense or loss that meets all of the following criteria:
- Is included in the determination of the taxpayer's net earnings or loss;
- Is from a pass-through entity that is subject to and files a return for the tax imposed by this part; and
- Is allocated to a partner, shareholder, beneficiary or other owner of such pass-through entity;
- Any otherwise deductible intangible expense paid, accrued or incurred in connection with a transaction with one or more affiliates;
- Any deduction made pursuant to 26 U.S.C. § 199;
- In the case of a corporation that has elected S corporation status under 26 U.S.C. §§ 1361-1363, any gain that is not included in net earnings or loss and that is attributable to an election under 26 U.S.C. § 338(h)(10);
- Any amount in excess of reasonable rent that is paid, accrued or incurred for the rental, leasing or comparable use of industrial and commercial property owned by an affiliate, whether or not the affiliate is subject to the tax imposed by this part. For purposes of this subdivision (b)(1)(N), “industrial and commercial property” has the same meaning as in § 67-5-501 and “reasonable rent” means rent that does not exceed two percent (2%) per month of the appraised value of the property under chapter 5 of this title. When any person fails to make the adjustment to net earnings or net losses required by this subdivision (b)(1)(N) and the failure is determined by the commissioner to be due to negligence, there shall be imposed a penalty equal to fifty percent (50%) of the amount of the adjustment required by this subdivision (b)(1)(N). The commissioner is authorized to waive the penalty, in whole or in part, for good and reasonable cause under § 67-1-803. This subdivision (b)(1)(N) shall not apply to “commercial and industrial tangible personal property” as defined in § 67-5-501;
- Any deduction by a captive REIT for dividends paid, as defined under 26 U.S.C. § 561, that is allowed and taken under 26 U.S.C. § 857(b)(2)(B); provided, however, that this subdivision (b)(1)(O) shall not apply to a captive REIT that is owned, directly or indirectly, by a bank, a bank holding company, or a public REIT;
- Five percent (5%) of the amount included in federal taxable income under 26 U.S.C. § 951A before the deduction in 26 U.S.C. § 250; and
- Five percent (5%) of the amount included in federal taxable income under 26 U.S.C. § 965(a) before the deduction in 26 U.S.C. § 965(c).
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There shall be subtracted from the net earnings and losses:
- Dividends earned by a taxpayer who owns eighty percent (80%) or more of the outstanding capital stock of a corporation;
- Any amount included in federal taxable income but not taxable under the laws of this state;
- A portion of the gain or loss of the sale or other disposition of property having a higher basis for state excise tax purposes than federal income tax purposes measured by the difference in the state basis and the federal basis; provided, however, that there shall be no adjustment under this subdivision (b)(2)(C) as a result of the taxpayer not having been subject to the tax imposed by this part during any portion of the period during which the taxpayer took depreciation expense on the property for federal income tax purposes;
- The actual charitable contributions made during the tax year by a taxpayer;
- Any capital losses incurred during the fiscal year, arising in the course of a trade or business, and not deductible under 26 U.S.C. § 1211(a);
- Any expense, other than income taxes, not deducted in determining federal taxable income for which a credit against the federal income tax is allowable;
- Any amount included in federal taxable income solely as a result of lease characterizations permitted under § 168 of the Economic Recovery Tax Act of 1981, codified in 26 U.S.C. § 168, that would not have been permitted in the absence of such act;
- Any amount of depreciation or other expense that the taxpayer could have deducted in computing federal taxable income had it not made the election to enter into a lease transaction permitted under § 168 of the Economic Recovery Tax Act of 1981 that would not have been permitted in the absence of such act;
- Any depreciation in excess of that which the taxpayer deducted in computing its federal taxable income that could have been deducted in computing such income if the taxpayer had computed its depreciation under § 168 of the Internal Revenue Code as it existed and applied immediately prior to the passage of title 1, § 101, of the Job Creation and Worker Assistance Act of 2002;
- An amount equal to the difference, if any, between the reserve for bad debts allowed under 26 U.S.C. §§ 585 and 593, as such sections existed on December 31, 1986, and such reserve as it may have been modified subsequently;
- Any loss on the sale of an asset not already included in the taxpayer's net earnings or loss distributed by a taxpayer treated as a partnership for federal tax purposes, by an S corporation or by a business trust, to a member, partner, shareholder or certificate holder, when such asset is sold within twelve (12) months of the date of distribution. Thus, in such a case, the loss for excise tax purposes is recognized by the entity making the asset distribution rather than by the seller;
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Any net gain or any item of income that meets all of the following criteria:
- Is included in the determination of the taxpayer's net earnings or loss;
- Is from a pass-through entity that is subject to and files a return for the tax imposed by this part; and
- Is allocated to a partner, shareholder, beneficiary or other owner of such pass-through entity;
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Seventy-five percent (75%) of the value of charitable donations, including those otherwise deductible under any other provision of this part, that are made to a qualified public school support organization and meet all of the following requirements:
- For purposes of this subdivision (b)(2)(M), “qualified public school support organization” means an entity, other than a natural person, that is registered with the department for sales and use tax purposes pursuant to chapter 6 of this title and whose sole purpose is to promote and enhance Tennessee public schools;
- The deduction provided by this subdivision (b)(2)(M) shall apply only in the tax year in which the qualified public school support organization certifies to the taxpayer making the donation that it has spent the donation to purchase goods or services subject to the tax imposed by chapter 6 of this title and upon which such tax has actually been paid. The taxpayer making the donation must maintain a copy of such certification to establish entitlement to the deduction;
- Donations pursuant to this subdivision (b)(2)(M) must be monetary donations and not donations of goods or services;
- The taxpayer making the donation shall not designate a specific child as the beneficiary of the donation;
- Qualified public school support organizations receiving such donations must maintain adequate records to prove that the requirements of this subdivision (b)(2)(M) have been met, including proof in the form of invoices or other documentation to establish that the donation was used to purchase goods or services subject to the tax imposed by chapter 6 of this title and that such tax was actually paid; and
- If the qualified public school support organization falsely certifies to the taxpayer making the donation that the donation has been spent and tax paid in the manner required by this subdivision (b)(2)(M), the qualified public school support organization shall be liable for the tax imposed by chapter 6 of this title, including applicable penalties and interest, as if the donation had been spent on items subject to that tax;
- The department of revenue is authorized to share with the department of education information necessary to effectuate the purposes of subdivision (b)(2)(M)(i). The department of education shall be bound by restrictions on disclosure of such information otherwise applicable to the department of revenue;
- The commissioner of revenue and the commissioner of education are authorized to promulgate rules and regulations to effectuate the purposes of this subdivision (b)(2)(M). All such rules and regulations shall be promulgated in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5;
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Seventy-five percent (75%) of the value of charitable donations, including those otherwise deductible under any other provision of this part, that are made to a qualified public school support organization and meet all of the following requirements:
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Any intangible expense paid, accrued, or incurred in connection with a transaction with one (1) or more affiliates, if the intangible expense has been disclosed in accordance with subdivision (d)(1) and either of the following conditions are met:
- The affiliate to whom the expense has been paid, accrued, or incurred is registered for and paying the tax imposed by this part; or
- The expense was paid, accrued, or incurred to an affiliate in a foreign nation that is a signatory to a comprehensive income tax treaty with the United States or to an affiliate that is otherwise not required to be registered for or to pay the tax imposed by this part;
- Any intangible income included in the computation of a taxpayer’s net earnings that is accrued or earned in connection with a transaction with one (1) or more affiliates to the extent that the corresponding intangible expense is included in the affiliate’s Tennessee net earnings or net losses and is not deducted by the affiliate under subdivision (b)(2)(N);
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- Seventy-five percent (75%) of the value of charitable donations, including those otherwise deductible under any other provision of this part, that are made to nonprofit corporations, associations and organizations that are exempt from federal income taxation under § 501(c)(3) of the Internal Revenue Code of 1986, codified in 26 U.S.C. § 501(c)(3), to not-for-profit civic leagues or organizations that are exempt from federal income taxation under § 501(c)(4) of the Internal Revenue Code of 1986, codified in 26 U.S.C. § 501(c)(4), and to associations and organizations that are exempt from federal income taxation under § 501(c)(5) of the Internal Revenue Code of 1986, codified in 26 U.S.C. § 501(c)(5), and meet all of the requirements of this subdivision (b)(2)(P);
- The deduction provided by this subdivision (b)(2)(P) shall apply only in the tax year in which the qualified nonprofit corporation, association or organization certifies to the taxpayer making the donation that it has spent the donation to purchase goods or services subject to the tax imposed by chapter 6 of this title and upon which such tax has actually been paid. The taxpayer making the donation must maintain a copy of such certification to establish entitlement to the deduction;
- Donations pursuant to this subdivision (b)(2)(P) must be monetary donations and not donations of goods and services;
- The taxpayer making the donation shall not designate a specific purpose for the donation;
- Qualified nonprofit corporations, associations and organizations receiving such donations must maintain adequate records to prove that the requirements of this subdivision (b)(2)(P) have been met, including proof in the form of invoices or other documentation to establish that the donation was used to purchase goods or services subject to the tax imposed by chapter 6 of this title and that such tax was actually paid;
- If the qualified nonprofit corporation, association or organization falsely certifies to the taxpayer making the donation that the donation has been spent and tax paid in the manner required by this subdivision (b)(2)(P), the qualified nonprofit corporation, association or organization shall be liable for the tax imposed by chapter 6 of this title, including applicable penalties and interest, as if the donation had been spent on items subject to the tax;
- In the case of a corporation that has elected S corporation status under 26 U.S.C. §§ 1361-1363, any loss that is not included in net earnings or loss and that is attributable to an election under 26 U.S.C. § 338(h)(10);
- Any amount in excess of reasonable rent that is received or accrued for the rental, leasing, or comparable use of industrial and commercial property rented, leased, or otherwise provided to an affiliate; provided, however, that this subdivision (b)(2)(R) shall only apply to the extent the corresponding expense has been added to the net earnings or net losses of the affiliate in accordance with subdivision (b)(1)(N). For purposes of this subdivision (b)(2)(R), “industrial and commercial property” and “reasonable rent” shall have the same meaning as in subdivision (b)(1)(N);
- Any amount that the taxpayer would have excluded from federal taxable income as a result of applying § 118 of the Internal Revenue Code as it existed and applied immediately before enactment of the Tax Cuts and Jobs Act of 2017, Pub. L. No. 115-97;
- Any amount included in federal taxable income under 26 U.S.C. § 951A, relating to federal taxation of global intangible low-taxed income, to the extent it would otherwise be included in net earnings or losses as defined in subsection (a); and
- Any amount included in federal taxable income under 26 U.S.C. § 965(a), relating to federal taxation of deferred foreign income, to the extent it would otherwise be included in net earnings or losses as defined in subsection (a).
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There shall be added to a taxpayer's net earnings or net losses:
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A taxpayer's net earnings, or net loss, shall be determined under subsections (a) and (b) and shall be subject to further adjustments provided by this subsection (c). Taxpayers doing business both in and outside of Tennessee so as to be entitled to apportionment shall apportion such net earnings or net loss using the appropriate apportionment formula provided in this part. The taxpayer shall then deduct any loss carryovers, computed in accordance with this subsection (c), from its net earnings so determined.
- In the case of taxpayers that were subject to the excise tax under prior law, any net qualified operating loss incurred for fiscal years ending on or after January 15, 1984, may be deducted. In the case of all other taxpayers, any net operating loss incurred for fiscal years ending on or after July 1, 1999, may be deducted. For this purpose, “net operating loss” is defined as the excess of allowable deductions over total income allocable to this state for the year of the loss. Qualified net operating losses may be carried forward and deducted in the next succeeding tax year or years in which the taxpayer has net income until fully utilized, but in no case for more than fifteen (15) years after the taxable year in which the net operating loss occurs. For fiscal years ending on or after July 15, 1990, in the case of a unitary business, as defined in § 67-4-2004 the net operating loss incurred in the current year shall be determined on a combined basis as specified in subdivision (a)(3). For tax years ending prior to July 15, 1990, any net operating loss incurred by a member of the unitary group that has been apportioned to Tennessee in a year prior to filing a combined return shall be allowed to the unitary group in succeeding tax years until fully utilized, but in no case more than seven (7) years after the taxable year in which the net operating loss occurs.
- Except for unitary groups of financial institutions, each taxpayer is considered a separate entity; therefore, in the case of mergers, consolidations, and like transactions, no loss carryovers incurred by the predecessor taxpayer shall be allowed as a deduction from net earnings on the excise tax return filed by the successor taxpayer. With the exception set forth in subdivision (c)(3), a loss carryforward may be taken only by the taxpayer that generated it.
- Notwithstanding the provisions contained in subdivision (c)(2), when a taxpayer merges out of existence and into a successor taxpayer that has no income, expenses, assets, liabilities, equity or net worth, any qualified Tennessee loss carryover of the predecessor that merged out of existence shall be available for carryover and deduction from the net earnings of the surviving successor in accordance with this subsection (c).
- A unitary group of financial institutions may take any qualified Tennessee loss carryforward that was generated by any group member that is in existence as a member of the group at the end of the group's tax year; provided, that such loss carryover has not previously been taken by the member itself before it joined the group or by another unitary group of financial institutions at the time the financial institution generating the loss was a member of that group; and provided, that the loss carryover shall be subject to the limitations set forth in this subsection (c).
- There shall be added to the net loss as determined for excise tax purposes, all nonbusiness earnings, interest and dividends, excluded from net earnings pursuant to this section, and any other income excluded from net earnings pursuant to this section.
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- Notwithstanding subdivision (c)(1) to the contrary, a taxpayer that qualifies for the job tax credit provided in § 67-4-2109(b)(2)(B)(i) in connection with a required capital investment in excess of one billion dollars ($1,000,000,000) shall be allowed to carry forward and deduct any qualified net operating loss until the loss is fully utilized, and shall not be limited to a carryforward period of fifteen (15) years; provided, that the commissioner of revenue and the commissioner of economic and community development determine that extending the period during which the loss may be utilized is in the best interests of the state. For purposes of this subdivision (c)(6), “best interests of the state” includes, but is not limited to, a determination that the taxpayer made the required capital investment as a result of such action.
- Subdivision (c)(6)(A) shall apply only to applications received and approved by the commissioner of revenue and the commissioner of economic and community development on or before January 1, 2011.
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- Notwithstanding subdivision (c)(1) to the contrary, a taxpayer that qualifies for the job tax credit provided in § 67-4-2109(b)(2)(B)(ii), (b)(2)(B)(iii) or (b)(2)(B)(iv) in connection with a required capital investment in excess of one hundred million dollars ($100,000,000) shall be allowed to carry net operating losses forward beyond the initial fifteen-year period authorized under subdivision (c)(1), if the commissioner of revenue and the commissioner of economic and community development determine that extending the period during which the loss may be carried forward is in the best interest of the state. For purposes of this subdivision (c)(7), “best interests of the state” includes, but is not limited to, a determination that the taxpayer made the required capital investment as a result of such action. The commissioner of revenue and the commissioner of economic and community development shall determine the period during which net operating loss carryforward shall be allowed beyond the initial fifteen-year period.
- Subdivision (c)(7)(A) shall apply only to applications received and approved by the commissioner of revenue and the commissioner of economic and community development on or before January 1, 2011.
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- There shall be added to the net loss as determined for excise tax purposes the amount excluded from federal gross income under 26 U.S.C. § 108(a)(1)(A), (B), or (C) for the taxable year of the discharge.
- There shall be added to any qualified net operating loss as determined for excise tax purposes and carried forward to the year of the discharge the amount excluded from federal gross income under 26 U.S.C. § 108(a)(1)(A), (B), or (C) allocable or apportionable to this state for the taxable year of the discharge.
- The adjustments described in subdivision (c)(8)(A) shall be made first in the loss for the taxable year of the discharge and then in the carryforwards to such taxable year in the order of the taxable years from which each such carryforward arose.
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- Any taxpayer that pays, accrues, or incurs intangible expenses as a result of a transaction with one (1) or more affiliates shall disclose the intangible expenses on the form as prescribed by the commissioner.
- Any taxpayer that pays, accrues, or incurs intangible expenses as a result of a transaction with one (1) or more affiliates and either fails to disclose the intangible expenses or fails to add the expenses to net earnings or net losses in accordance with subdivision (b)(1)(K) shall be subject to a negligence penalty as set forth in § 67-1-804(b)(2).
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- Any financial institution that receives dividends, directly or indirectly, from one (1) or more captive REITs must disclose the dividends on a form prescribed by the commissioner. If a financial institution fails to make the required disclosure, the deduction allowed under subdivision (b)(2)(A) with respect to any direct or indirect dividends from the captive REIT or REITs shall be disallowed, the taxpayer's net earnings under this section shall be adjusted accordingly, and the taxpayer shall be subject to a negligence penalty as set forth in § 67-1-804(b)(2). If the taxpayer wishes to contest the adjustment, the taxpayer shall have the remedies set forth in chapter 1, part 18 of this title.
- For purposes of this subsection (e), “captive REIT” means an entity with an election in effect under § 856(c)(1) of the Internal Revenue Code, codified in 26 U.S.C. § 856(c)(1), in which the financial institution, directly or indirectly, has at least eighty percent (80%) ownership interest by value determined in accordance with generally accepted accounting principles and whose shares are not traded on a national stock exchange.
- The amount computed under subsections (a)-(e) shall be the taxpayer's net earnings for purposes of the Tennessee excise tax base to which the tax rate is applied as provided in § 67-4-2007.
Acts 1999, ch. 406, § 3; 2000, ch. 982, §§ 8-14, 46, 47; 2002, ch. 856, §§ 3a, 3b; 2004, ch. 592, § 5; 2004, ch. 785, § 1; 2004, ch. 835, §§ 1, 2; 2004, ch. 924, §§ 2-4; 2005, ch. 98, § 1; 2005, ch. 499, §§ 30-34, 64, 76; 2006, ch. 1019, §§ 7, 13-18, 28; 2007, ch. 602, §§ 15-18; 2008, ch. 1106, §§ 36, 43, 61; 2009, ch. 530, §§ 3, 4, 30, 32; 2010, ch. 1134, §§ 7-9, 19; 2011, ch. 467, §§ 1, 11; 2011, ch. 508, §§ 22, 23; 2012, ch. 842, §§ 2-4; 2013, ch. 321 § 8; 2015, ch. 273, § 2; 2015, ch. 514, §§ 28, 29; 2018, ch. 1011, §§ 1, 2; 2019, ch. 306, §§ 1, 2.
Compiler's Notes. Former 26 U.S.C. § 242, referred to in this section, was repealed by Act October 4, 1976.
Former 26 U.S.C. § 615, referred to in this section, was repealed by Act October 4, 1976.
Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2000, ch. 982, § 53, which applies to the amendment of (b)(1)(I) (now (b)(1)(J)) and (b)(2)(K) (now (b)(2)(L)) and addition of (b)(1)(J) (now (b)(1)(K)) and (b)(2)(L) (now (b)(2)(M)) by §§ 46 and 47 of that act, provided that those amendments apply to tax years ending on or after June 28, 2000; provided, that they shall not take effect as to any tax year of an entity which is not subject to the provisions of Acts 1999, ch. 406.
Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998.
The Internal Revenue Code, referred to in this section is codified in 26 U.S.C.
Acts 2002, ch. 856, § 14(c) provided that the 2002 amendment by that act shall apply to tax years ending on or after July 15, 2002.
Title 1, § 101 of the Job Creation and Worker Assistance Act of 2002, referred to in this section, is codified as Pub.L. 107-147, 116 Stat. 21 (2002) and became effective March 9, 2002.
Acts 2002, ch. 856, § 10, effective July 4, 2002, provided that notwithstanding any provision of law to the contrary, the commissioner of revenue is authorized to waive tax liability and associated interest and penalties otherwise imposed for failure to pay taxes levied pursuant to that act in a timely manner, but only to the extent that the taxpayer or vendor can demonstrate, to the commissioner's satisfaction, that the taxpayer's or vendor's noncompliance with the requirements of the act unavoidably and directly resulted from the close proximity of the effective date of the act with implementation of the increase in tax rates or items or activities taxed pursuant to the provisions of the act. Section 14(j) of that same act provided that § 10 be repealed effective September 2, 2002.
Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to that act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Acts 2004, ch. 592, § 16 provided that §§ 5 and 6 of the act shall apply to any asset sale occurring on or after July 1, 2004.
Acts 2004, ch. 785, § 2 provided that to the extent any taxpayer's liability for fiscal year 2003 is increased by the provisions of the act then the taxpayer shall have until June 30, 2004, to make additional payments with no penalty and interest to accrue.
Acts 2004, ch. 785, § 3 provided that the 2004 amendment by the act shall apply to tax years ending on or after July 15, 2002.
Acts 2004, ch. 835, § 3 provided that seventy-five percent (75%) of the operating and implementation costs of that act from July 1, 2004, to June 30, 2005, shall be satisfied from any increase in local sales tax revenues pursuant to that act and twenty-five percent (25%) of such costs shall be satisfied from any increase in state sales tax revenues pursuant to that act. The operating and implementation costs of that act from July 1, 2004, to June 30, 2005, that are to be satisfied by increases in local sales tax revenues shall be allocated only to counties implementing the provisions of the act.
Acts 2004, ch. 835, § 4 provided that the amendment by that act shall apply to tax years beginning on or after July 1, 2004.
Acts 2004, ch. 924, § 19 provided that the amendment by §§ 1-5 of that act apply to all tax periods beginning on or after January 1, 2004.
Acts 2005, ch. 98, § 2 provided that the commissioner of revenue is authorized to promulgate rules and regulations to effectuate the purposes of the act. All such rules and regulations shall be promulgated in accordance with the provisions of the Uniform Administrative Procedure Act, compiled in title 4, chapter 5.
Acts 2005, ch. 98, § 3 provided that seventy-five percent (75%) of the operating and implementation costs of the act from July 1, 2005, to June 30, 2006, shall be satisfied from any increase in local sales tax revenues pursuant to the act. The operating and implementation costs of the act from July 1, 2005, to June 30, 2006, that are to be satisfied by increases in local sales tax revenues shall be allocated only to counties implementing the provisions of the act.
Acts 2005, ch. 98, § 4 provided that, for purposes of promulgating rules and regulations, the act shall take effect on April 22, 2005, and shall apply to tax years beginning on or after July 1, 2005.
Acts 2006, ch. 1019, § 70 provided that § 7 of the act shall apply to tax years beginning on or after January 1, 2006.
Acts 2007, ch. 602, § 187 provided that §§ 15 and 16 of the act, which added (b)(1)(M) and (b)(2)(Q), shall apply to transactions occurring on or after October 1, 2007.
Acts 2008, ch. 1106, § 69 provided that § 36 of the act, which added (e), redesigated former (e) as present (f), and amended (f), shall apply to all tax periods ending on or after July 1, 2008.
Acts 2009, ch. 530, § 133 provided that §§ 3 and 4 of the act, which amended subdivisions (c)(6) and (7), effective June 25, 2009, shall apply to all business plans filed on or after July 1, 2009.
Acts 2009, ch. 530, § 133 provided that § 32 of the act, which amended subsection (e), effective June 25, 2009, shall apply to any tax period beginning on or after January 1, 2009.
Acts 2010, ch. 1134, § 66, provided that §§ 7-9 of the act, as amended by Acts 2011, ch. 467, § 1, which added subdivisions (a)(9), (b)(1)(O) and (e)(2), shall apply to all tax years ending on or after July 1, 2010.
Acts 2011, ch. 467, § 12 provided that § 11 of the act, which added subdivision (b)(2)(R), shall apply to tax years ending on or after June 10, 2011.
Acts 2011, ch. 508, § 34, provided that the act, which added subdivisions (c)(6)(B) and (c)(7)(B), shall apply to any written proposal by the department of economic and community development or the department of revenue on or after July 1, 2011.
Acts 2012, ch. 842, § 9 provided that the act, which amended subdivisions (b)(2)(N) and (O) and subsection (d), shall apply to all tax years ending on or after July 1, 2012.
Acts 2013, ch. 321, § 9 provided that § 8 of the act, which amended subsection (c), shall apply to any tax year in which a discharge of indebtedness occurred on or after October 1, 2013.
For the Preamble to the act concerning the need to modernize the sales and use taxes, franchise and excise taxes and business tax in the state to address the engagement in business within the state by out-of-state companies, see Acts 2015, ch. 514.
Acts 2015, ch. 514, § 31 provided that the act, which amended (b)(2)(N) and (d), shall apply to all tax years beginning on or after July 1, 2016.
Acts 2018, ch. 1011, § 5 provided that act section 2, which amended this section by adding (b)(2)(S), shall apply to tax periods beginning on or after January 1, 2017.
Acts 2019, ch. 306, § 3 provided that the act, which amended this section, shall apply to all tax periods beginning on or after January 1, 2018.
Amendments. The 2013 amendment, in (c), substituted “this subsection (c)” for “subdivisions (c)(1)-(5)” in the last sentence of the introductory paragraph and added (8).
The 2015 amendment by ch. 273 deleted “provided, that a schedule indicating the name and federal identification number of the public REIT receiving the distribution is attached;” at the end of (a)(5)(A).
The 2015 amendment by ch. 514, effective July 1, 2016, rewrote (b)(2)(N), which read: “(N) Any amount in excess of reasonable rent that is paid, accrued or incurred for the rental, leasing or comparable use of industrial and commercial property owned by an affiliate, whether or not the affiliate is subject to the tax imposed by this part. For purposes of this subdivision (b)(1)(N), “industrial and commercial property” has the same meaning as in § 67-5-501 and "reasonable rent" means rent that does not exceed two percent (2%) per month of the appraised value of the property under chapter 5 of this title. When any person fails to make the adjustment to net earnings or net losses required by this subdivision (b)(1)(N) and the failure is determined by the commissioner to be due to negligence, there shall be imposed a penalty equal to fifty percent (50%) of the amount of the adjustment required by this subdivision (b)(1)(N). The commissioner is authorized to waive the penalty, in whole or in part, for good and reasonable cause under § 67-1-803. This subdivision (b)(1)(N) shall not apply to “commercial and industrial tangible personal property” as defined in § 67-5-501; and”; and rewrote (d), which read: “Any taxpayer that pays, accrues or incurs intangible expenses as a result of a transaction with one (1) or more affiliates and fails to add such expenses to net earnings or net losses in accordance with subdivision (b)(1)(K) shall be subject to a negligence penalty as set forth in § 67-1-804(b)(2)”.
The 2018 amendment added (a)(10) and (b)(2)(S).
The 2019 amendment added (b)(1)(P), (b)(1)(Q), (b)(2)(T), and (b)(2)(U).
Effective Dates. Acts 2013, ch. 321, § 9. May 13, 2013.
Acts 2015, ch. 273, § 7. April 28, 2015.
Acts 2015, ch. 514, § 31. July 1, 2016.
Acts 2018, ch. 1011, § 5. May 21, 2018.
Acts 2019, ch. 306, § 3. May 8, 2019.
Law Reviews.
Bank Shares Taxation: Another Trap for the Unwary Draftsman (Ronald W. Blasi and Daniel P. Joyce), 51 Tenn. L. Rev. 445 (1984).
Building a House of Cards: A Policy Evaluation of Tennessee's Tax Reform Act of 2002 with Emphasis on Fairness to the Poor (Robert F. Parsley), 70 Tenn. L. Rev. 1177 (2003).
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
The Race is On: Choosing a Business Entity After the Tennessee Tax Revision and Reform Act of 1999 (Dania Leatherman and Marie A. Nelson), 35 Tenn. B.J. 24 (1999).
Attorney General Opinions. Net taxable earnings computations for excise tax refunds, OAG 94-119 (10/10/94).
Depreciation allowed under title 1, § 101, of the Job Creation and Worker Assistance Act of 2002 (26 U.S.C. § 168(k)) remains an amount added back to a limited partnership's federal ordinary income under T.C.A. § 67-4-2006(b)(1)(H) notwithstanding the deduction of the amount subject to self-employment taxes, OAG 04-103 (7/02/04).
Constitutionality, application and construction of provisions of proposed SB 603 [HB644/SB603 enacted as 2015 Acts ch. 514]. OAG 15-37, 2015 Tenn. AG LEXIS 38 (4/22/15).
NOTES TO DECISIONS
1. Calculation of Tax.
Taxpayer was not required to use its federal basis in an apartment complex that it transferred to the mortgage holder in lieu of foreclosure for purposes of calculating state excise taxes as T.C.A. § 67-4-2006(b)(2)(C) was not limited to situations where there was a legislatively-mandated “decoupling” of the net earnings tax basis. Hilloak Realty Co. v. Chumley, 233 S.W.3d 816, 2007 Tenn. App. LEXIS 170 (Tenn. Ct. App. Mar. 29, 2007), appeal denied, — S.W.3d —, 2007 Tenn. LEXIS 701 (Tenn. Aug. 13, 2007).
2. Excise Tax Properly Imposed.
Trial court did not err in ruling that a lease required a tenant to pay an assignee's excise tax because the lease provided that the tenant had to pay all taxes incurred pursuant to covenants and restrictions affecting the premises; the taxed earnings originated from the assignee's business activity of entering into a commercial lease, and such a tax arose from and/or was related to the rented premises and fell within the parameters of the net lease provisions. J-Star Holdings, LLC v. Pantry, Inc., — S.W.3d —, 2013 Tenn. App. LEXIS 6 (Tenn. Ct. App. Jan. 2, 2013).
3. Deductions.
T.C.A. § 67-4-2006(b)(2)(D) tells taxpayers to take its net earnings, add back any deductions taken under 26 U.S.C. § 170, and then subtract the actual charitable contributions made during the tax year to determine the final net earnings figure, and the taxpayer may subtract all of its contributions, rather than a percentage as allowed under federal law; Tenn. Comp. R. & Regs. 1320-6-1-.20 does not conflict with the statute by requiring that the book basis be used as the statute does not mention fair market value. Oak Ridge Land Co. v. Roberts, — S.W.3d —, 2012 Tenn. App. LEXIS 823 (Tenn. Ct. App. Nov. 29, 2012), appeal denied, Oak Ridge Land Co., L.P. v. Roberts, — S.W.3d —, 2013 Tenn. LEXIS 422 (Tenn. Apr. 9, 2013).
Taxpayer's summary judgment in an excise tax case was reversed as T.C.A. § 67-4-2006(b)(2)(D) told the taxpayer to take its net earnings, add back any deductions taken under 26 U.S.C. § 170, and then subtract the actual charitable contributions made during the tax year to determine the final net earnings figure, and the taxpayer could subtract all of its contributions, rather than a percentage as allowed under federal law; Tenn. Comp. R. & Regs. 1320-6-1-.20 did not conflict with the statute by requiring that the book basis be used as the statute did not mention fair market value. Oak Ridge Land Co. v. Roberts, — S.W.3d —, 2012 Tenn. App. LEXIS 823 (Tenn. Ct. App. Nov. 29, 2012), appeal denied, Oak Ridge Land Co., L.P. v. Roberts, — S.W.3d —, 2013 Tenn. LEXIS 422 (Tenn. Apr. 9, 2013).
Decisions Under Prior Law
1. Constitutionality.
Constitutionality of assessing corporate franchise and excise taxes on “commissions” paid to corporation, a domestic international sales corporation (DISC) engaged in the import-export trade, by its parent corporation, upheld. Cook Export Corp. v. King, 652 S.W.2d 896, 1983 Tenn. LEXIS 780 (Tenn. 1983).
2. Export Corporations.
The “commissions” paid to export corporation, a domestic international sales corporation (DISC), by parent corporation resulted in export corporation's tangible realization of monetary earnings to be included in its net earnings, subject to franchise and excise taxation. Cook Export Corp. v. King, 652 S.W.2d 896, 1983 Tenn. LEXIS 780 (Tenn. 1983).
3. Construction.
The tax structure of this section does not imply that the deduction allowed by this section is for net dividends received, or dividends received reduced by the amount of expenses incurred in earning them. Kellogg Co. v. Olsen, 675 S.W.2d 707, 1984 Tenn. LEXIS 939 (Tenn. 1984).
The excise tax is not an income tax for the purposes of federal statute that provides an exception from income tax for federal obligations. First Am. Nat'l Bank v. Olsen, 751 S.W.2d 417, 1987 Tenn. LEXIS 1076 (Tenn. 1987), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988).
Because no inconsistency exists between this section and § 9-9-112 providing a tax exemption for state obligations, application of the rules of statutory construction regarding conflicting statutory enactments is inappropriate and unnecessary; the statutes may be enforced together as they stand. First Am. Nat'l Bank v. Olsen, 751 S.W.2d 417, 1987 Tenn. LEXIS 1076 (Tenn. 1987), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988).
Under federal law 26 U.S.C. § 337, gains realized by a corporation from the sale of assets pursuant to a plan of liquidation were not taxable to the corporation, while under this section, gains realized from the sale of assets pursuant to a plan of liquidation were taxable to the corporation; consequently, if the sale was by the corporation, notwithstanding other circumstances, the gains were subject to state tax. Easco, Inc. v. Cardwell, 840 S.W.2d 913, 1992 Tenn. LEXIS 581 (Tenn. 1992).
Net earnings subject to the excise tax includes gains on transactions previously not subject to that tax. Easco, Inc. v. Cardwell, 840 S.W.2d 913, 1992 Tenn. LEXIS 581 (Tenn. 1992).
The purpose of the 1990 amendment to the corporate excise tax law requiring financial institutions to pay taxes on a combined basis was to eliminate the filing of separate returns and to treat the institutions that meet the definition of a unitary business as a single enterprise; therefore, it is necessary to exclude transactions between the members of the group, since these transactions have no economic effect on the earnings of the group as a whole. Wachovia Bank of N.Carolina, N.A. v. Johnson, 26 S.W.3d 621, 2000 Tenn. App. LEXIS 6 (Tenn. Ct. App. 2000), rehearing denied, Wachovia Bank of N.C. v. Johnson, — S.W.3d —, 2000 Tenn. App. LEXIS 93 (Tenn. Ct. App. Feb. 11, 2000).
The legislature intended the term “distributions,” as it is used in former T.C.A. § 67-4-2006, to be equated with expenses; therefore, distributions and receipts encompass incoming and outgoing transfers from transactions between group members. Wachovia Bank of N.Carolina, N.A. v. Johnson, 26 S.W.3d 621, 2000 Tenn. App. LEXIS 6 (Tenn. Ct. App. 2000), rehearing denied, Wachovia Bank of N.C. v. Johnson, — S.W.3d —, 2000 Tenn. App. LEXIS 93 (Tenn. Ct. App. Feb. 11, 2000).
4. Deductions.
“Depreciation recaptured” is not a proper deduction from federal taxable income in determining “net earnings” for excise tax purposes. Tennessee Growers, Inc. v. King, 682 S.W.2d 203, 1984 Tenn. LEXIS 896 (Tenn. 1984).
The deduction for dividends received from 80 percent subsidiaries, which is an allowable deduction in computing “net earnings” for Tennessee corporate excise tax purposes, is also an allowable deduction in computing a “net operating loss” pursuant to this section. Southern Ry. Co. v. Taylor, 812 S.W.2d 577, 1991 Tenn. LEXIS 250 (Tenn. 1991), superseded by statute as stated in, GMC v. Taylor, — S.W.2d —, 1996 Tenn. App. LEXIS 732 (Tenn. Ct. App. Nov. 13, 1996).
The provision in Department of Revenue Rule 1320-6-1.21(2)(a) calling for dividends received from 80 percent subsidiaries to be added to a net loss as determined for excise tax purposes has the effect of disallowing the deduction for such dividends for purposes of this section, is inconsistent with this section, and is void. Southern Ry. Co. v. Taylor, 812 S.W.2d 577, 1991 Tenn. LEXIS 250 (Tenn. 1991), superseded by statute as stated in, GMC v. Taylor, — S.W.2d —, 1996 Tenn. App. LEXIS 732 (Tenn. Ct. App. Nov. 13, 1996).
A unitary group of domestic financial institutions was entitled to a refund of corporate franchise taxes assessed on dividend payments from subsidiaries to the parent corporation. Independent S. Bancshares, Inc. v. Huddleston, 912 S.W.2d 705, 1995 Tenn. App. LEXIS 263 (Tenn. Ct. App. 1995).
5. Calculation of Tax.
The revenue commissioner was not authorized under either this section or former § 67-4-812(c)(1)(A) to reduce the dividends received deduction from federal taxable income in this section by an amount equal to the expenses incurred by the corporate taxpayer in earning the dividends. Kellogg Co. v. Olsen, 675 S.W.2d 707, 1984 Tenn. LEXIS 939 (Tenn. 1984).
This section has been amended so as to include in the calculation of taxable earnings Tennessee obligations and federal obligations, thus achieving the equality of treatment mandated by Memphis Bank & Trust Co. v. Garner, 459 U.S. 392, 103 S. Ct. 692, 74 L. Ed. 2d 562, 1983 U.S. LEXIS 1 (1983) for 31 U.S.C. § 742 purposes. Midland Bank & Trust Co. v. Olsen, 717 S.W.2d 580, 1986 Tenn. LEXIS 852 (Tenn. 1986), cert. denied, Celauro v. Midland Bank & Trust Co., 479 U.S. 1103, 107 S. Ct. 1336, 94 L. Ed. 2d 186, 1987 U.S. LEXIS 915 (1987), cert. denied, Celauro v. Midland Bank & Trust Co., 479 U.S. 1103, 107 S. Ct. 1336, 94 L. Ed. 2d 186, 1987 U.S. LEXIS 915 (1987).
Under this section federal taxable income is the base for determining net earnings. Easco, Inc. v. Cardwell, 840 S.W.2d 913, 1992 Tenn. LEXIS 581 (Tenn. 1992).
Plaintiff's excise tax returns did not properly reflect net earnings of the unitary group, inasmuch as such earnings must exclude income and expenses of intercompany transactions. Wachovia Bank of N.Carolina, N.A. v. Johnson, 26 S.W.3d 621, 2000 Tenn. App. LEXIS 6 (Tenn. Ct. App. 2000), rehearing denied, Wachovia Bank of N.C. v. Johnson, — S.W.3d —, 2000 Tenn. App. LEXIS 93 (Tenn. Ct. App. Feb. 11, 2000).
6. —Actual Losses.
Former subdivision (b)(2)(C) of this section was intended to permit the carryover of actual economic losses, and thus all taxable income is included in determining whether such an actual loss exists for excise tax purposes. First Am. Nat'l Bank v. Olsen, 751 S.W.2d 417, 1987 Tenn. LEXIS 1076 (Tenn. 1987), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988).
7. —Depreciation.
Depreciation expense is not a direct credit against the federal income tax. South Cent. Bell Tel. Co. v. Celauro, 754 S.W.2d 605, 1988 Tenn. LEXIS 141 (Tenn. 1988).
Where taxpayer used accelerated depreciation on all assets eligible therefor in computing taxable income for both state and federal purposes, the add-back of 10 percent of depreciation required under this option created a differential of 10 percent between the basis of its assets for federal purposes and their basis for state excise tax purposes. In other words, the taxpayer insisted that its effective depreciation for Tennessee tax purposes was only 90 percent of that allowed in computing federal taxable income. South Cent. Bell Tel. Co. v. Celauro, 754 S.W.2d 605, 1988 Tenn. LEXIS 141 (Tenn. 1988).
The 10 percent of depreciation expense added back to income should also be added back to the depreciated basis of assets otherwise arrived at by the methods of depreciation accounting which were used. South Cent. Bell Tel. Co. v. Celauro, 754 S.W.2d 605, 1988 Tenn. LEXIS 141 (Tenn. 1988).
8. —Earnings from Tax Exempt Obligations.
The provisions of this section which require the taxpayer to include the earnings from tax exempt obligations of the state, of its political subdivisions, and of the United States, in the calculation of net income, do not impair the obligation of the contracts formed when state obligations are purchased. First Am. Nat'l Bank v. Olsen, 751 S.W.2d 417, 1987 Tenn. LEXIS 1076 (Tenn. 1987), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988).
9. Internal Revenue Code § 337.
Transaction taxable under Tennessee excise tax law. Cavalier Indus., Inc. v. Olsen, 706 S.W.2d 950, 1986 Tenn. LEXIS 657 (Tenn. 1986).
Collateral References.
Construction and application of state corporate income tax statutes allowing net operating loss deductions. 33 A.L.R.5th 509.
State corporate income taxation of foreign dividends. 17 A.L.R.6th 623.
67-4-2007. Tax imposed.
- All persons, except those having not-for-profit status, doing business in this state and having a substantial nexus in this state shall, without exception other than as provided in this part, pay to the commissioner, annually, an excise tax, in addition to all other taxes, equal to six and one-half percent (6½%) of the net earnings for the next preceding fiscal year for business done in this state during that fiscal year. Notwithstanding the fact that a person is not-for-profit, such person shall be subject to excise tax on all of its Tennessee net earnings to the extent such earnings constitute unrelated business taxable income as defined in § 512 of the Internal Revenue Code, codified in 26 U.S.C. § 512, or are otherwise subject to income taxes under Subtitle A of such code. Notwithstanding the fact that a person is otherwise exempted from the excise tax, such person shall be subject to excise tax on all of its Tennessee net earnings that are attributable to any activities unrelated to and outside the scope of the activities that give it an exemption status.
- Every such person, now or hereafter doing business in this state, shall, as a recompense for the protection of its local activities and as compensation for the benefits it receives from doing business in Tennessee, pay the tax imposed by this part. A person doing business in Tennessee without incorporating, domesticating, qualifying or otherwise registering in Tennessee, or doing business in Tennessee while its charter, domestication, qualification or other registration is forfeited, revoked or suspended, is not relieved from filing a return and paying the excise tax levied by this part for each tax year that such person does business in Tennessee.
- The tax imposed by this part shall apply to taxpayers whose business is being conducted by a receivership or trusteeship appointed by any court of competent jurisdiction, and shall continue to accrue until such time as the taxpayer has been actually and legally dissolved or withdrawn from this state.
- For purposes of the excise tax levied by this part, a business entity shall be classified as a corporation, partnership, or other type business entity, consistent with the way the entity is classified for federal income tax purposes, and subject to tax in accordance with this part. Notwithstanding any law to the contrary, entities that are disregarded for federal income tax purposes, except for limited liability companies whose single member is a corporation, shall not be disregarded for Tennessee excise tax purposes.
-
- Except for unitary groups of financial institutions, captive REIT affiliated groups, and business entities that have been required or permitted to file excise tax returns on a combined, consolidated or separate accounting basis under § 67-4-2014, each taxpayer shall be considered a separate and single business entity for Tennessee excise tax purposes and shall file its Tennessee excise tax return on a separate entity basis reflecting only its own business activities even though it may have filed a consolidated federal income tax return with other members of its unitary group. The federal taxable income computed on a separate entity basis excise tax return and subject to adjustments set forth in § 67-4-2006 shall be the same federal taxable income that would have been computed on the taxpayer's federal return if it had been filed on a separate entity basis rather than a consolidated basis.
-
- Financial institutions subject to tax in this state, that are members of a unitary group, shall file a combined return and pay tax based on the apportioned combined net earnings of the entire unitary group, as defined in § 67-4-2006(a)(3). The members of the group shall designate one (1) member that is subject to tax in this state to file the combined return. Except as provided in subdivision (e)(2)(B), each member subject to tax in this state shall be jointly and severally liable for the tax imposed by this part with regard to the unitary business.
-
Joint and several liability for the tax imposed by this part with regard to the unitary business shall not apply to any member that is a limited liability company, limited liability partnership, or limited partnership and meets the criteria set forth either in subdivision (e)(2)(B)(i) or (e)(2)(B)(ii):
-
(a) The member was formed and operated for the primary purpose of acquiring, from one (1) or more of its direct or indirect owners, notes, accounts receivable, installment sale contracts, or similar evidences of indebtedness; and
- (i) (a) The member was formed and operated for the primary purpose of acquiring, from one (1) or more of its direct or indirect owners, notes, accounts receivable, installment sale contracts, or similar evidences of indebtedness; and
- The member has pledged substantially all of its assets as security, directly or indirectly, for third party borrowings or securitized indebtedness acquired by third parties; or
- Substantially all of the member's assets consist of assets described in subdivision (e)(2)(B)(i)(a ), cash and cash equivalents, third party debt securities, or equity interests in entities satisfying the requirements of subdivision (e)(2)(B)(i).
-
(a) The member was formed and operated for the primary purpose of acquiring, from one (1) or more of its direct or indirect owners, notes, accounts receivable, installment sale contracts, or similar evidences of indebtedness; and
-
For the purposes of subdivision (e)(2)(B), the following shall apply:
- The requirements of subdivision (e)(2)(B)(i)(a ) shall be satisfied by the presence of language in the entity's organizational or other governing documents expressly stating that the purpose of the entity is to acquire, own, manage, protect, conserve and sell or otherwise dispose of assets described in subdivision (e)(2)(B)(i)(a ), cash and cash equivalents, and third party debt securities; to enter into and perform its obligations under its organizational documents, any documents relating to the acquisition of the assets or any third party borrowing or securitized indebtedness to which the entity is a party; and to engage in activities related or incidental to the purposes in this subdivision (e)(2)(C)(i) and necessary or appropriate for the purposes in this subdivision (e)(2)(C)(i).
- “Substantially all” as set forth in subdivision (e)(2)(B) means at least two-thirds (66.67%) of the entity's assets as determined by fair market value.
- Persons subject to tax in this state that are members of a captive REIT affiliated group shall file a combined return and pay tax based on the apportioned combined net earnings of the entire captive REIT affiliated group, as defined in § 67-4-2006(a). The members of the group shall designate one (1) member that is subject to tax in this state to file the combined return. Each member subject to tax in this state shall be jointly and severally liable for the tax imposed by this part with regard to the affiliated group.
-
-
Any entity or individual not otherwise subject to the tax imposed by this part shall pay to the commissioner an excise tax equal to six and one-half percent (6.5%) of the gain from the sale of any asset if any of the following criteria is met:
- The entity or individual received the asset through a distribution from a taxpayer within the twelve-month period immediately prior to the sale and the taxpayer making the asset distribution ceased to exist prior to the sale;
- The entity or individual received the asset through a merger, liquidation, or any similar transaction involving a taxpayer subject to the tax imposed by this part during the twelve-month period immediately prior to the sale;
- The entity or individual qualified for the exemption provided in § 67-4-2008(a)(9) during the twelve-month period immediately prior to the sale; or
- The asset was owned, during the twelve-month period immediately prior to the sale, by an affiliate subject to the tax imposed by this part.
- Tax on such gain shall be reported and paid in accordance with § 67-4-2015; provided, however, that such tax shall not apply to any person having not-for-profit status. In no event shall the gain from the sale of such asset be taxed twice as a result of the same transaction.
- Any entity or individual who fails to report and pay the tax as required by this subsection (f) shall be subject to a penalty as set forth in § 67-1-804(b)(3).
-
Any entity or individual not otherwise subject to the tax imposed by this part shall pay to the commissioner an excise tax equal to six and one-half percent (6.5%) of the gain from the sale of any asset if any of the following criteria is met:
Acts 1999, ch. 406, § 3; 2000, ch. 982, §§ 15-17; 2002, ch. 856, § 3c; 2004, ch. 592, § 6; 2005, ch. 499, § 77; 2006, ch. 1019, § 32; 2007, ch. 602, § 19; 2008, ch. 1106, § 37; 2010, ch. 1134, §§ 10, 11, 22; 2015, ch. 514, § 7.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998.
The Internal Revenue Code, referred to in this section, is compiled in Title 26 of the United States Code; with Subtitle A compiled in 26 U.S.C. §§ 1-2000.
Acts 2002, ch. 856, § 14(c) provided that the 2002 amendment by that act shall apply to tax years ending on or after July 15, 2002.
Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to that act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Acts 2004, ch. 592, § 16 provided that §§ 5 and 6 of the act shall apply to any asset sale occurring on or after July 1, 2004.
Acts 2008, ch. 1106, § 69 provided that § 37 of the act, which added (f)(1)(D), shall apply to transactions occurring on or after July 1, 2008.
Acts 2010, ch. 1134, § 66, provided that §§ 10 and 11 of the act, which amended subdivision (e)(1) and added subdivision (e)(3), shall apply to all tax years ending on or after July 1, 2010.
For the Preamble to the act concerning the need to modernize the sales and use taxes, franchise and excise taxes and business tax in the state to address the engagement in business within the state by out-of-state companies, see Acts 2015, ch. 514.
Acts 2015, ch. 514, § 31 provided that the act, which amended (a), shall apply to all tax years beginning on or after January 1, 2016.
Amendments. The 2015 amendment, effective January 1, 2016, substituted “doing business in this state and having a substantial nexus in this state” for “doing business in Tennessee” at the beginning of the first sentence of (a).
Effective Dates. Acts 2015, ch. 514, § 31. January 1, 2016.
Law Reviews.
Building a House of Cards: A Policy Evaluation of Tennessee's Tax Reform Act of 2002 with Emphasis on Fairness to the Poor (Robert F. Parsley), 70 Tenn. L. Rev. 1177 (2003).
State Taxation on Corporate Income from a Multistate Business (Paul J. Hartman), 13 Vand. L. Rev. 21 (1959).
Tax Incentives for the Biotechnology Industry: Should Tennessee Offer Sales Tax Exemptions and Net Operating Loss Extensions? (Julie Tennyson), 70 Tenn. L. Rev. 321 (2003).
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
To Pay or Not to Pay: A Primer on the Federal Unrelated Business Income Tax (UBIT) for Non-tax Lawyers (Sean P. Scally), 37 No. 10 Tenn. B.J. 12 (2001).
Attorney General Opinions. Constitutionality, application and construction of provisions of proposed SB 603 [HB644/SB603 enacted as 2015 Acts ch. 514]. OAG 15-37, 2015 Tenn. AG LEXIS 38 (4/22/15).
Cited: Hilloak Realty Co. v. Chumley, 233 S.W.3d 816, 2007 Tenn. App. LEXIS 170 (Tenn. Ct. App. Mar. 29, 2007).
NOTES TO DECISIONS
0.5. Constitutionality.
Trial court properly granted summary judgment to the Commissioner of Revenue in an action filed by a parent LLC and its two subsidiaries challenging franchise and excise (F&E) taxes and rejected their constitutional challenge because, inter alia, the settlement proceeds represented lost revenues related to the parent's patents, the statute had a rational basis since it captured business earnings that were subject to the F&E tax that might otherwise go un- or under-reported, the settled action was akin to a business transaction in which the parent was compensated for lost business earnings, the parent failed to establish that it was entitled to apportionment, and the entities were warned against filing of a consolidated tax return. Emerachem Power, LLC v. Gerregano, — S.W.3d —, 2020 Tenn. App. LEXIS 256 (Tenn. Ct. App. June 1, 2020).
1. Calculation of Tax.
Under former T.C.A. § 67-4-806 (now T.C.A. § 67-4-2007), the company, as a corporation doing business in Tennessee, was required to pay an excise tax and the amount assessed would be determined by the amount of income reported by the company for federal income tax purposes, I.R.C. § 338(h)(10). Newell Window Furnishing, Inc. v. Johnson, 311 S.W.3d 441, 2008 Tenn. App. LEXIS 750 (Tenn. Ct. App. Dec. 9, 2008).
Variance imposed against the taxpayer under T.C.A. §§ 67-4-2014 and 67-4-2112 was appropriate because the application of the cost of performance formula did not fairly represent the taxpayer's business in Tennessee. The unusual fact situation was that all of the costs of production occurred outside of Tennessee, but the revenue derived from the end product only occurred when the product was distributed in Tennessee, which only then obligated the purchasers to pay the revenue proceeds to the producer for the sale of the advertising. Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009), appeal denied, BellSouth Adver. & Publ. Corp. v. Chumley, — S.W.3d —, 2010 Tenn. LEXIS 343 (Tenn. Mar. 1, 2010).
2. Excise Tax Properly Imposed.
Trial court did not err in ruling that a lease required a tenant to pay an assignee's excise tax because the lease provided that the tenant had to pay all taxes incurred pursuant to covenants and restrictions affecting the premises; the taxed earnings originated from the assignee's business activity of entering into a commercial lease, and such a tax arose from and/or was related to the rented premises and fell within the parameters of the net lease provisions. J-Star Holdings, LLC v. Pantry, Inc., — S.W.3d —, 2013 Tenn. App. LEXIS 6 (Tenn. Ct. App. Jan. 2, 2013).
3. Failure to Pay Excise Tax.
Excise taxes are imposed on the privilege of doing business in Tennessee, and they are not charges required to maintain an entity's corporate existence, such as annual reporting or filing a charter; the fact that failure to pay the excise tax may result in revocation of a company's charter under T.C.A. § 67-4-2016(c), does not make the excise tax a fee in connection with maintaining corporate existence because a company's obligation to pay excise taxes remains despite revocation of its charter or registration, T.C.A. § 67-4-2007(b). J-Star Holdings, LLC v. Pantry, Inc., — S.W.3d —, 2013 Tenn. App. LEXIS 6 (Tenn. Ct. App. Jan. 2, 2013).
Decisions Under Prior Law
1. In General.
Excise tax is not an income tax but a tax on the privilege of doing business in corporate form in the state. The taxes are levied to compensate the state for the protection of the taxpayer's local activities and as compensation for the benefits received from doing business in Tennessee. Cook Export Corp. v. King, 652 S.W.2d 896, 1983 Tenn. LEXIS 780 (Tenn. 1983).
The tax imposed in this section is upon the privilege of engaging in business in corporate form in Tennessee, and not merely on the doing of business. Tennessee Growers, Inc. v. King, 682 S.W.2d 203, 1984 Tenn. LEXIS 896 (Tenn. 1984).
Corporate excise tax is a nonproperty tax for the purposes of federal statute permitting federal obligations to be included in base for certain state taxes; it is imposed not on the income itself, but on the privilege of doing business in Tennessee in the corporate form. First Am. Nat'l Bank v. Olsen, 751 S.W.2d 417, 1987 Tenn. LEXIS 1076 (Tenn. 1987), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988).
The Tennessee Franchise Tax is imposed on a different tax base than the Corporate Excise Tax, but both expressly provide that the taxes are to be paid “in addition to all other taxes” (§ 67-4-806 [repealed] and former § 67-4-903 [see now this section]). The general assembly clearly intends that these taxes be taken in tandem and construed together as one scheme of taxation. First Am. Nat'l Bank v. Olsen, 751 S.W.2d 417, 1987 Tenn. LEXIS 1076 (Tenn. 1987), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988).
2. Constitutionality.
Former chapter, without defining the term “net earnings,” was not void as against the contention that it delegated to the commissioner of revenue the legislative power of determining the measure of the tax, since the term “net earnings” must be given its usual and ordinary meaning. Bank of Commerce & Trust Co. v. Senter, 149 Tenn. 569, 260 S.W. 144, 1923 Tenn. LEXIS 115 (1923).
A tax statute is not violative of the equal protection clause of United States Const., amend. 14, if the classification is based on a reason, even though such reason be a poor one. Bank of Commerce & Trust Co. v. Senter, 149 Tenn. 569, 260 S.W. 144, 1923 Tenn. LEXIS 115 (1923).
Former chapter was not violative of Tenn. Const., art. II, § 28, requiring equality and uniformity in taxation on property, for such “excise tax” was not a direct tax on property, but a privilege tax permitted by the constitutional provision. Bank of Commerce & Trust Co. v. Senter, 149 Tenn. 569, 260 S.W. 144, 1923 Tenn. LEXIS 115 (1923); General Sec. Co. v. Williams, 161 Tenn. 50, 29 S.W.2d 662, 1929 Tenn. LEXIS 34 (1930).
Former chapter was not unconstitutional under the contention that it arbitrarily taxed corporations to the exclusion of partnerships and individuals in competing activities. Bank of Commerce & Trust Co. v. Senter, 149 Tenn. 569, 260 S.W. 144, 1923 Tenn. LEXIS 115 (1923).
Former chapter, imposing an excise tax on the net earnings “arising from business done wholly within the state, excluding earnings from interstate commerce” was not void as the classification was not arbitrary and unreasonable, because the earnings derived from interstate commerce were not segregated; nor was it void because arbitrarily favorable to insurance companies and banks, since the state for the purpose of taxation may so classify. Additionally it was not void as discriminating in favor of those corporations which had not been in existence for a fiscal year and those that earned no profits. Bank of Commerce & Trust Co. v. Senter, 149 Tenn. 569, 260 S.W. 144, 1923 Tenn. LEXIS 115 (1923).
The tax was not invalid because income from tax exempt securities was included. General Sec. Co. v. Williams, 161 Tenn. 50, 29 S.W.2d 662, 1929 Tenn. LEXIS 34 (1930).
Provisions of former law relating to taxation of taxable entities not domesticating or qualifying to do business in Tennessee did not violate the commerce clause of United States Const., art. 1, § 8, when applied to corporations engaged in interstate commerce. Texas Gas Transmission Corp. v. Atkins, 205 Tenn. 495, 327 S.W.2d 305, 1959 Tenn. LEXIS 389 (1959).
Former section did not impose a direct tax on interstate commerce nor does it result in discrimination or multiple taxation. Texas Gas Transmission Corp. v. Atkins, 205 Tenn. 495, 327 S.W.2d 305, 1959 Tenn. LEXIS 389 (1959).
Former chapter in providing for use of apportionment formula as to corporations doing business in the state and elsewhere while taxing corporation only doing business in the state on basis of all of its earnings did not discriminate against interstate commerce. John Ownbey Co. v. Butler, 211 Tenn. 366, 365 S.W.2d 33, 1963 Tenn. LEXIS 356 (1963).
Imposition of excise and franchise taxes provided by former chapters upon foreign oil pipeline company which maintained pipeline across state, maintained right-of-way and other valuable properties in the state in its corporate capacity and exercised its corporate franchise within the state did not amount to a violation of the due process and commerce clauses of the U.S. Constitution. Mid-Valley Pipeline Co. v. King, 221 Tenn. 724, 431 S.W.2d 277, 1968 Tenn. LEXIS 532 (1968), appeal dismissed, 393 U.S. 321, 89 S. Ct. 556, 21 L. Ed. 2d 517, 1969 U.S. LEXIS 2869 (1969), appeal dismissed, Mid-Valley Pipeline Co. v. King, 393 U.S. 321, 89 S. Ct. 556, 21 L. Ed. 2d 517, 1969 U.S. LEXIS 2869 (1969).
Constitutionality of assessing corporate franchise and excise taxes on “commissions” paid to corporation, a domestic international sales corporation (DISC) engaged in the import-export trade, by its parent corporation, upheld. Cook Export Corp. v. King, 652 S.W.2d 896, 1983 Tenn. LEXIS 780 (Tenn. 1983).
3. —Preemption.
Federal domestic international sales corporation (DISC) provisions do not preempt state's franchise and excise tax provisions. Cook Export Corp. v. King, 652 S.W.2d 896, 1983 Tenn. LEXIS 780 (Tenn. 1983).
4. Construction.
A corporation is not liable on income derived from royalties on patent rights. Quicksafe Mfg. Corp. v. Graham, 161 Tenn. 46, 29 S.W.2d 253, 1929 Tenn. LEXIS 33 (1929).
Phrase “net earnings” is used in its ordinary sense, that is, the balance left after deducting necessary and legitimate expenses from total earnings. National Life & Accident Ins. Co. v. Dempster, 168 Tenn. 446, 79 S.W.2d 564, 1934 Tenn. LEXIS 77 (1934); Southern Coal Co. v. McCanless, 183 Tenn. 457, 192 S.W.2d 1003, 1946 Tenn. LEXIS 225 (1946).
Legislature intended by imposition of tax to include all net earnings regardless of source except that derived from interstate commerce. National Life & Accident Ins. Co. v. Dempster, 168 Tenn. 446, 79 S.W.2d 564, 1934 Tenn. LEXIS 77 (1934).
The term “local activities” as added by Acts 1955, ch. 185, was not synonymous with the term “intrastate commerce.” Texas Gas Transmission Corp. v. Atkins, 205 Tenn. 495, 327 S.W.2d 305, 1959 Tenn. LEXIS 389 (1959).
The term “net earnings,” not being defined by the statute, must be given its usual and ordinary meaning of what is left after earnings after deducting necessary and legitimate items of expense incident to corporate business. Woods Lumber Co. v. MacFarland, 209 Tenn. 667, 355 S.W.2d 448, 1962 Tenn. LEXIS 401 (1962); Genesco, Inc. v. Butler, 214 Tenn. 87, 377 S.W.2d 933, 1964 Tenn. LEXIS 452 (1964); R.C. Owen Co. v. Butler, 215 Tenn. 599, 387 S.W.2d 830, 1965 Tenn. LEXIS 670 (Tenn. Mar. 4, 1965).
5. Application of Tax.
Excise tax applies to building and loan associations. Home Bldg. & Loan Ass'n v. Graham, 155 Tenn. 524, 296 S.W. 10, 1926 Tenn. LEXIS 76 (1926).
An excise tax may properly be assessed against a domestic corporation organized to carry on a storage, warehousing and freighting business, although it has leased all its corporate property to another corporation for a rental which produces a net income. Memphis Dock & Forwarding Co. v. Fort, 170 Tenn. 109, 92 S.W.2d 408, 1935 Tenn. LEXIS 113 (1935).
Mere fact that corporation was engaged in interstate commerce rather than intrastate commerce was not determinative as to whether or not such corporation was subject to taxation under the former chapter. Texas Gas Transmission Corp. v. Atkins, 205 Tenn. 495, 327 S.W.2d 305, 1959 Tenn. LEXIS 389 (1959).
Former section relating to taxation of taxable entities not domesticating or qualifying to do business in Tennessee applied not only to corporations doing an intrastate business but also to corporations doing an interstate business who were engaged in local activities within the meaning of the former section. Texas Gas Transmission Corp. v. Atkins, 205 Tenn. 495, 327 S.W.2d 305, 1959 Tenn. LEXIS 389 (1959).
Former section applied to all corporations, cooperatives, joint-stock associations and business trusts organized under the laws of Tennessee or under the laws of any other state or country and doing business in Tennessee. Woods Lumber Co. v. MacFarland, 209 Tenn. 667, 355 S.W.2d 448, 1962 Tenn. LEXIS 401 (1962).
Local incidents or activities may be a basis of a franchise or excise tax measured by a properly apportioned net income of a foreign corporation engaged solely in interstate commerce provided the local activities can be separated from interstate activities. Mid-Valley Pipeline Co. v. King, 221 Tenn. 724, 431 S.W.2d 277, 1968 Tenn. LEXIS 532 (1968), appeal dismissed, 393 U.S. 321, 89 S. Ct. 556, 21 L. Ed. 2d 517, 1969 U.S. LEXIS 2869 (1969), appeal dismissed, Mid-Valley Pipeline Co. v. King, 393 U.S. 321, 89 S. Ct. 556, 21 L. Ed. 2d 517, 1969 U.S. LEXIS 2869 (1969).
Where the assets from the sale of a corporation were transferred to the stockholders on January 27, 1969, but the “Statement of Intent to Dissolve” was filed November 19, 1969, and “Articles of Dissolution” were filed December 26, 1969, with the secretary of state, which transactions were in compliance with the federal income tax law but not the state corporate excise tax law, which was due under the former section upon consummation of the sale as this was gain resulting to the corporation and such tax was properly collected from the plaintiff. Tidwell v. Berke, 532 S.W.2d 254, 1975 Tenn. LEXIS 611 (Tenn. 1975).
6. Calculation of Tax.
Exemption of government bonds from taxation does not carry with it the right to exclude proceeds from same in determining corporate tax on net earnings. National Life & Accident Ins. Co. v. Dempster, 168 Tenn. 446, 79 S.W.2d 564, 1934 Tenn. LEXIS 77 (1934).
Calculation of net earnings can only be made if expenses and earnings are fixed and definite, hence taxpayer is not entitled to any credit based on contingency. Southern Coal Co. v. McCanless, 183 Tenn. 457, 192 S.W.2d 1003, 1946 Tenn. LEXIS 225 (1946).
Source from which earnings are derived is not considered in determining net earnings. Southern Coach Lines v. McCanless, 191 Tenn. 634, 235 S.W.2d 804, 1951 Tenn. LEXIS 367 (1951).
All of the net earnings of a corporation without regard to the source from which the same is derived constitute the measure of the excise tax. Woods Lumber Co. v. MacFarland, 209 Tenn. 667, 355 S.W.2d 448, 1962 Tenn. LEXIS 401 (1962).
All corporations, domestic and foreign, organized for profit and engaged in business in Tennessee and elsewhere are required to allocate to Tennessee for excise tax purposes a fraction of their total net earnings from all sources, such fraction to be arrived at in accordance with the statutory formula applicable to the class in which the corporation may fall. Woods Lumber Co. v. MacFarland, 209 Tenn. 667, 355 S.W.2d 448, 1962 Tenn. LEXIS 401 (1962).
Domestic corporations whose manufacturing operations were performed in Tennessee and which accepted orders in Tennessee from out-of-state purchasers and for shipment out of the state from points in Tennessee were doing business in Tennessee under former section and were not entitled to apportion their earnings on the theory that they were doing business in Tennessee and elsewhere within the meaning of former law. John Ownbey Co. v. Butler, 211 Tenn. 366, 365 S.W.2d 33, 1963 Tenn. LEXIS 356 (1963).
State would not be estopped from collection of excise tax against corporations as doing business within the state even though it had previously permitted such corporations to apportion their earnings on doing business in the state and elsewhere and had previously misconstrued the law in this regard. John Ownbey Co. v. Butler, 211 Tenn. 366, 365 S.W.2d 33, 1963 Tenn. LEXIS 356 (1963).
Increase in value of property from date of its acquisition to date it was contributed to employee's trust fund by corporate taxpayer did not constitute net earnings for the purpose of taxation under former chapter. Genesco, Inc. v. Butler, 214 Tenn. 87, 377 S.W.2d 933, 1964 Tenn. LEXIS 452 (1964).
A Tennessee manufacturing corporation is required to pay excise tax to the state based on its entire net earnings without apportionment when the only activities the corporation has outside the state consist of the sale of its products through a subsidiary corporation owned and controlled by the Tennessee corporation when there are no taxes paid by the Tennessee corporation to any other state. Roane Hosiery, Inc. v. King, 214 Tenn. 441, 381 S.W.2d 265, 1964 Tenn. LEXIS 492 (Tenn. July 15, 1964).
Commissioner did not abuse his discretion in ruling that interest paid on securities denominated as debentures could not be deducted by corporation in determining net earnings where they were issued to partners in former partnership in exchange for their interest therein and made secondary to obligations incurred by the corporation and the holders acquired certain voting rights not ordinarily characteristic of debentures. R.C. Owen Co. v. Butler, 215 Tenn. 599, 387 S.W.2d 830, 1965 Tenn. LEXIS 670 (Tenn. Mar. 4, 1965).
7. Nature of Tax.
The tax levied by the former section was a privilege tax upon domestic and foreign corporations organized for profit and carrying on business in the state. Quicksafe Mfg. Corp. v. Graham, 161 Tenn. 46, 29 S.W.2d 253, 1929 Tenn. LEXIS 33 (1929).
Tax imposed under former section was privilege tax and not a direct property tax. National Life & Accident Ins. Co. v. Dempster, 168 Tenn. 446, 79 S.W.2d 564, 1934 Tenn. LEXIS 77 (1934).
An excise tax is a tax upon the privilege of doing business as a corporation and exercising the corporate powers for the purpose of producing a profit, the source of the profit and the character of the business carried on in the corporate name being immaterial, since the tax is measured by the net earnings resulting from whatever business may be done by the corporation in the exercise of power conferred upon it by its charter. Memphis Dock & Forwarding Co. v. Fort, 170 Tenn. 109, 92 S.W.2d 408, 1935 Tenn. LEXIS 113 (1935).
Imposition of excise and franchise tax on foreign corporation doing its entire business in Tennessee represents a single coordinate scheme of taxation. American Bemberg Corp. v. Carson, 188 Tenn. 263, 219 S.W.2d 169, 1949 Tenn. LEXIS 339 (1949).
The tax is neither a property tax nor an income tax but is a tax based on the privilege of doing business in corporate form in Tennessee. Woods Lumber Co. v. MacFarland, 209 Tenn. 667, 355 S.W.2d 448, 1962 Tenn. LEXIS 401 (1962).
The tax is imposed upon the privilege of doing business in the state and is not laid upon corporate earnings in the sense that an income tax is so laid but is measured entirely by the net income of the corporation. Roane Hosiery, Inc. v. King, 214 Tenn. 441, 381 S.W.2d 265, 1964 Tenn. LEXIS 492 (Tenn. July 15, 1964).
Foreign corporations doing business in this state without domesticating or qualifying to do business in Tennessee were required, as a recompense for the protection of their local activities and as compensation for the benefits they receive from doing business in Tennessee, to pay the excise and franchise taxes provided by former chapters. Mid-Valley Pipeline Co. v. King, 221 Tenn. 724, 431 S.W.2d 277, 1968 Tenn. LEXIS 532 (1968), appeal dismissed, 393 U.S. 321, 89 S. Ct. 556, 21 L. Ed. 2d 517, 1969 U.S. LEXIS 2869 (1969), appeal dismissed, Mid-Valley Pipeline Co. v. King, 393 U.S. 321, 89 S. Ct. 556, 21 L. Ed. 2d 517, 1969 U.S. LEXIS 2869 (1969).
The excise and franchise taxes provided by former chapters were upon the privilege of engaging in business in corporate form in Tennessee and not merely upon the doing of business. Mid-Valley Pipeline Co. v. King, 221 Tenn. 724, 431 S.W.2d 277, 1968 Tenn. LEXIS 532 (1968), appeal dismissed, 393 U.S. 321, 89 S. Ct. 556, 21 L. Ed. 2d 517, 1969 U.S. LEXIS 2869 (1969), appealed dismissed, Mid-Valley Pipeline Co. v. King, 393 U.S. 321, 89 S. Ct. 556, 21 L. Ed. 2d 517, 1969 U.S. LEXIS 2869 (1969).
8. Net Earnings.
Where real property to which a corporation held legal title was equitably owned by the sole stockholder who had purchased the stock for the purpose of liquidating the corporation, the proceeds of a sale of such property were the property of the equitable owner, no net earnings accrued to the corporation as a result of the sale, and the proceeds were not subject to the excise tax, although the corporation did not surrender its charter until almost six months later. Dattell v. Tidwell, 512 S.W.2d 550, 1974 Tenn. LEXIS 485 (Tenn. 1974).
9. Export Corporations.
The “commissions” paid to export corporation, a domestic international sales corporation (DISC), by parent corporation resulted in export corporation's tangible realization of monetary earnings to be included in its net earnings, subject to franchise and excise taxation. Cook Export Corp. v. King, 652 S.W.2d 896, 1983 Tenn. LEXIS 780 (Tenn. 1983).
67-4-2008. Exemptions.
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There shall be exempt from the payment of the excise tax levied under this part the following:
- Any corporation organized under the laws of Tennessee whose sole expressed corporate purpose is for the furthering of industrial development in communities throughout the state, and doing matters related thereto, and whose stockholders receive no income other than interest or dividends on money invested in such corporation for constructing industrial buildings and whose officers receive no compensation;
- Corporations organized for the purpose of erecting, owning or operating a common meeting place for more than one (1) Masonic lodge, more than one (1) Lodge of Odd Fellows, or similar lodges, and which corporations could obtain general welfare charters, and in which corporations all the stock is owned by lodges participating in the common temple or meeting place, regardless of the type of charter held by such operating corporations, except on income received by such corporations as rentals for use for commercial purposes;
- Any regulated investment company or investment fund organized as a unit investment trust taxable as a grantor trust under 26 U.S.C. §§ 671-677; provided, that not less than seventy-five percent (75%) of the value of the investments of such regulated investment company or unit investment trust shall be in any combination of bonds of the United States, Tennessee, or any county or any municipality or political subdivision of the state, including any agency, board, authority or commission of the state or its subdivisions;
- Federal credit unions, credit unions organized under the laws of other taxing jurisdictions, production credit associations organized under 12 U.S.C. § 2071 et seq., or merged associations under 12 U.S.C. § 2279c-1, production credit associations organized under title 56, chapter 4, part 4, or investment companies organized under title 56, chapter 4, part 3;
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Venture capital funds; provided, that, for purposes of this part, a venture capital fund is a limited liability company, limited liability partnership, limited partnership, or business trust, formed and operated for the exclusive purpose of buying, holding, and/or selling securities, including debt securities, primarily in non-publicly traded companies on its own behalf and not as a broker, and the capital of which fund is primarily derived from investments by entities and/or individuals that are not affiliated with the fund or investments by one (1) or more affiliates, if the affiliates also qualify as venture capital funds under this subdivision (a)(5). For purposes of this subdivision (a)(5), the following provisions shall apply:
- “Affiliated” means entities that are affiliates or part of an affiliated group;
- “Non-publicly traded companies” means any business entity that is not a publicly traded company;
- “Primarily” means over fifty percent (50%); and
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“Publicly traded company” is any company that is traded on:
- A national securities exchange registered under § 6 of the Securities Exchange Act of 1934 or exempted from registration under such act by 15 U.S.C. § 78f because of the limited volume of transactions;
- A foreign securities exchange operating under principles analogous to a national securities exchange;
- A regional or local exchange;
- An interdealer quotation system that regularly disseminates firm buy or sell quotations by identified brokers or dealers by electronic means or otherwise; or
- On a secondary market or the substantial equivalent of a secondary market, if taking into account all of the facts and circumstances, the owners are readily able to buy, sell or exchange their ownership interest in a manner that is comparable, economically, to trading on an exchange;
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Limited liability companies, limited partnerships, and limited liability partnerships, if all of the following criteria are met:
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At least sixty-six and sixty-seven hundredths percent (66.67%) of the activity of the entity is either farming or the holding of one (1) or more personal residences where one (1) or more of the members or partners reside. For purposes of this subdivision (a)(6)(A), the following provisions shall apply:
- “Farming” is the growing of crops, nursery products, timber or fibers, such as cotton, for human or animal use or consumption; the keeping of horses, cattle, sheep, goats, chickens or other animals for human or animal use or consumption; the keeping of animals that produce products, such as milk, eggs, wool or hides for human or animal use or consumption; or the leasing of the land to be used for the purposes described in this subdivision (a)(6)(A);
- For this purpose, the activity of the entity shall be considered farming only if at least sixty-six and sixty-seven hundredths percent (66.67%) of its income, including capital gains from the sale of land and other assets used in farming, is derived from farming and at least sixty-six and sixty-seven hundredths percent (66.67%) of its assets, valued at original cost to the entity, are used by the owner or by the owner's lessee or sharecropper for farming. In the event that an asset's original cost to the entity cannot be determined, or there is no original cost to the entity, for purposes of this subdivision (a)(6)(A), the property shall be valued at its fair market value at the time of acquisition by the entity;
- A “personal residence” or “personal residences,” as used in subdivision (a)(6)(A), includes acreage contiguous to the dwelling;
- Any entity that qualifies for franchise tax exemption under this subdivision (a)(6), because of farming activity or because the property has been used as a personal residence for at least five (5) years, shall remain exempt for one (1) year from the end of the calendar year in which it ceases to qualify for the exemption, but only with regard to property and transactions related to property that it held at the time that it last qualified for the exemption. Net worth resulting from sales and other transactions involving real, tangible, or intangible property acquired by the entity after it ceased to qualify for the exemption (after-acquired property) shall be subject to the franchise tax. After-acquired property shall be included in the entity's franchise tax minimum measure. If the entity computes an apportionment formula, any after-acquired property and any compensation or gross receipts related to such property shall be included in the appropriate factors of such formula; and
- In order to qualify as a personal residence, the dwelling unit must be occupied for personal use by partners or members of the entity for more days than it is rented to others who are not partners or members of the entity. For purposes of this subdivision (a)(6), Internal Revenue Code § 280A(d)(2), codified in 26 U.S.C. § 280A(d)(2), shall be used to define ‘‘personal use”;
- At least ninety-five percent (95%) of the voting rights, capital interest or profits of the entity are owned either by natural persons who are relatives of one another or by trusts for their benefit. For this purpose, natural persons shall be considered relatives, if, by blood or adoption, they are descended from a common ancestor and their relationship with each other is that of a first cousin or closer than that of a first cousin, or if they are spouses of one another;
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At least sixty-six and sixty-seven hundredths percent (66.67%) of the activity of the entity is either farming or the holding of one (1) or more personal residences where one (1) or more of the members or partners reside. For purposes of this subdivision (a)(6)(A), the following provisions shall apply:
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Limited liability companies, limited liability partnerships, limited partnerships, or business trusts existing on May 1, 1999, on which date and at all times thereafter met all of the following criteria:
- Were at least ninety-eight percent (98%) owned by corporate members of an affiliated group as defined in 26 U.S.C. § 1504(a);
- Were formed and operated for the exclusive purpose of acquiring notes from members of such affiliated group, accounts receivable, installment sale contracts, and similar evidence of indebtedness obtained in the ordinary course of business by one (1) or more members of such affiliated group;
- The assets of which directly or indirectly serve as security for third party borrowings or securitized indebtedness acquired by third parties;
- At least eighty percent (80%) of the income therefrom is included in the income of a corporation doing business in Tennessee; and
- Such income is subject to the applicable allocation and apportionment rules as found in this part;
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Any limited partnership or limited liability company organized exclusively for the purpose of providing affordable housing that meets the following criteria:
- The entity must have received an allocation of low-income housing tax credits pursuant to § 42 of the Internal Revenue Code of 1986, codified in 26 U.S.C. § 42; and
- An “extended low-income housing commitment” as defined in § 42(h)(6)(B) of the Internal Revenue Code of 1986, codified in 26 U.S.C. § 42(h)(6)(B), must be in effect with respect to each residential building owned by the entity for the period covered by the return;
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Obligated member entity; provided, that:
- For tax years beginning before January 2, 2000, the appropriate documentation, as required in subsections (b)-(d), shall be filed on or before September 15, 2000, with the secretary of state;
- For tax years beginning on or after July 2, 2004, but before August 1, 2005, the appropriate documentation, as required in subsections (b)-(d), shall be filed on or before August 1, 2005, with the secretary of state;
- For tax years beginning on or after July 1, 2008, but before October 1, 2009, the appropriate documentation, as required in subsections (b)-(d), shall be filed on or before October 1, 2009, with the secretary of state. For all other tax years, the appropriate documentation, as required in subsections (b)-(d), shall be filed on or before the first day of the taxable year for which a return is filed;
- To the extent that any obligated member, or any owner of an obligated member, provides limited liability protection, the obligated member entity shall owe the tax otherwise imposed by this part, and by part 21 of this chapter, on the portion of income and equity attributable to such obligated member. For purposes of this subdivision (a)(9)(D), ownership includes any form of ownership, whether in whole, in part, direct or indirect. Also, for purposes of this subdivision (a)(9)(D), estates, trusts that are not taxpayers, not-for-profit entities, or other entities exempt under this section, shall not be deemed to provide limited liability protection;
- If an additional obligated member is admitted to the obligated member entity, such obligated member must file the appropriate documentation with the secretary of state within sixty (60) days of such member's admission; and
- For purposes of this subdivision (a)(9), obligated members may be fully liable, even though one (1) or more persons or individuals dealing with the obligated member entity have, by contract, agreed to limit their claims against one (1) or more obligated members or against the obligated member entity;
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An entity that satisfies both of the following requirements:
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It:
- Is classified as a partnership or trust in accordance with 26 U.S.C. § 7701, and the federal regulations and rulings promulgated under 26 U.S.C. § 7701;
- Has elected to be treated as a real estate mortgage investment conduit (REMIC) under 26 U.S.C. § 860D;
- Has elected to be treated as a financial asset securitization investment trust (FASIT) under 26 U.S.C. § 860L; or
- Is a business trust, as defined in § 48-101-202(a), or is classified as a trust under the laws of the state in which it is created and is disregarded for federal income tax under 26 U.S.C. § 7701, and the federal regulations and rulings promulgated under 26 U.S.C. § 7701, when the commercial domicile of the trustee is not in this state; and
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- The sole purpose of the entity, except for foreclosures and dispositions of the assets of foreclosures, is the asset-backed securitization of debt obligations, such as first or second mortgages, including home equity loans, trade receivables, whether an open account or evidenced by a note or installment or conditional sales contract, obligations substituted for trade receivables, credit card receivables, personal property leases treated as debt for purposes of the Internal Revenue Code of 1986, home equity loans, automobile loans or similar debt obligations;
- “Trade receivables” as used in subdivision (a)(10)(B)(i) means obligations arising from the sale of inventory in the ordinary course of business;
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It:
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Any family-owned noncorporate entity, where substantially all the activity of the entity is either:
- The production of passive investment income; or
- The combination of the production of passive investment income and farming as defined in (a)(6)(A)(i);
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For purposes of this subdivision (a)(11):
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“Family-owned” means that at least ninety-five percent (95%) of the ownership units of the entity are owned by members of the family, which means, with respect to an individual, only:
- An ancestor of such individual;
- The spouse or former spouse of such individual;
- A lineal descendent of such individual, of such individual's spouse or former spouse, or of a parent of such individual;
- The spouse or former spouse of any lineal descendent described in subdivision (a)(11)(B)(i)(c) ; or
- The estate or trust of a deceased individual who, while living, was as described in any of subdivisions (a)(11)(B)(i)(a)-(d) ;
- A legally adopted child of an individual shall be treated as the child of such individual by blood;
- “Passive investment income” means gross receipts derived from royalties, rents from residential property or farm property, dividends, interest, annuities, and sales or exchanges of stock or securities to the extent of any gains therefrom;
- “Farm property” and “residential property” have the same meaning as in § 67-5-501, except that “residential property” includes any property leased or rented for residential purposes that includes not more than four (4) residential units and “farm property” does not include acreage used for recreational purposes by clubs including golf course playing hole improvements;
- Ownership units that are held in trust shall not be treated as owned by members of the family, unless the ownership units are property of a trust described in subdivision (a)(11)(B)(i)(e );
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“Family-owned” means that at least ninety-five percent (95%) of the ownership units of the entity are owned by members of the family, which means, with respect to an individual, only:
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Any family-owned noncorporate entity, where substantially all the activity of the entity is either:
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Diversified investing funds; provided, that, for purposes of this part, a diversified investing fund is a limited liability company, limited liability partnership, limited partnership or business trust that meets all of the following requirements:
- No less than ninety percent (90%) of the diversified investing fund's cost of its total assets consist of qualifying investment securities, deposits at banks or other financial institutions, and office space and equipment reasonably necessary to carry on its activities as a diversified investing fund;
- No less than ninety percent (90%) of its gross income consists of interest, dividends, and gains from the sale or exchange of qualifying investment securities; and
- Is formed and operated for the primary purpose of buying, holding, or selling qualifying investment securities, on its own behalf and not as a broker, and the capital of which fund is primarily derived from investments by entities or individuals who are not affiliated with the fund;
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For purposes of this subdivision (a)(12), the following provisions shall apply:
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“Affiliated” means entities that are affiliates or part of an affiliated group. As applied to individuals, “affiliates” means any natural person who, directly or indirectly, has more than fifty percent (50%) ownership interest in the fund. For purposes of this subdivision (a)(12)(B)(i), indirect ownership by an individual includes ownership by any family member of the individual, which means, with respect to the individual:
- An ancestor of the individual;
- The spouse or former spouse of the individual;
- A lineal descendant of the individual, of the individual's spouse or former spouse or of a parent of the individual;
- The spouse or former spouse of any lineal descendant described in subdivision (a)(12)(B)(i)(c ); or
- The estate or trust of a deceased individual who, while living, was as described in any of the subdivisions (a)(12)(B)(i)(a )-(d );
- “Primary” and “primarily”, over fifty percent (50%); and
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“Qualifying investment securities” include all of the following:
- Common stock, including preferred, or debt securities convertible into common stock, and preferred stock;
- Bonds, debentures, and other debt securities;
- Foreign and domestic currency deposits or equivalents and securities convertible into foreign securities;
- Mortgage or asset-backed securities secured by federal, state, or local governmental agencies;
- Repurchase agreements and loan participations;
- Foreign currency exchange contracts and forward and futures contracts on foreign currencies;
- Stock and bond index securities and futures contracts, and other similar financial securities and futures contracts on those securities;
- Options for the purchase or sale of any of the securities, currencies, contracts, or financial instruments described in subdivisions (a)(12)(B)(iii)(a )-(g ), inclusive;
- Warrants to purchase stock or an ownership interest in an entity;
- An ownership interest in a limited liability company, limited liability partnership, limited partnership, or business trust; and
- An ownership interest in a general partnership that would otherwise qualify as a diversified investing partnership under this subdivision (a)(12) were it not for its legal status as a general partnership;
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“Affiliated” means entities that are affiliates or part of an affiliated group. As applied to individuals, “affiliates” means any natural person who, directly or indirectly, has more than fifty percent (50%) ownership interest in the fund. For purposes of this subdivision (a)(12)(B)(i), indirect ownership by an individual includes ownership by any family member of the individual, which means, with respect to the individual:
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Diversified investing funds; provided, that, for purposes of this part, a diversified investing fund is a limited liability company, limited liability partnership, limited partnership or business trust that meets all of the following requirements:
- Tennessee historic property preservation or rehabilitation entities;
- Insurance companies, as defined in § 56-1-102;
- Any qualified TNInvestco, as defined in § 4-28-102, that has received an allocation of investment tax credits under the Tennessee Small Business Investment Company Credit Act, compiled in title 4, chapter 28, and continues to participate in the program established by such act;
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Any entity that:
- Is owned, in whole or in part, directly by a branch of the armed forces of the United States; and
- Derives more than fifty percent (50%) of its gross income from the operation of facilities that are located on property owned or leased by the federal government and operated primarily for the benefit of members of the armed forces of the United States; and
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- Any qualified low-income community historic structure owner;
- Any qualified low-income community historic structure lessee; or
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Any entity that directly or indirectly owns an interest in a qualified low-income community historic structure owner, a qualified low-income community historic structure lessee, or both, and that has no business operations or assets other than:
- Its investment in the qualified low-income community historic structure owner, the qualified low-income community historic structure lessee, or both;
- Business operations and assets incidental to its investment in the qualified low-income community historic structure owner, the qualified low-income community historic structure lessee, or both; and
- De minimis other operations and assets;
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For purposes of this subdivision (a)(17):
- “Qualified low-income community historic structure” means a “certified historic structure,” as defined in § 47 of the Internal Revenue Code (26 U.S.C. § 47), together with any associated contiguous real estate, located in a “low-income community,” as defined in § 45D of the Internal Revenue Code (26 U.S.C. § 45D), and with respect to which more than one hundred million dollars ($100,000,000) of “qualified rehabilitation expenditures,” as defined in § 47 of the Internal Revenue Code (26 U.S.C. § 47), are incurred after January 1, 2015;
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“Qualified low-income community historic structure lessee” means a limited liability company that leases or subleases substantially all of a qualified low-income community historic structure and that has no business operations or assets other than:
- Its lease or sublease of the qualified low-income community historic structure;
- Operations and assets incidental to leasing and subleasing of the qualified low-income community historic structure; and
- De minimis other operations and assets;
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“Qualified low-income community historic structure owner” means a limited liability company that owns a qualified low-income community historic structure and that has no business operations or assets other than:
- Its investment in the qualified low-income community historic structure;
- Business operations and assets incidental to the ownership, financing, and leasing of the qualified low-income community historic structure; and
- De minimis other operations and assets; and
- Any references to the Internal Revenue Code in this subdivision (a)(17) means the Internal Revenue Code in effect on January 1, 2015.
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Notwithstanding any law to the contrary, the certificate of a limited partnership may provide that one (1) or more specifically identified limited partners, as named in the certificate of limited partnership, shall be personally liable for all of the debts, obligations and liabilities of the limited partnership to the same extent as a general partner, and if so, each such specifically identified limited partner shall be liable to the same extent as a general partner in a general partnership; provided, that:
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“THE EXECUTION AND FILING OF THIS DOCUMENT WILL CAUSE SUCH LIMITED PARTNER TO BE PERSONALLY LIABLE FOR THE DEBTS AND OBLIGATIONS OF THE LIMITED PARTNERSHIP TO THE SAME EXTENT AS A GENERAL PARTNER. PLEASE CONSULT YOUR ATTORNEY.”
- In order to be effective, each limited partner so identified must sign the certificate of limited partnership, or an amendment to the certificate of limited partnership containing this provision and such signature must be notarized. The certificate or amendment must contain the following two (2) sentences in all capitalized letters:
- The amendment or certificate may provide that it is only effective if all limited partners make and maintain such an election. In such case the certificate of limited partnership must affirmatively identify each general and limited partner of the limited partnership and state that such persons constitute all partners;
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Each such limited partner shall continue to be personally liable for all of the debts, obligations and liabilities of the partnership to the same extent as a general partner would be until:
- Such limited partner withdraws from the partnership and the withdrawal is recorded with the certificate of limited partnership at the secretary of state's office; or
- The certificate of limited partnership is amended to strike such limited partner's name as a limited partner electing joint and several liability or, if the certificate of limited partnership provides that all limited partners must elect joint and several personal liability for all of the debts, obligations and liabilities of the limited partnership if any limited partners are to be so liable, an amendment striking one (1) limited partner who continues to be a limited partner shall strike all limited partners. Such document must be executed by the limited partner desiring to cease being so liable and promptly delivered to the general partner or partners and all other partners who are identified in the certificate of limited partnership as being jointly and severally personally liable for the debts, obligations and liabilities of the limited partnership; and
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Such limited partnership must have a written partnership agreement that sets forth in reasonable detail:
- The purpose of the limited partnership;
- The identity of each general partner;
- The scope of authority within the limited partnership of one or more of the general partners to incur debt or other obligations in the absence of limited partner approval;
- The fact that each limited partner electing to have joint and several liability shall be liable for all the debts and obligations of the limited partnership whether arising by contract, tort, or otherwise or from the actions of the general partner or partners or other limited partners in furtherance of the limited partnership's business or other activity;
- The fact that each limited partner may revoke such partner's election to have joint and several unlimited liability and remain a limited partner; and
- The terms and conditions under which one (1) or more general partners may be removed or the limited partnership dissolved and terminated.
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- A limited partner who is identified in the certificate of limited partnership as being personally liable always has the power, but not necessarily the right, to revoke the election for joint and several liability for the limited partnership's debts and obligations by filing an amendment to the certificate of limited partnership stating that such limited partner revokes such limited partner's election to be personally liable and shall not be liable for any future debts, obligations and liabilities of the limited partnership. Such amendment to the certificate shall be effective immediately except as provided in subdivision (b)(3).
- An amendment to the certificate of limited partnership filed pursuant to subdivision (b)(2) is not effective against such parties reasonably relying upon such certificate until the passage of ninety (90) days from the filing of the amendment to the certificate of limited partnership. Nevertheless, such limited partner or former limited partner shall continue to be liable for all of the debts, obligations and liabilities of the limited partnership incurred by the limited partnership while such limited partner assumed such liability, including, if applicable, the ninety-day period.
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Notwithstanding any law to the contrary, the certificate of a limited partnership may provide that one (1) or more specifically identified limited partners, as named in the certificate of limited partnership, shall be personally liable for all of the debts, obligations and liabilities of the limited partnership to the same extent as a general partner, and if so, each such specifically identified limited partner shall be liable to the same extent as a general partner in a general partnership; provided, that:
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Notwithstanding any law to the contrary, the application of registered limited liability partnership may provide that one (1) or more specifically identified partners, as named in the application, shall be personally liable for all of the debts, obligations and liabilities of the registered limited liability partnership to the same extent as a general partner of a general partnership; provided, that:
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“THE EXECUTION AND FILING OF THIS DOCUMENT WILL CAUSE SUCH PARTNER TO BE PERSONALLY LIABLE FOR THE DEBTS AND OBLIGATIONS OF THE LIMITED LIABILITY PARTNERSHIP TO THE SAME EXTENT AS A GENERAL PARTNER OF A GENERAL PARTNERSHIP. PLEASE CONSULT YOUR ATTORNEY.”
- In order to be effective, each partner so identified must sign the application of registered limited liability partnership, or an amendment to the application of registered limited liability partnership containing this provision and such signature must be notarized. The application or amendment must contain the following two (2) sentences in all capitalized letters:
- The amendment or application may provide that it is only effective if all partners make and maintain such an election. In such case the application of registered limited liability partnership must affirmatively identify each partner of the limited liability partnership and state that such persons constitute all partners; and
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Each such partner shall continue to be personally liable for all of the debts, obligations and liabilities of the partnership to the same extent as a general partner of a general partnership until:
- Such partner withdraws from the partnership and the withdrawal is recorded with the application at the secretary of state's office; or
- The application of registered limited liability partnership is amended to strike such partner's name as a partner electing joint and several liability or, if the application of limited liability partnership provides that all partners must elect joint and several personal liability for all of the debts, obligations and liabilities of the partnership if any are to be so liable, an amendment striking one (1) partner who has not withdrawn and continues to be a partner shall strike all partners. Such document must be executed by the partner desiring to cease being so liable and promptly delivered to all remaining partners who are identified in the application of registered limited liability partnership as being jointly and severally personally liable for the debts, obligations and liabilities of the partnership to the same extent as a general partner of a general partnership.
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Such limited liability partnership must have a written partnership agreement that sets forth in reasonable detail:
- The purpose of the partnership;
- The identity of each partner;
- The scope of authority within the partnership of one (1) or more of the partners to incur debt or other obligations in the absence of partner approval;
- The fact that each partner electing to have joint and several liability shall be liable for the all debts and obligations of the partnership whether arising by contract, tort, or otherwise or from the actions of the other partners in connection with the partnership's business or other activity;
- The fact that each partner has the power to revoke such partner's election to have joint and several unlimited liability and remain a partner; and
- The terms and conditions under which one (1) or more partners may be removed or the partnership dissolved and terminated.
- A partner, who is identified in the application of a limited liability partnership as being personally liable, always has the power, but not necessarily the right, to revoke the election for joint and several liability for the partnership's debts and obligations by filing an amendment to the application of limited liability partnership stating that such partner has revoked such partner's election to be liable for the debts and obligations of the partnership and shall not be liable for any future debts, obligations and liabilities of the partnership. Such amendment to the application shall be effective immediately except as provided in subdivision (c)(4).
- An amendment to the application of a limited liability partnership filed pursuant to § 61-1-1001 is not effective against such parties reasonably relying upon such application until the passage of ninety (90) days from the filing of the amendment to the application of limited liability partnership. Notwithstanding the preceding, such partner or former partner will continue to be liable for all of the debts, obligations and liabilities of the partnership incurred by the partnership while such partner assumed such liability.
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Notwithstanding any law to the contrary, the application of registered limited liability partnership may provide that one (1) or more specifically identified partners, as named in the application, shall be personally liable for all of the debts, obligations and liabilities of the registered limited liability partnership to the same extent as a general partner of a general partnership; provided, that:
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Notwithstanding any law to the contrary, the articles of a limited liability company may provide that one (1) or more specifically identified members, as named in the articles, will be personally liable for all of the debts, obligations and liabilities of the limited liability company and, if so, each such specifically identified member shall be liable to the same extent as a general partner in a general partnership; provided, that:
- In order to be effective, each member so identified must sign the articles, or an amendment to the articles containing this provision. The amendment or articles may provide that it is only effective if all members make and maintain such an election. In such case, the articles must affirmatively identify each member and state that such persons constitute all of the members of the limited liability company; and
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Each such member shall continue to be personally liable for all of the debts, obligations and liabilities of the limited liability company to the same extent as a general partner of a general partnership until:
- The member withdraws from the limited liability company; or
- The articles are amended to strike such member's name as a member electing joint and several liability or, if the articles provide that all members must elect joint and several personal liability for all of the debts, obligations and liabilities of the limited liability company if any are to be so liable, an amendment striking one (1) member who continues to be a member shall strike all members. The document must be executed by the member desiring to cease being so liable and promptly delivered to any remaining members who are identified in the articles as personally being jointly and severally liable for the debts, obligations and liabilities of the limited liability company.
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- Each person who, pursuant to subdivision (a)(11), enjoys exempt status from franchise and excise taxes shall periodically file such forms and report such information as the commissioner of revenue reasonably prescribes regarding the family-owned noncorporate entity and the family members participating in the family-owned noncorporate entity.
- [Deleted by 2013 amendment, effective July 1, 2013.]
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- Every person claiming exemption from taxation under this section shall file an application for exemption upon a form prescribed by the commissioner. The application shall be filed on or before the fifteenth day of the fourth month following the close of the first tax year for which the person claims the exemption.
- Every person claiming exemption from taxation under this section that has previously filed an application for exemption in accordance with subdivision (f)(1) shall, on or before the fifteenth day of the fourth month following the close of the person's tax year, file an application for renewal of exemption upon a form prescribed by the commissioner.
- No person shall be exempt from taxation under this section until the person has filed the application required by subdivision (f)(1) or (f)(2). The commissioner is authorized to accept an application that is filed after the time periods provided in subdivisions (f)(1) and (2). However, when any person fails to timely file the application, there shall be imposed a penalty in the amount of two hundred dollars ($200) per occurrence. The commissioner is authorized to waive the penalty, in whole or in part, for good and reasonable cause under § 67-1-803.
- Any person who claims an exemption under this section but fails to meet the criteria for exemption shall be subject to all tax, penalty and interest otherwise applicable under the law.
- Notwithstanding subdivisions (f)(1)-(4) to the contrary, the requirements in this subsection (f) shall not apply to any person that qualifies for exemption under subdivision (a)(1), (a)(2), (a)(3), (a)(4), (a)(13), (a)(14) or (a)(15).
Acts 1999, ch. 406, § 3; 2000, ch. 982, §§ 18, 59; 2001, ch. 275, § 1; 2004, ch. 580, § 1; 2004, ch. 592, § 15; 2004, ch. 812, § 1; 2004, ch. 924, § 6; 2005, ch. 499, §§ 3, 35-40, 87; 2006, ch. 1019, § 27; 2007, ch. 602, § 21; 2008, ch. 1106, §§ 38, 41, 55, 68; 2009, ch. 530, §§ 28, 29, 33; 2010, ch. 1134, §§ 35, 36; 2011, ch. 382, § 1; 2013, ch. 164, § 5; 2015, ch. 449, § 1; 2017, ch. 194, §§ 3, 4.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998.
The Securities Exchange Act of 1934, referred to in this section, is compiled in 15 U.S.C. § 78a et seq.
Acts 2004, ch. 812, § 3 provided that the amendment by § 1 of the act shall apply to tax periods ending on or after September 1, 2003.
Acts 2004, ch. 924, § 19 provided that the amendment by § 6 of that act shall apply to all tax periods ending on or after June 30, 2003.
The Internal Revenue Code of 1986, referred to in this section, is compiled in 26 U.S.C.
The financial asset securitization investment trust (FASIT) under 26 U.S.C. § 860L, referred to in this section, was repealed by Act Oct. 22, 2004, P.L.108-357, Title VIII, Subtitle B, Part II, § 835(a), 118 Stat. 1593, effective January 1, 2005, with certain exceptions, pursuant to Sec. 835(c) of such act, which appears as a 26 U.S.C. § 56 note.
Acts 2008, ch. 1106, § 69 provided that § 41 of the act, which amended subdivision (a)(12)(B)(i), shall apply to any tax period beginning on or after January 1, 2009.
Acts 2011, ch. 382, § 2 provided that the act, which added subdivision (a)(16), shall apply to tax periods ending on or after June 30, 2011.
Acts 2015, ch. 449, § 2 provided that the act, which added (a)(17), shall apply to tax periods ending on or after July 1, 2015.
Acts 2017, ch. 194, § 5 provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2017.
Amendments. The 2013 amendment deleted (e)(2) which read: “No later than January 20, 2009, the commissioner shall submit to the finance, ways and means committees of the senate and the house of representatives a summary report of the information so compiled. The report shall include analyses of the utilization, costs and benefits of the exemption, as well as findings and recommendations pertaining to continuation of the exemption.”
The 2015 amendment added (a)(17).
The 2017 amendment, in (f), substituted “shall be filed on or before the fifteenth day of the fourth month following the close” for “shall be filed within sixty (60) days of the beginning” in (1), and substituted “two hundred dollars ($200) per occurrence” for “one thousand dollars ($1,000) per occurrence” at the end of the third sentence in (3).
Effective Dates. Acts 2013, ch. 164, § 6. July 1, 2013.
Acts 2015, ch. 449, § 2. May 18, 2015.
Acts 2017, ch. 194, § 5. April 19, 2017.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
To Pay or Not to Pay: A Primer on the Federal Unrelated Business Income Tax (UBIT) for Non-tax Lawyers (Sean P. Scally), 37 Tenn. B.J. 12 (2001).
Where There's a Will: The 95% Family-Owned Test for Family Limited Partnerships (Dan Holbrook), 37 Tenn. B.J. 31 (2001).
67-4-2009. Credits.
The tax imposed by this part shall be in addition to all other taxes and there shall be no credit allowed upon it except the following:
- In accordance with § 56-4-217, there shall be credited upon the tax imposed by this part the net amount of gross premiums tax paid that is measured by a period that corresponds to the excise tax period on which the return is based, plus any amount used to offset payment to the Tennessee guaranty association that has not otherwise been recovered, but not including the gross premiums receipts tax paid by fire insurance companies for the purpose of executing the fire marshal law;
- When an audit of an excise tax return for any year not barred by the statute of limitations discloses a change in the amount of tax due, there may be applied upon it as a credit any amount that the taxpayer is otherwise entitled to receive either as a credit under part 4 or 5 of this chapter for excise taxes paid, or as a refund thereof under § 67-1-1802. This tax credit allowance may be applied notwithstanding the statute of limitations or the requirement for approval of certain refunds by the commissioner and the attorney general and reporter if such was made under § 67-1-1802, and also any statutory or regulatory requirement under various items of part 4 or 5 of this chapter that the excise tax be paid prior to the allowance of any credit;
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There shall be allowed against the sum total of the taxes imposed by the Franchise Tax Law of 1999, compiled in part 21 of this chapter, and by this part, a credit equal to one percent (1%) of the purchase price of industrial machinery purchased during the tax period covered by the return and located in this state. For purposes of this section, “industrial machinery” means:
- “Industrial machinery” as defined by § 67-6-102; or
- “Computer,” “computer network,” “computer software,” or “computer system” as defined by § 39-14-601, and any peripheral devices, including, but not limited to, hardware, such as printers, plotters, external disc drives, modems, and telephone units, purchased by a taxpayer in the process of making the required capital investment in Tennessee described in § 67-4-2109(a), if as a result of making such purchase and meeting the other requirements set forth in § 67-4-2109(b), the taxpayer qualifies for the job tax credit provided therein;
- The industrial machinery credit taken on any franchise and excise tax return, however, shall not exceed fifty percent (50%) of the combined franchise and excise tax liability shown by the return before the credit is taken;
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- Any unused credit may be carried forward in any tax period until the credit is taken; however, the credit may not be carried forward for more than fifteen (15) years;
- If the taxpayer qualifies for the credit provided in subdivision (3)(I)(i), the fifteen-year limitation otherwise applicable to the carry-forward of unused credit shall not apply; provided, that the commissioner of economic and community development and the commissioner of revenue have determined that the allowance of the additional carry-forward is in the best interest of the state;
- Subdivision (3)(C)(ii) shall apply only to applications received and approved by the commissioner of revenue and the commissioner of economic and community development on or before January 1, 2011;
- If the industrial machinery, for the purchase of which a tax credit has been allowed, is sold or removed from this state during its useful life according to the depreciation guidelines in effect for excise tax purposes, the department shall be entitled to recapture a portion of the credit allowed by increasing the franchise and/or excise tax liability of any taxpayer, for the taxable period during which the machinery was sold or removed, in an amount equal to the percentage of useful life remaining on the industrial machinery at the time of sale or removal times the total credit taken on the purchase of the machinery;
- For purposes of the allowance of the credit against franchise and excise taxes under this section, any taxpayer who is a lessee of new industrial machinery and the original user of the industrial machinery, including a lessee from an industrial development corporation as defined by title 7, chapter 53, or other tax exempt entity, shall be treated as having purchased the machinery during the tax period in which it is placed in service by the lessee, at an amount equal to its purchase price;
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If industrial machinery is leased for a period that constitutes less than eighty percent (80%) of its useful life, then the lessee shall be deemed to have purchased only a portion of the machinery, at an amount determined by multiplying the actual purchase price of the machinery by a fraction, the numerator of which is the lease term, and the denominator of which is the useful life of the leased machinery;
[Expired July 1, 2015; see (3)(G)(ii)]
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- Notwithstanding any law to the contrary, the industrial machinery franchise and excise tax credit provided in this subdivision (3) may be computed by a general partnership that operates a call center in this state that is placed in service by the general partnership on or after June 30, 2003, and that would otherwise qualify for the credit provided in § 67-4-2109(b)(3)(H). The industrial machinery franchise and excise tax credit shall be computed as if the general partnership were subject to franchise and excise tax. With respect to the general partnership tax year during which a credit is so computed, a partner in the general partnership that is subject to franchise and excise tax and that directly holds a first tier ownership interest in the general partnership may take a percentage of the credit that equals the total amount of the credit for the general partnership multiplied by the partner's percentage interest in the general partnership on the last day of the general partnership tax year against the partner's franchise and excise tax liability for the partner's tax year that includes the last day. The industrial machinery franchise and excise tax credit passed through from the general partnership to the first tier partner under this section shall, in the hands of the first tier partner, be subject to applicable provisions and limitations otherwise provided by this section, including carry forward provisions; provided, that in no case shall the credit or a carryover of a credit be taken by a business entity, unless it was a partner in the general partnership and subject to franchise and excise tax at the time the credit was earned by the general partnership;
- This subdivision (3)(G) shall expire on July 1, 2015; provided, that any taxpayer that has filed a business plan with the department prior to July 1, 2015, shall continue to be eligible for the credit;
- Notwithstanding any provision to the contrary, a taxpayer that has established its international, national, or regional headquarters in this state and has met the requirements to qualify for the credit provided in § 67-6-224, or a taxpayer that has established an international, national, or regional warehousing or distribution hub in this state and has met the requirements to be a qualified new or expanded warehouse or distribution facility, shall be allowed to offset up to one hundred percent (100%) of its franchise and/or excise tax liability by the industrial machinery credit provided in this subdivision (3), or any carryforward of the industrial machinery credit, if the commissioner of revenue and the commissioner of economic and community development determine that increasing the percentage of offset above that allowed by subdivision (3)(B) is in the best interests of the state. For purposes of this subdivision (3)(H), “best interests of the state” means a determination that the taxpayer established its headquarters or a warehousing or distribution hub in this state, or converted a regional headquarters or regional warehousing or distribution hub in this state into its national or international headquarters or a national or international warehousing or distribution hub, as a result of such action. The commissioner of revenue and the commissioner of economic and community development shall determine the percentage of franchise and/or excise tax liability allowed to be offset, above that otherwise allowed by subdivision (3)(B), and the period during which the increased offset shall continue;
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- If the taxpayer makes a required capital investment in excess of one billion dollars ($1,000,000,000) during the investment period, the credit allowed in subdivision (3)(A) shall be equal to ten percent (10%) of the purchase price of industrial machinery located in this state and purchased in the process of making the required capital investment. The credit shall be subject to subdivisions (3)(A)-(H), except that a taxpayer making the required capital investment for purposes of this subdivision (3)(I) shall be entitled to the credit for the items listed in subdivision (3)(A)(ii) regardless of whether the taxpayer meets any of the requirements of, or qualifies for, the job tax credit provided in § 67-4-2109(b);
- If the taxpayer makes a required capital investment in excess of five hundred million dollars ($500,000,000) during the investment period, the credit allowed in subdivision (3)(A) shall be equal to seven percent (7%) of the purchase price of industrial machinery located in this state and purchased in the process of making the required capital investment. The credit shall be subject to subdivisions (3)(A)-(H), except that a taxpayer making the required capital investment for purposes of this subdivision (3)(I) shall be entitled to the credit for the items listed in subdivision (3)(A)(ii) regardless of whether the taxpayer meets any of the requirements of, or qualifies for, the job tax credit provided in § 67-4-2109(b);
- If the taxpayer makes a required capital investment in excess of two hundred fifty million dollars ($250,000,000) during the investment period, the credit allowed in subdivision (3)(A) shall be equal to five percent (5%) of the purchase price of industrial machinery located in this state and purchased in the process of making the required capital investment. The credit shall be subject to subdivisions (3)(A)-(H), except that a taxpayer making the required capital investment for purposes of this subdivision (3)(I) shall be entitled to the credit for the items listed in subdivision (3)(A)(ii) regardless of whether the taxpayer meets any of the requirements of, or qualifies for, the job tax credit provided in § 67-4-2109(b);
- If the taxpayer makes a capital investment in excess of one hundred million dollars ($100,000,000) during the investment period, the credit allowed in subdivision (3)(A) shall be equal to three percent (3%) of the purchase price of industrial machinery located in this state and purchased in the process of making the required capital investment. The credit shall be subject to subdivisions (3)(A)-(H), except that a taxpayer making the required capital investment for purposes of this subdivision (3)(I) shall be entitled to the credit for the items listed in subdivision (3)(A)(ii) regardless of whether the taxpayer meets any of the requirements of, or qualifies for, the job tax credit provided in § 67-4-2109(b);
- The taxpayer shall file a business plan with the commissioner of revenue in order to qualify for the credit provided in this subdivision (3)(I). The business plan shall be filed on or before the last day of the first fiscal year in which the investment is made and shall describe the investment. The commissioner of revenue has the authority to conduct audits or require the filing of additional information necessary to substantiate or adjust the findings contained within the business plan and to determine that the taxpayer has complied with all statutory requirements so as to be entitled to the credit in this subdivision (3)(I);
- The credit in this subdivision (3)(I) shall begin to apply in the first year of the investment period; however, if the required capital investment is not met during the investment period, the taxpayer shall be subject to an assessment equal to the amount of any credit taken under this subdivision (3)(I) for which the taxpayer failed to qualify, plus interest;
- For purposes of this subdivision (3)(I), unless the context otherwise requires:
-
There shall be allowed against the sum total of the taxes imposed by the Franchise Tax Law of 1999, compiled in part 21 of this chapter, and by this part, a credit equal to one percent (1%) of the purchase price of industrial machinery purchased during the tax period covered by the return and located in this state. For purposes of this section, “industrial machinery” means:
- “Good cause” means a determination by the commissioner of economic and community development that the capital investment is a result of the credit provided in this subdivision (3)(I);
- “Investment period” means a period not to exceed three (3) years from the filing of the business plan related to the required capital investment, during which the required capital investment must be made. The three-year period for making the required capital investment may, for good cause shown, be extended by the commissioner of economic and community development for a reasonable period not to exceed four (4) years for a taxpayer that meets the requirements of subdivision (3)(I)(i) and not to exceed two (2) years for any other taxpayer; and
-
“Required capital investment” means an increase of a business investment in real property, tangible personal property or computer software owned or leased in this state valued in accordance with generally accepted accounting principles. A capital investment shall be deemed to have been made as of the date of payment or the date the taxpayer enters into a legally binding commitment or contract for purchase or construction; and
[Expired July 1, 2015; see (3)(J)(vi)]
(i) In addition to the credit provided in subdivision (3)(A), the owner of a qualifying environmental project shall be entitled to a one-time credit in the amount of one and three-fourths percent (1.75%) of the investment in the qualifying environmental project, and such credit shall have the same carry-forward features, limitations and other attributes as are applicable to job tax credits under § 67-4-2109(b)(1). The owner of a qualifying environmental project shall also be provided six (6) annual credits in the amount of one and three-fourths percent (1.75%) of the investment in the qualifying project, and such credits shall have the same carry-forward features, limitations and other attributes as are applicable to enhanced job tax credits under § 67-4-2109(b)(2)(B)(iii), and the entire investment in the qualifying environmental project shall be treated as exempt required capital investment for purposes of § 67-4-2108(a)(6)(G);
For purposes of this subdivision (3)(J), a “qualifying environmental project” means a project in which the taxpayer makes an investment in excess of one hundred million dollars ($100,000,000) to eliminate mercury from the manufacturing process and operations of one (1) or more existing chlor-alkali manufacturing and ancillary facilities and equipment in the state;
The maximum investment in a qualifying environmental project that is eligible for the credits provided under this subdivision (3)(J) is one hundred million dollars ($100,000,000), inclusive of all capital investment and other direct and indirect costs of the project. To be eligible for the credits provided under this subdivision (3)(J), construction of the qualifying environmental project must have commenced on or after January 1, 2011, and construction of the qualifying environmental project must be substantially complete on or before January 1, 2014. The credits provided under this subdivision (3)(J) shall first be available in the later of the year in which the qualifying environmental project is substantially complete or July 1, 2013;
As a condition to receiving credits under this subdivision (3)(J), the owner of a qualifying environmental project shall agree to maintain an annual average of at least three hundred fifty (350) jobs in the state that meet the requirements set forth in § 67-4-2109(a)(6)(A) for a period of six (6) years after substantial completion of the qualifying environmental project. In the event the owner does not maintain the required number of qualified jobs in a specific year, the annual credit provided under this subdivision (3)(J) for that year shall be reduced in proportion to the percentage of the shortfall;
As a further condition to receiving credits under this subdivision (3)(J), the owner of a qualifying environmental project shall agree to forego any and all claims for credits that may be available to the owner pursuant to § 67-4-2109(b)(1) and (2) in connection with the qualifying environmental project;
This subdivision (3)(J) shall expire on July 1, 2015; provided, that any taxpayer that has filed a business plan with the department prior to July 1, 2015, shall continue to be eligible for the credit;
A hospital company filing a franchise/excise tax return on a combined basis as required in § 67-4-2014(e), together with all other members of its combined group filing with it, shall be allowed as a credit against the combined annual franchise/excise tax imposed an amount equal to the lesser of the franchise tax or excise tax so that the combined annual franchise/excise tax of the combined group shall be limited to the greater of the two (2) of them; provided, that this credit shall not apply to tax years beginning on or after January 1, 2007;
A hospital company filing a franchise/excise tax return on a combined basis as described in § 67-4-2014(e), together with all members of its combined group filing with it, shall be allowed as a further credit against the combined annual franchise/excise tax imposed on the group remaining after application of the credit allowed under subdivision (4) an amount equal to four percent (4%) of the cost of medical supplies and medical equipment used by or placed in service by the members of the controlled group in this state during the tax year; provided, that the aggregate amount of the credit allowed to a taxpayer under subdivision (4), together with the credit allowed to a taxpayer under this subdivision (5), shall not exceed nine million dollars ($9,000,000) in any one (1) tax year; and provided, further, that the credit allowed under this subdivision (5) shall not apply to tax years beginning on or after January 1, 2007. A corporation or other entity shall be deemed to have used or placed in service medical supplies and medical equipment used or placed in service by a partnership or limited liability company of which it is a partner or member that would be a hospital company, as defined in § 67-4-2004, if it were a corporation or other entity upon which tax is imposed under this part and part 21 of this chapter, and would be a member of its same controlled group, as defined in § 267(f)(1) of the Internal Revenue Code of 1986, codified in 26 U.S.C. § 267(f)(1), if it were a corporation and its partners or members were shareholders. The amount of the cost of such medical supplies and medical equipment that is attributed to and deemed to have been used or placed in service by such corporation or other entity shall be equal to the pro rata portion of the cost of medical supplies and medical equipment used or placed in service by the partnership or limited liability company in the tax year. Such pro rata portion shall be determined based upon the corporation's or other entity's percentage of the profits and losses of such partnership or limited liability company during such tax year. As used in this subdivision (5), “medical equipment” has the same meaning as “major medical equipment” as set forth in § 68-11-102(10) [repealed], but without the limitation therein as to the cost thereof; and “medical supplies” means all apparatus, consumable products, appliances, and other tangible personal property, except drugs and medicines, used in provision of patient health care services, including all recordkeeping and documentation in connection with such services;
(A) Except for unitary groups of financial institutions, each taxpayer is considered a separate entity; therefore, in the case of mergers, consolidations, and like transactions, no tax credit incurred by the predecessor taxpayer shall be allowed as a credit on the tax return filed by the successor taxpayer. With the exception set forth in subdivision (6)(B), a credit carryforward may be taken only by the taxpayer that generated it;
Notwithstanding the provisions contained in subdivision (6)(A), when a taxpayer merges out of existence and into a successor taxpayer that has no income, expenses, assets, liabilities, equity or net worth, any qualified Tennessee credit carryover of the predecessor that merged out of existence shall be available for carryover on the return of the surviving successor; provided, that the time limitations for the carryover have not expired;
A unitary group of financial institutions may take any qualified credit that was generated by any group member that is in existence as a member of the group at the end of the group's tax year; provided, that such credit has not previously been taken by the member itself before it joined the group or by another unitary group of financial institutions at the time the financial institution generating the credit was a member of that group; and provided, further, that the credit carryover shall be subject to the limitations set forth in this subdivision (6);
A credit shall be allowed against the tax imposed by this part in an amount equal to the tax imposed by chapter 2 of this title paid by the taxpayer;
(A) There shall be allowed against the sum total of the taxes imposed by the Franchise Tax Law of 1999, and by this part, a credit equal to fifty percent (50%) of the purchase price of brownfield property purchased in this state during the tax period covered by the return for the purpose of a qualified development project;
For the purposes of this subdivision (8), unless the context otherwise requires:
“Brownfield property” means real property that is the subject of an investigation or remediation as a brownfield project under a voluntary agreement or consent order pursuant to § 68-212-224;
“Capital investment” means an investment in real property, tangible personal property or computer software owned or leased in this state valued in accordance with generally accepted accounting principles. A capital investment shall be deemed to have been made as of the date of payment or the date the taxpayer enters into a legally binding commitment or contract for purchase or construction of the real or personal property;
“Investment period” means a period not to exceed five (5) years from the filing of the business plan related to the required capital investment, during which the required capital investment must be made;
[Deleted by 2020 amendment.]
“Qualified development project” means a project consisting of a capital investment of at least twenty-five million dollars ($25,000,000), located on a brownfield property, and having a business plan approved by the commissioner of revenue in accordance with the applicable provisions of subdivision (8)(E);
The credit allowed pursuant to this subdivision (8) shall apply against the excise tax imposed by this part and the Franchise Tax Law of 1999; provided, however, that such credit, together with any carry-forward thereof, taken on any franchise and excise tax return shall not exceed fifty percent (50%) of the combined franchise and excise tax liability shown by the return before any credit is taken. Any credit authorized under this subdivision (8)(C) that is unused may be carried forward in any tax period until the credit is taken; provided, that the credit may not be carried forward for more than fifteen (15) years;
[Deleted by 2020 amendment.]
(i) The taxpayer shall file a business plan for the development project with the commissioner of revenue in order to qualify for the credit provided in subdivision (8)(A). The plan must describe the capital investment to be made toward the qualified development project within the investment period and also include a determination by the commissioner of finance and administration, the commissioner of revenue, and the commissioner of economic and community development pursuant to subdivision (8)(H) that the credit is in the best interest of the state;
[Deleted by 2020 amendment.]
Qualifying plans shall be approved by the commissioner of revenue. At such time, an approval letter authorizing the credit, the value of the credit and the terms of the credit shall be issued. A copy of the approval letter shall be filed by the taxpayer with the department of revenue in any year in which the taxpayer utilizes the credit;
The commissioner of revenue has the authority to conduct audits or require the filing of additional information necessary to substantiate or adjust the findings contained within the business plan and to determine that the taxpayer has complied with all statutory requirements so as to be entitled to the credit in this subdivision (8);
In order to receive the credit, the taxpayer must submit a claim for the credit, along with documentation as required by the commissioner showing that the capital investment was made toward the qualified development project during the investment period. The taxpayer shall not be eligible to receive the credit until the minimum capital investment required by subdivision (8)(B)(v) has been met;
The commissioner shall review the claim for the credit and notify the taxpayer of the approved tax credit amount. The taxpayer may not take the credit until the commissioner has notified the taxpayer of the approved amount;
Notwithstanding any provision of this subdivision (8) to the contrary, no credit shall be allowed unless the commissioner of finance and administration, the commissioner of revenue, and the commissioner of economic and community development determine, in their sole discretion, that the credit is in the best interest of the state. For purposes of this subdivision (8)(H), “best interest of the state” means a determination by the commissioner of finance and administration, the commissioner of revenue, and the commissioner of economic and community development that the qualified development project is a result of the credit provided in subdivision (8)(A) and that the economic benefits to this state resulting from the qualified development project outweigh the anticipated amount of the credit; and
For a qualified development project in which the taxpayer receives the brownfield property from a county, municipality, or industrial development board as defined in § 7-53-101 for a sale price of less than one dollar ($1.00), the amount of any credit authorized under this subdivision (8) is fifty percent (50%) of the most recent purchase price of the brownfield property that was paid by the county, municipality, or industrial development board; and
(A) Notwithstanding subdivision (8), there shall be allowed against the sum total of the taxes imposed by the Franchise Tax Law of 1999 and by this part, a credit equal to seventy-five percent (75%) of the purchase price of brownfield property purchased in a tier 3 or tier 4 enhancement county in this state during the tax period covered by the return for the purpose of a qualified development project;
For the purposes of this subdivision (9), unless the context otherwise requires:
“Brownfield property” means real property that is the subject of an investigation or remediation as a brownfield project under a voluntary agreement or consent order pursuant to § 68-212-224;
“Capital investment” means an investment in real property, tangible personal property, or computer software owned or leased in this state valued in accordance with generally accepted accounting principles. A capital investment shall be deemed to have been made as of the earlier of the date of payment or the date the taxpayer enters into a legally binding commitment or contract for lease, purchase, or construction of the real or personal property;
“Investment period” means a period not to exceed five (5) years from the filing of the business plan related to the required capital investment, during which the required capital investment must be made; and
“Qualified development project” means a project consisting of a capital investment of at least five million dollars ($5,000,000), located on a brownfield property, and having a business plan approved by the commissioner of revenue in accordance with the applicable provisions of subdivision (9)(D);
The credit allowed pursuant to this subdivision (9) shall apply against the excise tax imposed by this part and the Franchise Tax Law of 1999; provided, however, that such credit, together with any carry-forward thereof, taken on any franchise and excise tax return shall not exceed seventy-five percent (75%) of the combined franchise and excise tax liability shown on the return before any credit is taken. Any credit authorized under this subdivision (9)(C) that is unused may be carried forward in any tax period until the credit is taken; provided, that the credit may not be carried forward for more than fifteen (15) years;
(i) The taxpayer shall file a business plan for the qualified development project with the commissioner of revenue prior to the investment period in order to qualify for the credit provided in subdivision (9)(A). The plan shall describe the capital investment to be made toward the qualified development project within the investment period and shall also include a determination by the commissioner of finance and administration, the commissioner of revenue, and the commissioner of economic and community development pursuant to subdivision (9)(G) that the credit is in the best interest of the state;
Qualifying plans shall be approved by the commissioner of revenue. At such time, an approval letter authorizing the credit, the value of the credit, and the terms of the credit shall be issued. A copy of the approval letter must be filed by the taxpayer with the department of revenue in any year in which the taxpayer utilizes the credit; and
The commissioner of revenue has the authority to conduct audits or require the filing of additional information necessary to substantiate or adjust the information contained in the business plan and to determine that the taxpayer has complied with all statutory requirements so as to be entitled to the credit pursuant to this subdivision (9);
In order to receive the credit, the taxpayer must submit a claim for the credit, along with documentation as required by the commissioner showing that the capital investment was made toward the qualified development project during the investment period. The taxpayer shall not be eligible to receive the credit until the minimum capital investment required by subdivision (9)(B)(iv) has been met;
The commissioner shall review the claim for the credit and notify the taxpayer of the approved tax credit amount. The taxpayer may not take the credit until the commissioner has notified the taxpayer of the approved amount;
Notwithstanding any provision of this subdivision (9) to the contrary, no credit shall be allowed unless the commissioner of finance and administration, the commissioner of revenue, and the commissioner of economic and community development determine, in their sole discretion, that the credit is in the best interest of the state. For purposes of this subdivision (9)(G), “best interest of the state” means a determination by the commissioner of finance and administration, the commissioner of revenue, and the commissioner of economic and community development that the qualified development project is a result of the credit provided in subdivision (9)(A) and that the economic benefits to this state resulting from the qualified development project outweigh the anticipated amount of the credit; and
For a qualified development project in which the taxpayer receives the brownfield property from a county, municipality, or industrial development board as defined in § 7-53-101 for a sale price of less than one dollar ($1.00), the amount of any credit authorized under this subdivision (9) is seventy-five percent (75%) of the most recent purchase price of the brownfield property that was paid by the county, municipality, or industrial development board.
Acts 1999, ch. 406, § 3; 2000, ch. 973, § 1; 2000, ch. 982, §§ 19, 54; 2003, ch. 202, § 2; 2006, ch. 1019, § 1; 2007, ch. 602, § 1; 2008, ch. 1106, §§ 56, 57; 2009, ch. 530, §§ 2, 5-7, 15, 23; 2010, ch. 1134, § 65; 2011, ch. 508, §§ 24, 28, 29; 2012, ch. 937, § 1; 2015, ch. 504, §§ 4, 5; 2017, ch. 228, § 15; 2019, ch. 501, § 2; 2020, ch. 606, §§ 1-15.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998.
Section 68-11-102(10), referred to in this section, was repealed by Acts 2002, ch. 780, which repealed title 68, ch. 11, part 1, effective July 1, 2002.
Acts 2003, ch. 202, § 3, provided that the act shall apply to qualifying partner's tax years ending on or after June 30, 2003.
Acts 2006, ch. 1019, § 70 provided that § 1 of the act shall apply to tax years beginning on or after January 1, 2006.
Acts 2009, ch. 530, § 133 provided that §§ 2, 5, 6, 7, 15 and 23 of the act, which deleted subdivision (3) and amended subdivision (4), shall apply to all business plans filed on or after July 1, 2009.
Acts 2011, ch, 508, § 34 provided that the act, which amended subdivision (3), shall apply to any written proposal by the department of economic and community development or the department of revenue on or after July 1, 2011.
Acts 2017, ch. 228, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Tennessee Broadband Accessibility Act.”
Acts 2017, ch. 228, § 16 provided that § 15 of the act, which amended this section, shall apply to qualified broadband internet access equipment placed into service on or after April 24, 2017.
For Preamble to the act concerning intent of the General Assembly regarding exemptions from sales and use taxes for certain charges related to fiber-optic cable, see Acts 2019, ch. 501.
Amendments. The 2015 amendment redesignated former (3)(G) as present (3)(G)(i), added (3)(G)(ii); and added (3)(J)(vi).
The 2017 amendment added (9).
The 2019 amendment deleted (9), which read: “(9)(A) Subject to appropriations and the limitation in subdivisions (9)(C) and (D), there shall be allowed against the sum total of the taxes imposed by the Franchise Tax Law of 1999, compiled in part 21 of this chapter, and by this part, a credit equal to six percent (6%) of the purchase price of qualified broadband internet access equipment;“(B) For purposes of this subdivision (9), “qualified broadband internet access equipment” means new equipment placed into service by a service provider to provide broadband internet access services at minimum download speeds of twenty-five megabits per second (25 Mbps) and minimum upload speeds of three megabits per second (3 Mbps) to locations in a tier 3 or tier 4 enhancement county as determined under § 67-4-2109(a), and includes, but is not limited to, asynchronous transfer mode switches, digital subscriber line access multiplexers, routers, servers, multiplexers, other electronic equipment, fiber optic and copper cables, transmission facilities, and related equipment and property used directly or indirectly to transmit broadband signals;“(C) The credit taken on any franchise and excise tax return, however, must not exceed fifty percent (50%) of the combined franchise and excise tax liability shown by the return before the credit is taken. Any unused credit may be carried forward in any tax period until the credit is taken. However, the credit may not be carried forward for more than fifteen (15) taxable years; and“(D)(i) The total amount of credit provided to all taxpayers under this subdivision (9) must not exceed five million dollars ($5,000,000) for any calendar year;“(ii) If the total amount of credit claimed by all taxpayers for any calendar year exceeds the limitation in this subdivision (9)(D), the credit to be received by each taxpayer must be the product of five million dollars ($5,000,000) multiplied by the quotient of the credit claimed by the taxpayer divided by the total of all credits claimed by all taxpayers;“(iii) For purposes of applying the limitation in this subdivision (9)(D), a taxpayer must submit an application for the credit allowed under this subdivision (9), in the form prescribed by the department, by October 15 following the calendar year in which the qualified broadband internet access equipment was placed into service. No credit must be allowed under this subdivision (9) to any taxpayer that fails to submit the application by October 15;“(iv) By December 15 following the October 15 deadline set forth in subdivision (9)(D)(iii), the department shall notify the taxpayer of the amount of the credit allowed; and“(v) At any time during the applicable limitations period set out in § 67-1-1501(b), the department is authorized to conduct audits or require the filing of additional information necessary to substantiate or adjust the amount of the credit taken by a taxpayer.”
The 2020 amendment substituted “There” for “Except as otherwise provided in subdivision (8)(D), there” in (8)(A); in the definition of “capital investment”, substituted “an investment” for “a business investment” in the first sentence and substituted “construction of the real or personal property” for “construction” in the second sentence; deleted (8)(B)(iv), which read: “’Non-prime agricultural property’ means real property included within the United States department of agriculture land capability classification Classes IV, V, VI, VII and VIII; and”; deleted “or (8)(G)” following “(8)(E)” in the definition of “qualified development project”; deleted (8)(D), which read: “If the taxpayer makes an enhanced capital investment equal to or in excess of two hundred million dollars ($200,000,000) during the investment period for the qualified development project, the credit allowed in subdivision (8)(A) shall be equal to seventy-five percent (75%) of the purchase price of the brownfield property purchased in Tennessee for the purpose of the project;”; in (8)(E)(i), deleted “or the enhanced credit provided in subdivision (8)(0)” following “subdivision (8)(A)” in the first sentence and added the second sentence; deleted (8)(E)(ii), which read: “For purposes of the enhanced credit, the business plan shall be filed on or before the last day of the first fiscal year in which the investment is made and shall describe the capital investment;”; rewrote (8)(F), which read: “The credit provided in this subdivision (8) shall begin to apply in the first year of the investment period as provided in the business plan; however, if the capital investment is not met during the investment period, the taxpayer shall be subject to an assessment equal to the amount of any credit taken under this subdivision (8) for which the taxpayer failed to qualify, plus interest;”; rewrote (8)(G), which read: “The aggregate amount of the credits allowed to all taxpayers under this subdivision (8) shall not exceed ten million dollars ($10,000,000) in any one (1) tax year; provided, that in any tax year in which it is determined that credits remain available, the commissioner of revenue and the commissioner of economic and community development, in consultation with the commissioner of agriculture, may open availability to qualified development projects utilizing non-prime agricultural property. Credits for projects utilizing non-prime agricultural property shall be issued in the same manner and under the same terms as credits allowed for projects utilizing brownfield property except that all business plans for such projects shall be approved by the commissioner of economic and community development, in addition to the commissioner of revenue, and in consultation with the commissioner of agriculture; and”; in (8)(H), inserted “finance and administration, the commissioner of” in the first sentence, in the second sentence, inserted “finance and administration, the commissioner of”, inserted “qualified development” following “development that the”, and substituted “subdivision (8)(A) and that the economic benefits to this state resulting from the qualified development project outweigh the anticipated amount of the credit; and” for “this subdivision (8)”; added (8)(I); and added (9).
Effective Dates. Acts 2015, ch. 504, § 22. July 1, 2015.
Acts 2017, ch. 228, § 16. April 24, 2017.
Acts 2019, ch. 501, § 3. July 1, 2019.
Acts 2020, ch. 606, § 16. July 1, 2020.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
NOTES TO DECISIONS
1. Limitation of Premiums Tax.
Former T.C.A. § 56-4-217 dictated that the amount of premiums tax allowed as a credit against franchise and excise tax under former § 56-4-217 was limited to the amount of premiums tax actually obtained in cash by the commissioner of commerce and insurance from an insurance company. Tenn. Farmers Assur. Co. v. Chumley, 197 S.W.3d 767, 2006 Tenn. App. LEXIS 78 (Tenn. Ct. App. 2006), appeal denied, — S.W.3d —, 2006 Tenn. LEXIS 485 (Tenn. May 30, 2006).
67-4-2010. Taxation of persons doing business outside state.
- Any taxpayer having business activities that are taxable both inside and outside the state of Tennessee shall allocate or apportion its net earnings or losses as provided in this part. A taxpayer is considered taxable in another state only if the taxpayer is conducting activities in that state that, if conducted in Tennessee, would constitute doing business in Tennessee and would subject the taxpayer to either Tennessee's franchise tax or excise tax.
- Nonbusiness receipts shall not be included in the numerator or denominator of any apportionment formula.
Acts 1999, ch. 406, § 3; 2006, ch. 1019, § 22.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2006, ch. 1019, § 70 provided that § 22 of the act shall apply to tax years beginning on or after January 1, 2006.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
Cited: Blue Bell Creameries, LP v. Roberts, 333 S.W.3d 59, 2011 Tenn. LEXIS 6 (Tenn. Jan. 24, 2011).
NOTES TO DECISIONS
1. Variance Appropriate.
Variance imposed against the taxpayer under T.C.A. §§ 67-4-2014 and 67-4-2112 was appropriate because the application of the cost of performance formula did not fairly represent the taxpayer's business in Tennessee. The unusual fact situation was that all of the costs of production occurred outside of Tennessee, but the revenue derived from the end product only occurred when the product was distributed in Tennessee, which only then obligated the purchasers to pay the revenue proceeds to the producer for the sale of the advertising. Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009), appeal denied, BellSouth Adver. & Publ. Corp. v. Chumley, — S.W.3d —, 2010 Tenn. LEXIS 343 (Tenn. Mar. 1, 2010).
4. Minimal Out-of-State Contacts.
Corporate taxpayer was entitled to apportion its tax liability for certain tax years based on its incorporation in Florida because the taxpayer's incorporation in Florida constituted a sufficient substantial nexus for taxation jurisdiction. Although it appeared from the record that Florida did not actually tax the taxpayer in the tax years at issue, this was of no moment, because Florida had constitutional nexus to tax, and the accompanying risk of taxation could fuel a Commerce Clause challenge with respect to Tennessee's assessments. Popularcategories.com, Inc. v. Gerregano, — S.W.3d —, 2018 Tenn. App. LEXIS 747 (Tenn. Ct. App. Dec. 20, 2018).
Decisions Under Prior Law
1. In General.
The guiding principle is that a state may not tax value earned outside its borders; the broad inquiry is whether the taxing power exerted by the state bears fiscal relation to the protection, opportunities, and benefits given by the state; the simple and controlling question is whether the state has given anything for which it can ask return. Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
2. Constitutionality.
Even if a taxpayer's business is wholly in interstate commerce, a nondiscriminatory tax by Tennessee upon the net income of a foreign corporation having a commercial domicile there or upon net income derived from within the state is not prohibited by the commerce clause of the federal constitution. Memphis Natural Gas Co. v. Beeler, 315 U.S. 649, 62 S. Ct. 857, 86 L. Ed. 1090, 1942 U.S. LEXIS 782 (1942).
Statement of United States supreme court in Memphis Natural Gas Co. v. Beeler (1942), 315 U.S. 649, 62 S. Ct. 857, 86 L. Ed. 1090, 1942 U.S. LEXIS 782 (1942), “[i]n any case even if taxpayer's business were wholly in interstate commerce, a nondiscriminatory tax by Tennessee upon the net income of a foreign corporation having a commercial domicile there … or upon net income derived from within the state … is not prohibited by the commerce clause …” was not obiter dicta and the Tennessee supreme court is bound thereby. Memphis Natural Gas Co. v. McCanless, 180 Tenn. 695, 177 S.W.2d 843, 1944 Tenn. LEXIS 338, cert. denied, 323 U.S. 785, 65 S. Ct. 275, 89 L. Ed. 627 (1944), cert. denied, Memphis Natural Gas Co. v. McCanless, 323 U.S. 785, 65 S. Ct. 275, 89 L. Ed. 626 (1944).
Mere fact that net earnings upon which a tax is based is derived from interstate business in Tennessee does not necessarily impose a burden on interstate commerce. American Bemberg Corp. v. Carson, 188 Tenn. 263, 219 S.W.2d 169, 1949 Tenn. LEXIS 339 (1949).
This part, in providing for the use of an apportionment formula as to corporations doing business in the state and elsewhere while taxing corporations only doing business in the state on the basis of all of its earnings, did not discriminate against interstate commerce. John Ownbey Co. v. Butler, 211 Tenn. 366, 365 S.W.2d 33, 1963 Tenn. LEXIS 356 (1963).
3. Construction.
It was the intention of the general assembly by the 1937 amendments to reach earnings from interstate business of corporations as far as possible. Memphis Natural Gas Co. v. McCanless, 180 Tenn. 695, 177 S.W.2d 843, 1944 Tenn. LEXIS 338, cert. denied, 323 U.S. 785, 65 S. Ct. 275, 89 L. Ed. 627 (1944), cert. denied, Memphis Natural Gas Co. v. McCanless, 323 U.S. 785, 65 S. Ct. 275, 89 L. Ed. 626 (1944).
4. Minimal Out-of-State Contacts.
Where the corporate taxpayer was neither domesticated nor paid excise taxes in another state and all out-of-state contacts were minimal, it had no right to apportion earnings. H.D. Lessors, Inc. v. Tidwell, 544 S.W.2d 611, 1976 Tenn. LEXIS 518 (Tenn. 1976), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
5. Doing Business Within State.
Corporations not doing business in the state and those that derive no net earnings from business done in the state are not subject to the tax. Quicksafe Mfg. Corp. v. Graham, 161 Tenn. 46, 29 S.W.2d 253, 1929 Tenn. LEXIS 33 (1929).
A foreign corporation is doing business within the state when it transacts therein some substantial part of its ordinary business. State ex rel. McCanless v. Cincinnati S. Ry., 178 Tenn. 328, 157 S.W.2d 833, 1941 Tenn. LEXIS 63 (1941).
Domestic corporations whose manufacturing operations were performed in Tennessee and which accepted orders in Tennessee from out-of-state purchasers and for shipment out of the state from points in Tennessee were doing business in Tennessee and were not entitled to apportion their earnings on the theory that they were doing business in Tennessee and elsewhere within the meaning of former section. John Ownbey Co. v. Butler, 211 Tenn. 366, 365 S.W.2d 33, 1963 Tenn. LEXIS 356 (1963).
State would not be estopped from collection of excise tax against corporations as doing business within the state even though it had previously permitted such corporations to apportion their earnings on doing business in the state and elsewhere and had previously misconstrued the law in this regard. John Ownbey Co. v. Butler, 211 Tenn. 366, 365 S.W.2d 33, 1963 Tenn. LEXIS 356 (1963).
6. Location of Inventory.
The destination of the in-process inventory is not the controlling factor; it is where the in-process inventory actually is located on the last day of the fiscal year. Allenberg Cotton Co. v. Woods, 640 S.W.2d 543, 1982 Tenn. LEXIS 350 (Tenn. 1982).
7. Income Producing Activities.
The purchase of a product, as well as its sale, is an income producing activity. Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
8. Statutory Formula.
The tax should be apportioned fairly according to ratio of sales in and outside of Tennessee. Woods Lumber Co. v. Hall, 158 Tenn. 458, 14 S.W.2d 734, 1928 Tenn. LEXIS 175 (Tenn. Mar. 16, 1929).
Statutory formula for computing tax against foreign corporation doing business in Tennessee is valid. American Bemberg Corp. v. Carson, 188 Tenn. 263, 219 S.W.2d 169, 1949 Tenn. LEXIS 339 (1949).
Physical location of financial papers of foreign corporation are not controlling on assessment of franchise and excise taxes by Tennessee. American Bemberg Corp. v. Carson, 188 Tenn. 263, 219 S.W.2d 169, 1949 Tenn. LEXIS 339 (1949).
It is only when application of the formula results in allocating to the taxing state an amount of earnings or net worth palpably disproportionate to the business done or property owned in the state that the due process clause of U.S. Const., amend. 14, may be successfully invoked by the corporation taxed. W.S. Dickey Clay Mfg. Co. v. Dickinson, 200 Tenn. 25, 289 S.W.2d 533, 1956 Tenn. LEXIS 373 (1956); Roane Hosiery, Inc. v. King, 214 Tenn. 441, 381 S.W.2d 265, 1964 Tenn. LEXIS 492 (Tenn. July 15, 1964).
The burden of proof rests upon the taxpayer to show by clear and cogent evidence that the formula of apportionment provided by these former sections results in taxation of value outside the state. W.S. Dickey Clay Mfg. Co. v. Dickinson, 200 Tenn. 25, 289 S.W.2d 533, 1956 Tenn. LEXIS 373 (1956); Roane Hosiery, Inc. v. King, 214 Tenn. 441, 381 S.W.2d 265, 1964 Tenn. LEXIS 492 (Tenn. July 15, 1964).
All net earnings of a corporation without regard to the source from which they are derived constitute the measure of the excise tax. Brookside Mills, Inc. v. Atkins, 204 Tenn. 517, 322 S.W.2d 217, 1959 Tenn. LEXIS 305 (1959); Woods Lumber Co. v. MacFarland, 209 Tenn. 667, 355 S.W.2d 448, 1962 Tenn. LEXIS 401 (1962).
The burden is upon the taxpayer to show that he comes within the intendment of an apportionment formula to such an extent that he is actually engaged in business in a corporate form in states other than Tennessee. John Ownbey Co. v. Butler, 211 Tenn. 366, 365 S.W.2d 33, 1963 Tenn. LEXIS 356 (1963); Roane Hosiery, Inc. v. King, 214 Tenn. 441, 381 S.W.2d 265, 1964 Tenn. LEXIS 492 (Tenn. July 15, 1964).
A Tennessee manufacturing corporation is required to pay excise tax to the state based on its entire net earnings without apportionment when the only activities the corporation has outside the state consist of the sale of its products through a subsidiary corporation owned and controlled by the Tennessee corporation when there are no taxes paid by the Tennessee corporation to any other state. Roane Hosiery, Inc. v. King, 214 Tenn. 441, 381 S.W.2d 265, 1964 Tenn. LEXIS 492 (Tenn. July 15, 1964).
Tennessee corporation which conducted all of its manufacturing in Tennessee, but had showrooms in three other states and warehouses in two, had 18 out of 20 salesmen in other states, and paid personal property taxes on inventories in other states was entitled to use a statutory apportionment formula for its excise and franchise taxes on the ground that it was doing business in Tennessee and elsewhere. Tidwell v. Gaines Mfg. Co., 526 S.W.2d 460, 1975 Tenn. LEXIS 600 (Tenn. 1975), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
9. Net Earnings.
Since the statute does not define the term “net earnings,” it must be given its usual and ordinary meaning as what is left of earnings after deduction of necessary and legal items of expense incident to corporate business. Brookside Mills, Inc. v. Atkins, 204 Tenn. 517, 322 S.W.2d 217, 1959 Tenn. LEXIS 305 (1959).
10. Dividends.
Dividends, as the term is ordinarily used, refers to the recurrent return upon stock paid to stockholders by a going corporation in the ordinary course of business which does not reduce their stock holdings and leaves them in a position to enjoy future returns upon the same stock. Gallagher v. Butler, 214 Tenn. 129, 378 S.W.2d 161, 1964 Tenn. LEXIS 457 (1964).
11. Determination of Corporate Status.
Once it was established that a corporation was doing business outside the state under this former section, there were no additional showings that must be made to establish doing business outside the state. Tidwell v. Security Mills, Inc., 510 S.W.2d 503, 1974 Tenn. LEXIS 505 (Tenn. 1974).
67-4-2011. Allocation of earnings.
- To the extent that they constitute nonbusiness earnings, rents and royalties from real or tangible personal property, capital gains, interest, dividends, or patent or copyright royalties shall be allocated as provided in this section.
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- Net rents and royalties from real property located in this state are allocable to this state.
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Net rents and royalties from tangible personal property are allocable to this state:
- If and to the extent that the property is utilized in this state; or
- In their entirety, if the taxpayer's commercial domicile is in this state and the taxpayer is not organized under the laws of or taxable in the state in which the property is utilized.
- The extent of utilization of tangible personal property in a state is determined by multiplying the rents and royalties by a fraction, the numerator of which is the number of days of physical location of the property in the state during the rental or royalty period in the taxable year, and the denominator of which is the number of days of physical location of the property everywhere during all rental or royalty periods in the taxable year. If the physical location of the property during the rental or royalty period is unknown or unascertainable by the taxpayer, tangible personal property is utilized in the state in which the property was located at the time the rental or royalty payer obtained possession.
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- Capital gains and losses from sales of real property located in this state are allocable to this state.
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Capital gains and losses from sales of tangible personal property are allocable to this state, if:
- The property had a situs in this state at the time of the sale; or
- The taxpayer's commercial domicile is in this state and the taxpayer is not taxable in the state in which the property had a situs.
- Capital gains and losses from sales of intangible personal property are allocable to this state, if the taxpayer's commercial domicile is in this state.
- Interest and dividends are allocable to this state, if the taxpayer's commercial domicile is in this state.
-
-
Patent and copyright royalties are allocable to this state, if and to the extent that the patent or copyright is utilized by the payer in:
- This state; or
- A state in which the taxpayer is not taxable and the taxpayer's commercial domicile is in this state.
- A patent is utilized in a state to the extent that it is employed in production, fabrication, manufacturing, or other processing in the state or to the extent that a patented product is produced in the state. If the basis of receipts from patent royalties does not permit allocation to states, or if the accounting procedures do not reflect states of utilization, the patent is utilized in the state in which the taxpayer's commercial domicile is located.
- A copyright is utilized in a state to the extent that printing or other publication originates in the state. If the basis of receipts from copyright royalties does not permit allocation to states, or if the accounting procedures do not reflect states of utilization, the copyright is utilized in the state in which the taxpayer's commercial domicile is located.
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Patent and copyright royalties are allocable to this state, if and to the extent that the patent or copyright is utilized by the payer in:
Acts 1999, ch. 406, § 3.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
Cited: Blue Bell Creameries, LP v. Roberts, 333 S.W.3d 59, 2011 Tenn. LEXIS 6 (Tenn. Jan. 24, 2011).
NOTES TO DECISIONS
Decisions Under Prior Law
1. Recapture of Depreciation.
Income from recapture of depreciation may be business or nonbusiness earnings, and is income for excise tax purposes. Tennessee Growers, Inc. v. King, 682 S.W.2d 203, 1984 Tenn. LEXIS 896 (Tenn. 1984).
2. Commercial Domicile.
Since corporation's capital gains from divestitures were “nonbusiness earnings” under former § 67-4-804(a)(5), and since the parties stipulated that the capital gains could not be “allocated” to Tennessee under this former section if found to be “nonbusiness earnings,” the corporation was entitled to a refund of corporate excise taxes plus statutory interest. Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 1993 Tenn. LEXIS 160 (Tenn. 1993).
Tennessee was not the corporate commercial domicile of a corporation where the evidence clearly showed that its trade or business was not directed or managed from Tennessee; therefore, its nonbusiness earnings were not allocable to the state and were not taxable. Associated Partnership I v. Huddleston, 889 S.W.2d 190, 1994 Tenn. LEXIS 306 (Tenn. 1994), rehearing denied, 889 S.W.2d 190, 1994 Tenn. LEXIS 382 (Tenn. 1994), superseded by statute as stated in, Gannett Satellite Info. Network, Inc. v. State, 2009 MT 5, 348 Mont. 333, 201 P.3d 132, 2009 Mont. LEXIS 5 (2009).
Collateral References.
Construction and Application of Uniform Division of Income for Tax Purposes Act (UDITPA) — Apportionment of Business Income. 80 A.L.R.6th 325.
67-4-2012. Apportionment formula.
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- Except as otherwise provided in this part, for tax years beginning prior to July 1, 2016, all net earnings shall be apportioned to this state by multiplying the earnings by a fraction, the numerator of which shall be the property factor plus the payroll factor plus twice the receipts factor, and the denominator of the fraction shall be four (4).
- Except as otherwise provided in this part, for tax years beginning on or after July 1, 2016, all net earnings shall be apportioned to this state by multiplying the earnings by a fraction, the numerator of which shall be the property factor plus the payroll factor plus three (3) times the receipts factor, and the denominator of the fraction shall be five (5).
- The property factor is a fraction, the numerator of which is the average value of the taxpayer's real and tangible personal property owned or rented and used in this state during the tax period, and the denominator of which is the average value of all the taxpayer's real and tangible personal property owned or rented and used during the tax period. For this purpose, “property” includes a taxpayer's ownership share of the real or tangible property owned or rented by any general partnership, or entity treated as a general partnership for federal income tax purposes, in which such taxpayer has an ownership interest. A return being filed by a limited liability company that has a general partnership as its single member shall include in its property factor only the real and tangible property owned or used by the limited liability company. “Property” also includes a taxpayer's ownership share of the real or tangible property owned or rented by any limited partnership, subchapter S corporation, limited liability company or other entity treated as a partnership for federal income tax purposes, in which the taxpayer has an ownership interest, directly or indirectly through one (1) or more such entities, and that is not doing business in Tennessee and, therefore, is not subject to Tennessee excise tax. The cost value or rental value of such property shall be determined from the books and records of the entity in which the taxpayer has an interest and such property shall be valued in accordance with subsection (c).
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- Property owned by the taxpayer is valued at its original cost. Property rented by the taxpayer is valued at eight (8) times the net annual rental rate. Net annual rental rate is the annual rental rate paid by the taxpayer less any annual rental rate received by the taxpayer from subrentals. A lessee's payments to a lessor, or on such lessor's behalf, as part of rent, or in lieu of rent, shall be included as rent in the property factor of the apportionment formula provided by this section. Except with respect to tangible personal property, for purposes of this subsection (c), payments, such as interest, taxes, insurance, repairs or other items, shall be treated as rent paid by the lessee, if they would have been paid by the lessor if the lease contract or other agreement had not specifically provided that they be paid by the lessee.
- For purposes of this section, the value of owned or leased mobile or movable property located both inside and outside of the state of Tennessee during a tax period shall be determined on the basis of the total percentage of time such property is inside the state during the tax period; provided, that the value of an automobile or truck assigned to a traveling employee shall be considered in Tennessee, if the employee's compensation is assigned to Tennessee for purposes of the taxpayer's apportionment formula payroll factor, or if such vehicle is licensed in Tennessee.
- The average value of property shall be determined by averaging the values at the beginning and ending of the tax period; but the commissioner may require the averaging of monthly values during the tax period, if reasonably required to reflect properly the average value of the taxpayer's property.
- The payroll factor is a fraction, the numerator of which is the total amount paid in this state during the tax period by the taxpayer for compensation, and the denominator of which is the total compensation paid everywhere during the tax period. For this purpose, “compensation” includes a taxpayer's ownership share of the compensation of any general partnership, or entity treated as a general partnership for federal income tax purposes, in which such taxpayer has an ownership interest. A return being filed by a limited liability company that has a general partnership as its single member shall include in its payroll factor only the compensation attributed to the limited liability company. “Compensation” also includes a taxpayer's share of any specific compensation of any limited partnership, subchapter S corporation, limited liability company or other entity treated as a partnership for federal income tax purposes, in which the taxpayer has an ownership interest, directly or indirectly through one (1) or more such entities, and which is not doing business in Tennessee and thus is not subject to Tennessee excise tax.
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Compensation is paid in this state, if:
- The individual's service is performed entirely inside the state;
- The individual's service is performed both inside and outside the state, but the service performed outside the state is incidental to the individual's service inside the state; or
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Some of the service is performed in the state; and
- The base of operations or, if there is no base of operations, the place from which the service is directed or controlled is in the state; or
- The base of operations or the place from which the service is directed or controlled is not in any state in which some part of the service is performed, but the individual's residence is in this state.
- The receipts factor is a fraction, the numerator of which is the total receipts of the taxpayer in this state during the tax period, and the denominator of which is the total receipts of the taxpayer everywhere during the tax period. For this purpose, “gross receipts” includes a taxpayer's ownership share of the gross receipts of any general partnership, or entity treated as a general partnership for federal income tax purposes, in which such taxpayer has an ownership interest. A return being filed by a limited liability company that has a general partnership as its single member shall include in its receipts factor only the gross receipts attributed to the limited liability company. “Gross receipts” also includes a taxpayer's ownership share of gross receipts of any limited partnership, subchapter S corporation, limited liability company, or other entity treated as a partnership for federal income tax purposes, in which the taxpayer has an ownership interest, directly or indirectly through one (1) or more such entities, and that is not doing business in Tennessee and thus is not subject to Tennessee excise tax.
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Sales of tangible personal property are in this state, if:
- The property is delivered or shipped to a purchaser, other than the United States government, inside this state regardless of the F.O.B. point or other conditions of the sale; or
- The property is shipped from an office, store, warehouse, factory or other place of storage in this state and the purchaser is the United States government.
-
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Sales, other than sales of tangible personal property, are in this state if the taxpayer's market for the sale is in this state. The taxpayer's market for a sale is in this state:
- In the case of sale, rental, lease, or license of real property, if and to the extent the property is located in this state;
- In the case of rental, lease, or license of tangible personal property, if and to the extent the property is located in this state;
- In the case of sale of a service, if and to the extent the service is delivered to a location in this state;
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In the case of intangible property:
- That is rented, leased, or licensed, if and to the extent the intangible property is used in this state; provided, that intangible property utilized in marketing a good or service to a consumer is considered used in this state if that good or service is purchased by a consumer who is in this state; and
-
That is sold, if and to the extent the property is used in this state; provided, that:
- A contract right, government license, or similar intangible property that authorizes the holder to conduct a business activity in a specific geographic area is considered used in this state if the geographic area includes all or part of this state;
- Receipts from intangible property sales that are contingent on the productivity, use, or disposition of the intangible property shall be treated as receipts from the rental, lease, or licensing of such intangible property under subdivision (i)(1)(D)(i); and
- All other receipts from a sale of intangible property shall be excluded from the numerator and denominator of the receipts factor.
- If the state or states of assignment under subdivision (i)(1) cannot be determined, the state or states of assignment shall be reasonably approximated.
- If the state of assignment cannot be determined under subdivision (i)(1) or reasonably approximated under subdivision (i)(2), such sale shall be excluded from the numerator and denominator of the sales factor.
- If the application of this subsection (i) to a tax year results in a lower apportionment factor than under the application of the apportionment method in subsection (i) as it was in effect prior to January 1, 2016, then a taxpayer may annually elect to apply the apportionment method in subsection (i) as in effect prior to January 1, 2016; provided, however, the election must result in a higher apportionment factor for the tax year, and the taxpayer must have net earnings, rather than a net loss, for that tax year as computed under § 67-4-2006.
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Sales, other than sales of tangible personal property, are in this state if the taxpayer's market for the sale is in this state. The taxpayer's market for a sale is in this state:
-
-
For any qualified member of a qualified group, total receipts in this state shall equal the receipts from all sales of tangible personal property that are in this state as determined under subsection (h), plus the arithmetical average of the receipts from all sales other than sales of tangible personal property that are in this state as determined under each of the following alternative methods:
- All sales that are in this state as determined under subsection (i); and
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All sales, other than sales of tangible personal property, where the earnings-producing activity is performed:
- In this state; or
- Both in and outside this state and a greater proportion of the earnings-producing activity is performed in this state than in any other state, based on costs of performance.
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For purposes of this subsection (j), the following definitions shall apply:
-
“Qualified expenditures” means expenditures incurred in transactions with persons who are not members of the qualified group for the following:
- Purchasing tangible personal property placed in service in this state by a member of the qualified group; and
- Payroll for employees employed by a member of the qualified group at a facility in this state;
-
“Qualified group” means an affiliated group that meets both of the following criteria:
- One or more members of the group is a qualified member; and
- The members of the group, during the tax period, either:
- “Qualified member” means a person that is principally engaged in the sale of “telecommunications service,” “mobile telecommunications service,” “Internet access service,” “video programming service,” “direct-to-home satellite television programming service,” or a combination of such services, as each such term is used or defined in chapter 6 of this title.
-
“Qualified expenditures” means expenditures incurred in transactions with persons who are not members of the qualified group for the following:
- The method provided by this subsection (j) for determining the total receipts in this state of a qualified member shall be the only method for determining such receipts under this part.
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For any qualified member of a qualified group, total receipts in this state shall equal the receipts from all sales of tangible personal property that are in this state as determined under subsection (h), plus the arithmetical average of the receipts from all sales other than sales of tangible personal property that are in this state as determined under each of the following alternative methods:
- Notwithstanding any provision of this section to the contrary, any gain on the sale of an asset that is designated as goodwill and is required to be included as Class VII assets pursuant to the reporting requirements of 26 U.S.C. §§ 338(b)(5) and 1060, and associated regulations, shall be excluded from both the numerator and the denominator of the apportionment formula receipts factor.
-
- A taxpayer whose principal business in Tennessee is manufacturing may elect to apportion net earnings to this state by multiplying the earnings by a fraction, the numerator of which is the total receipts of the taxpayer in Tennessee during the taxable year and the denominator of which is the total receipts of the taxpayer from any location within or outside of the state during the taxable year.
- For purposes of this subsection (l ), a taxpayer's principal business in Tennessee is manufacturing if more than fifty percent (50%) of the revenue derived from its activities in this state, excluding passive income, is from fabricating or processing tangible personal property for resale and consumption off the premises. For purposes of this subsection (l ), “passive income” means dividend income, interest income, income derived from the sale of securities, and income derived from the licensing or sale of patents, trademarks, tradenames, copyrights, know-how, or other intellectual property.
- To elect the method of apportionment provided in this subsection (l ), the taxpayer shall notify the department of the election, in writing, on its return for the taxable year to which the election applies.
- Once a taxpayer elects the method of apportionment provided in this subsection (l ), such election shall remain in effect for a minimum of five (5) tax years and thereafter until revoked. The taxpayer may revoke the election after the minimum period by notifying the department of the revocation, in writing, on its return for the first taxable year to which the revocation applies. A taxpayer that revokes the election shall not be permitted to newly elect the method of apportionment provided in this subsection (l ) for a period of five (5) tax years, beginning with the tax year in which the taxpayer revoked the previous election.
-
- Notwithstanding any other provision of this part, a financial asset management company may elect to apportion net earnings by multiplying such earnings by a fraction, the numerator of which is the total receipts of the taxpayer in Tennessee during the taxable year as determined under this section and the denominator of which is the total receipts of the taxpayer everywhere during the taxable year.
-
For the purposes of this subsection (m):
-
-
“Financial asset management company” means an entity that is a limited partnership, or is treated as a partnership for federal tax purposes, that is engaged in the business of providing financial asset management services, and either:
- Incur, in the aggregate, qualified expenditures in an amount greater than one hundred fifty million dollars ($150,000,000); or
- Make sales that are subject to the tax imposed by chapter 6 of this title in excess of one hundred fifty million dollars ($150,000,000);
- Has a class of equity securities registered under Section 12(g) of the Securities Exchange Act of 1934 (15 U.S.C. § 78l(g)) and, as a result, is subject to the public company reporting requirements contained in Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m); or
- Is owned by a publicly traded partnership that owns at least twenty-five percent (25%) of the entity and such ownership interest constitutes more than fifty percent (50%) of the total assets of the publicly traded partnership; and
- “Financial asset management company” does not include any type of real estate investment trust as defined in § 67-4-2004;
-
“Financial asset management company” means an entity that is a limited partnership, or is treated as a partnership for federal tax purposes, that is engaged in the business of providing financial asset management services, and either:
- “Financial asset management services” means the following services when performed with respect to financial investments: managing portfolio assets of others on a fee or commission basis; rendering investment advice, including investment research and analysis; making determinations as to when sales and purchases of investments are to be made; and selling or purchasing of investments;
- “Financial investments” means, without limitation, investments in stocks, stock options, bonds, and alternative asset classes (including, but not limited to, real estate, commodities, and other debt obligations); and
- “Publicly traded partnership” means an entity that is a limited partnership, or is treated as a partnership for federal tax purposes, that files with the securities and exchange commission and whose shares are regularly traded on a securities exchange that is either registered as a national securities exchange with the securities exchange commission under Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. § 78f), or is a national securities exchange of a foreign country and regulated in a substantially similar manner by a foreign financial regulatory authority.
-
- To elect the method of apportionment provided in this subsection (m), the taxpayer shall notify the department of the election, in writing, on its return for the taxable year to which the election applies.
- Once a taxpayer elects the method of apportionment provided in this subsection (m), such election shall remain in effect for a minimum of five (5) tax years and thereafter until revoked. The taxpayer may revoke the election after the minimum period by notifying the department of the revocation, in writing, on its return for the first taxable year to which the revocation applies. A taxpayer that revokes the election shall not be permitted to newly elect the method of apportionment provided in this subsection (m) for a period of five (5) tax years, beginning with the tax year in which the taxpayer revoked the previous election.
Acts 1999, ch. 406, § 3; 2000, ch. 982, §§ 20-22, 48; 2006, ch. 1019, § 19; 2011, ch. 467, § 2; 2015, ch. 514, §§ 8, 9; 2017, ch. 181, § 28; 2018, ch. 656, § 1.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers. Pursuant to Acts 1999, ch. 406, § 19(c), notwithstanding § 19(b) of the act, subsection (j) of this section shall apply to tax years ending on or after June 30, 1999.
Acts 2000, ch. 982, § 53, which applies to the addition of (k) by § 48 of that act, provided that those amendments apply to tax years ending on or after June 28, 2000; provided, that they shall not take effect as to any tax year of an entity which is not subject to the provisions of Acts 1999, ch. 406.
Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998.
For the Preamble to the act concerning the need to modernize the sales and use taxes, franchise and excise taxes and business tax in the state to address the engagement in business within the state by out-of-state companies, see Acts 2015, ch. 514.
Acts 2015, ch. 514, § 31 provided that the act, which amended (i) and (j), shall apply to all tax years beginning on or after July 1, 2016.
Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Acts 2017, ch. 181, § 38 provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2017.
Acts 2018, ch. 656, § 3 provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2018.
Amendments. The 2015 amendment by ch. 514, effective May 20, 2015, rewrote (a), which read: “Except as may otherwise be provided in this part, all net earnings shall be apportioned to this state by multiplying the earnings by a fraction, the numerator of which shall be the property factor plus the payroll factor plus twice the receipts factor and the denominator of such fraction shall be four (4).”
The 2015 amendment by ch. 514, effective July 1, 2016, rewrote (i) and (j), which read: “(i) Sales, other than sales of tangible personal property, are in this state, if the earnings-producing activity is performed:“(1) In this state; or“(2) Both in and outside this state and a greater proportion of the earnings-producing activity is performed in this state than in any other state, based on costs of performance.“(j) Notwithstanding any law other than § 67-4-2014 to the contrary, any person doing business in Tennessee, who licenses the use of patents, trademarks, tradenames, copyrights, or know-how, or other intellectual property to another person in Tennessee, and who is paid royalties or other income based on the sale of products or other activity in Tennessee by the licensee, shall source such income to Tennessee for purposes of its apportionment formula receipts factor.”
The 2017 amendment added (l ).
The 2018 amendment added (m).
Effective Dates. Acts 2015, ch. 514, § 31. May 20, 2015; July 1, 2016.
Acts 2017, ch. 181, § 38. April 26, 2017.
Acts 2018, ch. 656, § 3. April 9, 2018.
Law Reviews.
State Taxation on Corporate Income from a Multistate Business (Paul J. Hartman), 13 Vand. L. Rev. 21 (1959).
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
Cited: Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009); Blue Bell Creameries, LP v. Roberts, 333 S.W.3d 59, 2011 Tenn. LEXIS 6 (Tenn. Jan. 24, 2011).
NOTES TO DECISIONS
2. Apportionment.
Issuance of a variance by the Commissioner of Revenue of the State of Tennessee was approved because the Commissioner had the authority, acting pursuant to T.C.A. § 67-4-2014, to require taxpayers, which provided wireless communication and data services within and without Tennessee, to use an apportionment methodology for franchise and excise taxes other than the standard cost of performance methodology codified in T.C.A. §§ 67-4-2012 and 67-4-2110. Vodafone Ams. Holdings Inc. v. Roberts, — S.W.3d —, 2014 Tenn. App. LEXIS 362 (Tenn. Ct. App. June 23, 2014), aff'd, Vodafone Ams. Holdings, Inc. v. Roberts, 486 S.W.3d 496, 2016 Tenn. LEXIS 182 (Tenn. Mar. 23, 2016).
Tennessee Department of Revenue's tax assessment of the net earnings and net worth for franchise and excise tax purposes of a taxpayer, which provided internet, cable television, and phone service to customers in Tennessee and other states, was presumed correct because the activity at issue was not performed solely in Tennessee and the taxpayer selected its categories of earnings producing activity in an attempt to circumvent its tax liability. Comcast Holdings Corp. v. Tenn. Dep't of Revenue, — S.W.3d —, 2019 Tenn. App. LEXIS 193 (Tenn. Ct. App. Apr. 25, 2019).
Decisions Under Prior Law
1. Constitutionality.
If method of allocation used by commissioner in fixing excise tax on manufacturing corporation located in Tennessee is fairly calculated to assign to Tennessee that portion of the net income of the manufacturer reasonably attributable to business done in the state the due process clause is not violated. General Shoe Corp. v. Stokes, 181 Tenn. 286, 181 S.W.2d 146, 1944 Tenn. LEXIS 372 (1944).
Application of statutory formula by commissioner in computing excise and franchise taxes of foreign corporation operating a factory in Tennessee did not violate fourteenth amendment of the United States constitution where accounting system of corporation by treating factory as an entity separate from its sales showed that factory sustained a large loss due to improvement and enlargement of plant if corporation realized substantial net profits from increase in sales. Crane Co. v. Carson, 191 Tenn. 353, 234 S.W.2d 644, 1950 Tenn. LEXIS 583 (1950), cert. denied, 340 U.S. 906, 71 S. Ct. 282, 95 L. Ed. 655, 1950 U.S. LEXIS 1339 (1950), cert. denied, Crane Co. v. Carson, 340 U.S. 906, 71 S. Ct. 282, 95 L. Ed. 655, 1950 U.S. LEXIS 1339 (1950).
2. Apportionment.
Where corporation engaged in dealing in lumber in Tennessee and Arkansas was engaged in a unitary business with one ownership, one management, one set of offices, one board of directors with its home office in Tennessee, apportionment formula was properly applied to all of the corporation's net earnings from both inside and outside of Tennessee. Woods Lumber Co. v. MacFarland, 209 Tenn. 667, 355 S.W.2d 448, 1962 Tenn. LEXIS 401 (1962).
Where shoe manufacturer operated eight plants in Tennessee, one plant in Georgia, and one plant in Kentucky it was immaterial that 97 percent of raw material which made up 51 percent of its manufacturing cost was purchased in Massachusetts, since 87 percent of material purchased was used in Tennessee in manufacturing its product. General Shoe Corp. v. Stokes, 181 Tenn. 286, 181 S.W.2d 146, 1944 Tenn. LEXIS 372 (1944).
Where Delaware corporation domesticated in Tennessee carried on its sole business of manufacturing textiles in Tennessee although it maintained an executive office in New York, profits from speculation in cotton futures in Rhode Island were apportionable and properly included in determining franchise and excise tax. Brookside Mills, Inc. v. Atkins, 204 Tenn. 517, 322 S.W.2d 217, 1959 Tenn. LEXIS 305 (1959).
A Tennessee manufacturing corporation is required to pay excise tax to the state based on its entire net earnings without apportionment when the only activities the corporation has outside the state consist of the sale of its products through a subsidiary corporation owned and controlled by the Tennessee corporation when there are no taxes paid by the Tennessee corporation to any other state. Roane Hosiery, Inc. v. King, 214 Tenn. 441, 381 S.W.2d 265, 1964 Tenn. LEXIS 492 (Tenn. July 15, 1964).
A corporation and its affiliates engaged in business inside and outside the state were required to file excise tax returns on a separate entity basis, in accordance with the standard apportionment formula set forth in this former section, rather than on a combined or consolidated basis; there was no evidence of evasion of taxes or shifting of income among the group, as required for combined reporting pursuant to former § 67-4-812. AT & T Co. v. Huddleston, 880 S.W.2d 682, 1994 Tenn. App. LEXIS 141 (Tenn. Ct. App. 1994).
3. Milling Lumber in Transit.
Corporations doing business of milling in transit are not engaged in interstate commerce so as to be freed from the excise tax on earnings therefrom. Jorgensen-Bennett Mfg. Co. v. Knight, 156 Tenn. 579, 3 S.W.2d 668, 1927 Tenn. LEXIS 153, 60 A.L.R. 393 (1927), appeal dismissed, 279 U.S. 877, 49 S. Ct. 185, 73 L. Ed. 1013 (1929), appeal dismissed, 278 U.S. 583, 49 S. Ct. 186, 73 L. Ed. 519, 1929 U.S. LEXIS 27 (U.S. Jan. 21, 1929), appeal dismissed, Jorgensen-Bennett Mfg. Co. v. Knight, 278 U.S. 583, 49 S. Ct. 186, 73 L. Ed. 519, 1929 U.S. LEXIS 27 (U.S. Jan. 21, 1929); Jorgensen-Bennett Mfg. Co. v. Knight, 279 U.S. 877, 49 S. Ct. 185, 73 L. Ed. 1013 (1929).
4. Public Warehouses.
A foreign corporation engaged in storage of goods in and distribution of those goods from a public warehouse owned in Tennessee was not exempt from payment of excise tax. Sealed Power Corp. v. Stokes, 174 Tenn. 493, 127 S.W.2d 114, 1938 Tenn. LEXIS 116 (1938).
Public warehouses maintained by cigarette company for storage of cigarettes while awaiting orders from customers in Tennessee and elsewhere were “agencies” for storage of its products. R.J. Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, 1948 Tenn. LEXIS 422 (1948), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
Tobacco products stored in public warehouses in Tennessee while awaiting orders from customers both inside and outside the state had come to rest, hence imposition by Tennessee of franchise and excise taxes did not constitute a burden on interstate commerce. R.J. Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, 1948 Tenn. LEXIS 422 (1948), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
A foreign corporation carrying on its business in the state through use of public warehouses is doing intrastate business and is liable for excise privilege taxes. R.J. Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, 1948 Tenn. LEXIS 422 (1948), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
Assessment of excise taxes on North Carolina corporation storing products for sale in public warehouses in Tennessee on a tax base of one and one-half percent of assets of corporation was not confiscatory or unreasonable where total sales of corporation were $436,311,355 and sales in Tennessee were $9,038,318. R.J. Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, 1948 Tenn. LEXIS 422 (1948), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
5. Net Earnings of Broadcasting Company.
Where in determining the amount of net earnings of a domestic radio broadcasting corporation subject to the tax imposed by this former section the commissioner used the proportion of gross receipts everywhere and it was conceded by the corporation that if it was liable at all the method of computing the tax was correct, and where the evidence was to the effect that most of the revenue that was taxed came from local advertisers and that listeners outside the state were not numerous, such corporation was not protected from liability by the provisions of the commerce clause of the federal constitution. WDOD Broadcasting Corp. v. Stokes, 180 Tenn. 677, 177 S.W.2d 837, 1941 Tenn. LEXIS 8 (1941).
6. Construction Company.
Where corporation was engaged in constructing oil and gas pipelines for use by oil and gas transmission companies, such transmission companies furnishing the pipes, the formula for figuring the tax of such construction company is that set forth in this former section and not former § 67-4-809. Western Pipe Line Constructors v. Dickinson, 203 Tenn. 248, 310 S.W.2d 455, 1958 Tenn. LEXIS 297 (Tenn. Feb. 6, 1958).
7. Doing Business Out of State.
Tennessee corporation subject to this former section whose principal place of business was in Tennessee was not also doing business in North Carolina by virtue of the fact that it maintained a salesman in North Carolina, contracted with North Carolina mills for processing of certain of its thread which was held in North Carolina for processing but not for warehousing, and voluntarily paid certain North Carolina franchise and income taxes. Signal Thread Co. v. King, 222 Tenn. 241, 435 S.W.2d 468, 1968 Tenn. LEXIS 430 (1968).
8. —Burden of Showing Improper Application.
Where evidence did not sustain contention of manufacturing corporation operating five plants, one of which was in Tennessee, that its business was multifold rather than unitary and the only other evidence offered was a profit and loss statement of the plants and no excise tax returns or ratios made thereunder were offered in evidence, corporation did not sustain the burden of showing that application of formula provided in former section in allocating the tax against such corporation resulted in taxation of values outside the state so as to constitute a violation of due process under U. S. Const., amend. 14. W.S. Dickey Clay Mfg. Co. v. Dickinson, 200 Tenn. 25, 289 S.W.2d 533, 1956 Tenn. LEXIS 373 (1956).
9. —Unitary and Multifold Operations Distinguished.
Where manufacturer of clay pipe and products maintained five manufacturing plants, one of which was in Tennessee, and the facts showed unity of ownership, unity of management and unity of use to a greater or lesser extent, the coexistence of such unities characterized the business as being unitary and not multifold and the application of the formula provided by former section was proper. W.S. Dickey Clay Mfg. Co. v. Dickinson, 200 Tenn. 25, 289 S.W.2d 533, 1956 Tenn. LEXIS 373 (1956).
Fact that business of manufacturing corporation engaged in the manufacture of clay products at five plants, one of which was located in Tennessee, was unitary rather than multifold so as to be subject to the formula provided by former section was shown by the following factors: Change in type of equipment used at Tennessee plant was determined at central office on basis of experience at other plants and paid for by corporation; machine shops at all plants repaired equipment indiscriminately for each other; clay pit located near Tennessee plant was used both by such plant and out of state plant; plants did not compete with each other but had separate sales territories; although plants bought on open market they received a discount if they purchased from each other; and ultimate control of sales price was at central office. W.S. Dickey Clay Mfg. Co. v. Dickinson, 200 Tenn. 25, 289 S.W.2d 533, 1956 Tenn. LEXIS 373 (1956).
10. Manufacturing Costs.
The costs incurred by corporate taxpayer at nonowned out-of-state mills can properly be treated as costs of manufacturing, collecting, assembling and processing where the taxpayer was in control of the day to day activities of the mills and the activity of the mills was to process raw materials exclusively for the taxpayer. Tidwell v. Security Mills, Inc., 510 S.W.2d 503, 1974 Tenn. LEXIS 505 (Tenn. 1974).
11. Nonformula Apportionment Factors.
Property, payroll, and sales of a joint venture could be taken into account in apportioning plaintiff's business earnings and franchise tax base where the statutory formula did not fairly represent the extent of the taxpayer's business activity in Tennessee. Federated Stores Realty, Inc. v. Huddleston, 852 S.W.2d 206, 1992 Tenn. LEXIS 359 (Tenn. 1992), rehearing denied, 852 S.W.2d 206, 1993 Tenn. LEXIS 178 (Tenn. May 3, 1993).
12. Return of Capital.
The return of capital from cash investments is includable in the denominator under former § 67-4-811(g)(1). Sherwin-Williams Co. v. Johnson, 989 S.W.2d 710, 1998 Tenn. App. LEXIS 701 (Tenn. App. 1998).
Collateral References.
Construction and Application of Uniform Division of Income for Tax Purposes Act (UDITPA) — Apportionment of Business Income. 80 A.L.R.6th 325.
67-4-2013. Apportionment — Special provisions.
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If the principal business in this state is that of a common carrier of persons or property for hire, then the appropriate ratios shall be as follows:
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Railroads. The ratio obtained by taking the arithmetical average of the following two (2) ratios:
- The gross receipts from railway operations on business beginning and ending inside this state without entering or passing through any other state as compared with its entire gross receipts from such operations in and outside the state; and
- The mileage owned and operated inside Tennessee, plus mileage leased and operated inside Tennessee, as compared with the total of such mileage in and outside the state;
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Motor Carriers. The ratio obtained by taking the arithmetical average of the following two (2) ratios:
- The gross receipts from operations on business beginning and ending in this state without entering or passing through any other state as compared with its entire gross receipts from such operations in and outside the state; and
- The ratio of the total franchise miles, or odometer miles, if there are no franchise miles, to which it holds or uses under lease, contract or otherwise, certificates of convenience and necessity from the interstate commerce commission or the department of safety inside the state, to the total franchise or odometer miles to which it holds or uses certificates from such commission or department, and like commissions, departments or agencies of other states, in and outside the state, all as shown by the annual reports made by such motor carrier to the various commissions, departments or agencies from which it holds certificates;
- Rail and Motor Carriers. Where the taxpayer is engaged in transporting passengers and property by both rail and motor, then the ratio of the sum of the miles in the state as computed under subdivisions (a)(1) and (2) to the sum of the miles under such subdivisions in and outside the state;
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Pipelines. The ratio obtained by taking the arithmetical average of the following two (2) ratios:
- The gross receipts from operations on business beginning and ending inside this state without entering or passing through any other state as compared with its entire gross receipts from such operations inside and outside the state; and
- The ratio of the pipeline miles owned, operated, or owned and operated inside the state to the miles of pipeline owned, operated or owned and operated inside and outside the state;
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Air Carriers. The ratio obtained by taking the arithmetical average of the following two (2) ratios:
- The originating revenue in the state as compared with the entire originating revenue in and outside the state; and
- The ratio of the total air miles flown in the state to the total air miles flown in and outside the state. “Air miles flown in the state” only includes miles in the state from flights originating from or ending in the state, or both originating from and ending in the state;
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Air Express Carriers. The ratio obtained by taking the arithmetical average of the following two (2) ratios:
- The originating revenue inside the state as compared with the entire originating revenue in and outside the state; and
- The ratio of the total air miles flown and ground miles traveled in the state to the total air miles flown and ground miles traveled in and outside the state. Air miles flown in the state shall only include miles in the state, from flights originating from or ending in the state, or both originating from and ending in the state. Ground miles traveled in the state or traveled in and outside the state shall only include miles traveled with respect to the actual common carriage of persons or property for hire; and
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Barges. The ratio obtained by taking the arithmetical average of the following two (2) ratios:
- The revenue from the transportation of cargo loaded in this state as compared with the entire revenue from the transportation of cargo loaded in and outside the state; and
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- The ratio of the total miles operated in the state to the total miles operated in and outside the state. Miles operated in the state shall be fifty percent (50%) of the miles operated on the Mississippi River adjacent to the Tennessee shoreline, plus all miles operated on inland waterways within the state;
- “Mile operated” means one (1) mile of movement of each barge.
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Railroads. The ratio obtained by taking the arithmetical average of the following two (2) ratios:
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- Notwithstanding any other provision of this part, net earnings of a financial institution that is not a member of a unitary group and therefore not filing a combined return, and that has business activities both in and outside this state, shall be apportioned by multiplying such earnings by the quotient of the institution's total receipts attributable to the transaction of business in Tennessee, as determined under subdivision (b)(3), divided by the institution's total receipts attributable to transacting business in all taxing jurisdictions, as determined under subdivision (b)(3). “Receipts” means all gross income derived from transactions and activities in the regular course of business, except that receipts from the disposition of assets such as securities and money market transactions are included to the extent of the net taxable gain on such transactions.
- A unitary group shall have earnings apportioned to Tennessee that consists of the apportioned net earnings of the unitary group, as determined under subdivision (b)(1), including the receipts of those members of the unitary business that would not be subject to taxation in this state, if considered apart from the unitary group.
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Receipts, as used in this section, shall be attributed to Tennessee as follows:
- Receipts from the lease or rental of real or tangible personal property shall be attributed to Tennessee, if the property is located in Tennessee;
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- Interest income and other receipts from assets in the nature of loans or installment sales contracts, that are primarily secured by or deal with real or tangible personal property, shall be attributed to Tennessee, if the security or sale property is located in Tennessee. If any part of the sale property or property standing as security for the payment of the debt is located part in and part outside the state, only such proportion of the interest income or other receipts shall be attributed to Tennessee as the value of the property in the state bears to the whole property;
- “Value” means only that value that the property would command at a fair and voluntary sale. Value shall be determined at the time the loan is made and shall not vary from year to year. In the event additional real or tangible personal property is pledged as security, or otherwise covered under a loan or installment sales contract after the time the loan is made, the ratio based on the value of the property in the state compared to the whole property shall be adjusted;
- Interest income and other receipts from consumer loans not secured by real or tangible personal property shall be attributed to Tennessee, if the loan is made to a resident of Tennessee, whether at a place of business, by a traveling loan officer, by mail, telephone or other electronic means;
- Interest income and other receipts from commercial loans and installment obligations not secured by real or tangible personal property shall be attributed to Tennessee, if the proceeds of the loan are to be applied in Tennessee. If it cannot be determined where the funds are to be applied, the receipts are to be attributed to the state in which the business applied for the loan. As used in this subdivision (b)(3)(D), “applied for” means initial inquiry, including customer assistance in preparing the loan application, or submission of a completed loan application, whichever occurs first. For attribution purposes, “loan” does not include demand deposit clearing accounts, federal funds, certificates of deposit, and other similar wholesale banking instruments issued by other financial institutions;
- All receipts and fee income from the issuance of letters of credit, acceptance of drafts, and other devices for assuring or guaranteeing a loan or credit, shall be attributed in the same manner as interest income and other receipts from the loan are attributed, as set out in subdivision (b)(3)(B), (C), or (D);
- Interest income, merchant discount, other receipts, including service charges from financial institution credit card and travel and entertainment credit card receivables and credit card holders, and fees shall be attributed to the state to which the card charges and fees are regularly billed;
- Receipts from the sale of an asset, tangible or intangible, shall be attributed in the same manner that the income from the asset would be attributed under this subsection (b);
- Receipts equal to the net gain or income from the sale of a security made by a person who is a dealer in such security within the meaning of 26 U.S.C. § 475 shall be attributed to Tennessee if such person's customer is located in Tennessee and such receipt is not otherwise attributed under subdivision (b)(3)(G). For purposes of this subdivision (b)(3)(H), a customer is in this state if the customer is an individual, trust, or estate that is a resident of this state and, for all other customers, if the customer's commercial domicile is in this state. Unless the dealer has actual knowledge of the residence or commercial domicile of a customer during a taxable year, the customer shall be deemed to be a customer in this state if the billing address of the customer, as shown in the records of the dealer, is in this state;
- Receipts from the performance of fiduciary and other services shall be attributed in accordance with § 67-4-2012(i)(1)(C);
- Receipts from the issuance of traveler's checks, money orders or United States savings bonds shall be attributed to the state where such items are purchased;
- Receipts from a participating financial institution's portion of participation loans shall be attributed as otherwise provided under this subsection (b). A participation loan is any loan in which more than one (1) lender is a creditor to a common borrower; and
- Any other receipts not specifically attributed to Tennessee or to another taxing jurisdiction when applying this subsection (b) shall be attributed to Tennessee in the same proportion that the enumerated receipts are attributed to Tennessee under subdivisions (b)(3)(A)-(K).
- Insurance companies shall apportion net earnings by a ratio of their premiums on policies, persons and property in and outside the state; however, foreign insurance companies, not domiciled in Tennessee, shall not consider nor include any annuity considerations as premiums for purposes of this section.
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- For tax years beginning prior to July 1, 2016, the net earnings of a captive REIT affiliated group shall be apportioned to this state based on property, payroll, and double weighted receipts as provided in § 67-4-2012(a)(1), including the factors of those members of the affiliated group that would not be subject to taxation in this state if considered apart from the affiliated group; provided, however, that dividends, receipts, and expenses resulting from transactions between members of the affiliated group shall be excluded for purposes of apportionment under this subdivision (d)(1).
- For tax years beginning on or after July 1, 2016, the net earnings of a captive REIT affiliated group shall be apportioned to this state based on property, payroll, and triple weighted receipts as provided in § 67-4-2012(a)(2), including the factors of those members of the affiliated group that would not be subject to taxation in this state if considered apart from the affiliated group; provided, however, that dividends, receipts, and expenses resulting from transactions between members of the affiliated group shall be excluded for purposes of apportionment under this subdivision (d)(2).
Acts 1999, ch. 406, § 3; 2005, ch. 499, § 78; 2007, ch. 602, § 13; 2010, ch. 1134, § 12; 2015, ch. 514, §§ 10-13.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2007, ch. 602, § 187 provided that the act shall apply to tax years ending on or after July 1, 2007.
Acts 2010, ch. 1134, § 66, provided that § 12 of the act, which added subsection (d), shall apply to all tax years ending on or after July 1, 2010.
Acts 2015, ch. 514, § 1 provided that the act shall be known and may be cited as the “Revenue Modernization Act”.
For the Preamble to the act concerning the need to modernize the sales and use taxes, franchise and excise taxes and business tax in the state to address the engagement in business within the state by out-of-state companies, see Acts 2015, ch. 514.
Acts 2015, ch. 514, § 31 provided that the act, which added (b)(3)(H), amended (b)(3)(I), and amended (b)(3)(L), shall apply to all tax years beginning on or after July 1, 2016.
Amendments. The 2015 amendment rewrote (d), which read: “The net earnings of a captive REIT affiliated group shall be apportioned to Tennessee based on property, payroll, and double weighted receipts as provided in § 67-4-2012, including the factors of those members of the affiliated group that would not be subject to taxation in this state if considered apart from the affiliated group; provided, however, that dividends, receipts, and expenses resulting from transactions between members of the affiliated group shall be excluded for purposes of apportionment under this subsection (d).”
The 2015 amendment, effective July 1, 2016, added (b)(3)(H) and redesignated former (b)(3)(H)-(b)(3)(K) as present (b)(3)(I)-(b)(3)(L); substituted “67-4-2012(i)(1)(C)” for “67-4-2012(i)” in (b)(3)(I); and substituted “(b)(3)(A)-(K)” for “(b)(3)(A)-(J)” in (b)(3)(L).
Effective Dates. Acts 2015, ch. 514, § 31. May 20, 2015; July 1, 2016.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
NOTES TO DECISIONS
Decisions Under Prior Law
1. Motor Carriers.
Company which acquired rolling stock from predecessor consisting of streetcars which it entered on books for $1.00 was not entitled to value rolling stock at original price paid for same by predecessor in determining net earnings realized in sale of rolling property for scrap. Southern Coach Lines v. McCanless, 191 Tenn. 634, 235 S.W.2d 804, 1951 Tenn. LEXIS 367 (1951).
2. Pipelines.
The retail sale of gas at the burner tips by one who pipes the gas into the state or by a local distributor acquiring the gas from another who has similarly brought it into the state is subject to state taxation and regulation. Memphis Natural Gas Co. v. Beeler, 315 U.S. 649, 62 S. Ct. 857, 86 L. Ed. 1090, 1942 U.S. LEXIS 782 (1942).
Where a foreign corporation purchased gas outside the state and delivered it to a distribution company by pipeline and where the contract between the two amounted to a profit sharing agreement or a joint enterprise, the foreign corporation was liable for the tax imposed by former sections. Memphis Natural Gas Co. v. Beeler, 315 U.S. 649, 62 S. Ct. 857, 86 L. Ed. 1090, 1942 U.S. LEXIS 782 (1942).
Foreign corporation having its commercial domicile in Tennessee which was engaged in the delivery of natural gas by pipeline from out of state to local distributors in Tennessee was liable for the tax imposed by former section even though it had no control over the local distributors and was entirely engaged in interstate commerce. Memphis Natural Gas Co. v. McCanless, 180 Tenn. 695, 177 S.W.2d 843, 1944 Tenn. LEXIS 338, cert. denied, 323 U.S. 785, 65 S. Ct. 275, 89 L. Ed. 627 (1944), cert. denied, Memphis Natural Gas Co. v. McCanless, 323 U.S. 785, 65 S. Ct. 275, 89 L. Ed. 626 (1944).
While foreign corporation piping gas through state and which sells to several Tennessee cities and utilities who pipe the gas from the interstate line to consumers in their own connecting gas lines is not engaged in intrastate business and cannot be taxed as such, such corporation is subject to excise and franchise taxes for the privilege of engaging in business in corporate form in the state. Texas Gas Transmission Corp. v. Atkins, 197 Tenn. 123, 270 S.W.2d 384, 1954 Tenn. LEXIS 463 (1954), cert. denied, 348 U.S. 883, 75 S. Ct. 125, 99 L. Ed. 694, 1954 U.S. LEXIS 1496 (1954).
3. Railroads.
Where the city of Cincinnati, Ohio, and a board of trustees of such city for a railroad which had been constructed from Cincinnati to Chattanooga and leased to another corporation on a long term lease, were merely engaged in collecting of rentals from such property and making distribution thereof in the state of Ohio, neither the city nor the board of trustees were doing business in Tennessee so as to be subject to the tax imposed by the former sections. State ex rel. McCanless v. Cincinnati S. Ry., 178 Tenn. 328, 157 S.W.2d 833, 1941 Tenn. LEXIS 63 (1941).
Where railroad's sole business was the leasing of its lines to another railroad, in determining the gross receipts for tax purposes it was not to include all shipments that entered and left its tracks in Tennessee but only those shipments which began and ended in Tennessee without entering or passing through any other state. Nashville & D.R.R. v. Woods, 604 S.W.2d 47, 1980 Tenn. LEXIS 491 (Tenn. 1980).
Collateral References.
Construction and Application of Uniform Division of Income for Tax Purposes Act (UDITPA) — Apportionment of Business Income. 80 A.L.R.6th 325.
67-4-2014. Variances from standard apportionment formula — Notice of discontinuation — Hospital companies.
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If the tax computation, allocation or apportionment provisions of this part or chapter 2 of this title do not fairly represent the extent of the taxpayer's business activity in this state, or the taxpayer's net earnings, the taxpayer may petition for, or the department through its delegates may require, in respect to all or any part of the taxpayer's business activity, if reasonable:
- Separate accounting;
- The exclusion of any one (1) or more of the formula factors;
- The inclusion of one (1) or more additional apportionment formula factors that will fairly represent the taxpayer's business activity in this state;
- The use of any other method to source receipts for purposes of the receipts factor or factors of the apportionment formula numerator or numerators; or
- The employment of any other method to effectuate an equitable computation, allocation and apportionment of the taxpayer's net earnings or losses that fairly represents the extent of the business entity's activities in Tennessee.
- If any factors are excluded from or added to the statutory apportionment formula, an appropriate change shall be made in the number used as the denominator of the fraction.
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- In any case of two (2) or more persons, organizations, trades or businesses, whether or not incorporated and whether or not affiliated, owned or controlled directly or indirectly by the same interests, the commissioner through delegates may distribute, apportion, or allocate income, deductions, credits, or allowances between or among such persons, organizations, trades or businesses, if the commissioner determines that such distribution, apportionment, or allocation is necessary in order to prevent evasion of taxes, excessive use or abuse of exemptions, or to clearly reflect the income of such persons, organizations, trades or businesses. In addition, the commissioner through delegates may require combined reports utilizing a common apportionment formula covering members of an affiliated group. It is the intent of the general assembly that the federal regulations, rulings, and court implementations with respect to 26 U.S.C. § 482 be used as guidance in the administration of this subdivision (c)(1).
- In the case of two (2) or more entities owned or controlled directly or indirectly by the same persons, including, but not limited to, affiliated groups, the commissioner, through the commissioner's delegates, may require combined reports and, if applicable, the utilization of a common apportionment formula covering such entities.
- The commissioner may apply federal taxation concepts, including, but not limited to, “assignment of income,” “arms length,” and “fair market value” to dealings between and among affiliates.
- The commissioner may disregard any entity created or transaction made that has no business purpose or is created or made with the primary purpose of evading either the federal income tax or the excise tax.
- When another method of tax computation, allocation or apportionment as set out above has once been established, it shall continue in effect so long as the circumstances justifying the variation remain substantially unchanged, or until changed or discontinued by the department, whichever occurs first. In the event that the department changes or discontinues a variation from the statutory computation, allocation or apportionment provisions that has been granted to or required of a taxpayer, reasonable notice shall be given to the taxpayer affected, and any such change or discontinuation shall apply prospectively to the first and subsequent tax periods beginning on or after the date of such notice.
- For tax years beginning on or before December 31, 2006, a hospital company, as defined in § 67-4-2004, shall file its franchise and excise tax return on a combined basis, together with all other corporations or other entities subject to the taxes imposed under this part and part 21 of this chapter that are members of its controlled group, as defined in 26 U.S.C. § 267(f)(1), and that are doing business in and taxable by this state, apportioned or allocated as to each member separately as provided in §§ 67-4-2011 and 67-4-2012, and then combined. Such combined franchise and excise tax returns shall be signed on behalf of one (1) member of the combined controlled group for itself and on behalf of the other members of the combined controlled group, and such signature shall constitute representation and evidence of authority to file on behalf of all members of the combined controlled group. The combined return shall contain all financial statements and schedules that would be required of each member filing a separate franchise and excise tax return. Each member's net earnings or losses subject to carryover, as the case may be, and each member's apportionment ratio, and applicable supporting schedules shall be computed separately as would be required by law if no combined return were required. The franchise and excise tax shall be computed for the combined group based on the combined net earnings or net losses of the members as combined and shown on the combined return filed for members of the controlled group of companies doing business in this state. The losses available to each member of the controlled group under current or prior law shall be available for offset against the net earnings of the combined group in the first year of filing on a combined basis, and any portion that is not used to offset net earnings of the combined group in the first combined year shall be carried forward on a combined basis to be available as an offset to future net earnings of the combined group in accordance with and subject to the time limitations set forth in § 67-4-2006(c)(1); provided, that such combination shall not extend the time limitation of any then existing net operating losses. No member of the combined group may file its franchise and excise tax return on a separate basis without the consent of the commissioner.
Acts 1999, ch. 406, § 3; 2005, ch. 499, §§ 41-43; 2006, ch. 1019, § 57.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers. Pursuant to Acts 1999, ch. 406, § 19(c), notwithstanding § 19(b) of the act, the provisions of this section relating to variances, fraud and abuse shall apply to tax years ending on or after June 30, 1999.
Acts 2005, ch. 499, § 91 provided that §§ 41-43 of the act shall apply to tax periods beginning on or after January 1, 2005.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
NOTES TO DECISIONS
0.5. Generally.
Supreme Court of Tennessee finds that Tennessee's legislature intended for the commissioner of revenue to have the authority to impose a variance where application of the statutory apportionment formula does not fairly represent the extent of the taxpayer's business activity in Tennessee. Vodafone Ams. Holdings, Inc. v. Roberts, 486 S.W.3d 496, 2016 Tenn. LEXIS 182 (Tenn. Mar. 23, 2016).
1. Variance Appropriate.
Variance imposed against the taxpayer under T.C.A. §§ 67-4-2014 and 67-4-2112 was appropriate because the application of the cost of performance formula did not fairly represent the taxpayer's business in Tennessee. The unusual fact situation was that all of the costs of production occurred outside of Tennessee, but the revenue derived from the end product only occurred when the product was distributed in Tennessee, which only then obligated the purchasers to pay the revenue proceeds to the producer for the sale of the advertising. Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009), appeal denied, BellSouth Adver. & Publ. Corp. v. Chumley, — S.W.3d —, 2010 Tenn. LEXIS 343 (Tenn. Mar. 1, 2010).
Issuance of a variance by the commissioner of revenue of the State of Tennessee was approved because the commissioner had the authority, acting pursuant to T.C.A. § 67-4-2014, to require taxpayers, which provided wireless communication and data services within and without Tennessee, to use an apportionment methodology for franchise and excise taxes other than the standard cost of performance methodology codified in T.C.A. §§ 67-4-2012 and 67-4-2110. Vodafone Ams. Holdings Inc. v. Roberts, — S.W.3d —, 2014 Tenn. App. LEXIS 362 (Tenn. Ct. App. June 23, 2014), aff'd, Vodafone Ams. Holdings, Inc. v. Roberts, 486 S.W.3d 496, 2016 Tenn. LEXIS 182 (Tenn. Mar. 23, 2016).
Commissioner of revenue did not abuse his discretion in concluding that application of the statutory apportionment formula to a provider's telecommunications services would not have resulted in a fair representation of the provider's business activity in the state given the commissioner's authority set forth in T.C.A. §§ 67-4-2014(a)(5) and 67-4-2112(a)(5), and the variance letter outlined the reasoning for the conclusion. Vodafone Ams. Holdings, Inc. v. Roberts, 486 S.W.3d 496, 2016 Tenn. LEXIS 182 (Tenn. Mar. 23, 2016).
Commissioner of revenue's requirement that the telecommunications provider use the methodology from its original tax returns for the relevant period to calculate its franchise and excise taxes was reasonable as it fairly represented the provider's business activity. Vodafone Ams. Holdings, Inc. v. Roberts, 486 S.W.3d 496, 2016 Tenn. LEXIS 182 (Tenn. Mar. 23, 2016).
Decisions Under Prior Law
1. In General.
Trial court erred in granting plaintiffs' motion to compel discovery regarding variances granted other taxpayers pursuant to this former section because the information sought was not relevant to the issue to be determined, which was whether the allocation and apportionment provisions of the statute fairly represent the extent of the taxpayer's business activity in this state, in that, in a de novo trial pursuant to T.C.A. § 67-1-1802(c)(1), the action taken by the commissioner with regard to requests for variance made by other taxpayers is not relevant to whether the statutory apportionment formula provisions “fairly represent the extent of the taxpayer's business activity in this state.” American Tel. & Tel. Co. v. Cardwell, 798 S.W.2d 761, 1990 Tenn. LEXIS 408 (Tenn. 1990).
2. Legislative Intent.
To determine the scope of the revenue commissioner's authority granted by former subdivision (c)(1), it is necessary to look to judicial interpretations of 26 U.S.C. § 482 as an indication of legislative intent. Kellogg Co. v. Olsen, 675 S.W.2d 707, 1984 Tenn. LEXIS 939 (Tenn. 1984).
The distortion which results when expenses incurred in earning nontaxable income are deductible will exist in every situation in which the deduction is available to a corporation, and was contemplated and authorized by the legislature. Kellogg Co. v. Olsen, 675 S.W.2d 707, 1984 Tenn. LEXIS 939 (Tenn. 1984).
3. Application.
The revenue commissioner was not authorized under either former § 67-4-805(b)(2)(A) or former subdivision (c)(1)(A) of this section to reduce the dividends received deduction from federal taxable income in § 67-4-805(b)(2)(A) by an amount equal to the expenses incurred by the corporate taxpayer in earning the dividends. Kellogg Co. v. Olsen, 675 S.W.2d 707, 1984 Tenn. LEXIS 939 (Tenn. 1984).
A corporation and its affiliates engaged in business within and without the state were required to file excise tax returns on a separate entity basis, in accordance with the standard apportionment formula set forth in former § 67-4-811, rather than on a combined or consolidated basis; there was no evidence of evasion of taxes or shifting of income among the group, as required for combined reporting pursuant to this former section. AT & T Co. v. Huddleston, 880 S.W.2d 682, 1994 Tenn. App. LEXIS 141 (Tenn. Ct. App. 1994).
4. Statutory Formula.
Court is without power to compel commissioner to depart from statutory formula and use “hardship” formula in taxing foreign corporations, though former commissioners used “hardship” formulas since matter is discretionary with the commissioner subject to approval of the attorney-general and reporter. American Bemberg Corp. v. Carson, 188 Tenn. 263, 219 S.W.2d 169, 1949 Tenn. LEXIS 339 (1949).
Commissioner can exercise discretion in determining whether facts and circumstances justify departure from statutory formula in imposing tax on foreign corporations doing business in Tennessee. American Bemberg Corp. v. Carson, 188 Tenn. 263, 219 S.W.2d 169, 1949 Tenn. LEXIS 339 (1949).
Commissioner is entitled to provide method of fixing net earnings and as long as method adopted is not arbitrary the method is final. Southern Coach Lines v. McCanless, 191 Tenn. 634, 235 S.W.2d 804, 1951 Tenn. LEXIS 367 (1951).
Fact that corporation which was engaged in dealing in lumber made unusually large profit from sale of out of state timber land did not constitute valid reason for variation from standard apportionment formula. Woods Lumber Co. v. MacFarland, 209 Tenn. 667, 355 S.W.2d 448, 1962 Tenn. LEXIS 401 (1962).
A corporation and its affiliates engaged in business within and without the state were required to file excise tax returns on a separate entity basis, in accordance with the standard apportionment formula set forth in former § 67-4-811, rather than on a combined or consolidated basis; there was no evidence of evasion of taxes or shifting of income among the group, as required for combined reporting pursuant to this former section. AT & T Co. v. Huddleston, 880 S.W.2d 682, 1994 Tenn. App. LEXIS 141 (Tenn. Ct. App. 1994).
Commissioner acted within his discretion when he varied the statutory apportionment formula for calculating corporate excise taxes and applied the alternative provisions of this statute because including the taxpayer's return of capital from cash investments in the denominator unfairly represented the taxpayer's business within the state. Sherwin-Williams Co. v. Johnson, 989 S.W.2d 710, 1998 Tenn. App. LEXIS 701 (Tenn. App. 1998).
5. Waiver of Tax.
Commissioner of finance cannot waive right of state to collect tax. R.J. Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, 1948 Tenn. LEXIS 422 (1948), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
6. Discretion of Commissioner.
Where evidence did not support the contention of manufacturing corporation operating five plants, one of which was in Tennessee, that its business was multifold rather than unitary and the only other evidence offered was the profit and loss statements of all the plants and where the excise tax returns and ratios made thereunder were not in evidence, commissioner did not abuse his discretion in not applying the hardship formula provided by former section. W.S. Dickey Clay Mfg. Co. v. Dickinson, 200 Tenn. 25, 289 S.W.2d 533, 1956 Tenn. LEXIS 373 (1956).
Application of hardship formula addresses itself to the discretion of the commissioner. Woods Lumber Co. v. MacFarland, 209 Tenn. 667, 355 S.W.2d 448, 1962 Tenn. LEXIS 401 (1962).
7. Leased Equipment.
The railroad corporation, having leased its equipment to an operating company, was liable for excise and franchise taxes where the court had placed the taxes upon the privilege of doing business in corporate form. Nashville & Decatur R. Co. v. Atkins, 489 S.W.2d 837, 1973 Tenn. LEXIS 531 (Tenn. 1973).
67-4-2015. Filing of returns — Payment of tax — Penalty.
- The franchise and excise tax return shall be filed with the commissioner on or before the fifteenth day of the fourth month following the close of the taxpayer's taxable year. The return shall coincide with the accounting period covered by the federal return and the appropriate tax must be paid to the department at the time of filing the return. In the event the return covers a period of less than twelve (12) months, the excise tax shall not be prorated.
-
Every taxpayer, who has a combined franchise and excise tax liability of five thousand dollars ($5,000) or more, after application of all available franchise and excise tax credits, for both the immediately preceding tax year, annualized if the preceding tax year was for less than twelve (12) months, and the current tax year, shall make four (4) quarterly estimated franchise and excise tax payments for its current tax year. A taxpayer electing to compute its net worth on a consolidated basis shall compute its quarterly estimated franchise and excise tax payments taking into consideration that its net worth will be computed on a consolidated basis. Except as otherwise provided in this section, the minimum amount of each quarterly payment shall be the lesser of:
- Twenty-five percent (25%) of the combined franchise and excise tax shown on the tax return for the preceding tax year, annualized if the preceding tax year was for less than twelve (12) months; or
- Twenty-five percent (25%) of eighty percent (80%) of the combined franchise and excise tax liability for the current tax year.
- The first quarterly payment shall be due on the fifteenth day of the fourth month of the current tax year; the second payment on the fifteenth day of the sixth month; the third payment on the fifteenth day of the ninth month; and the final payment on the fifteenth day of the first month of the next succeeding tax year.
- If there is a deficiency or delinquency of any quarterly estimated tax payment required, a penalty in the amount of two percent (2%) for each month of underpayment or part thereof not to exceed a total of twenty-four percent (24%) and interest at the rate prescribed by § 67-1-801 shall be assessed.
-
The period of underpayment of any required quarterly estimated franchise and excise tax payment shall extend from the date the payment was required to be paid to the earlier of:
- The fifteenth day of the fourth month following the close of the taxable year; or
- With respect to all or any portion of the underpayment, the date on which all or any portion of the underpayment is paid.
- A quarterly payment of estimated franchise and excise tax on any installment date shall be considered a payment of any previous underpayment only to the extent such payment exceeds the amount of the installment payable for that date.
-
-
Notwithstanding this section to the contrary, with respect to the excise tax component of its quarterly estimated franchise and excise tax payments, a taxpayer may elect to calculate that excise tax component in the manner provided by Section 6655(e)(2) of the Internal Revenue Code. For those taxpayers that elect to calculate the excise tax component of their quarterly estimated franchise and excise tax payments in the manner provided by this subsection (g), the franchise tax component of each quarterly estimated payment shall be the lesser of:
- Twenty-five percent (25%) of the franchise tax shown on the tax return for the preceding tax year, annualized if the preceding tax year was for less than twelve (12) months; or
- Twenty-five percent (25%) of eighty percent (80%) of the franchise tax liability for the current tax year.
- A taxpayer electing to calculate its quarterly estimated franchise and excise tax payments under this subsection (g) shall establish the amount of each estimated payment on a form prescribed by the commissioner.
-
Notwithstanding this section to the contrary, with respect to the excise tax component of its quarterly estimated franchise and excise tax payments, a taxpayer may elect to calculate that excise tax component in the manner provided by Section 6655(e)(2) of the Internal Revenue Code. For those taxpayers that elect to calculate the excise tax component of their quarterly estimated franchise and excise tax payments in the manner provided by this subsection (g), the franchise tax component of each quarterly estimated payment shall be the lesser of:
-
-
- An extension of time of six (6) months in which to file the franchise and excise tax return shall be granted if, on or before the original due date of the return, the extension request is made as required in subdivision (h)(2) and the taxpayer has paid franchise and excise taxes equal to at least the lesser of:
-
- Ninety percent (90%) of the liability for the tax year for which the extension is being requested; or
- The commissioner shall ensure that any new integrated tax system implemented by the department will support the annualization of quarterly estimated payments.
-
-
As used in this subsection (k), “perfection period” means a period of ten (10) calendar days, beginning with the day after date of the first transmission of an electronic return that is subsequently rejected by the commissioner, for the taxpayer to either:
- Correct any errors in the return that cause it to fail to meet any of the validation criteria set by the commissioner and retransmit it; provided, that the commissioner subsequently accepts the corrected return; or
- File a paper return postmarked on or before the expiration of the ten (10) calendar days; provided, that the taxpayer is not required to electronically file or the commissioner grants the taxpayer permission to file the return on paper.
- A taxpayer's electronically filed return shall be treated as filed on the date of the last transmission prior to the return being accepted by the commissioner, except as provided in subdivision (k)(3). A taxpayer's paper return shall be treated as filed when mailed and postmarked, except as provided in subdivision (k)(3).
- A return that complies with the requirements of the perfection period shall be treated as filed on the date of the first electronic transmission.
-
As used in this subsection (k), “perfection period” means a period of ten (10) calendar days, beginning with the day after date of the first transmission of an electronic return that is subsequently rejected by the commissioner, for the taxpayer to either:
One hundred percent (100%) of the tax shown due on the tax return for the preceding tax year, annualized if the preceding tax year was for less than twelve (12) months; provided, however, that, if there was no liability for the preceding tax year, the amount paid shall equal the minimum tax amount provided in § 67-4-2119.
A taxpayer electing to compute its net worth on a consolidated basis shall make its franchise, excise tax extension request and compute the payment thereon taking into consideration that its net worth will be computed on a consolidated basis.
Where the taxes paid on or before the original due date of the return do not equal the amount provided in subdivision (h)(1)(A), or if the return is not filed by the extended due date, penalty as provided by § 67-1-804 and interest as provided by § 67-1-801(a) shall attach as though no extension had been granted.
An extension request shall be made as follows:
If the taxpayer is not required to make a tax payment with its extension request, the taxpayer may use either a form prescribed by the commissioner or a copy of the taxpayer's request for an automatic extension of time to file its federal income tax return for the corresponding tax period. The form shall not be filed on the original due date of the return but, instead, shall be attached to the return filed on or before the extended due date;
If the taxpayer is required to make a tax payment with its extension request and the taxpayer does not file its federal income tax return as a member of a consolidated group, the taxpayer may use either a form prescribed by the commissioner or a copy of the taxpayer's request for an automatic extension of time to file its federal income tax return for the corresponding tax period. The form shall be filed with the tax payment on or before the original due date of the return; and
If the taxpayer is required to make a tax payment with its extension request and the taxpayer files its federal income tax return as a member of a consolidated group, the taxpayer must use a form prescribed by the commissioner. The form shall be filed with the tax payment on or before the original due date of the return.
Final return status shall apply to the first return that reflects any activity or event giving rise to such status, and shall apply to all subsequent returns filed by the taxpayer. The taxpayer shall file a return for each tax period during which the taxpayer is in final return status. This requirement shall include returns of taxpayers with any remaining assets, activity, equity, or proceeds; or with installment sales attributable to any Tennessee assets regardless of whether the entity has any remaining in-state activity.
Acts 1999, ch. 406, § 3; 2000, ch. 982, §§ 23-25; 2003, ch. 164, §§ 1, 2; 2004, ch. 786, § 2; 2004, ch. 932, §§ 2, 3; 2005, ch. 499, § 79; 2012, ch. 658, § 1; 2013, ch. 321, § 2; 2016, ch. 881, §§ 2-7; 2017, ch. 194, §§ 1, 2; 2018, ch. 1048, § 2.
Code Commission Notes.
Former subsection (h), concerning waiver of franchise and excise tax penalties for tax years beginning on or after July 1, 1999, and before July 1, 2000, was deleted as obsolete by authority of the code commission in 2006.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998.
Acts 2004, ch. 786, § 5 provided that § 2 of the act shall apply to tax periods ending on or after July 1, 2004.
Acts 2004, ch. 932, § 11 provided that the amendment by that act shall apply to all tax years beginning on or after January 1, 2004.
Acts 2012, ch. 658, § 2 provided that the act, which rewrote subdivision (g)(1), shall apply to tax periods ending on or after July 1, 2012.
Acts 2016, ch. 881, § 8 provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2016.
Acts 2017, ch. 194, § 5 provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2017.
For the Preamble to the act concerning electronic filing of tax returns, please see Acts 2018, ch. 1048.
Acts 2018, ch. 1048, § 3 provided that the act, which amended this section, shall apply to tax returns filed on or after October 1, 2018.
Amendments. The 2013 amendment added (h).
The 2016 amendment, in (b), substituted “, after application of all available franchise and excise tax credits, for both the immediately preceding tax year, annualized if the preceding tax year was for less than twelve (12) months, and the current tax year, shall make four (4)” for “for the current tax year, shall make four (4) equal” in the first sentence of the introductory paragraph of (b), and substituted “eighty percent (80%)” for “one hundred percent (100%)” in (2); in the first sentence of (d), substituted “two percent (2%)” for “five percent (5%)” and substituted “twenty-four percent (24%)” for “twenty-five percent (25%)”; deleted the former last sentence of (d) which read: “Notwithstanding any law to the contrary, a taxpayer that has timely made four (4) quarterly estimated franchise and excise tax payments, each of which equals at least twenty-five percent (25%) of the current year's franchise and excise tax liability, shall not be assessed a deficiency penalty with regard to any quarterly payment.” ; and added (i).
The 2017 amendment added “Except as otherwise provided in this section,” in the last sentence of the introductory paragraph of (b); and added (g) and redesignated former (g)-(i) to be present (h)-(j), respectively.
The 2018 amendment, effective October 1, 2018, added (k).
Effective Dates. Acts 2013, ch. 321, § 9. May 13, 2013.
Acts 2016, ch. 881, § 8. April 27, 2016.
Acts 2017, ch. 194, § 5. April 19, 2017.
Acts 2018, ch. 1048, § 3. October 1, 2018.
Law Reviews.
Delegation of Powers to Administrative Agencies in Tennessee (Phillip P. Durand), 27 Tenn. L. Rev. 569 (1960).
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
Cited: Wachovia Bank of N.Carolina, N.A. v. Johnson, 26 S.W.3d 621, 2000 Tenn. App. LEXIS 6 (Tenn. Ct. App. 2000).
NOTES TO DECISIONS
Decisions Under Prior Law
1. Unitary Groups.
A unitary group of domestic financial institutions was entitled to a refund of corporate franchise taxes assessed on dividend payments from subsidiaries to the parent corporation. Independent S. Bancshares, Inc. v. Huddleston, 912 S.W.2d 705, 1995 Tenn. App. LEXIS 263 (Tenn. Ct. App. 1995).
67-4-2016. Collection — Dissolved entities.
- The commissioner is empowered and it is the commissioner's duty to collect the tax, together with penalty and interest, levied under this part from any officer, stockholder, partner, member, principal, or employee of a taxpayer that is out of business or has dissolved, liquidated, otherwise terminated at a time when it has refused or failed to pay the excise tax levied under this part, and any such officer, stockholder, partner, member, principal, or employee has received property belonging to the taxpayer, but such collection shall be limited to the value of the property received.
- The commissioner is empowered to certify to the secretary of state the name of any taxpayer that fails or refuses to file any statement or return or to pay any fee or tax required by this part; however, no certification shall be issued until such statement, return, or tax has remained delinquent for a period of ninety (90) days.
- At the time of such certification to the secretary of state, the commissioner shall give notice to the taxpayer of the action taken. Thereupon, the charter or certificate of such taxpayer or its domestication in Tennessee shall stand as automatically dissolved or revoked and the secretary of state shall note such revocation or dissolution upon the secretary of state's records.
- At any time after the date of revocation or dissolution, such charter or certificate or domestication may be reinstated upon the filing of all reports and the payment of all fees, taxes, penalty and interest due the state; provided, that the title has not been taken by another taxpayer.
Acts 1999, ch. 406, § 3.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
NOTES TO DECISIONS
1. Unitary Groups.
A unitary group of domestic financial institutions was entitled to a refund of corporate franchise taxes assessed on dividend payments from subsidiaries to the parent corporation. Independent S. Bancshares, Inc. v. Huddleston, 912 S.W.2d 705, 1995 Tenn. App. LEXIS 263 (Tenn. Ct. App. 1995).
2. Failure to Pay Excise Tax.
Excise taxes are imposed on the privilege of doing business in Tennessee, and they are not charges required to maintain an entity's corporate existence, such as annual reporting or filing a charter; the fact that failure to pay the excise tax may result in revocation of a company's charter under T.C.A. § 67-4-2016(c), does not make the excise tax a fee in connection with maintaining corporate existence because a company's obligation to pay excise taxes remains despite revocation of its charter or registration, T.C.A. § 67-4-2007(b). J-Star Holdings, LLC v. Pantry, Inc., — S.W.3d —, 2013 Tenn. App. LEXIS 6 (Tenn. Ct. App. Jan. 2, 2013).
3. Action Against Shareholder.
Simplest construction of T.C.A. §§ 67-4-2016, 67-4-2017, and 67-1-1444, and one that does not create conflict between them, is to enforce the plain language of §§ 67-4-2016 and 67-4-2117, which does not require the finding of a fraudulent conveyance solely in those situations where the transferee of assets is a shareholder in a now-dissolved corporation. Similarly, the plain language of § 67-1-1444 demonstrates that it would apply in any other situation wherein assets have been transferred by any person in order to defraud the Tennessee Department of Revenue from levying against those assets for the collection of tax liability. Bookstaff v. Gerregano, — S.W.3d —, 2017 Tenn. App. LEXIS 821 (Tenn. Ct. App. Dec. 20, 2017).
Because the Tennessee Department of Revenue obtained a judgment against a corporation for the unpaid franchise and excise taxes, thus establishing that such judgment could be collected at any time pursuant to T.C.A. § 67-1-1429(a)(3), and because T.C.A. §§ 67-4-2016 and 67-4-2117 permitted collection from a stockholder, the Department's lawsuit against a former stockholder was not barred by T.C.A. § 67-1-1429(a)(1)(A). Bookstaff v. Gerregano, — S.W.3d —, 2017 Tenn. App. LEXIS 821 (Tenn. Ct. App. Dec. 20, 2017).
67-4-2017. Taxation of banks and financial institution unitary businesses.
-
All the taxes collected under this part shall be applied as follows:
-
To cities and counties, an amount for each bank with a deposit facility in this state and each “financial institution unitary business” as defined in this section:
- Three percent (3%) of the net earnings of the bank and the net earnings of a financial institution unitary business determined on a combined basis for the second fiscal year preceding the year in which the distribution under this section is made, less seven percent (7%) of the ad valorem taxes paid by the bank or financial institution unitary business on its real property and tangible personal property for the second fiscal year preceding the year in which the distribution is made. For the purposes of this subdivision (a)(1), “net earnings,” as applicable to either a bank or financial institution unitary business, does not include amounts attributable to interest earned on bonds and other obligations of the state of Tennessee. As used in this section, “financial institution unitary business” includes only those financial institutions that form a unitary business as defined in § 67-4-2004, that file a combined franchise, excise tax return in Tennessee and that have at least one (1) member with a deposit facility in Tennessee. The total amount thus determined shall be allocated between the county and municipal governments where the office of the bank or financial institution unitary business is located in the same proportion as the property tax rate of each such taxing jurisdiction shall bear to the sum of the property tax rates;
-
In circumstances where a bank or financial institution unitary business has more than one (1) branch or office, the total allocation attributable to such bank or financial institution unitary business as determined in subdivision (a)(1)(A) shall be further allocated between such counties and cities where its branches or offices are located as follows:
- The proportionate percentage that is produced by the ratio of the deposits of each branch or office of the bank or financial institution unitary business to the total deposits of the bank or financial institution unitary business shall be determined as of January 1 of each year, and the percentage so determined shall then be applied to the total allocation to determine the portion of the total attributable to each branch or office;
- The branches or offices shall then be grouped each to a common location so as to determine the aggregate allocation of all branches or offices located in each individual county and municipality; and
- The percentage of the total allocation allowable to each county and municipality shall be divided between the county and municipality where the branch or office is maintained in the same proportion as the property tax rates of each for the second year preceding the year in which the distribution under this section is made shall bear to the total of the property tax rates;
- The director of the division of property assessments shall provide to the commissioner, periodically on a timely basis, the ad valorem property tax rates for each taxing jurisdiction. The commissioner shall report the amount of such allocations made to each county and municipality to the comptroller of the treasury for audit purposes on an annual basis;
- The status of each bank or financial institution unitary business as of January 1 of the fiscal year for which the allocation is calculated shall be the determining status;
- If the net earnings of any bank or financial institution unitary business shall be redetermined for any period in accordance with this part, the commissioner shall recalculate the allocation attributable to such bank or financial institution unitary business, and any indicated increase or decrease in allocation shall be effected in the next succeeding general allocation to the respective county and municipal governments, as appropriate; and
- The commissioner has the authority and power to prescribe forms upon which all banks or financial institution unitary businesses shall report such facts and information as will enable the department to ascertain the correctness of the allocation. The department has the full power to summon witnesses, to inspect or require the production of books and papers, and to obtain and consider any evidence and records other than the reports submitted by such banks or financial institution unitary businesses that it may deem proper or necessary to carry out its responsibilities under subdivision (a)(1). If any bank or financial institution unitary business subject to this part fails, refuses or neglects to collect and file such form with the department as provided by this section, the department shall determine the amount of the allocation in regard to such bank or financial institution unitary business on the basis of the best information available; and
- After allocations to counties and municipalities as provided in subdivision (a)(1), the remainder of the taxes collected under this part shall be applied to and become a part of the general fund of the state.
-
To cities and counties, an amount for each bank with a deposit facility in this state and each “financial institution unitary business” as defined in this section:
- The general assembly is exercising its discretion granted in article II, § 28 of the Tennessee Constitution to establish the manner in which banks shall be taxed. The allocation of taxes to local governments provided in subdivision (a)(1) shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of banks and banking associations,” and all taxes on the redeemable or cash value of all their outstanding shares of capital stock, certificates of deposit and certificates of investment, by whatever name called, of such bank or banking association; provided, that such bank or banking association shall nonetheless continue to be subject to ad valorem taxes on its real property, tangible personal property and all other taxes to which it is currently subject.
Acts 1999, ch. 406, § 3; 2003, ch. 355, § 42; 2005, ch. 500, § 5; 2006, ch. 989, § 10.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2003, ch. 355, § 66 provided that no expenditure of public funds pursuant to the act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Acts 2003, ch. 355, § 73 provided that there is established within the general fund the state-shared revenue reduction mitigation account. Any amounts in the state-shared revenue reduction mitigation account shall be applied by the commissioner of finance and administration to offset reductions in state-shared revenues allocated to local governments pursuant to the provisions of the act so that such reductions shall not exceed nine percent (9%) of state-shared revenues that otherwise would have been allocated to any such local government. Funds shall be restored on a pro rata basis taking into account the percentage reduction to each local government from each state-shared revenue source.
Acts 2006, ch. 989, § 17 provided that §§ 1-14 of the act shall apply to funds remitted to the department of revenue on or after August 1, 2006.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
NOTES TO DECISIONS
3. Action Against Shareholder.
Simplest construction of T.C.A. §§ 67-4-2016, 67-4-2017, and 67-1-1444, and one that does not create conflict between them, is to enforce the plain language of §§ 67-4-2016 and 67-4-2117, which does not require the finding of a fraudulent conveyance solely in those situations where the transferee of assets is a shareholder in a now-dissolved corporation. Similarly, the plain language of § 67-1-1444 demonstrates that it would apply in any other situation wherein assets have been transferred by any person in order to defraud the Tennessee Department of Revenue from levying against those assets for the collection of tax liability. Bookstaff v. Gerregano, — S.W.3d —, 2017 Tenn. App. LEXIS 821 (Tenn. Ct. App. Dec. 20, 2017).
Because the Tennessee Department of Revenue obtained a judgment against a corporation for the unpaid franchise and excise taxes, thus establishing that such judgment could be collected at any time pursuant to T.C.A. § 67-1-1429(a)(3), and because T.C.A. §§ 67-4-2016 and 67-4-2117 permitted collection from a stockholder, the Department's lawsuit against a former stockholder was not barred by T.C.A. § 67-1-1429(a)(1)(A). Bookstaff v. Gerregano, — S.W.3d —, 2017 Tenn. App. LEXIS 821 (Tenn. Ct. App. Dec. 20, 2017).
67-4-2018. Criteria for job tax credit.
-
This section shall apply to any person who meets all of the following criteria, notwithstanding any other law to the contrary:
- The person was formed as a business entity after December 31, 1995;
- The person was not subject to Tennessee franchise or excise taxes prior to the date chapter 406 of the Public Acts of 1999 became applicable to it; and
- Had the person been subject to franchise taxes, it could have, under former § 67-4-908(c) prior to its repeal by chapter 406, qualified for the job tax credit and any carryover thereof for the calendar tax years 1997 and 1998.
-
Any person who meets the criteria set forth in subdivisions (a)(1)-(3) shall be entitled to:
- In accordance with the provisions and limitations of former § 67-4-908(c) prior to its repeal, compute any job tax credit that it would have been entitled to for the calendar tax years 1997 and 1998, had it been subject to the Tennessee franchise tax for those tax years;
- Apply the job tax credit computed under subdivision (b)(1) to the franchise tax that it would have had in that tax year, had it been subject to such tax, and apply any remaining unused carryover thereof to the franchise tax that it had, or would have had, if it had been subject to the franchise tax, in the next succeeding tax year until fully utilized, but in no case for more than fifteen (15) years after the tax year in which the credit originated;
- In accordance with the provisions and limitations of former § 67-4-808(5) prior to its repeal, compute any industrial machinery excise tax credit that it would have had for the calendar tax years 1997 and 1998, had it been subject to the Tennessee excise tax for those tax years;
- Apply the industrial machinery excise tax credit computed under subdivision (3) to the excise tax that it would have had, if it had been subject to the excise tax in that tax year, and apply any remaining unused carryover thereof to the excise tax that it had, or that it would have had, if it had it been subject to such tax, in the next succeeding tax year until fully utilized, but in no case for more than fifteen (15) years after the tax year in which the credit originated. The recapture provisions of former § 67-4-808(4)(D) prior to its repeal shall apply, if any of the industrial machinery purchased in 1997 or 1998 is sold or removed from Tennessee before the expiration of its useful life as established according to the depreciation guidelines in effect for excise tax purposes;
- In accordance with the provisions and limitations of former § 67-4-805(b)(2)(C) prior to its repeal, compute any net operating loss carryover that it would have had for the calendar tax years 1997 and 1998 had it been subject to Tennessee excise tax for those tax years; and
- Apply any net operating loss carryover computed under subdivision (b)(5) to any Tennessee net earnings subject to Tennessee excise tax, or that would have been subject to excise tax had the person been liable to pay such a tax, in the next succeeding tax year until fully utilized, but in no case for more than fifteen (15) years after the tax year in which the loss originated.
Acts 2000, ch. 982, § 26.
Compiler's Notes. Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998.
Chapter 406 of the Public Acts of 1999 repealed the former excise and franchise tax laws effective July 1, 1999.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
67-4-2019. Exemption for distributions to publicly traded real estate investment trust (public REIT).
There shall be exempt from the payment of the excise tax levied under this part any person treated as a partnership for federal tax purposes that directly or indirectly distributes one hundred percent (100%) of its net earnings or net losses to a public REIT.
Acts 2006, ch. 1019, § 12.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
67-4-2020. Taxes collected from loan and related companies.
This section does not create or impose a new tax, but shall govern allocation of taxes already collected under this part from financial institutions, including loan or trust companies regulated by the department of financial institutions, which do not have deposit facilities. These taxes shall be allocated as follows:
-
To cities and counties, an amount for each institution with a branch in this state and each “financial institution unitary business” as defined in this section:
- Three percent (3%) of the net earnings of the institution and the net earnings of a financial institution unitary business determined on a combined basis for the second fiscal year preceding the year in which the distribution under this section is made, less seven percent (7%) of the ad valorem taxes paid by the financial institution or financial institution unitary business on its real and tangible personal property for the second fiscal year preceding the year in which the distribution is made. For purposes of this subdivision (1), “net earnings” does not include amounts attributable to interest earned on bonds and other obligations of this state. As used in this section, “financial institution unitary business” includes only those financial institutions that form a unitary business as defined in § 67-4-2004, that file a combined franchise, excise tax return in this state and that have at least one (1) member with a branch in this state. The total amount thus determined shall be allocated between the county and municipal governments where the office of the financial institution or financial institution unitary business is located in the same proportion as the property tax rate of each such taxing jurisdiction shall bear to the sum of the property tax rates;
-
In circumstances where a financial institution or financial institution unitary business has more than one (1) branch or office, the total allocation attributable to such financial institution or financial institution unitary business as determined in subdivision (1)(A) shall be further allocated between such counties and cities where its branches or offices are located as follows:
- The proportionate percentage that is produced by the ratio of outstanding loans and sales contracts receivable in each branch or office of the financial institution or financial institution unitary business to the total outstanding loans and sales contracts receivable of the financial institution or financial institution unitary business shall be determined as of January 1 for each year, and the percentage so determined shall then be applied to the total allocation to determine the portion of the total attributable to each branch or office;
- The branches or offices shall then be grouped each to a common location so as to determine the aggregate allocation of all branches or offices located in each individual county and municipality; and
- The percentage of the total allocation allowable to each county and municipality shall be divided between the county and municipality where the branch or office is maintained in the same proportion as the property tax rates of each for the second year preceding the year in which the distribution under this section is made shall bear to the total of the property tax rates.
- The director of the division of property assessments shall provide to the commissioner, periodically on a timely basis, the ad valorem property tax rates for each taxing jurisdiction. The commissioner shall report the amount of such allocations made to each county and municipality to the comptroller of the treasury for audit purposes on an annual basis.
- The status of each financial institution or financial institution unitary business as of January 1 of the fiscal year for which the allocation is calculated shall be the determining basis.
- If the net earnings of any financial institution or financial institution unitary business shall be redetermined for any period in accordance with this part, the commissioner shall recalculate the allocation attributable to such financial institution or financial institution unitary business, and any indicated increase or decrease in allocation shall be effected in the next succeeding general allocation to the respective county and municipal governments, as appropriate.
- The commissioner has the authority and power to prescribe forms upon which all financial institutions or financial institution unitary businesses shall report such facts and information as will enable the department to ascertain the correctness of the allocation. The department has the full power to summon witnesses, to inspect or require the production of books and papers, and to obtain and consider any evidence and records other than the reports submitted by such financial institutions or financial institution unitary businesses that it may deem proper or necessary to carry out its responsibilities under this section. If any financial institution or financial institution unitary business subject to this part fails, refuses or neglects to collect and file such form with the department as provided by this section, the department shall determine the amount of the allocation in regard to such institution on the basis of the best information available.
- After allocation to counties and municipalities as provided in subdivision (1), the remainder of the taxes collected under this part shall be applied to and become a part of the general fund of the state.
Acts 2011, ch. 438, § 3.
Compiler's Notes. Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chatper 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to itle 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
67-4-2021. Taxes collected from investment companies.
This section does not create or impose a new tax, but shall govern allocation of taxes already collected under this part from regulated investment companies that are not part of a financial institution unitary business. These taxes shall be allocated as follows:
-
To cities and counties, an amount for each institution with a branch in this state as determined in this subdivision (1).
- Three percent (3%) of the net earnings of the company less seven percent (7%) of the ad valorem taxes paid by the company on its real and tangible personal property for the second fiscal year preceding the year in which the distribution is made. For purposes of this subdivision (1), “net earnings” does not include amounts attributable to interest earned on bonds and other obligations of this state. The total amount thus determined shall be allocated between the county and municipal governments where the office of the investment company is located in the same proportion as the property tax rate of each such taxing jurisdiction shall bear to the sum of the property tax rates;
-
In circumstances where an investment company has more than one (1) branch or office, the total allocation attributable to such company as determined in subdivision (1)(A) shall be further allocated between such counties and cities where its branches or offices are located as follows:
- The proportionate percentage that is produced by the ratio of account balances attributed to each branch or office of the company to the total account balances of the company shall be determined as of January 1 of each year, and the percentage so determined shall then be applied to the total allocation to determine the portion of the total attributable to each branch or office;
- The branches or offices shall then be grouped each to a common location so as to determine the aggregate allocation of all branches or offices located in each individual county and municipality; and
- The percentage of the total allocation allowable to each county and municipality shall be divided between the county and municipality where the branch or office is maintained in the same proportion as the property tax rates of each for the second year preceding the year in which the distribution under this section is made shall bear to the total of the property tax rates.
- The director of the division of property assessments shall provide to the commissioner, periodically on a timely basis, the ad valorem property tax rates for each taxing jurisdiction. The commissioner shall report the amount of such allocations made to each county and municipality to the comptroller of the treasury for audit purposes on an annual basis.
- The status of each investment company as of January 1 of the fiscal year for which the allocation is calculated shall be the determining basis.
- If the net earnings of any investment company shall be redetermined for any period in accordance with this part, the commissioner shall recalculate the allocation attributable to the company, and any indicated increase or decrease in allocation shall be effected in the next succeeding general allocation to the respective county and municipal governments, as appropriate.
- The commissioner has the authority and power to prescribe forms upon which all investment companies shall report such facts and information as will enable the department to ascertain the correctness of the allocation. The department has the full power to summon witnesses, to inspect or require the production of books and papers, and to obtain and consider any evidence and records other than the reports submitted by such companies that it may deem proper or necessary to carry out its responsibilities under this section. If any investment company subject to this part fails, refuses or neglects to collect and file such form with the department as provided by this section, the department shall determine the amount of the allocation in regard to such company on the basis of the best information available.
- After allocation to counties and municipalities as provided in subdivision (1), the remainder of the taxes collected under this part shall be applied to and become a part of the general fund of the state.
Acts 2011, ch. 438, § 4.
Compiler's Notes. Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chatper 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to itle 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
67-4-2022. Taxes collected from cemetery companies.
This section does not create or impose a new tax, but shall govern allocation of taxes already collected under this part from cemetery companies as defined in § 46-1-102. These taxes shall be allocated as follows:
-
To cities and counties, an amount for each company with an office in this state as determined in this subdivision (1).
- Three percent (3%) of the net earnings of the company less seven percent (7%) of the ad valorem taxes paid by the company on its real and tangible personal property for the second fiscal year preceding the year in which the distribution is made. For purposes of this subdivision (1), “net earnings” does not include amounts attributable to interest earned on bonds and other obligations of this state. The total amount thus determined shall be allocated between the county and municipal governments where the office of the company is located in the same proportion as the property tax rate of each such taxing jurisdiction shall bear to the sum of the property tax rates;
-
In circumstances where a company has more than one (1) office, the total allocation attributable to such company as determined in subdivision (1)(A) shall be further allocated between such counties and cities where its offices are located as follows:
- The proportionate percentage that is produced by the ratio of assessed value for ad valorem tax of real and tangible personal property associated with each office of the company, to the total assessed value for all offices of the company shall be determined as of January 1 of each year, and the percentage so determined shall then be applied to the total allocation to determine the portion of the total attributable to each office;
- The offices shall then be grouped each to a common location so as to determine the aggregate allocation of all offices located in each individual county and municipality; and
- The percentage of the total allocation allowable to each county and municipality shall be divided between the county and municipality where the office is maintained in the same proportion as the property tax rates of each for the second year preceding the year in which the distribution under this section is made shall bear to the total of the property tax rates.
- The director of the division of property assessments shall provide to the commissioner, periodically on a timely basis, the ad valorem property tax rates for each taxing jurisdiction. The commissioner shall report the amount of such allocations made to each county and municipality to the comptroller of the treasury for audit purposes on an annual basis.
- The status of each cemetery company as of January 1 of the fiscal year for which the allocation is calculated shall be the determining basis.
- If the net earnings of any cemetery company shall be redetermined for any period in accordance with this part, the commissioner shall recalculate the allocation attributable to the company, and any indicated increase or decrease in allocation shall be effected in the next succeeding general allocation to the respective county and municipal governments, as appropriate.
- The commissioner and the county assessors of property shall exchange such information as will enable the department to ascertain the correctness of the allocation.
- After allocation to counties and municipalities as provided in subdivision (1), the remainder of the taxes collected under this part shall be applied to and become a part of the general fund of the state.
Acts 2011, ch. 438, § 5.
Compiler's Notes. Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chatper 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to itle 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
Law Reviews.
Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012).
67-4-2023. Election for application of section by taxpayer meeting gross sales threshold and receipts factor threshold — Total amount derived from certified distribution sales to be excluded from numerator of receipts factor — Payment of excise tax on amount excluded from numerator.
- Notwithstanding any law to the contrary, a taxpayer that meets the gross sales threshold and the receipts factor threshold during the tax period qualifies for the application of this section and may elect the application of this section by filing an election form with the department and providing such information as may be required by the commissioner on or before the due date of the tax return for the period for which such election is to take effect. Such election shall remain in effect until revoked by the taxpayer or until the taxpayer no longer qualifies for the election.
-
For purposes of this section, the following shall apply:
- A taxpayer meets the gross sales threshold if the taxpayer's sales of tangible personal property made in this state during the tax period to all distributors exceed one billion dollars ($1,000,000,000), as determined under § 67-4-2012 without regard to this section;
- A taxpayer meets the receipts factor threshold if the taxpayer's receipts factor, as determined under § 67-4-2012 without regard to this section, exceeds ten percent (10%); and
- “Certified distribution sales” means sales of tangible personal property made in this state by the taxpayer to any distributor, whether or not affiliated with the taxpayer, that is resold for ultimate use or consumption outside the state; provided, that the distributor has certified that such property has been resold for ultimate use or consumption outside this state. Such certification shall be made in the manner prescribed by the commissioner.
-
- A taxpayer that has made the election described in subsection (a) shall, so long as such election is in effect, apportion net earnings and net worth in the manner prescribed elsewhere in this part and the Franchise Tax Law, compiled in part 21 of this chapter; provided, however, that the total amount derived from certified distribution sales shall be excluded from the numerator of the receipts factor, as that term is defined elsewhere in this part and the Franchise Tax Law.
-
A taxpayer that has made the election described in subsection (a) shall, so long as such election is in effect, pay to the commissioner, annually, an excise tax on the total amount of certified distribution sales excluded from the numerator of the taxpayer's receipts factor. The amount of such tax shall be computed in the following manner:
- In the case of taxpayers excluding no more than two billion dollars ($2,000,000,000) of certified distribution sales for the tax period, the amount of such tax shall be five-tenths of one percent (0.5%) of the total amount of certified distribution sales;
-
In the case of taxpayers excluding more than two billion dollars ($2,000,000,000) but no more than three billion dollars ($3,000,000,000) of certified distribution sales for the tax period, the amount of such tax shall be:
- Three-eighths of one percent (0.375%) of certified distribution sales in excess of two billion dollars ($2,000,000,000); plus
- Ten million dollars ($10,000,000);
-
In the case of taxpayers excluding more than three billion dollars ($3,000,000,000) but no more than four billion dollars ($4,000,000,000) of certified distribution sales for the tax period, the amount of such tax shall be:
- One-fourth of one percent (0.25%) of certified distribution sales in excess of three billion dollars ($3,000,000,000); plus
- Thirteen million, seven hundred fifty thousand dollars ($13,750,000); and
-
In the case of taxpayers excluding more than four billion dollars ($4,000,000,000) of certified distribution sales for the tax period, the amount of such tax shall be:
- One-eighth of one percent (0.125%) of certified distribution sales in excess of four billion dollars ($4,000,000,000); plus
- Sixteen million, two hundred fifty thousand dollars ($16,250,000).
- The tax due under subdivision (c)(2) shall be in addition to all other taxes, including the tax imposed by § 67-4-2007(a).
Acts 2015, ch. 514, § 14.
Compiler's Notes. For the Preamble to the act concerning the need to modernize the sales and use taxes, franchise and excise taxes and business tax in the state to address the engagement in business within the state by out-of-state companies, see Acts 2015, ch. 514.
Acts 2015, ch. 514, § 1 provided that the act shall be known and may be cited as the “Revenue Modernization Act”.
Effective Dates. Acts 2015, ch. 514, § 31. January 1, 2016.
Part 21
Franchise Tax Law of 1999
67-4-2101. Short title.
This part shall be known and may be cited as the “Franchise Tax Law of 1999.”
Acts 1999, ch. 406, § 4.
Compiler's Notes. Acts 1999, ch. 406, § 13, provided that the commissioner is authorized to promulgate rules and regulations in accordance with the provisions of title 4, chapter 5, to implement and administer the provisions of this act. Such rules, to the extent deemed necessary by the commissioner for timely implementation of this act, shall include public necessity rules (now emergency rules).
Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Cross-References. Insurance taxes, title 56, ch. 4, part 2.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 79.
Law Reviews.
Amendments to the Tax Revision and Reform Act (J. Leigh Griffith), 36 Tenn. B.J. 23 (2000).
State and Local Taxation of Financial Institutions: An Opportunity for Reform (C. James Judson & Susan G. Duffy), 39 Vand. L. Rev. 1057 (1986).
Taxing Tennessee: New Business Taxes for 1999 (J. Leigh Griffith), 35 Tenn. B.J. 12 (1999).
To Pay or Not to Pay: A Primer on the Federal Unrelated Business Income Tax (UBIT) for Non-tax Lawyers (Sean P. Scally), 37 Tenn. B.J. 12 (2001).
Attorney General Opinions. Since the Tennessee franchise tax is measured by a taxable entity's net worth and not by net income, Public Law 86-272, compiled in 15 U.S.C. §§ 381-84, does not impose any restrictions with respect to the application of the franchise tax, even in instances in which it does prohibit application of the excise tax, OAG 04-159 (11/08/04).
NOTES TO DECISIONS
1. Variance.
Variance imposed against the taxpayer under T.C.A. §§ 67-4-2014 and 67-4-2112 was appropriate because the application of the cost of performance formula did not fairly represent the taxpayer's business in Tennessee. The unusual fact situation was that all of the costs of production occurred outside of Tennessee, but the revenue derived from the end product only occurred when the product was distributed in Tennessee, which only then obligated the purchasers to pay the revenue proceeds to the producer for the sale of the advertising. Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009), appeal denied, BellSouth Adver. & Publ. Corp. v. Chumley, — S.W.3d —, 2010 Tenn. LEXIS 343 (Tenn. Mar. 1, 2010).
2. Excise Tax.
Trial court did not err in ruling that a lease required a tenant to pay an assignee's excise tax because the lease provided that the tenant had to pay all taxes incurred pursuant to covenants and restrictions affecting the premises; the lease's express exclusion of the franchise tax from the required payments implied the inclusion of the excise tax. J-Star Holdings, LLC v. Pantry, Inc., — S.W.3d —, 2013 Tenn. App. LEXIS 6 (Tenn. Ct. App. Jan. 2, 2013).
Decisions Under Prior Law
1. Nature of Tax.
The franchise tax is not an ad valorem property tax but is a tax levied upon the privilege of engaging in business in corporate form in Tennessee. Omnicon, Inc. v. King, 688 S.W.2d 818, 1985 Tenn. LEXIS 482 (Tenn. 1985).
The Tennessee Franchise Tax is imposed on a different tax base than the Corporate Excise Tax, but both expressly provide that the taxes are to be paid “in addition to all other taxes” (§ 67-4-806 [now repealed] and former § 67-4-903). The legislature clearly intended that these taxes be taken in tandem and construed together as one scheme of taxation. First Am. Nat'l Bank v. Olsen, 751 S.W.2d 417, 1987 Tenn. LEXIS 1076 (Tenn. 1987), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988).
Collateral References. Taxation 371
67-4-2102. Tax for state purposes only.
The tax imposed in this part is a state tax for state purposes only and no county or municipality or taxing district shall have power to levy any like tax.
Acts 1999, ch. 406, § 4.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
67-4-2103. Corporations subject to tax — Exemptions.
- The supervision and collection of the tax imposed by this part is under the direction of the department of revenue, and the department has the authority and power to prescribe forms upon which entities liable for the tax imposed shall make reports of such facts and information as will enable the commissioner to ascertain the correctness of the amount reported and paid by such entities.
- The commissioner may, within the commissioner's discretion, require any taxpayer to file with its Tennessee franchise tax return, a copy of the federal tax forms filed with the internal revenue service for the same tax year.
- All persons subject to the tax imposed by this part shall register with the department of revenue by completing and filing a registration information form prescribed by the department. Such form shall be filed with the department within sixty (60) days after July 1, 1999, or within fifteen (15) days after the date the person becomes subject to the tax, whichever date occurs last; provided, that persons registered under prior law, or who have filed a return under prior law, are not required to register for the tax imposed by this part.
- Notwithstanding any law to the contrary, except as otherwise provided in this subsection (d), for tax years beginning on or after January 1, 2004, a taxpayer that is a member of an affiliated group or a financial institution affiliated group may elect to compute its net worth on a consolidated basis; provided, that, upon such election, each member of the group shall be required to compute its net worth on a consolidated basis. However, such election shall not be allowed, unless each member of the group closes its taxable year on the same date, except that the election shall be allowed when a member exits the group during the taxable year due to a change in ownership, merger, or liquidation of the member, in which case the member exiting the group shall be excluded from the group and shall compute its net worth as otherwise provided in this part.
- If a taxpayer joins an affiliated group or financial institution affiliated group and the group has elected to compute its net worth on a consolidated basis, the taxpayer joining the group shall be bound by the group's election.
- If an affiliated group does not qualify as a financial institution affiliated group but contains a member that is classified as a financial institution based solely on the fact that the member generates more than fifty percent (50%) of its gross income from conducting the business of a financial institution, then any such member shall calculate its net worth base using the apportionment methodology applicable to the entire group.
- A taxpayer electing to compute its net worth on a consolidated basis shall make such election by filing a group registration form with the department and providing such information as may be reasonably required by the commissioner on or before the due date of the tax return for the period for which such election is to take effect. If a member of an affiliated group or a financial institution affiliated group enters or leaves the group at any time during the tax year, the department shall be advised by filing an amended group registration form and providing such information as the commissioner may reasonably require on or before the due date of the tax return for the period during which such event occurs. The election of an affiliated group to compute its net worth on a consolidated basis shall not be terminated solely as a result of the taxpayer's failure to advise the department of members entering or leaving the group.
- Once a taxpayer elects to compute its net worth on a consolidated basis, such election shall remain in effect for a minimum of five (5) tax years and thereafter until revoked. The affiliated group may revoke such election after the minimum period by filing a group registration revocation form with the department and providing such information as the commissioner may reasonably require on or before the due date of the tax return for the period during which such election is to be revoked.
- The commissioner is authorized to accept a late election, a late revocation of an election, or to permit an early revocation of an election to compute net worth on a consolidated basis, if the commissioner determines that there is a good and reasonable cause for such action. For tax returns filed for periods beginning January 1, 2004, and ending on or before December 31, 2006, an affiliated group shall be allowed to compute its net worth on a consolidated basis by filing an amended return along with a group registration form and such information as may be reasonably required by the commissioner.
-
-
Upon written request by the taxpayer making the election under subsection (d), the commissioner is authorized, in the commissioner’s discretion, to allow the exclusion of one (1) or more persons that would otherwise be members of the taxpayer’s affiliated group, if the commissioner determines that:
-
- Such persons are included in the taxpayer's affiliated group solely by virtue of a direct or indirect interest and are so operationally remote from the taxpayer that the taxpayer would be unable to obtain the information necessary to calculate the net worth of the group if such persons were included as members; or
- Such person has a direct or indirect interest in both the taxpayer and one or more persons described in subdivision (j)(1)(A)(i) and is so operationally remote from the taxpayer that the taxpayer would be unable to obtain the information necessary to calculate the net worth of the group if such person was included as a member; and
- The exclusion of such persons from the affiliated group would result in a fair representation of the affiliated group's consolidated net worth.
-
- Such written request shall provide such information as may be reasonably required by the commissioner and shall be submitted on or before the due date of the tax return for the period for which such exclusion is to take effect. The commissioner is authorized to accept a late request if the commissioner determines that there is a good and reasonable cause for such action. If the commissioner allows the exclusion of persons from the taxpayer's affiliated group under subdivision (j)(1), all members of the taxpayer's affiliated group shall be bound by such exclusion.
-
Upon written request by the taxpayer making the election under subsection (d), the commissioner is authorized, in the commissioner’s discretion, to allow the exclusion of one (1) or more persons that would otherwise be members of the taxpayer’s affiliated group, if the commissioner determines that:
Acts 1999, ch. 406, § 4; 2004, ch. 932, § 4; 2005, ch. 499, § 80; 2012, ch. 842, § 6.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2004, ch. 932, § 11 provided that the amendment by that act shall apply to all tax years beginning on or after January 1, 2004.
67-4-2104. Doing business in Tennessee a taxable privilege.
Doing business in Tennessee by any person or taxpayer, and/or exercising the corporate franchise, are declared to be taxable privileges. The tax is an accrued tax and is imposed for the exercise of the specified privilege during the period that coincides with the tax year covered by the return required.
Acts 1999, ch. 406, § 4.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
67-4-2105. Persons doing business in state and having substantial nexus in state subject to tax.
- All persons doing business in this state and having a substantial nexus in this state, including any limited liability company regardless of how it is treated for federal income tax purposes, or any person exercising the corporate franchise, except for those having not-for-profit status or otherwise exempt under § 67-4-2008, shall pay to the commissioner of revenue annually a privilege tax in addition to all other taxes, the rate and measure of which are hereinafter set forth. The tax shall be paid for the privilege of doing business in Tennessee, and shall be in addition to all other taxes levied by any other statute. Notwithstanding any law to the contrary, a not-for-profit entity shall be subject to the franchise tax on all of its Tennessee net worth or real or tangible personal property owned or used, as the case may be, that is attributable to activities subject to income taxes under § 512 or any other provision of subtitle A of the Internal Revenue Code. Notwithstanding any law to the contrary, a taxpayer that is exempted from the franchise tax shall be subject to such tax on all of its Tennessee net worth or real or tangible personal property owned or used, as the case may be, that is attributable to any activities that are unrelated to and outside the scope of the activities that gave the entity its exempt status.
- Every taxpayer as described in subsection (a) shall, as a recompense for the protection of its local activities and as compensation for the benefits it receives from doing business in Tennessee, pay the tax imposed by this part.
- The tax imposed by this part shall apply to taxpayers whose business is being conducted by a receivership or trusteeship appointed by any court of competent jurisdiction, and shall continue to accrue until such time as the taxpayer has been actually and legally dissolved or withdrawn from this state. A person doing business in Tennessee without incorporating, domesticating, qualifying or otherwise registering in Tennessee or doing business in Tennessee while its charter, domestication, qualification or other registration is forfeited, revoked or suspended shall not be relieved from filing a return and paying the franchise tax levied by this part for each tax year that it does business in Tennessee.
-
- A financial institution shall be presumed, subject to rebuttal, to be doing business in this state, if the sum of its assets and the absolute value of its deposits attributable to sources within this state is five million dollars ($5,000,000) or more.
-
Additionally, a financial institution shall be deemed to be doing business in this state, if the institution:
- Maintains an office in this state;
- Has an employee, representative or independent contractor conducting business in this state;
- Regularly sells products or services of any kind or nature to customers in this state that receive the product in this state;
- Regularly solicits business from potential customers in this state;
- Regularly performs services outside this state that are consumed in this state;
- Regularly engages in transactions with customers in this state that involve intangible property, including loans, and result in receipts flowing to the taxpayer from within this state;
- Owns or leases property located in this state; or
- Regularly solicits and receives deposits from customers in this state.
-
Notwithstanding any other provision to the contrary, a financial institution is not considered to be conducting the business of a financial institution in this state, if the only activity of the financial institution in this state is the ownership of an interest in one (1) or more of the following types of property, including those activities within this state that are reasonably required to evaluate and complete the acquisition or disposition of the property, or the servicing of the property, or the income from it, the collection of income from the property, or the acquisition or liquidation of the collateral relating to the property:
- An interest in a real estate mortgage investment conduit, a real estate investment trust, or a regulated investment company as those terms are defined by the Internal Revenue Code of 1986;
- An interest in a loan-backed security representing ownership or participation in a pool of promissory notes or certificates of interest that provide for payments in relation to payments or reasonable projections of payments on the notes or certificates;
- An interest in a loan, lease, note or other assets attributed to this state and in which the payment obligations were solicited and entered into by an independent person that is not acting on behalf of the owner;
- An interest in the right to service or collect income from a loan or other asset from which interest on the loan or other asset is attributed to this state and in which the payment obligations were solicited and entered into by an independent person that is not acting on behalf of the owner;
- An interest in demand deposit clearing accounts, federal funds, certificates of deposit and other similar wholesale banking instruments issued by other financial institutions;
- An interest in a security;
- An interest of a financial institution in any intangible, tangible, real or personal property acquired in satisfaction, whether in whole or in part, of any asset embodying a payment obligation that is in default, whether secured or unsecured, if the ownership of the interest would be exempt otherwise as provided in subdivisions (e)(1)-(4);
-
For the purposes of subdivisions (e)(3) and (4), an “independent person who is not acting on behalf of the owner” is defined as follows:
- At the time of the acquisition of the assets, the owner of the assets shall not directly or indirectly own fifteen percent (15%) or more of the outstanding stock or, in the case of a partnership, fifteen percent (15%) or more of the capital or profits interest of the entity from which the owner originally acquired the assets. In determining indirect ownership, an owner is deemed to own all of the stock, capital interest or profits interest owned by another person, if the owner directly owns fifteen percent (15%) or more of the stock, capital interest or profits interest in that other person. Also, the owner is deemed to own all stock, capital interest and profits interest directly owned by any intermediary parties in the transaction, to the extent a fifteen percent (15%) or more chain of ownership of stock, capital interest or profits interest exists between the owner and any intermediary party;
- The entity from which the owner acquired the assets shall regularly sell, assign or transfer interest in such assets to three (3) or more persons during the full twelve-month period immediately preceding the month of acquisition; and
- The entity from which the owner acquired the assets shall not sell, assign or transfer ninety percent (90%) or more of its exempt assets to the owner during the full twelve-month period immediately preceding the month of acquisition.
Acts 1999, ch. 406, § 4; 2000, ch. 982, §§ 27, 28, 49, 50; 2003, ch. 355, § 38; 2003, ch. 418, § 11; 2006, ch. 1019, § 9; 2013, ch. 321, § 3; 2015, ch. 514, § 15.
Code Commission Notes.
This section was amended twice in 2003, first by Acts 355, § 38, effective June 16, 2003, then by ch. 418, § 11, effective June 24, 2003. The amendments conflict in subsection (f). The amendment by ch. 355 would have inserted “except for a financial institution included in a unitary group of financial institutions otherwise subject to franchise and excise taxes,” following “Notwithstanding any other provision to the contrary” at the beginning of (f); the amendment by ch. 418 deleted this language.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
The Internal Revenue Code, referred to in this section, is compiled in 26 U.S.C.; with Subtitle A compiled as 26 U.S.C. §§ 1-2000.
Acts 2000, ch. 982, § 53, which applies to the insertion of “under the provisions of subsection (b)” in (a), and the addition of (b) by §§ 49 and 50 of that act, provided that those amendments apply to tax years ending on or after June 28, 2000; provided, that they shall not take effect as to any tax year of an entity which is not subject to the provisions of Acts 1999, ch. 406.
Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998.
Acts 2003, ch. 355, § 69 provided that the act shall apply to tax years ending on or after June 15, 2003.
Acts 2003, ch. 355, § 66 provided that no expenditure of public funds pursuant to the act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Acts 2003, ch. 355, § 73 provided that there is established within the general fund the state-shared revenue reduction mitigation account. Any amounts in the state-shared revenue reduction mitigation account shall be applied by the commissioner of finance and administration to offset reductions in state-shared revenues allocated to local governments pursuant to the provisions of the act so that such reductions shall not exceed nine percent (9%) of state-shared revenues that otherwise would have been allocated to any such local government. Funds shall be restored on a pro rata basis taking into account the percentage reduction to each local government from each state-shared revenue source.
Acts 2003, ch. 355, § 69 provided that the act shall apply to tax years ending on or after June 15, 2003.
Acts 2003, ch. 418, § 16(d) provided that the act shall apply to the period beginning January 1, 2003.
For the Preamble to the act concerning the need to modernize the sales and use taxes, franchise and excise taxes and business tax in the state to address the engagement in business within the state by out-of-state companies, see Acts 2015, ch. 514.
Acts 2015, ch. 514, § 31 provided that the act, which amended (a), shall apply to all tax years beginning on or after January 1, 2016.
Amendments. The 2013 amendment deleted “or under subsection (b)” following “under § 67-4-2008” in the first sentence of (a).
The 2015 amendment, effective January 1, 2016, substituted “doing business in this state and having a substantial nexus in this state” for “doing business in Tennessee” in (a).
Effective Dates. Acts 2013, ch. 321, § 9. May 13, 2013.
Acts 2015, ch. 514, § 31. January 1, 2016.
Cross-References. Savings and loan associations subject to tax, § 45-3-901.
Law Reviews.
Taxation — Interstate Commerce — Franchise and Excise Taxes, 27 Tenn. L. Rev. 308 (1960).
NOTES TO DECISIONS
Decisions Under Prior Law
1. In General.
The Tennessee Franchise Tax is imposed on a different tax base than the Corporate Excise Tax, but both expressly provide that the taxes are to be paid “in addition to all other taxes” (§ 67-4-806 [repealed] and former § 67-4-903). The general assembly clearly intends that these taxes be taken in tandem and construed together as one scheme of taxation. First Am. Nat'l Bank v. Olsen, 751 S.W.2d 417, 1987 Tenn. LEXIS 1076 (Tenn. 1987), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988), appeal dismissed, First American Nat'l Bank v. Taylor, 485 U.S. 1001, 108 S. Ct. 1460, 99 L. Ed. 2d 691, 1988 U.S. LEXIS 1821 (1988).
2. Constitutionality.
Constitutionality of assessing corporate franchise and excise taxes on “commissions” paid to corporation, a domestic international sales corporation (DISC) engaged in the import-export trade, by its parent corporation, was upheld. Cook Export Corp. v. King, 652 S.W.2d 896, 1983 Tenn. LEXIS 780 (Tenn. 1983).
Acts 1900, ch. 504 was not unconstitutional because it applied to corporations which had already entered the state and paid the privilege tax then required to enter and do business in the state. Mengel Box Co. v. Stevens, 141 Tenn. 373, 210 S.W. 635, 1918 Tenn. LEXIS 98 (1918).
Where tax imposed by Acts 1935 (Ex. Sess.), ch. 5 upon privilege of corporations or trusts doing business in such form or upon partnerships doing business of type for which corporations could be formed, such tax was on the character of the entity engaged in business and not on the character of the business pursued, and since it arbitrarily excluded individuals while including partnerships, both of whom are afforded the right of doing business as citizens generally and held no special franchise or privilege from the state other than their common rights of citizens, such tax was arbitrary and capricious with reference to partnerships and was in violation of Tenn. Const., art. I, § 8 and U.S. Const., amend. 14, § 1. Corn v. Fort, 170 Tenn. 377, 95 S.W.2d 620, 1935 Tenn. LEXIS 145, 106 A.L.R. 647 (1935).
Where provisions of Acts 1935 (Ex. Sess.), ch. 5 relating to tax on privilege of doing business as a corporation, trust or partnership were declared unconstitutional with reference to partnership, such provisions were held to be severable where act contained a section declaring each section, subsection, or paragraph severable and where court found the eliding of one of the entities declared subject to the tax would not impair the validity of the act as to those included. Corn v. Fort, 170 Tenn. 377, 95 S.W.2d 620, 1935 Tenn. LEXIS 145, 106 A.L.R. 647 (1935).
Provisions of second paragraph of the former section as added by Acts 1955, ch. 183, § 1, and relating to taxation of taxable entities not domesticating or qualifying to do business in Tennessee did not violate commerce clause of U.S. Const., art. 1, § 8 when applied to corporations engaged in interstate commerce. Texas Gas Transmission Corp. v. Atkins, 205 Tenn. 495, 327 S.W.2d 305, 1959 Tenn. LEXIS 389 (1959).
The former section did not impose a direct tax on interstate commerce nor did it result in discrimination or multiple taxation. Texas Gas Transmission Corp. v. Atkins, 205 Tenn. 495, 327 S.W.2d 305, 1959 Tenn. LEXIS 389 (1959).
Imposition of excise and franchise taxes provided by former chapters upon foreign oil pipeline company which maintained pipeline across state, maintained right-of-way and other valuable properties in the state in its corporate capacity, and exercised its corporate franchise within the state did not amount to a violation of the due process and commerce clauses of the U.S. constitution. Mid-Valley Pipeline Co. v. King, 221 Tenn. 724, 431 S.W.2d 277, 1968 Tenn. LEXIS 532 (1968), appeal dismissed, 393 U.S. 321, 89 S. Ct. 556, 21 L. Ed. 2d 517, 1969 U.S. LEXIS 2869 (1969), appeal dismissed, Mid-Valley Pipeline Co. v. King, 393 U.S. 321, 89 S. Ct. 556, 21 L. Ed. 2d 517, 1969 U.S. LEXIS 2869 (1969).
3. Construction.
The power of the legislature is supreme over foreign corporations doing business in the state insofar as interstate commerce is not affected. Atlas Powder Co. v. Goodloe, 131 Tenn. 490, 175 S.W. 547, 1914 Tenn. LEXIS 123 (1914).
The term “local activities” as contained in the second paragraph of the former section as added by Acts 1955, ch. 183, § 1, was not synonymous with the term “intrastate commerce.” Texas Gas Transmission Corp. v. Atkins, 205 Tenn. 495, 327 S.W.2d 305, 1959 Tenn. LEXIS 389 (1959).
4. Application.
The substance of the privilege tax prescribed by Acts 1909, ch. 504 was the doing of business in this state; and a foreign corporation previously admitted, upon the payment of the tax then prescribed, which continued to do business in this state subsequent to such statute, became liable to the tax prescribed by such statute, just as a foreign corporation which entered the state after the enactment of such statute. Mengel Box Co. v. Stevens, 141 Tenn. 373, 210 S.W. 635, 1918 Tenn. LEXIS 98 (1918).
Mere fact that corporation was engaged in interstate commerce rather than intrastate was not determinative as to whether or not such corporation was subject to taxation under this chapter. Texas Gas Transmission Corp. v. Atkins, 205 Tenn. 495, 327 S.W.2d 305, 1959 Tenn. LEXIS 389 (1959).
Second paragraph of the former section as added by Acts 1955, ch. 183, § 1, and relating to taxation of taxable entities not domesticating or qualifying to do business in Tennessee applied not only to corporations doing an intrastate business but also to corporations doing an interstate business who were engaged in local activities within the meaning of the former section. Texas Gas Transmission Corp. v. Atkins, 205 Tenn. 495, 327 S.W.2d 305, 1959 Tenn. LEXIS 389 (1959).
5. Preemption.
Federal domestic international sales corporation (DISC) provisions do not preempt state's franchise and excise tax provisions. Cook Export Corp. v. King, 652 S.W.2d 896, 1983 Tenn. LEXIS 780 (Tenn. 1983).
6. Nature of Tax.
By the imposition and collection of the privilege tax for the license of a foreign corporation to do business in this state, the state is not cut off from imposing a higher license tax or from changing its method of privilege or excise taxation. Mengel Box Co. v. Stevens, 141 Tenn. 373, 210 S.W. 635, 1918 Tenn. LEXIS 98 (1918).
The franchise tax imposed by former chapter is a privilege tax levied on corporations for the privilege of doing business in Tennessee. R.J. Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, 1948 Tenn. LEXIS 422 (1948), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
The franchise tax is not converted into a property tax merely because it is measured by the value of property. Memphis Peabody Corp. v. MacFarland, 211 Tenn. 384, 365 S.W.2d 40, 1963 Tenn. LEXIS 357 (1963).
The tax imposed by former chapter is a privilege tax and not a property tax. Memphis Peabody Corp. v. MacFarland, 211 Tenn. 384, 365 S.W.2d 40, 1963 Tenn. LEXIS 357 (1963).
The excise and franchise taxes provided by former chapters are upon the privilege of engaging in business in corporate form in Tennessee and not merely upon the doing of business. Mid-Valley Pipeline Co. v. King, 221 Tenn. 724, 431 S.W.2d 277, 1968 Tenn. LEXIS 532 (1968), appeal dismissed, 393 U.S. 321, 89 S. Ct. 556, 21 L. Ed. 2d 517, 1969 U.S. LEXIS 2869 (1969), appeal dismissed, Mid-Valley Pipeline Co. v. King, 393 U.S. 321, 89 S. Ct. 556, 21 L. Ed. 2d 517, 1969 U.S. LEXIS 2869 (1969).
Foreign corporations doing business in this state without domesticating or qualifying to do business in Tennessee shall as a recompense for the protection of their local activities and as compensation for the benefits they receive from doing business in Tennessee pay the excise and franchise taxes provided by former chapters. Mid-Valley Pipeline Co. v. King, 221 Tenn. 724, 431 S.W.2d 277, 1968 Tenn. LEXIS 532 (1968), appeal dismissed, 393 U.S. 321, 89 S. Ct. 556, 21 L. Ed. 2d 517, 1969 U.S. LEXIS 2869 (1969), appeal dismissed, Mid-Valley Pipeline Co. v. King, 393 U.S. 321, 89 S. Ct. 556, 21 L. Ed. 2d 517, 1969 U.S. LEXIS 2869 (1969).
7. Double Taxation.
Coal dealer who was subject to the provisions of Acts 1935 (Ex. Sess.), ch. 5, which provided for a privilege tax on corporation doing intrastate business in the state and also to the provisions of the General Revenue Act as a coal dealer was not subject to double taxation since the tax under the General Revenue Act was placed on all coal dealers and the tax under the Act of 1935 was for the privilege of doing intrastate business in the state. Corn v. Fort, 170 Tenn. 377, 95 S.W.2d 620, 1935 Tenn. LEXIS 145, 106 A.L.R. 647 (1935).
Acts of 1935 (Ex. Sess.), ch. 5 levying tax on privilege of corporation doing business in the state and based on net worth of capital of such corporation in the state and excise tax levied by former statute on corporations based on net earnings did not result in double taxation, as Act of 1935 allowed credit for amount of tax paid under former statute. Corn v. Fort, 170 Tenn. 377, 95 S.W.2d 620, 1935 Tenn. LEXIS 145, 106 A.L.R. 647 (1935).
8. Export Corporations.
The “commissions” paid to export corporation, a domestic international sales corporation (DISC), by parent corporation resulted in export corporation's tangible realization of monetary earnings to be included in its net earnings, subject to franchise and excise taxation. Cook Export Corp. v. King, 652 S.W.2d 896, 1983 Tenn. LEXIS 780 (Tenn. 1983).
9. Doing Business Within State.
Activities constituted closing business within state. Broadmoor-Kingsport Apts., Inc. v. State, 686 S.W.2d 70, 1985 Tenn. LEXIS 486 (Tenn. 1985).
The term “doing business” is not uniformly defined in the cases, and its meaning will vary dependent on the situation. Broadmoor-Kingsport Apts., Inc. v. State, 686 S.W.2d 70, 1985 Tenn. LEXIS 486 (Tenn. 1985).
Acts 1937, ch. 106 providing that storage of merchandise in public warehouses within the state for distribution under sales consummated outside the state constituted the doing of business within the state exempting corporation from paying of fixed fee for doing business in the state did not exempt corporation from payment of franchise and excise privilege taxes. Sealed Power Corp. v. Stokes, 174 Tenn. 493, 127 S.W.2d 114, 1938 Tenn. LEXIS 116 (1938).
A foreign corporation is doing business within the state when it transacts therein some substantial part of its ordinary business. State ex rel. McCanless v. Cincinnati S. Ry., 178 Tenn. 328, 157 S.W.2d 833, 1941 Tenn. LEXIS 63 (1941).
The city of Cincinnati and the trustees of that city for a railroad constructed by the city about 1880 from Cincinnati to Chattanooga were not doing business in Tennessee during the years 1934 to 1938 where the railroad was rented on a long term lease and the collection of rents and disbursements were made in Ohio. State ex rel. McCanless v. Cincinnati S. Ry., 178 Tenn. 328, 157 S.W.2d 833, 1941 Tenn. LEXIS 63 (1941).
Local incidents or activities may be a basis of a franchise or excise tax measured by a properly apportioned net income of a foreign corporation engaged solely in interstate commerce provided the local activities can be separated from interstate activities. Mid-Valley Pipeline Co. v. King, 221 Tenn. 724, 431 S.W.2d 277, 1968 Tenn. LEXIS 532 (1968), appeal dismissed, 393 U.S. 321, 89 S. Ct. 556, 21 L. Ed. 2d 517, 1969 U.S. LEXIS 2869 (1969).
10. Different Considerations for Different Purposes.
Different factors and considerations are applicable when the concern is whether a corporation is amenable to service of process, rather than when franchise and excise taxes are at issue. Broadmoor-Kingsport Apts., Inc. v. State, 686 S.W.2d 70, 1985 Tenn. LEXIS 486 (Tenn. 1985).
Collateral References.
Affiliated corporation, franchise tax of corporation as affected by creation of. 117 A.L.R. 508.
Capital stock on which franchise tax is based, including in, capital stock representing property located in another state. 98 A.L.R. 1444.
Deductibility of other taxes or fees in computing corporate franchise taxes. 148 A.L.R. 263, 174 A.L.R. 1263.
Holding companies as within contemplation of statutes taxing franchises of certain classes of corporations. 98 A.L.R. 1511.
Indebtedness of corporation as proper item for inclusion in computing franchise tax. 107 A.L.R. 1303.
Interest paid to stockholders or their families, express limitations on deduction of, in computing franchise tax of corporation. 140 A.L.R. 1350.
Nonpar stock and par value stock, difference between, as basis of classification. 36 A.L.R. 794, 45 A.L.R. 1501, 65 A.L.R. 1347.
Ownership or control by foreign corporation of stock of other corporation as constituting doing business within state under tax statutes. 18 A.L.R.2d 187.
Property tax as distinguished from franchise tax. 103 A.L.R. 61.
State income tax treatment of intangible holding companies. 11 A.L.R.6th 543.
Tax on corporation as affected by fact that corporation is not actually engaged in or carrying on business for which it was incorporated. 124 A.L.R. 1109.
67-4-2106. Rate of tax.
- The privilege tax imposed on all taxpayers shall be a tax of twenty-five cents (25¢) per one hundred dollars ($100), or major fraction thereof, of a taxpayer's net worth, determined in accordance with subsection (b), at the close of the tax year covered by the required return.
- For purposes of this section, for taxpayer's filing on a separate entity basis, “net worth” is defined as the difference between a taxpayer's total assets less its total liabilities computed in accordance with generally accepted accounting principles. However, if the taxpayer does not maintain its books and records in accordance with generally accepted accounting principles, net worth shall be computed in accordance with the accounting method used by the taxpayer for federal tax purposes, so long as the method fairly reflects the taxpayer's net worth for purposes of the tax levied by this part. For taxpayers required by this part to file as a unitary group on a combined basis, “net worth” is defined as the difference between each unitary groups' taxpayers' total assets less its total liabilities computed in accordance with generally accepted accounting principles. For a taxpayer electing to compute its net worth on a consolidated basis, net worth is defined as the difference between the total assets less the total liabilities of the affiliated group at the close of business on the last day of the tax year, as shown by a pro forma consolidated balance sheet including all members of the group. The pro forma consolidated balance sheet shall be prepared in accordance with generally accepted accounting principles wherein transactions and holdings between members of the group and holdings in non-domestic persons have been eliminated. For a captive REIT affiliated group, “net worth” is defined as the difference between the total assets less the total liabilities of the affiliated group at the close of business on the last day of the tax year, as shown by a pro forma consolidated balance sheet including all members of the group. The pro forma consolidated balance sheet shall be prepared in accordance with generally accepted accounting principles wherein transactions and holdings between members of the group and holdings in non-domestic persons have been eliminated.
- For purposes of the franchise tax levied by this part, a business entity shall be classified as a corporation, partnership, or other type business entity, consistent with the way the entity is classified for federal income tax purposes, and subject to tax in accordance with this part 21. Notwithstanding any law to the contrary, entities that are disregarded for federal income tax purposes, except for limited liability companies whose single member is a corporation, shall not be disregarded for Tennessee franchise tax purposes. Except for unitary groups of financial institutions, captive REIT affiliated groups, and business entities that have been required or permitted to file franchise tax returns on a combined, consolidated or separate accounting basis under § 67-4-2112, each taxpayer shall be considered a separate and single business entity for Tennessee franchise tax purposes and shall file its Tennessee franchise tax return on a separate entity basis reflecting only its own business activities even though it may have filed a consolidated federal income tax return with other members of its unitary group.
Acts 1999, ch. 406, § 4; 2000, ch. 982, §§ 29-31; 2004, ch. 932, § 5; 2010, ch. 1134, §§ 13, 14.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998.
Acts 2004, ch. 932, § 11 provided that the amendment by that act shall apply to all tax years beginning on or after January 1, 2004.
Acts 2010, ch. 1134, § 66, provided that §§ 13, 14 of the act, which amended subsections (b) and (c), shall apply to all tax years ending on or after July 1, 2010.
Law Reviews.
The Race is On: Choosing a Business Entity After the Tennessee Tax Revision and Reform Act of 1999 (Dania Leatherman and Marie A. Nelson), 35 Tenn. B.J. 24 (1999).
NOTES TO DECISIONS
Decisions Under Prior Law
1. Value of Corporate Capital.
Where Acts 1935 (Ex. Sess.), ch. 5 provided for a privilege tax measured by the net worth of capital invested in the state by the entity subject to the tax, such tax was not a violation of the equal protection clause of the federal constitution or the uniformity clause of the state constitution as providing for a property tax in addition to the regularly imposed property tax, nor was it a violation of such clauses in that the measurement used included property exempt from the ad valorem tax since the tax provided for in such act was not a tax upon the property involved but rather the value of the property was used as a measurement for the tax imposed. Corn v. Fort, 170 Tenn. 377, 95 S.W.2d 620, 1935 Tenn. LEXIS 145, 106 A.L.R. 647 (1935).
It was the intent of the legislature in enacting Acts 1935, (Ex. Sess.), ch. 5 to levy a prescribed rate against the actual cash value of visible corporate capital of the corporation in the state in the manner provided for in § 3 of the act and the provisions of § 4 of the act authorizing the commissioner to adopt a method as he may deem adequate and equitable to the state and the taxpayer in determining the amount of capital properly allocable to the state is only auxiliary and was not intended to set up a different tax base so as to reduce the levy. Life & Cas. Ins. Co. v. Stokes, 172 Tenn. 639, 113 S.W.2d 1176, 1937 Tenn. LEXIS 109 (1937); National Life & Accident Ins. Co. v. Fort, 172 Tenn. 645, 113 S.W.2d 1175, 1937 Tenn. LEXIS 110 (1937).
Former statutes when read together and reasonably interpreted imposed a privilege tax on the net worth or capital of a corporation and stated the method by which the minimum net worth of the capital of a corporation was to be determined. Memphis Peabody Corp. v. MacFarland, 211 Tenn. 384, 365 S.W.2d 40, 1963 Tenn. LEXIS 357 (1963).
67-4-2107. Tax diminished by operating deficits or business losses deemed impairment of capital.
- Where a corporation doing business without surplus or undivided profits has had the value of its capital stock impaired by operating deficits or other business losses, such as fire, flood, tornado, or other natural disasters, and where such deficit or loss is carried upon the books and records of the corporation as an impairment of capital, the measure of the tax shall be diminished by such loss or deficit.
-
- If the capital stock of a corporation that is a subsidiary of another corporation or closely affiliated with another corporation by stock ownership is inadequate for its business needs apart from credit extended or indebtedness guaranteed by the parent or an affiliated corporation, in determining the amount of capital, surplus and undivided profit of such corporation with respect to its liability for the tax imposed by this part, there shall be included in the measure of the tax the indebtedness owed to or guaranteed by the parent or an affiliated corporation. If necessary to apportion such indebtedness, the methods of allocation set forth in this part shall be used.
- [Deleted by 2013 amendment, effective May 13, 2013.]
Acts 1999, ch. 406, § 4; 2000, ch. 982, § 32; 2002, ch. 729, § 1; 2004, ch. 932, § 6; 2013, ch. 321, §§ 4, 5.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998.
Acts 2004, ch. 932, § 11 provided that the amendment by that act shall apply to all tax years beginning on or after January 1, 2004.
Amendments. The 2013 amendment, in (b), substituted “set forth in this part” for “set forth in subdivision (b)(2)” in the last sentence of (1), and deleted (2) which read: “(2)(A) Notwithstanding the provisions of this subsection (b) to the contrary, any corporation that, pursuant to this subdivision (b)(2), has excluded any indebtedness to or guaranteed by a parent or an affiliated corporation in determining the amount of its capital, surplus and undivided profits subject to franchise tax, shall provide the commissioner with an additional computational schedule to supplement its franchise and excise tax return. This schedule shall be filed with the return or within ninety (90) days from April 23, 1998, if the return has already been filed. It shall show the corporation's total indebtedness to or guaranteed by its parent or any affiliated corporation, and a computation of the amount of any indebtedness that would have been included in the determination of its capital, surplus and undivided profits subject to the franchise tax had it not been for this subdivision (b)(2).“(B) Any corporation that fails to timely file the schedule required by subdivision (b)(2)(A) shall be expressly prohibited from relying upon subdivision (b)(2)(A) to exclude any of its indebtedness to or guaranteed by a parent or affiliated corporation from its franchise tax base. In such a case, the commissioner shall disregard subdivision (b)(2)(A) for the tax year involved and shall assess any resulting additional franchise tax plus interest accrued from the original due date of the return.”
Effective Dates. Acts 2013, ch. 321, § 9. May 13, 2013.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Taxation, § 79.
NOTES TO DECISIONS
Decisions Under Prior Law
1. “Impairment of Capital” Construed.
Commissioner did not err in making assessment for franchise tax on the ground that books of company showed an “impairment of capital” where company paid dividends on its stock every year, since dividends could only be payable if a surplus. Trenton Cotton Oil Co. v. McCanless, 190 Tenn. 219, 229 S.W.2d 143, 1950 Tenn. LEXIS 442 (1950).
2. Omission of Reserves.
Where it was alleged by insurance company that the assessment of the value of such corporation's capital included reserves that belonged to policyholders but where the record did not disclose any sort of segregation or separate investment of such items, there was no basis for omitting such alleged reserves from the assessment. Life & Cas. Ins. Co. v. Stokes, 172 Tenn. 639, 113 S.W.2d 1176, 1937 Tenn. LEXIS 109 (1937); National Life & Accident Ins. Co. v. Fort, 172 Tenn. 645, 113 S.W.2d 1175, 1937 Tenn. LEXIS 110 (1937).
Bad debts actually uncollectible can be deducted from surplus, but a reserve set up for bad debts now uncollectible and uncollectible in the future cannot be deducted from surplus. E.L. Bruce Co. v. Evans, 190 Tenn. 176, 228 S.W.2d 105, 1950 Tenn. LEXIS 435 (1950).
67-4-2108. Value of tangible property as minimum tax base — Exempt property.
-
- The measure of the tax levied by this part shall in no case be less than the actual value of the real or tangible property owned or used in Tennessee, excluding exempt inventory and exempt required capital investments.
- There shall not be included within the meaning hereof the value of any property while construction of that property is in progress and, in addition thereto, there is no actual utilization of such property by the taxpayer either in whole or in part.
-
For purposes of this section, “property” shall be valued at cost less accumulated depreciation in accordance with generally accepted accounting principles; provided, that, if the taxpayer, other than any taxpayer required by this part to file as a unitary group on a combined basis, does not maintain its books and records in accordance with generally accepted accounting principles, the value of the property shall be computed in accordance with the accounting method used by the taxpayer for federal tax purposes, so long as the method fairly reflects the property's value for purposes of the tax levied by this part. Notwithstanding any provision of this subdivision (a)(3) to the contrary, railroad companies as defined by the uniform system of accounts in 49 CFR 1201 may compute the value of their “property” in accordance with the method used for federal tax purposes so long as such method fairly reflects the property's value for purposes of the tax levied by this part. A return being filed by a limited liability company that has a general partnership as its single member shall include in its franchise tax minimum measure only the real and tangible property owned or used by the limited liability company. For this purpose, “property” includes a taxpayer's ownership share of the real or tangible property owned or rented by any general or limited partnership, subchapter S corporation, limited liability company, or other entity treated as a partnership for federal tax purposes and not subject to the tax levied by this part and in which the taxpayer has an ownership interest either directly or indirectly through one (1) or more such entities. In cases where part or all of the property is rented, the value of rented property used shall be determined by multiplying the net annual rental by the following multiples:
Multiples
- Real property 8
- Machinery and equipment used in manufacturing and processing 3
- Furniture, office machinery and equipment 2
- Delivery or mobile equipment 1
- For purposes of this section, the value of owned or leased mobile or movable property located both in and outside Tennessee during a tax period shall be determined on the basis of the total percentage of time such property is within the state during the tax period; provided, that the value of an automobile or truck assigned to a traveling employee shall be considered in Tennessee, if the employee's compensation is assigned to Tennessee for purposes of the taxpayer's apportionment formula payroll factor, or if such vehicle is licensed in Tennessee.
-
- For purposes of this section, any system, method, improvement, structure, device or appliance appurtenant thereto, used primarily for the control, reduction, or elimination of water or air pollution, or used primarily for the disposal, treatment or recycling of hazardous waste, and required to meet mandatory requirements of state, federal or local law, shall not be deemed to be property that is actually utilized by the taxpayer in the conduct of its principal business. Copies of certificates provided for in § 67-5-604 shall be furnished to the commissioner by the taxpayer with the franchise tax return to verify exemption.
- This exemption shall apply only to property, the construction, reconstruction or erection of which is completed by the taxpayer during corporate fiscal years ending on or after July 15, 1981, or which is acquired by the taxpayer during such fiscal years, and the original use of that commences with the taxpayer and commences during such fiscal years.
- Machinery and equipment used to produce electricity in a certified green energy production facility shall not be deemed to be property that is actually utilized by the taxpayer for purposes of this section. A copy of the facility certification issued by the department of environment and conservation shall be furnished to the commissioner by the taxpayer with the franchise tax return to verify exemption.
-
As used in this section, unless the context otherwise requires:
- “Configuring” computer products means integrating a computer with peripheral computer products, such as a hard disk drive, additional memory or software;
- “Exempt inventory” means that portion of a taxpayer's finished goods inventory in excess of fifty million dollars ($50,000,000) for fiscal years beginning on or after July 15, 1996; forty million dollars ($40,000,000) for fiscal years beginning on or after July 15, 1997; and thirty million dollars ($30,000,000) for fiscal years beginning on or after July 15, 1998, that would otherwise be included in the minimum measure of the taxpayer's franchise tax base;
-
“Finished goods inventory” means tangible personal property that is:
- Owned by the taxpayer;
- Stored in a facility used primarily for manufacturing, warehousing, or distribution of such inventory;
- Held for wholesale or retail sale by the taxpayer, but not sold over-the-counter to consumers at the location where stored;
- Shown as inventory on the taxpayer's books and records kept in accordance with generally accepted accounting principles; and
- In need of no further fabrication or processing by or for the taxpayer, except, in the case of configuring, testing or packaging of computer products;
- “Net annual rental” means the gross annual rental paid by the taxpayer, less the gross rental received by the taxpayer for sub-rental. A lessee's payments to a lessor, or on such lessor's behalf, as part of rent, or in lieu of rent, shall be considered rent for purposes of this section. Except with respect to tangible personal property, for purposes of this subsection (a), payments, such as interest, taxes, insurance, repairs or other items, shall be treated as rent paid by the lessee if they would have been paid by the lessor, if the lease contract or other agreement had not specifically provided that they be paid by the lessee;
- “Property” includes a taxpayer's share of any specific property in a general partnership in which such taxpayer has a partnership interest;
- “Used” means only such property as is actually utilized by the taxpayer in the conduct of its principal business; and
- “Exempt required capital investments” means two thirds (2/3) in value of all capital investments that are the basis for a taxpayer's entitlement to credits under § 67-4-2109(b)(2)(B); provided, however, that the investments shall qualify as “exempt required capital investments” only in those tax years in which the additional annual credit is actually allowed under § 67-4-2109(b)(2)(B).
- In the case of property leased from an industrial development corporation formed pursuant to title 7, chapter 53, part 1, the value may be determined either in accordance with subsection (a) or, at the taxpayer's election, by capitalizing the lease on the taxpayer's books and records in accordance with generally accepted accounting principles. The taxpayer may change its election not more than once during the term of the lease.
Acts 1999, ch. 406, § 4; 2000, ch. 982, §§ 33, 51, 57; 2000, ch. 983, § 12; 2004, ch. 924, §§ 5, 18; 2006, ch. 1019, § 10; 2009, ch. 530, § 14; 2010, ch. 1134, § 39.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2000, ch. 982, § 53, which applies to the amendment of (a)(1) by § 51 of that act, provided that those amendments apply to tax years ending on or after June 28, 2000; provided, that they shall not take effect as to any tax year of an entity which is not subject to the provisions of Acts 1999, ch. 406.
Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998.
Acts 2004, ch. 924, § 19 provided that the amendment to subdivision (a)(6) by § 5 of that act apply to all tax periods beginning on or after January 1, 2004.
Acts 2009, ch. 530, § 133 provided that § 14 of the act, which amended subdivision (a)(6)(G), shall apply to all business plans filed on or after July 1, 2009.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 79.
Law Reviews.
The Race is On: Choosing a Business Entity After the Tennessee Tax Revision and Reform Act of 1999 (Dania Leatherman and Marie A. Nelson), 35 Tenn. B.J. 24 (1999).
NOTES TO DECISIONS
1. Net Worth.
Where a taxpayer was in the business of buying and selling real property, the trial court properly found that the parcels of land that were being developed for sale, should have been included in the taxpayer's net worth for the purpose of computing the franchise tax under T.C.A. § 67-4-2108, as those properties were part of the capital employed by the taxpayer's business. Oak Ridge Land Co. v. Roberts, — S.W.3d —, 2012 Tenn. App. LEXIS 823 (Tenn. Ct. App. Nov. 29, 2012), appeal denied, Oak Ridge Land Co., L.P. v. Roberts, — S.W.3d —, 2013 Tenn. LEXIS 422 (Tenn. Apr. 9, 2013).
Decisions Under Prior Law
1. Constitutionality.
Acts 1935 (Ex. Sess.), ch. 5 was not unconstitutional on grounds that the valuation of the property under such act was never less than the valuation assessed for ad valorem tax purposes but might be more, since both valuation imposed for ad valorem purposes and for the valuation as provided for under the act of 1935 provided adequate remedies to taxpayer who felt aggrieved by such assessments. Corn v. Fort, 170 Tenn. 377, 95 S.W.2d 620, 1935 Tenn. LEXIS 145, 106 A.L.R. 647 (1935).
2. Legislative Intent.
That the general assembly intended to tax corporations for the use of their corporate franchise, regardless of earnings or losses, is evident from the existence of the former provisions establishing a minimum tax base using the value of tangible property as a measure. Commercial Equities Corp. v. Tollett, 596 S.W.2d 801, 1980 Tenn. LEXIS 428 (Tenn. 1980).
3. Burden of Establishing Exemption.
The burden of establishing an exemption is on the taxpayer seeking it and that exemption must be expressed in clear language which includes the taxpayer. It must not be extended or broadened beyond the command of the provision. Commercial Equities Corp. v. Tollett, 596 S.W.2d 801, 1980 Tenn. LEXIS 428 (Tenn. 1980).
4. Net Worth.
Former statutes when read together and reasonably interpreted imposed a privilege tax on the net worth or capital of a corporation and stated the method by which the minimum net worth of the capital of a corporation was to be determined. Memphis Peabody Corp. v. MacFarland, 211 Tenn. 384, 365 S.W.2d 40, 1963 Tenn. LEXIS 357 (1963).
5. Property Under Construction.
The value of homes under construction by a corporation in the business of building and selling homes is utilized as part of the capital employed in doing business and is not exempt. Crown Enters., Inc. v. Woods, 557 S.W.2d 491, 1977 Tenn. LEXIS 673 (Tenn. 1977).
Where the nature of a taxpayer's business was the construction and leasing of buildings for office space, it was held that it must be utilizing the buildings it had under construction in conducting its business, for this construction was the very essence of its business. The fact that the taxpayer had not yet leased the buildings and realized income from them was not determinative. Commercial Equities Corp. v. Tollett, 596 S.W.2d 801, 1980 Tenn. LEXIS 428 (Tenn. 1980).
6. Leased Property.
The general assembly did not intend that same property be included as a part of the base of the tax in returns of both the lessor and lessee corporation. Memphis Peabody Corp. v. MacFarland, 211 Tenn. 384, 365 S.W.2d 40, 1963 Tenn. LEXIS 357 (1963).
Property which a corporation did not own but leased in the operation of its business was not to be taken into consideration in determining its minimum franchise tax liability. Memphis Peabody Corp. v. MacFarland, 211 Tenn. 384, 365 S.W.2d 40, 1963 Tenn. LEXIS 357 (1963).
7. Avoidance of Tax.
A taxpayer may not, through a business arrangement or organization, such as interest in a partnership which owns the property it uses, escape the minimum measure of the tax. Tollett v. Franklin Equities, Inc., 586 S.W.2d 96, 1979 Tenn. LEXIS 488 (Tenn. 1979).
8. Interest in Partnership.
In determining a corporate taxpayer's interest in a partnership for purposes of the Franchise Tax Law the value of the partnership interest, as represented by the capital accounts of the partnership, is the figure which should be the basis of the valuation, rather than the book value of the assets of the partnership. Omnicon, Inc. v. King, 688 S.W.2d 818, 1985 Tenn. LEXIS 482 (Tenn. 1985).
The net worth of the partnership is a more accurate basis for calculating the actual value of those property rights than is the book value of the assets of the partnership. Omnicon, Inc. v. King, 688 S.W.2d 818, 1985 Tenn. LEXIS 482 (Tenn. 1985).
9. Use of Corporate Form.
It would be untenable to permit a party to take advantage of the corporate form to hold title to property and to conduct business with respect to that property and then permit the party to disavow the corporate ownership when it becomes disadvantageous. Broadmoor-Kingsport Apts., Inc. v. State, 686 S.W.2d 70, 1985 Tenn. LEXIS 486 (Tenn. 1985).
10. Value of Property Used.
The purchase price paid by a coal company as a royalty for the coal it purchased from the mineral owners was not treated as rent for the purpose of arriving at “the value of property used” pursuant to former subdivisions (a)(1) and (3). Carl Clear Coal Corp. v. Huddleston, 850 S.W.2d 140, 1992 Tenn. App. LEXIS 1027 (Tenn. Ct. App. 1992), appeal denied, — S.W.2d —, 1993 Tenn. LEXIS 127 (Tenn. Mar. 22, 1993).
67-4-2109. Credit for gross premiums tax and job tax.
-
As used in subsection (b):
- “Best interests of the state” means a determination by the commissioner of revenue and the commissioner of economic and community development that the capital investment or jobs are a result of the credit provided in this section. In addition to its use in subsection (b), the definition in this subdivision (a)(1) shall apply to this section in its entirety unless otherwise specifically provided;
-
-
“Enhancement county” means a county that meets one (1) of the following criteria for any month during the twenty-four (24) months immediately prior to the creation of any qualified job for which a job tax credit is sought pursuant to subsection (b), based on monthly statistics from the department of labor and workforce development:
- The average number of dislocated workers in the county exceeds the average number of dislocated workers in this state; or
- The per capita income of the county is less than Tennessee's average per capita income;
- Notwithstanding subdivision (a)(2)(A), based on an annual evaluation as of July 1 of each year, the commissioner of economic and community development may determine that a county qualifies as an enhancement county if the county experiences substantial characteristics of economic distress, including, but not limited to, major loss of employment, recent high unemployment rates, traditionally low levels of family incomes, high levels of poverty and high concentrations of employment in declining industries;
- Upon determining that a county qualifies as an enhancement county under subdivision (a)(2)(A) or (a)(2)(B), the department of economic and community development shall designate the county as a tier 1, tier 2, tier 3, or tier 4 enhancement county based on unemployment, per capita income, and poverty levels of all Tennessee counties using statistical data prepared by any agency of the state or federal government no later than July 1 of each year. A list of all tier 1, tier 2, tier 3, and tier 4 enhancement counties shall be published annually by the department of economic and community development;
-
“Enhancement county” means a county that meets one (1) of the following criteria for any month during the twenty-four (24) months immediately prior to the creation of any qualified job for which a job tax credit is sought pursuant to subsection (b), based on monthly statistics from the department of labor and workforce development:
- “Industrial wage job” means a qualified job with wages equal to or greater than the state's average occupational wage, as defined in § 67-4-2004, for the month of January of the year during which the job was created;
- “Investment period” means the period during which qualified jobs are created as a result of the required capital investment; provided, however, that the period shall not exceed three (3) years from the effective date of the business plan;
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“Qualified business enterprise” means an enterprise:
- In which the business has made the required capital investment necessary to permit the creation or expansion of manufacturing, warehousing and distribution, processing tangible personal property, research and development, computer services, call centers, headquarters facilities, as defined in § 67-6-224(b), back office operations, convention or trade show facilities, or tourism-related businesses, including, but not limited to, restaurants, lodging establishments, or other tourism-related attractions;
- In which the business has made the required capital investment necessary to permit the creation or expansion of a repair service facility primarily engaged in providing repairs for aircraft owned by unrelated commercial, governmental or foreign persons; or
- That promotes high-skill, high-wage jobs in high-technology areas, emerging occupations or skilled manufacturing jobs in which the business has made the required capital investment necessary to permit an increase in the number of qualified jobs in that county and that receives an approval from the commissioner of revenue and the commissioner of economic and community development in a manner prescribed by the department of revenue;
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“Qualified job” means a job that meets all of the following criteria:
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- Except as provided in subdivision (a)(6)(A)(ii), the job position is a permanent, rather than seasonal or part-time, employment position providing employment in a qualified business enterprise for at least twelve (12) consecutive months to a person for at least thirty-seven and one-half (37½) hours per week with minimum health care, as described in the Tennessee Small Employer Group Health Coverage Reform Act, compiled in title 56, chapter 7, part 22; or
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A majority of the duties that the job position entails involve adventure tourism, as defined in § 11-11-203; the qualified business enterprise that created the job position is located in an area designated as an adventure tourism district pursuant to § 11-11-204(c); and the job position is:
- A permanent employment position created on or after July 1, 2017, providing employment in a qualified business enterprise for at least twelve (12) consecutive months to a person for at least thirty-seven and one-half (37½) hours per week with or without minimum health care, as described in the Tennessee Small Employer Group Health Coverage Reform Act;
- A position providing seasonal employment, as defined in § 50-7-306 for at least twenty-six (26) consecutive weeks, created on or after July 1, 2017, with or without minimum health care, as described in the Tennessee Small Employer Group Health Coverage Reform Act; provided, that, for the purpose of calculating the number of jobs that a qualified business has created under subdivision (b)(1)(C) in order to qualify for the job tax credit, a position of seasonal employment shall be counted as one-half (½) of one (1) job; or
- A position providing part-time employment for at least twenty (20) hours per week for twelve (12) consecutive months, created on or after July 1, 2017, with or without minimum health care, as described in the Tennessee Small Employer Group Health Coverage Reform Act; provided, that, for the purpose of calculating the number of jobs that a qualified business has created under subdivision (b)(1)(C) in order to qualify for the job tax credit, a position of part-time employment shall be counted as one-half (½) of one (1) job;
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The job position is newly created in this state, and:
- For a permanent position under subdivision (a)(6)(A)(i), for at least ninety (90) days prior to being filled by the taxpayer, the job position did not exist in this state as a job position of the taxpayer or of another business entity; or
- For a permanent, part-time, or seasonal position under subdivision (a)(6)(A)(ii), for at least thirty-six (36) months prior to being filled by the taxpayer, the job position did not exist in this state as a job position of the taxpayer or of another business entity;
- The job position is filled; provided, however, that a position will be deemed filled if it subsequently becomes vacant but is refilled within a period of not more than ninety (90) days; and
- In the case of back office operations job positions under subdivision (a)(5)(A), the job position must meet the definition of industrial wage job under subdivision (a)(3); and
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- “Required capital investment”, except for convention or trade show enterprises, means an investment of five hundred thousand dollars ($500,000) in real property, tangible personal property or computer software owned or leased in this state valued in accordance with generally accepted accounting principles. For businesses engaged in convention or trade show enterprises, “required capital investment” means an investment of ten million dollars ($10,000,000) in such property in the same manner described for other enterprises. A capital investment shall be deemed to have been made as of the date of payment or the date the business enterprise enters into a legally binding commitment or contract for purchase or construction.
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Job Tax Credit; General Provisions.
- Subject to the requirements set forth in this subsection (b), there shall be allowed to any qualified business enterprise that makes the required capital investment a credit equal to four thousand five hundred dollars ($4,500) for each qualified job created during the investment period.
- The qualified business enterprise shall file a business plan with the commissioner in order to qualify for the credit provided by this subsection (b). The business plan shall be filed in a manner prescribed by the commissioner and shall describe the investment to be made, the number of jobs the investment will create, the expected dates the jobs will be filled and the effective date of the plan.
- In order to qualify for the credit, the qualified business enterprise must, within the investment period, make the required capital investment and create at least twenty-five (25) qualified jobs; provided, that if the qualified business enterprise is located in a tier 3 enhancement county, the qualified business enterprise must, within the investment period, make the required capital investment and create at least twenty (20) qualified jobs; provided further, that if the qualified business enterprise is located in a tier 4 enhancement county, the qualified business enterprise must, within the investment period, make the required capital investment and create at least ten (10) qualified jobs. The credit provided in subdivision (b)(1)(A) shall first apply in the tax year in which the qualified business enterprise first satisfies the capital investment and job creation requirements and in subsequent tax years within the investment period in which further net increases occur above the level of employment established when the credit was last taken.
- The credit shall apply against the franchise tax imposed by this part and the excise tax imposed by part 20 of this chapter; provided, however, that the credit, together with any carry-forward thereof, taken on any franchise and excise tax return shall not exceed fifty percent (50%) of the combined franchise and excise tax liability shown on the return before any credit is taken. Any unused credit may be carried forward in any tax period until the credit is taken; provided, however, that the credit may not be carried forward for more than fifteen (15) years.
- The commissioner of revenue has the authority to conduct audits or require the filing of additional information necessary to substantiate or adjust the findings contained within the business plan and to determine that the business enterprise has complied with all statutory requirements so as to be entitled to the credit.
- Nothing in this subsection (b) shall require that the taxpayer establish its commercial domicile in this state in order to receive the credit provided in this subsection (b).
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Job Tax Credit; Additional Annual Credit. In addition to the credit allowed in subdivision (b)(1), the following tax credit shall be allowed in the circumstances described; provided, that the taxpayer otherwise meets all of the requirements of subdivision (b)(1):
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If the qualified business enterprise is located in a tier 2, tier 3, or tier 4 enhancement county, an annual credit shall be allowed as follows:
- If the qualified business enterprise is located in a tier 2 enhancement county, the additional annual credit shall be allowed for a period of three (3) years beginning with the first tax year in which the qualified business enterprise applies the credit in accordance with subdivision (b)(2)(D);
- If the qualified business enterprise is located in a tier 3 enhancement county, the additional annual credit shall be allowed for a period of five (5) years beginning with the first tax year in which the qualified business enterprise applies the credit in accordance with subdivision (b)(2)(D);
- If the qualified business enterprise is located in a tier 4 enhancement county, the additional annual credit shall be allowed for a period of five (5) years beginning with the first tax year in which the qualified business enterprise applies the credit in accordance with subdivision (b)(2)(D); and
- The additional annual credit shall equal four thousand five hundred dollars ($4,500) for each qualified job; provided, that the job remains filled by employees during the year in which the credit is taken. This annual credit may be used to offset up to one hundred percent (100%) of the taxpayer's franchise and excise tax liability for that year. Any unused annual credit, however, shall not be carried forward beyond the year in which the credit originated;
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If the qualified business enterprise involves a higher level of investment and job creation, as specifically described in subdivisions (b)(2)(B)(i)-(v), an annual credit shall be allowed as follows:
- If the investment exceeds one billion dollars ($1,000,000,000) and at least five hundred (500) industrial wage jobs are created, the additional annual credit shall be allowed for a period of twenty (20) years beginning with the first tax year in which the qualified business enterprise applies the credit in accordance with subdivision (b)(2)(D);
- If the investment exceeds five hundred million dollars ($500,000,000) and at least five hundred (500) industrial wage jobs are created, the additional annual credit shall be allowed for a period of twelve (12) years beginning with the first tax year in which the qualified business enterprise applies the credit in accordance with subdivision (b)(2)(D);
- If the investment exceeds two hundred fifty million dollars ($250,000,000) and at least two hundred fifty (250) industrial wage jobs are created, the additional annual credit shall be allowed for a period of six (6) years beginning with the first tax year in which the qualified business enterprise applies the credit in accordance with subdivision (b)(2)(D);
- If the investment exceeds one hundred million dollars ($100,000,000) and at least one hundred (100) industrial wage jobs are created, the additional annual credit shall be allowed for a period of three (3) years beginning with the first tax year in which the qualified business enterprise applies the credit in accordance with subdivision (b)(2)(D);
- If the investment exceeds ten million dollars ($10,000,000) and at least one hundred (100) qualified jobs are created that also meet the definition of headquarters staff employees under § 67-6-224 and pay at least one hundred fifty percent (150%) of the state's average occupational wage for the month of January of the year in which the jobs are created, the additional annual credit shall be allowed for a period of three (3) years beginning with the first tax year in which the qualified business enterprise applies the credit in accordance with subdivision (b)(2)(D);
- The additional annual credit shall equal five thousand dollars ($5,000) for each job specifically described in subdivisions (b)(2)(B)(i)-(v); provided, that the jobs remain filled during the year in which the credit is being taken. This annual credit may be used to offset up to one hundred percent (100%) of the taxpayer's franchise and excise tax liability for that year. Any unused annual credit, however, shall not be carried forward beyond the year in which the credit originated;
- The taxpayer shall be allowed a period not to exceed three (3) years from the effective date of the business plan in order to make the required capital investment necessary to qualify for the additional annual credit allowed under this subdivision (b)(2)(B). If determined to be in the best interests of the state, the three-year period for making the required investment may be extended by the commissioner of economic and community development for a reasonable period not to exceed two (2) additional years, or four (4) additional years if the investment exceeds one billion dollars ($1,000,000,000).
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If the qualified business enterprise is located in an area designated as an adventure tourism district pursuant to § 11-11-204(c), an annual credit shall be allowed as follows:
- If the qualified business enterprise is located in a tier 1 enhancement county, the additional annual credit shall be allowed if the qualified business enterprise creates at least twenty-five (25) qualified jobs;
- If the qualified business enterprise is located in a tier 2 enhancement county, the additional annual credit shall be allowed if the qualified business enterprise creates at least nineteen (19) qualified jobs;
- If the qualified business enterprise is located in a tier 3 enhancement county, the additional annual credit shall be allowed if the qualified business enterprise creates at least thirteen (13) qualified jobs;
- If the qualified business enterprise is located in a tier 4 enhancement county, the additional annual credit shall be allowed if the qualified business enterprise creates at least ten (10) qualified jobs;
- The additional annual credit shall be allowed for a period of three (3) years for a qualified business enterprise located in a tier 1 or tier 2 enhancement county, beginning with the first tax year in which the qualified business enterprise applies the credit in accordance with subdivision (b)(2)(D);
- The additional annual credit shall be allowed for a period of five (5) years for a qualified business enterprise located in a tier 3 or tier 4 enhancement county, beginning with the first tax year in which the qualified business enterprise applies the credit in accordance with subdivision (b)(2)(D); and
- The additional annual credit shall equal four thousand five hundred dollars ($4,500) for each qualified job; provided, that the job remains filled by employees during the year in which the credit is being taken. This annual credit may be used to offset up to one hundred percent (100%) of the taxpayer's franchise and excise tax liability for that year. Any unused annual credit, however, shall not be carried forward beyond the year in which the credit originated.
- The qualified business enterprise may first apply the credit provided in this subdivision (b)(2) in any tax year after the qualified business enterprise has met all of the requirements of subdivisions (b)(1) and (b)(2); provided, however, that the qualified business enterprise must begin to apply the credit no later than the first tax year following the end of the investment period.
- Notwithstanding any provision to the contrary, the circumstances described in subdivisions (b)(2)(A)(i)-(ii) and (b)(2)(B)(i)-(v) shall be deemed to be mutually exclusive and a taxpayer shall not receive a credit under more than one (1) such subdivision for jobs created during a single investment period.
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If the qualified business enterprise is located in a tier 2, tier 3, or tier 4 enhancement county, an annual credit shall be allowed as follows:
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Job Tax Credit; Special provisions. This subdivision (b)(3) shall serve as exceptions to subdivisions (b)(1) and (2). To the extent a conflict exists between this subdivision (b)(3) and subdivision (b)(1) or (b)(2), this subdivision (b)(3) shall control. Otherwise, subdivisions (b)(1) and (2) shall apply to any credits provided under this subsection (b):
- The job tax credit allowed in subdivision (b)(1) shall be increased from four thousand five hundred dollars ($4,500) to five thousand dollars ($5,000) if the qualified business enterprise qualifies for the additional annual credit allowed in subdivision (b)(2)(B);
- [Deleted by 2019 amendment.]
- If the qualified business enterprise is located in a tier 2 enhancement county, the taxpayer shall have three (3) years in order to create the minimum number of qualified jobs necessary to receive the credit. If the qualified business enterprise is located in a tier 3 or tier 4 enhancement county, the taxpayer shall have five (5) years to create the minimum number of qualified jobs necessary to receive the credit;
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- If the required capital investment exceeds one billion dollars ($1,000,000,000), the time limitations otherwise applicable to the carry-forward of unused job tax credits under subdivision (b)(1)(D) and subdivision (b)(2)(B)(vi) shall not apply, and any unused credit may be carried forward until fully utilized, if the commissioner of revenue and the commissioner of economic and community development have determined that the allowance of the additional carry-forward is in the best interests of the state;
- Subdivision (b)(3)(D)(i) shall apply only to applications received and approved by the commissioner of revenue and the commissioner of economic and community development on or before January 1, 2011;
- The commissioner of revenue, with the approval of the commissioner of economic and community development, is authorized to approve job tax credit in cases where the newly created position existed in this state as a job position of the taxpayer or of another business entity less than ninety (90) days prior to being filled by the taxpayer; provided, that all other requirements to obtain the credit have been satisfied by the taxpayer; and provided, further, that the commissioner of revenue and the commissioner of economic and community development have determined that allowance of the credit is in the best interests of the state;
- A taxpayer that has established its international, national or regional headquarters in this state and has met the requirements to qualify for the credit provided in § 67-6-224, or a taxpayer that has established an international, national or regional warehousing or distribution hub in this state and has met the requirements to be a qualified new or expanded warehouse or distribution facility, shall be allowed to offset up to one hundred percent (100%) of its franchise or excise, or both, tax liability by job tax credits, or any carry-forward of the job tax credits, if the commissioner of revenue and the commissioner of economic and community development determine that increasing the percentage of offset permitted to the taxpayer is in the best interests of the state. The commissioner of revenue and the commissioner of economic and community development shall determine the percentage of franchise or excise, or both, tax liability allowed to be offset by this subdivision (b)(3)(F) that otherwise allowed by subdivision (b)(1) and the period during which the increased offset shall continue;
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The credits otherwise provided in this subsection (b) shall be allowed for new high-skill, high-wage, qualified jobs in high-technology areas, emerging occupations or skilled manufacturing, regardless of whether net employment is increased; provided, however, that this subdivision (b)(3)(G) shall apply only to new jobs created by a taxpayer who failed to meet the net increase requirement due to worker layoffs or reductions, where such workers have been certified by the federal department of labor's division of trade adjustment assistance as having been adversely affected by foreign trade, so as to be eligible for assistance in accordance with the federal Trade Adjustment Assistance Reform Act of 2002, compiled in U.S.C. title 19. A taxpayer seeking qualification for jobs tax credits under this subsection (b) shall be required to satisfy all other requirements of this subsection (b), and shall be required to provide evidence to the commissioner of revenue of the department of labor's certification of eligibility for assistance for the taxpayer's adversely affected worker group;
[Expired July 1, 2015; see (3)(H)(ii)]
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- The credits provided by this subsection (b) may be computed by a general partnership that establishes and operates a call center in Tennessee that is placed in service by the general partnership on or after June 30, 2003, and that would otherwise qualify for the job tax credit provided in this subsection (b); provided, that the credit shall first apply in the tax year in which the qualified business enterprise increases net full-time employment by four hundred (400) or more jobs, and shall then apply in those subsequent fiscal years in which further net increases occur above the level of employment established when the credit was last taken. The credit provided in this subsection (b) may also be computed by a general partnership that has established an international, national or regional headquarters in this state that meets the definition of a qualified headquarters facility under § 67-6-224 and would otherwise qualify for the job tax credits provided in this subsection (b). The amount of the credit shall be computed under this subsection (b) as if the general partnership were subject to franchise and excise tax under part 20 of this chapter and this part. With respect to the general partnership tax year during which a credit is so computed, a partner in the general partnership that is subject to Tennessee franchise and excise tax and that directly holds a first tier ownership interest in the general partnership may take a percentage of the credit that equals the total amount of the credit for the general partnership multiplied by the partner's percentage interest in the general partnership on the last day of the general partnership tax year against the partner's franchise and excise tax liability for the partner's tax year that includes the last day. The job tax credit passed through from the general partnership to the first tier partner under this subsection (b) shall, in the hands of the first tier partner, be subject to applicable provisions and limitations otherwise provided by this subsection (b), including carry-forward provisions; provided, that in no case shall the credit or a carryover thereof be taken by a business entity, unless it was a partner in the general partnership and subject to franchise and excise tax at the time the credit was earned by the general partnership;
- This subdivision (b)(3)(H) shall expire on July 1, 2015; provided, that any taxpayer that has filed a business plan with the department prior to July 1, 2015, shall continue to be eligible for the credit;
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[Deleted by 2019 amendment.]
[Expired July 1, 2015; see (3)(J)(ii)]
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- Any airline company that has established its international, national or regional headquarters in this state and has met the requirements to qualify for the credit provided in § 67-6-224 may elect to convert any available and unused job tax credit created under subdivision (b)(1) and any available and unused additional annual credit created under subdivision (b)(2) into a refundable credit which shall be discounted to net present value using the interest rate in effect pursuant to § 67-1-801 on the date of such election; provided, however, that the election shall be available only if the commissioner of revenue and the commissioner of economic and community development determine that allowance of the election is in the best interests of the state;
- This subdivision (b)(3)(J) shall expire on July 1, 2015; provided, that any taxpayer that has filed a business plan with the department prior to July 1, 2015, shall continue to be eligible for the credit.
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Job Tax Credit; General Provisions.
- In accordance with § 56-4-217, there shall be credited upon the tax imposed by this part the net amount of gross premiums tax paid that is measured by a period that corresponds to the franchise tax period on which the return is based, plus any amount used to offset payment to the Tennessee guaranty association that has not otherwise been recovered, but not including the gross premiums receipts tax paid by fire insurance companies for the purpose of executing the fire marshal law.
- When an audit of a tax return for any year not barred by the statute of limitations discloses a change in the amount of tax due, there may be applied upon it as a credit any amount that the taxpayer is otherwise entitled to receive either as a credit under parts 4-6 of this chapter for franchise taxes paid, or as a refund thereof under § 67-1-707. This tax credit allowance may be applied, notwithstanding the statute of limitations or the requirement for approval of certain refunds by the commissioner and the attorney general and reporter, if such was made under § 67-1-707, and also any statutory or regulatory requirement under various sections of parts 4-6 of this chapter that the franchise tax be paid prior to the allowance of any credit.
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- Each taxpayer is considered a separate entity; therefore, in the case of mergers, consolidations, and like transactions, no tax credit incurred by the predecessor taxpayer shall be allowed as a deduction on the tax return filed by the successor taxpayer. With the exception set forth in subdivision (e)(2), a credit carryforward may be taken only by the taxpayer that generated it.
- Notwithstanding the provisions contained in subdivision (e)(1), when a taxpayer merges out of existence and into a successor taxpayer that has no income, expenses, assets, liabilities, equity or net worth, any qualified Tennessee credit carryover of the predecessor that merged out of existence shall be available for carryover on the return of the surviving successor; provided, that the time limitations for the carryover have not expired.
- A unitary group of financial institutions may take any qualified credit that was generated by any group member that is in existence as a member of the group at the end of the group's tax year; provided, that such credit has not previously been taken by the member itself before it joined the group or by another unitary group of financial institutions at the time the financial institution generating the credit was a member of that group; and provided, further, that the credit carryover shall be subject to the limitations set forth in this subsection (e).
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As used in this subsection (f), unless the context otherwise requires:
- “Full-time employee job” means a permanent, rather than seasonal or part-time, employment position, providing employment for at least twelve (12) consecutive months, to a person for at least thirty-seven and one half (37.5) hours per week, if that person is enrolled in minimal health care benefits, as described in title 56, chapter 7, part 22; and
- “Part-time employee job” means a part-time employment position, providing employment for at least twelve (12) consecutive months, to a person for at least ten (10) hours per week.
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A job tax credit of five thousand dollars ($5,000) for each net new full-time employee job, and two thousand dollars ($2,000) for each net new part-time employee job, for a person with disabilities who is receiving state services directly related to such disabilities, shall be allowed against a taxpayer's franchise and excise liability tax for that year; provided, that:
- The employment of such individual creates a net increase in the number of persons with disabilities employed by the taxpayer within the ninety-day period immediately preceding the employment;
- The taxpayer provides such employment for at least twelve (12) consecutive months and for no less than the minimal hours per week; and for employees enrolled in the minimal health care benefits described in subdivision (f)(1), for respective full-time employment jobs and part-time employment jobs;
- The credit allowed by this subdivision (f)(2) for the employment of persons with disabilities shall first apply in the tax year in which the taxpayer increases net new employment of such persons by one (1) or more, and in those subsequent fiscal years in which further net increases occur above the level of such employment established when the credit was last taken;
- The taxpayer is not required to make a capital investment in a qualified business enterprise in order to receive the credit allowed by this subdivision (f)(2) for the employment of persons with disabilities; and
- The credit provided by this subdivision (f)(2) may be granted only to taxpayers who participate in an existing employment incentive program, pursuant to which persons with disabilities are being served by the department of mental health and substance abuse services, the department of intellectual and developmental disabilities, the division of rehabilitation services of the department of human services, council on developmental disabilities, or any other similar state employment incentive program. Such employment incentive programs shall annually provide to the commissioner of revenue for approval, on or before July 1, a list of their existing employment incentive programs promoting the hiring of disabled individuals.
- The taxpayer shall file a plan with the commissioner of revenue, on a form prescribed by the commissioner, in order to qualify for the credit. The form shall be filed on or before the last day of the fiscal year in which the employment begins, and shall state the number of persons with disabilities newly employed. The commissioner of revenue shall certify a taxpayer's participation in one (1) of these programs and the number of persons employed by the taxpayer meeting the criteria established by this subsection (f).
- The commissioner of revenue has the authority to conduct audits or require the filing of additional information necessary to substantiate or adjust the amount of credit allowed by this subsection (f), and to determine that the taxpayer has complied with all statutory requirements so as to be entitled to the job tax credit.
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Subdivision (b)(1)(D), relating to the carryforward of any unused job tax credit, shall apply to the credit allowed by this subsection (f).
[Expired July 1, 2015; see (g)(11)]
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As used in this subsection (f), unless the context otherwise requires:
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- For purposes of this subsection (g), “headquarters facility,” “headquarters staff employees,” “investment period,” “new full-time employee job,” “qualified headquarters facility,” and “qualified headquarters facility relocation expenses” shall have the same meanings as defined in § 67-6-224.
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In addition to the job tax credit provided in subsection (b), there is allowed a credit against a taxpayer's franchise and excise tax liability equal to any qualified headquarters facility relocation expenses incurred by the taxpayer during the investment period; provided, that the taxpayer meets one (1) of the following criteria:
- The taxpayer creates at least one hundred (100) but less than two hundred fifty (250) net new full-time employee jobs that pay at least one hundred fifty percent (150%) of this state's average occupational wage;
- The taxpayer creates at least two hundred fifty (250) but less than five hundred (500) net new full-time employee jobs that pay at least one hundred fifty percent (150%) of this state's average occupational wage;
- The taxpayer creates at least five hundred (500) but less than seven hundred fifty (750) net new full-time employee jobs that pay at least one hundred fifty percent (150%) of this state's average occupational wage;
- The taxpayer creates at least seven hundred fifty (750) net new full-time employee jobs that pay at least one hundred fifty percent (150%) of this state's average occupational wage; or
- The taxpayer creates at least five hundred (500) net new full-time employee jobs in connection with a capital investment in excess of one billion dollars ($1,000,000,000).
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Notwithstanding any law to the contrary, the total credit allowed to a taxpayer under this subsection (g) shall not exceed the appropriate dollar amount listed in one (1) of the following subdivisions (g)(3)(A)-(E), multiplied by the number of headquarters staff employee positions relocated by the taxpayer to the qualified headquarters facility during the investment period:
- For a taxpayer meeting the requirements in subdivision (g)(2)(A), ten thousand dollars ($10,000);
- For a taxpayer meeting the requirements in subdivision (g)(2)(B), twenty thousand dollars ($20,000);
- For a taxpayer meeting the requirements in subdivision (g)(2)(C), thirty thousand dollars ($30,000);
- For a taxpayer meeting the requirements in subdivision (g)(2)(D), forty thousand dollars ($40,000); and
- For a taxpayer meeting the requirement in subdivision (g)(2)(E), one hundred thousand dollars ($100,000).
- To the extent any amount allowed as a credit under this subsection (g) exceeds the combined tax imposed by this part and by part 20 of this chapter, the amount of such excess shall be considered an overpayment and shall be refunded to the taxpayer. Such refund shall be subject to the procedures of § 67-1-1802; provided, however, notwithstanding any procedure of § 67-1-1802 to the contrary, that a claim for refund must be filed with the commissioner within three (3) years from December 31 of the year in which the qualified headquarters facility relocation expense was incurred.
- If the qualified headquarters facility is not utilized as a headquarters facility for a period of at least ten (10) years from the end of the investment period, the taxpayer shall be subject to an assessment of tax, plus applicable interest, calculated in accordance with this subdivision (g)(5). The amount of tax assessed under this subdivision (g)(5) shall equal the total credit or refund, or both, taken pursuant to this subsection (g) multiplied by a fraction, the numerator of which is the number of years the facility is not utilized as a headquarters facility and the denominator of which is ten (10). The amount of interest shall be calculated in accordance with § 67-1-801 from the date the facility is no longer utilized as a headquarters facility until the date paid.
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- If the headquarters staff employee position is not filled in Tennessee during the investment period, the taxpayer shall be subject to an assessment of the total amount of credit or refund taken relating to such employee position pursuant to this subsection (g) plus interest; and
- If the headquarters staff employee position does not remain filled in Tennessee for a period of at least five (5) years, beginning from the date such employee position was initially filled in Tennessee, the taxpayer shall be subject to an assessment of the total amount of credit or refund taken relating to such employee position pursuant to this subsection (g), plus interest.
- Nothing in this subsection (g) shall require that the taxpayer establish its commercial domicile in this state in order to receive the credit provided in this subsection (g).
- The credit provided for by this subsection (g) may be computed by a general partnership that has established an international, national or regional headquarters in this state that meets the definition of a qualified headquarters facility under § 67-6-224 and has qualified for the job tax credit provided for in subsection (c). The amount of the credit shall be allowed under this section as if the general partnership were subject to franchise and excise tax under part 20 of this chapter and this part. With respect to the general partnership tax year during which a credit is so computed, a partner in the general partnership that is subject to this state's franchise and excise tax and that directly holds a first tier ownership interest in the general partnership may take a percentage of the credit that equals the total amount of the credit for the general partnership multiplied by the partner's percentage interest in the general partnership on the last day of the general partnership tax year against the partner's franchise and excise tax liability for the partner's tax year that includes the last day. The relocation expense credit passed through from the general partnership to the first tier partner under this section shall, in the hands of the first tier partner, be subject to applicable provisions and limitations otherwise provided by this section. In no case shall the credit be taken by a business entity unless it was a partner in the general partnership and subject to franchise and excise tax at the time the credit was earned by the general partnership.
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- [Deleted by 2019 amendment.]
- Any insurance company, as defined in § 56-1-102, that otherwise meets all of the criteria contained in this subsection (g) and would be subject to the tax imposed by this part and part 20 of this chapter if not for the exemption provided in § 67-4-2008(a)(14), shall be granted the credit provided in this subsection (g) and shall be entitled to a refund as provided in subdivision (g)(4).
- This subsection (g) shall expire on July 1, 2015; provided, that any taxpayer that has filed a business plan with the department prior to July 1, 2015, shall continue to be eligible for the credit.
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There shall be allowed, for any financial institution, a credit against the sum total of the taxes imposed by the Franchise Tax Law, compiled in this part, and by the Excise Tax Law, compiled in part 20 of this chapter, an amount equal to either:
- Five percent (5%) of a qualified loan or qualified long-term investment made to an eligible housing entity for any eligible activity; or
- Three percent (3%) annually of the unpaid principal balance of a qualified loan made to an eligible housing entity for any eligible activity as of December 31 of each year for the life of the loan or fifteen (15) years, whichever is earlier.
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There shall be allowed, for any financial institution, a credit against the sum total of the taxes imposed by the Franchise Tax Law, compiled in this part, and by the Excise Tax Law, compiled in part 20 of this chapter, an amount equal to either:
- Ten percent (10%) of a grant, contribution, or qualified low-rate loan made to an eligible housing entity for any eligible activity; or
- Five percent (5%) annually of the unpaid principal balance of a qualified low-rate loan made to an eligible housing entity for any eligible activity as of December 31 of each year for the life of the loan or fifteen (15) years, whichever is earlier.
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For purposes of this subsection (h), the following definitions shall apply:
- “Eligible activity” means an activity that creates or preserves affordable housing for low-income Tennesseans, an activity to help low-income Tennesseans obtain safe and affordable housing, an activity that builds the capacity of an eligible nonprofit to provide housing opportunities to low-income Tennesseans, including the construction or expansion of an office or other facility in which low-income housing related planning and educational opportunities will be provided, and any other activities approved by the executive director of the Tennessee housing development agency and the commissioner of revenue;
- “Eligible housing entity” means:
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There shall be allowed, for any financial institution, a credit against the sum total of the taxes imposed by the Franchise Tax Law, compiled in this part, and by the Excise Tax Law, compiled in part 20 of this chapter, an amount equal to either:
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A Tennessee nonprofit corporation with Internal Revenue Code § 501(c)(3) status (26 U.S.C. § 501(c)(3)), including an entity created and controlled by such corporation, or a wholly-owned subsidiary of such corporation, that engages in eligible activity on behalf of such corporation;
[Expired July 1, 2015; see (i)(2)]
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For purposes of this subsection (j):
- “Qualified expenses” means those expenses incurred in this state that are necessary for the production of a movie or episodic television program in this state; provided, however, that the expenses shall not qualify under this subdivision (j)(1)(A) unless both the commissioner of revenue and the commissioner of economic and community development determine, in their sole discretion, that the production and the allowance of the credit are in the best interests of this state. For purposes of this subdivision (j)(1)(A), “best interests of this state” means a determination by the commissioner of revenue and the commissioner of economic and community development that the production is a result of the credit provided in this subsection (j) and that the production is not found to be obscene as defined in § 39-17-901;
- “Qualified investor” means any entity that has established a headquarters facility as defined in § 67-6-224 that has invested in a qualified production company; and
- “Qualified production company” means any entity that incurs at least one million dollars ($1,000,000) in qualified expenses.
- A credit in an amount equal to fifteen percent (15%) of any qualified expenses shall be allowed against the combined franchise and excise tax liability of any qualified production company that has established a headquarters facility as defined in § 67-6-224. If the qualified production company does not have a headquarters facility as defined in § 67-6-224, then any qualified investor shall be allowed a credit equal to the amount of credit to which the qualified production company would have been entitled had it established a headquarters facility as defined in § 67-6-224, multiplied by the qualified investor's percentage ownership interest in the qualified production company.
- In order for either a qualified production company or a qualified investor to become entitled to a credit under this subsection (j), the qualified production company shall submit documentation verifying that the qualified expenses have been incurred and paid.
- The commissioner shall review the documentation and notify the qualified production company of the approved credit.
- Once the qualified production company has been notified of the approved credit, either the qualified production company or the qualified investment company, as appropriate, may submit a claim for the credit. To the extent that any amount allowed as a credit under this subsection (j) exceeds the current and outstanding combined franchise and excise tax liability of the claimant, the amount of such excess shall be deemed an overpayment and shall be refunded to the claimant. For qualified expenses incurred and paid during any tax year, the commissioner is authorized to issue a refund as described in this subdivision (j)(5) prior to the expiration of such tax year if the amount of the approved credit exceeds the claimant's current and outstanding franchise and excise tax liability on the date of such refund. Any refund under this subsection (j) shall be subject to the procedures of § 67-1-1802; provided, however, notwithstanding any procedure of § 67-1-1802 to the contrary, that a claim for refund shall be filed with the commissioner within three (3) years from December 31 of the year in which the qualified expenses were incurred. In no case shall a refund for the same qualified expenses be allowed twice.
- The credit provided for in this subsection (j) shall not apply to tax years beginning on or after July 1, 2012; provided, that this subdivision (j)(6) shall have no effect on the right of any taxpayer to realize the benefits of any credit provided under this subsection (j) in the event that the commissioner of revenue and the commissioner of economic and community development determine that the taxpayer’s production is in the “best interest of this state” pursuant to subdivision (j)(1)(A) and the taxpayer incurs expenses related to such production prior to July 1, 2012.
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For purposes of this subsection (j):
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There shall be allowed, for any financial institution, a credit against the sum total of the taxes imposed by the Franchise Tax law, compiled in this part, and by the Excise Tax law, compiled in part 20 of this chapter, an amount equal to either:
- Five percent (5%) of a qualified loan or qualified long-term investment made to a community development financial institution that is certified by the United States department of the treasury's community development financial institutions fund; or
- Three percent (3%) annually of the unpaid principal balance of a qualified loan made to a community development financial institution that is certified by the United States department of the treasury's community development financial institutions fund as of December 31 of each year for the life of the loan or fifteen (15) years, whichever is earlier.
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There shall be allowed, for any financial institution, a credit against the sum total of the taxes imposed by the Franchise Tax law, compiled in this part, and by the Excise Tax law, compiled in part 20 of this chapter, an amount equal to either:
- Ten percent (10%) of a grant, contribution, or qualified low-rate loan made to a community development financial institution that is certified by the United States department of the treasury's community development financial institutions fund; or
- Five percent (5%) annually of the unpaid principal balance of a qualified low-rate loan made to a community development financial institution that is certified by the United States department of the treasury's community development financial institutions fund as of December 31 of each year for the life of the loan or fifteen (15) years, whichever is earlier.
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For purposes of this subsection (k):
- “Financial institution” has the same meaning as defined in § 67-4-2004;
- “Qualified loan” means a loan that is at least two percent (2%) below the prime rate, as published by the Wall Street Journal at the time the loan is approved, that does not qualify as a qualified low-rate loan;
- “Qualified long-term investment” means an equity investment made for a period of more than five (5) years; and
- “Qualified low-rate loan” means a loan that is at least four percent (4%) below the prime rate, as published by the Wall Street Journal at the time the loan is approved.
- Any unused credit allowed under subdivision (k)(1)(A) or (k)(2)(A) may be carried forward for fifteen (15) years after the tax year in which the credit originated. Any unused credit allowed under subdivision (k)(1)(B) or (k)(2)(B) shall not be carried forward beyond the tax year in which the credit originated.
- Notwithstanding § 47-14-103 or any other provision to the contrary, a community development financial institution, as described in this subsection (k), shall be allowed to charge a rate of interest not to exceed twenty-four percent (24%) per annum.
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There shall be allowed, for any financial institution, a credit against the sum total of the taxes imposed by the Franchise Tax law, compiled in this part, and by the Excise Tax law, compiled in part 20 of this chapter, an amount equal to either:
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- There shall be allowed, for any financial institution, a credit against the sum total of the taxes imposed by the Franchise Tax Law, compiled in this part, and the Excise Tax Law, compiled in part 20 of this chapter, in an amount equal to ten percent (10%) of the financial institution's contribution to the Tennessee rural opportunity fund or the Tennessee small business opportunity fund. The credit provided in this subsection (l ) shall be allowed each year for a period of ten (10) years, beginning with the tax year in which the contribution is made. Any unused credit allowed under this subsection (l ) shall not be carried forward beyond the tax year in which the credit originated.
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For purposes of this subsection (l ), the loaning of funds by the taxpayer to the Tennessee rural opportunity fund or the Tennessee small business opportunity fund shall constitute a contribution by the taxpayer to the Tennessee rural opportunity fund or the Tennessee small business opportunity fund. If, however, at the close of the tenth year of the period during which the credit is allowed, the taxpayer or its assignee has received repayment, or retains any right to repayment, of all or any portion of the amount contributed to the Tennessee rural opportunity fund or the Tennessee small business opportunity fund or any interest accrued thereon, the department shall be entitled to recapture the credit allowed by increasing the franchise tax liability or the excise tax liability, or both, of the taxpayer by the credit recapture amount for the first tax year following the ten-year period during which the credit is allowed. The credit recapture amount shall be equal to the total amount of credit allowed, plus interest at the rate determined under § 67-1-801 from the date the credit was offset against the taxpayer's franchise tax liability or the excise tax liability, or both.
[Expired July 1, 2015; see (m)(6)]
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As used in this subsection (m):
- “Carbon charge” means a tax or fee imposed or levied by the federal or state government, the purpose of which is to reduce the emission of greenhouse gases. “Carbon charge” may include, but is not limited to, a tax, emission fee or charge, or required purchase of carbon or emission off-sets or credits, whether incurred by or imposed directly on the certified green energy supply chain manufacturer or campus affiliate or imposed on the Tennessee Valley authority or other applicable energy provider and billed to the certified green energy supply chain manufacturer or campus affiliate;
- “Certified green energy supply chain manufacturer” means any manufacturer that has made, during the investment period, a required capital investment in excess of two hundred fifty million dollars ($250,000,000) in constructing, expanding or remodeling a facility that is certified by the commissioner of revenue, the commissioner of economic and community development and the commissioner of environment and conservation, in their sole discretion, to be a facility engaged in manufacturing a product that is necessary for the production of green energy;
- “Charge for electricity sold” means the total delivered cost of electricity sold to the certified green energy supply chain manufacturer or campus affiliate at the point of delivery to the facility. The charge for electricity sold shall be the total amount due as shown on the customer's electricity bills over the applicable tax year. Any carbon charge shall be excluded from the charge for electricity sold to the extent the carbon charge is included in the credit allowed in subdivision (m)(4);
- “Investment period” means a period not to exceed three (3) years from the filing of the business plan related to qualification as a certified green energy supply chain manufacturer, during which the required capital investment must be made; and
- “Maximum certified rate” means a rate expressed as a price per kilowatt hour for calculating the green energy tax credit allowed in subdivision (m)(3) and shall be established through the issuance of a private letter ruling by the commissioner of revenue, which shall be subject to approval by the commissioner of economic and community development and the commissioner of finance and administration and any such maximum certified rate established for a green energy supply chain manufacturer shall apply to any campus affiliate.
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The credits provided in this subsection (m) and any other applicable credits, net operating losses or carry-forwards thereof provided and in part 20 of this chapter and this part shall be applied in the following order:
- Any credits, net operating losses or carry-forwards thereof available to the certified green energy supply chain manufacturer, campus affiliate, integrated customer or integrated supplier pursuant to this part or part 20 of this chapter, except for those contained in this subsection (m), shall be applied to the taxpayer's tax liability first;
- Any green energy tax credit available pursuant to subdivision (m)(3) shall be applied to the taxpayer's liability second and shall be refundable as provided in subdivision (m)(3) if the credit exceeds the taxpayer's remaining liability; and
- Any carbon tax credit available pursuant to subdivision (m)(4) shall be applied to the taxpayer's liability third and shall be refundable as provided in subdivision (m)(4) if the credit exceeds the taxpayer's remaining liability.
- A certified green energy supply chain manufacturer and campus affiliate, integrated customer or integrated supplier of a green energy supply chain manufacturer shall be allowed a green energy tax credit against the sum total of the taxes imposed by the Franchise Tax Law compiled in this part and the Excise Tax Law compiled in part 20 of this chapter, equal to the amount by which the charge for electricity sold to the certified green energy supply chain manufacturer, campus affiliate, integrated customer or integrated supplier exceeds the charge that would have been made for such total delivered electricity if the maximum certified rate had been applied during the applicable tax year. The Tennessee Valley authority, or the applicable energy provider, shall supply such information as deemed necessary by the commissioner of revenue to verify the amount of the credit. Consistent with subdivision (m)(2), to the extent that any amount allowed as a credit under this subdivision (m)(3), for any tax year, exceeds the combined tax imposed by part 20 of this chapter and this part after the application of all available credits other than the credit provided in subdivision (m)(4), the amount of the excess shall be considered an overpayment and shall be refunded to the taxpayer; provided, however, that the overpayment and the refund shall not exceed, for any one (1) tax year, an amount equal to one million five hundred thousand dollars ($1,500,000) for each two hundred fifty million dollars ($250,000,000) in capital investments made by the certified green energy supply chain manufacturer. The refund shall be subject to the procedures of § 67-1-1802; provided, however, that, notwithstanding any procedure of § 67-1-1802 to the contrary, a claim for refund must be filed with the commissioner within three (3) years from December 31 of the year in which the credit provided by this subdivision (m)(3) was incurred. To the extent any amount allowed as a credit under this subdivision (m)(3) is not applied to the taxpayer's liability and is not received by the taxpayer as a refund, the credit may be carried forward in perpetuity until it is claimed as a refund or utilized as a credit by the certified green energy supply chain manufacturer pursuant to this subdivision (m)(3). Except for the purpose of receiving a refund or otherwise utilizing credits that have been carried forward, the credit provided for in this subdivision (m)(3) shall cease to be effective on January 1, 2029, and no new credit shall be allowed for tax years ending on or after January 1, 2029.
- A certified green energy supply chain manufacturer and any campus affiliates shall be allowed a carbon charge credit against the sum total of the taxes imposed by the Franchise Tax Law compiled in this part and the Excise Tax Law compiled in part 20 of this chapter, equal to any carbon charges incurred by or imposed directly on the certified green energy supply chain manufacturer, campus affiliate or imposed on the Tennessee Valley authority or other applicable energy provider and billed to the certified green energy supply chain manufacturer or campus affiliate during the applicable tax year. The Tennessee Valley authority, or the applicable energy provider, shall supply such information as deemed necessary by the commissioner of revenue to verify the amount of the carbon charge credit. Consistent with subdivision (m)(2), to the extent any amount allowed as a carbon charge credit under this subdivision (m)(4) exceeds the combined tax imposed by this part and by part 20 of this chapter after the application of all other available credits, the amount of the excess shall be considered an overpayment and shall be refunded to the taxpayer. The refund shall be subject to the procedures of § 67-1-1802; provided, however, that, notwithstanding any procedure of § 67-1-1802 to the contrary, a claim for refund must be filed with the commissioner within three (3) years from December 31 of the year in which the credit provided by this subdivision (m)(4) was incurred.
- The investment period for making the required capital investment may be extended by the commissioner of economic and community development for a reasonable period, not to exceed two (2) years, for good cause shown. For purposes of this subdivision (m)(5), “good cause” means a determination by the commissioner of economic and community development that the capital investment is a result of the credit provided in this subsection (m).
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This subsection (m) shall expire on July 1, 2015; provided, that any taxpayer that has filed a business plan with the department prior to July 1, 2015, shall continue to be eligible for the credit.
[Expired July 1, 2015; see (n)(2)]
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As used in this subsection (m):
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- There shall be allowed a credit against a key tenant's franchise and excise tax liability equal to any qualified medical trade center relocation expenses incurred by the key tenant; provided, however, that such credit shall not exceed an amount equal to ten dollars ($10.00) for each square foot of space within the facility that is leased and occupied by the key tenant. To the extent that any amount allowed as a credit under this subsection (n), for any tax year, exceeds the combined franchise and excise tax after the application of all available credits, the amount of such excess shall be considered an overpayment and shall be refunded to the key tenant. The refund shall be subject to the procedures of § 67-1-1802; provided, however, notwithstanding any procedure of § 67-1-1802 to the contrary, that a claim for refund shall be filed with the commissioner within three (3) years from December 31 of the year in which the qualified medical trade center relocation expenses were incurred.
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This subsection (n) shall expire on July 1, 2015; provided, that any taxpayer that has filed a business plan with the department prior to July 1, 2015, shall continue to be eligible for the credit.
[Expired July 1, 2015; see (o)(6)]
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- For purposes of this subsection (o), “qualified advertising expenses” means advertising expenses that are incurred for the purpose of co-promoting a qualified medical trade center and the State of Tennessee or the City of Nashville; provided, however, that the expenses shall not qualify under this subdivision (o)(1) unless both the commissioner of revenue and the commissioner of economic and community development determine, in their sole discretion, that the advertising and the allowance of the credit are in the best interests of this state. For purposes of this subdivision (o)(1), “best interests of the state” means a determination by the commissioner of revenue and the commissioner of economic and community development that the advertising is a result of the credit provided in this subsection (o).
- A credit in an amount equal to fifteen percent (15%) of any qualified advertising expenses shall be allowed against the combined franchise and excise tax liability of any taxpayer that incurs and pays such qualified expenses.
- In order for a taxpayer to become entitled to a credit under this subsection (o), the taxpayer shall submit documentation verifying that the qualified advertising expenses have been incurred and paid.
- The commissioner shall review the documentation and notify the taxpayer of the approved credit.
- Once the taxpayer has been notified of the approved credit, the taxpayer may submit a claim for the credit. To the extent that any amount allowed as a credit under this subsection (o), for any tax year, exceeds the combined franchise and excise tax after the application of all available credits, the amount of such excess shall be considered an overpayment and shall be refunded to the taxpayer. The refund shall be subject to the procedures of § 67-1-1802; provided, however, notwithstanding any procedure of § 67-1-1802 to the contrary, that a claim for refund shall be filed with the commissioner within three (3) years from December 31 of the year in which the qualified advertising expenses were incurred.
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This subsection (o) shall expire on July 1, 2015; provided, that any taxpayer that has filed a business plan with the department prior to July 1, 2015, shall continue to be eligible for the credit.
[Expired July 1, 2015; see (p)(2)]
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- The commissioner of revenue, the commissioner of economic and community development, and the commissioner of finance and administration are authorized, with the approval of the comptroller of the treasury, to jointly establish a program pursuant to which buildings, facilities, or other infrastructure may be developed utilizing a state funding mechanism and pursuant to which the value of tax credits that have been earned by the taxpayer but remain unutilized may be applied, in lieu of payments, toward the purchase or lease of such property pursuant to a contractual agreement between the taxpayer and the program. Such tax credits may include those to which the taxpayer is entitled under this section or under any other provision of this part, part 20 of this chapter, or chapter 6 of this title.
- This subsection (p) shall expire on July 1, 2015; provided, that any taxpayer that has filed a business plan with the department prior to July 1, 2015, shall continue to be eligible for the credit.
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As used in this subsection (q):
- “Business plan” means a job creation plan submitted by a qualified business to the commissioner;
- “Community resurgence job tax credit” means the credit provided to a qualified business located in a high-poverty area as provided in this subsection (q);
- “Full-time job” means a permanent employment position providing employment for at least twelve (12) consecutive months, to a person for at least thirty-seven and one-half (37.5) hours per week;
- “High-poverty area” means a census tract with a poverty level, all population, in excess of thirty percent (30%), according to the American community survey three-year estimates in 2013, and determined decennially thereafter, as compiled by the department of economic and community development in consultation with the office of local government, comptroller of the treasury;
- “Qualified business” means a new or existing business located in a high-poverty area according to the most recent decennial determination at the time a business plan is filed with the commissioner; and
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“Qualifying job” means:
- A full-time job with wages equal to, or greater than, the state's average occupational wage, as defined in § 67-4-2004, for the month of January of the year during which the job was created;
- The job is newly created in this state and, for at least ninety (90) days prior to being filled by the taxpayer, did not exist in this state as a job of the taxpayer or of another business entity; and
- The job is created within a three-year period from the effective date of the business plan.
- In addition to any other credits allowed in this section, there shall be allowed to any qualified business a community resurgence job tax credit equal to two thousand five hundred dollars ($2,500) for each qualifying job created.
- The qualified business shall file a business plan with the commissioner in order to qualify for the credit provided by this subsection (q). The business plan shall be filed in a manner prescribed by the commissioner and shall describe the type of business, the number of jobs to be created, the expected dates the jobs will be filled, and the effective date of the plan.
- In order to qualify for the credit, the qualified business shall create at least ten (10) qualifying jobs. The credit provided in subdivision (q)(2) shall first apply in the tax year in which the qualified business first satisfies the job creation requirements and in subsequent tax years in which further net increases occur above the level of employment established when the credit was last taken.
- The credit shall apply against the franchise tax imposed by this part and the excise tax imposed by the Excise Tax Law of 1999, compiled in part 20 of this chapter; provided, however, that the credit, together with any carry-forward thereof, taken on any franchise and excise tax return shall not exceed fifty percent (50%) of the combined franchise and excise tax liability shown on the return before any credit is taken. Any unused credit may be carried forward in any tax period until the credit is taken; provided, however, that the credit may not be carried forward for more than fifteen (15) years.
- The commissioner has the authority to conduct audits or require the filing of additional information necessary to substantiate or adjust the amount of credit allowed by this subsection (q), and to determine that the taxpayer has complied with all statutory requirements so as to be entitled to the community resurgence job tax credit. If it is determined that the taxpayer failed to comply, the taxpayer shall be subject to an assessment equal to the amount of any credit taken under this subsection (q) for which the taxpayer failed to qualify, plus interest.
- The aggregate amount of the credits allowed to all taxpayers under this subsection (q) shall not exceed twelve million five hundred thousand dollars ($12,500,000) in any one (1) tax year.
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As used in this subsection (q):
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- The commissioner shall, no later than January 1, 2018, and by January 1 of each subsequent year, report to the members of the finance, ways and means committees of the house of representatives and the senate with respect to the tax credits claimed under this section and § 67-4-2009 for tax periods ending during the previous fiscal year.
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The report shall contain the following information:
- The number of taxpayers claiming the credit;
- The total amount of credit claimed;
- The number of jobs created during the fiscal year as reported by the taxpayer, if the credit is awarded based on jobs created;
- The total amount of credit carried forward from a prior tax year; and
- The nature of business of the taxpayers claiming the credit, if the nature of the business is available.
- Nothing in this subsection (r) authorizes the disclosure of returns, tax information, or tax administration information, as such terms are defined in § 67-1-1701.
If determined to be in the best interests of the state, the commissioner is further authorized to allow a relocation expense credit to any scrap metal processing facility relocating from a central business district or an area adjacent to the central business district and separated only by a waterway. Such credit shall be equal to the amount of relocation expenses incurred and paid by the facility but shall not exceed the amount of credit allowed under subdivision (g)(3)(E) for the relocation of staff employees of a headquarters facility.
The Tennessee housing development agency;
A public housing authority, including an entity created and controlled by such authority, or a wholly-owned subsidiary of such authority, that engages in eligible activity on behalf of such authority; or
A development district, including a development district that engages in eligible activity;
“Financial institution” has the definition as provided in § 67-4-2004;
“Low-income” means any individual or family at or below eighty percent (80%) of the applicable area median family income as determined by family size;
“Qualified loan” means a loan that is at least two percent (2%) below the prime rate, as published by the Wall Street Journal at the time the loan is approved, that does not qualify as a qualified low-rate loan;
“Qualified long-term investment” means an equity investment made for a period of more than five (5) years to an eligible housing entity; and
“Qualified low-rate loan” means a loan that is at least four percent (4%) below the prime rate, as published by the Wall Street Journal at the time the loan is approved.
In order to take the credit, the regulated financial institution must maintain a certification from the Tennessee housing development agency establishing entitlement to the credit.
The eligible housing entity receiving the funds must maintain such records as required by the Tennessee housing development agency, to ensure that affordable housing opportunities are being provided.
The department of revenue is authorized to share with the Tennessee housing development agency information necessary to effectuate the purposes of this subsection (h). The Tennessee housing development agency shall be bound by restrictions on disclosure of such information otherwise applicable to the department of revenue.
The commissioner of revenue and the executive director of the Tennessee housing development agency are authorized to promulgate rules and regulations to effectuate the purposes of this subsection (h). All such rules and regulations shall be promulgated in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
Any unused credit allowed under subdivision (h)(1)(A) or (h)(2)(A) may be carried forward for fifteen (15) years after the tax year in which the credit originated. Any unused credit allowed under subdivision (h)(1)(B) or (h)(2)(B) shall not be carried forward beyond the tax year in which the credit originated.
(1) A taxpayer that has established its international, national, or regional headquarters in this state and has met the requirements to qualify for the credit provided in § 67-6-224 shall be allowed a credit against the franchise tax imposed under this part equal to the rate of tax imposed under § 67-4-2007 multiplied by any net operating loss incurred by the taxpayer during the tax year covered by the return, or properly carried over from a previous tax year, in accordance with § 67-4-2006; provided, that the credit allowed in this subsection (i) shall only be available if the taxpayer is unable to use the loss or loss carryover to offset net income during the current tax year for excise tax purposes. If a net operating loss or loss carryover is used to calculate a credit under this subsection (i), it shall no longer be available as a deduction for excise tax purposes, and under no circumstances shall the same net operating loss be used for both franchise and excise tax purposes. The credit in this subsection (i) shall only be available upon a determination by the commissioner of revenue and the commissioner of economic and community development that the utilization of net operating losses or loss carryovers against the taxpayer's franchise tax liability is in the best interests of the state. For purposes of this subsection (i), “best interests of the state” means a determination that the taxpayer established its headquarters in this state or converted a regional headquarters in this state into its national or international headquarters as a result of such action. The commissioner of revenue and the commissioner of economic and community development shall determine the period during which the credit provided by this subsection (i) shall be allowed to the taxpayer.
This subsection (i) shall expire on July 1, 2015; provided, that any taxpayer that has filed a business plan with the department prior to July 1, 2015, shall continue to be eligible for the credit.
Acts 1999, ch. 406, § 4; 2000, ch. 973, § 1; 2000, ch. 982, §§ 34, 54-56; 2000, ch. 983, §§ 10, 11; 2003, ch. 202, § 1; 2004, ch. 592, §§ 1-4, 13, 14; 2004, ch. 924, § 14; 2005, ch. 490, § 1; 2005, ch. 499, §§ 59, 62, 63, 85, 88, 90; 2006, ch. 779, §§ 1, 2; 2006, ch. 1019, §§ 2-5, 8, 24, 25, 26, 29; 2007, ch. 602, §§ 2, 8-12, 180-182; 2008, ch. 1106, §§ 42, 44, 46-50, 52, 58, 62; 2009, ch. 477, § 1; 2009, ch. 530, §§ 1, 16, 17, 27, 132; 2010, ch. 1100, § 102; 2010, ch. 1134, §§ 23, 25-32, 34, 37, 52, 53, 55, 56; 2011, ch. 72, § 16; 2011, ch. 383, §§ 4, 5; 2011, ch. 508, §§ 13-21, 25-27; 2012, ch. 575, § 1; 2012, ch. 576, §§ 1, 2; 2012, ch. 1026, § 10; 2013, ch. 378, § 2; 2015, ch. 504, §§ 6-16; 2015, ch. 521, § 2; 2016, ch. 759, §§ 1, 2; 2016, ch. 1019, §§ 4-8; 2017, ch. 251, § 1; 2017, ch. 417, § 1; 2019, ch. 401, §§ 1, 2; 2019, ch. 451, § 2.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998.
Acts 2003, ch. 202, § 3, provided that the act shall apply to qualifying partner's tax years ending on or after June 30, 2003.
Acts 2005, ch. 490, § 2 provided that the commissioner of finance and administration shall identify those grant funds that are generated by § 33-1-301, or any similar grant funds that may be appropriately applied to the subject matter of the act, and shall ensure that those grant funds are used to offset the cost of the job tax credit created in § 67-4-2109 by § 1 of the act.
Acts 2005, ch. 490, § 3 provided that the act shall apply to tax periods ending on or after July 1, 2006.
Acts 2006, ch. 1019, § 70 provided that §§ 2-4, 8 and 29 of the act shall apply to tax years beginning on or after January 1, 2006.
Acts 2008, ch. 1106, § 69 provided that §§ 49 and 50 of the act, which amended (c)(3) and added (h)(8), shall apply to any business plan filed with the department of revenue on or after January 1, 2008.
Acts 2009, ch. 477, § 1, directed the code commission to change all references from “division of mental retardation services” to “division of intellectual disabilities services” and to include the changes in supplements and replacement volumes for the Tennessee Code Annotated.
Acts 2009, ch. 530, § 133 provided that §§ 1, 16, 17, 27 and 132 of the act, which amended subsections (a)-(c), subdivisions (h)(2)(E), (h)(3)(E) and (h)(5) and subsection (n) shall apply to all business plans filed on or after July 1, 2009.
Acts 2010, ch. 1100, § 153 provided that the commissioner of mental health and developmental disabilities, the commissioner of mental health, the commissioner of intellectual and developmental disabilities, and the commissioner of finance and administration are authorized to promulgate rules and regulations to effectuate the purposes of the act. All such rules and regulations shall be promulgated in accordance with the provisions of the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
Acts 2011, ch, 508, § 34 provided that the act, which amended subsections (a), (b), (g), (i) and (m), shall apply to any written proposal by the department of economic and community development or the department of revenue on or after July 1, 2011.
Acts 2015, ch. 504, § 22 provided that the act, which amended this section, shall apply to tax years ending on or after July 1, 2015.
Acts 2015, ch. 521, § 1 provided that the act, which added (q), shall be known and may be cited as the “Community Resurgence Job Tax Credit Act of 2015.”
Acts 2016, ch. 759, § 3 provided that the act, which amended this section, shall take effect April 19, 2016, and shall apply to the creation of adventure tourism job positions in adventure tourism districts on or after July 1, 2017, and to applications submitted on or after July 1, 2017.
Acts 2016, ch. 1019, § 1 provided that the act shall be known and may be cited as the “Rural Economic Opportunity Act of 2016”.
Acts 2016, ch. 1019, § 9 provided that the act, which amended this section, shall apply to tax years ending on or after July 1, 2016.
Acts 2019, ch. 451, § 4 provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2019.
Amendments. The 2013 amendment, in (b)(2)(C), added present (i)-(iii) and (v), redesignated former (i) and (ii) as present (iv) and (vi), and inserted “for a qualified business enterprise located in a tier 1 or tier 2 enhancement county,” in present (iv).
The 2015 amendment by ch. 504, in (a)(5)(A), inserted “back office operations,” after “67-6-224(b)”, and substituted “tourism-related” for “tourism related” two times near the end of the subdivision; rewrote (a)(6)(D) which read: “(D) The job position is filled prior to January 1, 2016; and”; in (b)(2)(B)(iii), deleted “An integrated supplier or integrated customer, as defined in § 67-4-2004, shall qualify for the credit provided in this subdivision (b)(2)(B)(iii), regardless of the level of its capital investment or the number of jobs created;” at the end; redesignated former (b)(3)(H) as present (b)(3)(H)(i) and added (b)(3)(H)(ii); redesignated former (b)(3)(J) as present (b)(3)(J)(i) and added (b)(3)(J)(ii); added (g)(11); redesignated former (i) as present (i)(1) and added (i)(2); added (m)(6); redesignated former (n) as present (n)(1) and added (n)(2); added (o)(6); and redesignated former (p) as present (p)(1) and added (p)(2).
The 2015 amendment by ch. 521 added (q).
The 2016 amendment, by ch. 759, in (a)(6)(A)(i), added “Except as provided in subdivision (a)(6)(A)(ii)” at the beginning and substituted “in the Tennessee Small Employer Group Health Coverage Reform Act, compiled in title 56, chapter 7, part 22; or” for “in title 56, chapter 7, part 22” at the end; added (a)(6)(A)(ii); divided former (a)(6)(B) into the present introductory language and (a)(6)(B)(i) by substituting “state, and:” for “state and,” at the end of the present introductory language; added (a)(6)(B)(ii); and in present (a)(6)(B)(i), added “For a permanent position under subdivision (a)(6)(A)(i),” at the beginning, inserted “the job position”, and added “or” at the end.
The 2016 amendment by ch. 1019, in (a)(2)(C), substituted “a tier 1, tier 2, tier 3, or tier 4 enhancement county” for “a tier 1, tier 2, or tier 3 enhancement county” in the first sentence, and substituted “all tier 1, tier 2, tier 3, and tier 4 enhancement counties” for “all tier 1, tier 2, and tier 3 enhancement counties” in the second sentence; added the provisos to the end of the first sentence of (b)(1)(C); in (b)(2)(A), substituted “a tier 2, tier 3, or tier 4 enhancement county” for “a tier 2 or tier 3 enhancement county” in the introductory language, added (iii) and redesignated former (iii) as present (iv), and substituted “credit is taken” for “credit is being taken” at the end of the first sentence of present (iv); rewrote (b)(2)(C) which read: “(C) If the qualified business enterprise is located in an area designated as an adventure tourism zone pursuant to § 11-11-204(c), an annual credit shall be allowed as follows:“(i) If the qualified business enterprise is located in a tier 1 enhancement county, the additional annual credit shall be allowed if the qualified business enterprise meets one hundred percent (100%) of the job creation requirement in subdivision (b)(1)(C);“(ii) If the qualified business enterprise is located in a tier 2 enhancement county, the additional annual credit shall be allowed if the qualified business enterprise meets at least seventy-five percent (75%) of the job creation requirement in subdivision (b)(1)(C); “(iii) If the qualified business enterprise is located in a tier 3 enhancement county, the additional annual credit shall be allowed if the qualified business enterprise meets at least fifty percent (50%) of the job creation requirement in subdivision (b)(1)(C);“(iv) The additional annual credit shall be allowed for a period of three (3) years for a qualified business enterprise located in a tier 1 or tier 2 enhancement county, beginning with the first tax year in which the qualified business enterprise applies the credit in accordance with subdivision (b)(2)(D);“(v) The additional annual credit shall be allowed for a period of five (5) years for a qualified business enterprise located in a tier 3 enhancement county, beginning with the first tax year in which the qualified business enterprise applies the credit in accordance with subdivision (b)(2)(D); and“(vi) The additional annual credit shall equal four thousand five hundred dollars ($4,500) for each qualified job; provided, that the job remains filled by employees during the year in which the credit is being taken. This annual credit may be used to offset up to one hundred percent (100%) of the taxpayer's franchise and excise tax liability for that year. Any unused annual credit, however, shall not be carried forward beyond the year in which the credit originated.”; and substituted “a tier 3 or tier 4 enhancement county” for “a tier 3 enhancement county” in the second sentence of (b)(3)(C).
The 2017 amendment by ch. 251 added (r).
The 2017 amendment by ch. 417 rewrote (h)(3)(B) which read: “(B) 'Eligible housing entity' means a Tennessee nonprofit corporation with an Internal Revenue Code § 501(c)(3) status, codified in 26 U.S.C. § 501(c)(3), the Tennessee housing development agency, a public housing authority, or a development district;”.
The 2019 amendment, by ch. 401, in (h)(3)(A), inserted “including the construction or expansion of an office or other facility in which low-income housing related planning and educational opportunities will be provided,” following “housing opportunities to low-income Tennesseans,”; in (h)(3)(B)(iv), substituted “A development district, including a development district that engages in eligible activity” for “A development district”.
The 2019 amendment by ch. 451 deleted (b)(3)(B) which read, “(B) If determined to be in the best interests of the state, the commissioner is authorized to allow the credit to a qualified business enterprise that is located in an enhancement county upon the creation of less than twenty-five (25) qualified jobs. The commissioner of revenue and the commissioner of economic and community development shall determine the number of qualified jobs necessary for the taxpayer to receive the credit;”; deleted (b)(3)(I) which read, “(I) If determined to be in the best interests of the state, the commissioner of revenue and the commissioner of economic and community development are authorized to lower the number of jobs that must be created in order to qualify for the additional annual credit provided in subdivision (b)(2)(B); provided, however, that the amount of the credit shall also be reduced in direct proportion to the reduction in the job creation requirement. Under no circumstances, however, shall the job creation requirement be lowered by more than fifty percent (50%);”; and deleted (g)(9)(i) which read, “(i) If determined to be in the best interests of the state, the commissioner of revenue and the commissioner of economic and community development are authorized to lower the number of jobs that must be created in order to qualify for the credit provided in this subsection (g); provided, however, that the amount of the credit shall also be reduced in direct proportion to the reduction in the job creation requirement. Under no circumstances, however, shall the job creation requirement be lowered by more than fifty percent (50%).”
Effective Dates. Acts 2013, ch. 378, § 5. May 14, 2013.
Acts 2015, ch. 504, § 22. July 1, 2015.
Acts 2015, ch. 521, § 3. July 1, 2015.
Acts 2016, ch. 759, § 3. April 19, 2016.
Acts 2016, ch. 1019, § 9. July 1, 2016.
Acts 2017, ch. 251, § 2. May 2, 2017.
Acts 2017, ch. 417, § 2. May 18, 2017.
Acts 2019, ch. 401, § 3. May 10, 2019.
Acts 2019, ch. 451, § 4. July 1, 2019.
Cross-References. Reporting requirement satisfied by notice to general assembly members of publication of report, § 3-1-114.
67-4-2110. Apportionment for persons doing business outside state.
- Any taxpayer having business activities that are taxable both inside and outside the state of Tennessee shall allocate or apportion its net worth as provided in this part. A taxpayer is considered taxable in another state only if the taxpayer is conducting activities in that state that, if conducted in Tennessee, would constitute doing business in Tennessee and would subject the taxpayer to either Tennessee's franchise tax or excise tax.
- Nonbusiness receipts shall not be included in the numerator or denominator of any apportionment formula.
Acts 1999, ch. 406, § 4; 2006, ch. 1019, § 23.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2006, ch. 1019, § 70 provided that § 23 of the act shall apply to tax years beginning on or after January 1, 2006.
Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Taxation, § 79.
NOTES TO DECISIONS
1. Variance.
Issuance of a variance by the Commissioner of Revenue of the State of Tennessee was approved because the Commissioner had the authority, acting pursuant to T.C.A. § 67-4-2014, to require taxpayers, which provided wireless communication and data services within and without Tennessee, to use an apportionment methodology for franchise and excise taxes other than the standard cost of performance methodology codified in T.C.A. §§ 67-4-2012 and 67-4-2110. Vodafone Ams. Holdings Inc. v. Roberts, — S.W.3d —, 2014 Tenn. App. LEXIS 362 (Tenn. Ct. App. June 23, 2014), aff'd, Vodafone Ams. Holdings, Inc. v. Roberts, 486 S.W.3d 496, 2016 Tenn. LEXIS 182 (Tenn. Mar. 23, 2016).
2. Incorporation Out-of-State.
Corporate taxpayer was entitled to apportion its tax liability for certain tax years based on its incorporation in Florida because the taxpayer's incorporation in Florida constituted a sufficient substantial nexus for taxation jurisdiction. Although it appeared from the record that Florida did not actually tax the taxpayer in the tax years at issue, this was of no moment, because Florida had constitutional nexus to tax, and the accompanying risk of taxation could fuel a Commerce Clause challenge with respect to Tennessee's assessments. Popularcategories.com, Inc. v. Gerregano, — S.W.3d —, 2018 Tenn. App. LEXIS 747 (Tenn. Ct. App. Dec. 20, 2018).
Decisions Under Prior Law
1. Use of Statutory Formula.
Statutory formula for computing tax against foreign corporation doing business in Tennessee was valid. American Bemberg Corp. v. Carson, 188 Tenn. 263, 219 S.W.2d 169, 1949 Tenn. LEXIS 339 (1949).
In determining whether commissioner had abused his discretion in imposing excise and franchise taxes on foreign corporation doing business in Tennessee the mere fact that formula for franchise tax gave a factor of more than 99 percent did not per se invalidate the use of formula or show that Tennessee had taxed extraterritorial values since entire coordinate scheme of taxation must be considered. American Bemberg Corp. v. Carson, 188 Tenn. 263, 219 S.W.2d 169, 1949 Tenn. LEXIS 339 (1949).
Foreign corporate taxpayer in order to show violation of due process in computation of tax by commissioner through use of statutory formula must show that application of the formula had resulted in an arbitrary and palpably disproportionate allocation to Tennessee of income earned in another state or net worth employed outside of Tennessee. American Bemberg Corp. v. Carson, 188 Tenn. 263, 219 S.W.2d 169, 1949 Tenn. LEXIS 339 (1949).
67-4-2111. Apportionment of net worth.
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- Except as otherwise provided in this part, for tax years beginning prior to July 1, 2016, the net worth of a taxpayer doing business both in and outside this state shall be apportioned to this state by multiplying such values by a fraction, the numerator of which shall be the property factor plus the payroll factor plus twice the receipts factor, and the denominator of the fraction shall be four (4).
- Except as otherwise provided in this part, for tax years beginning on or after July 1, 2016, the net worth of a taxpayer doing business both in and outside this state shall be apportioned to this state by multiplying such values by a fraction, the numerator of which shall be the property factor plus the payroll factor plus three (3) times the receipts factor, and the denominator of the fraction shall be five (5).
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- The property factor is a fraction, the numerator of which is the average value of the taxpayer's real and tangible personal property, excluding exempt inventory as defined in § 67-4-2108(a)(6), owned or rented and used in this state during the tax period, and the denominator of which is the average value of all the taxpayer's real and tangible personal property, excluding exempt inventory, owned or rented and used during the tax period.
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For a taxpayer electing to compute its net worth on a consolidated basis, and for a member of a captive REIT affiliated group, the property factor is a fraction computed as follows:
- The numerator of which is the average value of the taxpayer's real and tangible personal property, excluding exempt inventory as defined in § 67-4-2108(a)(6)(B), owned or rented and used in this state during the tax period; and
- The denominator of which is the average value of the group's real and tangible personal property, excluding exempt inventory, owned or rented and used during the tax period.
- Exempt inventory shall be determined on a per member basis. Property owned by the taxpayer is valued at its original cost. Property rented by the taxpayer is valued at eight (8) times the net annual rental rate. The property factor shall be determined based on a pro forma consolidated balance sheet prepared in accordance with generally accepted accounting principles wherein transactions and holdings between members of the group and holdings in non-domestic persons have been eliminated.
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For a taxpayer electing to compute its net worth on a consolidated basis, and for a member of a captive REIT affiliated group, the property factor is a fraction computed as follows:
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If a member of an affiliated group apportions its income in accordance with § 67-4-2013(a), then for purposes of computing its net worth on a consolidated basis, the member shall compute the numerator of its property factor as follows:
- The numerator shall include the average value of the taxpayer's real and tangible personal property, excluding exempt inventory as defined in § 67-4-2108(a)(6)(B), owned or rented and used in this state during the tax period;
- In determining the average value of mobile property to be included in the numerator, the value of such property shall be multiplied by a fraction the numerator of which is the total in-state miles of similarly classified mobile property and the denominator of which is the total everywhere miles of similarly classified mobile property; and
- For purpose of computing the fraction in subdivision (b)(3)(B), in-state miles and everywhere miles shall be calculated in accordance with the appropriate provisions of § 67-4-2013(a). For purposes of determining whether mobile property is similarly classified, the classification groupings enumerated in § 67-4-2013(a)(1)-(7) shall be used.
- For purposes of this section, “property” includes a taxpayer's ownership share of the real or tangible property owned or rented by any general partnership, or entity treated as a general partnership for federal income tax purposes, in which such taxpayer has an ownership interest. A return being filed by a limited liability company that has a general partnership as its single member shall include in its property factor only the real and tangible property owned or used by the limited liability company. “Property” also includes a taxpayer's ownership share of the real or tangible property owned or rented by any limited partnership, subchapter S corporation, limited liability company or other entity treated as a partnership for federal income tax purposes, in which the taxpayer has an ownership interest, directly or indirectly through one (1) or more such entities, and that is not doing business in Tennessee and, therefore, is not subject to Tennessee franchise tax. The cost value or rental value of such property shall be determined from the books and records of the entity in which the taxpayer has an interest and such property shall be valued in accordance with subsection (c).
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- Property owned by the taxpayer is valued at its original cost. Property rented by the taxpayer is valued at eight (8) times the net annual rental rate. Net annual rental rate is the annual rental rate paid by the taxpayer, less any annual rental rate received by the taxpayer from sub-rentals. A lessee's payments to a lessor, or on such lessor's behalf, as a part of rent, or in lieu of rent, shall be included as rent in the property factor of the apportionment formula provided by this section. Except with respect to tangible personal property, for purposes of this subsection (c), payments, such as interest, taxes, insurance, repairs or other items, shall be treated as rent paid by the lessee, if they would have been paid by the lessor if the lease contract or other agreement had not specifically provided that they be paid by the lessee.
- For purposes of this section, the value of owned or leased mobile or movable property located both in and outside Tennessee during a tax period shall be determined on the basis of the total percentage of time such property is in the state during the tax period; provided, that the value of an automobile or truck assigned to a traveling employee shall be considered in Tennessee, if the employee's compensation is assigned to Tennessee for purposes of the taxpayer's apportionment formula payroll factor, or if such vehicle is licensed in Tennessee.
- The average value of property shall be determined by averaging the values at the beginning and end of the tax period, but the commissioner may require the averaging of monthly values during the tax period, if reasonably required to reflect properly the average value of the taxpayer's property.
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- The payroll factor is a fraction, the numerator of which is the total amount paid in this state during the tax period by the taxpayer for compensation, and the denominator of which is the total compensation paid everywhere during the tax period.
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For a taxpayer electing to compute its net worth on a consolidated basis, and for a member of a captive REIT affiliated group, the payroll factor is a fraction computed as follows:
- The numerator of which is the total amount paid in this state during the tax period by the taxpayer for compensation; and
- The denominator of which is the total compensation of the group paid everywhere during the tax period.
- The payroll factor shall be determined at the close of business on the last day of the tax year as shown by a pro forma consolidated income statement prepared in accordance with generally accepted accounting principles wherein transactions and holdings between members of the group and holdings in non-domestic persons have been eliminated.
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For a taxpayer electing to compute its net worth on a consolidated basis, and for a member of a captive REIT affiliated group, the payroll factor is a fraction computed as follows:
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If a member of an affiliated group apportions its income in accordance with § 67-4-2013(a), then for purposes of computing its net worth on a consolidated basis, the member shall compute the numerator of its payroll factor as follows:
- The numerator shall include the total amount paid in this state during the tax period by the taxpayer for compensation;
- In determining the portion of compensation to be included in the numerator for personnel performing interstate services, the total compensation for such personnel shall be multiplied by a fraction the numerator of which is the total in-state miles traveled by personnel operating similarly classified mobile property and the denominator of which is the total everywhere miles traveled by personnel operating similarly classified mobile property; and
- For purposes of computing the fraction in subdivision (e)(3)(B), in-state miles and everywhere miles shall be calculated in accordance with the appropriate provisions of § 67-4-2013(a). For purposes of determining whether mobile property is similarly classified, the classification groupings enumerated in § 67-4-2013(a)(1)-(7) shall be used.
- For purposes of this part, “compensation” has the same meaning as set forth in the Excise Tax Law of 1999, compiled in part 20 of this chapter.
- For purposes of this section, “compensation” includes a taxpayer's ownership share of the compensation of any general partnership, or entity treated as a general partnership for federal income tax purposes, in which such taxpayer has an ownership interest. A return being filed by a limited liability company that has a general partnership as its single member shall include in its payroll factor only the compensation attributed to the limited liability company. “Compensation” also includes a taxpayer's ownership share of the real or tangible property owned or rented by any limited partnership, subchapter S corporation, limited liability company or other entity treated as a partnership for federal income tax purposes, in which the taxpayer has an ownership interest, directly or indirectly through one (1) or more such entities, and that is not doing business in Tennessee and thus is not subject to Tennessee franchise tax.
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Compensation is paid in this state, if:
- The individual's service is performed entirely in the state;
- The individual's service is performed both in and outside the state, but the service performed outside the state is incidental to the individual's service in the state; or
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Some of the service is performed in the state; and:
- The base of operations, or, if there is no base of operations, the place from which the service is directed or controlled is in the state; or
- The base of operations or the place from which the service is directed or controlled is not in any state in which some part of the service is performed, but the individual's residence is in this state.
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- The receipts factor is a fraction, the numerator of which is the total receipts of the taxpayer in this state during the tax period, and the denominator of which is the total receipts of the taxpayer everywhere during the tax period.
- For a taxpayer electing to compute its net worth on a consolidated basis, and for a member of a captive REIT affiliated group, the receipts factor is a fraction, the numerator of which is the taxpayer's total receipts in this state during the tax period, and the denominator of which is the group's total receipts during the tax period. The receipts factor shall be determined for the group at the close of business on the last day of the tax year as shown by a pro forma consolidated income statement prepared in accordance with generally accepted accounting principles wherein transactions and holdings between members of the group and holdings in non-domestic persons have been eliminated.
- If a member of an affiliated group apportions its income in accordance with § 67-4-2013(a), then for purposes of computing its net worth on a consolidated basis, the member shall compute the numerator of the receipts factor in accordance with the appropriate provisions of § 67-4-2013(a).
- For purposes of this section, “gross receipts” includes a taxpayer's ownership share of the gross receipts of any general partnership or entity treated as a general partnership for federal income tax purposes in which such taxpayer has an ownership interest. A return being filed by a limited liability company that has a general partnership as its single member shall include in its receipts factor only the gross receipts attributed to the limited liability company. “Gross receipts” also includes a taxpayer's ownership share of gross receipts of any limited partnership, subchapter S corporation, limited liability company, or other entity treated as a partnership for federal income tax purposes, in which the taxpayer has an ownership interest, directly or indirectly, through one (1) or more such entities, and that is not doing business in Tennessee and thus is not subject to Tennessee franchise tax.
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Receipts from sales of tangible personal property are in this state, if the:
- Property is delivered or shipped to a purchaser, other than the United States government, in this state regardless of the F.O.B. point or other conditions of the sale; or
- Property is shipped from an office, store, warehouse, factory or other place of storage in this state and the purchaser is the United States government.
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Sales, other than sales of tangible personal property, are in this state if the taxpayer's market for the sales is in this state. The taxpayer's market for a sale is in this state:
- In the case of sale, rental, lease, or license of real property, if and to the extent the property is located in this state;
- In the case of rental, lease, or license of tangible personal property, if and to the extent the property is located in this state;
- In the case of sale of a service, if and to the extent the service is delivered to a location in this state; and
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In the case of intangible property:
- That is rented, leased, or licensed, if and to the extent the intangible property is used in this state; provided, that intangible property utilized in marketing a good or service to a consumer is considered used in this state if that good or service is purchased by a consumer who is in this state; and
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That is sold, if and to the extent the property is used in this state; provided, that:
- A contract right, government license, or similar intangible property that authorizes the holder to conduct a business activity in a specific geographic area is considered used in this state if the geographic area includes all or part of this state;
- Receipts from intangible property sales that are contingent on the productivity, use, or disposition of the intangible property shall be treated as receipts from the rental, lease, or licensing of such intangible property under subdivision (i)(1)(D)(i); and
- All other receipts from a sale of intangible property shall be excluded from the numerator and denominator of the receipts factor.
- If the state or states of assignment under subdivision (i)(1) cannot be determined, the state or states of assignment shall be reasonably approximated.
- If the state of assignment cannot be determined under subdivision (i)(1) or reasonably approximated under subdivision (i)(2), such sale shall be excluded from the numerator and denominator of the sales factor.
- If the application of this subsection (i) to a tax year results in a lower apportionment factor than under the application of the apportionment method in this subsection (i) as it was in effect prior to January 1, 2016, then a taxpayer may annually elect to apply the apportionment method in this subsection (i) as in effect prior to January 1, 2016; provided, however, the election must result in a higher apportionment factor for the tax year, and the taxpayer must have net earnings, rather than a net loss, for that tax year as computed under § 67-4-2006.
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Sales, other than sales of tangible personal property, are in this state if the taxpayer's market for the sales is in this state. The taxpayer's market for a sale is in this state:
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For any qualified member of a qualified group, total receipts in this state shall equal the receipts from all sales of tangible personal property that are in this state as determined under subsection (h), plus the arithmetical average of the receipts from all sales other than sales of tangible personal property that are in this state as determined under each of the following alternative methods:
- All sales that are in this state as determined under subsection (i); and
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All sales, other than sales of tangible personal property, where the earnings-producing activity is performed:
- In this state; or
- Both in and outside this state and a greater proportion of the earnings-producing activity is performed in this state than in any other state, based on costs of performance.
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For purposes of this subsection (j), the following definitions shall apply:
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“Qualified expenditures” means expenditures incurred in transactions with persons who are not members of the qualified group for the following:
- Purchasing tangible personal property placed in service in this state by a member of the qualified group; and
- Payroll for employees employed by a member of the qualified group at a facility in this state;
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“Qualified group” means an affiliated group that meets both of the following criteria:
- One or more members of the group is a qualified member; and
- The members of the group, during the tax period, either:
- “Qualified member” means a person that is principally engaged in the sale of “telecommunications service,” “mobile telecommunications service,” “Internet access service,” “video programming service,” “direct-to-home satellite television programming service,” or a combination of such services, as each such term is used or defined in chapter 6 of this title.
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“Qualified expenditures” means expenditures incurred in transactions with persons who are not members of the qualified group for the following:
- The method provided by this subsection (j) for determining the total receipts in this state of a qualified member shall be the only method for determining such receipts under this part.
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For any qualified member of a qualified group, total receipts in this state shall equal the receipts from all sales of tangible personal property that are in this state as determined under subsection (h), plus the arithmetical average of the receipts from all sales other than sales of tangible personal property that are in this state as determined under each of the following alternative methods:
- Notwithstanding any provision of this section to the contrary, any gain on the sale of an asset that is designated as goodwill and is required to be included as Class VII assets pursuant to the reporting requirements of 26 U.S.C. §§ 338(b)(5) and 1060, and associated regulations, shall be excluded from both the numerator and the denominator of the apportionment formula receipts factor.
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- A taxpayer whose principal business in Tennessee is manufacturing may elect to apportion net worth to this state by multiplying such values by a fraction, the numerator of which is the total receipts of the taxpayer in Tennessee during the taxable year and the denominator of which is the total receipts of the taxpayer from any location within or outside of the state during the taxable year.
- For purposes of this subsection (l ), a taxpayer's principal business in Tennessee is manufacturing if more than fifty percent (50%) of the revenue derived from its activities in this state, excluding passive income, is from fabricating or processing tangible personal property for resale and consumption off the premises. For purposes of this subsection (l ), “passive income” means dividend income, interest income, income derived from the sale of securities, and income derived from the licensing or sale of patents, trademarks, tradenames, copyrights, know-how, or other intellectual property.
- To elect the method of apportionment provided in this subsection (l ), the taxpayer shall notify the department of the election, in writing, on its return for the taxable year to which the election applies.
- Once a taxpayer elects the method of apportionment provided in this subsection (l ), such election shall remain in effect for a minimum of five (5) tax years and thereafter until revoked. The taxpayer may revoke the election after the minimum period by notifying the department of the revocation, in writing, on its return for the first taxable year to which the revocation applies. A taxpayer that revokes the election shall not be permitted to newly elect the method of apportionment provided in this subsection (l ) for a period of five (5) tax years, beginning with the tax year in which the taxpayer revoked the previous election.
- Notwithstanding any other provision of law, prior to July 1, 2033, or any earlier date on which no bonds issued pursuant to title 9, chapter 9, and outstanding as of July 1, 2013, shall remain outstanding, this subsection (l ) shall become operative only for such fiscal years as to which the state funding board shall have certified as provided by § 9-9-104(b).
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- Notwithstanding any other provision of this part, a financial asset management company may elect to apportion net worth by multiplying such net worth by a fraction, the numerator of which is the total receipts of the taxpayer in Tennessee during the taxable year as determined under this section and the denominator of which is the total receipts of the taxpayer everywhere during the taxable year.
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For the purposes of this subsection (m):
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“Financial asset management company” means an entity that is a limited partnership, or is treated as a partnership for federal tax purposes, that is engaged in the business of providing financial asset management services, and either:
- Incur, in the aggregate, qualified expenditures in an amount greater than one hundred fifty million dollars ($150,000,000); or
- Make sales that are subject to the tax imposed by chapter 6 of this title in excess of one hundred fifty million dollars ($150,000,000);
- Has a class of equity securities registered under Section 12(g) of the Securities Exchange Act of 1934 (15 U.S.C. § 78l(g)) and, as a result, is subject to the public company reporting requirements contained in Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m); or
- Is owned by a publicly traded partnership that owns at least twenty five percent (25%) of the entity and such ownership interest constitutes more than fifty percent (50%) of the total assets of the publicly traded partnership; and
- “Financial asset management company” does not include any type of real estate investment trust as defined in § 67-4-2004;
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“Financial asset management company” means an entity that is a limited partnership, or is treated as a partnership for federal tax purposes, that is engaged in the business of providing financial asset management services, and either:
- “Financial asset management services” means the following services when performed with respect to financial investments: managing portfolio assets of others on a fee or commission basis; rendering investment advice, including investment research and analysis; making determinations as to when sales and purchases of investments are to be made; and selling or purchasing of investments;
- “Financial investments” means, without limitation, investments in stocks, stock options, bonds, and alternative asset classes (including, but not limited to, real estate, commodities, and other debt obligations); and
- “Publicly traded partnership” means an entity that is a limited partnership, or is treated as a partnership for federal tax purposes, that files with the securities and exchange commission and whose shares are regularly traded on a securities exchange that is either registered as a national securities exchange with the securities exchange commission under Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. § 78f), or is a national securities exchange of a foreign country and regulated in a substantially similar manner by a foreign financial regulatory authority.
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- To elect the method of apportionment provided in this subsection (m), the taxpayer shall notify the department of the election, in writing, on its return for the taxable year to which the election applies.
- Once a taxpayer elects the method of apportionment provided in this subsection (m), such election shall remain in effect for a minimum of five (5) tax years and thereafter until revoked. The taxpayer may revoke the election after the minimum period by notifying the department of the revocation, in writing, on its return for the first taxable year to which the revocation applies. A taxpayer that revokes the election shall not be permitted to newly elect the method of apportionment provided in this subsection (m) for a period of five (5) tax years, beginning with the tax year in which the taxpayer revoked the previous election.
Acts 1999, ch. 406, § 4; 2000, ch. 982, §§ 35-37, 52; 2004, ch. 932, §§ 7-9; 2006, ch. 1019, § 20; 2010, ch. 1134, §§ 15-17; 2011, ch. 467, §§ 3, 4; 2013, ch. 321, § 6; 2015, ch. 514, §§ 16, 17; 2017, ch. 181, § 29; 2018, ch. 656, § 2.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers. Pursuant to Acts 1999, ch. 406, § 19(c), notwithstanding § 19(b) of the act, subsection (j) of this section shall apply to tax years ending on or after June 30, 1999.
Acts 2000, ch. 982, § 53, which applies to the addition of (k) by § 52 of that act, provided that those amendments apply to tax years ending on or after June 28, 2000; provided, that they shall not take effect as to any tax year of an entity which is not subject to the provisions of Acts 1999, ch. 406.
Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998.
Acts 2004, ch. 932, § 11 provided that the amendment by that act shall apply to all tax years beginning on or after January 1, 2004.
Acts 2010, ch. 1134, § 66, provided that §§ 15-17 of the act, which amended subdivisions (b)(2)(A), (e)(2)(A) and (g)(2), shall apply to all tax years ending on or after July 1, 2010.
Acts 2015, ch. 514, § 1 provided that the act shall be known and may be cited as the “Revenue Modernization Act”.
For the Preamble to the act concerning the need to modernize the sales and use taxes, franchise and excise taxes and business tax in the state to address the engagement in business within the state by out-of-state companies, see Acts 2015, ch. 514.
Acts 2015, ch. 514, § 31 provided that the act, which amended (i) and (j), shall apply to all tax years beginning on or after July 1, 2016.
Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Acts 2017, ch. 181, § 38 provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2017.
Acts 2018, ch. 656, § 3 provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2018.
Amendments. The 2013 amendment substituted “§ 67-4-2013(a)(1)-(7)” for “§ 67-4-2013(a)(1)-(6)” in the last sentence of (e)(3)(C).
The 2015 amendment by ch. 514, effective May 20, 2015, rewrote (a) which read: “Except as may otherwise be provided in this part, the net worth of a taxpayer doing business both in and outside Tennessee shall be apportioned to this state by multiplying such values by a fraction, the numerator of which shall be the property factor plus the payroll factor plus twice the receipts factor and the denominator of such fraction shall be four (4).”
The 2015 amendment by ch. 514, effective July 1, 2016, rewrote (i) and (j) which read: “(i) Sales, other than sales of tangible personal property, are in this state, if the:“(1) Earnings-producing activity is performed in this state; or“(2) Earnings-producing activity is performed both in and outside this state and a greater proportion of the earnings-producing activity is performed in this state than in any other state based on costs of performance.“(j) Notwithstanding any law other than § 67-4-2112 to the contrary, any person doing business in Tennessee, who licenses the use of patents, trademarks, tradenames, copyrights, or know-how, or other intellectual property to another person in Tennessee, and who is paid royalties or other income based on the sale of products or other activity in Tennessee by the licensee, shall source such income to Tennessee for purposes of its apportionment formula sales factor.”
The 2017 amendment added (l ).
The 2018 amendment added (m).
Effective Dates. Acts 2013, ch. 321, § 9. May 13, 2013.
Acts 2015, ch. 514, § 31. May 20, 2015; July 1, 2016.
Acts 2017, ch. 181, § 38. April 26, 2017.
Acts 2018, ch. 656, § 3. April 9, 2018.
Law Reviews.
Where There's a Will: The 95% Family-Owned Test for Family Limited Partnerships (Dan Holbrook), 37 Tenn. B.J. 31 (2001).
Cited: Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009).
NOTES TO DECISIONS
1. Application of Statutory Formula.
Issuance of a variance by the Commissioner of Revenue of the State of Tennessee was approved because the Commissioner had the authority, acting pursuant to T.C.A. § 67-4-2014, to require taxpayers, which provided wireless communication and data services within and without Tennessee, to use an apportionment methodology for franchise and excise taxes other than the standard cost of performance methodology codified in T.C.A. §§ 67-4-2012 and 67-4-2110. Vodafone Ams. Holdings Inc. v. Roberts, — S.W.3d —, 2014 Tenn. App. LEXIS 362 (Tenn. Ct. App. June 23, 2014), aff'd, Vodafone Ams. Holdings, Inc. v. Roberts, 486 S.W.3d 496, 2016 Tenn. LEXIS 182 (Tenn. Mar. 23, 2016).
5. Assessment of Tax.
Tennessee Department of Revenue's tax assessment of the net earnings and net worth for franchise and excise tax purposes of a taxpayer, which provided internet, cable television, and phone service to customers in Tennessee and other states, was presumed correct because the activity at issue was not performed solely in Tennessee and the taxpayer selected its categories of earnings producing activity in an attempt to circumvent its tax liability. Comcast Holdings Corp. v. Tenn. Dep't of Revenue, — S.W.3d —, 2019 Tenn. App. LEXIS 193 (Tenn. Ct. App. Apr. 25, 2019).
Decisions Under Prior Law
1. Application of Statutory Formula.
Application of statutory formula by commissioner in computing franchise taxes of foreign corporation operating a factory in Tennessee did not violate U.S. Const., amend. 14 where accounting system of corporation, by treating factory as an entity separate from its sales, showed that factory sustained a large loss due to improvement and enlargement of plant if corporation realized substantial net profits from increase in sales. Crane Co. v. Carson, 191 Tenn. 353, 234 S.W.2d 644, 1950 Tenn. LEXIS 583 (1950), cert. denied, 340 U.S. 906, 71 S. Ct. 282, 95 L. Ed. 655, 1950 U.S. LEXIS 1339 (1950), cert. denied, Crane Co. v. Carson, 340 U.S. 906, 71 S. Ct. 282, 95 L. Ed. 655, 1950 U.S. LEXIS 1339 (1950).
Tennessee corporation which conducted all of its manufacturing in Tennessee, but had showrooms in three other states and warehouses in two, had 18 out of 20 salesmen in other states, and paid personal property taxes on inventories in other states was entitled to use a statutory apportionment formula for its excise and franchise taxes on the ground that it was doing business in Tennessee and elsewhere. Tidwell v. Gaines Mfg. Co., 526 S.W.2d 460, 1975 Tenn. LEXIS 600 (Tenn. 1975), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
2. Doing Business Out of State.
Tennessee corporation subject to former statute whose principal place of business was in Tennessee was not also doing business in North Carolina by virtue of fact that it maintained a salesman in North Carolina, contracted with North Carolina mills for processing of certain of its thread which was held in North Carolina for processing but not for warehousing, and voluntarily paid certain North Carolina franchise and income taxes. Signal Thread Co. v. King, 222 Tenn. 241, 435 S.W.2d 468, 1968 Tenn. LEXIS 430 (1968).
3. Doing Business in State.
A foreign corporation carrying on its business in the state through use of public warehouses is doing intrastate business and is liable for franchise privilege tax. R.J. Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, 1948 Tenn. LEXIS 422 (1948), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
4. “Agencies” Construed.
Public warehouses maintained by cigarette company for storage of cigarettes while awaiting orders from customers in Tennessee and elsewhere were “agencies” for storage of its products. R.J. Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, 1948 Tenn. LEXIS 422 (1948), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
5. Assessment of Tax.
Assessment of franchise taxes on North Carolina corporation storing products for sale in public warehouses in Tennessee on a tax base of one and one-half percent of assets of corporation was not confiscatory or unreasonable where total sales of corporation were $436,311,355 and sales in Tennessee were $9,038,318. R.J. Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, 1948 Tenn. LEXIS 422 (1948), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
Tobacco products stored in public warehouses in Tennessee while awaiting orders from customers both within and outside state had come to rest, hence imposition by Tennessee of franchise and excise taxes did not constitute a burden on interstate commerce. R.J. Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, 1948 Tenn. LEXIS 422 (1948), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
6. Leased Equipment.
The railroad corporation having leased its equipment to an operating company should not have been taxed at a higher rate than it would have been if it operated its property itself. Nashville & Decatur R. Co. v. Atkins, 489 S.W.2d 837, 1973 Tenn. LEXIS 531 (Tenn. 1973).
7. Nonformula Apportionment Factors.
Property, payroll, and sales of a joint venture could be taken into account in apportioning taxpayer's business earnings and franchise tax base where the statutory formula did not fairly represent the extent of the taxpayer's business activity in Tennessee. Federated Stores Realty, Inc. v. Huddleston, 852 S.W.2d 206, 1992 Tenn. LEXIS 359 (Tenn. 1992), rehearing denied, 852 S.W.2d 206, 1993 Tenn. LEXIS 178 (Tenn. May 3, 1993).
67-4-2112. Variances from standard apportionment formula — Notice of discontinuation — Hospital companies.
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If the tax computation, allocation or apportionment provisions of this part do not fairly represent the extent of the taxpayer's business activity in this state, or the taxpayer's net worth, as adjusted, the taxpayer may petition for, or the department through its delegates may require, in respect to all or any part of the taxpayer's business activity, if reasonable:
- Separate accounting;
- The exclusion of any one (1) or more of the formula factors;
- The inclusion of one (1) or more additional apportionment formula factors that will fairly represent the taxpayer's business activity in this state;
- The use of any other method to source receipts for purposes of the receipts factor or factors of the apportionment formula numerator or numerators; or
- The employment of any other method to effectuate an equitable computation, allocation and apportionment of the taxpayer's net worth, as adjusted, that fairly represents the extent of the business entity's activities in Tennessee.
- If any factors are excluded from or added to the statutory apportionment formula, an appropriate change shall be made in the number used as the denominator of the fraction.
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- In any case of two (2) or more persons, organizations, trades or businesses, whether or not incorporated and whether or not affiliated, owned or controlled directly or indirectly by the same interests, the commissioner through delegates may distribute, apportion, or allocate net worth, income, deductions, credits, or allowances between or among such persons, organizations, trades or businesses, if the commissioner determines that such distribution, apportionment, or allocation is necessary in order to prevent evasion of taxes, excessive use or abuse of exemptions, or to clearly reflect the net worth or gross receipts of such persons, organizations, trades or businesses. In addition, the commissioner through delegates may require combined reports utilizing a common apportionment formula covering members of an affiliated group. It is the intent of the general assembly that the federal regulations, rulings and court interpretations with respect to 26 U.S.C. § 482 be used as guidance in the administration of this subdivision (c)(1).
- In the case of two (2) or more entities owned or controlled directly or indirectly by the same persons, including but not limited to affiliated groups, the commissioner, through the commissioner's delegates, may require combined reports and, if applicable, the utilization of a common apportionment formula covering such entities.
- The commissioner may apply federal taxation concepts, including, but not limited to, “assignment of income,” “arms length” and “fair market value” to dealings between and among affiliates.
- The commissioner may disregard any entity created or transaction made that has no business purpose or is created or made with the primary purpose of evading either the federal income tax or the franchise tax.
- When another method of tax computation, allocation or apportionment has once been established, it shall continue in effect so long as the circumstances justifying the variation remain substantially unchanged, or until changed or discontinued by the department, whichever occurs first. In the event that the department changes or discontinues a variation from the statutory computation, allocation or apportionment provisions that has been granted to or required of a taxpayer, reasonable notice shall be given to the taxpayer affected, and any such change or discontinuation shall apply prospectively to the first tax period and to the subsequent tax periods that begin on or after the date of such notice.
- For tax years beginning on or before December 31, 2006, a hospital company, as defined in § 67-4-2004, shall file its franchise and excise tax return on a combined basis, together with all other corporations or other entities subject to the taxes imposed under parts 20 and 21 of this chapter that are members of its controlled group, as defined in § 267(f)(1) of the Internal Revenue Code, codified in 26 U.S.C. § 267(f)(1), and that are doing business in and taxable by this state, apportioned or allocated as to each member separately as provided in §§ 67-4-2110 and 67-4-2111, and then combined. Such combined franchise and excise tax returns shall be signed on behalf of one (1) member of the combined controlled group for itself and on behalf of the other members of the combined controlled group, and such signature shall constitute representation and evidence of authority to file on behalf of all members of the combined controlled group. The combined return shall contain all financial statements and schedules that would be required of each member filing a separate franchise tax return. Each member's net earnings or losses subject to carryover, as the case may be, and each member's apportionment ratio, and applicable supporting schedules shall be computed separately as would be required by law if no combined return were required. The franchise and excise tax shall be computed for the combined group based on the combined net earnings or net losses of the members as combined and shown on the combined return filed for members of the controlled group of companies doing business in this state. The losses available to each member of the controlled group under current or prior law shall be available for offset against the net earnings of the combined group in the first year of filing on a combined basis, and any portion that is not used to offset net earnings of the combined group in the first combined year shall be carried forward on a combined basis to be available as an offset to future net earnings of the combined group in accordance with and subject to the time limitations set forth in § 67-4-2006(c)(1); provided, that such combination shall not extend the time limitation of any then existing net operating losses. No member of the combined group may file its franchise and excise tax return on a separate basis without the consent of the commissioner.
Acts 1999, ch. 406, § 4; 2005, ch. 499, §§ 44-46.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers. Pursuant to Acts 1999, ch. 406, § 19(c), notwithstanding § 19(b) of the act, the provisions of this section relating to variances, fraud and abuse shall apply to tax years ending on or after June 30, 1999.
Acts 2005, ch. 499, § 91 provided that §§ 44-46 of the act shall apply to tax periods beginning on or after January 1, 2005.
NOTES TO DECISIONS
0.5. Generally.
Supreme Court of Tennessee finds that Tennessee's legislature intended for the commissioner of revenue to have the authority to impose a variance where application of the statutory apportionment formula does not fairly represent the extent of the taxpayer's business activity in Tennessee. Vodafone Ams. Holdings, Inc. v. Roberts, 486 S.W.3d 496, 2016 Tenn. LEXIS 182 (Tenn. Mar. 23, 2016).
1. Variation from Statutory Formula.
Variance imposed against the taxpayer under T.C.A. §§ 67-4-2014 and 67-4-2112 was appropriate because the application of the cost of performance formula did not fairly represent the taxpayer's business in Tennessee. The unusual fact situation was that all of the costs of production occurred outside of Tennessee, but the revenue derived from the end product only occurred when the product was distributed in Tennessee, which only then obligated the purchasers to pay the revenue proceeds to the producer for the sale of the advertising. Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009), appeal denied, BellSouth Adver. & Publ. Corp. v. Chumley, — S.W.3d —, 2010 Tenn. LEXIS 343 (Tenn. Mar. 1, 2010).
Commissioner of revenue did not abuse his discretion in concluding that application of the statutory apportionment formula to a provider's telecommunications services would not have resulted in a fair representation of the provider's business activity in the state given the commissioner's authority set forth in T.C.A. §§ 67-4-2014(a)(5) and 67-4-2112(a)(5), and the variance letter outlined the reasoning for the conclusion. Vodafone Ams. Holdings, Inc. v. Roberts, 486 S.W.3d 496, 2016 Tenn. LEXIS 182 (Tenn. Mar. 23, 2016).
Commissioner of revenue's requirement that the telecommunications provider use the methodology from its original tax returns for the relevant period to calculate its franchise and excise taxes was reasonable as it fairly represented the provider's business activity. Vodafone Ams. Holdings, Inc. v. Roberts, 486 S.W.3d 496, 2016 Tenn. LEXIS 182 (Tenn. Mar. 23, 2016).
Decisions Under Prior Law
1. Variation from Statutory Formula.
Acts 1935 (Ex. Sess.), ch. 5 which imposed tax on foreign corporations and trusts for privilege of doing business in the state based on valuation of net capital in the state and provided that valuation placed on such property for excise tax purposes might be used if commissioner was of the opinion that such valuation was fair or that after giving notice the commissioner might evaluate the property himself and that such evaluation might be appealed to chancery court did not amount to delegation of legislative power to the commissioner or to chancery court since there was no uncertainty as to the yardstick or measurement in the determination of the amount of the tax such measurement being a percentage of the value of capital invested. Corn v. Fort, 170 Tenn. 377, 95 S.W.2d 620, 1935 Tenn. LEXIS 145, 106 A.L.R. 647 (1935).
Commissioner can exercise discretion in determining whether facts and circumstances justify departure from statutory formula in imposing tax on foreign corporations doing business in Tennessee. American Bemberg Corp. v. Carson, 188 Tenn. 263, 219 S.W.2d 169, 1949 Tenn. LEXIS 339 (1949).
Court was without power to compel commissioner to depart from statutory formula and use “hardship” formula in taxing foreign corporations, though former commissioners used “hardship” formula since matter was discretionary with the commissioner subject to approval of attorney-general. American Bemberg Corp. v. Carson, 188 Tenn. 263, 219 S.W.2d 169, 1949 Tenn. LEXIS 339 (1949).
2. Waiver of Tax.
Commissioner of finance could not waive right of state to collect tax. R.J. Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, 1948 Tenn. LEXIS 422 (1948), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).
3. Leased Equipment.
The railroad corporation, having leased its equipment to an operating corporation, should not have been subjected to a higher tax than it would have been if it operated its properties itself. Nashville & Decatur R. Co. v. Atkins, 489 S.W.2d 837, 1973 Tenn. LEXIS 531 (Tenn. 1973).
The railroad corporation, having leased its equipment to an operating company, was liable for excise and franchise taxes where the court had placed the taxes upon the privilege of doing business in corporate form. Nashville & Decatur R. Co. v. Atkins, 489 S.W.2d 837, 1973 Tenn. LEXIS 531 (Tenn. 1973).
67-4-2113. Where principal business of taxpayer is that of a common carrier of persons or property for hire or of an insurance company — Apportionment of net worth.
If a taxpayer's principal business in this state is that of a common carrier of persons or property for hire, or of an insurance company, the taxpayer's net worth shall be apportioned to Tennessee on the basis of the following ratios:
-
Railroads. The ratio obtained by taking the arithmetical average of the following two (2) ratios:
- The gross receipts from railway operations on business beginning and ending in this state without entering or passing through any other state as compared with its gross receipts from such operations in and outside the state; and
- The mileage owned and operated in Tennessee plus mileage leased and operated in Tennessee as compared with the total of such mileage in and outside this state;
-
Motor Carriers. The ratio obtained by taking the arithmetical average of the following two (2) ratios:
- The gross receipts from operations on business beginning and ending inside this state without entering or passing through any other state as compared with its entire gross receipts from such operations in and outside the state; and
- The ratio of the total franchise miles or odometer miles, if there are no franchise miles, to which it holds or uses under lease, contract or otherwise, certificates of convenience and necessity from the interstate commerce commission or the department of safety inside the state, to the total franchise, or odometer, miles that it holds or uses under such certificates from the commissions, and like commissions, departments or agencies of other states, in and outside the state, all as shown by the annual reports made by the corporation to the various commissions from which it holds certificates;
- Rail and Motor Carriers. Where the taxpayer is engaged in transporting passengers and property by both rail and motor, then the ratio of the sum of the miles in the state as computed under subdivisions (1) and (2), to the sum of the miles under the subdivisions in and outside the state;
-
Pipelines. The ratio obtained by taking the arithmetical average of the following two (2) ratios:
- The gross receipts from operations on business beginning and ending inside the state without entering or passing through any other state as compared with its entire gross receipts from such operations in and outside the state; and
- The ratio of the pipeline miles owned or operated or owned and operated in the state to the miles of pipelines owned or operated or owned and operated in and outside the state;
-
- Insurance Companies Domiciled in Tennessee. The ratio of the premiums on policies, persons and property in this state to total premiums;
- Insurance Companies Not Domiciled in Tennessee. The ratio of premiums on policies, persons and property in this state to total premiums, except that annuity considerations shall be excluded from the numerator and denominator of the ratio;
-
Air Carriers. The ratio obtained by taking the arithmetical average of the following two (2) ratios:
- The originating revenue inside the state as compared with the entire originating revenue in and outside the state; and
- The ratio of the total air miles flown in the state to the total air miles flown in and outside the state. Air miles flown in the state shall only include miles in the state from flights originating from or ending in the state, or both originating from and ending in the state;
-
Air Express Carriers. The ratio obtained by taking the arithmetical average of the following two (2) ratios:
- The originating revenue in the state as compared with the entire originating revenue in and outside the state; and
- The ratio of the total air miles flown and ground miles traveled in the state to the total air miles flown and ground miles traveled in and outside the state. Air miles flown in the state shall only include miles in the state from flights originating from or ending in the state, or both originating from and ending in the state. Ground miles traveled in the state or traveled in and outside the state shall only include miles traveled with respect to the actual common carriage of persons or property for hire; and
-
Barges. The ratio obtained by taking the arithmetical average of the following two (2) ratios:
- The revenue from the transportation of cargo loaded in this state as compared with the entire revenue from the transportation of cargo loaded in and outside the state; and
-
- The ratio of the total miles operated in the state to the total miles operated in and outside the state. Miles operated in the state shall be fifty percent (50%) of the miles operated on the Mississippi River adjacent to the Tennessee shoreline, plus all miles operated on inland waterways within the state;
- “Mile operated” means one (1) mile of movement of each barge.
Acts 1999, ch. 406, § 4; 2007, ch. 602, § 14.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2007, ch. 602, § 187 provided that the act shall apply to tax years ending on or after July 1, 2007.
NOTES TO DECISIONS
Decisions Under Prior Law
1. Railroads.
Where railroad's sole business was the leasing of its lines to another railroad in determining the gross receipts for tax purposes it was not to include all shipments that entered and left its tracks in Tennessee but only those shipments which began and ended in Tennessee without entering or passing through any other state. Nashville & D.R.R. v. Woods, 604 S.W.2d 47, 1980 Tenn. LEXIS 491 (Tenn. 1980).
67-4-2114. Annual return — Contents — Financial unitary businesses.
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Every taxpayer liable for the tax imposed by this part shall file with the commissioner of revenue on such form as the commissioner may prescribe an accurate and complete return, signed by its president or other principal officer under penalty of perjury, which report shall contain the following data:
- The name of the taxpayer, the state in which chartered or otherwise organized, the location of its principal place of business in this state and the location of its principal or home office;
- If applicable, the amount of capital stock subscribed and paid in, the amount issued and outstanding, the amount of surplus and undivided profits or, if applicable, the amount or net worth, assets minus liabilities, together with the book value of each share of such stock as shown by the books and records of the corporation at the close of its last fiscal year;
- A comparative balance sheet as of the beginning and close of the last fiscal year as shown by the books and records of the taxpayer; and
- Such other and further information as may be required by the commissioner for the reasonable enforcement of this part.
- By the enumeration of the specific data required in subsection (a), it is not intended to divest the commissioner of the commissioner's right to require all information that the commissioner may deem necessary for the enforcement of this part.
-
- Financial institutions subject to tax in this state that are members of a unitary group, as defined in § 67-4-2004, shall file a combined return, and pay the tax imposed by this part, after apportionment, based on all operations of the unitary business. This report shall include the information set out in subsections (a) and (b), for every member of the unitary group, even if some of the members would not otherwise be subject to taxation under this part. Dividends, receipts and expenses resulting from transactions between members of a unitary group shall be excluded from the return, for purposes of apportionment under § 67-4-2118. The members shall designate one (1) member that would otherwise be subject to tax on a separate entity basis to file the combined return. Except as provided in subdivision (c)(2), each member subject to tax in this state shall be jointly and severally liable for the tax imposed by this part with regard to the unitary business.
-
Joint and several liability for the tax imposed by this part with regard to the unitary business shall not apply to any member that is a limited liability company, limited liability partnership, or limited partnership and meets the criteria set forth either in subdivision (c)(2)(A) or (c)(2)(B):
-
- The member was formed and operated for the primary purpose of acquiring, from one (1) or more of its direct or indirect owners, notes, accounts receivable, installment sale contracts, or similar evidences of indebtedness; and
- The member has pledged substantially all of its assets as security, directly or indirectly, for third party borrowings or securitized indebtedness acquired by third parties; or
- Substantially all of whose assets consist of assets described in subdivision (c)(2)(A)(i), cash and cash equivalents, third party debt securities, or equity interests in entities satisfying the requirements of subdivision (c)(2)(A).
-
-
For the purposes of subdivision (c)(2), the following shall apply:
- The requirements of subdivision (c)(2)(A)(i) shall be satisfied by the presence of language in the entity's organizational or other governing documents expressly stating that the purpose of the entity is to acquire, own, manage, protect, conserve and sell or otherwise dispose of assets described in subdivision (c)(2)(A)(i), cash and cash equivalents, and third party debt securities; to enter into and perform its obligations under its organizational documents, any documents relating to the acquisition of the assets or any third party borrowing or securitized indebtedness to which the entity is a party; and to engage in activities related or incidental to the purposes in this subdivision (c)(3)(A) and necessary or appropriate for the purposes in this subdivision (c)(3)(A);
- “Substantially all” as set forth in subdivision (c)(2) means at least two-thirds (66.67%) of the entity's assets as determined by fair market value.
- Persons subject to tax in this state that are members of a captive REIT affiliated group, as defined in § 67-4-2004, shall file a combined return and pay the tax imposed by this part, after apportionment, based on all operations of the entire captive REIT affiliated group. The return required by this section shall include the information set out in subsections (a) and (b) for every member of the affiliated group, even if some of the members would not otherwise be subject to taxation under this part. The members of the group shall designate one (1) member that would otherwise be subject to tax on a separate entity basis to file the combined return. Each member subject to tax in this state shall be jointly and severally liable for the tax imposed by this part with regard to the affiliated group.
Acts 1999, ch. 406, § 4; 2005, ch. 499, § 81; 2007, ch. 602, § 20; 2010, ch. 1134, § 18.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2010, ch. 1134, § 66, provided that § 18 of the act, which added subsection (d), shall apply to all tax years ending on or after July 1, 2010.
Cross-References. Perjury, title 39, ch. 16, part 7.
NOTES TO DECISIONS
1. Franchise Taxes.
A unitary group of domestic financial institutions was entitled to a refund of corporate franchise taxes assessed on dividend payments from subsidiaries to the parent corporation. Independent S. Bancshares, Inc. v. Huddleston, 912 S.W.2d 705, 1995 Tenn. App. LEXIS 263 (Tenn. Ct. App. 1995).
67-4-2115. Filing of return.
- The franchise tax return shall be filed as provided in § 67-4-2015. On any return covering less than a twelve-month period, including the return of a taxpayer in final return status, but excluding any return based on a fifty-two to fifty-three-week year, the franchise tax shall be prorated to cover the proportionate part of the year covered by the return. In the event the taxpayer's taxable year is closed within less than twelve (12) months of incorporation, formation, domestication, or commencing of business, the franchise tax of a domestic entity shall be prorated to cover the proportionate part of the year since the date of incorporation or formation, or the date of commencing business, whichever occurred first. The franchise tax of a taxpayer formed outside of Tennessee shall be prorated to cover the proportionate part of the year since beginning business in this state. On any return where the franchise tax is prorated, annualization of rent paid shall be required when determining the minimum franchise tax measure under § 67-4-2108. Proration of the franchise tax and annualization of rent paid shall be computed by a fraction based on a days method.
- If a person or taxpayer in final return status effects a complete liquidation that is initiated and completed on the same date, then the franchise tax shall be computed utilizing net worth, or the minimum franchise tax base under § 67-4-2108, on the date immediately preceding the liquidating event; otherwise, on any return of a taxpayer in final return status, the franchise tax shall be computed by using the average monthly value of net worth or the average monthly value of the real and tangible property owned in Tennessee. Such average monthly value shall be determined by totaling the value of net worth as of the final day of each month of the tax period, or the book value of the real and tangible property owned in Tennessee as of the final day of each month of the tax period, and then dividing that total by the number of months in the tax period. In the event the taxpayer is part of an affiliated group that has elected to compute its net worth on a consolidated basis, such election shall not apply to the taxpayer while it is in final return status unless the entire affiliated group is in final return status during the same tax period, in which case the election shall continue to apply to the taxpayer.
Acts 1999, ch. 406, § 4; 2005, ch. 499, § 82; 2013, ch. 321, § 7.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Amendments. The 2013 amendment rewrote the section which read: “The franchise tax return shall be filed as provided in § 67-4-2015. In the event the taxpayer's taxable year is closed within less than twelve (12) months of incorporation, domestication, or commencing of business, the franchise tax of a domestic corporation shall be prorated to cover the proportionate part of the year since the date of incorporation, or the date of commencing business, whichever occurred first. The franchise tax of a foreign corporation shall be prorated to cover the proportionate part of the year since beginning business in this state; provided, that, in such an event, annualization of rent paid shall be required when determining the minimum franchise tax base under § 67-4-2108. In the event the taxpayer changes its accounting period covered by the federal return, a return shall be required for each closing of an accounting period, and the franchise tax shall be prorated to cover the proportionate part of the year covered by the return; provided, that, in such an event, annualization of rent paid shall be required when determining the minimum franchise tax base under § 67-4-2108. Except as provided in this section, the franchise tax shall not be prorated.”
Effective Dates. Acts 2013, ch. 321, § 9. May 13, 2013.
NOTES TO DECISIONS
Decisions Under Prior Law
1. Location of Papers.
Physical location of financial papers of foreign corporation are not controlling on assessment of franchise and excise taxes by Tennessee. American Bemberg Corp. v. Carson, 188 Tenn. 263, 219 S.W.2d 169, 1949 Tenn. LEXIS 339 (1949).
67-4-2116. Failure to file tax return — Revocation of charter or certificate — Reinstatement.
- The commissioner is empowered to certify to the secretary of state the name of any taxpayer that fails or refuses to file any statement or franchise and excise tax return required by parts 20 or 21 of this chapter, or to pay any fee or tax required by this chapter; however, no certification shall be issued until such statement, return, or tax has remained delinquent for a period of ninety (90) days.
- At the time of such certification to the secretary of state, the commissioner shall give notice to the taxpayer of the action taken. Thereupon, the charter, certificate of such taxpayer or its domestication in Tennessee shall stand as automatically dissolved or revoked, and the secretary of state shall note such revocation or dissolution upon the secretary of state's records.
- At any time after the date of revocation or dissolution, such charter, or certificate or domestication may be reinstated upon the filing of all reports and the payment of all fees, taxes, penalty and interest due the state; provided, that the title has not been taken by another taxpayer.
Acts 1999, ch. 406, § 4.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Law Reviews.
Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).
Cited: Blaylock & Brown Constr. Co. v. Collierville Bd., 23 S.W.3d 316, 1999 Tenn. App. LEXIS 863 (Tenn. Ct. App. 1999).
NOTES TO DECISIONS
Decisions Under Prior Law
1. Purpose.
The sole purpose of this former section was to raise revenue for the state. Loveday v. Cate, 854 S.W.2d 877, 1992 Tenn. App. LEXIS 963 (Tenn. Ct. App. 1992), appeal denied, — S.W.2d —, 1993 Tenn. LEXIS 128 (Tenn. Mar. 22, 1993).
2. Effect of Revocation.
After a corporate charter is revoked for nonpayment of franchise and excise taxes, a stockholder does not have a right to partition the real estate titled to the corporation and subsequent reinstatement of the corporate charter will defeat a right of partition of the corporation's assets. Kerney v. Cobb, 658 S.W.2d 128, 1983 Tenn. App. LEXIS 612 (Tenn. Ct. App. 1983).
The object of these former statutes being solely the raising of revenue for the state, it would be inequitable to permit third persons who had dealt with the corporation in the period when its charter had been forfeited to defend suits against them on this ground after the corporation had complied with the statute and it had been reinstated as a corporation and entitled to all its franchises and privileges. Kerney v. Cobb, 658 S.W.2d 128, 1983 Tenn. App. LEXIS 612 (Tenn. Ct. App. 1983).
Revocation of charter did not justify judgment rescinding the sale of hardware store and requiring restitution of the funds paid by the purchaser on “mutual mistake” theory where purchaser suffered no damages as a result of the mutual mistake, and seller was not restored to the status quo. Loveday v. Cate, 854 S.W.2d 877, 1992 Tenn. App. LEXIS 963 (Tenn. Ct. App. 1992), appeal denied, — S.W.2d —, 1993 Tenn. LEXIS 128 (Tenn. Mar. 22, 1993).
This former section did not stand for the proposition that once a corporation's charter is revoked that corporation no longer exists and, therefore, any acts by the “corporation” are invalid. Loveday v. Cate, 854 S.W.2d 877, 1992 Tenn. App. LEXIS 963 (Tenn. Ct. App. 1992), appeal denied, — S.W.2d —, 1993 Tenn. LEXIS 128 (Tenn. Mar. 22, 1993).
Where corporate charter was revoked and there was no statutory provision continuing the existence of the corporation, property of the defunct corporation passed to its sole stockholder subject to any outstanding claims of the corporation. Jesse A. Bland Co. v. Knox Concrete Products, Inc., 207 Tenn. 206, 338 S.W.2d 605, 1960 Tenn. LEXIS 448 (1960).
Where corporate charter was revoked, corporation had only a reasonable time to wind up the present affairs and business of the corporation in accordance with the applicable statutes and action brought seven years thereafter for damage to personal property by fire and for unpaid rent was not brought within a reasonable time. Jesse A. Bland Co. v. Knox Concrete Products, Inc., 207 Tenn. 206, 338 S.W.2d 605, 1960 Tenn. LEXIS 448 (1960).
Revocation of a corporation's charter did not relieve a debtor of liability to an assignee of the corporation on an obligation assigned 10 months before revocation. United States use of Jahn v. Jones Coal Co., 368 F.2d 217, 1966 U.S. App. LEXIS 6702 (6th Cir.), cert. denied, Jones Coal Co. v. United States, 385 U.S. 818, 87 S. Ct. 40, 17 L. Ed. 2d 56, 1966 U.S. LEXIS 630 (1966), cert. denied, Jones Coal Co. v. United States, 385 U.S. 818, 87 S. Ct. 40, 17 L. Ed. 2d 56, 1966 U.S. LEXIS 630 (1966).
3. Reinstatement Retroactive.
It was the intent of the general assembly in providing for reinstatement of the corporate charter to validate the corporation's privileges and existence from the date of revocation. Kerney v. Cobb, 658 S.W.2d 128, 1983 Tenn. App. LEXIS 612 (Tenn. Ct. App. 1983).
4. Effect of Reinstatement.
Absent injury to the rights of third parties, reinstatement of a corporate charter validates otherwise legal transactions occurring in the interim between revocation and reinstatement of the charter. In re Butcher, 45 B.R. 736, 1985 B.R. LEXIS 6891 (Bankr. E.D. Tenn. 1985).
5. Bankruptcy.
A corporation whose corporate charter has been revoked administratively by the Tennessee secretary of state does have standing as a corporation to file a chapter 11 bankruptcy petition. In re H & K Plumbing & Heating, 187 B.R. 238, 1995 Bankr. LEXIS 1427 (Bankr. W.D. Tenn. 1995).
67-4-2117. Collection — Dissolved entities.
The commissioner is empowered and it is the commissioner's duty to collect the tax, together with penalty and interest, levied under this part from any officer, stockholder, partner, member, principal, or employee of a taxpayer that has dissolved or has been liquidated, at a time such taxpayer has refused or failed to pay the franchise tax levied under this part, and such individual has received property belonging to the taxpayer, but such collection shall be limited to the value of the property received.
Acts 1999, ch. 406, § 4.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
67-4-2118. Apportionment — Financial institutions.
- Notwithstanding any other provision of this part, a financial institution that is not filing a combined report and that has business activity both in and outside Tennessee, and that is paying tax based on its net worth, shall apportion its tax base to Tennessee by multiplying net worth by the quotient of the institution's total receipts attributable to the transaction of business in Tennessee, as determined under subsection (c), divided by the institution's total receipts attributable to transacting business in all taxing jurisdictions, as determined under subsection (c). “Receipts” includes all gross income derived from transactions and activities in the regular course of business, except that the receipts from the disposition of assets, such as securities and money market transactions, are included to the extent of the net taxable gain on such transactions.
- A unitary group shall have net worth apportioned to Tennessee based on the apportioned net worth of the unitary group, as determined under subsection (a), including the receipts of those members of the unitary business that would not be subject to taxation in this state, if considered apart from the unitary group.
-
“Receipts,” as used in this section, shall be attributed to Tennessee as follows:
- Receipts from the lease or rental of real or tangible personal property shall be attributed to Tennessee, if the property is located in Tennessee;
-
- Interest income and other receipts from assets, in the nature of loans or installment sales contracts that are primarily secured by or deal with real or tangible personal property, shall be attributed to Tennessee, if the security or sale property is located in Tennessee. If any part of the sale property or property standing as security for the payment of the debt is located part in and part outside the state, only such proportion of the interest income or other receipts shall be attributed to Tennessee as the value of the property in the state bears to the whole property;
- “Value” means only that value that the property would command at a fair and voluntary sale. Value shall be determined at the time the loan is made and shall not vary from year to year. In the event additional real or tangible personal property is pledged as security or otherwise covered under a loan or installment sales contract after the time the loan is made, the ratio based on the value of the property in the state compared to the whole property shall be adjusted;
- Interest income and other receipts from consumer loans not secured by real or tangible personal property shall be attributed to Tennessee, if the loan is made to a resident of Tennessee, whether at a place of business, by a traveling loan officer, by mail, by telephone or by other electronic means;
- Interest income and other receipts from commercial loans and installment obligations not secured by real or tangible personal property shall be attributed to Tennessee, if the proceeds of the loan are to be applied in Tennessee. If it cannot be determined where the funds are to be applied, the receipts are to be attributed to the state in which the business applied for the loan. As used in this subdivision (c)(4), “applied for” means initial inquiry, including customer assistance in preparing the loan application, or submission of a completed loan application, whichever occurs first. For attribution purposes, “loan” does not include demand deposit accounts, federal funds, certificates of deposit, and other similar wholesale banking instruments issued by other financial institutions;
- All receipts and fee income from the issuance of letters of credit, acceptance of drafts, and other devices for assuring or guaranteeing a loan or credit shall be attributed in the same manner as interest income and other receipts from the loan are attributed, as set out in either subdivision (c)(2), (c)(3) or (c)(4);
- Interest income, merchant discount, other receipts, including service charges from financial institution credit card and travel and entertainment credit card receivables and credit card holders, and fees shall be attributed to the state to which the card charges and fees are regularly billed;
- Receipts from the sale of an asset, tangible or intangible, shall be attributed in the same manner that the income from the asset would be attributed under this section;
- Receipts equal to the net gain or income from the sale of a security made by a person who is a dealer in such security within the meaning of 26 U.S.C. § 475 shall be attributed to Tennessee if such person's customer is located in Tennessee and the receipt is not otherwise attributed under subdivision (c)(7). For purposes of this subdivision (c)(8), a customer is in this state if the customer is an individual, trust, or estate that is a resident of this state and, for all other customers, if the customer's commercial domicile is in this state. Unless the dealer has actual knowledge of the residence or commercial domicile of a customer during a taxable year, the customer shall be deemed to be a customer in this state if the billing address of the customer, as shown in the records of the dealer, is in this state;
- Receipts from the performance of fiduciary and other services shall be attributed in accordance with § 67-4-2111(i)(1)(C);
- Receipts from the issuance of traveler's checks, money orders or United States savings bonds shall be attributed to the state where such items are purchased;
- Receipts from a participating financial institution's portion of participation loans shall be attributed as otherwise provided under this subsection (c). A participation loan is any loan in which more than one (1) lender is a creditor to a common borrower; and
- Any other receipts of gross income not specifically attributed to Tennessee or to another taxing jurisdiction when applying this subsection (c) shall be attributed to Tennessee in the same proportion that aggregate receipts are attributed to Tennessee under subdivisions (c)(1)-(11).
-
- The financial institution affiliated group shall prepare a pro forma consolidated balance sheet, in accordance with generally accepted accounting principles, in which transactions and holdings between members of the group and holdings in nondomestic persons have been eliminated;
-
- For tax years beginning on or after January 1, 2008, the consolidated net worth of the financial institution affiliated group shall be the difference between total assets, less the sum of total liabilities shown on the consolidated balance sheet prepared pursuant to subdivision (d)(1), and twenty percent (20%) of the financial institution affiliated group's securities classified as held to maturity or available for sale as shown on the group's accounting statements, prepared in accordance with generally accepted accounting principles, at the close of business on the last day of the tax year, as shown by a pro forma consolidated balance sheet;
- For tax years beginning on or after January 1, 2009, the consolidated net worth of the financial institution affiliated group shall be the difference between total assets, less the sum of total liabilities shown on the consolidated balance sheet prepared pursuant to subdivision (d)(1), and twelve and one-half percent (12.5%) of the financial institution affiliated group's securities classified as held to maturity or available for sale as shown on the group's accounting statements, prepared in accordance with generally accepted accounting principles, at the close of business on the last day of the tax year, as shown by a pro forma consolidated balance sheet;
- For tax years beginning on or after January 1, 2010, the consolidated net worth of the financial institution affiliated group shall be the difference between total assets, less the sum of total liabilities shown on the consolidated balance sheet prepared pursuant to subdivision (d)(1), and five percent (5%) of the financial institution affiliated group's securities classified as held to maturity or available for sale as shown on the group's accounting statements, prepared in accordance with generally accepted accounting principles, at the close of business on the last day of the tax year, as shown by a pro forma consolidated balance sheet; and
- For tax years beginning on or after January 1, 2011, the consolidated net worth of the financial institution affiliated group shall be the difference between total assets, less the sum of total liabilities shown on the consolidated balance sheet prepared pursuant to subdivision (d)(1);
-
Each member of the group shall apportion its net worth to Tennessee by multiplying the net worth of the entire financial institution affiliated group, as computed under subdivision (d)(2), by a fraction, the numerator of which is the total gross receipts of the member attributable to Tennessee during the tax period, and the denominator of which is the aggregate gross receipts of all members of the group during the tax period. For purposes of this subdivision (d)(3), receipts shall be determined as follows:
- Dividends and receipts resulting from transactions between members of the group shall be excluded from both the numerator and denominator;
- If the member is a financial institution, then for purposes of calculating the member's numerator, receipts shall be attributed to Tennessee in a manner consistent with subsection (c);
- If a member is not a financial institution, then for purposes of calculating the member's numerator, receipts shall be attributed to Tennessee in a manner consistent with § 67-4-2111(h)-(j); and
- The denominator shall consist of the total gross receipts of all members of the group during the tax period, and shall be determined by adding the total gross receipts derived from the activities enumerated in subdivisions (c)(1)-(11) by the group's financial institution members, and the total gross receipts of the group's nonfinancial institution members, as determined in accordance with § 67-4-2111(g)(1) and (4) during the tax period; and
- The unitary members of the financial institution affiliated group shall report and pay the franchise tax computed under this section on a combined return. As such, the unitary group shall pay franchise tax on the greater of the unitary group's combined apportioned equity, or the unitary group's combined minimum tax base, calculated in accordance with § 67-4-2108. The nonunitary members of the financial institution affiliated group shall report and pay the franchise tax computed under this section on a separate entity basis. As such, the nonunitary members shall pay franchise tax on the greater of apportioned net worth, as calculated on a consolidated basis, or the nonunitary member's minimum tax base, as determined in accordance with § 67-4-2108.
Acts 1999, ch. 406, § 4; 2004, ch. 932, § 10; 2005, ch. 499, § 83; 2008, ch. 1106, § 53; 2015, ch. 514, §§ 18-20.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2004, ch. 932, § 11 provided that the amendment by that act shall apply to all tax years beginning on or after January 1, 2004.
Acts 2015, ch. 514, § 1 provided that the act shall be known and may be cited as the “Revenue Modernization Act”.
For the Preamble to the act concerning the need to modernize the sales and use taxes, franchise and excise taxes and business tax in the state to address the engagement in business within the state by out-of-state companies, see Acts 2015, ch. 514.
Acts 2015, ch. 514, § 31 provided that the act, which amended (c), shall apply to all tax years beginning on or after July 1, 2016.
Amendments. The 2015 amendment, effective July 1, 2016, added (c)(8) and redesignated former (c)(8)-(c)(11) as present (c)(9)-(c)(12); in (c)(9), substituted “§ 67-4-2111(i)(1)(C)” for “§ 67-4-2111(i)”; and in (c)(12), substituted “(c)(1)-(c)(11)” for “(c)(1)-(c)(10)”.
Effective Dates. Acts 2015, ch. 514, § 31. July 1, 2016.
67-4-2119. Minimum franchise tax.
The minimum franchise tax payable under this part shall be one hundred dollars ($100). A taxable entity that is incorporated, domesticated, qualified or otherwise registered to do business in Tennessee but is, or has become, inactive in Tennessee, or whose charter, domestication, qualification or other registration is forfeited, revoked or suspended without the entity being properly dissolved, surrendered, withdrawn, cancelled or otherwise properly terminated, shall not be relieved from filing a return and paying the franchise tax, which shall be no less than the one-hundred-dollar minimum, levied by this part for each tax year.
Acts 1999, ch. 406, § 4; 2000, ch. 982, § 38.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act “shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998, the public welfare requiring it.”
67-4-2120. Distribution of tax revenues.
All taxes collected under this part shall be distributed to the general fund.
Acts 1999, ch. 406, § 4.
Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to franchise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers.
67-4-2121. Tax imposed on manufacturer.
- Notwithstanding any provision of this part to the contrary, the tax imposed by this part on any manufacturer shall be levied only on the first two billion dollars ($2,000,000,000) of apportioned net worth or real and tangible personal property owned or used in Tennessee.
- For purposes of this section, “manufacturer” means any person whose principal business is fabricating or processing tangible personal property for resale and ultimate use or consumption off the premises of the person engaging in such fabricating or processing.
Acts 2005, ch. 499, § 61.
Compiler's Notes. Acts 2005, ch. 499, § 91 provided that § 61 of the act shall apply to tax periods ending after December 31, 2005.
Part 22
Coin-operated Amusement Machine Tax Act
67-4-2201. Short title.
This part shall be known and may be cited as the “Coin-operated Amusement Machine Tax Act.”
Acts 2002, ch. 856, § 2b.
Compiler's Notes. Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to that act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 80.
Law Reviews.
Building a House of Cards: A Policy Evaluation of Tennessee's Tax Reform Act of 2002 with Emphasis on Fairness to the Poor (Robert F. Parsley), 70 Tenn. L. Rev. 1177 (2003).
Attorney General Opinions. Implementation of the Coin-operated Amusement Machine Tax Act, OAG 05-180 (12/15/05).
Comparative Legislation. Coin-operated amusements:
Ark. Code § 26-57-401 et seq.
Ga. O.C.G.A. § 48-17-1 et seq.
Ky. Rev. Stat. Ann. § 137.410.
Va. Code § 58.1-3720 et seq.
NOTES TO DECISIONS
Decisions Under Prior Law
1. Video Card Games.
The legislature did not exempt video card games from the definition of gambling device contained in § 39-6-601(4) (repealed; see § 39-17-501) by enacting former § 67-4-507. Brackner v. Estes, 698 S.W.2d 637, 1985 Tenn. App. LEXIS 2999 (Tenn. Ct. App. 1985).
Video card games were presumed to be for amusement only if they come within the exception of § 39-6-601 (repealed; see § 39-17-501) and were taxable under former § 67-4-507. If the video card games do not come within the exception, they were per se gambling devices, were not taxable under former § 67-4-507, and were subject to confiscation under § 39-6-602 (repealed; see § 39-17-505). Brackner v. Estes, 698 S.W.2d 637, 1985 Tenn. App. LEXIS 2999 (Tenn. Ct. App. 1985); T & W Enterprises, Inc. v. Casey, 715 S.W.2d 356, 1986 Tenn. App. LEXIS 3092 (Tenn. Ct. App. 1986).
It appears that in enacting the tax on coin-operated amusement devices (former § 67-4-507(f)), the general assembly intended to make clear that purchasing a tax stamp and affixing it to a device capable of being used for gambling would not render an illegal device legal. T & W Enterprises, Inc. v. Casey, 715 S.W.2d 356, 1986 Tenn. App. LEXIS 3092 (Tenn. Ct. App. 1986).
Collateral References. Taxation 371
67-4-2202. Tax imposed — Supervision and collection — Rules and regulations.
- The state tax imposed by this part shall be the exclusive tax levied on bona fide coin-operated amusement machines. No local government may impose any additional tax, fee, or assessment of any kind on such machines. Nothing contained in this part shall affect any person's liability for state or local sales or use tax that is imposed pursuant to chapter 6 of this title for the privilege of selling or using such devices. The receipts from bona fide coin-operated amusement machines shall not be the basis of tax under chapter 6 of this title.
- The supervision and collection of the taxes imposed by this part are under the direction of the department of revenue. The commissioner of revenue is authorized to promulgate rules and regulations to effectuate the purposes of this part. All such rules and regulations shall be promulgated in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
- The taxes imposed by this part shall be administered and collected on an annual basis for the privilege of owning bona fide coin-operated amusement machines used commercially for public play for tax years beginning on July 1 and ending on the following June 30.
Acts 2002, ch. 856, § 2b.
Compiler's Notes. Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to that act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
67-4-2203. Part definitions.
As used in this part, unless the context otherwise requires:
- “Applicant” or “licensee” means an owner as defined in this section, who is licensed to do business in this state, including an owner's officers, directors, shareholders, individuals, members of any association or other entity not specified, and, when applicable in context, the business entity itself;
- “Bona fide coin-operated amusement machine” means any coin or token operated game, machine or device that, as a result of depositing a coin, token or other object, automatically or by or through some mechanical or electronic operation involving skill, chance, or a combination thereof, affords music, amusement, or entertainment of some character without vending any merchandise. “Bona fide coin-operated amusement machine” does not include any bona fide merchandise vending machines as defined in rules promulgated by the department of revenue, or any device operated for the purpose of unlawful gambling;
- “Business owner or business operator” means an owner or operator of a business where one (1) or more bona fide coin-operated amusement machines are available for commercial use and play by the public;
- “Commissioner” means the commissioner of revenue;
- “Machine tax” means the annual per machine tax that every owner of a bona fide coin-operated amusement machine in commercial use must pay;
- “Master license” means the certificate that every owner of a bona fide coin-operated amusement machine must obtain and display in the business owner's or business operator's place of business where the machine is located for commercial use by the public for play, in order to operate the machine in this state legally;
- “Owner” means any person, individual, firm, company, association, or other business entity owning any bona fide coin-operated amusement machine. “Owner” does not include an individual who owns a bona fide coin-operated amusement machine solely for personal use and who does not make the machine available for play by others at a charge, either directly or indirectly; and
- “Sticker” means the decal issued for each bona fide coin-operated amusement machine to show proof of payment of the machine tax.
Acts 2002, ch. 856, § 2b.
Compiler's Notes. Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to that act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
67-4-2204. Levy of annual license tax — Issuance of certificate — Six-month license — Display of license — Refund or credit — Duplicate license — Nontransferable — Application for renewal — Denial — Penalties.
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There is levied an annual license tax on the privilege of owning bona fide coin-operated amusement machines for commercial use by the public. Prior to exercising such privilege, every owner who offers others the opportunity to play for a charge, whether directly or indirectly, any bona fide coin-operated amusement machine shall pay to the commissioner the annual license tax as follows:
- Level one license. An owner owning fifty (50) or fewer machines shall pay a master license tax of five hundred dollars ($500). If after an owner obtains a level one license for a tax year, the owner acquires additional machines, so that the owner owns more than fifty (50) but no more than two hundred (200) machines, such owner shall pay an additional master license tax of five hundred dollars ($500);
- Level two license. An owner owning more than fifty (50) machines but no more than two hundred (200) machines shall pay a master license tax of one thousand dollars ($1000). If after an owner obtains a level two license for a tax year, the owner acquires additional machines, so that the owner owns more than two hundred (200) machines, such owner shall pay an additional master license tax of one thousand dollars ($1000); and
- Level three license. An owner owning more than two hundred (200) machines shall pay a master license tax of two thousand dollars ($2000).
- Upon payment of the annual master license tax, the commissioner shall issue the appropriate master license certificate to the owner. Each master license certificate shall contain the name and address of the owner.
- An owner may obtain a six-month master license on or after January 1 of a tax year by paying a tax of two hundred fifty dollars ($250) for a level one license; five hundred dollars ($500) for a level two license; and one thousand dollars ($1000) for a level three license. Such license shall expire on June 30, of the tax year.
- A copy of an owner's master license certificate shall be prominently displayed at each location where the owner has a bona fide coin-operated amusement machine available for commercial use and for play by the public.
- No refund or credit of the master license tax levied in this section may be made to any owner who ceases to own bona fide coin-operated amusement machines prior to the end of any tax year.
- The commissioner may issue a duplicate original master license certificate, if an original master license certificate has been lost, stolen, or destroyed. If an original master license certificate is lost, stolen, or destroyed, a sworn, written statement must be submitted explaining the circumstances by which the master license was lost, stolen, or destroyed, and a replacement fee of one hundred dollars ($100) paid, before a duplicate original master license certificate may be issued.
- A master license is effective for a single business entity.
- A master license is nontransferable.
- Application for renewal of a master license must be made to the commissioner by June 1 of each year. An owner, who properly completes a renewal application, timely files the renewal application with the commissioner, and remits all taxes and fees with the renewal application, may continue to offer bona fide coin-operated amusement machines for play by the public after June 30 if the renewal license and new stickers have not been issued; provided, however, that the owner displays with the expired master license in each location, where bona fide coin-operated amusement machines are offered for play by the public, a copy of a receipt showing that the application for the renewal license was timely filed.
- An original application for a master license, an application for a six-month license, or a renewal application must be accompanied by the appropriate taxes and fees.
- The commissioner shall give written notice to an applicant or licensee of any denial of an application or renewal application or revocation of a master license.
- The commissioner shall not renew a master license and shall suspend or revoke a master license, if the commissioner finds that the applicant or licensee owes to the state any taxes, fees, delinquent taxes or fees, or penalties resulting from delinquent taxes, or that an owner has failed to display the master license at any location where a bona fide coin-operated amusement machine is available for commercial use and for play by the public, or that an owner has made a machine available for commercial use and for play by the public without a valid sticker attached.
- Acceptance and display of a master license certificate issued under this part constitutes consent by the owner and by the business owner or business operator of the business where a bona fide coin-operated amusement machine is available for commercial use and for play by the public that the commissioner and the commissioner's agents may freely enter the business premises during normal business hours for the purpose of ensuring compliance with this part.
- An owner shall attach identification to each bona fide coin-operated amusement machine showing the owner's name, address, and phone number.
Acts 2002, ch. 856, § 2b.
Compiler's Notes. Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to that act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
67-4-2205. Machine tax — Sticker.
- For the privilege of owning a bona fide coin-operated amusement machine offered for commercial use and for play by the public, there is additionally levied a machine tax of ten dollars ($10.00) for each bona fide coin-operated amusement machine. The owner shall pay the machine tax to the commissioner prior to making a machine available for commercial use and for play by the public. If, after payment of the master license tax and machine taxes, an owner obtains additional bona fide coin-operated amusement machines, the owner shall pay to the commissioner a ten-dollar machine tax for each machine, prior to making a machine available for commercial use and for play by the public. No refund or credit of a machine tax levied in this section shall be made.
- The commissioner shall issue a sticker to evidence the payment of the machine tax. The owner shall securely affix a sticker to each machine available for commercial use and for play by the public. Owners may transfer stickers from one (1) machine to another and from location to location so long as all machines in commercial use available for play by the public have a sticker and the owner uses the stickers only for machines that the owner owns.
Acts 2002, ch. 856, § 2b.
Compiler's Notes. Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to that act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
NOTES TO DECISIONS
Decisions Under Prior Law
1. Video Card Games.
It appears that in enacting the tax on coin-operated amusement devices (former § 67-4-507(f)), the general assembly intended to make clear that purchasing a tax stamp and affixing it to a device capable of being used for gambling would not render an illegal device legal. T & W Enterprises, Inc. v. Casey, 715 S.W.2d 356, 1986 Tenn. App. LEXIS 3092 (Tenn. Ct. App. 1986).
67-4-2206. Penalties.
- A penalty of fifty dollars ($50.00) shall be assessed by the commissioner for every machine that is available for commercial use and for play by the public without a sticker or that is located in a business where the master license of the owner is not displayed.
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- An owner who knowingly makes a bona fide coin-operated amusement machine available for commercial use and for play by the public without a current master license or without a sticker affixed to the machine commits a Class A misdemeanor.
- A business owner or business operator who knowingly permits bona fide coin-operated amusement machines to be operated by the public on the business' premises without display of a copy of the owner's master license or without a sticker affixed to each machine commits a Class A misdemeanor.
- Intentional removal of a machine tax sticker from a bona fide coin-operated amusement machine by the owner, except as permitted in § 67-4-2205(b), or by a person other than the owner is a Class C misdemeanor.
- Any bona fide coin-operated amusement machine available for commercial use and play by the public in a location that does not have a copy of the owner's master license displayed or any bona fide coin-operated amusement machine available for commercial use and play by the public without a valid sticker affixed is subject to confiscation as contraband. Prior to confiscation, the owner shall have thirty (30) days in which to remedy any noncompliance with this part, including payment of any penalties.
Acts 2002, ch. 856, § 2b.
Compiler's Notes. Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to that act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
Cross-References. Penalties for Class A and C misdemeanors, § 40-35-111.
67-4-2207. Construction.
Nothing in this part, including payment of the taxes or fees provided for in this part, shall be construed to make legal an otherwise illegal device, or to authorize or permit gambling on any device whatsoever.
Acts 2002, ch. 856, § 2b.
Compiler's Notes. Acts 2002, ch. 856, § 13 provided that no expenditure of public funds pursuant to that act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.
NOTES TO DECISIONS
Decisions Under Prior Law
1. Federal Law Violation.
Even though defendant's leasing of video poker machines was a lawful, taxable privilege in the state, by arranging to reimburse lessees for cash payouts to successful players, defendants stepped beyond the lawful privilege and were properly charged under 18 U.S.C. § 1955. United States v. Wall, 92 F.3d 1444, 1996 FED App. 266P, 1996 U.S. App. LEXIS 20401 (6th Cir. Tenn. 1996), cert. denied, 519 U.S. 1059, 117 S. Ct. 690, 136 L. Ed. 2d 613, 1997 U.S. LEXIS 113 (1997).
Part 23
Special User Privilege Tax Law [Effective on July 1, 2021.]
67-4-2301. Short title. [Effective on July 1, 2021.]
This part shall be known and may be cited as the “Special User Privilege Tax Law.”
Acts 2003, ch. 357, § 75; 2004, ch. 959, § 68; 2005, ch. 311, § 1; 2007, ch. 602, §§ 51, 129; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 75, as amended by Acts 2004, ch. 959, § 68, as amended by Acts 2005, ch. 311, § 1, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 129, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009, July 1, 2011.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
Collateral References. Taxation 371
67-4-2302. User privilege tax generally. [Effective on July 1, 2021.]
- There is levied on the purchase, use, importation for use, or consumption of the goods and services named in this part, at the rates specified by this part, a user privilege tax to be paid by the purchaser, user, or consumer.
- The commissioner of revenue shall administer and enforce the assessment and collection of the taxes levied by this part. All persons subject to the tax levied by this part are required to register with the department of revenue.
- The exemptions provided for in §§ 67-6-308, 67-6-322, 67-6-325, 67-6-326, 67-6-328, 67-6-329, 67-6-331, 67-6-340 and 67-6-384 are applicable to the tax levied under this part.
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- The taxes levied under this part shall be due and payable monthly, on the first day of each month, and for the purposes of ascertaining the amount of tax payable under this part, it shall be the duty of all dealers on or before the twentieth day of each month to transmit to the commissioner returns showing the purchase price arising from the purchase, use, importation for use, or consumption of the goods and services taxed pursuant to this part during the preceding calendar month.
- At the time of transmitting the return required by this subsection (d) to the commissioner, the dealer shall remit to the commissioner with the return the amount of tax due, and failure to so remit the tax shall cause the tax to become delinquent.
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- The commissioner is authorized to prescribe all rules and regulations necessary for the administration of this part, and for the collection of the taxes imposed by this part.
- Rules and regulations not inconsistent with this part when promulgated by the commissioner, and approved by the attorney general and reporter, shall have the force and effect of law.
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- When any person fails to file any form, statement, report or return required to be filed with the commissioner, after being given written notice of the failure to file, the commissioner is authorized to determine the tax liability of the person from whatever source of information may be available to the commissioner or the commissioner's delegates.
- An assessment made by the commissioner pursuant to this authority shall be binding as if made upon the sworn statement, report or return of the person liable for the payment of the tax; and any person against whom the assessment is lawfully made shall thereafter be estopped to dispute the accuracy of the assessment, except upon filing a true and accurate return, together with supporting evidence that the commissioner may require, indicating precisely the amount of the alleged inaccuracy.
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- It is the duty of every person required to pay a tax under this part to keep and preserve records showing the gross amount of special user privilege tax owed to the state, and the amount of the person's purchases, uses, importations for use, or consumption taxable under this part, and other books of account that may be necessary to determine the amount of tax, and all those books and records shall be open to inspection at all reasonable hours to the commissioner or any person duly authorized by the commissioner.
- All the books and records shall be maintained by the taxpayer for a period of three (3) years from December 31 of the year in which the taxpayer is responsible for paying the tax on the transaction or transactions represented by the record.
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- Any tax levied by this part is a transactional tax in lieu of the sales or use tax and shall be considered a sales or use tax for purposes of reciprocity and giving credit for sales or use tax paid.
Acts 2003, ch. 357, § 75; 2004, ch. 959, §§ 37, 57, 68; 2005, ch. 311, §§ 1, 2; 2007, ch. 602, §§ 51, 129; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 75, as amended by Acts 2004, ch. 959, §§ 37, 57, 68, as amended by Acts 2005, ch. 311, §§ 1, 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 129, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009, July 1, 2011.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2303. Tax on water and energy fuels — Exemptions. [Effective on July 1, 2021.]
- There is levied a tax of one and one half percent (1.5%) on the purchase price of water, and a tax of one and one half percent (1.5%) on the purchase price of gas, electricity, fuel oil, coal, and other energy fuel, sold to or used by manufacturers.
- For the purpose of this section, “manufacturer” means one whose principal business is fabricating or processing tangible personal property for resale.
- Water, gas, electricity, fuel oil, coal, and other energy fuel sold to or used by manufacturers shall be exempt from the tax levied by this section whenever it may be established to the satisfaction of the commissioner, by separate metering or otherwise, that the substance is exclusively used directly in the manufacturing process, coming into direct contact with the article being fabricated or processed by the manufacturer, and being expended in the course of the contact. Whenever the commissioner determines that the use of the substance by a manufacturer meets such test, the commissioner shall issue a certificate evidencing the entitlement of the manufacturer to the exemption. The certificate may be revoked by the commissioner at any time upon a finding that the conditions precedent to the exemption no longer exist. The commissioner's action as to the granting or revoking of a certificate shall be reviewable solely by a petition for common law certiorari addressed to the chancery court of Davidson County.
- Any water or energy fuel used by a manufacturer in fabricating or processing tangible personal property for resale shall be exempt from the tax imposed by this section when the water or energy fuel is produced or extracted directly by the manufacturer from facilities owned by the manufacturer or in the public domain.
- Notwithstanding the requirement of direct contact, there shall be exempt entirely from the tax imposed by this section electricity used to generate radiant heat for production of heat-treated glass when sold to or used by manufacturers; provided, however, that the manufacturer has applied for and received a certificate of exemption as required by this section.
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The tax levied by this section shall also apply to the use of such substances by a person engaged at a location in packaging automotive aftermarket products manufactured at other locations by the same person or by a corporation affiliated with the manufacturing corporation such that:
- Either corporation directly owns or controls one hundred percent (100%) of the capital stock of the other corporation; or
- One hundred percent (100%) of the capital stock of both corporations is directly owned or controlled by a common parent.
- “Packaging”, as used in subdivision (f)(1), refers only to the fabrication or installation, or both, of that packaging that will accompany the automotive aftermarket product when sold at retail. The tax shall apply only to such substances used in the packaging process, if the use is established to the satisfaction of the commissioner by separate metering or otherwise.
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The tax levied by this section shall also apply to the use of such substances by a person engaged at a location in packaging automotive aftermarket products manufactured at other locations by the same person or by a corporation affiliated with the manufacturing corporation such that:
- Notwithstanding the requirement of direct contact, natural gas used to generate heat for the production of primary aluminum and aluminum can sheet products when sold to or used by manufacturers shall be exempt from the tax imposed by this section; provided, however, that the manufacturer applies for and receives a certificate of exemption as required by this section.
- There is also levied a tax of one and one-half percent (1.5%) on the purchase price of electricity sold to or used by a qualified data center as defined in § 67-6-102.
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The tax collected on the use of water shall be distributed as follows:
- Sixty-seven percent (67%) shall be deposited in the state general fund; and
- The remaining thirty-three percent (33%) shall be distributed to incorporated municipalities in the proportion that the population of each bears to the aggregate population of the state and to counties in the proportion that the population of unincorporated areas of the county bears to the aggregate population of the state, according to the most recent federal census or other census authorized by law.
- The tax collected on the use of gas, electricity, fuel oil, coal, and other energy fuel shall be deposited in the state general fund.
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The tax collected on the use of water shall be distributed as follows:
Acts 2003, ch. 357, § 75; 2004, ch. 959, §§ 38, 68; 2005, ch. 311, §§ 1, 2; 2007, ch. 602, §§ 51, 129; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 75, as amended by Acts 2004, ch. 959, §§ 38, 68, as amended by Acts 2005, ch. 311, §§ 1, 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 129, which enacted this section, shall take effect July 1, 2021.
For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2304. Tax on energy purchased from an energy resource recovery facility. [Effective on July 1, 2021.]
- There is levied a tax of seven percent (7%) on the purchase price of energy in the form of steam or chilled water purchased from an energy resource recovery facility operated in a county with a metropolitan form of government.
- The tax collected pursuant to this section shall be deposited in the state general fund.
Acts 2003, ch. 357, § 75; 2004, ch. 959, §§ 39, 68; 2005, ch. 311, §§ 1, 2; 2007, ch. 602, §§ 51, 129; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 75, as amended by Acts 2004, ch. 959, §§ 39, 68, as amended by Acts 2005, ch. 311, §§ 1, 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 129, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2305. Tax on tangible personal property sold to common carriers for use outside the state. [Effective on July 1, 2021.]
- There is levied a tax at the rate of five and one-quarter percent (5.25%) on the purchase price of tangible personal property, excluding items listed in §§ 67-4-2307, 67-4-2701, 67-6-302, 67-6-313(i), 67-6-321, and 67-6-331, sold and delivered to common carriers in this state for use outside this state.
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The tax collected under this section shall be distributed as follows:
- Seventy-one and forty-three hundredths percent (71.43%) shall be deposited in the state general fund; and
- The remaining twenty-eight and fifty-seven hundredths percent (28.57%) shall be distributed to incorporated municipalities in the proportion that the population of each bears to the aggregate population of the state and to counties in the proportion that the population of unincorporated areas of the county bears to the aggregate population of the state, according to the most recent federal census or other census authorized by law.
- This section does not apply to sales of food and food ingredients, candy, dietary supplements, alcoholic beverages, tobacco and fuel.
Acts 2003, ch. 357, § 75; 2004, ch. 959, §§ 40, 41, 68, 69; 2005, ch. 311, §§ 1, 2; 2007, ch. 602, §§ 51, 129; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 75, as amended by Acts 2004, ch. 959, §§ 40, 41, 68, 69, as amended by Acts 2005, ch. 311, §§ 1, 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 129, which enacted this section, shall take effect July 1, 2021.
For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2306. Exemption for articles of tangible personal property imported for export or produced for export. [Effective on July 1, 2021.]
It is not the intention of this part to levy a tax upon articles of tangible personal property imported into this state for export, or produced or manufactured in this state for export. If the sale of tangible personal property imported into this state is sourced to this state, this exemption shall apply; provided, that the purchaser's use of the tangible personal property imported into this state is limited to storage, inspection, or repackaging for shipment of the property for export outside this state.
Acts 2004, ch. 959, § 36; 2005, ch. 311, § 2; T.C.A. § 67-4-2308; Acts 2007, ch. 602, §§ 52, 129; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; T.C.A. § 67-4-2307; Acts 2014, ch. 908, § 12; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 36, as amended by Acts 2005, ch. 311, § 2, which purported to enact these provisions as § 67-4-2308, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 129, which enacted this section, shall take effect July 1, 2021.
Former section 67-4-2306, as enacted by Acts 2007, ch. 602, § 129, pertaining to tax on diesel fuel for trains in interstate commerce, was to take effect July 1, 2015, but was deleted by Acts 2014, ch. 908, § 12, effective July 1, 2014, prior to going into effect. Acts 2014, ch. 908, § 12 further provided that the remaining amendatory sections be redesignated accordingly. Therefore, the section has been deleted in its entirety and the section formerly designated as § 67-4-2307 has been redesignated as § 67-4-2306.
Amendments. The 2014 amendment transferred this section from § 67-4-2307.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2014, ch. 908, § 18. July 1, 2014.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2307. Exemption for certain property and services. [Effective on July 1, 2021.]
-
The taxes imposed by this part shall not apply to any property or services:
- Upon which the sales or use tax imposed by chapter 6 of this title has been paid;
- Upon which a sales or use tax was previously legally imposed and collected by another state, at a rate equal to or greater than the rate of tax provided for in this part; or
- Upon which another state has previously legally imposed and collected a tax substantially similar to the tax imposed by this part, at a rate equal to or greater than the rate of tax provided for in this part.
- If the taxes described in subsection (a) are at a rate lesser than the rate imposed by this part, the tax imposed by this part shall be at the difference between the rate of tax imposed by this part and the rate of the tax described in subsection (a).
- Notwithstanding subsections (a) and (b), the tax levied by this part shall apply without reduction for any sales or use tax, or tax substantially similar to the tax levied by this part, that is paid to another state on the same transaction, if that state does not have the first right to tax or has no statutory provisions to reduce its sales or use tax, or tax substantially similar to the tax levied by this part, by any payment of the tax levied by this part. Each taxpayer seeking a reduction of the tax levied by this part due to payment of a sales or use tax or tax substantially similar to the tax levied by this part to another state on the same transaction shall furnish evidence to the satisfaction of the commissioner that the tax statutes of the other state would allow a reduction of its sales or use taxes or tax substantially similar to the tax levied by this part in like factual situations.
- The taxpayer shall bear the burden of maintaining documentary proof that the taxes described in subsection (a) have been paid.
Acts 2004, ch. 959, § 36; 2005, ch. 311, § 2; T.C.A. 67-4-2309; Acts 2007, ch. 602, §§ 52, 129; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; T.C.A. 67-4-2308; Acts. 2014, ch. 908, § 12; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 42, as amended by Acts 2005, ch. 311, § 2, which purported to enact these provisions as § 67-4-2309, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 129, which enacted this section, shall take effect July 1, 2021.
Former section 67-4-2306, as enacted by Acts 2007, ch. 602, § 129, pertaining to tax on diesel fuel for trains in interstate commerce, was to take effect July 1, 2015, but was deleted by Acts 2014, ch. 908, § 12, effective July 1, 2014, prior to going into effect. Acts 2014, ch. 908, § 12 further provided that the remaining amendatory sections be redesignated accordingly. Therefore, the section formerly designated as § 67-4-2308 has been redesignated as § 67-4-2307.
Amendments. The 2014 amendment transferred this section from § 67-4-2308.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2014, ch. 908, § 18. July 1, 2014.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
Part 24
Cable and Satellite Television Service [Effective on July 1, 2021.]
67-4-2401. Tax on video programming service. [Effective on July 1, 2021.]
- There is levied a privilege tax of nine percent (9%) of the gross charge for providing video programming services as defined in § 67-6-102, when the services are delivered to the subscriber at a location in this state.
- The tax shall not apply to the first fifteen dollars ($15.00) of the gross charges for the video programming services.
-
The tax collected under this section shall be distributed as follows:
- Eighty-two percent (82%) shall be deposited to the state general fund; and
- The remaining eighteen percent (18%) shall be distributed to incorporated municipalities in the proportion that the population of each bears to the aggregate population of the state and to counties in the proportion the population of unincorporated areas of the county bears to the aggregate population of the state, according to the most recent federal census and other census authorized by law.
Acts 2003, ch. 357, § 76; 2004, ch. 959, §§ 43, 44, 68; 2005, ch. 311, §§ 1, 2; 2007, ch. 602, §§ 51, 130; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 76, as amended by Acts 2004, ch. 959, §§ 43, 44, 68, as amended by Acts 2005, ch. 311, §§ 1, 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further provided by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 130, which enacted this section, shall take effect July 1, 2021.
For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
Comparative Legislation. Taxation of cable or satellite services:
Ala. Code § 40-21-80 et seq.
Ark. Code § 26-52-315.
O.C.G.A. § 48-8-13.
Ky. Rev. Stat. Ann. § 136.600 et seq.
N.C. Gen. Stat. § 105-164.4c.
Ky. Rev. Stat. Ann. § 160.614.
Va. Code § 58.1-645 et seq.
Collateral References. Taxation 371
67-4-2402. Tax on satellite television service. [Effective on July 1, 2021.]
- There is levied a privilege tax of eight and one-quarter percent (8.25%) of the gross charge for services provided by a direct-to-home satellite service provider, when the services are delivered to the subscriber at a location in this state.
- The tax collected under this section shall be deposited to the state general fund.
Acts 2003, ch. 357, § 76; 2004, ch. 959, §§ 45, 68; 2005, ch. 311, §§ 1, 2; 2007, ch. 602, §§ 51, 130; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 76, as amended by Acts 2004, ch. 959, §§ 45, 68, as amended by Acts 2005, ch. 311, §§ 1, 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further provided by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 130, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
Collateral References.
Validity, construction, and application of state taxes on revenues and income from communications satellite services. 51 A.L.R.6th 257.
67-4-2403. Collection of tax — Notice to customers. [Effective on July 1, 2021.]
- The taxes levied in this part shall be collected from the dealer as defined in § 67-6-102 and paid at the time and in the manner provided in this part. The tax imposed by this chapter shall be collected by the dealer from the consumer insofar as it can be done.
- The providers shall indicate in some definite manner whether their customers are paying this privilege tax. This indication must be stated on the ticket, invoice, or other record given to the customer.
Acts 2003, ch. 357, § 76; 2004, ch. 959, § 68; 2005, ch. 311, § 1; 2007, ch. 602, § 51, 130; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 76, as amended by Acts 2004, ch. 959, § 68, as amended by Acts 2005, ch. 311, § 1, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further provided by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 130, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2404. When taxes due and payable. [Effective on July 1, 2021.]
- The taxes levied under this part shall be due and payable monthly, on the first day of each month, and for the purposes of ascertaining the amount of tax payable under this chapter, it shall be the duty of all dealers on or before the twentieth day of each month to transmit to the commissioner returns showing the gross charges arising from the sale of services taxable under this chapter during the preceding calendar month.
- At the time of transmitting the return required under this part to the commissioner, the dealer shall remit to the commissioner with the return the amount of tax due, and failure to so remit the tax shall cause the tax to become delinquent.
Acts 2003, ch. 357, § 76; 2004, ch. 959, § 68; 2005, ch. 311, § 1; 2007, ch. 602, §§ 51, 130; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1;2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 76, as amended by Acts 2004, ch. 959, § 68, as amended by Acts 2005, ch. 311, § 1, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further provided by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 130, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2405. Administration and enforcement. [Effective on July 1, 2021.]
- The commissioner of revenue shall administer and enforce the assessment and collection of the taxes levied by this part.
-
- The commissioner is authorized to prescribe all rules and regulations necessary for the administration of this part, and for the collection of the taxes imposed by this part.
- Rules and regulations not inconsistent with this part, when promulgated by the commissioner, and approved by the attorney general and reporter, shall have the force and effect of law.
- The commissioner is empowered to examine the books and records of any person subject to this part.
Acts 2003, ch. 357, § 76; 2004, ch. 959, § 68; 2005, ch. 311, § 1; 2007, ch. 602, §§ 51, 130; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 76, as amended by Acts 2004, ch. 959, § 68, as amended by Acts 2005, ch. 311, § 1, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further provided by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 130, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2406. Failure to file — Assessment. [Effective on July 1, 2021.]
- When any person fails to file any form, statement, report or return required to be filed with the commissioner, after being given written notice of the failure to file, the commissioner is authorized to determine the tax liability of the person from whatever source of information may be available to the commissioner or the commissioner's delegates.
- An assessment made by the commissioner pursuant to this authority shall be binding as if made upon the sworn statement, report or return of the person liable for the payment of the tax. Any person against whom the assessment is lawfully made shall thereafter be estopped to dispute the accuracy of the assessment, except upon filing a true and accurate return, together with supporting evidence that the commissioner may require, indicating precisely the amount of the alleged inaccuracy.
Acts 2003, ch. 357, § 76; 2004, ch. 959, § 68; 2005, ch. 311, § 1; 2007, ch. 602, §§ 51, 130; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 76, as amended by Acts 2004, ch. 959, § 68, as amended by Acts 2005, ch. 311, § 1, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further provided by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 130, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2407. Maintenance of records. [Effective on July 1, 2021.]
- It is the duty of every person required to pay a tax under this part to keep and preserve records showing the gross amount of tax levied by this part owed to the state, and the amount of the person's gross receipts taxable under this part, and other books of account that may be necessary to determine the amount of tax under this part, and the books and records shall be open to inspection at all reasonable hours to the commissioner or any person duly authorized by the commissioner.
- The books and records shall be maintained by the taxpayer for a period of three (3) years from December 31 of the year in which the taxpayer is responsible for paying the tax on the transaction or transactions represented by the record.
Acts 2003, ch. 357, § 76; 2004, ch. 959, §§ 46, 68; 2005, ch. 311, §§ 1, 2; 2007, ch. 602, §§ 51, 130; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 76, as amended by Acts 2004, ch. 959, §§ 46, 68, as amended by Acts 2005, ch. 311, §§ 1, 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further provided by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 130, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2408. Exemptions. [Effective on July 1, 2021.]
The exemptions provided for in §§ 67-6-308, 67-6-322, 67-6-325, 67-6-328, and 67-6-384 are applicable to the tax levied under this part. In addition, all sales made to the state or any county or municipality within the state shall be exempt from the tax levied under this part.
Acts 2004, ch. 959, § 47; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 130; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 47, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further provided by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 130, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2409. Exemption for video programming services or direct-to-home satellite services sold for resale — “For resale” defined. [Effective on July 1, 2021.]
The tax imposed by this part shall not apply when the video programming services or direct-to-home satellite services are sold for resale. “For resale” means that the customer of the video programming service or direct-to-home satellite service provider purchases the services, sells those services to others, and is liable for the tax imposed by this part, or for the sales tax imposed by chapter 6 of this title, on its sales of those specific services. The commissioner is authorized and empowered to require the use of certificates of resale, or other satisfactory proof, as proof that any sale claimed to be a sale for resale is in fact a sale for resale. In cases where a customer purchases some services for resale and others for the customer's use and consumption, the seller shall separate the taxable and resale amounts on the bill, invoice, or statement provided to its customer.
Acts 2004, ch. 959, § 47; 2005 ch. 311, § 2; 2007, ch. 602, §§ 52, 130; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 47, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further provided by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 130, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2410. Credit for bad debts arising from sale. [Effective on July 1, 2021.]
A person who has paid the tax imposed by this part on any sale taxable under this part may take credit for any bad debts arising from the sale, in any return filed under this part. Sections 67-6-507(e) and 67-1-1802(d) shall apply to the credit.
Acts 2004, ch. 959, § 64; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 130; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 64, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further provided by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 130, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
Part 25
Dyed Diesel Fuel [Effective on July 1, 2021.]
67-4-2501. Tax on dyed diesel fuel. [Effective on July 1, 2021.]
- There is levied a privilege tax of seven percent (7%) of gross charges on the retail sale of dyed diesel fuel, as “dyed diesel fuel” is defined in § 67-3-103. For purposes of this part, retail sale shall mean the same as defined in § 67-6-102.
- The commissioner is authorized and empowered to require the use of certificates of resale, or other satisfactory proof, as proof that any sale claimed to be other than a “retail sale” is in fact not a retail sale.
- The tax collected under this section shall be deposited to the state general fund.
Acts 2003, ch. 357, § 77; 2004, ch. 959, § 68; 2005, ch. 311, § 1; 2007, ch. 602, §§ 51, 131; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 77, as amended by Acts 2004, ch. 959, § 68, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1, provided that Acts 2007, ch. 602, § 131, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
Comparative Legislation. Special fuel taxes:
Ga. O.C.G.A. § 48-8-1 et seq.
Ky. Rev. Stat. Ann. § 138.210 et seq.
Miss. Code Ann. § 27-55-501 et seq.
Mo. Rev. Stat. Ann. § 142.926 et seq.
N.C. Gen. Stat. § 105-449.60 et seq.
Va. Code § 58.1-2201 et seq.
Collateral References. Taxation 371
67-4-2502. Collection of tax — Notice to customers. [Effective on July 1, 2021.]
- The tax shall be collected from the dealer as defined in § 67-6-102 and paid at the time and in the manner provided in this part. The tax imposed by this part shall be collected by the dealer from the consumer insofar as it can be done.
- The dealer shall indicate in some definite manner whether its customers are paying this privilege tax. This indication shall be stated on the ticket, invoice, or other record given to the customer.
Acts 2003, ch. 357, § 77; 2004, ch. 959, § 68; 2005, ch. 311, § 1; 2007, ch. 602, §§ 51, 131; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 77, as amended by Acts 2004, ch. 959, § 68, as amended by Acts 2005, ch. 311, § 1, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1, provided that Acts 2007, ch. 602, § 131, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2503. Exemptions. [Effective on July 1, 2021.]
Sales to governmental entities that are exempt from the sales tax imposed by chapter 6 of this title, and sales of fuel to a qualified farmer or nurseryman, as defined in § 67-6-207 for agricultural purposes, as defined in § 67-3-103, shall be exempt from the tax imposed by this part. Sales of dyed diesel fuel taxed per gallon by § 67-3-202 are exempt from the tax imposed by this part.
Acts 2003, ch. 357, § 77; 2004, ch. 959, § 68; 2005, ch. 311, § 1; 2007, ch. 602, §§ 51, 131; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2014, ch. 908, § 13; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 77, as amended by Acts 2004, ch. 959, § 68, as amended by Acts 2005, ch. 311, § 1, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1, provided that Acts 2007, ch. 602, § 131, which enacted this section, shall take effect July 1, 2021.
Amendments. The 2014 amendment added the last sentence to the section.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2014, ch. 908, § 18. July 1, 2014.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2504. When taxes due and payable. [Effective on July 1, 2021.]
- The taxes levied under this part shall be due and payable monthly, on the first day of each month, and for the purposes of ascertaining the amount of tax payable under this part, it shall be the duty of all dealers on or before the twentieth day of each month to transmit to the commissioner returns showing the gross charges of fuel taxable under this part during the preceding calendar month.
- At the time of transmitting the return required under this section to the commissioner, the dealer shall remit to the commissioner with the return the amount of tax due, and failure to so remit the tax shall cause the tax to become delinquent.
Acts 2003, ch. 357, § 77; 2004, ch. 959, § 68; 2005, ch. 311, § 1; 2007, ch. 602, §§ 51, 131; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 77, as amended by Acts 2004, ch. 959, § 68, as amended by Acts 2005, ch. 311, § 1, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1, provided that Acts 2007, ch. 602, § 131, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2505. Administration and enforcement. [Effective on July 1, 2021.]
- The commissioner of revenue shall administer and enforce the assessment and collection of the taxes levied by this part.
-
- The commissioner is authorized to prescribe all rules and regulations necessary for the administration of this part, and for the collection of the taxes imposed by this part.
- Rules and regulations not inconsistent with this part when promulgated by the commissioner, and approved by the attorney general and reporter, shall have the force and effect of law.
- The commissioner is empowered to examine the books and records of any person subject to this part.
Acts 2003, ch. 357, § 77; 2004, ch. 959, § 68; 2005, ch. 311, § 1; 2007, ch. 602, §§ 51, 131; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 77, as amended by Acts 2004, ch. 959, § 68, as amended by Acts 2005, ch. 311, § 1, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1, provided that Acts 2007, ch. 602, § 131, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2506. Failure to file — Assessments. [Effective on July 1, 2021.]
- When any person fails to file any form, statement, report or return required to be filed with the commissioner, after being given written notice of the failure to file, the commissioner is authorized to determine the tax liability of the person from whatever source of information may be available to the commissioner or the commissioner's delegates.
- An assessment made by the commissioner pursuant to this authority shall be binding as if made upon the sworn statement, report or return of the person liable for the payment of the tax; and any person against whom the assessment is lawfully made shall thereafter be estopped to dispute the accuracy of the assessment, except upon filing a true and accurate return, together with supporting evidence that the commissioner may require, indicating precisely the amount of the alleged inaccuracy.
Acts 2003, ch. 357, § 77; 2004, ch. 959, § 68; 2005, ch. 311, § 1; 2007, ch. 602, §§ 51, 131; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 77, as amended by Acts 2004, ch. 959, § 68, as amended by Acts 2005, ch. 311, § 1, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1, provided that Acts 2007, ch. 602, § 131, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2507. Maintenance of records. [Effective on July 1, 2021.]
- It is the duty of every person required to pay a tax under this part to keep and preserve records showing the gross amount of tax levied by this part owed to the state, and the amount of the person's gross retail sales taxable under this part, and other books of account that may be necessary to determine the amount of tax under this part, and all those books and records shall be open to inspection at all reasonable hours to the commissioner, the commissioner's delegates, or any person duly authorized by either of them.
- All the books and records shall be maintained by the taxpayer for a period of three (3) years from December 31 of the year in which the taxpayer is responsible for paying the tax on the transaction or transactions represented by the record.
Acts 2003, ch. 357, § 77; 2004, ch. 959, §§ 48, 68; 2005, ch. 311, §§ 1, 2; 2007, ch. 602, §§ 51, 131; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 77, as amended by Acts 2004, ch. 959, §§ 48, 68, as amended by Acts 2005, ch. 311, §§ 1, 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1, provided that Acts 2007, ch. 602, § 131, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2508. Credit for bad debts arising from sale. [Effective on July 1, 2021.]
A person who has paid the tax imposed by this part on any sale taxable under this part may take credit for any bad debts arising from such sale, in any return filed under this part. Sections 67-6-507(e) and 67-1-1802(d) shall apply to the credit.
Acts 2004, ch. 959, § 65; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 131; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 65, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1, provided that Acts 2007, ch. 602, § 131, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
Part 26
Tobacco Settlement Funds
67-4-2601. Part definitions.
As used in this part:
- “Brand family” means all styles of cigarettes sold under the same trademark and differentiated from one another by means of additional modifiers or descriptors, including, but not limited to, “menthol,” “lights,” “kings,” and “100s,” and includes any brand name, alone or in conjunction with any other word, trademark, logo, symbol, motto, selling message, recognizable pattern of colors, or any other indicia of product identification identical or similar to, or identifiable with, a previously known brand of cigarettes;
- “Cigarette” has the same meaning as in § 47-31-102;
- “Cigarette rolling machine operator” has the same meaning as in § 67-4-1001;
- “Commissioner” means the commissioner of revenue;
- “Delivery sale” has the same meaning as in § 67-4-1001;
- “Importer” means any person in the United States to whom cigarettes manufactured in a foreign country are shipped or consigned or any person who removes cigarettes for sale or consumption in the United States from a customs bonded warehouse;
- “Licensed agent” means a person who is authorized to affix tax stamps to packages or other containers of cigarettes under § 67-4-1006 or any person who is required to pay the tobacco tax imposed pursuant to § 67-4-1002;
- “Master settlement agreement” has the same meaning as in § 47-31-102;
- “Non-participating manufacturer” means any tobacco product manufacturer that is not a participating manufacturer;
- “Participating manufacturer” has the meaning given that term in Section II(jj) of the master settlement agreement and all amendments thereto;
- “Qualified escrow fund” has the same meaning as that term is defined in § 47-31-102;
- “Retail dealer” has the same meaning as in § 67-4-1001;
- “Tobacco distributor” has the same meaning as in § 67-4-1001;
- “Tobacco product manufacturer” has the same meaning as that term is defined in § 47-31-102;
- “Units sold” has the same meaning as that term is defined in § 47-31-102; and
- “Wholesale dealer and jobber” has the same meaning as in § 67-4-1001.
Acts 2003, ch. 294, § 2; 2014, ch. 749, § 7.
Compiler's Notes. Pursuant to Article III, Section 18 of the Constitution of Tennessee, Acts 2014, ch. 749 took effect on April 21, 2014.
Amendments. The 2014 amendment added definitions “Cigarette rolling machine operator”, “Delivery sale”, “Importer”, “Retail dealer”, “Tobacco distributor”, and “Wholesale dealer and jobber”.
Effective Dates. Acts 2014, ch. 749, § 13. April 21, 2014. [See the Compiler's Note.]
Comparative Legislation. Tobacco settlement funds:
Ark. Code § 19-12-101 et seq.
Miss. Code Ann. § 43-13-401 et seq.
Va. Code § 3.2-4200 et seq.
Cited: S & M Brands, Inc. v. Summers, 420 F. Supp. 2d 840, 2006 U.S. Dist. LEXIS 11518 (M.D. Tenn. 2006); SM Brands, Inc. v. Cooper, 527 F.3d 500, 2008 FED App. 178P, 2008 U.S. App. LEXIS 10251 (6th Cir. May 13, 2008).
NOTES TO DECISIONS
1. Constitutionality.
Cigarette importer had standing to challenge the enactment and enforcement of the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999, T.C.A. § 47-31-101 et seq., and T.C.A. § 67-4-2601 et seq., because it alleged that it was directly affected by the penalties imposed by the statutes. S & M Brands, Inc. v. Summers, 393 F. Supp. 2d 604, 2005 U.S. Dist. LEXIS 23216 (M.D. Tenn. 2005), aff'd, S&M Brands, Inc. v. Summers, 228 Fed. Appx. 560, 2007 FED App. 283N, 2007-1 Trade Cas. (CCH) P75673, 2007 U.S. App. LEXIS 9218 (6th Cir. Tenn. 2007).
Enforcement of the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999, T.C.A. § 47-31-101 et seq., T.C.A. § 67-4-2601 et seq., and the Allocable Share Relase Provision contained in the original version of T.C.A. 47-31-103, did not violate the procedural due process rights of plaintiffs, tobacco manufacturers or importers who were not part of the Master Settlement Agreement between 46 states and domestic cigarette manufacturers, because the statutes applied equally to all cigarette manufacturers or importers that sold cigarettes within Tennessee. S & M Brands, Inc. v. Summers, 393 F. Supp. 2d 604, 2005 U.S. Dist. LEXIS 23216 (M.D. Tenn. 2005), aff'd, S&M Brands, Inc. v. Summers, 228 Fed. Appx. 560, 2007 FED App. 283N, 2007-1 Trade Cas. (CCH) P75673, 2007 U.S. App. LEXIS 9218 (6th Cir. Tenn. 2007).
Enforcement of the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999, T.C.A. § 47-31-101 et seq., and T.C.A. § 67-4-2601 et seq., did not violate the equal protection rights of plaintiffs, tobacco manufacturers or importers who were not part of the Master Settlement Agreement (MSA) between 46 states and domestic cigarette manufacturers, because, while it was true that the Escrow Act distinguished among tobacco product manufacturers on the basis of whether they had or had not chosen to enter into the MSA, that distinction was rationally related to Tennessee's legitimate purpose of ensuring a source of recovery from all manufacturers for Tennessee's potential future costs related to cigarette smoking; § 67-4-2601 et seq. severed the legitimate, rational purpose of preventing non-complaint manufacturers from selling their products in Tennessee. S & M Brands, Inc. v. Summers, 393 F. Supp. 2d 604, 2005 U.S. Dist. LEXIS 23216 (M.D. Tenn. 2005), aff'd, S&M Brands, Inc. v. Summers, 228 Fed. Appx. 560, 2007 FED App. 283N, 2007-1 Trade Cas. (CCH) P75673, 2007 U.S. App. LEXIS 9218 (6th Cir. Tenn. 2007).
Enforcement of the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999, T.C.A. § 47-31-101 et seq., and T.C.A. § 67-4-2601 et seq., did not violate the First Amendment rights of plaintiffs, tobacco manufacturers or importers who were not part of the Master Settlement Agreement (MSA) between 46 states and domestic cigarette manufacturers, because the attorney general was neither denying a benefit to plaintiffs that they could obtain by giving up their freedom of speech nor punishing plaintiffs for refusing to give up their free speech rights, and therefore the unconstitutional conditions doctrine did not apply. S & M Brands, Inc. v. Summers, 393 F. Supp. 2d 604, 2005 U.S. Dist. LEXIS 23216 (M.D. Tenn. 2005), aff'd, S&M Brands, Inc. v. Summers, 228 Fed. Appx. 560, 2007 FED App. 283N, 2007-1 Trade Cas. (CCH) P75673, 2007 U.S. App. LEXIS 9218 (6th Cir. Tenn. 2007).
2. Federal preemption.
Federal Cigarette Labeling & Advertising Act, 15 U.S.C. § 1331 et seq., does not preempt Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999, T.C.A. § 47-31-101 et seq., or T.C.A. § 67-4-2601 et seq., because the Tennessee tobacco statutes do not impose any requirements pertaining to labeling or promotion, much less any that conflict with federal law. S & M Brands, Inc. v. Summers, 393 F. Supp. 2d 604, 2005 U.S. Dist. LEXIS 23216 (M.D. Tenn. 2005), aff'd, S&M Brands, Inc. v. Summers, 228 Fed. Appx. 560, 2007 FED App. 283N, 2007-1 Trade Cas. (CCH) P75673, 2007 U.S. App. LEXIS 9218 (6th Cir. Tenn. 2007).
Master Settlement Agreement (MSA) entered into by 46 states and domestic cigarette manufacturers, the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999, T.C.A. § 47-31-101 et seq., and T.C.A. § 67-4-2601 et seq., were immune from challenge on antitrust grounds under the state-action doctrine, and the Tennessee attorney general was immune from liability for enforcing or threatening to enforce them on antitrust grounds, because they were express actions of Tennessee; the statutes were not preempted by the Sherman Act, 15 U.S.C. § 1, because they neither mandated nor authorized conduct that necessarily constituted a violation of antitrust laws in all cases. S & M Brands, Inc. v. Summers, 393 F. Supp. 2d 604, 2005 U.S. Dist. LEXIS 23216 (M.D. Tenn. 2005), aff'd, S&M Brands, Inc. v. Summers, 228 Fed. Appx. 560, 2007 FED App. 283N, 2007-1 Trade Cas. (CCH) P75673, 2007 U.S. App. LEXIS 9218 (6th Cir. Tenn. 2007).
Collateral References.
Validity, Construction, Application, and Effect of Master Settlement Agreement (MSA) Between Tobacco Companies and Various States, and State Statutes Implementing Agreement; Use and Distribution of MSA Proceeds. 25 A.L.R.6th 435.
Taxation 371
67-4-2602. Certification by tobacco product manufacturer as to compliance — Directory listing certified manufacturers and brand families — Unlawful practices.
-
Every tobacco product manufacturer whose cigarettes are sold in this state, whether directly or through a distributor, retailer or similar intermediary or intermediaries, shall execute and deliver on a form prescribed by the commissioner a certification to the commissioner and attorney general and reporter, no later than the thirtieth day of April each year, certifying under penalty of perjury that, as of the date of such certification, such tobacco product manufacturer either is a participating manufacturer, or is in full compliance with § 47-31-103.
- A participating manufacturer shall include in its certification a list of its brand families. The participating manufacturer shall update such list thirty (30) calendar days prior to any addition to or modification of its brand families by executing and delivering a supplemental certification to the attorney general and reporter and commissioner.
-
-
A non-participating manufacturer shall include in its certification:
- A list of all of its brand families and the number of units sold for each brand family that were sold in the state during the preceding calendar year;
- A list of all of its brand families that have been sold in the state at any time during the current calendar year;
- Indication, by an asterisk, of any brand family sold in the state during the preceding calendar year that is no longer being sold in the state as of the date of such certification; and
- Identification by name and address of any other manufacturer of such brand families in the preceding or current calendar year.
- The non-participating manufacturer shall update such list thirty (30) calendar days prior to any addition to or modification of its brand families by executing and delivering a supplemental certification to the attorney general and reporter and commissioner.
-
A non-participating manufacturer shall include in its certification:
-
In the case of a non-participating manufacturer, such certification shall further certify:
- That such non-participating manufacturer is registered to do business in the state or has appointed a resident agent for service of process and provided notice thereof as required by § 67-4-2603;
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That such non-participating manufacturer:
- Has established and continues to maintain a qualified escrow fund; and
- Has executed a qualified escrow agreement that has been reviewed and approved by the attorney general and reporter and that governs the qualified escrow fund;
- That such non-participating manufacturer is in full compliance with title 47, chapter 31 and this part, and any regulations promulgated pursuant thereto;
-
- The name, address and telephone number of the financial institution where the non-participating manufacturer has established such qualified escrow fund required pursuant to § 47-31-103 and all regulations promulgated thereto;
- The account number of such qualified escrow fund and any sub-account number for Tennessee;
- The amount such non-participating manufacturer placed in such fund for cigarettes sold in the state during the preceding calendar year, the date and amount of each such deposit, and such evidence or verification as may be deemed necessary by the attorney general and reporter to confirm the foregoing; and
- The amount and date of any withdrawal or transfer of funds the non-participating manufacturer made at any time from such fund or from any other qualified escrow fund into which it ever made escrow payments pursuant to § 47-31-103 and all regulations promulgated thereto; and
- That the non-participating manufacturer has certified in writing on a form approved by the commissioner that it consents to be sued in the circuit or chancery courts in the state for purposes of enforcing this statute or for an action to enforce § 47-31-103.
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In the case of a non-participating manufacturer located outside of the United States, the certification shall further certify that the non-participating manufacturer has provided a declaration from each of its importers into the United States of any of its brand families to be sold in this state. The declaration shall be on a form prescribed by the attorney general and reporter and shall state the following:
- The importer accepts joint and several liability with the non-participating manufacturer for all obligations to place funds into a qualified escrow fund, for payment of all civil penalties and for payment of all reasonable costs and expenses of investigation and prosecution, including attorneys' fees, authorized in accordance with the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999, compiled in title 47, chapter 31;
- The importer consents to personal jurisdiction in Tennessee for the purpose of claims by the state for any obligation to place funds into a qualified escrow fund, for payment of any civil penalties and for payment of any reasonable costs and expenses of investigation or prosecution, including attorneys' fees, authorized in accordance with the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999; and
- The importer has appointed a registered agent for service of process in this state according to the same requirements as established in this part for any nonresident or foreign non-participating manufacturer that has not registered to do business in this state as a foreign corporation or business entity.
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A tobacco product manufacturer may not include a brand family in its certification unless:
- In the case of a participating manufacturer, said participating manufacturer affirms that the brand family is deemed to be its cigarettes for purposes of calculating its payments under the master settlement agreement for the relevant year, in the volume and shares determined pursuant to the master settlement agreement; and
- In the case of a non-participating manufacturer, said non-participating manufacturer affirms that the brand family is deemed to be its cigarettes for purposes of § 47-31-103. Nothing in this section shall be construed as limiting or otherwise affecting the state's right to maintain that a brand family constitutes cigarettes of a different tobacco product manufacturer for purposes of calculating payments under the master settlement agreement or for purposes of § 47-31-103.
- Tobacco product manufacturers shall maintain all invoices and documentation of sales and other such information relied upon for such certification for a period of five (5) years, unless otherwise required by law to maintain them for a greater period of time.
-
Not later than May 31, 2003, the commissioner shall develop and make available for public inspection a directory listing all tobacco product manufacturers that have provided current and accurate certifications conforming to the requirements of subsection (a) and all brand families that are listed in such certifications (the “directory”), except that:
- The commissioner shall not include or retain in such directory the name or brand families of any non-participating manufacturer that has failed to provide the required certification or whose certification the commissioner determines is not in compliance with subdivisions (a)(2) and (3), unless the commissioner has determined that such violation has been cured to the satisfaction of the commissioner;
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Neither a tobacco product manufacturer nor brand family shall be included or retained in the directory, if the commissioner concludes, in the case of a non-participating manufacturer, that:
- Any escrow payment required pursuant to § 47-31-103 for any period for any brand family, whether or not listed by such non-participating manufacturer, has not been fully paid into a qualified escrow fund governed by a qualified escrow agreement that has been approved by the attorney general and reporter;
- Any outstanding final judgment, including interest on the judgment, for a violation of § 47-31-103 has not been fully satisfied for such brand family or such manufacturer; or
- Such non-participating manufacturer has underpaid escrow obligations in this state or any state unless such underpayment is cured within sixty (60) days of entry of a final order establishing the required escrow payment amount; however, such cure shall have no such effect if such underpayment is the result of fraud or deceit;
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A non-participating tobacco product manufacturer may be removed from the state's directory of approved tobacco product manufacturers, if the commissioner determines such action is in the best interest of the state and the operation of the directory, if the tobacco product manufacturer or any of its affiliates, officers, directors, or owners has:
- Been removed from any state's directory of approved tobacco product manufacturers based on any acts or omissions that would, if done in this state, be grounds for removal from the directory, except that if the basis for removal is a good faith dispute regarding the amount of escrow required for units sold in other states, the non-participating manufacturer shall have the opportunity to cure the underpayment of escrow within sixty (60) days of entry of a final order establishing the required escrow payment amount;
- Plead guilty or nolo contendere to or has been found guilty of a crime relating to the reporting, distribution, sale or taxation of cigarettes or tobacco products; or
- Failed to cooperate with any request for information from the commissioner made pursuant to § 67-4-2604(d) to the satisfaction of the commissioner;
- The commissioner shall update the directory as necessary in order to correct mistakes and to add or remove a tobacco product manufacturer or brand family to keep the directory in conformity with the requirements of this part; and
- Every licensed agent shall provide and update as necessary an electronic mail address to the commissioner for the purpose of receiving any notifications as may be required by this part.
-
It shall be unlawful for any person to:
- Affix a stamp to a package or other container of cigarettes of a tobacco product manufacturer or brand family not included in the directory; or
- Sell, offer, or possess for sale, in this state, or import for personal consumption in this state, cigarettes of a tobacco product manufacturer or brand family not included in the directory.
-
- A non-participating manufacturer shall not be included or retained in the directory of approved tobacco product manufacturers until it has posted a bond in accordance with this subsection (d), in addition to any other requirements for inclusion in the directory contained in this part.
- The bond required by this subsection (d) shall be posted by corporate surety located within the United States. The amount of the bond shall be the greater of one hundred thousand dollars ($100,000) or the greatest required escrow amount due from the non-participating manufacturer or its predecessor for any of the twelve (12) preceding calendar quarters. The bond shall be posted at least ten (10) days in advance of each calendar quarter.
- The bond shall be written in favor of the state of Tennessee and shall be conditioned on the performance by the non-participating manufacturer of all of its escrow deposit and other financial obligations under this part and § 47-31-103.
- If the non-participating manufacturer has failed to make or have made on its behalf escrow deposits equal to the full amount owed for a quarter within fifteen (15) days following the due date for the quarter, the state may execute upon the bond in the amount equal to any remaining amount of escrow due. The amount collected may be deposited into the state treasury and shall reduce the amount of escrow due from that non-participating manufacturer by the dollar amount collected.
- If the state obtains a judgment against the non-participating manufacturer for the non-participating manufacturer's failure to make an escrow deposit, the state may also execute on the bond to recover the amount of civil penalties and attorneys' fees obtained in that judgment. Funds collected from such bonds shall be counted first toward the amount of escrow due but not deposited into escrow by the non-participating manufacturer.
- For each non-participating manufacturer located outside of the United States, each importer into the United States of any such non-participating manufacturer's brand families that are sold in this state shall bear joint and several liability with such non-participating manufacturer for all obligations to place funds into a qualified escrow fund, for payment of all civil penalties and for payment of all reasonable costs and expenses of investigation and prosecution, including attorneys' fees, authorized in accordance with the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999.
- Service of process on the importer's appointed registered agent for service of process may be served in any manner authorized by law and shall constitute legal and valid service of process on the importer. The importer is subject to the same requirements in this part as non-participating manufacturers regarding notice of termination of the agency appointment. Any importer that has not appointed and engaged an agent as required in this section shall be deemed to have appointed the secretary of state as such agent and may be proceeded against in courts of this state by service of process on the secretary of state.
Acts 2003, ch. 294, § 3; 2009, ch. 381, § 1; 2012, ch. 669, §§ 1-5; 2014, ch. 749, § 10.
Amendments. The 2014 amendment, effective October 1, 2014, rewrote (d) which read: “(d)(1) A non-participating manufacturer that is not listed in the directory of approved tobacco manufacturers shall not be included in the directory until it has posted a bond in accordance with this subsection (d), in addition to any other requirements for inclusion in the directory contained in this chapter.“(2) The bond required by this subsection (d) shall be posted by corporate surety located within the United States in the amount of one hundred thousand dollars ($100,000). The bond shall be written in favor of the state of Tennessee and shall be conditioned on the performance by the non-participating manufacturer of all of its duties and obligations under this chapter and the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999, compiled in title 47, chapter 31. The bond shall remain in effect for twenty-four (24) months from the date posted.“(3) If the non-participating manufacturer fails to perform duties and obligations on which the bond is conditioned, the state shall be authorized to execute on the bond, first to recover any amounts the non-participating manufacturer failed to place into escrow as required by the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999, then to recover penalties and attorneys' fees under the Tennessee Tobacco Manufacturers' Escrow Fund Act of 1999 and this chapter.”
Effective Dates. Acts 2014, ch. 749, § 13. April 21, 2014; October 1, 2014 (section 10).
Cited: SM Brands, Inc. v. Cooper, 527 F.3d 500, 2008 FED App. 178P, 2008 U.S. App. LEXIS 10251 (6th Cir. May 13, 2008).
67-4-2603. Registered agent necessary for listing of non-resident or non-participating manufacturer.
- Any non-resident or foreign non-participating manufacturer that has not registered to do business in the state as a foreign corporation or business entity shall, as a condition precedent to having its brand families included or retained in the directory, appoint and continually engage without interruption the services of an agent in this state to act as an agent for the service of process on whom all process, and any action or proceeding against it concerning or arising out of the enforcement of this part and title 47, chapter 31, may be served in any manner authorized by law. Such service shall constitute legal and valid service of process on the non-participating manufacturer. The non-participating manufacturer shall provide the name, address, phone number and proof of the appointment and availability of such agent to and to the satisfaction of the commissioner and attorney general and reporter.
- The non-participating manufacturer shall provide notice to the commissioner and attorney general and reporter thirty (30) calendar days prior to termination of the authority of an agent and shall further provide proof to the satisfaction of the attorney general and reporter of the appointment of a new agent no less than five (5) calendar days prior to the termination of an existing agent appointment. In the event an agent terminates an agency appointment, the non-participating manufacturer shall notify the commissioner and attorney general and reporter of said termination within five (5) calendar days and shall include proof to the satisfaction of the attorney general and reporter of the appointment of a new agent.
- Any non-participating manufacturer whose cigarettes are sold in this state, who has not appointed and engaged an agent as required in this section, shall be deemed to have appointed the secretary of state as such agent and may be proceeded against in courts of this state by service of process upon the secretary of state; provided, however, that the appointment of the secretary of state as such agent shall not satisfy the condition precedent for having the brand families of the non-participating manufacturer included or retained in the directory.
Acts 2003, ch. 294, § 4.
67-4-2604. Submission of information.
- Not later than fifteen (15) calendar days after the end of each calendar month, each licensed agent shall submit information that the commissioner requires to facilitate compliance with this part, including, but not limited to, a list by brand family of the total number of cigarettes, or, in the case of roll your own, the equivalent stick count, for which the licensed agent affixed stamps during the previous calendar month or otherwise paid the tax due for the cigarettes. The report shall further include all cigarettes received and sold during the prior month, even if cigarettes were previously stamped by another licensed agent. The licensed agent shall maintain, and make available to the commissioner, all invoices and documentation of sales of all cigarettes and any other information relied upon in reporting to the commissioner for a period of seven (7) years.
- The commissioner is authorized to disclose to the attorney general and reporter any information received under this part and requested by the attorney general and reporter for purposes of determining compliance with and enforcing this part. The commissioner and attorney general and reporter shall share with each other the information received under this part, and may share such information with other federal, state or local agencies only for purposes of enforcement of this part, title 47, chapter 31, or corresponding laws of other states. Additionally, the commissioner and attorney general and reporter may share information pursuant to § 67-4-1028(a). The attorney general and reporter is authorized to disclose to a cigarette or roll your own manufacturer any information that has been provided by a licensed agent as required by this section regarding the purchases from that manufacturer on which tax stamps have been applied or the tax otherwise paid, so long as the recipient agrees to execute a document satisfactory to the attorney general and reporter that protects the confidential nature of such information.
- The attorney general and reporter may require at any time from the non-participating manufacturer proof, from the financial institution in which such manufacturer has established a qualified escrow fund for the purpose of compliance with § 47-31-103, of the amount of money in such fund, exclusive of interest, the amount and date of each deposit to such fund, and the amount and date of each withdrawal from such fund.
- In addition to the information required to be submitted pursuant to § 67-4-2602 or this section, the commissioner may require a licensed agent or tobacco product manufacturer to submit any additional information including, but not limited to, samples of the packaging or labeling of each brand family, as is necessary to enable the commissioner to determine whether a tobacco product manufacturer is in compliance with this part.
- [Deleted by 2014 amendment, effective April 21, 2014.]
- The commissioner may, in addition to any other law, impose and collect a monetary penalty not to exceed one hundred dollars ($100) per day for the failure of a distributor or wholesaler to timely or accurately comply with this section. Any monetary penalty collected pursuant to this section shall be deposited in the general fund. The submission in a report of a false statement under this chapter by a licensed agent is an offense punishable as a Class E felony.
- The commissioner may, in accordance with the procedure set forth in § 67-4-1016, and in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, suspend or revoke the license of an agent for knowingly filing false licensed distributor reports.
Acts 2003, ch. 294, § 5; 2007, ch. 602, § 179; 2009, ch. 340, §§ 1, 2; 2010, ch. 707, § 1; 2014, ch. 749, §§ 8, 11.
Compiler's Notes. Pursuant to Article III, Section 18 of the Constitution of Tennessee, Acts 2014, ch. 749 took effect on April 21, 2014.
Amendments. The 2014 amendment in (b) added the third sentence and deleted (e) which read: “To promote compliance with this chapter, the commissioner may promulgate regulations requiring a tobacco product manufacturer subject to the requirements of § 67-4-2602(a)(2), to make the escrow deposits required in quarterly installments during the year in which the sales covered by the deposits are made. The commissioner may require production of information sufficient to determine the adequacy of the amount of the installment deposit.”
Effective Dates. Acts 2014, ch. 749, § 13. April 21, 2014. [See the Compiler's Note.]
Cross-References. Confidentiality of public records, § 10-7-504.
Penalty for Class E felony, § 40-35-111.
67-4-2605. Additional penalties.
- In addition to or in lieu of any other civil or criminal remedy provided by law, if the commissioner has reasonable grounds to believe that a licensed agent or any other person has violated § 67-4-2602(c) or any regulation adopted pursuant to this part, the commissioner may revoke or suspend the license of the licensed agent in the manner provided by § 67-4-1016 and in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. Each stamp affixed and each sale or offer to sell cigarettes in violation of § 67-4-2602(c) shall constitute a separate violation. For each violation of this part, the commissioner may also impose a civil penalty in an amount not to exceed the greater of five hundred percent (500%) of the retail value of the cigarettes or five thousand dollars ($5,000), if the commissioner has reasonable grounds to believe that a violation of § 67-4-2602(c) or any regulations adopted pursuant thereto has occurred. Such penalty shall be imposed in the manner provided by § 67-4-1015 and in accordance with the Uniform Administrative Procedures Act. In the event of a conflict between § 67-4-1015 or § 67-4-1016 and the Uniform Administrative Procedures Act, the Uniform Administrative Procedures Act shall govern.
- Any cigarettes that have been sold, offered for sale, or possessed for sale, in this state, or imported for personal consumption in this state, in violation of § 67-4-2602(c) shall be deemed contraband under § 67-4-1020 and such cigarettes shall be subject to seizure and forfeiture as provided in such section, and all such cigarettes so seized and forfeited shall be destroyed and not resold.
- The attorney general and reporter, on behalf of the commissioner, may seek an injunction to restrain a threatened or actual violation of § 67-4-2602(c) or § 67-4-2604(a) or (d) by a licensed agent and to compel the licensed agent to comply with such subsections. In any action brought pursuant to this section, the state shall be entitled to recover the costs of investigation, costs of the action and reasonable attorney fees.
-
It shall be unlawful for a person to:
- Sell or distribute cigarettes that the person knows or should know are intended for distribution or sale in the state in violation of § 67-4-2602(c), or
- Acquire, hold, own, possess, transport, import, or cause to be imported cigarettes, that the person knows or should know are intended for distribution or sale in the state in violation of § 67-4-2602(c).
- A violation of this section shall be a Class B misdemeanor.
Acts 2003, ch. 294, § 6.
Cross-References. Penalty for Class B misdemeanor, § 40-35-111.
Cited: SM Brands, Inc. v. Cooper, 527 F.3d 500, 2008 FED App. 178P, 2008 U.S. App. LEXIS 10251 (6th Cir. May 13, 2008).
67-4-2606. Determination to list or to remove from list — Compliance — Promulgation of regulations — Enforcement — Violation — Conflicts of laws.
- If the commissioner elects not to include a brand family or tobacco product manufacturer on the directory, or if the commissioner removes a brand family or tobacco product manufacturer from the directory, that action is subject to review in the manner provided by § 67-1-105 and in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. In the event of a conflict between § 67-1-105 and the Uniform Administrative Procedures Act, the Uniform Administrative Procedures Act shall govern. At least fifteen (15) days prior to the removal of a tobacco product manufacturer or brand family from the directory, the commissioner shall post notification of the removal in the directory and transmit notification of the removal to any person who has provided an electronic mail address to the commissioner for the purpose of receiving electronic mail notifications of directory updates. Any person interested in receiving the notifications shall be allowed to register on the official web site maintained by the department of revenue.
- No person shall be issued a license or granted a renewal of a license to act as a licensed agent unless such person has certified in writing, under penalty of perjury, that such person will comply fully with this part.
- For the year 2003, the first report of licensed agents required by § 67-4-2604(a) shall be due July 6, 2003; the certifications by a tobacco product manufacturer described in § 67-4-2602(a) shall be due July 21, 2003; and the directory described in § 67-4-2602(b) shall be published or made available by September 4, 2003.
- The commissioner may promulgate regulations necessary to effect the purposes of this part.
- In any action brought by the state to enforce this part, the state shall be entitled to recover the costs of investigation, expert witness fees, costs of the action and reasonable attorney fees.
- If a court determines that a person has violated this part, the court shall order and enjoin any profits, gain, gross receipts or other benefit from the violation to be disgorged and paid to the state treasurer for deposit in the state's general fund. Unless otherwise expressly provided the remedies or penalties provided by this part are cumulative to each other and to the remedies or penalties available under all other laws of this state.
- If a court of competent jurisdiction finds that this part and of title 47, chapter 31 conflict and cannot be harmonized, then such provisions of title 47, chapter 31 shall control. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this part causes title 47, chapter 31 to no longer constitute a qualifying or model statute, as those terms are defined in the master settlement agreement, then that portion of this part shall not be valid. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this part is for any reason held to be invalid, unlawful or unconstitutional, such decision shall not affect the validity of the remaining portions of this part or any part of it.
Acts 2003, ch. 294, § 7; 2009, ch. 343, § 1.
Compiler's Notes. The official web site of the department of revenue, as mentioned in the last sentence of subsection (a), can be found at http://www.state.tn.us/revenue/.
Cited: S & M Brands, Inc. v. Summers, 420 F. Supp. 2d 840, 2006 U.S. Dist. LEXIS 11518 (M.D. Tenn. 2006); SM Brands, Inc. v. Cooper, 527 F.3d 500, 2008 FED App. 178P, 2008 U.S. App. LEXIS 10251 (6th Cir. May 13, 2008).
NOTES TO DECISIONS
1. Subject Matter Jurisdiction.
Manufacturer sufficiently supported its jurisdictional allegation that it faced the risk of removal from the Directory of Approved Tobacco Product Manufacturers with resultant loss of sales and reputation while it pursued judicial review of a final administrative order; the manufacturer alleged potential injury, judicial review of the final administrative decision would not provide an adequate remedy, and the trial court has subject matter jurisdiction to review the interlocutory appeal of the administrative order denying the manufacturer's motion to compel. Xcaliber Int'l Ltd., LLC v. Tenn. Dep't of Revenue, — S.W.3d —, 2018 Tenn. App. LEXIS 528 (Tenn. Ct. App. Sept. 10, 2018).
67-4-2607. Admissibility into evidence of licensed cigarette distributor reports filed with the department of revenue.
Notwithstanding any other law or rule of evidence to the contrary, a copy of a licensed distributor report filed with the commissioner pursuant to § 67-4-2604(a) shall be admitted into evidence for the purpose of proving the total number of cigarettes by brand family, or, in case of roll your own, the equivalent stick count, for which the licensed agent affixed Tennessee tax stamps during the previous calendar month or otherwise paid the tax due for cigarettes, as a non-hearsay document in all judicial and administrative proceedings.
Acts 2011, ch. 264, § 1.
67-4-2608. Inspections, audits and investigations.
-
For the purpose of determining compliance with § 47-31-103 and this part, the department is authorized to conduct inspections, audits, and investigations of:
- Non-participating manufacturers and their importers;
- Licensed agents;
- Tobacco distributors;
- Wholesale dealers and jobbers;
- Retail dealers;
- Persons or entities engaged in delivery sales; and
- Cigarette rolling machine operators.
- The commissioner, or a designee, and the attorney general and reporter, or a designee, are authorized to administer all necessary oaths, issue subpoenas, compel the attendance of witnesses, take depositions within and without the state, and compel the production of pertinent books, payrolls, accounts, papers, records, documents, and testimony relevant to such investigation.
- Every non-participating manufacturer, non-participating manufacturer importer, licensed agent, tobacco distributor, wholesaler dealer and jobber, retailer dealer, person engaged in delivery sales, and cigarette rolling machine operator shall permit the commissioner or the commissioner's authorized agent or representative to inspect at any time all tobacco products, invoices, books, papers and memoranda, including the general books, both operating and proprietary ledgers, and other records, as may be deemed necessary by the commissioner in ascertaining compliance with § 47-31-103 and this part. Every cigarette rolling machine operator shall permit the commissioner or the commissioner's authorized agent to inspect the operator's cigarette rolling machine at any time.
- No non-participating manufacturer, non-participating manufacturer importer, licensed agent, tobacco distributor, wholesaler dealer and jobber, retailer dealer, person engaged in delivery sales, or cigarette rolling machine operator shall be permitted to claim any part of the premises whereon the non-participating manufacturer, non-participating manufacturer importer, licensed agent, tobacco distributor, wholesale dealer and jobber, retailer dealer, person engaged in delivery sales, or cigarette rolling machine operator is engaged in business, to be exempt from inspection, as being the dwelling or home of the non-participating manufacturer, non-participating manufacturer importer, licensed agent, tobacco distributor, wholesale dealer and jobber, retailer dealer, person engaged in delivery sales, or cigarette rolling machine operator. An application for license under part 10 of this chapter shall be an express waiver of such claim.
- All non-participating manufacturers, non-participating manufacturer importers, licensed agents, tobacco distributors, wholesaler dealer and jobbers, retailer dealers, persons engaged in delivery sales, or cigarette rolling machine operators failing to permit the examination of tobacco products, invoices, books and other memoranda, including the general books, both operating and proprietary ledgers, and other records, or interfering with the orderly inspection or examination thereof, or failing to file such reports as may be required by the commissioner, commit a Class A misdemeanor.
Acts 2014, ch. 749, § 9.
Compiler's Notes. Pursuant to Article III, Section 18 of the Constitution of Tennessee, Acts 2014, ch. 749 took effect on April 21, 2014.
Effective Dates. Acts 2014, ch. 749, § 13. April 21, 2014. [See the Compiler's Note.]
Cross-References. Penalty for Class A misdemeanor, § 40-35-111.
67-4-2609. Authority to execute search warrants for purposes of enforcing part.
Any duly authorized representative, agent or employee of the department who has been designated by the commissioner to enforce this part is authorized and empowered to execute search warrants and do all acts incident to the search warrant, in the same manner as search warrants may be levied by sheriffs and other peace officers.
Acts 2014, ch. 749, § 9.
Compiler's Notes. Pursuant to Article III, Section 18 of the Constitution of Tennessee, Acts 2014, ch. 749 took effect on April 21, 2014.
Effective Dates. Acts 2014, ch. 749, § 13. April 21, 2014. [See the Compiler's Note.]
67-4-2610. Persons enforcing part have power and authority of police officers — Concurrent authority of highway patrol — Authority to be armed.
- Inspectors, agents, representatives or officers appointed by the commissioner shall be cloaked with and have the duty, power and authority as police officers to enforce this part.
- The highway patrol shall likewise have concurrent authority to assist in the enforcement of this part.
- Any duly authorized representative or employee of the department who has been specifically designated by the commissioner to enforce this part, is authorized and empowered to go armed, or carry a pistol while on active duty engaged in enforcing this part.
- Nothing in this part shall be construed to limit the authority of the department of revenue or the attorney general's office as otherwise provided by law.
Acts 2014, ch. 749, § 9.
Compiler's Notes. Pursuant to Article III, Section 18 of the Constitution of Tennessee, Acts 2014, ch. 749 took effect on April 21, 2014.
Effective Dates. Acts 2014, ch. 749, § 13. April 21, 2014. [See the Compiler's Note.]
Part 27
Aviation Fuel [Effective on July 1, 2021.]
67-4-2701. Privilege tax on gross charge for aviation fuel — “Gross charge” defined. [Effective on July 1, 2021.]
There is levied a privilege tax of four and one-half percent (4.5%) of the gross charge for the sale, use, consumption, distribution and storage of aviation fuel used in the operation of airplane or aircraft motors. For the purpose of this part, “gross charge” shall include the actual price paid for the aviation fuel without any deductions from the actual price paid, except for federal excise tax.
Acts 2004, ch. 959, § 56; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 132; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 56, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 132, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
Comparative Legislation. Fuel taxes:
Ala. Code § 40-17-1 et seq.
Ark. Code § 26-55-101 et seq.
O.C.G.A. § 48-9-1 et seq.
Ky. Rev. Stat. Ann. § 138.210 et seq.
Miss. Code Ann. § 27-55-501 et seq.
Mo. Rev. Stat. § 142.009 et seq.
N.C. Gen. Stat. § 105-449.37.
Va. Code § 58.1-1719 et seq.
Collateral References. Taxation 371
67-4-2702. Collection — Notice to customer regarding payment of tax — Payment by purchaser — Transactional tax. [Effective on July 1, 2021.]
- The taxes levied in this part shall be collected from the dealer as defined in § 67-6-102, and paid at the time and in the manner provided in this part. The tax imposed by this chapter shall be collected by the dealer from the consumer insofar as it can be done.
- The dealer shall indicate in some definite manner whether the customer is paying this privilege tax. This indication shall be stated on the ticket, invoice, or other record given to the customer.
- The tax levied by this section shall be paid by the purchaser in those cases where the seller of the aviation fuel is not liable to collect the tax.
- The tax levied by this part is a transactional tax in lieu of the sales or use tax and shall be considered a sales or use tax for purposes of reciprocity and giving credit for sales or use tax paid.
Acts 2004, ch. 959, § 56; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 132; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 56, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 132, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2703. Payment of tax. [Effective on July 1, 2021.]
- The taxes levied under this part shall be due and payable monthly, on the first day of each month, and for the purposes of ascertaining the amount of tax payable under this part, it shall be the duty of all dealers on or before the twentieth day of each month to transmit to the commissioner returns showing the gross charges arising from the sale of aviation fuel taxable under this part during the preceding calendar month.
- Each dealer shall also remit the amount of tax due with each return required in subsection (a). If the taxes due with the return are not remitted to the commissioner before the due date of the return, the return shall be considered delinquent and penalty and interest shall attach to the taxes due as provided by law.
- Each dealer of aviation fuel shall include on the return a statement under penalty of perjury, evidencing the total amount in gallons of aviation fuel sold and the dollar amount collected from the sales, and any other information as may be required by the commissioner on forms prescribed by the department.
Acts 2004, ch. 959, § 56; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 132; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 56, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 132, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2704. Administration and enforcement — Rules and regulations — Examination of books and records. [Effective on July 1, 2021.]
- The commissioner of revenue shall administer and enforce the assessment and collection of the taxes levied by this part.
-
- The commissioner is authorized to prescribe all rules and regulations necessary for the administration of this part, and for the collection of the taxes imposed by this part.
- Rules and regulations not inconsistent with this part when promulgated by the commissioner, and approved by the attorney general and reporter, shall have the force and effect of law.
- The commissioner is empowered to examine the books and records of any person subject to this part.
Acts 2004, ch. 959, § 56; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 132; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 56, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 132, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2705. Determination of tax liability — Assessments. [Effective on July 1, 2021.]
- When any person fails to file any form, statement, report or return required to be filed with the commissioner, after being given written notice of the failure to file, the commissioner is authorized to determine the tax liability of the person from whatever source of information may be available to the commissioner or the commissioner's delegates.
- An assessment made by the commissioner pursuant to this authority shall be binding as if made upon the sworn statement, report or return of the person liable for the payment of the tax; and any person against whom the assessment is lawfully made shall thereafter be estopped to dispute the accuracy thereof, except upon filing a true and accurate return, together with supporting evidence that the commissioner may require, indicating precisely the amount of the alleged inaccuracy.
Acts 2004, ch. 959, § 56; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 132; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 56, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 132, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2706. Duty to keep and preserve records. [Effective on July 1, 2021.]
- It is the duty of every person required to pay a tax under this part to keep and preserve records showing the gross amount of tax owed to the state, and the amount of the person's gross charges taxable under this part, and other books of account that may be necessary to determine the amount of the tax under this part, and all those books and records shall be open to inspection at all reasonable hours to the commissioner or any person duly authorized by the commissioner.
- The books and records shall be maintained by the taxpayer for a period of three (3) years from December 31 of the year in which the taxpayer is responsible for paying the tax on the transaction or transactions represented by the record.
Acts 2004, ch. 959, § 56; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 132; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 56, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 132, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2707. Deposits to transportation equity fund. [Effective on July 1, 2021.]
The tax collected under this part shall be deposited to the transportation equity fund.
Acts 2004, ch. 959, § 56; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 132; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 56, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 132, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2708. Exemption for aviation fuel sold for resale — Proof. [Effective on July 1, 2021.]
The tax imposed by this part shall not apply when the aviation fuel is sold for resale. The commissioner is authorized and empowered to require the use of certificates of resale, or other satisfactory proof, as proof that any sale claimed to be a sale for resale is in fact a sale for resale.
Acts 2004, ch. 959, § 56; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 132; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 56, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 132, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2709. Additional exemptions. [Effective on July 1, 2021.]
The exemptions provided for in §§ 67-6-308, 67-6-322, 67-6-325, 67-6-328, and 67-6-384 are applicable to the tax levied under this part. In addition, all sales made to the state or any county or municipality within the state shall be exempt from the tax levied under this part.
Acts 2004, ch. 959, § 56; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 132; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 56, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 132, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2710. Exemption for products sold to or used by commercial air carriers for international flights. [Effective on July 1, 2021.]
There is exempt from the tax imposed by this chapter fuel and petroleum products sold to or used by a commercial air carrier, certified by the carrier to be used for consumption, shipment or storage in the conduct of its business as an air common carrier for a flight destined for or continuing from a location outside the United States.
Acts 2004, ch. 959, § 56; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 132; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 56, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 132, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2711. Liability of commercial air carrier for tax — “Commercial air carrier” defined. [Effective on July 1, 2021.]
- A commercial air carrier may purchase aviation fuel without payment of tax to the dealer by presenting the dealer with a certificate issued pursuant to § 67-6-528, in which case the carrier becomes liable for reporting and payment of the privilege tax pursuant to the terms of this section.
- For purposes of this section, “commercial air carrier” means an entity authorized and certificated by the United States department of transportation or another federal or a foreign authority to engage in the carriage of persons or property by air in interstate or foreign commerce.
Acts 2004, ch. 959, § 56; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 132; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 56, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 132, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
67-4-2712. Taxes collected in another state. [Effective on July 1, 2021.]
-
The tax imposed by this part shall not apply to any aviation fuel:
- Upon which a sales or use tax was previously legally imposed and collected by another state, at a rate equal to or greater than the rate of tax provided for in this part; or
- Upon which another state has previously legally imposed and collected a tax substantially similar to the tax imposed by this part, at a rate equal to or greater than the rate of tax provided for in this part.
- If the taxes described in subsection (a) are at a rate less than the rate imposed by this part, the tax imposed by this part shall be at the difference between the rate of tax imposed by this part and the rate of the tax described in subsection (a).
- Notwithstanding subsections (a) and (b), the tax levied by this part shall apply without reduction for any sales or use tax or tax substantially similar to the tax levied by this part that is paid to another state on the same transaction if that state does not have the first right to tax or has no statutory provisions to reduce its sales or use tax, or tax substantially similar to the tax levied by this part, by any payment of the tax levied by this part. Each taxpayer seeking a reduction of the tax levied by this part due to payment of a sales or use tax or tax substantially similar to the tax levied by this part to another state on the same transaction shall furnish evidence to the satisfaction of the commissioner that the tax statutes of the other state would allow a reduction of its sales or use taxes or tax substantially similar to the tax levied by this part in like factual situations.
- The taxpayer shall bear the burden of maintaining documentary proof that the taxes described in subsection (a) have been paid.
Acts 2004, ch. 959, § 56; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 132; 2009, ch. 530, § 35; 2011, ch. 72, § 1; 2013, ch. 480, § 1; 2015, ch. 273, § 3; 2017, ch. 193, § 1; 2019, ch. 157, § 1.
Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 56, as amended by Acts 2005, ch. 311, § 2, is repealed in its entirety, effective June 28, 2007.
Acts 2007, ch. 602, § 187, as amended by Acts 2009, ch. 530, § 35, and further amended by Acts 2011, ch. 72, § 1, and further amended by Acts 2013, ch. 480, § 1, and further amended by Acts 2015, ch. 273, § 3, and further amended by Acts 2017, ch. 193, § 1, and further amended by Acts 2019, ch. 157, § 1 provided that Acts 2007, ch. 602, § 132, which enacted this section, shall take effect July 1, 2021.
Effective Dates. Acts 2007, ch. 602, § 187. June 28, 2007, July 1, 2009.
Acts 2009, ch. 530, § 133. June 25, 2009.
Acts 2011, ch. 72, § 18. April 13, 2011, July 1, 2013.
Acts 2013, ch. 480, § 3. May 20, 2013, July 1, 2015.
Acts 2015, ch. 273, § 7. April 28, 2015, July 1, 2017.
Acts 2017, ch. 193, § 2. April 19, 2017, July 1, 2019.
Acts 2019, ch. 157, § 2. April 12, 2019, July 1, 2021.
Part 28
Taxation of Unauthorized Substances
67-4-2801. Purpose.
The purpose of this part is to levy a tax on every merchant of unauthorized substances to generate revenue for state and local law enforcement agencies for use by those agencies to investigate, combat, prevent and reduce drug crimes, and for the general fund. Such tax shall be measured by the quantity of unauthorized substances sold, bartered, traded, or distributed to another for consideration or the quantity of unauthorized substances possessed with intent to sell, barter, trade, or distribute to another for consideration. This is not a criminal statute. It is a civil taxing measure contributing to the general revenue fund and a civil remedial measure designed to mitigate against the enormous costs of law enforcement related to drug control for state and local government. Nothing in this part may in any manner provide immunity from criminal prosecution for a person who possesses an illegal substance.
Acts 2004, ch. 803, § 2; 2010, ch. 962, § 1.
Cited: Wicker v. Comm'r, Tenn. Dep't of Revenue, 342 S.W.3d 35, 2010 Tenn. App. LEXIS 397 (Tenn. Ct. App. June 23, 2010).
Collateral References. 25 Am. Jur. 2d Drugs and Controlled Substances § 55 et seq.
71 Am. Jur. 2d State and Local Taxation § 569.
85 C.J.S. Taxation § 1995.
Taxation 371
67-4-2802. Part definitions.
As used in this part, unless the context clearly requires otherwise:
- “Commissioner” means the commissioner of revenue;
- “Controlled substance” means a controlled substance as defined in § 39-17-402, and not included in “low-street-value drugs”;
- “Controlled substance analogue” means a controlled substance analogue as defined in § 39-17-454;
- “Illicit alcoholic beverage” means an alcoholic beverage, as defined in § 57-3-101, not authorized by the Tennessee alcoholic beverage commission. “Illicit alcoholic beverage” includes, but is not limited to, the products known as “bootleg liquor,” “moonshine,” “non-tax-paid liquor,” and “white liquor”;
- “Local law enforcement agency” means a municipal police department, a metropolitan police department, or a sheriff's office;
-
“Low-street-value drug” means any of the following controlled substances:
- An anabolic steroid as defined in § 39-17-410(f);
- A depressant described in § 39-17-412(c);
- A hallucinogenic substance described in § 39-17-406(d);
- A stimulant described in § 39-17-412(f); or
- A controlled substance described in § 39-17-414;
- “Marijuana” means all parts of the plant of the genus cannabis, whether growing or not; the seeds of this plant; the resin extracted from any part of this plant; and every compound, salt, derivative, mixture, or preparation of this plant, its seeds, or its resin. “Marijuana” does not include hemp, as defined in § 43-27-101;
- “Merchant” means a merchant or peddler within the scope of article II, § 28 of the Constitution of Tennessee and includes any person who is actually engaged in the act of selling, bartering, trading, or distributing to another for consideration any unauthorized substances regardless of the quantity under § 67-4-2803(a), and such person shall be subject to the tax imposed under this part. Any person who actually or constructively possesses, at a particular time, any unauthorized substances in a quantity sufficient to create a principal tax liability of at least ten thousand dollars ($10,000) under § 67-4-2803(a) is presumed to be possessing the unauthorized substances for the purpose of sale, barter, trade, or distribution to another for consideration and is presumed to be a merchant within the meaning of this subdivision (8); such presumption may be rebutted only by clear and convincing evidence that the person did not sell, barter, trade, or distribute for consideration such substances or intend to do so; except, however, that if the person sells, barters, trades, or distributes to another for consideration any unauthorized substances in any quantity under § 67-4-2803(a), the presumption shall not apply and the person shall be considered a merchant and subject to the tax imposed by this part regardless of the quantity involved in the transaction;
- “Person” means person as defined in § 39-17-402;
- “State law enforcement agency” means any state agency, force, department, or unit responsible for enforcing criminal laws; and
- “Unauthorized substance” means a controlled substance, a controlled substance analogue, a low-street-value drug or an illicit alcoholic beverage.
Acts 2004, ch. 803, § 3; 2006, ch. 1019, § 50; 2010, ch. 962, § 1; 2011, ch. 103, § 1; 2012, ch. 848, §§ 86, 87; 2014, ch. 916, § 7; 2019, ch. 87, § 11.
Compiler's Notes. For the preamble to the act concerning growing of industrial hemp, please refer to Acts 2014, ch. 916.
Amendments. The 2014 amendment added “. “Marijuana” does not include industrial hemp, as defined in § 43-26-102” to the end of the definition of “Marijuana”.
The 2019 amendment substituted “hemp, as defined in § 43-27-101” for “industrial hemp, as defined in § 43-26-102” in the definition of “marijuana”.
Effective Dates. Acts 2014, ch. 916, § 9. July 1, 2014; provided that for purposes of promulgating rules and regulations, the act shall take effect May 13, 2014.
Acts 2019, ch. 87, § 13. April 4, 2019.
67-4-2803. Excise tax rates — Methods of measuring quantities.
-
A tax, as follows, is levied on and payable by any merchant of unauthorized substances:
- Forty cents (40¢) for each gram, or fraction thereof, of harvested marijuana stems and stalks that have been separated from and are not mixed with any other parts of the marijuana plant;
- Three dollars and fifty cents ($3.50) for each gram, or fraction thereof, of marijuana, other than separated stems and stalks taxed under subdivision (a)(1) or plants with foliation taxed under subdivision (a)(3);
- Three hundred fifty dollars ($350) per plant, whether growing or detached from the soil, on each marijuana plant with foliation;
- Fifty dollars ($50.00) for each gram, or fraction thereof, of cocaine;
- Two hundred dollars ($200) for each gram, or fraction thereof, of any other controlled substance, controlled substance analogue or low-street-value drug that is sold by weight;
- Fifty dollars ($50.00) for each ten (10) dosage units, or fraction thereof, of any low-street-value drug that is not sold by weight;
- Two hundred dollars ($200) for each ten (10) dosage units, or fraction thereof, of any other controlled substance or controlled substance analogue that is not sold by weight;
- Thirty-one dollars and seventy cents ($31.70) for each gallon, or fraction thereof, of illicit alcoholic beverages sold by the drink; or
- Twelve dollars and eighty cents ($12.80) for each gallon, or fraction thereof, of illicit alcoholic beverages not sold by the drink.
- A quantity of marijuana or other unauthorized substance is measured by the weight of the substance whether pure, impure or dilute, or by the number of dosage units in the merchant's possession when the substance is not sold by weight. A quantity of an unauthorized substance is dilute if it consists of a detectable quantity of pure controlled substance and any excipients or fillers.
-
For purposes of this part, a person constructively possesses an unauthorized substance when the person has:
- Knowledge of the unauthorized substance; and
- The ability and intention to exercise control over the unauthorized substance.
Acts 2004, ch. 803, § 4; 2006, ch. 1019, §§ 51, 52; 2010, ch. 962, § 1; 2012, ch. 848, §§ 88, 89.
67-4-2804. Exemptions.
- The tax levied in this part does not apply to an unauthorized substance in the possession of a merchant who is authorized by law to possess the substance. This exemption applies only during the time the merchant's possession of the unauthorized substance is authorized by law.
-
The tax levied in this part does not apply to the following marijuana:
- Harvested mature marijuana stalks when separated from and not mixed with any other parts of the marijuana plant;
- Fiber or any other product of marijuana stalks described in subdivision (b)(1), except resin extracted from the stalks;
- Marijuana seeds that have been sterilized and are incapable of germination; or
- Roots of the marijuana plant.
Acts 2004, ch. 803, § 5; 2010, ch. 962, § 1.
67-4-2805. Issuance of stamps to indicate payment of tax — Report of seizure of unauthorized substances.
- The commissioner shall issue stamps to affix to unauthorized substances to indicate payment of the tax by the merchant required by this part. A merchant shall report the taxes payable under this part at the time and on the form prescribed by the commissioner. The merchant is not required to give the merchant's name, address, social security number, or any other identifying information on the form. Upon payment of the tax, the commissioner shall issue stamps in an amount equal to the amount of the tax paid. Taxes may be paid and stamps may be issued either by mail or in person.
- Every local law enforcement agency and every state law enforcement agency must report to the department of revenue within forty-eight (48) hours after seizing an unauthorized substance from or making an arrest of a merchant under this part when the appropriate stamps as required by this part have not been affixed to the unauthorized substances. The report shall be in the manner prescribed by the commissioner and shall include the time and place of the arrest or seizure, the amount, location, and kind of substance, the identification of any merchant and such merchant's social security number, and any other information prescribed by the commissioner.
Acts 2004, ch. 803, § 6; 2006, ch. 1019, § 53; 2010, ch. 962, § 1.
67-4-2806. Payment of tax.
- The tax imposed by this part pursuant to § 67-4-2803, evidenced by a stamp issued by the commissioner and permanently affixed to unauthorized substances pursuant to subsection (b), is payable by a merchant within forty-eight (48) hours after the merchant acquires actual or constructive possession of unauthorized substance on which a stamp has not been affixed, exclusive of Saturdays, Sundays, and legal holidays of this state, in which case the tax is payable on the next working day. If the tax is not paid within forty-eight (48) hours, the tax shall become delinquent and shall accrue penalty and interest pursuant to chapter 1, part 8 of this title.
- Upon payment of the tax and receipt of the tax stamps, the merchant shall permanently affix the appropriate stamps to the unauthorized substance.
- Once the tax due levied pursuant to this part has been paid, no additional tax is due and payable by a merchant in accordance with this part who may subsequently acquire or handle the unauthorized substance on which an appropriate stamp has been affixed.
- If a merchant is found in possession of a substance taxable under this part on which an appropriate stamp has not been affixed, it shall be presumed the merchant has been in possession of such substance for longer than forty-eight (48) hours, exclusive of Saturdays, Sundays, and legal holidays of this state.
Acts 2004, ch. 803, § 7; 2010, ch. 962, § 1.
67-4-2807. Assessment of tax, penalties and interest — Notice — Collection.
Notwithstanding any other law, an assessment against a merchant under this part on which a stamp has not been affixed as required by this part shall be made as provided in this section. The commissioner shall assess the tax, applicable penalty, and interest based on any information brought to the attention of the commissioner, or the commissioner's duly authorized assistants, that a merchant is liable for unpaid tax pursuant to this part. The tax shall be assessed in the same manner as any other tax assessment, except when this part specifies otherwise. The commissioner shall notify the merchant in writing of the amount of the tax, penalty, and interest due. The notice of assessment shall be either mailed to the merchant at the merchant's last known address or served on the merchant in person. If the merchant does not pay the tax, penalty, and interest upon receipt of the notice of assessment, the commissioner shall collect the assessment, including penalty and interest, pursuant to the procedures set forth in chapter 1, parts 14 and 18, of this title. The merchant may seek review of the assessment as provided in chapter 1, part 18, of this title. Section 67-1-1802 is applicable to the tax levied by this part.
Acts 2004, ch. 803, § 8; 2007, ch. 602, § 28; 2010, ch. 962, § 1.
67-4-2808. Confidentiality — Immunity — Statistics.
- Notwithstanding any other law, information obtained as a result of a merchant's efforts to comply with this part is confidential and, unless obtained independently from any acts undertaken by a merchant to comply with the tax levied by this part, such acts, including the taxpayer's maintenance of a suit to determine liability under the tax levied by this part, may not be disclosed by the commissioner or used in a criminal prosecution other than a prosecution for a violation of this part.
- Chapter 1, part 17, of this title, including the criminal penalties specified therein, shall apply to the tax levied under this part, except that no information shall be disclosed pursuant to chapter 1, part 17, of this title unless that information was obtained independently from any acts undertaken by a merchant to comply with the tax levied by this part, such acts including the taxpayer's maintenance of a suit to determine liability under the tax levied by this part.
- This section does not prohibit the commissioner from publishing statistics that do not disclose the identity of merchants or the contents of particular returns or reports.
Acts 2004, ch. 803, § 9; 2007, ch. 602, § 29; 2010, ch. 962, § 1.
Cross-References. Confidentiality of public records, § 10-7-504.
67-4-2809. Unauthorized substances tax account — Remittance of tax once unencumbered — Application of proceeds of tax.
- The commissioner shall credit the proceeds of the tax levied by this part to a special nonreverting account to be called the state unauthorized substances tax account, until the tax proceeds are unencumbered. The commissioner shall remit the unencumbered tax proceeds as provided in this section on a quarterly or more frequent basis.
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Tax proceeds are unencumbered when:
- The tax has been paid and the collection process completed; and
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- The taxpayer has no current right to file a refund claim, and the paid tax is not the subject of any pending lawsuit for the recovery of that tax; or
- The time for the taxpayer to file suit pursuant to § 67-1-1802(c) has expired.
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- The commissioner shall first apply the unencumbered tax proceeds to the costs of storing and disposing of the assets seized in payment of the assessment under this part and then to the costs incurred by the commissioner due to implementation and enforcement of this part, which costs shall be added to and become part of the assessment.
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- From the remaining proceeds, the commissioner shall remit seventy-five percent (75%) of the unencumbered tax proceeds that were collected by assessment to the state or local law enforcement agency that conducted the investigation of a merchant that led to the assessment. Such proceeds are to be used by the agency solely for the purpose of investigating, combating, preventing, and reducing drug crimes.
- If more than one (1) state or local law enforcement agency conducted the investigation, then the commissioner shall determine the equitable share for each agency based on the contribution each agency made to the investigation.
- The commissioner's determination of the equitable share for each agency shall be final and shall not be subject to review in an administrative or judicial proceeding.
- The commissioner shall credit the remaining unencumbered tax proceeds to the general fund.
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Tax proceeds are unencumbered when:
- Notwithstanding any other provision of this section, in the event the tax levied by this part is voluntarily paid to the department of revenue, and not as a result of an investigation or arrest by a state or local law enforcement agency, such voluntarily paid tax shall be considered unencumbered upon payment, and the commissioner shall credit the entire tax proceeds to the general fund.
Acts 2004, ch. 803, § 10; 2005, ch. 499, § 18; 2010, ch. 962, § 1.
67-4-2810. Construction.
This part shall not be construed to confer any immunity from criminal prosecution or conviction for a violation of title 39, chapter 17, part 4, upon any person who voluntarily pays the tax imposed by this part or who otherwise complies with this part.
Acts 2004, ch. 803, § 11; 2010, ch. 962, § 1.
67-4-2811. Rules and regulations.
The commissioner shall have the authority to promulgate rules in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, to implement, administer and enforce this part.
Acts 2004, ch. 803, § 12; 2010, ch. 962, § 1.
Part 29
County Powers Relief Act
67-4-2901. Short title.
This part shall be known and may be cited as the “County Powers Relief Act.”
Acts 2006, ch. 953, § 1.
Attorney General Opinions. Dickson County adequate facilities tax, OAG 07-040 (4/2/07).
Collateral References. Taxation 371
67-4-2902. Purpose of part.
The purpose of this part is to authorize counties to levy a privilege tax on persons and entities engaged in the residential development of property, in order to provide a county with an additional source of funding to defray the cost of providing school facilities to meet the needs of the citizens of the county as a result of population growth.
Acts 2006, ch. 953, § 1.
67-4-2903. Part definitions.
As used in this part, unless the context otherwise requires:
- “Building” means any structure built for the support, shelter, or enclosure of persons, chattels, or movable property of any kind, including a mobile home. “Building” does not mean any structures used primarily for agricultural purposes;
- “Building permit” means a permit for development issued in the county, whether by a county, metropolitan or municipal government;
- “Capital improvement program” means a proposed schedule of future capital projects, listed in order of construction priority, together with cost estimates and the anticipated means of financing each project requiring the expenditure of public funds, over and above the annual local government operating expenses, for the purchase, construction, or replacement of physical assets;
- “County” means a county or metropolitan government;
- “County school facilities privilege tax” means a tax on new residential development as defined in this part;
- “Development” means the construction, building, erection, or improvement to land by providing a new building or structure that provides floor area for residential use;
- “Dwelling unit” means a room, or rooms connected together, constituting a separate, independent housekeeping establishment for owner occupancy, rental or lease on a daily, weekly, monthly or longer basis, physically separated from any other room, rooms or dwelling units that may be in the same building, and containing independent cooking and sleeping facilities;
- “Floor area” for residential development means the total of the gross horizontal area of all floors, including basements, cellars, or attics, that is heated or air-conditioned living space;
- “Governing body” means the county legislative body or metropolitan council;
- “Person” means any individual, firm, partnership, limited liability company, joint-venture, association, corporation, estate, trust, business trust, receiver, syndicate, or other group or combination acting as a unit;
- “Place of worship” means that portion of a building, owned by a religious institution that has property tax exempt status, that is used for worship services and related functions; provided, however, that a place of worship does not include buildings and portions of buildings that are used for purposes other than worship and related functions or that are intended to be leased, rented or used by persons who do not have a tax exempt status;
- “Public building” means a building owned by the state of Tennessee or any agency or political subdivision of the state of Tennessee, including, but not limited to, counties, metropolitan governments, municipalities, school districts or special districts, or the federal government or any agency of the federal government; and
- “Residential” means the development of any property for a dwelling unit or units.
Acts 2006, ch. 953, § 1.
67-4-2904. Residential development declared to be a locally taxable privilege.
Engaging in the act of residential development within a county, except as excluded by this part, is declared to be a privilege upon which a county, by resolution or ordinance of its governing body, may levy a tax, subject to the conditions and limitations contained in this part. The resolution or ordinance shall be adopted by a two-thirds (2/3) vote of the entire membership of the county legislative body at two (2) consecutive, regularly scheduled meetings.
Acts 2006, ch. 953, § 1.
67-4-2905. Adoption of administrative guidelines, procedures, regulations and forms.
After levying the tax, the county governing body shall, by resolution or ordinance adopted by majority vote, adopt administrative guidelines, procedures, regulations and forms necessary to properly implement, administer and enforce this part.
Acts 2006, ch. 953, § 1.
67-4-2906. Application.
This part shall not apply to development of:
- Public buildings;
- Places of worship;
- Barns or other outbuildings used for agricultural purposes;
- Replacement buildings or structures for previously existing buildings and structures destroyed by fire or other disaster;
- A building or structure owned by a nonprofit corporation that is a qualified 501(c)(3) corporation under the federal Internal Revenue Code, codified in 26 U.S.C. § 501(c)(3); or
- A building or structure located in any census tract of the county that has been designated by the federal government as being eligible for federal incentives because of blight, economic distress or urban renewal, upon a proper finding by the county legislative body that the exemption is necessary to stimulate growth in these economically challenged areas.
Acts 2006, ch. 953, § 1.
67-4-2907. Criteria for levying tax.
A governing body is prohibited from levying a tax pursuant to this part, unless the county meets one (1) or more of the following criteria:
- The county experienced a growth rate of twenty percent (20%) or more in total population from the 1990 federal census to the 2000 federal census, or the county experiences growth of twenty percent (20%) or more between any subsequent federal decennial censuses; or
- The county experienced a nine percent (9%) or more increase in population over the period from the year 2000 to 2004, or over a subsequent four-year period, according to United States census bureau population estimates.
Acts 2006, ch. 953, § 1.
Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
67-4-2908. Tax based on the floor area of residential development.
For the exercise of the privilege of development, a county may levy a tax based on the floor area of residential development. A county initially levying a tax under the authority granted by this part may levy the tax at a rate not to exceed one dollar ($1.00) per square foot on residential property. Whenever a county has levied a tax pursuant to this part or increased the rate of the tax, it may not increase the rate of the tax or levy an additional tax on the privilege of development for a period of four (4) years from the effective date of the tax or rate increase. After four (4) years from the date the county initially levies the tax or from the date of the last increase in the rate of the tax, the county legislative body may increase the rate of the tax by a percentage not to exceed ten percent (10%).
Acts 2006, ch. 953, § 1.
67-4-2909. Adoption of capital improvement program required.
A governing body shall not levy a tax pursuant to this part, unless it has adopted a capital improvement program. The adopted capital improvement program may be amended by the governing body.
Acts 2006, ch. 953, § 1.
67-4-2910. Collection of tax.
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Any tax levied pursuant to this part shall be collected in the following manner:
- At the time of application for a building permit for residential development, the municipal or county official issuing the permit shall compute the estimated tax liability for the county school facilities privilege tax, based upon the proposed square footage of the facility to be built and the current rate of the county's school facilities privilege tax. As a condition of receiving the permit, the applicant shall sign a form indicating that the applicant recognizes the liability for the tax. The official shall keep one (1) copy of the form for the official's records and shall provide a copy to the applicant. If the permit is issued by a municipal building official, the official shall also forward a copy of the form within thirty (30) days of the issuance of the building permit to the county official or employee who has been designated by the county legislative body to collect the tax. As an alternative, the county and any municipality within the county may provide by interlocal agreement for the municipal building official to be designated as a collector of the tax and provide for a commission to be paid to the municipality for such services.
- The tax shall not be due until the earlier of one (1) year from the date of issuance of the building permit or thirty (30) days after the first transfer of title to the property being developed after the building permit is issued. If, after one (1) year from issuance of the building permit, the building or structure is not complete or title has not been transferred, the permit holder may, in lieu of paying the tax, request an extension for one (1) year. The permit holder may request a maximum of two (2) extensions. Extensions shall not be denied, if the permit holder makes a showing to the official responsible for collecting the tax that the building or structure is not complete.
- Once it becomes due, the tax shall be paid to the official or officials designated by the county governing body to collect the tax. At the time of payment, the official shall review the tax liability to determine whether the square footage of the completed building or structure corresponds to the initial estimated square footage in the building permit. The tax shall be computed using the actual square footage of the completed building or structure, but the rate of the tax shall be based upon the rate applicable at the time the permit was issued.
- The revenue from the tax shall be paid over to the county trustee within thirty (30) days for deposit, in accordance with § 67-4-2911.
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- If the tax is not paid by a permit holder within ninety (90) days of the due date, the official responsible for collection of the tax shall report this delinquency to the county's delinquent tax attorney. The delinquent tax attorney shall bring an action against the permit holder for the full amount of the tax, plus statutory interest and a penalty of fifty percent (50%) of the amount of tax owed. The compensation of the delinquent tax attorney for such services shall be determined by agreement between the county trustee and the delinquent tax attorney.
- No permit holder who owes delinquent school facilities taxes shall be eligible to receive a building permit for any other project in the county until such time as the delinquency, plus any penalties and interest, are paid in full.
Acts 2006, ch. 953, § 1.
67-4-2911. Remittance of taxes collected.
The taxes collected pursuant to this part shall be remitted by the collector to the county or metropolitan government trustee, who shall place the tax proceeds in the fund or funds designated by the governing body, but the tax proceeds shall be used exclusively for the purpose of funding capital expenditures for education, including the retirement of bonded indebtedness, the need for which is reasonably related to population growth.
Acts 2006, ch. 953, § 1.
67-4-2912. Administrative procedure for review of tax decisions — Judicial review.
Any county or metropolitan government levying a tax pursuant to this part shall provide, by resolution or ordinance, a procedure whereby any person aggrieved by the decision of any responsible official in administering this part may obtain review of the official's decision administratively. The result of the administrative decision shall be subject to judicial review in accordance with law.
Acts 2006, ch. 953, § 1.
67-4-2913. Preemption.
After June 20, 2006, no county shall be authorized to enact an impact fee on development or a local real estate transfer tax by private or public act. In addition, this part shall be the exclusive authority for local governments to adopt any new or additional adequate facilities taxes on development. However, this part shall not be construed to prevent a municipality or county from exercising any authority to levy or collect similar development taxes or impact fees granted by a private act that was in effect prior to June 20, 2006, or from revising the dedicated use and purpose of a tax on new development from public facilities to public school facilities. A county levying a development tax or impact fee by private act on June 20, 2006, shall be prohibited from using the authority provided in this part so long as the private act is in effect.
Acts 2006, ch. 953, § 1.
Attorney General Opinions. A county that imposed a development tax pursuant to a pre-existing private act may continue to levy that tax for so long as that act remains in effect; the County Powers Relief Act, however, precludes a county from relying on a subsequently-enacted private act to impose or increase a development tax, OAG 07-006 (1/17/07).
County's authority to levy or increase an adequate facilities tax pursuant to a private act, OAG 07-056 (4/23/07).
The general assembly may expand T.C.A. § 67-4-2913’s exception for counties with pre-existing private acts to allow for the amendment of these private acts to authorize the imposition of a new tax or an increase in the existing tax rate, OAG 07-057 (4/25/07).
The restrictions on impact fees and adequate facilities taxes in T.C.A.§ 67-4-2913 do not prohibit a city from enacting an ordinance that would require developers of real property either to construct sidewalks or pay a fee in lieu of constructing the sidewalks, OAG 07-161 (12/11/07).
Part 30
Local Tourism Development Zone Business Tax Act
67-4-3001. Short title — Legislative intent.
- This part shall be known and may be cited as the “Local Tourism Development Zone Business Tax Act.”
- The taxes imposed by this part shall be in addition to all other privilege taxes.
- It is the legislative intent, within the framework of this part, to recognize that there are limitations on state taxation imposed by the constitutions of the United States and of this state and not to impose the tax where prohibited by the constitutions; but it is intended to impose that tax to the extent permitted under the constitutions and the words of imposition used in this part.
Acts 2007, 500, § 1.
Collateral References. Taxation 371
67-4-3002. Part definitions.
As used in this part, unless the context otherwise requires:
- “Business” includes any activity engaged in by any person, or caused to be engaged in by the person, with the object of gain, benefit, or advantage, either direct or indirect. “Business” does not include occasional and isolated sales or transactions by a person not routinely engaged in business;
- “Cost,” as applied to any public use facility, has the same meaning as set forth in § 7-88-103;
- “Gross sales” means the sum total of all sales under this part as defined in this section, without any deduction whatsoever of any kind or character, except as provided in this part;
- “Municipality” means any incorporated city or county located in this state;
- “Person” includes any individual, firm, partnership, joint venture, association, corporation, estate, trust, business trust, receiver, syndicate, or other group or combination acting as a unit;
- “Public authority” means any agency, authority or instrumentality described by § 7-88-103;
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“Qualified public use facility” or “public use facility” means:
- A building, complex, center, or facility described by § 7-88-103;
- A full-service hotel with not less than two hundred fifty (250) rooms and related retail, commercial, and parking space that is located in a tourism development zone; or
- A mixed-use development, including a full-service hotel with not less than one hundred fifty (150) rooms and including any retail, office, apartment, condominium, or other commercial or residential uses, that is located in a tourism development zone;
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- “Sale” means any transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property for a consideration, and includes the fabrication of tangible personal property for consumers who furnish, either directly or indirectly, the materials used in fabrication work, and the furnishing, repairing or servicing for a consideration of any tangible personal property consumed on the premises of the person furnishing, preparing or serving the tangible personal property;
- “Sale” includes a transaction whereby the possession of property is transferred but the seller retains title as security for the payment of the price;
- “Sale” includes the furnishing of any of the things or services taxable under this part; and
- “Sale” includes sales of tickets, fees or other charges made for admission to amusement or theme parks or other tourist attractions;
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- “Sales price” means the total amount for which tangible personal property or services rendered is sold, including any services that are a part of the sale, valued in money, whether paid in money or otherwise, and includes any amount for which credit is given to the purchaser by the seller, without any deduction from the price on account of the cost of the property sold, the cost of materials used, labor or service cost, losses, or any other expense whatsoever; provided, that “sales price” does not include any additional consideration given by the purchaser for the privilege of making deferred payments, regardless of whether the additional consideration is known as interest, time price differential on conditional sales contracts, carrying charges or any other name by which it is known, and does not include any additional consideration received by a motor vehicle dealer from a lender for the sale or assignment to the lender of a chattel lease or conditional sales contract; provided, further, that the “sales price” shall be reduced by the deductions set forth in § 67-4-711;
- “Sales price” for services rendered by a person for an affiliated business entity does not include any amount that is accounted for as a reasonable allocation of cost incurred in providing the service; and
- “Sales price” does not include any advertising cost paid by a seller to an auctioneer for the purpose of advertising an auction, when no portion of the payment is retained as profit by the auctioneer, and when the payment has been placed in an escrow or a trust account by the auctioneers on behalf of the seller;
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- “Services” means and includes every activity, function or work engaged in by a person for profit or monetary gain, except as otherwise provided in this part. Services for profit or monetary gain does not include services rendered by a person for an affiliated business entity; provided, that the services are accounted for as allocations of cost incurred in providing the service without any markup whatsoever; and
- “Services” does not include sales of tangible personal property;
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- “Tangible personal property” means and includes personal property that may be seen, weighed, measured, felt or touched, or is in any other manner perceptible to the senses; and
- “Tangible personal property” does not include stocks, bonds, notes, insurance or other obligations or securities, nor does it include any materials, substances or other items of any nature inserted into or affixed to the human body by duly licensed physicians or dentists or otherwise dispensed by them in the treatment of patients; and
- “Tourism development zone” means an area described by § 7-88-103.
Acts 2007, 500, § 1; 2020, ch. 752, § 1.
Amendments. The 2020 amendment inserted “or “public use facility” means:” in (7); designated the definition of “Qualified public use facility” as (7)(A); and added (7)(B) and (7)(C).
Effective Dates. Acts 2020, ch. 752, § 4. June 22, 2020.
67-4-3003. Privilege tax on sales in business activity in a qualified public use facility and in tourism development zones — Ordinance authorizing privilege tax — Petition by voters calling for election — Election — Duration of tax.
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- The making of sales by engaging in any business or business activity, except for those businesses exempt under § 67-4-712, in a qualified public use facility or in a portion of a qualified public use facility that is designated by an ordinance of the municipality is declared to be a privilege upon which the municipality in which the business or business activity is carried on may levy a privilege tax in an amount not to exceed five percent (5%) of the sales price.
- The municipality may also by ordinance levy the privilege tax imposed by this part on businesses in the tourism development zone that are outside the qualified public use facility, that are owned or operated either wholly, partly, or jointly by the owner or operator of the qualified public use facility. Only the municipality that obtained certification of the tourism development zone in which the qualified public use facility is located is authorized to levy the tax pursuant to this part.
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- No ordinance authorizing the privilege tax in subsection (a) shall take effect unless it is approved by a two-thirds (2/3) vote of the municipal legislative body at two (2) consecutive, regularly scheduled meetings, or unless it is approved by a majority of the number of qualified voters of the municipality voting in an election on the question of whether or not the tax should be levied.
- If there is a petition of ten percent (10%) of the qualified voters who voted in the municipality in the last gubernatorial election that is filed with the county election commission within thirty (30) days of final approval of the ordinance by the municipal legislative body, then the county election commission shall call an election on the question of whether or not the tax should be levied in accordance with this section.
- The municipal legislative body shall direct the county election commission to call the election, to be held in a regular election or in a special election for the purpose of approving or rejecting the tax levy. The municipality shall pay the cost of any special election.
- The ballots used in the election shall have printed on them the substance of the ordinance and the voters shall vote for or against its approval.
- The votes cast on the question shall be canvassed and the results proclaimed by the county election commission and certified by it to the municipal legislative body.
- The qualifications of voters voting on the question shall be the same as those required for participation in general elections.
- All laws applicable to general elections shall apply to the determination of the approval or rejection of this tax levy.
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Tax levied pursuant to this part shall continue until the earlier of:
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- If such qualified public use facility is described in § 67-4-3002(7)(A), the date on which the cumulative amount, apportioned and distributed to the municipality under §§ 7-88-106(a) and 67-4-3005, equals either the cost of the qualified public use facility, plus any interest on indebtedness of the municipality or public authority related to the cost, or any lesser amount of the cost of the qualified public use facility and interest that may be established in authorizing the levy of the tax; or
- If such qualified public use facility is described in § 67-4-3002(7)(B) or (7)(C), the date on which the cumulative amount, apportioned and distributed to the municipality under § 67-4-3005, equals either the cost of the qualified public use facility, plus any interest on indebtedness of the municipality or public authority related to the cost, or any lesser amount of the cost of the qualified public use facility and interest that may be established in authorizing the levy of the tax;
- The date on which the qualified public use facility ceases to be a qualified public use facility; or
- Thirty (30) years from the date it is reasonably anticipated that the facility will commence operations as a public use facility, at which time the authority of the municipality to levy the tax shall expire and be terminated.
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Tax levied pursuant to this part for a qualified public use facility approved pursuant to § 7-88-106(a)(2) shall continue until the earlier of:
- Thirty (30) years from the date it is reasonably anticipated that the facility will commence operations as a public use facility; or
- The date the cumulative amount apportioned and distributed to the municipality under § 67-4-3005 with respect to such public use facility equals the indebtedness of the municipality or public authority, plus interest thereon, related to the cost of the public use facility payable from such amount.
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Tax levied pursuant to this part shall continue until the earlier of:
Acts 2007, 500, § 1; 2018, ch. 1058, § 2; 2020, ch. 752, § 2.
Amendments. The 2018 amendment added (c)(2).
The 2020 amendment redesignated former (c)(1)(A) as present (c)(1)(A)(i), inserted “If such qualified public use facility is described in § 67-4-3002(7)(A),” in the beginning of the subdivision and “or” at the end of the subdivision; and added (c)(1)(A)(ii).
Effective Dates. Acts 2018, ch. 1058. § 3. May 21, 2018.
Acts 2020, ch. 752, § 4. June 22, 2020.
67-4-3004. Tourism development zone business tax.
The tourism development zone business tax is a privilege tax imposed upon persons engaged in various businesses and activities in a portion of a tourism development zone as designated pursuant to § 67-4-3003(a). A dealer may invoice the tax as a separate item and pass it on to the dealer's customers. If the dealer passes the tax on to the customer, the tax shall be added to the gross receipts and be used in determining the tax base for both the business tax and the sales and use tax.
Acts 2007, 500, § 1.
67-4-3005. Revenues — The qualified public use facility development fund — Deficit and surplus revenue.
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The portion of the revenue received by the municipality from the tax, as is designated by the resolution of the municipality enacting the levy of tax set forth in this part, shall be deposited into a fund entitled the “qualified public use facility development fund,” which shall be used:
- As set forth in § 7-88-106, if such qualified public use facility is described in § 67-4-3002(7)(A), for the purpose of paying the cost of the qualified public use facility and the costs of bonded indebtedness, principal and interest, including expenses of the bond sale or sales, incurred by the municipality or public authority in financing, acquiring, constructing, leasing, equipping, and renovating a qualified public use facility. The remaining revenue shall be deposited in the general fund of the municipality; or
- As set forth in this section, if such qualified public use facility is described in § 67-4-3002(7)(B) or (7)(C), for the purpose of paying the cost of the qualified public use facility and the costs of bonded indebtedness, principal and interest, including expenses of the bond sale or sales, incurred by the municipality or public authority in financing, acquiring, constructing, leasing, equipping, and renovating a qualified public use facility. The remaining revenue shall be deposited in the general fund of the municipality.
- If, at the close of any fiscal year, the revenue from the tax is not sufficient to meet the total debt service of the municipality or public authority for bonded indebtedness incurred for the qualified public use facility, the balance, if any, of the debt service not paid by revenue from the tax at the end of the fiscal year shall be accumulated in a separate deficit account that shall bear simple interest at the same rate as the bonds issued by each governmental entity for construction of the qualified public use facilities. If the municipality or public authority has not incurred bonded indebtedness for the qualified public use facility and at the close of any fiscal year, the revenue from the tax is not sufficient to meet the total cost of the qualified public use facility, then the balance, if any, of the cost not paid by revenue from the tax at the end of the fiscal year shall be accumulated in a separate deficit account.
- If the revenue from the tax in any fiscal year exceeds the total of the debt service requirements or the total cost of the qualified public use facility for that year, the surplus revenue thus accruing shall be retained by the municipality as a sinking fund for any future debt service requirements or future cost of the qualified public use facility or, alternatively, the surplus may be applied to the reduction of the deficit accounts of the municipality.
Acts 2007, 500, § 1; 2020, ch. 752, § 3.
Amendments. The 2020 amendment inserted a semicolon at the end of (a) and designated (a)(1); inserted “, if such qualified public use facility is described in § 67-4-3002(7)(A),” in (a)(1); and added (a)(2).
Effective Dates. Acts 2020, ch. 752, § 4. June 22, 2020.
67-4-3006. Registration with tax collector.
Every person taxable under this part shall, prior to engaging in business, as defined in § 67-4-3002, register with the county clerk, in the case of taxes owed to the county, and with the city official designated as the collector of tax by city charter or ordinance in the case of taxes owed to a municipality.
Acts 2007, 500, § 1.
67-4-3007. Filing of monthly returns and remittances — Delinquency — Interest and penalties — Rules and regulations.
- Monthly returns and remittances shall be filed by each business with the county clerk not later than the twentieth day of each month for the preceding month, on forms prescribed, prepared and furnished by the county.
- In all cases, the payment of the tax shall accompany the return and failure to so remit the tax shall cause the tax to become delinquent.
- The county clerk in administering and enforcing the surcharge or tax shall additionally have those powers and duties with respect to collecting taxes as provided in this title, including, but not limited to, the collection of interest and penalties on businesses.
- The municipal legislative body is authorized to adopt reasonable rules and regulations for the implementation of this part, including the form for such returns.
Acts 2007, 500, § 1.
67-4-3008. Taxpayer license.
- Upon receipt of the minimum tax prescribed by this part, together with penalties and interest prescribed in this part if the payment is delinquent, it shall be the duty of each collector to issue a license to the taxpayer.
- It shall be the duty of each taxpayer to exhibit the license received pursuant to subsection (a).
Acts 2007, 500, § 1.
67-4-3009. Applicability.
This part shall not apply to any county having a metropolitan form of government with a population of more than five hundred thousand (500,000), according to the 2000 federal census or any subsequent federal census.
Acts 2007, 500, § 1.
Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Part 31
In Lieu of Tax Payments
67-4-3101. Obligation to make in lieu of tax payments on certain wholesale electric current.
- It is the intention of this part to establish an obligation to make in lieu of tax payments to help keep Tennessee and its local governments whole from any diminution in the in lieu of tax payments paid by the Tennessee Valley authority on account of the provision of wholesale electric current to municipal utilities, electric cooperatives and other similar entities for resale within the state by sources other than the Tennessee Valley authority. Accordingly, each person, including each governmental and cooperatively organized person, engaged in the business of making covered wholesale sales of electric current to a municipality, electric cooperative or other similar customer shall, for the privilege of doing such business, remit to the state for state purposes a payment in lieu of tax in an amount to be calculated in accordance with subsection (b).
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For purposes of this section:
- “Covered wholesale sales of electric current” means wholesale sales of electric current for resale within any area where the Tennessee Valley authority is the primary source of wholesale power as of June 11, 2010;
- “Gross receipts” means the total gross receipts derived from all covered wholesale sales of electric current; and
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“Tennessee apportioned gross receipts” means gross receipts multiplied by a ratio obtained by taking the arithmetical average of the following two ratios:
- The percentage by which the gross receipts derived from covered wholesale sales of electric current occurring within Tennessee bears to the total gross receipts derived from all covered wholesale sales of electric current; and
- The percentage by which the book value of the power property held in Tennessee by the seller of covered wholesale sales of electric current bears to the book value of all power property held by the seller of covered wholesale sales of electric current. The book value of power property shall include that portion of the investment allocated or estimated to be allocable to power.
- The payment in lieu of tax required pursuant to subsection (a) shall equal five percent (5%) of the Tennessee apportioned gross receipts of the person making covered wholesale sales of electric current.
-
For purposes of this section:
- There shall be credited upon the in lieu of tax payments required by this section any taxes paid pursuant to part 3, 4, 20, or 21 of this chapter by or on behalf of the person engaged in a covered wholesale sale of electric current on account of the ownership or operation of electric generation facilities and other property used to generate, transmit or distribute such electric current. There shall be further credited upon the in lieu of tax payments required by this section any ad valorem taxes or payments in lieu of ad valorem taxes paid to the state of Tennessee or local governments within the state by or on behalf of the person engaged in a covered wholesale sale of electric current on account of the ownership or operation of electric generation facilities and other property used to generate, transmit or distribute such electric current.
- If the person making covered wholesale sales of electric current does not make the required in lieu of tax payment calculated in accordance with subsections (b) and (c), then each municipality, electric cooperative or other similar customer engaged in making use of covered wholesale sales of electric current shall be responsible for making such payment in lieu of taxes applicable to the customer's use of such power and energy. Only one (1) in lieu of tax payment shall be required for a single sale and use of a covered wholesale sale of electric current.
- This section and the required in lieu of tax payments do not apply to any wholesale sale of electric current to or by the Tennessee Valley authority or to any power property held by or attributed to the Tennessee Valley authority.
- Any in lieu of tax payment collected pursuant to this section shall be added to the amounts received by the state from payments in lieu of taxes from the Tennessee Valley authority and the combined amount shall then be distributed according to § 67-9-101.
- Except as otherwise specifically provided in this section, the in lieu of tax obligations required by this section shall be administered and collected in the same manner as privilege taxes are administered and collected under part 3 of this chapter.
Acts 2010, ch. 1035, § 3.
Collateral References. Taxation 371
Part 32
Local Tax Surcharge
67-4-3201. Part definitions.
As used in this part:
- “Implementing agency” means any public transit agency, regional transportation authority created under title 64, chapter 8, or other local government department, agency, or designated entity that is responsible for planning or implementing a transit improvement program;
-
“Local government” means:
- Any county in this state, including any county having a metropolitan or consolidated form of government, having a population in excess of one hundred twelve thousand (112,000), according to the 2010 federal census or any subsequent federal census; or
- Any city in this state having a population in excess of one hundred sixty-five thousand (165,000), according to the 2010 federal census or any subsequent federal census;
- “Public transit system” means any mass transit system intended for shared passenger transport services to the general public, together with any building, structure, appurtenance, utility, transport support facility, transport vehicles, service vehicles, parking facility, or any other facility, structure, vehicle, or property needed to operate the transportation facility or provide connectivity for the transportation facility to any other non-mass transit system transportation infrastructure, including, but not limited to, interstates, highways, roads, streets, alleys, and sidewalks;
- “Surcharge” means a tax, or combination of taxes, levied by a local government pursuant to this part; and
- “Transit improvement program” means a program consisting of specified public transit system projects and services.
Acts 2017, ch. 181, § 27.
Compiler's Notes. Acts 2017, ch. 181, § 1 provided that the act, which enacted this part, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Effective Dates. Acts 2017, ch. 181, § 38. April 26, 2017.
67-4-3202. Local option transit surcharge.
-
A local government is authorized to levy a surcharge, for use in accordance with § 67-4-3205, on the same privileges subject to the taxes listed in subdivisions (a)(1)-(6), if the underlying local tax on such privileges is being collected at the time a transit improvement program is adopted in accordance with § 67-4-3206. Any surcharge shall be a separate charge in addition to the local taxes provided in subdivisions (a)(1)-(6). Notwithstanding, and in addition to, any other law authorizing a local government to impose a local privilege tax, and subject to the maximum rates or amounts provided in subdivision (g)(2), any surcharge levied pursuant to this part shall be limited to the following local privilege taxes:
- Local option sales and use tax, pursuant to chapter 6, part 7 of this title;
- Business tax, pursuant to the Business Tax Act, compiled in part 7 of this chapter;
- Motor vehicle tax, pursuant to title 5, chapter 8, part 1 or an applicable private act;
- Local rental car tax, pursuant to part 19 of this chapter;
- Tourist accommodation tax, pursuant to title 7, chapter 4, or hotel occupancy tax pursuant to part 14 of this chapter or an applicable private act; and
- Residential development tax, pursuant to the County Powers Relief Act, compiled in part 29 of this chapter.
-
No surcharge under this part shall become effective unless approved by a majority of the number of registered voters of the local government voting in an election on the question of whether the surcharge shall be levied, pursuant to the procedures in this subsection (b). Upon the adoption of a transit improvement program in accordance with § 67-4-3206, and receipt of a certified copy of the adopted ordinance or resolution regarding the program, the county election commission is directed to call an election to be held in accordance with § 2-3-204 to approve or reject the levy of the surcharge. An election to approve or reject the levy of the surcharge may be considered a general election for purposes of § 2-3-204(c), which shall be conducted as follows:
- The ballots used in the election shall have printed on them the surcharge and the brief summary of the transit improvement program from the ordinance or resolution adopted pursuant to § 67-4-3206, providing options to vote “FOR” or “AGAINST” the ordinance or resolution levying the surcharge, and the voters shall vote for or against approval of the ordinance or resolution;
- The votes cast shall be canvassed and the results proclaimed and certified by the county election commission to the local government's legislative body;
- The qualifications of voters shall be the same as those required for participation in general elections;
- All laws applicable to general elections shall apply to the determination of the approval or rejection of the surcharge; and
- If the majority of those voting in the election vote for the ordinance or resolution levying the surcharge, the ordinance or resolution shall be deemed to be approved on the date that the county election commission makes its official canvass of the election returns.
- No surcharge shall be collected until the first day of a month occurring at least sixty (60) days after the date of approval of the levy of the surcharge; provided, however, that such surcharge shall apply only to tax periods beginning on or after October 1, 2017. The local government shall furnish a certified copy of the adopted ordinance or resolution to the department of revenue within ten (10) days of the approval of the levy of the surcharge.
- Any surcharge levied pursuant to this part shall remain in effect until the occurrence of a specific date or condition of termination in the ordinance or resolution adopting the surcharge, or until the surcharge is repealed in the same manner as adopted under this part.
- If an election held pursuant to this part results in the rejection of the levy of the surcharge, a subsequent election regarding a surcharge authorized by this part may not be held for at least twelve (12) months from the date of the election.
- If a surcharge authorized by this part is ratified by a city that meets the definition of local government in § 67-4-3201 prior to adoption or ratification of a surcharge by the county in which the city or town is located, the effectiveness of the city's surcharge shall be suspended for a period of forty (40) days beyond the date on which it would otherwise be effective. If during this forty-day period, the county legislative body adopts a resolution in accordance with § 67-4-3206, the effectiveness of the surcharge shall be further suspended until the referendum is held in accordance with this section. If the county surcharge is ratified, the city's surcharge shall be null and void. A city that meets the definition of local government in § 67-4-3201 shall not adopt a surcharge pursuant to this part if a county has adopted and is collecting a surcharge pursuant to this part.
-
- The rate of a surcharge for the local taxes provided in subdivisions (a)(1)-(6) shall not exceed the maximum rate or amount established in subdivision (g)(2) for the applicable surcharge. The maximum rate or amount of a surcharge shall be applied to the aggregate of all transit improvement programs adopted by a local government in accordance with § 67-4-3206 and no surcharge may be levied which shall cause the rate or amount of any surcharge to exceed the maximum rate or amount. A local government shall levy any surcharge up to the maximum rate or amount as provided in subdivision (g)(2) without affecting the available taxing authority and rates or amounts of local taxes listed in subdivisions (a)(1)-(6).
-
- No local government may levy a surcharge on the local option sales and use tax under subdivision (a)(1) that separately exceeds the maximum rate established for the applicable underlying local option sales and use tax.
- No local government may levy any combination of tourist accommodation taxes or fees pursuant to title 7, chapter 4, hotel occupancy taxes pursuant to part 14 of this chapter or an applicable private act, local tourism development zone business taxes pursuant to the Local Tourism Development Zone Business Tax Act, compiled in part 30 of this chapter, state sales and use taxes pursuant to chapter 6 of this title, local option sales and use taxes pursuant to chapter 6, part 7 of this title, or surcharges on any combination of tourist accommodation taxes or fees, hotel occupancy taxes, and local option sales and use taxes that under subdivisions (a)(1) and (a)(5) exceed a combined rate of twenty percent (20%) on hotels, motels, or other tourist accommodations subject to such taxes and surcharges.
- No local government may levy a surcharge on a business tax under subdivision (a)(2), a surcharge on a local rental car tax under subdivision (a)(4), or a surcharge on a residential development tax under subdivision (a)(6) that separately exceeds the rate of twenty percent (20%) of the current applicable rate of the business tax, local rental car tax, or residential development tax.
- No local government may levy a combination of a motor vehicle tax and a surcharge on a motor vehicle tax that under subdivision (a)(3) exceeds a combined amount of two hundred dollars ($200) on persons subject to such taxes and surcharges.
- Nothing in this part requires revenue from a surcharge levied pursuant to this part to be expended or distributed for school purposes.
Acts 2017, ch. 181, § 27.
Compiler's Notes. Acts 2017, ch. 181, § 1 provided that the act, which enacted this part, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Effective Dates. Acts 2017, ch. 181, § 38. April 26, 2017.
67-4-3203. Collection and administration.
- Any surcharge shall be levied, collected, and administered in the same manner as the applicable underlying local tax, and shall be subject to the same conditions, limitations, exemptions, credits, returns, and other requirements as are applicable to the underlying local tax.
- The taxpayer shall have the remedies applicable to the underlying local tax.
- Any penalty and interest applicable to the underlying local tax shall be applicable to the surcharge.
-
For any surcharge that the department of revenue administers and collects, the department of revenue shall administer and collect the surcharge as follows:
- In collecting and administering a surcharge levied under this part, the commissioner of revenue shall have the same powers as the commissioner has in collecting and administering the underlying tax;
- The department shall remit the proceeds of the surcharge to the local government levying the surcharge, less an administrative fee of one and one hundred twenty-five thousandths percent (1.125%) to cover its expenses of administering the collection and remittance of the surcharge; and
- Upon any claim of illegal assessment or collection, the taxpayer shall have the remedies provided in § 67-1-1438, and chapter 1, part 18 of this title, it being the intention of the general assembly that the law which applies to the recovery of underlying taxes illegally assessed or collected be conformed to apply to the recovery of surcharges illegally assessed or collected under this part.
- Any surcharge on the business tax shall be applied to all persons subject to the tax and shall be calculated based on their applicable rates and classifications pursuant to § 67-4-709.
Acts 2017, ch. 181, § 27.
Compiler's Notes. Acts 2017, ch. 181, § 1 provided that the act, which enacted this part, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Effective Dates. Acts 2017, ch. 181, § 38. April 26, 2017.
67-4-3204. Local option sales and use tax.
-
Notwithstanding that a local government may levy a surcharge under this chapter on the local option sales and use tax pursuant to chapter 6, part 7 of this title for use in accordance with § 67-4-3205, and in addition to the exemptions authorized by § 67-4-3203(a), the following items shall be exempt from the surcharge:
- Water sold to or used by manufacturers and taxed at the state rate of one percent (1%) as authorized in § 67-6-206;
- Sales of tangible personal property to a common carrier for use outside the state;
- Video programming services as defined in § 67-6-102;
- Telecommunication services;
- Specified digital products as defined in § 67-6-102; and
- Sales of tangible personal property when obtained from any vending machine or device and taxed at the local rate of two and one quarter percent (2.25%) as authorized in § 67-6-702(h).
- Any surcharge on the local option sales and use tax shall apply only to the first one thousand six hundred dollars ($1,600) on the sale or use of any single article of personal property as defined in § 67-6-702(d).
- [Deleted by 2020 amendment.]
- Except as otherwise provided in subsection (a), any surcharge on the local option sales and use tax shall apply equally and uniformly to all sales of tangible personal property, services, and other items subject to the tax, and shall be subject to the same exemptions provided in chapter 6 of this title as are applicable to the tax.
Acts 2017, ch. 181, § 27; 2020, ch. 759, § 9.
Compiler's Notes. Acts 2017, ch. 181, § 1 provided that the act, which enacted this part, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Amendments. The 2020 amendment deleted (c), which read: “Any surcharge on the local option sales and use tax shall not apply to sales made by dealers with no location in this state who choose to pay local tax pursuant to § 67-6-702(f) at the rate set forth in that section.”
Effective Dates. Acts 2017, ch. 181, § 38. April 26, 2017.
Acts 2020, ch. 759, § 18. October 1, 2020 at 12:01 a.m.
67-4-3205. Use of surcharge revenue.
- Revenue from a surcharge must be used for costs associated with the planning, engineering, development, construction, implementation, administration, management, operation, and maintenance of public transit system projects that are part of a transit improvement program.
-
Revenue from the surcharge may be:
- Combined with other funding generated by local, state, or federal governments from taxes, fees, or fares, and may be used to match state aid funds and federal grants;
- Combined with private moneys where allowed by law and used as a public entity's share of costs associated with a public-private initiative entered into pursuant to Chapter 975 of the Public Acts of 2016;
- Pledged to the payment of bonds issued for the purposes of financing a transit improvement program in accordance with this part; and
- Directed or transferred to implementing agencies to carry out a transit improvement program.
-
If either a transit improvement program or a public transit system project that is part of a transit improvement program becomes unfeasible, impossible, or not financially viable, the revenue from the surcharge for the transit improvement program may be directed to and utilized for a separate transit improvement program or public transit system project that:
-
Has been approved by:
- The local government's legislative body, as required in § 67-4-3206(e)(1); and
- A majority of the number of registered voters of the local government voting in an election pursuant to the procedures in § 67-4-3202; and
- Otherwise meets the requirements of this part.
-
Has been approved by:
- The proceeds of any bonds issued for the purposes of financing a transit improvement program shall not be used for operations of any public transit system projects or services that are part of the program, and in no event, shall the credit of any local government be given or loaned to or in aid of any person, company, association, or corporation, within the meaning of the Constitution of Tennessee, article II, § 29.
Acts 2017, ch. 181, § 27.
Compiler's Notes. Acts 2017, ch. 181, § 1 provided that the act, which enacted this part, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Effective Dates. Acts 2017, ch. 181, § 38. April 26, 2017.
67-4-3206. Adoption of transit improvement programs.
- Before a surcharge may be imposed, a transit improvement program shall be developed and adopted in accordance with this section.
- A transit improvement program must indicate and describe in reasonable detail the public transit system projects and services to be funded and implemented under the program.
-
A transit improvement program must state:
- The type and rate of a surcharge that will provide funding to the program;
- When a surcharge will terminate or the date or conditions upon which the surcharge will be terminated or reduced;
- Any other sources of funding for the program;
- An estimate of the initial and recurring cost of the program;
- The implementing agencies responsible for carrying out the program; and
- The geographic location of the public transit system projects.
-
Prior to adoption of a transit improvement program in accordance with subsection (e), a local government must:
- Solicit public comment regarding the transit improvement program;
- Make reasonable efforts to notify or coordinate with other local governments surrounding the local government that is considering adopting the transit improvement program; and
- Prepare a plan of financing that demonstrates a proposed transit improvement program's financial feasibility that includes the methodology and assumptions used in the financial forecasts and projections supporting the plan's analysis. The plan of financing shall include information on the amount of the transit improvement program's infrastructure to be financed through the issuance of bonds or other debt. The plan of financing's analysis will be based on forecasts and projections for at least a ten-year period after the planned inception date for the program. For the purposes of this section, “financial feasibility” means the transit improvement program is likely to be viable after taking into account the anticipated costs, risks, and liabilities of the transit improvement program, the anticipated revenue generated by the surcharge and transit improvement program, and the local government's financial position. A local government shall obtain a determination or opinion in accordance with the attestation standards from an independent certified public accounting firm that the assumptions in the local government's plan of financing provide a reasonable basis for the local government's forecast or projection given the hypothetical assumptions supporting its analysis that the proposed transit improvement program is financially feasible. Prior to obtaining the determination or opinion, the local government shall obtain approval from the comptroller of the treasury of the selection of the firm and the procedures to be used by the firm in making the determination or opinion. Upon approval of the firm and the procedures to be used by the firm by the comptroller of the treasury, the local government shall submit to the firm a plan of financing for any of the projects or services to be provided as part of the transit improvement program. Other relevant information may be considered in making the determination or opinion required by this subdivision (d)(3). The local government shall publish the completed financial feasibility determination or opinion in its entirety with the plan of financing on its website as soon as practicable after completion.
-
- A transit improvement program is adopted if it is passed by ordinance or resolution by majority vote of the local government's legislative body.
- A copy of such ordinance or resolution must be provided to the department of revenue prior to the election on the question of whether the surcharge shall be levied.
- The ordinance or resolution must contain a brief summary of the transit improvement program for which revenue from the surcharge will be used, written in a clear and coherent manner using words with common everyday meanings, and not exceeding two hundred fifty (250) words in length, and must include the information listed in subsections (b) and (c). The brief summary shall be placed on the ballot pursuant to § 67-4-3202(b)(1).
- The financing and operations of a transit improvement program shall be accounted for in a manner approved by the comptroller of the treasury and in compliance with generally accepted accounting principles (GAAP). Nothing in this part limits the authority of the comptroller of the treasury to audit the revenues and expenditures of a transit improvement program, the financing or operations of a transit improvement program, and to charge a reasonable fee for its services.
Acts 2017, ch. 181, § 27.
Compiler's Notes. Acts 2017, ch. 181, § 1 provided that the act, which enacted this part, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Effective Dates. Acts 2017, ch. 181, § 38. April 26, 2017.
67-4-1425. Limitations on levy of tax.
Chapter 5
Property Taxes
Part 1
Levy of Tax
67-5-101. Property subject to tax generally.
All property, real and personal, shall be assessed for taxation for state, county and municipal purposes, except such as is declared exempt in part 2 of this chapter, or unless otherwise provided.
Acts 1973, ch. 226, § 5; T.C.A., § 67-401.
Cross-References. Public building authorities, municipal tax for lease, loan agreement, sales contract or operating contract, § 12-10-115.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, §§ 14, 28.
Law Reviews.
The Computer's Role in Simplifying Compliance with State and Local Taxation (Ray Westphal), 39 Vand. L. Rev. 1097 (1986).
The Hazards of Taxing Contaminated Properties: Owners Beware! (Darlene Marsh, Byron Taylor and Andy Raines), 37 Tenn. B.J. 21 (2001).
NOTES TO DECISIONS
1. Exemption from Tax.
When a lessor has paid business taxes on lease income, the lessor is exempt from property taxes on the value of the leased goods. IBM Credit Corp. v. County of Hamilton, 830 S.W.2d 77, 1992 Tenn. App. LEXIS 65 (Tenn. Ct. App. 1992).
67-5-102. Taxation by county.
-
- For county general purposes, the various counties are authorized to levy an ad valorem tax upon all property subject to this form of taxation.
- The amount of such tax shall be fixed by the county legislative body of each county.
- “County general purpose levy” means a levy for all county purposes, except roads, bridges, schools, debt service, sinking funds and levies pursuant to special tax laws not included in the above.
- Taxes on property for county purposes shall be imposed on the value of the property, as defined and determined in this chapter and as otherwise provided by law.
- All existing limitations and restrictions, whether restrictive as to total dollar amount or restrictive as to specific uses, or a combination of the two (2), whether imposed by general or private act, or home rule charter, upon the maximum rate or amount of any county, municipality or metropolitan government ad valorem tax levy, are repealed effective January 1, 1973.
Code 1858, § 490; Shan., § 650; Acts 1931 (1st Ex. Sess.), ch. 3, § 1; Code 1932, § 1049; C. Supp. 1950, § 1045.1; Acts 1957, ch. 328, § 1; 1973, ch. 226, § 6; T.C.A. (orig. ed.), §§ 67-643, 67-1001, 67-1007; Acts 2015, ch. 44, § 1.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 5.
Law Reviews.
Tax Limitations of Counties and Municipalities (M. P. O'Connor), 12 Tenn. L. Rev. 174 (1934).
NOTES TO DECISIONS
1. Federal Law.
Under the federal Railroad Revitalization and Regulatory Reform Act of 1976, 49 U.S.C. § 11503 (repealed), which prohibits a state's taxation scheme from discriminating against railroads, plaintiff did not meet the standard used to enjoin the collection of ad valorem taxes by the state — which is, “reasonable cause to believe” that a violation of subsection 11503(b) has occurred or is about to occur — where plaintiff simply showed the possibility of a violation. CSX Transp., Inc. v. Tennessee State Bd. of Equalization, 964 F.2d 548, 1992 U.S. App. LEXIS 10646 (6th Cir. 1992).
Decisions Under Prior Law
1. Taxing Power of County.
A general act fixing limit of taxing power of county does not repeal or modify an earlier special act authorizing a particular levy. Burnett v. Maloney, 97 Tenn. 697, 37 S.W. 689, 1896 Tenn. LEXIS 197, 34 L.R.A. 541 (1896).
County, in levying taxes, acts in a legislative capacity, and, therefore, such levies are subject to revocation or amendment. Where county legislative body made tax levy at its April term and at succeeding term modified same, such modified levy was valid. Southern R. Co. v. Hamblen County, 117 Tenn. 327, 97 S.W. 455, 1906 Tenn. LEXIS 50 (1906).
2. Construction.
The general assembly did not intend to repeal the former section by a private act creating the commission form of government in Knox County, requiring the board of commissioners to submit an annual budget to the county legislative body, and making it mandatory upon the county legislative body to levy a tax sufficient to cover the budget. But even if the general assembly did so intend, it had the right to confer such authority upon the board. Troutman v. Crippen, 186 Tenn. 459, 212 S.W.2d 33, 1937 Tenn. LEXIS 4 (1937).
3. Maximum Rate.
The county cannot levy a higher rate of school tax than the general state levy, which includes the levy for state purposes proper and for school purposes proper. But fixing the rate higher than is lawful does not render the entire levy void, but only the excess above the limit. Bright v. Halloman, 75 Tenn. 309, 1881 Tenn. LEXIS 121 (1881).
Taxes authorized to be assessed for special purposes, as for the construction of public bridges, are not included in computing the maximum rate at which taxes may be assessed for county purposes. Nashville, C. & S. L. Ry. v. Hodges, 75 Tenn. 663, 1881 Tenn. LEXIS 163 (1881).
Counties by virtue of the former section were authorized to levy a tax amounting to and not exceeding 30 cents on every 100 dollars worth of taxable property in the county for county purposes, as distinguished from “special purposes” such as public roads, public pikes, public schools, interest on county debts and other special purposes. Southern Ry. v. Hawkins County, 130 Tenn. 397, 170 S.W. 1028, 1914 Tenn. LEXIS 38 (1914).
Action of county in fixing rate at 22 cents when law limited rate to 20 cents could be corrected later by a reduction to 20 cents, so as to make the levy binding. N. C. & S. L. R. Co. v. Carroll County, 12 Tenn. App. 380, — S.W.2d —, 1930 Tenn. App. LEXIS 78 (Tenn. Ct. App. 1930).
Jail levy of 18 cents was void where purpose was not to use funds realized for jail but to evade statutory limit of 40 cents for general fund. State ex rel. Campbell County v. Delinquent Taxpayers of 1939, 183 Tenn. 64, 191 S.W.2d 153, 1945 Tenn. LEXIS 273 (1945).
Where county budget provided a 25 cent levy for general county purposes and a special levy of 20 cents for salaries of county officers, the special levy was in fact for a general purpose and the aggregate of the two levies was therefore excessive under statute providing a 40 cent limit to levies for general county purposes. State ex rel. Anderson County v. Aycock, 193 Tenn. 157, 245 S.W.2d 182, 1951 Tenn. LEXIS 341 (1951).
Amount of ad valorem tax in excess of that fixed by general law is void unless the general assembly declares it is for a specific purpose. Cincinnati, N.O. & T.P. Ry. v. Rhea County, 194 Tenn. 167, 250 S.W.2d 60, 1952 Tenn. LEXIS 363 (1952).
Where county authorized a levy for general county purposes in excess of 40 cent limit set forth in former section, the general assembly by special act could validate excess amount as being for a special purpose, and act was not unconstitutional on the ground that it was retrospective since the general assembly could have authorized excess prior to levy. Cincinnati, N.O. & T.P. Ry. v. Rhea County, 194 Tenn. 167, 250 S.W.2d 60, 1952 Tenn. LEXIS 363 (1952).
4. Special Tax Levy.
Appropriations for court costs must be paid out of the general county funds derived from the 40 cent levy for general county purposes, and any attempted special levy for such purpose is invalid. Storie v. Norman, 174 Tenn. 647, 130 S.W.2d 101, 1938 Tenn. LEXIS 134 (1939).
Special tax levy by the county denominated as “pauper tax” over and above the 40 cent levy for general tax purposes was not authorized by statute and void as being a special tax for the support of the poor which is a general county purpose. Storie v. Norman, 174 Tenn. 647, 130 S.W.2d 101, 1938 Tenn. LEXIS 134 (1939).
5. Appropriation Out of General Fund.
County cannot appropriate out of general fund a sum for repairing and construction of schoolhouses. State ex rel. Davidson County Board of Education v. Pollard, 124 Tenn. 127, 136 S.W. 427, 1910 Tenn. LEXIS 47 (1911).
67-5-103. Taxation by municipality.
- Taxes on property for municipal purposes shall be imposed on the value of the property, as defined and determined in this chapter and as otherwise provided by law, and shall be collected by the same officers at the time and in the manner prescribed for the collection of county taxes, except as otherwise provided by law.
- All existing limitations and restrictions, whether restrictive as to total dollar amount or restrictive as to specific uses or a combination of the two (2), whether imposed by general or private act, or home rule charter, upon the maximum rate or amount of any county, municipality or metropolitan government ad valorem tax levy, are repealed effective January 1, 1973.
- With respect to municipalities that fund all or part of the cost of waste disposal by special assessment to the property owner, as authorized in § 6-2-201(19), the special assessment may be billed in the same manner as municipal real property taxes and the special assessment may be billed on the real property tax notices, but shall not constitute a lien on any affected property or accrue any penalties or interest for late payment. Any municipality that exercises this method of waste disposal by special assessment shall bear all costs of system modifications necessary to prepare property tax notices.
- A municipality that imposes a storm water user's fee, pursuant to § 68-221-1107, may bill such fee, upon passage of an ordinance by a two-thirds (2/3) majority of the legislative body, in the same manner as municipal real property taxes and add such fee to the real property tax notices. This subsection (d) applies in any municipality having a population of not less than fifty-one thousand (51,000) nor more than fifty-two thousand (52,000) and located in a county with a population of not less than one hundred sixty thousand six hundred (160,600) nor more than one hundred sixty thousand seven hundred (160,700), according to the 2010 federal census or any subsequent federal census.
Acts 1907, ch. 602, § 40; Shan., § 811a1; Code 1932, § 1483; Acts 1951, ch. 238, § 3; 1973, ch. 226, § 6; T.C.A. (orig. ed.), §§ 67-643, 67-1010; Acts 1996, ch. 974, § 1; 2015, ch. 44, § 2; 2018, ch. 922, § 1.
Compiler's Notes. For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Amendments. The 2018 amendment added (d).
Effective Dates. Acts 2018, ch. 922, § 2. May 1, 2018.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 5.
NOTES TO DECISIONS
1. Limit of Tax.
Oil company could not be taxed by city for merchants' privilege tax where it was already taxed for privilege of selling oil and gasoline, since state revenue act did not specifically provide for double taxation. Gulf Refining Co. v. Chattanooga, 136 Tenn. 505, 190 S.W. 463, 1916 Tenn. LEXIS 155 (1916).
Power of a municipal corporation to impose taxes is subject to be enlarged, restricted, or entirely withheld by the general assembly. Memphis Union Station Co. v. City of Memphis, 161 Tenn. 203, 30 S.W.2d 240, 1929 Tenn. LEXIS 50 (1929).
Decisions Under Prior Law
1. Rate of Tax.
Municipal corporations may levy a higher rate of taxation than the rate levied by the state, because they are not restrained from so doing by the constitution, when they are not restricted by any legislation. Fulgum v. Mayor of Nashville, 76 Tenn. 635, 1881 Tenn. LEXIS 54 (1881).
Municipality authorized by charter to tax privileges was not entitled to tax a privilege in a greater amount than that taxed by the state, since power to tax under charter was subject to act of general assembly declaring that county or municipal tax on privilege could not exceed state tax. Ignaz v. Mayor of Knoxville, 1 Tenn. Ch. App. 1 (1901).
2. Special Tax.
A city's power to improve and repair its streets carries with it the power to levy a special tax to pay the debts incurred for such improvements and repairs, and a city may be mandamused to do so. Mayor of Bristol v. Dixon, 55 Tenn. 864, 1875 Tenn. LEXIS 10 (1875).
Power to issue bonds carries with it the power to levy and collect taxes to pay same. State ex rel. Clyde v. Mayor, etc., of Bristol, 109 Tenn. 315, 70 S.W. 1031, 1902 Tenn. LEXIS 77 (1902).
67-5-104. Locality does not meet municipality requirements.
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Notwithstanding any provisions of title 6 or any other law to the contrary:
If, after July 1, 1998, a locality is deemed by the state to be a municipality for purposes of distributing grants or state-shared taxes; and
If, thereafter the locality, acting in good faith and under color of law and for municipal purposes, collects and expends or obligates municipal property tax revenues; and
If, thereafter it is judicially determined that the locality was not incorporated in accordance with the requirements of law and, therefore, is not a municipality; then
neither the locality nor any person who acted on behalf of the locality is required to return or repay such municipal property tax revenues; however, any portion of such municipal property tax revenues, that remains unexpended and unobligated, shall be returned to the municipal property taxpayers on a pro rata basis.
- As used in subsection (a), “the locality, acting in good faith and under color of law and for municipal purposes, collects and expends” includes, but is not limited to, reimbursement paid from municipal property tax revenues for documented, reasonable expenses of municipal incorporation that were paid out-of-pocket by one (1) or more residents acting on behalf of the locality and its incorporation.
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Notwithstanding any law to the contrary:
If, grants, state-shared taxes and municipal property tax revenues were co-mingled by the locality, then
for purposes of subsection (a) and § 9-4-5306(a), there shall be a rebuttable presumption that the locality expended or obligated all such grants and state-shared taxes before it expended or obligated any such municipal property tax revenues.
Acts 2000, ch. 898, § 2.
67-5-105. Chapter definitions.
As used in this chapter:
- “Collector” means in the case of any tax entity, other than a county, that collects its own taxes, assessments, or other charges secured by property, the officer of such tax entity responsible for collecting such taxes, assessments, or charges;
- “Tax entity” includes counties, cities, metropolitan governments, municipal corporations, quasi-municipal corporations, and political subdivisions having authority to levy a property tax; and
- “Taxpayer” means any owner of property subject to taxation or any party liable for property taxes.
Acts 2013, ch. 353, § 1.
Part 2
Exemptions
67-5-201. Real property transferred between exempt and nonexempt persons.
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- In the event real property heretofore exempt under §§ 67-5-203, 67-5-204, 67-5-206 — 67-5-208, 67-5-211 — 67-5-214, 67-5-218, and 67-5-219 is conveyed or transferred by sale, lease or otherwise to a person, firm or corporation, rendering the status of the property as nonexempt by reason of the transfer, the nonexempt grantee, lessor or other nonexempt taxpayer shall be liable for the real estate taxes thereon from the date of the transfer to the end of the taxable year; and the state, county or municipal collector of taxes shall collect the real estate taxes due from the date of the transfer, notwithstanding the status of the property as of the assessment date of January 1 of each year. A tax lien shall attach on the date of the transfer as otherwise provided by law, but the nonexempt grantee shall remain personally liable for taxes resulting from such transfer of property regardless of any subsequent transfer that may occur during that tax year.
- The state, county and municipal tax collector shall collect the taxes on a pro rata basis for the current taxable year on and after the assessment date of January 1.
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- The grantor or lessor of tax exempt property that is conveyed or transferred by sale, lease or otherwise to a person, firm or corporation, rendering the status of the property as nonexempt by reason of the transfer, shall promptly report to the assessor any change in the use or ownership of the property that might affect its exempt status.
- A grantor or lessor of tax exempt property includes a governmental entity; department, agency, board, commission, or instrumentality of the state or local government; industrial development corporation; or any other agency or authority created by a governmental entity or any other grantor or lessor of property exempt under this part.
- The grantee or lessee of real property that, prior to the transfer to such grantee or lessee was tax exempt, shall promptly report to the assessor the change in the use or ownership of such property. Notwithstanding §§ 67-1-1005 and 67-5-1806, the grantee or lessee of such real property shall be personally liable for all taxes, and penalties and interest, from the date of the transfer to the date the assessor is notified of such change in the use or ownership of property, and the collection of taxes against such grantee or lessee with respect to such property shall not be barred; provided, however, that no tax lien shall arise against the real property conveyed to a bona fide purchaser who records the deed for such property or notifies the assessor of the change in the use or ownership of such property. The burden of proving a bona fide sale shall be upon the owner of the property at the time of such recording or notification.
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- In the event the ownership of real property that has heretofore been subject to assessment and taxation is conveyed or transferred to a person, firm or corporation that is exempt from property assessment and taxation and the real property is used for purposes that would render the status of the property as exempt from assessment and taxation under §§ 67-5-203, 67-5-204, 67-5-207, 67-5-208, and 67-5-211 — 67-5-217, the new owner of the property shall not be liable for the real property taxes thereon, from the date of transfer and change of use from a nonexempt ownership and use to an exempt ownership and use to the end of the taxable year, notwithstanding the status of the property as of the assessment date of January 1 of that year.
- The assessor of property shall make an assessment of such property on the basis of its value and use to which it is put following its transfer; provided, that for the year in which the transfer of property occurred, the assessment shall be prorated and the owner shall be liable only for the taxes for the portion of the year that the property was subject to assessment.
- The state, county and municipal tax collector shall collect taxes on the basis of the assessment as prorated by the assessor of property.
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- The grantor of nonexempt property that is conveyed or transferred by sale to a person, firm, or corporation, rendering the status of the property as exempt by reason of the transfer, shall promptly report to the assessor any change in the use or ownership of the property that might affect its nonexempt status.
- A grantor of nonexempt property includes any person, firm, or corporation that is not otherwise exempt under this part. The grantor of real property that, prior to the transfer to such grantee was nonexempt, shall promptly report to the assessor the change in ownership or use of such property. The nonexempt grantor's notice of the change in ownership or use to the assessor shall be a prerequisite to the grantor seeking a refund of taxes paid related to exempt ownership or use of the property occurring after the date of transfer to the tax exempt grantee by sale.
Acts 1973, ch. 226, § 5; T.C.A., § 67-403; Acts 1984, ch. 926, §§ 1, 2; 2004, ch. 531, §§ 1, 3; 2006, ch. 621, §§ 1, 2.
Compiler's Notes. Acts 2004, ch. 531, § 4 provided that the act shall apply to claims pending on April 14, 2004.
Cross-References. Homestead Act, title 7, ch. 66.
67-5-202. Trust estates.
Every trust estate shall be entitled to the same exemption as if owned by a single taxpayer.
Acts 1973, ch. 226, § 6; T.C.A., § 67-618.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 26.1.
67-5-203. Government property.
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- All property of the United States, the state of Tennessee, any county, or any incorporated town, city or taxing district in the state that is used exclusively for public, county or municipal purposes shall be exempt from taxation; provided, that real property purchased for investment purposes by the Tennessee consolidated retirement system shall be subject to property taxation.
- All property of any educational institution owned, operated or otherwise controlled by the state of Tennessee as trustee, or otherwise, shall be exempt from taxation.
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- When all of the area that is assessed as a single unit by the assessor of property of any political subdivision is acquired in its entirety by the United States government, the state of Tennessee, or any agency or political subdivision thereof, any lien for property taxes assessed by the political subdivision for the year in which the property is so acquired shall be released on the approval of the assessor of property of the political subdivision assessing such taxes with respect to that portion of the taxes representing the remainder of the calendar year after the date of the instrument or conveyance by the property owner, or after the date of the entry of an order of possession, if the property is acquired by condemnation, and the property owner shall be relieved of all personal liability for that portion of the taxes.
- Either the condemnor or the property owner may request the assessor to provide such proration, which shall be based on the last made assessment and rate fixed, according to law, and the trustee shall accept tender of the amount determined to be owing.
- Where only a portion of the entire unit assessed for taxes by the assessor of property of a political subdivision is so acquired, the portion of the taxes for the entire year attributable to the part taken, where same is acquired by deed, shall be arrived at by dividing an amount equal to the assessed valuation of the portion taken, as agreed upon between the property owner and the assessor of property, by the present assessed valuation of the entire assessed unit and multiplying the resulting quotient against the amount of the whole tax assessed against the entire unit for the full year after which the portion of the property so acquired shall be relieved of the lien of the portion of the taxes for the remainder of the calendar year as provided in subdivision (b)(1), and the property owner shall be relieved of all personal liability as to the portion of the taxes as provided in subdivision (b)(1); provided, that, where the portion of the property is being acquired by condemnation, the court will determine the portion of the entire year's taxes attributable to the part taken after hearing proof on behalf of the property owner and the taxing authorities, with the burden being on the taxing authorities to assure their proper appearance before the court.
- In the event of such an acquisition by deed, either the condemnor or the property owner may request the assessor to provide such proration, after the assessor has agreed with the property owner relative to the assessed valuation of the portion taken; and under either circumstances set forth in subdivision (b)(3), the proration shall be based on the last made assessment and rate fixed, according to law, and the trustee shall accept tender of the amount determined to be owing.
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- If real property owned by the state or any political subdivision of the state is leased to a person, corporation, or other business entity for the purpose of operating a golf course or for the purpose of developing and operating a golf course, then the person, corporation, or business entity shall make payments in lieu of ad valorem taxes. Such payments shall be in an amount equal to the ad valorem taxes otherwise due and payable by a taxpaying entity upon the current fair market value of the leased real property.
- Nothing contained in subdivision (c)(1) shall be construed or applied in any manner that violates Constitution of Tennessee, Article XI, § 2.
- If real property owned by any political subdivision of the state is leased or conveyed in any manner to a person, corporation or other business entity which has the purpose or effect of reducing the real or personal property appraisal and tax collection of the county in which the real property is located, the lease, conveyance or other transfer arrangement may not be for a period in excess of thirty (30) years without approval from the county's legislative body of the county in which the real property is located, unless the agreement requires the lessee to pay all real and personal property taxes to the county in which the property is located for any year after the initial thirty-year occupancy period as if such property was not owned by any political subdivision of the state or other tax exempt entity. This subsection (d) shall not apply to the payment in lieu of tax programs jointly administered by the municipality and the county in which the real property is located, whether through a jointly authorized entity or a memorandum of understanding.
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Real property owned by any political subdivision of the state that is leased or conveyed in any manner to a person, corporation, or other business entity shall be assessed as if the lessee were the owner, if:
- The lease or other transfer arrangement is for a period of fifty (50) years or more; or
- The lease, other than a lease negotiated pursuant to title 7, chapter 53, the Housing Authorities Law, compiled in title 13, chapter 20, or title 48, chapter 101, part 3, permits the lessee to acquire the real property for a nominal sum at or before the completion of the term.
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- Notwithstanding any law to the contrary, if a lease is for less than fifty (50) years and is either extended or amended to be greater than fifty (50) years, or if a new lease is executed that has a term greater than fifty (50) years, any potential tax liability pursuant to this subsection (e) shall begin in the fifty-first year of the extended, amended, or new lease.
- Subdivision (e)(2)(A) shall only apply in any county having a population of over nine hundred thousand (900,000), according to the 2010 federal census or any subsequent federal census.
- This subdivision (e)(2) shall also apply to leases in effect as of May 18, 2015.
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Real property owned by any political subdivision of the state that is leased or conveyed in any manner to a person, corporation, or other business entity shall be assessed as if the lessee were the owner, if:
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- Notwithstanding any law to the contrary, for the purposes of subsections (d) and (e), the term political subdivision of the state shall not include any airport authority or public entity created by or subject to title 42.
- Subdivision (f)(1) shall only apply in any county having a population of over nine hundred thousand (900,000), according to the 2010 federal census or any subsequent federal census.
- This subsection (f) shall also apply to leases in effect as of May 18, 2015.
Acts 1973, ch. 226, § 5; 1976, ch. 449, §§ 1, 2; T.C.A., §§ 67-404, 67-501; Acts 1986, ch. 856, §§ 1, 2; 1987, ch. 48, § 1; 1987, ch. 54, § 18; 1990, ch. 926, §§ 1, 2; 1990, ch. 1016, § 9; 2014, ch. 933, § 1; 2015, ch. 455, §§ 1-3; 2016, ch. 642, § 1.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, §§ 23, 25.
Law Reviews.
State and Local Taxation — 1963 Tennessee Survey (Paul J. Hartman), 17 Vand. L. Rev. 1150 (1964).
Attorney General Opinions. Tax exemption of county health care facility located in another county, OAG 99-045 (3/1/99).
NOTES TO DECISIONS
1. In General.
Tax exemption provisions are most strongly construed against the person claiming the exemption. Crown Enters., Inc. v. Woods, 557 S.W.2d 491, 1977 Tenn. LEXIS 673 (Tenn. 1977).
Decisions Under Prior Law
1. United States Property.
Lands in the state of Tennessee, which, pursuant to acts of congress for levying and collecting direct taxes, are sold to the United States for the amount of the tax thereon, and are afterwards transferred by the United States or are redeemed by the former owner, are not liable for state taxes while so owned by the United States. Van Brocklin v. Tennessee, 117 U.S. 151, 6 S. Ct. 670, 29 L. Ed. 845, 1886 U.S. LEXIS 1822 (1886).
Property of the United States is not subject to state taxation. Wisconsin Cent. R.R. v. Price County, 133 U.S. 496, 10 S. Ct. 341, 33 L. Ed. 687, 1890 U.S. LEXIS 1926 (1890).
Bonds of the United States are not subject to taxation. Mosely v. State, 115 Tenn. 52, 86 S.W. 714, 1905 Tenn. LEXIS 44 (1905).
The value of patent rights is not subject to taxation. Quicksafe Mfg. Corp. v. Graham, 161 Tenn. 46, 29 S.W.2d 253, 1929 Tenn. LEXIS 33 (1929).
Where city in consent decree agreed to pay county portion of tax, equivalent to revenues from Tennessee Valley authority, city was bound thereby even though subsequent federal court case was to the effect that cities were under no obligation to pay portion of such payments to counties. City of Shelbyville v. State ex rel. Bedford County, 220 Tenn. 197, 415 S.W.2d 139, 1967 Tenn. LEXIS 463 (1967).
Assessment by county of ad valorem real property tax under this section or interest in real property of independent contractor who operated an army ammunitions plant on a cost-plus basis with the United States was, in reality, a tax upon the United States itself in violation of the supremacy clause. United States v. Hawkins County, 859 F.2d 20, 1988 U.S. App. LEXIS 13306 (6th Cir. 1988), cert. denied, Tennessee v. United States, 490 U.S. 1005, 109 S. Ct. 1638, 104 L. Ed. 2d 154, 1989 U.S. LEXIS 1673 (1989), cert. denied, Tennessee v. United States, 490 U.S. 1005, 109 S. Ct. 1638, 104 L. Ed. 2d 154, 1989 U.S. LEXIS 1673 (1989).
2. —State Property.
The source of property employed by the state for a public purpose does not affect the nature of such property as the public is the beneficiary whether the property is acquired by legislative appropriation or by gift of third parties. State ex rel. Beeler v. City of Nashville, 178 Tenn. 344, 157 S.W.2d 839, 1941 Tenn. LEXIS 64 (1941).
3. —Municipal Property.
Under Tenn. Const., art. II, § 28, the general assembly may exempt municipal corporations from taxation on their property used exclusively for public or corporation purposes; but that portion of a city's waterworks plant located in another city and used exclusively to supply water therein for profit to the owning city is subject to taxation in the local city. Mayor of Knoxville v. Park City, 130 Tenn. 626, 172 S.W. 286, 1914 Tenn. LEXIS 66, L.R.A. (n.s.) 1915D1103 (1914).
A water pipeline partly within and partly without city limits is exempt, the service to those outside being incidental to the primary public use. Johnson City v. Weeks, 133 Tenn. 277, 180 S.W. 327, 1915 Tenn. LEXIS 93, 3 A.L.R. 1431 (1915).
Where water lines used by city to serve city and its suburban area were located in adjacent county, same could not be taxed by adjacent county except for that portion used to serve water customers in small town in adjacent county. Johnson City v. Booth, 37 Tenn. App. 231, 261 S.W.2d 820, 1953 Tenn. App. LEXIS 83 (1953).
Real estate purchased by city in adjoining county to protect watershed in order that its water supply taken from springs might be protected was not taxable by county in which real estate was located since it was used exclusively for municipal function. Johnson City v. Booth, 37 Tenn. App. 231, 261 S.W.2d 820, 1953 Tenn. App. LEXIS 83 (1953).
Electric power property located in Marion County but owned by city of Chattanooga and operated through the electric power board of Chattanooga was not subject to general ad valorem tax by Marion County where the operation in that county was so consistent with and incidental to the principal function of the power board as not to destroy or alter its public purpose and operations in such county only amounted to .6 of one percent of the total customers and revenues only amounted to .26 of one percent of the total. City of Chattanooga v. Marion County, 204 Tenn. 56, 315 S.W.2d 407, 1958 Tenn. LEXIS 246 (Tenn. July 11, 1958).
Where the city leases its property for commercial purposes, and the city and county are consolidated, the city is not required to assess its property separately when assessing the leasehold interest. Metropolitan Gov't v. Schatten Cypress Co., 530 S.W.2d 277, 1975 Tenn. LEXIS 562 (Tenn. 1975).
4. Educational Institutions.
Investment property of the state used exclusively for public purposes is exempt from taxation and such property is used exclusively for public purposes when income therefrom is exclusively so applied. State ex rel. Beeler v. City of Nashville, 178 Tenn. 344, 157 S.W.2d 839, 1941 Tenn. LEXIS 64 (1941).
Education was a public purpose within the meaning of former section. State ex rel. Beeler v. City of Nashville, 178 Tenn. 344, 157 S.W.2d 839, 1941 Tenn. LEXIS 64 (1941).
An educational enterprise is still a public purpose although it serves only a limited territory. State ex rel. Beeler v. City of Nashville, 178 Tenn. 344, 157 S.W.2d 839, 1941 Tenn. LEXIS 64 (1941).
Property devised to the state as trustee to be used by state for a public educational institution which was accepted by the state and used for such purpose was exempt from taxation under former section. State ex rel. Beeler v. City of Nashville, 178 Tenn. 344, 157 S.W.2d 839, 1941 Tenn. LEXIS 64 (1941).
Provision that all property of any educational institution owned, operated or controlled by the state as trustee or otherwise was not contrary to Tenn. Const., art. II, § 28 or U.S. Const., amend. 14. Nashville v. State Bd. of Equalization, 210 Tenn. 587, 360 S.W.2d 458, 1962 Tenn. LEXIS 319 (1962).
Real property held by state as trustee for educational institution was exempt from taxation by city even though used for commercial purposes. Nashville v. State Bd. of Equalization, 210 Tenn. 587, 360 S.W.2d 458, 1962 Tenn. LEXIS 319 (1962).
Provision of prior law that all property of any educational institution owned, operated or controlled by the state is exempt from taxation is constitutional and not repugnant to Tenn. Const., art. II, § 28, providing that all property may be taxed but that the general assembly may exempt property held by the state, counties, cities or towns and used exclusively for public or corporation purposes. Lamanna v. University of Tennessee, 225 Tenn. 25, 462 S.W.2d 877, 1971 Tenn. LEXIS 270 (1971).
Property of University of Tennessee leased for commercial purposes was exempt from taxation by county. Lamanna v. University of Tennessee, 225 Tenn. 25, 462 S.W.2d 877, 1971 Tenn. LEXIS 270 (1971).
5. Agencies.
A school textbook concern that has obtained a contract from the state textbook commission to furnish school books to the state and that has contracted with a dealer within the state to establish depots for the sale of school books is not a state agency exempt from taxation. American Book Co. v. Shelton, 117 Tenn. 745, 100 S.W. 725, 1906 Tenn. LEXIS 75 (Tenn. Dec. 1906).
Neither the state nor any of its arms or agencies are liable to taxation, unless expressly so declared by statute, for they are impliedly excluded from the general tax laws. Henson v. Monday, 143 Tenn. 418, 224 S.W. 1043, 1920 Tenn. LEXIS 30 (1920).
67-5-204. Public ways.
All roads, streets, alleys, and promenades where legally dedicated and thrown open for public travel or use free of charge shall be exempt from taxation.
Acts 1973, ch. 226, § 5; T.C.A., § 67-502.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 26.1.
67-5-205. Government bonds and notes.
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- Whenever the state of Tennessee, or any agency thereof, shall issue any bonds or notes for any public purpose, without regard to when issued, neither the principal of nor the interest on such bonds or notes shall be taxed by this state or by any county or municipality or taxing district of this state, except inheritance, transfer and estate taxes.
- Whenever any county or any agency thereof shall issue any bonds or notes for any public purpose, without regard to when authorized, neither the principal nor the interest of such bonds or notes shall be taxed by the state or by any county or municipality in this state.
- Whenever any incorporated town or city, or any agency thereof, shall issue any bonds or notes, without regard to when authorized, for any public purpose, neither the principal of nor the interest on such bonds or notes shall be taxed by this state or by any county or municipality of this state.
- In the event the courts of this state shall hold that any of this section is invalid and that such bonds or notes are taxable, such holding shall not affect the validity of any bonds or notes so issued.
Acts 1973, ch. 226, § 5; 1977, ch. 2, § 1; T.C.A., §§ 67-503 — 67-506; Acts 2001, ch. 28, § 1.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 24.
Decisions Under Prior Law
1. Constitutionality.
Former statute did not violate Tenn. Const., art. II, § 28. Foster v. Roberts, 142 Tenn. 350, 219 S.W. 729, 1919 Tenn. LEXIS 64, 9 A.L.R. 431 (1919).
The purpose of Tenn. Const., art. II, § 28, is to promote uniformity of taxation and to prevent discrimination among taxpayers; the state is not a taxpayer unless there exists a clear divestiture of its rights as sovereign; consequently state bonds are not taxable if the tax would ultimately have to be borne by the state itself and its bonds are not properly within the meaning of the constitution. Foster v. Roberts, 142 Tenn. 350, 219 S.W. 729, 1919 Tenn. LEXIS 64, 9 A.L.R. 431 (1919).
2. Extent of Exemption.
The exemption cannot be extended to bonds of an educational institution though without capital stock. Cumberland Univ. v. Golladay, 152 Tenn. 82, 274 S.W. 536, 1924 Tenn. LEXIS 105 (1925).
Exemption of government bonds from taxation does not carry with it the right to exclude proceeds from same in determining corporate tax on net earnings. National Life & Accident Ins. Co. v. Dempster, 168 Tenn. 446, 79 S.W.2d 564, 1934 Tenn. LEXIS 77 (1934).
67-5-206. Housing authorities.
- The property of housing authorities shall be exempt from all taxes and special assessments of the state or any county, city, town, metropolitan government or political subdivision thereof; provided, that, in lieu of such taxes or special assessments, a housing authority shall agree to make payments to any county, city, town, metropolitan government or political subdivision of the state for services, improvements or facilities furnished by such county, city, town, metropolitan government or political subdivision for the benefit of a housing project owned by the housing authority, but in no event shall such payments exceed the estimated cost to such county, city, town, metropolitan government or political subdivision of the services, improvements or facilities to be so furnished.
- The bonds or notes of a housing authority are declared to be issued for an essential public and government purpose and, together with interest thereon and income therefrom, shall be exempt from all taxes.
Acts 1973, ch. 226, § 5; T.C.A., §§ 67-507, 67-508.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 26.1.
Law Reviews.
Taxation — Exemption of Housing Authority, 15 Tenn. L. Rev. 829 (1939).
Attorney General Opinions. Housing authorities and payments in lieu of tax, OAG 96-097 (7/29/96).
A clerk and master who has conducted a delinquent property tax sale may not insist as a condition precedent to issuing a deed that the purchaser pay prior years’ taxes that were not included in the minimum bid for the property, OAG 05-156 (10/13/05).
Decisions Under Prior Law
1. Effect of Incorporation.
Knoxville housing authority, although incorporated, was none the less an arm or agency of the city of Knoxville so that the general assembly could properly exempt both property held by the authority and bonds issued by the authority from taxation. Knoxville Housing Authority, Inc. v. Knoxville, 174 Tenn. 76, 123 S.W.2d 1085, 1938 Tenn. LEXIS 66 (1939).
67-5-207. Religious, charitable, scientific, educational institutions.
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- Property of Tennessee nonprofit corporations that is used for permanent housing of low income persons with disabilities, or low income elderly persons, is exempt in accordance with this section. The property must be financed by a grant under § 211 or § 811 of the National Affordable Housing Act (42 U.S.C. §§ 12741 and 8013, respectively), or the McKinney-Vento Homeless Assistance Act (42 U.S.C. § 11301 et seq.), or be financed or refinanced by a loan made, insured, or guaranteed by a branch, department or agency of the United States government under § 515(b) or § 521 of the Housing Act of 1949 (42 U.S.C. §§ 1485(b) and 1490a, respectively), § 202 of the Housing Act of 1959 (12 U.S.C. § 1701q, § 221, § 223, § 231) or § 236 of the National Housing Act (12 U.S.C. §§ 1715l, 1715n, 1715v and 1715z-1, respectively), or § 8 of the United States Housing Act of 1937, as amended by the Housing and Community Development Act of 1974 (42 U.S.C. § 1437f). For the purposes of this section, a loan is considered to be guaranteed if the federal housing agency has consented to assignment of a housing assistance program contract as security for the loan. In the case of a property financed or refinanced by a loan, eligibility for the exemption under these programs continues so long as there is an unpaid balance on the loan. Following payment of the loan in full, a property shall continue to be exempt from taxation so long as the project is restricted to use for elderly persons or persons with disabilities as defined in the programs. In the case of a property financed by a grant, eligibility for the exemption under these programs continues so long as the project is restricted to use for elderly persons or persons with disabilities as defined in the programs. The property must be used as below-cost housing for elderly persons or persons with disabilities within the program definitions, who have incomes not in excess of limits established for the enumerated program by the department of housing and urban development (HUD). If a property was approved by HUD for participation in the program without specific low income guidelines, the property may nevertheless qualify for exemption on a pro rata basis, if at least fifty percent (50%) of the low income residents have incomes that would qualify under HUD guidelines for any of the enumerated programs. In such cases the property shall be exempt in the same percentage that low income residents represent of the total occupancy of the property at full capacity, determined as of January 1 each year, on the basis of information supplied to the assessor on or before April 20.
- The owners of projects exceeding twelve (12) units shall agree to make payments in lieu of taxes to the tax jurisdictions in which they are located, in an amount negotiated to cover the cost of improvements, facilities or services rendered by the tax jurisdiction, but if no amount is agreed the payments shall be not less than twenty-five percent (25%) of the amount of tax that would be due if the project were not exempt. In no event shall such payments be required of public housing authorities operating under the Housing Authorities Law, compiled in title 13, chapter 20.
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To qualify for such exemption, any such not-for-profit corporation must first be exempt from federal income taxation by virtue of qualifying as an exempt charitable organization or as an exempt social welfare organization under the Internal Revenue Code (26 U.S.C.), and any amendments thereto. In addition, the not-for-profit corporation shall have charter provisions providing in substance that:
- The directors and officers shall serve without compensation;
- The corporation is irrevocably dedicated to and operated exclusively for not-for-profit purposes;
- No part of the income or assets of the corporation shall be distributed to nor inure to the benefit of any individual;
- In the event of dissolution of the corporation or other liquidation of its assets, the corporation's property shall not be conveyed to any individual for less than the fair-market value of such property; and
- All assets remaining after payment of the corporation's debts shall be conveyed or distributed only to an organization or organizations created and operated for not-for-profit purposes similar to those of the corporation.
- All claims for exemption under this section are subject to § 67-5-212(b).
- Subject to the general requirements of this section for exemption of federally assisted housing, there shall also be exempted under this section those properties owned by not-for-profit organizations and funded under the HOME Investment Partnerships Program (42 U.S.C. § 12701 et seq.), or a housing trust fund established in accordance with title 7, chapter 8 or title 13, chapter 23, part 5. To qualify, the property must be used for permanent housing for low income or very low income persons who are elderly or have a disability.
- Nothing in this section shall be construed to preclude the application of § 67-5-212 to transitional or temporary housing that qualifies as a charitable use of property under that section.
Acts 1973, ch. 226, § 5; 1975, ch. 168, § 1; 1975, ch. 323, § 1; 1983, ch. 122, §§ 1-3; T.C.A., § 67-509; Acts 1988, ch. 1002, §§ 1, 2; 1990, ch. 1009, §§ 1, 2; 1991, ch. 399, § 1; 1992, ch. 652, §§ 1, 2; 1993, ch. 454, §§ 1-3; 1994, ch. 617, § 1; 1994, ch. 645, § 1; 1997, ch. 347, § 1; 2002, ch. 704, §§ 1-4; 2008, ch. 1104, § 1; 2009, ch. 111, §§ 1, 2; 2011, ch. 47, §§ 74, 75; 2014, ch. 887, §§ 1, 2; 2019, ch. 355, § 1.
Compiler's Notes. Acts 1994, ch. 645, § 2, provided that the 1994 amendment by that act (inserting “§ 515(b) or § 521 of the Housing Act of 1949” (42 U.S.C. §§ 1485(b), 1490a) in (a)(1)) shall apply prospectively and also to assessments for 1994 and earlier years if the assessments were the subject of a pending claim or appeal for exemption before the state board of equalization on January 1, 1994.
Acts 2002, ch. 704, § 5 provided that the amendments to this section shall apply prospectively as well as retroactively to applications for exemption pending or under appeal to the state board of equalization on May 1, 2002.
Acts 2008, ch. 1104, § 5 provided that nothing in this act, which rewrote subsection (d), shall be construed as affecting a prior final determination of the exempt status of any property in this state.
Acts 2009, ch. 111, § 3 provided that the act, which amended § 67-5-207(a)(1) and (d), shall apply both to applications filed on or after April 30, 2009, and to applications for exemption that are pending or under appeal to the state board of equalization on or after April 30, 2009.
Acts 2011, ch. 47, § 107 provided that nothing in the legislation shall be construed to alter or otherwise affect the eligibility for services or the rights or responsibilities of individuals covered by the provision on the day before the date of enactment of this legislation, which was July 1, 2011.
Acts 2011, ch. 47, § 108 provided that the provisions of the act are declared to be remedial in nature and all provisions of the act shall be liberally construed to effectuate its purposes.
Acts 2014, ch. 887, § 3 provided that the act, which amended subsection (a), shall apply to applications approved after May 1, 2014; to applications pending or under appeal on May 1, 2014; and to projects funded by loans whose exemption is continued, as provided in § 67-5-207, notwithstanding payment in full of the loan, under the terms of the act.
Amendments. The 2019 amendment substituted “a housing trust fund established in accordance with title 7, chapter 8 or title 13, chapter 23, part 5” for “the state-funded Housing Opportunities Using State Encouragement (HOUSE) Program” in (d).
Effective Dates. Acts 2019, ch. 355, § 6. May 10, 2019.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 26.1.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
Attorney General Opinions. Applicability, OAG 89-136 (11/9/89).
67-5-208. Recycling waste products.
- Property owned by a nonprofit corporation, that is operated for the purpose of recycling or disposing of waste products and converting same to heat or cooling for public buildings or facilities where the reversionary interest to such properties is in the state or any of its political subdivisions, shall be exempt from taxation.
- Such purpose is defined as a public one, performed on behalf of such governmental entity, notwithstanding that some of the by-products of such undertaking may be furnished to private entities.
Acts 1973, ch. 226, § 5; T.C.A., § 67-510.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 26.1.
67-5-209. Private act hospital authorities.
In addition to all rights and powers granted to a private act hospital authority under title 7, chapter 57, part 6, such a private act hospital authority shall be exempt from the payment of any taxes or fees to the state or any subdivisions thereof, or to any officer or employee of the state or any subdivision thereof, except as hereinafter provided. This exemption does not include fees paid by private act hospital authorities as required by § 68-11-216. All property of an authority residing within the boundaries of its creating or participating governing authorities or entities shall be exempt from all county and municipal taxes; provided, that the authority shall pay all county and municipal fees. An authority may agree to the payment of tax equivalents to the creating or participating governing authority or entity. Authorities shall be required to apply to the state board of equalization for claims for exemption of property residing outside the boundaries of their creating or participating governing authorities or entities. The claims for exemption shall be determined by the state board of equalization, following application in the manner required by § 67-5-212, and exemptions shall be:
- Limited to property of the authority which would be exempt if owned and operated by a charitable hospital under § 67-5-212; and
- Granted in accordance with the same criteria used by the board of equalization in granting exemptions to property owned and operated by a charitable hospital under § 67-5-212.
Acts 2001, ch. 385, § 1; 2013, ch. 417, § 1.
Compiler's Notes. Former § 67-5-209 (Acts 1973, ch. 226, § 5; 1978, ch. 837, §§ 1, 2; 1983, ch. 429, § 25; T.C.A., § 67-511(a)), concerning air and water pollution control equipment, was repealed by Acts 1985, ch. 287, § 1. For present provisions relating to taxation of pollution control equipment, see § 67-5-604.
Acts 2001, ch. 385, § 2 provided that the act, which enacted this section, is not intended to reflect prior legislative intent, one way or the other, regarding the taxation of property of private act hospital authorities. Act 2001, ch. 385 shall not affect rights and duties that matured, penalties that were incurred, or proceedings that were begun before June 12, 2001.
67-5-210. Real property owned and used by nonprofit economic or charitable development organization — Requirements.
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Subject to the general requirements of § 67-5-212, real property owned and used by a nonprofit economic or charitable development organization shall be eligible for property tax exemption as a charitable use of property when the provisions of this section are met. Real property owned by a nonprofit entity that is exempt from federal income taxation under § 501(a) of the Internal Revenue Code (25 U.S.C. § 501(a)) as an organization described in § 501(c)(3) (§ 26 U.S.C. § 501(c)(3)), and that is engaged in economic development, shall be eligible for property tax exemption to the extent the property is used:
- To expand entrepreneurship in the community;
- To commercialize technologies into scalable businesses;
- To provide affordable office or lab space and shared meeting rooms;
- To provide services, including accelerator programming and business training; and
- To provide supporting facilities for parking, delivery, storage, and access, as well as expansion space for the facilities described in subdivisions (a)(1)-(a)(4).
- This section shall apply only to a nonprofit entity that has been in continual operation for not less than ten (10) years from May 18, 2015, and that has executed an economic development mission for not less than ten (10) years from May 18, 2015.
- Any owner of real property claiming exemption under this section shall be required to file an application for exemption with the state board of equalization on the same form and in the same manner prescribed in § 67-5-212(b).
- This section shall apply only in a county containing a research hospital, as defined by § 63-6-204(f)(7)(I).
Acts 2015, ch. 456, § 1.
Compiler's Notes. Former § 67-5-210 (Acts 1973, ch. 226, § 5; 1975, ch. 837, §§ 1, 2; 1983, ch. 429, § 25; T.C.A., § 67-511(b)), concerning solar or wind power equipment, provided in former subsection (b) that this section and the exemption provided for therein terminated on January 1, 1988, and had no effect on taxation or assessment made after that date.
67-5-211. Charter or contract exemptions.
- All property protected by valid charter or contract exemption shall be exempt from taxation.
- This title shall not be so construed, and shall not so operate, as to exonerate and release from taxation any company or corporation whose charter exempts stock and shares thereof from taxation; but it is enacted that in all cases where such stock is exempted, such company or corporation shall be assessed in such way as may be lawful; and in all cases in which, by the terms or legal effect of the charter, the shares of stock in any corporation are wholly or partially exempt from taxation, or in which a rate of taxation on the shares of the stock is fixed and prescribed, and declared to be in lieu of all other taxes for state, county, and municipal purposes, there shall be assessed and levied a tax, at a rate uniform with the rate levied upon other taxable property, upon the capital stock of such corporation, the value of which capital stock shall be fixed and returned to the assessor as being equal to the aggregate and not less than the actual cash value of all shares of stock in such corporation, including the net surplus; provided, that, where the state has provided in the charter of any such corporation or company that it shall pay a stated percent on each share of stock subscribed annually to the state, which shall be in lieu of all other taxes, it shall be entitled annually to a credit therefor, upon its assessment of its capital stock as provided in this section. This subsection (b) shall not apply so as to prescribe that the capital stock of any such company or corporation shall be assessed and taxes collected upon such assessment for municipal purposes, when the supreme court has, in a suit for the collection of such taxes, adjudged that the capital stock of a corporation was exempt from the payment of them by virtue of its charter.
Acts 1973, ch. 226, § 5; T.C.A., §§ 67-402, 67-512.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 19.
Decisions Under Prior Law
1. Construction.
Exemption of the capital stock of a company from taxation is not equivalent to an exemption of the property purchased with or represented by the capital. Railroad Co. v. Gaines, 97 U.S. 697, 24 L. Ed. 1091, 1878 U.S. LEXIS 1499 (1878).
An exemption from taxation must be clearly granted; mere silence amounts to a denial of exemption. Phoenix Fire & Marine Ins. Co. v. Tennessee, 161 U.S. 174, 16 S. Ct. 471, 40 L. Ed. 660, 1896 U.S. LEXIS 2150 (1896).
Exemption from taxation is not conferred upon a company by a charter granting it “all the rights and privileges” of another company to which had been granted “all the rights, privileges and immunities” given a third company, the charter of which last-mentioned company contained a tax exemption clause; the omission of the word “immunities” giving rise to a doubt which required the denial of the existence of the exemption. Phoenix Fire & Marine Ins. Co. v. Tennessee, 161 U.S. 174, 16 S. Ct. 471, 40 L. Ed. 660, 1896 U.S. LEXIS 2150 (1896).
A delay of 24 years in accepting a charter granting a tax exemption forfeits the right to such exemption when, in the meantime, a constitution has been adopted which prohibited the granting of an exemption such as that contained in the charter. Planters' Ins. Co. v. Tennessee, 161 U.S. 193, 16 S. Ct. 466, 40 L. Ed. 667, 1896 U.S. LEXIS 2152 (1896).
Exemptions from taxation are contrary to public policy, and can only be allowed when granted in clear and unmistakable terms, and the benefit of the doubt must be given to the state. State ex rel. Davidson County v. Waggoner, 162 Tenn. 172, 35 S.W.2d 389, 1930 Tenn. LEXIS 75 (1931).
2. Burden of Proof.
Burden of proof is on claimant to the exemption. State ex rel. Davidson County v. Waggoner, 162 Tenn. 172, 35 S.W.2d 389, 1930 Tenn. LEXIS 75 (1931).
3. Bank Charters.
A bank charter which provides “institution shall have a lien on the stock for debts due it by the stockholders before and in preference to other creditors, except the state for taxes; and shall pay to the state an annual tax of one half of one percent on each share of capital stock, which shall be in lieu of all other taxes,” grants an exemption of the stock in the hands of shareholders from any other tax than that imposed by the charter, and a subsequent law imposing an additional tax on such stock impairs the obligation of the contract. Bank of Commerce v. Tennessee, 161 U.S. 134, 16 S. Ct. 456, 40 L. Ed. 645, 1896 U.S. LEXIS 2147 (1896), modified, 163 U.S. 416, 16 S. Ct. 1113, 41 L. Ed. 211, 1896 U.S. LEXIS 2278 (1896); Shelby County v. Union & Planters' Bank, 161 U.S. 149, 16 S. Ct. 558, 40 L. Ed. 650, 1896 U.S. LEXIS 2148 (1896).
A charter provision exempting from taxation stock of a bank upon payment of an annual tax of one half of one percent upon each share thereof, which was to be in lieu of all other taxes, does not grant an exemption to the surplus belonging to the bank since such surplus is distinct from the capital stock. Bank of Commerce v. Tennessee, 161 U.S. 134, 16 S. Ct. 456, 40 L. Ed. 645, 1896 U.S. LEXIS 2147 (1896), modified, 163 U.S. 416, 16 S. Ct. 1113, 41 L. Ed. 211, 1896 U.S. LEXIS 2278 (1896); Shelby County v. Union & Planters' Bank, 161 U.S. 149, 16 S. Ct. 558, 40 L. Ed. 650, 1896 U.S. LEXIS 2148 (1896).
A charter provision exempting shares of stock of a certain bank from taxation when in the hands of shareholders does not exempt the capital stock of the bank from taxation, there being a distinction between shares of stock in the hands of shareholders and capital stock of the bank. Shelby County v. Union & Planters' Bank, 161 U.S. 149, 16 S. Ct. 558, 40 L. Ed. 650, 1896 U.S. LEXIS 2148 (1896).
4. Railroad Companies.
The grant to one railroad company of all the powers, rights, and privileges possessed by another such company does not confer upon the first company an exemption from taxation which the latter company possessed. Railroad Co. v. Gaines, 97 U.S. 697, 24 L. Ed. 1091, 1878 U.S. LEXIS 1499 (1878).
The charter of a railroad which provides that “no tax shall ever be laid on such road or its fixtures which will reduce the dividends below eight percent,” grants an exemption to the extent and for the purpose stated and the state, by a subsequent law, cannot impair the obligation of this contract. Mobile & O.R.R. v. Tennessee, 153 U.S. 486, 14 S. Ct. 968, 38 L. Ed. 793, 1894 U.S. LEXIS 2198 (1894).
5. Change of Business.
When an insurance company, charter of which contains a tax exemption clause, changes its business from insurance to that of banking, under authority of a state law, it loses the tax exemption feature of its charter. Memphis City Bank v. Tennessee, 161 U.S. 186, 16 S. Ct. 468, 40 L. Ed. 664, 1896 U.S. LEXIS 2151 (1896).
6. Effect of Sale.
Immunity from taxation is not such a franchise of a railroad corporation as passes by sale under a mortgage given on the property and franchises of the company. Railroad Co. v. County of Hamblen, 102 U.S. 273, 26 L. Ed. 152, 1880 U.S. LEXIS 2036 (Tenn. Nov. 29, 1880). See also Wilson v. Gaines, 103 U.S. 417, 26 L. Ed. 401, 1880 U.S. LEXIS 2132 (1881).
An exemption from taxation contained in a charter is a personal privilege in favor of the corporation therein specifically referred to which does not pass with the sale of the charter in the absence of an express or clear intention on the part of the law requiring the exemption to pass as a continuing franchise to the purchaser thereof. Mercantile Bank v. Tennessee ex rel. Memphis, 161 U.S. 161, 16 S. Ct. 461, 40 L. Ed. 656, 1896 U.S. LEXIS 2149 (1896).
The charter of a corporation giving it all the rights, reservations, restrictions, and liabilities given to and imposed upon another company does not grant an exemption from taxation which the last-mentioned company possessed. Home Ins. & Trust Co. v. Tennessee, 161 U.S. 198, 16 S. Ct. 476, 40 L. Ed. 669, 1896 U.S. LEXIS 2153 (1896).
7. Surrender.
The general assembly has no power to contract with a company for the surrender of its charter exemption as to taxation in such a way as to involve a release from the constitutional mode of taxation after the charter exemption has expired. Railroad Co. v. Gaines, 97 U.S. 697, 24 L. Ed. 1091, 1878 U.S. LEXIS 1499 (1878).
67-5-212. Religious, charitable, scientific, educational institutions — Assessment Act.
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There shall be exempt from property taxation the real and personal property, or any part of the real and personal property, owned by any religious, charitable, scientific, or nonprofit educational institution that is occupied and actually used by the institution or its officers purely and exclusively for carrying out one (1) or more of the exempt purposes for which the institution was created or exists. There shall further be exempt from property taxation the real and personal property, or any part of the real and personal property, owned by an exempt institution, but occupied and actually used by:
- Another religious, charitable, scientific, or nonprofit educational institution or its officers purely and exclusively for carrying out one (1) or more of the exempt purposes for which the occupying institution was created or exists;
- An exempt institution that originated as part of a single exempt institution and that continues to use the property for the same religious, charitable, scientific, or nonprofit educational purposes, whether by charter, contract, or other agreement or arrangement; or
- The United States government, the state of Tennessee, or any agency or political subdivision thereof.
- In determining the exemption applicable to a post-secondary educational institution, there shall be a presumption that the entire original campus of an institution chartered before 1930 is an historical and integral entity, and is exempt so long as no particular portion of such campus is used for nonexempt purposes.
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The property of such institution shall not be exempt, if:
- The owner, or any stockholder, officer, member, or employee of such institution shall receive or may be lawfully entitled to receive any pecuniary profit from the operations of that property in competition with like property owned by others that is not exempt, except reasonable compensation for services in effecting one (1) or more of such purposes, or as proper beneficiaries of its strictly religious, charitable, scientific, or educational purposes; or
- The organization thereof for any such avowed purpose be a guise or pretense for directly or indirectly making any other pecuniary profit for such institution, or for any of its members or employees, or if it be not in good faith organized or conducted exclusively for one (1) or more of these purposes.
- The real property of any such institution not so used exclusively for carrying out thereupon one (1) or more of such purposes, but leased or otherwise used for other purposes, whether the income received therefrom be used for one (1) or more of such purposes or not, shall not be exempt; but, if a portion only of any lot or building of any such institution is used purely and exclusively for carrying out thereupon one (1) or more of such purposes of such institution, then such lot or building shall be so exempt only to the extent of the value of the portion so used, and the remaining or other portion shall be subject to taxation.
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The property of such institution shall not be exempt, if:
- No church shall be granted an exemption on more than one (1) parsonage, and an exempt parsonage may not include within the exemption more than three (3) acres.
- For property owned by a corporation organized for the exclusive purpose of holding title to property for use by any organization that itself qualifies for exemption under this section, only such property of the corporation, or such parts thereof, as would be entitled to an exemption under this section if owned directly by such organization shall be exempt from property taxation.
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There shall be exempt from property taxation the real and personal property, or any part of the real and personal property, owned by any religious, charitable, scientific, or nonprofit educational institution that is occupied and actually used by the institution or its officers purely and exclusively for carrying out one (1) or more of the exempt purposes for which the institution was created or exists. There shall further be exempt from property taxation the real and personal property, or any part of the real and personal property, owned by an exempt institution, but occupied and actually used by:
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- Any owner of real or personal property claiming exemption under this section or § 67-5-207, § 67-5-213, § 67-5-219, or as otherwise required by law, shall file an application for the exemption with the state board of equalization on a form prescribed by the board and supply such further information as the board may require to determine whether the property qualifies for exemption. No property that is subject to these application requirements shall be exempted from property taxes unless the application has been approved in writing by the board. An application shall be deemed filed on the date it is received by the board or, if mailed, on the postmark date. The applicant shall provide a copy of the application with any supporting materials to the assessor of property of the county in which the property is located. An application for exemption pursuant to this section or any other section referring to these procedures shall be treated as an appeal for purposes of § 67-5-1512.
- The board shall make an initial determination granting or denying exemption through its staff designee, who shall send written notice of the initial determination to the applicant and the assessor of property. Written notice includes notification by electronic means and notice may be preserved in digital or electronic format. Either the assessor of property or the applicant may appeal the initial determination to the board and shall be entitled to a hearing prior to any final determination of exemption. The assessor shall retain copies of any approved exemptions in paper, electronic, or digital format. Upon approval of exemption, it is not necessary that the applicant reapply each year, but the exemption shall not be transferable or assignable and the applicant shall promptly report to the assessor any change in the use or ownership of the property that might affect its exempt status. The board may by rule impose a filing fee for processing applications for exemption. Such filing fee shall not exceed one hundred twenty dollars ($120) and shall be proportionate to the value of the property at issue. For purposes of this section, “filing” means one (1) submission that may include multiple parcels, including real and personal property, with a clear nexus to one (1) exemption determination.
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Any institution claiming an exemption under this section that has not previously filed an application for and been granted an exemption for a parcel must file an application for exemption with the state board of equalization by May 20 of the year for which exemption is sought. If the application is approved, the exemption will be effective as of January 1 of the year of application or as of the date the exempt use of such parcel began, whichever is later. If application is made after May 20 of the year for which exemption is sought, but prior to the end of the year, the application may be approved but will be effective for only a portion of the year determined as follows:
- If application is filed within thirty (30) days after the exempt use of the property began, exemption will be effective as of the date the exempt use began; or
- If application is filed more than thirty (30) days after the exempt use began, the exemption will be effective as of the date of application.
- If a religious institution acquires property that was duly exempt at the time of transfer from a transferor who had previously been approved for a religious use exemption of the property, or if a religious institution acquires property to replace its own exempt property, then the effective date of exemption shall be three (3) years prior to the date of application, or the date the acquiring institution began to use the property for religious purposes, whichever is later. The purpose of this subdivision (b)(3) is to provide continuity of exempt status for property transferred from one exempt religious institution to another in the specified circumstances. For purposes of this subdivision (b)(3), property transferred by a lender following foreclosure shall be deemed to have been transferred by the foreclosed debtor, whether or not the property was assessed in the name of the lender during the lender's possession.
- In any county having a metropolitan form of government and a population in excess of five hundred thousand (500,000), according to the 2010 federal census or any subsequent federal census, if a nonprofit educational institution which is a medical college acquires one (1) or more parcels of land or portions thereof for the purpose of carrying out one (1) or more of the exempt purposes for which the institution was created or exists, the institution may claim and file an application for exemption under this section or § 67-5-213, and the effective date of such exemption shall be up to three (3) years prior to the date of application, or the date the institution began to use the property for exempt purposes, whichever is later. This subdivision (b)(3)(C) shall apply to properties acquired before May 25, 2017, so that such properties are not subject to taxation under this chapter while owned by the exempt educational institution and used for one (1) or more of the exempt purposes for which the institution was created or exists; provided, however, that nothing in this subdivision (b)(3)(C) requires a county to refund any taxes that were collected prior to May 25, 2017.
- In any county with a population of not less than four hundred thirty-two thousand two hundred (432,200) nor more than four-hundred thirty-two thousand three hundred (432,300), according to the 2010 federal census or any subsequent federal census, or within a municipality located within such county, if a nonprofit children's hospital changes the use of one (1) or more parcels of land or portions thereof for the purpose of carrying out one (1) or more of the exempt purposes for which the institution was created or exists, the institution may claim and file an application for exemption under this section or § 67-5-213, and the effective date of such exemption shall be up to three (3) years prior to the date of application, or the date the institution began to use the property for exempt purposes, whichever is later. In determining the date that a qualifying institution begins using property for an exempt purpose, subsection (g) applies to the full extent of both improvements and underlying real property so that the entire property, to the extent that the full value of underlying land and any improvements thereon, is considered to be occupied and used by the qualifying institution or its officers purely and exclusively for the institution's purposes from and after the commencement of construction of improvements. This subdivision (b)(3)(D) applies to properties acquired before May 15, 2018, so that such properties are not subject to taxation under this chapter while owned by the qualifying institution and used for one (1) or more of the exempt purposes for which the institution was created or exists, and any property taxes paid on such property that were collected prior to May 15, 2018, shall be refunded.
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Any institution claiming an exemption under this section that has not previously filed an application for and been granted an exemption for a parcel must file an application for exemption with the state board of equalization by May 20 of the year for which exemption is sought. If the application is approved, the exemption will be effective as of January 1 of the year of application or as of the date the exempt use of such parcel began, whichever is later. If application is made after May 20 of the year for which exemption is sought, but prior to the end of the year, the application may be approved but will be effective for only a portion of the year determined as follows:
- All questions of exemption under this section shall be subject to review and final determination by the board; provided, that any determination by the board is subject to judicial review by petition of certiorari to the appropriate chancery court. All other provisions of law notwithstanding, no property shall be entitled to judicial review of its status under this statute, except as provided by the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, and only after the exhaustion of administrative remedies as provided in this section.
- The state board of equalization may revoke any exemption approved under this section, either in whole or in part, if it determines that the exemption was approved on the basis of fraud, misrepresentation, or erroneous information, that the current owner of the property does not qualify for exemption, or that the property is not actually being used for an exempt purpose. Property is not actually being used for an exempt purpose if the property is not currently in use, has been abandoned, is not suitable for human habitation, or is being used for a nonexempt purpose. The executive secretary of the board may initiate proceedings for revocation on the executive secretary's own motion or upon the written complaint of any person upon a determination of probable cause. Revocation shall not be retroactive, unless the order of revocation incorporates a finding of fraud or misrepresentation on the part of the applicant or failure of the applicant to give notice of a change in the use or ownership of the property as required by this section.
- As used in this section, “charitable institution” includes any nonprofit organization or association devoting its efforts and property, or any portion thereof, exclusively to the improvement of human rights and/or conditions in the community.
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The property, or any part thereof, owned by any religious, charitable, scientific or educational membership nonprofit organization chartered by the United States congress shall not be denied exemption because administrative, social or recreational activities of such organization are conducted thereon, where the activities are:
- Agencies for the advancement and enlargement of the purposes for which the organizations exist;
- In furtherance of the general purposes of such organization; or
- To promote the interest of its membership in such organizations.
- When property is owned by corporations organized for the exclusive purpose of holding title to property for use of any organization that itself qualifies for such exemption from taxation under this subsection (d), only such property of the corporation, or such parts thereof, as would be entitled to an exemption under this subsection (d) if owned directly by such organization shall not be denied exemptions.
- The exemption of property or parts thereof under this subsection (d) shall be applicable only to such part of the property on which such organization conducts administrative, social or recreational activities, if it is less than the entire property.
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The property, or any part thereof, owned by any religious, charitable, scientific or educational membership nonprofit organization chartered by the United States congress shall not be denied exemption because administrative, social or recreational activities of such organization are conducted thereon, where the activities are:
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- There shall be exempt from property taxation the property of labor organizations exempted from the payment of federal income taxes by the United States Internal Revenue Code (26 U.S.C. § 501(c)(5)), when such property is not used for revenue producing profit, but is used by such organization for charitable or educational meetings; but, if part of the property is used for revenue producing profit, then the part so used shall not be exempt from property taxation; provided, that the real property on which the building is situated shall be exempt from property taxation.
- No such organization that discriminates against any person based upon race, sex, religious beliefs or national origin shall be eligible for the property tax exemption authorized by subdivision (e)(1).
- [Deleted by 2019 amendment.]
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In the case of property that is owned by any religious, charitable, scientific, or educational institution and on which such institution constructs improvements to be occupied and used by such institution or its officers purely and exclusively for carrying out thereupon one (1) or more of the purposes for which the institution was created or exists, the property may be exempt as follows:
- If construction of the improvements is completed within twelve (12) months of its commencement, the property, to the extent of the value of the land and the value of the improvements constructed thereon, shall be considered to be occupied and used by the institution or its officers purely and exclusively for the institution's purposes from and after, but not before, the commencement of construction of the improvements. Land shall be considered occupied and used by the institution to the extent it is reasonably necessary to support structures or site improvements associated with structures;
- If construction of the improvements is completed more than twelve (12) months after commencement, the property, to the extent of the value of the improvements constructed thereon for these purposes, shall be considered to be occupied and used by the institution or its officers purely and exclusively for the institution's purposes from and after, but not before, the commencement of construction of the improvements and to the extent of such value shall be exempt from taxation;
- If the improvements upon completion are not so occupied and used, then no part of the value of the property shall be exempt from taxation during the construction of the improvements;
- If upon completion of the improvements a portion thereof is not so used and occupied, such portion shall not be exempt from taxation during construction of the improvements; and
- If the improvements upon completion are not occupied and used by such institution or its officers for a period of ten (10) years, purely and exclusively for carrying out thereupon one (1) or more of the purposes for which such institution was created or exists, the institution shall be liable for the full amount of property taxes that would otherwise have been due and payable during the period of construction, plus penalties and interest as provided in this title.
- There shall be exempt from property taxation the property or any part thereof of fraternal organizations exempted from the payment of federal income taxes by the United States Internal Revenue Code (26 U.S.C. § 501(c)), to the extent that such property is used not for revenue-producing profit, but directly, physically and exclusively for religious, charitable, scientific and educational activities.
- There shall be exempt from property taxation the property, or any part thereof, of nonprofit county fair associations.
- There shall be exempt from property taxation the property or any portion thereof containing one (1) residential dwelling located in a community park that is open to entry by the general public, if such dwelling is owned by a nonprofit religious, charitable, educational or scientific organization that does not receive income from the resident thereof, if such resident does not occupy the dwelling in lieu of a salary, and if such resident, by such resident's presence, would discourage or prohibit damage or destruction by vandalism of the organization's property.
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There shall be exempt from property taxation any property upon which a caretaker's dwelling is located, if:
- The dwelling is located upon land owned by a nonprofit member organization chartered by the United States congress;
- The land immediately surrounding the dwelling is used by such organization for nonprofit religious, charitable, educational or scientific purposes; and
- The caretaker's presence is required for the physical security of the users of the property as well as to discourage or prohibit damage or destruction of the organization's property by vandalism.
- The general assembly finds that public radio broadcasting serves a valid educational purpose so long as the broadcaster holds an educational broadcast license issued by the federal communications commission; and, therefore, that property, or any part thereof, owned by a public radio station that is an affiliate member of the public broadcasting network, and that is organized as a nonprofit charitable or educational institution, shall be exempt from property taxation to the extent the property is used in a manner consistent with the license.
- The general assembly finds that public television broadcasting serves a valid educational purpose so long as the broadcaster holds a noncommercial educational broadcast license issued by the federal communications commission. Therefore, that property, or any part thereof, owned by a public television station that is an affiliate member of the public broadcasting network, and that is organized as a nonprofit charitable or educational institution, shall be exempt from property taxation to the extent the property is used in a manner consistent with the license.
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There shall be exempt from property taxation the real and personal property, or any part thereof, that is owned by a religious or charitable institution and that is occupied and used by such institution for a thrift shop; provided, that:
- The institution is exempt from payment of federal income taxes under Section 501(c)(3) of the Internal Revenue Code (26 U.S.C. § 501(c)(3));
-
- The thrift shop is operated as a training venue for persons in need of occupational rehabilitation; or
- The thrift shop is operated primarily by volunteers;
- The inventory of the thrift shop is obtained by donation to the institution that owns and operates the shop;
- Goods are priced at levels generally ascribed to used property;
- Goods are given to persons whose financial situations preclude payment; and
- The net proceeds of the thrift shop are used solely for the charitable purposes of the institution that owns and operates the shop.
- Land not necessary to support exempt structures or site improvements associated with exempt structures, including land used for recreation, retreats or sanctuaries, shall not be eligible for exemption beyond a maximum of one hundred (100) acres per county for each religious, charitable, scientific or nonprofit educational institution qualified for exemption pursuant to this section. For purposes of applying this limit, land owned by an exempt institution shall be aggregated with land owned by related exempt institutions having common ownership or control. Qualifying land in excess of the limit shall be classified as forest land upon application submitted pursuant to § 67-5-1006, or as open space land upon application submitted pursuant to § 67-5-1007, and the effective date of the classification shall be the date the property might otherwise have qualified for exemption.
Acts 1973, ch. 226, § 5; 1974, ch. 771, §§ 5-7; 1974, ch. 774, §§ 1, 2; 1975, ch. 322, § 1; 1976, ch. 670, §§ 1, 2; 1976, ch. 849, § 1; 1977, ch. 255, §§ 1, 2; 1977, ch. 421, §§ 1-5; 1979, ch. 22, § 1; 1981, ch. 96, § 1; 1981, ch. 218, § 1; 1981, ch. 306, §§ 1, 2; 1982, ch. 713, § 1; 1983, ch. 460, § 1; T.C.A., § 67-513; Acts 1984, ch. 507, § 1; 1984, ch. 651, § 1; 1984, ch. 749, § 1; 1984, ch. 766, § 1; 1984, ch. 809, § 1; 1984, ch. 832, § 4; 1985, ch. 68, § 1; 1994, ch. 541, §§ 2-8; 1997, ch. 467, § 1; 2000, ch. 628, § 1; 2000, ch. 793, § 1; 2000, ch. 938, § 2; 2000, ch. 993, § 2; 2002, ch. 687, §§ 1, 2; 2003, ch. 251, § 1; 2004, ch. 531, § 2; 2004, ch. 635, § 1; 2004, ch. 732, §§ 1, 2; 2005, ch. 500, § 12(a); 2006, ch. 740, § 1; 2006, ch. 861, § 1; 2007, ch. 292, § 2; 2008, ch. 1104, §§ 2-4; 2010, ch. 1036, § 2; 2010, ch. 1074, § 1; 2011, ch. 415, § 1; 2013, ch. 209, § 5; 2017, ch. 155, § 1; 2017, ch. 409, § 1; 2017, ch. 465, § 1; 2018, ch. 527, § 1; 2018, ch. 957, § 1; 2019, ch. 355, §§ 2-5.
Compiler's Notes. Acts 1994, ch. 541, § 10 provided that the amendment by that act shall not be construed to terminate the tax-exempt status of any parcel of property on January 1, 1995.
Acts 1997, ch. 467, § 2 provided that that act, which added the last paragraph in (b)(3), shall apply both to applications filed after June 13, 1997, and to applications for exemption which are pending our under appeal to the state board of equalization on that date.
Acts 2000, ch. 628, § 2 provided that the amendments by that act shall apply to applications for exemption pending or under appeal to the State Board of Equalization on April 5, 2000, but shall expire and be void and of no effect July 1, 2000. From April 12, 2000, to July 1, 2000, the following two sentences were in effect at the end of (b)(3):
“Notwithstanding the date of application, the exemption shall take effect up to eighteen (18) months earlier than the date of application, where the application was submitted due to relocation by the applicant of a use previously approved for exemption. In no event may the exemption in such cases date back earlier than the date the property subject to the application began to be used for exempt purposes.”
Acts 2000, ch. 793, § 2 provided that the amendment, in addition to prospective application, shall apply to applications for exemption pending or under appeal at the State Board of Equalization on March 23, 2000.
Acts 2000, ch. 938, § 3, provided that the act, which amended this section and added § 67-5-224, shall take effect June 21, 2000, the public welfare requiring it, and shall apply to applications or appeals pending before the state board of equalization on June 21, 2000. Any application or appeal pending on June 21, 2000, seeking exemption of property used for the purposes hereinabove described may be amended to reflect a change in ownership of the property if such amendment is filed with the State Board of Equalization within ninety (90) days from June 21, 2000. Any organization which has an application or appeal pending before the State Board of Equalization on June 21, 2000, has ninety (90) days from June 21, 2000, to provide evidence of compliance with the terms of the act. The executive secretary of the state board may extend this ninety (90) day period for an additional ninety (90) days.
Acts 2000, ch. 993, § 3 provided that the act shall apply to all matters pending before the board of equalization on June 28, 2000.
Acts 2002, ch. 687, § 3 provided that subsection (m) of this section, in addition to prospective application, shall apply to applications pending or under appeal to the state board of equalization on May 1, 2002.
Acts 2004, ch. 531, § 4 provided that the act shall apply to claims pending on April 14, 2004.
Acts 2004, ch. 635, § 2 provided that the act shall apply retroactively to the calendar year beginning January 1, 1998.
Acts 2004, ch. 732, § 3 provided that in addition to prospective applications, the act shall apply to applications pending or under appeal to the state board of equalization on May 24, 2004.
Acts 2005, ch. 500, § 12(b) provided that, notwithstanding any provision of the act or any other law to the contrary, the provisions of ch. 500, § 12(a) shall apply to claims pending on or after June 22, 2005.
Acts 2006, ch. 861, § 3 provided that the act, in addition to prospective applications, shall apply to applications pending before or under appeal to the state board of equalization, applications for which the executive secretary or state board designee has made a determination but the period in which to appeal under § 67-5-1501(c) has not run, or applications for which an appeal has been filed in court.
Acts 2008, ch. 1104, § 5 provided that nothing in this act, which rewrote subdivision (a)(1), added subdivision (a)(4), and rewrote subdivision (b)(3)(B), shall be construed as affecting a prior final determination of the exempt status of any property in this state.
Acts 2010, ch. 1036, § 5, provided that the act, which amended subdivision (b)(3)(B), shall apply to exemption applications filed after June 11, 2010, and also to applications pending or under appeal before the state board of equalization, as of June 11, 2010.
Acts 2011, ch. 415, § 3 provided that the act, which amended subsections (l ) and (m), shall apply to applications pending on June 6, 2011, as well as applications received thereafter.
Acts 2017, ch. 409, § 2 provided that the act, which amended this section, shall apply to all property with respect to which a leasehold interest was acquired on or after April 29, 2016. Nothing in the act entitles a religious, charitable, scientific, or nonprofit educational institution to a refund for taxes paid on property with respect to which a leasehold interest was acquired on or after April 29, 2016, and for which such taxes became due and owing before May 18, 2017.
Amendments. The 2018 amendment by ch. 527, in (b)(1), substituted “§ 67-5-213, § 67-5-219, or as otherwise required by law,” for “§ 67-5-213 or § 67-5-219” in the first sentence; inserted “that is subject to these application requirements” and deleted “under these sections,” following “property taxes” in the second sentence; and deleted the former third sentence, which read: “A separate application shall be filed for each parcel of property for which exemption is claimed.”
The 2018 amendment by ch. 957 added (b)(3)(D).
The 2019 amendment, in (a)(1), inserted “real and personal” preceding “property” twice, substituted “, but” for “that is” preceding “occupied and”, and deleted “another exempt institution for one (1) or more of the exempt purposes for which it was created or exists under an arrangement” at the end; rewrote (a)(1)(A), which read: “In which the owning institution receives no more rent than a reasonably allocated share of the cost of use, excluding the cost of capital improvements, debt service, depreciation, and interest, as determined by the state board of equalization; or”; in (a)(1)(B), substituted “An exempt institution” for “Which is solely between exempt institutions”, and substituted “continues” for “continue”; and added (a)(1)(C) and (a)(5); in (b)(2), substituted “exemptions” for “applications”, inserted “filing” preceding “fee” twice, and rewrote the last sentence, which read: “For purposes of this section, ‘filing’ means one (1) submission that may include multiple parcels, including real and personal property, with a clear nexus to one (1) exemption determination.”; in (b)(3)(A)(i), deleted “or May 20, whichever is later” following “use began”; in (b)(3)(D), substituted “subsection (g)” for “§ 67-5-212(g)”; in (b)(5), inserted “either in whole or in part,” preceding “if it determines”, substituted “that the current owner” for “or that the current owner or use”, and inserted “, or that the property is not actually being used for an exempt purpose. Property is not actually being used for an exempt purpose if the property is not currently in use, has been abandoned, is not suitable for human habitation, or is being used for a nonexempt purpose” following “qualify for exemption”; deleted (f), which read: “There shall be exempt from property taxation the property or any part thereof of nonprofit artificial breeding associations chartered under the Tennessee Nonprofit Corporation Act, compiled in title 48, chapters 51-69.”; in (g), deleted the designation for (g)(1) from the first paragraph and added “may be exempt as follows:” at the end; added (g)(1); added the designations for (g)(2) and (3); in (g)(2), added “If construction of the improvements is completed more than twelve (12) months after commencement, the property” at the beginning, deleted “the” preceding “construction of”, and deleted “provided, that, if” at the end; in (g)(3), inserted “If” at the beginning, and substituted the semicolon at the end for a period; deleted former (g)(4), which read: “Construction begun, and having the effect of activating this subsection (g), shall be completed within five (5) years or the effect of this subsection (g) shall be null and void.”; redesignated former (g)(2) and (3) as (g)(4) and (5), respectively; and in (g)(4), substituted “of the improvements; and” for a period at the end.
Effective Dates. Acts 2018, ch. 527, § 3. March 7, 2018.
Acts 2018, ch. 957, § 2. May 15, 2018.
Acts 2019, ch. 355, § 6. May 10, 2019.
Cross-References. Income tax exemptions, § 67-2-104.
Property tax exemption for property used for religious, charitable, scientific, literary or educational purposes, Tenn. Const., art. II, § 28.
Textbooks. Tennessee Jurisprudence, 3 Tenn. Juris., Arson, § 3; 23 Tenn. Juris., Taxation, § 25.
Attorney General Opinions. Constitutionality of Williamson County Executive's (now county mayor's) line-item veto over county budget, OAG 97-047 (4/14/97).
NOTES TO DECISIONS
1. In General.
It requires actual use to take real property off the tax rolls. Metropolitan Gov't v. State Bd. of Equalization, 543 S.W.2d 587, 1976 Tenn. LEXIS 481 (Tenn. 1976).
Where a hospital owned by a nonprofit corporation was still under construction, the property was not “occupied and used” for charitable purposes, and did not qualify for the exemption. Metropolitan Gov't v. State Bd. of Equalization, 543 S.W.2d 587, 1976 Tenn. LEXIS 481 (Tenn. 1976).
The receipt of rent undoubtedly disentitles a property owner to exemption under this section. Tusculum College v. State Board of Equalization, 600 S.W.2d 739, 1980 Tenn. App. LEXIS 331 (Tenn. Ct. App. 1980).
The property of a religious, charitable, scientific or educational institution is exempt only if occupied and used by it purely and exclusively for carrying out one or more of the purposes for which the institution exists or occupied and used by another exempt institution purely and exclusively for one or more of the purposes for which the other exempt institution was created or exists, and in the latter event, no more than one dollar per year rental may be paid by the latter institution to the former. Memphis Dev. Found. v. State Bd. of Equalization, 653 S.W.2d 266, 1983 Tenn. App. LEXIS 574 (Tenn. Ct. App. 1983).
The exemption of government-owned property is not comparable to the exemption granted charities. The government is entitled to exemption because it is the government, not because the use is a charitable use, but the exemption for charitable use by a charity is narrowly defined and depends upon the use. Memphis Dev. Found. v. State Bd. of Equalization, 653 S.W.2d 266, 1983 Tenn. App. LEXIS 574 (Tenn. Ct. App. 1983).
Neither the constitution nor this section allows the ownership of unused property by a tax exempt organization to confer exemption upon the property. It is the use and not the nonuse which confers exemption. Memphis Dev. Found. v. State Bd. of Equalization, 653 S.W.2d 266, 1983 Tenn. App. LEXIS 574 (Tenn. Ct. App. 1983).
A private, not-for-profit corporation cannot buy an historic building and offer it for rent for commercial use at a price in competition with owners of other buildings without subjecting the property to taxation. Memphis Dev. Found. v. State Bd. of Equalization, 653 S.W.2d 266, 1983 Tenn. App. LEXIS 574 (Tenn. Ct. App. 1983).
While the promotion and encouragement of urban redevelopment may be an exempt activity, demolition, remodeling and carrying on commercial activity on the redeveloped property is not an exempt activity. Memphis Dev. Found. v. State Bd. of Equalization, 653 S.W.2d 266, 1983 Tenn. App. LEXIS 574 (Tenn. Ct. App. 1983).
Tax exemptions in favor of religious, scientific, literary and educational institutions are liberally construed. Kopsombut-Myint Buddhist Center v. State Bd. of Equalization, 728 S.W.2d 327, 1986 Tenn. App. LEXIS 3607 (Tenn. Ct. App. 1986).
2. Constitutionality.
The amendment made to T.C.A. § 67-5-212(a)(1) by Chapter 766 of Public Acts of 1984 is in violation of Tenn. Const., art. II, § 28, and is, therefore, invalid. The remaining portion of T.C.A. § 67-5-212(a)(1) remains in effect. Metropolitan Government of Nashville & Davidson County v. Tennessee State Bd. of Equalization, 817 S.W.2d 953, 1991 Tenn. LEXIS 342 (Tenn. 1991), rehearing denied, — S.W.2d —, 1991 Tenn. LEXIS 433 (Tenn. Oct. 28, 1991).
3. Construction.
The phrase “purely and exclusively” relating to the use requirement meant that the use was directly incidental to or an integral part of the recognized purposes of an exempt institution. Methodist Hosps. v. Assessment Appeals Comm'n, 669 S.W.2d 305, 1984 Tenn. LEXIS 780 (Tenn. 1984).
The exemption in favor of a religious, scientific, literary, or educational institution is liberally construed, whereas there is a presumption against exempting other property from taxation. Christian Home for Aged, Inc. v. Tennessee Assmt. Appeals Comm'n, 790 S.W.2d 288, 1990 Tenn. App. LEXIS 83 (Tenn. Ct. App. 1990).
4. Jurisdiction.
College failed to exhaust all administrative remedies before seeking judicial review of the denial of its request for exemption from property tax; as such, the lower court lacked subject matter jurisdiction. State ex rel. County of Hamblen v. Knoxville College, 60 S.W.3d 93, 2001 Tenn. App. LEXIS 439 (Tenn. Ct. App. 2001).
5. Remedies.
Appeal to the state board of equalization as provided in this section for obtaining a determination of tax exempt classification is not an exclusive remedy, and plaintiff is not prevented from paying the tax under protest and suing in chancery for a refund. Vanderbilt Univ. v. Ferguson, 554 S.W.2d 128, 1976 Tenn. App. LEXIS 265 (Tenn. Ct. App. 1976).
6. Educational Institutions.
Parking facilities provided for the teaching staff, nurses and other personnel of Vanderbilt University Hospital were reasonably necessary for the operation of the hospital, the program and activities of which were directly related to and a part of the educational program of the institution and hence qualified for tax exempt status. Vanderbilt Univ. v. Ferguson, 554 S.W.2d 128, 1976 Tenn. App. LEXIS 265 (Tenn. Ct. App. 1976).
Tax exemptions in favor of educational institutions must be liberally construed. Vanderbilt Univ. v. Ferguson, 554 S.W.2d 128, 1976 Tenn. App. LEXIS 265 (Tenn. Ct. App. 1976).
Housing furnished to a college president represented a part payment of his compensation, thereby relieving the college of paying the amount of salary which would otherwise be required; thus, the president's home was no more exempt than other housing on which rent was being paid. Tusculum College v. State Board of Equalization, 600 S.W.2d 739, 1980 Tenn. App. LEXIS 331 (Tenn. Ct. App. 1980).
Where it was shown that most employees had off-campus housing, there was no ground for finding that the maintenance of on-campus housing was indispensable to obtaining the services of the employees involved; thus, residences rented by the college to faculty and staff members were not exempt under the rule in Vanderbilt Univ. v. Ferguson, 554 S.W.2d 128, 1976 Tenn. App. LEXIS 265 (Tenn. Ct. App. 1976). Tusculum College v. State Board of Equalization, 600 S.W.2d 739, 1980 Tenn. App. LEXIS 331 (Tenn. Ct. App. 1980).
Where the occupancy was for purposes of residence and not for purposes of instruction of students, faculty and staff housing was occupied and used purely and exclusively for carrying out one or more of the purposes for which such institution was created or exists. Tusculum College v. State Board of Equalization, 600 S.W.2d 739, 1980 Tenn. App. LEXIS 331 (Tenn. Ct. App. 1980).
7. Religious Institutions.
Parsonages, per se, are not given exemption under this section; only those pieces of property that are used purely and exclusively for religious, charitable, scientific or educational purposes are exempt. Blackwood Bros. Evangelistic Ass'n v. State Bd. of Equalization, 614 S.W.2d 364, 1980 Tenn. App. LEXIS 420 (Tenn. Ct. App. 1980).
Where a minister and his family lived in the property and went forth from there to make a living and preach, sing, and evangelize in the name of his religion, that did not make the property's use exclusively for religious purposes. Blackwood Bros. Evangelistic Ass'n v. State Bd. of Equalization, 614 S.W.2d 364, 1980 Tenn. App. LEXIS 420 (Tenn. Ct. App. 1980).
Even though a church may have more than one parsonage used purely and exclusively for religious purposes, only one would be exempt. Blackwood Bros. Evangelistic Ass'n v. State Bd. of Equalization, 614 S.W.2d 364, 1980 Tenn. App. LEXIS 420 (Tenn. Ct. App. 1980).
State board of equalization's definition of parsonage which required that it be the home of a full time regular minister of a local church was not arbitrary and capricious. Blackwood Bros. Evangelistic Ass'n v. State Bd. of Equalization, 614 S.W.2d 364, 1980 Tenn. App. LEXIS 420 (Tenn. Ct. App. 1980).
It was error to deny tax exemption for property held under an oral joint venture formed as a nonprofit entity where the property was held in trust for a religious institution and was to be conveyed to that institution once it was organized as a not-for-profit organization. Kopsombut-Myint Buddhist Center v. State Bd. of Equalization, 728 S.W.2d 327, 1986 Tenn. App. LEXIS 3607 (Tenn. Ct. App. 1986).
A religious institution's realty is exempt from property taxation only when it is both occupied and used exclusively by the institution for one of its charter purposes, and the exemption is denied not only to property leased by it to others, but also to property occupied by it but not used exclusively for a charter purpose. Christian Home for Aged, Inc. v. Tennessee Assmt. Appeals Comm'n, 790 S.W.2d 288, 1990 Tenn. App. LEXIS 83 (Tenn. Ct. App. 1990).
Chapel was the only part of retirement community which qualified for the religious exemption, where the community's towers, townhouses, cottages and efficiency apartments were occupied primarily for residential purposes and not to further any religious purpose within the meaning of this section. Christian Home for Aged, Inc. v. Tennessee Assmt. Appeals Comm'n, 790 S.W.2d 288, 1990 Tenn. App. LEXIS 83 (Tenn. Ct. App. 1990).
Trial court did not err in finding that a house owned by a church and used for overseas missionaries temporarily returning the United States was not tax exempt, because it was not directly incidental to or reasonably necessary for the church to accomplish its missionary work. First Presbyterian Church of Chattanooga v. Tenn. Bd. of Equalization, 127 S.W.3d 742, 2003 Tenn. App. LEXIS 577 (Tenn. Ct. App. 2003), appeal denied, — S.W.3d —, 2004 Tenn. LEXIS 120 (Tenn. Feb. 2, 2004).
Evidence did not preponderate against the State Board of Equalization's finding that a bookstore/cafe area contained in a church family life center facility did not qualify that space for the tax exemption provided by the former T.C.A. § 67-5-212 because the bookstore/cafe area was nothing short of a retail establishment housed within the walls of the center, complete with paid staff, inventory control, retail pricing, and a wide array of merchandise for sale to the general public. Christ Church Pentecostal v. Tenn. State Bd. of Equalization, 428 S.W.3d 800, 2013 Tenn. App. LEXIS 197 (Tenn. Ct. App. Mar. 21, 2013), appeal denied, — S.W.3d —, 2013 Tenn. LEXIS 742 (Tenn. Sept. 10, 2013).
Evidence did not preponderate against the State Board of Equalization's finding that a fee-based membership fitness center and gymnasium area contained in a church family life center facility qualified for a fifty percent pro rata tax exemption provided by the former T.C.A. § 67-5-212 because, in addition to operating in part as a commercial enterprise, the church used the gymnasium for a faith-based youth basketball program, youth fellowship, and other church-related activities. Christ Church Pentecostal v. Tenn. State Bd. of Equalization, 428 S.W.3d 800, 2013 Tenn. App. LEXIS 197 (Tenn. Ct. App. Mar. 21, 2013), appeal denied, — S.W.3d —, 2013 Tenn. LEXIS 742 (Tenn. Sept. 10, 2013).
Partial denial of a church's application for property tax exemption under the former T.C.A. § 67-5-212 for a bookstore/cafe and fitness center located within the church did not violate Tenn. Const. art. XI, § 8 because the Tennessee Legislature classified religious organizations differently from family wellness centers and university bookstores and, as such, they were not similarly situated. Christ Church Pentecostal v. Tenn. State Bd. of Equalization, 428 S.W.3d 800, 2013 Tenn. App. LEXIS 197 (Tenn. Ct. App. Mar. 21, 2013), appeal denied, — S.W.3d —, 2013 Tenn. LEXIS 742 (Tenn. Sept. 10, 2013).
8. Charitable Institutions.
A parking lot for hospital employees was incidental to or an integral part of the hospital and was exempt from ad valorem taxation. Methodist Hosps. v. Assessment Appeals Comm'n, 669 S.W.2d 305, 1984 Tenn. LEXIS 780 (Tenn. 1984).
A corporation created by two charitable hospitals for the exclusive purpose of doing their laundry was deemed a charitable institution and entitled to the exemption under this section. Shared Hosp. Servs. Corp. v. Ferguson, 673 S.W.2d 135, 1984 Tenn. LEXIS 930 (Tenn. 1984).
A separate institution formed by one or more charitable institutions would not automatically be deemed a charitable institution and entitled to the exemption; however, the separate institution would be deemed a charitable institution to the extent its services were used for charitable purposes. Shared Hosp. Servs. Corp. v. Ferguson, 673 S.W.2d 135, 1984 Tenn. LEXIS 930 (Tenn. 1984).
Any nonprofit organization or association which devotes its efforts to improvement of conditions in the community is a charitable institution and exempted from property taxation. Downtown Hospital Asso. v. Tennessee State Bd. of Equalization, 760 S.W.2d 954, 1988 Tenn. App. LEXIS 457 (Tenn. Ct. App. 1988).
Nonprofit hospital corporation was a charitable institution, within the meaning of this section, where its charter provided that it was a charitable corporation created to provide a general hospital “with the ultimate aim of promoting civic improvement in the well being of man,” its directors were unpaid volunteers, its principal revenue source was medicare and medicaid payments, and all of its revenue was used for operating expenses, debt retirement, maintenance and improvements. Downtown Hospital Asso. v. Tennessee State Bd. of Equalization, 760 S.W.2d 954, 1988 Tenn. App. LEXIS 457 (Tenn. Ct. App. 1988).
T.C.A. § 67-5-212 refers only to what constitutes a charitable organization and not to what is a charitable use. Christian Home for Aged, Inc. v. Tennessee Assmt. Appeals Comm'n, 790 S.W.2d 288, 1990 Tenn. App. LEXIS 83 (Tenn. Ct. App. 1990).
Although retirement village served the elderly by providing a community in which their special needs could be met, the village's property was not used purely and exclusively for a charitable purpose where financially disabled members of the public were effectively excluded from the benefits provided. Christian Home for Aged, Inc. v. Tennessee Assmt. Appeals Comm'n, 790 S.W.2d 288, 1990 Tenn. App. LEXIS 83 (Tenn. Ct. App. 1990).
Trial court properly determined that charitable organization's property was tax exempt under T.C.A. § 67-5-212(a)(3) because even though the property was used once a year for a golf tournament, it was not used for commercial activity but was used exclusively for its charitable purpose or those purposes directly incidental to it; also, there was no requirement that the use be continuous. Youth Programs, Inc. v. Tenn. State Bd. of Equalization, 170 S.W.3d 92, 2004 Tenn. App. LEXIS 838 (Tenn. Ct. App. 2004), appeal denied, Youth Programs, Inc. v. Tenn. Bd. of Equalization, — S.W.3d —, 2005 Tenn. LEXIS 534 (Tenn. May 23, 2005).
Tennessee State Board of Equalization properly recalculated the electric cooperatives' annual ad valorem taxes for 2015 and recertified the assessments because, as the Attorney General correctly found, the statutory tax exemption for electric cooperatives was unconstitutional where there was no element of charity associated with electric cooperatives, the statutory exemption was incompatible with the statutory charitable exemption framework, the exemption appeared to be a mechanism to recoup expenses of construction, and the language of the exemption itself would seem to indicate it was not a charitable exemption due to the limitation of the exemption to four years. Caney Fork Elec. Coop. v. Tenn. State Bd. of Equalization, — S.W.3d —, 2016 Tenn. App. LEXIS 714 (Tenn. Ct. App. Sept. 23, 2016).
9. Proration of Exemption.
Proration of exemption should be in proportion to use time, that is, comparing time of actual use for charitable and noncharitable purposes, without consideration of idle time. Memphis Dev. Found. v. State Bd. of Equalization, 653 S.W.2d 266, 1983 Tenn. App. LEXIS 574 (Tenn. Ct. App. 1983).
There is no deadline on the effective filing of an application for tax exemption, and an exempt institution is entitled to tax relief for that part of the current tax year it owns the property and uses it purely and exclusively for one or more of the purposes for which the exempt institution was created. Methodist Hosps. v. Assessment Appeals Comm'n, 669 S.W.2d 305, 1984 Tenn. LEXIS 780 (Tenn. 1984).
67-5-213. Property of certain educational institutions.
- Real estate owned by an educational institution and used primarily for dormitory purposes for its students, even though other student activities are incidentally conducted therein, and even though the student's spouse or children may reside therein, is exempt from taxation.
- A residence and no more than three (3) acres of its surrounding grounds, owned by a college or university and used as the home of its chief executive officer, is exempt from taxation, whether or not located on the campus of the college or university, if the chief executive officer of the institution is required to reside there as a condition of employment.
-
-
Residential units owned by a nonprofit college or university or nonprofit secondary school that boards all or some of its students and located on or immediately adjoining its campus are exempt from taxation, if such residential units meet all of the following criteria:
- The unit is occupied by a member of the faculty or staff of the institution;
- Such occupancy is required as a condition of that person's employment as a convenience for the institution or to attend to plant or equipment;
- The institution that owns the unit receives no income from the unit except a reasonable service and maintenance fee;
- The employee occupying the unit receives no equity of ownership or any other thing of permanent or transferable value from occupancy of the unit;
- The right of the employee to occupy the unit ends with such employee's tenure on the faculty or staff of that institution; and
- The unit is occupied wholly by the employee and the employee's immediate family.
- The exemption from taxation provided by this section to a nonprofit college or university or nonprofit secondary school that boards all or some of its students applies only to a number of residential units equal to those owned by the college or university or private school as of July 1, 1981, plus five (5) residential units per institution in addition to those already owned by that institution. The limitation of exemption of this subdivision (c)(2) to the residential units owned by a nonprofit college or university or nonprofit secondary school in 1981, plus five (5) residential units shall not apply to an institution chartered before 1930, whose entire original campus is an historical and integral entity, so long as the residential units owned by such nonprofit college or university or nonprofit secondary school satisfy the criteria of subdivision (c)(1).
- This subsection (c) does not apply to any institution in any county having a population of not less than two hundred fifty-four thousand (254,000) nor more than two hundred fifty-five thousand (255,000), according to the 1970 federal census or any subsequent federal census.
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Residential units owned by a nonprofit college or university or nonprofit secondary school that boards all or some of its students and located on or immediately adjoining its campus are exempt from taxation, if such residential units meet all of the following criteria:
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- A bookstore, owned by a college or university, located on the campus of the owning institution, and operated not-for-profit to furnish students at that institution with textbooks and other ancillary required materials is exempt from taxation, even though the bookstore may sell other items of a souvenir nature, such as wearing apparel, glassware, and china embossed with the name, seal or logo of the institution, or items such as toiletries or stationery supplies for the convenience of students.
- This subsection (d) does not apply to any institution in any county having a population of not less than two hundred fifty-four thousand (254,000) nor more than two hundred fifty-five thousand (255,000), according to the 1970 federal census or any subsequent federal census.
- This section applies only to nonprofit educational institutions.
Acts 1973, ch. 226, § 5; 1981, ch. 296, § 1; 1981, ch. 486, §§ 1-3; T.C.A., § 67-514; Acts 1984, ch. 809, § 2; 1993, ch. 168, §§ 1, 2; 1995, ch. 163, § 1.
Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 25.
Law Reviews.
Taxation — Exemption of College Fraternities, 16 Tenn. L. Rev. 369 (1940).
Decisions Under Prior Law
1. Housing Facilities.
Housing facilities owned by college and used for housing married students and their families were directly incidental to and an integral part of the process of college and university education and as such exempt from taxation. George Peabody College for Teachers v. State Bd. of Equalization, 219 Tenn. 123, 407 S.W.2d 443, 1966 Tenn. LEXIS 511 (1966).
2. Other Housing Excluded.
Prior to 1981, this section specifically exempted school dormitories and could be construed to exclude other housing, such as faculty and staff residences, under the doctrine of inclusio unius est exclusio alterius (mention of one excludes all others). Tusculum College v. State Board of Equalization, 600 S.W.2d 739, 1980 Tenn. App. LEXIS 331 (Tenn. Ct. App. 1980).
67-5-214. Cemeteries and monuments.
- Places of burial used as such, monuments of the dead and all nonprofit cemeteries shall be exempt from taxation.
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- There shall also be exempt from taxation any real property owned by cemeteries operated on a for-profit basis that has been prepared and is being held for burial purposes; provided, that the amount of such property shall not exceed the reasonable expectation of public needs.
- Cemeteries shall be required to apply for exemption and obtain approval of exemption by the state board of equalization, if charges are imposed for use of burial plots.
Acts 1973, ch. 226, § 5; 1980, ch. 689, § 1; T.C.A., § 67-515; Acts 1994, ch. 541, § 9.
Compiler's Notes. Acts 1994, ch. 541, § 10 provided that the amendment by the act, which amended subdivision (b)(2), shall not be construed to terminate the tax-exempt status of any parcel of property on January 1, 1995.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 20.
Decisions Under Prior Law
1. Cemeteries.
Former statute operated to exempt from taxation the real estate and improvements, and the improvement fund of an incorporated cemetery company, but did not operate to exempt its personal effects, and did not operate to exempt its stock in the hands of the stockholders, based upon such effects. Forest Hill Cem. Co. v. Creath, 127 Tenn. 686, 157 S.W. 412, 1913 Tenn. LEXIS 12 (1913).
67-5-215. Personal bank accounts and other personal property.
- The entire amount of money deposited in an individual's personal or family checking or savings account and seven thousand five hundred dollars ($7,500) worth of personal household goods and furnishings, wearing apparel and other such tangible personal property in the hands of a taxpayer shall be exempt from taxation.
- Where such property is owned jointly by a husband and wife, the exemption shall be fifteen thousand dollars ($15,000) and any exemption applying to any minor child of the family living at home and not used by the minor child personally may be applied to the total family household goods and furnishings, wearing apparel, and other such tangible personal property used by the family in common.
Acts 1973, ch. 226, § 5; 1977, ch. 133, § 1; 1978, ch. 902, §§ 1-4; T.C.A., § 67-516; Acts 1984, ch. 793, § 1.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 26.1.
Attorney General Opinions. Exclusion from ad valorem taxation of personal property of individuals, OAG 00-062 (4/3/00).
67-5-216. Growing crops.
- All growing crops of whatever kind, including, but not limited to, timber, nursery stock, shrubs, flowers, and ornamental trees, the direct product of the soil of this state or any other state of the union, in the hands of the producer or the producer's immediate vendee, and articles manufactured from the produce of this state, or any other state of the union, in the hands of the manufacturer, shall be exempt from taxation.
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- All livestock and poultry of whatever kind in the hands of the producer or the producer's immediate vendee shall be exempt from taxation.
- “Immediate vendee” is limited to farm use and does not include any person using such products in meat processing.
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- “Articles manufactured from the produce of this state, or any other state of the union, in the hands of the manufacturer” include and have always included aged whiskey barrels during the time in which such barrels are owned or leased by a person that produces or manufactures whiskey in those barrels.
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For purposes of this subsection (c), an “aged whiskey barrel” is defined as a barrel that:
- Is comprised of the timber of this state, or any other state of the union;
- Contains, or has contained, whiskey; and
- Has changed, or will change, in form or appearance as a result of the unique process of aging whiskey.
- For purposes of this subsection (c), “whiskey” has the same meaning as the term “whisky” as defined in 27 CFR 5.22(b) and includes all products identified as “whisky” in 27 CFR 5.22(b).
Acts 1973, ch. 226, § 5; 1977, ch. 84, § 1; T.C.A., § 67-517; Acts 2018, ch. 971, § 1.
Compiler's Notes. Acts 2018, ch. 971, § 2 provided that any action or proceeding to correct an assessment or request a refund or other relief on the basis of the act, which amended this section, shall be subject to the applicable statutes of limitations, which are in no way altered or amended by the act.
Acts 2018, ch. 971, § 3 provided that the act, which amended this section, shall apply retroactively to all periods prior to May 17, 2018.
Amendments. The 2018 amendment added (c).
Effective Dates. Acts 2018, ch. 971, § 3. May 17, 2018.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 21.
Attorney General Opinions. The proposed legislation would exempt from taxation wooden barrels while the barrels are used to produce whiskey. But those barrels are not within the scope of the exemption allowed for “manufactured articles” under article II, section 30 of the Tennessee Constitution. The legislative finding to the contrary notwithstanding, barrels used by a whiskey maker to age whiskey are not “manufactured articles” as that term has long been construed by the Tennessee Supreme Court. A statute exempting such barrels from taxation would not comport with article II, section 30, of the Tennessee Constitution. OAG 18-06, 2018 Tenn. AG LEXIS 49 (3/5/2018).
Proposed Senate Bill 2076/House Bill 2038, 110th Tenn. Gen. Assem. (2018), as amended by Amendment No. 2 to HB 2038 (HA 0942/Drafting Code 014670), is not constitutional. Under article II, section 30, of the Tennessee Constitution, as interpreted and construed by the Tennessee Supreme Court, an article being used to manufacture another product — such as a barrel being used by a whiskey maker to manufacture aged whiskey — is not entitled to an exemption from constitutionally mandated ad valorem taxation, and it is not within the legislative power to override or modify a judicial interpretation of the Constitution. OAG 18-15, 2018 Tenn. AG LEXIS 12 (3/26/2018).
Decisions Under Prior Law
1. Construction.
The term “produce of the state” as used in the constitution embraces whatever is produced or grown in the state, or is the yield of the state, whether it be crops, timber, coal, iron, marble, or wood, or any other article which may be treated as produced or grown within the state from or on the soil, or may be found in the soil. Benedict v. Davidson County, 110 Tenn. 183, 67 S.W. 806, 1902 Tenn. LEXIS 52 (1901).
The term “produce of the state” as used in the constitution has been construed to be limited to articles produced or grown from or on the soil or to be found in the soil and therefore excludes animals, though manufactured into food products within the state. Neuhoff Packing Co. v. Sharpe, 146 Tenn. 293, 240 S.W. 1101, 1921 Tenn. LEXIS 19 (1921).
2. “In Whose Hands.”
Alcohol, rum, licorice, salt, sugar, and other ingredients, purchased through the channels of commerce, and on hand and intended for use in the manufacture of tobacco, were not exempt from taxation under Tenn. Const., art. II, §§ 28, 30, and under former statute, as products of the soil in the hands of the producer's immediate vendee, or as articles manufactured therefrom, while stored awaiting their intended use. Nashville Tobacco Works v. City of Nashville, 149 Tenn. 551, 260 S.W. 449, 1923 Tenn. LEXIS 113 (1923).
Products of the soil of Tennessee are not exempt from taxation after they have left the hands of the producer and his immediate vendee. Morgan & Hamilton Co. v. City of Nashville, 151 Tenn. 382, 270 S.W. 75, 1924 Tenn. LEXIS 70 (1924).
3. Other States.
Logs of a mill operator, grown on Tennessee soil, and lumber, rough and smooth, cut by him from such logs, are articles manufactured from the produce of the state and exempt from taxation. Benedict v. Davidson County, 110 Tenn. 183, 67 S.W. 806, 1902 Tenn. LEXIS 52 (1901). See also I. M. Darnell & Son Co. v. Memphis, 208 U.S. 113, 28 S. Ct. 247, 52 L. Ed. 413, 1908 U.S. LEXIS 1427 (1908).
A tax discriminates against property the product of the soil of other states brought into and at rest within the state of Tennessee and is invalid when like property, produced from the soil of Tennessee, is exempted, since such action places a direct burden upon interstate commerce. I. M. Darnell & Son Co. v. Memphis, 208 U.S. 113, 28 S. Ct. 247, 52 L. Ed. 413, 1908 U.S. LEXIS 1427 (1908).
A Tennessee corporation purchasing tobacco produced in Kentucky from a New Jersey corporation, of which it was a subsidiary, at a price sufficient to cover the seller's cost of buying from the producers, rehandling, and shipping, was not exempt from taxation thereon, under Tenn. Const., art. II, § 28, and under former statute, as products of the soil in the hands of the producer's immediate vendee. Nashville Tobacco Works v. City of Nashville, 149 Tenn. 551, 260 S.W. 449, 1923 Tenn. LEXIS 113 (1923).
As tobacco produced in this state is exempt from taxation as the direct product of the soil in the hands of the producer, and his immediate vendee Tenn. Const., art. II, § 28, so tobacco produced in Kentucky is exempt from taxation in the hands of the purchaser's immediate vendee in Tennessee, because the state cannot discriminate unfavorably in its taxing laws against the products of another state. Nashville Tobacco Works v. City of Nashville, 149 Tenn. 551, 260 S.W. 449, 1923 Tenn. LEXIS 113 (1923).
4. Burden of Proof.
It was incumbent on a tobacco manufacturing company claiming exemption of leaf tobacco and ingredients used in the manufacture of tobacco affirmatively to show such exemption. Nashville Tobacco Works v. City of Nashville, 149 Tenn. 551, 260 S.W. 449, 1923 Tenn. LEXIS 113 (1923).
5. Manufactured Articles.
Manufactured articles are not exempt as commodities of commerce, but as articles of manufacture in the hands of the manufacturer; and immunity from taxation does not follow manufactured articles after they have left the hands of the manufacturer. Morgan & Hamilton Co. v. City of Nashville, 151 Tenn. 382, 270 S.W. 75, 1924 Tenn. LEXIS 70 (1924).
Articles in storage awaiting conversion by a manufacturer are not exempt from taxation until the process of conversion actually begins. Morgan & Hamilton Co. v. City of Nashville, 151 Tenn. 382, 270 S.W. 75, 1924 Tenn. LEXIS 70 (1924).
67-5-217. Property in transit.
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Tangible personal property that:
- Is moving in interstate commerce through or over the territory of this state; or
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Was consigned to a warehouse within this state from outside this state, for storage, in transit, to a final destination, whether specified when transportation begins or afterwards, that is also outside this state,
shall be deemed not to have acquired a situs in this state for purposes of ad valorem taxation.
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- Tangible personal property transported to a plant, warehouse or establishment within this state, from outside this state, for storage or repackaging, and held for eventual sale or other disposition, other than at retail, to a destination, whether specified when transportation begins or afterwards, that is outside this state, shall be deemed not to have acquired a situs within this state for purposes of ad valorem taxation.
- In the event such tangible personal property mentioned in subdivision (b)(1) is held for sale or eventual disposition to destinations both within and without this state, then this exemption shall be applicable to that percentage of the value of such tangible personal property, in the same proportion that sales or other dispositions to final destinations outside of this state, during the preceding year, bears to the total sales or dispositions of such tangible personal property during such preceding year.
Acts 1973, ch. 226, § 5; T.C.A., § 67-518.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 26.1.
67-5-218. Historic properties.
-
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There shall be exempt from property taxation the value of any improvement made to or restoration of any structure included within title 4, chapter 11, part 2, or that is certified by a historic properties review board, as provided for in subdivision (a)(2), when the improvement or restoration is necessitated by:
- Any comprehensive plan for the development of a district or zone authorized in § 13-7-401;
- The official preservation plan of the state of Tennessee as required by United States Public Law 89-665 (16 U.S.C. § 470);
- Any other federal or state plan of development or redevelopment that includes the preservation and restoration of structures covered by this section; or
- The agreement of the owner of an individual structure to restore such structure in accordance with guidelines specified by a historic properties review board, as provided for herein, and to refrain from significantly altering or demolishing such structure during the period of exemption.
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The chief administrative officer of each county shall appoint a historic properties review board for that jurisdiction, to be approved by a majority vote of the county governing body.
- The review board shall consist of at least five (5) members of whom at least one (1) shall be an architect, if resident in the county, who is a member of the American Institute of Architects or meets the membership qualifications of that body, one (1) shall be a member of the local planning commission, and one (1) shall be the county historian, a member of the county historical commission, or a member of the county historical society.
- The review board shall formulate criteria for certification of historic properties with the assistance of the Tennessee historical commission, and subject to review and comment by the state preservation officer.
- All structures, except those on the Tennessee or National Register of Historic Places, whose owners seek to benefit from this section, shall be certified in accordance with these criteria. The exemption of any structure certified in accordance with this section, wherever located, shall also include any structure or residence used in the management or care of such historical structure. Any structure one hundred seventy-five (175) years of age or older shall be presumed to meet the criteria on the basis of age alone, any structure one hundred twenty-five (125) years of age or older shall be presumed to meet the criteria, unless established otherwise, and any structure seventy-five (75) years of age or older shall be assumed to meet the criteria subject to individual review.
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Such exemptions shall continue in effect for ten (10) years in the case of a partial or exterior restoration or improvement, as determined by the review board, and fifteen (15) years in the case of a total restoration, as determined by the review board.
- At the end of the applicable period, the structure shall be assessed and taxed on the basis of its full market value.
- If any structure receiving an exemption under this section is demolished or significantly altered, as determined by the review board, during the period of exemption, the exemption of the improved value will immediately end and the owner shall be liable at that time for any difference between the tax paid and the tax that would have been due on such improved value.
- The exemptions and restrictions provided for in this section shall apply to the structure itself and pass with its title.
- Exemptions may be made in all counties in accordance with subdivisions (a)(1)-(4) for property that would be exempt under § 67-5-212.
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There shall be exempt from property taxation the value of any improvement made to or restoration of any structure included within title 4, chapter 11, part 2, or that is certified by a historic properties review board, as provided for in subdivision (a)(2), when the improvement or restoration is necessitated by:
- This section shall only apply to counties having a population of two hundred thousand (200,000) or more, according to the 1970 federal census, or any subsequent federal census, it being the finding of the general assembly that redevelopment pressures are greater on historic structures in heavily urbanized areas.
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- This section shall apply only to those counties that, by a majority vote of the governing body of the county, choose to come under its provisions.
- Any incorporated municipality that desires to come under the provisions of this section may do so separately by a majority vote of its governing body. In that event, however, only the territory within the corporate bounds of the municipality shall be affected by this section.
Acts 1976, ch. 826, §§ 2-4; 1978, ch. 621, § 1; 1980, ch. 697, §§ 1, 2; T.C.A., §§ 67-519 — 67-521.
Code Commission Notes.
Former subdivision (a)(1)(C), concerning any project initiated under the provisions of title 7, chapter 36, was deleted as obsolete by authority of the code commission in 2006.
Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 26.1.
67-5-219. Airport runways and aprons.
There is exempt from the property tax so much of the real property of private public use airports as is shown to be used for airport runways and aprons. For the purposes of this section, such runways and aprons shall be deemed to be property used exclusively for public or corporation purposes.
Acts 1978, ch. 680, § 1; T.C.A., § 67-522; Acts 1984, ch. 815, § 1.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 26.1.
67-5-220. Property held in foreign trade zone.
Tangible personal property imported from outside of the United States and held in a foreign trade zone or foreign trade subzone, as defined in title 7, chapter 85, for the purpose of sale, manufacture, processing, assembly, grading, cleaning, mixing or display shall be exempt from Tennessee ad valorem taxation while held in the foreign trade zone or subzone and thereafter, if the property is then exported from the foreign trade zone or subzone directly to a location outside of Tennessee.
Acts 1983, ch. 223, § 1; T.C.A., § 67-523.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 26.1.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
67-5-221. Property owned by a charitable organization for low-income housing.
- Subject to the application requirements of § 67-5-212, land, including buildings on the land, owned by a charitable institution and held for the purpose of constructing one (1) or more single family dwellings to be conveyed for use as the residence of a low-income household as defined in § 13-23-103, shall be exempt during the period of its ownership by the charitable institution until the date it is conveyed to the adult head of the low-income household, but not to exceed the periods established in subsections (b) and (c). The effective date of exemption shall be determined under § 67-5-212. If a dwelling is not constructed and conveyed as provided in this section within such periods, the property shall be encumbered by the full amount of taxes together with penalties and interest that would otherwise have been due.
- If the property purchased is a single lot on which only a single family home may be constructed, the property is exempt for a period not to exceed eighteen (18) months.
- If the property is planned for subdivision into multiple single family lots according to plans filed by the organization, the period of exemption shall be eighteen (18) months plus six (6) months for each additional lot planned beyond the first. If a lot is not developed as planned, a proportionate share of taxes that would have been due upon the lot, including delinquency penalties and interest, shall accrue from the date of acquisition of the property by the organization. Taxes shall accrue on individual lots within a multi-lot development at the time each lot is conveyed as provided in this section.
- This section shall be implemented in any county upon the adoption of a resolution by two-thirds (2/3) vote of the county legislative body.
Acts 1995, ch. 209, § 1; 2010, ch. 889, § 1.
Compiler's Notes. Acts 1995, ch. 209, § 2 provided that this section applies to the 1995 tax year and subsequent years.
Acts 2010, ch. 889, § 2 provided that the act, which amended subsection (a), shall apply to tax years beginning on or after January 1, 2010.
67-5-222. Historic properties owned by charitable institutions.
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Subject to the application requirements of § 67-5-212, property owned by a charitable institution shall have a one hundred percent (100%) exemption from property taxation, if the property is:
- On the National Register of Historical Places;
- Used for occasional rentals that last for no more than two (2) days at a time per event;
- Not rented out more than one hundred eighty (180) days per year, and the proceeds received from such rental periods must be used solely for the purposes of defraying the maintenance and upkeep of such property; and
- Has been owned and maintained by the charitable institution for at least ten (10) years prior to application for the exemption.
- The owner of such qualified property shall submit a comprehensive preservation and maintenance plan to the historic properties review board that demonstrates how the property tax savings will be applied to the preservation and maintenance of the property. Such plans shall meet the guidelines established by the historic properties review board.
- The tax exemption shall be valid for a ten-year period; however, the owner of the property may apply for additional exemption periods; provided, that an updated preservation and maintenance plan is filed with the historic properties review board in accordance with its guidelines.
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- This section shall apply only to those counties that, by a two-thirds (2/3) vote of the governing body of the county, choose to come under its provisions.
- Any incorporated municipality that desires to come under the provisions of this section may do so separately by a two-thirds (2/3) vote of its governing body. In that event, however, only the territory within the corporate bounds of the municipality shall be affected by this section.
Acts 1996, ch. 1027, §§ 2, 3.
Compiler's Notes. Acts 1996, ch. 1027, which enacted this section, is and may be cited as the “Historic Properties Preservation Act.”
67-5-223. Community and performing arts.
- Subject to the application requirements of § 67-5-212, property owned by nonprofit community and performing arts organizations and used by them or other nonprofit community and performing arts organizations is eligible for property tax exemption as a charitable or educational use of property upon compliance with this section. Real property owned by such organizations is eligible for exemption to the extent that it is used by nonprofit community and performing arts organizations for public museums, art galleries, performing arts auditoriums and theaters, and any uses necessary and incidental to the foregoing. Personal property owned by such organizations is eligible for exemption to the extent it is used by the organization to equip and operate real property pursuant to this subsection (a). Other personal property, regardless of its location, is eligible for exemption to the extent it is used for business or office operations of the organization or used in shows, exhibits or productions of the organization.
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The organization seeking exemption shall meet the following requirements:
- The property must be owned and used by a public benefit nonprofit organization established as either a nonprofit corporation or an unincorporated entity operating as an association, a trust or a foundation pursuant to written articles of governance;
- The organization must be operated and governed by a board of directors of not less than ten (10) members, all of whom are natural persons, and all powers and affairs of the organization shall be exercised under the authority of the board of directors;
- Not more than three (3) members of the organization or its board of directors may be employees of the organization;
- Other than as an employee, no member, officer or director shall be compensated for service as such;
- Other than for services as an employee, no member, director or officer of the organization, directly or indirectly, may sell or provide, for monetary remuneration, any goods or services to the organization. “Indirectly” means through a business organization of which the employee, member, director or officer of the organization or a spouse, child or parent owns more than a three percent (3%) interest in the business;
- No member, director or officer of the organization may lend money to the organization, if the loan is secured by the organization's property;
- Other than for services as an employee, no member, director or officer of the organization may profit from shows, exhibits or productions of the organization or have any monetary interest in shows, exhibits or productions of the organization;
- In the event the organization sells any of its property that has been exempt from taxation, it must notify the attorney general and reporter of its intent to sell the property at least twenty-one (21) but not more than sixty (60) days before the date of sale;
- The articles of governance of any unincorporated organization shall include the provisions set out in this subsection (b) or be specifically incorporated by reference;
- The articles of governance of the organization, whether incorporated or not, and all amendments thereto shall be filed with the assessor of property in the county in which the organization owns exempt property. This requirement shall not be construed to override any other existing law as to filing of organizational documents; and
- The organization shall annually supply the assessor of property with a report that includes a listing of activities and uses of the property, current statements of financial condition, and such further information as the assessor may require.
- This section shall apply only to those counties that approve applicability by two-thirds (2/3) vote of the county governing body, which may impose a requirement of periodic local review or renewal of exemption. The assessor of property shall maintain with the records for the property an estimate of the market value of the property as of the date of the last county-wide reappraisal.
Acts 1998, ch. 855, § 1; 2000, ch. 887, §§ 1, 2; 2007, ch. 66, § 1.
Compiler's Notes. Acts 1998, ch. 855, § 2 provided that this section shall apply to applications or appeals pending before the state board of equalization on May 1, 1998. Any application or appeal pending on May 1, 1998, seeking exemption of property used for the purposes described in this section may be amended to reflect a change in ownership of the property if such amendment is filed with the state board of equalization within ninety days of May 1, 1998. Any community or performing arts organization which has an application or appeal pending before the state board of equalization on May 1, 1998, has ninety days from May 1, 1998, to provide evidence of compliance with the terms of this section. The executive secretary or exemption designee may extend this ninety-day period for an additional ninety days.
Acts 2000, ch. 887, § 3 provided that the provisions of the act shall be given retroactive application to January 1, 2000, for new applications for property meeting the requirements of the act that are filed on or before June 20, 2000. For pending applications meeting the requirements of the act, the provisions of the act shall be given retroactive application to the date the application was filed with the state board of equalization.
67-5-224. Exemption for charitable or nonprofit organizations engaged in economic development.
- Subject to the general requirements of § 67-5-212, real and tangible personal property owned and used by a nonprofit economic and/or charitable development organization shall be eligible for property tax exemption as a charitable use of property where the provisions of this section are met. Real and tangible personal property owned by a nonprofit entity, whether charitable or otherwise, which entity is recognized as tax exempt by the internal revenue service and is engaged in economic development, shall be eligible for property tax exemption to the extent such property is used to provide small business counseling and/or shared office and information systems infrastructure for small business development. Tangible personal property owned by a nonprofit charitable organization shall likewise be eligible for property tax exemption to the extent it is used to provide counseling, informational and technical assistance to other charitable organizations in applying for grants.
- Any owner of real or personal property claiming exemption under this section shall be required to file an application for exemption with the state board of equalization on the same form and in the same manner prescribed in § 67-5-212(b).
- This section shall only apply to counties containing a national laboratory facility or counties immediately adjacent to such counties.
Acts 2000, ch. 938, § 1.
Compiler's Notes. Acts 2000, ch. 938, § 3, provided that that act, which added this section and amended § 67-5-212, shall take effect June 21, 2000, the public welfare requiring it, and shall apply to applications or appeals pending before the state board of equalization on June 21, 2000. Any application or appeal pending on June 21, 2000, seeking exemption of property used for the purposes described in this section may be amended to reflect a change in ownership of the property if such amendment is filed with the board within ninety (90) days from June 21, 2000. Any organization which has an application or appeal pending before the board on June 21, 2000, has ninety (90) days from June 21, 2000 to provide evidence of compliance with the terms of the act. The executive secretary of the board may extend this ninety-day period for an additional ninety (90) days.
67-5-225. Family wellness center exemption.
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Real and personal property used as a nonprofit family wellness center shall be exempt from property taxes as a charitable use of property, if the center is owned and operated as provided in this section. “Family wellness center” means real and personal property used to provide physical exercise opportunities for children and adults. The property must be owned by a nonprofit corporation that is a charitable institution that:
- Has as its historic sole purpose the provision of programs promoting physical, mental, and spiritual health, on a holistic basis without emphasizing one over another;
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Provides at least five (5) of the following eight (8) programs dedicated to the improvement of conditions in the community and to support for families:
- Day care programs for preschool and school-aged children;
- Team sports opportunities for youth and teens;
- Leadership development for youth, teens, and adults;
- Services for at-risk youth and teens;
- Summer programs for at-risk and non-at-risk youth and teens;
- Outreach and exercise programs for seniors;
- Aquatic programs for all ages and skill levels; and
- Services for disabled children and adults; and
- Provides all programs and services to those of all ages, incomes and abilities under a fee structure that reasonably accommodates persons of limited means and, therefore, ensures that ability to pay is not a consideration. The corporation must further meet the requirements of subsection (b).
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To qualify for exemption, the nonprofit corporation must first be exempt from federal income taxation as an exempt charitable organization under § 501(c)(3) of the Internal Revenue Code (26 U.S.C. § 501(c)(3)), and any amendments thereto. In addition, the nonprofit corporation shall provide that:
- The directors and officers shall serve without compensation beyond reasonable compensation for services performed;
- The corporation is dedicated to and operated exclusively for nonprofit purposes;
- No part of the income or the assets of the corporation shall be distributed to inure to the benefit of any individual; and
- Upon liquidation or dissolution, all assets remaining after payment of the corporation's debts shall be conveyed or distributed only in accordance with the requirements applicable to a § 501(c)(3) corporation.
- All claims for exemptions under this section are subject to § 67-5-212(b).
- Nothing in this section shall prevent property of the corporation other than wellness centers from qualifying under other provisions of law.
Acts 2000, ch. 982, § 58; 2000, ch. 993, § 1.
Compiler's Notes. Acts 2000, ch. 982, § 58, and ch. 993, § 3, contained identical language, which has been codified once. Both also provide that this section applies to all matters pending before the state board of equalization on June 28, 2000.
Section 501(c)(3) of the Internal Revenue Code, referred to in this section, is codified in 26 U.S.C. § 501(c)(3).
67-5-226. Museum exemption.
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Subject to the applicable requirements of § 67-5-212, real and tangible personal property owned and used by an organization as a museum shall have a one hundred percent (100%) exemption from property taxation, if:
- The organization owns the real property for which the exemption is sought;
- The organization owning the property is exempted from the payment of federal income taxes by § 501(c)(3) of the Internal Revenue Code (26 U.S.C. § 501(c)(3));
- The property is located within the limits of an incorporated municipality;
- The exempt organization actually operates the museum;
- The museum displays local, regional and state crafts and items of historical interest; and
- The board members of the organization receive no compensation for their services.
- Any owner of real or personal property claiming exemption under this section shall be required to file an application for exemption with the state board of equalization on the same form and in the same manner prescribed in § 67-5-212(b).
-
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Notwithstanding § 67-5-212 or any other law to the contrary, real property and tangible personal property, owned or possessed by an organization and used exclusively by that organization for an educational museum, shall have a one-hundred-percent exemption from property taxation, if:
- The educational museum is located upon land owned by state, county or municipal government, or an agency or entity thereof, including any municipal or regional airport authority;
- The educational museum exhibits historic artifacts and other items of historical significance and instruction;
- The educational museum is designated, by Tennessee law, as an official state repository and archive;
- The organization is exempt from payment of federal income taxes pursuant to § 501(c)(3) of the Internal Revenue Code;
- The organization's board members receive no compensation for serving on the board; and
- The organization's employees and volunteers actually manage and perform the daily operations and programs of the educational museum.
- Any organization claiming exemption under subdivision (c)(1) shall file an application for exemption with the state board of equalization, on the same form and in the same manner as prescribed in § 67-5-212(b).
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Notwithstanding § 67-5-212 or any other law to the contrary, real property and tangible personal property, owned or possessed by an organization and used exclusively by that organization for an educational museum, shall have a one-hundred-percent exemption from property taxation, if:
Acts 2002, ch. 877, § 1; 2005, ch. 500, § 13(c).
Compiler's Notes. Acts 2005, ch. 500, § 13(b) provided that, notwithstanding any provision of this act or any other law to the contrary, the provisions ch. 500, § 13(c) shall apply to claims pending or under appeal on or after June 22, 2005.
Internal Revenue Code § 501(c)(3), referred to in this section, is codified in 26 U.S.C. § 501(c)(3).
67-5-227. Property used for educational programs.
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Subject to the requirements of § 67-5-212, tangible personal property owned and used by a nonprofit organization pursuant to the requirements of this section shall be eligible for property tax exemption as an educational use of property. To qualify for the exemption, the property shall be owned by a nonprofit corporation that:
- Is exempt from federal income taxation as an exempt organization under § 501(c)(3) of the Internal Revenue Code (26 U.S.C. § 501(c)(3));
- Has as its historic sole purpose the provision of programs that educate youth, teens, and adults about the Congressional Medal of Honor and its local and national recipients, including character development programs for youth in local schools and family development centers that are dedicated to teaching them about the six (6) character traits that the Medal of Honor recipients share, which are courage, commitment, sacrifice, patriotism, integrity, and citizenship;
- Provides that the corporation's board members shall serve without compensation; and
- Is dedicated to and operated exclusively for nonprofit purposes.
- Any owner of tangible personal property claiming exemption under this section shall be required to file an application for exemption with the state board of equalization on the same form and in the same manner prescribed in § 67-5-212(b).
Acts 2018, ch. 820, § 1.
Effective Dates. Acts 2018, ch. 820, § 2. April 24, 2018.
Part 3
Assessors and Equalizers Generally
67-5-301. Deputies authorized.
Counties, cities and towns are authorized to employ deputy assessors of property, in their discretion, to serve as assistants and advisors to the assessor of property in the assessment of taxes.
Acts 1947, ch. 209, § 1; C. Supp. 1950, § 1446.1 (Williams, § 1418.1); impl. am. Acts 1955, ch. 69, § 1; Acts 1963, ch. 286, § 8; T.C.A. (orig. ed.), § 67-1706; Acts 2008, ch. 971, § 1.
Compiler's Notes. Acts 2008, ch. 971, § 1 provided that the code commission is directed to change all references to “tax assessor”, wherever such references appear, to “assessor of property”, as such sections are amended or volumes are replaced. See § 1-1-116.
Cross-References. Assessors of property, title 67, ch. 5, part 5.
67-5-302. Filing and preservation of oaths.
The clerk of each county shall keep and preserve the oaths prescribed for assessors and deputies in paper, electronic, or digital format.
Acts 1907, ch. 602, § 36; Shan., § 972a6; Code 1932, § 1688; modified; T.C.A. (orig. ed.), § 67-1715; Acts 2019, ch. 63, § 1.
Amendments. The 2019 amendment deleted “, in a well bound book, which the county shall furnish at its expense,” following “county shall”, and substituted “in paper, electronic, or digital format” for “, and shall forward the book to the state board of equalization” at the end.
Effective Dates. Acts 2019, ch. 63, § 6. March 28, 2019.
67-5-303. Obtaining evidence.
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- The assessor, in person or by a deputy, has the power and duty to examine any person believed to have any knowledge or information relating to the assessment of property of any taxpayer.
- For such purpose, the assessor has the power to administer oaths and compel any witness to appear and to answer oral or written questions and the power to inspect or require the production of books and papers.
- Assessors and their deputies have like powers and perform like duties when there is any reason to suspect any taxpayer has withheld or concealed information concerning any taxable property, or the classification or the value thereof, and such investigation may be performed by questions put to the taxpayer, the taxpayer's agent, attorney, or any other person.
- Any witness refusing to appear or to take such oath or make such answers, when called upon by the assessor to do so, commits a Class C misdemeanor.
- Any person falsely, corruptly, or knowingly misrepresenting any material statement made as a witness to such assessor or deputy assessor commits perjury and is subject to indictment for the same.
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- The assessor or deputy assessor shall reduce to writing all statements made by the owner of any property interest or witness under this section, and such statement shall be filed and maintained in the office of the assessor for a period of not less than three (3) years or the end of the then current reappraisal cycle, whichever is greater.
- Information obtained pursuant to this section shall be confidential and shall not be disclosed by state or local officials, agents or employees, except as authorized by this part. Violations of confidentiality as provided herein shall be punishable in the same manner as violations of § 67-5-401 regarding taxpayer records of the department of revenue. Nothing in this section shall be construed to make evidence introduced by a party in court or administrative proceedings confidential, unless otherwise provided in a protective order issued by the judge in the proceedings.
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Pursuant to rules of the state board of equalization, information otherwise confidential may be disclosed to:
- The taxpayer or the taxpayer's authorized designee, upon written request;
- Individuals designated by a judge presiding in court or administrative proceedings, subject to protective orders issued in the proceedings;
- Officials, and their agents or employees, responsible for the administration or collection of taxes due from the taxpayer, but only to the extent necessary for this purpose and subject otherwise to the confidentiality required by this section.
- The assessor and agents or employees of the assessor have the authority to go upon land in order to obtain information for the assessment of property. If the landowner refuses or objects to entry upon the land, the assessor may petition the circuit or chancery court for an order allowing entry at a specified time for purposes of appraising the land and improvements for assessment purposes. The assessor and agents or employees of the assessor may enter a building that is under construction and not yet secured or occupied, for the purpose of making a correct assessment of the property, whether or not the owner has given specific consent to the entry. Once a building is occupied or secured, the assessor and agents or employees of the assessor may enter as an invitee or with the consent of the owner or occupant; provided, that, if unreasonably withheld, the assessor may gain entry on reasonable notice pursuant to an order of the circuit or chancery court.
Acts 1973, ch. 226, § 6; T.C.A., §§ 67-622 — 67-625; Acts 1988, ch. 633, § 2; 1989, ch. 591, § 113; 1996, ch. 845, § 1; 2013, ch. 209, §§ 6, 7; 2015, ch. 136, § 1.
Cross-References. Confidentiality of public records, § 10-7-504.
Penalty for Class C misdemeanor, § 40-35-111.
Perjury, title 39, ch. 16, part 7.
Law Reviews.
Tax Problems Presented by the Tennessee Constitution (Eugene L. Parker, Jr.), 4 Vand. L. Rev. 116 (1950).
Attorney General Opinions. County assessor's and board of equalization's powers to compel witnesses, OAG 06-059 (4/3/06).
67-5-304. Reports to local and state boards of equalization.
- The assessor shall make a report of the assessor's assessments and shall make available to the local board of equalization all of the assessor's records pertaining to the area involved on or before the first day the board shall meet.
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Each assessor, when making the report of assessments to the local board of equalization as provided in subsection (a), shall accompany the report with the following oath, which shall be taken and subscribed to before the county mayor, or in the county mayor's absence, before a notary public, viz:
I, , assessor of the county (city) of , state of Tennessee, do solemnly swear (or affirm) that I have assessed all taxable property, in the county (city) of , as far as ascertainable, to the true owners thereof, and that I have determined the classification and assessed valuation of all taxable property as prescribed by law; and that I have faithfully discharged all my duties without fear, favor, or affection to the best of my knowledge and ability, so help me God.
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- It is the duty of each assessor to compile a report listing the total of all assessments prepared by the assessor's office in such manner and on such forms as may be required by the state board of equalization.
- [Deleted by 2019 amendment.]
Acts 1973, ch. 226, § 6; T.C.A., §§ 67-629, 67-630, 67-632; Acts 2003, ch. 90, § 2; 2019, ch. 63, § 3.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
Amendments. The 2019 amendment deleted former (c)(2), which read: “Such report shall be filed with the state board of equalization at such time as the board shall require.”
Effective Dates. Acts 2019, ch. 63, § 6. March 28, 2019.
67-5-305. Failure to perform — Proceedings against assessor.
- It is unlawful for any assessor of property or deputy assessor to willfully fail, refuse or neglect to perform, obey and observe the duties or requirements of this chapter.
- It is the duty of the county mayor to report promptly to the district attorney general or to a proper agent of the state any failure, neglect, or refusal of any assessor or deputy assessor to comply with any of the requirements of this chapter and duties as required by law.
- If the director of property assessments has cause to believe any assessor of property or deputy assessor has willfully failed, refused or neglected to perform, obey and observe any duties or requirements of this chapter, the director shall notify, in writing, the assessor of property or deputy assessor of the specific instances wherein the director has cause to believe the assessor or deputy assessor has willfully failed to perform.
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- After the expiration of at least fifteen (15) days from the date of such notice, if the director has reason to believe that such assessor of property or deputy assessor has not made a satisfactory effort to perform the duties or requirements of this chapter, the director shall request the state board of equalization to convene in the taxing jurisdiction of the assessor of property or deputy assessor for the purpose of conducting a hearing to determine whether or not the assessor of property or deputy assessor has willfully failed to perform, obey and observe the duties or requirements of this chapter.
- If the state board of equalization consents to convene for a hearing of this matter, the assessor of property or deputy assessor shall be provided at least ten (10) days' written notice of the time and place for the hearing, which shall be within the county or taxing jurisdiction of the assessor of property or deputy assessor.
- Further, the notice shall set forth the specific purpose for such hearing.
- The burden of proof shall be upon the director of property assessments to show that the assessor of property or deputy assessor has willfully failed, refused or neglected to perform, obey and observe the duties or requirements of this chapter, and the rules of evidence applicable to proceedings before the chancery court in Tennessee shall be followed by the state board in such hearing.
- The assessor of property or deputy assessor shall be entitled to be heard, either personally or by counsel, and shall have the privilege of introducing any competent evidence.
- Any action of the state board of equalization shall be final and conclusive, subject to judicial review by petition of certiorari to the appropriate chancery court.
- If the assessor of property or deputy assessor is found innocent of the charges against such assessor or deputy assessor in chancery court, the board shall be required to pay the costs of such proceeding.
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- Upon a finding by the state board of equalization that any assessor of property or deputy assessor has willfully failed, refused or neglected to perform, obey and observe the duties or requirements of this chapter, the board shall notify the county mayor or such other county official as may be necessary of such failure to perform, obey and observe the duties or requirements of this chapter, and the issuance of any warrant for compensation to such assessor of property or deputy assessor shall be discontinued until a determination is made by the board that such assessor of property or deputy assessor has made a satisfactory effort to perform, obey and observe the duties or requirements of this chapter.
- Further, such assessor of property or deputy assessor shall not be reimbursed for such period of time as is determined by the board that such person has willfully failed, refused or neglected to perform, obey and observe the duties and requirements of this chapter.
- If the board causes the compensation of any assessor of property or deputy assessor to be discontinued and the assessor or deputy assessor is subsequently held to be innocent of the charges against the assessor or deputy assessor, the assessor or deputy assessor shall then be reimbursed for the full amount withheld from the assessor or deputy assessor, plus interest at the rate of seven percent (7%) a year.
- If a finding is made by the board that any assessor or deputy assessor has willfully failed to perform the duties and requirements of this chapter, and such assessor or deputy assessor files a petition of certiorari to chancery court to review the action within thirty (30) days of the date the assessor or deputy assessor is notified of the action of the board, no compensation of such assessor or deputy assessor shall be withheld until the appropriate chancery court has rendered a final decision on the matter.
Acts 1973, ch. 226, § 6; T.C.A., §§ 67-633 — 67-638; Acts 2003, ch. 90, § 2.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
Cross-References. Failure of assessor to comply with Agricultural, Forest, and Open Space Land Act of 1976, § 67-5-1010.
67-5-306. Fines and penalties.
- It is unlawful for any assessor or deputy assessor willfully or knowingly to assess any property subject to taxation in the names of or in the initials of any other than the person to whom the property should be lawfully assessed. Each violation of this subsection (a) is a Class C misdemeanor.
- It is unlawful for any assessor or deputy assessor willfully or knowingly to permit or allow any property subject to taxation to be or remain unassessed or omitted from assessment, or willfully or knowingly to assess any property at less than the percentage of value required by law. Each violation of this subsection (b) is a Class C misdemeanor.
- Each assessor or deputy assessor or member of the county board of equalization who violates, neglects, or fails, or refuses to comply with any of the provisions of this chapter or chapter 1 of this title, unless otherwise expressly made punishable as a misdemeanor, shall pay and forfeit to the state the sum of not less than fifty dollars ($50.00) nor more than one hundred dollars ($100) for each offense, which penalty shall be recovered of the offender and sureties on such person's bond, in the case of assessors and deputies, and of the members of the board of equalization personally, in any court of record in the county or before any general sessions court of the county, by motion on five (5) days' notice or by suit instituted for the purpose.
- It is the duty of the district attorneys general, upon the information or at the request of any reputable citizen of the state, to investigate and prosecute, ex officio, all the offenses defined in subsection (c).
- It is the duty of each district attorney general, county auditor, and county mayor, when such person learns, or has reasonable grounds to believe, that subsection (c) has been violated, to institute proceedings by motion or suit to recover the penalties prescribed.
- It is unlawful for any assessor or deputy assessor or any member of any county board of equalization to draw or receive any compensation for services, or for any county mayor to issue any warrant for the same, until such assessor or deputy assessor or member of such board shall have fully kept and performed each and every one of the requirements of subsection (c), and the failure to keep and perform any of the same shall be held and deemed a waiver of any right to any compensation for services.
- Any county mayor or county clerk, or district attorney general, or county auditor, who fails, neglects, or refuses to obey and observe the requirements imposed by subsection (c) commits a Class C misdemeanor.
Acts 1907, ch. 602, §§ 33-35, 37; Shan., §§ 972a2-972a5, 972a8; mod. Code 1932, §§ 1684-1687, 1689; modified; Acts 1973, ch. 226, § 6; T.C.A. (orig. ed.), §§ 67-641, 67-642, 67-1710 — 67-1714; Acts 1989, ch. 591, § 113; 2003, ch. 90, § 2.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
Cross-References. Penalty for Class C misdemeanor, § 40-35-111.
Law Reviews.
The Tennessee Court Systems — Prosecution, 8 Mem. St. U.L. Rev. 477 (1978).
67-5-307. Informal review of assessments.
Assessors may provide taxpayers with an informal review of assessments made pursuant to § 67-5-504 or made during a county reappraisal pursuant to § 67-5-1601 if the following requirements are met:
- The informal review concludes at least ten (10) days prior to county board of equalization adjournment; and
- The assessor informs the taxpayer in writing of the taxpayer's right to appeal to the county board of equalization if dissatisfied with the outcome of the informal review.
Acts 2019, ch. 63, § 2.
Effective Dates. Acts 2019, ch. 63, § 6. March 28, 2019.
Part 4
State Tax Records
67-5-401. Availability for local use.
- In order to facilitate and provide a more uniform method of obtaining information for the use and benefit of assessors of property of the various political subdivisions of the state in equalizing taxes and fixing assessments, the commissioner of revenue is empowered, authorized and directed to open for inspection at any time by any official, body or commission lawfully charged with the administration of the tax laws of any political subdivision of the state, all records, reports, returns and schedules, or excerpts therefrom, filed by taxpayers with the department of revenue pursuant to present laws or those hereafter enacted.
- Any information thus secured by any official, body or commission of any political subdivision may be used only for the purpose of administration of the tax laws of such political subdivision.
- The commissioner shall furnish, upon written request of any official, body or commission of any political subdivision, certified copies of such records, reports, returns or schedules, or excerpts therefrom, as may be requested by such official, body or commission.
- The commissioner may promulgate such rules and regulations for the administration of this section and fix such reasonable fees to be charged for furnishing certified copies of any records, reports, returns and schedules, or excerpts therefrom, provided for herein as is deemed necessary in order that the administration of this section may not be an expense to the state.
- Any officer, employee or agent of the state, or any political subdivision of the state, who divulges any information acquired through privileges granted under this section, except as authorized or required by this section, or other laws, or when called upon to testify in any judicial or administrative proceeding to which the state or any political subdivision of the state or such state or local official, body or commission, as such, is a party, commits a Class C misdemeanor.
Acts 1939, ch. 127, §§ 1-5; C. Supp. 1950, §§ 1689.1-1689.5; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), §§ 67-1701 — 67-1705; Acts 1989, ch. 591, § 113; 2008, ch. 971, § 1.
Compiler's Notes. Acts 2008, ch. 971, § 1 provided that the code commission is directed to change all references to “tax assessor”, wherever such references appear, to “assessor of property”, as such sections are amended or volumes are replaced. See § 1-1-116.
Cross-References. Confidentiality of public records, § 10-7-504.
Penalty for Class C misdemeanor, § 40-35-111.
Law Reviews.
Consideration in Formation of Contracts in Tennessee (John H. Moore), 16 Tenn. L. Rev. 915 (1941).
67-5-402. Confidentiality of information.
- Apart from a taxpayer's annual reporting schedule filed with the assessor, information required to be filed or submitted by a taxpayer with regard to an assessment of tangible personal property, or provided by a taxpayer in response to an audit or information request by assessing officials or their agents with regard to an assessment of tangible personal property, shall be confidential and shall not be disclosed by state or local officials, agents or employees, except as authorized by this part. Violations of this section shall be punishable in the same manner as violations of § 67-5-401 regarding taxpayer records of the department of revenue.
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Pursuant to rules of the state board of equalization, schedules, returns and information otherwise confidential may be disclosed to:
- The taxpayer or the taxpayer's authorized designee, upon written request;
- Individuals designated by a judge presiding in court or administrative proceedings, subject to protective orders issued in the proceedings;
- Officials, and their agents or employees, responsible for the administration or collection of taxes due from the taxpayer, but only to the extent necessary for this purpose and subject otherwise to the confidentiality required by this section; and
- The department of human services or its contractors in the Title IV-D child support program pursuant to § 36-5-801.
Acts 1999, ch. 96, § 1.
Cross-References. Confidentiality of public records, § 10-7-504.
Part 5
Classification and Assessment — Miscellaneous Provisions
67-5-501. Definitions.
For purposes of classification and assessment of property:
- “All other tangible personal property” includes all tangible personal property, including that used in agriculture, except public utility tangible personal property and commercial and industrial tangible personal property;
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“Commercial and industrial tangible personal property” includes personal property, such as goods, chattels and other articles of value that are capable of manual or physical possession, and machinery and equipment that are:
- Used essentially and principally for the commercial or industrial purposes or processes for which they are intended; and
- If affixed or attached to real property, can be detached without material injury to such real property;
- “Farm property” includes all real property that is used, or held for use, in agriculture as defined in §§ 1-3-105 and 43-1-113, including, but not limited to, growing crops, pastures, orchards, nurseries, plants, trees, timber, raising livestock or poultry, or the production of raw dairy products, and acreage used for recreational purposes by clubs, including golf course playing hole improvements;
- “Industrial and commercial property” includes all property of every kind used, directly or indirectly, or held for use, for any commercial, mining, industrial, manufacturing, trade, professional, club whether public or private, nonexempt lodge, business, or similar purpose, whether conducted for profit or not. All real property that is used, or held for use, for dwelling purposes that contains two (2) or more rental units is hereby defined and shall be classified as “industrial and commercial property”;
- “Intangible personal property” includes personal property, such as money, any evidence of debt owed to a taxpayer, any evidence of ownership in a corporation or other business organization having multiple owners, and all other forms of property, the value of which is expressed in terms of what the property represents rather than its own intrinsic worth. “Intangible personal property” includes all personal property not defined as “tangible personal property”;
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“Modern market telecommunications provider” means:
- An incumbent local exchange telephone company that elects market regulation pursuant to § 65-5-109;
- A telephone cooperative organized pursuant to § 65-29-102; or
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A nongovernmental entity or separate operating division within the entity if the business activity of the entity or division is limited to providing:
- Competitive local exchange telephone services; or
- Interconnected voice over internet protocol services;
- “Movable structure” includes any mobile home or such other movable structure that is constructed as a trailer or semitrailer and designed to either be towed along the highways or to be parked off the highways, and that may be used, temporarily or permanently, as a residence, apartment, office, storehouse, warehouse or for any other commercial or industrial purpose; but does not include self-propelled vehicles, sleeping and camping facilities attached to, or designed to be attached to, or drawn by a pick-up truck or an automobile, and that contains less than three hundred square feet (300 sq. ft.) of enclosed space;
- “Personal property” includes every species and character of property that is not classified as real property;
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“Public utility property” includes all property of every kind, whether owned or leased, and used, or held for use, directly or indirectly in the operation of a public utility, which includes, but is not necessarily limited to, the following business entities, whether corporate or otherwise:
- Railroad companies;
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Telephone companies other than the following:
- Companies providing cellular telephone service as defined in § 65-4-101(6)(A)(vi);
- Companies providing radio common carrier service as defined in § 65-30-103;
- Companies providing long distance telephone service; and
- Modern market telecommunications providers;
- Freight and private car companies that are defined as any business, other than a railroad company, that owns, uses, furnishes, leases, rents or operates to, from, through, in or across this state or any part thereof any kind of railroad car, including, but not necessarily limited to, flat, tank, refrigerator, or similar type cars;
- Street car companies;
- Power companies, whether hydroelectric, steam, atomic, or other kinds for the transmission of power;
- Express companies;
- Pipeline companies;
- Gas companies;
- Electric light companies;
- Water and/or sewerage companies;
- Motor bus and/or truck companies holding a certificate of convenience and necessity or contract hauler's permit from the department of safety or the federal highway administration and domiciled in this state and/or owning or leasing real or personal property located in this state;
- Taxicab, transit and limousine companies;
- Commercial air carrier companies holding a certificate of convenience and necessity from the department of transportation, civil aeronautics board, federal aviation administration, or any other federal or state regulatory agency; excepting those companies whose operations are solely chartered operations; and
- Water transportation carrier companies which operate boats and barges over the waterways of this state for hire, which are registered for these purposes with the United States army corps of engineers or any other federal or state agency and which are domiciled in this state or own or lease real or personal property located in this state; provided, that the portion of property of these companies used for water carriage that was exempt from regulation by the interstate commerce commission under federal law in effect on November 1, 1995, shall not be considered public utility property for classification and assessment purposes;
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- “Real property” includes lands, tenements, hereditaments, structures, improvements, movable property assessable under § 67-5-802, or machinery and equipment affixed to realty, except as otherwise provided for in this section, and all rights thereto and interests therein, equitable as well as legal;
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Real property includes, but is not limited to, the following:
- Surface, underground or elevated railroads, and railroad structures, substructures and superstructures, tracks and the metal thereon, branches, switches and other improvements or structures permitted or authorized to be made in, upon, or under any public or private property;
- Telephone, broadcast, transmission and telegraph poles, supports, conduits, towers and enclosures for electrical conductors upon, above and underground and pipes and conduits used for wire, cables and lines buried underground, except for underground conduits and enclosures for wire, cables, lines and similar facilities owned, leased or used to provide services pursuant to the terms and authority of a franchise license issued by an appropriate franchising authority in accordance with § 7-59-102. This subdivision (10)(B) shall not operate to change the classification of any radio or television broadcast property that was assessed as tangible personal property for the tax year 2003;
- Mains, pipes, pipelines and tanks permitted or authorized to be built, laid or placed in, upon, or under any public or private street or place for conducting steam, heat, water, oil, electricity or any property, substance or product capable of transportation or conveyance therein or that is protected thereby, excluding propane tanks for residential use and above ground storage tanks that can be moved without disassembly and are not affixed to the land; and
- Bridges, wharves, piers, boat docks, boat houses, marinas and other similar structures that are attached to real property by anchors, cables, wires, ramps, pillars, poles, foundation, or connected with any one (1) utility service, such as electricity, natural gas, water or telephone; provided, that nothing in this subdivision (10)(B) shall be construed to include boats temporarily connected with any utility service, or floating dry-dock equipment or boat lifts;
- “Residential property” includes all real property that is used, or held for use, for dwelling purposes and that contains not more than one (1) rental unit. All real property that is used, or held for use, for dwelling purposes, but that contains two (2) or more rental units, is defined and shall be classified as “industrial and commercial property”;
- “Revised assessment” means the correction of an error or omission in the assessment roll so long as the trustee or the municipal collector retains control of the tax roll book; and
- “Tangible personal property” includes personal property such as goods, chattels, and other articles of value that are capable of manual or physical possession, and certain machinery and equipment, separate and apart from any real property, and the value of which is intrinsic to the article itself.
Acts 1973, ch. 226, § 6; 1974, ch. 467, §§ 2, 3; 1982, ch. 774, §§ 1, 2; T.C.A., § 67-601; Acts 1984, ch. 832, § 5; 1989, ch. 312, § 3; 1995, ch. 305, § 121; 1997, ch. 109, § 1; 1999, ch. 198, § 1; 2000, ch. 571, § 2; 2004, ch. 719, § 1; 2006, ch. 521, § 1; 2017, ch. 351, § 1; 2017, ch. 490, §§ 1, 2.
Compiler's Notes. Acts 1995, ch. 305, § 32 provided that, notwithstanding the provisions of title 65, chapter 15 to the contrary, vehicles required to obtain a certificate of convenience and necessity or contract hauler permit pursuant to the provisions of § 65-15-107(f) [deleted], shall be regulated by the Tennessee regulatory authority. The Tennessee regulatory authority shall register all such vehicles operating in intrastate and interstate commerce in Tennessee solely for demonstration of compliance with registration and insurance requirements of § 65-15-109.
Acts 1995, ch. 305, § 47 provided:
“(a) Notwithstanding any provision of law to the contrary, upon the effective date of this section [May 26, 1995], all employees of the public service commission charged with the responsibility of regulating and enforcing the provisions of Tennessee Code Annotated, Title 67, assigned by provisions of this act to the office of the comptroller and any other employees of the public service commission necessary to assist in such regulating and enforcing, shall be transferred to the comptroller of the treasury.
“(b) All reports, documents, surveys, books, records, papers or other writings in the possession of the public service commission with respect to administering such provisions assigned to the office of the comptroller of the treasury by this act, shall be transferred to and remain in the custody of the comptroller.
“(c) All leases, contracts and all contract rights, and responsibilities in existence with the public service commission with respect to the duties transferred by this section shall be preserved and transferred to the office of the comptroller of the treasury.
“(d) All assets, liabilities and obligations of the public service commission with respect to the duties transferred by this section shall become the assets, liabilities and obligations of the office of the comptroller of the treasury.
“(e) Any revenues from rates, fares, charges, fines, and other moneys received pursuant to Tennessee Code Annotated, Title 65, and assigned to the office of the comptroller by this act shall be allocated to the office of the comptroller of the treasury to implement the provisions of this act.
“(f) The comptroller shall promulgate rules and regulations pursuant to Title 4, Chapter 5, to effectuate the purposes of this act.”
Acts 1999, ch. 198, § 3, provided that the act, which rewrote (8)(N) (now (9)(N)), applies to the 1999 tax year and successive tax years.
Acts 2004, ch. 719, § 3 provided that the act shall apply to tax year 2004, and to tax years thereafter, and to any claim or claims for prior years that have not been finally adjudicated by the state board of equalization as of May 18, 2004.
Acts 2017, ch. 490, § 15 provided that the act, which amended this section, shall apply to all tax periods beginning on or after January 1, 2017.
Law Reviews.
Open Space Taxation and State Constitutions (David A. Myers), 33 Vand. L. Rev. 837 (1980).
The Hazards of Taxing Contaminated Properties: Owners Beware! (Darlene Marsh, Byron Taylor and Andy Raines), 37 Tenn. B.J. 21 (2001).
Attorney General Opinions. The definition for “agriculture” at T.C.A. §§ 1-3-105(2)(A) and 43-1-113(b)(1) is applicable to the word “agriculture” as used in the definition of “Farm Property” in T.C.A. § 67-5-501(3). OAG 17-30, 2017 Tenn. AG LEXIS 29 (4/17/2017).
NOTES TO DECISIONS
1. Constitutionality.
Tennessee taxation scheme for motor carrier transportation property violates the Motor Carrier Act of 1980 (49 U.S.C. § 11503a) [omitted]. Arkansas-Best Freight Sys. v. Cochran, 546 F. Supp. 904, 1981 U.S. Dist. LEXIS 18427 (M.D. Tenn. 1981).
Taxpayer who operated a gasoline pipeline that was assessed at a fifty-five percent rate under the amended T.C.A. § 67-5-501(9) could not maintain a federal action to challenge that statute's constitutionality because the Tax Injunction Act, 28 U.S.C. § 1341, barred the taxpayer's federal challenge; the taxpayer had a state forum for raising constitutional challenges and a plain, speedy, and efficient state remedy. Colonial Pipeline Co. v. Morgan, 474 F.3d 211, 2007 FED App. 6P, 2007 U.S. App. LEXIS 358 (6th Cir. Tenn. 2007).
2. Movable Structures.
House trailers and mobile homes, although defined as real property by statute for tax purposes, are personal property within the meaning of § 514 of the Soldiers' and Sailors' Civil Relief Act (50 U.S.C. App. § 574) [omitted] and, as such, where owned by nonresident military service personnel on active duty in the state pursuant to military orders, are immune from state taxation. United States v. Shelby County, 385 F. Supp. 1187, 1974 U.S. Dist. LEXIS 6362 (W.D. Tenn. 1974).
3. Government Agencies.
Company's argument of inherent bias was without merit where the Tennessee State Board of Equalization, like other administrative agencies, could perform some functions that might fall within the ambit of all three branches of government; nothing prohibits agencies from simultaneously taking on quasi-executive and quasi-judicial roles, absent specific allegations of bias or prejudgment. Colonial Pipeline Co. v. Morgan, 263 S.W.3d 827, 2008 Tenn. LEXIS 589 (Tenn. Sept. 9, 2008).
4. Railroads.
Classification of railroads as public utilities for tax purposes whereby railroad property was taxed at higher rate than industrial and commercial property was not palpably arbitrary or invidiously discriminatory or otherwise unconstitutional. Louisville & N. R. Co. v. Atkins, 390 F. Supp. 576, 1975 U.S. Dist. LEXIS 13415 (M.D. Tenn. 1975), aff'd, 423 U.S. 802, 96 S. Ct. 10, 46 L. Ed. 2d 24, 1975 U.S. LEXIS 2211 (1975), aff'd, Louisville & N. R. Co. v. Atkins, 423 U.S. 802, 96 S. Ct. 10, 46 L. Ed. 2d 24, 1975 U.S. LEXIS 2211 (1975).
Classification and assessment of railroad property for taxation purposes under this section have been preempted by § 306 of the Railroad Revitalization and Regulatory Reform Act of 1976, 49 U.S.C. § 11503 [omitted]. Tennessee v. Louisville & N.R.R., 478 F. Supp. 199, 1979 U.S. Dist. LEXIS 10396 (M.D. Tenn. 1979), aff'd without opinion, 652 F.2d 59, 1981 U.S. App. LEXIS 19040 (6th Cir. 1981), aff'd, Tennessee v. Louisville & N. R. Co., 652 F.2d 59, 1981 U.S. App. LEXIS 19040 (6th Cir. 1981), cert. denied, 454 U.S. 834, 102 S. Ct. 135, 70 L. Ed. 2d 114, 1981 U.S. LEXIS 3309 (1981), cert. denied, Tennessee v. Louisville & N. R. Co., 454 U.S. 834, 102 S. Ct. 135, 70 L. Ed. 2d 114, 1981 U.S. LEXIS 3309 (1981).
In light of broad substantial economic effect test, Tennessee's property tax classification system under which railroads are classified as a public utility, “affects” interstate commerce. Tennessee v. Louisville & N.R.R., 478 F. Supp. 199, 1979 U.S. Dist. LEXIS 10396 (M.D. Tenn. 1979), aff'd without opinion, 652 F.2d 59, 1981 U.S. App. LEXIS 19040 (6th Cir. 1981), aff'd, Tennessee v. Louisville & N. R. Co., 652 F.2d 59, 1981 U.S. App. LEXIS 19040 (6th Cir. 1981), cert. denied, 454 U.S. 834, 102 S. Ct. 135, 70 L. Ed. 2d 114, 1981 U.S. LEXIS 3309 (1981), cert. denied, Tennessee v. Louisville & N. R. Co., 454 U.S. 834, 102 S. Ct. 135, 70 L. Ed. 2d 114, 1981 U.S. LEXIS 3309 (1981).
5. —Railroad Equipment.
Where a freight car company, which leased railroad cars of various types to private businesses engaged in the shipping of products requiring special types of equipment, used its rolling stock for the specific purpose of transporting property over railroad lines in direct competition with and for identical purposes as property owned and operated by the railroads themselves, the freight car company was a “public utility” for purpose of the ad valorem property tax rather than tangible commercial and industrial personalty. General American Transp. Corp. v. Tennessee State Board of Equalization, 536 S.W.2d 212, 1976 Tenn. LEXIS 622 (Tenn. 1976).
6. Dwellings Containing Two or More Rental Units.
Classification distinguishing between the assessment rate for residential property containing a single rental unit and that containing two or more such rental units was based on a reasonable classification and does not violate the equal protection clause of U.S. Const., amend. 14. Snow v. Memphis, 527 S.W.2d 55, 1975 Tenn. LEXIS 631 (Tenn. 1975), dismissed, 423 U.S. 1083, 96 S. Ct. 873, 47 L. Ed. 2d 95, 1976 U.S. LEXIS 1213 (1976), appeal dismissed, Snow v. Memphis, 423 U.S. 1083, 96 S. Ct. 873, 47 L. Ed. 2d 95, 1976 U.S. LEXIS 1213 (1976).
The classification of multiple housing units held by the owner for rental purposes as industrial or commercial property for taxation purposes does not violate the owner's rights to equal protection under the state or federal constitutions in that such classification is based on the rational decision to treat owner-occupiers more favorably than owners of income-producing property. Castlewood, Inc. v. Anderson County, 969 S.W.2d 908, 1998 Tenn. LEXIS 295 (Tenn. 1998), cert. denied, 525 U.S. 949, 119 S. Ct. 375, 142 L. Ed. 2d 310, 1998 U.S. LEXIS 6724 (1998).
7. Rental Property.
Property being used directly in the operation of a public utility is public utility property within the definition of this section and must be classified as such for the purpose of ad valorem taxes, even though the owner being taxed leases the property. Crown Enters., Inc. v. State Bd. of Equalization, 543 S.W.2d 583, 1976 Tenn. LEXIS 480 (Tenn. 1976).
Multiple condominium units owned by a single owner for rental purposes should not be classified for assessment purposes differently than other residential property and, therefore, are appropriately classified as industrial and commercial. Castlewood, Inc. v. Anderson County, 969 S.W.2d 908, 1998 Tenn. LEXIS 295 (Tenn. 1998), cert. denied, 525 U.S. 949, 119 S. Ct. 375, 142 L. Ed. 2d 310, 1998 U.S. LEXIS 6724 (1998).
8. Private Covenant.
The definition of residential property in this section has no application in construing the meaning of a private covenant restricting the property to residential use. Parks v. Richardson, 567 S.W.2d 465, 1977 Tenn. App. LEXIS 321, 99 A.L.R.3d 976 (Tenn. Ct. App. 1977).
9. Inventories of Rental Merchants.
The constitutional and statutory intent of Tenn. Const., art. II, § 28 is to substitute the gross receipts tax of the Business Tax Act for the Property Tax Act's ad valorem tax on inventories of merchandise; and there is no basis for discrimination between inventories of merchandise held by rental merchants and those held by other retail merchants. Dixie Rents, Inc. v. City of Memphis, 594 S.W.2d 397, 1979 Tenn. App. LEXIS 376 (Tenn. Ct. App. 1979); Eastman Kodak Co. v. Garrett, 671 S.W.2d 474, 1983 Tenn. App. LEXIS 684 (Tenn. Ct. App. 1983).
The holding in Dixie Rents, Inc. v. City of Memphis, 594 S.W.2d 397, 1979 Tenn. App. LEXIS 376 (Tenn. Ct. App. 1979), that a merchant taxable under the Business Tax Act may not also be subjected to ad valorem property taxes, with respect to leased property of the merchant, applied not only to property in possession of the lessor, but also to property in the possession of the lessee. Eastman Kodak Co. v. Garrett, 671 S.W.2d 474, 1983 Tenn. App. LEXIS 684 (Tenn. Ct. App. 1983).
10. Real Property.
Interest created by a contract between United States and private corporation, where the corporation used federally owned property was not an estate in real property for property tax purposes. United States v. Anderson County, 575 F. Supp. 574, 1983 U.S. Dist. LEXIS 11901 (E.D. Tenn. 1983), aff'd, 761 F.2d 1169, 1985 U.S. App. LEXIS 31123 (6th Cir. 1985), cert. denied, 464 U.S. 1017, 104 S. Ct. 548, 78 L. Ed. 2d 722, 1983 U.S. LEXIS 2733 (1983), cert. denied, Anderson County v. United States, 464 U.S. 1017, 104 S. Ct. 548, 78 L. Ed. 2d 722, 1983 U.S. LEXIS 2733 (1983), aff'd, United States v. Anderson County, 761 F.2d 1169, 1985 U.S. App. LEXIS 31123 (6th Cir. 1985), cert. denied, 474 U.S. 919, 106 S. Ct. 248, 88 L. Ed. 2d 256, 1985 U.S. LEXIS 4100 (1985), cert. denied, Anderson County v. United States, 474 U.S. 919, 106 S. Ct. 248, 88 L. Ed. 2d 256, 1985 U.S. LEXIS 4100 (1985); Union Carbide Corp. v. Alexander, 679 S.W.2d 938, 1984 Tenn. LEXIS 950 (Tenn. 1984); United States v. Anderson County, 761 F.2d 1169, 1985 U.S. App. LEXIS 31123 (6th Cir. 1985), cert. denied, 474 U.S. 919, 106 S. Ct. 248, 88 L. Ed. 2d 256, 1985 U.S. LEXIS 4100 (1985), cert. denied, Anderson County v. United States, 474 U.S. 919, 106 S. Ct. 248, 88 L. Ed. 2d 256, 1985 U.S. LEXIS 4100 (1985); United States v. Hawkins County, 664 F. Supp. 288, 1985 U.S. Dist. LEXIS 21007 (E.D. Tenn. 1985), aff'd, 812 F.2d 1409, 1987 U.S. App. LEXIS 890 (6th Cir. Tenn. 1987), aff'd, U.S. v. Hawkins County, 812 F.2d 1409, 1987 U.S. App. LEXIS 890 (6th Cir. Tenn. 1987).
The mere use by a company of real property for purposes of performing a contract does not amount to an incident of ownership. Union Carbide Corp. v. Alexander, 679 S.W.2d 938, 1984 Tenn. LEXIS 950 (Tenn. 1984); United States v. Anderson County, 761 F.2d 1169, 1985 U.S. App. LEXIS 31123 (6th Cir. 1985), cert. denied, 474 U.S. 919, 106 S. Ct. 248, 88 L. Ed. 2d 256, 1985 U.S. LEXIS 4100 (1985), cert. denied, Anderson County v. United States, 474 U.S. 919, 106 S. Ct. 248, 88 L. Ed. 2d 256, 1985 U.S. LEXIS 4100 (1985).
Where a creditor held a judicial lien on the debtors' real property under T.C.A. § 25-5-101(b) and Tenn. R. Civ. P. 69.07(2), and where the real property was improved with the debtors' residence and with an unoccupied farmhouse, the debtors could avoid the judicial lien under 11 U.S.C. § 522(f) as against the entire property, including the farmhouse, as they were entitled to claim a homestead exemption under T.C.A. § 26-2-301 against their property as a whole, including any improvements on the real property on which their residence was located. In making this determination, the court noted that T.C.A. § 26-2-301(f) provided that the debtors were entitled to a homestead exemption on real property used as a principal place of residence and that T.C.A. § 67-5-501(9)(A) defined real property as including structures and improvements. In re Young, 471 B.R. 715, 2012 Bankr. LEXIS 2153 (Bankr. E.D. Tenn. May 15, 2012).
11. Public Utility Property.
12. —Express Companies.
The Federal Express Corporation was properly taxed as an express company under T.C.A. § 67-5-501(8)(F) (now (9)(F)) rather than a commercial air carrier under T.C.A. § 67-5-501(8)(M) (now (9)(M)). Federal Express Corp. v. Tennessee State Bd. of Equalization, 717 S.W.2d 873, 1986 Tenn. LEXIS 844 (Tenn. 1986).
67-5-502. Place and function of assessment.
-
The function of assessment shall be to assess:
- All property, except such property as shall be assessed by the comptroller of the treasury, to the person or persons owning or claiming to own the same on January 1 for the year for which the assessment is made, if known and, if not, to unknown owners; provided, that any temporary improvement, or movable structures that are assessable under § 67-5-802, regardless of ownership, shall be assessed as real property as an improvement to the land where located;
- The property held by executors and administrators in the county, district or ward in which the decedent resided at the time of the death until such have been distributed; but, if the deceased lived in another state, then the property shall be assessed where the personal representative resides; and
- Personal property held by trustees and guardians of minors and severely and persistently mentally ill persons to each guardian or trustee in the county, ward or district where such minor, or severely and persistently mentally ill person resides, if a resident of the state; and, if a nonresident, then in the county, ward or civil district in which the guardian or trustee resides; provided, that guardian held property shall be assessed in the county where the guardian having control thereof renders such guardian's annual settlement.
- The property of all street railroad, gas, electric light companies, modern market telecommunications providers, and all public utility companies, including their franchises, used within any town, city, or taxing district where the office of the company is located outside of such incorporated city or town or taxing district, but with the main property within the city, shall be taxed in the city, town, or taxing district as if the office was situated within the city limits, and the property, including franchises of the corporations and joint stock companies that lie wholly or mainly within any incorporated city, taxing district, or town, or whose chief business is within any incorporated city, taxing district, or town, shall be assessed for taxation in such city, taxing district, or town; provided, that all real property and tangible personal property shall be taxed in the district where situated; and provided further, that public utility property of every kind, whether real property, tangible personal property, or intangible personal property, shall all be assessed for taxes at fifty-five percent (55%) of its value and that all property of modern market telecommunications providers shall be assessed at the rate applicable to commercial and industrial property of the same type.
- Leased personal property used by a public utility company or modern market telecommunications provider shall be assessed to such company or provider, unless such property is the subject of a lawful agreement between the lessee and a local government for payments in lieu of taxes. Other leased personal property shall be classified according to the lessee's use and assessed to the lessee, unless such property is the subject of a lawful agreement between the lessee and a local government, or instrumentality thereof, for payments in lieu of taxes. Personal property that is leased to and used by any religious, charitable, scientific, or nonprofit educational institution purely and exclusively for one (1) or more of the purposes for which the institution was previously determined to be exempt under § 67-5-212 shall not be deemed to be used in a business or profession, and shall not be classified as industrial or commercial property for property tax purposes.
- All mineral interests and all other interests of whatever character, not defined as products of the soil, in real property, including the interest that the lessee may have in and to the improvements erected upon land where the fee, reversion, or remainder therein is exempt to the owner, and which interest or interests is or are owned separately from the general freehold, shall be assessed to the owner thereof, separately from the other interests in such real estate, which other interests shall be assessed to the owner thereof, all of which shall be assessed as real property, unless the lessee's or a sublessee's interest in any such real property, including any improvements erected upon the land, is the subject of a lawful agreement between a lessee and a local government, or instrumentality thereof, for payments in lieu of taxes, entered into or amended on or after April 30, 2019, in which case such property shall be assessed solely to such governmental entity and shall be subject to all applicable exemptions.
- Notwithstanding contrary provisions of law, the comptroller of the treasury may establish a pilot program for assessing leased tangible personal property to the owner/lessor rather than the lessee. Participation in the program shall be voluntary, at the election of owner/lessors who are selected by the comptroller of the treasury to participate based on criteria that optimize savings in the cost of assessment compliance and administration. The comptroller of the treasury may impose a fee to defray the cost of administration. Participants shall be permitted to report leased property centrally in lieu of the schedules otherwise required under § 67-5-903 or § 67-5-904, and the comptroller of the treasury shall be responsible for distributing centrally reported assessments based on situs. Participants may be permitted to claim the business tax credit provided in § 67-4-713 for property taxes paid pursuant to a central assessment, and the credit may be taken at the participant's option either on the return due in the jurisdiction of situs or the jurisdiction from which the lease originated.
Acts 1973, ch. 226, § 6; T.C.A., § 67-602; Acts 1990, ch. 1075, § 6; 1992, ch. 660, § 1; 1995, ch. 305, § 122; 1998, ch. 894, § 2; 2004, ch. 571, § 1; 2004, ch. 667, § 1; 2017, ch. 490, § 3; 2019, ch. 265, §§ 1, 2.
Compiler's Notes. Acts 1991, ch. 660, § 2 provided that the amendment by that act applies to assessments for the 1991 and later tax years.
Acts 2017, ch. 490, § 15 provided that the act, which amended this section, shall apply to all tax periods beginning on or after January 1, 2017.
Amendments. The 2019 amendment inserted “or instrumentality thereof,” in the second sentence of (c); and added the language beginning with “, unless the lessee's or a sublessee's interest” in the second sentence of (d).
Effective Dates. Acts 2019, ch. 265, § 3. April 30, 2019.
NOTES TO DECISIONS
1. “Movable Structures.”
House trailers and mobile homes, although defined as real property by statute for tax purposes, are personal property within the meaning of § 514 of the Soldiers' and Sailors' Civil Relief Act (50 U.S.C. Appx. § 574) [omitted] and, as such, where owned by nonresident military service personnel on active duty under military orders, are immune from state taxation. United States v. Shelby County, 385 F. Supp. 1187, 1974 U.S. Dist. LEXIS 6362 (W.D. Tenn. 1974).
2. Separate Interests.
Where a metropolitan city government owning property leased on a long term basis assessed the leasehold to the lessee, it was not necessary for the city government to separately assess the land itself which it owned since such property was exempt from assessment. Metropolitan Gov't v. Schatten Cypress Co., 530 S.W.2d 277, 1975 Tenn. LEXIS 562 (Tenn. 1975).
3. Licenses.
Interest created by a contract between United States and private corporation, where the corporation used a federally owned laboratory on federal land to develop and produce nuclear weapons, was a license and not an estate in real property for property tax purposes. United States v. Anderson County, 575 F. Supp. 574, 1983 U.S. Dist. LEXIS 11901 (E.D. Tenn. 1983), aff'd, 761 F.2d 1169, 1985 U.S. App. LEXIS 31123 (6th Cir. 1985), cert. denied, 464 U.S. 1017, 104 S. Ct. 548, 78 L. Ed. 2d 722, 1983 U.S. LEXIS 2733 (1983), cert. denied, Anderson County v. United States, 464 U.S. 1017, 104 S. Ct. 548, 78 L. Ed. 2d 722, 1983 U.S. LEXIS 2733 (1983), aff'd, United States v. Anderson County, 761 F.2d 1169, 1985 U.S. App. LEXIS 31123 (6th Cir. 1985), cert. denied, 474 U.S. 919, 106 S. Ct. 248, 88 L. Ed. 2d 256, 1985 U.S. LEXIS 4100 (1985), cert. denied, Anderson County v. United States, 474 U.S. 919, 106 S. Ct. 248, 88 L. Ed. 2d 256, 1985 U.S. LEXIS 4100 (1985); Union Carbide Corp. v. Alexander, 679 S.W.2d 938, 1984 Tenn. LEXIS 950 (Tenn. 1984); United States v. Anderson County, 761 F.2d 1169, 1985 U.S. App. LEXIS 31123 (6th Cir. 1985), cert. denied, 474 U.S. 919, 106 S. Ct. 248, 88 L. Ed. 2d 256, 1985 U.S. LEXIS 4100 (1985), cert. denied, Anderson County v. United States, 474 U.S. 919, 106 S. Ct. 248, 88 L. Ed. 2d 256, 1985 U.S. LEXIS 4100 (1985).
Decisions Under Prior Law
1. In General.
Acts 1907, ch. 602, § 20 provided for assessment of real property for taxation in both odd and even years with the time of assessment in both cases being fixed as of January tenth so that it necessarily followed that such assessments were identical in time, purpose and basis and were performed by the same person. Metropolitan Government of Nashville v. Hillsboro Land Co., 222 Tenn. 431, 436 S.W.2d 850, 1968 Tenn. LEXIS 441 (1968).
2. Assessment of Interests in Land.
Former statute was clearly intended to require the separate assessment of all interests in land, and was not limited to interests of like character, as mineral and timber interests. An assessment on real property as a whole, without attempting to value the leasehold separately, was void as against the lessee. State v. Grosvenor, 149 Tenn. 158, 258 S.W. 140, 1923 Tenn. LEXIS 88 (1923).
A remainder interest was part of the general freehold and not owned separately therefrom and was not subject to separate assessment. Sherrill v. Board of Equalization, 224 Tenn. 201, 452 S.W.2d 857, 1970 Tenn. LEXIS 315 (1970).
3. —Life Tenant and Remainderman Prior to 1897 Act.
A life tenant in possession is the owner to whom property should be assessed, and it is incumbent on the life tenant to keep down the taxes, and a life estate is liable for taxes and any sale of real estate for taxes during the life of the life tenant reaches only the life estate. Ferguson v. Quinn, 97 Tenn. 46, 36 S.W. 576, 1896 Tenn. LEXIS 116, 33 L.R.A. 688 (1896).
4. —Life Tenant and Remainderman After 1897 Act.
Statute of 1897 making a remainderman liable for taxes assessed against life tenant was constitutional. Hadley v. Hadley, 114 Tenn. 156, 87 S.W. 250, 1904 Tenn. LEXIS 79 (1905).
Statute of 1897 created a lien against a remainder interest for taxes assessed against a life tenant and changed the prior law. Hadley v. Hadley, 114 Tenn. 156, 87 S.W. 250, 1904 Tenn. LEXIS 79 (1905).
A remainderman is not liable for penalties arising from nonpayment by a life tenant of taxes assessed against life tenant. Hadley v. Hadley, 114 Tenn. 156, 87 S.W. 250, 1904 Tenn. LEXIS 79 (1905).
5. Situs of Intangible Property.
Intangible personal property is assessable where the owner has his domicile. Grundy County v. Tennessee C., I. & R.R., 94 Tenn. 295, 29 S.W. 116, 1894 Tenn. LEXIS 46 (1895).
6. —Situs of Intangible Property of Decedent.
7. — —Prior to 1907 Act.
Before 1907, the situs of intangible personal property for taxation was the residence or domicile of the personal representative. Gallatin v. Alexander, 78 Tenn. 475, 1882 Tenn. LEXIS 209 (1882).
8. — —1907 Act Construed.
The intangible personalty of a resident decedent, physically located and taxable in another state, is not taxable here for the word “held,” used in 1907 section, does not mean “owned,” but “controlled for taxation purposes.” McKennon v. McFall, 127 Tenn. 393, 155 S.W. 158, 1912 Tenn. LEXIS 38 (1912).
Resident decedent's stock in a bank in another state, and taxable there, is not taxable here. McKennon v. McFall, 127 Tenn. 393, 155 S.W. 158, 1912 Tenn. LEXIS 38 (1912).
The taxable situs of a bank deposit cannot be so diverted by the executors as to avoid taxation. McKennon v. McFall, 127 Tenn. 393, 155 S.W. 158, 1912 Tenn. LEXIS 38 (1912).
The situs of decedent's intangible personalty may be fixed for taxation here, though physically outside the state. McKennon v. McFall, 127 Tenn. 393, 155 S.W. 158, 1912 Tenn. LEXIS 38 (1912).
Intangible personalty is not always taxable where the decedent resided at his death. McKennon v. McFall, 127 Tenn. 393, 155 S.W. 158, 1912 Tenn. LEXIS 38 (1912).
9. — —Injunction Proceedings.
Where executors file a bill to enjoin the collection of a judgment for taxes, rendered by the county trustee, the burden of proof rests upon them to show some fact upon which the tax assessment is claimed to be invalid. McKennon v. McFall, 127 Tenn. 393, 155 S.W. 158, 1912 Tenn. LEXIS 38 (1912).
10. Taxation in Condemnation Proceedings.
A judgment in condemnation proceedings for the appropriation of land pending an appeal is assessable for taxes. Pryor v. Marion County, 140 Tenn. 399, 204 S.W. 1152, 1917 Tenn. LEXIS 147, 1918F L.R.A. (n.s.) 820 (1917).
Where government in condemnation proceeding secured order for possession of property on December 10, 1942, but did not obtain title to same until after January 10, 1943, taxes were legally assessed against defendant, but government had moral obligation to pay taxes out of proceeds. United States v. 232.68 Acres of Land, 57 F. Supp. 891, 1944 U.S. Dist. LEXIS 1825 (W.D. Tenn. 1944).
11. Difficulty of Assessment.
Under Tenn. Const., art. II, § 28, providing that all property shall be taxed, and specifying what the general assembly may exempt from taxation, the property is not exempted because of the difficulty of assessing it at its actual worth. Pryor v. Marion County, 140 Tenn. 399, 204 S.W. 1152, 1917 Tenn. LEXIS 147, 1918F L.R.A. (n.s.) 820 (1917).
12. Effect of Nonlisting.
Sections of Acts 1907, ch. 602, did not prevent recovery in an action on notes not listed for taxation, and proof of the nonlisting merely authorized the court to impose payment of costs on plaintiff and the declaration of a lien on the recovery. Poss v. Albert, 139 Tenn. 1, 200 S.W. 976, 1917 Tenn. LEXIS 81 (1917).
13. Time of Assessment.
Under Acts 1879, ch. 79, property was to be assessed to the person owning or claiming to own the same on the tenth day of January of the year for which the assessment was made, but if the property changed hands after January 10, an assessment in the name of the subsequent owner fixed a valid lien upon the property. Chesapeake, O. & S.W.R.R. v. State, 81 Tenn. 348, 1884 Tenn. LEXIS 49 (1884).
67-5-503. Classification.
- For purposes of taxation, all property shall be classified into three (3) classes, to wit: real property, tangible personal property and intangible personal property, and into such subclasses as may otherwise be established by law.
- The ratio of assessment to value of property in each class or subclass shall be equal and uniform throughout the state, and each respective taxing authority shall apply the same tax rate to all property within its jurisdiction.
Acts 1973, ch. 226, § 6; T.C.A., § 67-609.
Cross-References. Classification of property, Tenn. Const., art. II, § 28.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 34.
67-5-504. Assessment date.
- All assessments of real property and of personal property shall be made annually and as of January 1 for the year to which the assessment applies, unless otherwise provided for, except that whenever under any plan or program of consolidation of governmental functions of county offices with comparable facilities under any municipal charter, in any county having a population in excess of seven hundred thousand (700,000), according to the 1980 federal census or any subsequent federal census, it is expedient to fix different assessment dates than those established herein, in order to avoid the destruction of existing municipal fiscal policies, the county assessor in such county may establish assessment activity dates other than those set forth in this title, if approved by ordinance or resolution of the local governing body.
- Not later than May 20 of each year, the assessment of all property in the county shall be made by the assessor of property; provided, that the assessment of all property within any municipality shall be completed by the assessor of property not less than forty (40) days prior to the beginning tax due date of the municipality.
- Any annexing municipality that makes assessments of taxes shall only assess the tax on real property within the annexed territory if the annexation takes effect prior to January 1 of the year in which the assessment is made.
Acts 1973, ch. 226, § 6; 1983, ch. 430, § 3; T.C.A., §§ 67-603, 67-604; Acts 2013, ch. 462, § 2.
Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Acts 2013, ch. 462, § 5 provided that § 2 of the act, which added subsection (c), shall apply to assessments made on or after January 1, 2012.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 30.
Attorney General Opinions. Eligibility to levy and collect property tax, OAG 99-089 (4/8/99).
There is no legal authority for prorating property tax rates to coincide with county's fiscal year beginning July 1, OAG 05-047 (4/18/05).
NOTES TO DECISIONS
1. Assessment Date Not Immutable.
This section does not establish an immutable assessment date of January 1. Arkansas-Best Freight Sys. v. Cochran, 546 F. Supp. 904, 1981 U.S. Dist. LEXIS 18427 (M.D. Tenn. 1981).
2. Annexations.
Where city annexed property, but annexation was challenged, and the challenge was not finally resolved until after January 1, 1990, property within the annexed area was not subject to the city's property tax until after January 1, 1991. Piper v. City of Memphis, 861 S.W.2d 832, 1992 Tenn. App. LEXIS 418 (Tenn. Ct. App. 1992).
Trial court properly granted a city summary judgment in property owners' action alleging it had no authority to assess property taxes in an annexed area for 2012 because the annexation took effect on July 29, 2011, and thus, the city was entitled to collect property taxes from the newly annexed area for 2012; the city's failure to provide municipal services to the residents of the annexed area until July 1, 2012 did not alter or delay the effective date of the annexation. O'Shields v. City of Memphis, — S.W.3d —, 2017 Tenn. App. LEXIS 132 (Tenn. Ct. App. Feb. 23, 2017), appeal denied, O'Shields v. City of Memphis, — S.W.3d —, 2017 Tenn. LEXIS 420 (Tenn. July 19, 2017).
Decisions Under Prior Law
1. Taxable Day.
The taxable day in Tennessee was January 10, and the taxable status of property was fixed as of that day with reference to whether or not such property was exempt from taxation for that fiscal year. Mid-State Baptist Hosp. v. City of Nashville, 211 Tenn. 599, 366 S.W.2d 769, 1963 Tenn. LEXIS 383 (1963); Oak Ridge Hosp. v. City of Oak Ridge, 57 Tenn. App. 487, 420 S.W.2d 583, 1967 Tenn. App. LEXIS 271 (1967).
67-5-505. Forms, schedules, rules.
- The state division of property assessments, with the approval of the state board of equalization, shall prescribe the forms and schedules to be used and the records to be kept by each assessor relating to the assessment of property of every kind.
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- In determining the ownership, valuation, classification, and assessment of all property of every kind, the assessor shall follow the assessment manuals, instructions, and the rules and regulations approved by the board.
- Notwithstanding any provisions of this title to the contrary, no local assessor of property shall be in violation of any rules and regulations promulgated by the board under such provisions of such sections and chapters when the implementation of such rules and regulations cannot be accomplished without official action in some manner by the local governing body of the jurisdiction, and such body has refused to act on a request by the local assessor so as to permit the implementation of the rules and regulations by the local assessor.
- Upon a finding by the division that the assessor of property or the county is unable or unwilling to comply with requirements under this part, including rules of the board or submission of any necessary plan of compliance required by the board, the director of the division shall report such finding to the board. The board shall notify the assessor of property and the county mayor of the nature of the noncompliance and shall indicate the action required to correct such noncompliance. If satisfactory action is not taken by the assessor or the county to correct the noncompliance within sixty (60) days from the date that notice of noncompliance is given, the board shall direct the division, and the division shall thereupon be authorized to take such steps as are necessary to ensure compliance with the requirements of this part, and the county found in noncompliance shall reimburse the state for all costs incurred by the state pursuant to this action. If such costs are not reimbursed to the state within forty-five (45) days of the date of an invoice for such costs, the state may recover its costs through the deduction of such costs from any state-shared taxes as identified in § 4-31-105, otherwise due the county.
Acts 1973, ch. 226, §§ 6, 13; T.C.A., §§ 67-605, 67-613; Acts 1999, ch. 147, § 1; 2003, ch. 90, § 2.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
Cross-References. Assessment manuals, § 67-5-602.
Law Reviews.
Ad Valorem Taxation of Agricultural Land in Tennessee, 4 Mem. St. U.L. Rev. 127 (1973).
67-5-506. Assistance of state officials.
It is the duty of the chief mine inspector, the state geologist and other state officials, when called upon to do so by the director of property assessments or the state board of equalization, to render assistance to such director or state board, in ascertaining the valuation or classification of any property, or interest therein, to the end that such property may be accurately assessed.
Acts 1973, ch. 226, § 6; T.C.A., § 67-610.
67-5-507. Contracts for advice.
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- The governing body of any county, or the governing body of any town or city, is authorized and empowered, in its discretion, to enter into contracts with individuals, firms or corporations to render advice or assistance to the local assessor of property and the local board of equalization in the assessment and equalization of taxes.
- Such contracts may provide that such person, firm or corporation shall go over all the tax rolls of the county or city, as the case may be, and examine all taxable property in the county or city, and make recommendations to the assessor of property and to the board of equalization, to the end that all property may be assessed in the correct amount and name of its lawful owner, and that all errors and double assessments on the tax rolls may be eliminated; provided, that the function of the person, firm or corporation rendering such services shall be advisory only, and the final decision as to the amount of assessments and the equalization of assessments shall be made by the assessor of property and the board of equalization as provided by law. Nothing herein shall be construed to apply to assessments that are required to be made by the comptroller of the treasury.
- Counties, cities and towns are authorized to enter into such contracts and to appropriate and expend such amounts as may be deemed necessary for such purposes in the discretion of the governing body of the county, city or town involved.
- Counties, cities and towns may contract with the state board of equalization, under title 4, chapter 3, part 51, for advice and assistance in the preparation and awarding of the contracts and inspection and approval of services rendered thereunder.
- The governing body of any county and the governing body of any city or town are authorized and empowered to enter into joint contracts for such purposes for the employment of corporations, firms or individuals to render the services provided for in this section jointly to the county and to cities or towns located therein. The cost as between the county and the cities and towns located therein shall be in such amounts as may be mutually agreed upon by the governing bodies of the counties, cities or towns.
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- No contract entered into by authority of this section shall contain any provisions whereby the person, firm or corporation employed thereunder shall be paid upon a percentage basis, or on any basis whereby the compensation under the contract is in anywise dependent or conditioned upon increasing or reducing the aggregate assessment of property in the county, city or town involved.
- Any contract containing a provision whereby the compensation is conditioned upon or measured directly or indirectly by an increase or a reduction in assessments shall be void and unenforceable.
- This section shall not be construed to repeal or amend any existing statute with respect to the assessment and equalization of taxes, but shall be supplementary to existing statutes.
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- Notwithstanding any of the foregoing, in the event that a county governing body contracts with a person, firm or corporation to examine the tax rolls of the county for personal property, and to give advice and assistance to the county assessor of property regarding personal property identification and valuation, all municipalities in the county that levy a property tax shall share in the cost of such contract and shall contribute their respective share to the county general fund within one (1) year of the execution of the contract. The share of the cost of the county contract for each municipality in the county that levies a property tax shall be a percentage of the cost of the contract based upon the following formula: the percentage that the total amount of the personal property values located within the municipality bear to the total personal property values of the entire county, located both within and outside of the municipal boundaries, times the percentage that the municipal property tax rate bears to the combined county and municipal property tax rate. The property valuation and tax rates used in this formula shall be the latest available at the time of the execution of the contract.
- Subdivision (e)(1) does not apply in any county having a charter form of government and having a population in excess of eight hundred thousand (800,000), according to the 1990 federal census or any subsequent federal census.
Acts 1947, ch. 209, §§ 1-4; C. Supp. 1950, §§ 1446.1, 1446.2 (Williams, §§ 1418.1-1418.4); impl. am. Acts 1955, ch. 69, § 1; 1963, ch. 286, § 8; T.C.A. (orig. ed.), §§ 67-1706 — 67-1709; Acts 1984, ch. 832, § 8; 1995, ch. 305, § 123; 1998, ch. 949, §§ 1, 2; 2008, ch. 971, § 1.
Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Acts 2008, ch. 971, § 1 provided that the code commission is directed to change all references to “tax assessor”, wherever such references appear, to “assessor of property”, as such sections are amended or volumes are replaced. See § 1-1-116.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 29.
Attorney General Opinions. Governmental entity's authority to contract with private firm to audit, assess, or collect taxes, OAG 05-181 (12/20/05).
No specific statutory authority exists that would authorize local or state governments to outsource non-delinquent revenue administration beyond the statutes discussed in Opinion No. 05-181, OAG 06-039 (2/23/06).
NOTES TO DECISIONS
1. Reassessments.
Where county acting in capacity of tax assessor (now assessor of property) makes reassessments after assessments are held void, county may employ professional appraisers under this section and act upon the recommendations of such appraisers as provided in this section. Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964).
2. Reappraisal.
Work product of organization employed by Knox County for reappraisal was only a recommendation, and final decision as to valuation was to be made by Knox County tax assessor (now assessor of property) and Knox County board of equalization. State by Webster v. Word, 508 S.W.2d 539, 1974 Tenn. LEXIS 421 (Tenn. 1974).
67-5-508. Records and notice of assessment.
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- Prior to May 20 of each year, the assessor shall note upon the assessor's records the current classification and assessed valuation of all taxable property within the assessor's jurisdiction; provided, that, in regard to municipalities, the time requirements of § 67-5-504 shall control.
- The assessor shall hold such records open to public inspection, at the assessor's office, during normal business hours; and shall, furthermore, cause to be published at least once in a newspaper of general circulation within the assessor's jurisdiction, a notice when and where such records may be inspected, such notice to be published not later than ten (10) calendar days before the local board of equalization begins its annual session. The notice shall be set forth in the publication within distinct and prominent borders, and shall have a width of not less than two (2) regular columns of such newspaper and a depth of at least four inches (4"). The notice shall state the day upon which the county board of equalization will convene, the last day appeals will be accepted, and a warning that failure to appeal the assessment to the county board of equalization may result in the assessment becoming final without further right of appeal.
- In addition, at least ten (10) calendar days before the local board of equalization commences its annual session, the assessor or the assessor's deputy shall notify, or cause to be notified, each taxpayer of any change in the classification or assessed valuation of the taxpayer's property. Such notification shall be sent by United States mail, addressed to the last known address of the taxpayer, and shall be effective when mailed. The notification shall show the previous year's assessment and classification and the current year's assessment and classification.
- A notation of the date of any notification of a change in classification or assessed valuation, or a dated copy of such notification, shall be included in the records of the assessor; and such records shall be preserved by the assessor for not less than two (2) years.
- For the year in which a reappraisal program is completed and the values so determined are approved by the state division of property assessments to be used as the basis for making assessments in any county, any notice showing the appraised value of property and sent to a property owner by any company, which has been employed for the purpose of conducting such reappraisal program, shall be in lieu of the notice herein required to be sent by an assessor of property to a taxpayer whose classification or assessed valuation has been changed; provided, that the assessor of property uses the appraised value as set forth on the notice from the company as the basis for the assessor's assessment; and provided further, that the assessor of property does not change the classification of the property from its former classification.
- Further, upon a consolidation of the municipal and other assessment offices within any county with the office of the county assessor of property, as provided in § 67-1-513, the county assessor of property shall not be required to notify each taxpayer within such municipality, unless a change has been made by the county assessor of property from the former classification and assessed valuation that existed on the county tax roll for the preceding year; provided, that the assessor of property shall hold the assessor's records open to public inspection at the assessor's office during normal business hours and shall cause to be published at least once, in a newspaper of general circulation within the assessor's jurisdiction, a notice where and when such records may be inspected. Such notice shall be published not later than ten (10) calendar days before the local board of equalization begins its annual session.
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- Should an assessor fail to complete and note upon the assessor's records the assessment of a taxpayer's property prior to May 20, or should an assessor fail to notify a taxpayer, or the taxpayer's agent, of any change in the classification or assessed valuation of the taxpayer's property, such taxpayer shall have no legal basis for complaint; provided, that the assessment against the property is completed, and a notice of any new or changed classification or assessed valuation is sent by United States mail, to the last known address of the taxpayer, at least ten (10) calendar days before the local board of equalization ends its annual session.
- In the event an assessor shall fail to complete any assessment, or notify any taxpayer of a change in the classification or assessed valuation of the taxpayer's property, at least ten (10) calendar days before the local board of equalization ends its annual session, such failure shall not affect, in any way, the validity of such assessment, classification or assessed valuation; but an aggrieved property owner shall have the right to appeal directly to the state board of equalization at its next regular session; and no proceedings shall be undertaken to collect any taxes based upon such assessment, or penalty added, until thirty (30) calendar days after the board shall have rendered a final decision on such appeal or complaint. Upon written request of any party, or upon its own motion, the state board of equalization may remand any such complaint or appeal to the local board of equalization.
- As an alternative to notice by mail as provided in this section, notice may be sent by email using the email address provided to the assessor by the taxpayer.
- An assessor of property may maintain any records as required under this part in an electronic format.
Acts 1973, ch. 226, § 6; 1974, ch. 771, § 14; T.C.A., §§ 67-627, 67-628; Acts 1984, ch. 832, § 6; 1990, ch. 899, § 1; 1999, ch. 153, § 1; 2013, ch. 209, § 8; 2017, ch. 248, § 1.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 31.
67-5-509. Errors — Correction of assessments.
- If the tax computed on an erroneous basis of valuation or assessment has been paid prior to certification of the corrected assessment by the assessor, the trustee or municipal collector shall, within sixty (60) days after receipt of such certification from the assessor, refund to the taxpayer that portion of such tax paid that resulted from the erroneous assessment, such refund to be made without the necessity of payment under protest or such other requirements as usually pertain to refunds of taxes unjustly or illegally collected.
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- The validity of any assessment or levy of taxes, or proceedings for the equalization, review, or collection of taxes, or for the enforcement of any tax lien, shall not be affected by any defect, error, irregularity or omission in such assessment, levy or proceedings, unless the defect, error, irregularity or omission shall result in a denial of minimum constitutional guarantees.
- As used in this subsection (b), “assessment” includes a back assessment, reassessment, or correction of assessment error.
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- Whenever the assessor shall discover, or it has been called to such assessor's attention, that there has been an error or omission in the listing, description, classification or assessed value of property or any other error or omission in the tax rolls held by the trustee or municipal collector, the assessor shall certify in writing the facts to the trustee or municipal collector, who shall receive the tax on the corrected assessment and report the difference in the trustee's or municipal collector's errors and releasement list, and shall make such other corrections as such certificate may show right and proper.
- The assessor shall certify to the trustee or municipal collector the facts and the reasons for such a change in such assessment, and the tax shall be collected upon the revised assessment.
- The state board of equalization may require that a copy of such certification be furnished by the assessor to the executive secretary to the state board of equalization.
- Correction of assessments pursuant to this section must be requested by the taxpayer, or initiated by the assessor, prior to March 1, no more than the second year following the tax year for which the correction is to be made. Additional taxes due as the result of a corrected assessment shall not be deemed delinquent until sixty (60) days after the date notice of the corrected assessment is sent to the taxpayer. Once a suit has been filed for the collection of delinquent taxes pursuant to § 67-5-2405, the assessment and levy for all county, municipal and other property tax purposes are deemed to be valid and are not subject to correction under this section.
- Should any assessor fail or refuse to correct any error as provided in this section within thirty (30) days after being requested to do so, or should the correction of any error result in an increase in an assessment, any person aggrieved thereby may appeal directly to the state board of equalization and may be assisted or represented in the appeal as provided in § 67-5-1514. Appeal to the board shall be filed within forty-five (45) days after the assessor's failure or refusal to correct the error, or within forty-five (45) days after the assessor sends notice of any assessment change resulting from the correction. If determined by the board that any such error exists, the board shall issue an order certifying the corrected assessment to the trustee or municipal collector.
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- An assessor shall correct an error in coding, entry, or transcription of data, if documentation clearly establishes that an error occurred and that the error affected the property's value as of the assessment date. The assessor shall also correct errors in the ownership, location, or physical description of property. An assessor may not revisit, as a correction of error, matters requiring an application of the assessor's judgment, such as the quality of fit or finish in a structure, the degree to which location or depreciation affects property value, or the degree of comparability of a property to others in the relevant market.
- On appeal, an owner aggrieved by the assessor's decision with regard to the correction of an error may argue the applicability of this section, including whether the error affected the recorded value, but the appeal may not reopen issues of value generally that should properly have been raised before the county board of equalization.
- The assessor's conclusion that a residential duplex was fully available for rent as of the assessment date is not a correctable error absent a demonstrated mistake in coding, entry, or transcription of data. Errors or omissions correctable under this section do not include clerical mistakes in tax reports or schedules filed by a taxpayer with the assessor.
Acts 1973, ch. 226, § 6; 1974, ch. 771, § 8; 1976, ch. 782, § 13; 1977, ch. 262, § 1; T.C.A., §§ 67-606, 67-639, 67-640; Acts 1984, ch. 662, § 1; 1990, ch. 898, § 1; 1992, ch. 996, §§ 1, 2; 2013, ch. 209, § 9; 2015, ch. 193, § 1.
Compiler's Notes. Acts 2009, ch. 530, § 104 provided that the deadline established by subsection (d) is extended with respect to forced assessments of tangible personal property for tax year 2007 until September 1, 2009.
Law Reviews.
Recovering Erroneously Paid Property Taxes in Tennessee: An Epic Journey, 10 Mem. St. U.L. Rev. 279 (1980).
Attorney General Opinions. Jurisdiction over the correction of property tax assessment errors, OAG 96-077 (4/24/96).
Assessor's authority to reduce assessment, OAG 07-037 (3/26/07).
Meaning of obvious clerical mistakes under T.C.A. § 67-5-509(f). OAG 13-103, 2013 Tenn. AG LEXIS 101 (12/10/13).
NOTES TO DECISIONS
1. In General.
Where the owner of property being taxed had a full opportunity both before the state board of equalization and the courts to present his position on the controlling issue of law, any error in the procedure before the hearing examiner or the board was harmless error. Crown Enters., Inc. v. State Bd. of Equalization, 543 S.W.2d 583, 1976 Tenn. LEXIS 480 (Tenn. 1976).
2. Due Process.
Where defendants got notice of a reassessment of their property in 1980 or 1981 and were served with process in 1986, they had two chances to protest and challenge the reassessment; and such notice and opportunity to be heard complied with the due process requirements of the state and federal constitutions. State v. Delinquent Taxpayers, 785 S.W.2d 819, 1989 Tenn. App. LEXIS 732 (Tenn. Ct. App. 1989).
67-5-510. Establishment of county tax rate.
It is the duty of the county legislative bodies, on the first Monday in July, or as soon thereafter as practicable, to fix the tax rates on all properties within their respective jurisdictions for all county purposes, except that in any county having a population in excess of seven hundred thousand (700,000), according to the 1980 federal census or any subsequent federal census, establishing tax due dates other than the first Monday in October each year, in accordance with § 67-1-701(a), shall have the authority to fix tax rates for all county purposes at dates prior to the first Monday in July.
Acts 1921, ch. 113, § 19; Shan. Supp., § 809a26; Code 1932, § 1461; Acts 1983, ch. 430, § 1; T.C.A. (orig. ed.), § 67-1004.
Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Attorney General Opinions. A county board of commissioners, having previously approved a tax rate for a particular fiscal year, may amend the county's tax rate, provided the new rate is fixed before taxes become due on the first Monday in October, OAG 04-149 (10/01/04).
67-5-511. Fiduciaries' returns.
- Persons acting as executors, administrators, guardians, agents, attorneys, clerks of any court, or in any fiduciary capacity whatever, shall make a return of the property, moneys, and effects held or controlled by them in any of such capacities, separate from the individual returns, showing the names of the person or persons for whose use and benefit such is held, and the same shall be listed separately for taxation.
- In all cases where any person acting in a fiduciary capacity shall fail, or neglect, or refuse to return to the assessor the schedule of property for taxation as provided for in subsection (a), the assessor may report in writing the fact to the county mayor, who shall cite the person, agent, attorney, firm, officer, officers of the company or corporation before the county mayor, and shall demand of them to answer the questions provided in this chapter, under oath or affirmation, and shall have power to punish for contempt for failure to answer; and, if the refusal to answer is persisted in, the county mayor shall make such an assessment in such cases from the best information that the county mayor can obtain, and such assessment shall be prima facie evidence as to the value and ownership of the property, and the costs accrued under this section shall be paid by and be charged against the taxpayers and upon the property.
Acts 1973, ch. 226, § 6; T.C.A., §§ 67-618, 67-619; Acts 2003, ch. 90, § 2.
Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.
Decisions Under Prior Law
1. Clerks.
Notes executed to a clerk and master on sale of land under a decree were held not taxable under former law since they were in the court's custody merely in course of collection. Carhart v. Jones, 37 S.W. 565, 1896 Tenn. Ch. App. LEXIS 32 (Tenn. Ch. App. 1896).
2. Receivership.
Former law did not authorize taxation of funds in hand of a receiver under general creditor's bill to wind up an insolvent corporation, nor of funds in the hand of the clerk, obtained by him in process of collection, but applied only to such trust estates as were held and managed as trust funds to be loaned out or invested. Schoolfield v. Schoolfield, Hanaver & Co., 103 Tenn. 63, 52 S.W. 867, 1899 Tenn. LEXIS 87 (1899).
67-5-512. New counties.
The assessments made by the county assessor or the district assessor, as the case may be, of the new county on the taxable property in the districts or parts of districts that formerly constituted a part of the old county, and which had outstanding indebtedness at the time of the formation of the new county, shall be and constitute the assessment for the old county for the purpose of taxation to pay the debt and the interest thereon; and it shall be the duty of the assessor in and for the new county to furnish the assessments to the assessor of the old county within twenty (20) days after same has been passed upon by the board of equalization of the new county; provided, that the assessment shall be copied by the assessor of the old county in the office of the assessor of the new county, and the copy of such assessment shall be a legal, valid, and binding assessment, when so made, in all respects and to all intents and purposes as is the assessment in the county or counties from which the same is copied.
Acts 1973, ch. 226, § 6; T.C.A., § 67-644.
67-5-513. Sale or termination of business.
- If any taxpayer operating for the purpose of making a profit as a business or profession, partnership, joint venture, corporation, limited liability company, manufacturer or other legal entity having personal property, tangible or intangible, assessable by the county assessor or other authority, sells the business, relocates it outside the jurisdiction or terminates it, the taxpayer shall notify the assessor and trustee and make payment within fifteen (15) days after the date of selling, relocating or terminating the business, of any taxes, interest and penalties due and owing and the taxes of the current year in accordance with the assessment records, which shall be based on the last assessment and rate fixed, according to law. The assessor shall certify the assessment to the appropriate collecting officials and the collecting official shall then send a notice of taxes due based on the certification from the assessor and shall accept payment of the amount determined to be owing. Additional taxes due as the result of the certification assessment shall not be deemed delinquent until thirty (30) days after the date notice of the assessment is sent to the taxpayer. Upon the expiration of thirty (30) days the collecting official may pursue collection of such delinquent personal property taxes as provided in § 67-5-2003.
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- The successor, successors or assigns shall be required to withhold a sufficient amount of the purchase money to cover the amount on the assessment records for the current year determined as set forth in subsection (a), and any amount of such taxes, interest and penalties due and unpaid, until such former owner produces a certificate from the assessor stating that such former owner does or does not appear on the assessor's assessment records for the current year and a receipt from the trustee and municipal collector showing that all taxes, interest and penalties have been paid, or a certificate stating that no taxes, interest or penalties are due.
- If the purchaser of a business fails to withhold the purchase money as provided in subdivision (b)(1), the purchaser shall not be an innocent purchaser and shall be personally liable, together with the prior owner, for the payment of all personalty taxes, interest and penalties accruing and unpaid on account of the operation of the business by any former owner, owners or assigns, and for any assessment for the current year based on the last made assessment and the tax rate fixed according to law, and the trustee shall accept tender of the amount determined to be owing.
Acts 1981, ch. 463, § 1; T.C.A., § 67-1723; Acts 2013, ch. 353, § 32; 2014, ch. 883, § 3.
Textbooks. Tennessee Forms (Robinson, Ramsey and Harwell), No. 8-104.
67-5-514. Telecommunications tower properties.
If owned by a public utility company, telecommunications tower properties used in whole or in part for telecommunications shall be assessable by the comptroller of the treasury. As used in this section, telecommunications tower properties includes the tower, site improvements, land and structures supporting it.
Acts 2000, ch. 649, § 1; 2019, ch. 102, § 1.
Compiler's Notes. Acts 2000, ch. 649, § 5, provided that the act shall apply to the 2000 tax year. A taxpayer subject to assessment by the comptroller of the treasury under § 67-5-513, § 67-5-903(f), § 67-5-1301(a)(2), or § 67-5-1310 for the first time for tax year 2000 shall be afforded up to sixty (60) days, from the date the taxpayer is supplied a report form, to file any ad valorem report otherwise required by § 67-5-1303 for tax year 2000.
Amendments. The 2019 amendment substituted “If owned” for “Whether or not owned” at the beginning of the first sentence.
Effective Dates. Acts 2019, ch. 102, § 2. April 11, 2019.
67-5-515. Assessment of operating property of municipal or similar provider of broadband services.
Beginning on January 1, 2023, the operating property of a municipal or similar provider of broadband services that provides competitive local exchange telephone services or interconnected voice over internet protocol services through a dedicated telecommunications division and that makes in lieu of tax payments pursuant to title 7, chapter 52, part 4 or 6, or that makes similar in lieu of tax payments pursuant to a private act, and that is currently paying such in lieu of taxes based upon a rate of assessment of fifty-five percent (55%), shall be classified and assessed in the same manner as the operating property of a modern market telecommunications provider for purposes of calculating the in lieu of tax payments to be paid with respect to its operating property used to provide such competitive local exchange telephone services or interconnected voice over internet protocol services.
Acts 2017, ch. 490, § 14.
Part 6
Classification and Assessment — Valuation
67-5-601. General policy — Legislative findings.
- The value of all property shall be ascertained from the evidence of its sound, intrinsic and immediate value, for purposes of sale between a willing seller and a willing buyer without consideration of speculative values, and when appropriate, subject to the Agricultural, Forest and Open Space Land Act of 1976, compiled in part 10 of this chapter.
- It is the legislative intent that no appraisal under this part shall be influenced by inflated values resulting from speculative purchases in particular areas in anticipation of uncertain future real estate markets; but all property of every kind shall be appraised according to its sound, intrinsic and immediate economic value, which shall be ascertained in accordance with such official assessment manuals as may be promulgated and issued by the state division of property assessments and approved by the state board of equalization pursuant to law.
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- The general assembly finds that the increased market value of certain residential property zoned for commercial use has caused an increase in taxes to the extent that citizens are faced with the necessity of selling dwelling houses in which they have lived for many years. The general assembly finds that present use valuation has been extended to others, and is warranted under certain circumstances to relieve the burden of increased taxation to residential owners.
- It is the policy of this state that the owners of residential property who have lived on that property for a significant period of time should be allowed to continue to live on that property without a disproportionate increase in taxes due to the property being zoned for commercial use.
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For the purposes of this subsection (c):
- “Dwelling house” means a residence occupied by the owner of an estate in that property, with such residence being zoned for commercial use, used solely for residential purposes, and occupied by that owner or a person to whom the current owner is a lineal descendant for a period of twenty-five (25) years or more, together with the real estate upon which it is situated up to a maximum five (5) acres; and
- “Owner” means a citizen and resident of Tennessee who occupies the citizen's or resident's dwelling house, as opposed to occupying any other residence, for at least nine (9) months out of each calendar year.
- Any owner of a dwelling house may make application to the assessor of property of the county in which the property is located for its classification under this subsection (c). Property that has been determined by the assessor of property to qualify under this subsection (c) shall be valued for ad valorem tax purposes at its market value for residential purposes. The assessment on such property shall include the entire year in which the land is classified under this subsection (c). Any person who is denied such classification shall have the same rights and remedies for appeal and relief as are provided taxpayers for any action of assessors of property.
- Should the use or ownership of the property change so that it no longer qualifies under this subsection (c), then the property owner shall have the duty of informing the assessor of property. Upon discovering that a property no longer qualifies for classification under this subsection (c), the assessor of property shall reclassify the property and shall value the property according to its current market value for subsequent tax years. In the event such change in use or ownership does not timely come to the attention of the assessor of property, and upon the assessor discovering that the property no longer qualifies, such reclassification shall affect each year that the property has failed to qualify, and the taxpayer shall be liable for the difference in taxes, including penalty and interest.
- It is the legislative intent that the twenty-five-year time period is an integral part of this subsection (c). If this provision is held by a court of competent jurisdiction to be an unreasonable classification or otherwise declared unconstitutional, then this entire subsection (c) shall be null and void.
- The unmarried spouse of a deceased owner, occupying the dwelling house as a surviving joint tenant or tenant by the entireties, may continue to reside in the dwelling house without disqualifying the property from the benefits of this subsection (c). The term of occupancy by that spouse shall not be deemed to interrupt the twenty-five-year time period required for continued eligibility of the property for the benefits of this subsection (c).
- The general assembly finds that due to the abundance of limestone, sand and gravel in this state and the difficulty in valuing the contributory interest in limestone, sand and gravel that such contributory interest in limestone, sand and gravel shall be deemed to have no value for property tax purposes. This does not affect the commercial classification of real property used for quarry purposes.
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- The general assembly finds that any property that generates electricity using green sources such as geothermal, hydrogen, solar or wind, is generally capable of producing less electricity than conventional sources due to uncertain or intermittent energy sources or other factors, that net operating income will be affected by unusual cost and market conditions, and that the commercially competitive disadvantage of these green energy source properties evidences that their sound, intrinsic and immediate value is significantly less than their total installed costs. The general assembly further finds that unless these circumstances are considered in the determination of value for tax purposes under this chapter, investment in property to generate electricity from green sources will be unreasonably discouraged, denying the citizens of Tennessee the environmental benefits associated with the greater use of these domestic renewable energy sources for power generation.
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Based on the foregoing findings, the sound, intrinsic and immediate value of green energy source property should not initially exceed a percentage of total installed costs equal to the ratio of projected electricity output over a period of one (1) year to the maximum capacity of the property, as follows:
- The sound, intrinsic and immediate value of wind source property should not initially exceed one-third (1/3) of total installed costs;
- The sound, intrinsic and immediate value of solar source property should not initially exceed twelve and one-half percent (12.5%) of total installed costs; and
- The sound, intrinsic and immediate value of other green source property should not initially exceed its appropriate capacity factor as determined by the state board of equalization in consultation with the department of environment and conservation.
- The assessor of property, or the comptroller of the treasury, in the case of public utility property, shall take the foregoing findings into account in determining the sound, intrinsic and immediate value of green source property when the property is initially appraised and each time the property is reappraised. A copy of the green energy production facility certification issued by the department of environment and conservation, or filing of a schedule or statement pursuant to § 67-5-1303, effective as of January 1 of the year for which valuation under this subsection (e) is claimed, shall be required and shall be provided by the property owner to the comptroller's office by March 1 of the first year for which valuation under this subsection (e) is claimed. The department of environment and conservation shall report each month to the comptroller of the treasury a listing of certifications approved in the preceding month, and shall provide copies of certification records to the comptroller of the treasury on request. On or before the scheduled reappraisal in each county, the comptroller of the treasury shall advise the assessor of known locations of certified or other green energy property and whether the property is assessable locally or centrally.
- The general assembly finds that any public utility property or commercial and industrial property that is used to engage in the fueling of natural gas vehicles and that is a certified alternative fueling site as described in the definition of “certified green energy production facility” in § 67-4-2004, is generally capable of fueling fewer types of vehicles due to limited availability from original equipment manufacturers, that use of such alternative, domestically produced transportation fuels should be encouraged to improve air quality and to enhance our nation's energy security, and immediate economic value for all purposes under this chapter should not initially exceed thirty percent (30%) of its total installed costs. The general assembly further finds that, unless the findings are considered in the determination of the sound, intrinsic, and immediate economic value of such property for all purposes under this chapter, investment in property for fueling alternative fuel vehicles will be unreasonably discouraged, denying the citizens of this state the environmental benefits and domestic energy security associated with the use of natural gas as a transportation fuel. The assessor of property, in assessing any such commercial and industrial property, or the comptroller of the treasury, in assessing any such public utility property, that engages in the fueling of motor vehicles with natural gas, shall take these findings by the general assembly into account in determining the sound, intrinsic, and immediate economic value of such property, when the property is initially appraised and each time the property is reappraised. A copy of the facility certification issued by the department of environment and conservation shall be required in order to qualify for such valuation. The valuation of personal property under this section shall also apply to machinery and equipment utilized in a natural gas vehicle fueling station. Such equipment shall include, but not be limited to, storage vessels, compressors, dryers, dispensers, piping, compressed or liquefied gas appliances, or any other item that is installed by a natural gas provider.
Acts 1973, ch. 226, § 6; 1974, ch. 771, § 8; 1976, ch. 782, § 13; 1977, ch. 262, § 1; T.C.A., § 67-606; Acts 1987, ch. 430, §§ 2-4; 1994, ch. 786, § 1; 1997, ch. 195, §§ 1, 2; 2003, ch. 377, § 1; 2013, ch. 297, § 1; 2013, ch. 423, § 4; 2015, ch. 471, § 1.
Compiler's Notes. Acts 1997, ch. 195, § 3 provided that the act, which amended this section, shall apply to the 1997 tax year and subsequent years.
Acts 2003, ch. 377, § 2 provided that the act shall apply to property assessed for tax year 2003 and tax years thereafter.
Acts 2013, ch. 297, § 3 provided that the act, which amended subsection (e), shall apply retroactively for tax year 2013.
For the Preamble to the act concerning alternative fuel vehicles and fueling infrastructure, please refer to Acts 2013, ch. 423.
Acts 2013, ch. 423, § 1 provided that the act, which added subsection (f), shall be known and may be cited as the “Energy Independence Act of 2013.”
Acts 2015, ch. 471, § 3 provided that the act, which added (c)(7), shall apply to tax years beginning on or after January 1, 2015.
Cross-References. Basis of valuation, Tenn. Const., art. II, § 28.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 35.
Law Reviews.
Ad Valorem Taxation of Agricultural Land in Tennessee, 4 Mem. St. U.L. Rev. 127 (1973).
Attorney General Opinions. Valuation of property that generates electricity using wind, OAG 03-068 (5/27/03).
Valuation of property that generates electricity using certain energy sources. OAG 13-19, 2013 Tenn. AG LEXIS 22 (3/11/13).
Valuation of certified green energy production facility property; amendments by Acts 2013, ch. 297. OAG 13-28, 2013 Tenn. AG LEXIS 29 (3/26/13).
NOTES TO DECISIONS
1. Constitutional Questions.
Plaintiff's argument that he was denied equal protection under the law was without merit where the appraisal and assessment of his properties, using the direct comparable sales method, was in compliance with T.C.A. § 67-5-601(a). Willamette Indus., Inc. v. Tennessee Assessment Appeals Comm'n, 11 S.W.3d 142, 1999 Tenn. App. LEXIS 611 (Tenn. Ct. App. 1999).
2. Construction.
The value arrived at under T.C.A. § 67-5-1008 is equal to the value that would result from T.C.A. § 67-5-601. Marion County v. State Bd. of Equalization, 710 S.W.2d 521, 1986 Tenn. App. LEXIS 2768 (Tenn. Ct. App. 1986).
3. Surface Value and Mineral Value.
In general terms, surface values are determined without regard to mineral value and without regard to the value of growing crops, which, by statutory mandate, includes trees. The mineral value must then be determined and the surface value must, in order to obtain true equalization, be further reduced by the value of the underlying minerals. Richardson v. Tennessee Assessment Appeals Com., 828 S.W.2d 403, 1991 Tenn. App. LEXIS 742 (Tenn. Ct. App. 1991), rehearing denied, — S.W.2d —, 1991 Tenn. App. LEXIS 783 (Tenn. Ct. App. Oct. 1, 1991).
4. Timberland.
There is no authority that requires the residual method of appraisal be utilized in the valuation of timberland; on the contrary, no authority suggests that any single method is mandated, to the exclusion of all others. Willamette Indus., Inc. v. Tennessee Assessment Appeals Comm'n, 11 S.W.3d 142, 1999 Tenn. App. LEXIS 611 (Tenn. Ct. App. 1999).
67-5-602. Assessment guided by manuals — Factors for consideration.
- Except as provided in § 67-5-601(c), in determining the value of all property of every kind, the assessor shall be guided by, and follow the instructions of, the appropriate assessment manuals issued by the division of property assessments and approved by the state board of equalization. In the preparation of the manual, the division of property assessments and the state board of equalization shall consult with the United States forest service and the state forester in establishing the guidelines to be used in determining the value of forestland.
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For determining the value of real property, such manuals shall provide for consideration of the following factors:
- Location;
- Current use;
- Whether income bearing or non-income bearing;
- Zoning restrictions on use;
- Legal restrictions on use;
- Availability of water, electricity, gas, sewers, street lighting, and other municipal services;
- Inundated wetlands;
- Natural productivity of the soil, except that the value of growing crops shall not be added to the value of the land. As used in this subdivision (b)(8), “crops” includes trees; and
- All other factors and evidence of value generally recognized by appraisers as bearing on the sound, intrinsic and immediate economic value at the time of assessment.
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For determining the value of industrial, commercial, farm machinery and other personal property, such manuals shall provide for consideration of the following factors:
- Current use;
- Depreciated value;
- Actual value after allowance for obsolescence; and
- All other factors and evidence of value generally recognized by appraisers as bearing on the sound, intrinsic and immediate economic value at the time of assessment.
- Notwithstanding the foregoing, all farm personal property and also all household and kitchen furniture, tableware, musical instruments, wearing apparel, private passenger motor vehicles, jewelry and other personal property of similar character used in the taxpayer's own household, together with all intangible property, including bank accounts, of the taxpayer, may be assumed prima facie by the assessor of property to be of a value not in excess of seven thousand five hundred dollars ($7,500) per individual and fifteen thousand dollars ($15,000) for jointly owned property held by husband and wife in the absence of any tax return or schedule to the contrary.
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For determining the value of industrial, commercial, farm machinery and other personal property, such manuals shall provide for consideration of the following factors:
Acts 1973, ch. 226, § 6; 1974, ch. 771, § 8; 1976, ch. 782, § 13; 1977, ch. 262, § 1; T.C.A., § 67-606; Acts 1987, ch. 430, § 1; 1988, ch. 831, § 1; 1995, ch. 362, § 1.
Cross-References. Forms, schedules, and rules, § 67-5-505.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 35.
Attorney General Opinions. Exclusion from ad valorem taxation of personal property of individuals, OAG 00-062 (4/3/00).
NOTES TO DECISIONS
1. Constitutionality.
Tenn. Const., art. II, § 28 requires the reclassification of all property for ad valorem tax purposes and valuation at 100 percent of full market value, and the action of taxing authorities in valuing public utility properties at full value and other properties at less than full value violated the equal protection clause of the fourteenth amendment and entitled the public utility taxpayers to obtain equalization. Louisville & N. R. Co. v. Public Service Com., 631 F.2d 426, 1980 U.S. App. LEXIS 13669 (6th Cir. Tenn. 1980), cert. denied, 450 U.S. 959, 101 S. Ct. 1418, 67 L. Ed. 2d 384, 1981 U.S. LEXIS 1073 (1981), cert. denied, Public Service Com. v. Louisville & N. R. Co., 450 U.S. 959, 101 S. Ct. 1418, 67 L. Ed. 2d 384, 1981 U.S. LEXIS 1073 (1981).
2. Condition of Title Irrelevant.
In assessing the value of land, account should not be taken of the condition of the title of the alleged land owner or of any cloud upon it; nor should account be taken of the possibility that he would be unwilling to sell it because of an understanding with his grantor, or of the possibility that a purchaser would be put on notice that this grantor has an equitable interest in the property. The law requires an assessment of the value, not of the purported owner's title, but of the land; the assessed value of the land represents the value of all interest in the land. Hoover v. State Board of Equalization, 579 S.W.2d 192, 1978 Tenn. App. LEXIS 338 (Tenn. Ct. App. 1978).
3. Life Tenancies.
The full value of the land is taxed in the hands of the life tenants, notwithstanding the fact that a life tenant has less than a full and unrestricted ownership of the land. Hoover v. State Board of Equalization, 579 S.W.2d 192, 1978 Tenn. App. LEXIS 338 (Tenn. Ct. App. 1978).
4. Restrictions Running with Land.
In placing a valuation on the property, this section recognizes the existence of restrictions and encumbrances that affect the value of the fee simple estate, i.e., zoning restrictions, easements, etc., which are restrictions that run with the land, rather than those that are personal to the parties in possession. Hoover v. State Board of Equalization, 579 S.W.2d 192, 1978 Tenn. App. LEXIS 338 (Tenn. Ct. App. 1978).
A private individual could not self-impose a restriction whereby he might be able to limit or avoid paying his just share of the ad valorem taxes due to government nor can a corporation. Hoover v. State Board of Equalization, 579 S.W.2d 192, 1978 Tenn. App. LEXIS 338 (Tenn. Ct. App. 1978).
5. Value Attaches to Property.
For property tax purposes, value attaches to the property itself, not to the interest of the current party in possession. Hoover v. State Board of Equalization, 579 S.W.2d 192, 1978 Tenn. App. LEXIS 338 (Tenn. Ct. App. 1978).
6. Classification for Assessment, Not Valuation.
Tennessee has chosen to classify properties for assessment purposes, not for valuation purposes. Louisville & N. R. Co. v. Public Service Com., 631 F.2d 426, 1980 U.S. App. LEXIS 13669 (6th Cir. Tenn. 1980), cert. denied, 450 U.S. 959, 101 S. Ct. 1418, 67 L. Ed. 2d 384, 1981 U.S. LEXIS 1073 (1981), cert. denied, Public Service Com. v. Louisville & N. R. Co., 450 U.S. 959, 101 S. Ct. 1418, 67 L. Ed. 2d 384, 1981 U.S. LEXIS 1073 (1981).
7. Surface Value and Mineral Value.
In general terms, surface values are determined without regard to mineral value and without regard to the value of growing crops, which, by statutory mandate, includes trees. The mineral value must then be determined and the surface value must, in order to obtain true equalization, be further reduced by the value of the underlying minerals. Richardson v. Tennessee Assessment Appeals Com., 828 S.W.2d 403, 1991 Tenn. App. LEXIS 742 (Tenn. Ct. App. 1991), rehearing denied, — S.W.2d —, 1991 Tenn. App. LEXIS 783 (Tenn. Ct. App. Oct. 1, 1991).
67-5-603. Property damage — Improvements to property.
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- If, after January 1 and before September 1 of any year, a building or improvement shall be moved, demolished or destroyed, or substantially damaged by fire, flood, wind or any other disaster, and is not restored and no other improvement is constructed in its place before September 1 of that year, the assessor of property shall make or correct the assessment of such property on the basis of the value of the property after such move, destruction or substantial damage of the improvements, notwithstanding the status of the property as of the assessment date of January 1; provided, that for the year in which such improvement is moved, demolished, destroyed, or so damaged, the assessment of the improvement shall be prorated for the portion of the year prior to the date of such move, destruction or damage. This section shall not apply to the movement of a mobile home or other movable structure as defined in § 67-5-501.
- The state, county, or municipal tax collector shall collect taxes on the basis of the revised or corrected assessment as prorated by the assessor.
- An improvement shall be deemed substantially damaged when as a consequence thereof it has been rendered unfit for use or occupancy, or when such damage has reduced the value of the improvement by more than fifty percent (50%).
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- If, after January 1 and before September 1 of any year, an improvement or new building is completed and ready for use or occupancy, or the property has been sold or leased, the assessor of property shall make or correct the assessment of such property, on the basis of the value of the improvement at the time of its completion, notwithstanding the status of the property as of the assessment date of January 1; provided, that for the year in which such improvement or building is completed, the assessment, or increase in assessment, of the improvement shall be prorated for the portion of the year following the date of its completion.
- The state, county or municipal tax collector shall collect taxes on the basis of the revised or corrected assessment as prorated by the assessor.
- For the purpose of assessment, an improvement or new building shall be deemed completed and ready for use or occupancy when the structural portion of the building or improvement is substantially completed, even though the interior finish or certain appointments may be left to the choice of a prospective buyer or tenant after consummation of a sale or lease of the property.
- Any improvement or new building shall be deemed completed and to have a value for assessment purposes when the real property upon which such improvement or new building is located shall have been conveyed to a bona fide purchaser, or when such new building or improvement has been occupied or used or shall be suitable for occupancy or use, whichever shall first occur. In no event shall any improvement or new building be considered incomplete for valuation or assessment purposes for more than one (1) calendar year immediately following the date on which such construction was commenced.
- In the event an improvement or new building shall be considered incomplete for assessment purposes on January 1 of any year, the owner of such improvement or new building shall, not later than February 1 of that year, submit to the assessor of property, in writing, the total cost of all materials used in such incompleted structure as of January 1, and the assessor of property shall assess such incomplete structure as real property, based on the fair market value of the materials used therein. Actual cost of all materials shall be prima facie evidence of the value of such incompleted improvements.
- In order to assist assessors of property in locating improvements to property, including new buildings and additions to existing buildings, in counties where building permits are not required, the state director of fire prevention shall each month provide to assessors of property of such counties the names of property owners and location of the property for which electrical inspections have been made. The location of the property shall be given with reference to the assessor's map and parcel identification number. In addition, in counties that do not require building permits, copies of permits for subsurface sewage disposal systems shall be furnished to the assessor of property of the county where such systems are located by the agency issuing such permits.
Acts 1973, ch. 226, § 6; 1974, ch. 555, § 1; T.C.A., §§ 67-607, 67-608; Acts 1986, ch. 507, § 1; 1991, ch. 15, § 1; 2010, ch. 1036, § 3; 2017, ch. 11, § 1.
Compiler's Notes. Acts 2010, ch. 1036, § 3, which added sub- section (d), provided that former subsection (d) shall expire on December 31, 2010.
Acts 2010, ch. 1036, § 5, provided that the act, which added subsection (d), shall apply to exemption applications filed after June 11, 2010, and also to applications pending or under appeal before the state board of equalization, as of June 11, 2010.
Subsection (d) was deleted by its own terms, effective December 31, 2017, pursuant to 2017, ch. 11, § 1.
Textbooks. Tennessee Forms (Robinson, Ramsey and Harwell), No. 8-1101.
Law Reviews.
Ad Valorem Taxation of Agricultural Land in Tennessee, 4 Mem. St. U.L. Rev. 127 (1973).
Attorney General Opinions. Deadline for making prorated property tax assessments under T.C.A. 67-5-603 is the same as the deadline under T.C.A. § 67-1-1005 — September 1 of the year following the tax year for which the original assessment was made, OAG 05-028 (3/21/05).
Decisions Under Prior Law
1. Constitutionality.
Acts 1967, ch. 312 which added a proviso to this section to the effect that no property should be assessed to include improvements until such improvements had been completed or 18 months had passed following commencement of construction was unconstitutional as violating Tenn. Const. art. II, § 28 requiring all property to be taxed according to its value so that taxes shall be equal and uniform throughout the state. Metropolitan Government of Nashville v. Hillsboro Land Co., 222 Tenn. 431, 436 S.W.2d 850, 1968 Tenn. LEXIS 441 (1968).
2. Taxation of Improvements.
Taxation of incomplete improvements on real estate as personal property did not work a postponement of an increase in value, did not allow property of a class to be taxed at less than its value and was not discriminatory. State ex rel. Russell v. LaManna, 498 S.W.2d 891, 1973 Tenn. LEXIS 462 (Tenn. 1973).
67-5-604. Pollution control facilities.
- For purposes of this chapter, “pollution control facilities” means any system, method, improvement, structure, device or appliance appurtenant thereto used or intended for the primary purpose of eliminating, preventing or reducing air or water pollution or for the primary purpose of treating, pretreating, recycling or disposing of any hazardous or toxic waste, solid or liquid, when such pollutants or waste are created as a result of fabricating or processing by the owner, operator or lessee of the pollution control facilities, and that, if released without such treatment, pretreatment, modification or disposal, might be harmful, detrimental or offensive to the public and the public interest.
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- The value of qualified pollution control facilities shall, for the purpose of ad valorem property taxation, be deemed to be its salvage value, that is, the estimated fair market value, if any, that could be realized upon the voluntary sale or other disposition of such property when it can no longer be used for the purpose for which it was designed. For purposes of this section, salvage value shall never exceed one-half percent (0.5%) of the acquisition value of such facilities. Facilities may qualify for the valuation provided in this subdivision (b)(1) by obtaining a certificate from the department of environment and conservation, or by such county boards of health as it may designate.
- Such certificate shall be issued in the event that the property used for pollution control is in compliance with the applicable rules and regulations adopted pursuant to the various provisions of §§ 68-201-101 — 68-201-116, 68-221-101 — 68-221-206, title 68, chapter 212, part 1 and title 69, chapter 3, part 1.
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- Application for a certificate shall be filed with the department or its designated representative, in such a manner and form as may be prescribed by regulations adopted by the department and shall contain specifications of such facilities.
- The department shall determine whether such application should be allowed in whole or in part, within thirty (30) days of receipt, and shall approve or disapprove the issuance of the certificate. Upon failure of the department to issue such approval or disapproval within the thirty-day period, the application for certificate shall be considered to be approved.
- For purposes of ad valorem taxation, the effective date of the valuation provided in this section shall be January 1, following the date of application.
Acts 1985, ch. 287, § 2; 1991, ch. 503, § 2; 1992, ch. 693, § 1; 2010, ch. 1134, § 41; 2013, ch. 297, § 2.
Compiler's Notes. Acts 1985, ch. 287, by setting the value of pollution control equipment for tax purposes as a percentage of its salvage value, created an exemption from property tax and may be unconstitutional under Tenn. Const., art. II, § 28. See Opinions of the Attorney General 86-142 (8/12/86).
Acts 2013, ch. 297, § 3 provided that the act, which deleted subsection (d), shall apply retroactively for tax year 2013.
Attorney General Opinions. The extension of T.C.A.§ 67-5-604 to limit valuation of certified green energy production facilities in the same manner as valuation of pollution control facilities is of doubtful constitutionality. OAG 12-102, 2012 Tenn. AG LEXIS 104 (11/1/12).
67-5-605. Assessment of leasehold.
Leasehold interests assessable under § 67-5-502 shall be valued by discounting to present value the excess, if any, of fair market rent over actual and imputed rent for the leased premises, for the projected term of the lease, including renewal options. As an alternative in valuing an interest in residential property, the interests assessable under § 67-5-502(d) may be valued by the sales comparison approach using sales or transfers of similar interests in residential property. By virtue of the speculative nature of valuation of options to purchase, any option that the lessee may be given to purchase the leased premises shall be deemed to have no value. The state board of equalization is authorized to promulgate rules governing the procedure for these valuations.
Acts 1995, ch. 373, § 1; 2008, ch. 802, § 1.
Compiler's Notes. Acts 1995, ch. 373, § 2 provided that this section shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before January 1, 1996.
67-5-606. Proration of commercial and industrial property damaged by disaster.
- If, after January 1 and before September 1 of any year, commercial and industrial tangible personal property is destroyed, demolished or substantially damaged by fire, flood, wind or any disaster certified by the federal emergency management agency (FEMA), and is not restored and no commercial and industrial tangible personal property is operated in its place before September 1 of that year, the assessor of property shall prorate the assessment of the commercial and industrial tangible personal property for the portion of the year prior to the date of such destruction, demolition or substantial damage.
- The state, county, or municipal tax collector shall collect taxes on the basis of the revised or corrected assessment as prorated by the assessor.
Acts 1999, ch. 422, § 1; 2010, ch. 1134, § 58; 2017, ch. 11, § 2.
Compiler's Notes. Acts 2010, ch. 1134, § 58 provided that former subsection (c) shall expire on December 31, 2010.
Subsection (c), as added by Acts 2011, ch. 11, § 2, was deleted effective December 31, 2017 pursuant to its own terms.
Part 7
Classification and Assessment — Tax Relief
67-5-701. Administrative provisions — Appropriations.
- The state board of equalization, through the division of property assessments, shall be charged with the implementation of §§ 67-5-702 — 67-5-704, and shall promulgate all necessary rules, regulations and procedures for their implementation.
- “Taxpayer” includes any owner of a mobile home whose mobile home is located on land owned by a taxpayer other than the owner of the mobile home. In the event a mobile home owned by a taxpayer is located on land owned by another individual, the assessor of property shall be required to certify to the division of property assessments the assessed value of such mobile home in order that the amount of taxes to be reimbursed to such taxpayer can be computed.
- Property tax relief as provided in this part is obtainable by application submitted to the collecting official using a form approved by the state board of equalization. The collecting official shall make a preliminary determination of eligibility and forward the application to the state for final approval. The collecting official may allow the applicant a credit for the projected amount of property tax relief if the applicant appears from the application to be eligible and submits the balance of property taxes due at the time the credit is given. The collecting official may present evidence of the credit in an approved form to the director of the division of property assessments, who shall thereupon authorize payment to the tax jurisdiction of the amount for which the applicant was credited in taxes. If later processing of the application indicates the applicant was ineligible or the credit was otherwise issued in error, the state shall notify the applicant and the collecting official and may recover the erroneous payment from the tax jurisdiction. The amount represented by the erroneous payment shall thereupon become due and payable by the applicant as property taxes, but the taxes shall not accrue delinquency penalty or interest until sixty (60) days from the date of notification to the applicant.
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- All taxpayers otherwise eligible for tax relief under §§ 67-5-702 — 67-5-704, but who fail to apply for a refund or present a credit voucher for credit on their taxes within thirty-five (35) days from the date taxes in the jurisdiction become delinquent for that year, shall be deemed ineligible for such relief for that tax year. Nothing in this subdivision (d)(1) shall be construed to require the payment of the full amount of taxes by the delinquency date as a condition of eligibility for tax relief.
- All applications for refunds or presentments of credit vouchers shall be valid only if received in the office of the division of property assessments by May 5 following the last date such applications or presentments may be made or within thirty (30) days from the deadline established in subdivision (d)(1), whichever is later.
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- The comptroller of the treasury shall annually estimate the cost of the tax relief program at the current income limit, and shall estimate the annual income limit for eligibility likely to maintain the property tax relief program at a constant level of expenditure, and shall provide these estimates to the department of finance and administration as part of the budget preparation process and, at the same time, provide these estimates to the members of the general assembly.
- The comptroller of the treasury may provide the department and the general assembly such other information on program costs or limits as may be desirable or necessary.
- If the comptroller determines that annual appropriations will be insufficient to permit full payment of claims reflecting the income and value standards established in this part or in the annual appropriations act, the comptroller shall calculate and apply a factor to uniformly adjust individual payments to permit all timely claims to be paid within the limits of the appropriation. Promptly upon making this determination and calculating the appropriate factor, the comptroller shall notify local collecting officials and the commissioner of finance and administration.
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- Under no condition shall any taxpayer receive tax relief for property taxes paid on more than one (1) place of residence for any tax year.
- Tax relief shall be provided to only one (1) recipient for a given property for any tax year, per taxing jurisdiction.
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- Any taxpayer who willfully provides false information concerning the taxpayer's income or other information relative to eligibility for tax relief shall immediately repay to the state the full amount of any tax relief received as a result of such false information, plus an amount equal to the penalty and interest calculated according to the rates specified in former § 67-1-801(b) [repealed].
- Any person who received tax relief payments in error for any tax year or years shall repay the state the amount received in error, but there shall be a bar against collection of such repayments, unless demand is made within two (2) years following the due date for the tax year to which the erroneous payments relate. Such person may reapply and may obtain tax relief for a subsequent tax year; provided, that eligibility is established and such person either pays the full amount of repayment due or applies one-half (½) of the tax relief amount for which the person may be eligible to repay the state for amounts received in error until such time as no further repayment is due. The limited liability and right to reapply afforded in this subdivision (g)(2) shall not be available to persons who willfully provide false information concerning eligibility. Repayment shall not be required of a person where the social security administration, the department of human services, the veterans' administration, the railroad retirement board, or some other similar governmental or private entity first determines a person to be eligible for property tax relief but later determines that the person was ineligible.
- Other provisions of the law to the contrary notwithstanding, if a taxpayer eligible for tax relief pursuant to § 67-5-702 or § 67-5-703 dies after applying for tax relief or after receiving a voucher, the surviving spouse, and only the surviving spouse, shall be qualified to present to the collecting official the tax relief voucher selected for the deceased and to receive a final payment for the tax year for which the voucher was selected, unless the taxes were paid prior to the taxpayer's death. If the taxes were paid at the time application was made and prior to the taxpayer's death, either the surviving spouse or any duly appointed personal representative of the decedent may receive the payment.
- If a governmental entity acquires an interest in real property that divides a contiguous parcel into two (2) or more noncontiguous parcels, then for tax relief purposes pursuant to §§ 67-5-702 — 67-5-704, such noncontiguous parcels shall be considered to be one (1) contiguous parcel. This section shall apply to any such acquisition creating two (2) or more noncontiguous parcels on or after January 1, 1981.
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- The legislative bodies of counties, municipalities and metropolitan forms of government may, by act of the local legislative body, provide for the appropriation of funds for tax relief for elderly low-income homeowners as described in § 67-5-702, for disabled homeowners as described in § 67-5-703, and for disabled veterans as described in § 67-5-704; provided, that in no event shall the total relief allowed by the state and counties, municipalities or metropolitan forms of government exceed the total taxes actually paid.
- The ordinance authorized by subdivision (j)(1) shall include provisions that only those taxpayers who qualify under §§ 67-5-702 — 67-5-704 are eligible for such additional tax relief, and that the eligible taxpayers shall have previously applied for and obtained the relief authorized by § 67-5-702, § 67-5-703 or § 67-5-704.
- The director of the division of property assessments is authorized to waive application of any deadline imposed by this section upon determining that the failure to meet the deadline was excusable for good and reasonable cause as the phrase is used in § 67-1-803. No deadline may be extended hereunder beyond December 31 of the year following the tax year.
- Any municipality within that county may, upon ordinance or resolution of the legislative body, enter into a contract with another collecting official within the same county for the purpose of outsourcing the processing of tax relief applications received from taxpayers. The collecting official shall submit such applications and supporting documents to the state for tax relief processing.
- Financial records filed for purposes of income verification, including financial information reported on any application, shall be confidential and shall not be subject to inspection under the Tennessee public records law, compiled in title 10, chapter 7, but shall be available to local or state officials who administer, enforce, or audit the tax relief program or requirements under §§ 67-5-701 — 67-5-703.
Acts 1973, ch. 226, § 6; 1974, ch. 771, § 10; T.C.A., § 67-648; Acts 1980, ch. 787, §§ 1-3; 1981, ch. 400, § 1; 1983, ch. 127, §§ 3, 4, 6, 7; 1983, ch. 292, § 1; T.C.A., §§ 67-673, 67-675 — 67-678; Acts 1985, ch. 53, § 1; 1988, ch. 522, §§ 1-3; 1995, ch. 166, §§ 1, 2; 1997, ch. 115, § 1; 1999, ch. 110, §§ 1, 2; 2005, ch. 326, § 1; 2006, ch. 739, § 1; 2010, ch. 932, § 1; 2011, ch. 17, §§ 1, 2; 2013, ch. 63, § 1; 2014, ch. 860, § 1; 2015, ch. 226, § 1.
Compiler's Notes. Former § 67-1-801(b), referred to in this section, was repealed by Acts 1988, ch. 526, § 5.
Acts 1995, ch. 166, § 3 provided that the amendments by that act apply to the 1995 tax year.
Acts 2011, ch. 17, § 3 provided that the act, which amended subdivisions (d)(2) and (g)(2), shall apply to pending claims for the 2011 tax year and thereafter.
Acts 2013, ch. 63, § 5 provided that the act, which added subsection (m), shall apply to all information submitted and received for any tax years beginning prior to April 1, 2013, as well as tax years beginning after April 1, 2013.
Pursuant to Article III, Section 18 of the Constitution of Tennessee, Acts 2014, ch. 860 took effect on April 29, 2014.
Acts 2014, ch. 860, § 2 provided that this act, which added subdivision (e)(3), shall apply to claims for the 2014 tax year and thereafter.
Cross-References. Confidentiality of public records, § 10-7-504.
Real property tax deferral, title 7, ch. 64.
Attorney General Opinions. Constitutionality of local government supplementation of state tax relief program, OAG 98-034 (2/9/98).
Legislative bodies of counties and/or municipalities do not have the authority to exempt those who qualify for the state tax relief program from collection of storm water fees, OAG 06-177 (12/19/06).
67-5-702. Elderly low-income homeowners.
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- There shall be paid from the general funds of the state to certain low-income taxpayers sixty-five (65) years of age or older the amount necessary to pay or reimburse such taxpayers for all or part of the local property taxes paid for a given year on that property that the taxpayer owned and used as the taxpayer's residence as provided in this part.
- For tax year 2007 and thereafter, the taxpayer's annual income from all sources shall not exceed twenty-four thousand dollars ($24,000), or such other amount as set forth in the general appropriations act. This annual income limit shall be adjusted each tax year to reflect the cost of living adjustment for social security recipients as determined by the social security administration and shall be rounded to the nearest ten dollars ($10.00). The income attributable to the applicant for tax relief shall be the income of all owners of the property, the income of applicant's spouse and the income of any owner of a remainder or reversion in the property if the property constituted the person's legal residence at any time during the year for which tax relief is claimed. Any portion of social security income, social security equivalent railroad retirement benefits, and veterans entitlements required to be paid to a nursing home for nursing home care by federal regulations shall not be considered income to an owner who relocates to a nursing home.
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- Such reimbursement shall be paid on the first twenty-seven thousand dollars ($27,000), or such other amount as set forth in the general appropriations act or as adjusted pursuant to subdivision (a)(3)(B), of the full market value of such property.
- Beginning for tax year 2018, and each subsequent tax year, the amount on which reimbursement shall be paid under subdivision (a)(3)(A) shall be increased annually to reflect inflation, as measured by the United States bureau of labor statistics consumer price index for all urban consumers and shall be rounded to the nearest one hundred dollars ($100). The comptroller of the treasury shall notify taxpayers of any change in dollar amounts made pursuant to this subdivision (a)(3)(B) and post the information in a readily identifiable location on the comptroller's website. The annual percentage changes used in this calculation shall be no less than zero percent (0%) and no more than three percent (3%).
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- In determining the amount of relief to a taxpayer, the effective assessed value on the first twenty-seven thousand dollars ($27,000), or such other amount as set forth in the general appropriations act or as adjusted pursuant to subdivision (a)(3)(B), of full market value shall be multiplied by a tax rate that has been adjusted to reflect the relationship between appraised value and market value in that jurisdiction, as determined by the state board of equalization.
- The effective assessed value shall be determined by multiplying the full market value of the property up to twenty-seven thousand dollars ($27,000), or such other amount as set forth in the general appropriations act or as adjusted pursuant to subdivision (a)(3)(B), by twenty-five percent (25%).
- The full market value of the property shall be determined by adjusting the appraised value of the property as shown on the records of the assessor of property by a factor that reflects the relationship between appraised value and market value in that jurisdiction, as determined by the state board of equalization.
- Taxpayers who become sixty-five (65) years of age on or before December 31 of the year for which application is made for property tax relief and are otherwise eligible shall be qualified as elderly low-income homeowners.
- Elderly low-income homeowners shall continue to qualify for property tax relief while the taxpayer is temporarily relocated for health care to the home of a friend or relative, or to a hospital or skilled or intermediate care facility if the taxpayer indicates an intent to return to the residence when recovered sufficiently.
- For purposes of this section, an elderly low-income homeowner's residence shall be determined in accordance with the principles set forth by § 2-2-122.
- Elderly low-income homeowners who were temporarily relocated for health care to the home of a friend or relative, or to a hospital or skilled or intermediate care facility during the period beginning on or after October 3, 2017, and prior to April 12, 2018, and whose reimbursement under this section ceased during such period as a result of such temporary relocation, shall receive reimbursement retroactively for such period, and shall continue to receive such reimbursement in accordance with this section on or after April 12, 2018.
Acts 1973, ch. 226, § 6; 1974, ch. 771, § 9; 1978, ch. 936, § 1; 1979, ch. 388, §§ 1, 3; T.C.A., § 67-645; Acts 1983, ch. 127, § 1; T.C.A., § 67-670; Acts 1988, ch. 496, § 1; 1988, ch. 522, §§ 4-6; 1992, ch. 964, § 1; 1992, ch. 1021, § 1; 1993, ch. 500, § 1; 1996, ch. 967, § 2; 1998, ch. 726, § 1; 1998, ch. 1031, § 1; 2006, ch. 1019, §§ 61-63; 2007, ch. 539, § 1; 2009, ch. 68, § 1; 2015, ch. 481, § 2; 2016, ch. 1065, § 2; 2017, ch. 181, §§ 31, 32; 2018, ch. 710, § 1.
Compiler's Notes. Acts 1998, ch. 1031, which substituted “eighteen thousand dollars ($18,000)” for “fifteen thousand dollars ($15,000)” throughout this section, provided that the act applies to the 1998 tax year.
Acts 2015, ch. 481, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Save the Tax Relief Act.”
Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Amendments. The 2018 amendment added (d)-(f).
Effective Dates. Acts 2018, ch. 710, § 5. April 12, 2018.
Cross-References. Tax relief for low income elderly homeowners authorized, Tenn. Const., art. II, § 28.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
Attorney General Opinions. Property tax relief, OAG 99-216 (10/27/99).
Property tax relief for disabled homeowners, OAG 07-103 (7/11/07).
NOTES TO DECISIONS
1. In General.
T.C.A. § 67-5-702 is not an exemption statute at all; the property remains subject to the tax at all times, and cities and counties receive the full benefit of the property tax. T.C.A. § 67-5-702 only provides that elderly low-income taxpayers are entitled to reimbursement out of state funds of a part of the taxes paid. Henderer v. State Bd. of Equalization, 746 S.W.2d 719, 1987 Tenn. App. LEXIS 3125 (Tenn. Ct. App. 1987).
2. Joint Owners.
Board of equalization rules requiring that the income of all owners of the property must be considered in determining eligibility under this section, as applied to a joint owner, were held inconsistent with the plain meaning of T.C.A. § 67-5-702. Henderer v. State Bd. of Equalization, 746 S.W.2d 719, 1987 Tenn. App. LEXIS 3125 (Tenn. Ct. App. 1987).
67-5-703. Disabled homeowners.
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- There shall be paid from the general funds of the state to certain taxpayers who are totally and permanently disabled, as may be determined by rules and regulations of the state board of equalization, the amount necessary to pay or reimburse such taxpayers for all or part of the local property taxes paid for a given year on that property that the taxpayer owned and used as the taxpayer's residence as provided in this section.
- For tax year 2007 and thereafter, the taxpayer's annual income from all sources shall not exceed twenty-four thousand dollars ($24,000), or such other amount as set in the general appropriations act. The annual income limit shall be adjusted each tax year to reflect the cost of living adjustment for social security recipients as determined by the social security administration and shall be rounded to the nearest ten dollars ($10.00). The income attributable to the applicant for tax relief shall be the income of all owners of the property, the income of applicant's spouse and the income of any owner of a remainder or reversion in the property if the property constituted the person's legal residence at any time during the year for which tax relief is claimed. Any portion of social security income, social security equivalent railroad retirement benefits, and veterans entitlements required to be paid to a nursing home for nursing home care by federal regulations shall not be considered income to an owner who relocates to a nursing home.
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- Such reimbursement shall be paid on the first twenty seven thousand dollars ($27,000), or such other amount as set forth in the general appropriations act or as adjusted pursuant to subdivision (a)(3)(B), of the full market value of such property.
- Beginning for tax year 2018, and each subsequent tax year, the amount on which reimbursement shall be paid shall be increased annually to reflect inflation, as measured by the United States bureau of labor statistics consumer price index for all urban consumers and shall be rounded to the nearest one hundred dollars ($100). The comptroller of the treasury shall notify taxpayers of any change in dollar amounts made pursuant to this subdivision (a)(3)(B) and post the information in a readily identifiable location on the comptroller's website. The annual percentage changes used in this calculation shall be no less than zero percent (0%) and no more than three percent (3%).
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- In determining the amount of relief to a taxpayer, the effective assessed value on the first twenty seven thousand dollars ($27,000), or such other amount as set forth in the general appropriations act or as adjusted pursuant to subdivision (a)(3)(B), of full market value shall be multiplied by a tax rate that has been adjusted to reflect the relationship between appraised value and market value in that jurisdiction, as determined by the state board of equalization.
- The effective assessed value shall be determined by multiplying the full market value of the property up to twenty seven thousand dollars ($27,000), or such other amount as set forth in the general appropriations act or as adjusted pursuant to subdivision (a)(3)(B), by twenty-five percent (25%).
- The full market value of the property shall be determined by adjusting the appraised value of the property as shown on the records of the assessor of property by a factor that reflects the relationship between appraised value and market value in that jurisdiction, as determined by the state board of equalization.
- Taxpayers who become totally and permanently disabled on or before December 31 of the year for which application is made for property tax relief and are otherwise eligible shall be qualified as disabled homeowners.
- Any information concerning the disability status of a disabled homeowner shall be confidential and shall not be subject to inspection under Tennessee public records law, compiled in title 10, chapter 7, but shall be available to local or state officials who administer, enforce, or audit the tax relief program or requirements under this section.
- Disabled homeowners shall continue to qualify for property tax relief while the taxpayer is temporarily relocated for health care to the home of a friend or relative, or to a hospital or skilled or intermediate care facility if the taxpayer indicates an intent to return to the residence when recovered sufficiently.
- For purposes of this section, a disabled homeowner's residence shall be determined in accordance with the principles set forth by § 2-2-122.
- Disabled homeowners who were temporarily relocated for health care to the home of a friend or relative, or to a hospital or skilled or intermediate care facility during the period beginning on or after October 3, 2017, and prior to April 12, 2018, and whose reimbursement under this section ceased during such period as a result of such temporary relocation, shall receive reimbursement retroactively for such period, and shall continue to receive such reimbursement in accordance with this section on or after April 12, 2018.
Acts 1973, ch. 226, § 6; 1978, ch. 936, § 2; 1979, ch. 388, §§ 2, 3; T.C.A., § 67-646; Acts 1983, ch. 127, § 2; T.C.A., § 67-671; Acts 1988, ch. 496, § 2; 1988, ch. 522, §§ 7-9; 1992, ch. 964, § 2; 1992, ch. 1021, § 2; 1993, ch. 500, § 2; 1996, ch. 967, § 3; 1998, ch. 726, § 2; 1998, ch. 1031, § 2; 2006, ch. 1019, §§ 64-66; 2008, ch. 806, § 1; 2009, ch. 68, § 2; 2013, ch. 63, § 2; 2015, ch. 481, § 3; 2016, ch. 1065, § 3; 2017, ch. 181, §§ 33, 34; 2018, ch. 710, § 2.
Compiler's Notes. Acts 1993, ch. 500, § 3 provided that the amendment by that act shall apply to tax year 1993.
Acts 2013, ch. 63, § 5 provided that the act, which added subsection (d), shall apply to all information submitted and received for any tax years beginning prior to April 1, 2013, as well as tax years beginning after April 1, 2013.
Acts 2015, ch. 481, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Save the Tax Relief Act.”
Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Amendments. The 2018 amendment added (e)-(g).
Effective Dates. Acts 2018, ch. 710, § 5. April 12, 2018.
Cross-References. Confidentiality of public records, § 10-7-504.
Real property tax deferral applicable to disabled taxpayers, § 7-64-211.
Tax relief for low income disabled homeowners authorized, Tenn. Const., art. II, § 28.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
67-5-704. Disabled veteran's residence.
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- There shall be paid from the general funds of the state to certain disabled veterans the amount necessary to pay or reimburse such taxpayers for all or part of the local property taxes paid for a given tax year on that property that the disabled veteran owned and used as the disabled veteran's residence as provided in this section.
- Such reimbursement shall be paid on the first one hundred seventy-five thousand dollars ($175,000) of the full market value of such property.
- In determining the amount of relief to a taxpayer, the effective assessed value on the first one hundred seventy-five thousand dollars ($175,000) of full market value shall be multiplied by a tax rate that has been adjusted to reflect the relationship between appraised value and market value in that jurisdiction, as determined by the state board of equalization.
- The effective assessed value shall be determined by multiplying the full market value of the property up to one hundred seventy-five thousand dollars ($175,000) by twenty-five percent (25%).
- The full market value of the property shall be determined by adjusting the appraised value of the property as shown on the records of the assessor of property by a factor that reflects the relationship between appraised value and market value in that jurisdiction, as determined by the state board of equalization.
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For the purposes of this section, a “disabled veteran” means a person who has served in the armed forces of the United States, and who has:
- Acquired in connection with such service a disability from paraplegia or permanent paralysis of both legs and lower part of the body resulting from traumatic injury or disease to the spinal cord or brain, or from legal blindness, or from loss or loss of use of two (2) or more limbs from any service-connected cause;
- Acquired one hundred percent (100%) permanent total disability, as determined by the United States veterans' administration, and such disability resulting from having served as a prisoner of war; or
- Acquired service-connected permanent and total disability or disabilities, as determined by the United States department of veterans' affairs.
- Under no conditions shall property tax relief extend to any person who was dishonorably discharged from any of the armed services.
- The determination of the United States veterans' administration concerning the disability status of a veteran shall be conclusive for purposes of this section.
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Property tax relief shall also be extended to the surviving spouse of a disabled veteran who, at the time of the disabled veteran's death, was eligible for disabled veterans' property tax relief. If a subsequent amendment to the law concerning eligibility as a disabled veteran would have made the deceased veteran eligible for disabled veterans' property tax relief, then property tax relief shall also be extended to the surviving spouse. A surviving spouse shall continue to qualify for disabled veterans' property tax relief as long as the surviving spouse:
- Does not remarry;
- Solely or jointly owns the property for which tax relief is claimed; and
- Uses the property for which tax relief is claimed exclusively as a home.
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Property tax relief shall also be extended to the surviving spouse of a veteran whose death results from a service-connected, combat-related cause, as determined by the United States veterans' administration; provided, that:
- The surviving spouse does not remarry; and
- The property for which tax relief is claimed is owned by and used exclusively by the surviving spouse as a home.
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Property tax relief shall also be extended to the surviving spouse of a soldier whose death results from being deployed, away from any home base of training and in support of combat or peace operations; provided, that the surviving spouse:
- Does not remarry;
- Solely or jointly owns the property for which tax relief is claimed; and
- Uses the property for which tax relief is claimed exclusively as a home.
- The refund provided by this section shall be in lieu of any payment under § 67-5-702 or § 67-5-703.
- Any information concerning the disability status of a disabled veteran or the death of a soldier shall be confidential and shall not be subject to inspection under Tennessee public records law, compiled in title 10, chapter 7, but shall be available to local or state officials who administer, enforce, or audit the tax relief program or requirements under this section.
- A disabled veteran shall continue to qualify for property tax relief while the disabled veteran is temporarily relocated for health care to the home of a friend or relative, or to a hospital or skilled or intermediate care facility if the disabled veteran indicates an intent to return to the residence when recovered sufficiently.
- For purposes of this section, a disabled veteran's residence shall be determined in accordance with the principles set forth by § 2-2-122.
- Disabled veterans who were temporarily relocated for health care to the home of a friend or relative, or to a hospital or skilled or intermediate care facility during the period beginning on or after October 3, 2017, and prior to April 12, 2018, and whose reimbursement under this section ceased during such period as a result of such temporary relocation, shall receive reimbursement retroactively for such period, and shall continue to receive such reimbursement in accordance with this section on or after April 12, 2018.
- As used in this section, “disabled veteran” includes the veteran's otherwise qualified surviving spouse.
Acts 1973, ch. 226, § 6; 1976, ch. 829, § 1; 1979, ch. 281, § 1; T.C.A., § 67-647; Acts 1980, ch. 690, § 1; 1981, ch. 328, § 1; 1983, ch. 127, § 5; T.C.A., § 67-672; Acts 1984, ch. 802, § 1; 1984, ch. 983, § 1; 1985, ch. 113, § 1; 1988, ch. 522, §§ 10-13; 1996, ch. 967, § 1; 2002, ch. 699, §§ 1, 2; 2002, ch. 751, § 1; 2004, ch. 852, § 1; 2005, ch. 458, §§ 1-3; 2006, ch. 884, §§ 1-4; 2006, ch. 978, § 1; 2006, ch. 1019, §§ 67-69; 2007, ch. 553, § 1; 2011, ch. 262, § 1; 2011, ch. 418, § 1; 2012, ch. 1087, § 1; 2013, ch. 63, § 3; 2015, ch. 481, §§ 4-6; 2016, ch. 1065, § 1; 2017, ch. 181, § 37; 2018, ch. 710, § 3.
Compiler's Notes. Acts 2004, ch. 852, § 2 provided that the amendment by that act shall apply to tax years beginning on and after January 1, 2005.
Acts 2005, ch. 458, § 4 provided that the act shall apply to tax years beginning on and after January 1, 2006.
Acts 2006, ch. 884, § 5 provided that § 4 of the act shall apply to appeals pending on June 20, 2006, and that §§ 1-4 of the act shall apply to tax years beginning on and after January 1, 2007.
Acts 2006, ch. 978, § 2 provided that no additional appropriation shall be made for the purpose of funding the act. Funds to be used to fund the act shall be earmarked out of the funds made available to the state board of equalization or the division of property assessment for certain disabled veterans by the general appropriations act.
Acts 2006, ch. 978, § 3 provided that the act shall apply to tax years beginning on or after July 1, 2006.
Acts 2006, ch. 884, §§ 1-3 purported to amend subdivisions (a)(2)-(4) with the same amendments enacted by Acts 2006, ch. 1019, §§ 67-69; therefore, the amendments by ch. 884 were not given effect.
Acts 2011, ch. 418, § 2 provided that the act, which amended subsection (e), shall apply to tax years beginning on or after January 1, 2011.
Acts 2013, ch. 63, § 5 provided that the act, which added subsection (i), shall apply to all information submitted and received for any tax years beginning prior to April 1, 2013, as well as tax years beginning after April 1, 2013.
Acts 2015, ch. 481, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Save the Tax Relief Act.”
Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”
Amendments. The 2018 amendment added (j)-(m).
Effective Dates. Acts 2018, ch. 710, § 5. April 12, 2018.
Cross-References. Confidentiality of public records, § 10-7-504.
Real property tax deferral applicable to disabled veterans, § 7-64-211.
Tax relief for disabled home owners authorized, Tenn. Const., art. II, § 28.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
Attorney General Opinions. The maximum annual income threshold of T.C.A. § 67-5-704(a)(2)(A) (deleted in 2016) does not conflict with 38 U.S.C. § 5301(a)(1), which mandates that veterans' benefits be exempt from taxation. OAG 16-12, 2016 Tenn. AG LEXIS 12 (3/29/ 2016).
67-5-705. Property Tax Freeze Act.
- This section shall be known and may be cited as the “Property Tax Freeze Act.”
- The purpose of this section is to provide for uniform and orderly administration of the property tax freeze program for eligible taxpayers in those jurisdictions adopting it. This section is not intended to displace other forms of property tax relief available at the time of its passage except as expressly provided in this section.
-
As used in this section, unless the context otherwise requires:
- “Base tax” means the property tax due on the principal residence of a qualifying taxpayer at the time the jurisdiction levying the tax adopts a resolution or ordinance approving the property tax freeze under this section. If the taxpayer did not qualify or did not own an eligible residence when the freeze was adopted, “base tax” means the maximum property tax due on the taxpayer's eligible residence for the year in which the taxpayer became eligible on the basis of an approved application. If a taxpayer reapplies after acquiring a new residence or after a period of ineligibility, the base tax shall be recalculated for the year of reapplication and reestablishment of eligibility;
- “Collecting official” means the county trustee or, in the case of taxes due a municipality, the county trustee or other official responsible for collection of property taxes;
- “Improvement” means any change to a dwelling or dwelling lot that would properly warrant a change by the assessor in the assessed value of the property for the year or portion of the year in which the improvement is made; and
- “Principal residence” means the dwelling owned by the taxpayer and eligible as the taxpayer's legal residence for voting purposes. Program rules shall establish the maximum size limits for land that may qualify as a taxpayer's principal residence. The rules shall take into consideration lot size requirements under applicable zoning, as well as property actually used to support residential structures; provided, however, that the size limit shall not exceed five (5) acres. The tax freeze granted by this section shall only apply to the residence and no more than the maximum limit for land established by the rules.
- The legislative body of any county or municipality may by resolution or ordinance adopt the property tax freeze program provided in this section. The county or municipality may thereafter terminate the freeze program by resolution or ordinance; provided, however, that the resolution or ordinance terminating the program shall not have the effect of terminating the program until the following tax year.
-
- Taxpayers seeking the property tax freeze shall apply annually to the collecting official by the deadline established in program rules, and applicants must qualify on the basis of age, income and ownership of eligible property. The collecting official shall determine whether requirements for eligibility have been met, and the collecting official's determination shall be final, subject to audit and recovery of taxes, including interest at the rates otherwise provided for delinquent taxes under § 67-5-2010, if the applicant is later determined to have not been eligible. Any taxpayer who knowingly provides false information concerning the taxpayer's income or other information relative to eligibility for the program, commits a Class A misdemeanor.
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If the collecting official approves the application, property taxes due on the applicant's principal residence shall be the lesser of:
- The actual tax due; or
- The base tax; provided, that the base tax shall be adjusted to reflect any percentage increase in the value of the property determined by the assessor to be attributed to improvements made or discovered after the time the base tax was established. The base tax shall be recalculated in any year in which the actual tax due is less than the previously established base tax for the property, and the recalculated base tax shall apply until further recalculated pursuant to this part.
-
- To qualify for the property tax freeze, the applicant shall be sixty-five (65) years of age by the end of the year in which the application is filed. The applicant shall further own and use the property as the applicant's principal residence for which the freeze is sought in the year of application or reapplication and through the deadline date for application or reapplication.
- In addition to the qualifications stated in subdivision (f)(1), the applicant's income, combined with the income of any other owners of the property, the income of applicant's spouse and the income of any owner of a remainder or reversion in the property if the property constituted the person's legal residence at any time during the year, may not exceed the limit stated in subdivision (f)(3). Income for purposes of qualification means income from all sources as defined by program rules.
- The income limit for the property tax freeze program shall be the greater of the weighted average of the median household income for age groups sixty-five (65) years of age to seventy-four (74) years of age and seventy-five (75) years of age or over who resided within the county as determined in the most recent federal decennial census, or the applicable state tax relief income limit established under § 67-5-702. This limit shall be adjusted by the comptroller of the treasury to reflect the cost of living adjustment for social security recipients as determined by the social security administration and shall be rounded to the nearest ten dollars ($10.00). The adjusted weighted average median household income level for each county shall be published annually by the comptroller of the treasury.
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- The comptroller of the treasury is authorized to perform income verification or other related services or assistance at the request of a county or municipality, if the county or municipality agrees to pay fees sufficient to reimburse the actual costs to the comptroller of the treasury in providing such services or assistance, unless or to the extent not appropriated by the general assembly.
- Financial records filed for purposes of income verification shall be confidential and shall not be subject to inspection under the Tennessee public records law, compiled in title 10, chapter 7, but shall be available to local or state officials who administer, enforce, or audit the tax freeze program or requirements imposed under this section.
- The property tax freeze program shall conform to any uniform definitions, application forms and requirements, income verification procedures and other necessary or desirable rules, regulations, policies and procedures not in conflict with this section, as may be adopted by the state board of equalization through the division of property assessments.
Acts 1979, ch. 407, §§ 1, 2; T.C.A., §§ 67-649, 67-674; Acts 2007, ch. 581, § 1; 2009, ch. 68, § 3; 2013, ch. 63, § 4; 2014, ch. 938, § 1; 2017, ch. 299, § 2.
Compiler's Notes. By memorandum opinion dated January 10, 1980, the chancery court of Shelby County, in the case of Perkins v. Alexander , declared this section, prior to being rewritten by Acts 2007, ch. 581, § 1, to be unconstitutional, in that it violates the requirements of Tenn. Const. art. II, § 28, that all property be taxed according to its value, that such taxes be equal and uniform, that each respective taxing authority shall apply the same rate to all property within its jurisdiction, and that elderly tax relief obligations shall not be imposed upon counties, cities and towns.
Acts 2007, ch. 581, § 3 provided that the act shall apply to tax years beginning on and after January 1, 2008.
Acts 2013, ch. 63, § 5 provided that the act, which amended subdivision (g)(2), shall apply to all information submitted and received for any tax years beginning prior to April 1, 2013, as well as tax years beginning after April 1, 2013.
Cross-References. Confidentiality of public records, § 10-7-504.
Penalty for Class A misdemeanor, § 40-35-111.
Attorney General Opinions. Constitutionality, OAG 89-111 (9/5/89) [opinion rendered prior to section being rewritten by Acts 2007, ch. 581, § 1].
Implementation of property tax freeze, OAG 07-108 (7/17/07).
Applicability of property tax freeze to special school districts, OAG 07-109 (7/17/07).
Part 8
Classification and Assessment — Real Property
67-5-801. Classification and rate of assessment. [Effective until January 1, 2021. See the version effective on January 1, 2021.]
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For the purposes of taxation, all real property, except vacant or unused property or property held for use, shall be classified according to use and assessed as provided in this section:
- Public Utility Property. Public utility property shall be assessed at fifty-five percent (55%) of its value;
- Industrial and Commercial Property. Industrial and commercial property shall be assessed at forty percent (40%) of its value;
- Residential Property. Residential property shall be assessed at twenty-five percent (25%) of its value; and
- Farm Property. Farm property shall be assessed at twenty-five percent (25%) of its value.
- Where a parcel of real property is used for more than one (1) purpose, which would result in different subclassifications and different assessment percentages, then it shall be apportioned among the subclasses according to guidelines established by rules and regulations of the state board of equalization.
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All real property that is vacant, or unused, or held for use, shall be classified according to its immediate most suitable economic use, which shall be determined after consideration of:
- Immediate prior use, if any;
- Location;
- Zoning classification; provided, that vacant subdivision lots in incorporated cities, towns, or urbanized areas shall be classified as zoned, unless upon consideration of all factors, it is determined that such zoning does not reflect the immediate most suitable economic use of the property;
- Other legal restrictions on use;
- Availability of water, electricity, gas, sewers, street lighting, and public services;
- Size;
- Access to public thoroughfares; and
- Any other factors relevant to a determination of the immediate most suitable economic use of the property.
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- If, after consideration of all such factors, any such real property does not fall within any of the definitions and classifications in this section, such property shall be classified and assessed as farm or residential property.
- When a mobile home attached to real property as described in § 67-5-802 is used as a residence, the assessor of property may presume the classification is residential.
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All real property that is vacant, or unused, or held for use, shall be classified according to its immediate most suitable economic use, which shall be determined after consideration of:
Acts 1973, ch. 226, § 6; T.C.A., § 67-611; Acts 2017, ch. 297, § 1.
Compiler's Notes. Acts 2017, ch. 297, § 4 provided that the act, which amended this section, shall apply to the tax year beginning January 1, 2017.
Cross-References. Classification, Tenn. Const., art. II, § 28.
Classification and assessment of insurance companies, title 67, ch. 5, part 12.
Classification and assessment of utilities and carriers, title 67, ch. 5, part 13.
Classification of agricultural, forest and open space land, title 67, ch. 5, part 10.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 34.
Law Reviews.
Recovering Erroneously Paid Property Taxes in Tennessee: An Epic Journey, 10 Mem. St. U.L. Rev. 279 (1980).
Attorney General Opinions. House Bill 768/Senate Bill 907 conforms to Tenn. Const. Article II, Section 28, insofar as the proposed legislation would apply to property with no more than one rental unit. The proposed legislation would violate article II, section 28, if it were applied to residential property containing two or more rental units. As long as assessors of property apply the presumption that would be created by the proposed legislation only to property with no more than one rental unit, HB 768/SB 907 conforms to existing case law. OAG 17-32, 2017 Tenn. AG LEXIS 31 (4/21/2017).
After Public Chapter 490 becomes effective, the Comptroller of the Treasury will continue to be responsible for reappraising the properties of modern market telecommunications providers. The reappraisal schedule for the telecommunications providers’ properties will remain the same. Their localized and nonoperating real property will be updated in each county during that county’s reappraisal year. Their operating properties will be assessed and updated annually. AG LEXIS 34 (7/26/2017).
NOTES TO DECISIONS
1. According to Use.
Classification “according to use” requires property to be assessed to the owner according to the actual use made of the property and not the owner's use. Crown Enters., Inc. v. State Bd. of Equalization, 543 S.W.2d 583, 1976 Tenn. LEXIS 480 (Tenn. 1976).
67-5-801. Classification and rate of assessment. [Effective on January 1, 2021. See the version effective until January 1, 2021.]
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For the purposes of taxation, all real property, except vacant or unused property or property held for use, shall be classified according to use and assessed as provided in this section:
- Public Utility Property. Public utility property shall be assessed at fifty-five percent (55%) of its value;
- Industrial and Commercial Property. Industrial and commercial property shall be assessed at forty percent (40%) of its value;
- Residential Property. Residential property shall be assessed at twenty-five percent (25%) of its value; and
- Farm Property. Farm property shall be assessed at twenty-five percent (25%) of its value.
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- Where a parcel of real property is used for more than one (1) purpose, which would result in different subclassifications and different assessment percentages, then it shall be apportioned among the subclasses according to guidelines established by rules and regulations of the state board of equalization.
- Notwithstanding subdivision (b)(1), when a parcel of real property is the principal residence of its owner, contains not more than one (1) rental unit, and is used as a short-term rental unit, as defined by § 13-7-602, the assessor of property should presume the classification of the property is residential.
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When a parcel is classified as residential under subdivision (b)(2), the same owner of the property may request residential classification for a maximum of one (1) additional parcel in this state and the assessor of property should presume residential classification when the one (1) additional parcel meets the following conditions:
- The parcel of real property contains not more than one (1) rental unit;
- The property is used as a short-term rental unit, as defined by § 13-7-602;
- The owner of the property lives on the property a minimum of fourteen (14) days each year or at least ten percent (10%) of the number of days the property is rented as a short-term rental unit, whichever is greater; and
- The owner of the property annually files a written affidavit with the assessor of property by September 1 of the prior year verifying that the property meets all requirements and the owner has no more than one (1) additional parcel in addition to their principal residence under this section.
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All real property that is vacant, or unused, or held for use, shall be classified according to its immediate most suitable economic use, which shall be determined after consideration of:
- Immediate prior use, if any;
- Location;
- Zoning classification; provided, that vacant subdivision lots in incorporated cities, towns, or urbanized areas shall be classified as zoned, unless upon consideration of all factors, it is determined that such zoning does not reflect the immediate most suitable economic use of the property;
- Other legal restrictions on use;
- Availability of water, electricity, gas, sewers, street lighting, and public services;
- Size;
- Access to public thoroughfares; and
- Any other factors relevant to a determination of the immediate most suitable economic use of the property.
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- If, after consideration of all such factors, any such real property does not fall within any of the definitions and classifications in this section, such property shall be classified and assessed as farm or residential property.
- When a mobile home attached to real property as described in § 67-5-802 is used as a residence, the assessor of property may presume the classification is residential.
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All real property that is vacant, or unused, or held for use, shall be classified according to its immediate most suitable economic use, which shall be determined after consideration of:
Acts 1973, ch. 226, § 6; T.C.A., § 67-611; Acts 2017, ch. 297, § 1; 2020, ch. 787, § 11.
Compiler's Notes. Acts 2017, ch. 297, § 4 provided that the act, which amended this section, shall apply to the tax year beginning January 1, 2017.
Amendments. The 2020 amendment, effective January 1, 2021, added (b)(2) and (b)(3).
Effective Dates. Acts 2020, ch. 787, § 12. January 1, 2021.
Cross-References. Classification,Tenn. Const., art. II, § 28.
Classification and assessment of insurance companies, title 67, ch. 5, part 12.
Classification and assessment of utilities and carriers, title 67, ch. 5, part 13.
Classification of agricultural, forest and open space land, title 67, ch. 5, part 10.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 34.
Law Reviews.
Recovering Erroneously Paid Property Taxes in Tennessee: An Epic Journey, 10 Mem. St. U.L. Rev. 279 (1980).
Attorney General Opinions. House Bill 768/Senate Bill 907 conforms to Tenn. Const. Article II, Section 28, insofar as the proposed legislation would apply to property with no more than one rental unit. The proposed legislation would violate article II, section 28, if it were applied to residential property containing two or more rental units. As long as assessors of property apply the presumption that would be created by the proposed legislation only to property with no more than one rental unit, HB 768/SB 907 conforms to existing case law. OAG 17-32, 2017 Tenn. AG LEXIS 31 (4/21/2017).
After Public Chapter 490 becomes effective, the Comptroller of the Treasury will continue to be responsible for reappraising the properties of modern market telecommunications providers. The reappraisal schedule for the telecommunications providers’ properties will remain the same. Their localized and nonoperating real property will be updated in each county during that county’s reappraisal year. Their operating properties will be assessed and updated annually. AG LEXIS 34 (7/26/2017).
NOTES TO DECISIONS
1. According to Use.
Classification “according to use” requires property to be assessed to the owner according to the actual use made of the property and not the owner's use. Crown Enters., Inc. v. State Bd. of Equalization, 543 S.W.2d 583, 1976 Tenn. LEXIS 480 (Tenn. 1976).
67-5-802. Mobile homes.
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- Any movable structure and appurtenance that is attached to real property by virtue of being on a foundation, or being underpinned, or connected with any one (1) utility service, such as electricity, natural gas, water, or telephone, shall be assessed for tax purposes as real property as an improvement to the land where located; however, in cases where the movable structures are attached to land occupied and used as trailer or mobile home parks where the owner of the land is renting spaces or lots for maintaining the movable structures, the owner of the movable structures shall be responsible for the additional tax imposed by reason of the improvement, and the owner of the land shall be granted a lien against the movable structure to secure the payment of the municipal and county taxes. Such lien shall constitute a first lien against the movable structure and shall be the only lien granted to the owner of the land without prior notification to any lienholder of record. If a moveable structure becomes vacant, the owner of the land shall be granted a lien against the moveable structure for rent due upon written notice delivered by certified mail to any lienholder of record, unless such lienholder is prevented by law from removing the moveable structure. Such lien shall be effective thirty (30) days after such notice, if the moveable structure remains vacant for thirty (30) days or more after the notice and is not removed within that time and shall be for rent accrued after notice to the lienholder. Prior to removal, a lienholder shall notify an owner of land by certified mail of its lien and intent to remove. All notices required to be given by certified mail shall be deemed to be effective upon mailing.
- Any such tax shall be collectible by the owner of the mobile park on a fiscal year basis, or in the alternative, the owner of the mobile park shall have the right to collect the tax by the month on a pro rata share, together with any monthly rents due the owner.
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- On or before March 1 of each year, the assessor of property shall furnish to each owner of land used as a mobile home park a schedule approved by the division of property assessments, requiring the owner to list all movable structures as defined in § 67-5-501, that were located on the owner's land as of the assessment date. For purposes of this subsection (b), “mobile home park” means a parcel or contiguous parcels under common ownership containing three (3) or more rental spaces or lots for movable structures.
- It is the duty of each owner of land upon which a movable structure is located to list each such structure, its make, year, serial number, size, original cost and such other pertinent information as may be required by the division of property assessments, sign the list and return it to the assessor of property on or before April 1 of each year. The assessor of property shall furnish to each owner of land used as a mobile home park a schedule of the assessed value of each moveable structure on or before July 1 of each year.
- This section shall not apply to a movable structure being used as a temporary office at a construction site, if such movable structure is otherwise assessed.
- In order to assist assessors of property in locating mobile homes and other movable structures that are moved onto and attached to land, the state director of fire prevention shall each month provide to assessors of property in the respective counties the names of mobile home owners and the location of property for which electrical inspections have been made.
- If the owner of land prevails in a suit for reimbursement of taxes against the owner of a mobile home or other movable structure located on the land, the owner of land shall be entitled to recover the costs of suit, including reasonable attorney's fees.
Acts 1973, ch. 226, § 6; 1974, ch. 555, § 2; 1976, ch. 673, § 1; T.C.A., § 67-612; Acts 1989, ch. 304, § 1; 1999, ch. 92, §§ 1, 2; 1999, ch. 513, § 1.
Textbooks. Tennessee Jurisprudence, 18 Tenn. Juris., Liens, § 11; 23 Tenn. Juris., Taxation, § 14.
Attorney General Opinions. Taxation of mobile homes, OAG 95-071 (7/5/95).
NOTES TO DECISIONS
1. Constitutionality.
This section represents an attempt by the legislature to implement Tenn. Const., art. II, § 28, which provides for the assessment of house trailers, mobile homes and all similar movable structures, as real property as an improvement to them and where located. Belle-Aire Village, Inc. v. Ghorley, 574 S.W.2d 723, 1978 Tenn. LEXIS 680 (Tenn. 1978).
2. Construction with Other Statutes.
This section, insofar as it pertains to a lien, should be construed in pari materia with title 66, chapter 21, part 1, which provides for the enforcement of liens on personalty when no method of enforcing them is otherwise provided. When construed, adequate means for enforcing the lien in question are provided. Although the mobile home is treated under this section as real property for tax purposes, it is treated as personal property for purposes of allowing the lien in favor of the landowner, as provided by this section. Therefore, there is no impediment to the employment of title 66, chapter 21, part 1 for the enforcement of this lien, although title 66, chapter 21, part 1 provides for the enforcement only of liens upon personal property. Belle-Aire Village, Inc. v. Ghorley, 574 S.W.2d 723, 1978 Tenn. LEXIS 680 (Tenn. 1978).
3. Nature of Lien.
The lien granted to the landowner under this section is not a “tax lien.” The lien is not granted to the state, county or municipal government but to the landowner. Neither does it secure the payment of taxes to a governmental entity; instead, it secures the landowner's claim for reimbursement against the owner of the mobile home for the amount of taxes on the mobile home which the landowner has already paid. Belle-Aire Village, Inc. v. Ghorley, 574 S.W.2d 723, 1978 Tenn. LEXIS 680 (Tenn. 1978).
Since the lien in question is not a “tax lien,” the owner of land used as a mobile home park is not entitled to the remedies and benefits provided by statutes which deal with tax liens. Belle-Aire Village, Inc. v. Ghorley, 574 S.W.2d 723, 1978 Tenn. LEXIS 680 (Tenn. 1978).
The lien provisions of this section are merely a statutory lien in favor of the landowner. Belle-Aire Village, Inc. v. Ghorley, 574 S.W.2d 723, 1978 Tenn. LEXIS 680 (Tenn. 1978).
4. Military Service Personnel.
House trailers and mobile homes, although defined as real property by statute for tax purposes, are personal property within the meaning of § 514 of the Soldiers' and Sailors' Civil Relief Act (50 U.S.C. App. § 574) [omitted] and, as such, where owned by nonresident military service personnel on active duty in the state pursuant to military orders, are immune from state taxation. United States v. Shelby County, 385 F. Supp. 1187, 1974 U.S. Dist. LEXIS 6362 (W.D. Tenn. 1974).
67-5-803. Tract lying partly outside taxing district.
When assessing for public taxes any tract of land lying partly within the limits of a drainage district, special school district or other special taxing district, and partly outside the limits of such district, an assessor shall assess that part of such tract lying within the limits of such district as one (1) independent tract, and that part of any such tract lying outside of the limits of such district as another independent tract, to the end that the amount of the taxes due to each taxing district may be definitely known.
Acts 1973, ch. 226, § 6; T.C.A., § 67-615.
NOTES TO DECISIONS
1. Applicability.
This section is inapplicable in suit brought in connection with special assessments levied by the county court pursuant to § 69-6-135. Weakley County v. Odle, 654 S.W.2d 402, 1983 Tenn. App. LEXIS 586 (Tenn. Ct. App. 1983).
67-5-804. Assessor's records for each taxable parcel — Identification and registration of mineral interests.
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For purposes of assessment of real property, each assessor shall keep a record for each parcel of taxable real property in the assessor's taxing jurisdiction, which shall show the following:
- The description of the property;
- The name of the true owner or owners, if known;
- The value of the land or lot, the value of the improvements, and also the separate value of any interests in real property or improvements thereon assessable as under § 67-5-502(d);
- The classification or subclassification and the appropriate percentage rate for purposes of assessment;
- The actual assessment that results from the multiplication of the value of the property by the appropriate percentage rate; and
- Any other information as may be required by the state board of equalization.
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All mineral owners shall be required to identify their mineral interests with the property assessor in the county in which the interest is located. The mineral owner shall provide a deed reference number for the mineral interest and shall specify where that mineral estate lies, citing tax maps and parcel numbers for the owner or owners of surface above the mineral estate. All property registered and identified sufficiently to the property assessor on July 1, 1987, and on which taxes have been paid through the current tax year on July 1, 1987, shall not be required to register again. Property shall be deemed to have been identified sufficiently, if and only if, it has been identified to the property assessor by the mineral owner in at least one (1) of these three (3) ways:
- By map and parcel number of the surface owners above the mineral estate;
- By providing to the property assessor reliable and accurate maps showing the location of the mineral interest in relation to the surface estates, which maps shall be kept on file in the property assessor's office. The property assessor shall use those maps to identify the surface owners above the mineral interest; or
- By providing the names of the surface owners and enough additional information so that the property assessor can identify on the property assessor's maps the location of the mineral interest. The property assessor shall keep the names and information on file and shall use the information to identify on the property assessor's maps the location of the mineral interest in relation to the surface estate.
- The state board of equalization shall furnish to local property assessors a form for mineral owners to use.
Acts 1973, ch. 226, § 6; T.C.A., § 67-613; Acts 1987, ch. 282, §§ 4, 11; 1988, ch. 702, § 3.
Cross-References. Limitation of actions, lapse of mineral interests, § 28-2-110.
Preservation, or extinguishment and reversion of mineral interests, § 66-5-108.
Property taxes, classification and assessment, mineral interests, back assessments, location, § 67-5-809.
Property taxes, notice of sale of land, mineral interests, § 67-5-2502.
Textbooks. Tennessee Forms (Robinson, Ramsey and Harwell), Nos. 8-227, 8-431.
67-5-805. Rules for describing real property.
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In describing real estate, the following rules shall be observed:
- The number of town lots and blocks of the property as a whole or a part shall be given;
- The name of the street, avenue, alley, or road on which it fronts, and the front feet thereof shall be given, unless the size, dimensions, and quantity can be more conveniently given in acres, then to be given in acres;
- If the property is a part of any known subdivision, its size, dimensions, quantity, and front feet or acres shall be given;
- In describing tracts of land, when it can be done, the surveyor's district, range, township, section, and sectional subdivision shall be designated and the number of acres;
- The lands by which the described tract is bounded shall also be given in the assessment; and
- When part of a known tract, subdivision, lot or block of land is assessed by a description that identifies it, or any part of it that is assessed but not so identified, such description shall be held to embrace all of such tract, subdivision, lot or block not included in the part identified.
- A failure to assess according to this chapter shall not in any wise vitiate the assessment or sale of lands under this chapter, and parol testimony shall always be admissible to supply a description of land on the assessment roll or in conveyance for taxes, where such testimony will show what land was assessed and sold, and there is enough in the description on the roll or conveyance to be applied to a particular tract or parcel of land by aid of such testimony.
Acts 1973, ch. 226, § 6; 1980, ch. 709, §§ 1, 2; T.C.A., § 67-614.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 32.
Decisions Under Prior Law
1. In General.
Statutory provisions reviewed as to sufficiency of description on tax assessment roll. State v. Collier, 160 Tenn. 403, 23 S.W.2d 897, 1929 Tenn. LEXIS 120 (1930), superseded by statute as stated in, Toler by Lack v. City of Cookeville, 952 S.W.2d 831, 1997 Tenn. App. LEXIS 89 (Tenn. Ct. App. 1997).
2. Adequacy.
A certificate of sale of “eleven tracts of land, containing 23,640 acres, lying in 13th district, sold as the property of Assure Assure,” made by the tax collector of White County, does not sufficiently identify the land to enable the court to decree title. James A. Quinby & Co. v. North American Coal & Transp. Co., 49 Tenn. 596, 1871 Tenn. LEXIS 49 (1871).
Description in assessment of land, by the general boundaries on the north, east, south, and west may be sufficient. Ex parte Trim, 1 Shan. 657 (1876).
Description of less than the whole of a lot sold for taxes, as “84 feet of this lot,” made in the certificate of sale, is insufficient, though the description of the whole lot in the assessment is sufficient. Wands v. Brien, 81 Tenn. 732, 1884 Tenn. LEXIS 94 (1884).
Where land assessed by the city was described for some years as “Knobs” with the supposed acreage and value following and for other years merely as “Watauga Avenue” with the supposed acreage and value following and where the evidence was to the effect that the section of the city known as “The Knobs” contained about 300 acres while the tract assessed contained only about 40 or 50 acres and did not touch Watauga Avenue by 200 feet or more, the assessments for these years were void because of lack of sufficiency of the description. City of Bristol v. Delinquent Taxpayers, 179 Tenn. 604, 168 S.W.2d 782, 1942 Tenn. LEXIS 60 (1942).
If there was enough in the description contained in the assessment roll to be applied by proof to a particular parcel of land, the assessment was good. Moore v. City of Chattanooga, 52 Tenn. App. 76, 371 S.W.2d 815, 1963 Tenn. App. LEXIS 91 (1963).
3. Parol Evidence.
Parol evidence is admissible to locate and identify the land under the given description, and to apply such description, but not to supply the same. Dobson v. Litton, 45 Tenn. 616, 1868 Tenn. LEXIS 54 (1868); Johnson v. Kellogg, 54 Tenn. 262, 1872 Tenn. LEXIS 44 (1872); White v. Motley, 63 Tenn. 544, 1874 Tenn. LEXIS 302 (1874); Cohen v. Woollard, 2 Cooper's Tenn. Ch. 686 (1876); Dougherty v. Chesnutt, 86 Tenn. 1, 5 S.W. 444, 1887 Tenn. LEXIS 17 (1887); Railroad v. Webster, 106 Tenn. 586, 61 S.W. 1018, 1900 Tenn. LEXIS 194 (Tenn. 1900).
Under the statute of frauds the descriptive terms employed together with the parol proof must be such as to point out some especial parcel of land to the exclusion of any other parcel of land. City of Bristol v. Delinquent Taxpayers, 179 Tenn. 604, 168 S.W.2d 782, 1942 Tenn. LEXIS 60 (1942).
Finding of master that oral evidence was not sufficient to show that paving assessments were definite was one of fact, hence where court of appeals concurred in finding there was no question for review before the supreme court. Cox v. Bristol, 183 Tenn. 82, 191 S.W.2d 160, 1945 Tenn. LEXIS 275 (1945).
67-5-806. Use of property maps — Revision of property maps.
- Where any county or municipality other than metropolitan governments has prepared or has had prepared property maps, that identify parcels of land within the area of that local government, that assign a number or other identifying symbol to such parcels and that show names of streets and public ways, and where such maps have been made a matter of public record and have been filed in the office of the county registrar, the parcel number or other identifying symbol that a specific parcel has been assigned on the official property identification map or maps shall be a sufficient description and identification of such property for purposes of assessment. Property maps prepared for property tax and assessment purposes shall not be conclusive evidence of property ownership in any court of law.
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- The state division of property assessment shall supervise the preparation, maintenance, revision and recording of all such property maps. It shall be the duty of the assessor to annually file a copy or reproduction of such property maps, as currently revised, with the county register of deeds, except in counties with a metropolitan form of government, who shall, without charge, accept, file, and preserve such copy or reproduction as a public record. Such copy or reproduction shall be filed on or before April 15 of each year, and shall reflect the status of property as of January 1. The copy or reproduction must use a format and storage medium approved by the director of the division of property assessments.
- The state division of property assessment shall revise such property maps to indicate the proper boundary between adjoining counties upon receipt of a notice from the state board of equalization as provided in former § 5-2-115(d)(3) [repealed].
Acts 1973, ch. 226, § 6; 1980, ch. 709, §§ 1, 2; T.C.A., § 67-614; Acts 1986, ch. 703, § 3; 1987, ch. 46, §§ 1, 2; 1998, ch. 666, §§ 1, 2; 2000, ch. 622, § 2; 2013, ch. 209, § 10; 2019, ch. 59, § 1.
Compiler's Notes. Acts 2000, ch. 622, § 3 provided that the act shall apply to the tax year next following the adjustment of the records of the state board.
Section 5-2-115(d)(3), referred to in this section, was deleted by Acts 2010, ch. 739, § 1, effective April 9, 2010.
Amendments. The 2019 amendment, effective January 1, 2020, substituted “April 15” for “October 1” in the second sentence of (b)(1).
Effective Dates. Acts 2019, ch. 59, § 2. January 1, 2020.
Cross-References. Location of boundaries, §§ 5-2-114 — 5-2-117.
67-5-807. Preparation and delivery of tax rolls or books.
- Every assessor shall identify all taxable property on the assessor's assessment records in such manner that tax rolls can be provided for each taxing entity within the assessor's jurisdiction.
- The county legislative body may impose upon the county clerk, or upon the assessor of property, the duty of making out from the assessment books, prepared by the county assessor of property for the latest year, either a bound or a loose-leaf tax book or books, or unit tax ledger cards, one (1) for each parcel of property, and the person so designated to perform this duty shall deliver the books or ledger cards to the trustee on or before the first Monday of October each and every year, respectively, and the person shall receive for such services such compensation as the county legislative body shall allow; provided, that the trustee shall have, at the date of the trustee's induction into office, entered into the several bonds in the amount of taxes as required by law.
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- Tax books or unit of ledger cards shall be arranged by districts, or by convenient subdivision of districts, and shall be suitably ruled so as to show the names of the owners either in alphabetical order, or in the order in which the parcels of property identified by a parcel number, are geographically located within the district or subdivision of the district, the number of lots and blocks, number of acres, description of the property as contained in the assessment roll, the value of each lot, tract, or parcel of land, and the valuation of personal property under the appropriate head or items called for by this chapter.
- On the valuation of the real and personal property of each taxpayer, taxes shall be calculated and extended in appropriate columns, according to and at the rate levied by the proper authorities.
- Tax books, tax rolls, or unit of ledger cards may have attached thereto and made a part thereof a schedule of definitions, defining words, letters, signs, symbols and figures appearing in such tax rolls, and such schedule of definitions when so attached shall be regarded as a part of each assessment contained in such tax books, tax rolls, or unit of ledger cards; and such tax books, tax rolls and unit of ledger cards may by reference incorporate records on file in any public office in the county.
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- It is the duty of the county clerk or assessor of property, in making out the tax books, to place all the property within the limits of any given municipality so that it will be separate from the other property, and, by footing up the assessed valuations on each page and recapitulating such footings, the county clerk or assessor of property shall show the aggregate valuation of all property within the limits of each incorporated town, city, or taxing district, and in the same manner the county clerk or assessor of property shall show the aggregate valuation of all property within the limits of the county.
- The tax books for realty shall show the name of the owner, if known, the description of each lot, tract, or parcel of land, and the value thereof.
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- The county clerk or assessor of property shall make out from the tax books an aggregate statement, showing the value of all town lots, the number of acres, and value of all tracts of land and the value of all personal property.
- This statement shall be made and the tax shown by civil districts and wards, and shall show the aggregate for the whole county from the items named.
- The clerk or assessor shall specify in such statement which of the districts are urban or country districts.
- This statement shall be forwarded to the commissioner of revenue on or before the first Monday in November in each and every year.
- The clerk or assessor shall also certify a like statement to the mayor of each municipality by that date.
- Should any county clerk or assessor of property fail to comply with the requirements of subsection (e) or § 67-1-701(a), when within such county clerk's or assessor of property's power to do so, the county clerk or assessor of property shall forfeit all claims for compensation for labor and services for making out and preparing the tax books.
Acts 1907, ch. 602, §§ 39, 40, 43, 44; Shan., §§ 811, 811a1, 812, 813; mod. Code 1932, §§ 1482-1485; impl. am. Acts 1937, ch. 33, § 50; Acts 1951, ch. 122, § 1; 1951, ch. 238, §§ 2-4; modified; impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 286, § 5; modified; 1973, ch. 226, § 6; T.C.A. (orig. ed.), §§ 67-626, 67-1008 — 67-1012; Acts 2008, ch. 971, § 1.
Compiler's Notes. Acts 2008, ch. 971, § 1 provided that the code commission is directed to change all references to “tax assessor”, wherever such references appear, to “assessor of property”, as such sections are amended or volumes are replaced. See § 1-1-116.
Attorney General Opinions. Under T.C.A. § 67-5-1601(c)(2), a city generally is required to pay one half of the local costs of reappraisal of properties within the city. The city and county may agree on a different amount, but the city may not unilaterally choose to pay a lesser amount. Furthermore, the county assessor may not agree to withhold the tax rolls from a city, even if the city has not paid one half of the reappraisal costs of properties within the city as required by T.C.A. § 67-5-1601(c)(2). OAG 17-50, 2017 Tenn. AG LEXIS 50 (11/15/2017).
NOTES TO DECISIONS
1. Compensation of Clerk.
County was not estopped from collecting excess fees applied by county clerk as extra compensation due him for making out tax books, since it was duty of court to fix compensation if any due, and clerk could not withhold excess fees from county. Sullivan County v. O'Dell, 169 Tenn. 248, 84 S.W.2d 577, 1934 Tenn. LEXIS 103 (1935).
67-5-808. Metropolitan governments — Tax rolls.
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Assessors of property for metropolitan governments shall assess separately and keep separate records and make up separate assessment rolls for:
- Property in the urban services district;
- Property within the limits of each incorporated city; and
- Other property, being all property in the general services district and not in the urban services district or in any incorporated city.
- The aggregate of the enumerated assessment records and rolls shall be the assessment records and rolls for the general services district, and the assessor of property shall so certify to the trustee, without obligation or a need to compile any other record or roll for the general services district.
Acts 1973, ch 226, § 6; T.C.A., § 67-626; Acts 2008, ch. 971, § 1.
Compiler's Notes. Acts 2008, ch. 971, § 1 provided that the code commission is directed to change all references to “tax assessor”, wherever such references appear, to “assessor of property”, as such sections are amended or volumes are replaced. See § 1-1-116.
67-5-809. Mineral interests — Back assessments — Location.
- The collector of taxes shall place a back assessment against the mineral interest pursuant to § 67-1-1005, if the tax collector determines that the mineral interest property has previously escaped taxation. If the collector of taxes has not previously provided notice to the owner of a dormant mineral interest of the assessment of taxes on such interest, then there shall be no back assessment of taxes, but the owner of the mineral interest shall be liable for taxes accruing after July 1, 1987, as otherwise provided by law.
- Failure of the mineral interest owner to register a mineral interest with the property assessor within three (3) years of July 1, 1987, shall subject the property to back assessment or reassessment pursuant to chapter 1, part 1 of this title, and to a penalty of twenty-five percent (25%) of the assessment or back assessment of taxes.
- Any mineral interest owner who, although currently paying taxes on a mineral interest assessment, fails to identify the location of that interest as required in § 67-5-804 shall be subject to penalty and interest. A penalty of ten percent (10%) shall be levied on the current assessment of that mineral interest.
- Further, any mineral interest owner failing to identify the location of the mineral interest according to § 67-5-804 shall not claim payment of taxes as a use of mineral interest as provided in title 66, chapter 5.
Acts 1987, ch. 282, §§ 5, 10.
Cross-References. Limitation of actions, lapse of mineral interests, § 28-2-110.
Preservation, or extinguishment and reversion of mineral interests, § 66-5-108.
Property taxes, classification and assessment, records, identification and registration of mineral interests, § 67-5-804.
Property taxes, notice of sale of land, mineral interests, § 67-5-2502.
Textbooks. Tennessee Forms (Robinson, Ramsey and Harwell), Nos. 8-227, 8-431.
Part 9
Classification and Assessment — Tangible Personal Property
67-5-901. Classification and rate of assessment — Leased property.
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For purposes of taxation, all tangible personal property, except inventories of merchandise held by merchants and businesses for sale and exchange by persons taxable under chapter 4, part 7 of this title, and unused tangible personal property shall be classified according to its use and assessed as follows:
- Public utility property shall be assessed at fifty-five percent (55%) of its value;
- Industrial and commercial property shall be assessed at thirty percent (30%) of its value; and
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- All other tangible personal property shall be assessed at five percent (5%) of its value, except that, for the purpose of taxation under this chapter, all other tangible personal property shall be deemed to have no value;
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All tangible personal property that is not in use shall be classified according to its immediate most suitable economic use, which shall be determined after consideration of the following:
- Immediate past use, if any;
- Nature of the property;
- Classification of the real property upon which it is located;
- Normal use of the property;
- Ownership; and
- Any other factors relevant to a determination of the immediate most suitable economic use of the property.
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- “Inventories of merchandise held by merchants and businesses for sale and exchange” includes tangible personal property held for lease or rental, but does not include such property in the possession of a lessee. Leased personal property in the possession of the lessee shall be classified and assessed according to the use of the lessee.
- Prosthetic surgical kits, including reusable tools and containers, as well as prosthetics and supplies, shall be considered “inventories of merchandise held by merchants and businesses for sale and exchange” as to the typical stock on hand at the premises of the merchant or business owner, or when held for thirty (30) days or less by a customer for use in surgeries; provided, that proceeds of the transaction are subject to business tax. Kits leased or consigned to the same customer/user for longer than thirty (30) days, with or without a written lease or consignment agreement, shall be considered leased tangible personal property assessable to the customer/user. The typical stock on hand at the premises of the customer/user shall be considered leased tangible personal property unless otherwise documented. Leased or consigned kits otherwise assessable to the customer/user but withdrawn or relocated from the customer/user's premises by the lessor within thirty (30) days may be adjusted by filing of an amended tangible personal property schedule for the year assessed according to the applicable statute, if the basis for the adjustment is documented.
Acts 1973, ch. 226, § 6; 1977, ch. 337, § 2; T.C.A., § 67-616; Acts 1988, ch. 941, §§ 2, 3; 1990, ch. 1075, § 7; 2001, ch. 448, § 1; 2009, ch. 530, § 131.
Compiler's Notes. Former subsection (c), concerning residential real property used for overnight rentals, became void under its own terms after December 31, 2002.
Cross-References. Classification and assessment of insurance companies, title 67, ch. 5, part 12.
Classification and assessment of utilities and carriers, title 67, ch. 5, part 13.
Classification and rate of assessment of personal property for taxation, Tenn. Const., art. II, § 28.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 34.
Attorney General Opinions. Constitutionality, OAG 89-89 (5/30/89).
Exclusion from ad valorem taxation of personal property of individuals, OAG 00-062 (4/3/00).
After Public Chapter 490 becomes effective, the Comptroller of the Treasury will continue to be responsible for reappraising the properties of modern market telecommunications providers. The reappraisal schedule for the telecommunications providers’ properties will remain the same. Their localized and nonoperating real property will be updated in each county during that county’s reappraisal year. Their operating properties will be assessed and updated annually. AG LEXIS 34 (7/26/2017).
NOTES TO DECISIONS
1. Constitutionality.
The classifications in T.C.A. § 67-5-901 are specifically authorized by Tenn. Const. art. II, § 28. There is no merit to the claim of invidious discrimination under Tenn. Const. art. XI, § 8. Sherwood Co. v. Clary, 734 S.W.2d 318, 1987 Tenn. LEXIS 1068 (Tenn. 1987).
The exemption of nonbusiness tangible property is not violative of the equal protection clause of the U.S. Const., amend. 14. Sherwood Co. v. Clary, 734 S.W.2d 318, 1987 Tenn. LEXIS 1068 (Tenn. 1987).
2. Construction with Other Statutes.
This section and ch. 4, part 7 of this title must be read in pari materia as they are written in pari materia. Dixie Rents, Inc. v. City of Memphis, 594 S.W.2d 397, 1979 Tenn. App. LEXIS 376 (Tenn. Ct. App. 1979); Art Pancake's United Rent-All v. Ferguson, 601 S.W.2d 926, 1979 Tenn. App. LEXIS 396 (Tenn. Ct. App. 1979); Coble Systems, Inc. v. Armstrong, 660 S.W.2d 802, 1983 Tenn. App. LEXIS 628 (Tenn. Ct. App. 1983).
Where party was subject to business tax under ch. 4, part 7 of this title, its inventory which was used for rental purposes was exempt from personal property ad valorem tax levied by county or municipality. Art Pancake's United Rent-All v. Ferguson, 601 S.W.2d 926, 1979 Tenn. App. LEXIS 396 (Tenn. Ct. App. 1979).
3. Situs of Taxation.
Leased personal property located in one city and/or county cannot be subjected to personal property ad valorem taxes in that city and/or county, when the rental receipts from this leased property have been included in computing the business tax paid by the owner in another city and/or county. Coble Systems, Inc. v. Armstrong, 660 S.W.2d 802, 1983 Tenn. App. LEXIS 628 (Tenn. Ct. App. 1983).
4. Exemption.
When a lessor has paid business taxes on lease income, the lessor is exempt from property taxes on the value of the leased goods. IBM Credit Corp. v. County of Hamilton, 830 S.W.2d 77, 1992 Tenn. App. LEXIS 65 (Tenn. Ct. App. 1992).
67-5-902. Schedules generally.
- Unless otherwise provided for, those owners and lessees of taxable tangible personal property who are required by rules and regulations of the state board of equalization to report to the assessor shall report on such schedule as the state board of equalization may require. The schedule adopted by the board shall provide that a value different from standard depreciated cost may be used where such value more closely approximates fair market value, and the assessor may request supportive information in such instances from the taxpayer.
- If a taxpayer would be liable for additional tax due to back assessment of property omitted from a reporting schedule, or due to reassessment of property included in the schedule, the taxpayer may offset this liability by showing that other property listed on the schedule was over reported, or by providing information that the reassessed property or other property listed on the schedule should be valued using a nonstandard method that more closely approximates fair market value.
- With approval of the director of property assessments, the assessor may require electronic filing for tangible personal property schedules and for any year in which electronic filing is required in the county, the filing deadline is extended to April 15, and tangible personal property assessments may be appealed directly to the state board of equalization until forty-five (45) days after the assessment change notice is sent.
Acts 1973, ch. 226, § 6, T.C.A., § 67-617; Acts 1990, ch. 1075, § 3; 2005, ch. 201, § 1; 2014, ch. 938, § 2.
Attorney General Opinions. Proposed legislation to preclude parties from raising nonstandard value assessment issue in administrative proceedings would have no effect on taxpayer's right to be represented by non-lawyer agent, OAG 03-070 (5/27/03).
67-5-903. Schedules — Property used for business, professions, manufacturing.
- All partnerships, corporations, other business associations not issuing stock and individuals operating for profit as a business or profession, including manufacturers, except those whose property is entirely assessable by the comptroller of the treasury, shall be furnished by the assessor not later than February 1 of each year, a schedule requiring the taxpayer to list in detail all tangible personal property owned by the taxpayer and used or held for use in such business or profession, including, but not limited to, furniture, fixtures, machinery and equipment, all raw materials, supplies, but excluding all finished goods in the hands of the manufacturer and the inventories of merchandise held for sale or exchange, such schedule to be approved by the director of property assessments. Failure of the assessor to send a schedule or failure of the taxpayer to receive a schedule shall not relieve or excuse any taxpayer from filing such schedule by March 1, nor shall it prevent the assessor from issuing a forced assessment against the taxpayer.
- It is the duty of the taxpayer to list fully such tangible personal property used, or held for use, in the taxpayer's business or profession on such schedule, including such other information relating thereto as may be required by the assessor, place its correct value thereon, sign the schedule, and return it to the assessor on or before March 1 of each year. In lieu of detailing acquisition cost on the reporting schedule, the taxpayer may certify that the depreciated value of tangible personal property otherwise reportable on the form is one thousand dollars ($1,000) or less. The assessor shall accept the certification, subject to audit, and fix the value of tangible personal property assessable to the taxpayer pursuant to the schedule, at one thousand dollars ($1,000). This value shall be subject to equalization pursuant to § 67-5-1509. The certification stated on the schedule shall warn the taxpayer that it is made subject to penalties for perjury and subject to statutory penalty and costs if proven false. The taxpayer shall designate on the schedule one (1) or more individuals as owner or owners of the business, or responsible person or persons in the event of dissolution of a corporate or limited liability entity, for the purposes of § 67-5-513(a).
- A taxpayer who fails, refuses or neglects to complete, sign and file the schedule with the assessor of property as provided in subsection (b) shall be deemed to have waived objections to the forced assessment determined by the assessor, subject only to the remedies provided in subsection (d). In determining a forced assessment, the assessor shall consider available evidence indicative of the fair market value of property assessable to the taxpayer under this section, and having determined the assessable value of the property, the assessor shall give the taxpayer notice of the assessment by United States mail, addressed to the last known address of the taxpayer or the taxpayer's agent at least five (5) calendar days before the local board of equalization commences its annual session.
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The remedies of a taxpayer against whom a forced assessment is made are as follows:
- The taxpayer may appeal to the county board of equalization pursuant to § 67-5-1407, but shall present a completed schedule as otherwise provided in this section;
- If the deadline to appeal to the county board of equalization has expired, then the taxpayer may request the assessor to mitigate the forced assessment by reducing the forced assessment to the standard depreciated value of the taxpayer's assessable property plus twenty-five percent (25%), so long as the failure to file the schedule or failure to timely appeal to the county board of equalization was not the result of gross negligence or willful disregard of the law. Mitigation of the forced assessment shall follow the procedure, including appeal, prescribed for correction of error under § 67-5-509, but must be requested within the same deadline as provided for amendment of a schedule pursuant to subsection (e). Gross negligence shall be presumed if notice of the forced assessment, in a form approved by the state board of equalization, was sent certified mail, return receipt requested, to the taxpayer's last known address on file with the assessor;
- Whether or not an assessor's error affected the original assessment, the assessor may correct a forced assessment using the procedure provided and subject to the deadlines provided in § 67-5-509, upon determining that the taxpayer was not in business as of the assessment date for the year at issue, and upon determining that the taxpayer did not own or lease tangible personal property used or held for use in a business as of the assessment date for the year at issue.
- The taxpayer may amend a timely filed personal property schedule at any time on or before September 1 following the tax year. A personal property schedule may be amended for the following reasons only: adding or deleting of property to correctly reflect the status of the property as of the assessment date; correcting the reported cost or vintage year of property; correcting the name or address of the taxpayer; deleting property that has been reported more than once resulting in a duplicate assessment; reporting property in the appropriate group; and correcting other reporting clerical errors. However, under no circumstances shall a taxpayer be permitted to amend a personal property schedule to submit an original claim for nonstandard value for property that was not the subject of a properly documented claim of nonstandard value in the timely filed personal property schedule. If the assessor agrees with the amended schedule, the assessor shall thereupon revise the assessment and certify the revised assessment to the trustee. If the assessor believes the assessment should be otherwise than claimed in the amended schedule, the assessor shall adjust the assessment and give written notice to the taxpayer of the adjusted assessment. The taxpayer may appeal the assessor's adjustment of or refusal to accept an amended assessment schedule to the local and state boards of equalization in the manner otherwise provided by law. Additional taxes due as the result of an amended schedule shall not be deemed delinquent on or before sixty (60) days after the date notice of the amended assessment was sent to the taxpayer. Amendment of a personal property schedule shall not be permitted once suit has been filed to collect delinquent taxes related to the original assessment. The assessor shall, within sixty (60) days from receipt of the taxpayer's amended schedule, review and accept or reject the schedule. In any event, the taxpayer shall be notified in writing of the results of the review. If the assessor has not notified the taxpayer that the amended schedule has been accepted or rejected within sixty (60) days, the taxpayer's amended schedule shall be deemed not accepted by the assessor.
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The schedule approved by the director of property assessments and supplied to taxpayers shall contain schedules reflecting the following rates of allowable depreciated cost for the listed categories of property, as well as spaces for general data on the particular taxpayer:
GROUP 1A — Vehicles (five-year life) Year Cost on File Revised Cost Depr. 1 .80 2 .60 3 .40 4 .20 Prior .20 TOTAL GROUP 1B (eight-year life) GROUP 1 — Furniture, Fixtures, General Equipment, and All Other Property Not Listed in Another Group Year Cost on File Revised Cost Depr. 1 .88 2 .75 3 .63 4 .50 5 .38 6 .25 7 .20 Prior GROUP 2 — Computers, Copiers, Peripherals, and Tools (three-year life) Year Cost on File Revised Cost Depr. 1 .67 2 .33 Prior .20 TOTAL GROUP 3 — Molds, Dies, and Jigs (four-year life) Year Cost on File Revised Cost Depr. 1 .75 2 .50 3 .25 Prior .20 TOTAL GROUP 4 — Aircraft, Boats and Towers (not classified as real property) (thirteen-year life) Year Cost on File Revised Cost Depr. 1 .92 2 .85 3 .77 4 .69 5 .62 6 .54 7 .46 8 .38 9 .31 10 .23 11 .20 Prior .20 TOTAL GROUP 5 — Manufacturing Machinery (eight-year life) Year Cost on File Revised Cost Depr. 1 .88 2 .75 3 .63 4 .50 5 .38 6 .25 7 .20 Prior .20 TOTAL GROUP 6 — Billboards, Tanks, and Pipelines (unless classified as real property) (sixteen-year life) Year Cost on File Revised Cost Depr. 1 .94 2 .88 3 .81 4 .75 5 .69 6 .63 7 .56 8 .50 9 .44 10 .38 11 .31 12 .25 13 .20 Prior .20 TOTAL GROUP 7 — Scrap Property Year Cost on File Revised Cost Depr. All .02 GROUP 8 — Raw Materials and Supplies Cost on File Revised Cost Original cost
Click to view table.
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- Tangible personal property that the taxpayer treats as construction-in-process (CIP) for federal income tax purposes as of the assessment date may be reported in the taxpayer's schedule filed with the assessor at fifteen percent (15%) of its cost as reported for federal income tax purposes. Qualified pollution control property shall be valued as provided in § 67-5-604, notwithstanding its state of completion.
- No back assessments of CIP, as the term is used in subdivision (g)(1), shall occur prior to January 1, 1994. If back assessments have occurred involving CIP, those assessments shall be voided and all taxes paid shall be refunded to those taxpayers who have an action or claim pending before an assessing authority or court on the CIP issue.
- Property classified as computers under Group 2 shall include all operational computer software. For purposes of this section, “operational computer software” means embedded software so integral to the operation of a computer that the computer could not perform any valuable or useful function without the software. All other computer software, whether prepackaged or custom, is deemed intangible personal property for purposes of this part and is not subject to tax under this part. If computer software other than operational computer software is included in the sale or lease price of a computer without being separately stated, the cost of the software that is not operational computer software shall be included in the reported cost of the computer, unless an appropriate deduction is established by a claim of nonstandard value or by other means provided under rules of the state board of equalization. This subsection (h) shall not be construed to affect the value or taxable status of any other property subject to tax under this chapter. Nothing in this subsection (h) shall affect a taxpayer's right under § 67-5-902, to seek a value different from a standard depreciated cost, where the value more closely approximates fair market value.
Acts 1973, ch. 226, § 6; 1975, ch. 171, § 12; 1978, ch. 700, § 1; T.C.A., § 67-620; Acts 1990, ch. 898, §§ 3, 5; 1990, ch. 1075, § 2; 1993, ch. 323, §§ 1, 2; 1995, ch. 305, § 124; 1996, ch. 833, § 1; 1998, ch. 898, § 1; 2000, ch. 649, § 3; 2006, ch. 821, § 1; 2007, ch. 37, § 1; 2007, ch. 38, § 1; 2007, ch. 132, §§ 2, 3; 2007, ch. 179, § 1; 2007, ch. 292, § 1; 2009, ch. 163, § 1; 2011, ch. 93, §§ 1, 4; 2012, ch. 571, § 1; 2013, ch. 353, § 33; 2014, ch. 938, § 3.
Code Commission Notes.
This section was amended by two acts in 2007, first by ch. 38, § 1, effective January 1, 2008, then by ch. 132, § 2, effective May 10, 2007, neither of the acts referring to the other. Acts 2007, ch. 38 purported to amend this section with provisions that are identical to those made by ch. 132 and was not given effect. The section as set out above reflects the amendments by ch. 132.
Compiler's Notes. Acts 1996, ch. 833, § 2 provided that the amendment by that act shall apply to assessments for the 1996 tax year.
Acts 1998, ch. 898, which added the last four sentences in (b), provided in § 2 that the act applies to the 1999 tax year.
Acts 2000, ch. 649, § 5, provided that the act shall apply to the 2000 tax year. A taxpayer subject to assessment by the comptroller of the treasury under § 67-5-513, § 67-5-903(f), § 67-5-1301(a)(2), or § 67-5-1310 for the first time for tax year 2000 shall be afforded up to sixty (60) days, from the date the taxpayer is supplied a report form, to file any ad valorem report otherwise required by § 67-5-1303 for tax year 2000.
Cross-References. Telecommunication towers, § 67-5-514.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 34.
Attorney General Opinions. The property tax code imposes no deadline for the assessor to accept or reject an amended tangible personal property schedule submitted pursuant to T.C.A. § 67-5-903(e), OAG 07-027 (3/12/07).
A judge does not have discretion pursuant to T.C.A. § 39-17-1317(a) to return a rifle used to violate the hunting laws, OAG 07-027 (3/12/07).
NOTES TO DECISIONS
1. Constitutionality.
T.C.A. § 67-5-903(f) and the depreciation schedules forming a part thereof are constitutional since, under the provisions of Tenn. Const. art. II, § 28, the value and definition of property is to be ascertained in such manner as the Tennessee legislature shall direct. In re All Assessments, 67 S.W.3d 805, 2001 Tenn. App. LEXIS 683 (Tenn. Ct. App. 2001), rehearing denied, — S.W.3d —, 2001 Tenn. App. LEXIS 770 (Tenn. Ct. App. Oct. 4, 2001).
2. Construction in Process.
Although construction in process (CIP) was subject to the taxing power of the legislature prior to and including tax year 1993, it was not the legislature's intent that it be so taxed until the enactment of T.C.A. § 67-5-903(g) and that subsection expressly voids all back assessments prior to January 1, 1994. Thus, such property could not be assessed earlier than the time at which it was completed and placed in service until the legislature enacted this statute which specifically provides for a different time. Kellogg Co. v. Tennessee Assessment Appeals Comm'n, 978 S.W.2d 946, 1998 Tenn. App. LEXIS 405 (Tenn. Ct. App. 1998).
3. Burden of Proof.
Where taxes on tangible personal property were paid under the provisions of this section and suit for recovery of such taxes paid was brought on the ground that the property was exempt from tax as inventory, it was necessary to show that such tax was paid under protest, duress or coercion. Bill's Institutional Commissary Corp. v. Shelby County, 584 S.W.2d 805, 1979 Tenn. App. LEXIS 321 (Tenn. Ct. App. 1979).
4. Disputed Assessment.
In order to obtain relief from a disputed assessment, the taxpayer must file the schedule called for by this section. West Coal Corp. v. State Bd. of Equalization, 649 S.W.2d 595, 1983 Tenn. App. LEXIS 554 (Tenn. Ct. App. 1983).
Chancery court did not have subject matter jurisdiction, pursuant to T.C.A. §§ 67-5-903, 67-5-1401, and 67-5-1407, to hear a taxpayer's administrator's complaint contesting the method of valuation used and the actual value used in the forced assessments of the taxpayer's tangible personal property, as well as claims that the assessor acted fraudulently. Schutte v. Johnson, 337 S.W.3d 767, 2010 Tenn. App. LEXIS 157 (Tenn. Ct. App. Mar. 2, 2010), appeal denied, — S.W.3d —, 2010 Tenn. LEXIS 931 (Tenn. Sept. 23, 2010).
67-5-904. Schedules — Leased property.
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- For the purpose of assessing leased property, it is the further duty of the taxpayer to list fully on a schedule provided by the assessor all tangible personal property that is leased by the taxpayer for the conduct of the taxpayer's business.
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Leased property shall include equipment, machinery and all tangible personal property used in the conduct of, or as a part of, the taxpayer's business, including, but not limited to, the following:
- Equipment that is leased only, not sold;
- Equipment that is leased at nominal rent or loaned under certain circumstances;
- Equipment that is leased and not permitted to be sold;
- Leased coin-operated machines and devices;
- Equipment that is placed on location;
- Vehicles, automobiles, trucks;
- Furniture; and
- Electronic equipment.
- The lessor, or owner of leased tangible personal property, shall provide such information as the assessor may request regarding the location, valuation or use of such property.
Acts 1973, ch. 226, § 6; T.C.A., § 67-621; Acts 1990, ch. 1075, §§ 8, 9.
Part 10
Classification and Assessment — Agricultural, Forest and Open Space Land Act of 1976
67-5-1001. Short title.
Sections 11-14-201, 11-15-107, 11-15-108, and this part shall be known and may be cited as the “Agricultural, Forest and Open Space Land Act of 1976.”
Acts 1976, ch. 782, § 1; T.C.A., § 67-650.
Cross-References. Classification and assessment of real property, title 67, ch. 5, part 8.
NOTES TO DECISIONS
1. Constitutionality.
This part is constitutional and does not violate Tenn. Const., art. II, §§ 28 and 29, art. XI, § 8, or U.S. Const., amend. 14. Marion County v. State Bd. of Equalization, 710 S.W.2d 521, 1986 Tenn. App. LEXIS 2768 (Tenn. Ct. App. 1986).
67-5-1002. Legislative findings.
The general assembly finds that:
- The existence of much agricultural, forest and open space land is threatened by pressure from urbanization, scattered residential and commercial development, and the system of property taxation. This pressure is the result of urban sprawl around urban and metropolitan areas, which also brings about land use conflicts, creates high costs for public services, contributes to increased energy usage, and stimulates land speculation;
-
The preservation of open space in or near urban areas contributes to:
- The use, enjoyment and economic value of surrounding residential, commercial, industrial or public use lands;
- The conservation of natural resources, water, air, and wildlife;
- The planning and preservation of land in an open condition for the general welfare;
- A relief from the monotony of continued urban sprawl; and
- An opportunity for the study and enjoyment of natural areas by urban and suburban residents who might not otherwise have access to such amenities;
- Many prime agricultural and forest lands in Tennessee, valuable for producing food and fiber for a hungry world, are being permanently lost for any agricultural purposes and that these lands constitute important economic, physical, social, and esthetic assets to the surrounding lands and to the people of Tennessee;
- Many landowners are being forced by economic pressures to sell such agricultural, forest, or open space land for premature development by the imposition of taxes based, not on the value of the land in its current use, but on its potential for conversion to another use; and
- The findings of subdivisions (1)-(4) must be tempered by the fact that in rural counties an over-abundance of land held by a single landowner that is classified on the tax rolls by this part could have an adverse effect upon the ad valorem tax base of the county, and thereby disrupt needed services provided by the county. To this end, a limit must be placed upon the number of acres that any one (1) owner within a tax jurisdiction can bring within this part.
Acts 1976, ch. 782, § 2; T.C.A., § 67-651; Acts 1984, ch. 685, § 1.
Compiler's Notes. Section 67-5-1050 provides for a referendum whereby in certain counties the provisions of §§ 67-5-1002(5), 67-5-1003(3), and 67-5-1004(8) (now § 67-5-1004(7)), may operate to change the classification of any land that has been classified under the provisions of this part prior to July 1, 1984. See § 67-5-1050.
Acts 1984, ch. 685, § 4, provided: “The provisions of this act shall not operate to change the classification of any land which has been classified under the provisions of this part prior to July 1, 1984.”
Cross-References. Change in classification, § 67-5-1050.
Land classified prior to July 1, 1984, classification change in certain counties, § 67-5-1011.
67-5-1003. Policy of state.
The general assembly declares that it is the policy of this state that:
- The owners of existing open space should have the opportunity for themselves, their heirs and assigns to preserve such land in its existing open condition, if it is their desire to do so, and if any or all of the benefits enumerated in § 67-5-1002 would accrue to the public thereby, and that the taxing or zoning powers of governmental entities in Tennessee should not be used to force unwise, unplanned or premature development of such land;
- The preservation of open space is a public purpose necessary for sound, healthful, and well-planned urban development, that the economic development of urban and suburban areas can be enhanced by the preservation of such open space, and that public funds may be expended by the state or any municipality or county in the state for the purpose of preserving existing open space for one (1) or more of the reasons enumerated in this section; and
- No person may place more than one thousand five hundred (1,500) acres of land within any one (1) taxing jurisdiction under this part. For purposes of this maximum limit, ownership shall be attributed among multiple owners as follows: a person shall be deemed to have placed under the provisions of this part that percentage of the total acreage of any parcel classified under this part that equals the percentage of such person's ownership interest in such parcel. If a parcel classified under this part is owned by a trust, partnership, corporation or other artificial entity, a person shall be deemed to have placed under this part that percentage of the total acreage of the parcel that equals the person's percentage interest in the ownership or net earnings of the entity. Further, a parcel owned by an artificial entity shall be aggregated with parcels owned by other artificial entities having fifty percent (50%) or more common ownership or control, and together the parcels may not exceed the maximum acreage provided in this section. To the extent that a parcel of property is owned by a person who is disqualified under this subdivision (3), such property or portion thereof in which such person owns an interest shall be ineligible for classification under this part. If property is disqualified for use value classification solely as the result of these ownership attribution provisions, any rollback assessment due shall be limited to tax savings accruing after April 14, 1992. This subdivision (3) shall not operate to apply the maximum acreage limitation to an agricultural classification that the owner obtained prior to July 1, 1984.
Acts 1976, ch. 782, § 3; T.C.A., § 67-652; Acts 1984, ch. 685, § 2; 1992, ch. 661, § 1; 2008, ch. 1161, § 1.
Compiler's Notes. Section 67-5-1050 provides for a referendum whereby in certain counties the provisions of §§ 67-5-1002(5), 67-5-1003(3), and 67-5-1004(8) (now § 67-5-1004(7)), may operate to change the classification of any land which has been classified under the provisions of this part prior to July 1, 1984. See § 67-5-1050.
Acts 1984, ch. 685, § 4, provided: “The provisions of this act shall not operate to change the classification of any land which has been classified under the provisions of this part prior to July 1, 1984.”
Acts 2008, ch. 1161, § 7 provided that if property is disqualified for use value classification solely as the result of the act, any rollback assessment shall be limited to tax savings accruing after June 13, 2008.
Cross-References. Change in classification, § 67-5-1050.
Land classified prior to July 1, 1984, classification change in certain counties, § 67-5-1011.
67-5-1004. Definitions.
As used in §§ 11-14-201, 11-15-107, 11-15-108, and this part, unless the context otherwise requires:
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“Agricultural land” means land that meets the minimum size requirements specified in subdivision (1)(B) and that either:
- Constitutes a farm unit engaged in the production or growing of agricultural products; or
- Has been farmed by the owner or the owner's parent or spouse for at least twenty-five (25) years and is used as the residence of the owner and not used for any purpose inconsistent with an agricultural use.
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To be eligible as agricultural land, property must meet one (1) of the following minimum size requirements by consisting of:
- A single tract of at least fifteen (15) acres, including woodlands and wastelands;
- Two (2) noncontiguous tracts within the same county, including woodlands and wastelands, one (1) of which is at least fifteen (15) acres and the other being at least ten (10) acres and together constituting a farm unit; or
- Two (2) noncontiguous tracts within the same county totaling at least fifteen (15) acres, including woodlands and wastelands, that are separated only by a road, body of water, or public or private easement and together constituting a farm unit;
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“Agricultural land” means land that meets the minimum size requirements specified in subdivision (1)(B) and that either:
- “Commissioner” means the commissioner of agriculture or the commissioner's designee;
- “Forest land” means land constituting a forest unit engaged in the growing of trees under a sound program of sustained yield management that is at least fifteen (15) acres and that has tree growth in such quantity and quality and so managed as to constitute a forest;
- “Gross agricultural income” means total income, exclusive of adjustments or deductions, derived from the production or growing of crops, plants, animals, aquaculture products, nursery, or floral products, including income from the rental of property for such purposes and income from federal set aside and related agricultural management programs;
- “Local government advisory committee,” “Tennessee local government advisory committee,” or “Tennessee local government planning advisory committee” means the local government planning advisory committee created by § 4-3-727;
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“Open space easement” means a perpetual right in land of less than fee simple that:
- Obligates the grantor and the grantor's heirs and assigns to certain restrictions constituted to maintain and enhance the existing open or natural character of the land;
- Is restricted to the area defined in the easement deed; and
- Grants no right of physical access to the public, except as provided for in the easement;
- “Open space land” means any area of land other than agricultural and forest land, of not less than three (3) acres, characterized principally by open or natural condition, and whose preservation would tend to provide the public with one (1) or more of the benefits enumerated in § 67-5-1002, and that is not currently in agricultural land or forest land use. “Open space land” includes greenbelt lands or lands primarily devoted to recreational use;
- “Owner” means the person holding title to the land;
- “Person” means any individual, partnership, corporation, organization, association, or other legal entity;
- “Planning commission” means a commission created under § 13-3-101 or § 13-4-101;
- “Present use value” means the value of land based on its current use as either agricultural, forest, or open space land and assuming that there is no possibility of the land being used for another purpose;
- “Rollback taxes” means the amount of back tax differential payable under § 67-5-1008; and
- “State forester” means the director of the division of forestry.
Acts 1976, ch. 782, § 4; 1977, ch. 256, § 1; 1978, ch. 613, §§ 1, 2; T.C.A., § 67-653; Acts 1984, ch. 685, § 3; 1992, ch. 661, §§ 2-5; 1992, ch. 693, § 18; 1998, ch. 1066, § 8; 1999, ch. 141, § 1; 2002, ch. 632, § 1; 2017, ch. 297, § 2; 2019, ch. 436, § 1.
Code Commission Notes.
Former subdivision (3), concerning the director of the state planning commission, was deleted as obsolete by authority of the code commission in 2006.
Compiler's Notes. Section 67-5-1050 provides for a referendum whereby in certain counties the provisions of §§ 67-5-1002(5), 67-5-1003(3), and 67-5-1004(8) (now § 67-5-1004(7)), may operate to change the classification of any land which has been classified under the provisions of this part prior to July 1, 1984. See section 67-5-1050.
The amendment to this section by Acts 2002, ch. 632, § 1 shall not apply to properties for which the agricultural classification was approved prior to January 1, 2003, until there has been a sale of the property, or change of use to a nonqualifying use.
Acts 1984, ch. 685, § 4, provided: “The provisions of this act shall not operate to change the classification of any land that has been classified under the provisions of this part prior to July 1, 1984.”
Acts 1999, ch. 141, § 7 provided that the 1999 amendment by that act, which rewrote (1), shall be effective for tax year 1999.
Acts 2002, ch. 632, § 6 provided that there shall be no rollback assessment when property is disqualified solely as a result of amendments by the act to §§ 67-5-1004(1)(B) and 67-5-1008(d)(2)-(4) and (e)(3), so long as the property continues to be used in a qualifying use and is not the subject of a sale or transfer which would cause the property to violate the minimum size or maximum acreage provisions of this part. Such disqualified property shall be at risk of a rollback assessment until it has been assessed at market value under part 6 of this chapter for three (3) years, and during such time a rollback assessment shall be made if the property ceases to be used in a qualifying use or is the subject of a sale or transfer which would cause the property to violate the minimum size or maximum acreage provisions of this part.
Acts 2017, ch. 297, § 4 provided that the act, which amended this section, shall apply to the tax year beginning January 1, 2017.
Amendments. The 2019 amendment, effective January 1, 2020, in (1)(B), substituted “one (1) of the following minimum size requirements by consisting of:” for “minimum size requirements as follows: it must consist either of a”; added the designations for (1)(B)(i) and (ii); and added (1)(B)(iii).
Effective Dates. Acts 2019, ch. 436, § 2. January 1, 2020.
Cross-References. Change in classification, § 67-5-1050.
Land classified prior to July 1, 1984, classification change in certain counties, § 67-5-1011.
NOTES TO DECISIONS
1. Agricultural Land.
Although plaintiff did not actually farm or cultivate property, evidence was sufficient to show the subject property was being held for the production or growing of crops. Batson East-Land Co. v. Boyd, 4 S.W.3d 185, 1998 Tenn. App. LEXIS 313 (Tenn. Ct. App. 1998).
67-5-1005. Classification of agricultural land.
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- Any owner of land may apply for its classification as agricultural by filing a written application with the assessor of property. The application must be filed by March 1. Reapplication thereafter is not required so long as the ownership as of the assessment date remains unchanged. Property that qualified as agricultural the year before under different ownership is disqualified if the new owner does not timely apply. The assessor shall send a notice of disqualification to these owners, but shall accept a late application if filed within thirty (30) days of the notice of disqualification and accompanied by a late application fee of fifty dollars ($50.00).
- The assessor shall determine whether such land is agricultural land, and, if such a determination is made, the assessor shall classify and include it as such on the county tax roll.
- In determining whether any land is agricultural land, the assessor of property shall take into account, among other things, the acreage of such land, the productivity of such land, and the portion thereof in actual use for farming or held for farming or agricultural operation. The assessor may presume that a tract of land is used as agricultural land, if the land produces gross agricultural income averaging at least one thousand five hundred dollars ($1,500) per year over any three-year period in which the land is so classified. The presumption may be rebutted, notwithstanding the level of agricultural income by evidence indicating whether the property is used as “agricultural land” as defined in this part.
- An application for classification of land as agricultural land shall be made upon a form prescribed by the state board of equalization and shall set forth a description of the land, a general description of the use to which it is being put, and such other information as the assessor may require to aid the assessor in determining whether the land qualifies for classification as agricultural land.
- The assessor shall verify actual agricultural uses claimed for the property during the on-site review provided under § 67-5-1601. The assessor may at any time require other proof of use or ownership necessary to verify compliance with this part.
- Any person aggrieved by the denial of any application for the classification of land as agricultural land has the same rights and remedies for appeal and relief as are provided in the general statutes for taxpayers claiming to be aggrieved by the actions of assessors of property or boards of equalization.
Acts 1976, ch. 782, § 5; T.C.A., § 67-654; Acts 1989, ch. 56, § 1; 1992, ch. 661, §§ 6, 7; 1994, ch. 838, § 1; 1996, ch. 707, § 1; 1999, ch. 141, §§ 2, 3; 2001, ch. 152, § 1; 2008, ch. 971, § 1; 2008, ch. 1161, § 2.
Compiler's Notes. Acts 1996, ch. 707, § 2 provided that the 1996 amendment by that act shall apply to assessments under appeal to the state board of equalization on April 3, 1996.
Acts 1999, ch. 141, § 7 provided that the 1999 amendment by that act, which rewrote (a)(1) and (c), shall be effective for tax year 1999.
Acts 2008, ch. 1161, § 7 provided that if property is disqualified for use value classification solely as the result of the act, any rollback assessment shall be limited to tax savings accruing after June 13, 2008.
Law Reviews.
1996 Real Estate Legislation: What You Don't Know Can Hurt You (William R. Bruce), 32 Tenn. B.J. 12 (1996).
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
67-5-1006. Classification of forest land.
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- Any owner of land may apply for its classification as forest land by filing a written application with the assessor of property. The application must be filed by March 1. Reapplication thereafter is not required so long as the ownership as of the assessment date remains unchanged. Property that qualified as forest land the year before under different ownership is disqualified if the new owner does not timely apply. The assessor shall send a notice of disqualification to these owners, but shall accept a late application if filed within thirty (30) days of the notice of disqualification and accompanied by a late application fee of fifty dollars ($50.00).
- The assessor shall determine whether such land is forest land, and, if such a determination is made, the assessor shall classify and include it as such on the county tax roll.
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- In determining whether any land is forest land, the assessor of property shall take into account, among other things, the acreage of such land, the amount and type of timber on the land, the actual and potential growth rate of the timber, and the management practices being applied to the land and to the timber on it.
- The assessor of property may request the advice of the state forester in determining whether any land should be classified as forest land, and the state forester shall make such advice available.
- An application for classification of land as forest land shall be made upon a form prescribed by the state board of equalization, in consultation with the state forester, and shall include a description of the land, a general description of the uses to which it is being put, aerial photographs, if available, and such other information as the assessor of property or state forester may require to aid the assessor of property in determining whether the land qualifies for designation as forest land.
- Any person aggrieved by the denial of an application for the classification of land as forest land has the same rights and remedies for appeal and relief as are provided in the general statutes for taxpayers claiming to be aggrieved by the actions of assessors of property or boards of equalization.
Acts 1976, ch. 782, § 6; T.C.A., § 67-655; Acts 1989, ch. 56, § 2; 1999, ch. 141, § 4; 2000, ch. 599, § 1; 2001, ch. 152, § 2; 2008, ch. 971, § 1; 2008, ch. 1161, § 3. 2017, ch. 297, § 3.
Compiler's Notes. Acts 1999, ch. 141, § 7 provided that the 1999 amendment by that act, which rewrote (a)(1), shall be effective for tax year 1999.
Acts 2000, ch. 599, § 3, provided that the amendment by the act shall be effective for tax year 2000.
Acts 2008, ch. 1161, § 7 provided that if property is disqualified for use value classification solely as the result of the act, any rollback assessment shall be limited to tax savings accruing after June 13, 2008.
Acts 2017, ch. 297, § 4 provided that the act, which amended this section, shall apply to the tax year beginning January 1, 2017.
67-5-1007. Classification of open space.
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- The planning commission, in preparing a land use or comprehensive plan for the municipality or county, may designate upon such plan areas that it recommends for preservation as areas of open space land, other than lands currently in agricultural and forestry uses.
- Land included in any area so designated upon such plan as finally adopted may be classified as open space land for purposes of property taxation, if there has been no change in the use of such area that has adversely affected its essential character as an area of open space land between the date of the adoption of such plan and the date of such classification.
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- Any owner of land may apply for its classification as open space land by filing a written application with the assessor of property. The application must be filed by March 1. Reapplication thereafter is not required so long as the ownership as of the assessment date remains unchanged. Property that qualified as open space land the year before under different ownership is disqualified if the new owner does not timely apply. The assessor shall send a notice of disqualification to these owners, but shall accept a late application if filed within thirty (30) days of the notice of disqualification and accompanied by a late application fee of fifty dollars ($50.00).
- Such assessor shall determine whether there has been any change in the area designated as an area of open space land upon the plan of such municipality or county and, if the assessor determines that there has been no such change, the assessor shall classify such land as open space land and include it as such upon the tax rolls of the county.
- An application for classification of land as open space land shall be made upon a form prescribed by the state board of equalization and shall set forth a description of the land, a general description of the use to which it is being put, and such other information as the assessor may require to aid the assessor in determining whether such land qualifies for such classification.
- Any person aggrieved by the denial by an assessor of any application for the classification of land as open space land shall have the same rights and remedies for appeal and relief as are provided in the general statutes for taxpayers claiming to be aggrieved by the actions of assessors or boards of equalization.
Acts 1976, ch. 782, § 7; T.C.A., § 67-656; Acts 1989, ch. 56, § 3; 1999, ch. 141, § 5; 2000, ch. 599, § 2; 2001, ch. 152, § 3; 2008, ch. 1161, § 4.
Code Commission Notes.
Former subsection (b), concerning the state planning office's designation of land as open space land in the absence of local planning, was deleted as obsolete by authority of the code commission in 2003.
Compiler's Notes. Acts 1999, ch. 141, § 7 provided that the 1999 amendment by that act, which rewrote (c)(1), shall be effective for tax year 1999.
Acts 2000, ch. 599, § 3, provided that the amendment by the act shall be effective for tax year 2000.
Acts 2008, ch. 1161, § 7 provided that if property is disqualified for use value classification solely as the result of that act, any rollback assessment shall be limited to tax savings accruing after June 13, 2008.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
67-5-1008. Present use valuation — Capitalization of income method — Rollback taxes — Involuntary conversion of use.
- When a parcel of land has been classified by the assessor of property as agricultural, forest, or open space land under this part, it shall be subsequently considered that its current use for agricultural or timber purposes or as open space used for neither of these purposes is its immediate most suitable economic use, and assessment shall be based upon its value in that current use, rather than on value for some other use as may be determined in accordance with part 6 of this chapter. It is the responsibility of the applicant to promptly notify the assessor of any change in the use or ownership of the property that might affect its eligibility under this part.
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- After a parcel of land has been classified by the assessor of property as agricultural, forest, or open space land under this part, the assessor of property shall record it on a separate list for the classified property. The assessor may record with the register of deeds the application for the classification of the property. However, if the assessor does not record the application, then the property owner shall record with the register of deeds the application for the classification of the property. Any fees that may be required shall be paid by the property owner.
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Henceforth, the assessor shall appraise the land and compute the taxes each year based upon both:
- The twenty-five percent (25%) of appraised value applicable to property in the farm classification and present use value; and
- Farm classification and value as determined under part 6 of this chapter, but taxes shall be assessed and paid only on the basis of farm classification and present use value under this part.
- The taxes computed under part 6 of this chapter shall be used to compute the rollback taxes, as defined in § 67-5-1004 and as provided for in subsection (d).
- The general assembly finds that value as determined under subdivision (b)(2)(B) should not be deemed the value of property for any purpose other than a future assessment of rollback taxes, because it does not determine the actual tax liability of a qualifying owner at the time of valuation. Accordingly, value as determined under subdivision (b)(2)(B) shall not be deemed determinative of fair market value for any purpose other than the administration of property taxes under this title.
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- A parcel of land classified by the assessor as agricultural, forest or open space land under this part shall be valued by dividing three (3) into the sum of two (2) times the use value as defined in this subsection (c), plus the farm land value as defined in this subsection (c). The rate of increase in per acre present use values as determined under this subsection (c) shall not exceed a factor measured by the number of years since the last general reappraisal or updating of values in the county, times six percent (6%).
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Use value shall be determined by dividing:
- The annual agricultural income estimate for such parcel as determined by the division of property tax assessment by;
- The capitalization rate as determined in subdivision (c)(2)(C).
- For purposes of this part, “agricultural income estimate” means anticipated net return to land utilizing sound farming or forestry practices. In determining anticipated net return to land that is used for agricultural and forestry purposes, the division of property tax assessments shall consider farm income, or forestry income, soil productivity, topography, susceptibility to flooding, rental value and other factors that may serve to determine anticipated agricultural or forestry income. The annual agricultural income estimate for a parcel of open space land shall be the same as that for the least productive type of agricultural land.
- The capitalization rate shall be the maximum allowable rate on loans for terms in excess of five (5) years guaranteed by the federal Farm Service Agency or its successor, as of the assessment date for the year in which the use value schedule is being developed. The rate may be adjusted by no more than one hundred (100) basis points to reflect differences in land classes within a jurisdiction.
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Use value shall be determined by dividing:
- Farm land value shall be determined by the division of property assessments based solely on farm-to-farm sales least influenced by commercial, industrial, residential, recreational or urban development, the potential for such development, or any other speculative factors.
- The state board of equalization, upon petition by at least ten (10) owners of agricultural, forest or open space land, or upon petition of any organization representing ten (10) or more owners of agricultural, forest or open space land, shall convene a hearing to determine whether the capitalization rate has been properly determined by the division of property tax assessments, whether the agricultural income estimates determined by the division of property tax assessments are fair and reasonable, or if the farm land values have been determined in accordance with this section. Such hearing shall be held in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, part 3. The petition shall be filed at the office of the state board of equalization on or before twenty (20) days after the date the division of property assessments publishes notice of the availability of the proposed use value schedule in a newspaper of general circulation within the county.
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The appropriate assessor shall compute the amount of taxes saved by the difference in present use value assessment and value assessment under part 6 of this chapter, for each of the preceding three (3) years for agricultural and forest land, and for the preceding five (5) years for open space land, and the assessor shall notify the trustee that such amount is payable, if:
- Such land ceases to qualify as agricultural land, forest land, or open space land as defined in § 67-5-1004;
- The owner of such land requests in writing that the classification as agricultural land, forest land, or open space land be withdrawn;
- The land is covered by a duly recorded subdivision plat or an unrecorded plan of development and any portion is being developed; except that, where a recorded plat or an unrecorded plan of development contains phases or sections, only the phases or sections being developed are disqualified;
- An owner fails to file an application as required by this part;
- The land exceeds the acreage limitations of § 67-5-1003(3); or
- The land is conveyed or transferred and the conveyance or transfer would render the status of the land exempt.
- When the tax rate for the most recent year of rollback taxes is not yet available, the assessor shall calculate the amount of taxes saved for the most recent year by using the last made assessment and rate fixed according to law, and the trustee shall accept tender of the amount determined to be owing.
- The amount of tax savings calculated under this subsection (d) shall be the rollback taxes due as the result of disqualification or withdrawal of the land from classification under this part. Rollback taxes shall be payable from the date written notice is provided by the assessor, but shall not be delinquent until March 1 of the following year. When the assessor determines there is liability for rollback taxes, the assessor shall give written notice to the tax collecting official identifying the basis of the rollback taxes and the person the assessor finds to be responsible for payment, and the assessor shall provide a copy of the notice to the responsible person. Rollback taxes shall be a first lien on the disqualified property in the same manner as other property taxes, and shall also be a personal responsibility of the current owner or seller of the land as provided in this part. The assessor may void the rollback assessment, if it is determined that the assessment was imposed in error, except there shall be no refund of rollback taxes that have been collected at the request of a buyer or seller at the time of sale. Liability for rollback taxes, but not property values, may be appealed to the state board of equalization by March 1 of the year following the notice by the assessor. However, property values fixing the amount of rollback taxes may only be appealed as otherwise provided by law.
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- If, under subdivision (d)(1), only a portion of a parcel is subject to rollback taxes, the assessor of property shall apportion the assessment of such parcel on the first tax roll prepared after such taxes become payable, and enter the apportioned amount attributable to such portion as a separately assessed parcel on the tax roll.
- Such apportionment shall be made for each of the years to which the rollback taxes apply.
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The appropriate assessor shall compute the amount of taxes saved by the difference in present use value assessment and value assessment under part 6 of this chapter, for each of the preceding three (3) years for agricultural and forest land, and for the preceding five (5) years for open space land, and the assessor shall notify the trustee that such amount is payable, if:
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- In the event that any land classified under this part as agricultural, forest, or open space land or any portion thereof is converted to a use other than those stipulated herein by virtue of a taking by eminent domain or other involuntary proceeding, except a tax sale, such land or any portion thereof involuntarily converted to such other use shall not be subject to rollback taxes by the landowner, and the agency or body doing the taking shall be liable for the rollback taxes. Property transferred and converted to an exempt or nonqualifying use shall be considered to have been converted involuntarily if the transferee or an agent for the transferee sought the transfer and had power of eminent domain.
- In the event the land involuntarily converted to such other use constitutes only a portion of a parcel so classified on the assessment rolls, the assessor shall apportion the assessment and enter the portion involuntarily converted as a separately assessed parcel on the appropriate portion of the assessment roll. For as long as the landowner continues to own the remaining portion of such parcel and for as long as the landowner's lineal descendants collectively own at least fifty percent (50%) of the remaining portion of such parcel, the remaining portion so owned shall not be disqualified from use value classification under this part solely because it is made too small to qualify as the result of the involuntary proceeding.
- In the event that any land classified under this part as agricultural, forest, or open space land or any portion thereof is acquired by a bank, as defined in § 45-2-107(a)(1)(A), by a savings and loan association, as defined in § 45-3-104(a)(1), or by a holder of a deed of trust or mortgage in satisfaction or partial satisfaction of a debt previously contracted in good faith, such land or any portion thereof so acquired shall not be subject to rollback taxes assessed against or payable by the bank or savings and loan association, and shall be subject to rollback taxes, only if the land is used for a non-green belt purpose or after such land is sold by the bank, savings and loan association or a holder of a deed of trust or mortgage and then only as provided in subsection (d). This subdivision (e)(3) shall likewise apply to the temporary transfer of property classified under this part to a trustee in bankruptcy.
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- If any property or any portion of the property classified under this part as agricultural, forest, or open space land is disqualified by a change in the law or as a result of an assessor's correction of a prior error of law or fact, then the property or any portion of the property that is disqualified shall not be assessable for rollback taxes. The property owner shall be liable for rollback taxes under these circumstances if the erroneous classification resulted from any fraud, deception, or intentional misrepresentation, misstatement, or omission of full statement by the property owner or the property owner's designee.
- Nothing in this subdivision (e)(4) shall relieve a property owner of liability for rollback taxes if other disqualifying circumstances occur before the property has been assessed at market value for three (3) years.
- If the sale of agricultural, forest or open space land will result in such property being disqualified as agricultural, forest or open space land due to conversion to an ineligible use or otherwise, the seller shall be liable for rollback taxes, unless otherwise provided by written contract. If the buyer declares in writing at the time of sale an intention to continue the greenbelt classification but fails to file any form necessary to continue the classification within ninety (90) days from the sale date, the rollback taxes shall become solely the responsibility of the buyer.
- For purposes of valuation pursuant to this section, the maximum acreage available for any one (1) owner classified as forest or open space land under this part shall be one thousand five hundred (1,500) acres. This subsection (g) shall operate to change the classification of any such land in excess of one thousand five hundred (1,500) acres that has been so classified under this part prior to July 1, 1984.
- Property passing to a lineal descendant of a deceased greenbelt owner, by reason of the death of the greenbelt owner, shall not be subject to rollback solely because the total greenbelt acreage of the new owner exceeds the maximum under § 67-5-1003, or will exceed the maximum following the transfer. Property exceeding the limit in these circumstances shall be disqualified from greenbelt classification, but shall not be assessable for rollback unless other disqualifying circumstances occur before the property has been assessed at market value three (3) years.
Acts 1976, ch. 782, § 8; 1979, ch. 149, §§ 1, 2; 1982, ch. 818, § 1; 1983, ch. 267, § 1; T.C.A., § 67-657; Acts 1987, ch. 279, §§ 1, 2, 4; 1992, ch. 661, §§ 8-12; 1995, ch. 459, §§ 1, 2; 1997, ch. 160, § 1; 1998, ch. 683, § 1; 1999, ch. 141, § 6; 2001, ch. 152, §§ 4-7; 2002, ch. 632, §§ 2-5; 2006, ch. 861, § 2; 2008, ch. 971, § 1; 2008, ch. 1161, §§ 5, 6; 2010, ch. 928, § 1; 2014, ch. 589, § 1; 2016, ch. 685, § 1; 2019, ch. 322, § 1.
Code Commission Notes.
Former subdivisions (c)(1)(A) and (B) were deleted as obsolete by authority of the code commission in 2006.
Compiler's Notes. Acts 1995, ch. 459, § 3 provided that the 1995 amendment changes in (c)(2)(C) shall apply beginning with the 1996 tax year; however, the 1995 amendment changes in (e)(2) also apply to the 1995 tax year.
Acts 1999, ch. 141, § 7 provided that the 1999 amendment by that act, which added the last sentence in (a), shall be effective for tax year 1999.
Acts 2001, ch. 152, § 8 provided that the amendments by that act shall be effective for tax year 2001.
Acts 2002, ch. 632, § 6 provided that there shall be no rollback assessment when property is disqualified solely as a result of amendments by the act to §§ 67-5-1004(1)(B) and 67-5-1008(d)(2)-(4) and (e)(3), so long as the property continues to be used in a qualifying use and is not the subject of a sale or transfer which would cause the property to violate the minimum size or maximum acreage provisions of this part. Such disqualified property shall be at risk of a rollback assessment until it has been assessed at market value under part 6 of this chapter for three (3) years, and during such time a rollback assessment shall be made if the property ceases to be used in a qualifying use or is the subject of a sale or transfer which would cause the property to violate the minimum size or maximum acreage provisions of this part.
Acts 2006, ch. 861, § 3 provided that the act, in addition to prospective applications, shall apply to applications pending before or under appeal to the state board of equalization, applications for which the executive secretary or state board designee has made a determination but the period in which to appeal under § 67-5-1501(c) has not run, or applications for which an appeal has been filed in court.
Acts 2008, ch. 1161, § 7 provided that if property is disqualified for use value classification solely as the result of that act, any rollback assessment shall be limited to tax savings accruing after June 13, 2008.
Amendments. The 2019 amendment, in (b)(1), deleted the former first sentence, which read: “After a parcel of land has been classified by the assessor of property as agricultural, forest, or open space land under this part, the assessor of property shall record it on a separate list for such classified property, and the assessor shall record with the register of deeds the application for such classification of the property”, and added the first three sentences.
Effective Dates. Acts 2019, ch. 322, § 2. May 8, 2019.
Law Reviews.
Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).
Attorney General Opinions. Rollback taxes are not due when greenbelt property is conveyed to a government entity and that entity maintains the property's greenbelt use, OAG 05-046 (4/12/05).
Greenbelt rollback tax liability on land converted to exempt status. OAG 10-71, 2010 Tenn. AG LEXIS 77 (5/21/10).
Greenbelt rollback tax liability on land purchased through the wetlands acquisition fund. OAG 12-51, 2012 Tenn. AG LEXIS 50 (5/9/12).
NOTES TO DECISIONS
1. Constitutionality.
The valuation formula in T.C.A. § 67-5-1008 is constitutional. Marion County v. State Bd. of Equalization, 710 S.W.2d 521, 1986 Tenn. App. LEXIS 2768 (Tenn. Ct. App. 1986).
2. Construction.
The value arrived at under T.C.A. § 67-5-1008 is equal to the value that would result from the general statute, T.C.A. § 67-5-601. Marion County v. State Bd. of Equalization, 710 S.W.2d 521, 1986 Tenn. App. LEXIS 2768 (Tenn. Ct. App. 1986).
67-5-1009. Assessment of open space easement — Basis of classification.
-
Where an open space easement as defined in § 67-5-1004 has been executed and recorded for the benefit of a local government or a qualified conservation organization as provided in this section or as provided in § 11-15-107, the assessor of property shall henceforth assess the value and classification of such land, and taxes shall be computed and recorded each year both on the basis of:
- Farm classification and value in its existing use under this part, taking into consideration the limitation on future use as provided for in the easement; and
- Such classification and value, under part 6 of this chapter, as if the easement did not exist; but taxes shall be assessed and paid only on the basis of farm classification and fair market value in its existing use, taking into consideration the limitation on future use as provided for in the easement.
-
-
To serve as the basis of a classification as open space land pursuant to this part, an open space easement executed for the benefit of a local government shall be preceded by a consultation with a local planning commission and shall be subject to cancellation by the local governing body, only if all of the following conditions are met:
- The easement has been in effect for a period of at least ten (10) years;
- The local governing body determines that the open space is not needed in that location and that the public interest would be better served by cancellation of the easement;
- The local planning commission finds that the open space is not needed in that location and that the public interest would be better served by the cancellation of the easement; and
- The owner has paid to the county and municipality in which the land is situated an amount equal to the difference between the taxes actually paid during the ten (10) preceding years and the taxes computed during the ten (10) preceding years on the basis of fair market value and classification of the land as if the easement had not existed, as provided for in this section.
- Nothing in this subsection (b) shall be deemed to prohibit the owner and the local government from agreeing to additional conditions that must be met before cancellation is allowed.
-
To serve as the basis of a classification as open space land pursuant to this part, an open space easement executed for the benefit of a local government shall be preceded by a consultation with a local planning commission and shall be subject to cancellation by the local governing body, only if all of the following conditions are met:
-
- Open space land, as defined in § 67-5-1004, that comprises at least fifteen (15) contiguous acres may also qualify for classification and assessment under this part, if the owner grants an open space easement to a qualified conservation organization and the grantee organization accepts the easement in writing.
- Any portion of the land that is in actual use as a home site or any other non-open space use shall not qualify as open space land for purposes of this section.
- If the owner of the land reserves a portion of the land for future development, construction of improvements for private use, or any other non-open space use, then that portion shall lose eligibility as open space land upon commencement of the non-open space use and the owner shall pay to the affected county and city the property taxes saved as a result of the open space classification of that portion of the land and an additional amount equal to ten percent (10%) of the taxes saved.
- Any written agreement for easement entered into after July 1, 2007, shall contain a disclosure that rollback taxes may be due if the easement is cancelled.
- A qualified conservation organization is a nonprofit organization that is approved by the Tennessee heritage conservation trust fund board of trustees and meets the eligibility criteria established by the trustees for recipients of trust fund grants or loans. For purposes of this section, a qualified conservation organization also includes any department or agency of the United States government which acquires an easement pursuant to law for the purpose of restoring or conserving land for natural resources, water, air and wildlife.
- Any owner of open space easement land who seeks to have the land classified for assessment pursuant to this part shall apply to the assessor as provided in § 67-5-1007(b) and record a copy of the easement and the grantee's written acceptance with the register of deeds.
Acts 1976, ch. 782, § 10; T.C.A., § 67-658; Acts 1996, ch. 809, §§ 1, 2; 2007, ch. 514, §§ 1, 2; 2014, ch. 846, § 1.
Compiler's Notes. Pursuant to Article III, Section 18 of the Constitution of Tennessee, Acts 2014, ch. 846 took effect on April 28, 2014.
Cross-References. Discontinuance of open space easements, § 11-15-108.
67-5-1010. Noncompliance by assessor.
In the event that any assessor of property fails to properly carry out the assessor of property's duties in accordance with this part, all compensation to such assessor shall be discontinued pursuant to § 67-5-305.
Acts 1982, ch. 818, § 2; T.C.A., § 67-659; Acts 2008, ch. 971, § 1.
Compiler's Notes. Acts 2008, ch. 971, § 1 provided that the code commission is directed to change all references to “tax assessor”, wherever such references appear, to “assessor of property”, as such sections are amended or volumes are replaced. See § 1-1-116.
67-5-1011. Land classified prior to July 1, 1984 — Classification change in certain counties.
In counties having a population according to the 1980 federal census or any subsequent federal census of not less than thirteen thousand nine hundred (13,900) nor more than fourteen thousand (14,000), §§ 67-5-1002(5), 67-5-1003(3), and 67-5-1004(7), concerning the maximum limit of acreage available for any one (1) owner under this part, shall operate to change the classification of any land which has been classified under this part prior to July 1, 1984.
Acts 1987, ch. 207, § 1.
Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Acts 1987, ch. 207, § 3 provided that this section shall have no effect unless it is approved by a two-thirds (2/3) vote of the county legislative body of any county to which it may apply, and that its approval or non-approval shall be proclaimed by the presiding officer of the county legislative body and certified by him to the secretary of state.
67-5-1012 — 67-5-1049. [Reserved.]
- In counties having a population according to the 1980 federal census or any subsequent federal census of not less than fourteen thousand nine hundred (14,900) nor more than fourteen thousand nine hundred twenty-five (14,925), §§ 67-5-1002(5), 67-5-1003(3) and 67-5-1004(7), concerning the maximum limit of acreage available for any one (1) owner under this part, shall operate to change the classification of any land which has been classified under this part prior to July 1, 1984.
- This section shall have no effect unless it is approved by a two-thirds (2/3) vote of the county legislative body of any county to which it may apply. Its approval or nonapproval shall be proclaimed by the presiding officer of the county legislative body and certified by the presiding officer to the secretary of state.
Acts 1985, ch. 199, §§ 1, 3.
Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Part 11
Classification and Assessment — Stock [Repealed]
67-5-1101. [Repealed.]
Acts 1907, ch. 602, § 24; Shan., § 790; Acts 1927, ch. 39, § 1; Code 1932, § 1391; Acts 1968, ch. 431, § 8; 1977, ch. 140, § 2; T.C.A. (orig. ed.), § 67-715; Acts 2000, ch. 870, § 2; 2009, ch. 530, § 106, repealed by Acts 2011, ch. 438, § 1, effective June 10, 2011.Acts 1907, ch. 602, § 24; Shan., §§ 790, 790a1, 790a3, 791, § 791a1, § 791a2, § 791a3, § 791a4, 792, § 792a1, § 792a2, § 792a3; Acts 1927, ch. 39, § 1; Code 1932, §§ 1391-1398, 1400-1403; Acts 1953, ch. 118, § 2; Acts 1968, ch. 431, § 8; Acts 1953, ch. 118, § 1; Acts 1971, ch. 434, § 1; 1977, ch. 140, §§ 2-6; T.C.A. (orig. ed.), §§ 67-715 – 67-718, 67-720-67–728; Acts 2000, ch. 870, § 2; Acts 2008, ch. 1069, § 1; 2009, ch. 530, § 106; 2011, ch. 93, § 2, repealed by Acts 2011, ch. 438, § 1, effective June 10, 2011.
Compiler's Notes. Former part 11, §§ 67-5-1101 — 67-5-1113, concerned stock classification and assessment.
Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chapter 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in title 67, chapter 5, part 11 and §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to title 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
Section 67-5-1105 was amended by two acts in 2011, first by ch. 93, § 2, effective April 21, 2011, then by ch. 438, § 1, effective June 10, 2011, neither of the acts referring to the other. Acts 2011, ch. 93 amended this section by adding the following sentence to the end of § 67-5-1105(b): “Failure of the assessor to send a schedule or failure of the taxpayer to receive a schedule shall not relieve or excuse any taxpayer from filing such schedule by March 1, nor shall it prevent the assessor from issuing a forced assessment against the taxpayer.” Acts 2011, ch. 438 deleted title 67, ch. 5, part 11 in its entirety; therefore, the last sentence of § 67-5-1105(b) was in effect from April 21, 2011, until June 10, 2011.
67-5-1102. [Repealed.]
Acts 1907, ch. 602, § 24; Shan., § 790; Acts 1927, ch. 39, § 1; Code 1932, § 1391; Acts 1953, ch. 118, § 1; 1977, ch. 140, § 3; T.C.A. (orig. ed.), § 67-716, repealed by Acts 2011, ch. 438, § 1, effective June 10, 2011.
Compiler's Notes. Former part 11, §§ 67-5-1101 — 67-5-1113, concerned stock classification and assessment.
Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chatper 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in title 67, chapter 5, part 11 and §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to itle 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
67-5-1103. [Repealed.]
Acts 1907, ch. 602, § 24; Shan., § 709a1; Acts 1927, ch. 39, § 1; Code 1932, § 1392; Acts 1971, ch. 434, § 1; 1977, ch. 140, § 4; T.C.A. (orig. ed.), § 67-717, repealed by Acts 2011, ch. 438, § 1, effective June 10, 2011.
Compiler's Notes. Former part 11, §§ 67-5-1101 — 67-5-1113, concerned stock classification and assessment.
Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chatper 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in title 67, chapter 5, part 11 and §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to itle 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
67-5-1104. [Repealed.]
Acts 1907, ch. 602, § 24; Shan., § 790a3; Acts 1927, ch. 39, § 1; Code 1932, § 1393; T.C.A. (orig. ed.), § 67-718, repealed by Acts 2011, ch. 438, § 1, effective June 10, 2011.
Compiler's Notes. Former part 11, §§ 67-5-1101 — 67-5-1113, concerned stock classification and assessment.
Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chatper 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in title 67, chapter 5, part 11 and §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to itle 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
67-5-1105. [Repealed.]
Acts 1907, ch. 602, § 24; Shan., § 791; Acts 1927, ch. 39, § 1; Code 1932, § 1394; Acts 1953, ch. 118, § 2; T.C.A. (orig. ed.), § 67-720; Acts 2008, ch. 1069, § 1; 2011, ch. 93, § 2.
Compiler's Notes. Former part 11, §§ 67-5-1101 — 67-5-1113, concerned stock classification and assessment.
Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chatper 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in title 67, chapter 5, part 11 and §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to itle 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
Section 67-5-1105 was amended by two acts in 2011, first by ch. 93, § 2, effective April 21, 2011, then by ch. 438, § 1, effective June 10, 2011, neither of the acts referring to the other. Acts 2011, ch. 93 amended this section by adding the following sentence to the end of § 67-5-1105(b): “Failure of the assessor to send a schedule or failure of the taxpayer to receive a schedule shall not relieve or excuse any taxpayer from filing such schedule by March 1, nor shall it prevent the assessor from issuing a forced assessment against the taxpayer.” Acts 2011, ch. 438 deleted title 67, ch. 5, part 11 in its entirety; therefore, the last sentence of § 67-5-1105(b) was in effect from April 21, 2011, until June 10, 2011.
67-5-1106. [Repealed.]
Acts 1907, ch. 602, § 24; Shan., § 792; Code 1932, § 1400; Acts 1977, ch. 140, § 5; T.C.A. (orig. ed.), § 67-721, repealed by Acts 2011, ch. 438, § 1, effective June 10, 2011.
Compiler's Notes. Former part 11, §§ 67-5-1101 — 67-5-1113, concerned stock classification and assessment.
Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chatper 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in title 67, chapter 5, part 11 and §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to itle 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
67-5-1107. [Repealed.]
Acts 1907, ch. 602, § 24; Shan., § 791a1; Code 1932, § 1395; T.C.A. (orig. ed.), § 67-722, repealed by Acts 2011, ch. 438, § 1, effective June 10, 2011.
Compiler's Notes. Former part 11, §§ 67-5-1101 — 67-5-1113, concerned stock classification and assessment.
Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chatper 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in title 67, chapter 5, part 11 and §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to itle 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
67-5-1108. [Repealed.]
Acts 1907, ch. 602, § 24; Shan., § 791a2; Code 1932, § 1396; T.C.A. (orig. ed.), § 67-723, repealed by Acts 2011, ch. 438, § 1, effective June 10, 2011.
Compiler's Notes. Former part 11, §§ 67-5-1101 — 67-5-1113, concerned stock classification and assessment.
Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chatper 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in title 67, chapter 5, part 11 and §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to itle 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
67-5-1109. [Repealed.]
Acts 1907, ch. 602, § 24; Shan., § 791a3; Code 1932, § 1397; T.C.A. (orig. ed.), § 67-724, repealed by Acts 2011, ch. 438, § 1, effective June 10, 2011.
Compiler's Notes. Former part 11, §§ 67-5-1101 — 67-5-1113, concerned stock classification and assessment.
Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chatper 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in title 67, chapter 5, part 11 and §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to itle 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
67-5-1110. [Repealed.]
Acts 1907, ch. 602, § 24; Shan., § 791a4; Code 1932, § 1398; T.C.A. (orig. ed.), § 67-725, repealed by Acts 2011, ch. 438, § 1, effective June 10, 2011.
Compiler's Notes. Former part 11, §§ 67-5-1101 — 67-5-1113, concerned stock classification and assessment.
Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chatper 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in title 67, chapter 5, part 11 and §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to itle 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
67-5-1111. [Repealed.]
Acts 1907, ch. 602, § 24; Shan., § 792a1; Code 1932, § 1401; Acts 1977, ch. 140, § 6; T.C.A. (orig. ed.), § 67-726, repealed by Acts 2011, ch. 438, § 1, effective June 10, 2011.
Compiler's Notes. Former part 11, §§ 67-5-1101 — 67-5-1113, concerned stock classification and assessment.
Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chatper 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in title 67, chapter 5, part 11 and §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to itle 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
67-5-1112. [Repealed.]
Acts 1907, ch. 602, § 24; Shan., § 792a2; Code 1932, § 1402; T.C.A. (orig. ed.), § 67-727, repealed by Acts 2011, ch. 438, § 1, effective June 10, 2011.
Compiler's Notes. Former part 11, §§ 67-5-1101 — 67-5-1113, concerned stock classification and assessment.
Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chatper 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in title 67, chapter 5, part 11 and §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to itle 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
67-5-1113. [Repealed.]
Acts 1907, ch. 602, § 24; Shan., § 792a3; Code 1932, § 1403; T.C.A. (orig. ed.), § 67-728, repealed by Acts 2011, ch. 438, § 1, effective June 10, 2011.
Compiler's Notes. Former part 11, §§ 67-5-1101 — 67-5-1113, concerned stock classification and assessment.
Acts 2011, ch. 438, § 2 provided that it is the intent of the general assembly by the act to exercise its discretion granted in the Tennessee Constitution, Art. II, § 28, to establish the manner in which intangible personal property of financial institutions other than banks and insurance companies, and intangible personal property of cemetery companies formerly assessed under title 67, chapter 5, part 11, is assessed and taxed. The allocation of taxes to local governments provided in the act shall be in lieu of the taxation of the subclassification of intangible personal property designated as “shares of stock of stockholders of any loan company, or investment company, or cemetery company” and in lieu of all taxes on the redeemable or cash value of all their outstanding shares of capital stock, loans, accounts or certificates of investment, by whatever name called; provided, that such companies shall nonetheless continue to be subject to ad valorem taxes on their real and tangible personal property and shall continue to be subject to all other taxes (other than the tax deleted in title 67, chatper 5, part 11) to which they are currently subject.
Acts 2011, ch. 438, § 6 provided that the allocation of excise taxes to counties and cities provided in title 67, chapter 5, part 11 and §§ 67-4-2020 — 67-4-2022 shall be limited to one million dollars ($1,000,000) for 2011, and distribution shall not be made before July 1, 2012. If total sharing is diminished for any county as the result of this cap, counties with certified 2010 assessments pursuant to itle 67, chapter 5, part 11 will share first up to the amount of property tax billed on the 2010 assessments, and the remaining counties shall share the balance in proportion to their share in the original allocation.
Acts 2011, ch. 438, § 7 provided that the act shall not affect rights or duties that matured, liabilities or penalties that were incurred, or proceedings begun before their effective date, except as otherwise therein specifically provided.
Acts 2011, ch. 438, § 8 provided that if any provision of the act or the application thereof to any person or circumstance is held invalid on the basis that the legislature has not properly exercised its authority, then all provisions and applications of the act are declared to be invalid and void.
Acts 2011, ch. 438, § 9 provided that the act shall apply both to assessments made under title 67, chapter 5, part 11, and to collections received under title 67, chapter 4, part 20, on and after January 1, 2011.
Part 12
Classification and Assessment — Insurance Companies
67-5-1201. Property and stock taxable.
The corporate property and capital stock employed in Tennessee of every insurance company whose principal office is located in the state shall be taxed according to its value, that value to be ascertained as provided in this part.
Acts 1968, ch. 431, § 1; T.C.A., § 67-729.
Cross-References. Taxation authorized, Tenn. Const., art. II, § 28.
67-5-1202. Place of assessment.
The corporate property and capital stock referred to in § 67-5-1201 shall be assessed at the following places:
- The real property and tangible personal property shall be assessed and taxed where situated; and
- The balance of such corporate property and capital stock shall be assessed and taxed in the county or civil district in which the principal office of such company is maintained.
Acts 1968, ch. 431, § 2; T.C.A., § 67-730.
67-5-1203. Determination of value.
- The value of such real property and tangible personal property shall be ascertained in the same manner as the real property and tangible personal property of other taxpayers.
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The value of the balance of the corporate property and capital stock employed in Tennessee by an insurance company with stockholders shall be ascertained in the following manner:
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The assessor shall first determine the aggregate amount of the issued and outstanding capital stock and surplus of such company as shown on its annual statement and shall deduct therefrom:
- One-fourth (¼) the sum of the value of the property held at the end of each calendar quarter by such company which is exempt from ad valorem property taxation under any law of this state or of the United States; and
- The assessed value of all the real and tangible personal property of such company situated in and having a permanent situs in other states;
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The assessor shall then apportion such remaining value to this state on the basis of the smaller of the following two (2) ratios:
- The ratio which the direct premiums and annuity considerations received by such company from policies on persons residing in or property located in this state during the preceding calendar year bear to the total premiums, including premiums for reinsurance assumed, and annuity considerations received by such company during such year from all sources; or
- The ratio which the aggregate direct premiums and annuity considerations received by all companies subject to this part from policies on persons residing in or property located in this state during the preceding calendar year bear to the aggregate total premiums, including premiums for reinsurance assumed, and annuity considerations received by all such companies during such year from all sources, which ratio shall be computed and published by the commissioner of commerce and insurance on or before April 15 of each year;
-
From such apportioned value, the assessor shall deduct:
- The assessed value of all real property and tangible personal property of such company otherwise assessed or returned for taxation in Tennessee; and
-
The assessed value of all real property in Tennessee occupied by such company as its principal office under a lease which provides that all ad valorem taxes on such property shall be paid by such company, and which has been registered in the county where such principal office is located;
and the remainder shall constitute the value of the balance of the corporate property and the capital stock employed in Tennessee by such company.
-
The assessor shall first determine the aggregate amount of the issued and outstanding capital stock and surplus of such company as shown on its annual statement and shall deduct therefrom:
-
- In the case of an insurance company without stockholders, the value of the corporate property of such company for purposes of this section, excluding real property and tangible personal property, shall be equal to the total dividends paid to policyholders in the preceding calendar year.
- For purposes of this subsection (c), “dividends” do not include returns or reductions of premiums or credits applied to premiums.
- The assessor shall make the assessment on such value at the same percentage or ratio of assessment to value of property as was provided by law for the year 1972.
Acts 1968, ch. 431, § 3; 1973, ch. 226, § 9; T.C.A., § 67-731; Acts 2013, ch. 328, §§ 1, 2.
Compiler's Notes. Acts 2013, ch. 328, § 3 provided that: (a) The act, which amended this section, shall apply to all assessments issued under this part regardless of the year in which the assessment applies.
The act shall not apply to an insurance company which, after May 13, 2013, is either:
- Converted from a stock insurance company; or
- Organized to receive the assets of a stock insurance company.
67-5-1204. New insurance companies — Application.
- During the first fifteen (15) full years an insurance company is in business, its apportionment ratio, determined in accordance with § 67-5-1203(b)(2), shall be reduced proportionately at the rate of one-fifteenth (1/15) for each full year that fifteen (15) exceeds the number of full years it has been in business.
- The period of fifteen (15) full years shall be measured from the earliest date the company, or any predecessor insurance company of which the company is the continuing corporation, was authorized and qualified to do insurance business subject to the maximum fifteen (15) years of reduced assessments as set forth in subsection (c).
- This section shall not apply to any insurance company formed as a successor in interest to any insurance company that has already received a reduction in its apportionment ratio for the entirety of the fifteen (15) years permitted pursuant to subsection (a); provided, however, that any insurance company formed as a successor in interest in the year 2006 shall be entitled to receive the reduction to its apportionment ratio provided in subsection (a) during the first five (5) full years of its existence to the same extent as a new insurance company not formed as a successor in interest.
Acts 1968, ch. 431, § 4; T.C.A., § 67-732; Acts 2009, ch. 361, §§ 1, 2.
67-5-1205. Elements included in valuation of stock.
- The value of the corporate property and capital stock of each company subject to this part shall be construed as including all the tangible and intangible value of such company.
- The assessment and taxation of such corporate property and capital stock under this part shall be in lieu of the taxation of the income derived from such corporate property and capital stock and of the assessment and taxation of the shares of stock of such company as the personal property of its stockholders.
- No person shall be taxed on the income derived from any stock which constitutes a part of the capital stock of any insurance company which is itself subject to this part or which has a wholly-owned subsidiary which is subject to this part.
Acts 1968, ch. 431, § 5; T.C.A., § 67-733.
67-5-1206. Assessment schedule — Reporting schedule — Forced assessment — Remedies.
-
The president or chief financial officer of each company subject to this part shall fill out and furnish under oath to the assessor of the county in which the principal office of such company is maintained an assessment schedule in writing, which schedule shall contain the following information:
- The number of shares of each class of capital stock issued and outstanding and the par value per share;
- The amount of surplus, including special surplus funds, paid-in and contributed surplus and unassigned surplus;
- An itemized statement of the value of all property which is exempt from ad valorem taxation by any law of this state or of the United States, showing the appropriate code section granting the exemption for each item;
- An itemized statement of the assessed value of all real property and tangible personal property having a situs outside Tennessee, showing the location of each item;
- An itemized statement of the assessed value of all real property and tangible personal property having a situs in Tennessee, showing the location of each item;
- A statement of the assessed value of all real property in Tennessee occupied by such company as its principal office under a lease, together with a copy of such lease;
- A statement of the date such company was first authorized and qualified to do insurance business, or, if such company is the continuing corporation resulting from a merger or consolidation, a statement of the earliest date its predecessor corporations were authorized and qualified to do insurance business; and
- Such other facts pertaining to the value of its corporate property and capital stock as may be deemed necessary or material by the assessor.
- The assessment schedule filed pursuant to this section shall be derived from, and consistent with, the annual statement of such company as of the last day of the preceding calendar year as filed with the commissioner of commerce and insurance.
- The assessor shall furnish by February 1 a reporting schedule in a form approved by the state board of equalization to each company subject to assessment under this part, and the schedule shall be completed and returned by the company by March 1 of the year for which the assessment is to be made. A taxpayer who fails, refuses or neglects to complete, sign, and file the schedule with the assessor of property, as provided in subsection (a), shall be deemed to have waived objections to the forced assessment determined by the assessor, subject only to the remedies provided in subsection (d). In determining a forced assessment, the assessor shall consider available evidence indicative of the assessable value of property assessable to the taxpayer under this section, and having determined the assessable value of property assessable to the taxpayer under this section, the assessor shall give the taxpayer notice of the assessment by United States mail, addressed to the last known address of the taxpayer, or the taxpayer's agent, at least ten (10) calendar days before the local board of equalization commences its annual session. Failure of the assessor to send a schedule or failure of the taxpayer to receive a schedule shall not relieve or excuse any taxpayer from filing such schedule by March 1, nor shall it prevent the assessor from issuing a forced assessment against the taxpayer.
-
If a forced assessment is shown to exceed the assessable value of the taxpayer's property, then the taxpayer shall have the following remedies:
- The taxpayer may appeal to the county board of equalization pursuant to § 67-5-1407, but must present a completed schedule as otherwise provided in this section;
- If the deadline to appeal to the county board of equalization has expired, then the taxpayer may request the assessor to mitigate the forced assessment by reducing the forced assessment to the assessable value of the taxpayer's assessable property plus twenty-five percent (25%), so long as the failure to file the schedule or failure to timely appeal to the county board of equalization was not the result of gross negligence or willful disregard of the law. Mitigation of the forced assessment shall follow the procedure provided and be subject to the deadlines provided in § 67-5-509. Gross negligence shall be presumed if notice of the forced assessment, in a form approved by the state board of equalization, was sent certified mail, return receipt requested, to the taxpayer's last known address on file with the assessor.
- Whether or not an assessor's error affected the original assessment, the assessor may correct a forced assessment using the procedure provided and subject to the deadlines provided in § 67-5-509, upon determining that the taxpayer was not in business as of the assessment date for the year at issue, and upon determining that the taxpayer did not own property assessable pursuant to this part as of the assessment date for the year at issue.
- The taxpayer may amend a schedule timely filed with the assessor in the same manner provided for tangible personal property returns.
Acts 1968, ch. 431, § 6; T.C.A., § 67-734; Acts 2008, ch. 1069, § 2; 2011, ch. 93, § 3; 2012, ch. 571, § 2.
Compiler's Notes. Acts 2008, ch. 1069, § 3 provided that the act shall apply to assessments made for tax year 2009 and thereafter.
67-5-1207. Minimum assessment.
In no event shall the assessment of the balance of the corporate property and capital stock of any company under § 67-5-1203(b), in any year up to and including the year 1980, be less than the assessment of the shares of stock of such company for the year 1967, under this part, or, in the case of a corporation which is the continuing corporation resulting from a merger or consolidation, less than the aggregate assessment of the shares of stock of all its predecessor corporations for the year 1967, under this part.
Acts 1968, ch. 431, § 7; T.C.A., § 67-735.
67-5-1208. Nonseverability.
If any provision of this part and the 1968 amendments to §§ 67-5-1101 [repealed] and 67-2-104 or the application thereof to any person or circumstance is held invalid, such provision shall not be severable from this part and the 1968 amendments to §§ 67-5-1101 [repealed] and 67-2-104 and the whole of such provisions shall fail and be inoperative.
Acts 1968, ch. 431, § 9; T.C.A., § 67-736.
Compiler's Notes. Section 67-5-1101, referred to in this section, was repealed by Acts 2011, ch. 438, § 1, effective June 10, 2011.
67-5-1209. Application of part to pure captive insurance company.
The tax levied by this part shall not apply to the balance of the corporate property and capital stock, otherwise subject to valuation and assessment under §§ 67-5-1202(2) and 67-5-1203(b), of any pure captive insurance company, as defined in § 56-13-102 or of any entity operating in a similar manner to a pure captive insurance company such that fifty-one percent (51%) or more of its direct written premium revenue is from an affiliated company, as defined in § 56-13-102, or an associated company, as defined in § 56-13-102.
Acts 2008, ch. 1106, § 59.
Part 13
Classification and Assessment — Utilities and Carriers
67-5-1301. Assessment by comptroller of the treasury.
-
The comptroller of the treasury is authorized and directed to assess for taxation, for state, county, and municipal purposes, all of the properties of every description, tangible and intangible, within the state, owned by and all personal property used and/or leased by the following named persons hereinafter referred to as companies, namely:
- Railroad companies;
- Telephone, radio common carrier, cellular or wireless telecommunications and telecommunications tower companies;
- Freight and private car companies, hereby defined as any company, other than a railroad company, which owns, uses, furnishes, leases, rents, or operates to, from, through, in or across this state or any part thereof, any kind of railroad car including, but not necessarily limited to, flat, tank, refrigerator or similar type car;
- Streetcar companies;
- Power companies, whether hydroelectric, steam, atomic, or other kinds for the transmission of power;
- Express companies;
- Pipeline companies;
- Gas companies;
- Electric light companies;
- Water and/or sewerage companies;
- Motor bus and/or truck companies, excluding towing companies, operating commercial motor vehicles exclusively authorized for hire holding United States department of transportation registrations issued by this state through the performance and registration information systems management (PRISM) or the federal motor carrier safety administration (FMCSA) and domiciled in this state and/or owning or leasing real or personal property, including those owner operators who operate under such motor bus and/or truck company's motor carrier authority, located in this state;
- Commercial air carrier companies holding a certificate of convenience and necessity from the department of transportation, civil aeronautics board, federal aviation administration or any other federal or state regulatory agency excepting those companies whose operations are solely chartered operations;
- Water transportation carrier companies which operate boats and barges over the waterways of this state for hire, which are registered with the United States army corps of engineers or any other federal or state agency and/or domiciled in this state and/or owning or leasing real or personal property located in this state; and
- Modern market telecommunications providers.
- The comptroller of the treasury shall assess all of such property annually as of the same date as other properties are assessed by law; provided, that this part shall not apply to corporations organized under the laws of Tennessee whose principal business is the manufacture of products of the soil of Tennessee and who for the transportation alone of such products furnish their own cars.
- Provisions generally applicable to post-certification revision of local assessments shall also apply to public utility property, including, without limitation, back assessment or reassessment under chapter 1, part 10 of this title, correction of assessment errors under § 67-5-509, proration of assessments under § 67-5-603, and relief from forced assessments and amendment of taxpayer filed schedules under § 67-5-903. Provisions for confidentiality of taxpayer information under § 67-5-402 shall likewise be applicable to information provided by public utility taxpayers. For purposes of applying these provisions to public utility property, the comptroller of the treasury shall act as assessing authority, and the actions of the comptroller of the treasury shall be subject to review directly by the state board of equalization.
Acts 1973, ch. 226, § 11; 1974, ch. 467, § 4; T.C.A., § 67-901; Acts 1984, ch. 832, § 7; 1995, ch. 305, § 125; 1996, ch. 662, § 1; 1998, ch. 911, § 1; 2000, ch. 571, § 3; 2000, ch. 649, § 2; 2006, ch. 672, § 1; 2007, ch. 132, § 5; 2010, ch. 942, § 1; 2010, ch. 1036, § 1; 2017, ch. 490, § 4.
Compiler's Notes. Acts 1995, ch. 305, § 32 provided that, nothwithstanding the provisions of title 65, chapter 15 to the contrary, vehicles required to obtain a certificate of convenience and necessity or contract hauler permit pursuant to the provisions of § 65-15-107(f) [deleted], shall be regulated by the Tennessee regulatory authority. The Tennessee regulatory authority shall register all such vehicles operating in intrastate and interstate commerce in Tennessee solely for demonstration of compliance with registration and insurance requirements of § 65-15-109.
Acts 1995, ch. 305, § 47 provided:
“(a) Notwithstanding any provision of law to the contrary, upon the effective date of this section [May 26, 1995], all employees of the public service commission charged with the responsibility of regulating and enforcing the provisions of Tennessee Code Annotated, Title 67, assigned by provisions of this act to the office of the comptroller and any other employees of the public service commission necessary to assist in such regulating and enforcing, shall be transferred to the comptroller of the treasury.
“(b) All reports, documents, surveys, books, records, papers or other writings in the possession of the public service commission with respect to administering such provisions assigned to the office of the comptroller of the treasury by this act, shall be transferred to and remain in the custody of the comptroller.
“(c) All leases, contracts and all contract rights, and responsibilities in existence with the public service commission with respect to the duties transferred by this section shall be preserved and transferred to the office of the comptroller of the treasury.
“(d) All assets, liabilities and obligations of the public service commission with respect to the duties transferred by this section shall become the assets, liabilities and obligations of the office of the comptroller of the treasury.
“(e) Any revenues from rates, fares, charges, fines, and other moneys received pursuant to Tennessee Code Annotated, Title 65, and assigned to the office of the comptroller by this act shall be allocated to the office of the comptroller of the treasury to implement the provisions of this act.
“(f) The comptroller shall promulgate rules and regulations pursuant to Title 4, Chapter 5, to effectuate the purposes of this act.”
Acts 1996, ch. 662, § 4 provided that the amendments by that act apply to assessments for the 1996 tax year.
Acts 2000, ch. 649, § 5, provided that the act shall apply to the 2000 tax year. A taxpayer subject to assessment by the comptroller of the treasury under § 67-5-513, § 67-5-903(f), § 67-5-1301(a)(2), or § 67-5-1310 for the first time for tax year 2000 shall be afforded up to sixty (60) days, from the date the taxpayer is supplied a report form, to file any ad valorem report otherwise required by § 67-5-1303 for tax year 2000.
Acts 2010, ch. 1036, § 5, provided that the act, which rewrote subsection (c), shall apply to exemption applications filed after June 11, 2010, and also to applications pending or under appeal before the state board of equalization, as of June 11, 2010.
Acts 2017, ch. 490, § 15 provided that the act, which amended this section, shall apply to all tax periods beginning on or after January 1, 2017.
Cross-References. Confidentiality of public records, § 10-7-504.
Law Reviews.
Discriminatory Demands and Divided Decisions: State and Local Taxation of Rail, Motor, and Air Carrier Property (Scott M. Schoenwald), 39 Vand. L. Rev. 1107 (1986).
Attorney General Opinions. Lack of county authority to assess and audit properties of centrally-assessed taxpayers, OAG 05-092 (6/8/05).
After Public Chapter 490 becomes effective, the Comptroller of the Treasury will continue to be responsible for reappraising the properties of modern market telecommunications providers. The reappraisal schedule for the telecommunications providers’ properties will remain the same. Their localized and nonoperating real property will be updated in each county during that county’s reappraisal year. Their operating properties will be assessed and updated annually. AG LEXIS 34 (7/26/2017).
NOTES TO DECISIONS
1. In General.
Where the assessment was on the fee interest in real property owned by the lessor, who was not a company described in this section, the property did not fall within either of the basic groups of properties that are to be assessed by the public service commission (now comptroller of the treasury). Crown Enters., Inc. v. State Bd. of Equalization, 543 S.W.2d 583, 1976 Tenn. LEXIS 480 (Tenn. 1976).
2. Federal Law.
Under the federal Railroad Revitalization and Regulatory Reform Act of 1976, 49 U.S.C. § 11503 [omitted] (which prohibited a state's taxation scheme from discriminating against railroads), plaintiff did not meet the standard used to enjoin the collection of ad valorem taxes by the state — which is “reasonable cause to believe” that a violation of subsection 11503(b) has occurred or is about to occur — where plaintiff simply showed the possibility of a violation. CSX Transp., Inc. v. Tennessee State Bd. of Equalization, 964 F.2d 548, 1992 U.S. App. LEXIS 10646 (6th Cir. 1992).
Decisions Under Prior Law
1. Constitutionality.
Acts 1919, ch. 49 is constitutional. The power to fix rates which it confers is legislative and not judicial. That power is exclusive, the courts having no jurisdiction over such matters until they have been submitted to and passed upon by the commission. McCollum v. Southern Bell Tel. & Tel. Co., 163 Tenn. 277, 43 S.W.2d 390, 1931 Tenn. LEXIS 112 (1931).
The state ad valorem tax did not offend the commerce clause of the United States Constitution. Howard Sober, Inc. v. Clement, 52 Tenn. App. 115, 372 S.W.2d 202, 1960 Tenn. App. LEXIS 140 (1960); Jack Cole Co. v. Ellington, 52 Tenn. App. 120, 372 S.W.2d 204, 1961 Tenn. App. LEXIS 136 (1961); E & L Transp. Co. v. Ellington, 212 Tenn. 671, 371 S.W.2d 456, 1963 Tenn. LEXIS 458 (1963).
Provisions of the former section authorizing assessment of property for ad valorem purposes under and by virtue of any certificate of convenience and necessity, permit or other operating authority granted by public service commission did not violate commerce clause of federal constitution or due process clauses of state and federal constitutions. Howard Sober, Inc. v. Clement, 52 Tenn. App. 115, 372 S.W.2d 202, 1960 Tenn. App. LEXIS 140 (1960); Jack Cole Co. v. Ellington, 52 Tenn. App. 120, 372 S.W.2d 204, 1961 Tenn. App. LEXIS 136 (1961); E & L Transp. Co. v. Ellington, 212 Tenn. 671, 371 S.W.2d 456, 1963 Tenn. LEXIS 458 (1963).
2. Construction.
Term “produce of the state” includes crops, coal, timber, iron, marble, wood, or any article which may be produced or grown within the state from the soil or found in the soil. Tennessee Prods. & Chem. Corp. v. Taylor, 190 Tenn. 130, 228 S.W.2d 87, 1950 Tenn. LEXIS 429 (1950).
Clause in former statutes exempting from ad valorem tax “all the products manufactured primarily from coal, hardwood or rock, which are products of soil of Tennessee” applied to tank cars used by a corporation for transportation of products manufactured from coal where 75 percent of all of the coal used was mined in Tennessee and greater part of manganese ore used was mined in Tennessee. Tennessee Prods. & Chem. Corp. v. Taylor, 190 Tenn. 130, 228 S.W.2d 87, 1950 Tenn. LEXIS 429 (1950).
3. Jurisdiction.
Federal court has equitable jurisdiction of a bill attacking validity of proceeding of commission, since assessment constitutes lien on property of railroad, and if proceeding by tax commission is invalid there is a cloud on title which federal court is entitled to remove. Taylor v. Louisville & N. R. Co., 88 F. 350, 1898 U.S. App. LEXIS 2089 (6th Cir. 1898), cert. denied, 172 U.S. 647, 19 S. Ct. 887, 43 L. Ed. 1182, 1898 U.S. LEXIS 2318 (1898), appeal dismissed, Taylor v. Nashville C. & S. L. R. Co., 20 S. Ct. 1022, 44 L. Ed. 1219 (U.S. 1899), cert. denied, Taylor v. Louisville & N. R. Co., 172 U.S. 647, 19 S. Ct. 887, 43 L. Ed. 1182, 1898 U.S. LEXIS 2318 (1898).
4. Formula for “Actual Cash Value.”
The legislature has not laid down a formula for guidance of commission in making assessment at “actual cash value.” McCord v. Nashville, C. & S. L. Ry., 187 Tenn. 277, 213 S.W.2d 196, 1948 Tenn. LEXIS 429 (1948).
5. Railroad Assessments.
Under Acts 1875, ch. 78, § 17, the county assessor and not the state assessor had the power to assess the bare roadbed. Neely v. Buchanan, 54 S.W. 995, 1899 Tenn. Ch. App. LEXIS 133 (Tenn. Ch. App. 1899).
Where method adopted by commission in assessing railroad properties did not result in overvaluation or discrimination against railroad as compared to other railroads whose property was taxed the levy and collection of taxes based on assessment could not be enjoined. Kansas City, Ft. S. & M.R.R. v. King, 120 F. 614, 1902 U.S. App. LEXIS 4687 (6th Cir. 1902).
Under Acts 1897, ch. 5, it was held that switches and industrial tracks at the main right-of-way, but used as a part of the general system, had to be assessed as distributable property, and their assessment as localized property was void. Nashville, C. & St. L. Ry. v. Board of Equalization, 122 Tenn. 1, 122 S.W. 467, 1908 Tenn. LEXIS 53 (1908).
Board did not err in assessing section of track as main track instead of side track as determined by interstate commerce commission where state commission had assessed it as main track for a period of ten years without objection by railroad. McCord v. Southern R. Co., 187 Tenn. 247, 213 S.W.2d 184, 1948 Tenn. LEXIS 428 (1948).
The 1945 assessment of railroad, which was higher than assessment in 1944, was not invalid, since the general assembly, in the passage of Acts 1945, chs. 17, 18 and 134 indicated legislative intent to also assess in 1945, as well as for the year of 1946, since all three of the public acts recited they were to take effect at once, “public welfare requiring it.” McCord v. Southern R. Co., 187 Tenn. 247, 213 S.W.2d 184, 1948 Tenn. LEXIS 428 (1948); McCord v. Nashville, C. & S. L. Ry., 187 Tenn. 277, 213 S.W.2d 196, 1948 Tenn. LEXIS 429 (1948); McCord v. Alabama G.S.R.R., 187 Tenn. 302, 213 S.W.2d 207, 1948 Tenn. LEXIS 430 (1948).
State board of equalization had authority to increase assessment level of entire county upon petition of railway company and service on county executive (now county mayor), county board of equalization and county tax assessor (now assessor of property) in accordance with state board's rules of practice and procedure without serving individual taxpayers in the county and upon evidence to the effect that public service commission exercised its judgment in performing statutory duty to assess railway property at actual cash value while other property in county was assessed at approximately 10 percent of cash value. Southern R. Co. v. Clement, 57 Tenn. App. 54, 415 S.W.2d 146, 1966 Tenn. App. LEXIS 199 (Tenn. Ct. App. 1966).
6. Water Company Assessment.
Where the charter of a water company conferred such powers and imposed such duties as to create a public utility, the property of such company was subject to be taxed and regulated by the railroad and public utilities commission (now public service commission) even though it had not exercised all the privileges granted by its charter but merely maintained lines through which the city furnished water. Nashville Water Co. v. Dunlap, 176 Tenn. 79, 138 S.W.2d 424, 1939 Tenn. LEXIS 102 (1940).
7. Motor Carriers.
Where taxpayers were irregular motor carriers operating into or through Tennessee in interstate commerce, such portion of their properties as was represented by the ratio of their Tennessee mileage to their total mileage was considered as having a Tennessee situs and could be assessed for ad valorem tax purposes by the public service commission. Jack Cole Co. v. Ellington, 52 Tenn. App. 120, 372 S.W.2d 204, 1961 Tenn. App. LEXIS 136 (1961); E & L Transp. Co. v. Ellington, 212 Tenn. 671, 371 S.W.2d 456, 1963 Tenn. LEXIS 458 (1963).
Under Acts 1969, ch. 327, amending former statute, leased equipment of a motor carrier was assessable to that carrier. Pulaski Highway Express, Inc. v. Dunn, 524 S.W.2d 636, 1975 Tenn. LEXIS 669 (Tenn. 1975).
8. Street Railways.
It was not the purpose of the legislature to provide for either the assessment or back assessment of street railway property under Acts 1907, ch. 602. Nashville R. & L. Co. v. Norvell, 122 Tenn. 613, 124 S.W. 613, 1909 Tenn. LEXIS 34 (1910).
67-5-1302. Basis of value and level of assessment.
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- The comptroller of the treasury shall, except as otherwise provided in this part, assess all operating property, real and personal, tangible and intangible, at fifty-five percent (55%) of its value. Such operating property which is used predominantly to provide cellular telephone service, radio common carrier service, or long distance telephone service, or which is used by a modern market telecommunications provider, shall be assessed at the rate applicable to commercial and industrial property of the same type. Property of water transportation carrier companies, or the portion thereof, which is used for water carriage which was exempt from regulation by the interstate commerce commission under federal law in effect on November 1, 1995, shall be assessed at the rate applicable to commercial and industrial property of the same type.
- The value shall be determined by the unit rule of appraisal where applicable.
- “Unit” means all operating property, tangible and intangible, owned and used and/or leased by the company as determined by the comptroller of the treasury.
- “Unit rule of appraisal” means the appraisal of the property as a whole without geographical or functional division of the whole.
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- The assessments of public utility property or property of modern market telecommunications providers, as set by the comptroller of the treasury in accordance with subsection (a), shall be adjusted, where necessary, on the basis of appropriate ratios, as are determined by the board of equalization for purposes of equalizing the values of such property to the prevailing level of value of property in each jurisdiction; provided, that no equalization factor for purposes of this section may exceed a factor of one (1.000).
- In filing the assessments made by the comptroller of the treasury with the board of equalization as required in § 67-5-1327, the comptroller of the treasury shall set out the assessments as determined by the comptroller of the treasury in accordance with the constitutional level of assessments.
- The comptroller of the treasury shall also furnish the board of equalization with the equalized assessments as soon as determined.
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- The comptroller of the treasury shall assess all nonoperating property at its proper level according to the use and class of property into which it may fall.
- Nonoperating property shall be appraised annually and valued as other locally assessed property.
- “Nonoperating property” means that property not used in the operations of the company as determined by the comptroller of the treasury.
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- The comptroller of the treasury shall recognize specific valuation for construction-in-process (CIP) tangible personal property in a manner consistent with that provided for locally assessed property under § 67-5-903(g)(1).
- The state board of equalization is directed to prepare and adopt rules and regulations for the administration and taxation of CIP pursuant to this section and § 67-5-903, and communicate such rules and regulations to taxpayers to ensure accurate and timely compliance by taxpayers. No back assessments of CIP, as the term is used in § 67-5-903(g), shall occur prior to January 1, 1994. If back assessments have occurred involving CIP, those assessments shall be voided and all taxes paid shall be refunded to those taxpayers who have an action or claim pending before an assessing authority or court on the CIP issue.
Acts 1973, ch. 226, § 11; 1980, ch. 827, § 4; T.C.A., § 67-902; Acts 1989, ch. 312, § 4; 1993, ch. 323, §§ 2, 3; 1995, ch. 305, § 125; 1999, ch. 198, § 2; 2013, ch. 209, § 11; 2017, ch. 490, §§ 5, 6.
Compiler's Notes. Acts 1999, ch. 198, § 3, provided that the amendment by that act, which added the last sentence in subdivision (a)(1), applies to the 1999 tax year and successive tax years.
Acts 2017, ch. 490, § 15 provided that the act, which amended this section, shall apply to all tax periods beginning on or after January 1, 2017.
Attorney General Opinions. After Public Chapter 490 becomes effective, the Comptroller of the Treasury will continue to be responsible for reappraising the properties of modern market telecommunications providers. The reappraisal schedule for the telecommunications providers’ properties will remain the same. Their localized and nonoperating real property will be updated in each county during that county’s reappraisal year. Their operating properties will be assessed and updated annually. AG LEXIS 34 (7/26/2017).
NOTES TO DECISIONS
1. Constitutionality.
T.C.A. § 67-5-1302(b)(1) is constitutional since, under the provisions of Tenn. Const. art. II, § 28, the value and definition of property is to be ascertained in such manner as the Tennessee legislature shall direct. In re All Assessments, 67 S.W.3d 805, 2001 Tenn. App. LEXIS 683 (Tenn. Ct. App. 2001), rehearing denied, — S.W.3d —, 2001 Tenn. App. LEXIS 770 (Tenn. Ct. App. Oct. 4, 2001); Williamson County v. Tenn. State Bd. of Equalization, 86 S.W.3d 216, 2001 Tenn. App. LEXIS 904 (Tenn. Ct. App. 2001).
2. Constitutional Requirements.
Tenn. Const., art. II, § 28 requires the reclassification of all property for ad valorem tax purposes and valuation at 100 percent of full market value, and the action of taxing authorities in valuing public utility properties at full value and other properties at less than full value violated the equal protection clause of U.S. Const., amend. 14 and entitled the public utility taxpayers to obtain equalization. Louisville & N. R. Co. v. Public Service Com., 631 F.2d 426, 1980 U.S. App. LEXIS 13669 (6th Cir. Tenn. 1980), cert. denied, 450 U.S. 959, 101 S. Ct. 1418, 67 L. Ed. 2d 384, 1981 U.S. LEXIS 1073 (1981), cert. denied, Public Service Com. v. Louisville & N. R. Co., 450 U.S. 959, 101 S. Ct. 1418, 67 L. Ed. 2d 384, 1981 U.S. LEXIS 1073 (1981).
3. Classification for Assessment, Not Valuation.
Tennessee has chosen to classify properties for assessment purposes, not for valuation purposes. Louisville & N. R. Co. v. Public Service Com., 631 F.2d 426, 1980 U.S. App. LEXIS 13669 (6th Cir. Tenn. 1980), cert. denied, 450 U.S. 959, 101 S. Ct. 1418, 67 L. Ed. 2d 384, 1981 U.S. LEXIS 1073 (1981), cert. denied, Public Service Com. v. Louisville & N. R. Co., 450 U.S. 959, 101 S. Ct. 1418, 67 L. Ed. 2d 384, 1981 U.S. LEXIS 1073 (1981).
4. Railroads.
The calculation of the full system values of several railroads involved using the applicable cost of equity determined by the board of equalization, using the embedded cost of debt, and computing the capitalization rate without including deferred federal income taxes as a component of the band of investment. Southern R. Co. v. State Bd. of Equalization, 682 S.W.2d 196, 1984 Tenn. LEXIS 891 (Tenn. 1984).
Under the federal Railroad Revitalization and Regulatory Reform Act of 1976, 49 U.S.C. § 11503 [omitted] (which prohibits a state's taxation scheme from discriminating against railroads), plaintiff did not meet the standard used to enjoin the collection of ad valorem taxes by the state — which is “reasonable cause to believe” that a violation of subsection 11503(b) has occurred or is about to occur — where plaintiff simply showed the possibility of a violation. CSX Transp., Inc. v. Tennessee State Bd. of Equalization, 964 F.2d 548, 1992 U.S. App. LEXIS 10646 (6th Cir. 1992).
67-5-1303. Schedules generally.
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It is the duty of the owners of property mentioned in § 67-5-1301, within the state, to annually file with the comptroller of the treasury on or before April 1, under oath, schedules and statements giving the following information concerning all properties owned or leased by such owners:
- The name of the company, its nature, whether a person, association, copartnership, corporation, or syndicate, and the state or country under whose laws it is organized;
- The location of its principal place of business, the post office address of the president, general manager, or executive officer or officers;
- The name and post office address of the chief officer or managing agent of the company in Tennessee;
- The gross revenue and net operating income of its business as a whole and of its business done within the state, and operating expenses for the preceding fiscal year;
- The total capital stock, number of shares issued or outstanding, the par face value thereof, and in case no shares of stock are issued, in what manner its capital is divided and holdings evidenced;
- The market value and average market value of the shares of stock on January 1 next preceding, or if the stock or capital have no market value, then the actual value;
- The real estate, buildings, machinery, fixtures, appliances, and personal property owned or leased by the company which is actually located within this state, the actual cost and value thereof and the counties and municipalities in which the same are located;
- Real estate, together with the permanent improvements thereon, situated inside of the state and not directly used in the conduct of the business within the state, the purpose for which it is used, its value and the sum at which it is assessed for taxation in the locality where situated;
- The bonded indebtedness and the market value thereof, if it has such, otherwise its actual value; and
- The class and use of all nonoperating property and the value thereof, and the counties and municipalities in which same is located.
- In addition to the foregoing information to be given by each owner of property assessable under this chapter, the statement shall contain information as set out in §§ 67-5-1304 — 67-5-1315 and other information as determined by the comptroller of the treasury.
Acts 1973, ch. 226, § 11; T.C.A., § 67-903; Acts 1995, ch. 305, § 125.
NOTES TO DECISIONS
1. Failure to File.
Tennessee State Board of Equalization's (Board) back assessment was affirmed because (1) the taxpayer was timely notified of the assessment but did not timely appeal, (2) the assessment was not time-barred, as the taxpayer's failure to file a required annual reporting schedule gave the Board three years to initiate the assessment, which the Board did, and (3) an official's statement based on partial information that the taxpayer would owe no taxes for that year did not justify reliance and nonpayment. Volunteer Princess Cruises, LLC v. Tenn. State Bd. of Equalization, — S.W.3d —, 2016 Tenn. App. LEXIS 820 (Tenn. Ct. App. Oct. 31, 2016).
67-5-1304. Railroad companies.
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- In addition to the information required by § 67-5-1303, the schedules and statements submitted by railroad companies shall include the length in miles of their entire roadbeds, switches and sidetracks, and the value of the whole, showing the number of miles and value thereof within the state, and within each county and each incorporated town thereof, the number of cars, their classes and value, the number of engines and their value, the location and description and value of all depot buildings, warehouses, and other real estate and where located, and all real and personal property belonging or leased to the company not above enumerated and its value.
- Statements shall also contain information showing the names and places of business of all private car line companies which are operating cars or having cars hauled under lease or contract, over its tracks in this state, the nature and substance of the contract of the railroad companies with each of the private car line companies and, in each instance, the compensation annually received or paid under contract with such private car companies, the number of cars of such companies used during the calendar year, and the number of miles such cars made over its system during the calendar year, both in and outside of the state.
-
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In assessing the properties of railroad companies, the comptroller of the treasury shall require the company to itemize all of the properties within this state, tangible and intangible, distributable and localized, and set out the value of each item, including, but not limited to, the following:
- Length, location, description, and value of main line track;
- The number and description of locomotives and their value;
- The number of cars, their classes and value, and all other rolling stock;
- Description and value of franchises, intangible property, and personal property within the state;
- Description, location, quality, and value of all land not used for roadbed; and
- Description, location, and value of all depot buildings, warehouses, and other structures on real estate.
- Nothing contained in this subsection (b) shall be construed as changing or affecting the classification of distributable and localized property as otherwise defined in this code.
-
In assessing the properties of railroad companies, the comptroller of the treasury shall require the company to itemize all of the properties within this state, tangible and intangible, distributable and localized, and set out the value of each item, including, but not limited to, the following:
Acts 1973, ch. 226, § 11; T.C.A., §§ 67-904, 67-929; Acts 1995, ch. 305, § 125.
Cross-References. Distributable and localized property, § 67-5-1325.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 35.
67-5-1305. Freight or private car companies.
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In addition to the information required by § 67-5-1303, the schedules and statements submitted by freight or private car companies shall include:
- The total length of main lines of all the railroads over which the cars are run;
- The total length of so much of the main lines of the railroad over which the same are run as is outside of this state;
- The length of lines of the railroad companies over which the cars are run within each of the counties and municipalities within the state;
- The number and class and value thereof;
- The mileage of all cars during the preceding year; and
- Such other information as may be required by the comptroller of the treasury.
- This part shall not apply to corporations, organized under the laws of Tennessee whose principal business is the manufacture of products of the soil of Tennessee and who for the transportation alone of such products furnish their own cars.
Acts 1973, ch. 226, § 11; T.C.A., § 67-905; Acts 1984, ch. 832, § 7; 1995, ch. 305, § 125.
Decisions Under Prior Law
1. Construction.
Term “produce of the state” includes crops, coal, timber, iron, marble, wood, or any article which may be produced or grown within the state from the soil or found in the soil. Tennessee Prods. & Chem. Corp. v. Taylor, 190 Tenn. 130, 228 S.W.2d 87, 1950 Tenn. LEXIS 429 (1950).
Clause in former statutes exempting from ad valorem tax “all the products manufactured primarily from coal, hardwood or rock, which are products of the soil of Tennessee” applied to tank cards used by a corporation for transportation of products manufactured from coal where 75 percent of all of the coal used was mined in Tennessee and greater part of manganese ore used was mined in Tennessee. Tennessee Prods. & Chem. Corp. v. Taylor, 190 Tenn. 130, 228 S.W.2d 87, 1950 Tenn. LEXIS 429 (1950).
2. Sleeping Cars.
Acts 1877, § 6, enacted March 16, 1877, which declared the running and using of sleeping cars in Tennessee, not owned by the railroad upon which they are run or used, a privilege and levied a tax on each, and every car or coach so run or used over such road is invalid insofar as it affects interstate commerce. Pickard v. Pullman S. Car Co., 117 U.S. 34, 6 S. Ct. 635, 29 L. Ed. 785, 1886 U.S. LEXIS 1814 (1886).
A tax of $500 per annum on each car of sleeping car companies doing business in the state imposes a burden on interstate commerce and is unconstitutional. Allen v. Pullman's Palace Car Co., 191 U.S. 171, 24 S. Ct. 39, 48 L. Ed. 134, 1903 U.S. LEXIS 1475 (1903).
An annual tax of $3,000 imposed upon sleeping car companies which carry one or more local passengers on cars operating within the state is not void as a burden on interstate commerce where the company may decline all local business if it seems fit to do so. Allen v. Pullman's Palace Car Co., 191 U.S. 171, 24 S. Ct. 39, 48 L. Ed. 134, 1903 U.S. LEXIS 1475 (1903).
67-5-1306. Express companies.
In addition to the information required by § 67-5-1303, the schedules and statements submitted by express companies shall include:
- The total length of lines or routes over which they transport merchandise, freight, or express;
- The total length of such lines or routes as are outside of this state;
- The length of such lines or routes within each of the counties or incorporated towns in this state;
- The names of the railroad companies and mileage of each over which such express is transported;
- The gross receipts, including all sums earned and charged for business done within the state, in connection with other companies; and
- The amount actually paid by such express companies within the year mentioned to the railroad companies of the state for the transportation of its freight and express, within and without the state, showing the amount paid to each railroad.
Acts 1973, ch. 226, § 11; T.C.A., § 67-906.
67-5-1307. Streetcar and interurban companies.
In addition to the information required by § 67-5-1303, the schedules and statements submitted by streetcar and interurban railroad companies shall include the length in miles of the entire roadbeds, switches, and sidetracks, number of miles in each county and each incorporated town, the value of the whole, number of cars, their classes and value, the location and description and value of all car sheds, transfer stations, power houses, and other real estate, showing the county or incorporated town within which such real estate or other property is located, together with its value.
Acts 1973, ch. 226, § 11; T.C.A., § 67-907.
67-5-1308. Motor bus and truck companies.
In addition to the information required by § 67-5-1303, the schedules and statements submitted by motor bus and/or truck companies domiciled in this state and/or owning or leasing real or personal property, including those owner operators who operate under such motor bus and/or truck company's motor carrier authority, located in this state, shall include:
- The number of vehicles, their class and/or kind, the cost and value of each vehicle owned and/or operated by, including those owner operators who operate under such motor bus and/or truck company's motor carrier authority, any such motor carrier;
- The total number of vehicle miles operated by any such motor carrier, together with the total number of vehicle miles and route miles operated within this state during the prior calendar year; and
- The location and description of all buildings, land, materials and supplies, tools and equipment, furniture, motor vehicles operated exclusively within any one (1) county or incorporated municipality, and other personal property, showing the cost and value of all such property, separately set forth to show same within and outside this state.
Acts 1973, ch. 226, § 11; T.C.A., § 67-908; Acts 2010, ch. 942, §§ 2, 3.
67-5-1309. Pipeline companies.
In addition to the information required by § 67-5-1303, the schedules and statements submitted by pipeline companies, which means companies owning a pipeline or pipelines, whether such pipelines be used for the transmission of oil, gas, or whatever, shall include the length, size, and value of lines, the number and capacity of tanks, showing the county and incorporated towns within which the same are located; and the location, value, and description of all other property, real and personal, in this state.
Acts 1973, ch. 226, § 11; T.C.A., § 67-909.
67-5-1310. Telephone, radio common carrier, telephone cooperative, and cellular or wireless telecommunication and telecommunications tower companies.
In addition to the information required by § 67-5-1303, the schedules and statements submitted by telephone, radio common carrier, telephone cooperative, cellular or wireless telecommunication and telecommunication tower companies shall include:
- The number of single conductor miles of wire, aerial cable, underground and buried cable, other cable in the company's entire system, and the number of single conductor miles of the same within this state and in each county and incorporated town;
- The total number of stations in the company's entire system and the number in this state;
- The total number of poles in the company's entire system, and the number in this state;
- The gross investment in each of the above types of property in the system and the gross investment in each in this state; and
- The location, description and value of all other property, real and personal, in this state.
Acts 1973, ch. 226, § 11; T.C.A., § 67-910; Acts 2000, ch. 649, § 4.
Compiler's Notes. Acts 2000, ch. 649, § 5, provided that the act shall apply to the 2000 tax year. A taxpayer subject to assessment by the comptroller of the treasury under § 67-5-513, § 67-5-903(f), § 67-5-1301(a)(2), or § 67-5-1310 for the first time for tax year 2000 shall be afforded up to sixty (60) days, from the date the taxpayer is supplied a report form, to file any ad valorem report otherwise required by § 67-5-1303 for tax year 2000.
67-5-1311. Gas, water, and sewerage companies.
In addition to the information required by § 67-5-1303, the schedules and statements submitted by gas, water, and sewerage companies shall include all its property, real and personal, setting forth therein the length in miles of the entire system of mains, conduits, number of services, governors, meters, and transformers in each incorporated town and county, together with the value of the whole, the capital stock, gross receipts from business in this state, during the preceding fiscal year, and the gross receipts from all sources, and the location, value, and description of all other property, real and personal, in this state.
Acts 1973, ch. 226, § 11; T.C.A., § 67-911.
67-5-1312. Power companies.
In addition to the information required by § 67-5-1303, the schedules and statements submitted by power companies shall include all its property, real and personal, setting forth also the length in miles of the entire lines of wires of its entire property; and showing how many miles there are in this state, and in each incorporated town and county, together with the value of the whole, the location, description of all towers, and all other property, real and personal, in this state.
Acts 1973, ch. 226, § 11; T.C.A., § 67-912.
67-5-1313. Electric light companies and electric cooperatives.
In addition to the information required by § 67-5-1303, the schedules and statements submitted by electric light companies and electric cooperatives, not municipally owned, shall include:
- The number of miles of poles and wires of its entire system, the nature of its wire system and the number of miles inside and outside the corporate limits of the city or town in which its property is located;
- The total number of transformers owned by the company, their location and their value;
- The description and location of all of its property, real and personal; and
- The gross income of the company from its operation and from all other sources and its operating expenses, which operating expenses are to be set out in detail.
Acts 1973, ch. 226, § 11; T.C.A., § 67-913.
67-5-1314. Commercial air carrier companies.
In addition to the information required by § 67-5-1303, the schedules and statements submitted by commercial air carrier companies which are assessed by the comptroller of the treasury shall include:
- The number, type, kind, and cost of all aircraft owned and/or used by the company;
- All machinery, tools, equipment, and all real and personal property owned and/or used by the company; and
- The gross revenue, passengers, takeoffs, landings, franchised routes, and ground hours in the system and the state.
Acts 1973, ch. 226, § 11; T.C.A., § 67-914; Acts 1995, ch. 305, § 125.
67-5-1315. Water transportation carrier companies.
In addition to the information required by § 67-5-1303, the schedules and statements submitted by water transportation carrier companies which are assessed by the comptroller of the treasury shall include:
- The number, type, kind, and cost of all barges, tugs and other equipment used by the company;
- The gross revenue, tons originated and terminated, and tons hauled in the system and the state; and
- The location, cost and value, and the description of all property, real and personal, operating within, from, or through this state.
Acts 1973, ch. 226, § 11; T.C.A., § 67-915; Acts 1995, ch. 305, § 125.
67-5-1316. Filing of return.
Every taxpayer liable for the assessment imposed by this part shall file with the comptroller of the treasury on such form as the comptroller of the treasury may prescribe an accurate and complete return, signed by the taxpayer, or the taxpayer's president or other company official under penalty of perjury. The comptroller of the treasury shall have the authority to require additional information to be filed. The comptroller of the treasury, in the comptroller's discretion, may establish a program which will allow for the required information to be filed electronically.
Acts 1973, ch. 226, § 11; T.C.A., § 67-916; Acts 2004, ch. 656, § 4.
67-5-1317. Failure to file schedules.
The owner of any property refusing or failing to file any schedule or statement required by this part shall be deemed to have waived the mode and manner of ascertaining the value of such property, and of the distribution or allocation by the comptroller of the treasury of such valuation or assessment to the various counties and municipalities of this state for the purposes of county and municipal taxation, and shall not be permitted to be heard in opposition to the valuation fixed upon such property by the comptroller of the treasury, nor in opposition to the distribution or allocation of same by the comptroller of the treasury to the various counties and municipalities for the purposes aforementioned; and may, at the discretion of the comptroller of the treasury, in addition, be liable to a penalty of one hundred dollars ($100) for each and every day which such owner is delinquent in filing such statement or schedule.
Acts 1973, ch. 226, § 11; T.C.A., § 67-917; Acts 1995, ch. 305, § 125.
67-5-1318. Collection of penalty.
It is the duty of the attorney general and reporter, upon the request of the comptroller of the treasury, to sue for and collect the penalty provided for in § 67-5-1317 before any court of competent jurisdiction in the same manner as any other debt, penalty, or forfeiture is now collected by law.
Acts 1973, ch. 226, § 11; T.C.A., § 67-918; Acts 1995, ch. 305, § 125.
Decisions Under Prior Law
1. Construction.
The penalties were not automatic, being enforceable only upon the request of the public service commission. Alterman Transp. Lines v. Public Serv. Comm'n, 259 F. Supp. 486, 1966 U.S. Dist. LEXIS 7925 (M.D. Tenn. 1966), aff'd, Alterman Transport Lines, Inc. v. Public Service Com., 386 U.S. 262, 87 S. Ct. 1023, 18 L. Ed. 2d 39, 1967 U.S. LEXIS 2032 (1967), rehearing denied, Alterman Transport Lines, Inc. v. Public Service Com., 386 U.S. 1014, 87 S. Ct. 1343, 18 L. Ed. 2d 452 (1967), aff'd, Alterman Transport Lines, Inc. v. Public Service Com., 386 U.S. 262, 87 S. Ct. 1023, 18 L. Ed. 2d 39, 1967 U.S. LEXIS 2032 (1967).
67-5-1319. Additional information required by comptroller of the treasury — Access to records.
- The comptroller of the treasury shall require, in addition to the schedules and statements above referred to, such additional information and take such additional evidence as to the value of any property to be assessed by the comptroller of the treasury as may be deemed proper. The additional information and evidence as it pertains to the assessment of personal property shall be confidential pursuant to § 67-5-402.
- Such additional evidence shall be reduced to writing, and the opportunity shall be afforded, if desired, to the owner to submit additional evidence or counterevidence to that required by the comptroller of the treasury. The records of the comptroller of the treasury shall at all times be open to inspection of the owner or owners of any property assessable under this part.
Acts 1973, ch. 226, § 11; T.C.A., § 67-919; Acts 1995, ch. 305, § 125; 2007, ch. 132, § 6.
Cross-References. Confidentiality of public records, § 10-7-504.
Decisions Under Prior Law
1. Failure to Reduce Evidence to Writing.
Fact that prior to assessment of railroad by commission two members of commission made a personal inspection of tracks and building equipment of railroad and that evidence obtained by inspection was not reduced to writing pursuant to requirement contained in former section was immaterial since railroad had trial de novo before the board and could have examined two commissioners and also could have introduced additional evidence. McCord v. Southern R. Co., 187 Tenn. 247, 213 S.W.2d 184, 1948 Tenn. LEXIS 428 (1948); McCord v. Nashville, C. & S. L. Ry., 187 Tenn. 277, 213 S.W.2d 196, 1948 Tenn. LEXIS 429 (1948).
67-5-1320. Power of comptroller of the treasury to obtain evidence.
To ascertain any of the foregoing facts, the comptroller of the treasury is hereby vested with the power to summon any person, call for any books, administer oaths, examine any such person or books touching any matters deemed necessary to enable comptroller of the treasury to arrive at the correct value of such property, and may issue summons to any county to be executed by the sheriff of such county.
Acts 1973, ch. 226, § 11; T.C.A., § 67-920; Acts 1995, ch. 305, § 125.
67-5-1321. False testimony — Disobedience of summons.
- Any person called on to testify commits perjury if that person testifies falsely.
- Any person failing to attend when summoned commits a Class C misdemeanor.
Acts 1973, ch. 226, § 11; T.C.A., § 67-921; Acts 1989, ch. 591, § 113.
Cross-References. Penalty for Class C misdemeanor, § 40-35-111.
Perjury, title 39, ch. 16, part 7.
67-5-1322. Determination of value and allocation to state.
- Upon examination of every such schedule and statement and all other evidence taken by it, the comptroller of the treasury shall proceed to ascertain and determine the value of such property within the state for taxation in accordance with the unit rule of appraisal where applicable, as determined by the comptroller of the treasury, taking into consideration the following factors where appropriate: the capital stock, corporate property, franchises, income, and the market value of the shares of stock and bonded indebtedness.
- The comptroller of the treasury may use any other evidence as is afforded by the statements and schedules or other evidence taken to enable the comptroller of the treasury to determine the value of the properties of such persons.
-
In applying the unit rule of appraisal, the comptroller of the treasury shall allocate for taxation to this state its share of the unit or system value, taking into consideration the following factors where appropriate:
- The ratio of route and/or over-the-road miles traveled in this state to the route and/or over-the-road miles traveled in the system;
- The ratio of original cost of the property in this state to the original cost of the property in the system;
- The ratio of scheduled ground hours, gross revenue, and passenger miles in this state to the scheduled ground hours, gross revenue and passenger miles in the system; and
- The ratio of gross revenue, all track miles, ton miles, and tons originated and terminated in this state to the gross revenue, all track miles, ton miles, and tons originated and terminated in the system.
- The comptroller of the treasury may also consider any other factors that will help determine the state's share of the unit or system value.
Acts 1973, ch. 226, § 11; T.C.A., § 67-922; Acts 1995, ch. 305, § 125.
Decisions Under Prior Law
1. Factors Considered by Commission.
The commission and board was under no compulsion to make the assessment against an interstate railroad on the basis of capitalization of net income or to make net worth a predominant factor in arriving at the value of property in the state although such factors could properly be considered. Nashville, C. & S. L. Ry. v. Browning, 176 Tenn. 245, 140 S.W.2d 781, 1939 Tenn. LEXIS 121, aff'd, Nashville, C. & S. L. Railway v. Browning, 310 U.S. 362, 60 S. Ct. 968, 84 L. Ed. 1254, 1940 U.S. LEXIS 593 (May 20, 1940), aff'd, Nashville, C. & S. L. Railway v. Browning, 310 U.S. 362, 60 S. Ct. 968, 84 L. Ed. 1254, 1940 U.S. LEXIS 593 (May 20, 1940).
Complaint of railroad that nontaxable interest bearing securities and corporate stock was included in assessment was without merit where the assessment showed on its face that the value of the railroad was fixed “making due allowance for all nontaxable securities held.” Nashville, C. & S. L. Ry. v. Browning, 176 Tenn. 245, 140 S.W.2d 781, 1939 Tenn. LEXIS 121, aff'd, Nashville, C. & S. L. Railway v. Browning, 310 U.S. 362, 60 S. Ct. 968, 84 L. Ed. 1254, 1940 U.S. LEXIS 593 (May 20, 1940), aff'd, Nashville, C. & S. L. Railway v. Browning, 310 U.S. 362, 60 S. Ct. 968, 84 L. Ed. 1254, 1940 U.S. LEXIS 593 (May 20, 1940).
A railroad was to be assessed by taking into consideration the elements of value specified in this section and other evidence which enabled the commission to fix the actual value of the railroad. McCord v. Nashville, C. & S. L. Ry., 187 Tenn. 277, 213 S.W.2d 196, 1948 Tenn. LEXIS 429 (1948).
2. Actual Value.
Where railroad contended that assessment against it was invalid on ground that the commission and state board of equalization assessed its property at actual value while the property of all other taxpayers was assessed at two thirds of actual value and affidavits of county assessors were introduced to the effect that it was their practice to assess property at not more than 75 percent of actual value, the contention of the railroad was without merit where there was no allegation or proof that the state board systematically refused to equalize assessments at actual value. Nashville, C. & S. L. Ry. v. Browning, 176 Tenn. 245, 140 S.W.2d 781, 1939 Tenn. LEXIS 121, aff'd, Nashville, C. & S. L. Railway v. Browning, 310 U.S. 362, 60 S. Ct. 968, 84 L. Ed. 1254, 1940 U.S. LEXIS 593 (May 20, 1940), aff'd, Nashville, C. & S. L. Railway v. Browning, 310 U.S. 362, 60 S. Ct. 968, 84 L. Ed. 1254, 1940 U.S. LEXIS 593 (May 20, 1940).
3. Cash Value.
If the needs of a state require higher taxes, the fourteenth amendment certainly does not bar their imposition. The maintenance of higher assessment in the face of declining value is merely another way of achieving the same result. Hence, the valuation of a railroad's property far in excess of its full cash value did not constitute a denial of due process. Nashville, C. & S. L. Railway v. Browning, 310 U.S. 362, 60 S. Ct. 968, 84 L. Ed. 1254, 1940 U.S. LEXIS 593 (May 20, 1940).
4. Equalization of Assessments.
State board of equalization had authority to increase assessment level of entire county upon petition of railway company and service on county executive (now county mayor), county board of equalization and county tax assessor (now assessor of property) in accordance with state board's rules of practice and procedure without serving individual taxpayers in the county and upon evidence to effect that public service commission had exercised its judgment in performing statutory duty to assess railway property at actual cash value while other property in county was assessed at approximately ten percent of actual value. Southern R. Co. v. Clement, 57 Tenn. App. 54, 415 S.W.2d 146, 1966 Tenn. App. LEXIS 199 (Tenn. Ct. App. 1966).
67-5-1323. Distribution and apportionment to county, municipality, and taxing district.
Having allocated to this state its share of the unit or system value in accordance with § 67-5-1322, the comptroller of the treasury shall then determine the assessment and the portion of the property which is distributable and the portion that is localized in accordance with § 67-5-1325.
Acts 1973, ch. 226, § 11; T.C.A., § 67-923; Acts 1995, ch. 305, § 125.
67-5-1324. Situs of intangibles apportioned to state.
The proportionate share of the value of the intangible property of such companies as do business in this and other states, growing out of the use of their tangible property in this state under their franchises, privileges, and contracts, shall have its situs in this state and in the several counties and municipalities thereof in which they exercise their rights; provided, that property of any such owner located outside of the state which is not directly used in the business to which the property in the state is devoted shall not enter into the value of the property within the state to be assessed.
Acts 1973, ch. 226, § 11; T.C.A., § 67-924.
67-5-1325. Distributable and localized property.
-
The franchises, intangible property, and personal property, within the state, but having no actual situs therein, of each company to be assessed under this part, and, in addition thereto:
- The roadbed and rolling stock of railroad companies;
- Poles and lines of telephone, radio common carrier, telephone cooperative, and telegraph companies;
- Rolling stock and movable property of express, street car, freight, and private car companies;
- Motor vehicles, buses, trucks, tractors, trailers and movable property of motor bus and/or truck companies;
- The pipeline or lines of pipeline companies;
- The aircraft of commercial certificated air carrier companies assessed by the comptroller of the treasury; and
-
The barges, boats, and tugs of water transportation carrier companies assessed by the comptroller of the treasury;
shall be known as distributable property.
-
-
Distributable property shall be apportioned to the counties, municipalities, and other taxing districts by the comptroller of the treasury after having considered the following factors where appropriate:
- The ratio of route and/or over-the-road miles traveled in the taxing district to the route and/or over-the-road miles traveled in the state;
- The ratio of original cost of the property in the taxing district to the original cost of the property in the state;
- The ratio of main line miles of track in the taxing district to the main line miles of track in the state;
- The ratio of traffic density in the taxing district to the traffic density in the state; and
- The ratio of ground hours and gross revenue in the taxing district to the ground hours and gross revenue in the state.
- The comptroller of the treasury may also consider any other factors that will help determine the apportionment of the distributable property to the counties, municipalities, and taxing districts.
-
Distributable property shall be apportioned to the counties, municipalities, and other taxing districts by the comptroller of the treasury after having considered the following factors where appropriate:
-
- Real, personal, and other property, operating and nonoperating, such as depots, buildings, and terminals, having an actual situs, shall be known as localized property of such companies, and shall be apportioned to the counties, municipalities, and taxing districts where located.
- The apportionment shall be based on the value of the property in the taxing district as determined by the comptroller of the treasury.
- Subsections (a)-(c) shall not apply to gas, water, sewerage, power transmission, electric cooperative, and electric light companies, but, in such cases, all the property of such companies shall be deemed localized property, and shall be apportioned to the taxing district where located.
-
- The main line miles of any railroad property shall include all side tracks, switches, bridges, trestles, ties, rails, and super-structures of every kind.
- The line of any telegraph and telephone company shall include all wires, cables, poles, and instruments.
Acts 1973, ch. 226, § 11; T.C.A., §§ 67-925 — 67-928; Acts 1984, ch. 832, § 7; 1995, ch. 305, § 125.
Decisions Under Prior Law
1. Apportionment Based on Mileage.
Where apportionment of distributable property of a railroad for tax purposes was made on basis of the average value per mile of such property multiplied by the number of miles of main track in Tennessee and there was no showing of special circumstances indicating the portions of the railroad outside Tennessee were largely of greater value than the portion within the state, such apportionment did not violate the provisions of this section, Tenn. Const., art. I, § 8, or art. II, § 28, or the due process clause of U.S. Const., amend. 14. Nashville, C. & S. L. Ry. v. Browning, 176 Tenn. 245, 140 S.W.2d 781, 1939 Tenn. LEXIS 121, aff'd, Nashville, C. & S. L. Railway v. Browning, 310 U.S. 362, 60 S. Ct. 968, 84 L. Ed. 1254, 1940 U.S. LEXIS 593 (May 20, 1940), aff'd, Nashville, C. & S. L. Railway v. Browning, 310 U.S. 362, 60 S. Ct. 968, 84 L. Ed. 1254, 1940 U.S. LEXIS 593 (May 20, 1940).
In assessing the property of an interstate railroad company, the value of its entire system and not merely of that portion within Tennessee had first to be ascertained. From this value was deducted the value of the company's terminal buildings, shops, and nonoperating real estate. The remaining sum served as the base for calculating the value of what in the language of Tennessee law is called the utility's “distributable” property attributable to Tennessee, which the commission ascertained by taking the ratio which petitioner's mileage in Tennessee bears to its total mileage. It was held that in basing its apportionment on mileage, the Tennessee commission adopted a familiar and frequently sanctioned formula, and did not violate the commerce clause of the constitution. Nashville, C. & S. L. Railway v. Browning, 310 U.S. 362, 60 S. Ct. 968, 84 L. Ed. 1254, 1940 U.S. LEXIS 593 (May 20, 1940).
Former statute did not permit assessment of all interstate railroads on a “mileage” basis until after value of distributable property wherever situated within the state was ascertained. McCord v. Alabama G.S.R.R., 187 Tenn. 302, 213 S.W.2d 207, 1948 Tenn. LEXIS 430 (1948).
Where railroad leased all trackage, stations, and other facilities at terminal point which had been assessed to owner, an increase of assessment against defendant railroad on the ground that it held vast terminal facilities on basis of “mileage” formula was erroneous where railroad was not given a chance to present evidence on facilities involved. McCord v. Alabama G.S.R.R., 187 Tenn. 302, 213 S.W.2d 207, 1948 Tenn. LEXIS 430 (1948).
67-5-1326. Preservation of records.
It is the duty of the comptroller of the treasury to preserve and maintain the records used by the comptroller of the treasury in these assessments for a period of not less than seven (7) years. These records shall be public records, subject to inspection by the taxpayer under reasonable regulations; provided, that information required to be kept confidential pursuant to § 67-5-402 shall not be a public record.
Acts 1973, ch. 226, § 11; T.C.A., § 67-930; Acts 1995, ch. 305, § 125; 2000, ch. 571, § 1; 2007, ch. 132, § 7.
Cross-References. Confidentiality of public records, § 10-7-504.
67-5-1327. Date of completion of assessments — Hearing of exceptions — Filing with state board.
- On or before the first Monday in August, assessments shall be completed and the comptroller of the treasury shall send a notice of assessment to each company assessable under this part.
- Within ten (10) days from the first Monday in August, any owner, or user, the state or any county, municipality, or incorporated town may appear and file exceptions to such assessment, together with such evidence as the owner, user, state, county, municipality or incorporated town may desire to submit as to the value of the property assessed, and at the expiration of the ten (10) days, the comptroller of the treasury shall convene an informal hearing and examine such additional evidence and exceptions as may have been filed, and act thereon, either changing or affirming its valuation. All persons or entities authorized to file an exception under this section but failing to file an exception within the time permitted shall be deemed to have waived any objection to the assessments.
- On or before the first Monday in September, the comptroller of the treasury shall file with the board of equalization the assessments made by the comptroller, together with such records as may be deemed necessary. The comptroller of the treasury shall send notice to any person or entity filing an exception to the action taken on the exception, and persons or entities affected by the comptroller of the treasury's action on the exceptions may file further exceptions with the state board of equalization, for review pursuant to § 67-5-1328. All persons or entities authorized to file an exception under this section but failing to do so on or before twenty (20) days from the first Monday in September shall be deemed to have waived any objection they may otherwise have raised with regard to the assessments.
Acts 1973, ch. 226, § 11; T.C.A., § 67-931; Acts 1995, ch. 305, § 125; 1996, ch. 662, § 2; 1997, ch. 160, §§ 2-4.
Compiler's Notes. Acts 1996, ch. 662, § 4 provided that the amendments by that act apply to assessments for the 1996 tax year.
NOTES TO DECISIONS
1. Constitutionality.
Company sought declaratory and injunctive relief, not money damages or a tax refund, and while the company did appeal its 2004 assessment to the Tennessee State Board of Equalization, the appeal was still pending, and subject matter of its suit for a declaratory judgment was of a different nature; while state officers correctly asserted that taxpayers must exhaust administrative remedies to appeal a final decision of the board, T.C.A. § 67-5-1327 was not a barrier to a constitutional challenge to facial validity of the statute. Colonial Pipeline Co. v. Morgan, 263 S.W.3d 827, 2008 Tenn. LEXIS 589 (Tenn. Sept. 9, 2008).
2. Notice.
Taxpayer's assessments for two tax years were vacated and remanded for further findings because the record did not show the taxpayer received T.C.A. § 67-5-1327 notice sufficient to satisfy due process, as an administrative law judge made no findings on the issue and erred in holding (1) the Comptroller only had to issue the notices and (2) any failure to issue the notices was of questionable legal import given taxpayers' strict deadlines in T.C.A. §§ 67-5-1327 and 67-5-1329(a). Volunteer Princess Cruises, LLC v. Tenn. State Bd. of Equalization, — S.W.3d —, 2016 Tenn. App. LEXIS 820 (Tenn. Ct. App. Oct. 31, 2016).
67-5-1328. Review of assessments by state board.
-
- The state board of equalization shall proceed to examine such assessments as made by the comptroller of the treasury, and is authorized to increase or diminish the valuation placed upon any property valued by the comptroller of the treasury, and is further authorized to require of the comptroller of the treasury any additional evidence touching one (1) or more of the properties assessed, and shall consider such additional evidence so furnished in fixing the correct value of any property so assessed, and the assessments shall not be deemed complete until corrected and approved by the board; the board is authorized to call the comptroller of the treasury at any time to perform the duties imposed upon it; provided, that if the board so desires, it shall have the power, without referring any assessment to the comptroller of the treasury, to employ experts, accountants, and to call witnesses to testify upon any assessment certified to it by the comptroller of the treasury. The board shall have the same powers to compel attendance of witnesses, production of books, papers, and documentary evidence as is by this chapter given to the comptroller of the treasury.
- The board has the right to call upon the federal highway administration for any valuations of property in the office of the administration and evidence in possession of such administration in support of such valuations.
- All of the evidence thus acquired by the board shall be considered by it in addition to the evidence transmitted to it by the comptroller of the treasury in support of the assessment so fixed by the comptroller of the treasury.
- Any expense incurred by the board in calling for the additional proof as to the value of any property certified to it by the comptroller of the treasury shall be by the board certified to the commissioner of finance and administration and paid by the commissioner out of any moneys in the state treasury not otherwise appropriated.
Acts 1973, ch. 226, § 11; T.C.A., § 67-932; Acts 1995, ch. 305, § 125; 2000, ch. 571, § 4.
NOTES TO DECISIONS
1. Federal Law.
Under the federal Railroad Revitalization and Regulatory Reform Act of 1976, 49 U.S.C. § 11503 [omitted] (which prohibits a state's taxation scheme from discriminating against railroads), plaintiff did not meet the standard used to enjoin the collection of ad valorem taxes by the state — which is “reasonable cause to believe” that a violation of subsection 11503(b) has occurred or is about to occur — where plaintiff simply showed the possibility of a violation. CSX Transp., Inc. v. Tennessee State Bd. of Equalization, 964 F.2d 548, 1992 U.S. App. LEXIS 10646 (6th Cir. 1992).
Decisions Under Prior Law
1. 1945 Assessment.
The 1945 assessment of railroad, which was higher than assessment in 1944, was not invalid, since legislature in passage of Acts 1945, chs. 17, 18 and 134 indicated legislature intent to also assess in 1945, as well as for the year of 1946, since all three of the public acts recited they were to take effect at once, “public welfare requiring it.” McCord v. Southern R. Co., 187 Tenn. 247, 213 S.W.2d 184, 1948 Tenn. LEXIS 428 (1948); McCord v. Nashville, C. & S. L. Ry., 187 Tenn. 277, 213 S.W.2d 196, 1948 Tenn. LEXIS 429 (1948); McCord v. Alabama G.S.R.R., 187 Tenn. 302, 213 S.W.2d 207, 1948 Tenn. LEXIS 430 (1948).
2. Valuation.
An assessment by board based on valuation of entire system at approximately 71 percent of average valuation determined by use of five methods of valuation was justified. McCord v. Southern R. Co., 187 Tenn. 247, 213 S.W.2d 184, 1948 Tenn. LEXIS 428 (1948); McCord v. Nashville, C. & S. L. Ry., 187 Tenn. 277, 213 S.W.2d 196, 1948 Tenn. LEXIS 429 (1948).
3. Equalization of Assessment.
Where board assessed property of railroad at approximately 71 percent of its actual value and certified that it had equalized such assessment with the assessment of all other property in the state assessed for ad valorem taxes the record did not show a discrimination against railroad merely because railroad presented evidence in the form of affidavits that county tax assessors (now assessors of property) and county boards of equalization assessed other properties coming within their jurisdiction at percentages ranging from 40 percent to 80 percent of actual value. McCord v. Southern R. Co., 187 Tenn. 247, 213 S.W.2d 184, 1948 Tenn. LEXIS 428 (1948); McCord v. Nashville, C. & S. L. Ry., 187 Tenn. 277, 213 S.W.2d 196, 1948 Tenn. LEXIS 429 (1948).
Board of equalization was authorized in nonassessment year to entertain action by railway taxpayer to raise assessments of other taxpayers in county. Southern R. Co. v. Clement, 57 Tenn. App. 54, 415 S.W.2d 146, 1966 Tenn. App. LEXIS 199 (Tenn. Ct. App. 1966).
State board of equalization had authority to increase assessment level of entire county upon petition of railway company and service on county executive (now county mayor), county board of equalization and county tax assessor (now assessor of property) in accordance with state board's rules of practice and procedure without serving individual taxpayers in county and upon evidence to effect that public service commission had exercised its judgment in performing statutory duty to assess railway property at actual cash value while other property in county was assessed at approximately ten percent of cash value. Southern R. Co. v. Clement, 57 Tenn. App. 54, 415 S.W.2d 146, 1966 Tenn. App. LEXIS 199 (Tenn. Ct. App. 1966).
4. Evidence.
Fact that prior to assessment of railroad by commission two members of commission made a personal inspection of tracks and building equipment of railroad and that evidence obtained by inspection was not reduced to writing pursuant to requirement contained in former statute was immaterial since railroad had trial de novo before the board and could have examined two commissioners and also could have introduced additional evidence. McCord v. Southern R. Co., 187 Tenn. 247, 213 S.W.2d 184, 1948 Tenn. LEXIS 428 (1948).
67-5-1329. Certification of valuation to comptroller of the treasury.
- On or before the third Monday in October, the state board of equalization shall certify to the comptroller of the treasury the valuation fixed by it upon each property assessed under this part. The action of the board in fixing the valuation upon such property shall be conclusive and final, and the valuation so fixed shall be assessed against such property and the taxes due thereunder be paid. If the board fails to certify assessments to the comptroller of the treasury on or before the third Monday in October, the validity of the certification thus delayed shall be unaffected, but the taxpayer shall be afforded a minimum of thirty (30) days from the date the comptroller of the treasury distributes the assessments to local collecting officials, in which to pay taxes without delinquency penalty and interest.
- If any railroad, public utility, or modern market telecommunications provider has been or is hereafter aggrieved at the assessment so fixed and certified by the board, such taxpayer shall be required to pay the taxes due and owing the state, counties, and municipalities, upon the full value of the assessment, under protest. Upon termination of any proceedings that may be instituted in any of the courts of this state or in any of the courts of the United States by such taxpayer to review such assessment, the state, counties and municipalities, and any school district, road district, or other taxing district to which such taxes have been paid, shall refund in cash and with interest, such part of the taxes so paid to it as may be adjudged to be excessive or illegal by any final decree or order entered in any such proceeding, or in default of such refund, such taxpayer is authorized to take credit for the amount of such illegal or excessive tax, with interest, against any tax thereafter becoming due from and payable by such taxpayer, to the state, or any county, municipality, road district, school district, or any other taxing district authorized by law to levy taxes.
-
- If the state board of equalization has not completed its review of the assessment certified by the comptroller of the treasury within the time provided herein due to exceptions filed by the property owner with the board, the property owner shall be required to pay at least the undisputed portion of the property taxes, based upon the assessment certified by the comptroller of the treasury to the board, tentatively equalized according to the county appraisal ratios approved by the board pursuant to §§ 67-5-1302(b) and 67-5-1509(a), pending final disposition of the exceptions by the board. The partial payment provided herein shall be made within thirty (30) days of written demand therefor by the affected tax jurisdiction, and the board may dismiss the exceptions of any property owner who fails or refuses to make the payment as provided. The property owner may, in addition, pay the disputed portion of such taxes if the taxing authority to whom such taxes will be due agrees to accept the payment. Upon final disposition of the exceptions and certification of the final assessment to the comptroller of the treasury by the board, any overpayment of taxes shall be refunded to the property owner with interest, and any remainder of taxes due but unpaid shall be payable and collectable as otherwise provided by law. Interest shall be due upon unpaid or overpaid taxes under appeal in the same manner provided in § 67-5-1512, and the statutory interest otherwise accruing on delinquent taxes under § 67-5-2010 shall not accrue until the delinquency date or thirty (30) days after the final assessment is certified by the board, whichever is later. At the option of the jurisdiction, refund of overpaid taxes with any interest due may be made by lump sum payment or by crediting such payment against future taxes until paid in full. Payments made by the property owner pursuant to this subsection (c) shall not be construed to prejudice the property owner's appeal or right to a refund of payments determined not to be due, nor shall such payments be considered a voluntary payment. For purposes of this section, authority to bill or make written demand for payment of taxes is vested in the tax collecting official of the jurisdiction, and authority to act otherwise on behalf of the jurisdiction in electing options provided herein is vested in the chief executive officer of the jurisdiction, unless the jurisdiction votes by a majority of its chief legislative body to designate some other official as the person electing options.
- This subsection (c) applies to assessments for the 1990 and later tax years.
Acts 1973, ch. 226, § 11; T.C.A., § 67-933; Acts 1992, ch. 527, §§ 1, 2; 1995, ch. 305, § 125; 1998, ch. 606, § 1; 2017, ch. 299, § 3; 2017, ch. 490, § 7.
Code Commission Notes.
The former proviso at the end of subdivision (c)(2), concerning the imposition of interest between the delinquency date for 1990 taxes and February 27, 1992, was deleted as obsolete by authority of the code commission in 2006.
Compiler's Notes. Acts 2017, ch. 490, § 15 provided that the act, which amended this section, shall apply to all tax periods beginning on or after January 1, 2017.
Law Reviews.
Administrative Law — 1954 Tennessee Survey, 7 Vand. L. Rev. 733 (1954).
NOTES TO DECISIONS
1. Challenged Assessments.
2. —Procedure.
Notwithstanding the provisions of any other statutes, the proper procedure to challenge the assessment of centrally assessed commercial air carrier property taxes is to pay them under protest pursuant to T.C.A. § 67-5-1329(b) and to file a petition for review with the middle division of the court of appeals pursuant to § 4-5-322(b)(1). Northwest Airlines v. Tennessee State Bd. of Equalization, 861 S.W.2d 232, 1993 Tenn. LEXIS 318 (Tenn. 1993).
Taxpayer's assessments for two tax years were vacated and remanded for further findings because the record did not show the taxpayer received T.C.A. § 67-5-1327 notice sufficient to satisfy due process, as an administrative law judge made no findings on the issue and erred in holding (1) the Comptroller only had to issue the notices and (2) any failure to issue the notices was of questionable legal import given taxpayers' strict deadlines in T.C.A. §§ 67-5-1327 and 67-5-1329(a). Volunteer Princess Cruises, LLC v. Tenn. State Bd. of Equalization, — S.W.3d —, 2016 Tenn. App. LEXIS 820 (Tenn. Ct. App. Oct. 31, 2016).
3. —Remedies.
Any railroad or public utility that is aggrieved by the assessment certified by the state board and that successfully challenges the assessment in the state or federal courts is entitled to a refund or a credit after payment under protest under this section. Louisville & N. R. Co. v. Public Service Com., 493 F. Supp. 162, 1978 U.S. Dist. LEXIS 17954 (M.D. Tenn. 1978), aff'd, 631 F.2d 426, 1980 U.S. App. LEXIS 13669 (6th Cir. Tenn. 1980), aff'd, Louisville & N. R. Co. v. Public Service Com., 631 F.2d 426, 1980 U.S. App. LEXIS 13669 (6th Cir. Tenn. 1980), cert. denied, 450 U.S. 959, 101 S. Ct. 1418, 67 L. Ed. 2d 384, 1981 U.S. LEXIS 1073 (1981), cert. denied, Public Service Com. v. Louisville & N. R. Co., 450 U.S. 959, 101 S. Ct. 1418, 67 L. Ed. 2d 384, 1981 U.S. LEXIS 1073 (1981).
67-5-1330. Special assessment on notice by state board.
- If at any time it shall appear to the satisfaction of the state board of equalization that any company, whose property is assessable under this part, is inadequately assessed, or that its property has been omitted from taxation, it shall be its duty to notify the comptroller of the treasury thereof in writing, whereby the comptroller of the treasury shall make the proper assessment, and the assessment shall go to the board as upon appeal upon the records, as it is provided in cases of assessments in the first instance.
- The board shall examine and act upon such record as soon as practicable and certify its final action to the comptroller of the treasury, the collection of the taxes so assessed to be then proceeded with according to the regular course.
Acts 1973, ch. 226, § 11; T.C.A., § 67-934; Acts 1995, ch. 305, § 125; 1996, ch. 662, § 3.
Compiler's Notes. Acts 1996, ch. 662, § 4 provided that the amendments by that act apply to assessments for the 1996 tax year.
67-5-1331. Certification of valuation to local officials — Collection of tax.
- As soon as the comptroller of the treasury has received the valuation from the board of equalization, the comptroller of the treasury shall certify to the trustee and county assessor of property of each county in which any of such property lies, the amount to be taxed in such counties, respectively, for county purposes; and likewise to the city recorder and/or city official whose responsibility it is to collect the tax of any incorporated city or town the amount to be taxed by such city or town.
- [Deleted by 2019 amendment.]
Acts 1973, ch. 226, § 11; T.C.A., § 67-935; Acts 1995, ch. 305, § 125; 2019, ch. 118, § 2.
Amendments. The 2019 amendment deleted former (b) which read: “The amount of the state tax, if any, shall be collected by the comptroller of the treasury.”
Effective Dates. Acts 2019, ch. 118, § 5. April 9, 2019.
67-5-1332. Lien of taxes — Delinquency.
The taxes so assessed in behalf of counties, towns, and cities shall be a first lien upon the property from January 1 of the year for which the taxes are assessed, and they shall become due and delinquent as all other ad valorem taxes.
Acts 1973, ch. 226, § 11; T.C.A., § 67-936; Acts 2019, ch. 118, § 3.
Amendments. The 2019 amendment deleted “the state,” preceding “counties, towns, and cities”.
Effective Dates. Acts 2019, ch. 118, § 5. April 9, 2019.
67-5-1333. [Repealed.]
Acts 1973, ch. 226, § 11; T.C.A., § 67-937; Acts 1995, ch. 305, § 125; repealed by Acts 2019, ch. 118, § 4, effective April 9, 2019.
Compiler's Notes. Former § 67-5-1333 concerned issuance of distress warrants and sale of property for delinquent taxes.
67-5-1334. Collection of county and city taxes.
The taxes due to any county or city shall be collected as any other county or city taxes may be collected by law and at the rate fixed by such county or city.
Acts 1973, ch. 226, § 11; T.C.A., § 67-938.
Part 14
Assessment Review — County Boards of Equalization
67-5-1401. Failure of taxpayer to protest assessment before board — Effect.
If the taxpayer fails, neglects or refuses to appear before the county board of equalization prior to its final adjournment, the assessment as determined by the assessor shall be conclusive against the taxpayer, and such taxpayer shall be required to pay the taxes on such amount; provided, that nothing herein shall be taken as conclusive against the state, county or municipality.
Acts 1973, ch. 226, § 6; T.C.A., § 67-631.
Cross-References. Review of assessments of utilities and carriers, § 67-5-1329.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, §§ 18, 37.
NOTES TO DECISIONS
1. Bankruptcy Proceeding.
A bankruptcy trustee could make a “proper request” for a refund of city and county real property taxes paid postpetition under protest, even though he did not exhaust his administrative remedies. Roberts v. Sullivan County (In re Penking Trust), 196 B.R. 389, 1996 Bankr. LEXIS 658 (Bankr. E.D. Tenn. 1996).
2. Jurisdiction.
Chancery court did not have subject matter jurisdiction, pursuant to T.C.A. §§ 67-5-903, 67-5-1401, and 67-5-1407, to hear a taxpayer's administrator's complaint contesting the method of valuation used and the actual value used in the forced assessments of the taxpayer's tangible personal property, as well as claims that the assessor acted fraudulently. Schutte v. Johnson, 337 S.W.3d 767, 2010 Tenn. App. LEXIS 157 (Tenn. Ct. App. Mar. 2, 2010), appeal denied, — S.W.3d —, 2010 Tenn. LEXIS 931 (Tenn. Sept. 23, 2010).
Trial court correctly determined that it lacked jurisdiction to hear the taxpayer's appeal of reclassification because the taxpayer failed to exhaust all administrative remedies by bringing the issue before the county board of equalization. E. Tenn. Pilot's Club, Inc. v. Knox Cty., — S.W.3d —, 2019 Tenn. App. LEXIS 33 (Tenn. Ct. App. Jan. 25, 2019).
Decisions Under Prior Law
1. Failure to Assert Exemption.
Where a taxpayer's property is exempt, its assessment by a city is void; and the fact that the taxpayer does not protest its assessment to the tax assessor (now assessor of property) or the city board of equalizers does not estop him from challenging the assessment by a bill in chancery. Nashville Labor Temple v. Nashville, 146 Tenn. 429, 243 S.W. 78, 1921 Tenn. LEXIS 25, 23 A.L.R. 807 (1922).
67-5-1402. Duties of board.
The county board of equalization has and shall perform the following duties:
- Carefully examine, compare and equalize the county assessments;
- Assure that all taxable properties are included on the assessment lists;
- Eliminate from the assessment lists such property as is lawfully exempt from taxation; provided, that if an application for exemption of such property is required under part 2 of this chapter, the property shall not be eliminated from the assessment lists unless such exemption is approved by an authorized designee of the state board of equalization;
- Hear complaints of taxpayers who feel aggrieved on account of excessive assessments of their property;
- Decrease the assessments of such properties as the board determines have been excessively assessed;
- Increase the assessments of such properties as the board determines are underassessed; provided, that owners of such properties are duly notified and given an opportunity to be heard;
- Correct such errors arising from clerical mistakes or otherwise that may come or be brought to the attention of the board; and
- Take whatever steps are necessary to assure that the assessments of all properties within its jurisdiction conform to laws of the state and rules and regulations of the state board of equalization.
Acts 1973, ch. 226, § 10; T.C.A., § 67-801; Acts 1994, ch. 541, § 1.
Compiler's Notes. Acts 1994, ch. 541, § 10 provided that the amendment by that act shall not be construed to terminate the tax-exempt status of any parcel of property on January 1, 1995.
Cross-References. Contracts for assistance to equalizers, § 67-5-507.
Equalization required, Tenn. Const., art. II, § 28.
Municipal assessments, correction of errors, equalization, § 6-55-604.
Organization of board, title 67, ch. 1, part 4.
Law Reviews.
Recovering Erroneously Paid Property Taxes in Tennessee: An Epic Journey, 10 Mem. St. U.L. Rev. 279 (1980).
Attorney General Opinions. Neither the board's executive director nor the county assessor can compromise or settle a contested assessment without board approval, OAG 05-102 (7/6/05).
NOTES TO DECISIONS
1. Appeal to Board.
Appeal to the state board of equalization is not the exclusive remedy for obtaining a determination of tax exempt classification of property, and plaintiff is not prevented from paying the tax under protest and suing in chancery court for a refund. Vanderbilt Univ. v. Ferguson, 554 S.W.2d 128, 1976 Tenn. App. LEXIS 265 (Tenn. Ct. App. 1976).
The taxpayer may contest assessments as often as they are made. In re Washington Mfg. Co., 120 B.R. 918, 1990 Bankr. LEXIS 2348 (Bankr. M.D. Tenn. 1990).
Decisions Under Prior Law
1. Appeal to Board.
Complaint before the board of equalizers must be made as a prerequisite to suit to recover taxes properly paid under protest; but the rule does not apply when the taxes are illegal or the assessment is fraudulent, as where the assessment was made without authority of law. Ward v. Alsup, 100 Tenn. 619, 46 S.W. 573, 1898 Tenn. LEXIS 25 (1898); Union & Planters' Bank v. Memphis, 107 Tenn. 66, 64 S.W. 13, 1901 Tenn. LEXIS 59 (1901); Cincinnati, N.O. & T.P.R.R. v. Hamilton County, 120 Tenn. 1, 113 S.W. 361, 1907 Tenn. LEXIS 35 (1907); Nashville, C. & S. L. R. Co. v. Marion County, 120 Tenn. 347, 108 S.W. 1058, 1907 Tenn. LEXIS 52 (1907). See also First Nat'l Bank v. Sevier County, 161 Tenn. 676, 30 S.W.2d 243, 1929 Tenn. LEXIS 68 (1929).
Former statutory provisions reviewed in holding that court of chancery had no jurisdiction of bill seeking a refund of tax paid on land, on ground that land was owned by bank and no allowance was made therefor in assessing capital stock, where bank failed to appeal from order of county board of equalization after relief was refused. Mossy Creek Bank v. Jefferson County, 153 Tenn. 332, 284 S.W. 64, 1925 Tenn. LEXIS 30 (1925).
2. Determination of Cash Value.
The board has discretionary authority to determine actual cash value from all the facts and circumstances, and is not bound by a recent voluntary sale price. Treadwell Realty Co. v. City of Memphis, 173 Tenn. 168, 116 S.W.2d 997, 1937 Tenn. LEXIS 23 (1937).
67-5-1403. Assessor — Assistance and recommendations to board.
- It is the duty of the assessor of property or deputy assessor to meet with the county board of equalization on the first day of its session and to sit with such board in an advisory capacity during each and every day of the session of such board, and to render to such county board assistance in the performance of its official duties in equalizing assessments.
- In addition to other assistance, the assessor of property or deputy assessor may recommend to the board that changes of assessment or classification be made from those certified in the report of assessments required under § 67-5-304, but such recommended changes shall not be so numerous as to amount to the general reappraisal of a class or type of property.
Acts 1973, ch. 226, § 10; 1983, ch. 377, § 2; T.C.A., § 67-802.
NOTES TO DECISIONS
1. Claim of Tax Exempt Status.
When one is claiming tax exempt status it is not necessary that such person first pursue the administrative remedies pursuant to this part and part 15 of this chapter. Bill's Institutional Commissary Corp. v. Shelby County, 584 S.W.2d 805, 1979 Tenn. App. LEXIS 321 (Tenn. Ct. App. 1979).
67-5-1404. Power of board to obtain evidence.
- The board may examine any person as a witness, and hear any proof that may be offered by any taxpayer in or about any question touching the classification, value, or assessment of any property described in the assessment roll.
- The board has the power and authority to send for persons and papers, to examine and enforce the attendance of witnesses, and obtain any evidence or information that may be deemed material in the performance of its duties.
- Each member of the board has the power to administer an oath, and any person who willfully or corruptly swears falsely to any material fact before the board commits perjury and is indictable for such offense.
Acts 1973, ch. 226, § 10; T.C.A., § 67-803.
Cross-References. Perjury, title 39, ch. 16, part 7.
Attorney General Opinions. County assessor's and board of equalization's powers to compel witnesses, OAG 06-059 (4/3/06).
Decisions Under Prior Law
1. Discretion on Matters of Evidence.
The refusal of the county board of equalization to hear or examine witnesses offered on behalf of a taxpayer complaining of excessive valuation does not constitute sufficient cause for granting a writ of certiorari, for the board has unlimited discretion in the matter of hearing evidence. Tomlinson v. Board of Equalization, 88 Tenn. 1, 12 S.W. 414, 1889 Tenn. LEXIS 28, 6 L.R.A. 207 (1889).
67-5-1405. Examination of assessors by board.
It is the duty of the board to bring before it the assessor of property or deputy assessor of the county, and propound to the assessor or deputy assessor such questions as are, in the opinion of the board, proper to ascertain the manner in which the classification, value or assessment of the property was determined by the assessor or deputy assessor, and such other questions as will aid the board in the equalization of assessments.
Acts 1973, ch. 226, § 10; T.C.A., § 67-804.
67-5-1406. Hearing officers.
- The county board of equalization may appoint one (1) or more hearing officers, with approval by simple majority vote of the county commission on a resolution, to conduct preliminary hearings and to make investigations regarding complaints before the board.
- The hearing officers shall assist the county board and prepare proposed findings of fact and conclusions and recommend the same to the county board.
- The county board may adopt any recommendation of such hearing officers as its final decision; provided, that any property owner who desires to be heard directly by the county board is given the opportunity to be heard by the board.
Acts 1973, ch. 226, § 10; T.C.A., § 67-805; Acts 2014, ch. 691, § 2; 2015, ch. 471, § 2.
Compiler's Notes. Acts 2015, ch. 471, § 3 provided that the act, which amended (a), shall apply to tax years beginning on or after January 1, 2015.
67-5-1407. Complaints to county board of equalization.
-
-
Any owner of property or taxpayer liable for taxation in the state has the right by personal appearance, or by the personal appearance of the duly authorized agent of the owner of the property, which agency shall be evidenced by a written authorization executed by the owner or taxpayer, or by representation by an attorney, to make complaint before the county board of equalization on one (1) or more of the following grounds:
- Property under appeal or protest by the taxpayer has been erroneously classified or subclassified for purposes of taxation;
- Property under appeal or protest by the taxpayer has been assessed on the basis of an appraised value that is more than the basis of value provided for in part 6 of this chapter; and
- Property other than property under appeal or protest by the taxpayer has been assessed on the basis of appraised values which are less than the basis of value provided for in part 6 of this chapter.
- Upon such complaint being made before the county board, it may hear any evidence or witness offered by the complainant, or may take such steps as it may deem material to the investigation of the complaint.
-
Any owner of property or taxpayer liable for taxation in the state has the right by personal appearance, or by the personal appearance of the duly authorized agent of the owner of the property, which agency shall be evidenced by a written authorization executed by the owner or taxpayer, or by representation by an attorney, to make complaint before the county board of equalization on one (1) or more of the following grounds:
-
-
Any local governmental entity has the right to make a complaint before the assessor of property and county board of equalization on the value of property within the local governmental entity on one (1) or more of the following grounds:
- The property has been erroneously classified or subclassified for purposes of taxation;
- The property has not been included on the assessment lists; and
- The property has been assessed on the basis of appraised values which are less than the basis of value provided for in part 6 of this chapter.
- Upon complaint by the local governmental entity, the county board of equalization shall give the property owner at least five (5) days' notice of a hearing to be held before the board. The notice shall be sent by United States mail to the last known address of the property owner.
-
Any local governmental entity has the right to make a complaint before the assessor of property and county board of equalization on the value of property within the local governmental entity on one (1) or more of the following grounds:
- The county board may hear any evidence or witnesses offered by the local governmental entity or owner or may take such steps as it may deem material to the investigation of the complaint.
- When the assessor of property or the county board of equalization requests from the owner, or the owner's duly authorized agent, specific data regarding the property that is not readily available through public records and is necessary to make an accurate appraisal of the property in question, and such owner or duly authorized agent fails, refuses or neglects to supply this data in a timely manner for the assessor of property or county board of equalization to study and consider, the owner shall thereby forfeit the owner's right to introduce information concerning the property requested by the assessor of property or any local board of equalization, but denied by the lawful owner or the owner's duly authorized agent on appeal to the state board of equalization.
-
-
Notwithstanding the provisions of this section to the contrary, in any county having a population of not less than seven hundred seventy thousand (770,000) nor more than seven hundred eighty thousand (780,000), according to the 1980 federal census or any subsequent federal census, any taxpayer, or owner of property subject to taxation in the state, has the right to make complaint before the county board of equalization on one (1) or more of the following grounds:
- The property under complaint has been erroneously classified or subclassified or erroneously assessed for purposes of taxation other than as provided in § 67-5-212;
- The property under complaint has been assessed on the basis of an appraised value that is more than the basis of value provided for in part 6 of this chapter; and
- Property other than the property under complaint has been assessed on the basis of appraised values that are less than the basis of value provided for in part 6 of this chapter.
- Any taxpayer, or owner, has the right to appear in person before any county board of equalization, or by an agent having written authorization, by an attorney, by an agent who is registered with the state board of equalization, or by any member of the taxpayer's or owner's immediate family. Any county board may permit written appearance and in that event, any subsequent appeal to the state board of equalization shall be limited to those grounds made by written appearance before the county board.
- In the event there may be duplicate appeals filed on any parcel or should the board have reason to believe that representation is not duly authorized, the board may require from any agent, or other representative, written authorization signed by the taxpayer.
- No agent or other representative shall file an appeal before the county or state boards of equalization without first obtaining written authorization from the taxpayer.
-
Notwithstanding the provisions of this section to the contrary, in any county having a population of not less than seven hundred seventy thousand (770,000) nor more than seven hundred eighty thousand (780,000), according to the 1980 federal census or any subsequent federal census, any taxpayer, or owner of property subject to taxation in the state, has the right to make complaint before the county board of equalization on one (1) or more of the following grounds:
- Wherever in this section personal appearance at a hearing is required, in the discretion of the board all or part of the hearing may be conducted by telephone, television, software or other electronic means, if each participant in the hearing has an opportunity to participate in, to hear, and, if technically feasible, to see the entire proceedings while taking place.
Acts 1973, ch. 226, § 10; 1974, ch. 644, § 2; 1975, ch. 171, § 13; T.C.A., § 67-806; Acts 1986, ch. 585, §§ 1, 2; 1989, ch. 419, § 1; 1998, ch. 1066, §§ 1-3, 7; 2013, ch. 209, § 12.
Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Law Reviews.
Recovering Erroneously Paid Property Taxes in Tennessee: An Epic Journey, 10 Mem. St. U.L. Rev. 279 (1980).
The Proper Scope of Nonlawyer Representation in State Administrative Proceedings: A State Specific Balancing Approach, 43 Vand. L. Rev. 245 (1990).
Attorney General Opinions. Authority to terminate funding for regular and special sessions of county boards of equalization, OAG 96-094 (7/29/96).
Requirement of written taxpayer authorization for taxpayer representatives, OAG 99-054 (3/9/99).
NOTES TO DECISIONS
1. In General.
Any taxpayer, or owner of property liable for taxation in the state, is authorized by this section to make complaint before the county board of equalization on the ground that his property has been erroneously classified, or that his property has been assessed on the basis of an appraised value in excess of market value, or that property other than his own has been assessed on the basis of appraised values that are less than market value. Louisville & N. R. Co. v. Public Service Com., 493 F. Supp. 162, 1978 U.S. Dist. LEXIS 17954 (M.D. Tenn. 1978), aff'd, 631 F.2d 426, 1980 U.S. App. LEXIS 13669 (6th Cir. Tenn. 1980), aff'd, Louisville & N. R. Co. v. Public Service Com., 631 F.2d 426, 1980 U.S. App. LEXIS 13669 (6th Cir. Tenn. 1980), cert. denied, 450 U.S. 959, 101 S. Ct. 1418, 67 L. Ed. 2d 384, 1981 U.S. LEXIS 1073 (1981), cert. denied, Public Service Com. v. Louisville & N. R. Co., 450 U.S. 959, 101 S. Ct. 1418, 67 L. Ed. 2d 384, 1981 U.S. LEXIS 1073 (1981).
Chancery court did not have subject matter jurisdiction, pursuant to T.C.A. §§ 67-5-903, 67-5-1401, and 67-5-1407, to hear a taxpayer's administrator's complaint contesting the method of valuation used and the actual value used in the forced assessments of the taxpayer's tangible personal property, as well as claims that the assessor acted fraudulently. Schutte v. Johnson, 337 S.W.3d 767, 2010 Tenn. App. LEXIS 157 (Tenn. Ct. App. Mar. 2, 2010), appeal denied, — S.W.3d —, 2010 Tenn. LEXIS 931 (Tenn. Sept. 23, 2010).
2. Constitutional Requirements.
All property must be valued under Tenn. Const., art. II, § 28 at 100 percent of market value, and the failure of the taxing authorities to so value one or more subclasses permits those subclasses whose property is appraised at market value to seek and obtain equalization. Louisville & N. R. Co. v. Public Service Com., 493 F. Supp. 162, 1978 U.S. Dist. LEXIS 17954 (M.D. Tenn. 1978), aff'd, 631 F.2d 426, 1980 U.S. App. LEXIS 13669 (6th Cir. Tenn. 1980), aff'd, Louisville & N. R. Co. v. Public Service Com., 631 F.2d 426, 1980 U.S. App. LEXIS 13669 (6th Cir. Tenn. 1980), cert. denied, 450 U.S. 959, 101 S. Ct. 1418, 67 L. Ed. 2d 384, 1981 U.S. LEXIS 1073 (1981), cert. denied, Public Service Com. v. Louisville & N. R. Co., 450 U.S. 959, 101 S. Ct. 1418, 67 L. Ed. 2d 384, 1981 U.S. LEXIS 1073 (1981).
Decisions Under Prior Law
1. Grounds for Relief.
The statute afforded a taxpayer relief in the event: (1) Other property than his own had been assessed at less than actual cash value; or (2) Other property had been assessed at less percentage of actual cash value than his own; or (3) His own property had been assessed at more than its actual cash value. Southern R. Co. v. Clement, 57 Tenn. App. 54, 415 S.W.2d 146, 1966 Tenn. App. LEXIS 199 (Tenn. Ct. App. 1966).
2. Increasing Assessments.
Board of equalization was authorized in nonassessment year to entertain action by taxpayer to raise assessments other than his own. Southern R. Co. v. Clement, 57 Tenn. App. 54, 415 S.W.2d 146, 1966 Tenn. App. LEXIS 199 (Tenn. Ct. App. 1966).
67-5-1408. Disposition of complaints.
Upon its consideration of any complaint or other information available, the county board of equalization may make such changes, by way of increase or decrease in assessments, appraised values, or changes in classifications or subclassifications, as in its judgment are proper, just and equitable; provided, that the property owner or owners shall be duly notified by the board of any increase of assessment or change in classification and given an opportunity to be heard.
- Such notice shall be given at least five (5) days before the adjournment of the board, and such notice shall include the tax year for which any increase of assessment or change in classification is made.
- Notice by United States mail to the last known address shall be deemed sufficient within the meaning of this section.
Acts 1973, ch. 226, § 10; 1983, ch. 377, § 1; T.C.A., § 67-807(a).
67-5-1409. Time for completion of board action.
- Any action by the county board of equalization during its regular session, except upon consideration of a complaint as provided in § 67-5-1407, shall be completed and the notice of decision and appeal procedure sent no later than five (5) days prior to the date taxes are due, which in the case of counties, taxes are due on the first Monday of October of a tax year.
- This shall not apply to special sessions or extraordinary actions under § 67-1-404, § 67-5-508, § 67-5-1503 [repealed], or other applicable law; nor shall it apply for the year in which a county completes reappraisal pursuant to part 16 of this chapter.
- In any county having a population greater than eight hundred ninety thousand (890,000), according to the 2000 federal census or any subsequent federal census, when meeting in special session, except as otherwise determined by a two-thirds (2/3) vote of the county legislative body, the board may act only on an assessment for which an active and timely filed appeal is pending.
Acts 1983, ch. 377, § 1; T.C.A., § 67-807(b); Acts 1987, ch. 346, § 16; 2003, ch. 362, § 1.
Compiler's Notes. Former § 67-5-1503, referred to in this section, was repealed by Acts 1993, ch. 315, § 14, effective May 17, 1993.
For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Cross-References. Personal property sales, withholding proceeds for personal property tax satisfaction; liability for failure to withhold, § 67-5-2003.
67-5-1410. Certification of assessments.
Upon completion of its duties, the county board of equalization shall have prepared a certificate signed by each member and filed in the office of the county clerk, viz:
We, the undersigned members of the board of equalization of County, do hereby certify that we have examined the assessments and classifications of taxable property within the county; we have heard and considered all appeals of such taxpayers as have duly made complaint to the county board of equalization; we have made only such changes in assessments and classifications as in our judgment are proper, just and equitable and are prescribed by law; and we have faithfully discharged all our duties without fear, favor, or affection to the best of our knowledge and ability in accordance with the laws of the state of Tennessee.Witness our hand this day of , .
Acts 1973, ch. 226, § 10; T.C.A., § 67-808.
67-5-1411. Board's action final — Notice.
- When the county board of equalization shall have determined the matters before it, such action shall be final except insofar as the same may be revised or changed by the state board of equalization.
-
The county board of equalization shall give notice of its final decision and the procedure of appeal to the state board of equalization to each property owner heard, and the notice shall include the following:
- The taxpayer's right to electronically file an appeal to the state board of equalization, including a link to the online appeal form;
- The current address of the state board of equalization as indicated on its website;
- All relevant statutory deadlines; and
- Any other information required by the state board of equalization.
Acts 1973, ch. 226, § 10; T.C.A., § 67-809; Acts 2017, ch. 103, § 1.
Law Reviews.
Judicial Review and the Uniform Administrative Procedures Act (Toxey H. Sewell), 6 Mem. St. U.L. Rev. 253 (1976).
Decisions Under Prior Law
1. Administrative Remedies.
Suit to enjoin equalization board from proceeding in an allegedly illegal manner was properly dismissed where complainant had not exhausted the administrative remedy of appeal to the state board. Elliott v. Equalization Bd., 213 Tenn. 33, 372 S.W.2d 181, 1963 Tenn. LEXIS 464 (1963).
Where property owners appeared before a county board of equalization and the matter was determined by that board, such property owners could not successfully complain in court of the action of the county board where they had failed to carry the matter before the state board for review. Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964).
Where corporation asserted right to tax-exempt status as distinguished from asserting that it had been grossly, fraudulently or intentionally overvalued or discriminated against, it was not obligated to exhaust administrative remedies before county and state boards of equalization before bringing suit in court. Rosewood, Inc. v. Garner, 63 Tenn. App. 559, 476 S.W.2d 273, 1971 Tenn. App. LEXIS 254 (1971).
2. Jurisdiction.
Assessment on land owned by bank with no allowance on assessment of bank's capital stock therefor, involved an excessive assessment of bank's capital stock, within jurisdiction of county board of equalizers, and not double taxation. Mossy Creek Bank v. Jefferson County, 153 Tenn. 332, 284 S.W. 64, 1925 Tenn. LEXIS 30 (1925).
3. Finality of Action.
No right of review by the courts exists, unless it be shown that the board exceeded its jurisdiction, failed to observe statutory requirements, or acted fraudulently, and a mere showing that the assessment was considerably more than a recent cash purchase price did not show a fraudulent exercise of board's discretion. Treadwell Realty Co. v. City of Memphis, 173 Tenn. 168, 116 S.W.2d 997, 1937 Tenn. LEXIS 23 (1937).
Court had no authority to review action of county board of equalization unless the record justified the conclusion that the board exceeded its jurisdiction, failed to observe statutory requirements or acted fraudulently. Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964).
67-5-1412. Appeal of county or other local board action to state board authorized.
-
- Any taxpayer, or any owner of property subject to taxation in the state, who is aggrieved by any action taken by the county board of equalization or other local board of equalization has the right to a hearing and determination by the state board of equalization of any complaint made on any of the grounds provided in § 67-5-1407. At any conference or hearing pursuant to part 15 of this chapter, and in the event there may be duplicate appeals filed on any parcel or should the state board of equalization have reason to believe that representation is not duly authorized, the board may require from any agent, or other representative, written authorization signed by the taxpayer.
- No agent or other representative shall file an appeal before the county or state boards of equalization without first obtaining written authorization from the taxpayer.
-
- The taxpayer or owner must first make complaint and appeal to the local board of equalization unless the taxpayer or owner has not been duly notified by the assessor of property of an increase in the taxpayer's or owner's assessment or change in classification as provided for in § 67-5-508.
- Notwithstanding subdivision (b)(1) or any other law to the contrary, a taxpayer or owner may, with the written consent of the assessor, appeal the valuation of industrial and commercial real and tangible personal property to the local board of equalization, or directly to the state board of equalization. A direct appeal to the state board of equalization must be filed before August 1 of the tax year. The taxpayer or owner shall request, in writing via certified mail, return receipt requested, such concurrence from the assessor within ten (10) days after the date the assessment notice for the property is sent, or by June 1 of the tax year, or such other date as may be prescribed by the assessor, but no later than the adjournment date for the regular annual session of the county board of equalization. The request shall state, at a minimum, the name in which the property is assessed, the parcel identification number, the value sought, the basis for the appeal and the name, address, telephone number and fax number of the person requesting the direct appeal. The assessor shall provide such concurrence at least ten (10) days before the adjournment of the county board. If the assessor does not concur with a direct appeal to the state board, and so states in writing at least ten (10) days before the adjournment of the county board of equalization, then the taxpayer or owner shall appeal first to the local board of equalization. If the assessor fails to act upon the taxpayer's or owner's request at least ten (10) days before the adjournment of the county board, then the state board of equalization shall accept the direct appeal of the taxpayer or owner. A taxpayer or owner filing a direct appeal shall attach a copy of the assessor's concurrence to the appeal form filed with the state board, or, if the assessor failed to act timely on a request for a direct appeal, a taxpayer or owner filing a direct appeal shall attach a copy of the written request for the concurrence and a statement that the assessor of property failed to provide a timely response to the request. All direct appeals to the state board under this subdivision (b)(2) shall be filed before August 1 of the tax year.
- [Deleted by 2020 amendment.]
- Complaints and appeals to the state board of equalization must be filed in such format as the board may require by rule, and the board may permit the use of electronic filing including electronic verification and signatures. The appellant has the right to withdraw any complaint and appeal at any time before a decision has been entered on the primary issue of the complaint and appeal.
- The assessor of property or taxing jurisdiction also has the right to appeal from any action of the local board of equalization to the state board of equalization in the same manner as provided in subsections (a)-(c).
- Appeals to the state board of equalization from action of a local board of equalization must be filed on or before August 1 of the tax year, or within forty-five (45) days of the date notice of the local board action was sent, whichever is later. If notice of an assessment or classification change pursuant to § 67-5-508 was sent to the taxpayer's last known address later than ten (10) days before the adjournment of the local board of equalization, the taxpayer may appeal directly to the state board at any time within forty-five (45) days after the notice was sent. If notice was not sent, the taxpayer may appeal directly to the state board at any time within forty-five (45) days after the tax billing date for the assessment. The taxpayer has the right to a hearing and determination to show reasonable cause for the taxpayer's failure to file an appeal as provided in this section and, upon demonstrating such reasonable cause, the board shall accept such appeal from the taxpayer up to March 1 of the year subsequent to the year in which the time for appeal to the state board began to run.
- “Taxpayer” as used in this part or part 15 of this chapter, means the owner of the property under appeal or any lessee legally obligated to pay ad valorem taxes for which the property is liable. A lessee obligated to pay some but not all of the taxes for which the property is liable, may appeal the assessment only if the owner consents to the appeal in writing. A property manager, attorney, or other authorized agent may authorize an appeal if the taxpayer has authorized in writing the property manager, attorney, or other authorized agent to do so.
Acts 1973, ch. 226, § 10; T.C.A., § 67-810; Acts 1986, ch. 585, § 3; 1989, ch. 102, § 1; 1990, ch. 899, § 2; 1991, ch. 161, § 1; 1997, ch. 160, § 5; 1998, ch. 1066, §§ 4, 5; 2004, ch. 737, § 1; 2005, ch. 480, §§ 1-4; 2006, ch. 600, § 1; 2006, ch. 640, §§ 1, 2; 2007, ch. 51, § 1; 2007, ch. 98, § 1; 2007, ch. 111, § 1; 2007, ch. 132, § 4; 2007, ch. 133, § 1; 2011, ch. 32, § 1; 2020, ch. 521, §§ 1, 2.
Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.
Acts 2006, ch. 600, § 1 purported to amend subdivision (b)(3) by adding “in any county having a population of not less than one hundred twenty-six thousand six hundred (126,600) nor more than one hundred twenty-six thousand seven hundred (126,700)”. Acts 2006, ch. 640, § 1 subsequently rewrote subdivision (b)(3). The population range added by ch. 600 is included within the population ranges enacted by ch. 640.
Amendments. The 2020 amendment deleted (b)(3) and the following table, which read: “Subdivision (b)(2) shall not apply in any county having the following populations, according to the 2000 federal census or any subsequent federal census:Not less than Nor more than 10,980 11,00011,700 11,80014,530 14,54016,000 16,10017,650 17,67019,790 19,80020,100 20,15026,700 26,80027,080 27,15028,790 28,81029,440 29,45029,470 29,48029,860 29,90034,850 34,95035,900 36,00037,500 37,60039,080 39,10043,150 43,17548,000 48,05048,150 48,20049,000 49,10051,000 51,50051,900 51,95053,550 53,57062,300 62,35062,900 63,00091,830 91,850105,800 105,900107,100 108,000125,000 127,000133,000 135,000150,000 160,000182,000 183,000382,000 382,100800,000 900,000”; and in (c), substituted “must” for “shall” in the first sentence, “appellant” for “taxpayer or owner” and “a decision” for “the final order” in the second sentence.
Effective Dates. Acts 2020, ch. 521, § 5. March 6, 2020.
Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 37.
Law Reviews.
Recovering Erroneously Paid Property Taxes in Tennessee: An Epic Journey, 10 Mem. St. U.L. Rev. 279 (1980).
Attorney General Opinions. Requirement of written taxpayer authorization for taxpayer representatives, OAG 99-054 (3/9/99).
67-5-1413. [Repealed.]
Acts 1973, ch. 226, § 10; T.C.A., § 67-811; repealed by Acts 2018, ch. 527, § 2, effective March 7, 2018.
Compiler's Notes. Former § 67-5-1413 concerned a record of changes by county boards of equalization and submission of such records to the state board.
67-5-1414. Record of board's action preserved by assessor.
- The individual property records maintained in the office of each assessor of property shall show all actions taken by the county board of equalization which change the classification, value or assessment of any parcel of property.
- Further, upon the completion of the duties of the board, the records and papers of the board shall be turned over to the assessor of property for preservation for a period of at least ten (10) years.
Acts 1973, ch. 226, § 10; T.C.A., § 67-812.
67-5-1415. Proceedings by board against assessors.
It is the duty of the members of the county board of equalization, when it is known to or reasonably suspected by any one (1) of them that any assessor of property or deputy assessor has knowingly or willfully classified, valued or assessed any property in violation of the requirements of law, to report the same to the district attorney general or proper officer of the state, whose duty it shall be, upon receiving such information, to institute proceedings against the assessor upon the assessor's bond to recover the penalty prescribed in § 67-5-306.
Acts 1973, ch. 226, § 10; modified; T.C.A., § 67-813.