Discover how recent amendments to Tennessee's franchise tax laws can put money back into your business's pocket.
What is Happening?
Tennessee has recently amended its Franchise Tax law due to concerns that a portion of the law may be unconstitutional under the U.S. Constitution. This proactive measure by the state ensures compliance with federal laws and rectifies past discrepancies. The changes are designed to address potential legal challenges and to align the state’s tax policies more closely with constitutional requirements.
This issue arose from potential conflicts with the Commerce Clause or other provisions of the U.S. Constitution that govern state taxation and interstate commerce. By amending the law, Tennessee avoids costly legal battles and fosters a more business-friendly environment.
Why is This Important?
The state's Fiscal Review Committee anticipates that over $1.5 billion in refunds will be distributed to more than 100,000 taxpayers. This is a substantial opportunity for businesses to recover some of the taxes paid in prior years.
For many businesses, this refund could provide much-needed financial relief, enhance cash flow, and support reinvestment in their operations.
Who is Eligible?
Eligible entities include:
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C/S Corporations
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LLCs
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PLLCs
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LLPs
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LPs
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Cooperatives
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REITs
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Banks
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Savings and Loan Associations
These entities must have filed Tennessee Franchise Tax returns for 2020-2023. This broad eligibility ensures that many businesses can benefit from the refunds.
When and How to Claim Your Refund
Refund claims must be filed between May 15, 2024, and November 30, 2024. This window provides ample time for businesses to prepare and submit their claims, ensuring eligible entities do not miss out on this opportunity.
Our team is currently reviewing eligibility and will be amending returns and filing refund claims on behalf of our clients over the next few months. If you have any questions or need assistance in determining your eligibility, please reach out to us.
Potential Refund Calculation
Calculating the potential refund involves a detailed analysis of previous tax payments and the specific changes to the franchise tax law.
To estimate your potential refund:
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Review Your Previous Tax Payments: Look at the Franchise Tax payments made for tax years 2020-2023.
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Amendment Adjustments: Consider any adjustments that will be applied based on the new rules.
The exact calculation will vary depending on the specifics of each business's tax filings. Our team will handle these details to ensure accurate and timely refund claims.
We are already reviewing past returns and determining eligibility for our clients. If you are not a client, we recommend discussing potential eligibility with your business's tax advisor or contacting us for a consultation.
