In a significant change, theTennessee Franchise Tax has become more straightforward and taxpayer-friendly. Under the previous law, this tax was calculated based on the greater of the taxpayer’s net worth or the net book value of their fixed assets, real property, inventory, plus rents and leases paid.

But here’s the twist: On April 25, 2024, the merged House Bill 1893 and Senate Bill 2103 was passed. Starting with tax years ending after January 1, 2024, the taxpayer’s net worth will be the sole basis for the Tennessee franchise tax.

Refunds Alert! If you have been paying franchise tax based on asset book value rather than net worth, you are in luck. You can claim a refund for the difference between these two amounts. Tax periods ending after March 30, 2020, are eligible. For calendar year taxpayers, this includes the years 2020-2023.

The Refund Process:
1. Amend Prior Year Returns: Review and adjust your prior tax returns.
2. Submit via TNTAP Portal: File a form through your TNTAP portal, explaining the refund reasons and amount.
3. Additional Info: Depending on the refund size, you may need to provide extra details.
4. Claim Window: From May 15, 2024, to November 30, 2024.

Spotlight on Taxpayers: In June 2025, the Tennessee Department of Revenue’s website will feature refund recipients. While exact amounts will not be published, taxpayers will be grouped by refund size:

• $0 – $750
• $751 – $10,000
• Above $10,000

The Tennessee Society of Certified Public Accountants (TSCPA) has the most comphrensive update regarding this change and what it means for business owners. You can read that article using this link:TSCPA Tennessee Franchise Tax Update

We will update you as to the next steps, as the Tennessee Department of Revenue provides guidance. If you have questions or want to discuss it further, please contact us.

Information in this email is subject to change upon passage of the legislation. We will share updates as guidance from Tennessee Department of Revenue is made available.

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