Amnesty Program for Tennessee Business Tax

Any business operating in the state of Tennessee is subject to an annually imposed business tax. The business tax is separate and in addition to franchise and excise tax, as well as sales tax. Historically, business tax returns were filed with local municipalities and counties, but will now be filed with the Tennessee Department of Revenue.

The department is conducting a compliance program to identify taxpayers subject to business tax but not yet registered and filing returns. If taxpayers voluntarily register and agree to pay three years’ back taxes, including interest, the department will waive all penalties. Companies that do not voluntarily comply and wait to be contacted will be required to pay from 6 to 10 years worth of back taxes and interest. Additionally, a mandatory penalty of up to 25% will be assessed on any tax due.

The business tax is considered a privilege tax on any business, business activity, vocation, or occupation that is specifically outlined in the state statute. There are five classifications of business types for business tax purposes, which include but are not limited to retail and wholesale sales, various types of contracting businesses, and industrial loan and thrift companies. There is also a detailed list of business activities which are exempt from the business tax. The specifics of these provisions are beyond the scope of this newsletter; however, if you have questions regarding whether or not your business is subject to the business tax, please contact our office or your county or municipal office.

Although business tax returns are now filed with the Department of Revenue, businesses will continue to obtain business licenses from the county clerk and/or municipal offices.

We strongly encourage any business not currently in compliance with the business tax requirements to take advantage of this amnesty program. Please do not hesitate to contact our office if we can assist you in this matter.

To comply with the requirements of IRS Circular 230, we must inform you that the information discussed above is not intended or written to be used, and cannot be used by the recipient or any other taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or any other applicable tax law, or to promote, market or recommend to another party any transaction, entity, investment plan, arrangement or other matter.