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Franchise Tax Reform goes to Conference Committee: The House and Senate have yet to come to an agreement between their competing versions of HB1893/SB2103, the Governor’s proposed franchise tax reform this week, leading to the appointment of a conference committee to iron out the differences.
It is the Tennessee Chamber’s understanding that most of the differences between the versions have been agreed to. The final bill is likely to include the Senate version’s full 3 years of refunds and the House’s provision that would protect businesses with franchise tax credits from having those devalued by allowing an option to remain in the current environment – where they pay on real and tangible property instead of going to net worth – if the real and tangible property measure results in a higher tax liability than the net worth measure would.
The final outstanding issue appears to be the House’s provision that would require the Department of Revenue to publish the names and refund amounts of any business receiving a refund on their website.
Urge Legislature to Address Frivolous Business Website Lawsuits: Please contact your legislators in both chambers to urge them to pass the House amended version of SB2221/HB1658 to protect businesses in the state that are being targeted for utilizing standard business practices before more of these lawsuits are filed.
Tennessee's wiretapping law, which was passed in 1994 when the internet was in its infancy, was designed to criminalize the "interception" of oral, wire, or other electronic communications” (old-school phone tapping). Violating this wiretapping statute is a Class D Felony, but the statute also grants the injured party the ability to sue for $10,000 per violation. Plaintiff's lawyers claim that every time a person visits a website that uses third-party technology, like cookies or pixels, it is an "interception,” and that the website operator is liable to be sued by the visitor for $10,000 per person per click. This is a gross misuse of the wiretapping statute, as the use of this third-party technology does not constitute the practice of wiretapping as is rightfully understood.
Budget Passes: The budget begins July 1 and due to flat revenues and expiring federal funds the budget is down roughly $10 billion from last year’s record budget. The budget puts the state roughly back on track to what the state was spending before the pandemic. However, this year’s budget allocates more state dollars as opposed to last year’s higher appropriation of federal funds. Highlights of the budget are below.
- Roughly $400 million recurring cut for businesses by removing the alternative measure portion of the franchise tax
- $1.5 billion non-recurring funds for three years of retroactive refunds for businesses of over-collected franchise tax based on the alternative measure.
- $10 million for a Nuclear Development grant
- $261 million increase for the Tennessee Investment in Student Achievement funding formula, including $125 million for teacher salary increases and retirement contributions
- $40 million for ECD for Infrastructure improvements at I-24 industrial site
- $15.8 million for rural health pathways workforce development program
- $144 million in funding for a statewide school voucher program *legislation is still being considered by legislators*
Information provided by the Tennessee Chamber of Commerce.
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