$5000 Refund Payment: Who is eligible for an up to 5,000-dollar payment in Tennessee?

Tennessee House and Senate approved legislation allowing businesses with significant presence in the state to be subject to the franchise tax.

(Credit: WBUR)

5000 Refund Payment: As a result of legislation that the Tennessee House and Senate approved, some taxpayers may receive a sizable refund.

Except for not-for-profit organizations, all businesses operating in Tennessee and having a significant presence there are liable for the franchise tax.

This covers subchapter S corporations, corporations, limited liability companies, professional limited liability companies, cooperatives, business trusts, joint stock associations, regulated investment companies, REITs, state-chartered or national banks, and state-chartered or federally chartered savings and loan associations, among other entities.

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For the uninformed, the aforementioned fee is essentially a privilege tax that is paid in exchange for the right to conduct business in Tennessee.

However, S.B. 2103, which the legislature approved and sent to the governor, permits the deletion of the alternative property measure for tax years that end on or after January 1, 2024.

According to PWC, this means that taxpayers who planned to pay on the physical property base “will want to adjust their remaining 2024 estimated payments to account for the fact they will be subject to tax on a lower apportioned net worth base.”

Who Qualifies?

The law would mandate that refunds “equal to the amount of tax paid minus the amount of tax otherwise due without regard to Sec. 67-4-2108” (the alternative property measure of the tax) be given to the Department of Revenue.

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For a tax period ending on or after March 31, 2020, the tax subject to refund must have been remitted to the Department on a return filed on or after January 1, 2021. It’s also necessary to submit the refund claim between May 15, 2024, and November 30, 2024.

Beginning ninety days after the Department receives the return claim and all supporting documentation, interest will be calculated at the federal short-term rate + 0.5%.

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