Top Three Takeaways

• Franchise tax will only be calculated based on a taxpayer’s apportioned net worth (assets minus liabilities) for tax years ending on or after January 1, 2024.
• Taxpayers can request refunds for tax returns filed on or after January 1, 2021, based on the net book value of property owned or used in Tennessee.
• A list of taxpayers that receive refunds will be temporarily published on the Department of Revenue’s website.

Franchise Tax Refund Deadline

Governor Bill Lee signed SB 2103 on May 10, enacting changes to the calculation of Tennessee’s franchise tax. The change eliminates the net book value of Tennessee property as a measure of the franchise tax base and allows refund claims going back to 2021.

Changes to Franchise Tax Base

Under prior law, the 0.25% Tennessee franchise tax was calculated based on the greater of apportioned net worth or the net book value of real and tangible personal property owned or used in Tennessee (alternative property measure).

The new law repeals the alternative property measure, requiring a taxpayer to pay solely using its apportioned net worth. Further, the law authorizes refunds of franchise tax previously paid based on the alternative property measure.

Refund Opportunities

The law allows refund opportunities based on the difference between the amount of tax paid under the alternative property measure calculation and the apportioned net worth method.

If you need help understanding these changes to Tennessee franchise law or claiming a refund, our Tax team can help.