Tennessee Senate Bill SB0981

Tennessee 2023-2024 Regular Session

• Introduced: 1/31/23

Caption

AN ACT to amend Tennessee Code Annotated, Title 67, Chapter 4, Part 20 and Title 67, Chapter 4, Part 21, relative to exemptions from franchise and excise taxes.

Impact

The enactment of SB 0981 will likely have significant implications for state tax laws. By enabling specific community development entities to receive tax exemptions, the bill encourages investment in economically challenged regions within Tennessee. This could potentially lead to an increase in funding for local projects, thereby boosting economic activity and job creation. However, the bill also raises questions regarding the impact on state revenue, as tax exemptions could reduce the overall tax base in the short term.

Summary

Senate Bill 0981 aims to amend certain sections of the Tennessee Code Annotated concerning exemptions from franchise and excise taxes. The bill introduces a provision that provides tax exemptions for community development entities certified by the U.S. Department of the Treasury. Specifically, it relates to those entities receiving allocations of federal new market tax credits when used for qualified low-income community investments in Tennessee. This legislative move intends to promote economic development in low-income areas by creating financial incentives for businesses and nonprofit organizations operating in those locales.

Contention

Notable points of contention surrounding SB 0981 may arise from the potential perceptions of preferential treatment for community development entities, prompting discussions on fairness in the tax system. Some stakeholders may argue that while fostering economic development is crucial, providing exemptions could strain the state's financial resources or create an uneven playing field among businesses. Debates may also surface regarding the effectiveness of such tax incentives in achieving the desired outcomes, such as actual job creation and long-term economic stability.

Additional_notes

The bill is expected to take effect upon becoming law and will apply to tax periods beginning on or after January 1, 2024. This timeline indicates a preparedness to implement the changes swiftly, reflecting the urgency attributed to fostering community development in Tennessee.