Tennessee House Bill HB0323

Tennessee 2023-2024 Regular Session

• Introduced: 1/20/23
• Refer: 2/28/23
• Refer: 3/22/23
• Refer: 3/28/23
• Engrossed: 4/4/23
• Enrolled: 4/24/23
• Passed: 5/11/23
• Chaptered: 5/19/23

Caption

AN ACT to amend Tennessee Code Annotated, Title 67, relative to taxation.

Impact

The alterations introduced by HB0323 may lead to significant implications for state laws, particularly concerning taxation frameworks. The adjustments to franchise and excise taxes, alongside the modifications to how net earnings are assessed, are expected to affect the tax burden on businesses. Such changes could simplify compliance for multi-state businesses, potentially improving their operational efficiencies while also redefining tax obligations based on new apportionment formulas. The repeal provisions for certain subsections after December 31, 2025, suggest a temporary measure that necessitates ongoing legislative attention.

Summary

House Bill 0323 focuses on amending various sections related to taxation in the Tennessee Code Annotated, specifically targeting the apportionment of net earnings and adjustments to taxes applicable to businesses. The bill proposes changes to how net earnings are calculated and apportioned to the state, which impacts the overall tax liability of businesses operating both in and outside Tennessee. It introduces new fractional percentages for apportioning net worth based on property, payroll, and receipts, aiming to streamline tax calculations and enhance revenue collection for the state.

Sentiment

The sentiment around HB0323 seems to reflect a pro-business outlook, suggesting that the changes could alleviate some of the complexities currently faced by companies regarding tax calculations and compliance. However, there may be concerns among some stakeholders about the adequacy of protections for revenue generation and ensuring that larger corporations do not disproportionately benefit from these adjustments at the expense of smaller entities and local governments.

Contention

Notable points of contention arise regarding how the new apportionment methods will affect different businesses, particularly those with a significant physical presence in Tennessee. Critics may argue that while the bill is designed to promote business, it could lead to tax reductions that hamper state and local funding. Moreover, determining the balance between fostering a favorable business climate and maintaining fiscal integrity for state education and infrastructure could become a contentious political issue.