AN ACT to amend Tennessee Code Annotated, Title 67, Chapter 4, Part 20 and Title 67, Chapter 4, Part 21, relative to credits against franchise and excise tax liability.
If implemented, SB0430 could substantially alter the framework governing tax credits in Tennessee. The transferability of franchise and excise tax credits may encourage greater investment in businesses by allowing more entities to benefit from available credits, potentially leading to increased economic growth. This change could particularly assist small businesses that may find accessing the full benefits of tax credits challenging under the current structure, thereby acting as an economic stimulus. Additionally, such a shift may simplify compliance with tax regulations for businesses engaging in partnerships or collaborations.
SB0430, proposed in Tennessee, aims to amend the state's existing laws concerning franchise and excise tax credits by urging the Department of Revenue to study the feasibility and economic implications of allowing all tax credits to be transferable to other entities. This bill seeks to enhance flexibility in the utilization of tax credits, potentially benefiting businesses and promoting economic activity by enabling tax credits to be shared or utilized by a third party rather than being restricted to the original recipient. The study mandated by the bill must be reported to pertinent legislative committees by January 1, 2026, which could pave the way for future legislative actions based on the findings.
Potential points of contention surrounding SB0430 could center on the implications of transferring tax credits, with concerns about fairness and equitable access for businesses of different sizes. Opponents might argue that transferring tax credits could unduly favor larger corporations or entities that can afford to leverage them more effectively, while smaller enterprises could remain disadvantaged. Furthermore, debates may arise regarding the study's scope and the measures that will be taken to ensure that the tax code remains fair and beneficial to all segments of the state's economy.