Tennessee Businesses to See New Taxes, Fewer Loopholes, Economic Incentives in Year Ahead

 

NASHVILLE, TN – July 16, 2009 – Business leaders from across the state heard a panel of noted experts state that they could expect new taxes and fees, fewer loopholes and a range of economic incentives designed to stimulate business growth in the coming year.

 Many critical changes in Tennessee tax laws were made during the just-ended legislative session, the experts noted in providing their perspective on the impact of those changes on Tennessee  businesses and organizations.

 Weighing in during the discussion was Michael D. Sontag, Member and Tax Practice Chairman of the Bass Berry & Sims law firm; Michael Stewart, attorney with Branstetter, Stranch & Jennings and state representative from House District 52; and Reagan Farr, commissioner of the Tennessee Department of Revenue.  The event was created and sponsored by public accounting firm Carr, Riggs & Ingram, LLC, one of the Southeast’s ‘Top Four’ accounting and business consulting firms and a top 40 firm nationally, in partnership with BusinessTN magazine and Bass, Berry & Sims.

Franchise/excise taxes were one area the experts noted where affected businesses could see significant changes.  Most industrial/commercial rent will no longer be exempt from franchise/excise tax, and new penalties were laid out for failure to notify the state in timely fashion of exemption from such taxes.  Deduction for rent expense paid to an affiliate can now also be subjected to limitations.

 In another area of note, only 50% of business tax will be allowed to be offset by personal property taxes, and an organization’s dominant business activity will now determine their business tax rate, the panelists noted. 

 The taxation of software maintenance contracts was clarified and expanded, while advertising agency preliminary artwork and services can now be exempt from tax under most instances.

 “In one morning, business leaders from across the state were able to obtain insight as to critical changes in Tennessee tax laws made by the state legislature this session – information it might normally take them months to accumulate,” noted Sandy McClarty, senior tax partner of presenting sponsor Carr, Riggs & Ingram.  “We sponsored this program to prepare them to walk away with current, well-rounded and qualified information for making business decisions for their business and clients – direct from the newsmakers.”

In other notable developments covered: 

• Job tax credit and headquarter relocation credit increases are now available to eligible businesses     across the state.
• Personal property taxes will now shift in administration to the Department of Revenue from local authorities.

• The state clarified emerging industries that are eligible for sales and use tax credits.