The House and Senate have come to an agreement on their differences in this session's franchise tax legislation. There will be some transparency about which businesses are seeking refunds due to new changes to the franchise tax.
House Majority Leader William Lamberth (R-Portland) began the conference committee meeting Thursday morning by saying the House had agreed to concede to the Senate for a three-year period for businesses to be able to request a refund. In exchange, the Senate agreed to a transparency provision.
Gov. Bill Lee’s push to change the franchise tax law would remove the property tax portion of the law, which currently states businesses pay based on the greater of either their net worth or their property owned in the state. Businesses that paid on the property tax provision in the past three years would be eligible for the refund. The General Assembly approved $1.5 billion in the budget for potential refunds. That’s because, Republicans say, it’s the right thing to do and it’s the business’s own money going back.
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“We are not taking money from individual Tennessee taxpayers,” said Sen. Bo Watson (R-Hixson), chair of the Senate Finance Committee. “We are taking the money that these companies have paid into our tax system — which we believe to be an overpayment based on our review of the law — and are returning that money to them, as we should.”
The transparency aspect of the conference committee’s decision states that the names of businesses that requested refunds would be released in May 2025. The exact amount they receive will not be given, but instead, they will be placed in a category ranging from $0 to $750, $750 to $10,000, and $10,000 and up — as well as a category for pending refunds.
Democrats contend that this will not yield true transparency and have repeatedly called the refunds hand-outs. Rep. Bo Mitchell (D-Nashville) said the categories were "laughable." The minority party noted most of the $1.5 billion in the budget will likely go to larger companies for which refunds may end up in either the pending or the $10,000-and-up categories, providing no real transparency regarding how much each company received.
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“I refute any assertion that creating that pending category is a way for a business to avoid being disclosed,” Senate Majority Leader Jack Johnson (R-Franklin) said.
Lamberth stressed the move to reveal taxpayer information is unprecedented: "For this one instance, for this one moment in time, we are allowing that information to be out there."
According to records from the Tennessee Department of Revenue first reported by The Tennessean, 86 businesses filed refund claims alleging a legal issue with the current law. And 24 of those paid on the property measure of the tax. The total amount for which the 24 would be eligible to receive is $15 million. The department determined 100,000 taxpayers would be eligible for the refund. However, the department also said 53 percent of the refund dollars would go to only about 19,000 companies that are located out of state.
“The majority of the dollars are going out of state,” Sen. Jeff Yarbro (D-Nashville) said. “We’re not giving any transparency about where those dollars are really going.”
The conference committee report passed a Senate vote of 25-6 along party lines. Later in the House, the conference committee report passed by a vote of 68-20-8. Representatives who were present and did not vote were Jody Barrett, Michele Carringer, Scott Cepicky, John Crawford, Johnny Garrett, Ronnie Glynn, Michael Hale and Justin Lafferty.
This article was first published by our sister publication, the Nashville Post.
