The TN Department of Revenue has recently issued guidance on new legislation that eliminates the property measure from the franchise tax calculation and allows the department to issue refunds to eligible taxpayers. Prior to this change, franchise tax was calculated on the higher of net worth (Sch. F) or the book value of real and personal property owned or rented (Sch. G). For tax years ending on January 1, 2024 or later, Schedule G is no longer used and franchise tax is based solely on the net worth calculation.
The legislation also provides for a refund of franchise tax to eligible taxpayers who calculated their franchise tax on the property measure in prior years. The refund will be the difference between the franchise tax calculated on the original return, and what the franchise tax should have been when based on net worth. This refund is available for tax years ending on or after March 31, 2020 for which a return was filed on or after January 1, 2021. For most calendar year filers, this will mean their 2020 – 2023 franchise tax returns. There are specific requirements for claiming the refunds, and the taxpayer should weigh the benefits of doing so. Those taxpayers who already filed their franchise tax for those years based on the net worth calculation, or those who paid the minimum franchise tax of $100, are not eligible for the refund. Amended returns and the refund claim process must be submitted no later than November 30, 2024.
It is important to note that any taxpayer accepting a refund under this law, waives their right to suit against TN as it pertains to these provisions of the franchise tax. Those who claim refunds will have their name published on the department’s website along with their approximate refund amount.
The TN Department of Revenue has said they will identify taxpayers that qualify for the refund and send out notifications. We recommend taxpayers search their own files to determine if they qualify for a refund. At DMJPS, we are working to identify clients who will benefit from this refund, and will reach out to discuss. Specific instructions and forms are included on the TN Department of Revenue’s website, and we recommend you consult your DMJPS tax professional for assistance.
If you have any questions or would like additional information, please contact DMJPS
Joseph Nash, CPA
Joseph (Joe) Nash works in taxation services at DMJPS. He has experience with family-owned businesses, including partnerships and corporations, and associated trusts and individuals. His work spans across multiple industries. He strives to provide thorough client service and foster long-term relationships.