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Business Tax Transition

The goal of the 2013 Uniformity and Small Business Relief Act is to make life easier for taxpayers, but it also means some changes to the business tax, starting January 1, 2014.

One objective of the new law is to lessen the tax burden for small businesses:

  • Businesses in a county or municipality with less than $10,000 in annual sales do not have to file a business tax return.
  • However, businesses with annual sales between $3,000 and $10,000 must pay $15 each year to get a "minimal activity license" from the local clerk.
  • Businesses with annual sales of $10,000 or more must get a business license from the local clerk. A $15 license fee is required for all new businesses that can be renewed at no charge when the annual business tax return is filed. This is not a new requirement.

The new law also makes the business tax filing process simpler:

  • A business' tax period will now coincide with its fiscal year, rather than arbitrary dates previously set under state law. This change was made in response to numerous requests from taxpayers and accountants.
  • Calendar year 2014 will be the transition period where taxpayers will match their business tax to other annual state and federal tax filings.
  • Taxpayers must file their business tax returns electronically. A video explaining the registration process can be found here. If filing an electronic return creates a hardship on a business, it can file a return in paper form after asking permission from the Department of Revenue.

The application of the business tax is more uniform:

  • Business tax now will be imposed in all 95 counties in the state.
  • The change to a "state" business tax does not impact the business requirement to obtain a business license from a county, nor does it impact how the revenue is distributed back to the counties.
  • There is no impact on the "city" level business tax. If a city has a business tax, it stays in place. If it does not have a business tax, no business tax is imposed, unless local legislators pass a law to put a tax in place.

Additional Information:

Determine what your new due date will be based on your business classification.

Use this chart to calculate your personal property tax credit.

Frequently Asked Questions

Click here to download the letter regarding the changes to business tax.

Questions:

Taxpayers with questions can e-mail the Department at businesstax.transition@tn.gov or call our Taxpayer Services division at (615) 253-0600 or toll-free at (800) 342-1003.