Bass, Berry & Sims attorneys Mike Sontag, Steve Jasper, Sara Morgan, and Robert Guth authored an article outlining how two appellate court cases, the Department of Revenue's new Business Tax Manual, and recent legislative developments have brought needed clarity to the Tennessee business tax. Outlined in further detail in the full article, the authors explore the following three topics:
- The Tennessee Court of Appeals decisions - Eisai and Bearing Distributors - that provided direction to Tennessee taxpayers attempting to apply the wholesaler concept.
- The Tennessee Department of Revenue's recently completed and comprehensive update of its published business tax guidance in a new Business Tax Manual, including an update to address the recent decisions.
- The recently adopted Tennessee Works Act, which includes several significant tax reforms, including his much-publicized move to single-sales-factor apportionment for state franchise and excise tax.
The authors conclude by noting that "taxpayers should review the recently updated Business Tax Manual, revise their Tennessee tax compliance procedures accordingly, and implement reasonable practices to properly classify and document their sales. Not only will these efforts reduce the overall risk of errors, but as the two recent cases show, taxpayers able to present evidence of proactive compliance are likely to enjoy greater leniency in both audit and judicial review."
The full article, "Tennessee's Three Branches Bring Clarity to the Business Tax," was published by Tax Notes State on May 15 and is available online (subscription required).
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