Tennessee Simplifies 2023 Franchise Tax Refunds

Tennessee’s franchise tax structure was updated earlier this year with the signing of HB 1893 and SB 2103 by Governor Bill Lee on May 10, 2024, meaning that Schedule G was eliminated from the state’s franchise tax calculation (read more in our article, Tennessee Modernizes Franchise Tax, Offers Refunds for Prior Property Measure Payments). Now the state of Tennessee has created a streamlined filing process introduced for the 2023 tax year.

Schedule G Still Required for 2023 Tax Year

For tax periods beginning on or after Jan. 1, 2024, Tennessee eliminated the property measure (Schedule G) from the franchise tax calculation. However, for tax periods ending on or before Dec. 31, 2023, Schedule G was still a required part of the return. Previously, taxpayers were required to complete Schedule G (property value); calculate and potentially pay tax based on the greater of Schedule F net worth (business value) or Schedule G property value; and file an amended return and claim a refund if they paid tax based on Schedule G.

New Streamlined Filing Option

The Tennessee Department of Revenue has introduced a new option to avoid the hassle of multiple filings for taxpayers who would have paid a higher tax based on Schedule G property. These taxpayers can now file their 2023 return using Schedule F net worth without completing Schedule G. To qualify, taxpayers must do the following by Nov. 30, 2024:

• Complete and submit a Pro Forma Schedule G.
• File a completed Claim for Refund of Franchise Tax Paid on Property Measure (Schedule G) form.

The streamlined filing option can help taxpayers by reducing the amount of returns needed to file, allowing them to pay based on a potentially lower Schedule F net worth as well as receiving a refund for any excess tax paid on Schedule G property.

Who Can Use This Option?

Taxpayers who already filed their 2023 return using Schedule F net worth (without completing Schedule G) can use this option if Schedule G property would have been higher. Taxpayers who have not yet filed their 2023 return can also use this option if completing Schedule G would result in a higher tax liability.

How Can I Submit My Information?

The Tennessee Department of Revenue recommends using the Tennessee Taxpayer Access Point (TNTAP) to submit the Proforma Schedule G as well as the Claim for Refund of Franchise Tax Paid on Property Measure (Schedule G). The due date for filing applications for these refunds is Nov. 30, 2024.

Windham Brannon’s State and Local Tax Practice can help Tennessee taxpayers determine if they are eligible for a refund and how to complete the claims process effectively and accurately. For questions or more information, contact your Windham Brannon advisor today, or reach out to Tim Clancy, Windham Brannon’s State and Local Tax Practice Leader.