Category Archives: state taxes

Legislature raises fees for county audits, sets up historic preservation funds

Legislation raising fees that counties pay for audits by the comptroller’s office and diverting new revenue from the state’s real estate transfer tax to historic preservation funds has won almost unanimous approval by the Legislature.

State law requires annual audits of county governments and In 89 of the state’s 95 counties, the comptroller does the auditing. Under current law, those counties pay a fee based on population — 30 cents per resident.

Under SB2654, the fee will be increase to 36 cents per resident starting next year with the comptroller granted authority to raise the cost another 3 cents per resident in each of the following years. The Republican sponsors, Senate Majority Leader Mark Norris of Collierville and House Finance Committee Chairman Charles Sargent of Franklin, said the extra money is needed to cover increased costs — and if the future increases are not necessary, they won’t be implemented.

The Fiscal Review Committee estimated the cost to the counties would be about $230,000 next year. Six of the state’s most populous counties, including Knox, hired their own auditors and do not rely on the comptroller.

Another provision of the bill creates two new uses for money collected from the state’s real estate transfer tax —— purchase of Civil War sites and purchase of historic properties. The Fiscal Review staff estimates that the two funds will split about $1 million next year as a result of the bill’s enactment.

Currently, funds from the tax are earmarked for four other funds — one for wetlands acquisition, one for state park land acquisition, one for local park acquisition and the Agricultural Resources Conservation Fund. Under the bill, those accounts will be frozen at their current levels of annual funding and all growth money will go to the new funds.

The bill passed the Senate 31-1 and was approved 92-1 in the House. The no votes came from Senate Minority Leader Lee Harris, D-Memphis, and Rep. John Mark Windle, D-Livingston.

‘Bike trail bill’ taken off the legislative road

A controversial legislative bill restricting Tennessee cities and counties’ use of gas taxes for parks, greenways, bike lanes and similar infrastructure is dead for the year, reports the Times-Free Press.

Rep. Mike Carter, R-Ooltewah, confirmed he took the bill off notice (Thursday) after it became clear the Senate Finance Committee wouldn’t proceed with the companion measure (SB1716) sponsored by Sen. Todd Gardenhire, R-Chattanooga.

The bill drew opposition from biking enthusiasts as well as concerns from at least some cities.

“It got pulled in the Senate so there’s no reason to run it,” Carter said.

…”What it does is it says here’s what we’re going to spend your gas tax money on. So the next year when the gas tax bill runs, people can decide ‘I want to raise my money for this purpose or for this purpose.’ And they can decide.

“It’s actually an honesty in government bill, which is revolutionary and would be very difficult to pass.”

Bike Walk, an advocacy group, mobilized members to oppose the legislation. The bill was amended substantially and provided a number of exceptions. For example, one provision would have let local governments continue to use fuel tax revenues for bike lanes and sidewalks on roads with posted speed limits under 35 miles per hours. But it required an engineering study.

Legislature approves state budget, cut in Hall income tax

By Eric Schelzig, Associated Press
NASHVILLE, Tenn. — State lawmakers on Thursday approved a nearly $35 billion annual spending plan for the budget year beginning July 1, sending the measure to Republican Gov. Bill Haslam’s desk.

While hot button topics like social issues and guns tend to draw much attention during the legislative session, passing a balanced budget is the chief responsibility for members of the General Assembly.

The Senate voted 32-1 in favor of the budget, while the House approved it by an 87-7 margin.

Lawmakers had spent much of the week hammering out agreements over smaller budget items, while leaving intact most of the spending proposal Haslam proposed at the start of the session.

One last-minute measure approved by lawmakers is a 17 percent reduction in the state’s Hall tax on income on stocks and bonds. The change is projected to cause a loss of $28 million in state revenues, plus another $15 million from the communities where the tax is collected.
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State wins $13M tax fight with Verizon Wireless

News release from Administrative Office of the Courts
Nashville, Tenn. – The Tennessee Supreme Court has upheld a decision by the Tennessee Department of Revenue to impose a tax variance on the parent company of Verizon Wireless. The Court held that the Commissioner of Revenue was within his authority to impose the variance, in order to keep the company from avoiding paying Tennessee franchise and excise taxes on over a billion dollars in revenue from sales to Tennessee customers.

The lawsuit was filed by Vodafone Americas Holdings, Inc., a multistate wireless telecommunications corporation, and its subsidiaries (Vodafone), doing business throughout the United States as Verizon Wireless.

From 2000-2006, Vodafone filed Tennessee franchise and excise tax returns and paid taxes totaling more than $13 million on the revenues Vodafone received for services provided to its Tennessee customers. In 2007, Vodafone filed a lawsuit asking the trial court to require the Department of Revenue to refund nearly all of the Tennessee franchise and excise taxes Vodafone had paid for the years 2002 through 2006. Vodafone claimed that, if the apportionment formula in Tennessee’s franchise and excise tax statutes were applied correctly, Vodafone would owe virtually no taxes on its sales receipts for cell phone services provided to Tennessee customers, receipts that totaled over a billion dollars in revenue to Vodafone.
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McCormick drops bill inspired by Armstrong case

House Majority Leader Gerald McCormick has dropped an effort to change state law so that future legislators would be prohibited from dealing in cigarette tax stamps as Rep. Joe Armstrong is accused of doing.

Armstrong, D-Knoxville, faces trial in August on federal tax evasion charges stemming from what the indictment says was a profit of about $500,000 from cigarette tax stamp transactions in 2007. After reading reports of the indictment, McCormick, R-Chattanooga, said he was surprised that the transaction itself was legal and introduced HB1440 — also sponsored by Senate Majority Leader Mark Norris — to make it illegal.

But McCormick said he had encountered concerns with the legislation on several fronts and ultimately decided to drop the push for passage. Officially, he took it “off notice” last week in the House Agriculture Subcommittee, which has now closed for the 2016 session.
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Repeal of newspaper tax exemption abandoned

NASHVILLE, Tenn. (AP) — The sponsor of a proposal to end a Tennessee sales tax exemption for newspapers has removed the bill from consideration for the year.

State Sen. Todd Gardenhire said he introduced the bill (SB1846) because of questions about whether the exemption “was justified in today’s environment.” The Chattanooga Republican said there are too many exemptions in state law, and that he wants to re-examine the issue next year.

According to a legislative analysis, the state forgoes about $11 million a year because periodicals aren’t subject to the tax. Local governments miss out on another $3.9 million.

Gardenhire also sponsored a bill to allow legal notices to be published online instead of in printed newspapers. That measure failed to receive a motion in the State and Local Government Committee last month.

Gas tax effort this year? Gov says maybe, maybe not

NASHVILLE, Tenn. (AP) — Republican Gov. Bill Haslam’s on-again, off-again gas tax hike could return this year. Maybe.

The governor spent much of last fall traveling across the state to draw attention to the state’s transportation funding needs, but said at the start of this year’s legislative session that he didn’t think there was enough support to take up the matter this year.

But the governor told reporters on Tuesday that he is having aides survey lawmakers about whether road project needs in their districts are pressing enough that they are now willing to get behind the state’s first gas tax increase since 1989. The governor has said the state has a more than $6 billion backlog of road projects.

“If people are saying, ‘I do want to do this in my district,’ then we’ll come back with a full plan,” Haslam said.

“If people say, ‘I’m interested in this, but I don’t want to do anything at all on addressing fuel tax,’ then we won’t do it,” he said.

Haslam said the scope of any road proposal would be based on lawmakers’ feedback.

“But that is going to happen eventually,” Haslam said. “We cannot keep doing what we’re doing now.”
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Beverage tax, ‘temporary’ since 1981, renewed again

NASHVILLE, Tenn. (AP) — Tennessee’s “temporary” tax used to pay for roadside cleanup would extend into its fourth decade under a bill advancing in the state Legislature.

The tax on beer and soft drinks was first enacted in 1981, and has been reauthorized every six years since then.

The levy is 50 cents on each barrel of beer and 0.4 percent on gross receipts of soft drink sales. It raises about $4.8 million each year for cleanup efforts.

Republican Sen. Ken Yager of Kingston, the main Senate sponsor of the bill (SB1938), said the tax has led to the collection of 300,000 tons of roadside litter around the state.

The Senate voted 32-0 to approve the bill on Monday. The House Finance Committee is scheduled to take up the matter on Tuesday.

With erectile dysfunction bill down, Democrats try ‘tampon tax’ cut

While a House subcommittee killed last week a proposal from two Democratic women to put new restrictions on erectile dysfunction medications, they are now pushing legislation that would reduce the state sales tax on diapers, feminine hygiene products and nonprescription drugs.

The erectile dysfunction bill (HB1927) was killed on voice vote by the House Health Subcommittee after Dr. John Hale, president of the Tennessee Medical Association, declared the statewide physicians’ organization opposed the measure as unnecessary and unwarranted.

“You’d make a lot of your constituents very unhappy if you pass this,” Hale, a Union City doctor, warned the panel.

Rep. Sherry Jones, D-Nashville, and Sen. Sara Kyle, D-Memphis, sponsored the measure – perhaps somewhat tongue-in-cheek – as a contrast to Republican legislators enacting various measures to put restrictions on abortion, often arguing that concern over women’s health motivated their efforts.
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Democrats push tax cut for feminine hygiene products, diapers

News release from Senate Democratic Caucus
NASHVILLE – Following discussion of several proposals to cut the Hall tax on stock dividends, state Sen. Sara Kyle and state Rep. Sherry Jones have introduced legislation to cut sales taxes on basic necessities.

“We have a $600 million budget surplus, and our colleagues have spent a lot of effort trying to cut taxes on investment income and stock dividends,” Sen. Kyle said. “We are suggesting an alternative that would benefit every single Tennessean at every income level. We have some of the highest sales taxes in the nation, and it’s wrong to take money out of people’s pockets on the basic necessities of life.”

SB 2285 and HB 2059 would reduce the sales tax on diapers, feminine hygiene products and nonexempt over-the–counter drugs from 7 percent to 5 percent, the same rate charged on food. It will be presented Tuesday in the Senate Finance Ways and Means Revenue Subcommittee.
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