Business Tax License Update

Uniformity & Small Business Relief Act of 2013

Public Chapter 313 makes changes in the business tax to provide tax relief to small businesses and to increase uniformity across the state. Several highlights include:

• Business tax exemption is raised from $3,000 in gross sales to any business with less than $10,000 in gross sales (provided that businesses with between $3,000 and $10,000 in gross sales obtain a minimal activity license from their county/city clerk)
• Converts the county/city business tax into a state level tax using the same revenue distribution formula that applied under prior law
• Clarifies the application of the business tax to out-of-state businesses that perform certain activities in the state
• Authorizes the commissioner of Revenue to accept a single filing of business tax returns covering multiple jurisdictions, a complement to the commissioner’s authority to change the tax period to coincide with taxpayer’s fiscal year end

The effective date of January 1, 2014, applies to tax periods on or after that date.

How This Applies to Current Business License Holders

Gross Receipts

If your gross receipts are $3,000 to $9,999 during the business tax reporting period, when you renew your current business license you will do this at the City’s tax office, not through the State of Tennessee. The City tax office will then issue you a Minimal Activity License for a flat fee of $15. Each year upon expiration you will report your gross receipts; if your gross receipts put you above the $9,999 limit then you will file with the State of Tennessee for a business license renewal. Any questions about differentiating between the Minimal Activity License and the Business License can be emailed to Finance or by calling 931-645-7436.

Reporting Tax Period/Timeline

The Uniformity and Small Business Relief Act of 2013 establishes and regulates a uniform reporting tax period for all Business License classifications as well as Minimal Activity Licenses. Effective January 1, 2014 the reporting tax period will run with taxpayer’s fiscal year (January 1 to December 31), unless the taxpayer notifies their respective collecting official otherwise (Minimal Activity License holders notify the City, Business License holders notify the State). The returns for the January 1 to December 31 period will be due to their respective collecting agency no later than April 15.

How Do These Changes Affect Me?

Additional Information

For more information about business license renewals and classifications, please visit the State of Tennessee Department of Revenue’s website.