On May 10, 2024, Governor Bill Lee enacted Public Chapter 950 which resulted in the removal of the property measure component from the franchise tax computation for tax years ending on or after January 1, 2024. Under this legislative amendment, taxpayers who previously remitted taxes based on the property measure (the book value of real or tangible property) are eligible to submit a refund claim if the tax was reported to the department on a return filed on or after January 1, 2021, covering a tax period that ended on or after March 31, 2020.
Previously, Tennessee’s franchise tax was determined by two bases: net worth (Schedule F) and real tangible property (Schedule G) within the state. The greater of the two bases was subjected to a tax rate of 0.25 percent, with a minimum tax of $100. However, following the recent legislative repeal, taxpayers will calculate their franchise tax solely based on net worth, effective for tax years ending on or after January 1, 2024.
What You Need to Know About the Refund
- Refund claims must be filed between May 15, 2024, and November 30, 2024.
- The refundable amount is the difference between the franchise tax previously remitted, calculated based on the property measure (Schedule G), and the tax liability that would have been incurred based on the net worth measure (Schedule F).
- A separate refund claim must be filed for other issues unrelated to this legislation.
- Tax actually paid includes any tax credits from Schedule D Schedule of Credits that was applied on the return. These credits will be reinstated on the taxpayer’s account and will not be included in the refund.
- Businesses that have been terminated and no longer exist are ineligible to claim refunds for the applicable tax periods.
- The Department will publish a list of taxpayers' names from May 31, 2025, to June 30, 2025, if the refund amount falls within the following thresholds:
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- $750 or less
- $751 - $10,000
- More than $10,000
How to Claim a Refund for Tennessee’s Franchise Tax:
- Taxpayers must file amended returns1 to calculate the franchise tax based on net worth (Schedule F), excluding Schedule G (property measure). For further guidance on the refund process, refer to Franchise and Excise Tax Notice #24-05.
- Submit form Claim for Refund of Franchise Tax Paid on Property Measure (Schedule G)
For more information, contact one of Evolved's tax experts.
1. Amended returns for eligible tax periods must be filed in chronological order.
2. Form Report of Debts must be filed with the refund claim form if the amount requested is $200 or more
Evolved is a tax compliance and advisory firm with offices in New York City, Philadelphia and Stamford, serving clients nationally throughout the US. We provide tax provision, private equity and venture capital services alongside advisory for high net-worth tax and family office tax.
