05/12/2008
CONTACT: Jim Brown, 615-337-5507 or Todd Pack, 615-872-5897
Removal of small business franchise and excise tax exemption would affect families investing in commercial real estate
NASHVILLE, Tenn. -- A provision in a technical corrections bill would do away with an important franchise and excise tax exemption that encourages ownership of family-owned limited liability corporations and limited partnerships in commercial property. Senate Bill 4173 and House Bill 4129 are moving toward important votes in committees in the Tennessee Senate and House of Representatives, according to the National Federation of Independent Business in Tennessee.
"NFIB members believe so-called 'technical corrections' are meant to correct oversights or ambiguity in the statutes," said Jim Brown, NFIB/Tennessee state director. "But one provision bunched with more than 50 others in the proposed amendment would go way beyond a simple correction. It would overturn an important law the Legislature enacted eight years ago to encourage family ownership of commercial real estate."
Brown plans to testify against the amendment provision in the Senate Tax Subcommittee this afternoon.
The amendment to SB 4173/HB 4129 filed by Sen. Jim Kyle (Memphis) and Rep. Gary Odom (Nashville) would have a devastating impact on many small business owners, said Brown, noting many entrepreneurs have no idea the proposal is under consideration or are just learning of it now.
"Overwhelmingly, our members believe the Legislature should deliberate over substantive proposals rather than be pressed at the end of the session to reverse laws legislators enacted years ago," he said.
Pat St. Charles, a real estate investor and NFIB member from Chattanooga, said, "Eight years ago, Tennessee encouraged families to invest in commercial real estate with limited liability and tax advantages. Now the state wants to reverse course, apparently to raise revenues, through a change included in the technical corrections bill.
"Our family pooled our resources to invest in real estate," he said. "This change would discourage us from investing through a limited liability company and would make it most costly for us to compete against larger businesses with greater resources than us."
Brown said the provision in the amendment also would discourage long-term financial planning. "Some of our members use these investments as college funds or for retirement," Brown said. "Changing the rules now would make it harder for them to plan for their futures. Other NFIB members are concerned the proposal would devalue real estate at a time when the state's economy and financial markets can least afford it."
