Tennessee Looking at Tangible Personal Property Tax Reform

Date: June 16, 2022

The preliminary draft report will be issued in a few months

At the urging of NFIB, Tennessee is conducting a comprehensive study of the impact of the tangible personal property tax (TPP) on small businesses and preparing recommendations for potential reforms.  

Earlier today, the Tennessee Advisory Commission on Intergovernmental Relations (TACIR) held a hearing, which included six panelists, four of them from NFIB. Joining State Director Jim Brown were NFIB members Kelsie Jones with Jones Law Solutions in Nashville, Kevin McAdams from Elliott Davis in Franklin, and Daniel Sohn from Vireo Systems in Madison. Each brought a great perspective of the history and/or burden of the tax.  

The following are excerpts from prepared testimony, but you can watch the entire hearing here, starting at the 17-minute mark. 

Daniel Sohn 

“(The TPP) is very burdensome to a medium-sized business like ours. … We spent at least $2,000 in manhours to complete our personal property tax inventory and review, and this does not include valuable time lost on critical tasks. And if we were subject to an audit – I am quite sure it would take at least a week to try to identify any discrepancies.” 

Kevin McAdams 

“… The cost of compliance to a company is often more than the annual (tax paid). … The two main and impactful cost components for businesses to comply with the tax … (are) maintaining the data necessary to comply with the tax return filings year after year … and the costs associated with the inevitable audits of personal property tax returns.” 

Kelsie Jones 

“A recurring scenario in discussions of further property tax change has been the tug-of-war between local governments seeking to protect a stable revenue source (especially for schools) and taxpayer groups looking to control not just the liability and amount of tax but also perceived inefficiencies in tax compliance.” 

Jim Brown 

“Our smallest businesses often spend hundreds of dollars to pay a tax that can amount to between $10 and $25, … while our mid-sized and larger companies spend even more time and money to comply – in time researching new purchases and filing the schedule, in time away from their daily functions and growing their businesses, and in paying tax experts to review and file their paperwork. It’s a lot of red tape.” 

“Consistently, many NFIB members have said they believe this tax is a double tax. They’ve paid sales & use tax on the equipment up front, but then have to pay the tax for decades, sometimes paying more in tangible personal property tax than the initial purchase cost and sales & use tax on equipment and computers.” 

The preliminary draft of TACIR’s report will be issued in a few months, which we plan to use to engage our membership in Tennessee. 

Related Content: Small Business News | Tennessee

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