United States

Tennessee: Proposed Legislation would Adopt Single-Receipts Factor Apportionment

Jan 09, 2017
From KPMG TaxWatch

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Legislation (Senate Bill 8) recently introduced in Tennessee, would adopt single-receipts factor apportionment for franchise and excise tax purposes. Specifically, effective for tax years beginning on or after July 1, 2017, a taxpayer’s net earnings and net worth would be apportioned to Tennessee by use of the receipts factor only. For tax years beginning on or after July 1, 2016, net earnings and net worth are apportioned to Tennessee using a three-factor formula with triple-weighed sales (i.e., the sales factor accounts for 60 percent of the overall apportionment factor). Prior to this law change taxpayers apportioned their tax base to Tennessee using a three-factor double-weighted sales formula. Other fairly recent changes to Tennessee’s corporate tax regime include new factor presence nexus standards that apply for tax years beginning on or after January 1, 2016. Under these standards, taxpayers with over $500,000 of Tennessee-sourced sales will be deemed to have substantial nexus with Tennessee for franchise and excise, as well as business tax purposes. Also effective for tax years beginning on or after July 1, 2016, changes have been made to the state’s related-party addback rules and new market-based sourcing provisions apply. Please stay tuned to TWIST for future updates on Tennessee Senate Bill 8.


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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.