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2018 Legislative Summaries

Department of Revenue Extension

Public Chapter 701 extends the department of revenue for four years to June 30, 2022.

Effective Date: April 12, 2018

Alcohol Sales on Sundays

Public Chapter 783 authorizes the sale of wine on Sundays by retail food stores beginning January 1, 2019. It authorizes the sale of wine and alcoholic beverages on Sundays by licensed liquor stores effective immediately.

Effective Date:

            Wine sales by a retail food store authorized on and after: January 1, 2019

            Additional Provisions: April 20, 2018

Beer and Alcoholic Beverage Shipment Reporting

Public Chapter 933 requires common carriers that contract with direct shippers for delivery of beer and other alcoholic beverages into Tennessee to report such shipments to the department. 

Effective Date: July 1, 2018

Alcoholic Beverage Samples at a Distillery Not Subject to LBD Tax

Public Chapter 1027 specifies that samples and sales of alcoholic beverages sold for consumption on the premises of a distillery are not subject to liquor by the drink tax (LBD).

Effective Date: May 21, 2018

Single Sales Factor Apportionment for Financial Asset Management Companies

Public Chapter 656 authorizes financial asset management companies, as defined in the act, to elect to a single sales factor apportionment formula for franchise and excise tax purposes. The law establishes that an election remains in effect for 5 years.

Effective Date: April 9, 2018 and applies to tax years beginning on or after January 1, 2018.

Federal Tax Cut and Jobs Act of 2017 Decoupling Provisions

Public Chapter 1011 decouples Tennessee from two provisions of the federal Tax Cut and Jobs Act of 2017:

1)      the business interest deduction cap for tax years beginning on or after January 1, 2020; and

2)      inclusion of state grants in federal taxable income for tax years beginning on or after January 1, 2017.

Effective Date: May 21, 2018

Perfection Period

Public Chapter 1048 establishes a "perfection period" for electronically filed franchise and excise tax returns when there is a rejection of the return for failure to meet a validation test. The legislation defines the "perfection period" to mean a period of ten calendar days, beginning with the day after date of the first transmission of an electronic return that is subsequently rejected by the commissioner.

Effective Date: October 1, 2018

Unblended Methanol Exemption

Public Chapter 924 exempts from motor fuel tax and sales tax all methanol sold for use in highway or non-highway vehicles that is not composed of or blended with gasoline, diesel fuel, or other fuels or petroleum products.

Effective Date: May 15, 2018

Angel Investor Credit

Public Chapter 892 establishes that the “Angel Investor” Hall income tax credit may be measured by the value of an indirect or direct cash investment.

Effective Date: May 3, 2018 and applies to tax years beginning on or after January 1, 2017.

Perfection Period

Public Chapter 1048 establishes a "perfection period" for electronically filed Hall income tax returns when there is a rejection of the return for failure to meet a validation test, and subsequent acceptance of the return. The legislation defines the "perfection period" to mean a period of ten calendar days, beginning with the day after date of the first transmission of an electronic return that is subsequently rejected by the commissioner.

Effective Date: October 1, 2018

Adult Performance Business Tax

Public Chapter 764 establishes a $2 tax on adult performance businesses for each entry by each customer. The business has discretion on whether to collect the tax from its customers or pay the tax in another manner. All revenue collected from the tax is to be allocated to the state general fund, with the intent that it be allocated to programs for victims of sex trafficking. This tax will sunset on July 1, 2021.

Effective Date: July 1, 2018

Coal Severance Assessments

Public Chapter 839 enacts the “Primacy and Reclamation Act of Tennessee.” The act creates an additional coal severance assessment of $0.04/ton for coal that is severed from the ground in underground mining operations, as well as a $0.09/ton assessment for coal that is severed from the ground in surface mining and reclamation operations. The assessment is payable in the same manner as the coal severance tax. All revenue from this assessment is to be deposited in the Coal Mining Protection Fund to be used for administering the Primacy and Reclamation Act.

Effective Date: The act is considered effective upon deposit of federal funds in the Coal Mining Protection Fund.

Exemption for Veterans with Service-Connected Disabilities

Public Chapter 541 creates exemptions from sales tax, registration fee, and local motor vehicle privilege tax, for any motor vehicle sold to a veteran or service member who has a service-connected disability and who is eligible for a United States department of Veterans Affairs automobile grant under the Disabled Veterans' and Servicemen's Automobile Assistance Act of 1970. The law limits the sales and use tax exemption to the portion of the purchase price that is in excess of the amount of the grant received.

Effective Date: March 5, 2018

Border Region Retail Tourism Development District Investment Period Extensions

Public Chapter 804 increases the investment period for a border region retail tourism development district by five years.

Effective Date: April 24, 2018

Public Utility Water Sales

Public Chapter 813 establishes that sales and use tax on sales of water by public utilities only applies to charges on a customer’s monthly bill for metered usage, monthly minimum bill, monthly customer charge, or a monthly demand charge. It further specifies that sales and use tax on sales of natural gas, propane, and electricity sold directly to consumers for non-residential uses only applies to charges on a customer’s monthly bill for metered usage, monthly minimum bill, monthly customer charge, or monthly demand charge.

Effective Date: April 27, 2018

Distressed County Deadline Extension for Commercial Development District

Public Chapter 896 extends the deadline by which a distressed rural county may apply to retain the sales and use tax generated from a commercial development district to December 31, 2020.

Effective Date: May 3, 2018

Event Tourism Fund

Public Chapter 959 creates the event tourism fund to reimburse sponsoring localities for expenses related to hosting certain national and/or international events. The Departments of Finance and Administration and Tourism Development must certify the event. If certified, the event venue host must register the event and all vendors with the Department of Revenue.

Fifty percent (50%) of event revenue from the state sales and use tax and liquor-by-the-drink tax imposed in the event venue during the event period that isn’t otherwise earmarked for education purposes will be deposited in the event tourism fund. The allocations to the event tourism fund will not include amounts allocated to a sports authority or Tourism Development Zone. The locality must apply to the Department of Finance and Administration for reimbursement from the fund.

Effective Date: January 1, 2019

Industrial Machinery Exemption Clarification

Public Chapter 963 establishes that any entity qualifying for the sales and use tax exemption for spallation neutron source facilities is not eligible for a sales and use tax exemption with regard to any industrial machinery that is used in the operation of a qualified data center or used primarily for research and development. This limitation does not apply to a leadership computing facility that is funded by the United States government, or instrumentality thereof, not funded with any state funds, and located at a national laboratory.

Effective Date: May 15, 2018

Courthouse Square Revitalization Pilot Project Act of 2005 Allocation Extension

Public Chapter 1011 continues the allocation of state sales tax revenue to municipalities under the Courthouse Square Revitalization Pilot Project Act of 2005 until June 30, 2028.

Effective Date: May 21, 2018

All-Terrain Vehicle Definition Expanded

Public Chapter 585 broadens the definition of “all-terrain vehicle” to include vehicles up to 2,500 pounds. It further broadens the definition of “Class I off-highway vehicle” to include vehicles up to 2,500 pounds, 80 inches in width. It clarifies that mini-trucks are Class I off-highway vehicles.

Effective Date: July 1, 2018

National Guard License Plate Application Extended

Public Chapter 691 authorizes surviving spouses of deceased National Guard members to apply for issuance of a National Guard license plate.

Effective Date: April 9, 2018

Deaf and Hard of Hearing Designation

Public Chapter 735 authorizes an owner or lessee of a motor vehicle who is deaf or hard of hearing to request that the department include such designation in the Tennessee Vehicle Title and Registration System (VTRS) database.

Effective Date: July 1, 2018

Volunteer Firefighter and Rescue Squad Fee Exemption

Public Chapter 923 exempts active volunteer firefighters and rescue squad members with at least one year of service from payment of the vehicle registration fee at the time of renewal. The exemption applies to one license plate per qualified registrant; and certification or a sworn statement must be provided from the captain of the local rescue squad to which the person is attached confirming the applicant is an active volunteer member. The county legislative body is also authorized to waive the motor vehicle tax for vehicles receiving this exemption.

Effective Date: May 15, 2018

5th Special Forces Group (Airborne) License Plate

Public Chapter 926 creates a 5th Special Forces Group (Airborne) license plate for active, retired, and honorably discharged members. The plates can be displayed on vehicles owned or lease by members, their spouses, or their children.

Effective Date: July 1, 2018

Government Service License Plates

Public Chapter 985 permits government service license plates to be issued for vehicles leased by governmental units.

Effective Date: May 21, 2018

Amateur Radio Station License Plate Requirements

Public Chapter 990 establishes that in order to obtain an amateur radio station license plate without having to pay an additional $25 fee, the registrant must show proof of credentials approved by the county emergency management director or a class license as an amateur radio operator issued by the FCC.

Effective Date: May 21, 2018

New Specialty Plates

Public Chapter 1023 designates new specialty plates including:

  • Boone Lake Association
  • Domestic Violence and Sexual Assault Awareness
  • Down Syndrome Awareness
  • Historic Maury
  • Kiwanis International
  • Lung Cancer Awareness
  • Louisiana State University
  • Methodist Le Bonheur Healthcare
  • Mountain Tough
  • North Carolina State University
  • Stand with Israel
  • Suicide Prevention
  • TN Back the Blue
  • University of South Carolina

The public chapter also designates new military and collegiate plates including:

  • Rakassans
  • Paratrooper
  • Cumberland University

It extends until July 1, 2019, the timeframe for meeting the issuance requirement of 1,000 plates for the following plates:

  • Niswonger Children’s Hospital
  • Martin Luther King, Jr.
  • Save the Bees
  • Mothers Against Drunk Driving

The public chapter creates new license plate designs for the following plates:

  • Cold War Era Veteran
  • Disabled Veteran

It changes the name of two previously designated organizations:

  • Tennessee Fraternal Order of Police is changed to Fraternal Order of Police
  • Harpeth River Watershed Association is changed to Harpeth Conservancy

Furthermore, Public Chapter 1023 designates new code section citations for Title 55, Chapter 4.

Effective Date: July 1, 2018