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Tennessee Legislature Considering Bill to Exempt Certain COVID-19 Relief Payments from Excise Tax

Monday, April 05, 2021 | 08:05am

The Tennessee General Assembly is currently considering legislation (SB0775/HB0776) that would exempt certain COVID-19 relief payments received between March 1, 2020, and December 31, 2021, from the Tennessee excise tax.

If this legislation is passed into law, taxpayers who are subject to the Tennessee excise tax will be able to deduct eligible COVID-19 relief payments on their Tennessee franchise and excise tax returns. This excise tax deduction would apply to payments received from the following Tennessee economic relief programs:

  • Tennessee Business Relief Program;
  • Tennessee Supplemental Employer Recovery Grant Program;
  • Coronavirus Agricultural and Forestry Business Fund;
  • Hospital Staffing Assistance Program;
  • Emergency Medical Services Ambulance Assistance Program;

·         Tennessee Small and Rural Hospital Readiness Grants Program; or

·         Payments issued by Tennessee from the federal Child Care and Development Block Grant.

Eligible COVID-19 relief payments received by a taxpayer during 2020 would be deducted on the taxpayer’s 2020 franchise and excise tax return, and eligible payments received during 2021 would be deducted on the 2021 return.

Note: This legislation is still being considered by the Tennessee General Assembly and has not yet been passed into law. Therefore, taxpayers who file a franchise and excise tax return prior to the passage of this legislation should not deduct any COVID-19 relief payments on the return. If a taxpayer wishes to delay filing its 2020 return, pending the passage of this legislation, the taxpayer may submit an Application for Extension of Time to File, which grants a taxpayer who meets the extension requirements an extension of six months, from the original return due date, to file the return. For taxpayers who must remit an extension payment, the extension application is due on or before the taxpayer’s original return due date. Please click here for more information on how to file an extension. 

Should this legislation be passed into law, the Department will publish guidance informing taxpayers as to how they may proceed in claiming the excise tax deduction. If this legislation passes, taxpayers who have already filed a franchise and excise tax return for the 2020 tax year will be able to amend the return to take the excise tax deduction for eligible relief payments received during 2020.