Entities Exempt from Franchise & Excise Tax

Seventeen different types of entities are exempt from the franchise and excise taxes. You can file for an exemption (without creating a logon) using the Tennessee Taxpayer Access Point (TNTAP).

Industrial Development Corporations

Masonic lodges and similar lodges

Regulated Investment Companies owning 75% in the United States, Tennessee, or local bonds

Federal and state credit unions

Venture Capital Funds *

Farming/personal residence in LLCs or LPs *^

LLCs or LPs that acquire receivables from an affiliate that reported the income in Tennessee *

LLCs or LPs that provide affordable housing and receives Low-income Housing Credit *

LLCs or LPs where the members are fully obligated for the debts of the entity (OME) *

Partnership, trust, REMIC, or FASIT that has asset-backed security of debt obligations *

Family-Owned Non-corporate Entity (FONCE) *^

LLC, LP, or business trust organized as Diversified Investing Fund *

Tennessee historic property preservation entities

Insurance companies

TN Investco entity that receives investment credits under the Tennessee Small Business Act

Any entity owned in whole or part by the Armed Forces and has 50% of income from property primarily for benefit of members of the armed forces *

Qualified Low-income Community Historic Structure *

* Entities marked with an asterisk must file an application for exemption on form FAE 183, Application for Exemption/Annual Exemption Renewal in order to receive the exemption. Thereafter, they must annually certify that they continue to be eligible for the exemption. Both the initial application and the annual renewal are filed on form FAE183.

^ Note that these entities must complete page three of the form to disclose their activity in the state. This form with the appropriate sections completed must be submitted by the 15th day of the fourth month following the close of the entity’s taxable year. Entities requesting an extension for federal income tax are automatically granted an extension.