Taxpayers Receiving Letters Regarding Tennessee Business Tax Filing/Payment Requirements

Taxpayers around Tennessee are receiving notices from the Department of Revenue suggesting that they may no longer have an obligation to pay the Tennessee Business Tax. Here’s the facts of the matter:

The Tennessee Works Tax Act significantly alters the business tax filing requirements for small businesses in Tennessee. Key points from this notice that small business owners should be aware of include:

1. Increased Filing Threshold: The Act increases the business tax filing threshold from $10,000 to $100,000 in gross receipts for both state and local business taxes​​​​. This change means that businesses with annual gross receipts less than $100,000 are no longer required to file an annual business tax return.
2. Local Business License Requirement: Despite the increased threshold for filing business tax, many businesses with more than $3,000 in gross receipts will still need to obtain a Minimal Activity License in each county or city where they have a business location.
3. Impact on Tennessee Businesses: Approximately 140,000 Tennessee businesses are expected to benefit from this change, as they will no longer be required to file business tax under the new threshold​​.

This legislative change, effective for tax years ending on or after December 31, 2023, represents a significant shift in the taxation landscape for small businesses in Tennessee, potentially reducing the administrative burden and tax liability for many small businesses in the state.

Clients or Businesses with questions are welcome to contact us at (615) 267-0125 if they have any questions regarding the law change and how it may apply to them. You can also review Tennessee Revenue Notice 23-08 for additional information.