Tennessee Department of Revenue Updates Various Tax Manuals

March 7, 2023

The Tennessee Department of Revenue recently updated various tax manuals and released a brief overview of the substantive updates. The updates are predominately based on new legislation and taxpayer questions, as well as opportunities for improved clarity or expanded guidance.

Changes were made to the following manuals:

  • Alcohol Tax Manual
  • Business Tax Manual
  • Franchise and Excise Tax Manual
  • Recordation Tax Manual
  • Sales and Use Tax Manual
  • Utilities Tax Manual

Notably, the Franchise and Excise Tax Manual was updated to address the state tax implications of certain changes under the federal Tax Cuts and Jobs Act of 2017 (TCJA). The TCJA-related changes are as follows:

  • Pages 285 and 296 have been updated to include details on the new Schedule J lines to implement Tennessee’s decoupling from Internal Revenue Code §174, as amended by the TCJA, relating to research and development expenditures.
  • Pages 300-301 have been updated to reflect the Department’s revised position that, in computing net earnings or loss for Tennessee excise tax purposes, taxpayers are entitled to the full amount of the federal deduction relating to foreign-derived intangible income (FDII) under Internal Revenue Code §250(a)(1)(A).

For more information and links to the tax manuals, see the Department’s Tax Manuals webpage.