TSCPA News

Final Legislative Update - May 12

May 12, 2017

2017 LEGISLATIVE REPORT

May 12, 2017

Bills and Legislative News Affecting the Accounting Profession

 COMMENTS

The bills on the following list have been identified by TSCPA’s legislative tracker as bills of interest to the CPA profession.  They may be viewed in their entirety at www.legislature.state.tn.us/.  If you have questions or comments, please email tscpa@tscpa.com. 

After an uncharacteristically long legislative session, the 110th General Assembly of the State of Tennessee adjourned on Wednesday of this week. Having passed its three major legislative initiatives; the IMPROVE Act, the Tennessee Broadband Accessibility Act, and the Tennessee Reconnect Act, this session can be considered a win for the Haslam Administration.

The IMPROVE (Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy) Act increases Tennessee’s fuel tax for the first time in 28 years and raises an estimated $300 million of dedicated funding per year to address Tennessee’s $10.5 billion backlog of 962 road and bridge projects across the state. Earlier this week, the Administration unveiled the initial listing of bridges and projects that will be tackled first under the IMPROVE Act. The fuel tax increase will be phased in over three years. The Act also lowers the sales tax imposed on food items by 1%, and changes the Franchise and Excise tax formula to a single weighted sales factor for manufacturers, amongst other things. The franchise and excise tax cut has already been linked to one new company building a manufacturing plant in Tennessee. The IMPROVE Act had been a two year endeavor by the administration and one that faced tough opposition from many in House Leadership.

The Tennessee Broadband Accessibility Act aims to increase broadband access for Tennessee’s roughly 800,000 unserved citizens by providing $45 million over three years in grants and tax credits for service providers, while also allowing Tennessee’s electric cooperatives to provide retail broadband and video services in their respective electric service territories. The Governor touted this legislation as an education and jobs initiative as well.

The Tennessee Reconnect Act is one portion of Governor Haslam’s larger Drive to 55 initiative, which has the goal of equipping 55% of Tennesseans with a college degree or certificate by 2025. The intent of the Reconnect Act is to aid adults in returning to college by establishing last-dollar scholarships for adults to attend community colleges tuition-free. The scholarships will be funded through the lottery for education account and will cost approximately $10 million once fully implemented. This Act partners with the Governor’s Tennessee Promise providing two years of college for free through last dollar scholarships to graduating high school seniors.

2017 is an election off-year in Tennessee. Therefore, with the exception of a few committee meetings and summer studies, legislators will return to their districts, families, and regular jobs until January of 2018. In the meantime, the legislative offices and committee rooms will move to the remodeled Cordell Hull building.  We will continue to monitor summer study committees and other boards and commissions over the summer.

Key
✔- Legislation with an active status
♦ - Comments
PC - Link to Public Chapter

AUDIT

ü SB 315 by Gresham/HB 136 by M. White - Local government audit findings. Requires a local government receiving annual audit findings to submit its annual budget and a corrective action plan to the comptroller. Prohibits the comptroller from approving a local government budget with audit findings if the local government fails to submit a corrective action plan to the comptroller. Authorizes sales tax revenue to be withheld from a noncomplying local government. Grants the comptroller discretion to waive certain requirements.

Fiscal Note:            (Dated February 12, 2017) Other Fiscal Impact – The fiscal impact of this bill is a potential temporary loss of use of an unknown but significant amount of sales tax revenue for any local government entity out of compliance with this legislation. Otherwise, any fiscal impact for state and local government is considered not significant.

Amendment:          Senate Amendment 1 (006580) deletes and rewrites the original bill such that the only substantive change is to only require local governments with one or more audit findings to submit a corrective action plan to the Comptroller of the Treasury (COT) addressing each finding.

Senate Status:        Senate passed on 4/20/2017 with amendment.

House Status:        House passed on 5/4/2017.

Other Status:         Sent to the Governor on 5/11/2017.

PC SB 463 by Bell/HB 436 by McDaniel - Time frame for submission of corrective action plan after audit from comptroller. Requires the officer who is the administrative head of any department, agency, or institution of the state, to submit a corrective action plan to the comptroller of the treasury which addresses the actions taken, or to be taken, in response to each audit finding and related recommendations of the comptroller of the treasury relative to the effective and efficient management of accounts, books, records, or other evidences of financial transactions. The corrective action plan should provide the name or names of the contact person or persons responsible for the corrective action, the corrective action taken or planned, and the anticipated completion date. The comptroller of the treasury shall at any time notify the chairs of the finance ways and means, government operations, and fiscal review committees of the general assembly of any department, agency, or institution’s failure to timely implement such recommendations, to submit the audit report required by subsection (c) of the bill, or to comply with its corrective action plan. Those committees may direct the department, agency, or institution to provide a written statement to the requesting committee explaining why full corrective action has not been taken. If a requesting committee determines that the written statement is not sufficient, that committee may require the department, agency, or institution to appear before the committee.

Status:                   Enacted as Public Chapter 20 effective March 24, 2017.

SB 878 by Harris/HB 827 by S. Jones - Performance audits of private service providers contracting with the department of children's services. Requires the comptroller to audit the performance of any private provider of services that contracts with the department including an evaluation of provider performance as it relates to outcomes of clients and their families. Requires the comptroller to report its findings to the judiciary committee of the senate and the civil justice committee of the house of representatives.

Fiscal Note:            (Dated March 26, 2017) Increase State Expenditures - $3,000/One-Time $92,000/Recurring

Senate Status:        State & Local Government deferred on 4/11/2017 to 2018.

House Status:        State Government Subcommittee deferred on 4/12/2017 to 2018.

BUDGET

ü SB 483 by Norris/HB 511 by Sargent - Appropriations - FY 2016 and FY 2017. Make appropriations for the purpose of defraying the expenses of the state government for the fiscal years beginning July 1, 2016, and July 1, 2017,

Amendment:          House Amendment 2 (003333) is the administration amendment to the appropriations bill. House Amendment 3 (005555) is the legislative adjustments to the appropriations bill. House Amendment 5 (008510) appropriates $3,120,000 to the department of finance and administration for the purpose of making grants to be used to support travel of veterans to Washington D.C. to visit certain memorials. House Amendment 13 (008501) appropriates $12,000,000 for the purpose of providing services to infants with neonatal abstinence syndrome with $4,000,000 of such sum to be allocated to services for those infants in each grand division of the state. House Amendment 14 (008514) earmarks funds from the Aeronautic Economic Development Fund in the following manner: (a) $4,000,000 for the Cleveland Municipal Airport Authority in support of expansion and development at the Cleveland Regional Jetport; (b) $8,500,000 for the Tri-Cities Airport Authority in support of expansion and development at the Tri-Cities Regional Airport; and (c) $15,000,000 for the Metropolitan Knoxville Airport Authority in support of the Oak Ridge Airport Initiative. House Amendment 16 (008506) appropriates the sum of $50,000 to Johnson City for the sole purpose of costs associated with the Johnson City Veterans Memorial. House Amendment 17 (008527) appropriates the sum of $300,000,000 to the Department of Education for the sole purpose of distributing grants to LEAs to pay down capital debt. It is the legislative intent that grants be distributed based on the proportion of funds received by each LEA as determined through the BEP formula. House Amendment 7 (008187) appropriates funds for the purpose of implementing Senate Bill 831 / House Bill 841, relative to the Education Investment Act. House Amendment 18 (008559) earmarks a sum sufficient from the funds in the TennCare reserve, not to exceed $3,605,800, for the sole purpose of implementing Senate Bill 1227/ House Bill 901, if such bill becomes a law. House Amendment 1-22 (008575) authorizes the Commissioner of Finance and Administration to transfer the sum of $55,000,000 from the general fund to the highway fund. It is the legislative intent that the entire amount transferred in this item be earmarked for planning, engineering, right-of-way acquisition, construction, improvement, and rehabilitation of roads and bridges on the state-aid highway system. House Amendment 22 (008568) is the stripper amendment and removes any previously adopted amendments from the bill.

Senate Status:        Senate passed on 5/8/2017.

House Status:        House passed on 5/5/2017 with amendments 1-22 and 22.

Other Status:         Sent to the speakers for signatures on 5/8/2017.

ü SB 484 by Norris/HB 512 by Sargent - Statutory revisions necessary for implementation of the annual appropriations act. Allows the commissioner of health to direct funds in the health access incentive account to programs relative to prevention initiatives, efforts to improve the built environment, and strategies to improve the health of the population. Makes statutory revisions necessary to implementation of the annual appropriations act.

Amendment:          House Amendment 1 (008372) deletes and rewrites the bills such that the substantive changes are to: 1) establish that the Department of Human Services (DHS) is required to supervise the administration of the food stamp and food assistance program in Tennessee and to remove the Department of Labor and Workforce Development’s (DLWD) full and complete charge of the employment and employment training programs authorized under the Food Stamp Act of 1977; and 2) authorize service credit for the suspended salary increase that occurred from July 1, 2003, to June 30, 2004 for the following: commissioned members of the highway patrol; commissioned members and electronic alarms technicians of the Division of Motor Vehicle Enforcement; commissioned members of the Tennessee Law Enforcement Training Academy (TLETA); assistant district attorneys; assistant public defenders; public defender investigators; post-conviction defenders; and Tennessee Wildlife Resources Agency’s (TWRA) officers, biologists, and other positions unique to TWRA.

Senate Status:        Senate passed on 5/8/2017.

House Status:        House passed on 5/5/2017 with amendment 1.

Other Status:         Sent to the speakers for signatures on 5/8/2017.

ü SB 485 by Norris/HB 513 by Sargent - Bond issuance. Authorizes the state to issue and sell direct obligation bonds of up to $80 million.

Fiscal Note:            (Dated February 15, 2017) Increase State Expenditures - $8,800,000 – First-Year Debt Service $130,400,000 Over the life of the bonds $80,000,000 Principal $50,400,000 Interest

Senate Status:        Senate passed on 5/8/2017.

House Status:        House passed on 5/5/2017.

Other Status:         Sent to the speakers for signatures on 5/8/2017.

ü SB 486 by Norris/HB 514 by Sargent – Index of appropriations. Authorizes state spending to exceed growth in revenues by $438 million or 2.85 percent.

Fiscal Note:            (Dated February 22, 2017) Other Fiscal Impact – Authorizes an increase in appropriations from state tax revenue up to $438,000,000 for FY16-17.

Senate Status:        Senate passed on 5/8/2017.

House Status:        House passed on 5/5/2017.

Other Status:         Sent to the speakers for signatures on 5/8/2017.

COMMERCIAL LAW

ü SB 438 by J. Johnson/HB 484 by Travis - Tennessee Uniform Limited Partnership Act of 2017. Amends TCA Title 61, relative to commercial law and business entities in Tennessee. Enacts the Tennessee Uniform Limited Partnership Act of 2017. Revises sections regarding limited partnerships and limited liability partnerships, including dissolution of such partnerships. Also amends sections relative to foreign limited partnerships.

Fiscal Note:            (Dated March 6, 2017) Increase State Revenue - $51,300/FY17-18/General Fund $1,600/FY17-18/Division of Business Services $114,600/FY18-19 and Subsequent Years/General Fund $3,500/FY18-19 and Subsequent Years/ Division of Business Services Increase State Expenditures - Exceeds $80,000/FY17-18/General Fund

Senate Status:        Senate passed on 5/4/2017.

House Status:        House passed on 5/9/2017.

Other Status:         Sent to the speakers for signatures on 5/9/2017.

GENERAL

PC SB 417 by Lundberg/HB 469 by Zachary - Fundraising for the TN financial literacy commission. Clarifies that the state treasurer as chair of the Tennessee financial literacy commission has the authority to raise funds for the commission.

Status:                   Enacted as Public Chapter 81 effective March 31, 2017.

GOVERNMENT REGULATION

ü PC SB 449 by Bell/HB 566 by Howell - Guides to practice for administrative agencies. –Various groups have begun opposing this bill after it passed.•

Amendment:          Senate Amendment 1 (005309) deletes and rewrites the bill, clarifies that the rules promulgated by entities pursuant to this legislation shall supersede any existing guides to practice developed or approved by a private organization or association that conflict with or are otherwise not included in such rules. Requires that no entity adopt guides to practice that a private organization or association developed or approved; only applies to guides to practice established, adopted, or amended after effective date. Rules will supersede existing guides.

Status:                   Enacted as Public Chapter 215 effective April 28, 2017.

SB 910 by Bell/HB 852 by Daniel - Burden of proof in contested case hearings on state agencies. Places the burden of proof in contested case hearings on state agencies to prove, by clear and convincing evidence, that the action taken by the agencies was proper.

Senate Status:        Government Operations passed on 4/12/2017 with amendment; Sent to Calendar Committee.

House Status:        State Government Subcommittee deferred on 4/12/2017 to 2018.

SB 911 by Bell/HB 769 by Daniel - Requirements for revocation of a license by an agency. Prohibits the revocation of a license by an agency unless the agency provides notice of facts or conduct that warrant such action and the licensee was permitted to show compliance; requires testimony in an agency proceeding to be given under oath and for persons who allege misconduct by a licensee to be present and available to testify at the proceeding. Requires a person who is denied an occupational license or certification by the final decision of an agency and that decision is subsequently reversed on appeal, to be awarded attorney fees, court costs, pre-judgment interest, post-judgment interest, and lost wages from the agency. Specifies that any lost wages awarded shall only include income lost for the period in which the person was aggrieved by the final decision in the contested case hearing.

Senate Status:        Taken off notice in Government Operations on 3/29/2017.

House Status:        Taken off notice in Business & Utilities Subcommittee on 3/28/2017.

SB 1075 by Lundberg/HB 971 by Crawford - Adverse action related to a license or other privilege - written request for hearing. Increases from 10 to 12 the number of days following any adverse action related to a license or other privilege that the licensee must file a written request for a hearing before the commissioner to contest the action.

Amendment:          House Finance Subcommittee Amendment 1 (007935) rewrites the bill. Revises the distribution of local government revenue generation by the 2.25 percent local sales tax imposed on the sales price on the sales made in this state by dealers with no location in Tennessee.

Senate Status:        Referred to Finance Revenue Subcommittee.

House Status:        Finance deferred on 5/9/2017 to 2018.

ü PC SB 1217 by Norris/HB 326 by Hawk - UAPA - rules that may constitute unreasonable restraints of trade. Authorizes commissioners and chief executive officers of administrative departments under which regulatory boards operate to review and either approve or veto rules that may constitute unreasonable restraints of trade. –Part of Administration Package to correct Supreme Court on a North Carolina case as it relates to Accountancy Board and other regulatory boards’ exposure to personal liability. TSCPA is supportive. Amendment added narrows Administration authority over Rules.•

Amendment:          Senate Amendment 2 (004380) rewrites language in the bill to require each supervising official to ensure that the actions of regulatory boards that displace competition are consistent with a clearly articulated state policy. The supervising official must evaluate whether the action may constitute a potentially unreasonable restraint of trade that requires further review; and if it is determined that an action requires further review, the supervising official must provide notice to the regulatory board within ten (10) business days of the date the action was taken that the action is subject to further review. The supervising official must also review the full evidentiary record regarding the action and, if necessary, supplement the evidentiary record or direct the regulatory board or other involved persons or entities to supplement the evidentiary record. Amends section 2 of the bill to state that prior to a rule being filed by a regulatory board, with the secretary of state, the commissioner or chief executive officer of the administrative department under which a regulatory board operates or to which a regulatory board is administratively attached, or a designee to the extent a conflict of interest may exist with respect to the commissioner or chief executive officer, will remand a rule that may constitute a potentially unreasonable restraint of trade to the regulatory board for additional information, further proceedings, or modification, if the rule is not consistent with a clearly articulated state policy or law established by the general assembly with respect to the regulatory board.

Status:                   Enacted as Public Chapter 230 effective April 24, 2017.

PROFESSIONAL PRIVILEGE TAX

SB 205 by Bowling/HB 1034 by Van Huss - Eliminates the professional privilege tax. Eliminates the professional privilege tax for the tax year ending on May 31, 2018, and subsequent tax years.

Fiscal Note:            (Dated February 7, 2017) Decrease State Revenue - Net Impact - $88,918,900/FY16-17 and Subsequent Years Decrease State Expenditures - $974,400/FY16-17 and Subsequent Years Increase Local Revenue - $441,200/FY16-17 and Subsequent Years

Senate Status:        Taken off notice in Finance, Ways & Means on 5/9/2017.

House Status:        Taken off notice in Finance Subcommittee on 5/8/2017.

SB 234 by Harris/HB 602 by Williams - Professional privilege taxation. Amends language exempting an attorney who is legally forbidden to practice law by the supreme court of Tennessee, from the privilege tax.

Fiscal Note:            (Dated February 23, 2017) Decrease State Revenue – Net Impact – Exceeds $231,900 Increase Local Revenue – Exceeds $3,300

Senate Status:        Finance Revenue Subcommittee sent to Finance with a negative recommendation on 3/1/2017.

House Status:        Referred to Finance Subcommittee.

SB 306 by Kyle/HB 46 by Clemmons - Professional privilege tax. Exempts individuals from the professional privilege tax for the first year in which they are licensed or registered in a taxable profession.

Fiscal Note:            (Dated February 1, 2017) Decrease State Revenue - Net Impact - $9,004,100 Decrease State Expenditures - $98,800 Increase Local Revenue - $44,700

Senate Status:        Taken off notice in Finance, Ways & Means on 5/9/2017.

House Status:        Taken off notice in Finance Subcommittee on 5/8/2017.

PROFESSIONS AND LICENSURE

SB 290 by Yarbro/HB 355 by Beck - Includes sales prices for accounting and legal services within a central business improvement district as exempt from additional fees. Clarifies that the sales prices for accounting, legal, or other professional services provided within a central business improvement district located within a tourism development zone are not subject to an additional fee. –Bill changes definition to exclude accounting profession that is taxed in Nashville business improvement district.•

Senate Status:        Referred to State & Local Government.

House Status:        Referred to State Government Subcommittee.

ü SB 473 by Roberts/HB 979 by Calfee - Freedom to Prosper Act. Enacts the "Freedom to Prosper Act" to prohibit local government entities with jurisdictional boundaries from: (1) Imposing any licensing requirements on an occupation unless the political subdivision imposed licensing requirements on that occupation prior to July 1, 2017. Subject to (3), a political subdivision may continue to impose licensing requirements on an occupation if the political subdivision imposed licensing requirements on that occupation prior to July 1, 2017; (2) Imposing any licensing requirement on an occupation that expands or increases any licensing requirements imposed on such occupation by a state agency; or (3) Continuing to impose licensing requirements on an occupation, if a state agency begins to impose licensing requirements on the occupation and the occupation was not previously subject to licensing requirements imposed by a state agency.

Fiscal Note:            (Dated March 5, 2017) Forgone Local Revenue – Exceeds $10,000 Local Expenditures – Cost Avoidance – Exceeds $10,000

Amendment:          Senate Amendment 2 (006536) deletes and rewrites the bill such that the only substantive changes include: clarifies that the prohibition on new licensing requirements of a previously unregulated profession, occupation, or trade only applies to occupations which are currently subject to state licensure requirements; clarifies that the provisions of this bill as amended do not apply to licensing requirements of or on any other regulation of law enforcement officers, firefighters, emergency medical service providers, emergency rescue management providers, or any other type of first responder or emergency service provider.

Senate Status:        Senate passed on 4/19/2017 with amendment.

House Status:        House passed on 5/1/2017.

Other Status:         Governor signed on 5/9/2017.

PUBLIC EMPLOYEES

SB 808 by Yager/HB 909 by Wirgau - County Financial Officer Certification and Education Act of 2017. Establishes the County Financial Officer Certification and Education Act of 2017. Requires certain county financial officers to complete initial training and continuing education in order to ensure competence in the handling of county funds and the protection of public moneys.

Senate Status:        Taken off notice in State & Local Government on 4/5/2017.

House Status:        Local Government Subcommittee deferred on 4/11/2017 to 2018.

ü SB 1209 by Norris/HB 319 by Hawk - Background checks for employees with access to federal tax information. Authorizes state departments to obtain criminal background checks on all employees or contractors with access to federal tax information. Requires these departments to establish written policies related to employee background checks. Authorizes department chiefs to designate who meets the requirement for criminal background checks. –Part of Administration Package.•

Fiscal Note:            (Dated March 28, 2017) Increase State Revenue – $50,800/Tennessee Bureau of Investigation/FY17-18 $21,200/Tennessee Bureau of Investigation/FY18-19 and Subsequent Years Increase State Expenditures – $138,200/General Fund/FY17-18 $57,600/General Fund/FY18-19 and Subsequent Years

Amendment:          Senate Amendment 1 (005296) deletes and rewrites the proposed legislation to remove subsection (e) that authorized the chief executive officer of each department to establish the job titles and classifications subject to background checks.

Status:                   Governor signed on 5/9/2017.

PUBLIC FINANCE

PC SB 314 by Briggs/HB 386 by Farmer - Reporting tax increment revenues. Requires tax increment agencies to file annual statement of revenue for only active plans which are currently producing tax increment revenues.

Status:                   Enacted as Public Chapter 17 effective March 24, 2017.

TAXES BUSINESS

SB 8 by Green/HB 714 by Whitson - Statutory apportionment formula used to calculate franchise and excise taxes. For tax years beginning on or after July 1, 2017, changes the statutory apportionment formula used to calculate franchise and excise taxes from a three-factor formula to a single-sales-factor formula. –Contained in the Improve Act.•

Fiscal Note:            (Dated February 10, 2017) Decrease State Revenue – $12,233,000/FY17-18 $48,195,500/FY18-19 $90,795,500/FY19-20 $73,148,000/FY20-21 $67,500,000/FY21-22 and Subsequent Years Increase State Expenditures – $383,800/FY17-18 Other Fiscal Impact – Secondary economic impacts may occur as a result of this bill. Due to multiple unknown factors, fiscal impacts directly attributable to such secondary economic impacts cannot be quantified with reasonable certainty.

Senate Status:        Finance Revenue Subcommittee returned to Finance without a recommendation on 3/21/2017.

House Status:        Referred to Finance Subcommittee.

ü PC SB 302 by E. Jackson/HB 646 by McDaniel - Bail bonds tax excluded from total gross sales reported on business tax returns. Clarifies that the bail bonds tax collected by a bail bondsman shall be excluded from the total gross sales reported on business tax returns or deducted from the gross sales reported.

Fiscal Note:            (Dated March 2, 2017) Decrease State Revenue – $2,800 Decrease Local Revenue – $3,800

Status:                   Enacted as Public Chapter 236 effective April 28, 2017.

ü PC SB 828 by Yarbro/HB 844 by Fitzhugh - Requires a report on the total number of jobs created for which franchise and excise tax credits were claimed. Requires commissioner of revenue to annually report the total of created jobs which tax credits were claimed for the preceding year to finance, ways, and means committee.

Amendment:          House Amendment 1 (005076) deletes all language after the enacting clause. Requires the Commissioner of the Department of Revenue (DOR) to report, by January 1, 2018, and annually thereafter, to the members of Finance, Ways and Means Committees of the General Assembly the following information with respect to franchise and excise tax credits claimed for tax periods ending during the previous fiscal year: the number of taxpayers claiming the credit; the total amount of credit claimed; the number of jobs created during the fiscal year as reported by the taxpayer, if the credit is awarded based on jobs created; the total amount of credit carried forward from a prior tax year; and the nature of business of the taxpayers claiming the credit, if the nature of the business is available.

Status:                   Enacted as Public Chapter 251 effective May 2, 2017.

SB 1078 by Lundberg/HB 1095 by T. Hill - Franchise and excise tax credits and exemptions for aeronautical jobs. Requires the department of revenue to report the number and amount of franchise and excise tax credits and exemptions issued to privately owned air carriers, general aviation airports, and aeronautical facilities operated in this state.

Amendment:          Senate Transportation & Safety Committee amendment 1 (006491) deletes and rewrites the bill, adding language that outlines repayment of grant funds for airports that received state funds for the planning and construction of any aerospace industrial park.

Senate Status:        Taken off notice in Finance, Ways & Means on 5/9/2017.

House Status:        Transportation passed on 4/11/2017; Sent to Finance.

ü PC SB 1207 by Norris/HB 320 by Hawk - Re-calculation of franchise/excise tax payments. Alters the formula used to calculate quarterly payments for franchise and excise taxes. Reduces the penalty for failing to timely file an excise tax exemption form from $1,000 to $200. –Part of Administration Package. Annualization bill. Funded in budget. TSCPA supports.•

Status:                   Enacted as Public Chapter 194 effective April 19, 2017.

SB 1236 by Norris/HB 957 by Akbari - Community resurgence job tax credits. Revises the wage requirement for a qualifying job under the Community Resurgence Job Tax Credit Act of 2015 from requiring wages equal to, or greater than, the state's average occupational wage to requiring wages at least 65 percent of the labor workforce development area wage.

Fiscal Note:            (Dated March 8, 2017) Decrease State Revenue – Exceeds $50,000/FY17-18 Exceeds $100,000/FY18-19 and Subsequent Years Forgone State Revenue – Exceeds $50,000/FY17-18 Exceeds $100,000/FY18-19 and Subsequent Years

Senate Status:        Finance Revenue Subcommittee passed on 3/15/2017; Sent to Finance.

House Status:        Taken off notice in Finance Subcommittee on 5/8/2017.

SB 1274 by Norris/HB 1042 by Gant - Taxation of business entities and their owners. Allows professionals who own corporations, limited partnerships, and similar business entities to take their professional privilege tax payment as a credit against the business entity's franchise and excise tax liability.

Fiscal Note:            (Dated March 8, 2017) Decrease State Revenue – $2,000,000

Senate Status:        Taken off notice in Finance, Ways & Means on 5/9/2017.

House Status:        Taken off notice in Finance Subcommittee on 5/8/2017.

SB 1277 by Norris/HB 1345 by Camper - Pilot program to issue franchise and excise tax credits to shippers making shipments into and from Shelby County. Establishes a pilot program to issue franchise and excise tax credits to shippers making shipments into and from Shelby County. Requires a shipper to establish and implement a turn-around policy that assures pickups and deliveries are performed during the period of time agreed upon, and that the shipper provides the motor carrier with contact information for any person receiving the delivery.

Fiscal Note:            (Dated March 10, 2017) Decrease State Revenue – Exceeds $2,065,900/FY18-19 and Subsequent Years Increase State Expenditures – $149,300/FY18-19 $139,600/FY19-20 and Subsequent Years Other Fiscal Impact – Secondary economic impacts may occur as a result of this bill. Such impacts may be reflected as improvements in shipment delivery times for Tennessee businesses, an increase in the state’s competitiveness in retaining existing shipping companies and recruiting other shipping companies to locate in the state, and additional commercial activity in the state as a result of qualified companies reinvesting their savings in the state’s economy. Any fiscal impacts directly attributable to such economic impacts are considered secondary and cannot be quantified with reasonable certainty.

Senate Status:        Taken off notice in Finance, Ways & Means on 5/9/2017.

House Status:        Taken off notice in Finance Subcommittee on 5/8/2017.

SB 1426 by Tracy/HB 674 by Lynn - Retailers to deduct bad debt written off by a lender from a private label credit card account. Allows retailers to deduct bad debt written off by a lender from a private label credit card account on the retailer's sales tax return under certain conditions.

Fiscal Note:            (Dated March 17, 2017) Decrease State Revenue – $4,367,000 Decrease Local Revenue – $1,750,000

Senate Status:        Taken off notice in Finance, Ways & Means on 5/9/2017.

House Status:        Taken off notice in Finance Subcommittee on 5/8/2017.

TAXES FUEL

ü PC SB 1221 by Norris/HB 534 by Casada – Transportation Funding. –Part of Administration Package. Gas Tax bill. Includes food, Hall and F&E tax cuts.•

Amendment:          Senate Amendment 3 (007192) deletes all language after the enacting clause. Enacts the Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act or the 2017 Tax Cut Act. Increases motor vehicle registration fees for Class (A) through Class (H) vehicles by $5.00 each. Imposes an additional motor vehicle registration and renewal fee of $100.00 on electric vehicles. Increases registration fees for private and commercial motor vehicles operating for hire who transport passengers by $10.00 each. Increases registration taxes for trucks and truck tractors by $20.00 each. Increases the gasoline tax rate from $0.20 per gallon to: $0.24 per gallon effective July 1, 2017; $0.25 per gallon effective July 1, 2018; and $0.26 per gallon effective July 1, 2019. Requires all revenue generated from the gasoline tax rate increase be allocated as follows: 25.40 percent to counties (subject to certain restrictions); 12.70 percent to municipalities; and 61.90 percent to the Highway Fund. Deletes the local gasoline tax option, codified in Tennessee Code Annotated Chapter 67, Title 3, Part 10, which authorized municipalities and counties to levy a local gasoline tax of $0.01 per gallon to fund public transportation systems. Increases the diesel tax rate from $0.17 per gallon to: $0.21 per gallon effective July 1, 2017; $0.24 per gallon effective July 1, 2018; and $0.27 per gallon effective July 1, 2019. Establishes that the diesel tax rate will remain $0.17 for diesel fuel that is indelibly dyed and used by a commercial carrier to produce power for a means of transportation, as defined in the Transportation Fuel Equity Act. Requires all revenue generated from the diesel tax rate increase be allocated as follows: 17.50 percent to counties; 8.80 percent to municipalities; and 73.70 percent to the Highway Fund. Increases the liquified gas tax rate from $0.14 to: $0.17 per gallon effective July 1, 2017; $0.19 per gallon effective July 1, 2018; and $0.22 per gallon effective July 1, 2019. Requires all revenue generated from the liquified gas tax rate increase be allocated to the Highway Fund. Increases the compressed natural gas tax rate from $0.13 to: $0.16 per gallon effective July 1, 2017; $0.18 per gallon effective July 1, 2018; and $0.21 per gallon effective July 1, 2019. Requires all revenue generated from the compressed natural gas tax rate increase be allocated to the Highway Fund. Establishes the intent of the General Assembly that all revenues derived from the increased taxes and fees imposed by the IMPROVE Act on petroleum products, alternative fuels, and motor vehicle registrations, shall be used to: o Maintain roads and bridges on the state highway system, including the interstate highway system; o Support economic development and promote the professional development needs of women and minorities through the construction of transportation facilities in accordance with the State Industrial Access Act and the Local Interstate and Fully Controlled Access Highway Connector Act; o Maintain public roads and bridges within the boundaries of the state parks; o Support local government investment in transit programs to improve regional transit services across the state and help manage congestion along major highways; o Assist rural transit providers in improving the efficiency of demand response services; o Support projects and programs identified in the Department of Transportation’s annual transportation improvement program; and o Fund the development and construction of 962 projects specified in the IMPROVE Act. Authorizes the Department of Transportation (TDOT) to recommend modifications of the project list, and requires the Department to report to the General Assembly, beginning on or before July 1, 2018, and annually thereafter, on the status of projects listed in the IMPROVE Act. Authorizes local governments to levy a surcharge on the same privileges subject to the following taxes, if the underlying local tax on such privileges is currently being collected: local option sales and use tax; business tax; motor vehicle tax; local rental car tax; tourist accommodation tax or hotel occupancy tax; and residential development tax. Establishes maximum rates for such surcharges. Establishes that no such surcharge shall become effective unless a local government develops and adopts a transit improvement program, and unless it is approved by a majority of the number of registered voters of the local government. Defines “local government” as: any county in the state having a population in excess of 112,000 according to the 2010 federal census or any subsequent federal censuses; or any city having a population in excess of 165,000 according to the 2010 federal census or any subsequent federal censuses. Establishes that any surcharge shall be levied, collected, and administered in the same manner as the applicable underlying local tax, and authorizes the Department of Revenue (DOR) to keep an administrative fee of 1.125 percent of proceeds of any such surcharge that the Department will administer and collect. Requires revenue from the surcharge be used for costs associated with the planning, engineering, development, construction, implementation, administration, management, operation, and maintenance of public transit system projects that are part of a transit improvement plan. Establishes that, if a transit improvement program or a public transit system project becomes unfeasible, impossible, or not financially viable, the revenue from the surcharge may be directed to and utilized for a separate transit improvement program or public transit system project, if certain conditions are met. Authorizes taxpayers whose principal business in Tennessee is manufacturing to elect to apportion their net worth, for franchise tax purposes, and their net earnings, for excise tax purposes, by multiplying them by a fraction, the numerator of which is the total receipts of the taxpayer in Tennessee during the taxable year and the denominator of which is the total receipts of the taxpayer from any location within or outside of the state during the taxable year. This authorization applies to tax years beginning on or after January 1, 2017. Establishes that a taxpayer’s principal business in Tennessee is manufacturing if more than 50 percent of the revenue derived from its activities in this state, excluding passive income, is from fabricating or processing tangible personal property for resale and consumption off the premises. Decreases, from 5.00 percent to 4.00 percent, the state sales tax rate on the retail sale of food and food ingredients. This tax rate decrease is effective July 1, 2017. Decreases the Hall Income Tax (HIT) rate from 5.00 percent to: 4.00 percent for tax years beginning on or after January 1, 2017; 3.00 percent for tax years beginning on or after January 1, 2018; 2.00 percent for tax years beginning on or after January 1, 2019; 1.00 percent for tax years beginning on or after January 1, 2020; and zero percent for tax years beginning on or after January 1, 2021. Increases the property value threshold for determining the extent of any property tax relief payments to low-income elderly homeowners and low-income disabled homeowners from $23,500 of the full market value of the property to $27,000 of the full market value of the property. Increases the property value threshold for determining the extent of any property tax relief payments to disabled veteran and surviving spouse homeowners from $100,000 of the full market value of the property to $135,100 of the full market value of the property. Requires such thresholds to be increased annually for inflation, but limits any such increases to the zero to three percent range.

Status:                   Enacted as Public Chapter 181 effective April 24, 2017 and July 1, 2017 (various sections).

TAXES GENERAL

ü SB 193 by Overbey/HB 331 by Swann - People 100 years of age or older exempt from the Hall income tax. Exempts people 100 years of age or older, or any persons who file a joint return and either spouse is 100 years of age or older, from the Hall income tax.

Fiscal Note:            (Dated February 3, 2017) Decrease State Revenue - Net Impact - $76,000/Each Year FY17-18 through FY21-22 Decrease Local Revenue - Net Impact - $40,600/Each Year FY17-18 through FY21-22

Amendment:          House Amendment 1 (007076) deletes and replaces language of the original bill to establish that the proposed HIT exemption will apply to tax years beginning on or after January 1, 2018, rather than January 1, 2017.

Senate Status:        Senate passed on 5/9/2017.

House Status:        House passed on 5/9/2017 with amendment 1.

Other Status:         Sent to the speakers for signatures on 5/9/2017.

TAXES PROPERTY

PC SB 139 by Dickerson/HB 87 by Crawford - County board of equalization notices of final decision. Requires the county board of equalization to give notice to any property owner that appears before the board of its final decision and the procedure of appeal to the state board of equalization. Also to give notice of the taxpayer's right to electronically file an appeal to the state board of equalization including a link to the online appeal form, the current address of the state board of equalization as indicated on its website, statutory deadlines, and any other information required by the state board of equalization.

Status:                   Enacted as Public Chapter 103 effective July 1, 2017.

PC SB 142 by Bailey/HB 83 by Gravitt - County board of equalization continuing education and training. Requires board members of the board of equalization and county board hearing officers to complete annual continuing education and training on duties and responsibilities of their office as a condition of appointment or continued service. Requires a minimum of at least four hours of training for board members to complete annually and minimum recordkeeping requirements related to members' certificates of attendance. Such training will include board governance, open meetings requirements, and other topics reasonably related to the duties of the members of the county board of equalization.

Amendment:          House amendment 1 (003956) adds new language to clarify that mandatory annual continuing education and training is only required under subsection (e) of the bill, to the extent that the education and training is provided by the comptroller of the treasury free of charge.

Status:                   Enacted as Public Chapter 13 effective March 24, 2017.

PC SB 238 by Haile/HB 282 by Carr - Board of Equalization- property tax appeals. Authorizes the state board of equalization to appoint members from the division of property assessments, to serve in the capacity of hearing examiners to conduct preliminary hearings and to make investigations for the board or the assessment appeals commission regarding complaints and appeals from assessments and classifications. Clarifies that a hearing examiner includes an administrative judge serving by appointment of the state board of equalization or an administrative judge serving on behalf of the board under appointment by the secretary of state. Sets standards for a review hearing in the case of an appeal of a hearing examiners' decision, or if the state board of equalization or the assessment appeals commission does not adopt the recommendation of the hearing examiner.

Status:                   Enacted as Public Chapter 133 effective July 1, 2017.

ü PC SB 257 by Tracy/HB 579 by Tillis - Notice to property taxpayer in property tax case. States that return of the receipt for a mailed summons or notice that is either signed by the defendant or marked refused shall be grounds for a default judgment in a delinquent property tax case.

Status:                   Enacted as Public Chapter 198 effective July 1, 2017.

ü SB 564 by Harper/HB 585 by Love – Meharry Medical College exempt from property taxes in Davidson County. Exempts Meharry Medical College in Davidson County from property taxes.

Amendment:          House Amendment 1 (005818) deletes language of the original bill that referenced nonprofit medical college educational institutions located in Shelby County. Clarifies that a county is not required to refund any taxes collected prior to the effective date of the act.

Senate Status:        Senate passed on 5/9/2017.

House Status:        House passed on 4/13/2017 with amendment.

Other Status:         Sent to the speakers for signatures on 5/9/2017.

SB 594 by Watson/HB 544 by McCormick - Report on counties and cities that have adopted property tax freeze program. Requires the comptroller to report to the chairs of the senate finance, ways and means committee and the house finance, ways and means committee concerning the number of counties and municipalities that have adopted the property tax freeze program by ordinance or resolution by January 15, 2018.

Senate Status:        Referred to Finance, Ways & Means.

House Status:        Referred to Local Government Subcommittee.

ü SB 904 by Bell/HB 912 by Wirgau - Redefines "farm property" for classification and assessment of property tax. Redefines "farm property" for classification and assessment of property tax.

Fiscal Note:            (Dated March 11, 2017) Decrease Local Revenue – Net Impact – $1,470,900

Amendment:          Senate Amendment 1 (005385) deletes language in the original bill that defines “farm property” and replaces it with language specifying that “agriculture” shall be defined by Tenn. Code Ann. § 1-3-105(2) and § 43-1-113, for purposes of property tax assessment.

Senate Status:        Senate passed on 5/1/2017 with amendment 1.

House Status:        House passed on 5/3/2017.

Other Status:         Sent to the Governor on 5/4/2017.

ü SB 907 by Bell/HB 768 by Howell - Mailings of notice by delinquent tax attorneys. Clarifies that a delinquent tax attorney preparing to seize personal property may, when delivering notice by mail, deliver the notice by certified, registered, or first class mail.

Amendment:          Senate Amendment 2 (007224) deletes all language after the enacting clause. Establishes a 15 acre minimum for property classified as forest land under the Agricultural, Forest, and Open Space Land Act. Transfers the responsibility for taxpayer appeals for forest land eligibility determination from the State Forester to the county boards of equalization and the State Board of Equalization (SBOE). States that this legislation applies to tax years beginning January 1, 2017.

Status:                   Governor signed on 5/5/2017.

SB 940 by Ketron/HB 791 by Sparks - Property taxes Equalization Board adjustments. Deletes an outdated cross-reference to a deleted statute.

Amendment:          Senate State & Local Government Committee Amendment 1, House Amendment 1 (005178) deletes all language after the enacting clause. Establishes a 15 acre minimum for property classified as forest land under the agricultural, forest, and open space land act. Transfers the responsibility for taxpayers appeals of forest land eligibility determination from the state forester to the county boards of equalization and the state board of equalization. Senate State & Local Government Committee Amendment 2 (006304) changes the effective date.

Senate Status:        State & Local Government passed on 4/4/2017 with amendments; Sent to Finance.

House Status:        House passed on 4/20/2017 with amendment.

SB 1235 by Norris/HB 874 by Akbari - Expansion of the tax credit allowed for the purchase of brownfield property. Taxes, Exemption and Credits. Makes revisions to tax credits, such as expanding the tax credit allowed for the purchase of brownfield property to include real property that was previously the subject of an investigation or remediation as a brownfield project under a voluntary agreement or consent order.

Fiscal Note:            (Dated March 11, 2017) Decrease State Revenue – $9,940,000

Senate Status:        Referred to State & Local Government.

House Status:        Taken off notice in Local Government Subcommittee on 4/4/2017.

PC SB 1318 by Crowe/HB 86 by Curcio - Property tax exemption records. Changes the language of the preexisting code to clarify that property assessors may retain electronic or digital copies of property tax exemption applications to comply with existing retention requirement.

Status:                   Enacted as Public Chapter 155 effective July 1, 2017.

ü SB 1370 by Bailey/HB 425 by Williams - County board of equalization to conduct certain hearings by phone. Authorizes a county board of equalization to conduct hearings by telephone, television, software or electronic means when a taxpayer is provided an opportunity to challenge an increase of tax assessment or change in property classification.

Amendment:          House Amendment 1 (005113) deletes all language after the enacting clause. Authorizes the county trustee or other property tax collecting official to decline to bill the tax, decline to refer the tax for further collection, or abate any penalty or interest otherwise due for late payment of the tax in the instance of a de minimus property tax of less than five dollars that is authorized by a private act, resolution, or ordinance levying the tax. Requires the tax collecting official to maintain a list of de minimus taxes by parcel and by year, and the tax may be collected when a tax related to the same parcel is tendered for a later year provided that such collection is not barred by any applicable statute of limitations.

Status:                   Governor signed on 5/5/2017.

TAXES SALES

ü SB 3 by Dickerson/HB 6 by R. Williams - Apportionment of sales tax revenue associated with a major league soccer franchise. Allocates state sales tax revenue derived from sales of admissions to events of a major league soccer franchise to the municipality in which a sports authority is organized and has secured the franchise.

Fiscal Note:            (Dated February 26, 2017) Other Fiscal Impact – To the extent Nashville’s bid for a major league soccer team is successful, the state would forgo $1,364,200 in revenue each year beginning in FY19-20. All of this forgone revenue, plus an additional $65,800 that the local government would receive under current law pursuant to the state-shared sales tax allocation for a total of $1,430,000, would be allocated to Nashville for the exclusive use of the sports authority.

Senate Status:        Senate passed on 5/9/2017.

House Status:        House passed on 3/30/2017.

Other Status:         Sent to the speakers for signatures on 5/9/2017.

SB 10 by Green/HB 15 by Goins - Exemption - vehicles sold to disabled veteran or service member. Exempts from sales tax, registration fees, and motor vehicle privilege tax, any motor vehicle sold, given or donated to a veteran or service member who has a service-connected disability and who is eligible for a U.S. Department of Veterans Affairs automobile grant under the Disabled Veterans' and Servicemen's Automobile Assistance Act of 1970.

Fiscal Note:            (Dated January 24, 2017) Decrease State Revenue - Net Impact - $100,700 Decrease Local Revenue - $6,000

Amendment:          Senate Finance, Ways & Means Committee Amendment 1 (006608) deletes and replaces language of the bill to establish that the proposed state and local sales tax exemption only applies to the portion of the price of the vehicle that is in excess of the amount of the USDVA automobile grant received.

Senate Status:        Finance, Ways & Means passed on 4/18/2017 with amendment; Sent to Calendar Committee.

House Status:        Taken off notice in Finance Subcommittee on 5/8/2017.

SB 368 by Overbey/HB 369 by Carr - Materials purchased by a local education agency. Exempts contractors and subcontractors from the sales or use tax on construction materials if the materials are purchased by a local education agency and are used in the construction or improvements of such entity.

Fiscal Note:            (Dated February 18, 2017) Decrease State Revenue –$7,346,200 Decrease Local Revenue –$2,997,800 Decrease Local Expenditures –$10,344,000

Senate Status:        Finance, Ways & Means deferred on 5/9/2017 to summer study.

House Status:        Taken off notice in Finance Subcommittee on 5/8/2017.

SB 416 by Lundberg/HB 697 by Crawford - Exemption - diapers used by children. Exempts from sales and use tax the gross receipts derived from the sale of diapers for use by children.

Fiscal Note:            (Dated March 1, 2017) Decrease State Revenue – Net Impact – $6,825,700 Decrease Local Revenue – Net Impact – $2,785,400

Senate Status:        Referred to Finance Revenue Subcommittee.

House Status:        Referred to Finance Subcommittee.

SB 955 by Tracy/HB 703 by K. Brooks - Dealers may retain portion of taxes to compensate for costs incurred in accounting and remitting such taxes. Allows dealers reporting and remitting sales taxes to the department of revenue to retain a certain portion of those taxes in order to compensate for costs incurred in discharging their duties.

Fiscal Note:            (Dated February 25, 2017) Increase State Revenue – Net Impact – $12,490,900 Decrease Local Revenue – Net Impact – $30,553,700

Senate Status:        Taken off notice in Finance Revenue Subcommittee on 3/21/2017.

House Status:        Finance Subcommittee placed behind the budget.

SB 1118 by Kyle/HB 833 by Jones - Reduces state sales tax rate on diapers, feminine hygiene products, and nonexempt over-the-counter drugs. Reduces the state sales and use tax rate on retail sales of diapers, feminine hygiene products, and nonexempt over-the-counter drugs from 7 percent to 5 percent.

Fiscal Note:            (Dated March 8, 2017) Decrease State Revenue – Net Impact – $14,543,100 Decrease Local Revenue – Net Impact – $509,900

Senate Status:        Taken off notice in Finance, Ways & Means on 5/9/2017.

House Status:        Referred to Finance Subcommittee.

SB 1169 by Hensley/HB 426 by Butt - Exemption - CPAP supplies. Exempts CPAP supplies from being subject to sales and use tax.

Fiscal Note:            (Dated March 8, 2017) Decrease State Revenue – Net Impact – $1,275,000 Decrease Local Revenue – Net Impact – $520,300

Senate Status:        Taken off notice in Finance, Ways & Means on 5/9/2017.

House Status:        Taken off notice in Finance Subcommittee on 5/8/2017.

SB 1174 by Hensley/HB 926 by Butt - Reduces sales and use tax on food. Reduces the sales and use tax on food from 5 percent to 4.5 percent.

Fiscal Note:            (Dated February 22, 2017) Decrease State Revenue – Net Impact – $57,588,600 Decrease Local Revenue – Net Impact – $2,018,800 General

Senate Status:        Taken off notice in Finance, Ways & Means on 5/9/2017.

House Status:        Referred to Finance Subcommittee.

ü PC SB 1208 by Norris/HB 318 by Hawk - Delays effective date of certain streamlined sales tax provisions. Delays effective date of certain streamlined sales tax provisions until July 1, 2019. –Part of Administration Package.•

Status:                   Enacted as Public Chapter 193 effective April 19, 2017.