Tennessee Department of Revenue Provides Updates to Excise Tax Deductions and Guidance on Payments Received Under Tennessee Business Relief Program and Supplemental Employer Grant Program
The Tennessee Department of Revenue recently provided an update to excise tax deductions as well as updated guidance on payments received under the Tennessee Business Relief Program and the Supplemental Employer Grant Program.
The department issued Important Notice 21-03 stating that taxpayers who receive payments between March 1, 2020, and Dec. 31, 2021, through the following Tennessee economic relief programs that are funded by federal CARES Act funds or by appropriations under Title VI of the Social Security Act, may deduct the payments to the extent they are included in the taxpayer’s federal taxable income:
- 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
In addition, taxpayers who receive payments between March 1, 2020, and Dec. 31, 2021, out of the funds allocated to Tennessee for the Child Care and Development Block Grant under the CARES Act and the Further Consolidated Appropriations Act, 2020, may deduct those payments to the extent they are included in the taxpayer’s federal taxable income.
Relief payments that are eligible to be deducted for excise tax purposes should be deducted on FAE 170, Schedule J, Line 25. Taxpayers should deduct eligible payments on the return that covers the payment period. Taxpayers who filed a franchise and excise tax return but did not take the excise tax deduction for eligible relief payments received during the applicable tax year should file an amended return.
Governor Bill Lee signed new legislation into law (SB775/HB776) that changed the Tennessee excise tax treatment of payments received under the Tennessee Business Relief Program and the Supplemental Employer Recovery Grant program. The Department has now updated ET-7 to reflect this change.
ET-7 also states that payments received under the Tennessee Business Relief Program and the Supplemental Employer Recovery Grant are not included in gross receipts for Tennessee business tax purposes and are not subject to Tennessee business tax.