Tennessee attorneys, accountants, dentists and physicians may be all too familiar with the state’s professional privilege tax—a $400 tax levied for the privilege of engaging in certain occupations within the state. However, two adjustments that occurred during the 2016 legislative session may be a sign of more changes to come, including a possible reduction or phase-out of the tax.
Individuals licensed or registered in one of 22 occupations, whether or not those individuals are actually practicing in Tennessee, are currently subject to the annual tax, which has been imposed since 1992.
In an effort to make things easier for taxpayers and to aid with collection of the tax, the general assembly enacted H.B. 1634 this year, which adds a new section, §67-4-1712, to the Tennessee code. The new section requires the department of revenue to notify each person subject to the tax of their liability, the due date for the tax, and electronic filing requirements. Notification must be done by May 1 each year.
But the new notification requirement does not take effect until July 1, the start of the 2016-2017 fiscal year. So take note if you are licensed in one of the following occupations in Tennessee, because the tax is due June 1:
Bills that would reduce or repeal that tax were also considered this legislative season.
S.B. 556, first introduced in 2015, was an attempt to repeal the professional privilege tax through an $80 reduction occurring annually from 2016 through 2020, when the tax would be fully phased-out. The gradual reduction/phase-out would have decreased state revenue each year, costing the state approximately $77.3 million dollars a year after the tax was fully phased-out, according to S.B. 556’s March 2015 fiscal note.
However, a March 2016 rewrite of the bill eliminated the reduction and phase-out of the tax, and instead directs the Tennessee Advisory Commission on Intergovernmental Relations (TACIR) to study the history and intent of the tax, other states’ professional privilege taxes, and alternatives for phasing-out the tax, to avoid the fiscal impact eliminating the tax would have on the state. Proposals about exemptions from the tax for certain occupations or for nonresidents will also be considered.
TACIR must report its recommendations to the general assembly by Jan. 1, 2017.
Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Should the professional privilege tax be reduced or phased-out?
With a free trial to Premier State Tax Library, practitioners have a single trusted resource that provides all of the tools and information they need to develop and implement the right tax strategies.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)