Incentives Watch: Property Tax Exemptions Deemed Unconstitutional By Tennessee’s Attorney General

Tennessee’s Attorney General recently issued another opinion that calls into question the legal validity of the state’s use of property tax incentives to encourage economic development, reports a Bloomberg BNA Weekly State Tax Reportarticle.

In Opinion No. 13-11, the attorney general advised that allowing a four-year phase-in period for an increased assessment value on commercial property due to capital improvements is unconstitutional because it constitutes an impermissible tax exemption.

The phase-in period gives business owners a partial property tax exemption in order to reward them for making capital improvements on their property, the article notes.

In Tennessee, all property in the same class must be taxed in the same manner as all other property belonging to the same class.

Similarly, in Opinion No. 12-102, the attorney general addressed the issue of whether the state may cap the value of certified green energy production facility machinery and equipment at 0.5 percent of the equipment’s acquisition value.

The attorney general advised that a property tax exemption, not supported by a credible rationale related to valuation, given to business owners is likely unconstitutional.

For more information about the green energy production facility equipment property tax exemption, check out Bloomberg BNA’s Green Incentives Navigator.

In other developments . . .

A Tax Foundation blog reports that State Farm may be consolidating some of its offices and moving more employees from Illinois to Texas, as a result of increased income taxes in Illinois.


By: Kathleen Caggiano

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