Tennessee House, Senate reach deal on franchise tax bill — including public disclosures

Vivian Jones, Nashville Tennessean

After days of negotiations, House and Senate leaders reached a compromise Thursday on Tennessee Gov. Bill Lee’s proposed $1.9 billion franchise tax deal, agreeing to offer businesses three years of refunds and – for the first time in state history – publicly disclose names of businesses and the ranges of refund amounts.

Lee’s franchise tax package is largest new spending item this year. The plan would eliminate the franchise tax property tax calculation (expected to cost the state $400 million in revenue beginning this year), and offer up to $1.5 billion in refunds for as many as 100,000 businesses that paid taxes based on the property measure over the last three years. Administration officials have said the refunds are indispensable to avoid lawsuits and court-ordered penalties.

House leadership had pushed for offering only one year of refunds, and requiring names and refund amounts to be publicly disclosed. Senators did not support any public disclosure, and wanted three years of retroactive refunds, to align with the statute of limitations.

Days after declaring the two chambers “at an impasse,” a conference committee on the bill met Thursday morning to discuss final details of the deal. Committee members agreed along party lines to the following key points:

  • A three-year retroactive refund window.

  • Names of businesses and ranges of refund amounts would be made public, but only for a 30-day window.

  • Businesses must sign away ability to sue the state if they file for a refund.

  • No attorney fees will be awarded to businesses suing the state for franchise tax refunds.

  • Businesses would have between May 15 and Nov. 15 to file their refund claims.

Funding for three years of refunds – $1.5 billion – is included in the budget already adopted by both chambers. 

House members agreed to offer businesses three years of refunds in exchange for public disclosure of businesses receiving a refund.

“That is quite a concession obviously on our side, but we're willing to do that,” said House Majority Leader William Lamberth, R-Portland. “We value our business community, as I know our Senate colleagues do as well, and we see that as a significant reinvestment of those dollars back into our community here in Tennessee.”

Names of businesses who have filed for a refund and wide ranges of refund amounts would be publicly disclosed by the Department of Revenue for a 30-day window from May 31, 2025 to June 30, 2025 and then will be taken down.

“That information is not going to live in perpetuity out there,” said Senate Majority Leader Jack Johnson, R-Franklin.

Specific refund dollar amounts will not be disclosed: businesses receiving refunds will be listed in ranges $0-$750, $751-$10,000, and $10,000 and above.

“The disclosure information is a significant concession by the Senate – both the names as well as the ranges that are being provided,” said Senate Finance Committee Chair Bo Watson, R-Hixson.

Seventeen senators declared a personal interest in the legislation before voting on the franchise tax reform earlier this month.

Lee said Monday he opposes those transparency measures. It remains unclear how much Lee’s family business, the Lee Company, would financially benefit from the refund, something critics of the deal regularly cite.

Records from the Department of Revenue obtained by The Tennessean show that an estimated 53% of the refund dollar total would go to businesses located primarily out of state.

In addition, the bill specifies that any business that sues the state over the franchise and excise tax will not be able to recover attorney fees.

“It is not going to be attractive to sue this state under this issue and we hope that this puts to bed any potential legal issues that even might have been out there,” Lamberth said. “We see this is a big policy win for the state of Tennessee and our citizens.”

Vivian Jones covers state politics and government for The Tennessean. Reach her at vjones@tennessean.com or on X at @Vivian_E_Jones.

This article originally appeared on Nashville Tennessean: Tennessee House, Senate reach compromise on franchise tax deal

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