Conference Committee Recesses Without Agreement on Franchise Tax Refunds

The Conference Committee convened to reconcile Senate Bill 2103 and House Bill 1893 on franchise and excise tax changes but recessed without agreement after lawmakers disagreed over how far back refund claims should reach, whether recipients of extraordinary rebates should be publicly disclosed, and the potential fiscal exposure from litigation.

Senator Yeager, who presented the Senate's position, summarized the Senate bill as altering franchise tax law, including repealing the franchise tax minimum based on in-state property, creating a three-year window to seek refunds and establishing a fund to pay those refunds. "Senate bill 2103 makes changes in our franchise tax law by primarily... repeal[ing] the franchise tax minimum measure based on the property owned in the state," Yeager said, outlining the Senate's three-year refund window and fund for payouts.

Leader Lambert told the committee the House's version would make any distributed refunds public while preserving the confidentiality of the $400 million ongoing tax cut. "If we're gonna spend, you know, almost $2,000,000,000 here on a total tax cut and rebate, then the people of Tennessee deserve to know where their taxpayer dollars are going," Lambert said, and described the House's shorter refund lookback for tax periods ending on or after March 31, 2022 with claims required by Feb. 3, 2025. The House version also calls for a waiver for rebate recipients promising not to sue and asks that the attorney general's office review and approve the refund process; it would apply ECD credits against any rebate.

Members of the Senate signaled they could accept a signed waiver and preservation of tax credits but held to the Senate's preference for a three-year lookback period, citing recommendations from the governor, the Department of Revenue and the attorney general's office and expressing concern about exposing proprietary taxpayer information. Representative Williams, who was recognized as chairman for comments during the session, said he remained committed to the House approach and described the one-year rebate as a way to show partnership with the business community while stressing the transparency requirement for rebates.

Chairman Watson urged the committee to reconvene only after the attorney general and Department of Revenue have had the chance to present the legal and fiscal implications publicly. "We have $1,500,000,000 in the budget to fund this," Watson said, adding that if litigation were successful the state could face liabilities that are "multiples of $1,500,000,000." Watson said the public needs to understand the financial risk the state could incur if no adequate remedy is adopted.

Committee members discussed logistical constraints: both chambers had floor sessions in the afternoon, complicating immediate follow-up; members agreed that if the committee cannot resolve the matter quickly, the implementation date might need to shift from May 1 to May 15 so the Department of Revenue can update software and operational processes to handle claims.

With differences unresolved and no formal motions on the underlying bills, the chairs recessed the conference committee subject to the call of the chairs and said they would announce any reconvening on the respective floor calendars. The committee did not adopt or reject either chamber's text at the session's close; further deliberations were left to a future meeting with attorney general and revenue office participation.

The next procedural step announced was that the conference committee is recessed subject to the call of the chairs; committee leaders indicated they would reconvene and make a public announcement if and when a meeting time is set.