State & Local Tax Impacts of COVID-19 for Tennessee

Thoughtware Alert Published: Dec 11, 2020
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Information current as of December 31, 2020.

The SARS-CoV-2 virus and the incidence of COVID-19 are changing life across the globe. Many taxing jurisdictions are taking mitigating actions to create social distance and aid taxpayers. The following is a running list of actions by jurisdiction, which generally result in additional time to file and/or pay. Further, many jurisdictions have closed their offices to in-person use by taxpayers and suspended their audit and administrative functions. This alert doesn’t cover similar waivers from local-level taxing authorities. These developments continue to quickly evolve; check with your BKD Trusted Advisor or visit our COVID-19 Resource Center for current information as needed.

Information Specific to Tennessee

  • Tennessee will extend the deadline for businesses to file returns and make payments on the state’s franchise and excise taxes by three months to July 15.
    • Gov. Bill Lee announcement, March 24, 2020.
  • Tennessee announced that franchise taxpayers will have until July 15, 2020, to file returns and make any payments, including quarterly estimated payments, originally due April 15, 2020. Interest and late filing penalties will not be applied to returns filed and payments made by the extended due date.
    • Tennessee DOR Notice No. 20-05, March 25, 2020.
  • Tennessee extended the due date for filing and paying the Hall (individual) income tax to July 15 from April 15. The DOR stated that interest and late filing penalties won’t be applied to individual income tax returns filed and payments made on or before the extended due date.
    • Tennessee DOR Notice No. 20-06, March 26, 2020.
  • Tennessee extended the excise tax filing and payment deadline to June 15 from April 15. Interest and late filing penalties won’t be applied to returns filed and payments made on or before June 15. o Tennessee DOR Notice No. 20-07, March 31, 2020.
  • Tennessee extended the filing and payment date for professional privilege tax to July 1 from June 1 and waives all interest and penalty if filed/paid by that date.
    • Tennessee DOR Notice No. 20-11, April 1, 2020.
  • Tennessee has suspended, until July 1, the deadline for property tax relief applications for elderly low-income individuals, disabled individuals and disabled veterans, the deadline for individuals over 65 to apply for a property tax freeze and the payment due date and delinquency date for professional privilege tax.
    • Governor’s Executive Order No. 24, April 3, 2020.
  • Tennessee issued guidance on the effect of certain CARES Act provisions. Tennessee doesn’t permit bonus depreciation but does conform to the reduction in class life from QIP to 15 years from 39 years. Tennessee also conforms to the exclusion from gross income for forgiveness of a PPP loan. For net business interest under IRC §163(j), Tennessee conforms to the federal provisions, including the CARES Act, for tax periods beginning after December 31, 2017, and before January 1, 2020. For tax years beginning on or after January 1, 2020, Tennessee decoupled from the TCJA’s amendment of IRC §163(j), such that the deduction for business interest expense won’t be limited. Tennessee doesn’t follow federal revisions concerning net operating loss carryforwards and carrybacks.
    • Tennessee DOR, CARES Act FAQs, July 29, 2020.
  • Tennessee conforms to the interest expense limitation rules of IRC §163(j) for the 2018 and 2019 tax years but has decoupled from those rules for 2020. The DOR states that for tax years beginning on or after January 1, 2020, taxpayers may deduct the 2018 and 2019 carryforwards to the extent they are deducted for federal income tax purposes. The carryforward is limited to the same extent that it is limited for federal tax purposes. Tennessee taxpayers who are members of a consolidated group for federal tax purposes should allocate the federal consolidated group's carryforward of its business interest expense for the 2018 and 2019 tax years in the same manner as the group's interest expense deduction for those tax years. 
    • Tennessee DOR Notice No. 20-16, August 1, 2020.

For more information, reach out to your BKD Trusted Advisor or use the Contact Us form below.

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