TCA § 67-4-2015 — Filing of returns — Payment of tax — Penalty

The franchise and excise tax return shall be filed with the commissioner on or before the fifteenth day of the fourth month following the close of the taxpayer's taxable year. The return shall coincide with the accounting period covered by the federal return and the appropriate tax must be paid to the department at the time of filing the return. In the event the return covers a period of less than twelve (12) months, the excise tax shall not be prorated. Every taxpayer, who has a combined franchise and excise tax liability of five thousand dollars ($5,000) or more, after application of all available franchise and excise tax credits, for both the immediately preceding tax year, annualized if the preceding tax year was for less than twelve (12) months, and the current tax year, shall make four (4) quarterly estimated franchise and excise tax payments for its current tax year. A taxpayer electing to compute its net worth on a consolidated basis shall compute its quarterly estimated franchise and excise tax payments taking into consideration that its net worth will be computed on a consolidated basis. Except as otherwise provided in this section, the minimum amount of each quarterly payment shall be the lesser of: Twenty-five percent (25%) of the combined franchise and excise tax shown on the tax return for the preceding tax year, annualized if the preceding tax year was for less than twelve (12) months; or Twenty-five percent (25%) of eighty percent (80%) of the combined franchise and excise tax liability for the current tax year. The first quarterly payment shall be due on the fifteenth day of the fourth month of the current tax year; the second payment on the fifteenth day of the sixth month; the third payment on the fifteenth day of the ninth month; and the final payment on the fifteenth day of the first month of the next succeeding tax year. If there is a deficiency or delinquency of any quarterly estimated tax payment required, a penalty in the amount of two percent (2%) for each month of underpayment or part thereof not to exceed a total of twenty-four percent (24%) and interest at the rate prescribed by § 67-1-801 shall be assessed. The period of underpayment of any required quarterly estimated franchise and excise tax payment shall extend from the date the payment was required to be paid to the earlier of: The fifteenth day of the fourth month following the close of the taxable year; or With respect to all or any portion of the underpayment, the date on which all or any portion of the underpayment is paid. A quarterly payment of estimated franchise and excise tax on any installment date shall be considered a payment of any previous underpayment only to the extent such payment exceeds the amount of the installment payable for that date. Notwithstanding this section to the contrary, with respect to the excise tax component of its quarterly estimated franchise and excise tax payments, a taxpayer may elect to calculate that excise tax component in the manner provided by Section 6655(e)(2) of the Internal Revenue Code. For those taxpayers that elect to calculate the excise tax component of their quarterly estimated franchise and excise tax payments in the manner provided by this subsection (g), the franchise tax component of each quarterly estimated payment shall be the lesser of: Twenty-five percent (25%) of the franchise tax shown on the tax return for the preceding tax year, annualized if the preceding tax year was for less than twelve (12) months; or Twenty-five percent (25%) of eighty percent (80%) of the franchise tax liability for the current tax year. A taxpayer electing to calculate its quarterly estimated franchise and excise tax payments under this subsection (g) shall establish the amount of each estimated payment on a form prescribed by the commissioner. An extension of time of six (6) months in which to file the franchise and excise tax return shall be granted if, on or before the original due date of the return, the extension request is made as required in subdivision (h)(2) and the taxpayer has paid franchise and excise taxes equal to at least the lesser of: Ninety percent (90%) of the liability for the tax year for which the extension is being requested; or The commissioner shall ensure that any new integrated tax system implemented by the department will support the annualization of quarterly estimated payments. As used in this subsection (k), “perfection period” means a period of ten (10) calendar days, beginning with the day after date of the first transmission of an electronic return that is subsequently rejected by the commissioner, for the taxpayer to either: Correct any errors in the return that cause it to fail to meet any of the validation criteria set by the commissioner and retransmit it; provided, that the commissioner subsequently accepts the corrected return; or File a paper return postmarked on or before the expiration of the ten (10) calendar days; provided, that the taxpayer is not required to electronically file or the commissioner grants the taxpayer permission to file the return on paper. A taxpayer's electronically filed return shall be treated as filed on the date of the last transmission prior to the return being accepted by the commissioner, except as provided in subdivision (k)(3). A taxpayer's paper return shall be treated as filed when mailed and postmarked, except as provided in subdivision (k)(3). A return that complies with the requirements of the perfection period shall be treated as filed on the date of the first electronic transmission. One hundred percent (100%) of the tax shown due on the tax return for the preceding tax year, annualized if the preceding tax year was for less than twelve (12) months; provided, however, that, if there was no liability for the preceding tax year, the amount paid shall equal the minimum tax amount provided in § 67-4-2119 . A taxpayer electing to compute its net worth on a consolidated basis shall make its franchise, excise tax extension request and compute the payment thereon taking into consideration that its net worth will be computed on a consolidated basis. Where the taxes paid on or before the original due date of the return do not equal the amount provided in subdivision (h)(1)(A), or if the return is not filed by the extended due date, penalty as provided by § 67-1-804 and interest as provided by § 67-1-801(a) shall attach as though no extension had been granted. An extension request shall be made as follows: If the taxpayer is not required to make a tax payment with its extension request, the taxpayer may use either a form prescribed by the commissioner or a copy of the taxpayer's request for an automatic extension of time to file its federal income tax return for the corresponding tax period. The form shall not be filed on the original due date of the return but, instead, shall be attached to the return filed on or before the extended due date; If the taxpayer is required to make a tax payment with its extension request and the taxpayer does not file its federal income tax return as a member of a consolidated group, the taxpayer may use either a form prescribed by the commissioner or a copy of the taxpayer's request for an automatic extension of time to file its federal income tax return for the corresponding tax period. The form shall be filed with the tax payment on or before the original due date of the return; and If the taxpayer is required to make a tax payment with its extension request and the taxpayer files its federal income tax return as a member of a consolidated group, the taxpayer must use a form prescribed by the commissioner. The form shall be filed with the tax payment on or before the original due date of the return. Final return status shall apply to the first return that reflects any activity or event giving rise to such status, and shall apply to all subsequent returns filed by the taxpayer. The taxpayer shall file a return for each tax period during which the taxpayer is in final return status. This requirement shall include returns of taxpayers with any remaining assets, activity, equity, or proceeds; or with installment sales attributable to any Tennessee assets regardless of whether the entity has any remaining in-state activity. Acts 1999, ch. 406, § 3; 2000, ch. 982, §§ 23-25; 2003, ch. 164, §§ 1, 2; 2004, ch. 786, § 2; 2004, ch. 932, §§ 2, 3; 2005, ch. 499, § 79; 2012, ch. 658, § 1; 2013, ch. 321, § 2; 2016, ch. 881, §§ 2-7; 2017, ch. 194, §§ 1, 2; 2018, ch. 1048, § 2. Code Commission Notes. Former subsection (h), concerning waiver of franchise and excise tax penalties for tax years beginning on or after July 1, 1999, and before July 1, 2000, was deleted as obsolete by authority of the code commission in 2006. Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2001 — 67-4-2017 shall apply to tax years ending on and after June 30, 1999, for limited liability companies, limited liability partnerships and limited partnerships, in which one or more corporations subject to excise taxes under prior law directly or indirectly have in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998; however, §§ 67-4-2001 — 67-4-2017 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers. Acts 2000, ch. 982, § 60(a) provided that §§ 1-38 of that act shall apply to tax years beginning on or after July 1, 1999, and to limited liability companies, limited liability partnerships and limited partnerships whose tax years ended on or after June 30, 1999, and in which one (1) or more corporations subject to franchise and excise taxes under title 67, chapter 4, parts 8 and 9 before their repeal by Chapter 406 of the Public Acts of 1999, directly or indirectly had in the aggregate an eighty percent (80%) or more ownership interest at any time after June 30, 1998. Acts 2004, ch. 786, § 5 provided that § 2 of the act shall apply to tax periods ending on or after July 1, 2004. Acts 2004, ch. 932, § 11 provided that the amendment by that act shall apply to all tax years beginning on or after January 1, 2004. Acts 2012, ch. 658, § 2 provided that the act, which rewrote subdivision (g)(1), shall apply to tax periods ending on or after July 1, 2012. Acts 2016, ch. 881, § 8 provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2016. Acts 2017, ch. 194, § 5 provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2017. For the Preamble to the act concerning electronic filing of tax returns, please see Acts 2018, ch. 1048. Acts 2018, ch. 1048, § 3 provided that the act, which amended this section, shall apply to tax returns filed on or after October 1, 2018. Amendments. The 2013 amendment added (h). The 2016 amendment, in (b), substituted “, after application of all available franchise and excise tax credits, for both the immediately preceding tax year, annualized if the preceding tax year was for less than twelve (12) months, and the current tax year, shall make four (4)” for “for the current tax year, shall make four (4) equal” in the first sentence of the introductory paragraph of (b), and substituted “eighty percent (80%)” for “one hundred percent (100%)” in (2); in the first sentence of (d), substituted “two percent (2%)” for “five percent (5%)” and substituted “twenty-four percent (24%)” for “twenty-five percent (25%)”; deleted the former last sentence of (d) which read: “Notwithstanding any law to the contrary, a taxpayer that has timely made four (4) quarterly estimated franchise and excise tax payments, each of which equals at least twenty-five percent (25%) of the current year's franchise and excise tax liability, shall not be assessed a deficiency penalty with regard to any quarterly payment.” ; and added (i). The 2017 amendment added “Except as otherwise provided in this section,” in the last sentence of the introductory paragraph of (b); and added (g) and redesignated former (g)-(i) to be present (h)-(j), respectively. The 2018 amendment, effective October 1, 2018, added (k). Effective Dates. Acts 2013, ch. 321, § 9. May 13, 2013. Acts 2016, ch. 881, § 8. April 27, 2016. Acts 2017, ch. 194, § 5. April 19, 2017. Acts 2018, ch. 1048, § 3. October 1, 2018. Law Reviews. Delegation of Powers to Administrative Agencies in Tennessee (Phillip P. Durand), 27 Tenn. L. Rev. 569 (1960). Taxation-State Tax Apportionment of Out-Of-State Business Income—Constitutionality and Propriety of a State's Apportionment and Taxation of Capital Gains as Business Earnings (Clark Milner), 79 Tenn. L. Rev. 437 (2012). Cited: Wachovia Bank of N.Carolina, N.A. v. Johnson, 26 S.W.3d 621, 2000 Tenn. App. LEXIS 6 (Tenn. Ct. App. 2000). NOTES TO DECISIONS Decisions Under Prior Law 1. Unitary Groups. 1. Unitary Groups. A unitary group of domestic financial institutions was entitled to a refund of corporate franchise taxes assessed on dividend payments from subsidiaries to the parent corporation. Independent S. Bancshares, Inc. v. Huddleston, 912 S.W.2d 705, 1995 Tenn. App. LEXIS 263 (Tenn. Ct. App. 1995).