Tennessee § 67-4-2103 - Corporations subject to tax — Exemptions.

§ 67-4-2103. Corporations subject to tax — Exemptions.

The supervision and collection of the tax imposed by this part is under the direction of the department of revenue, and the department has the authority and power to prescribe forms upon which entities liable for the tax imposed shall make reports of such facts and information as will enable the commissioner to ascertain the correctness of the amount reported and paid by such entities. The commissioner may, within the commissioner's discretion, require any taxpayer to file with its Tennessee franchise tax return, a copy of the federal tax forms filed with the internal revenue service for the same tax year. All persons subject to the tax imposed by this part shall register with the department of revenue by completing and filing a registration information form prescribed by the department. Such form shall be filed with the department within sixty (60) days after July 1, 1999, or within fifteen (15) days after the date the person becomes subject to the tax, whichever date occurs last; provided, that persons registered under prior law, or who have filed a return under prior law, are not required to register for the tax imposed by this part. Notwithstanding any law to the contrary, except as otherwise provided in this subsection (d), for tax years beginning on or after January 1, 2004, a taxpayer that is a member of an affiliated group or a financial institution affiliated group may elect to compute its net worth on a consolidated basis; provided, that, upon such election, each member of the group shall be required to compute its net worth on a consolidated basis. However, such election shall not be allowed, unless each member of the group closes its taxable year on the same date, except that the election shall be allowed when a member exits the group during the taxable year due to a change in ownership, merger, or liquidation of the member, in which case the member exiting the group shall be excluded from the group and shall compute its net worth as otherwise provided in this part. If a taxpayer joins an affiliated group or financial institution affiliated group and the group has elected to compute its net worth on a consolidated basis, the taxpayer joining the group shall be bound by the group's election. If an affiliated group does not qualify as a financial institution affiliated group but contains a member that is classified as a financial institution based solely on the fact that the member generates more than fifty percent (50%) of its gross income from conducting the business of a financial institution, then any such member shall calculate its net worth base using the apportionment methodology applicable to the entire group. A taxpayer electing to compute its net worth on a consolidated basis shall make such election by filing a group registration form with the department and providing such information as may be reasonably required by the commissioner on or before the due date of the tax return for the period for which such election is to take effect. If a member of an affiliated group or a financial institution affiliated group enters or leaves the group at any time during the tax year, the department shall be advised by filing an amended group registration form and providing such information as the commissioner may reasonably require on or before the due date of the tax return for the period during which such event occurs. The election of an affiliated group to compute its net worth on a consolidated basis shall not be terminated solely as a result of the taxpayer's failure to advise the department of members entering or leaving the group. Once a taxpayer elects to compute its net worth on a consolidated basis, such election shall remain in effect for a minimum of five (5) tax years and thereafter until revoked. The affiliated group may revoke such election after the minimum period by filing a group registration revocation form with the department and providing such information as the commissioner may reasonably require on or before the due date of the tax return for the period during which such election is to be revoked. The commissioner is authorized to accept a late election, a late revocation of an election, or to permit an early revocation of an election to compute net worth on a consolidated basis, if the commissioner determines that there is a good and reasonable cause for such action. For tax returns filed for periods beginning January 1, 2004, and ending on or before December 31, 2006, an affiliated group shall be allowed to compute its net worth on a consolidated basis by filing an amended return along with a group registration form and such information as may be reasonably required by the commissioner. Upon written request by the taxpayer making the election under subsection (d), the commissioner is authorized, in the commissioner’s discretion, to allow the exclusion of one (1) or more persons that would otherwise be members of the taxpayer’s affiliated group, if the commissioner determines that: Such persons are included in the taxpayer's affiliated group solely by virtue of a direct or indirect interest and are so operationally remote from the taxpayer that the taxpayer would be unable to obtain the information necessary to calculate the net worth of the group if such persons were included as members; or Such person has a direct or indirect interest in both the taxpayer and one or more persons described in subdivision (j)(1)(A)(i) and is so operationally remote from the taxpayer that the taxpayer would be unable to obtain the information necessary to calculate the net worth of the group if such person was included as a member; and The exclusion of such persons from the affiliated group would result in a fair representation of the affiliated group's consolidated net worth. Such written request shall provide such information as may be reasonably required by the commissioner and shall be submitted on or before the due date of the tax return for the period for which such exclusion is to take effect. The commissioner is authorized to accept a late request if the commissioner determines that there is a good and reasonable cause for such action. If the commissioner allows the exclusion of persons from the taxpayer's affiliated group under subdivision (j)(1), all members of the taxpayer's affiliated group shall be bound by such exclusion. Acts 1999, ch. 406, § 4; 2004, ch. 932, § 4; 2005, ch. 499, § 80; 2012, ch. 842, § 6. Compiler's Notes. Acts 1999, ch. 406, § 19(b) provided that §§ 67-4-2101 — 67-4-2120 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 franchise 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, §§ 67-4-2101 — 67-4-2120 shall apply to tax years beginning on or after July 1, 1999, for all other taxpayers. 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.