2021 Legislative Summaries
Department of Revenue Published Guidance
Public Chapter 214 provides protections for taxpayers that reasonably rely on guidance issued by the Department of Revenue and published on the Department’s website.
This public chapter states that taxpayers are not liable for additional tax, interest, or penalties if the taxpayer received incorrect information or guidance from the Department of Revenue and relied on that guidance in making tax decisions. If the Department subsequently changes its guidance, the public chapter directs that taxpayers cannot be assessed for additional tax, interest, or penalties before the date the published guidance is changed.
Effective Date: July 1, 2021
Statute of Limitations for Collection During Bankruptcy
Public Chapter 217 directs that the statute of limitations for collection of tax liabilities stops running during a bankruptcy, probate, receivership, or an assignment for the benefit of creditors proceeding. The statute of limitations continues running 30 days after the bankruptcy stay is lifted or the proceedings halting collections ends.
Effective Date: April 22, 2021
Transfer of Alcoholic Beverage Inventory Upon Sale or Closure
Public Chapter 76 authorizes entities or persons holding a retail package store license, liquor-by-the-drink license, or retail food store license to sell or transfer their inventory of wine or alcoholic beverages to another licensee if their establishment closes or is sold.
This public chapter requires the licensee transferring the alcohol to notify the Alcoholic Beverage Commission and the Department of Revenue at least 10 days prior to the sale or transfer and identify the licensees involved in the sale or transfer and the alcohol being transferred.
Effective Date: March 29, 2021
Alcohol Delivery Service Fee
Public Chapter 185 authorizes licensed alcoholic beverage delivery services to charge a fee of not more than 10% on the price of the alcohol being delivered. The licensed delivery service is not responsible for remitting the taxes otherwise due on the alcohol it delivers.
Effective Date: April 20, 2021
Notice of Brand Registration
Public Chapter 324 requires the Department of Revenue to include the following information in the alcoholic beverage brand registration database: manufacturer/importer name, wholesaler name, addresses for both entities, brand names, and distribution territories. This public chapter also requires the Department to notify the applicable manufacturer and wholesaler(s) when a new brand registration contract is processed.
Effective Date: May 4, 2021
Fulfillment Centers
Public Chapter 331 authorizes winery direct shippers to ship only wine sold under a brand name owned or licensed to the winery, which is produced by the winery, produced exclusively for the winery under an existing contract, or produced and bottled exclusively for the winery.
This public chapter also requires fulfillment centers to obtain a license from the Tennessee Alcoholic Beverage Commission (ABC) in order to assist wineries in making direct shipments of wine to consumers and requires fulfillment centers to report quarterly to the ABC about their shipments.
This public chapter also clarifies that the winery direct shipper is responsible for remitting the alcoholic beverage gallonage tax and sales tax due on wine shipped directly to consumers, regardless of whether it uses a fulfillment center to fill the order. In addition, this public chapter explains that common carriers are required to include all shipments on behalf of winery direct shippers and fulfillment centers in their monthly reports submitted to the department.
Effective Date: January 1, 2022
Winery Direct Shippers Update
Public Chapter 425 authorizes winery direct shippers that manufacturer less than 270,000 liters of wine in a calendar year to ship up to 54 liters of wine to an individual per year.
Effective Date: May 12, 2021
Beer Manufacturer’s Self-Distribution Requirements
Public Chapter 432 authorizes beer manufacturers that brew up to 25,000 barrels of beer per year to self-distribute their beer directly to retailers in the county in which the manufacturer is located and to retailers in other counties, up to a maximum of 1,800 barrels per year. If a manufacturer self-distributing outside its home county distributes more than 1,800 barrels in a year, it must enter into a distribution contract with a wholesaler.
This public chapter requires manufacturers that self-distribute to register with the department as wholesalers, report the amount of beer self-distributed on their wholesale beer tax return, and report quantities of beer sold for consumption on the manufacturer's premises on their retail accountability program (RAP) report.
Effective Date: October 1, 2021
Alcohol Samples at Retail Location
Public Chapter 437 allows alcohol manufacturers to obtain alcohol to use as samples at a retail location either by picking up the alcohol from a wholesaler or having the wholesaler deliver the alcohol to the retail location. In both cases, this public chapter requires the wholesaler to issue a $0 invoice for the alcohol used as samples.
Effective Date: May 13, 2021
Micro Markets
Public Chapter 289 makes changes to sales tax reporting procedures for micro markets, which are unattended food establishments with controlled entry, not accessible by the general public.
This public chapter directs dealers who own or operate multiple micro markets in Tennessee to file one sales tax return and report sales from each local jurisdiction on a consolidated basis.
This public chapter also requires these establishments to obtain, for business tax purposes, a single certificate of registration for each local jurisdiction where multiple micro markets operate, rather than for each individual micro market location.
Effective Date: October 1, 2021
TV and Film Production Tax Credit and Exemption
Public Chapter 70 creates a sales and use tax exemption for tangible personal property, computer software, or services used for a qualified TV and film production. This public chapter also creates a franchise and excise tax credit for qualified payroll expenses incurred during such productions. Qualified productions include film, TV, video game, digital media, and esports productions.
Effective Date: July 1, 2021
COVID-19 Relief Payment Deduction
Public Chapter 154 creates an excise tax deduction for COVID-19 relief payments issued by the State of Tennessee using federal CARES Act funds or appropriations under Title VI of the Social Security Act. Relief payments received between March 1, 2020, and December 31, 2021, through the following programs, are eligible for the deduction:
- Tennessee Business Relief Program
- Tennessee Supplemental Employer Recovery Grant (SERG) Program
- Tennessee Coronavirus Agricultural and Forestry Business Fund
- Tennessee Coronavirus Relief Fund Hospital Staffing Assistance Program
- Tennessee Coronavirus Relief Fund Emergency Medical Services Ambulance Assistance Program
- Tennessee Small and Rural Hospital Readiness Grants Program
- Department of Human Services Childcare Agency Loss of Income and Response & Recovery Operations Grants funded through the federal Child Care and Development Block Grant
Effective Date: April 14, 2021
Seven-Month Franchise & Excise Tax Extension
Public Chapter 559 creates a seven-month franchise and excise tax extension for tax years beginning January 1, 2021.
Effective Date: May 26, 2021
To-Go Alcoholic Beverages
Public Chapter 451 authorizes persons and entities licensed to sell beer and alcoholic beverages for consumption on the premises to sell single servings of alcoholic beverages via drive-through, pickup, carryout, and delivery orders, so long as the sale includes prepared food and the alcohol is packaged in a bottle, can, or secure container with a lid or cap.
This public chapter also requires that licensees collect the liquor-by-the-drink tax on all to-go orders of alcoholic beverages, in the same manner as it is collected for sales made for consumption on the premises.
This law will sunset July 1, 2023.
Effective Date: May 14, 2021
Vacation Lodging Services
Public Chapter 264 requires vacation lodging services to collect and remit the local occupancy tax directly to the local government in which the rental unit is located. This public chapter defines “vacation lodging service” as “a person or entity that is engaged in the business of providing the services of management, marketing, booking, and rental of short-term rental units.”
Effective Date: April 30, 2021
Individual Education Account Tax Exemption
Public Chapter 113 states that any contributions or distributions made to an individual education account for or on behalf of participating students are exempt from state and local taxation.
Effective Date: April 13, 2021
Tax on Barrels of Beer and Bottled Soft Drinks
Public Chapter 158 extends until July 1, 2028, the temporary “litter” tax on bottles of soft drinks and barrels of beer to fund programs for the prevention and collection of litter.
Effective Date: June 1, 2021
TV and Film Production Tax Credit and Exemption
Public Chapter 70 creates a sales and use tax exemption for tangible personal property, computer software, or services used for a qualified TV and film production. This public chapter also creates a franchise and excise tax credit for qualified payroll expenses incurred during such productions. Qualified productions include film, TV, video game, digital media, and esports productions.
Effective Date: July 1, 2021
Pipeline and Railroad Component Exemption Upon Installation
Public Chapter 86 provides that the definition of “tangible personal property” for sales and use tax purposes does not include mains, pipes, pipelines, and tanks after they are attached to a building or structure, or installed underground.
This public chapter also provides that the definition of “tangible personal property” for sales and use tax purposes does not include railroads, railroad tracks, railroad components, or other railroad structures after they are installed.
Effective Date: July 1, 2021
Online Continuing Education Course Exemption
Public Chapter 139 exempts from sales and use tax online access to continuing education courses that meet regulatory requirements for licensed individuals, if offered by 501(c)(3) or 501(c)(6) professional organizations.
Effective Date: July 1, 2021
Quarterly Filing
Public Chapter 275 allows dealers with an average sales and use tax liability of $1,000/month or less over 12 consecutive months to file sales and use tax returns monthly or quarterly. This public chapter directs that the threshold for quarterly filing must be adjusted for inflation every five years, beginning January 1, 2026.
Effective Date: July 1, 2021
Postponed Streamlined Sales and Use Tax Provisions
Public Chapter 285 removes the Streamlined Sales and Use Tax Agreement provisions that were set to take effect July 1, 2021 from the Tennessee Code.
Effective Date: April 30, 2021
Micro Markets
Public Chapter 289 makes changes to sales tax reporting procedures for micro markets, which are unattended food establishments with controlled entry, not accessible by the general public.
This public chapter directs dealers who own or operate multiple micro markets in Tennessee to file one sales tax return and report sales from each local jurisdiction on a consolidated basis.
This public chapter also requires these establishments to obtain a single certificate of registration for each local jurisdiction where multiple micro markets operate, rather than for each individual micro market location.
Effective Date: October 1, 2021
Food Sales Tax Holiday
Public Chapter 456 creates a sales tax holiday for food, food ingredients, and prepared food from Friday July 30, 2021, through Thursday, August 5, 2021. The holiday does not include sales of alcoholic beverages.
Effective Date: July 1, 2021
Increase in Central Business Improvement District (CBID) Fee
Public Chapter 466 increases the Central Business Improvement Development (“CBID”) fee in Downtown Nashville from 0.25% to 0.50%. This public chapter states that one half of the revenue from the fee must go to the metropolitan government for events and marketing and one half must go to “promote safety and cleanliness” in the CBID district.
Effective Date: July 1, 2021
Reduction in Aviation Fuel Tax Rate
Public Chapter 477 lowers the aviation fuel tax rate from 4.5% to 4.25%. This public chapter also lowers the cap for transportation hubs from $10 million to $8.5 million for tax year July 1, 2021 through June 30, 2022, and further lowers the cap to $5 million for tax years occurring after July 1, 2022.
Effective Date: July 1, 2021
Refund Procedure
Public Chapter 480 creates a new sales and use tax refund procedure that allows consumers to request a refund directly from the Department of Revenue if the refund claim is $2,500 or greater and the dealer will not refund the sales tax to the consumer after two requests.
Effective Date: October 1, 2021
Gun Safe Sales Tax Holiday
Public Chapter 592 creates a sales tax holiday on the retail sale of gun safes and gun safety devices. This sales tax holiday will last for one year, from July 1, 2021 to June 30, 2022.
Effective Date: May 27, 2021
Precious Cargo Act of 2021
Public Chapter 55 allows the owner or lessee of a motor vehicle who needs assistance communicating needs to a first responder, or who needs assistance with exiting a motor vehicle, to request a designation of such a need on their motor vehicle registration. The public chapter requires the registrant to submit a statement from a physician, psychiatrist, psychologist, senior psychological examiner, or neurologist supporting their request.
Effective Date: January 1, 2022
Boat Transport License Plate
Public Chapter 97 converts the special purpose boat dealer license plate to a boat transport license plate and redesigns the plate accordingly. This public chapter allows a person or business that transports boats for hire to obtain boat transport license plates without having to present a business license to prove eligibility.
Effective Date: July 1, 2021
Class I Off-Highway Vehicle Definition
Public Chapter 103 increases the maximum dry weight of Class I off-highway vehicles to 3,500 pounds and clarifies that the maximum allowable width of these vehicles is 80 inches, as measured from the outside rim of the tires.
Effective Date: April 7, 2021
Temporary Liens for Motor Vehicles
Public Chapter 171 allows first lienholders or their designees to apply for a temporary lien with the Secretary of State at any time, regardless of whether they have a manufacturer’s statement of origin or the current certificate of title.
Effective Date: April 20, 2021
Motor Vehicle Registration Updates
Public Chapter 218 changes the maximum weight for Class 8 commercial freight vehicles from 56,000 lbs. to 55,000 lbs. This public chapter also clarifies that county clerks issue off-highway temporary permits in lieu of plates for off-highway vehicles for nonresidents, not the Department of Revenue. Additionally, this public chapter allows the Department of Revenue to issue renewal decals for special purpose dealer license plates, instead of new physical license plates.
Effective Date: July 1, 2021
Discharge of Lien Requirements
Public Chapter 240 requires motor vehicle lienholders to notify the Department of Revenue of the discharge of a first lien on the date the discharge occurs, by registered mail with a return receipt. This public chapter provides that the lienor is subject to a Class C misdemeanor if the Department is not notified within 72 hours of the discharge.
Effective Date: July 1, 2021
New License Plates
Public Chapter 579 designates various new specialty license plates including:
- Hampton University
- The Compassionate Friends
- Sheriff’s and Police Activities League of Memphis and Shelby County
- Millennial Debt Foundation
- The Equity Alliance
- City of Chattanooga
- Chattanooga Football Club
- The Ohio State University
- CASA
- Army Ranger
- Drive Electric Tennessee
- Tiger Haven
- TennesSEIA
- Dyslexia Awareness
- Cystic Fibrosis Awareness
- Natural Gas Fuels Tennessee
- The Volunteer State
- Honor the Fallen
- Wilson County The Place to Be
- Nashville Cares
- Service Dogs
This public chapter redesigns the following military license plates by adding the campaign or service medal. The new design will be issued only after existing inventory has been depleted.
- Vietnam Veteran
- Korean War Veteran
- Desert Storm Veteran
- Bosnia Veteran
- Operation Iraqi Freedom
- Operation Enduring Freedom
- Operation New Dawn
- Somalia Veteran
- Operation Inherent Resolve
This public chapter redesigns the Legislator Emeritus special purpose license plate available to members of the General Assembly to indicate whether they served in the Senate or House of Representatives.
This public chapter redesigns the Driving to a Cure license plates and changes the recipient of the plate proceeds to the Department of Health, for use in breast cancer research and prevention.
In addition, this public chapter extends until July 1, 2022, the timeframe for meeting the issuance requirement of 1,000 plates for the following license plates:
- Friends of Shelby Park and Bottoms
- Tennessee Chamber of Commerce and Industry
- Mothers Against Drunk Driving (MADD)
- Big Brothers Big Sister
- I RECYCLE
- Niswonger Children’s Hospital
- Enjoy the Ride
- Service Dogs Changing Lives
- African American Breast Cancer Awareness
Effective Date: July 1, 2021
Smokeless Nicotine Products
Public Chapter 69 exempts smokeless nicotine products from the Tennessee tobacco tax. This public chapter defines “smokeless nicotine products” as nicotine in the form of solids, gels, gums, or pastes intended for human consumption. “Smokeless nicotine product” does not include tobacco or tobacco products, such as snuff or chewing tobacco. These items remain subject to Tennessee tobacco tax.
Effective Date: March 31, 2021