This year marks a change in the administration of the Business License Tax in Tennessee. Starting with the 2010 license year, the State Department of Revenue will begin collecting the Business License Tax on behalf of local jurisdictions. With this change comes a new process as well as new level of scrutiny of who is or is not filing tax returns.

Starting with the collection of Classifications 1 and 5 due no later than February 28, 2010, the State will require all businesses who are filing sales and use tax electronically to file and pay the business license tax electronically. The State has revamped the business tax return in an attempt to shorten and simplify the return. Businesses filing the returns will pay the State who will forward the payment on to the local jurisdictions where the business license will be issued directly to the taxpayer. Because the State has implemented these new forms, the old returns can no longer be used and payments should definitely not be made to the local taxing jurisdictions as in past years.

The State has publicly announced their intentions to use this opportunity to identify businesses who are not registered or filing business tax returns. This will be done by matching records through various registration and reporting records the State has at its disposal. The Voluntary Disclosure Agreement program (VDA) will be available to those businesses who have not registered for business taxes only until December 31, 2009. After this time the State will begin sending inquiries to the delinquent taxpayers it has identified. Participation in the VDA program would require businesses to file delinquent returns back through the 2005 tax year along with interest, compared to the 6 year look-back period that the State can enforce on those businesses who do not come forward voluntarily. The program also allows delinquent taxpayers to avoid paying the 25% delinquency penalty that will be assessed to those who do not come forward voluntarily.

Whether your business needs assistance electronically filing or paying taxes, determining tax exposure for previous years or applying for the voluntary disclosure program the State & Local Tax Group at LBMC is able to assist your business in any aspect relating to the new Business License Tax.