TENNESSEE DEPARTMENT of REVENUE Franchise and Excise Tax 2021-2026
What is the Tennessee Department of Revenue Franchise and Excise Tax?
The Tennessee Department of Revenue administers the Franchise and Excise Tax, which applies to most businesses operating in the state. This tax is imposed on the net earnings of corporations and limited liability companies (LLCs), as well as on the value of their assets. The Franchise Tax is based on the greater of a company's net worth or the book value of its property, while the Excise Tax is calculated on the net earnings of the business. Understanding these taxes is essential for compliance and financial planning for businesses in Tennessee.
Steps to Complete the Tennessee Department of Revenue Franchise and Excise Tax
Completing the Tennessee Franchise and Excise Tax involves several key steps:
- Gather necessary financial documents, including balance sheets and income statements.
- Determine your business's net worth and net earnings for the tax year.
- Calculate the Franchise Tax based on the greater of your net worth or the book value of your property.
- Calculate the Excise Tax based on your net earnings.
- Complete the appropriate forms, such as the TN Form FAE 183, ensuring all information is accurate.
- Review the calculations for accuracy before submission.
Filing Deadlines / Important Dates
It is crucial to be aware of the filing deadlines for the Franchise and Excise Tax in Tennessee. Typically, the tax return is due on the fifteenth day of the fourth month following the end of your fiscal year. For most businesses operating on a calendar year, this means the due date is April 15. Extensions may be available, but businesses must file for them before the original due date to avoid penalties.
Required Documents
To accurately complete the Tennessee Franchise and Excise Tax forms, businesses need to prepare several documents:
- Balance sheet and income statement for the tax year.
- Records of any adjustments to income or deductions.
- Documentation supporting asset valuations.
- Previous tax returns for reference.
Penalties for Non-Compliance
Failure to comply with the Franchise and Excise Tax requirements can result in significant penalties. These may include late filing fees, interest on unpaid taxes, and potential legal action by the state. It is essential for businesses to file their returns on time and ensure all calculations are accurate to avoid these consequences.
Who Issues the Form?
The Tennessee Department of Revenue is responsible for issuing the Franchise and Excise Tax forms, including the TN Form FAE 183. This form is used by corporations and LLCs to report their Franchise and Excise Tax liabilities. The department provides guidance and resources to assist businesses in completing the form correctly.
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