Tennessee House passes version of massive franchise tax refund at odds with Senate

The Tennessee General Assembly is at odds over a massive franchise tax refund after the House and Senate passed vastly different versions of a bill backed by Gov. Bill Lee.

The House on Monday passed their slimmed down version of the plan, which would allow businesses to seek a one-year refund of a franchise tax some state officials say must be handed out to avoid a costly lawsuit. The House's plan would also require the state to publicly list businesses who benefit from the refund.

With the one-year time period, the House version would cost around $800 million, a significant savings compared to the Senate's three-year lookback, which is expected to cost Tennessee $1.9 billion between a gargantuan refund and new tax break.

Under the House plan, companies who take a refund from the state would also have to waive their right to sue over the franchise tax in the future, as lawmakers have argued they're pushing this legislation under the specter of a potential lawsuit.

Senate Republicans have previously blocked an effort to carve out transparency

Majority Leader William Lamberth, R-Portland, sponsored HB 1893 and has argued the tax change is simply "good policy," while Senate Republican leaders down the hall have continually indicated their hand is being forced by a looming lawsuit threat, the origin of which state officials have refused to disclose The Tennessean.

"No court, period, no court anywhere has found that our law is unconstitutional," Lamberth said of Tennessee's longstanding franchise and excise tax calculation, though he said the state is now "out of step with the rest of the country."

Though House Democrats said they were pleased to see additional transparency measures in the lower chamber's version, the caucus was critical the legislature could find millions to refund corporations while declining to pass a grocery tax or other tax relief for “hardworking Tennesseans.”

House Democratic Caucus Chair John Ray Clemmons, D-Nashville, called the bill "a voluntary codification of a corporate handout."

"We don’t owe those companies anything," Clemmons said. "They operated under the laws of Tennessee. They do not deserve a $700 million refund."

The House bill passed in a party line vote, though eight Republicans "blue lighted" the bill, recording themselves as present but not voting on the legislation.

With the two chambers at odds on such significant details, the legislation is expected to go to a conference committee in the coming days before a compromise is reached.

This article originally appeared on Nashville Tennessean: Tennessee House passes massive franchise tax refund at odds with Senate