A change in who collects business taxes in Tennessee has already uncovered 5,600 potential accounts going unpaid.
Starting in January, the state’s Department of Revenue will oversea business tax collections instead of county clerks. Commissioner Reagan Farr says his office has greater ability to compare federal, state and county level data to make sure businesses aren’t slipping through the cracks.
There are five classes of businesses in Tennessee. Already, Farr says his office has sent letters to 5,600 who aren’t paying their taxes. That’s just class one businesses, like gas stations and retail shops, so Farr says thousands more are out there.
“That’s 5,600 out of a class of taxpayers where they have 26,000 registered in the state. There’s over 500,000 business tax accounts, so if you extrapolate that, we anticipate finding as many as 100,000 unregistered businesses as part of our compliance effort.”
In the first year administering the business tax, the Department of Revenue expects to bring in an additional $20 million to the state budget.
The state’s offering incentives to businesses that come forward on their own.
Farr says he’s prearranged with the Attorney General and the state comptroller to allow partial amnesty.
“If you come forward with the state voluntarily, you only have to go back three years worth of liabilities, tax and interest. If we reach you or contact you by letter, we’re going to go back six years.”
If two letters are sent, Farr says auditors will go back ten years and charge penalties and interest.
Revenue Commissioner Reagan Farr and Davidson County Clerk John Arriola will testify Wednesday about the business tax collection changes. Watch the video here.