The state, not local governments, is now responsible for the administration and collection of business taxes effective Jan. 1, 2010.
In the past, city and county governments collected the tax, turned it into the state and split the revenue with the state government.

To help local businesses adjust to the new collection system, Sweetwater City Recorder Jessica Morgan led a free class on the changes.
About two-dozen business owners and accountants attended the Thursday session and a second business tax class is scheduled for 7 p.m. Jan. 14.

"You all are a very important part of Sweetwater," Morgan told those attending the class.
She said in particular, the state will focus on collecting from sub-contractors who might not be paying business taxes. The state will mail out information to businesses owners.
Morgan said the state believes the new system led by the Department of Revenue will boost the state's collections by $40 million a year.

"The 106th General Assembly enacted Public Chapter 530, shifting the administration and collection of business tax from local municipalities and counties to the Department of Revenue. With this change, the Department of Revenue will use its resources and experience in tax administration to collect the business tax, resulting in greater efficiency in the collection process and increased revenue for the state and for local governments," the Department of Revenue said in a press release. 

"This undertaking is a true partnership between state and the local governments," said Commissioner Reagan Farr. "While increasing revenue through improved tax compliance, we also plan on simplifying the tax process for business owners including developing a new, simplified tax return and initiating major education programs."

Beginning with Classification 1 taxpayers, due Feb. 28, 2010, all business tax returns will now be filed with the Tennessee Department of Revenue. Businesses will continue to obtain business licenses from the county clerks and/or municipal officials.
Businesses are divided into classes and generally pay taxes during a certain quarter during the year depending on classification.

The Department of Revenue said it is working closely with local municipalities and counties to make this transition a smooth process. The department is currently gathering registration data from the counties and cities to register the business owners and mail out tax returns as soon as possible. More information is available at the Department of Revenue's Web site www.TN.gov/revenue.

tommy.millsaps@advocateanddemocrat.com | 337-7101