Few details available so far as Tennessee hits nearly $1.28B in corporate tax refunds
As the Tennessee Department of Revenue continues to plow through processing about $1.5 billion in franchise tax refunds approved by lawmakers last year, little information is publicly available so far on the payouts – including how much of the funds were sent outside of the state.
So far, the agency has handed out nearly $1.28 billion in refunds to corporations, as of Dec. 20, 2024 – the latest available number, according to a budget document released by the Lee administration last week.
The department did not provide a more recent total of refunds paid out during January and February when The Tennessean asked on Feb. 11 for updated information.
With most of the funds now paid, it also remains unclear how much money remained inside the state, and how much landed outside of Tennessee.
While about 81% of the estimated 100,000 businesses determined eligible for refunds are located inside Tennessee, the revenue department estimated that the majority of refund dollars (53%) were headed out-of-state, according to documents obtained by The Tennessean last year through a records request.
The Tennessean made multiple requests beginning on Tuesday, Feb. 11 for updated information on the tax refund, including the number of eligible companies that did not apply for refunds, whether unused money dedicated for refunds would revert to the state's general fund and the number of in-state versus out-of-state applicants and the final destination for any funds paid out.
"The department has been working diligently to deliver an update that will be complete at the start of business next week, and while it will not be possible to change this timeline, we look forward to updating you and the public on Tuesday morning," department spokesperson Kelly Cortesi said by email Friday.
She said information on in-state versus out-of-state information wouldn't be available until the department finalizes program figures. She said final data will not be available until May 1, the extended deadline for taxpayers impacted by Hurricane Helene.
By law, the department must publicly disclose names of businesses that filed for a refund and general brackets of refund amounts for a 30-day period from May 31, 2025 to June 30, 2025. After June 30, the information will be taken down.
Republican leadership has continued to defend the unprecedented expense as unavoidable for the state due to legal issues – despite no lawsuit being filed. No state agency has publicly provided evidence of a legal threat, or named any company behind such a liability.
'That particular piece of legislation was to avoid a potential and probable lawsuit that would have cost the state of Tennessee billions of dollars,' Senate Finance Chairman Bo Watson, R-Hixson, told reporters Thursday.
The tax refund created a $400 million recurring loss to the state budget, but Watson argued the refund resulted in 'savings' for Tennessee.
'The most important thing is that we were able to mitigate hundreds of millions of dollars in legal fees,' said Senate Republican Caucus Chair Ken Yager, R-Kingston. 'There were going to be hundreds of attorneys involved in this. It's in the best interest of the state to do this.'
Republicans passed the $1.9 billion franchise tax reform bill last year after 17 senators – including Watson and Yager – disclosed conflicts of interest on the bill.
Watson touted strong Republican fiscal management for making it possible for the state to weather the financial 'body blow.'
'If that same situation had occurred 15 years ago... it would have been unsustainable,' Watson said. 'Because the way we've managed the budget over the past 15 years, we could take on a really significant financial hit.'
Meanwhile, administration officials are recommending the state take on more than $900 million in debt to help pay for capital projects.
It remains unclear whether, or how much, Gov. Bill Lee's family business, the Lee Company, has benefited financially from the legislation. Lee said last year he is unaware if the company could benefit, citing a blind trust that was initiated prior to his taking office.
Vivian Jones covers state government and politics for The Tennessean. Reach her at vjones@tennessean.com.
This article originally appeared on Nashville Tennessean: Tennessee franchise tax refunds: Nearly $1.28B paid out so far
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