WJHL – Postponing the due date for Tennessee business tax payments would be a welcome relief to small businesses, a Johnson City restauranteur said Monday. State Rep. Timothy Hill (R-Blountville), the chairman of the House Commerce Committee, suggested such a move in a Friday letter to Gov. Bill Lee.
“I’m sure that most small businesses are going to welcome anything, large or small right now, because of the pressure that we are going to have of paying our employees and paying our bills,” Firehouse Restaurant and Catering owner Tom Seaton said. Despite a very busy week offering carry out only last week, Seaton elected Saturday to shut down completely until at least April 6.
Hill is asking the Lee administration to allow a 90-day extension for the due date of the Franchise & Excise tax for certain businesses. Businesses pay 6.5 percent annually on their net taxable income as an excise tax, and 0.25 percent (minimum $100) on the net worth or tangible property of a corporation.
A business with a net worth of $1 million and net taxable income of $500,000, for instance, would face an F&E bill of $35,000 – $32,500 on income and $2,500 on the franchise value. He said a partner in a large CPA firm initially approached wondering what would happen if staff there had to be out of work.
“It helps the initial concern of the tax preparer, but it helps the small business owner actually have a little bit of cash on hand as opposed to having this stringent requirement on the business saying, ‘well you have to pay this or else,'” Hill said.
“The intent is, maybe there’s a threshold of small business owners that are literally just hanging on for dear life right now, that this can find a way to help them and maybe keep folks employed just a little bit longer, maybe help them make their rent.”
The Franchise & Excise tax is second only to sales tax in the revenues it brings to Tennessee. It netted more than $2.7 billion in the 2019 fiscal year ended last June 30, nearly 18 percent of total revenues.
Hill said businesses will have access to federal Small Business Administration loans and other avenues in the somewhat near future, but that many need aid sooner. “The question is, how does a business that is affected make it from here until that point, and can they? This is something that can help them right now with their own cash.”
Standing inside an empty lobby, looking out over an empty parking lot, Seaton said small business owners are just looking for some specific guidance from the government right now. He said he was following that guidance community health wise when he made the difficult decision to cease even carry out service less than 24 hours before Lee ordered dine-in service halted.
“We don’t know whether we need to go ahead and do a mass furlough of our staff,” he said. “We started to do that, was told not to that we needed to wait to see whether the stimulus bill passed or not. We all waited last night to see if it would pass and at the last minute it got pulled.
“People in Washington, people at the state, they need to look here and see what’s going on and realize we need to pass some help.”
Most of Seaton’s 80-plus full and part-time employees are young people who either live with parents or can move in with family, but he teared up talking about the few who aren’t.
“We’ve gone through our whole list trying to narrow it down to folks who are full time and who are paying rent, paying mortgages and providing for families,” Seaton said. “They’re all coming in for their paychecks tomorrow and we’re going to touch base and see what we can do to help them.”
Hill said that’s why he wrote his letter. He said Tennessee is in excellent fiscal shape and has sufficient reserves to help businesses in need and others. “I think we’re in fantastic shape to do that. I don’t get the sense from any sector of government that anybody wants to leave anybody hanging.”
He said he’s not certain whether Lee can make such an order — which would coincide with the new July 15 federal tax deadline — through a rule, by an emergency power or how exactly. The legislature is recessed until June 1. “I think it needs to happen within a week if not sooner,” Hill said.
He said he’s been in continuous talks with Lee’s staff about the issue, and that he also supports considering a hiatus on sales tax collections to give any businesses that are still bringing in some money another temporary break.
“I’m very much for all of the above right now for our businesses,” Hill said. “If it’s something that moves the needle to help them we need to do it, because I am convinced, this is a period in tome but it’s temporary.
“We’re just trying to be that bridge,” Hill added. “I don’t know where it goes from here, but you’ve got to put forward positive solutions, you have to. That’s why I wrote the letter and that’s why I’m so invested.”