taxes

About that whole voucher tax thing…

Gov. Bill Lee speaks to reporters on March 19, 2019, about his proposal to introduce an education savings account program in Tennessee. (Erik Schelzig, Tennessee Journal)

The revelation that Tennessee’s new school vouchers could well be considered taxable income by the IRS set off a furor at the statehouse among both supporters and opponents of the “education savings account” law.

Education Commissioner Penny Schwinn’s statement to the House Finance Committee appeared fairly unequivocal when asked during a Monday hearing: “My understanding is this is taxable, yes.”

Voucher supporters were quick to pounce, noting that the law includes a provision that states the more than $7,300 vouchers would not be considered income. But the caveat there is the state can only write legislation affecting Tennessee law. The IRS might have different ideas.

Schwinn told reporters she had come to that determination in consultation with state Attorney General Herbert Slatery’s office. But a spokeswoman for the AG said his office would not be in a position to weigh in on federal tax matters.

Schwinn’s spokeswoman later issued a new statement seeking to clarify matters:

The Commissioner’s comments at the budget hearing today were intended to reflect the possible need for the program’s filing and issuance of federal information reporting returns rather than taxability. We are continuing to work through the details of what will be required for ESA program implementation.

So where does that leave things for parents concerned about being hit with a big tax bill if they take the vouchers? It remains unclear. And now Democratic lawmakers are (perhaps inevitably) asking for a delay in the bill’s implementation so it can all be figured out.

Feds could consider school vouchers taxable income

Gov. Bill Lee speaks at the state Capitol on Sept. 16, 2019. (Erik Schelzig, Tennessee Journal)

Education Commissioner Penny Schwinn told lawmakers Monday that the federal government may consider money families receive under the Gov. Bill Lee’s school voucher program as taxable income.

(Update: There may be some backtracking going on.)

That may come as a surprise to lawmakers who voted for the bill that includes a provision stating that: “Funds received pursuant to this part …. do not constitute income of a parent of a participating student under title 67, chapter 2 or any other state law.”

As enacted, families in the Metro Nashville and Shelby County school districts earning up to 2.6 times the federal poverty level will be eligible for the program offering debit cards worth $7,376 — the equivalent of the average amount provided per student under the state’s school funding formula — to spend on expenses related to private school education. For a family of five, the income limit would be set at $76,500.

Schwinn told reporters after a House budget hearing that the tax determination was reached in consultation with the state Attorney General’s office.

Retiring Corker subject of billboard campaign in Nashville

U.S. Sen. Bob Corker (R-Chattanooga) may be hanging ’em up this year, but that’s not stopping a group called Not One Penny from taking out a billboard near the state Capitol in Nashville to attack him over his vote on President Donald Trump’s tax overhaul.

The Not One Penny campaign is part of the Tax March organization that describes itself as “everyday Americans who are tired of systems that are rigged in favor of the super-rich.” The billboard says that Corker’s vote for the tax bill led enriched the senator personally.

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AG contradicts Jack Daniels’ bill — says whiskey barrels can be taxed

A legal opinion from the state attorney general’s office says the barrels used to age whiskey in Tennessee distilleries are subject to property taxes paid by businesses, despite a contention to the contrary in a bill pending before the General Assembly.

Producers of Jack Daniels whiskey have been pushing the bill (SB2076) since officials in Moore County laid plans to begin applying the tax to aging barrels, something not done in the past. The fiscal note prepared by legislative staff estimates that would mean about $2.8 million in new revenue for Tennessee’s smallest county.

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TN Supreme Court rejects refund of liquor stores’ overpaid taxes

Press release from Administrative Office of the Courts

Nashville, Tenn. – In a unanimous opinion, the Tennessee Supreme Court ruled that a taxpayer must pay disputed municipal taxes under protest before suing for a refund.

The city of Morristown, based on a state statute, adopted an ordinance imposing an inspection fee on licensed alcoholic beverage retailers. The city set the fee at 8 percent of the wholesale price based on the county’s population. By 2011, the county’s population increased, and under the ordinance, the inspection fee should have decreased to a maximum fee of 5 percent of the wholesale price. However, from 2011–2014, the city of Morristown continued to charge alcoholic beverage retailers 8 percent inspection fees instead of the authorized 5 percent fees.  Continue reading

Randy Boyd releases tax info — $42M income in past two years

Press release from Randy Boyd campaign

Knoxville, Tenn. – During his two years of public service as commissioner of the Tennessee Department of Economic and Community Development, Republican gubernatorial candidate Randy Boyd returned his state salary back to the state and personally paid for all of his own travel and other official expenses – including any use of state aircraft and all other expenses while recruiting businesses to Tennessee from around the world.
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On the ‘testy’ exchange between Corker and Wolf Blitzer on tax bill

Excerpt from The Hill’s report on a “testy” exchange between Tennessee U.S. Sen. Bob Corker and CNN reporter Wolf Blitzer:

“I know I am being maligned,” Corker told Blitzer on Tuesday. “It’s just malicious.”

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Hatch ‘disgusted’ with Corker kickback claims

As the U.S. Senate prepared for a vote on federal tax overhaul legislation, Tennessee Sen. Bob Corker’s shift from no to yes “swirled into a political firestorm,” according to Politico. Senate Finance Committee Chairman Orrin Hatch on Tuesday sent Corker a letter basically declaring there was no “Corker kickback” – a label some have been using.

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Dean latest gubernatorial candidate to release tax info

Democratic gubernatorial candidate Karl Dean and his wife had $19.2 million in taxable income from 2013 to 2016, reports The Tennessean  after he provided a tax summary statement.

Last year alone, Dean and his wife, Delta Anne Davis, who works for the Southern Environmental Law Center, earned nearly $2.7 million.

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Corker surprised by special tax cut for his commercial real estate business

The latest version of the federal tax bill that Congress is expected to approve this week includes a provision that U.S. Sen. Bob Corker says caught him by surprise. It’s a tax break that would benefit persons with large commercial real estate holdings – such as Corker – and the senator has asked for an explanation.

Excerpt from a letter the Tennessee Republican sent Senate Finance Committee Chairman Orrin Hatch, R-Utah, on Sunday, as reported by Bloomberg News.

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