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HB 988

Cooperatives - As enacted, specifies that the privilege tax exemption for subsidiaries of agricultural cooperatives applies without regard to whether the subsidiary was formed as a corporation, limited liability company, limited liability partnership, or other legal entity, association, or body vested with the power or function of a legal entity. - Amends TCA Title 43, Chapter 16, Part 1 and Section 67-4-102.

114th Regular Session (2025-2026) Introduced by Pat Marsh

Tennessee bill exempts all agricultural cooperative subsidiaries from privilege taxes regardless of legal structure, clarifying prior ambiguous tax code language.

Comp. became Pub. Ch. 455
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Bill Summary · HB 988

Legislative bill overview

HB 988 clarifies that agricultural cooperative subsidiaries receive privilege tax exemptions regardless of their legal structure—whether organized as corporations, LLCs, limited liability partnerships, or other entity types. The bill amends Tennessee's tax code to remove ambiguity about which subsidiary forms qualify for the existing exemption.

Why is this important

Agricultural cooperatives are member-owned businesses that often use subsidiaries for specific operations. This clarification ensures tax treatment consistency across different business structures, reducing compliance uncertainty for cooperatives and potentially lowering their operational costs. The bill removes a potential barrier to cooperatives choosing the most efficient legal structure for their subsidiaries.

Potential points of contention

  • Tax revenue impact: State and local governments lose tax revenue from subsidiaries that now clearly qualify for exemption, though the fiscal effect appears modest given the narrow application
  • Scope creep concerns: Critics might argue the broad language ("other legal entity...vested with power or function") could be interpreted expansively beyond the original legislative intent
  • Fairness questions: Non-agricultural businesses may view preferential tax treatment for agricultural cooperatives as inequitable competitive advantage

Compiled from official sources — confirm details with the bill’s official record.

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