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HB 423

Taxes, Privilege - As introduced, 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

HB 423 expands agricultural cooperative subsidiary tax exemptions to all legal structures (corps, LLCs, partnerships) rather than limiting exemptions by entity type.

Intro., P1C.
#privilege #taxes
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WeVote Research Nonpartisan
Bill Summary · HB 423

Legislative bill overview

HB 423 clarifies that agricultural cooperative subsidiaries qualify for privilege tax exemptions regardless of their legal structure—whether organized as corporations, LLCs, partnerships, or other entity types. The bill amends Tennessee's tax code to ensure consistent treatment across different business structures while maintaining the underlying exemption policy.

Why is this important

Agricultural cooperatives are farmer-owned organizations that often use subsidiaries to conduct specialized operations (processing, marketing, distribution). Clarifying tax treatment removes legal uncertainty and prevents subsidiaries from facing unexpected tax burdens based solely on their organizational form, potentially affecting farm operations and cooperative viability across Tennessee.

Potential points of contention

  • Scope of "subsidiary" definition: The bill doesn't explicitly define what constitutes a subsidiary, potentially creating ambiguity about which entities qualify for the exemption and inviting future disputes
  • Revenue impact: Expanding exemption eligibility across multiple entity types may reduce state tax revenue, though the fiscal impact isn't quantified in the bill summary
  • Fairness concerns: Non-agricultural businesses organized as LLCs or partnerships might argue for equivalent tax treatment, raising questions about whether the exemption creates competitive advantages

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

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