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HB0057 • 2026

Municipal Government

AN ACT to amend Tennessee Code Annotated, Title 6, Chapter 56, Part 1, relative to audits of municipalities.

Taxes
Enacted

This bill passed the Legislature and reached final enactment based on the latest official action.

Sponsor
Moon, Powers
Last action
2025-03-21
Official status
Comp. became Pub. Ch. 18
Effective date
Not listed

Plain English Breakdown

The bill summary and text do not provide specific details about how municipalities will be notified regarding their compliance status or the exact procedures for waiving penalties, leaving these points uncertain.

Municipal Audit Requirements

This law changes the deadline for municipalities in Tennessee to submit their audits and sets penalties for late submissions.

What This Bill Does

  • Requires all municipal audits to be completed and sent to the comptroller within six months after the end of the fiscal year.
  • Specifies that a copy of each audit must also go to the mayor, chief executive officer, governing body members, and be made available to the press.
  • Imposes penalties on municipalities with two or more late audits by reducing their sales tax revenue up to 15% until they comply.
  • Requires any reduced sales tax money to be held in reserve and given back once the municipality is compliant again.
  • Allows the comptroller to waive penalties based on established policies.

Who It Names or Affects

  • Municipalities in Tennessee
  • The comptroller of the treasury

Terms To Know

Comptroller
A government official responsible for managing public funds and financial records.
Fiscal year
A period used for calculating annual financial statements, often starting on July 1st and ending on June 30th.

Limits and Unknowns

  • The bill does not specify the exact procedures for waiving penalties.
  • It is unclear how municipalities will be notified about their compliance status.

Bill History

  1. 2025-03-21 Tennessee General Assembly

    Comp. became Pub. Ch. 18

  2. 2025-03-21 Tennessee General Assembly

    Effective date(s) 07/01/2025

  3. 2025-03-21 Tennessee General Assembly

    Pub. Ch. 18

  4. 2025-03-12 Tennessee General Assembly

    Signed by Governor.

  5. 2025-03-04 Tennessee General Assembly

    Transmitted to Governor for action.

  6. 2025-03-04 Tennessee General Assembly

    Signed by H. Speaker

  7. 2025-03-03 Tennessee General Assembly

    Signed by Senate Speaker

  8. 2025-02-27 Tennessee General Assembly

    Comp. SB subst.

  9. 2025-02-27 Tennessee General Assembly

    Enrolled and ready for signatures

  10. 2025-02-27 Tennessee General Assembly

    Passed H., Ayes 93, Nays 0, PNV 0

  11. 2025-02-27 Tennessee General Assembly

    Subst. for comp. HB.

  12. 2025-02-27 Tennessee General Assembly

    Rcvd. from S., held on H. desk.

  13. 2025-02-24 Tennessee General Assembly

    H. Placed on Regular Calendar for 2/27/2025

  14. 2025-02-24 Tennessee General Assembly

    Sponsor(s) Added.

  15. 2025-02-24 Tennessee General Assembly

    Objected to on Consent Calendar.

  16. 2025-02-24 Tennessee General Assembly

    Engrossed; ready for transmission to House

  17. 2025-02-24 Tennessee General Assembly

    Passed Senate, Ayes 33, Nays 0

  18. 2025-02-20 Tennessee General Assembly

    H. Placed on Consent Calendar for 2/24/2025

  19. 2025-02-20 Tennessee General Assembly

    Placed on Senate Consent Calendar 2 for 2/24/2025

  20. 2025-02-19 Tennessee General Assembly

    Placed on cal. Calendar & Rules Committee for 2/20/2025

  21. 2025-02-19 Tennessee General Assembly

    Rec. for pass; ref to Calendar & Rules Committee

  22. 2025-02-18 Tennessee General Assembly

    Recommended for passage, refer to Senate Calendar Committee

  23. 2025-02-12 Tennessee General Assembly

    Placed on cal. State & Local Government Committee for 2/19/2025

  24. 2025-02-12 Tennessee General Assembly

    Rec. for pass by s/c ref. to State & Local Government Committee

  25. 2025-02-11 Tennessee General Assembly

    Sponsor(s) Added.

  26. 2025-02-11 Tennessee General Assembly

    Placed on Senate State and Local Government Committee calendar for 2/18/2025

  27. 2025-02-05 Tennessee General Assembly

    Placed on s/c cal Cities & Counties Subcommittee for 2/12/2025

  28. 2025-01-28 Tennessee General Assembly

    Assigned to s/c Cities & Counties Subcommittee

  29. 2025-01-16 Tennessee General Assembly

    Ref. to State & Local Government Committee

  30. 2025-01-15 Tennessee General Assembly

    P2C held on desk, pending appointment of Standing Committees

  31. 2025-01-15 Tennessee General Assembly

    Sponsor(s) Added.

  32. 2025-01-15 Tennessee General Assembly

    Passed on Second Consideration, refer to Senate State and Local Government Committee

  33. 2025-01-14 Tennessee General Assembly

    Sponsor(s) Added.

  34. 2025-01-14 Tennessee General Assembly

    Intro., P1C.

  35. 2025-01-14 Tennessee General Assembly

    Introduced, Passed on First Consideration

  36. 2025-01-13 Tennessee General Assembly

    Filed for introduction

  37. 2025-01-02 Tennessee General Assembly

    Filed for introduction

Official Summary Text

Present law requires the governing body of each municipality to make an annual audit of the accounts and records of all departments, boards, and agencies
under its jurisdiction that receive an
d disburse funds.

The audit must include

general funds, highway funds, school funds, public utilities, and municipal courts.
Present law requires such audits to be completed as soon as
practicable after the end of the fiscal year of the municipality.

Th
e preparer of the audit
must
furnish one copy of each audit to the mayor, chief executive officer, each member of the governing body, and the comptroller of the treasury
("comptroller)
.

Copies of each audit must also be made available to the press.
This
bill requires the audits to now be completed and submitted to the comptroller no later than six months following the end of the municipality's fiscal year.

As a penalty
for a municipality having two or more outstanding late annual audits, this bill req
uires sales tax revenue collected and distributed by the state to the municipality to be reduced by an amount mutually agreed upon by the comptroller and the commissioner of revenue. However, the sales tax revenue reduction must not exceed 15% of the tot
a
l amount due to the municipality in a fiscal year, until the municipality is in compliance with this bill.

The amounts
so
reduced must be held in reserve by the department of revenue and allocated to the municipality after the municipality complies with t
his bill. The comptroller
may
waive
such
a
penalty
in accordance with policies and procedures established by the comptroller.

Current Bill Text

Read the full stored bill text 
SENATE BILL 115
By Powers

HOUSE BILL 57
By Moon

HB0057
000790
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 6,
Chapter 56, Part 1, relative to audits of
municipalities.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 6-56-105(e), is amended by deleting
the subsection and substituting:
(e)
(1) All such audits must be completed and submitted to the comptroller of
the treasury no later than six (6) months following the end of the municipality's
fiscal year. The preparer of the audit shall furnish one (1) copy of each audit to
the mayor, chief executive officer, each member of the governing body, and the
comptroller of the treasury. Copies of each audit must also be made available to
the press.
(2) A municipality having two (2) or more outstanding late annual audits
is subject to the following penalty:
(A) Sales tax revenue collected and distributed by the state to the
municipality is reduced by an amount mutually agreed upon by the
comptroller of the treasury and the commissioner of revenue. The sales
tax revenue reduction must not exceed fifteen percent (15%) of the total
amount due to the municipality in a fiscal year, until the municipality is in
compliance with this section;
(B) The amounts reduced as a penalty pursuant to this section
are held in reserve by the department of revenue and allocated to the

- 2 - 000790

municipality after the municipality complies with this section as
determined by the comptroller of the treasury; and
(C) The comptroller of the treasury may waive a penalty assessed
in accordance with this subsection (e) in accordance with policies and
procedures established by the comptroller.
SECTION 2. This act takes effect July 1, 2025, the public welfare requiring it.