Taxes, Sales

Plain English Breakdown

The bill did not pass and was stopped in the State & Local Government Committee.

Tennessee Sales Tax Increase for Shelby County

This bill allows Shelby County to increase its sales and use tax rate from 2.75% to 3.75%, with all additional revenue dedicated exclusively to building a new county jail or retiring related debt.

What This Bill Does

• Allows Shelby County to raise the local sales and use tax rate to 3.75%
• Requires that any extra money from this higher tax be used only for constructing a new jail or paying off debts related to it
• Limits the period during which the increased tax can be collected to eight years, unless the debt is paid off earlier
• After the eight-year limit or when the debt is retired, the tax rate goes back down to 2.75%
• Ensures that cities and towns within Shelby County with a current tax rate of 2.75% can continue collecting this rate even after the county's rate drops

Who It Names or Affects

• Shelby County residents who buy goods or services
• Businesses in Shelby County selling taxable items
• The Shelby County government and its sheriff’s department

Terms To Know

Sales Tax

A tax charged on the sale of goods and services, collected by sellers from buyers

Use Tax

A tax similar to sales tax but applied when items are bought outside a state or county for use within it

Limits and Unknowns

• The bill did not pass and was stopped in the State & Local Government Committee
• It only applies if Shelby County's population is over 900,000 according to recent census data

Official Summary Text

Present law generally authorizes a
county, by resolution of its county legislative b
ody,
and an
incorporated city or town, by ordinance of its governing body,
to levy a
sale and use
tax not to
exceed
2.75
% as long as
the tax levied appl
ies
only to the first $1,600 on the sale or use of any single article of personal property.
Additionall
y,
sales of tangible personal property upon which a state sales and use tax is levied
is
subject to a local sales and use tax at the rate of 2.25% when obtained from any vending machine or device.

For Shelby County, this bill authorizes such rates to inc
rease to 3.75%. However,
all revenue generated from the increase in the county tax rate from 2.25%, and from the rate of 2.75% in those cities and towns that have that as their operative tax rate on the effective date of this act, to 3.75%
must
be used by
the county exclusively for the construction of a new county jail or to retire debt, including principal and interest and related expenses, on such construction.

APPORTIONMENT AND DISTRIBUTION

Apportionment and distribution of revenue generated from
suc
h
increase in the tax rate must continue for a period of eight years from the date collections begin or until the first day of a month occurring at least 30 days after the debt

is retired, whichever is sooner. If the debt is retired prior to the expiratio
n of the eight-year period, then the county
must
provide notice to the department of revenue within 10 days of the debt being retired.

Upon
the expiration of the authorized period for the levying of the tax rate at 3.75%, the tax rate within the county a
nd its cities and towns reverts to 2.75%.
However, t
he levy of the tax by cities and towns that have an operative tax rate of 2.75% on the effective date of this
bill
precludes
,
and has priority over
,
the county tax rate of 2.75% resulting from the revers
ion described in this
bill
.

A
ll revenue generated from the increase in the county tax rate from 2.25% in effect prior to the effective date of this
bill
to 2.75% after the reversion described in
this bill
must be allocated and distributed by the county t
o the county sheriff's department for administrative, operational, and capital expenses of the department. Revenue required to be
so
allocated and distributed must be in addition to other state and local moneys appropriated to the county sheriff's departm
ent
,
and the county
must
not use the revenue to supplant such moneys.

Current Bill Text

SENATE BILL 337
By Akbari

HOUSE BILL 308
By Gillespie

HB0308
001753
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 67,
Chapter 6, Part 7, relative to sales and use taxes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 67, Chapter 6, Part 7, is amended by
adding the following as a new section:
67-6-715.
(a) Notwithstanding § 67-6-702(a), a county, by resolution of its county
legislative body, is authorized to levy a tax in the same manner and on the same
privileges as described in § 67-6-702(a) at a rate of three and three-quarters percent
(3.75%).
(b)
(1) Notwithstanding § 67-6-712 or another law to the contrary, all
revenue generated from the increase in the county tax rate from two and one-
quarter percent (2.25%), and from the rate of two and three-quarters percent
(2.75%) in those cities and towns that have that as their operative tax rate on the
effective date of this act, to three and three-quarters percent (3.75%) must be
used by the county exclusively for the construction of a new county jail or to retire
debt, including principal and interest and related expenses, on such construction.
(2) Apportionment and distribution of revenue generated from the
increase in the tax rate to three and three-quarters percent (3.75%) must
continue as described in subdivision (b)(1) for a period of eight (8) years from the
date collections begin in accordance with § 67-6-706(a)(3) or until the first day of

- 2 - 001753

a month occurring at least thirty (30) days after the debt, including principal and
interest and related expenses, is retired, whichever is sooner. If the debt is
retired prior to the expiration of the eight-year period, then the county shall
provide notice to the department of revenue within ten (10) days of the debt
being retired.
(3) Notwithstanding this part to the contrary, upon the expiration of the
authorized period for the levying of the tax rate at three and three-quarters
percent (3.75%) pursuant to subdivision (b)(2), the tax rate within the county and
its cities and towns reverts to two and three-quarters percent (2.75%).
Notwithstanding § 67-6-703, the levy of the tax by cities and towns that have an
operative tax rate of two and three-quarters percent (2.75%) on the effective date
of this act precludes and has priority over the county tax rate of two and three-
quarters percent (2.75%) resulting from the reversion described in this
subdivision (b)(3).
(4) Notwithstanding § 67-6-712 or another law to the contrary, all
revenue generated from the increase in the county tax rate from the two and one-
quarter percent (2.25%) in effect prior to the effective date of this act to two and
three-quarters percent (2.75%) after the reversion described in subdivision (b)(3)
must be allocated and distributed by the county to the county sheriff's department
for administrative, operational, and capital expenses of the department.
Revenue required to be allocated and distributed in accordance with this
subdivision (b)(4) must be in addition to other state and local moneys
appropriated to the county sheriff's department and the county shall not use the
revenue to supplant such moneys.

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(c) This section applies in counties having a population of over nine hundred
thousand (900,000), according to the 2020 federal census or any subsequent federal
census.
SECTION 2. This act takes effect upon becoming a law, the public welfare requiring it.