Taxes, Privilege

Plain English Breakdown

The bill text and summary do not provide details on enforcement mechanisms for the tax exemption.

Tax Exemption for Agricultural Cooperative Subsidiaries

This bill changes Tennessee's tax laws to exempt certain subsidiaries of agricultural cooperatives from paying privilege taxes.

What This Bill Does

• Expands the current law that exempts subsidiaries of agricultural cooperatives from being taxed as profit-making businesses.
• Includes limited liability companies, partnerships, and other types of business entities in this exemption.

Who It Names or Affects

• Agricultural cooperative associations
• Subsidiaries of agricultural cooperatives

Terms To Know

Privilege tax

A tax that businesses pay for the right to do business in a state.

Subsidiary

A company controlled by another larger company or organization.

Limits and Unknowns

• The bill was withdrawn and is no longer active.
• It does not specify how the exemption will be enforced or monitored.

Official Summary Text

Present law prohibits a
ll corporations organized as subsidiaries and controlled by an agricultural cooperative assoc
iation formed in accordance with the laws of this state
from
be
ing
considered corporations organized for profit and doing business in
this state
, or subject to any privilege tax levied by any law as a tax for the privilege of doing business for profit in
t
his state. This bill expands this provision to also apply to
limited liability compan
ies
, limited liability partnership
s,
or other legal entit
ies
, association
s,
or bod
ies
vested with the power or function of a legal entity
,
so
organized
.

Current Bill Text

SENATE BILL 131
By Haile

HOUSE BILL 423
By Marsh

HB0423
001098
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 43,
Chapter 16, Part 1 and Section 67-4-102, relative
to subsidiaries of agricultural cooperative
associations.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 43-16-148, is amended by deleting
the section and substituting:
All business entities, as defined in § 43-38-103, organized as subsidiaries and
controlled by one (1) or more agricultural cooperative associations formed in accordance
with the laws of this state shall not be considered as entities organized for profit and
doing business in this state, or subject to a privilege tax levied by any law as a tax for the
privilege of doing business for profit in this state. It is the legislative intent to exempt by
this section subsidiary entities controlled by agricultural cooperative associations, where
any profits earned by the subsidiary entities are paid over to or expended for the benefit
of the agricultural cooperative associations, with the result that the activities carried on
by the subsidiary entities eventually promote and benefit the agricultural interests of this
state.
SECTION 2. This act takes effect upon becoming a law, the public welfare requiring it.