Banks and Financial Institutions

Plain English Breakdown

The bill does not specify exact amounts for refunds or penalties.

Tax on International Money Transfers

This bill imposes a tax on transmitting money from Tennessee to locations outside of the United States or its territories and allocates collected funds to various state programs.

What This Bill Does

• Imposes a tax on transmitting money from Tennessee to other countries or U.S. territories by licensed entities under the Money Transmission Modernization Act.
• Requires that taxes collected be deposited into a special fund called the International Money Transmission Tax Fund in the state general fund.
• Allows individuals who paid the tax to apply for a refund between June 1st and June 30th each year.
• Allocates funds from this tax to various state programs, including education and infrastructure projects.

Who It Names or Affects

• People or businesses that transmit money internationally from Tennessee.
• Local governments in Tennessee that receive funding for capital improvements.
• Teachers who may benefit from salary increases or bonuses funded by the K-12 Education Teacher Compensation Fund.

Terms To Know

Money Transmission Modernization Act

A law regulating money transmission services in Tennessee.

International Money Transmission Tax Fund

A special fund where taxes from international money transfers are deposited and managed.

Limits and Unknowns

• The bill does not specify the exact amount of tax for each transaction.
• Details about how refunds will be processed have not been fully outlined in the summary text.
• It is unclear what happens to unallocated funds or if there are any penalties for non-compliance.

Official Summary Text

Present law levies a tax on the sales price of certain, specifically described, services. This bill adds the transmitting of money from a location originating in this state to a location outside of the United States or its territories by an entity licen
sed under the Money Transmission Modernization Act to the services that are subject to such a tax.

INTERNATIONAL MONEY TRANSMISSION TAX FUND

This bill requires revenues from the tax as described above to be deposited in a special account in the state general fund, called the international money transmission tax fund. All revenue must be retained in this account until the revenue is unencumbe
red. This bill provides that the revenue becomes unencumbered on July 1st of each year after the expiration of the application period for a refund, as described below.

Refunds

This bill requires revenues generated from the tax as described above to be subject to a refund upon an application from the individual who paid the tax. Such an application must be submitted to the department of revenue between June 1
st
and June 30
th
and include the applicant's social security number or taxpayer identification number and proof of the taxes paid.

Allocation of Funds

This bill requires unencumbered funds remaining in the international money transmission tax fund to be allocated and distributed on July 1
st
of each year. Twenty-five percent of the funds must be allocated to the state general fund; 25% must be allocated to all counties and metropolitan governments in this state, in proportion with population, to be used for capital improvement projects and i
nfrastructure expenditures; and 25% must be allocated to the Tennessee peace officer standards and training commiss
ion to provide an additional pay supplement to law enforcement officers who complete in-service training requirements.

K-12 Education Teacher Compensation Fund

This bill establishes the K-12 education teacher compensation fund to be used to provide a pool of funds for employee salary increases or bonuses for teachers. Monies in the K-12 education teacher compensation fund must be allocated each August 1st to l
ocal education agencies throughout the state. This bill requires the remaining 25% of the unencumbered funds from the international money transmission tax fund to be allocated to this fund on July 1st of each year.

RULEMAKING

This bill authorizes the department of education to promulgate rules with regard to the K-12 education teacher compensation fund.

ON APRIL 9, 2026, THE HOUSE
ADOPTED AMENDMENT #1 AND PASSED HOUSE BILL 2502, AS AMENDED.

AMENDMENT #1 rewrites the bill to, instead, provide that the service of transmitting money from a location originating in this state to a location outside of the United States or its territories is a taxable service and such a tax is generally levied on
the amount of money transmitted. The tax imposed by this amendment is levied at the rate of (i) $10 per transaction; and (ii) 2% of any money transmitted in excess of $500. However, the service of transmitting money form a location in this state to a lo
ca
tion outside of the United States or its territories is not subject to the local option tax. The transmission of money by any corporation defined as a financial institution, except for those licensed under the Money Transmission Modernization Act, is exe
mpt from the tax levied by this amendment.

This amendment requires revenues generated from such a tax be allocated and distributed as follows:

•

20% to the state general fund.
•

38% to the TennCare buyback fund, to be used solely to fund TennCare hospital buybacks.
•

18.5% to the promising futures fund, to be administered by the department of human services and used solely to support pilot programs and targeted child care assistance initiatives that (i) strengthen and stabilize this state's child care workforce; (ii
) support employer participation in shared child care cost models; (iii) expand access to child care for working families who are ineligible for existing subsidy programs; and (iv) provide accountability, transparency, and data-driven evaluation to inform
f
uture programming and policy decisions.
•

18.5% to the Tennessee housing development agency, to be used solely for workforce housing initiatives.
•

5% to a the teacher internship fund, to be administered by the department of education to provide paid internships for teachers in training at public schools, including public charter schools.

Current Bill Text

SENATE BILL 2166
By Watson

HOUSE BILL 2502
By Sexton
HB2502
012314
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 4;
Title 38; Title 39; Title 45; Title 47; Title 49 and
Title 67, relative to money transmission.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 67-6-205(c), is amended by adding
the following as a new subdivision (10):
(10) The transmitting of money from a location originating in this state to a
location outside of the United States or its territories by an entity licensed under the
Money Transmission Modernization Act, compiled in title 45, chapter 7;
SECTION 2. Tennessee Code Annotated, Section 67-6-205(b), is amended by deleting
"Notwithstanding any other provision of law to the contrary," and substituting "Except as
provided in subsection (d) and notwithstanding any other law to the contrary,".
SECTION 3. Tennessee Code Annotated, Section 67-6-205, is amended by adding the
following as a new subsection (d):
(d) Notwithstanding § 67-6-103 or any other law to the contrary, revenues
generated from the tax imposed by subdivision (c)(10):
(1) Must be deposited in a special account in the state general fund to be
known as the international money transmission tax fund. Revenues must be
retained in the account until such time as the revenues are unencumbered.
Revenues are unencumbered on July 1 of each year after the expiration of the
refund application period described in subdivision (d)(3);

- 2 - 012314

(2) May be invested by the state treasurer pursuant to title 9, chapter 4,
part 6 for the sole benefit of the international money transmission tax fund while
encumbered;
(3) Are subject to refund upon application made by the individual who
paid the tax imposed by subdivision (c)(10); provided, that the application must
be submitted to the department between June 1 and June 30 and include the
applicant's social security number or taxpayer identification number in addition to
proof of the taxes paid and any additional information the department may
require; and
(4) Must be allocated and distributed on July 1 of each year as follows:
(A) Twenty-five percent (25%) to the state general fund;
(B) Twenty-five percent (25%) to all counties and metropolitan
governments in this state in proportion as the population of each county
or metropolitan government bears to the aggregate population of the
state, according to the latest federal census, to be used for capital
improvement projects and infrastructure expenditures;
(C) Twenty-five percent (25%) to the K-12 education teacher
compensation fund that is hereby created in the state treasury to be:
(i) Used to provide a pool of funds for employee salary
increases or bonuses for teachers;
(ii) Allocated each August 1 to local education agencies
throughout the state in accordance with rules promulgated by the
department of education; and

- 3 - 012314

(iii) Allocated by each local education agency for salary
increases or bonuses for teachers according to the agency's
salary and compensation schedules or bonus program; and
(D) Twenty-five percent (25%) to the Tennessee peace officer
standards and training commission to provide an additional pay
supplement to law enforcement officers who, pursuant to § 38-8-111,
complete in-service training requirements and receive the corresponding
pay supplement provided by that statute.
SECTION 4. For purposes of promulgating rules and forms, this act takes effect upon
becoming a law, the public welfare requiring it. For all other purposes, this act takes effect
January 1, 2027, the public welfare requiring it.