Taxes, Privilege

Plain English Breakdown

The bill summary does not provide detailed information on how the remaining balance will be allocated beyond what is already outlined in current law.

Changing How Recordation Tax Revenue is Distributed

This bill changes how recordation tax revenue is distributed by increasing the percentage that county registers can retain as commission and specifying where the remaining funds should be allocated.

What This Bill Does

• Increases from 2.4% to 5% the amount of realty transfer tax and mortgage tax collections retained by county registers for collecting and reporting these taxes
• Requires 50% of such collections to be deposited in the county general fund without being designated for a specific purpose
• Allocates the remaining balance to various state funds as outlined in current law

Who It Names or Affects

• County registers who collect recordation taxes
• Residents of Tennessee who pay real estate or mortgage transfer taxes

Terms To Know

Recordation tax

A tax that must be paid when property is transferred, used to fund state and local projects.

Commission

Money given as a reward for collecting taxes or completing tasks.

Limits and Unknowns

• The bill does not specify how the remaining funds will be allocated beyond what is already outlined in current law.
• It's unclear if this change will affect the overall amount of money available for state and local projects.

Official Summary Text

On all transfers of realty,
present law requires a privilege tax be paid to record such transfer
, for state purposes only, of 37¢
per $10
0 on property, with certain exceptions. Also, p
rior to the public recordation of any instru
ment evidencing an indebtedness
,
there
must
be paid a tax, for state purposes only, of 11.5¢
on each

$100 of the indebtedness so evidenced.

The county register and other officials charged with the collection of
such
taxes
must
report all collections to th
e department of revenue
. For
collecting and reporting
recordation
taxes, county registers
are
entitled to retain as commission 5% of the taxes so collected.
However
, 52% of the 5% commission
must
be remitted to the state treasurer and credited to the gen
eral fund of the state.

This bill requires, for the
5
% commission to
be retained by county registers
,
50%
to
be transferred and deposited in the county general fund without being designated for a specific purpose.
Th
e remainder of the taxes collected mu
st be remitted to the state treasurer to be deposited

to
the
special agency accounts
designated by present law
,

subject to
certain
allocation
s

as outlined below
, and to the general fund of the state.

Present law requires such special agency accounts to

b
e allocated certain amounts:
3.25¢
of the tax levied
to
be credited to the wetland acquisition fund, 1.75¢
to the local parks land acquisition fund, 1.5¢
to the state lands acquisition fund, and 1.5¢
to the agricultural resources conservation fund. Howev
er, beginning
with
fiscal year 2015-2016, 50% of the total growth in collections of recordation tax over the previous fiscal year and deposited to the above special funds must be transferred and credited elsewhere:

64% of the growth funds must be transfer
red and credited to the Tennessee Civil War or War Between the States site preservation fund
,
and 36% must be transferred and credited to the historic property land acquisition fund.

Current Bill Text

HOUSE BILL 586
By Bricken

SENATE BILL 469
By Bowling

SB0469
000898
- 1 -

AN ACT to amend Tennessee Code Annotated, Section
67-4-409, relative to recordation tax revenue.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 67-4-409(d)(2), is amended by
deleting the subdivision and substituting instead:
(2)
(A) Of the taxes collected under this section:
(i) Five percent (5%) must be retained by county registers as
commission for collecting and reporting the taxes levied under this
section; and
(ii) Fifty percent (50%) must be retained by the county register
and transferred and deposited in the county general fund without being
designated for a specific purpose.
(B) The remainder of the taxes collected must be remitted to the state
treasurer to be deposited to the funds enumerated in subsections (g), (i), (j), and
(l), subject to the allocation provided in subsection (m), and to the general fund of
the state.
SECTION 2. This act takes effect upon becoming a law, the public welfare requiring it.