Tennessee Franchise and Excise Tax Return (FAE 170)

The FAE 170 is a form used by the Tennessee Department of Revenue to collect franchise and excise taxes from corporations, LLCs, and partnerships doing business in the state. This form requires detailed information about the taxpayer’s financial status, including net worth, taxable income, and apportionment ratios. The instructions for completing the FAE 170 are comprehensive and can be found on the Tennessee Department of Revenue website.

Overview

The Tennessee Franchise and Excise Tax Return (FAE 170) is a comprehensive document that details the financial status of corporations, LLCs, and partnerships operating in the state. It requires detailed information about the taxpayer’s net worth, taxable income, and apportionment ratios. The FAE 170 is a critical component of the Tennessee Department of Revenue’s tax collection system, ensuring that businesses contribute their fair share to the state’s revenue stream. The form also serves as a valuable tool for tracking the financial performance of businesses within the state, providing insights into economic activity and growth.

Understanding the FAE 170 and its associated instructions is crucial for taxpayers. This document requires a thorough understanding of Tennessee’s tax laws and regulations, including the calculation of franchise and excise taxes. The instructions provide detailed guidance on each section of the form, explaining the required information, calculation methods, and applicable deadlines. It’s essential to adhere to these instructions diligently to ensure accurate and timely filing, avoiding potential penalties or audits.

The FAE 170 is a complex document, but the instructions provide a clear and concise roadmap for navigating its intricacies. By reviewing these instructions carefully, taxpayers can confidently complete the form, ensuring compliance with Tennessee tax regulations and contributing to the state’s fiscal well-being.

Filing Requirements

The Tennessee Franchise and Excise Tax Return (FAE 170) is a mandatory filing for a specific category of businesses. All corporations, LLCs, and partnerships, regardless of their tax status with the Internal Revenue Service (IRS), are subject to the Tennessee Franchise and Excise tax if they are chartered, qualified, or registered in Tennessee or conducting business within the state. This requirement extends to businesses that operate under a variety of organizational structures, including corporations, limited partnerships, limited liability companies, and business trusts.

The filing requirements are designed to ensure that all businesses operating within the state contribute their fair share to Tennessee’s revenue stream. The mandate for electronic filing, implemented by the Tennessee Department of Revenue, underscores the importance of efficiency and accountability in tax administration. It ensures that all filings and payments related to Forms FAE 170 and FAE 174, including extension requests and estimated payment filings, are processed promptly and accurately.

For businesses subject to these requirements, the FAE 170 represents a critical step in fulfilling their tax obligations in Tennessee. By adhering to the filing requirements and ensuring timely submission of the form, businesses can maintain compliance with state regulations and avoid potential penalties or audits.

Tax Calculation

The calculation of Tennessee franchise and excise taxes involves a two-pronged approach, encompassing both franchise tax and excise tax. The franchise tax, levied on corporations and LLCs, is calculated as 0.25% of the entity’s net worth or the value of its tangible property. This means that the tax is based on the total assets minus total liabilities of the corporation or LLC, or the value of its physical assets, whichever is greater.

The excise tax, on the other hand, is a flat 6.5% tax on the net taxable income generated by businesses within Tennessee. This income tax applies to all businesses except general partnerships and sole proprietorships, which are exempt from this particular tax. The excise tax is calculated on the net earnings from doing business in the state, and all capital losses are claimed in the year they are incurred.

For businesses operating in multiple states, the apportionment ratio is crucial in determining the portion of their income subject to Tennessee’s excise tax. This ratio, calculated on Schedule 170NC, 170SF, or 170SC, represents the proportion of the business’s total income derived from Tennessee. The franchise tax is also subject to apportionment, using the same ratio. These apportionment rules are designed to ensure fairness and prevent double taxation of income generated in multiple states.

Electronic Filing

The Tennessee Department of Revenue mandates electronic filing for all franchise and excise tax returns, including Forms FAE 170 and FAE 174; This requirement encompasses all aspects of the filing process, including the return itself, extension requests, and estimated payment filings. The transition to electronic filing has streamlined the tax filing process, reducing the need for paper forms and facilitating faster processing times.

To comply with this requirement, taxpayers must utilize approved electronic filing methods provided by the Tennessee Department of Revenue. These methods may include online portals, third-party tax preparation software, or other approved electronic filing systems. The department’s website provides detailed guidance on the available electronic filing options and the necessary procedures for submitting returns electronically.

The move towards electronic filing has not only simplified the filing process but has also enhanced security and accuracy. Electronic filing reduces the risk of errors associated with manual data entry and provides a secure platform for transmitting sensitive financial information. Taxpayers can access online resources and support services to ensure accurate and timely completion of their electronic filings.

Due Dates and Extensions

The due date for filing the Tennessee Franchise and Excise Tax Return (FAE 170) is typically the 15th day of the fourth month following the end of the tax year. For example, if the tax year ends on December 31, 2023, the due date for filing the FAE 170 is April 15, 2024. However, the Tennessee Department of Revenue provides certain exceptions and extensions to this general rule.

For instance, if the 15th day falls on a weekend or holiday, the due date is automatically shifted to the next business day. Furthermore, taxpayers may be eligible for an automatic extension of time to file, which extends the due date by six months. To obtain an extension, taxpayers must file Form 1040-ES (Estimated Tax for Individuals) or Form 1040-X (Amended U.S. Individual Income Tax Return) with the IRS.

It is crucial to note that an extension of time to file does not extend the time to pay the tax liability. Taxpayers are still required to pay their taxes by the original due date, even if they have obtained an extension to file. Failure to meet the payment deadline may result in penalties and interest charges. Taxpayers should consult the Tennessee Department of Revenue website for specific details regarding due dates, extensions, and payment options.

Amended Returns

An amended return is a revised version of a previously filed tax return. It is used to correct errors, omissions, or changes in information that may have affected the original filing. In the context of the Tennessee Franchise and Excise Tax Return (FAE 170), amended returns are filed when taxpayers discover inaccuracies or need to make adjustments to their previously submitted information.

To file an amended FAE 170, taxpayers must use the same form as the original return, marking the “Amended Return” box at the top of the form. They are required to provide a detailed explanation of the changes made, including the reason for the amendment and any supporting documentation. The amended return must be filed within three years from the original filing date or within two years from the date the tax was paid, whichever is later.

The Tennessee Department of Revenue allows taxpayers to file amended returns for various reasons, such as⁚

• Incorrectly reported income or expenses
• Changes in ownership structure or business operations
• Errors in calculating the franchise or excise tax
• Overpayments or underpayments of taxes

It is important to note that filing an amended return may trigger an audit by the Department of Revenue. Therefore, taxpayers should carefully review their original filings and ensure accuracy before submitting any amendments.

Taxpayer Information

The FAE 170 form requires taxpayers to provide accurate and complete information about their business entity. This section of the form is crucial for identifying the correct taxpayer and ensuring proper processing of the return. The taxpayer information section typically includes the following fields⁚

• Entity Name⁚ The legal name of the corporation, LLC, or partnership filing the return. This must match the name registered with the Tennessee Secretary of State.
• Federal Employer Identification Number (FEIN)⁚ The unique nine-digit number assigned to businesses by the Internal Revenue Service (IRS) for tax purposes.
• Tax Year Beginning and Ending Dates⁚ The specific period covered by the tax return. This should align with the taxpayer’s federal income tax filing period.
• Mailing Address⁚ The physical address where the taxpayer receives official correspondence and notices related to their tax filings.
• Contact Information⁚ This includes the name, phone number, and email address of the designated contact person for the taxpayer.

It is essential to ensure that all taxpayer information is accurate and up-to-date. Any discrepancies or errors in this section could lead to delays in processing the return and potential penalties. Taxpayers should carefully review and verify all information before submitting the FAE 170.

Schedule C⁚ Computation of Total Tax Due or Overpayment

Schedule C of the FAE 170 form is a critical component of the franchise and excise tax calculation. It provides a detailed breakdown of the taxpayer’s liability and any potential overpayments. This schedule guides taxpayers through a series of calculations to determine the final tax due or any refund they may be eligible for. The primary elements of Schedule C are⁚

• Franchise Tax⁚ This section calculates the franchise tax based on the taxpayer’s net worth or tangible property value. The franchise tax rate is typically 0.25% of the net worth or tangible property value.
• Excise Tax⁚ This section calculates the excise tax based on the taxpayer’s net taxable income earned in Tennessee. The excise tax rate is generally 6.5% of the net taxable income.
• Apportionment Ratio⁚ This ratio represents the portion of the taxpayer’s business activity that is attributable to Tennessee. It helps determine the amount of franchise and excise taxes owed to Tennessee.
• Tax Credits and Deductions⁚ Taxpayers can claim certain credits and deductions to reduce their overall tax liability. These may include credits for investment activities, research and development expenses, or other eligible expenses.
• Total Tax Due⁚ This line represents the final amount of franchise and excise taxes owed to Tennessee, after considering all applicable credits and deductions.
• Overpayment⁚ If the taxpayer has overpaid their franchise and excise taxes, this line will reflect the amount of overpayment that is eligible for a refund.

Taxpayers should carefully review Schedule C and ensure all calculations are accurate. Any errors in this section could result in an incorrect tax liability. The Tennessee Department of Revenue provides detailed instructions and examples to assist taxpayers in completing Schedule C accurately.

Contact Information

The Tennessee Department of Revenue provides various contact channels for taxpayers seeking assistance with the FAE 170 form or seeking clarification on franchise and excise tax matters. You can reach out to the department via phone, mail, or email for inquiries, concerns, or support. Here’s a breakdown of the primary contact options available⁚

• Phone⁚ The department’s main phone number is readily accessible on their official website. You can call during business hours to speak with a representative who can address your specific questions or concerns.
• Mail⁚ For formal correspondence, such as sending in completed FAE 170 forms or addressing specific issues, you can mail your correspondence to the Tennessee Department of Revenue at the designated address provided on their website.
• Email⁚ The Tennessee Department of Revenue maintains an email address for general inquiries and assistance. You can send an email outlining your question or issue, and a representative will respond to your query as soon as possible.

The department’s website also features a comprehensive FAQ section that addresses common questions related to franchise and excise tax filing, payment procedures, and other relevant topics. This online resource serves as a valuable tool for taxpayers seeking quick answers or general information. For more specific or complex inquiries, contacting the department via phone or email is recommended to ensure personalized guidance and timely support.

Additional Resources

The Tennessee Department of Revenue provides a wealth of resources to assist taxpayers in navigating the intricacies of the FAE 170 form and understanding franchise and excise tax obligations. These resources extend beyond the basic instructions and encompass a comprehensive suite of support materials tailored to different needs.

• Online Filing⁚ The department strongly encourages electronic filing for efficiency and accuracy. The Tennessee Department of Revenue’s website provides detailed information on how to electronically file the FAE 170 form, including compatible software options and instructions.
• Taxpayer Guides⁚ In addition to the FAE 170 instructions, the department offers comprehensive taxpayer guides that provide detailed explanations of franchise and excise tax concepts, filing requirements, and common scenarios. These guides serve as valuable reference tools for taxpayers seeking a deeper understanding of their tax obligations.
• FAQs⁚ The Tennessee Department of Revenue website features a dedicated FAQ section that addresses common questions related to franchise and excise taxes, including the FAE 170 form. This resource is a convenient starting point for taxpayers seeking quick answers or general information.
• Contact Information⁚ For personalized assistance or inquiries beyond the scope of the FAQ section, the department provides various contact channels, including phone, mail, and email, as detailed on their website.

By leveraging these additional resources, taxpayers can confidently navigate the complexities of the FAE 170 form and ensure compliance with Tennessee’s franchise and excise tax regulations. The department’s commitment to providing comprehensive support empowers taxpayers to fulfill their obligations effectively and efficiently.