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Business tax administration shifts from local government

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Starting with the New Year, local businesses will need to pay taxes to the state instead of the city or county.

Last year the General Assembly passed legislation shifting the administration and collection of business tax from local municipalities and counties to the state Department of Revenue.

Although payments must be made to the state, local businesses will still receive their licenses from local government, Rutherford County Clerk Administrative Supervisor Lisa Harrell said.

“This undertaking is a true partnership between state and the local governments,” state Commissioner Reagan Farr said. “While increasing revenue through improved tax compliance, we also plan on simplifying the tax process for business owners including developing a new, simplified tax return and initiating major education programs.”

With the change, the state hopes to use its resources and experience in tax administration to increase efficiency in the collection process and accordingly increasing revenue for the state and for local governments.

Murfreesboro City Recorder and Finance Director Melissa Wright said the state can ensure accurate collections because it has access to federal tax returns and sales tax filings.

Wright said businesses self-report gross receipts and the city has no way to double check that information, but the state can check against tax records and sales tax reports.

“We hope it will be a win-win once the bugs are worked out,” Wright said.

The Department of Revenue is working closely with local municipalities and counties to make this transition a smooth process. The department is currently gathering registration data from the counties and cities to register the business owners and mail out tax returns by the end of 2009.

The change was made because different communities put different levels of effort into collecting the business tax. While Murfreesboro and Rutherford County make sure filings are accurate and work together to make sure every business pays its fair share, not every county and municipality does, Wright said.

Both Harrell and Wright said local businesses can still visit their offices for help calculating the business tax, but it must be paid either electronically or in person in Nashville.

“We’ll be redirecting our focus on trying to find those who need a business license …” Wright said. “We’re certainly willing to help people in any way we can.”

More info …
Murfreesboro City Hall – 849-2629
Rutherford County Clerk – 898-7800
Read more from:
Business, Economy, State, Taxes
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