Amends TCA Title 67.

As of January 1, 2025, this bill creates the "Allied Investments in Tennessee Act" in order to increase supply chain investment, job creation, wage growth, and economic well-being within this state by providing 100 percent bonus depreciation for certain business capital investments in this state, and to prohibit the application of tax credits and other economic or financial incentives for companies domiciled within countries of concern.<br /> <br /> RESEARCH AND DEVELOPMENT EXPERIMENTAL EXPENDITURES<br /> <br /> This bill requires the department of revenue to allow taxpayers subject to the excise tax the option for full expensing for research and development experimental expenditures. As used in this bill, "full expensing" or "100 percent bonus depreciation" means the method for taxpayers to recover costs for research and development experimental expenditures and depreciable business assets by immediately deducting the full cost of such expenditures from taxable income in the tax year in which the cost is incurred or the property is placed in service<br /> <br /> This bill authorizes, for purposes of calculating taxes for a taxable year, a taxpayer to treat research and development experimental expenditures that are paid or incurred by the taxpayer during the taxable year in connection with the taxpayer's trade or business as expenses that are not chargeable to the capital account. Such expenditures as treated by the taxpayer are allowed as an immediate deduction and remain allowable as a full and immediate expense deduction in the year in which the expenses are incurred.<br /> <br /> Additionally, this bill authorizes a taxpayer to alternatively treat the depreciation of research and experimental expenditures in accordance with the schedule provided in amortization of research and experimental expenditures provisions under the Internal Revenue Code.<br /> <br /> This bill authorizes a taxpayer to make an election for a taxable year if made not later than the time prescribed by law for the filing of the excise tax return for the taxable year. The method elected by the taxpayer is irrevocable unless the revocation is specifically approved by the commissioner of revenue.<br /> <br /> QUALIFIED PROPERTY AND QUALIFIED IMPROVEMENT PROPERTY<br /> <br /> This bill requires the department of revenue to allow taxpayers subject to the franchise tax and the excise tax to immediately deduct as an expense the cost of certain depreciable assets to allow such taxpayers the option for full expensing for qualified property and qualified improvement property. As used in this bill, "qualified property" has the same meaning as described in the accelerated cost recovery system provisions under the Internal Revenue Code.<br /> <br /> Additionally, as used in this bill, “qualified improvement property” means any improvement made by the taxpayer to an interior portion of a building that is nonresidential real property if such improvement is placed in service after the date such building was first placed in service. <br /> <br /> This bill provides that for purposes of calculating taxes, expenditures for business assets that are qualified property or qualified improvement property are eligible for 100 percent bonus depreciation and may be deducted as an expense incurred by the taxpayer during the taxable year in which the property is placed in service. The property is fully and immediately deductible as an expense in the year in which the property is placed in service.<br /> <br /> This bill authorizes a taxpayer to alternatively treat the depreciation of qualified property and qualified improvement property in accordance with the schedule provided in the accelerated cost recovery system provisions of the Internal Revenue Code.<br /> <br /> This bill authorizes a taxpayer to make an election for a taxable year if made not later than the time prescribed by law for the filing of the applicable tax return for the taxable year. The method elected by the taxpayer is irrevocable unless the revocation is specifically approved by the commissioner of revenue.<br /> <br /> This bill requires, for purposes of this bill, a taxpayer to conform to the full expensing provisions described in the Internal Revenue Code regarding elections to expense certain depreciable business assets.<br /> <br /> COUNTRY OF CONCERN<br /> <br /> This bill prohibits an employer from being eligible to receive a tax credit or other economic or financial benefit in this state, if the employer (i) is domiciled within a country of concern; (ii) is owned by the government of a country of concern; (iii) is owned by a company domiciled within a country of concern; or (iv) contracts with employers or subcontractors domiciled within a country of concern. This provision applies to any work or service for an employer on a project for which a tax credit is sought.<br /> <br /> As used in this bill, "country of concern" means the People's Republic of China, the Russian Federation, the Islamic Republic of Iran, the Democratic People's Republic of Korea, the Republic of Cuba, the Venezuelan regime of Nicolás Maduro, the Syrian Arab Republic, or any other nation-state categorized as a country of concern by the governor in consultation with the United States department of state.<br /> <br /> REPORTING A SUSPECTED VIOLATION<br /> <br /> This bill authorizes a person or entity to report, based upon a reasonable belief, a suspected violation of this bill to the department of economic and community development ("department"). However, the report must be made within one year of the end of the term of a contract. Upon receiving a report, the department must request a written statement from the employer as to whether a violation has occurred and must conduct an investigation to determine whether a violation occurred. It is deemed a material breach of contract for an employer to refuse to provide a written statement described in this provision.<br /> <br /> This bill requires the department to provide written notice of the findings to the employer and initiate legal proceedings to recover any funds and penalties pursuant to this bill.<br /> <br /> This bill provides that if an employer violates this bill, then the employer is liable for the amount of the tax credits and any other financial or economic incentives received plus a penalty equal to 50 percent of the total value of any tax credits and any other financial or economic incentives received.<br /> <br /> Prior to executing a contract that awards a tax credit or other economic or financial incentive, this bill requires the department and any other contracting state department or agency, or political subdivision of the state or department or agency thereof, to execute a separate agreement with the contracting party that reserves the right of the department, agency, or other governmental entity to recover credits, grants, funds, and other disbursed incentives if this section is violated.<br /> <br /> RULE PROMULGATION<br /> <br /> This bill authorizes the departments of revenue and economic and community development to promulgate rules to effectuate this bill. <br />