Amends TCA Title 49 and Title 67.

This bill enacts the "Tennessee Data Transaction Tax Act," which as of January 1, 2025, imposes a data transaction privilege tax on an individual's or legal entity's, but not local government's, ("person") annual gross revenues that are derived from data transactions from digital advertising services in this state. The portion of a person's annual gross revenues derived from data transactions from digital advertising services in this state must be determined using an apportionment factor, which is a fraction, the numerator of which is the person's annual gross revenues derived from data transactions from digital advertising services in this state and the denominator of which is the person's annual gross revenues derived from data transactions from digital advertising services in the United States. This bill requires the department of revenue ("department") to promulgate rules that specify how to determine the state from which revenues from data transactions from digital advertising services are derived. TAX RATE This bill provides that the data transaction privilege tax is levied at the rate of 9.5 percent of the annual gross revenues derived from data transactions from digital advertising services in this state ("assessable base") and applies only to persons with an assessable base of $50,000,000 or more. Each person that, in a calendar year, has an assessable base of at least that amount must complete and file with the department a return on or before April 15 of the following year. A person that reasonably expects that the person's assessable base will be that amount or more must complete and file with the department a declaration of estimated tax, on or before April 15 of that year. RETURNS This bill requires a person who must file a declaration of estimated tax for a taxable year to complete and file with the department a quarterly estimated tax return on or before June 15, September 15, and December 15 of that year. A person required to file a return must (i) file with the return an attachment that provides any information that the department requires to determine annual gross revenues derived from data transactions from digital advertising services in this state and (ii) maintain records of data transactions from digital advertising services provided in this state and the basis for the calculation of the data transaction privilege tax owed for a minimum of five years. The chief executive officer, proprietor, owner, or highest-ranking manager must sign annual and quarterly returns to certify the accuracy of the information contained therein under penalty of perjury. TAX PAYMENT This bill generally requires a person who is required to file a return under this bill to pay the data transaction privilege tax with the return that covers the period for which the tax is due. However, a person that reasonably expects that the person's assessable base will be $50,000,000 or more and is required to file estimated data transaction privilege tax returns must pay (i) at least 25 percent of the estimated data transaction privilege tax shown on the declaration or amended declaration for the taxable year with the declaration or amended declaration that covers the year and with each quarterly return for that year; and (ii) any unpaid digital transaction privilege tax for the year shown on the person's return that covers that year. DISTRIBUTION OF TAXES This bill provides that the privilege tax collected under this bill, including penalties and interest, must be paid into the state treasury and earmarked and allocated as follows: (1) 98 percent to the department of education to expand and support universal pre-kindergarten programs in each public and public charter elementary school in this state; and (2) 2 percent to the department of revenue for the administration and enforcement of this bill. REMEDIES This bill provides that if the total amount of the digital transaction privilege tax due for the year is less than $300, then it is a Class E felony for (i) a person subject to this bill to knowingly fail to file a return, violate this bill; fail to keep books and records as required by this bill, file a fraudulent return, or violate a rule promulgated by the department for the administration and enforcement of this bill; (ii) an officer or agent of a corporation or manager, member, or agent of a limited liability company subject to this part to knowingly sign a fraudulent return filed on behalf of such corporation or limited liability company; or (iii) an accountant or other agent to knowingly enter false information on the return of any taxpayer. This bill further provides that if the total amount of the digital transaction privilege tax due for the year is $300 or more, then the violations described in (i)-(iii) constitute a Class D felony. A prosecution for a violation must commence within three years of the commission of the act. RULEMAKING This bill requires the commissioner of revenue to promulgate rules and forms necessary to implement this bill.