SALT Developments in the Southeast: Tennessee's Franchise Tax, Nexus Determinations, Current Cases

Continuous SALT changes are taking place across the nation. States are firming up and enacting legislation surrounding sourcing rules and nexus. All states imposing taxes have implemented PTE taxation regimes, and sales tax rules continue to evolve post-Wayfair.

In January 2024, South Carolina's Court of Appeals determined that Amazon, as a marketplace facilitator, had an obligation to collect sales taxes extending back to 2016, which predates the Wayfair decision. Also in 2024, Georgia, like many other states, enacted a tax on digital items. Digital downloads, code, and other digital products are subject to sales tax effective Jan. 1, 2024.

In 2023, Tennessee adopted a single-sales factor for apportionment. Most recently, the state proposed significant changes to its franchise tax, which could affect current estimated tax payments and offer refund opportunities. SALT practitioners working with businesses in the Southeast, and with potential nexus in these states, need to understand the impact of recent changes to minimize taxes and avoid penalties for these taxpayers.

Listen as our panel of SALT controversy experts covers recent state and local tax developments in the Southeastern states.