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Tennessee Establishes Taxpayer Protections

Tax Development May 20, 2021

Tennessee Establishes Taxpayer Protections

On April 22, 2021, Tennessee Governor Bill Lee signed House Bill 38 into law, establishing protections for taxpayers who rely on published tax guidance issued by the Department of Revenue. The new law provides that when the Commissioner of Revenue publishes guidance regarding tax law or policy, affected taxpayers are entitled to rely on that guidance. If subsequently the Commissioner changes that guidance, a taxpayer who relied on that guidance before it was changed is not liable for any assessment of additional tax, interest, or penalty that accrued before the guidance was changed. 

Additionally, this relief is available during an audit if the following conditions are met:

  1. The advice was reasonably relied upon by the taxpayer;
  2. Any proposed assessment that was not caused by the taxpayer’s failure to provide adequate or accurate information; and
  3. The department provided the advice to the taxpayer in writing, or department records establish that the erroneous advice was given verbally.

The law also provides that any policy changes can only be applied to the exercise of those situations occurring after that date of the policy change, unless otherwise provided by law.

This law change is effective on July 1, 2021. 


Mark L. Nachbar

Mary Bernard

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