Tennessee enacts the Revenue Modernization Act, which adopts new cloud computing use tax, overhauls the franchise and excise tax, and eliminates or modifies Tennessee tax credits.


On May 20, 2015, Tennessee Governor Bill Haslam (R) signed House Bill 644, the Revenue Modernization Act (“RMA”), as well as House Bill 291 (“H.B. 291”), into law. Together, these bills make changes to the Jobs Tax Credit and other credits which may require action by July 1, 2015, and beginning July 1, 2015, the RMA subjects “cloud” software to use tax to the extent used in Tennessee. In addition, the RMA adopts “click-through” nexus for Sales and Use Tax purposes and overhauls Tennessee’s Franchise and Excise Tax by adopting economic nexus, a triple-weighted sales factor, and market-based sourcing for sales of other than tangible personal property, and making more changes to Tennessee’s affiliated intangible expense add-back statute.

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