Section 67-1-1802 - Refunds - Report of debts(a)(1)(A) The commissioner of revenue, with the approval of the attorney general and reporter, except as provided in subdivision (a)(4), is empowered and directed to refund to taxpayers all taxes collected or administered by the commissioner that are, on the date of payment, paid in error or paid against any statute, rule, regulation or clause of the constitution of this state or of the United States. Such refunds shall include, but not be limited to, credit carryovers generated after an audit review of returns, reports, or other documents filed by the taxpayer, including amendments to the returns, reports, or other documents. Such refunds do not, however, include credits generated by mechanical processing or mechanical mathematical verification processes. The commissioner is also authorized to automatically issue a credit or refund, without the necessity of the approval processes set out in this subsection (a), for the portion of estimated taxes paid in excess of the actual liability established by the initial and subsequently filed return for the tax period. The authority granted in this subdivision (a)(1)(A) extends only to taxes for which a claim is filed, with the commissioner under penalties of perjury, within three (3) years from December 31 of the year in which the payment was made. The claim must set forth each ground upon which a refund is claimed, the amount of such refund, the tax period, the tax type, and information reasonably sufficient to apprise the commissioner of the general basis for the claim. A refund requested on a franchise and excise tax return, or amended return, properly filed with the commissioner is deemed to comply with those requirements. The entire disputed amount of tax, penalty and interest must be paid before any claim for refund can be filed.(B)(i) Any taxpayer requesting a refund in the amount of two hundred dollars ($200) or more that is not eligible for automatic credit or refund pursuant to subdivision (a)(1)(A) shall complete and submit a written report of debts owed to a claimant as defined in § 67-1-1808 on a form prescribed by the commissioner to accompany the claim for refund. If a debt is reported and if the claim for refund is approved, any or all of the refund amount shall be subject to offset to recover the amount of such debt, subject to the requirements of § 67-1-1808. Any person who, with intent to deceive, provides false information on such report commits the Class A misdemeanor offense of perjury pursuant to § 39-16-702. Such report shall state whether or not such person owes or does not owe any of the following debts as of the date of the claim:(a) State tax liabilities;(c) Overpayment of unemployment compensation benefits;(d) Overpayment of medical assistance benefits owed the bureau of TennCare;(e) Student loan or other obligation due to the Tennessee student assistance corporation;(f) Fees, costs or restitution owed to a clerk who serves a court of criminal jurisdiction;(g) Costs of incarceration;(h) Judgments or liens in favor of a state agency, department, commission, or bureau;(i) All other debts owed to any other claimant.(ii) Each of the debts in subdivision (a)(1)(B)(i) that are listed in the report shall be preceded by the words "Yes" and "No" and a taxpayer shall make a cross mark (X) or other similar mark opposite the debt the taxpayer owes or does not owe. If a taxpayer marks "Yes" for any such debt, the taxpayer shall attach documentation identifying the claimant to whom the debt is owed and the outstanding balance of the debt. The report shall clearly state in bold face type that a person who, with intent to deceive, provides false information on the report is guilty of the Class A misdemeanor offense of perjury. The report required by this subdivision (a)(1)(B) shall be made on a paper writing in substantially the following form: Click here to view form.
(2) The commissioner is authorized to make refunds without a claim being filed if the commissioner is in possession of proper proof and facts that a refund is due within three (3) years from December 31 of the year in which the payment was made.(3) The commissioner is authorized to refund excise taxes due a taxpayer because of a decrease in net income divulged by an examination by the internal revenue service; provided, that a claim is filed with the commissioner, supported by proper proof, within three (3) years from the date of such redetermination of net income by the internal revenue service.(4) The commissioner is authorized to refund estate or inheritance taxes due a taxpayer because of a decrease in federal estate tax resulting from an examination by the internal revenue service; provided, that a claim is filed with the commissioner, supported by proper proof, within two (2) years from the date of such redetermination of the estate by the internal revenue service.(5) The commissioner is authorized to refund, without the necessity of a claim having been filed, inheritance taxes due a taxpayer because of a decrease in inheritance tax resulting from an examination by the commissioner.(6)(A) The commissioner is authorized and empowered, in the commissioner's discretion, to designate subordinate officials in the department to approve, on the commissioner's behalf, claims for refunds in amounts of five thousand dollars ($5,000) or less. Only one (1) such subordinate official and one (1) alternate subordinate official shall be designated to approve any one (1) class of claims. The commissioner shall notify, in writing, the commissioner of finance and administration and the attorney general and reporter as to the names of any such subordinate officials so designated.(B) The commissioner is also authorized and empowered, in the commissioner's discretion, to approve claims for refunds in amounts of more than five thousand dollars ($5,000) but not more than fifteen thousand dollars ($15,000). The commissioner is authorized and empowered to designate, in the commissioner's discretion, subordinate officials in the department to initially review claims for refund. Such subordinate official shall make a finding in regard to each claim recommending either approval or disapproval. This finding shall be reviewed by the legal office of the department of revenue, which shall make its own recommendation approving or disapproving the claim. Both these findings shall be submitted to the commissioner, or the commissioner's designated subordinate official, who shall make a final determination, either approving or disapproving the claim in the commissioner's or the commissioner's designated subordinate official's discretion, based on all information available to the commissioner or the commissioner's designated subordinate official. The findings of the designated subordinate official and legal office shall be advisory only and shall not be construed to limit the discretion of the commissioner in making refunds under this subsection (a). The commissioner is authorized and empowered to designate subordinate officials in the department to approve, on the commissioner's behalf, claims for refund under this subdivision (a)(6)(B).(C) The commissioner is also authorized and empowered to approve claims for refunds in amounts of more than fifteen thousand dollars ($15,000); provided, that the attorney general and reporter may require that the refund of such claims or any class of such claims be subject to the attorney general and reporter's prior review and approval.(7) A refund which is authorized solely by a final court adjudication shall not be made to any person who is not either a party to such action or a party to another similar action.(8) In any case in which the statute of limitations on the assessment of tax is extended by agreement in writing pursuant to § 67-1-1501(b)(5), the periods specified in this subsection (a) which limit the ability of the commissioner to refund taxes may also be extended for an equivalent period of time by agreement in writing entered into by the commissioner or the commissioner's delegate and the taxpayer.(b)(1) All claims for refund filed pursuant to this section shall be finally determined within six (6) months following receipt of the claim. If the claim for refund is denied, the commissioner shall promptly notify the claimant of the denial and the claimant's right to file a suit for refund in the appropriate chancery court of this state within one (1) year from the date that the claim for refund was filed with the commissioner.(2) If a claim is not determined within the six-month period following receipt by the commissioner of such claim, the claim shall be deemed to be denied for the purpose of filing suit in chancery court.(c)(1) A suit challenging the denial or deemed denial of a claim for refund shall be filed in the appropriate chancery court of this state within one (1) year from the date that the claim for refund was filed with the commissioner; provided, that a taxpayer and the commissioner or the commissioner's delegate may enter into an agreement in writing within one (1) year from the date the taxpayer filed a claim for refund in which the taxpayer and the commissioner or the commissioner's delegate consent to suit being filed in chancery court beyond the one-year period provided in this subdivision (c)(1) and that, in the case of an agreement, the taxpayer may file suit in the appropriate chancery court challenging the denial or deemed denial of a claim for refund within the agreed upon period.(2) In a suit challenging the denial or deemed denial of a claim for refund, the chancery court shall conduct a de novo trial of the suit; provided, that the court shall have no jurisdiction in cases in which the issue is the existence, continued existence, or amount of a debt set off against a tax refund, or in which the issue is the validity of an assessment made pursuant to § 67-1-1808(i). The remedies established in § 67-1-1808 are a taxpayer's sole and exclusive remedies to challenge the existence, continued existence, or amount of a debt set off against a tax refund, or to challenge the validity of an assessment made pursuant to § 67-1-1808(i).(3) The commissioner, by written notice promptly delivered to the taxpayer, may waive the requirement that the taxpayer file a claim for refund, in which case the taxpayer may file suit in the appropriate chancery court of this state for a refund within one (1) year following the date of such waiver by the commissioner, and such suit shall proceed in all respects, including for the purpose of determining the date from which interest thereon should be calculated, as if proper and timely claim for refund had been filed by the taxpayer, and either denied or not acted upon by the commissioner within the period specified herein.(4) Notwithstanding this subsection (c), a suit challenging the denial or deemed denial of a claim for refund under § 67-4-2122 must be filed in the chancery court of Sumner County. The complaint must be signed by the taxpayer under the penalties of perjury, affirming that the taxpayer or affiant believes that the department's denial of the refund being challenged is unjust, illegal, or incorrect and that the suit is brought in good faith.(d) This section is specifically made applicable to a refund arising from the application of § 67-6-507(e)(6). If a certified service provider, as defined in § 67-6-102, has assumed sales and use tax return filing responsibilities of the seller, the provider shall have the right to claim, on behalf of the seller, any bad debt allowance or refund available to the seller under § 67-6-507.(e)(1) As used in this section, "taxpayer" means:(A) A dealer as defined in § 67-6-102 that remitted the sales or use taxes to the commissioner;(B) A person that paid the sales or use taxes to a dealer that collected and remitted such taxes to the commissioner, if: (i) The person requested a refund from the dealer on at least two (2) separate occasions and the dealer failed or declined to issue the refund; and(ii) The dealer attests to the following under penalty of perjury on a form prescribed by the commissioner:(a) The taxes were remitted to the department by the dealer, including the amount and the date remitted;(b) The dealer has not claimed and will not claim a refund of such taxes;(c) The dealer has not taken and will not take a credit for such taxes;(d) The dealer's sales and use tax account number; and(e) The local jurisdiction or jurisdictions for which any local sales tax included in the refund claim was collected and remitted; or(C) A person that paid sales or use taxes to a dealer that collected and remitted such taxes to the commissioner, if: (i) The person requested a refund from the dealer on at least two (2) separate occasions and the dealer failed or declined to issue the refund; and(ii) The person reasonably attempted but was unable to obtain an attestation from the dealer as required under subdivision (e)(1)(B)(ii); provided, however, a refund shall not be issued to a taxpayer that files a claim for refund under this subdivision (e)(1)(C) unless the commissioner, in the commissioner's discretion, determines that sufficient information is reasonably available to verify that the taxes were remitted by the dealer to the department, that the dealer has not claimed a refund of such taxes, that the dealer has not taken a credit for such taxes, the dealer's sales and use tax account number, and the local jurisdiction or jurisdictions for which any local sales tax included in the refund claim was collected and remitted. For purposes of this subdivision (e)(1)(C)(ii), a purchaser who contacts the dealer in writing at least twice at least ninety (90) days prior to the expiration of the statute of limitations for requesting such refund is deemed to have made a reasonable attempt to obtain the dealer's attestation.(2) For a taxpayer as defined in subdivision (e)(1)(B) or (e)(1)(C) to file a claim for refund under this subsection (e), the amount of the claim for refund to be filed by such taxpayer must exceed two thousand five hundred dollars ($2,500) per dealer.(3) Any refund claimed by a taxpayer must otherwise meet the requirements of this section.(4) Sales or use taxes that were collected from or passed on to customers by a taxpayer as defined in subdivision (e)(1)(A) shall not be refunded unless the taxpayer has refunded or credited the sales or use tax to its customers.Amended by 2024 Tenn. Acts, ch. 950,s 19, eff. 5/10/2024.Amended by 2021 Tenn. Acts, ch. 480, Secs.s 1, s 2 eff. 10/1/2021.Acts 1986, ch. 749, § 6; 1988, ch. 526, §§ 2, 3; 1989, ch. 127, § 1; 1989, ch. 236, § 6; 1991, ch. 80, § 2; 1992, ch. 626, §§ 2, 3; 1998, ch. 595, § 1; 1999, ch. 406, § 8; 2003 , ch. 357, § 2; 2004, ch. 721, § 1; 2004, ch. 959, §§ 51, 68; 2005, ch. 311, §§ 1, 2; 2005, ch. 499, § 27; 2007 , ch. 602, §§ 31-33, 51, 56; 2008 , ch. 1106, § 34; 2010 , ch. 1113, §§ 5, 6; 2011 , ch. 343, § 1.