CORRECTED: State won't identify alleged business tax violators

Officials of Tennessee Department of Revenue say that they will be able to provide county-by-county breakdowns of business tax violations, but that a complete county-by-county breakdown won't be immediately available due to the department's workload in preparing to take over business tax enforcement.

The T-G reported earlier this week that, because of privacy issues which prevent individual offenders from being identified by name, county-by-county breakdowns would not available except for the largest metro areas. A revenue department spokesperson says she was misunderstood by the Times-Gazette.

The newspaper is happy to set the record straight and plans to publish Bedford County totals once they become available.

The story as originally published appears below.

Although state officials say they've already identified thousands of businesses which don't appear to be paying business tax, they won't give a county-by-county breakdown of potential offenders or release any individual offender names.

The state is in the process of taking over business tax collection from local governments, and the state's argument for doing so is that by cross-checking various types of tax records, particularly sales tax records, the state can identify businesses which should be paying business tax but aren't.

Officials say taxpayer confidentiality rules prohibit them from releasing the names of individual businesses they've flagged for non-payment, and they say they don't want to release county-by-county numbers which might allow the curious to figure out which businesses in smaller counties are involved.

Sara Jo Houghland of Tennessee Department of Revenue said the department has released the names of local governments with more than 50 identified cases of non-payment. Those are:

Chattanooga 94

Knoxville 150

Memphis 405

Murfreesboro 52

Nashville 272

Department of Revenue officials say they can't release taxpayer names simply for non-payment, even if the taxes and penalties result in the business shutting down. The only tax offenses the department can publicize are those that involve violations of the process, such as filing false returns.

As the new rules take effect, Entrepreneurs will still go to the appropriate city or county office to obtain a new business license, but from that point forward the state will handle license renewals and collection of the business tax. Businesses which file their sales tax reports electronically will now be required to file their business tax returns electronically as well.

Bedford County Clerk Kathy Prater said earlier this month that the state has promised local governments will still receive the same revenue from business tax collections as in the past.

Any business which grosses over $3,000 is required to obtain a license and pay business tax. The tax is based on a percentage of gross income. The exact percentage varies by category of business, with 1/10 of one percent being one typical rate.

The new rules take effect Jan. 1, 2010, but the first filing deadline under the new rules will be Feb. 28. Returns due on that date will be filed with Tennessee Department of Revenue rather than with city or county governments.