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Tenn. Legislature Tables Bill on Taxation of Computer Software

Posted on: Tuesday, 24 January 2006, 00:00 CST

By Mike Pare, Chattanooga Times/Free Press, Tenn.

Jan. 24--A state proposal to make computer software used in business subject to property taxes in Tennessee was tabled for further study on Monday, a business official said.

"They want to gather public input. We'll provide them with plenty," said Hayes Ledford, the Chattanooga Area Chamber of Commerce's vice president of public affairs.

He said about 75 people filled a room as State Board of Equalization staff held a hearing on the issue in Nashville.

The proposal has drawn fire from both business groups and some state legislators who worried that it could drive up costs and hurt job growth.

Carl Hartley, an attorney speaking for the Chattanooga Manufacturers Association, said the proposal is "simply a bad idea."

"At a time when the state of Tennessee is trying to attract and retain businesses, and in particular businesses associated with the coveted manufacturing sector, this proposed rule amendment simply works at odds with those efforts by the state to cultivate economic development," he said.

Kelsie Jones, the board's executive secretary, has said there is no consistent approach to determining what business software should be considered taxable. The new rule would provide a uniform statewide standard, he said.

Mr. Ledford said the proposal likely will be brought up again, but he added that legislation has been introduced in the House by state Rep. Gerald McCormick, R-Chattanooga, to prevent software from being taxed. State Sen. David Fowler, R-Signal Mountain, said earlier he also planned to draft a bill on the issue.

Mr. Ledford said one of the main objections to the rule change is that such a major tax policy decision belongs to the Legislature and the governor.

In Hamilton County, Assessor of Property Bill Bennett has said his office has taxed operational software at companies where it has done audits for six or seven years.

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Source: Chattanooga Times/Free Press

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