ON APRIL 22, 2024, THE HOUSE ADOPTED AMENDMENT #2 AND PASSED HOUSE BILL 1046, AS AMENDED.
AMENDMENT #2 rewrites the bill to enact the "Tennessee Rural and Workforce Housing Act."
This amendment authorizes the Tennessee housing development agency ("agency") to allocate to the owner of a qualified project a credit against taxpayer liability for any tax imposed by the law relevant to insurance, excise tax law, or franchise tax law.
This amendment authorizes the owner of a qualified project to apportion a Tennessee rural and workforce housing tax credit among some or all of the direct partners or direct members of the business entity or association owning the qualified project, in any manner agreed to by such business entity or association, regardless of whether such business entities or associations are allocated or allowed any portion of the federal housing tax credit with respect to the qualified project. Likewise, if any of the direct partners or direct members of the business entity or association owning the qualified project is a pass-through entity, any such pass-through entity may further apportion a Tennessee rural and workforce housing tax credit to any of its direct partners, direct members, or direct shareholders in any manner agreed to by such parties, regardless of whether such parties are allocated or allowed any portion of the federal housing tax credit with respect to the qualified project.
Upon application or request, this amendment requires the agency to issue an eligibility statement to the owner of a qualified project to submit with a tax credit application as provided for in this amendment. The owner of a qualified project must file a tax credit application with the commissioner of revenue or the commissioner of commerce and insurance, as applicable, in order to claim a Tennessee rural and workforce housing tax credit against any taxpayer liability. The application must include the eligibility statement from the agency, a description of the qualified project, the amount of federal housing tax credit the qualified project received, the direct partners and members involved in the qualified project, how the Tennessee rural and workforce housing tax credit will be allocated among those direct partners and members, whether the qualified project is located in an eligible rural area as designated by the agency, and the amount of the Tennessee rural and workforce tax credit being claimed in the application.
As used in this amendment, a "qualified project" means a qualified low-income building, as that term is defined in the Internal Revenue Code, located in this state and placed in service after January 1, 2026, that receives a federal housing tax credit allocation from the agency for a project.
This amendment prohibits the total amount of the Tennessee rural and workforce housing tax credit that may be claimed for a taxable year from exceeding the taxpayer's liability. A credit that is unused may be carried forward in a tax period until the credit is taken. However, the credit may not be carried forward for more than 25 years. A taxpayer must not apply the credit against a prior tax years' liability, except that a credit may be claimed in a prior year corresponding to the date for which the agency issues an eligibility statement related to the qualified project. In the event that the agency does not issue an eligibility statement with respect to a qualified project before the end of the year in which a qualified project has been placed in service, any credits attributable to tax years prior to the year in which the agency issues the eligibility statement with respect to such qualified project must be allowed on a properly filed tax return for the year that includes the date on which the agency issued the eligibility statement related to the qualified project.
If, under a portion of a federal housing tax credit taken on a qualified project is required to be recaptured, then the taxpayer claiming a Tennessee rural and workforce housing tax credit with respect to such qualified project must have a portion of the Tennessee rural and workforce housing tax credit recaptured. The state recapture amount is equal to the proportion of the Tennessee rural and workforce housing tax credit claimed by the taxpayer that equals the proportion the federal recapture amount bears to the original federal housing tax credit amount subject to recapture.
If the recapture of a Tennessee rural and workforce housing tax credit is required, then this amendment requires the taxpayer to immediately notify the department of revenue on a form prescribed by the commissioner and submit an amended return to the department of revenue that includes the proportion of the Tennessee rural and workforce housing tax credit required to be recaptured, the identity of each taxpayer subject to the recapture, and the amount of tax credit previously allocated to such taxpayer. The statutory period for the assessment of additional franchise or excise tax resulting from such recapture must not expire prior to the expiration of two years from the date the commissioner or the commissioner's designee is notified in writing by the taxpayer of such recapture. In the case of an agreement in writing entered into by the commissioner, or the commissioner's designee, and the taxpayer within the time prescribed in this amendment for assessment, consenting to an assessment after such time, the tax may be assessed or a levy or other proceeding to enforce collection of such recapture may be made or begun with or without assessment at any time within the agreed upon period. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the previously agreed upon period. The total amount of all new Tennessee rural and workforce housing tax credits that may be allocated by the agency in any fiscal year is subject to authorization and must not exceed the amounts of such authorization, plus the total of all unallocated tax credits, if any, for any preceding years, and the total amount of any previously allocated tax credits that have been recaptured, revoked, canceled, or otherwise recovered but not otherwise reallocated.
This amendment requires the agency to allocate Tennessee rural and workforce housing tax credits pursuant to the qualified allocation plan developed by the agency pursuant to the Internal Revenue Code using uniform criteria that in the agency's discretion promote the highest value and greatest public benefit; provided, that no less than 50 percent of the Tennessee rural and workforce housing tax credits must be allocated to qualified projects in an eligible rural area as designated by the United States department of agriculture. The agency must allocate all authorized credits in the year they are authorized.
This amendment requires tax credits to be authorized by joint resolution of the general assembly.
This amendment requires a credit to be allowed against the tax imposed by the Excise Tax Law of 1999 and the Franchise Tax Law of 1999 in accordance with this amendment.
RULE PROMULGATION
This amendment authorizes the agency and the department of revenue and department of commerce and insurance to promulgate rules to effectuate this amendment
EFFECTIVE DATE
For purposes of rulemaking and other administrative actions, this amendment takes effect July 1, 2024, the public welfare requiring it. The Tennessee Housing Development Agency must not allocate, and the Department of Revenue must not credit, any tax credits prior to an authorization to implement the Tennessee Rural and Workforce Housing Tax Credits Act by joint resolution by the General Assembly. For all other purposes, this amendment takes effect July 1, 2025, the public welfare requiring it.
ON APRIL 24, 2024, THE SENATE SUBSTITUTED HOUSE BILL 1046 FOR SENATE BILL 1046, ADOPTED AMENDMENT #2, AND PASSED HOUSE BILL 1046, AS AMENDED.
AMENDMENT #2 makes technical corrections to statutory references.

Statutes affected:
Introduced: 13-23-114