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The Tennessee 183 form, issued by the Department of Revenue, serves a critical function in the exemption and annual renewal for Franchise and Excise Tax, playing a vital role within the state’s fiscal framework. This comprehensive document outlines the process and criteria for entities seeking exemption from certain taxes, covering a wide array of qualifications ranging from venture capital funds, farming and personal residences, to affordable housing projects and entities with specific ownership structures such as family-owned non-corporate entities. Furthermore, it addresses specialized conditions for obligated member entities, and diverse investment and debt securitization options including Asset-Backed Securitization and third-party indebtedness. The form not only lists requirements for each classification but also mandates detailed disclosure of activities and organizational structures for those applying under farming/personal residence or a family-owned non-corporate entity category. The legal and operational nuances captured within this document underscore the state’s attempt to balance incentive offerings for certain organizational types while ensuring compliance and integrity in tax reporting. Mandatory annual renewal signifies ongoing oversight and adherence to the stipulated criteria, emphasizing the dynamic relationship between the state and its economic entities. With penalties in place for non-compliance, the Tennessee 183 form delineates a clear path for entities to either claim or renew their tax exemption status, thus contributing to the broader economic ecosystem.

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TEN N ES S EE D EP AR TMEN T OF R EVEN U E

F r a n c h i s e a n d Ex c is e Ta x

Ap p lic a tio n fo r Ex e m p tio n / An n u a l Ex e m p tio n R e n e w a l

FAE 18 3

RV-R0012201(11/21)

Check all that apply:

 

 

 

 

New Exemption

Renewal

Final

Taxpayer has filed for federal extension

Tax Period Covered:

Start

 

End

 

FEIN:AccountNumber:

Effective Date of Registration with the Secretary of State:

SOS Control Number:

 

 

 

Legal Name:

 

 

 

 

 

 

 

 

 

Physical Location (No P.O.Box):

 

 

 

 

 

 

 

 

 

 

 

 

 

Street

 

 

City

State

Zip

Entity Mailing Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

Street

 

 

City

State

Zip

Business Telephone Number:

Email:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Please check one. All requirements for the selected exemption must be met.

Venture Capital Fund

•Entity is an LLC, LP, LLP, or business trust.

•Entity is operated for the exclusive purpose of buying, holding and/or selling securities, and more than 50% of securities are in non-publicly traded companies. Entity buys, sells, and/or holds securities on its own behalf and not as a broker.

•More than 50% of capital is from investments neither related to nor affiliated with the fund.

Farming/Personal Residence

•Entity is an LLC, LP, or LLP.

•1) At least 66.67% of the activity is in farming and 66.67% of assets are used by the owner or the owner’s lessee for farming; or 2) at least 66.67% of the activity is the holding of one or more personal residences where one or more of the members/partners reside.

•At least 95% of the voting rights, capital interest or profits are owned by natural persons who are relatives or by trusts for their benefit.

•Must complete Disclosure of Activity section.

Affordable Housing

THDA Project Identification Number(s):

•Entity is an LLC or LP.

•Entity was formed exclusively to provide affordable housing.

•Entity has received an allocation of low-income housing tax credits pursuant to IRC § 42.

•Each residential building has an extendedlow-income housing commitment as defined in IRC § 42(h)(6)(B).

Obligated Member Entity

•Entity is an LLC, LP, or LLP.

•All members or partners are fully liable for the debts, obligations, and liabilities of the entity.

•Required documentation has been filed with the Tennessee Secretary of State.

•Must attach required documentation that has been filed with the Tennessee Secretary of State.

Family-Owned Non-Corporate Entity

•Entity is an LLC, LP, or LLP.

•At least 95% of the ownership units of the entity are owned by members of the family or the estate or trust of a deceased individual who,while living,was a member of the family.

•At least 66.67% of the entity’s activity is either 1) the production of passive investment income; or 2) the combination of passive investment income and farming.

•Must complete Disclosure of Activity section.

Diversified Investment Fund

•Entity is an LLC, LP, LLP,or business trust.

•At least 90% of the cost of the entity’s total assets consists of qualifying investment securities, bank deposits, and office space and equipment.

•At least 90% of the entity’s gross income consists of interest, dividends, and gains from the sale or exchange of qualifyinginvestmentsecurities.

•The entity’s primarypurpose is buying, holding, and selling qualified securities on its own behalf and not as a broker.

•Capital is primarily derived from investments byentities or individuals not affiliated with the fund.

Asset-Backed Securitization (REMIC/FASIT)

•Entity is classified as one of the following: 1) a partnership or trust for federal tax purposes; 2) a REMIC; 3) a FASIT; 4) a business trust; or 5) a trust that is disregarded for federal tax purposes and whose trustee is domiciled outside Tennessee.

•The entity’s sole purpose, except for foreclosures, is the asset-backed securitization of debt obligations.

Security 3rd Party Indebtedness

•Entity is an LLC, LP,LLP or business trust existing on May 1, 1999.

•Entity is at least 98% owned by corporate members of an affiliated group and was formed exclusively to acquire notes from affiliated group members.

•Assets serve as security for third-party borrowings or securitized indebtedness acquired by third parties.

•At least 80% of the entity’s income from assets is included in the income of a corporation doing business in Tennessee and subject to applicable allocation and apportionment rules.

Facilities Owned by the Armed Forces

•Entity is owned, in whole or in part, directly by a branch of the armed forces of the United States.

•Entity derives more than 50% of its gross income from the operation of facilities that are located on property owned or leased by the federal government and operated primarily for the benefit of members of the armed forces of the United States.

Qualified Low-Income Community Historic Structure Owner or Lessee

•Entity owns an interest in or is a lessee of a qualified low-income housing historic structure.

•Entity has no business operations or assets other than its investment or lease in the qualified low-income community historic structure, business operations incidental to such investment or lease, and de minimis other operations and assets.

•Must attach a copy of the approval received under 26 U.S.C. §§ 47 and 45D.

Under penalties of perjury, I declare that I have examined this report, and to the best of my knowledge and belief, it is true, correct, and complete.

Taxpayer's Signature

 

 

 

 

 

Date

 

 

 

Title

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax Preparer's Signature

 

Preparer's PTIN

 

Date

 

 

 

Telephone

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preparer's Address

 

 

 

City

 

 

 

State

ZIP Code

Preparer's Email Address

 

 

 

 

 

 

 

 

 

 

 

 

 

TEN N ES S EE D EP AR TMEN T OF R EVEN U E

F r a n c h i s e a n d Ex c is e Ta x Ex e m p t En tity

D is c lo s u r e o f Ac tivity

Please complete this page if you have indicated that you are applying for or renewing an exemption for a farming/personal residence or a family owned non-corporate entity.

Organizational Structure

(a) Member/Partner Name

(b) Ownership Percentage (c) Relationship

1.

2.

3.

4.

Part I Family-Owned Non-Corporate Entity (“FONCE”)

(a) Passive Investment Income

 

(b) Non-Passive Investment Income

 

 

Source of Income

Receipts

Source of Income

Receipts

 

 

 

 

Industrial & commercial

 

 

Royalties

 

 

real estate rental

 

 

 

 

 

 

Other (please describe below):

 

 

 

Annuities

Interest

Gain on sale/exchange of stock

Gain on sale/exchange of securities

Rent from residential property

 

 

Total non-passive income

Rent/income from farming

 

 

Total passive income

$

 

Property address:

Property address:

Property address:

Property address:

Part II Farming Activity

County

(a) Type of Income

(b) Assets at Cost/FMV (see instructions)

 

 

 

 

Farm income

$

Assets used in farming

$

 

 

 

 

Other income

$

Other assets

$

 

 

 

 

Total income

$

Total assets

$

Part III Holding a Personal Residence

(a)Address

(b) Names of Residents

(c)Number of Days Residing at Property

I n s tr u c ti o n s : Ap p lic a tio n fo r Ex e m p tio n

Tenn. Code Ann. § 67-4-2008 provides exemption from Tennessee’s franchise and excise taxes under certain situations. The Application for Exemption should be completed by entities requesting exemption under provision of these laws. Please see the descriptions of exempt entities shown below to determine if your entity qualifies for exemption.

Each entity is required to make its initial application for exempt status on this form and must also submit a renewal application annually. This annual application is due each year by the 15th day of the fourth month following the end of the

entity’s fiscal year for which the entity is claiming an exemption. The entity should not submit this renewal before the fiscal year end of the exemption year. The Department will not process any early submitted renewals. Any

entity that fails to timely file an application for exemption or renewal may be charged a $200 penalty.

Please mail completed applications and annual renewals to: Tennessee Department of Revenue, 500 Deaderick Street, Nashville, TN 37242. For questions or assistance with this form, please call (615) 253-0700, Monday through Friday, 8:30 a.m.-4:30 p.m. CST or visit www.tn.gov/revenue for more detailed information.

Entity Descriptions:

Venture Capital Funds [Tenn. Code Ann. § 67-4-2008(a)(5)]: An LLC, LLP, or LP formed and operated exclusively for buying, holding, and/or selling securities, including debt securities, primarily in non-publicly traded companies, on its own behalf and not as a broker. The capital of the fund is primarily (over 50%) derived from investments by entities and/or individuals which are not affiliated with the fund. A “non-publicly traded company” is a business entity that is not a “publicly traded company,” which is defined as (a) a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934 or exempted from registration under such act by 15 U.S.C. Section 78f because of the limited volume of transac- tions; (b) a foreign securities exchange operating under principles analogous to a national securities exchange; (c) a regional or local exchange; (d) an interdealer quotation system that regularly disseminates firm buy or sell quotations by identified brokers or dealers by electronic means or otherwise; or (e) on a secondary market or the substantial equivalent thereof, if taking into account all of the facts and circumstances, the owners are readily able to buy, sell or exchange their ownership interest in a manner that is comparable, economically, to trading on an exchange.

Farming/Personal Residence [Tenn. Code Ann. § 67-4-2008(a)(6)]: An LLC, LP, or LLP where at least 66.67% of the activity of the entity is either farming or holding one or more personal residences, including acreage contiguous to the dwelling, where one or more of the members or partners reside. At least 95% of the entity must be owned either by persons who are relatives of one another or by trusts for their benefit. Natural person shall be considered “rela- tives” by blood or adoption if they are descended from a common ancestor and their relationship with each other is that of a first cousin or closer than that of a first cousin, or if they are spouses of one another.

Affordable Housing [Tenn. Code Ann. § 67-4-2008(a)(8)]: The LLC or LP must have received an allocation of low- income housing tax credits pursuant to Section 42 of the Internal Revenue Code of 1986, as amended (IRC). An “extended low-income housing commitment” as defined in Section 42(h)(6)(B) of the IRC, must be in effect with re- spect to each residential building owned by the entity for the period covered by the return. Attach separate Afford- able Housing Certification Form.

Obligated Member [Tenn. Code Ann. § 67-4-2008(a)(9)]: In order to qualify as an exempt obligated member entity, the appropriate documentation required for each of the entity’s members, partners or owners to waive their limited liability protection shall be filed with the Tennessee Secretary of State on or before the first day of the first otherwise taxable year for which the entity wishes to claim exemption. This does not relieve the obligated member entity from filing an initial Application for Exemption with the Department of Revenue by the 15th day of the fourth month following the end of the entity’s fiscal year for which the person claims the exemption or from submitting a renewal application annually by the date on which a return would otherwise be due were it not for the exemption. To the extent that any obligated member, or any owner of an obligated member, provides limited liability protection, the obligated member entity shall owe the taxes otherwise imposed by the franchise and excise statutes on the portion of income and equity attributable to such obligated member. Ownership includes any form of ownership, whether in whole, in part, direct or indirect. Also, estates, trusts that are not taxpayers, nonprofit entities, or other entities exempt under this section, shall not be deemed to provide limited liability protection. Documentation filed with the Tennessee Secretary of State’s office must also be filed with the Department of Revenue when this form is submitted.

REMIC or FASIT [Tenn. Code Ann. § 67-4-2008(a)(10)]: An entity: (a) which is classified as a partnership or trust in accordance with the federal regulations and rulings promulgated under 26 U.S.C. Section 7701, or has elected to be treated as a real estate mortgage investment conduit (REMIC) under 26 U.S.C. Section 860D, or as a financial asset securitization investment trust (FASIT) under 26 U.S.C. Section 860L, or a business trust, as defined in Section 48-101-202(a), when the commercial domicile of the trustee is not in Tennessee; and (b) the sole purpose of which, except for foreclosures and dispositions of the assets of foreclosures, is the asset-backed securitization of debt obligations, such as first or second mortgages, includ- ing home equity loans, trade receivables, whether an open account or evidenced by a note or installment or conditional sales contract, obligations substituted for trade receivables, credit card receivables, personal property leases treated as debt for purposes of the IRC, automobile loans or similar debt obligations. “Trade receivables” are defined as obligations arising from the sale of inventory in the ordinary course of business.

Family-Owned Non-Corporate Entity [Tenn. Code Ann. § 67-4-2008(a)(11)]: Any family-owned non-corporate entity where substantially all the activity of the entity is either (a) the production of passive investment income, or (b) the combination of the production of passive investment income and farming. “Family-owned” means that at least 95% of the ownership units of the entity are owned by members of the family, which means, with respect to an individual, only an ancestor of such individual; the spouse or former spouse of such individual; a lineal descendent of such individual, of such individual’s spouse or former spouse, or of a parent of such individual; the spouse or former spouse of any lineal descendent; or the estate or trust of a deceased individual who, while living, qualified as a lineal descendent. A legally adopted child of an individual shall be treated as the child of such individual by blood. “Passive investment income” means gross receipts derived from royalties, rent from residential real estate, dividends, interest, annuities, and any gains from sales or ex- changes of stock or securities. Entities with no income may qualify for this exemption if all other requirements are met.

Third Party Indebtedness [Tenn. Code Ann. § 67-4-2008(a)(7)]: This exemption is effective for periods beginning on or after May 1, 1999. The entity must be at least 98% owned by corporate members of an affiliated group and be formed and operated for the exclusive purpose of acquiring notes from members of such affiliated group, accounts receivable, install- ment sale contracts, and similar evidence of indebtedness obtained in the ordinary course of business by one or more members of such affiliated group. The entity’s assets must directly or indirectly serve as security for third party borrowings or securitized indebtedness acquired by third parties. At least 80% of the income therefrom must be included in the income of a corporation doing business in Tennessee, and such income must be subject to the applicable franchise and excise tax allocation and apportionment rules.

Diversified Investment Fund [Tenn. Code Ann. § 67-4-2008(a)(12)]: An entity that is formed and operated for the purpose of buying, holding, or selling qualified investment securities on its own behalf. The capital of the fund must be primarily derived from investments by entities or individuals that are not affiliated with the fund. At least 90% of the fund’s income must consist of interest, dividends, and gains from the sale or exchange of such investment securities.

Facilities Owned by the Armed Forces [Tenn. Code Ann. § 67-4-2008(a)(16): Any entity owned directly, in whole or in part, by a branch of the United States Armed Forces. The entity must derive more than 50% of its gross income from the operation of facilities that are located on property owned or leased by the federal government and operated primarily for the benefit of members of the United States Armed Forces.

Qualified Low-Income Community Structure Owner or Lessee [Tenn. Code Ann. § 67-4-2008(a)(17): The entity must own an interest in or be the lessee of a qualified low-income community historic structure. The entity must have no business operations or assets other than its investment or lease in the qualified low-income community historic structure, business operations and assets incidental to such investment or lease, and de minimis other operations and assets. Attach a copy of the approval received under 26 U.S.C.§§ 47 and 45D.

In s t r u c ti o n s : D is c lo s u re o f Ac ti vi ty

If the entity does not meet the exemption requirements in any given year, it is taxable on all activities for that year. A completed franchise and excise tax return (FAE170) must be filed electronically with payment of any taxes due by the 15th day of the fourth month following the close of the taxable year.

Definitions:

Family Member – To determine who is considered a family member of a family-owned non-corporate entity (FONCE), identify one person (either an owner or non-owner, living or deceased) to whom the owners are potentially related. With respect to that person, the following are considered members of the family:

1.Ancestor (mother, grandfather, great grandmother, etc.)

2.Spouse or former spouse

3.Lineal descendent of individual, individual’s spouse or former spouse or individual’s parent (brother, daugh- ter, grandson, niece, step-daughter, step-grandson, etc.)

4.Spouse or former spouse of #3 above

5.The estate or trust (testamentary) of a deceased individual who, while living, was one of the above

Relative – To determine who is considered a relative for the farming/personal residence exemption, natural persons shall be considered relatives, if, by blood or adoption, they are descended from a common ancestor and their rela- tionship with each other is that of a first cousin or closer than that of a first cousin, or if they are spouses of one another.

Farming – The growing of crops, nursery products, timber or fibers, such as cotton, for human or animal use or consumption; the keeping of horses, cattle, sheep, goats, chickens or other animals for human or animal use or consumption; the keeping of animals that produce products, such as milk, eggs, wool or hides for human or animal use or consumption; or the leasing of the land to be used for farming.

Filing Requirement:

The following entities must complete the Disclosure of Activity section:

1.FONCEs qualifying for exemption. Complete the Organizational Structure section and Part I.

2.LLCs,LPs, and LLPs qualifying for the farming activity exemption. Complete the Organizational Structure section and Part II.

3.LLCs,LPs, and LLPs qualifying for the holding a personal residence exemption. Complete the Organizational Structure section and Part III.

Organizational Structure:

(a)Provide the full names of all members or partners.

(b)Enter each member’s or partner’s percentage interest in the entity. The total must equal 100%.

(c)Identify the relationship of each partner (e.g., spouse, daughter, etc.). See definition of family member and relative above.

Part I - Family-Owned Non-Corporate Entity:

Passive Investment Income:

(a)Enter the gross amount received from each source. However, enter the net gain for capital gains on the sale of stock or securities. For a capital loss on the sale of stock or securities, enter $0.

Non-Passive Income:

(b)List the source and gross amount of non-passive income received during the reporting period.

Note: In order for an entity to qualify for the FONCE exemption: 1) at least 95% of its ownership must be held by members/partners who are family members; and 2) at least 66.67% of its income must be from passive investments and/or farming. If the entity has no income for the year, it meets the passive investment income test.

Part II - Farming Activity:

(a)Enter the amount of gross receipts earned by the entity from farming activities and all other activities. Farm income includes gross receipts derived from the property, including capital gains from the sale of land and other assets.

(b)Enter the original cost of assets owned by the entity. In the event an asset’s original cost cannot be determined, or there is no original cost to the entity, the property should be reported at its fair market value at the time of acquisition by the entity.

Note: In order for an entity to qualify for the Farming Activity exemption: 1) at least 66.67% of its income must be from farming; 2) at least 66.67% of its assets must be used in farming; and 3) at least 95% of the voting rights, capital interest or profits must be owned by family members as defined above.

Part III - Holding a Personal Residence:

(a)Enter the complete address of the property.

(b)If the property listed is residential property, enter the name of the person(s) residing at the property.

(c)Enter the length of time during the year that the person occupied the dwelling.

Note: In order for an entity to qualify for the Holding a Personal Residence exemption: 1) at least 66.67% of its activity must consist of holding one or more personal residences where one or more of the members/partners reside, 2) at least 95% of the voting rights, capital interest or profits must be owned by family members as defined above.

Download Tennessee 183

Document Data

Fact Name Detail
Governing Law Tenn. Code Ann. § 67-4-2008 outlines exemptions from Tennessee’s franchise and excise taxes for certain entities.
Application Purposes The Tennessee Form 183 is used for applying for exemption or annual exemption renewal from franchise and excise taxes.
Entity Types Covered Covers various entity types including LLCs, LPs, LLPs, business trusts, and certain partnerships or trusts recognized for federal tax purposes.
Exemption Categories Includes specific exemption categories such as Venture Capital Funds, Farming/Personal Residence, Affordable Housing, Family-Owned Non-Corporate Entities, and more.

Detailed Guide for Using Tennessee 183

Completing the Tennessee 183 form is a critical step for entities seeking franchise and excise tax exemptions/renewals. This process ensures your entity is recognized under Tennessee law for such privileges, adhering to specific criteria and regulations. Detailed carefully below is a guide through each step necessary to accurately complete the form, ensuring that all required information and documentation are provided. This guide aims to facilitate a smooth application process, allowing entities to comply with state stipulations effectively.

  1. Identify the type of application by checking the appropriate box: New Exemption, Renewal, or Final. If the taxpayer has filed for a federal extension, this should also be indicated.
  2. Enter the Tax Period Covered, including both the start and end dates in the specified format.
  3. Provide the FEIN (Federal Employer Identification Number) and Account Number, if applicable.
  4. Fill in the Effective Date of Registration with the Secretary of State and the SOS Control Number.
  5. Enter the Legal Name of the entity applying for the exemption/renewal.
  6. Specify the Physical Location of the entity, ensuring to include the street, city, state, and zip code. Remember, P.O. Boxes are not allowed.
  7. For the Entity Mailing Address, include the street, city, state, and zip code, which may differ from the physical location.
  8. Include the Business Telephone Number and Email to ensure the entity can be easily contacted.
  9. Check the box that corresponds to the type of exemption the entity is applying for. Ensure all requirements for the selected exemption are met.
  10. For selected exemptions such as Farming/Personal Residence or Family-Owned Non-Corporate Entity, complete the Disclosure of Activity section with the required information.
  11. If applicable, provide specific numbers like the THDA Project Identification Number(s) for Affordable Housing applications.
  12. Attach any required documentation that supports your application. This might include documentation filed with the Tennessee Secretary of State or the approval received under specific sections of the U.S.C for Qualified Low-Income Community Historic Structure Owner or Lessee.
  13. Review the application thoroughly. Under penalties of perjury, sign and date the application, indicating your role/title in the entity. The Tax Preparer (if applicable) should also sign, providing their PTIN, telephone number, address, and email address.
  14. Mail the completed application and any supplemental documents to the provided address of the Tennessee Department of Revenue before the specified deadline.

By following these steps carefully, entities can navigate the application process with clarity and precision, ensuring all necessary information and documentation are accurately presented for the Tennessee Department of Revenue's consideration.

Important Questions on This Form

What is the Tennessee 183 form?

The Tennessee 183 form, also known as the Application for Exemption/Annual Exemption Renewal for Franchise and Excise Tax, is a document submitted to the Tennessee Department of Revenue. It's used by entities to apply for or renew an exemption from the state's franchise and excise taxes under specific qualifying conditions.

Who needs to file a Tennessee 183 form?

Entities such as LLCs, LPs, LLPs, and business trusts seeking exemption from franchise and excise taxes for activities including farming, personal residence holding, affordable housing projects, venture capital fund operations, and several other specified categories need to file this form.

How often must the Tennessee 183 form be submitted?

The form must be submitted annually, by the 15th day of the fourth month following the end of the entity’s fiscal year. An initial application must also be filed to claim exemption for the first time.

What are the penalties for not timely filing the Tennessee 183 form?

Entities that fail to timely file an application for exemption or its renewal may be subjected to a $200 penalty.

What are the requirements for a venture capital fund to qualify for exemption?

A venture capital fund must be an LLC, LP, LLP, or business trust, operating exclusively for buying, holding, and/or selling securities, primarily in non-publicly traded companies. It is required that more than 50% of its capital comes from investments unaffiliated with the fund.

Can a family-owned non-corporate entity qualify for exemption?

Yes, family-owned non-corporate entities (FONCE) can qualify if at least 95% of ownership is by family members or trusts for their benefit, and the entity's activities are predominantly in producing passive investment income or farming.

What is required for an affordable housing entity to qualify for exemption?

To qualify, an affordable housing entity must be an LLC or LP formed exclusively to provide affordable housing, having received an allocation of low-income housing tax credits under IRC § 42, with each residential building having an extended low-income housing commitment.

Where does one submit the Tennessee 183 form?

The completed form along with any required documentation should be mailed to the Tennessee Department of Revenue at 500 Deaderick Street, Nashville, TN 37242.

Common mistakes

Filling out the Tennessee 183 form, a document crucial for entities seeking certain tax exemptions, can be a complex process. Mistakes can easily occur, which may result in the denial of the sought exemption. Here are ten common errors to watch for:

  1. Not checking the appropriate exemption category: The form accommodates various exemption qualifications such as Venture Capital Fund, Farming/Personal Residence, and others. Failing to check the right one or checking multiple that do not apply can lead to processing delays or outright rejection.
  2. Inaccurate information about the Tax Period Covered: Entities must precisely fill in the start and end dates of the tax period for which they're seeking exemption. Incorrect dates could invalidate the application.
  3. Providing a P.O. Box instead of a Physical Location: The form explicitly asks for a physical location; using a Post Office Box address goes against the instructions and can result in the form being returned.
  4. Incorrectly listing the FEIN or Account Number: An incorrect Federal Employer Identification Number (FEIN) or state-issued account number can lead to significant delays, as it hampers the Department of Revenue's ability to accurately process the exemption request.
  5. Omitting the Effective Date of Registration with the Secretary of State: This date is critical for verifying the entity's legal status and operation commencement within the state.
  6. Not completing the Disclosure of Activity section when required: Certain exemptions necessitate detailed disclosures about the entity's activities; overlooking this requirement can render the application incomplete.
  7. Failure to attach required documentation for specific exemptions: For instance, obligations like attaching the documentation filed with the Tennessee Secretary of State for an Obligated Member Entity or the approval received under 26 U.S.C. §§ 47 and 45D for a Qualified Low-Income Community Historic Structure Owner or Lessee are often missed.
  8. Not specifying the entity type correctly: The form delineates specific entity types eligible for each exemption. Misclassifying the entity can lead to the denial of the exemption.
  9. Overlooking the signature and date section: An unsigned form, or one without the appropriate titles and dates, is considered incomplete and will not be processed.
  10. Incorrectly listing the ownership percentages in the Organizational Structure section: This information must be precise, especially for exemptions relying on ownership by family members or other specified groups.

These mistakes, ranging from administrative oversights to substantive errors, underline the importance of thoroughness and accuracy when seeking exemptions under the Tennessee franchise and excise taxes. Entities are advised to carefully review the form instructions, ensure all relevant sections are fully completed, and attachments, where necessary, are included before submission. Doing so greatly increases the chances of a successful exemption application.

Knowing the common pitfalls associated with the Tennessee 183 form can empower entities to successfully navigate the exemption process, thereby avoiding unnecessary delays or the frustration of having to resubmit the application. It's not just about getting it done; it's about getting it done right.

Documents used along the form

When navigating the complexities of franchise and excise tax exemptions in Tennessee, particularly using the Tennessee 183 (FAE 183) form, several other documents often come into play. These essential documents support the exemption application or renewal process, ensuring compliance and meticulous record-keeping.

  • Affordable Housing Certification Form: This document is crucial for entities seeking exemption under the Affordable Housing provision. It substantiates the entity's claim to an allocation of low-income housing tax credits under IRC § 42, supporting the exemption application by demonstrating the entity's commitment and eligibility for providing affordable housing.
  • Disclosure of Activity: Required for entities applying for exemptions related to farming/personal residence or a family-owned non-corporate entity, this form provides detailed information about the entity's operations, including the nature of income and assets. It's essential for clarifying how the entity meets the specific criteria for these exemptions.
  • Documentation of Obligated Member Entity Status: For entities claiming exemption as an obligated member entity, this includes documents filed with the Tennessee Secretary of State that waive limited liability protection for all members or partners. It is critical for validating the entity's eligibility for the exemption by demonstrating full liability for debts, obligations, and liabilities.
  • Copy of Approval under 26 U.S.C. §§ 47 and 45D: Entities that own an interest in or are lessees of a qualified low-income community historic structure must attach this approval. This document is indispensable for entities claiming exemption based on their investment in qualified low-income community historic structures, evidencing federal recognition and eligibility for related tax incentives.

Understanding the interplay between the Tennessee 183 form and these associated documents helps navigate the exemption process coherently and efficiently. Each document plays a pivotal role in substantiating the exemption claims, ensuring entities meet the specific legal requirements for tax relief. The proper completion and submission of these documents underscore the importance of thorough preparation and adherence to regulations, safeguarding the entity's compliance with Tennessee's tax laws.

Similar forms

The Tennessee 183 form, specifically designed for the application and annual renewal of franchise and excise tax exemptions, shares similarities with various other documents across both state and federal levels, reflecting the diverse regulatory frameworks governing tax exemptions and compliance. Notable among these is the IRS Form 1023, used by organizations to apply for recognition of exemption under section 501(c)(3) of the Internal Revenue Code. Both forms serve as initial steps for entities to gain tax-exempt status, though the 183 form is state-specific and the 1023 pertains to federal tax exemptions, both require detailed information about the organization's purposes, activities, and financial structures to demonstrate eligibility for exemption.

Another analogous document is the IRS Form

Dos and Don'ts

When it comes to filling out the Tennessee 183 form for franchise and excise tax exemption or annual exemption renewal, it's important to pay close attention to detail. To assist you in this process, here is a list of do's and don'ts that you should consider:

  • Do read the instructions carefully before you start filling out the form to ensure you understand all requirements.
  • Do check all the boxes that apply to your situation, whether you're applying for a new exemption, renewal, or filing as a final statement.
  • Do provide accurate and complete information regarding your Federal Employer Identification Number (FE-step into the shoes of a paralegal))step into the shoes of a u.s.-based editor and make the sentence more active structure, step into the shoes of a paralegal)), account number, and dates that cover the tax period.
  • Do ensure that the entity's legal name and both physical and mailing addresses are correctly entered and match any official documents.
  • Do select the correct entity type that applies to your exemption claim, verifying that all specific requirements for that exemption are met.
  • Do not use P.O. Boxes where physical addresses are required, as this could lead to your application being denied or delayed.
  • Do not forget to attach any required documentation, especially if you're applying for exemptions that necessitate additional paperwork like the Obligated Member Entity or if you’re providing a Disclosure of Activity.
  • Do not leave any sections incomplete if they apply to your entity. Incomplete forms may be returned, causing delays in the processing of your exemption.
  • Do review your application for accuracy and completeness before signing. Remember, signing under penalties of perjury means you are attesting to the truthfulness of the information provided.

Taking these steps will help ensure that your Tennessee 183 form is correctly filled out and processed without unnecessary delays. It's always better to take your time and double-check everything than to rush and make mistakes that could have been avoided.

Misconceptions

Understanding the intricacies of the Tennessee Form FAE 183—Franchise and Excise Tax Application for Exemption/Annual Exemption Renewal—requires navigating through a series of misconceptions. As tax laws and exemptions can be complex, it's critical to clarify these misunderstandings to ensure entities are fully compliant and able to take advantage of applicable benefits.

  • Misconception 1: Any business entity can file for the exemptions listed on Form FAE 183. It's essential to understand that only specific types of entities—such as LLCs, LPs, LLPs, and certain trusts—qualify for the exemptions. Each exemption category has distinct criteria that must be met.

  • Misconception 2: Once an exemption is granted, it doesn't need to be renewed. Entities must renew their exemption annually by filing the FAE 183 by the 15th day of the fourth month following their fiscal year-end to maintain their exempt status.

  • Misconception 3: The FAE 183 form is only for claiming new exemptions. In reality, the form is used for both applying for new exemptions and renewing existing ones. There's also a section for finalizing an entity's tax obligations upon termination.

  • Misconception 4: Filing for an exemption automatically grants an extension for franchise and excise tax filings. While there's a box to indicate if the taxpayer has filed for a federal extension, filing Form FAE 183 does not itself extend the deadline for franchise and excise tax obligations.

  • Misconception 5: Any agricultural activity qualifies for the farming exemption. The specific criteria—such as the percentage of activity and asset use in farming—must be met. Additionally, a significant portion of the ownership must be held by natural persons or trusts for their benefit.

  • Misconception 6: The Affordable Housing exemption applies to any housing project. This exemption specifically requires the entity to have received an allocation of low-income housing tax credits under IRC § 42, along with other specific requirements.

  • Misconception 7: All nonprofits or charity entities are exempt under the FAE 183. Nonprofit status does not automatically qualify an entity for exemption under the categories outlined in the Form FAE 183. Each exemption has specific qualifications that must be met, unrelated to nonprofit status.

  • Misconception 8: The form is only necessary for entities operating within Tennessee. The requirement to file the FAE 183 applies to any eligible entity that meets the definition of doing business in Tennessee or owning property that would otherwise be subject to the state's franchise and excise taxes, regardless of where the entity is based.

Clarification of these misconceptions ensures entities are better prepared to navigate Tennessee's tax exemption process accurately. It is crucial for entities to carefully review the form's instructions and consult with tax professionals to ensure compliance and the proper application of exemptions.

Key takeaways

Filling out and using the Tennessee 183 form, officially known as the Tennessee Department of Revenue Franchise and Excise Tax Application for Exemption/Annual Exemption Renewal, requires attention to detail and comprehension of eligibility for different exemptions. The form serves entities seeking exemption from the franchise and excise taxes under specific conditions. Here are five key takeaways:

  • Entities must identify the type of exemption they are applying for by checking the appropriate box. These exemptions include options for venture capital funds, farming/personal residence entities, affordable housing projects, obligated member entities, family-owned non-corporate entities, diversified investment funds, asset-backed securitization entities, security for third-party indebtedness, facilities owned by the United States Armed Forces, and qualified low-income community historic structure owners or lessees.
  • Applications can be for a new exemption, renewal of an existing exemption, or a final application if the taxpayer has filed for a federal extension. Information required includes the tax period covered, FEIN, account number, effective date of registration with the Secretary of State, and legal and physical addresses.
  • Specific criteria must be met for the selected exemption type. For example, a farming/personal residence must have at least 66.67% of its activities in farming and 95% of its voting rights owned by natural persons who are relatives or trusts for their benefit. Each exemption type has distinct eligibility requirements.
  • The Disclosure of Activity section is a crucial part of the application for entities seeking exemptions related to farming/personal residence or a family-owned noncorporate entity. It requires detailed information regarding the organizational structure, sources of income, and, where applicable, details about the property used for farming or personal residence.
  • Applications and renewals must be submitted by the 15th day of the fourth month following the end of the entity's fiscal year. Timely submission is essential to avoid a penalty. The Tennessee Department of Revenue encourages applicants to ensure all information provided is accurate and complete to avoid processing delays or denials.

Entities seeking exemption under these provisions should meticulously review the eligibility criteria for their desired exemption category and ensure the completeness of the Disclosure of Activity section, if applicable. The completed form, along with any required attachments, should be mailed to the Tennessee Department of Revenue. This process helps entities accurately claim exemptions, ensuring compliance with state tax laws.

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