1. Why does the Department of Revenue require electronic filing of various tax returns?
The recent change to require electronic filing of certain taxes is based on the Department of Revenue’s continuing effort to increase efficiency in the collection process and is authorized by 2012 Public Chapter No. 657 (codified at TENN. CODE ANN. § 67-1-115 (Supp. 2012)). This law authorizes the Commissioner of Revenue to require that any return, including any payment that accompanies the return, be submitted electronically. This Act applies to any tax, regulatory, or other provision of law administered by the Department, including the Tennessee franchise and excise taxes, sales and use tax, and the professional privilege tax. Additionally, the Commissioner is authorized to impose, or allow third-party service providers to impose, a surcharge or convenience fee upon taxpayers making payment using a credit card. TENN. CODE ANN. § 67-1-703 (2011).
The electronic filing requirement permits the Department to process tax returns and payments more quickly and more efficiently. It also results in a significant cost savings to the state, which benefits all Tennessee residents.
2. Are there any exceptions to the electronic filing requirement?
If the electronic filing requirement creates a hardship upon the taxpayer, the taxpayer may file any return, including any payment that accompanies the return, in paper form. Generally, hardship exceptions will include taxpayers who do not possess a computer; taxpayers who do not have access to the Internet; and taxpayers who are adherents of a religious order that prohibits the use of computers and related technology. We provide computers in our Nashville office, as well as in all of our regional offices for taxpayers to use in filing their return.
While the Commissioner is authorized to require that any such paper filing be accompanied by a manual handling fee, no fee is being charged at this time.
If you wish to be considered for a hardship exemption, please submit a letter explaining the hardship to: Tennessee Department of Revenue, Electronic Commerce Unit, 500 Deaderick St., Nashville, TN 37242.
3. If I provide my bank account information with an electronic payment, what does the Department do with that information?
The Department’s electronic check payment process requires the taxpayer to create an electronic payment by inputting the bank routing number and bank account number, along with the amount of the payment. This process utilizes only the information that is currently found on the front of the taxpayer’s check.
If a payment is made by paper check, the Department keeps an electronic image of that check (which shows the account number and other information) for several years, as required by statute. If, on the other hand, the taxpayer inputs the bank account information to create an electronic payment, the Department retains the information only if the taxpayer files monthly or quarterly sales tax returns. For monthly and quarterly electronic sales tax filers, the bank account information is retained only until the next return is filed. For all other taxpayers who file electronically, the bank account information is not retained by the Department after the payment is processed.
4. If I provide my bank account information with an electronic payment, can the Department take money out of my account whenever it wants to?
No. The Department cannot levy on a taxpayer’s bank account except as authorized by law. The Department generally must follow strict procedures, including providing notice to the taxpayer, before initiating a levy. Obviously, an unwarranted levy would be contrary to law and is not a practice of the Department.
5. Is paying electronically any different than paying by paper check?
Payment by paper check is essentially the same process as paying electronically. Many of the challenges we face at the Department of Revenue are related to technology and its fast pace of development. The processing of bank payments, for industry and government both, has changed dramatically over the last few years. As a matter of industry practice, many transactions clear with no actual paper check ever being deposited. Rather, for those transactions that are still paid by paper check, the bank routing number and bank account number are read by a scanner and an “electronic check” is created and transmitted to the bank so that an account can be debited. Thus, payment by paper check is essentially the same process as described above.
6. If I file today, do I have to make a payment today?
No. You have the option of filing your return without a payment. However, you are required to make payments using an electronic payment option by the due date to avoid the assessment of penalty and interest. This would mean either remitting payment by ACH Debit or ACH Credit.
7. Is all the information I provide confidential?
Yes. Taxpayer confidentiality provisions in Tenn. Code Ann. Section 67-1-1702 state that all returns, tax information, and tax administration information shall be confidential. In addition, except as authorized in the law, no officer or employee of the state or any other person who has access to such information can disclose any tax information obtained as a result of performance of the officer or employees duties or obtained by any other means.
Additional questions? Contact the Department’s Electronic Commerce Hotline at (866) 368-6374 or (615) 253-0704.