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Payments in Lieu of Taxes: Industry

Reference Number: MTAS-1852
Reviewed Date: 11/22/2022

Revenue Class: Local Taxes

Fund: General

Account No.: 31520

Description: Property in this category is not subject to ad valorem taxes as the industrial development corporation is declared to be performing a public function on the behalf of the municipality. The corporation has the authority to negotiate and accept from its’ lessees payments in lieu of ad valorem taxes to the municipality, provided that these payments do not exceed ad valorem taxes otherwise due where the leased property is owned by an entity subject to taxation.

Authorization: T.C.A. § 7-53-305

Requirements or Restrictions: Cannot permit payment of in-lieu-of taxes to be waived or otherwise not assessed for a period of more than 20 years from the date of agreement (plus a reasonable construction or installation period not to exceed three (3) years) or contract unless both the commissioner of economic and community development and the comptroller of the treasury have made a written determination that it is in the best interest of the state to do so. T.C.A. § 7-53-305(b)(1).

Current Rate: N/A

Frequency of Payment: Annually.

Late Pay Penalty: Ten percent per annum interest from the due date plus reasonable attorneys’ fees. Other late penalties apply, but municipalities are not recipients of those penalties.

Exemptions: Minimum payments are not applicable to an eligible headquarters facility. Other exceptions apply to Memphis.

Collection: Corporation lessees submit on or before October 1 an annual report to the state board of equalization. A copy must be sent to the assessor on or before October 15.

Use Restrictions: None.