Tennessee Department of Revenue clarifies professional privilege tax rules ahead of June deadline

On May 27, 2025, a government meeting focused on the Professional Privilege Tax in Tennessee highlighted key issues and clarifications regarding this tax, which affects licensed professionals in the state. The discussions aimed to address common misconceptions and provide guidance as the June 1 payment deadline approaches.

The meeting emphasized the importance of timely payments, encouraging individuals to utilize the TenTap system to set up their tax payments in advance. Officials noted that many taxpayers tend to wait until the last minute, which could lead to complications. They stressed that paying early is a prudent approach to avoid potential issues.

A significant point of confusion discussed was the rationale behind the Professional Privilege Tax, particularly why it exists despite other fees, such as FINRA fees. Officials clarified that the tax is mandated by the Tennessee legislature, and the Department of Revenue is responsible for its administration, not its creation. This distinction is crucial for understanding the obligations of licensed professionals.

Questions from attendees revealed further complexities. For instance, individuals managing their parents' finances were concerned about their tax obligations. Officials clarified that if a person holds a professional license, they are subject to the tax, regardless of their clients' relationship to them. This highlights the tax's focus on licensure rather than the nature of the work performed.

Another topic of interest was the treatment of multiple licenses. A participant inquired whether holding two licenses would result in double taxation. Officials confirmed that individuals would only pay for the applicable license, alleviating concerns about being overcharged.

The meeting also addressed military exemptions from the tax, noting that military personnel must actively communicate their exemption status each year, as the Department of Revenue does not have access to their military orders. This requirement ensures that eligible individuals are not billed incorrectly.

In conclusion, the meeting served as an important platform for clarifying the Professional Privilege Tax and its implications for licensed professionals in Tennessee. As the June 1 deadline approaches, officials encourage proactive engagement with the tax system to ensure compliance and avoid unnecessary complications. The discussions underscored the need for clear communication and understanding of tax obligations among Tennessee's licensed professionals.