Legislation ensures marketplace facilitators collect sales tax on behalf of third party sellers – Legislation was approved requiring marketplace facilitators to remit Tennessee sales tax on behalf of third party sellers. The new statute requires the facilitators to collect taxes based on the address where the sale is shipped or where the taxable service is performed.
Marketplace facilitators are defined as persons that facilitate the sale of tangible personal property or taxable services for third party sellers through physical or electronic platforms, regardless of whether they receive a fee for their services, and collect the payment from purchasers and transmit it to the sellers. Some of these businesses are already collecting the tax. The new law applies to those with sales exceeding $100,000 to consumers in Tennessee during the previous 12-month period under the budget implementation act. This threshold standard matches the benchmark which was upheld as constitutional by the U.S. Supreme Court in the landmark South Dakota v. Wayfair case regarding collection of online sales taxes. Marketplace facilitator laws are currently in place in 40 of the 45 states that collect sales taxes.
Legislation updates and clarifies Tennessee’s Prompt Pay Act governing construction industry — Legislation updating and clarifying Tennessee’s Prompt Pay Act governing payments between contractors, subcontractors and lenders was approved during the 2020 session of the Tennessee General Assembly. It helps ensure fair procedures are in place for contractors and subcontractors to recover payment for work completed under a contract, including adequate timing, notice, and penalty provisions. The legislation is the result of numerous negotiations between representatives in the construction and banking industries over the past two years.
The new law clarifies that all contractors may recover construction proceeds through an equitable action; sets interest rates for late payment in line with those applicable to the State of Tennessee purchases; and introduces a “stop work” notice procedure to allow contractors and subcontractors to stop work when they are not paid per the contract agreement. It also provides a “Demand for Reasonable Assurances” to ensure the owner has obtained sufficient funding to pay for all labor and materials on a project. Finally, the legislation clarifies the construction statute of repose applies to litigation and arbitration and affirms that limitations of liability do not violate public policy.
Bill modernizing banking and financial institution regulations becomes law — Legislation modernizing regulations for financial and banking institutions became law this year. The new statute decreases from permanently to seven years the length of time that a bank must maintain some records; requires documentation of funds deposited to an account held by spouses if the funds are held in tenancy in entirety; removes the sunset provision of the elderly and vulnerable adult financial exploitation prevention act; and removes residency requirement for bank directors. Other changes include removing certain requirement for out-of-state banks to establish or acquire branches in Tennessee, removing certain residency requirements for state directors. and requiring stockholder meetings regarding mergers of state banks must be publicized in the newspaper.
Banking and trust laws improved under legislation passed this year – Legislation improving the state’s banking and trust laws were approved this year. Under previous law, the commissioner of the Department of Financial Institutions kept written agreements entered into with banks confidential, but federal agreements were disclosed to the public. This new law authorizes the public disclosure at the commissioner’s discretion of any written agreement jointly issued to a bank by the commissioner and the Federal Deposit Insurance Corporation (FDIC), or the Federal Reserve. In addition, the legislation makes a change to private trust companies. It allows a trust to hire an outside individual or entity to act as trustee to manage family private trust companies. Previously, it could only be a family member, causing hardship if there is not a qualified person to manage the trust.
Pilot program allows personal delivery devices on walkways — A bill allowing delivery robots to operate at low speeds on sidewalks and crosswalks in a pilot program in Tennessee has been approved by the Tennessee General Assembly. The robots won’t be able to exceed 10 miles per hour and must be equipped with a braking system to come to a controlled stop. The robots have sensors that stop them when approaching a person, animal, or item. They would only operate in pedestrian areas and must be clearly marked, including contact information. The new law does not preempt local governments’ ability to regulate the personnel delivery devices if necessary for public safety.