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Majority of $1.5B franchise tax refunds would flow out of Tennessee, new records show

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Majority of .5B franchise tax refunds would flow out of Tennessee, new records show


As Tennessee lawmakers take up final negotiations on a $1.9 billion franchise tax change package this week, new records obtained by The Tennessean show the landmark legislation was initially prompted by $15 million in valid franchise tax refunds sought by 24 businesses, and that if approved, a majority of the money would be headed out of state.

Gov. Bill Lee’s largest spending item this year is a proposal to change the method by which the state charges franchise taxes to businesses, eliminating the property tax calculation — a move that’s expected to cost the state $400 million in revenue beginning this year.

Lee’s proposal also includes $1.5 billion in refunds for up to 100,000 businesses which paid taxes based on the property measure over the last three years.

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While 81% of the estimated 100,000 businesses eligible for a refund are located primarily in Tennessee, 53% of the refund dollars would be headed out of state, according to a revenue department analysis included in the new records.

Administration officials have said the refunds are indispensable to avoid lawsuits and court-ordered penalties and have emphasized that refunds would go businesses of all sizes.

Of the 100,000 taxpayers who would be eligible for refunds, 29% are in real estate, 15% in manufacturing, 13% are in retail, 7% are in accommodations and food service, and 5% are in health care, the records show.

As a conference committee is expected to meet on the bill Tuesday morning at 10 a.m., House leadership is pushing for public disclosure of business names and refund amounts — something they say is a “make or break” to the deal — and only one year’s worth of refunds.

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Lee said Monday he opposes those transparency measures, and the Senate version does not include them. It remains unclear how much Lee’s family business, the Lee Company, would financially benefit from the refund, something critics of the deal regularly cite.

Administration officials have repeatedly said the change was prompted by more than 80 companies that approached the state seeking refunds. The Lee administration has declined to release details about the companies, letters indicating potential liability, or how much money companies sought in refunds from the state.

More: Tennessee declines to name 80 companies that prompted the $1.6B franchise tax change

New records obtained by The Tennessean in a records request to Lee’s office show that while 86 companies did file initial refund claims with the state, as officials have said, only 24 of the 86 paid franchise taxes based on the property measure and would be eligible for a refund under the Lee administration’s remedy. Of the $90 million in refunds the 86 companies requested, $15 million would go to the 24 eligible companies.

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“Most of the taxpayers that have already filed for a refund would not be eligible for a refund under the administration’s proposed remedy because they did not pay franchise tax on the property measure,” Lee spokesperson Elizabeth Johnson told The Tennessean in an email on Monday.

The first refund claims were filed in December 2022, and further claims were filed in 2023. Claimants are represented by the law firm Reed Smith LLC, according to the records, which include emails, a timeline and presentations and documents from both Lee’s office and the Department of Revenue.

Representatives from the Department of Revenue met with attorneys from Reed Smith prior to conducting the analysis, and continued those conversations while developing the reform proposal, according to a timeline of the legal challenge obtained by The Tennessean.

The Tennessee Department of Revenue has said that sharing information about the companies would violate state laws protecting taxpayer confidentiality. For example, email records show that in response to a Feb. 9 request from a Bloomberg Tax reporter for the total amount of refunds requested by companies, revenue spokesperson Kelly Cortesi responded that “state law prohibits us from disclosing this information.”

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Cortesi also cited state taxpayer confidentiality laws when asked for details by The Tennessean.

But while the Lee administration declined to disclose to the media the amount of refunds sought by the 86 companies, officials circulated fact sheets with that information to lawmakers, according to records obtained by The Tennessean.

Ten days after telling Bloomberg Tax that sharing the refund amount requested by companies would violate taxpayer confidentiality, the Department of Revenue shared handouts on the franchise tax reform that contained that exact information with lawmakers, according to an email sent by Lee’s Chief Counsel Erin Merrick.

“Revenue will share these handouts broadly with members,” Merrick wrote in an email to his deputies on Feb. 22. An early committee vote was initially set for the next week.

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Cortesi in a statement to The Tennessean for this story said the aggregate amount of refunds requested is not confidential.

“The Department of Revenue routinely prepares informational sheets for legislation for meetings with legislators, and we do not consider them to be private materials,” Cortesi told The Tennessean an email.

While the aggregate information for the 86 companies was shared with lawmakers, it was never publicly disclosed during committee hearings, via PowerPoint presentations to the public, or in other public comments. Officials only ever spoke generally about companies that would be eligible for a refund.

Instead, administration officials cited the more than 80 taxpayers that had already filed for franchise tax refunds while arguing the urgency of the reform. Officials never publicly said that while 86 companies had sought about $90 million in refunds, only 24 of the 86 that originally filed would be eligible for a refund, or that the refund amount to which they were entitled totaled $15 million.

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“The Department of Revenue has not misrepresented any information,” Cortesi told The Tennessean. “The department has consistently stated that approximately 100,000 taxpayers would be eligible for the remedy under the proposed legislation. This is only a portion of all franchise taxpayers.”

More: Tennessee Gov. Bill Lee opposes franchise tax transparency measure backed by House GOP

Vivian Jones covers state government and politics for The Tennessean. Reach her at vjones@tennessean.com or on X at @Vivian_E_Jones.



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Tennessee

I-24 reopens in Rutherford County after emergency shutdown

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I-24 reopens in Rutherford County after emergency shutdown


Update 2:45 p.m.

The Tennessee Highway Patrol said the emergency situation near I-24 in Rutherford County has been resolved and the interstate is in the process of reopening. Traffic is moving slowly as the scene clears. Drivers needing highway assistance can dial *847 (*THP).

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Authorities have shut down part of westbound I-24 in Rutherford County due to an ongoing emergency situation Wednesday afternoon.

Officials told NewsChannel 5 there is an armed individual who has barricaded themselves inside a home near the 9000 block of Manchester Pike.

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No hostages have been reported and officials added that the individual fired their gun into the air, but didn’t target anyone.

Law enforcement is working to negotiate with the individual to surrender and come out safely.

According to the Rutherford County Sheriff’s Office, I-24 westbound is closed from the Coffee County line to South Church Street. Nearby Highway 41 is also closed between Epps Mill Road and Big Springs Road.

The Tennessee SmartWay system reports police activity near mile marker 81, where all westbound lanes and the exit ramp are blocked.

Drivers are being directed to take Exit 97 toward Wartrace and follow U.S. Highway 231 back to I-24 in Murfreesboro as an alternate route.

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Authorities have not released additional details about the emergency situation.

Tenn. mom invites son’s organ recipients to do his favorite activity, dance

Here’s a beautiful story of how one mother turned her grief journey into a gathering of gratitude… and organ donation awareness.

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Robb Coles highlights a special event organized by Cari Hollis – whose 26-year old son Austin died two years ago. Austin agreed to be an organ donor – and that single gesture saved multiple lives.

Cari reached out to as many recipients she could find – several of whom traveled to Nashville for an emotional celebration in Austin’s honor. One woman – whose life was saved by receiving Austin’s lungs – put it simply: “He’s my angel”.

– Rhori Johnston





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New synthetic opioid ‘cychlorphine’ linked to 16 overdose deaths across East Tennessee

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New synthetic opioid ‘cychlorphine’ linked to 16 overdose deaths across East Tennessee


A newly identified synthetic opioid has been linked to at least 16 overdose deaths in East Tennessee, according to preliminary toxicology tests from the Knox County Regional Forensic Center.

Officials say the drug, N-propionitrile chlorphine, also known as cychlorphine, appeared in nine overdose deaths between late October and December. As of mid-January, the substance had been associated with seven additional deaths.

Authorities say the drug has been detected primarily in cases where other substances were present, including methamphetamine and fentanyl.

Chris Thomas, chief administrative officer and director of the Knox County Regional Forensic Center, said the drug has been appearing more frequently in toxicology reports, though officials are still working to understand how widely it has spread.

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“It’s showing up at an exponential rate and at this point, we don’t know if it’s a single batch and done with or if it’s the new future,” Thomas said.

Initial cases were identified in Knox County before spreading to several nearby counties, including Roane, McMinn, Campbell, Union, Anderson, Claiborne, and Sevier counties, according to forensic officials.

Dr. Darinka Mileusnic-Polchan, the center’s chief medical examiner, said cychlorphine is not approved for clinical use and has never been authorized for sale on the medical market.

“This isn’t a drug that has been approved for clinical use, and it’s never been clinically approved to be sold on the market,” said Dr. Darinka Mileusnic-Polchan, chief medical examiner at Knox County Regional Forensic Center. “We do know it’s more powerful than fentanyl and that naloxone, or Narcan, does not completely block the effects of the drug and multiple doses may be needed to prevent an overdose.”

She said early findings suggest the substance may be more potent than fentanyl. Mileusnic-Polchan also said naloxone, commonly known by the brand name Narcan, may require multiple doses to counteract overdoses involving the drug.

Researchers say cychlorphine is part of a group known as new synthetic opioids, or NSOs, laboratory-made opioids that differ structurally from fentanyl and its analogues.

According to the Center for Forensic Science Research and Education, the drug may have first appeared in China in 2024 before spreading to Europe, Canada, and the United States by mid-2025.

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The Knox County Regional Forensic Center first identified the substance in Tennessee in late November 2025 after it appeared in an overdose death in Roane County. Investigators later determined an earlier case in Knox County dated back to October.

Officials say the findings remain preliminary as investigators continue to study the substance and its role in overdose deaths.



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In final address, Gov. Bill Lee credits TN economic, innovation gains

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In final address, Gov. Bill Lee credits TN economic, innovation gains


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Tennessee Gov. Bill Lee touted the state’s numerous economic achievements in his final annual Governor’s Address hosted by the Nashville Area Chamber of Commerce, as he prepares to retire next year.

On stage at The Pinnacle March 10, Lee praised his administration’s work over the past seven years to lower poverty rates and expand industrial and economic diversity in the state.

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But he pointed out that he has a lot to look forward to after leaving public office, namely his large family.

“It’s the best part of my life,” he said, chuckling. “People often ask me what I’m going to do next. And I say, ‘Well I have 11 grandchildren.’”

Lee emphasized Tennessee’s declining poverty rates, increasing educational scores and ability to attract a plethora of high-paying businesses as wins during his administration.

“We’ve watched our poverty rate fall below the national average for the first time in the state’s history,” he said. “People in Tennessee have greater access to opportunity than they ever have before.”

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The number of economically distressed counties were “cut in half” in the last few years, thanks to increasing business opportunities, he said. “Distressed counties” is a designation of the nation’s poorest regions, according to the Appalachian Regional Commission.

“Our economy has attracted $55 billion in investment — just $11 billion this past year,” he said. “300,000 jobs created in our state in the last seven years.”

Lee called out companies like Starbucks, which announced on March 3 that the company’s southeastern U.S. corporate office is coming to Davidson County; In-n-Out, which is currently establishing a $125 million corporate hub in Franklin; software company Oracle, which is building a global headquarters on Nashville’s East Bank; Elon Musk’s xAi; Ford and more as drivers of prosperity in the state.

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“They’ve figured out that the business environment is here, and the culture is what they want for their people, and the opportunity exists for them to be more successful in our state than they might be across the country,” he said.

He also praised the Music City Loop, the privately funded tunneling project helmed by Musk’s The Boring Company to connect Nashville International Airport to the Tennessee State Capitol Building. Despite recent Metro Nashville opposition, Lee called the project an “innovative new transportation model to “move people…without charging taxpayer dollars.”

“It’s very exciting to me what they might [represent] for the future of transportation in our city and beyond,” he said. “Despite the political arguments about that, the pragmatic business argument for that is incredibly exciting.”

Lee closed the speech thanking business leaders for their support during the past seven years of his administration.

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“I could brag about this state for hours,” he said. “Because I’ve come to know her people, I’ve come to know her communities, her leaders, her uniqueness and her prominence, and I have been awed by what I’ve come to know in the past seven years. And I am honored. It’s been the highest honor of my life to be in the spot I am in.

“Our best days are ahead of us,” he said. “There will be a future governor that can (bring) better statistics, and better opportunity, and more hope for our people. And that makes me happy. There will be more, and there will be greater, and we together will share in what that looks like.”

Have a story to tell? Reach Angele Latham by email at alatham@gannett.com, or follow her on Twitter at @angele_latham



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