Tennessee House Bill HB0967

Tennessee 2025-2026 Regular Session

• Introduced: 2/5/25
• Refer: 2/10/25

Caption

AN ACT to amend Tennessee Code Annotated, Title 67, relative to taxes and fees collected by merchants and sellers.

Summary

HB0967 would require payment card networks to exclude certain state and local taxes and fees from the amount used to calculate interchange fees on electronic payment transactions. In practical terms, when a merchant separately identifies taxes or fees on a customer’s invoice or payment demand, those amounts could not be included in the base on which card-network interchange fees are charged. The bill expressly covers taxes such as sales and use taxes, hotel occupancy taxes, alcoholic beverage taxes, and rental vehicle surcharge taxes, and it also applies to taxes imposed under Title 67, Chapter 3. The bill sets out two compliance methods for payment card networks: either deduct the tax amount at settlement or rebate the proportionate interchange fee amount. If a merchant cannot transmit tax or fee amounts at the time of sale, the network must accept proof later and promptly credit the merchant’s settlement account. The measure also creates a civil penalty of up to $1,000 per violation, payable to the plaintiff, and requires refunding the surcharge to the merchant or seller. The act would take effect July 1, 2025.

Impact

HB0967 would amend Tennessee Code Annotated Title 67 by creating a new part governing how interchange fees are calculated for electronic payment transactions involving separately stated taxes and fees. It would affect payment card networks, merchants, and sellers by shifting the fee base so that state and local taxes are excluded from interchange calculations, potentially reducing processing costs for businesses that collect taxes on behalf of the state or local governments. The bill also creates an enforcement mechanism through civil penalties and refund obligations for noncompliant payment card networks.

Sentiment

No committee transcripts or recorded votes were provided, so there is no direct evidence of debate, amendment activity, or partisan division in the available record. Based on the bill text alone, the measure appears business-friendly and merchant-oriented, with a clear consumer-payment processing focus rather than a tax-rate change. The absence of recorded opposition or support in the supplied materials limits any stronger conclusion about overall sentiment.

Contention

The main point of contention likely would be the allocation of interchange-fee costs between merchants and payment card networks, especially whether card networks should be required to exclude tax amounts from fee calculations and to provide rebates or credits after settlement. Merchants and sellers would likely support the bill because it reduces fees charged on tax pass-through amounts, while payment card networks and possibly issuers could object to the operational burden, compliance complexity, and revenue impact. Another possible issue is the bill’s enforcement structure, including the private civil penalty provision and the requirement to refund surcharges to merchants.