Tennessee Senate Bill SB0370

Tennessee 2025-2026 Regular Session

• Introduced: 1/28/25

Caption

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

Summary

SB0370 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 or seller separately identifies taxes or fees on a customer’s invoice, the card network would have to deduct those amounts from the fee base or provide a proportional rebate so the merchant is not charged interchange fees on the tax portion of the sale. The bill defines key terms such as credit card, debit card, electronic payment transaction, interchange fee, issuer, payment card network, and settlement. It applies to taxes and fees that are calculated as a percentage of the transaction amount and separately listed, including sales and use taxes, hotel occupancy taxes, alcoholic beverage taxes, and rental vehicle surcharge taxes. If a merchant cannot transmit tax or fee amounts at the time of sale, the bill allows later proof and requires the network to promptly credit the merchant’s settlement account.

Impact

The bill would add a new part to Tennessee Code Annotated Title 67 and create a state-law requirement governing how payment card networks calculate interchange fees for transactions involving separately stated taxes and fees. It would effectively shift the cost burden so merchants and sellers are not charged card network fees on amounts collected for the state or local government, and it would apply to a range of tax categories already found in Tennessee tax law. Violations would expose payment card networks to a civil penalty of up to $1,000 per violation, payable to the plaintiff, and require refunds of the surcharge to affected merchants or sellers. The act would take effect July 1, 2025.

Sentiment

Based on the bill text and the absence of committee transcripts or recorded votes, there is no direct evidence of debate or opposition in the provided materials. The measure appears to be framed as a merchant-relief and tax-administration bill, suggesting likely support from business interests and sellers who process card payments. Because the bill imposes new obligations on payment card networks and issuers, those entities would likely be the primary parties with concerns about compliance and revenue impacts.

Contention

The main point of contention is likely who should bear interchange fees on the tax portion of a sale: merchants and sellers, or payment card networks and issuers. The bill favors merchants by requiring deductions or rebates tied to separately stated taxes and fees, which could reduce network revenue and create operational burdens for card processors. Another possible issue is implementation, especially where merchants cannot capture tax amounts at the point of sale and must later submit proof for reimbursement. No specific objections or supporters are documented in the provided transcripts or votes.