AN ACT to amend Tennessee Code Annotated, Title 4; Title 38; Title 39; Title 45; Title 47; Title 49 and Title 67, relative to money transmission.
SB2166 creates a new tax treatment for money transmitted from Tennessee to destinations outside the United States or its territories when the transfer is made by a business licensed under Tennessee’s Money Transmission Modernization Act. The bill amends the state tax code to impose a tax on those international money transmissions and directs the Department of Revenue to collect and administer the revenue under new procedures.
The bill also establishes a special account in the state general fund called the international money transmission tax fund. Money in that fund would be held until it becomes unencumbered, may be invested by the state treasurer while held, and may be refunded to the individual who paid the tax if an application is filed during a specified June window with identifying and payment documentation. After that, the revenue is to be distributed annually on July 1.
The distribution formula divides the revenue equally among four purposes: the state general fund; counties and metropolitan governments for capital improvements and infrastructure; a newly created K-12 education teacher compensation fund for teacher raises or bonuses; and the Tennessee Peace Officer Standards and Training Commission for additional pay supplements to law enforcement officers who complete in-service training and qualify for the existing statutory supplement. The bill also sets an effective date of January 1, 2027, while allowing rulemaking and forms to begin upon enactment.
The bill’s impact on state law is to add a new taxable category within Tennessee’s tax code for international money transmission and to create a dedicated revenue-accounting and distribution structure tied to that tax. It also creates a new teacher compensation fund in the state treasury and channels a share of the revenue to local governments and law enforcement pay supplements, affecting money transmitters, taxpayers who send funds abroad, local education agencies, counties, metropolitan governments, and public safety personnel.
The general sentiment appears cautiously favorable but not unanimous, as reflected by committee recommendations for passage with amendments in both the Senate Commerce and Labor Committee and the Senate Finance, Ways and Means Committee. The main points of contention likely involve the policy choice to tax international remittances, the administrative refund process, and how the revenue is allocated among general government, infrastructure, teacher pay, and law enforcement compensation. The recorded committee votes show some opposition, suggesting disagreement over either the tax itself or the spending priorities attached to it.
SB2166 amends Tennessee Code Annotated Title 67 to impose a new tax on money transmitted from Tennessee to locations outside the United States or its territories by licensed money transmitters. It creates a special international money transmission tax fund, establishes refund procedures, and directs annual distributions to the general fund, local governments for infrastructure, a new teacher compensation fund, and POST for law enforcement pay supplements. The bill also has conforming implications for Titles 4, 38, 39, 45, 47, 49, and 67, and it takes effect for most purposes on January 1, 2027.
The bill appears to have received mixed but generally supportive consideration in committee, with both committees recommending passage with amendments. The 7-2 and 8-3 votes indicate that while a majority favored advancing the measure, a meaningful minority had reservations. The available record does not include transcript debate, but the vote pattern suggests the bill was viewed as workable by supporters while still drawing concern from some members.
Likely areas of contention include whether Tennessee should tax international remittances at all, whether the tax could burden immigrant communities or consumers sending money abroad, and whether the refund mechanism is practical or burdensome. Another possible point of disagreement is the earmarking of revenue among competing priorities—general fund support, infrastructure, teacher compensation, and law enforcement supplements—since each allocation reflects a different policy objective. The committee opposition suggests at least some members were unconvinced by the tax policy, the revenue distribution scheme, or both.