Bass, Berry & Sims attorney Steve Jasper provided insight about the new Tennessee legislation taxing international money transfers. The Tennessee Senate has approved legislation, H.B. 2502 / S.B. 2166, that would tax international money transfers originating in the state, a move the State predicts will generate significant new revenue. As amended, the bill would impose a $10 fee per transfer and a 2% tax on amounts over $500, with proceeds allocated to the general fund, TennCare, and several education, workforce, housing, and child‑focused programs. If approved by the House, the measure would expand the range of services subject to Tennessee sales and use tax.
Steve raised concerns about the proposal’s constitutionality, noting that it applies only to transfers sent abroad. Steve said the tax “seems to be a clear violation of the foreign commerce clause,” explaining that it would “directly discriminate against and burden foreign commerce in favor of interstate commerce.”
Steve also cautioned that the tax would likely fall most heavily on individuals with fewer alternatives for sending money internationally. “Unfortunately, this tax will likely mostly impact individuals who already have less access or means to transmit money than most,” he said. He further observed that because the measure does not apply to all transfer methods—such as those routed through banks or out‑of‑state providers—some taxpayers could avoid the tax altogether, raising questions about both equity and projected revenue reliability. Steve noted that such issues could invite legal challenges and potential refund exposure for the state if the law were invalidated.
The full article, “Tennessee Senate OKs Tax on International Money Transfers,” was published by Tax Notes State on April 21 and is available online (subscription required).