How to Complete Tennessee Form FAE-183: FONCE, OME, and Renewal

Tennessee Form FAE-183 is the application a qualifying business files with the Tennessee Department of Revenue to claim — and each year renew — its exemption from the state’s franchise and excise taxes. The form is due by the 15th day of the fourth month after the close of the entity’s fiscal year, and it must be refiled every year to keep the exemption in place.¹ You can download it from the Department of Revenue’s franchise and excise tax forms page or submit it electronically through the Tennessee Taxpayer Access Point (TNTAP) without creating an account.²

Who Files FAE-183

Tennessee Code Annotated Section 67-4-2008 lists every entity type exempt from franchise and excise tax. Some of those exemptions apply automatically. FAE-183 is for the ones that don’t — the Department of Revenue marks those with an asterisk on its exempt entities page.² Three categories cover most filers.

Family-Owned Non-Corporate Entities (FONCEs)

A FONCE is an LLC, LP, or LLP that meets two tests. At least 95 percent of ownership must be held by members or partners who are relatives of one another, or by trusts or estates of deceased family members. And at least 66.67 percent of the entity’s activity must come from passive investment income, farming, or a combination of the two.³ An entity with no income for the year automatically satisfies the passive income test.¹

Obligated Member Entities (OMEs)

An OME is an LLC, LP, or LLP in which every member or partner is fully liable for all debts and obligations of the entity, having waived limited liability protection.³ The waiver documentation must be filed with the Tennessee Secretary of State on or before the first day of the first taxable year for which the exemption is claimed, and a copy of that same documentation must be attached to the FAE-183 sent to the Department of Revenue.¹

Affordable Housing Entities

LLCs or limited partnerships organized exclusively to provide affordable housing that receive the federal Low-Income Housing Tax Credit qualify to file FAE-183.² Have your project name and regulatory agreement details ready when you sit down with the form.

Completing the Form

The form has a general information header at the top, then separate parts for each exemption category. You fill in the header and only the part that matches your entity type.

Header

Enter the entity’s legal name, Federal Employer Identification Number, and Tennessee Secretary of State control number. If you don’t have the control number to hand, the Secretary of State’s online business entity search will return it. Check the box for initial application or annual renewal, and enter the fiscal year you are claiming.

FONCE Part

Start with the Organizational Structure table. List each member or partner by full name, ownership percentage, and relationship to the other owners. Social Security numbers are not requested; the section is built around proving the family-relationship requirement.¹

Then split income into two categories. Under Passive Investment Income, enter gross amounts from sources like interest, dividends, rents, royalties, and annuities. For capital gains on stock or securities, enter the net gain; if you had a capital loss, enter zero. Under Non-Passive Income, list each source and its gross amount. The Department uses these figures to verify the 66.67 percent passive-or-farming threshold.¹

OME Part

Check the box confirming that all members or partners are fully liable for the entity’s debts, and attach the liability waiver documentation already filed with the Secretary of State. If you have not yet filed that documentation with the Secretary of State, do so before submitting FAE-183. Without it on file, the exemption cannot be granted.¹

How to Submit It

Electronic filing through TNTAP is the fastest option and does not require an account or login.² From the TNTAP homepage, use the exemption filing links, follow the prompts, and upload the completed form with any attachments. Save or print the confirmation page.

To file on paper, mail the form to:

Tennessee Department of Revenue
500 Deaderick Street
Nashville, TN 37242¹

Paper takes longer to process. If you mail it, use certified mail or a tracked delivery service so you can prove it went out before the deadline.

When It’s Due

FAE-183 is due by the 15th day of the fourth month following the end of your fiscal year. For a calendar-year entity, that’s April 15.¹ Entities that request a federal income tax extension automatically get a Tennessee extension too.² If your entity doesn’t file a federal return, request a Tennessee-only extension on Form FAE-173 before the original due date.

Renewing Each Year

An approved exemption is not permanent. You have to refile FAE-183 every year to certify that the entity still meets the statutory requirements, and the renewal uses the same form as the initial application.² The renewal deadline matches the original: the 15th day of the fourth month after fiscal year-end.

If something disqualifying happens mid-year — a FONCE’s family ownership slipping below 95 percent, an OME’s members reinstating limited liability — the entity is taxable for the whole year. In that case, file Form FAE-170 electronically and pay any tax owed by the original due date.¹

Penalties for Filing Late

Missing the FAE-183 deadline can bring a $200 penalty.¹ If the Department later determines the entity wasn’t actually exempt and should have been paying the taxes, the consequences are heavier: a 5 percent penalty on the unpaid tax for each month or partial month the payment is delinquent, capped at 25 percent, with interest accruing on top.⁴ Filing a few days early is cheap insurance.

1
Tennessee Department of Revenue. FAE 183 – Application for Exemption/Annual Exemption Renewal
2
Tennessee Department of Revenue. Entities Exempt from Franchise and Excise Tax
3
Justia Law. Tennessee Code 67-4-2008 – Exemptions
4
Tennessee Department of Revenue. GEN-16 – Penalties and Interest