WASHINGTON, D.C. – The Financial Technology Association (FTA) today filed a declaratory judgment action in the Davidson County Chancery Court challenging the constitutionality of Tennessee House Bill 2502, a sweeping new tax on cross-border payments. The tax imposes significant costs on consumers and businesses that send funds to friends, family, vendors, or business associates abroad and runs afoul of the dormant Commerce Clause and the Import-Export Clause of the U.S. Constitution.
“When a state singles out international payments for special taxation, that is unconstitutional, plain and simple,” said Penny Lee, President and CEO of the Financial Technology Association. “The dormant Commerce Clause exists precisely to prevent this kind of unilateral state action. Tennessee consumers sending money to friends and family or business owners paying global vendors or suppliers should not face a higher cost simply because a state decided to tax the way they transact.”
Every year, millions of Tennessee residents send money internationally for a variety of reasons: to help a loved one serving abroad in the military, support a child studying or working overseas, handle business expenses such as paying foreign vendors, suppliers, or contractors, make donations to religious or non-profit organizations, or help friends and family members abroad. Tennesseans often opt to use licensed state money transmitters to facilitate these payments cheaply, quickly, and securely, because they value the accessibility of digital financial (or fintech) tools.
Sweeping New Tax Would Harm Tennessee Consumers and Businesses
On May 21, 2026, Tennessee enacted legislation imposing a $10 fee per international money transmission, plus an additional 2% fee on any amount over $500. The tax applies to money transmitted from a location originating in Tennessee to a location outside of the U.S. by entities licensed under the Money Transmission Modernization Act.
New Tax Is Unconstitutional
FTA’s filing today seeks a declaratory judgment that this new tax on cross-border payments is unconstitutional and asks the Court for a permanent injunction against the enforcement of that tax legislation. The U.S. Constitution’s dormant Commerce Clause prohibits states from discriminating against foreign commerce. Under U.S. Supreme Court precedents, a law that on its face discriminates against foreign commerce is presumptively unconstitutional, or “virtually per se invalid.” HB 2502 is a facial violation of the dormant Commerce Clause as it singles out transmissions that cross international lines and imposes a tax on them. Additionally, HB 2502 flouts the prohibition on unilateral state taxation of exports under the Import-Export Clause of the U.S. Constitution.
During debate on the bill, FTA worked to amend it to reflect current federal law and joined other trade associations in urging the Governor to veto it. The Act takes effect on January 1, 2027.
Access FTA’s full legal filing here. For more information, read “Just the Facts: Cross-Border Payments.”
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The Financial Technology Association (FTA) is a network of fintech industry leaders shaping the future of finance. We champion financial innovation and advocate for policies that expand competition, access, and opportunity.