WASHINGTON, D.C. – The Financial Technology Association joined a broad coalition of trade associations in calling on Tennessee Governor Bill Lee to veto House Bill 2502, legislation that would impose a new tax on cross-border payments processed by licensed money transmitters in the state.
HB 2502 would expand Tennessee’s sales and use tax to include a $10 minimum tax plus 2% on each cross-border payment exceeding $500, a burden that falls squarely on working families, small businesses, military families, and others who rely on regulated payment channels for everyday needs. Critically, the bill targets only licensed money transmitters, exempting other financial institutions from the same requirements.
The coalition letter warns that higher costs will push consumers toward informal, unregulated transfer methods, reducing the law enforcement visibility and anti-money laundering safeguards that licensed providers are required to maintain. The U.S. Government Accountability Office found that similar legislation in Oklahoma led to lower transaction volumes and increased use of unregulated alternatives, undermining the very goals such a tax purports to advance.
The letter also raises constitutional concerns, noting that the Foreign Commerce Clause grants Congress — not states — the authority to regulate international commercial activity. With a federal remittance tax already included in the One Big Beautiful Bill, a state-level tax would add a second layer of burden on the same transactions.
Read the full joint trades letter here.
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