Tennessee Code Title 6. Cities and Towns § 6-56-407

(1) Sales tax revenue collected and distributed by the state to the municipality shall be reduced by an amount mutually agreed upon by the comptroller of the treasury and the commissioner of revenue. The sales tax revenue reduction shall not exceed fifteen percent (15%) of the total amount due to the municipality in a fiscal year, until the municipality is in compliance with § 6-56-402;

(2) The amounts reduced as a penalty pursuant to this section shall be held in reserve by the department of revenue and allocated to the municipality after the municipality complies with § 6-56-402 as determined by the comptroller of the treasury.