Legal Definitions - TAN

TAN stands for tax-anticipation note. It is a short-term obligation issued by state or local governments to finance current expenditures and usually matures once the local government receives individual and corporate tax payments.

• A city issues a TAN to pay for road repairs that need to be done immediately. The TAN will be paid back once the city receives tax payments from its residents and businesses.
• A county issues a TAN to cover the cost of a new school building. The TAN will be paid back once property taxes are collected from homeowners.

These examples illustrate how TANs are used by local governments to cover expenses before they receive tax revenue. It allows them to address urgent needs without having to wait for tax payments to come in.