Chapter 1
General Provisions

Part 1
Miscellaneous Provisions

67-1-101. Liberal construction of title — Incidental powers of commissioner — Chapter definitions.

  1. It is declared to be the legislative intent that this title be liberally construed in favor of the jurisdiction and powers conferred upon the commissioner of revenue.
  2. The commissioner shall have and exercise all such incidental powers as may be necessary to carry out and effectuate the objects and purposes of this title.
  3. As used in this chapter, unless the context otherwise requires:
    1. “Commissioner” means the commissioner of revenue; and
    2. “Department” means the department of revenue.

Acts 1919, ch. 1, § 16; 1921, ch. 113, § 20; impl. am. Acts 1923, ch. 7, §§ 2, 19, 24, 25; Shan. Supp., § 809a27; mod. Code 1932, § 1462; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; Acts 1978, ch. 599, § 3; T.C.A. (orig. ed.), § 67-107.

Cross-References. Rulemaking by commissioner, § 67-1-1439.

Law Reviews.

Re-examining the Constitutionality of an Income Tax in Tennessee (Robert E. Cooper Jr.), 28 Tenn. B.J. 14 (1992).

Statutory Tax Penalties and Equitable Relief: The Common Law Breaks Down, 22 Mem. St. U.L. Rev. 755 (1992).

Comparative Legislation. General taxation provisions:

Ala.  Code § 40-1-1 et seq.

Ark.  Code § 26-1-101 et seq.

Ga. O.C.G.A. § 48-1-1 et seq.

Ky. Rev. Stat. Ann. § 131.010 et seq.

Miss.  Code Ann. § 27-1-1 et seq., § 27-3-1 et seq.

Mo. Rev. Stat. § 136.010 et seq.

N.C. Gen. Stat. § 105-1 et seq.

Va. Code § 58.1-1 et seq.

Cited: Southern R. Co. v. Clement, 57 Tenn. App. 54, 415 S.W.2d 146, 1966 Tenn. App. LEXIS 199 (Tenn. Ct. App. 1966); State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).

Collateral References. 71 Am. Jur. 2d State and Local Taxation § 1 et seq.

84 C.J.S. Taxation § 7 et seq.

Taxation 371

67-1-102. Powers and duties of commissioner and department of revenue.

  1. The commissioner has the powers and shall perform the duties conferred and imposed in this chapter in addition to such other powers and duties as may be conferred and imposed upon the commissioner by law. The commissioner is vested with power to prescribe rules and regulations not inconsistent with law and to prepare such forms as the commissioner may deem proper for the administration of the duties of the commissioner's office.
  2. The department has the power to:
    1. Administer the assessment and collection of all state taxes, except those for which responsibility is expressly conferred by statute upon some other officer or agency;
    2. Administer the assessment and collection of privilege taxes;
    3. Receive state revenues collected by county officials and make and retain records of such receipts;
    4. Investigate the tax systems of other states, and formulate and recommend to the governor such legislation as may be deemed expedient to prevent evasion of taxes, secure just and equitable taxation and improve the system of taxation in the state;
    5. Examine, at any and all times, the accounts of any private corporation, institution, association or board receiving appropriations from the general assembly;
    6. Require a complete record of the officers, assistants and employees appointed by the commissioners of the various departments, and require their salaries to be in conformity with the scale authorized;
    7. Procure from any department or agency of the state, or any of its political subdivisions, a copy of the complete record maintained by it of any convictions for violation of any criminal laws by any person who has made application to the department for employment, for the exclusive use of the department in screening the applicant to determine suitability for an appointment in the department;
    8. Compromise tax liabilities upon such terms as, in the commissioner's opinion, may seem to be in the best interests of the state; provided, that either the comptroller of the treasury or the attorney general and reporter may require that such compromises or any class of such compromises be subject to the comptroller's or attorney general's prior review and written approval. The commissioner may enter into agreements in connection with the compromises as may be necessary to effectuate the purposes of this subsection (b);
    9. Issue letter and revenue rulings at its discretion. A reasonable fee, not to exceed ten thousand dollars ($10,000) for expedited rulings requested pursuant to § 67-1-109(d) and not to exceed five hundred dollars ($500) for all other rulings, may be set and prescribed by the commissioner for issuing revenue and letter rulings; and
    10. Enter into a contract to participate in the multistate tax commission joint audit program.
  3. If a taxpayer challenges an assessment of taxes levied by local government that has been paid to the department, the commissioner shall notify the appropriate agencies of local government of such challenge, if the local amount in dispute exceeds twenty-five thousand dollars ($25,000) per county or city.

Acts 1921, ch. 113, § 2; 1923, ch. 7, §§ 12, 19, 24; 1923, ch. 106, § 1; Shan. Supp., §§ 373a44, 373a56, 809a8; Code 1932, §§ 269, 1478; Acts 1933, ch. 92, § 1; 1937, ch. 33, §§ 50, 51; 1937, ch. 291, § 1; 1945, ch. 57, § 1; 1947, ch. 17, § 3; C. Supp. 1950, §§ 255.50, 255.51 (Williams, §§ 255.53, 255.54, 269); modified; impl. am. Acts 1959, ch. 9, § 14; Acts 1965, ch. 5, § 1; 1965, ch. 154, § 1; 1970, ch. 500, § 2; 1970, ch. 559, § 4; 1973, ch. 151, § 1; 1973, ch. 368, § 1; 1973, ch. 373, § 1; 1977, ch. 106, § 1; 1978, ch. 531, § 1; 1978, ch. 599, § 1; 1980, ch. 460, § 1; 1981, ch. 34, § 1; 1983, ch. 148, § 1; T.C.A. (orig. ed.), §§ 4-305, 4-306, 67-101, 4-3-1903; Acts 1985, ch. 214, § 1; 1988, ch. 562, § 3; 1989, ch. 273, § 1; 2009, ch. 530, § 95; 2011, ch. 449, § 1; 2014, ch. 854, § 1.

Amendments. The 2014 amendment, effective January 1, 2015, rewrote the first sentence of (b)(8) which read: “Compromise tax liabilities, with the written approval of the comptroller of the treasury and the attorney general and reporter, upon such terms as, in their opinion, may seem to be in the best interests of the state.”

Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.

Cross-References. Applicability of administrative procedures provisions to commissioner of revenue, § 4-5-106.

Department of revenue, organization, title 4, ch. 3, part 19.

Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 963.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

Cited: Holiday Inns, Inc. v. Olsen, 692 S.W.2d 850, 1985 Tenn. LEXIS 603 (Tenn. 1985).

NOTES TO DECISIONS

1. Scope of Section.

The commissioner cannot enlarge the scope of a taxing statute by regulation, and rules contrary to the express directives of a taxing statute are void. Covington Pike Toyota, Inc. v. Cardwell, 829 S.W.2d 132, 1992 Tenn. LEXIS 221 (Tenn. 1992), superseded by statute as stated in, Reimann v. Huddleston, 883 S.W.2d 135, 1993 Tenn. App. LEXIS 756 (Tenn. Ct. App. 1993).

2. Rules and Regulations.

The commissioner was empowered under T.C.A. § 67-1-102 to promulgate a rule to regulate the payment of taxes. Dacco, Inc. v. Huddleston, 891 S.W.2d 920, 1994 Tenn. App. LEXIS 523 (Tenn. Ct. App. 1994).

67-1-103. Study of tax laws — Report.

  1. The commissioner shall make a careful study and investigation of the tax laws of other states.
  2. It is the commissioner's duty to prepare and transmit to the general assembly on the first day of its organizational session a report of the commissioner's work and the work of the state board of equalization, and to make such recommendations as the commissioner deems best for the interest of the state.

Acts 1921, ch. 113, § 2; impl. am. Acts 1923, ch. 7, §§ 19, 24; Acts 1923, ch. 106, § 1; Shan. Supp., § 809a8; Code 1932, § 1478; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; Acts 1965, ch. 5, § 1; 1965, ch. 154, § 1; 1970, ch. 500, § 2; 1970, ch. 559, § 4; 1973, ch. 151, § 1; 1973, ch. 368, § 1; 1973, ch. 373, § 1; 1977, ch. 106, § 1; 1978, ch. 599, § 1; 1980, ch. 460, § 1; 1981, ch. 34, § 1; 1983, ch. 148, § 1; T.C.A. (orig. ed.), § 67-101; Acts 1984, ch. 832, § 1.

67-1-104. Tax administration fund.

  1. There is created, in the offices of the commissioner and the state treasurer, a special fund to be designated as the tax administration fund, to be kept separate and apart and used to defray the expenses incurred under the tax laws designated in this chapter.
  2. All special appropriations and/or allowances for administration set out in §§ 4-7-112, 67-2-117, 67-2-118, 67-4-1025, 67-8-210, 67-8-401, and 67-8-403 and all other tax laws, the administration of which is entrusted to the commissioner, unless otherwise specifically provided, shall be paid, when and as capable of identification, into the tax administration fund, without deductions for any purpose whatsoever. All provisions of §§ 4-7-112, 67-2-117, 67-2-118, 67-4-1025, 67-8-210, 67-8-401, and 67-8-403 in conflict with the provisions of this section shall yield to this section.
  3. The expenses arising out of the enforcement of any such tax law, the administration allowance for which has been paid into the tax administration fund, shall be paid from the fund, and no part of such expense shall be paid out of the general fund, unless and until earmarked tax administration funds have been exhausted.
  4. No funds earmarked by this section shall be used except in accordance with the limitations and stipulations of the general appropriations act, unless the governor, state treasurer and comptroller of the treasury certify that an emergency exists and define the exact amount necessary to meet the emergency. The governor, state treasurer and comptroller of the treasury have the right to pass such funds to the general fund whenever they see fit and proper.

Acts 1933, ch. 75, §§ 1-4; mod. C. Supp. 1950, §§ 1811.1-1811.5; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), §§ 67-108 — 67-111.

67-1-105. Hearings by commissioner.

    1. In the absence of any other provisions, and except as may otherwise be provided by law, whenever any person is aggrieved and desires a hearing with respect to the final resolution of any issue or question involved in connection with either an application for and entitlement to the issuance of, or the proposed revocation of, any certificate, license, permit, privilege or right, or relating to the confiscation of any property, or any other adverse action proposed or taken to implement any revenue regulatory or registration law administered by the commissioner, not including those laws relating to assessments or levies of taxes, fees, fines, penalties, interest, or the waiver of penalties, such person shall, upon written request made within ten (10) days of the action complained of, be afforded an opportunity for a formal hearing before the commissioner.
    2. Such hearing shall be scheduled within a reasonable time following such request and shall be held after reasonable notice is given in writing by the commissioner to the person aggrieved and requesting such hearing, and such notice shall include a statement of the time, place and nature of the hearing.
    3. Any person afforded such a hearing may respond in person or by attorney, may submit appropriate responsive pleadings, and may present evidence and argument on all issues or questions involved.
    1. The commissioner may personally hold such hearings as the commissioner may deem proper.
    2. In addition to holding hearings, the commissioner is authorized to designate a hearing officer who may hold such hearings in the place of and in the absence of the commissioner. This authority to designate a hearing officer is also extended to include the conduct of any hearing authorized to be held under any other law. Such hearing officer shall be deemed to be and have the same authority as assistants to the commissioner as provided in § 4-3-1901.
    1. The commissioner, or any hearing officer designated by the commissioner, may utilize prehearing conferences to simplify or clarify the issues or questions involved and to expedite disposition of a contested denial or revocation of any certificate, license, permit, privilege or right, or any other adverse action or determination of the department, except such as may be specifically excepted from review in this manner.
    2. Unless otherwise precluded by law, informal disposition may be made of any contested action, issue or question by an agreed settlement or consent order.
    1. At the conclusion of any formal hearing or prehearing conference, or within a reasonable time thereafter, the commissioner shall issue such orders as, in the commissioner's discretion, the pleadings, evidence and argument justify.
    2. If a formal hearing is held by a hearing officer, as authorized in this section, the hearing officer shall make findings of fact, conclusions of law and proposed settlements or orders based thereon for submission to the commissioner within a reasonable time thereafter. If a prehearing conference is held by a hearing officer, as authorized in this section, the hearing officer may make such findings, conclusions and proposed settlements or orders if the circumstances warrant. If the commissioner concurs, the commissioner shall issue the same finding, conclusion, proposed settlement or order made by the hearing officer; or the commissioner may, upon review of the record, make such findings and conclusions and issue such orders as, in the commissioner's discretion, the record justifies.

Acts 1921, ch. 113, § 2; impl. am. Acts 1923, ch. 7, §§ 19, 24; Acts 1923, ch. 106, § 1; Shan. Supp., § 809a8; Code 1932, § 1478; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; Acts 1965, ch. 5, § 1; 1965, ch. 154, § 1; 1970, ch. 500, § 2; 1970, ch. 559, § 4; 1973, ch. 151, § 1; 1973, ch. 368, § 1; 1973, ch. 373, § 1; 1977, ch. 106, § 1; 1978, ch. 599, § 1; 1980, ch. 460, § 1; 1981, ch. 34, § 1; 1983, ch. 148, § 1; T.C.A. (orig. ed.), § 67-101.

Law Reviews.

Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).

Attorney General Opinions. If a contested case is heard by an administrative judge or hearing officer appointed by the commissioner of revenue under the authority of T.C.A. § 67-1-105(b)(2), the conduct of the contested case is governed by the provisions of the Uniform Administrative Procedures Act applicable to proceedings conducted by an administrative judge or hearing officer sitting alone; in those cases, the hearing officer is required to issue an initial order, which is reviewable by the commissioner, OAG 02-071 (5/29/02).

T.C.A. §§ 4-5-301(a)(1) and 4-5-314(a) do not apply when the commissioner elects to appoint an administrative judge or hearing officer to hold a contested case hearing sitting alone and in the absence of the commissioner, OAG 02-071 (5/29/02).

67-1-106. Optional reporting periods.

  1. Upon written request, the commissioner has the discretion to authorize a person to file tax returns and pay taxes collectible by the department on an optional reporting period that is either shorter or not more than seven (7) days longer than the regular statutory reporting period provided by law. An optional reporting period must conform to the accounting period used by the taxpayer in the taxpayer's books of account.
  2. A tax return and payment for an optional reporting period shall become delinquent if not filed or paid before that date that is the same number of days after the close of the optional reporting period as the regular statutory delinquency date is after the close of the regular reporting period. If an optional reporting period tax return or payment becomes delinquent, penalty and interest calculated under the regular statutory methods and rates shall be payable from the date of delinquency.
  3. A person authorized to use an optional reporting period shall continue on that basis until such person notifies the commissioner of an intention to revert to the regular statutory reporting period, or receives authorization from the commissioner to use a different optional reporting period. A person who elects to file tax returns and make payments on an optional reporting basis period shall be required to use that period for reporting and paying all taxes collectible from such person by the department.

Acts 1978, ch. 772, § 1; T.C.A., § 67-113.

67-1-107. Mailed tax papers or payments — Determination of filing date.

  1. Any tax report, claim, appeal, return, statement, remittance or other tax document required or authorized to be filed with or any payment made to the state or to any political subdivision of the state, that is:
    1. Transmitted through the United States mail or any alternative delivery service as authorized by § 7502 of the Internal Revenue Code, codified in 26 U.S.C. § 7502, shall be deemed filed and received by the state or political subdivision on the date shown by the post office cancellation mark stamped on the envelope or other appropriate wrapper containing it;
    2. Mailed but not received by the state or political subdivision, or where received and the cancellation mark is illegible, erroneous or omitted, shall be deemed filed and received on the date it was mailed, if the sender establishes by competent evidence that the tax report, claim, appeal, return, statement, remittance or other tax document was deposited in the United States mail; provided, that in cases of such nonreceipt of a tax report, claim, appeal, return, statement, remittance or other tax document required by law to be filed, the sender files with the state or political subdivision a duplicate thereof within ten (10) days after written notification is given to the sender by the state or political subdivision of the nonreceipt of such tax report, claim, appeal, return, statement, remittance, or other tax document; or
    3. Transmitted as provided in subdivision (a)(1) to the state or political subdivision and postmarked or delivered no more than twenty-four (24) hours subsequent to the last date for the timely filing of such document or payment, shall not be considered delinquent and shall preserve any rights otherwise dependent on timely filing; however, any such document or payment, transmitted as provided in subdivision (a)(1) to the state or political subdivision and postmarked or delivered more than twenty-four (24) hours subsequent to the last date for timely filing, shall be subject to any late charges, penalty or interest otherwise chargeable without regard to the twenty-four-hour grace period as provided in this subdivision (a)(3).
  2. When any tax report, claim, return, statement, remittance or other tax document is sent by United States registered mail, certified mail or certificate of mailing, a record authenticated by the United States postal service of such registration, certification or certificate shall be considered competent evidence, for the purposes of subdivision (a)(2), that the tax report, claim, return, statement, remittance or other tax document was mailed on the date of registration, certification or the certificate of mailing, if such record is accompanied by other competent evidence that the original of the duplicate furnished was contained in the envelope or other appropriate wrapper that is identified in the record so authenticated.

Acts 1969, ch. 202, §§ 1, 2; 1979, ch. 279, § 1; T.C.A., §§ 67-1716, 67-1717; Acts 1999, ch. 491, § 11; 2008, ch. 1106, § 1.

Compiler's Notes. Acts 2008, ch 1106, § 69 provided that § 1 of the act, which amended subsection (a), shall apply to matters under appeal on June 5, 2008.

Cross-References. Certified mail in lieu of registered mail, § 1-3-111.

67-1-108. Applicability of taxability policy changes.

If the commissioner changes the policy of the department as to the taxability of any privilege, such policy change shall be applied to the exercise of such privileges occurring after the date of such policy change only, unless otherwise provided by law.

Acts 1986, ch. 552, § 1.

Cited: Volunteer Val-Pak v. Celauro, 767 S.W.2d 635, 1989 Tenn. LEXIS 124 (Tenn. 1989).

NOTES TO DECISIONS

1. Legislative Intent.

Nothing in the provisions of Acts 1986, ch. 552 enacting T.C.A. § 67-1-108 indicated that the general assembly intended it to apply retroactively, and it was the legislative intent to retain the provisions of prior laws for taxes paid before March 6, 1986. Illinois C. G. Railroad v. State, 805 S.W.2d 746, 1991 Tenn. LEXIS 80 (Tenn. 1991).

67-1-109. Revenue and letter rulings.

  1. The commissioner has the power to issue revenue and letter rulings, at the commissioner's discretion.
  2. Revenue rulings shall be statements regarding the substantive application of law and statements of procedure that affect the rights and duties of taxpayers and other members of the public. Revenue rulings shall be advisory in nature and shall not be binding upon the department.
    1. Letter rulings shall interpret and apply the tax law to a specific set of existing facts furnished by a particular taxpayer. These rulings shall be binding upon the department and are applicable only to the individual taxpayer being addressed.
    2. Letter rulings can be revoked or modified by the commissioner at any time. Such revocation or modification shall be effective retroactively, unless the following conditions are met, in which case the revocation shall be prospective only:
      1. The taxpayer must not have misstated or omitted material facts involved in the transaction;
      2. Facts that develop later must not be materially different from the facts upon which the ruling was based;
      3. The applicable law must not have been changed or amended;
      4. The ruling must have been issued originally with respect to a prospective or proposed transaction; and
      5. The taxpayer directly involved must have acted in good faith in relying upon the ruling, and a retroactive revocation of the ruling must inure to the taxpayer's detriment.
  3. When prompt consideration of an issue is needed, a party can request an expedited letter or revenue ruling by expressly requesting an expedited ruling and by submitting the fee required to receive an expedited ruling, as such fee is established by the commissioner. When an expedited letter or revenue ruling is requested as provided in this subsection (d), the commissioner shall either issue a ruling within sixty (60) days of the date on which the request for an expedited ruling was submitted or deny the request and return the fee to the requesting party within seven (7) days of the date on which the request was submitted.
  4. Requests for revenue and letter rulings shall be submitted in the form and manner prescribed by regulations issued by the commissioner.
  5. A reasonable fee may be set and prescribed by the commissioner for issuing revenue and letter rulings. The fee shall not exceed ten thousand dollars ($10,000) for expedited revenue or letter rulings requested pursuant to subsection (d) and shall not exceed five hundred dollars ($500) for all other revenue and letter rulings.

Acts 1988, ch. 562, § 1; 2011, ch. 449, § 2.

Cross-References. Administrative procedures chapter inapplicable to revenue rulings and letter rulings, § 4-5-106.

Powers of commissioner and department of revenue, § 67-1-102.

67-1-110. Taxpayer bill of rights.

  1. This section shall be known and may be cited as the “Tennessee Taxpayer Bill of Rights.”
  2. The commissioner shall promulgate rules, regulations and adopt policies which would inform and advise taxpayers of their rights and would guarantee Tennessee taxpayers are treated with fairness, courtesy and common sense.
  3. The rules, regulations, and policies shall be known as the “Tennessee Taxpayer Bill of Rights,” shall be consistent with existing law and shall include, but not be limited to, the following provisions:

    As a taxpayer of Tennessee, you have a right to:

    1. Receive fair and courteous treatment from all the department's employees;
    2. Receive tax forms and information written in plain language;
    3. Receive prompt and accurate responses to all questions and requests for tax assistance;
    4. Request public records;
    5. Be assured that the department will keep confidential the financial information you give it;
    6. Know the department's policies with respect to use and retention of personally identifiable information;
    7. Receive tax notices that provide an explanation of the amount being billed;
    8. Receive a clear set of rules and procedures to resolve tax problems that arise from the interpretation and administration of Tennessee's tax laws;
    9. Dispute any proposed assessment by filing a timely request for an informal conference;
    10. Know that the department's employees are not paid or promoted as a result of money billed to or collected from taxpayers;
    11. Suggest ideas about how the department can better serve you;
    12. Prompt notification by the department of any refund to which you are entitled;
    13. Attend annual meetings held by the department in convenient locations to voice your suggestions;
    14. A ten-day notice before a levy on assets is enforced;
    15. A thirty-day notice before seized assets are liquidated;
    16. A speedy, informal, and inexpensive review of a proposed assessment in an informal conference with an impartial representative of the department and to be represented by an attorney, certified public accountant, or other representative; and
    17. Any other rights the commissioner deems necessary and appropriate.
  4. This section only applies to the state government of Tennessee.

Acts 1992, ch. 857, §§ 1, 3, 6; 2004, ch. 959, § 49; 2005, ch. 311, § 2; 2007, ch. 602, §§ 52, 54; 2014, ch. 854, § 2.

Compiler's Notes. Acts 2007, ch. 602, § 52 provided that Acts 2004, ch. 959, § 46, as amended by Acts 2005, ch. 311, was repealed in its entirety, effective June 28, 2007.

Amendments. The 2014 amendment, effective January 1, 2015,  in (c)(9) substituted “proposed assessment” for “tax liability” and “an informal conference” for “a hearing” and rewrote (c)(16) which read: “A speedy, informal and inexpensive appeal of any tax dispute before an impartial hearing officer from the department and to be represented by an attorney, certified public accountant or other representative; and”.

Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.

Cross-References. Confidentiality of public records, § 10-7-504.

67-1-111. Statewide uniformity of harvest or severance taxes.

The rate of any tax levied on the activity of harvesting or severing from the ground row crops, timber or other plants shall be equal and uniform in every county in the state. However, any such tax levied by private act or otherwise prior to July 30, 1997, shall remain valid and in effect, but the rate of tax shall not be increased by private act after July 30, 1997. No such tax shall be levied by any city or county after July 30, 1997, unless authorized by general law.

Acts 1997, ch. 561, § 1.

Attorney General Opinions. Tax on privilege of timber processing, OAG 98-006 (1/9/98).

67-1-112. Business tax — Taxes invoiced to customers to be included in tax base.

The business tax is a privilege tax imposed upon persons engaged in various businesses and activities in the state. If a dealer invoices the business tax as a separate item and passes it on to the dealer's customers, then the tax shall be added to the gross receipts and be used in determining the tax base for both business tax and sales and use tax purposes.

Acts 1997, ch. 561, § 2.

67-1-113. Keeping and maintenance of records — Access to records — Penalties for noncompliance.

  1. All persons and entities subject to any tax administered by the commissioner shall keep and preserve suitable records from which the taxpayer and the commissioner can determine the Tennessee tax liability, if any. All such records shall be open to examination at all reasonable hours by the commissioner or any authorized agents of the commissioner. If the taxpayer maintains any such records in an electronic format, the taxpayer shall comply with reasonable requests by the commissioner or the commissioner's authorized agents to provide those electronic records in a standard record format.
  2. Any taxpayer who fails to comply with this section shall be assessed taxes, plus any applicable penalty and interest based on the best information available to the department; and the burden shall be on the taxpayer to show by clear and cogent evidence that the assessment is incorrect.

Acts 2002, ch. 599, § 1.

67-1-114. Extension of due date for certain tax returns.

  1. With respect to taxes imposed under chapter 2 of this title, under chapter 4, part 20 or 21 of this title, or under chapter 8, part 1 of this title, whenever the due date for filing the return occurs on a legal holiday as defined under 26 U.S.C. § 7503, the commissioner is authorized, in the commissioner's discretion, to extend the due date of such return to the next succeeding day that is not a Saturday, Sunday or legal holiday.
  2. With respect to taxes administered and collected by the commissioner of revenue, whenever the internal revenue service generally extends for all taxpayers the due date of a federal return or extends the due date of such return for a specified group of taxpayers such as, but not limited to, those affected by a federally declared disaster, the commissioner of revenue is authorized, in the commissioner's discretion, to extend the due date for the filing of specified returns to a date that shall not be later than the last day of the extension period specified by the internal revenue service.
  3. For purposes of this section, “return” shall be deemed to include any remittance or other tax document, including, but not limited to, quarterly estimated payments and extension requests.

Acts 2011, ch. 72, § 17; 2011, ch. 467, § 10; 2012, ch. 842, § 7.

Compiler's Notes. Acts 2011, ch. 467, § 12 provided that § 10 of the act, which added the last sentence (now subsection (c)), shall apply to any return, remittance, or other tax document due on or after April 15, 2011.

Acts 2012, ch. 842, § 9 provided that the act, which amended this section, shall apply to returns with due dates on or after April 1, 2012.

67-1-115. Electronic submission of documents and payments.

  1. The commissioner is authorized to require that any return, report, claim, statement, application, or other document filed with the department, including any payment or remittance that accompanies such document, be submitted electronically in a manner approved by the commissioner beginning no sooner than ninety (90) days after the commissioner has certified that a system is in place for the electronic submission of such document or payment. Such certification shall be accomplished by the commissioner prominently posting a notice on the department's web site.
  2. If an electronic filing requirement imposed pursuant to the authority granted in subsection (a) creates a hardship upon the person subject to the requirement, such person shall be permitted to file the applicable document in paper form. The commissioner is authorized to require that any such paper filing be accompanied by a manual handling fee, not to exceed twenty-five dollars ($25.00), that is reasonably calculated by the department to account for the additional cost of preparing, printing, receiving, reviewing and processing any paper filing so permitted.
  3. This section shall apply to any tax, regulatory, or other law administered by the department of revenue under this or any other title. This section shall not, however, be construed to supersede or otherwise affect any electronic filing or payment requirement already provided by law on January 1, 2012, including any penalty or waiver provisions connected therewith, and shall not require the certification of any system already in place before January 1, 2012.
  4. Notwithstanding any law to the contrary, the cumulative total of manual handling fees charged to any one (1) taxpayer for all tax filings in any twelve-month period shall not exceed fifty dollars ($50.00).
  5. The department shall notify each taxpayer that the cumulative total of all manual handling fees for all paper returns, reports, claims, statements, applications, or other documents filed with the department, including any payments or remittances that accompany such documents, shall not exceed fifty dollars ($50.00) for all such filings in any twelve-month period. The department shall include such notice in any one (1) regularly scheduled communication between the department and the taxpayer.

Acts 2012, ch. 657, § 1.

67-1-116. Fees for processing of documents and payments.

Notwithstanding any law to the contrary, the commissioner is authorized to deduct and retain from the proceeds of any tax administered and collected by the commissioner an amount necessary to offset the fee paid to a third party for the processing of documents and payments that are submitted electronically to the department.

Acts 2012, ch. 657, § 2.

67-1-117. Commissioner's authority to permit filing, submission or retention of documents in digital format.

Notwithstanding any provision to the contrary, when any provision administered by the commissioner requires that any document be filed, submitted, or retained in paper, microfiche, or any other nondigital format, the commissioner is authorized to permit the filing, submission, or retention of such document in a digital format.

Acts 2012, ch. 657, § 3.

67-1-118. Review and report concerning credits found in §§ 67-4-2009, 67-4-2109, and 67-6-224.

The commissioner of economic and community development, in consultation with the commissioner of revenue, shall conduct a review of the credits found in §§ 67-4-2009, 67-4-2109, and 67-6-224. The review shall evaluate the previous four (4) fiscal years and may include an evaluation of the purpose of the credit, foregone revenue to the state as a result of the credit, any benefits provided to the state as a result of the credit, and the estimated indirect economic impact of the tax credit, where applicable. The report shall include a recommendation to modify, discontinue, or take no action with respect to each credit. The departments shall prepare a report of their findings and recommendations and shall deliver such report to the governor, the speakers of both houses, the finance, ways and means committees of both houses, and the office of legislative budget analysis no later than January 15, 2017. The review required by this section shall be conducted by the departments, and the report delivered to the governor, the speakers of both houses, the finance, ways and means committees of both houses, and the office of legislative budget analysis, each four (4) years thereafter.

Acts 2015, ch. 504, § 1.

Compiler's Notes. Acts 2015, ch. 504, § 22 provided that the act, which enacted this section, shall apply to tax years ending on or after July 1, 2015.

Effective Dates. Acts 2015, ch. 504, § 22. July 1, 2015.

Part 2
Division of Property Assessments

67-1-201. Creation — Director — Assistants — Expenses.

  1. There is created in the office of the comptroller of the treasury a division of property assessments.
  2. The comptroller of the treasury is authorized, with the approval of the state board of equalization, to appoint a director, who shall be the head of the division.
  3. The division of property assessments is authorized to employ such assistants as are deemed necessary by the comptroller of the treasury to enable the division to efficiently and thoroughly perform its duties.
  4. All expenses of the division, including salaries of its director and other employees, shall be paid out of moneys appropriated by the general assembly and made available to the comptroller of the treasury by law.

Acts 1973, ch. 226, § 2; T.C.A., § 67-231.

Collateral References. Taxation 371

67-1-202. Powers and duties.

  1. The division of property assessments, under the supervision of the comptroller of the treasury, and subject to such policies, rules and regulations as may be adopted by the state board of equalization, has and shall perform the following duties, to:
    1. Supervise and direct all reappraisals and revaluation programs to the cost of which the state of Tennessee contributes;
    2. Prescribe rules and regulations approved by the comptroller of the treasury and not otherwise reserved for the state board of equalization and not inconsistent with laws that relate to the administration of the duties of assessors of property;
    3. Prepare, furnish and require the use by assessors of such forms as may be required for the administration of the duties of assessors of property, and approve all forms, schedules and reports used by assessors and sent to taxpayers for reporting real or personal property;
    4. Obtain evidence, information and statistics relative to the value of property to be assessed and equalized;
    5. Require assessors to furnish reports under oath, giving specific information relating to assessments and other facts concerning properties and facts pertaining to the administration of the duties of the office of assessor;
    6. Effect the assessment of all property in the state in accordance with the state constitution and all statutory provisions. The comptroller of the treasury shall exercise all powers conferred upon the comptroller of the treasury by law to the end that assessments in every taxing jurisdiction may be in accordance with the law;
    7. Make an annual report, approved by the comptroller of the treasury, to the state board of equalization, with an appropriate summary of the work accomplished by the division, and make such recommendations to the state board of equalization as it may deem appropriate;
    8. Assist the state board of equalization in the preparation of an assessment manual or manuals for the appraisal, classification and assessment of property for use by local assessors in making their assessments of particular classes or parcels of property, including the assessment of various kinds of personal property owned and used by corporations, partnerships and individuals engaged in business or professions for profit;
    9. Assist the state board of equalization in conducting the educational and training courses for state and local assessing officials approved by the state board of equalization;
    10. Require that counties or other taxing jurisdictions take whatever steps deemed necessary by the state board of equalization to assure that reappraisal and revaluation programs are maintained and updated in accordance with instructions, policies, rules and regulations as adopted by the state board of equalization;
    11. At the direction of the state board of equalization, provide assessment services for any municipality which lies within the boundaries of two (2) or more counties and which has contracted for such services with the state board of equalization under § 67-1-307(a) and (b); and
    12. At the direction of the state board of equalization, provide for the appraisal of leasehold interests, mineral interests, or other fractional interest in any county which has petitioned for such assistance to the state board of equalization under § 67-1-307(a) and (b).
  2. The division of property assessments has the authority to go upon land in order to obtain information for the assessment of such property. If the landowner refuses or objects to entry upon the landowner's land, the division may petition the circuit or chancery court for an order allowing entry at a specified time for purposes of appraising the land and improvements for assessment purposes.
  3. The division of property assessments shall have the unconditional right to intervene in any contested case before the state board of equalization and shall have standing and be recognized as a party under the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. This unconditional right to intervene shall be liberally construed in favor of the division of property assessments and the intervention and participation in any contested case before the state board of equalization shall not be limited in any manner except as otherwise agreed to by the division of property assessments.

Acts 1973, ch. 226, § 2; 1974, ch. 467, § 1; 1974, ch. 771, § 4; 1983, ch. 236, §§ 3, 4; T.C.A., § 67-232; Acts 1988, ch. 633, § 1; 2009, ch. 256, § 1.

Compiler's Notes. Acts 2009, ch. 256, § 3, which added §§ 67-1-202(c) and 67-5-1514(e)(2), provided that the act shall apply to any and all appeals currently pending before the state board of equalization.

Cited: State by Webster v. Word, 508 S.W.2d 539, 1974 Tenn. LEXIS 421 (Tenn. 1974).

67-1-203. Duties of commissioner not duplicated.

Nothing in §§ 67-1-20167-1-204 shall be construed to diminish or to duplicate the duties of the commissioner with respect to assessment and collection of privilege taxes.

Acts 1973, ch. 226, § 2; T.C.A., § 67-233.

67-1-204. Liberal construction.

It is declared to be the legislative intent that §§ 67-1-20167-1-204 be liberally construed in favor of jurisdiction and powers conferred upon the division of property assessments, the comptroller of the treasury and the state board of equalization, and they and each of them have and shall exercise all such incidental powers as may be necessary to carry out and effectuate the objectives and purposes of §§ 67-1-20167-1-204, and to equalize the assessment of all property subject to taxation as provided by law.

Acts 1973, ch. 226, § 2; T.C.A., § 67-234.

67-1-205. Development of assessment procedures — Rules and regulations.

  1. It is the duty of the division of property assessments, under the direction and supervision of the state board of equalization, to undertake the development of methods and procedures to assist and guide local assessors of property and boards of equalization in officially administering the annual assessment process and in maintenance of assessments through a process of updating valuations, property ownership records and other information and records required by sound assessment practices.
  2. The board may promulgate rules and regulations to provide for such a system of assessments and to prescribe the participation in the system of assessments of local assessors of property and boards of equalization.

Acts 1973, ch. 226, § 2; T.C.A., § 67-235.

67-1-206. Information and records required.

  1. The board may require that local assessors of local property and boards of equalization submit to the division of property assessments such information as may be necessary to provide for the analysis of assessments and the continued maintenance of ownership, appraisal, classification, and assessment information.
  2. Based upon the information provided by local assessors of property and boards of equalization, the division of property assessments shall provide to such local taxing jurisdictions, as may be determined by the state board of equalization, the continued maintenance of ownership index cards, property record cards, assessment rolls, tax rolls, tax bills, tax receipts, and such other information as may be required by the state board of equalization.

Acts 1973, ch. 226, § 2; T.C.A., § 67-236.

Part 3
State Board of Equalization

67-1-301. Meetings — Notice.

  1. The state board of equalization shall meet in Nashville annually on the second Monday in August to set dates and places for its hearings of appeals from actions of local boards of equalization, and to consider such other matters as may come before the board.
  2. A majority of the board shall constitute a quorum for the transaction of business.
  3. It is the duty of the board to sit for a portion of its allotted time in the western division of the state and in the eastern division of the state, in addition to its sessions at Nashville, the time and place of the sessions to be held at other points than Nashville to be designated by the board, and publication of such time and place or times and places to be made through the press.
  4. Taxpayers and property owners, without further notice than this section and due publication of the times and places of the meetings of the board as required by this section, are charged with notice of the sessions.
  5. Such sessions shall continue from time to time and day to day until the equalization of all assessments is completed.
    1. In addition to the annual meeting required in subsection (a), the board shall meet at other times and places as the board may find necessary to carry out its duties and responsibilities.
    2. Such meetings may be held upon the call of the chair or vice chair when the public business so requires.
    3. A majority of the board shall constitute a quorum for the transaction of business.

Acts 1973, ch. 226, § 2; T.C.A., § 67-201.

Cross-References. Assessment review by state board of equalization, title 67, ch. 5, part 15.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 38.

Attorney General Opinions. Determining the value of real property by using the income approach is a commonly-used, appropriate method for valuing income-producing property for purposes of ad valorem taxation. The use of this approach does not result in the assessment of an income tax. Use of the income approach to value mineral interests likewise does not result in the assessment of an unauthorized severance tax. OAG 14-103, 2014 Tenn. AG LEXIS 106 (12/2/14).

NOTES TO DECISIONS

Decisions Under Prior Law

1. Quorum.

The taxing authority, as representative of all other taxpayers, as well as the taxpayer, was entitled to a hearing by a quorum of the state board. Polk County v. State Board of Equalization, 484 S.W.2d 49, 1972 Tenn. App. LEXIS 344 (Tenn. Ct. App. 1972).

Collateral References.

Adjournment or closing of books, power or duty of tax review or equalization board to act after date for. 105 A.L.R. 624.

Evidence as to assessable value, power of board of tax review to receive, without notice to taxpayer. 113 A.L.R. 990.

Taxation 371

67-1-302. Expenses.

  1. All necessary and proper expenses incurred by the board in the performance of its duties imposed under this title shall be paid out of the funds appropriated to the division of property assessments.
  2. All reimbursement for travel expenses shall be in accordance with the comprehensive travel regulations as promulgated by the department of finance and administration and approved by the attorney general and reporter.

Acts 1973, ch. 226, § 2; 1976, ch. 806, § 1(21); T.C.A., § 67-202.

67-1-303. Oath of board members — Compensation.

  1. It is the duty of the members to discharge the duties of the board without compensation, except those expenses provided for in § 67-1-302 and except as provided in subsection (b), but before entering upon the discharge of such duties, the members shall take and subscribe to an oath that the members will fairly and impartially perform the duties imposed upon them by the laws of the state of Tennessee. The oath shall be taken before some person authorized by law to administer an oath and be filed in the office of the secretary of state for preservation.
    1. Persons who are not officials of the state of Tennessee and who may, from time to time, serve as members of the state board of equalization shall be paid at the rate of fifty dollars ($50.00) per day for each day or part of a day in attendance at meetings of the state board of equalization.
    2. Such members who are not state officials shall be reimbursed necessary travel and per diem expenses as prescribed in the comprehensive travel regulations by the commissioner of finance and administration for employees of the state of Tennessee, during such service on the state board of equalization, or travel to or from a meeting of the state board of equalization.

Acts 1973, ch. 226, § 2; T.C.A., § 67-203.

67-1-304. Vice chair.

The board shall elect one (1) of its members to serve as vice chair, who shall preside in the absence of the chair.

Acts 1973, ch. 226, § 2; T.C.A., § 67-204.

67-1-305. Powers of board.

  1. The board is vested with the power to:
    1. Make such rules and regulations and prepare such forms as it may deem proper for its use;
    2. Obtain such evidence, information and statistics as may be deemed material as to the values, classifications and assessments of properties to be equalized;
    3. Regulate and prescribe the method of taking evidence before the board, whether by affidavit, deposition or otherwise;
    4. Send for papers and witnesses;
    5. Compel the attendance of witnesses and administer oaths to witnesses; and
    6. Do and perform all such acts as may be proper or necessary to accomplish the purpose of its creation.
  2. The board may issue subpoenas for witnesses, and place them in the hands of any executive officer of any county in this state whose duty it shall be to immediately execute them, and make due returns of the subpoenas.

Acts 1973, ch. 226, § 2; T.C.A., § 67-205.

NOTES TO DECISIONS

1. Rules and Regulations.

The board has the authority, pursuant to T.C.A. § 4-3-5103(1) and T.C.A. § 67-1-305(a)(1), to promulgate rules and manuals to aid in the appraisal, classification and assessment of property, and while the board could define the term “religious institution” by promulgating a rule, it is not required to do so as a condition to exercising its responsibility to hear and determine appeals concerning the exemption of property from taxation. The choice between using a rule-making proceeding and an adjudicatory proceeding is within the agency's discretion. Kopsombut-Myint Buddhist Center v. State Bd. of Equalization, 728 S.W.2d 327, 1986 Tenn. App. LEXIS 3607 (Tenn. Ct. App. 1986).

Decisions Under Prior Law

1. In General.

The board is a quasi-judicial agency, a creature of statute, duty bound to do justice by due process in the adjustment of tax assessments. Polk County v. State Board of Equalization, 484 S.W.2d 49, 1972 Tenn. App. LEXIS 344 (Tenn. Ct. App. 1972).

2. Rules and Regulations.

This statute was not interpreted to mean that the board was granted unlimited rule-making power nor the power to deprive any citizen or group of citizens of his or its right to justice by due process. Polk County v. State Board of Equalization, 484 S.W.2d 49, 1972 Tenn. App. LEXIS 344 (Tenn. Ct. App. 1972).

67-1-306. Agents and assistants — Fees for witnesses, service of process.

  1. All the agents and assistants appointed by the board have full power to administer oaths, take affidavits and depositions, and otherwise exercise all powers necessary to gather evidence by compelling the attendance of witnesses, the production of books and papers, and exercising all the powers of commissioners or clerks of courts in taking depositions.
  2. The agents and assistants appointed by the board may issue subpoenas for witnesses and place them in the hands of any executive officer of any county whose duty it shall be to immediately execute the subpoenas and make due return of the subpoenas.
  3. Any assistant appointed by the board to gather such evidence shall not receive any fee or emolument other than the assistant's agreed salary and actual necessary expenses.
  4. Witnesses and sheriffs or constables executing process shall receive the same compensation as is fixed by law for like service in a court of record.

Acts 1973, ch. 226, § 2; T.C.A., § 67-206.

67-1-307. Technical assistance to counties.

    1. The board is authorized to contract with the governing body of any county, or the governing body of any incorporated city or town, to furnish to any county or incorporated city or town such personnel, supplies, funds and technical assistance as may be needed to carry out a program of assessment, reassessment or equalization of property taxes.
    2. Upon the petition by a municipality that lies within the boundaries of two (2) or more counties, the board may enter into a contract with such municipality to provide the assessment services allowed under § 67-1-513.
    3. No contracts authorized by this section shall be entered into after January 1, 1974, by the board with any governing body other than those of counties, except that the board may enter into contracts with municipalities that lie within the boundaries of two (2) or more counties and who petition for assessment services allowed under § 67-1-513.
  1. The board shall establish rules and regulations that shall constitute a part of every contract of assistance. Such rules and regulations shall provide that the over-all cost incurred by the board shall be repaid to the board and shall state the terms and conditions on which such assistance shall be rendered including the interest charge, if any, on loans made, and such other rules and regulations as will adequately ensure the satisfactory completion of such programs.
  2. All funds appropriated to the board for the purpose of carrying out this section shall be kept in a special account by the board from which assistance shall be rendered, and funds repaid to the board under any contract shall be credited to the account and applied to any lawful obligation of the account.
  3. In the event of a default by a county, town or city in the payment or repayment of funds due under a contract, the board shall notify the comptroller of the treasury of the default and the amount of the default; it shall then be the duty of the comptroller of the treasury to have paid over to the board out of any state-shared taxes due the defaulting county, city or town sums sufficient to pay the amount in arrears under the contract.
  4. The assistance authorized by this section shall be supplemental to and administered separately from that authorized by title 4, chapter 3, part 51.

Acts 1973, ch. 226, § 2; impl. am. Acts 1978, ch. 934, §§ 7, 36; Acts 1983, ch. 236, § 2; T.C.A., §§ 67-207 — 67-211; Acts 1984, ch. 832, § 3.

Cited: State by Webster v. Word, 508 S.W.2d 539, 1974 Tenn. LEXIS 421 (Tenn. 1974).

67-1-308. Computer services available to localities.

The board may provide the use of computer facilities and services reasonably available from the state of Tennessee to such local taxing jurisdictions as the board determines do not have available adequate computer or similar services, and shall make a charge for the reasonable cost of the computer facilities and services to such local taxing jurisdictions in accordance with services rendered.

Acts 1973, ch. 226, § 2; T.C.A., § 67-212.

Part 4
County Boards of Equalization

67-1-401. Composition of boards.

  1. The county legislative body of each county shall, at the April session of each even year, from the different sections of the county, elect, for a term of two (2) years, five (5) freeholders and taxpayers who shall constitute a county board of equalization.
    1. In any county having a population greater than nine hundred thousand (900,000), according to the 2010 federal census or any subsequent federal census, the county board of equalization shall be appointed for a term of two (2) years, consisting of thirteen (13) freeholders and taxpayers, of which three (3) members shall be appointed by the county commission or governing board, four (4) members shall be appointed by the city council or governing board of the largest municipality, and one (1) member each shall be appointed by the city councils or governing boards of each of the six (6) largest remaining cities having a population greater than ten thousand (10,000).
    2. In counties having one (1) or more cities with a population exceeding sixty thousand (60,000), according to the federal census of 1970 or any subsequent federal census, two (2) of the members of the board shall be appointed by the governing body of the largest city.
    3. In counties having one (1) or more cities with a population of not less than ten thousand (10,000) nor more than sixty thousand (60,000), one (1) member of the board shall be appointed by the city council or governing body of each of the two (2) largest cities with a population in excess of ten thousand (10,000), within the county.
    4. In counties that have no city with a population of ten thousand (10,000) or more, one (1) member of the board shall be appointed by the city council or governing board of the largest city or town in the counties.
      1. In a county with a metropolitan form of government, the charter for the metropolitan government may provide for the creation of a metropolitan board of equalization consisting of either five (5) or seven (7) members. Appointments to such board shall include members selected from minorities, as well as members of the sex that historically has been under-represented on the board of equalization. This subdivision (a)(5)(A) shall not apply to such counties having a population of less than ten thousand (10,000), according to the 1980 federal census or any subsequent federal census.
      2. If a county with a metropolitan form of government having a population of not less than four hundred seventy thousand (470,000) nor more than five hundred thousand (500,000), according to the 1980 federal census or any subsequent federal census, creates a board of equalization consisting of seven (7) members, at least two (2) of the members of the board shall be appointed consistent with subdivision (a)(5)(A).
  2. If the county legislative body fails to elect, the county mayor shall appoint the members of the board and shall also fill such vacancies as the vacancies occur.
    1. Magistrates or state, municipal or county legislative or executive officials or employees shall all be ineligible for positions on a county board of equalization, but this prohibition does not apply to persons who receive only compensation in lieu of expenses or a per diem payment for services. No member of any county board of equalization shall represent any taxpayer in an assessment appeal. This subsection (c) does not apply to municipal officials or employees whose city, located in a county with a population of eight hundred thousand (800,000) or more, according to the 1990 federal census or any subsequent federal census, is not eligible to appoint a member to the board.
      1. Notwithstanding other provisions of this subsection (c), except in counties having a population of more than eighty-five thousand (85,000) but less than eighty-six thousand (86,000), according to the 1990 federal census or any subsequent federal census, state employees may be appointed to the county board of equalization, if their employment responsibilities do not include property assessments, except that in counties having a population of more than eight hundred thousand (800,000), according to the 1990 federal census or any subsequent federal census, state employees shall not be appointed to the county board of equalization.
      2. No state employee serving on the county board of equalization shall be compensated by the state for time served on the county board, except that an otherwise eligible employee may use accumulated annual leave to serve on the county board with approval of the employee's supervisor.
  3. In addition to its regular appointments under this section, an appointing authority may designate one (1) or more alternates, and the board of equalization chair may call upon an alternate to sit for a regular member who becomes unavailable for a particular hearing due to disqualification or other reason. A duly appointed alternate shall be sworn in the same manner as regular members, and any action taken by a duly appointed alternate shall be as effective as if taken by the unavailable individual.

Acts 1973, ch. 226, § 2; impl. am. Acts 1978, ch. 934, §§ 7, 16, 36; Acts 1982, ch. 832, § 1; T.C.A., § 67-251; Acts 1985, ch. 115, § 1; 1988, ch. 793, § 1; 1991, ch. 419, § 1; 1992, ch. 866, § 1; 1997, ch. 419, § 1; 2000, ch. 957, §§ 1, 2; 2003, ch. 90, § 2; 2003, ch. 363, § 1; 2006, ch. 734, § 1; 2013, ch. 209, §§ 1, 2; 2017, ch. 231, § 1.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Amendments. The 2013 amendment rewrote (a)(2) which read: “In cities of a population of sixty thousand (60,000) or over, according to the federal census of 1970 or any subsequent federal census, two (2) members of the board shall be appointed by the city council or existing governing board of such taxing district.”; and added (d).

The 2017 amendment, in (a)(1), substituted “greater than nine hundred thousand (900,000), according to the 2010 federal census” for “greater than eight hundred thousand (800,000), according to the 1990 federal census”, substituted “of thirteen (13) freeholders” for “of nine (9) freeholders”, substituted “four (4) members” for “three (3)  members” and substituted “six (6) largest remaining cities” for “three (3) largest remaining cities”.

Effective Dates. Acts 2013, ch. 209, § 17. April 23, 2013.

Acts 2017, ch. 231, § 2.  April 28, 2017.

Cross-References. Assessment review by county board of equalization, title 67, ch. 5, part 14.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 37.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem St. U.L. Rev. 707 (1978).

Collateral References. Taxation 371

67-1-402. Oath of members.

  1. Each member of the county board of equalization, before entering upon the discharge of the duties of office, shall, before the county mayor or other official authorized by law to administer oaths, take and subscribe to the following oath, to be filed with the county clerk, viz:

    “State of Tennessee,

    County.

    I,  , member of the board of equalization of such county do hereby solemnly swear (or affirm) that I will carefully examine, compare and equalize the assessments of such county in accordance with the constitution and the laws of the state of Tennessee; and that to the best of my knowledge and ability I will faithfully, honestly and impartially perform all duties imposed upon me as a member of the board by the laws of the state of Tennessee.

    Signed   Board member

    Sworn to before me, this the  day of  ,  .”

  2. On request of the state board of equalization, the county clerk shall make certified copies of such oaths and forward the copies to the state board of equalization. It is unlawful for any member of a county board to enter upon or undertake to discharge the duties of office without first taking, before entering upon the duties of office, the oath provided in subsection (a).

Acts 1973, ch. 226, § 2; impl. am. Acts 1978, ch. 934, §§ 16, 22, 36; T.C.A., § 67-252; Acts 2003, ch. 90, § 2; 2013, ch. 209, § 3.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Amendments. The 2013 amendment inserted “or other official authorized by law to administer oaths” in (a).

Effective Dates. Acts 2013, ch. 209, § 17. April 23, 2013.

67-1-403. Officers — Quorum — Record of daily transactions — Compensation — Training.

  1. Each county board of equalization shall elect one (1) of its members chair and one (1) secretary of the board.
  2. A majority of the board shall constitute a quorum for the transaction of business.
  3. The board shall keep a daily record of its transactions, and sign the record.
  4. Board members shall be paid by the county a compensation for their services. The county legislative body shall by resolution establish the compensation of the members and the chair of the county board of equalization.
    1. The county mayor shall require board members and county board hearing officers to complete annual continuing education and training on duties and responsibilities of their office as a condition of appointment or continued service.
    2. The county legislative body shall by resolution establish the minimum of at least four (4) hours of training for board members to complete annually and minimum recordkeeping requirements related to members' certificates of attendance.
    3. The subjects for the training and continuing education shall include board governance, open meetings requirements, and other topics reasonably related to the duties of the members of the county board of equalization.
    4. Any association or organization with appropriate knowledge and experience may prepare a training and continuing education curriculum for county boards of equalization covering the subjects set forth in subdivision (e)(3) to be submitted to the comptroller of the treasury for review and approval prior to use.
    5. Mandatory annual continuing education and training is only required under this subsection (e) to the extent that such education and training is provided by the comptroller of the treasury free of charge.

Acts 1973, ch. 226, § 2; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A., § 67-253; Acts 1997, ch. 168, § 1; 2014, ch. 691, § 1; 2017, ch. 13, § 1.

Amendments. The 2014 amendment added (e).

The 2017 amendment, in (e)(1), substituted “The county mayor shall” for “The county mayor may” at the beginning, and inserted “annual continuing education and”; and added (e)(2)-(5).

Effective Dates. Acts 2014, ch. 691, § 5. April 15, 2014.

Acts 2017, ch. 13, § 2. March 24, 2017.

NOTES TO DECISIONS

Decisions Under Prior Law

1. Status of Board.

County board is a quasi-court of the actions of which a taxpayer must keep advised. Mossy Creek Bank v. Jefferson County, 153 Tenn. 332, 284 S.W. 64, 1925 Tenn. LEXIS 30 (1925).

2. Appeal to Board.

Where only validity of the tax statute is attacked, the board is without authority to grant relief. No appeal to the board is necessary. First Nat'l Bank v. Sevier County, 161 Tenn. 676, 30 S.W.2d 243, 1929 Tenn. LEXIS 68 (1929).

67-1-404. Sessions.

  1. The county board of equalization and the board of equalization of any metropolitan government organized and existing pursuant to title 7, chapters 1-3 shall, on June 1 each year, meet and sit in regular session as necessity may require until the equalization has been completed; provided, that in any county having a population of not less than twenty-six thousand (26,000) nor more than twenty-six thousand one hundred (26,100), according to the 1970 federal census or any subsequent federal census, the county legislative body may by resolution or ordinance set an earlier date for such board's initial meeting.
    1. The board shall not sit longer than:
      1. Six (6) days in counties having a population of ten thousand (10,000) or less, according to the 1970 federal census or any subsequent federal census;
      2. Ten (10) days in counties having a population of over ten thousand (10,000) and under twenty thousand (20,000), according to the 1970 federal census or any subsequent federal census;
      3. Fifteen (15) days in counties having a population of over twenty thousand (20,000) and under thirty-five thousand (35,000), according to the 1970 federal census or any subsequent federal census; and
      4. For a number of days fixed by the respective county legislative bodies, but not in excess of thirty (30) days, in counties having a population of over thirty-five thousand (35,000), according to the 1970 federal census or any subsequent federal census.
    2. The county mayor, when the county legislative body cannot act, may extend the time or may call the board in special session at any time, if in the county mayor's judgment the public welfare requires it.
  2. Any county board of equalization, having jurisdiction over a municipality with a beginning tax due date different from that of the county, shall meet as required by the county legislative body, but at least one (1) month prior to the applicable beginning tax due date.

Acts 1973, ch. 226, § 2; impl. am. Acts 1978, ch. 934, §§ 7, 16, 36; Acts 1980, ch. 856, § 1; T.C.A., § 67-254; Acts 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Attorney General Opinions. Authority to terminate funding for regular and special sessions of county boards of equalization, OAG 96-094 (7/29/96).

NOTES TO DECISIONS

1. Taxpayer Contests.

The taxpayer may contest assessments as often as they are made. In re Washington Mfg. Co., 120 B.R. 918, 1990 Bankr. LEXIS 2348 (Bankr. M.D. Tenn. 1990).

Part 5
Assessors of Property

67-1-501. Construction.

It is declared to be the legislative intent that §§ 67-1-502 and 67-1-50867-1-513 be liberally construed in favor of jurisdiction and powers conferred upon the division of property assessments and the state board of equalization; and the division and the board and each of the entities shall have and exercise all such incidental powers as may be necessary to carry out and effectuate the objectives and purposes of §§ 67-1-502 and 67-1-50867-1-513, and to equalize the assessment of all property subject to taxation as provided by law.

Acts 1973, ch. 226, § 3; T.C.A., § 67-339.

Law Reviews.

Tax Delinquency in Tennessee — Legislative Aspects (Charles P. White), 12 Tenn. L. Rev. 71 (1934).

Cited: Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998).

Collateral References. Taxation 371

67-1-502. Election of assessor — Term.

An assessor of property shall be elected by the qualified voters of each county and shall hold office for a term of four (4) years and until the assessor's successor is elected and qualified.

Acts 1973, ch. 226, § 3; 1978, ch. 934, § 25; T.C.A., § 67-301.

Cross-References. Assessors and equalizers generally, title 67, ch. 5, part 3.

Time of election, § 2-3-202.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 29.

Cited: Blackwell v. Miller, 493 S.W.2d 88, 1973 Tenn. LEXIS 500 (Tenn. 1973); Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998).

67-1-503. County legislative body members ineligible.

No member of the county legislative body shall be eligible to hold the office of assessor.

Acts 1973, ch. 226, § 3; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A., § 67-302.

Attorney General Opinions. This section does not prohibit a county election commission from qualifying a county legislative body member to have his or her name placed on the ballot to seek the office of assessor of property, OAG 03-111 (9/8/03).

Cited: Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998).

67-1-504. Vacancies.

  1. In cases of vacancies, the county legislative body, at its first session after the vacancy occurs shall elect an assessor who shall hold office until the September 1 following the next regular August election.
  2. The assessor shall be elected by the qualified voters at the first regular August election coming after the vacancy, and shall hold office from the following September 1 to the close of the term for which the predecessor was elected.
  3. If the office of the assessor becomes vacant due to death, resignation or removal, the duties of the assessor shall be temporarily discharged by the chief deputy, or deputy designated as temporary successor by the assessor of property in writing, until a successor assessor is elected or appointed and qualified according to law.

Acts 1973, ch. 226, § 3; 1978, ch. 934, § 26; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A., § 67-303; Acts 1993, ch. 315, § 20.

Cited: Blackwell v. Miller, 493 S.W.2d 88, 1973 Tenn. LEXIS 500 (Tenn. 1973).

67-1-505. Surety bond.

  1. Each county assessor, before entering into the duties of office, shall enter into an official bond prepared in accordance with title 8, chapter 19, payable to the state of Tennessee, in the sum of fifty thousand dollars ($50,000), to be approved by the county mayor, conditioned in such manner as required by § 8-19-111. The bond shall be approved by the county legislative body, recorded in the office of the county register of deeds and transmitted to the office of the county clerk for safekeeping.
  2. Each county assessor of the state shall, on or before the January 1 following election, execute and enter into a new bond in the amounts provided by law and conditioned as directed in subsection (a), and it is unlawful after that date for any assessor to perform the duties of assessor without giving such bond. If such bond is not made by that date, that office shall become vacant and shall be filled as may be provided by law.

Acts 1973, ch. 226, § 3; 1976, ch. 616, § 2; 1977, ch. 270, § 22; 1978, ch. 689, §§ 11, 12; impl. am. Acts 1978, ch. 934, §§ 7, 16, 22, 36; T.C.A., §§ 67-304 — 67-306; Acts 1989, ch. 591, §§ 1, 6; 1998, ch. 677, § 19; 2003, ch. 90, § 2; 2012, ch. 974, §§ 3, 4.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Acts 2012, ch. 974, § 6, which amended subdivision (a)(1), and deleted subdivision (a)(2) and subsection (c), provided that the act shall apply to the renewal or obtaining of an official bond for any bonding after May 10, 2012.

Cited: Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998).

67-1-506. Deputy assessors and secretaries.

    1. In order to assure that each county assessor of property shall have a minimum staff to assist the county assessor in carrying out the duties and responsibilities required by law, the assessor is authorized to appoint at least one (1) deputy assessor for each four thousand five hundred (4,500) parcels of property, as determined by the division of property assessments, over and above the first four thousand five hundred (4,500) parcels of property within the assessor's taxing jurisdiction.
    2. Each deputy assessor shall have the same power, duties and liability of the assessor of property with respect to the appraisal, classification, and assessment of property.
    1. In any county where the assessor does not qualify for a deputy assessor under this section, the assessor is authorized, with the approval of the county legislative body, to employ or appoint a secretary to assist the assessor in the operation of the assessor's office. The compensation of such secretary shall be fixed by the county legislative body and paid out of county funds.
    2. The assessor shall employ such additional staff as the assessor deems necessary and establish rates of compensation for all employees within the appropriation established for the assessor's office by the county legislative body.
  1. The assessor of property shall be liable for any malfeasance, misfeasance, or nonfeasance of the assessor's deputy.

Acts 1973, ch. 226, § 3; 1974, ch. 480, § 1; 1974, ch. 771, § 15; 1976, ch. 719, § 1; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A., §§ 67-321, 67-322.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 29.

Attorney General Opinions. Authority of county assessor of property to determine the number and compensation of the employees in his or her office. OAG 15-41, 2015 Tenn. AG LEXIS 37   (4/24/15).

NOTES TO DECISIONS

1. Staff.

Since the assessor has the authority to appoint personnel to assist him or her, the assessor must also be authorized to make all employment decisions concerning them. Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998).

67-1-507. Oath of office.

  1. Each assessor shall take and subscribe to the following oath of office, before the county mayor or other official authorized by law to administer oaths, which oath shall be attached to and filed with the bond of the assessor in the office of the county clerk, viz:

    “I,  , assessor of property (or deputy assessor) of the county of  , state of Tennessee, do solemnly swear (or affirm) that I will appraise, classify, and assess all taxable property of the county of  , according to the Constitution of Tennessee and the laws of the state; that I will truly report all persons who fail or refuse to list their taxable property or who have to my knowledge returned a fraudulent list; and that I will faithfully, impartially and honestly discharge my duties as assessor of property according to the law, to the best of my knowledge and ability, without fear, favor or affection, so help me God.

    Signed   Assessor of Property

    Subscribed to and sworn before me this  day of  , 20 .”

  2. Each deputy assessor shall likewise take the oath and file the oath with the county clerk before entering upon the discharge of duties.

Acts 1973, ch. 226, § 3; 1981, ch. 305, § 1; T.C.A., § 67-331; Acts 2003, ch. 90, § 2; 2013, ch. 209, § 4.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Amendments. The 2013 amendment inserted “or other official authorized by law to administer oaths” in (a).

Effective Dates. Acts 2013, ch. 209, § 17. April 23, 2013.

Cited: Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998).

67-1-508. Compensation.

  1. The assessor of property of each county or metropolitan government shall receive as compensation an annual salary as established by § 8-24-102.
  2. The legislative or governing bodies of counties and metropolitan governments may from time to time fix the compensation of assessors as may, in their judgment, be necessary and proper in order to attract or retain the service of assessors of professional competence, technical skills and needed administrative abilities, any private acts, charter provisions or other legal restrictions to the contrary notwithstanding.
    1. Out of funds available to the state board of equalization or division of property assessments, the state board may provide grants to counties to fund incentive increases of compensation for those assessors and their deputies who successfully complete certain courses of study and field training, and attain certain levels of increased competence and technical skills as prescribed and provided by the state board of equalization. Grants made pursuant to this subsection (c) shall be used only as a cash salary bonus supplement to the assessor or deputy, and shall not be used to supplant existing salaries or other incentives or as substitutes for normal salary increases periodically due to assessors or their deputies.
    2. Any assessor or deputy assessor who has completed the necessary courses of study and training and has been designated by the International Association of Assessing Officers as a certified assessment evaluator shall receive additional compensation of not less than seven hundred fifty dollars ($750) per annum or ten percent (10%) of the assessor's or deputy assessor's normal annual salary otherwise provided by law, but not to exceed one thousand five hundred dollars ($1,500) per annum under rules established by the state board of equalization.
    3. Any assessor or deputy assessor who has completed the necessary courses of study and training and has been designated by the Tennessee Certified Assessor's Program as a “Tennessee Master Assessor” shall receive additional compensation of one thousand dollars ($1,000) per annum.
    4. Any assessor or deputy assessor who has completed the necessary courses of study and training and either been designated by the Tennessee Certified Assessor's Program as a Tennessee certified assessor, or has been designated by the International Association of Assessing Officers as a residential evaluation specialist shall receive additional compensation of seven hundred fifty dollars ($750) per annum.

Acts 1973, ch. 226, § 3; 1982, ch. 708, § 1; T.C.A., § 67-332; Acts 1984, ch. 674, § 1; 1996, ch. 936, § 1; 2006, ch. 901, § 1; 2007, ch. 602, § 50.

Compiler's Notes. This section may be affected by § 9-1-116, concerning entitlement to funds, absent appropriation.

For the fiscal year county officials salary schedule, see the County Technical Assistance Service web site at http://www.ctas.tennessee.edu

Attorney General Opinions. County assessor of properties as a fee office, OAG 06-031 (2/14/06).

Cited: Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998); Sneyd v. Washington County, 387 S.W.3d 1, 2012 Tenn. App. LEXIS 437 (Tenn. Ct. App. June 28, 2012).

NOTES TO DECISIONS

Decisions Under Prior Law

1. Construction.

Since the office of county tax assessor (now assessor of property) is not a constitutional office but a creature of the legislature, the creator can fix and amend the incidents of the office at will so long as it does so by acts that are in form not subject to constitutional objection and so long as the constitutional rights of individuals are not curtailed. Tenpenny v. Cannon County, 180 Tenn. 618, 177 S.W.2d 817, 1944 Tenn. LEXIS 329 (1944).

67-1-509. Qualifications — Confidentiality of examinations.

  1. To assure that the assessment functions will be performed in a professional manner by competent assessors, meeting clearly specified professional qualifications, the state board of equalization is authorized and directed to prescribe educational and training courses to be taken by assessors and their deputies, and to specify qualification requirements for certification of anyone who is to be engaged to appraise and assess property for the purpose of taxation. Such educational and training courses shall include information on the assessment of conservation and scenic easements and other instruments that limit or restrict the use, management, alteration, demolition or transfer of property for the purpose of preserving property that is of historical, architectural, archaeological or cultural value.
  2. The state board of equalization may authorize the division of property assessments to administer this function under the control and supervision of the state board, to specify the certification requirements of persons who are to be certificated as qualified as local assessors of property, and to prescribe qualifications of those who are to be certified as qualified to act as deputy assessors.
  3. Any specifications or qualifications that shall be determined upon as a prerequisite to receiving and holding a certificate from the state board as qualified to be an assessor or a deputy assessor of property shall be approved and promulgated by the state board of equalization.
  4. It is the legislative intent that this section shall not serve to prevent any duly elected or appointed assessor of property from assuming such office or performing the assessor's legally specified duties.
  5. Notwithstanding § 4-19-101, all examinations administered by the comptroller of the treasury as part of the assessment certification and education program, including, but not limited to, the total bank of questions from which the tests are developed, the answers, and the answer sheets of individual test takers, shall be confidential and shall not be public records or state records open for public inspection pursuant to § 10-7-503.

Acts 1973, ch. 226, § 3; T.C.A., § 67-333; Acts 1988, ch. 531, § 1; 2015, ch. 211, § 1.

Amendments. The 2015 amendment added (e).

Effective Dates. Acts 2015, ch. 211, § 3. April 20, 2015.

Cross-References. Confidentiality of public records, § 10-7-504.

Cited: Pharris v. Looper, 6 F. Supp. 2d 720, 1998 U.S. Dist. LEXIS 7843 (M.D. Tenn. 1998).

67-1-510. Certification and identification of assessors and deputies.

  1. The state board of equalization has the power and the duty to prescribe the educational and training courses to be taken by assessors and their deputies, with a long-range view of gradually raising the professional standards and qualifications required, and has the power and duty to issue certificates to those it has found to be qualified to be assessors and deputy assessors on the basis of their successful completion of such educational and training courses.
  2. The state board shall issue identification cards to all assessors and their deputies. Such identification card shall identify the holder as an assessor or the assessor's deputy. Furthermore, the state board shall issue identification decals for the motor vehicles used by an assessor or the assessor's deputy. Such decal shall identify the motor vehicle as one used by an assessor or the assessor's deputy in the performance of the assessor's or deputy assessor's official duties.

Acts 1973, ch. 226, § 3; 1978, ch. 624, § 1; T.C.A., § 67-334.

67-1-511. Revocation of certificate.

The state board of equalization, subject to proper rules and regulations to be published and furnished to every assessing official, has the power to invalidate the certificate of any assessor or deputy assessor who willfully fails or refuses to perform such person's duties faithfully in accordance with the rules, regulations and instructions promulgated and issued by the state board of equalization, its manuals of assessment and the laws of the state governing the assessment of property and the duties of each assessor and deputy assessor.

Acts 1973, ch. 226, § 3; T.C.A., § 67-335.

67-1-512. Schools and field training courses.

The state board, out of funds available to it by appropriation, may enter into contracts with educational or professional institutions or organizations conducting schools and field training courses for all Tennessee assessors and their deputies in keeping with standards and qualifications adopted or to be adopted.

Acts 1973, ch. 226, § 3; T.C.A., § 67-336.

67-1-513. Office consolidation.

    1. As soon as practicable, and in no event later than January 1 next following completion of countywide reappraisal of property in a county, and establishment of an effective plan of updating of assessments for that county certified by the state board of equalization, all municipal and other assessment offices in that county shall be consolidated with the office of the county assessor and thereafter there shall be only one (1) assessment office in that county, and a single roll shall be furnished at the cost of reproduction for use by all taxing jurisdictions within that county.
    2. However, any municipality that lies within the boundaries of two (2) or more counties may maintain an assessment office separate from the assessment offices of the counties in which such municipality lies, or may contract with the state board of equalization for assessment services for the municipality pursuant to § 67-1-307.
    1. Upon the consolidation of all municipal and other assessment offices within any county with the office of the county assessor of property, all local boards of equalization shall be consolidated with the county board of equalization, and thereafter there shall be only one (1) local board of equalization in the county.
    2. However, if any municipality lying within the boundaries of two (2) or more counties maintains an assessment office separate from the assessment offices of the county in which such municipality lies, or if such municipality contracts with the state board of equalization for the provision of assessment services under § 67-1-307, such municipality shall have a city board of equalization separate from the local boards of equalization of such counties.

Acts 1973, ch. 226, § 3; 1976, ch. 609, §§ 1, 2; 1983, ch. 236, § 1; T.C.A., § 67-337.

67-1-514. Changes in record-keeping systems.

Whenever the county legislative body has inaugurated, set up or approved any system of keeping records in the office of the assessor of property of such county, when such system has been approved by the comptroller of the treasury, such system may not be changed, altered, or abolished without approval of the comptroller of the treasury.

Acts 1973, ch. 226, § 3; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A., § 67-338; Acts 2008, ch. 971, § 1.

Compiler's Notes. Acts 2008, ch. 971, § 1 provided that the code commission is directed to change all references to “tax assessor”, wherever such references appear, to “assessor of property”, as such sections are amended or volumes are replaced. See § 1-1-116.

Part 6
General Revenue Authority of Counties

67-1-601. Counties may impose taxes.

A county legislative body may impose taxes for county purposes, and fix the rate of taxation, at its first session every year; and, if the legislative body omits such duty at the first session, it shall perform it at any subsequent quarterly session.

Code 1858, § 489 (deriv. Acts 1837-1838, ch. 135, § 2); Shan., § 649; Code 1932, § 1048; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A. (orig. ed.), § 67-1005.

Cross-References. Establishment of county tax rate, § 67-5-510.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 5.

Law Reviews.

Tax Limitations of Counties and Municipalities (M. P. O'Connor), 12 Tenn. L. Rev. 174 (1934).

NOTES TO DECISIONS

1. Time of Levy.

A tax levy for the preceding year may be made at a quarterly session during the succeeding year for general purposes; and a void assessment for the preceding year may be ratified by action of the county equivalent to a new levy at the same rate. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873); Southern R. Co. v. Hamblen County, 117 Tenn. 327, 97 S.W. 455, 1906 Tenn. LEXIS 50 (1906).

The term at which taxes are levied does not affect the validity of the tax. Bright v. Halloman, 75 Tenn. 309, 1881 Tenn. LEXIS 121 (1881).

A special tax levied for the current year may be modified by amendment, or a new levy may be made, at the succeeding January session, and the tax may be collected for the year of the original levy. Southern R. Co. v. Hamblen County, 117 Tenn. 327, 97 S.W. 455, 1906 Tenn. LEXIS 50 (1906).

A county may make a levy for special purposes which it has failed to make at a previous term, or which it made at such previous term in an irregular or illegal way. Southern R. Co. v. Hamblen County, 117 Tenn. 327, 97 S.W. 455, 1906 Tenn. LEXIS 50 (1906).

Collateral References. Taxation 371

67-1-602. Limit on county taxation — Equal and uniform taxation.

A county legislative body shall not levy any higher pro rata of taxes on any species of property or privilege than that fixed for the state, but the percentage of such levy, as compared with the state tax, shall be equal and uniform.

Acts 1869-1870, ch. 81, § 9; Shan., § 652; mod. Code 1932, § 1051; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A. (orig. ed.), § 67-1006.

Cross-References. Establishment of county tax rate, § 67-5-510.

Privilege tax, levy by counties and cities, §§ 67-4-501, 67-4-502.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, §§ 5, 8.

Law Reviews.

Tax Limitations of Counties and Municipalities (M. P. O'Connor), 12 Tenn. L. Rev. 174 (1934).

Attorney General Opinions. County wheel tax not limited by this section, OAG 97-109 (8/06/97).

Cited: Bright v. Halloman, 75 Tenn. 309, 1881 Tenn. LEXIS 121 (1881); Treadwell Realty Co. v. City of Memphis, 173 Tenn. 168, 116 S.W.2d 997, 1937 Tenn. LEXIS 23 (1937).

NOTES TO DECISIONS

1. Constitutionality.

Under § 67-1-602 and Tenn. Const., art. II, §§ 28 and 29, the general assembly had authority to impose upon the counties the restrictions contained in this section, and the county must observe the principle of equality and uniformity in levying privilege taxes. The slightest discrimination against any privilege tax will, as to the excess, be oppressive and unlawful. Stern v. Lewis, 2 Shan. 51 (1876).

2. Exemptions.

The county courts (now county legislative bodies) must levy “an equal and uniform” tax on all taxable property in their respective counties, and they can exempt no property from taxation for county purposes that is not also exempt from taxation by the state. Nashville & K. R. Co. v. Wilson County, 89 Tenn. 597, 15 S.W. 446, 1890 Tenn. LEXIS 84 (1891).

67-1-603. Revenue used to discharge debt — Special funds.

  1. All counties that levy and collect taxes for special purposes or to pay off any bonded indebtedness are empowered, through the county legislative bodies, to appropriate and use the funds levied and collected for such purposes to discharge any outstanding bonded indebtedness of the counties.
  2. Such counties have the authority, through the county legislative bodies, to place all the funds levied and collected for special purposes in one (1) fund, to be known as the special fund of the counties, and to appropriate and use the money for the purpose of discharging any bonded indebtedness of the counties.

Acts 1907, ch. 573, §§ 1, 2; Shan., §§ 648a1, 648a2; Code 1932, §§ 1046, 1047; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A. (orig. ed.), §§ 67-1002, 67-1003.

Cross-References. Levy for payment of bonds issued under cash basis law, § 9-11-112.

Tax for retirement of school bonds, § 49-3-1005.

Taxation by county, § 67-5-102.

Law Reviews.

Tax Limitations of Counties and Municipalities (M. P. O'Connor), 12 Tenn. L. Rev. 174 (1934).

Part 7
Collection and Enforcement Generally

67-1-701. When taxes payable.

  1. All taxes, state, county, and municipal, to be collected under this part, parts 10, 15 and 16 of this chapter, and chapter 5, parts 18-20 of this title shall be payable the first Monday in October in each year, except taxes of municipal corporations that, under existing laws, are authorized to collect their own taxes on property and privileges; provided, that, whenever, under any plan or program of consolidation of governmental functions of county offices with comparable facilities provided under any municipal charter, it is expedient to fix different due dates than those established in this subsection (a), in order to avoid the destruction of existing municipal fiscal policies, the county trustee of any county, by and with the consent of a majority of the members of the county legislative body of the county, may establish due dates other than those set forth in this subsection (a).
  2. County revenue shall be collected by the officers at the time and in the manner prescribed for the collection of the state revenue.
  3. All municipal taxes collectible by the county trustee shall become due and delinquent at the same time as state and county taxes; provided, that, whenever, under any plan or program of consolidation of governmental functions of county offices with comparable facilities provided under any municipal charter, it is expedient to fix different due dates than those established in subsection (a), in order to avoid the destruction of existing municipal fiscal policies, the county trustee of any county, by and with the consent of a majority of the members of the county legislative body of the county trustee's county, may establish due dates other than those set forth in subsection (a).

Code 1858, § 491; Shan., §§ 651, 773, 865; mod. Code 1932, §§ 1050, 1350, 1545; Acts 1907, ch. 602, § 41; 1909, ch. 542, § 1; 1961, ch. 312, § 1; 1961, ch. 314, § 1; impl. am. Acts 1978, ch. 934, §§ 7, 36; modified; Acts 1982, ch. 819, § 1; T.C.A. (orig. ed.), §§ 67-1101(a), 67-1102, 67-1103.

Cross-References. Inapplicability of section to real property tax deferral, § 7-64-204.

Payment to trustee, § 67-1-702.

Public building authorities, municipal tax for lease, loan agreement or sale contract payments, § 12-10-115.

Law Reviews.

Tax Limitations of Counties and Municipalities (M. P. O'Connor), 12 Tenn. L. Rev. 174 (1934).

Cited: Marlowe v. Kingdom Hall of Jehovah's Witnesses, 541 S.W.2d 121, 1976 Tenn. LEXIS 532 (Tenn. 1976).

NOTES TO DECISIONS

1. General Consideration.

“Due date” to which T.C.A. § 67-1-701(a) is referring must be the first Monday in October. Multiple Tennessee Attorney General Opinions state that property taxes are both “due and payable” on the first Monday in October; it is clear that Tennessee tax collectors, courts, and attorneys general have long interpreted Tennessee law to mean that property taxes are “due” on the first Monday in October. In re Goody's Family Clothing, Inc., 443 B.R. 5, 2010 Bankr. LEXIS 4120 (3rd Cir. Dec. 1, 2010).

Collateral References. Taxation 371

67-1-702. Payment to trustee.

  1. Every taxpayer shall pay state, county, municipal, highway, school and all of such taxpayer's property taxes to the county trustee, except when otherwise provided by law, and such taxes shall be due and payable on the first Monday in October of each year.
  2. Notwithstanding any law to the contrary, upon adoption of a resolution by the county legislative body, the county trustee may accept property taxes at any time after July 10, prior to the first Monday in October established by § 67-1-701, on which date trustees are required to accept property tax payments, and after the tax rates are finally set, the trustee's tax rolls are received and the trustee's receipts are prepared. County trustees may begin accepting tax relief applications on the same date on which the trustee accepts property tax payments.

Acts 1907, ch. 602, § 48; Shan., § 865a2; Acts 1923, ch. 77, § 1; mod. Code 1932, § 1547; Acts 1971, ch. 380, § 1; 1976, ch. 429, § 1; modified; Acts 1982, ch. 883, §§ 1-3; 1983, ch. 62, §§ 1, 2; 1983, ch. 430, § 2; T.C.A. (orig. ed.), § 67-1105; Acts 1988, ch. 795, § 20; 1989, ch. 291, § 5; 1989, ch. 550, §§ 5, 23; 1996, ch. 717, § 1; 1997, ch. 313, § 1.

Compiler's Notes. Acts 1989, ch. 550, §§ 8-21 were deemed local by the code commission and not codified in this code.

Attorney General Opinions. Duty of county trustee to collect municipal property taxes, OAG 99-183 (9/17/99).

67-1-703. Payment to state — Form — Time.

    1. The commissioner of revenue is empowered to accept, in payment of all taxes collected by the department, evidence satisfactory to the commissioner that the amount due for the tax has been deposited in a state depository designated pursuant to § 9-4-107, which has been approved by the state treasurer, to the credit of the state of Tennessee.
    2. Evidence of the deposit must be furnished to the commissioner on or before the due date of the tax as established by law, and no taxpayer paying taxes in such manner shall be relieved of any penalty for delinquency upon failure of such evidence to be seasonably furnished, except as provided in § 67-1-803.
  1. The commissioner may require that any person owing ten thousand dollars ($10,000) or more in connection with any return, report or other document to be filed with the department, or owing one thousand dollars ($1,000) or more in connection with any return, report or other document to be filed with the department under chapter 6 of this title or chapter 4, part 7 of this title, or owing two thousand five hundred dollars ($2,500) or more in connection with any quarterly estimated payment due under § 67-4-2015(b), shall pay any such tax liability to the state no later than the date the payment is required by law to be made in funds that are immediately available to the state on the date of payment. Payment in immediately available funds may be made by wire transfers of funds through the federal reserve system or by any other means established by the commissioner, with the approval of the state treasurer, that ensures the availability of such funds to the state on the date of payment. Evidence of such payment shall be furnished to the commissioner on or before the due date of the tax as established by law. Failure to timely make such payment in immediately available funds, or failure to provide such evidence of payment in a timely manner, shall subject the taxpayer to penalty and interest as provided by law for delinquent or deficient tax payments. If payment is timely made in other than immediately available funds, penalty and interest shall be added to the amount of tax due from the due date of the tax payment to the date that funds from the tax payment become available to the state.
  2. The commissioner is specifically authorized to establish, by rule, periodic filing and payment dates that are subsequent to the dates otherwise established by law for any taxes collected by the department in those instances where the commissioner deems it to be in the best interest of the state to do so. Such alternative date shall not, however, be later than the last day of the month in which the tax was otherwise due.
  3. The commissioner, in the commissioner's discretion, may require taxpayers who are required to electronically transfer any payment of twenty thousand dollars ($20,000) or more to the department of revenue to also electronically file the return, report or other document with which such electronically transferred payment is associated or on which credit for the payment electronically transferred is taken. In extenuating circumstances, the commissioner has discretionary authority to waive this requirement with respect to any taxpayer. To obtain a waiver, the taxpayer shall demonstrate in writing to the department that such circumstances exist. Any return or tax information, as defined by § 67-1-1701, electronically transferred under this subsection (d) shall constitute confidential information, the disclosure of which shall be subject to part 17 of this chapter.
  4. The commissioner is authorized to prescribe all rules necessary for the administration of this section.
    1. The commissioner is authorized, but not required, to accept credit cards, debit cards, or other similar financial transaction cards in payment of all taxes or other amounts collected by the department. The commissioner may adopt reasonable policies and rules governing the manner of acceptance of such cards.
    2. The commissioner may enter into appropriate agreements with card issuers or other appropriate parties as needed to facilitate the acceptance of payments authorized by this subsection (f). The commissioner may impose a surcharge or convenience fee upon persons making payment by credit card, debit card, or other similar financial transaction cards to wholly or partially offset, in the aggregate, any discount or administrative fees charged to the department on such payments.
    3. The commissioner also may enter into appropriate agreements with third-party service providers for the acceptance and processing of credit card, debit card, or other similar financial transaction card payments on the commissioner's behalf. Such agreements may authorize the third-party service provider to impose a surcharge or convenience fee upon persons making such payments.
    4. When a person elects to make a payment to the department by credit card, debit card, or other similar financial transaction card and a surcharge or convenience fee is imposed as authorized by this subsection (f), the payment of the surcharge or convenience fee shall be deemed voluntary and shall not be refundable. No person making any payment to the department by credit card, debit card, or other similar financial transaction card shall be relieved from liability for the underlying obligation, except to the extent that the department realizes final payment of the underlying obligation in cash or the equivalent. If final payment is not made by the card issuer or other guarantor of payment, then the underlying obligation shall survive and the department shall retain all remedies for enforcement that would have applied if the transaction had not occurred.

Acts 1921, ch. 113, § 2; impl. am. Acts 1923, ch. 7, §§ 19, 24; Acts 1923, ch. 106, § 1; Shan. Supp., § 809a8; Code 1932, § 1478; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; Acts 1965, ch. 5, § 1; 1965, ch. 154, § 1; 1970, ch. 500, § 2; 1970, ch. 559, § 4; 1973, ch. 151, § 1; 1973, ch. 368, § 1; 1973, ch. 373, § 1; 1977, ch. 106, § 1; 1978, ch. 599, § 1; 1980, ch. 460, § 1; 1981, ch. 34, § 1; 1983, ch. 148, § 1; T.C.A. (orig. ed.), § 67-101(3); Acts 1986, ch. 923, § 5; 1989, ch. 332, §§ 1, 2; 1995, ch. 274, § 1; 1998, ch. 657, § 1; 2004, ch. 786, § 1; 2005, ch. 131, § 1; 2007, ch. 602, § 30; 2009, ch. 530, § 94; 2011, ch. 467, § 7.

Code Commission Notes.

Acts 1998, ch. 657, which added (c), provided in § 2 that, prior to January 1, 2000, the provisions of the act shall not apply to any return, report or other document to be filed with the department under the provisions of chapter 4, parts 8 and 9 [repealed] of this title when the taxpayer is required to apportion such taxes.

Cross-References. Confidentiality of public records, § 10-7-504.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 52.

Law Reviews.

Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).

NOTES TO DECISIONS

1. Bank Depository Method of Payment.

Where a taxpayer pays his sales tax pursuant to the bank depository method authorized by this section, the bank acts as the agent of the depositor rather than the agent of the state. Electric Power Bd. v. Woods, 558 S.W.2d 821, 1977 Tenn. LEXIS 660 (Tenn. 1977).

Where sales tax was timely delivered to the bank by a taxpayer utilizing the bank depository method of payment authorized by this section, but where the actual deposit of such sales tax was not made by the bank before the date the tax was due, the mere delivery of the tax payment to the bank was not an actual and constructive payment of the tax to the state, hence the payment was delinquent and it was proper to disallow vendor's compensation and to assess interest and penalties. Electric Power Bd. v. Woods, 558 S.W.2d 821, 1977 Tenn. LEXIS 660 (Tenn. 1977).

67-1-704. Payment to county — Form and receipt.

  1. The trustee shall receive, in discharge of public taxes and other dues to the state, besides the constitutional and lawful currency of the United States:
    1. Warrants on the state treasury legally outstanding in the hands of each person to whom issued and unpaid;
    2. Coins of the United States;
    3. United States legal tender notes;
    4. Federal reserve notes; and
    5. In those counties having a population, according to the 1990 federal census or any subsequent federal census, of not less than thirty-four thousand eight hundred fifty (34,850) nor more than thirty-five thousand (35,000), payment by credit card or debit card.
    1. The trustee shall provide to each taxpayer a receipt printed or written in ink or indelible pencil, for all the taxes paid by the taxpayer.
    2. If a portion of the tax notice is to be retained by the taxpayer, in lieu of the trustee mailing a separate receipt of the payment to the taxpayer, the tax notice shall:
      1. Clearly state such fact; and
      2. Inform the taxpayer that, if the taxpayer desires the trustee to mail a separate receipt of the payment to the taxpayer, the taxpayer must include a self-addressed, stamped envelope when the taxes are paid.
    3. If the trustee provides a separate receipt of all taxes paid by the taxpayer, such receipt shall be numbered and dated.
    1. The trustee, on the payment of all state and county taxes, shall issue to the taxpayers a receipt showing the aggregate of state taxes and the aggregate of county taxes paid by the taxpayers, and each amount so separated and distinguished from the other amount in the receipt that the taxpayer may know, on reading the receipt, the taxes paid to the state and the taxes paid to the county. All tax receipts shall be so printed that, on the margin of the receipt at one (1) end, shall appear the separate levies composing the county rate and the purposes for which levied, and on the margin of the other end shall appear the separate levies composing the state rate and all purposes for which levied; provided, that, where it is impracticable literally to comply with the specific provisions of this subdivision (c)(1) with respect to the separation of state and county taxes, for any cause appearing to the commissioner of revenue, the commissioner is authorized to order such different arrangement of the tax receipt as will substantially comply with the requirements for the separation of the state and county taxes on the receipt.
    2. In counties where the tax assessing and tax collecting authorities use mechanical devices for the printing of assessments and tax receipts, the trustee may omit from such receipts the listing of the several levies composing the county rate and the purposes for which levied and statements with regard to any state levies; provided, that any taxpayer requesting such statement with regard to the levies shall be furnished a statement by the trustee.
  2. It is the duty of the county legislative body of each county to furnish the county trustee of the county with a sufficient number of tax receipts printed in duplicate and in a blank form in a book or books numbered from one (1) up, consecutively, and shall have the year for which the taxes are due printed in large figures, not less than one inch (1") deep, on the face of each receipt. The trustee shall be charged with these receipts, and must, in the trustee's final settlement, account for each blank receipt so received by the trustee. No payment to the trustee of any tax shall be legal and binding unless paid upon the regular tax receipt specified in this subsection (d), and duplicate receipts shall be preserved in the book or books, to be submitted to the county legislative body by the trustee whenever required to do so. The receipt book of duplicates, when filled, shall be filed in the office of the county clerk for reference, and shall be receipted for by the clerk and carefully preserved in the clerk's office as a record for the protection of taxpayers who have paid their taxes and lost or misplaced their receipts.
  3. Any trustee that properly collects state and county taxes by credit or debit card is authorized to collect a fee for processing any payment by credit or debit card; provided, that the fee shall not exceed the amount that the card issuer charges the trustee in connection with honoring the credit or debit card payment.
  4. As used in this section, unless the context otherwise requires:
    1. “Credit card” has the same meaning as set forth in § 39-14-102;
    2. “Debit card” has the same meaning as set forth in § 39-14-102; and
    3. “Issuer” has the same meaning as set forth in § 39-14-102.
  5. If a payment by credit or debit card is not honored by the issuer, the trustee may collect a service charge from the person who owes the public taxes. The service charge is in addition to the public taxes for which the credit or debit card was used and the original processing fee. The amount of the service charge shall be the same amount as the fee charged by the trustee for the collection of a check drawn on an account with insufficient funds.

Code 1858, § 603; Acts 1869-1870, ch. 81, § 2; 1879, ch. 139, § 4; 1889, ch. 200, § 1; integrated in Shan., §§ 871-873; mod. Code 1932, §§ 1550-1553; modified; Acts 1907, ch. 602, § 42; 1925, ch. 135, § 2; 1937, ch. 46, § 1; C. Supp. 1950, § 1551; Acts 1957, ch. 147, § 1; impl. am. Acts 1959, ch. 9, § 14; impl. am. Acts 1978, ch. 934, §§ 7, 22, 36; T.C.A. (orig. ed.), §§ 67-1108 — 67-1111; Acts 1999, ch. 474, §§ 1, 2; 2004, ch. 682, § 1.

Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

NOTES TO DECISIONS

1. Notes of Bank of Tennessee.

Taxpayer was entitled to pay taxes with notes issued by The Bank of Tennessee where bank charter stipulated that notes issued by bank should be received by all tax collectors in payment of taxes. Furman v. Nichol, 75 U.S. 44, 19 L. Ed. 370, 1868 U.S. LEXIS 1082 (1869).

2. Presumption of Performance of Duty.

It is presumed the trustee will do his duty in making out a slip to taxpayers so as to show division of public school funds. State ex rel. Cope v. Davidson County, 198 Tenn. 24, 277 S.W.2d 396, 1955 Tenn. LEXIS 340 (1955).

67-1-705. Collection fees.

No clerk, or other officer, shall make any charge for any statement, certificate, or receipt for taxes, except as provided in § 67-5-2007. Nothing in this section shall be construed to limit the ability of the trustee to request the taxpayer to include a self-addressed, stamped envelope if the taxpayer desires the trustee to mail a separate receipt of the payment of taxes to the taxpayer pursuant to § 67-1-704(b)(2)(B).

Acts 1881, ch. 163, § 1; Shan., § 874; mod. Code 1932, § 1563; T.C.A. (orig. ed.), § 67-1119; Acts 2004, ch. 682, § 2.

67-1-706. Collection of excessive tax prohibited.

It is a Class C misdemeanor for a collector of taxes to collect, under the color or pretense of office, more money, in the name of taxes, than is directed by law.

Code 1858, § 605; Shan., § 875; Code 1932, § 1564; T.C.A. (orig. ed.), § 67-1120; Acts 1989, ch. 591, § 113.

Cross-References. Penalty for Class C misdemeanor, § 40-35-111.

67-1-707. Adjustments and refunds.

  1. The county clerks of the various counties are also authorized and empowered to settle and adjust with taxpayers all errors and double assessments of county taxes erroneously or illegally collected by them and to direct the refunding of the taxes. Any claim for such refund by the county of taxes or revenue alleged to have been erroneously or illegally paid shall be filed with the county clerk, supported by proper proof within one (1) year from the date of payment; otherwise, the taxpayer shall not be entitled to a refund and the claim for refund shall be barred.
  2. Subsection (a) also applies to municipalities and municipal taxpayers; provided, however, that in the case of claims made for refund of municipal taxes, the duties, obligations, and responsibilities of the county clerk described in subsection (a) shall be performed by the city recorder, city clerk, or director of finance of the municipality acting under the direction and authority of the mayor or city manager.

Acts 1923, ch. 66, § 1; Shan. Supp., § 373a45; Acts 1927, ch. 89, § 18; mod. Code 1932, § 270; Acts 1935, ch. 167, § 1; 1937, ch. 108, art. 3, § 15; 1949, ch. 260, § 1; mod. C. Supp. 1950, §§ 270, 270.1; (Williams, §§ 270, 270.1, 270.2, 1248.142i); Acts 1951, ch. 215, § 1; 1951, ch. 264, § 2; 1955, ch. 184, § 1; impl. am. Acts 1959, ch. 9, § 14; Acts 1965, ch. 7, § 1; 1969, ch. 142, § 1; 1972, ch. 461, §§ 1, 2; modified; 1974, ch. 566, § 1; 1978, ch. 646, § 1; impl. am. Acts 1978, ch. 934, §§ 22, 36; Acts 1983, ch. 264, § 1; T.C.A. (orig. ed.), §§ 67-2301, 67-2302; Acts 1984, ch. 724, § 1; 1986, ch. 749, § 4; 2004, ch. 420, § 1.

Cross-References. Authority for refunds and settlements in metropolitan government areas, § 7-4-108.

Penalties and interest, § 67-1-801.

Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 970.

Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 71.

Law Reviews.

A Revolution in Tennessee Tax Procedure (S. Gale Graham), 22, Tenn. B.J. 13 (1986).

Cited: Fentress County Bank v. Holt, 535 S.W.2d 854, 1976 Tenn. LEXIS 586 (Tenn. 1976); Stroop v. Rutherford County, 567 S.W.2d 753, 1978 Tenn. LEXIS 605 (Tenn. 1978); Federal Express Corp. v. Woods, 569 S.W.2d 408, 1978 Tenn. LEXIS 617 (Tenn. 1978); McDowell Dev. Corp. v. Ferguson, 579 S.W.2d 863, 1978 Tenn. App. LEXIS 341 (Tenn. Ct. App. 1978).

NOTES TO DECISIONS

1. In General.

In suit for tax refund mandamus did not lie since this section empowers and directs the commissioner to make refunds only in those cases where he has the approval of the attorney-general and reporter to do so. Seagle—Paddock Pools, Inc. v. Benson, 503 S.W.2d 93, 1973 Tenn. LEXIS 431 (Tenn. 1973).

To recover under this chapter, plaintiff must show that the taxing statute, in terms, imposes the tax upon him and creates obligations owing by him to the taxing authority; it is not enough to show that in the course of business the economic burden of the tax was passed on to plaintiff by the true taxpayer. Brodbine v. Torrence, 545 S.W.2d 743, 1977 Tenn. LEXIS 608 (Tenn. 1977).

2. Remedies.

Taxpayer has two remedies for the recovery of county taxes, namely: (1) The administrative procedure provided under this section; and (2) Payment under protest and a common law suit for recovery, such suit being in the nature of an action of assumpsit for money had and received and governed by a six-year statute of limitation. Holloway v. Putnam County, 534 S.W.2d 292, 1976 Tenn. LEXIS 591 (Tenn. 1976); Bill's Institutional Commissary Corp. v. Shelby County, 584 S.W.2d 805, 1979 Tenn. App. LEXIS 321 (Tenn. Ct. App. 1979).

The legislature intended § 67-4-713 to be a separate procedure from that set out in this chapter. Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982).

Payment under protest under this chapter is not a prerequisite to recovery of taxes from a city under § 67-4-713. Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982).

The remedy afforded by this section was permissive, not mandatory, was final, and not subject to judicial review. Hertz Corp. v. County of Shelby, 667 S.W.2d 66, 1984 Tenn. LEXIS 772 (Tenn. 1984).

3. Judicial Review.

The action of the commissioner of revenue denying a claim for refund of sales and use taxes paid is not subject to judicial review under title 4, chapter 5. Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982).

Collateral References.

Amending claim for refund of taxes after time for filing has expired. 113 A.L.R. 1291.

Bankruptcy trustee's right to claim against government for tax refund. 102 A.L.R. 168.

Barred claim of government against taxpayer as available to defeat or diminish claim of taxpayer against government, or vice versa. 109 A.L.R. 1354, 130 A.L.R. 838, 154 A.L.R. 1052, 12 A.L.R.2d 815.

Conclusiveness of tax receipt. 73 A.L.R. 152.

Constitutionality of statute providing for refund of taxes illegally or erroneously exacted. 98 A.L.R. 284.

Corporation which paid tax wrongfully exacted upon shares of its stock as proper party to maintain action for its recovery. 84 A.L.R. 107.

Excessive assessments as within contemplation of statute providing for refunding of taxes, “erroneously or illegally charged.” 110 A.L.R. 670.

Judicial decision denying power of state to levy tax as supporting recovery of taxes paid at time when power of state to levy tax had been judicially upheld. 115 A.L.R. 641.

Limitation period for filing applications for refund, when begins to run. 175 A.L.R. 1100.

Mandatory or permissive character of legislation in relation to refund of taxes illegally exacted. 103 A.L.R. 817.

Propriety of class action in state courts to recover taxes. 10 A.L.R.4th 655.

Right to interest on tax refund or credit in absence of specific controlling statute. 88 A.L.R.2d 823.

Right to refund or recovery back of taxes paid on property not owned by taxpayer. 165 A.L.R. 879.

Suit against officer to recover tax upon ground of unconstitutionality of statute as suit against state. 43 A.L.R. 408.

Tax illegally exacted, judgment in favor of taxpayer for recovery of, as subject to provisions of statute regarding substance and form, manner of collection, or enforcement of judgment against municipality. 101 A.L.R. 800.

Time for claiming refund where tax is paid in instalments. 94 A.L.R. 978.

Unconstitutional statute or ordinance, recovery of tax paid under. 48 A.L.R. 1381, 74 A.L.R. 1301.

Who as between grantor and grantee, immediate or remote, is entitled to refund of tax. 105 A.L.R. 698.

67-1-708. Waiver of enforcement and collection.

The commissioner may waive enforcement and collection of any tax imposed under any revenue laws administered by the commissioner, in any case of deficiency, if:

  1. The amount of such deficiency is the lesser of ten dollars ($10.00) or ten percent (10%) of the total tax due;
  2. The commissioner determines that the cost to the department to collect such deficiency would be equal to or greater than the tax collected; and
  3. The commissioner determines that the deficiency does not result from fraud or an intention to avoid payment.

Acts 1985, ch. 297, § 1.

Part 8
Penalties and Interest

67-1-801. Rate of penalty and interest.

    1. When any person liable to pay any tax that is collected or administered by the commissioner of revenue fails to pay the tax, or any portion of the tax, on or before the date when such tax shall be required to be paid, interest shall be added to the amount of tax due, in addition to any penalty provided by law, at a rate to be determined by the commissioner in the manner provided in this subsection (a).
      1. The rate of interest determined by the commissioner shall be the formula rate of interest last published in the Tennessee Administrative Register, pursuant to title 47, chapter 14.
      2. The commissioner shall determine the rate of interest by causing notice of such rate to be filed with the secretary of state on July 1 each year, for publication in the Tennessee Administrative Register.
      3. The rate of interest determined by the commissioner shall become effective on July 1 of each year, and shall apply to all assessments of interest on and after July 1 of each year, until July 1 of the following year when the rate of interest shall be redetermined by the commissioner.
      4. The determination of the commissioner of the rate of interest on delinquent and deficient tax payments and the filing of notice thereof, as provided for in this chapter shall not constitute a rule under the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
    2. All delinquent or deficient payments of taxes, either administered or collected by the commissioner, shall accrue interest from the date delinquent or deficient until paid. For periods prior to the date of final assessment, interest shall accrue at the prevailing rate in effect on the date of the final assessment, regardless of the taxable period involved. For periods subsequent to the date of final assessment, interest shall accrue at the prevailing rate in effect on the date of the accrual of such interest.
    3. Any interest imposed on delinquent or deficient tax payments shall be considered part of such delinquent or deficient taxes and shall be payable to and collectible by the commissioner in the same manner as the tax is paid and collected.
    4. In any case where the commissioner, in the commissioner's discretion, agrees to permit a taxpayer to pay a tax liability to the department in installments over an extended period, the interest payable on the liability shall be computed at the time the taxpayer executes an agreement to do so.
      1. The interest shall be computed at a rate not to exceed the highest rate allowable by law in Tennessee on short-term business loans and upon the basis of the total tax, penalty and interest owed by the taxpayer at the time the agreement is made.
      2. If the taxpayer makes all of the monthly installment payments on a timely basis, no additional interest shall be computed on the liability covered by the agreement.
      3. If an installment payment is delinquent, additional interest shall be computed on the delinquency at the stated rate, and penalty shall be computed only if allowed by any other law.
      4. Any change in the interest rate shall be effective only after a notice of the change has been filed with the secretary of state. This notice shall not constitute a rule under the Uniform Administrative Procedures Act.
    5. Tax returns filed prior to the due date shall be deemed to be filed on the due date, rather than on the date actually filed.
    6. Notwithstanding the provisions of this section or any law to the contrary, no interest shall be imposed on delinquent or deficient payments of litigation taxes to be collected by the clerk of the appellate courts.
    1. When it is determined by administrative review that a person is entitled to a refund or credit of any tax collected or administered by the commissioner, and such person is not a debtor as defined in § 67-1-1808, interest shall be added to the amount of refund or credit due, beginning forty-five (45) days from the date the commissioner receives proper proof to verify that the refund or credit is due and payable. In the case of a taxpayer who is a debtor as defined in § 67-1-1808, when it is determined by administrative review that such taxpayer is entitled to a refund or credit of any tax collected or administered by the commissioner, interest shall be added to the amount of refund or credit due, beginning ninety (90) days from the date the commissioner receives proper proof to verify that the refund or credit is due and payable.
    2. When it is determined by court order that a person is entitled to a refund or credit of any tax collected or administered by the commissioner, interest shall be added to the amount of refund or credit due, beginning:
      1. Forty-five (45) days from the date of filing a claim for refund, pursuant to § 67-1-1802(a);
      2. Forty-five (45) days from the date of waiver by the commissioner, pursuant to § 67-1-1802(c)(3);
      3. On the date of payment, in the case of any tax collected after suit was filed under § 67-1-1801; or
      4. Ninety (90) days from the date of filing a claim for refund in the case of a taxpayer who is a debtor as defined in § 67-1-1808.
    3. The rate of interest to be paid pursuant to this subsection (b) shall be determined as provided in subsection (a).
    4. Except for taxes collected after suit is filed under § 67-1-1801, no interest shall be added to any refund made, or credit given, by the commissioner for which no claim for refund or application for credit is made by the taxpayer, pursuant to § 67-1-1802(a), or for which the requirement that the taxpayer file a claim for refund is waived by the commissioner, pursuant to § 67-1-1802(c)(3).
  1. Notwithstanding the provisions of this section, interest added to highway user fuel tax due or interest added to refunds of such taxes shall be computed in accordance with § 67-3-710 [repealed].

Acts 1907, ch. 602, §§ 48, 73; Shan., §§ 865a2, 865a3; Acts 1923, ch. 77, § 1; mod. Code 1932, §§ 1547, 1548; Acts 1971, ch. 380, § 1; 1974, ch. 693, § 1; 1976, ch. 429, § 1; 1978, ch. 802, § 1; 1980, ch. 885, § 1; modified; Acts 1982, ch. 883, §§ 1-3; 1983, ch. 62, §§ 1, 2; 1983, ch. 238, §§ 3, 4; 1983, ch. 430, § 2; T.C.A. (orig. ed.), §§ 67-112, 67-1105(b), 67-1106; Acts 1984, ch. 580, § 1; 1985, ch. 203, §§ 1, 2; 1986, ch. 749, § 3; 1986, ch. 851, § 1; 1987, ch. 2, §§ 1, 2; 1988, ch. 526, § 5; 1988, ch. 795, §§ 17, 18; 1989, ch. 291, § 4; 1989, ch. 550, § 4; 1993, ch. 142, § 15; 2002, ch. 559, § 3; 2005, ch. 499, § 28; 2010, ch. 1113, §§ 2, 3; 2014, ch. 854, § 3.

Code Commission Notes.

Acts 1988, ch. 526, § 45 provided that the amendment by that act shall apply to all assessments of penalty made on or after January 1, 1989.

Compiler's Notes. Section 67-3-710, referred to in this section, was repealed by Acts 1997, ch. 316, § 1, effective January 1, 1998. For new provisions concerning highway user fuel tax, see §§ 67-3-120167-3-1210.

Acts 2010, ch. 1113, § 8 provided that any claimant may promulgate rules to effectuate the provisions of the act relating to internal procedures for reporting debts and conducting administrative hearings. The department of revenue may promulgate such other rules to carry out the remaining provisions of the act.

Acts 2010, ch. 1113, § 9 provided that the act, which amended subsection (b), shall apply to any claim for refund filed with the department of revenue on or after July 1, 2009, that has not been finally determined.

Amendments. The 2014 amendment, effective January 1, 2015,  substituted “final assessment” for “tax assessment” twice in the second sentence and once in the last sentence of (a)(2).

Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.

Cross-References. Delinquent property taxes, title 67, ch. 5, part 20.

Effect of appeal or reappraisal on payment of interest and penalties on delinquent taxes, § 67-5-1512.

Penalty and costs, § 67-1-1008.

Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), §§ 944, 963.

Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 49.

Law Reviews.

A Revolution in Tennessee Tax Procedure (S. Gale Graham), 22 Tenn. B.J. 13 (1986).

Taxing Tennessee: New Business Taxes for 1999 (J. Leigh Griffith), 35 Tenn. B.J. 12 (1999).

Cited: Cummings v. Shipp, 156 Tenn. 595, 3 S.W.2d 1062, 1928 Tenn. LEXIS 241 (1928); Esch v. Wilcox, 181 Tenn. 165, 178 S.W.2d 770, 1944 Tenn. LEXIS 355 (1944); Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964); Genesco, Inc. v. Woods, 578 S.W.2d 639, 1979 Tenn. LEXIS 419 (Tenn. 1979); James v. Huddleston, 795 S.W.2d 661, 1990 Tenn. LEXIS 308 (Tenn. 1990).

NOTES TO DECISIONS

1. Extension of Time.

Any extension of time of payment must have uniform application to all counties. Shipp v. Cummings, 158 Tenn. 526, 14 S.W.2d 747, 1928 Tenn. LEXIS 183 (Tenn. Mar. 18, 1929).

2. Penalties.

Railroad company which secured injunction of tax assessment and court decree that assessment was illegal was liable for penalty and interest on payment of subsequent valid assessment. Illinois Cent. R.R. v. Garner, 190 Tenn. 694, 231 S.W.2d 352, 1950 Tenn. LEXIS 536 (1950).

3. Expenses of Administration.

Interest paid on Tennessee inheritance taxes and federal estate taxes is an expense of administration and is deductible for purposes of the Tennessee inheritance tax. Cleveland Bank & Trust Co. v. Olsen, 682 S.W.2d 200, 1984 Tenn. LEXIS 904 (Tenn. 1984).

4. Interest on Delinquencies.

An uncodified provision that the 1980 amendments to T.C.A. § 67-1-801 should be operative upon all assessments of interest made on or after July 1, 1980, without regard to the taxable period involved, does not change the unambiguous language of subdivision (a)(2) (as it existed prior to amendment in 1986) that interest shall accrue on delinquencies at the rate of interest in effect at the time the payment became due. Combustion Engineering, Inc. v. Jackson, 705 S.W.2d 655, 1986 Tenn. LEXIS 826 (Tenn. 1986).

5. Proper Proof.

First amended estate tax return did not constitute the proof necessary to verify the entitlement to and amount of inheritance and estate tax refunds due to the estate under T.C.A. § 67-1-801(b) since: (1) The first amended return included the order from the underlying legal dispute over the amount of wife's marital share and stated that the wife's share (and, consequently, the amount of the estate's inheritance tax refund) was contingent upon the federal tax treatment of the additional claimed deductions; (2) Without any documentation regarding the Internal Revenue Service's (IRS) treatment of the additional deductions claimed by the estate, it would have been impossible to determine the amount of inheritance tax refund; (3) The order linked the federal government's treatment of the claimed deductions to the inheritance tax refund due; and (4) The IRS's response to the Commissioner of the Tennessee Department of Revenue's inquiry was necessary for a determination of the refund from the first amended return. Boote v. Roberts, — S.W.3d —, 2013 Tenn. App. LEXIS 222 (Tenn. Ct. App. Mar. 28, 2013).

Second amended estate tax return did not constitute the proof necessary to verify the entitlement to and amount of an inheritance and estate tax refunds due to the estate under T.C.A. § 67-1-801(b) since: (1) The refund was dependent on the final determination from the Internal Revenue Service (IRS) of the federal estate tax; (2) The estate indicated that the estate tax refund was requested as a part of the amended inheritance tax return; (3) Even though the inheritance tax refund might not have been affected by the IRS determination of the federal estate tax, the estate tax refund could not be determined until the IRS issued a final determination; (4) The final determination was not provided to the Commissioner of the Tennessee Department of Revenue until April 1, 2011; and (5) Proper proof to verify the entire refund on the second amended return was not provided to the Commissioner until that date. Boote v. Roberts, — S.W.3d —, 2013 Tenn. App. LEXIS 222 (Tenn. Ct. App. Mar. 28, 2013).

Trial court did not err in finding that proper proof was not supplied until March 14, 2014 because the data originally provided was not sufficient for the Commissioner of Revenue to conduct the review of the refund claim; the review process was uniquely within the purview of the Commissioner and his auditing staff, as the trial court was ill equipped to conduct such an audit and conclude that a refund was or was not due. Mobility II LLC v. Roberts, — S.W.3d —, 2016 Tenn. App. LEXIS 743 (Tenn. Ct. App. Sept. 30, 2016), appeal denied, AT&T Mobility II, LLC v. Roberts, — S.W.3d —, 2017 Tenn. LEXIS 121 (Tenn. Feb. 15, 2017).

6. Interest on Refund.

Because no action by or order of the trial court resolved the taxpayer's refund claim, subsection (b)(2) did not apply; the Commissioner of Revenue granted the refund after an extensive review, the claim was resolved through the administrative process, and by operation of subsection (b)(1), interest on the refund was calculated from the date the taxpayer provided proper proof of the claim to the Commissioner. Mobility II LLC v. Roberts, — S.W.3d —, 2016 Tenn. App. LEXIS 743 (Tenn. Ct. App. Sept. 30, 2016), appeal denied, AT&T Mobility II, LLC v. Roberts, — S.W.3d —, 2017 Tenn. LEXIS 121 (Tenn. Feb. 15, 2017).

Decisions Under Prior Law

1. Penalties.

Amount of taxes due against life tenant is deductible from amount due remaindermen from partition sale but remaindermen are not liable for penalties, since duty to pay taxes is on the life tenant. Hadley v. Hadley, 114 Tenn. 156, 87 S.W. 250, 1904 Tenn. LEXIS 79 (1905).

2. Tax Paid Under Protest.

Taxpayer was not entitled to recover amount paid on illegal assessed tax where he paid same on day before tax became delinquent in order to avoid penalties and interest in the absence of a demand for payment even though receipt contained notation that tax was paid under protest. Cincinnati, N.O. & T.P.R.R. v. Hamilton County, 120 Tenn. 1, 113 S.W. 361, 1907 Tenn. LEXIS 35 (1907).

Collateral References.

Constitutional provision against imprisonment for debt as applicable to nonpayment of tax. 48 A.L.R.3d 1324.

Contest in good faith of validity of tax as affecting liability to penalty for failure to pay tax. 96 A.L.R. 925, 147 A.L.R. 142.

Declaratory judgment as to tax penalty. 132 A.L.R. 1145, 11 A.L.R.2d 359.

Doubt as to liability for, or as to person to whom to pay, tax, as affecting liability for penalties and interest. 137 A.L.R. 306.

Executor, administrator, or trustee, penalties or interest incurred by, as a charge against him personally or against the estate. 47 A.L.R.3d 507.

Injunction against assessment or collection of tax, applicability of statute denying remedy by, in case of attempt to collect penalties and coercive exactions. 108 A.L.R. 209.

Judgment for taxes, provisions in, as regards future penalties. 93 A.L.R. 793.

Notice to taxpayer, lack of, as affecting penalty for nonpayment of taxes when due. 102 A.L.R. 405.

Retroactive effect of statutes relating to interest on delinquent taxes. 77 A.L.R. 1034.

Time of mailing or time of receipt as determinative of liability for penalty or additional amount for failure to pay tax within prescribed time. 158 A.L.R. 370.

Voluntary character of payment of tax made to avoid penalty. 64 A.L.R. 42, 84 A.L.R. 294.

Taxation 371

67-1-802. Abatement or waiver of penalty.

The commissioner is authorized to abate, in whole or in part, any statutory penalty imposed under any revenue laws administered by the commissioner in any case of deficiency tax collection made by the department in connection with an audit conducted by it, if the commissioner determines that the payment by a taxpayer of a tax in an amount less than that due under the applicable laws and rules and regulations relates to a taxable period covered by a timely filed return and is not the result of:

  1. Negligence or intentional disregard of the tax law or rules and regulations; or
  2. Fraudulent underpayment of the tax.

Acts 1921, ch. 113, § 2; impl. am. Acts 1923, ch. 7, §§ 19, 24; Acts 1923, ch. 106, § 1; Shan. Supp., § 809a8; Code 1932, § 1478; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; Acts 1965, ch. 5, § 1; 1965, ch. 154, § 1; 1970, ch. 500, § 2; 1970, ch. 559, § 4; 1973, ch. 151, § 1; 1973, ch. 368, § 1; 1973, ch. 373, § 1; 1977, ch. 106, § 1; 1978, ch. 599, § 1; 1980, ch. 460, § 1; 1981, ch. 34, § 1; 1983, ch. 148, § 1; T.C.A. (orig. ed.), § 67-101(4); Acts 1988, ch. 526, § 7.

Code Commission Notes.

Acts 1988, ch. 526, § 45 provided that the amendment by that act shall apply to all assessments of penalty made on or after January 1, 1989.

Law Reviews.

Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).

67-1-803. Waiver of penalty.

    1. The commissioner is authorized to waive, in whole or in part, any statutory penalty imposed under any revenue laws administered by the commissioner in any case of deficiency or delinquency tax collection made by the department, if the commissioner determines that the payment by a taxpayer of a tax in an amount less than that due under the applicable laws and regulations, or that the failure of a taxpayer to pay any tax by the due date is the result of one (1) or more of the good and reasonable causes enumerated in subsection (c) and is not a result of gross negligence or willful disregard of the law.
    2. Under no circumstances, however, shall this authority be deemed to extend to any interest payable under the law in connection with any case of tax deficiency or delinquency.
    3. The commissioner shall prescribe and publish rules and regulations governing the manner in which applications for a waiver of penalty shall be accepted and processed.
  1. Initial receipt, review and recommendation for approval or disapproval of each application for waiver of penalty, as authorized in subsection (a), shall be made by the director, or the director's delegate, of the division or agency within the department charged by the commissioner with the enforcement of the tax involved. The commissioner or the commissioner's delegate shall thereafter review and approve or disapprove each application for waiver of penalty, as the commissioner or the commissioner's delegate may deem proper, and such determination by the commissioner or the commissioner's delegate shall constitute the determinative and final decision on the application.
    1. In the case of a tax deficiency, that is constituted by a failure to pay the full amount of tax due under the law, the following specific causes, if clearly established by the taxpayer, shall be acceptable as good and reasonable cause for the waiver of penalty:
      1. The taxpayer incurred the deficiency as a result of having been misled by erroneous advice or action, that was not clearly in contravention of the law, on the part of officials charged with the enforcement of this state's tax statutes;
      2. The taxpayer incurred the deficiency as a result of legal misadvice that was not clearly in contravention of the law, from an ostensibly competent and financially independent lawyer or accountant;
      3. The provisions of the pertinent law or regulation were, at the time the deficiency was incurred, unsettled, unclear, and misleading to a reasonable person; and the taxpayer acted in good faith on a reasonable, though mistaken, application of such law or regulation, with the result that the tax deficiency in question was incurred;
      4. The deficiency resulted from reliance by the taxpayer upon factual, but not legal, misrepresentations made by persons with whom the taxpayer dealt in the course of the taxpayer's business, other than the taxpayer's own agents or employees, the taxpayer having no reason to doubt or question such misrepresentations; or
      5. The deficiency resulted from a mistake of fact on the part of the taxpayer, who thereafter voluntarily and without any kind of demand upon the part of the officials charged with the enforcement of the law, tenders the amount of the deficiency, plus accrued interest.
    2. If the cause for the deficiency does not comport with any of the causes provided for in subdivision (c)(1), a determination may be made, nevertheless, as to whether the statement of facts submitted by the taxpayer, or known to the commissioner, establishes a good and reasonable cause. Any cause for a deficiency may be accepted as a good and reasonable cause that appears to the commissioner to justify a conclusion by the commissioner that the taxpayer has done everything the taxpayer could reasonably be expected to do as an ordinarily intelligent and reasonably prudent business person and that clearly negates either a willful disregard of the law or gross negligence.
    1. In the case of a tax delinquency of not more than thirty (30) days, which is constituted by a failure to file a return and pay the tax within not more than thirty (30) days after the time prescribed by law, the following specific causes, if clearly established by the taxpayer, shall be acceptable as good and reasonable cause for the waiver of penalty:
      1. Return was timely mailed, but for reasons either known or unknown was not timely received or not received at all, and the taxpayer satisfactorily explains noncompliance within § 67-1-107;
      2. Delinquency was due to erroneous information given the taxpayer by an official charged with the enforcement of this state's tax statutes;
      3. Delinquency was attributable to an intervening providential cause, such as, but not limited to, the occurrence of a disabling injury, illness, or death of the taxpayer, or a member of the taxpayer's immediate family, or of a person upon whom the taxpayer has heretofore exclusively relied for the preparation of the taxpayer's returns, and such intervening cause occurred prior to the date on which the required return and payment would otherwise be deemed delinquent;
      4. Delinquency was caused by unavoidable absence of the taxpayer or a person upon whom the taxpayer has heretofore exclusively relied for the preparation of the taxpayer's returns;
      5. Delinquency was caused by the destruction by fire or other casualty of the taxpayer's place of business or business records;
      6. The taxpayer proves that the taxpayer made timely application to the department for the proper tax forms, and these were not furnished the taxpayer in sufficient time to permit the executed return to be filed on or before the due date;
      7. The taxpayer proves that the taxpayer personally visited an office of the department before the expiration of the time within which to file the required return for the purpose of securing information or aid to properly make out the taxpayer's return and, through no fault of the taxpayer, was unable to secure such information or aid;
      8. Delinquency was a result of the taxpayer's failure to enclose a negotiable instrument, as defined by the Uniform Commercial Code, compiled in title 47, with the taxpayer's timely filed return, and the taxpayer promptly responds to a request for payment upon notification thereof, and satisfactorily demonstrates such failure was due to an inadvertent oversight or error; or
      9. Delinquency becomes apparent when the taxpayer voluntarily pays the tax but, for any legal reason, the department would be unable to enforce collection, such as the collection would be barred by the statute of limitations, the lack of jurisdiction or other similar reason.
    2. If the cause for the delinquency does not comport with any of the causes provided for in subdivision (d)(1), or if the delinquency is of more than thirty (30) days' duration, a determination may be made, nevertheless, as to whether the statement of facts submitted by the taxpayer, or known to the commissioner, establishes a good and reasonable cause. Any cause for a delinquency may be accepted as a good and reasonable cause that appears to the commissioner to justify a conclusion by the commissioner that the taxpayer has done everything the taxpayer could reasonably be expected to do as an ordinarily intelligent and reasonably prudent business person, and that clearly negates either a willful disregard of the law or gross negligence.
    3. Notwithstanding subdivisions (d)(1) and (2), the commissioner may accept as good and reasonable cause for waiver of a delinquency penalty the fact that the taxpayer has timely filed and paid such tax for a period of at least two (2) years next preceding the due date of the delinquent return and payment, if the specific cause for the delinquency does not constitute a willful disregard of the law or gross negligence. If the taxpayer has filed estimated payments of franchise and excise taxes by the due date as required by § 67-4-2015 for a period of at least two (2) years, but the estimated payments resulted in an underpayment for which penalties and interest accrued, the commissioner may consider such estimated payments to be filed in a timely manner for purposes of establishing good and reasonable cause under this subdivision (d)(3).
    1. There shall be no judicial review of the commissioner's action upon applications for waiver of penalty as authorized in subsection (a) otherwise than as provided in part 9 of this chapter.
    2. The commissioner's action upon all applications for waiver of penalty made under this section shall be deemed final.
    3. Prior determinations of the attorney general and reporter as to what constitutes good and reasonable cause for a deficiency shall serve as a guide and standard of reference for future decisions whenever those determinations may be applicable to the specific cause established.
      1. The commissioner is authorized, in the commissioner's discretion, to designate subordinate officials in the department to waive, on the commissioner's behalf, penalties in amounts of five thousand dollars ($5,000) or less.
      2. The commissioner is authorized, in the commissioner's discretion, to waive penalties in amounts of fifteen thousand dollars ($15,000) or less.
      3. The commissioner is authorized, in the commissioner's discretion, to waive penalties in amounts of more than fifteen thousand dollars ($15,000); provided, that the attorney general and reporter may require that such waivers or any class of such waivers be subject to the attorney general and reporter's prior review and approval.

Acts 1921, ch. 113, § 2; impl. am. Acts 1923, ch. 7, §§ 19, 24; Acts 1923, ch. 106, § 1; Shan. Supp., § 809a8; Code 1932, § 1478; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; Acts 1965, ch. 5, § 1; 1965, ch. 154, § 1; 1970, ch. 500, § 2; 1970, ch. 559, § 4; 1973, ch. 151, § 1; 1973, ch. 368, § 1; 1973, ch. 373, § 1; 1977, ch. 106, § 1; 1978, ch. 599, § 1; 1980, ch. 460, § 1; 1981, ch. 34, § 1; 1983, ch. 148, § 1; T.C.A. (orig. ed.), § 67-101(5); Acts 1984, ch. 550, § 1; 1984, ch. 832, § 2; 1988, ch. 526, § 8; 1992, ch. 626, § 1; 2011, ch. 467, § 9; 2015, ch. 514, § 2; 2016, ch. 881, § 1.

Compiler's Notes.  Acts 2015, ch. 514, § 1 provided that the act shall be known and may be cited as the “Revenue Modernization Act”.

For the Preamble to the act concerning the need to modernize the sales and use taxes, franchise and excise taxes and business tax in the state to address the engagement in business within the state by out-of-state companies, see Acts 2015, ch. 514.

Acts 2016, ch. 881, § 8 provided that the act, which amended (d)(3), shall apply to tax years beginning on or after January 1, 2016.

Amendments. The 2015 amendment, effective July 1, 2016, rewrote (a)(2), which read: “(2) Under no circumstances, however, shall this authority be deemed to extend to: (A) Any case in which a person fails to procure a license required by law, except when such failure is the result of having been misled by erroneous advice or action on the part of officials charged with the enforcement of this state's tax statutes, and such can be shown by the person by a clear preponderance of documentary evidence; or  (B) Any interest payable under the law in connection with any case of tax deficiency or delinquency.”

The 2016 amendment  added the last sentence in (d)(3).

Effective Dates. Acts 2015, ch. 514, § 31. July 1, 2016.

Acts 2016, ch. 881, § 8. April 27, 2016.

67-1-804. Delinquency — Negligence — Fraud — Dishonor of check — Exceptions.

    1. When any person fails to timely make any return or report or fails to timely pay any taxes shown to be due on the return or report, there shall be imposed against that person a penalty in the amount of five percent (5%) of the unpaid tax amount for each thirty (30) days or fraction thereof that the tax remains unpaid subsequent to the delinquency date, up to a maximum of twenty-five percent (25%) of the unpaid amount. Where a return or report is delinquent, the minimum penalty shall be fifteen dollars ($15.00), regardless of the amount of tax due or whether there is any tax due.
    2. A return, report, or payment shall be considered untimely if not made on or before the delinquency date under the applicable statutes, including any extensions of time granted. In the case of an untimely return, report, or payment, the penalty shall be calculated as of the original delinquency date, without reference to any extensions granted.
    3. In the case of quarterly tax payments made pursuant to § 67-4-308, the penalty shall be calculated as provided by that section.
    4. In the case of quarterly estimated tax payments made pursuant to § 67-4-2015, the penalty shall be calculated as provided by that section.
    5. In the case of an extension of time granted under § 67-4-2015, the penalty shall be calculated as provided by that section.
    1. When any person fails to report and pay the total amount of taxes determined to be due by the commissioner, if such failure is determined by the commissioner to be due to negligence, there shall be imposed a penalty in the amount of ten percent (10%) of the underpayment.
    2. When any person, upon the initial filing of the person’s franchise and excise tax return, fails to comply with the requirements described in § 67-4-2006(d) or (e) and such failure is determined by the commissioner to be due to negligence, there shall be imposed a penalty equal to the greater of ten thousand dollars ($10,000) or fifty percent (50%) of any adjustment to the initially filed return made under § 67-4-2006(b)(1)(K) or (e). The commissioner is authorized to waive the penalty, in whole or in part, for good and reasonable cause under § 67-1-803. Any penalty imposed under this subdivision (b)(2) shall be disregarded for purposes of determining the taxpayer’s filing record under subdivision (d)(3).
    3. When any person fails to pay the tax required by § 67-4-2007(f), if such failure is determined by the commissioner to be due to negligence, there shall be imposed a penalty in the amount of fifty percent (50%) of the underpayment.
    4. For the purpose of this section, “negligence” includes, but is not limited to, any failure to make a reasonable attempt to comply with any law relating to any tax collected or administered by the commissioner.
    5. A determination by the commissioner that a taxpayer has been negligent shall be deemed presumptively correct. Such determination may be rebutted only if the taxpayer makes a showing of due care. For purposes of this subdivision (b)(5), “due care” means that care that an ordinarily prudent business person would have exercised under the circumstances.
    6. This penalty is in addition to all other penalties provided by law, except as provided in subsection (c).
    1. When any person fails to report and pay the total amount of taxes determined to be due by the commissioner, if such failure is determined by the commissioner to be due to fraud, there shall be imposed against the taxpayer a penalty in the amount of one hundred percent (100%) of the underpayment.
    2. For the purpose of this subsection (c), “fraud” includes any deceitful practice or willful device resorted to with intent to evade the tax.
    3. A failure to pay the tax by one who charges or passes on the tax to others constitutes a presumption of fraud. Such presumption may be rebutted only if the taxpayer makes an affirmative showing of intent to pay the tax and comply with all other requirements of the taxing statute.
    4. Imposition of this penalty shall be in lieu of all other penalties imposed by the commissioner, except those provided in subsection (d) and part 14 of this chapter.
    1. If any check, money order, or electronic funds transfer in payment of any amount receivable under any law administered by the commissioner is dishonored, there shall be imposed a penalty upon the taxpayer in an amount equal to one percent (1%) of the amount of such check, money order, or electronic funds transfer; provided, that the penalty imposed shall be in an amount equal to ten percent (10%) of the amount of such check, money order, or electronic funds transfer for each dishonored check, money order, or electronic funds transfer in excess of two (2) issued by any one (1) person within one (1) calendar year. The minimum amount of the penalty imposed under this subdivision (d)(1) shall be fifteen dollars ($15.00). This subdivision (d)(1) does not apply if the person tendered such check, money order, or electronic funds transfer in good faith and with reasonable cause to believe that it would be duly paid.
    2. This penalty shall be in addition to all other penalties provided by law.
  1. For all purposes, the penalties imposed by any law administered by the commissioner shall be considered a part of the tax imposed.
  2. In no event shall judicial review of the commissioner's imposition of any penalty be other than as provided in part 18 of this chapter.
  3. This section shall apply to all taxes administered or collected by the commissioner, except that subsection (a) shall not apply to the tax imposed in § 67-4-409(b).
  4. Notwithstanding the provisions of this section, the penalty added to delinquent highway user fuel tax due shall be computed in accordance with § 67-3-1208.
  5. Subdivision (a)(1) shall not apply to litigation taxes to be collected by the clerk of the appellate courts.

Acts 1988, ch. 526, § 4; 1993, ch. 142, § 16; 2002, ch. 559, § 4; 2004, ch. 786, § 4; 2009, ch. 530, § 31; 2010, ch. 1134, § 21; 2012, ch. 842, § 5; 2014, ch. 764, § 1.

Compiler’s Notes.  Acts 2009, ch. 530, § 133 provided that § 31 of the act, which rewrote subdivision (b)(2), shall apply to any tax period beginning on or after January 1, 2009.

Acts 2012, ch. 842, § 9 provided that the act, which amended subdivision (b)(2), shall apply to all tax years ending on or after July 1, 2012.

Amendments. The 2014 amendment substituted  “check, money order, or electronic funds transfer” for “check or money order” in the first sentence of (d)(1) and substituted “check, money order, or electronic funds transfer” for “check” four times in (d)(1).

Effective Dates. Acts 2014, ch. 764, § 4. April 24, 2014.

Law Reviews.

Statutory Tax Penalties and Equitable Relief: The Common Law Breaks Down, 22 Mem. St. U.L. Rev. 755 (1992).

Taxing Tennessee: New Business Taxes for 1999 (J. Leigh Griffith), 35 Tenn. B.J. 12 (1999).

Attorney General Opinions. The penalty provisions of T.C.A. § 67-1-804(b) and (c) do not apply to the collection of litigation taxes because T.C.A. § 67-1-804 applies only to taxpayers who fail to both report and pay taxes due; however, the penalty provisions of T.C.A. § 67-1-804(a) and (d) do apply to the collection of litigation taxes, OAG 01-154 (10/1/01).

NOTES TO DECISIONS

1. Construction.

The penalty provisions of T.C.A. § 67-1-804 are to be construed strictly against the state and liberally in favor of the taxpayer, since penalties are odious and not favored by the law. James v. Huddleston, 795 S.W.2d 661, 1990 Tenn. LEXIS 308 (Tenn. 1990).

2. Equitable Relief from Penalties.

A court of equity, hearing a controversy between the state and a taxpayer who has been assessed a penalty, has the power of remitting the penalties imposed upon the taxpayer when the equities of the case demand. Such equitable remission of penalties, however, can only be granted upon a showing of good and reasonable cause. James v. Huddleston, 795 S.W.2d 661, 1990 Tenn. LEXIS 308 (Tenn. 1990).

Failure to make correct returns due to errors, oversights and honest mistakes is not grounds for equitable relief from penalties. James v. Huddleston, 795 S.W.2d 661, 1990 Tenn. LEXIS 308 (Tenn. 1990).

Part 9
Payment of Tax Under Protest

67-1-901. Payment under protest, involuntarily or under duress.

  1. In all cases where not otherwise provided in which an officer, charged by law with the collection of revenue due the state, shall institute any proceeding, or take any steps for the collection of the sum alleged or claimed to be due by the officer from any citizen, the person against whom the proceeding or step is taken shall, if that person conceives the same to be unjust or illegal, or against any statute or clause of the constitution of the state, pay the revenue under protest.
  2. This section shall not apply to any tax collected or administered by the commissioner of revenue when such tax is paid on or after January 1, 1986. Notwithstanding any other law to the contrary, it is the intent of the general assembly that it shall not be a condition precedent to any claim or suit for recovery of any taxes collected or administered by the commissioner when such taxes were paid on or after January 1, 1986, that the taxes were paid under protest, involuntarily, or under duress.

Acts 1873, ch. 44, § 1; Shan., § 1059; Code 1932, § 1790; T.C.A. (orig. ed.), § 67-2303; Acts 1986, ch. 749, § 12; 1987, ch. 92, § 2.

Cross-References. Claims commission, exclusive jurisdiction over claims for recovery of taxes collected or administered by state, § 9-8-307.

Payment of tax under protest, § 9-8-402.

Payment under protest, involuntarily, or under duress not prerequisite for suit after January 1, 1986, § 67-1-1807.

Taxpayer remedies for disputed taxes, title 67, ch. 1, part 18.

Taxpayer's bond pending appeal of levy, § 67-1-1411.

Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 970.

Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 17; 23 Tenn. Juris., Taxation, §§ 48, 75; 24 Tenn. Juris., Unemployment Compensation, § 4.

Law Reviews.

A Revolution in Tennessee Tax Procedure (S. Gale Graham), 22 Tenn. B.J. 13 (1986).

Cited: Taylor v. Louisville & N. R. Co., 88 F. 350, 1898 U.S. App. LEXIS 2089 (6th Cir. 1898); Humphries v. Carter, 172 Tenn. 392, 112 S.W.2d 833, 1937 Tenn. LEXIS 87 (1937); Gilmore Holding Corp. v. Stokes, 177 Tenn. 561, 151 S.W.2d 1079, 1940 Tenn. LEXIS 54 (1940); Wolfe v. Bryant, 181 Tenn. 357, 181 S.W.2d 343, 1944 Tenn. LEXIS 380 (1944); Southern Coal Co. v. McCanless, 183 Tenn. 457, 192 S.W.2d 1003, 1946 Tenn. LEXIS 225 (1946); Carbide & Carbon Chems. Corp. v. Carson, 192 Tenn. 150, 239 S.W.2d 27, 1951 Tenn. LEXIS 392 (1951); City of Memphis v. W.M.S. Co., 46 Tenn. App. 153, 326 S.W.2d 828, 1959 Tenn. App. LEXIS 91 (1959); General Electric Co. v. Butler, 211 Tenn. 196, 364 S.W.2d 361, 1962 Tenn. LEXIS 356 (1962); Memphis Peabody Corp. v. MacFarland, 211 Tenn. 384, 365 S.W.2d 40, 1963 Tenn. LEXIS 357 (1963); Benson v. United States Steel Corp., 225 Tenn. 164, 465 S.W.2d 124, 1971 Tenn. LEXIS 290 (1971); Burnett v. Benson, 483 S.W.2d 437, 1972 Tenn. LEXIS 365 (Tenn. 1972); Pidgeon-Thomas Iron Co. v. Garner, 495 S.W.2d 826, 1973 Tenn. LEXIS 496 (Tenn. 1973); Tidwell v. Goodyear Tire & Rubber Co., 520 S.W.2d 721, 1975 Tenn. LEXIS 702 (Tenn. 1975); Parkridge Hospital, Inc. v. Woods, 561 S.W.2d 754, 1978 Tenn. LEXIS 579 (Tenn. 1978); Stroop v. Rutherford County, 567 S.W.2d 753, 1978 Tenn. LEXIS 605 (Tenn. 1978); McDowell Dev. Corp. v. Ferguson, 579 S.W.2d 863, 1978 Tenn. App. LEXIS 341 (Tenn. Ct. App. 1978); Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982); Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Executone of Memphis, Inc. v. Garner, 650 S.W.2d 734, 1983 Tenn. LEXIS 659 (Tenn. 1983); Barret v. Olsen, 656 S.W.2d 373, 1983 Tenn. LEXIS 717 (Tenn. 1983); Daniel v. Metropolitan Government of Nashville & Davidson County, 696 S.W.2d 8, 1985 Tenn. App. LEXIS 2835 (Tenn. Ct. App. 1985); Angel v. Jackson, 724 S.W.2d 736, 1987 Tenn. LEXIS 822 (Tenn. 1987); Tennessee Farmers' Cooperative v. State, 736 S.W.2d 87, 1987 Tenn. LEXIS 960 (Tenn. 1987); Roberts v. Sullivan County (In re Penking Trust), 196 B.R. 389, 1996 Bankr. LEXIS 658 (Bankr. E.D. Tenn. 1996).

NOTES TO DECISIONS

1. Legislative Intent.

The 1986 amendment was not intended to reopen claims for taxes not paid under protest in earlier years. Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).

General Assembly intended to maintain the payment-under-protest requirement for municipal taxes; to the extent that Admiralty Suites & Inns v. Shelby County, 138 S.W.3d 233, 2003 Tenn. App. LEXIS 835 (Tenn. Ct. App. 2003)and Decatur County v. Vulcan Materials Co. , No. 2001-00858-COA-R3-CV, 2002 WL 31786985 (Tenn. Ct. App. Dec. 12, 2002) are inconsistent with this conclusion, the supreme court overrules these decisions. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

Legislature, by enacting T.C.A. §§ 67-1-1807 and 67-1-901(b), specifically removed the payment-under-protest requirement for disputed state taxes collected by the commissioner of revenue but did not eliminate this requirement for municipal taxes, and it enacted these statutes together as part of the same statutory scheme; under the doctrine of in pari materia, the supreme court reads these provisions together to give the intended effect to the entire statutory scheme. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

Supreme court presumes that the requirement of payment under protest in T.C.A. § 67-1-901(a), applicable to municipalities through T.C.A. § 67-1-911, has meaning and purpose and should be given full effect; supreme court is not free to add the language § 67-1-901(b) to expand the scope of T.C.A. §§ 67-1-1801 et seq., restrict the scope of T.C.A. §§ 67-1-901 et seq., or substitute its judgment for that of the Legislature. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

2. Application and Scope.

The statute relates only to revenue due the state. Saunders v. Russell, 78 Tenn. 293, 1882 Tenn. LEXIS 179 (1882); Mayor of Nashville v. Smith, 86 Tenn. 213, 6 S.W. 273, 1887 Tenn. LEXIS 40 (1887); Railroad v. Williams, 101 Tenn. 146, 46 S.W. 448, 1898 Tenn. LEXIS 44 (1898); State Nat'l Bank v. Memphis, 116 Tenn. 641, 94 S.W. 606, 1906 Tenn. LEXIS 17, 7 L.R.A. (n.s.) 663 (1906).

As to state taxes, the taxpayers' remedy is to pay them under protest and then sue for their recovery. Mayor of Nashville v. Smith, 86 Tenn. 213, 6 S.W. 273, 1887 Tenn. LEXIS 40 (1887).

Where the state fiscal agents make an erroneous or illegal charge and require the taxpayer to pay more than the law authorizes them to collect, this section supplies the remedy. Bank of Commerce & Trust Co. v. Senter, 149 Tenn. 569, 260 S.W. 144, 1923 Tenn. LEXIS 115 (1923).

This and the following sections provide a remedy for the taxpayer confronted by an unjust or illegal claim for taxes. The state cannot be postponed in the collection of its revenue, and the taxpayer must pay the tax under the conditions prescribed, as a condition precedent to contesting the liability for the tax or any part thereof. Bank of Commerce & Trust Co. v. Senter, 149 Tenn. 569, 260 S.W. 144, 1923 Tenn. LEXIS 115 (1923).

Procedure for recovery of taxes paid under protest by taxpayer does not apply to county taxes. Bell v. Clay County, 168 Tenn. 6, 73 S.W.2d 685, 1933 Tenn. LEXIS 76 (1933).

The provisions for payment under protest are applicable in every case, even though in particular instances they may work a hardship. Fort v. Dixie Oil Co., 170 Tenn. 183, 93 S.W.2d 1260, 1935 Tenn. LEXIS 124 (1935), cert. denied, Dixie Oil Co. v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 436, 1936 U.S. LEXIS 362 (1936); Fort v. Dixie Oil Co., 170 Tenn. 464, 95 S.W.2d 931, 1936 Tenn. LEXIS 16 (1936); Lyons v. Lay, 179 Tenn. 388, 166 S.W.2d 778, 1942 Tenn. LEXIS 35 (1942); Illinois C. R. Co. v. Garner, 193 Tenn. 91, 241 S.W.2d 926, 1951 Tenn. LEXIS 327 (1951), appeal dismissed, Illinois C. R. Co. v. Garner, 342 U.S. 900, 72 S. Ct. 295, 96 L. Ed. 674, 1952 U.S. LEXIS 2581 (1952).

This and the following sections afford the taxpayer an opportunity for a legal hearing in all cases where there is an attempt to collect revenue illegally and meet the requirements of due process. Bergeda v. State, 179 Tenn. 460, 167 S.W.2d 338, 1942 Tenn. LEXIS 43, 144 A.L.R. 696 (1942).

Where complainants have not paid a disputed tax, a suit to test its validity cannot be maintained and no right to a declaratory judgment arises. Complainants are limited as to remedy and procedure by this part. American Can Co. v. McCanless, 183 Tenn. 491, 193 S.W.2d 86, 1946 Tenn. LEXIS 229 (1946).

Where salaries of county officers were payable from taxes levied for general county purposes, and budget adopted by county included additional special levy for salaries, statute requiring payment of tax under protest did not govern, because revenue produced by void special levy was due the county, and statute was applicable only to revenue due the state. State ex rel. Anderson County v. Aycock, 193 Tenn. 157, 245 S.W.2d 182, 1951 Tenn. LEXIS 341 (1951).

This section permits a taxpayer to pay disputed taxes under protest and sue for their recovery but only in all cases where a remedy is not otherwise provided. Bracey v. Woods, 571 S.W.2d 828, 1978 Tenn. LEXIS 651 (Tenn. 1978).

With respect to taxpayers, this part provides an exclusive remedy (other than an administrative remedy set forth in § 67-1-707). That remedy is payment of the tax under protest and suit for recovery. Dominion Nat'l Bank v. Olsen, 651 S.W.2d 215, 1983 Tenn. LEXIS 778 (Tenn. 1983).

Where decedent's attorneys were pursuing tax assessment grievances through administrative remedy as required by law, the proper procedure was not the payment of assessment under protest and the bringing of an action for a refund. Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983).

The provisions of the 1986 amendment dispensing with the requirement of payment under protest do not apply to taxes paid prior to January 1, 1986. Aluminum Co. of Am. v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).

“Taxes paid on or after January 1, 1986” does not include an overpayment applied to 1984 taxes; T.C.A. § 67-1-901 specifically applies to taxes paid after January 1, 1986. GMC v. Taylor, 811 S.W.2d 897, 1991 Tenn. LEXIS 251 (Tenn. 1991), aff'd sub nom. Comdata Network, Inc. v. State Dep't of Revenue, 852 S.W.2d 223, 1993 Tenn. LEXIS 112 (Tenn. 1993).

In order to invoke the jurisdiction of a court to hear a claim that collection of a tax would be unjust or illegal, the taxpayer must first pay the tax, and a party is not excused from the requirement of the statute based on the nature of the party's challenge to the tax or the manner in which the unjustness or illegality of the tax is raised; there is no language in any of the remaining statutes which could be read to suggest that the requirement is dependent on the nature of the challenge. Nashville Metro Gov't v. New Orleans Manor, Inc., — S.W.3d —, 2014 Tenn. App. LEXIS 415 (Tenn. Ct. App. July 16, 2014), appeal denied, — S.W.3d —, 2014 Tenn. LEXIS 994 (Tenn. Nov. 19, 2014).

3. Effect of Other Statutes.

Acts 1949, ch. 235, providing for refund of inspection fees paid by butane and propane gas companies, which were not legally liable therefor, was constitutional and such companies were entitled to such refunds even though payment was not under protest and even though suit was not filed within 30 days after payment as provided in this part. Watauga Valley Gas Co. v. Evans, 192 Tenn. 413, 241 S.W.2d 511, 1951 Tenn. LEXIS 422 (1951).

Title 50, together with the procedures of this part, provides plaintiffs an adequate, speedy, and efficient method for determining whether the state's unemployment tax has been assessed in violation of their constitutional rights. Therefore, court was without jurisdiction to grant a plaintiff's request for injunctive relief. Independent Baptist Church v. Tennessee, 468 F. Supp. 71, 1978 U.S. Dist. LEXIS 14258 (E.D. Tenn. 1978).

4. Strict Compliance — Necessity.

The payment of taxes under protest and the institution of suit for their recovery must be made in strict pursuance of the provisions of the statute, or the bar of the statute against the right of the taxpayer to sue at all may be interposed by the state. Phillips v. Lewis, 3 Shannon's Cases 230 (1877).

This part provides an exclusive remedy for the taxpayer who seeks recovery of taxes wrongfully collected. He is forbidden to delay the collection even of illegal taxes by resort to extraordinary processes of certiorari, prohibition, and injunction. As between the taxing authority and the taxpayer, the latter is forced to pay the tax and sue for its recovery. The taxing authority is given the use of the money ad interim. Southern Coal Co. v. McCanless, 183 Tenn. 457, 192 S.W.2d 1003, 1946 Tenn. LEXIS 225 (1946).

5. Institution of Proceedings.

6. —Standing to Bring Action.

A nontaxpayer cannot maintain an action against a taxing authority for the recovery of state taxes even though he may bear the economic burden of those taxes. Beare Co. v. Olsen, 711 S.W.2d 603, 1986 Tenn. LEXIS 663 (Tenn. 1986).

7. —Tax Books as Process.

After delinquency, and not before, the tax books are process equivalent to an execution in the hands of the officer. Bright v. Halloman, 75 Tenn. 309, 1881 Tenn. LEXIS 121 (1881); Alexander v. Henderson, 105 Tenn. 431, 58 S.W. 648, 1900 Tenn. LEXIS 87 (1900); State Nat'l Bank v. Memphis, 116 Tenn. 641, 94 S.W. 606, 1906 Tenn. LEXIS 17, 7 L.R.A. (n.s.) 663 (1906); Cincinnati, N.O. & T.P.R.R. v. Hamilton County, 120 Tenn. 1, 113 S.W. 361, 1907 Tenn. LEXIS 35 (1907). See also Nashville, C. & St. L. Ry. v. Marion County, 120 Tenn. 347, 108 S.W. 1058, 1907 Tenn. LEXIS 52 (1907).

8. —Memorandum Not Process.

A deputy collector's levy for taxes is void, when it is made, not by virtue of a certified list from the county trustee as required by statute, but under a mere memorandum from the trustee of the amount of taxes due, which is not, and does not purport to be, a writ, execution, warrant, or other instrument known to the law, and does not command anything to be done. Alexander v. Henderson, 105 Tenn. 431, 58 S.W. 648, 1900 Tenn. LEXIS 87 (1900).

9. Voluntary Payments.

Payment, under protest, of taxes alleged to be illegal, before the same have become delinquent and without any demand or threat to levy, merely to prevent the imposition of a penalty and interest which would accrue, is a voluntary payment and the taxes so paid cannot be recovered. Cincinnati, N.O. & T.P.R.R. v. Hamilton County, 120 Tenn. 1, 113 S.W. 361, 1907 Tenn. LEXIS 35 (1907).

An overpayment of taxes due to a mistake of the law or its application is, nevertheless, a voluntary payment and cannot be recovered. Hertz Corp. v. County of Shelby, 667 S.W.2d 66, 1984 Tenn. LEXIS 772 (Tenn. 1984).

Where plaintiff voluntarily paid tax prior to January 1, 1986, right to recover taxes from commissioner of revenue was gone forever. Northern Telecom, Inc. v. Taylor, 781 S.W.2d 837, 1989 Tenn. LEXIS 526 (Tenn. 1989), cert. denied, Northern Telecom, Inc. v. Taylor, 496 U.S. 905, 110 S. Ct. 2587, 110 L. Ed. 2d 268, 1990 U.S. LEXIS 2907 (1990).

10. Payments to Protect Taxpayer's Interest.

Taxpayer was not entitled to recover privilege taxes paid to state where officer in charge of collection of state taxes had made no attempt to collect same even though such payment was made to ensure that proper privilege taxes had been paid in order that his right to sue on contract would be protected, but was entitled to recover county taxes paid for the same purpose. Bell v. Clay County, 168 Tenn. 6, 73 S.W.2d 685, 1933 Tenn. LEXIS 76 (1933).

11. Payment Under Protest.

Payment of taxes by a bank is not voluntary, so as to preclude their recovery by the bank, when an agreement was entered into between the city and the bank that the latter was permitted to pay its taxes under protest, the agreement reciting that a distress warrant was about to issue and that the taxes were paid in view of that fact, the city agreeing that it would not insist that such payment was voluntary. State Nat'l Bank v. Memphis, 116 Tenn. 641, 94 S.W. 606, 1906 Tenn. LEXIS 17, 7 L.R.A. (n.s.) 663 (1906).

To make a payment of taxes involuntary, it must appear that the officer authorized to collect the same, and to whom payment was made, had in his hands process authorizing the seizure of the person or property of the taxpayer, that such seizure of one or the other was imminent, and that there was no legal means of protecting the person or property except by payment. Under such circumstances, payment under protest will save the rights of the taxpayer to recover, if the tax should be illegal. Mere protest is not sufficient. Mere unwillingness to pay is not sufficient. Nashville, C. & St. L. Ry. v. Marion County, 120 Tenn. 347, 108 S.W. 1058, 1907 Tenn. LEXIS 52 (1907); Atlas Powder Co. v. Goodloe, 131 Tenn. 490, 175 S.W. 547, 1914 Tenn. LEXIS 123 (1914).

Payment, by a foreign corporation, of a franchise tax before the time limit for paying the same had expired, but under protest and with written notice that it reserved the right to sue for the recovery of the amount exacted, when failure to pay would have required the corporation's factory to remain idle and would have rendered its contract void, is made under duress and is not voluntary. Atlas Powder Co. v. Goodloe, 131 Tenn. 490, 175 S.W. 547, 1914 Tenn. LEXIS 123 (1914).

Payment of tax under protest, after taxbook became process, was not voluntary, but was made under duress, since the personal property could be seized immediately and the real property within a short time, and in the meantime the taxpayer could have been subjected to interest and penalties, if unsuccessful in his attack on the tax. St. Louis Basket & Box Co. v. Lauderdale County, 146 Tenn. 413, 241 S.W. 99, 1922 Tenn. LEXIS 6 (1922).

Uncontradicted statements in a letter to a collecting officer stating that the tax is being paid under protest, a check being inclosed to cover the tax demanded, which facts are corroborated by the action of the taxing official in sending a receipt carrying the endorsement that the tax was paid under protest, are sufficient evidence to protect the rights of the taxpayer. Quick Serv. Tire Co. v. Smith, 156 Tenn. 96, 299 S.W. 807, 1927 Tenn. LEXIS 89 (1927).

A taxpayer was allowed to recover a sales tax refund even though he had not paid the tax under protest as required by this section where the taxpayer could not have protested at the time of the original payment because the conditional sales contract was not cancelled and the goods were not returned until after the remittance. Tidwell v. RCA Corp., 528 S.W.2d 179, 1975 Tenn. LEXIS 620 (Tenn. 1975).

Banking institutions seeking to challenge assessment of local taxes on the outstanding capital stock of the banks had no access to the courts without first either paying the taxes under protest and then filing suit for their refund or going through local and state board of equalization for administrative review of the assessment without first paying the disputed taxes. Fentress County Bank v. Holt, 535 S.W.2d 854, 1976 Tenn. LEXIS 586 (Tenn. 1976).

Allowing taxes to become delinquent does not preclude payment of taxes under protest and suit for recovery. Vanderbilt Univ. v. Ferguson, 554 S.W.2d 128, 1976 Tenn. App. LEXIS 265 (Tenn. Ct. App. 1976).

Letters stating that taxes were being paid under protest fully met the requirement of this section. Lunceford v. King, 633 S.W.2d 761, 1982 Tenn. LEXIS 410 (Tenn. 1982).

If a taxpayer pays an illegal tax demand, with full knowledge of all the facts which render such demand illegal, without an immediate and urgent necessity for making such payment at the time, such a payment must be deemed to be voluntary, and cannot be recovered back, and absent specific proof of the pendency of a sale, a plaintiff taxpayer has not satisfied the requirement of an “immediate and urgent necessity for making such payment at the time …” by a bare showing that it was done in order to clear title for the purpose of transferring the property. Dixon v. King, 655 S.W.2d 900, 1983 Tenn. LEXIS 666 (Tenn. 1983).

Plaintiff need not have incurred penalties by waiting until a deficiency was assessed to insure a finding that its payment of use taxes was under protest. Service Merchandise Co. v. Jackson, 735 S.W.2d 443, 1987 Tenn. LEXIS 1071 (Tenn. 1987).

Since taxes were not paid under protest and were not actually paid after January 1, 1986, suit was properly dismissed. Comdata Network, Inc. v. State Dep't of Revenue, 852 S.W.2d 223, 1993 Tenn. LEXIS 112 (Tenn. 1993).

Trial court properly granted a city summary judgment because the trial court lacked jurisdiction to hear taxpayers' challenge; the taxpayers failed to pay the tax under protest as required by the statute. Nashville Metro Gov't v. New Orleans Manor, Inc., — S.W.3d —, 2014 Tenn. App. LEXIS 415 (Tenn. Ct. App. July 16, 2014), appeal denied, — S.W.3d —, 2014 Tenn. LEXIS 994 (Tenn. Nov. 19, 2014).

Court of appeals erred in affirming an order awarding retailers a judgment for overpayments they made to a municipality for alcoholic beverage inspection fees because the retailers did not pay the municipal taxes under protest before filing suit, and thus, they were not entitled to recover the overpayments; under subsection (a) a taxpayer must pay under protest disputed municipal taxes before filing suit for a refund. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

T.C.A. §§ 67-1-901 et seq., rather than T.C.A. §§ 67-1-1801 et seq., applies to a suit to recover municipal taxes; T.C.A. §§ 67-1-901 et seq. governs actions to recover disputed municipal taxes, and under T.C.A. § 67-1-901(a), a taxpayer must pay under protest disputed municipal taxes before filing suit for a refund. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

Provision in T.C.A. § 67-1-1807(a) that removed the requirement of payment under protest for state taxes is self-limiting; “as set out in this part” necessarily references a claim for refund under T.C.A. §§ 67-1-1801 to 67-1-1808, not a claim for refund under T.C.A. §§ 67-1-901 to 67-1-912, and because there is no conflict between § 67-1-1807 and T.C.A. § 67-1-901 et seq., § 67-1-1807 does not supersede the payment-under-protest requirement of § 67-1-901(a). Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

Before January 1, 1986, under T.C.A. § 67-1-901, a taxpayer was required to pay under protest both state and municipal taxes before filing suit for a refund, and on or after January 1, 1986, under T.C.A. §§ 67-1-901(b) and 67-1-1807(b)(1), a taxpayer is not required to pay under protest disputed state taxes collected or administered by the commissioner of revenue before filing suit for a refund. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

Statutory changes in T.C.A. §§ 67-1-901(b) and 67-1-1807(b) do not eliminate the requirement of payment under protest in § 67-1-901(a) for disputed municipal taxes; the 1986 enactments of § 67-1-901(b) and T.C.A. §§ 67-1-1801 et seq., that removed the requirement of payment under protest reference only taxes collected by the commissioner of revenue, and there is no mention of taxes collected by a municipality. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

12. —Partial Payment.

There is no authority for a taxpayer to pay only a portion of the tax liability assessed against him and then maintain a suit to litigate the entire assessment. Griffith Motors, Inc. v. King, 641 S.W.2d 200, 1982 Tenn. LEXIS 361 (Tenn. 1982).

13. Not Shown.

Excess mineral severance taxes previously paid to a county were not recoverable by taxpayers because the payments were not made involuntarily and under protest. Hoover, Inc. v. Rutherford County, 885 S.W.2d 67, 1994 Tenn. App. LEXIS 152 (Tenn. Ct. App. 1994).

Excess municipal inspection fees paid on the wholesale purchase of liquor were not recoverable by taxpayers because the payments were not made involuntarily and under protest. Lebanon Liquors, Inc. v. City of Lebanon, 885 S.W.2d 63, 1994 Tenn. App. LEXIS 82 (Tenn. Ct. App. 1994).

Even though a municipal ordinance covering the collection of inspection fees on the wholesale purchase of liquor contained a criminal penalty for noncompliance, the sanction fell upon the wholesalers and not the retailers, and it did not create a sense of immediacy for payment by the latter sufficient to justify a claim that payments were made under protest. Lebanon Liquors, Inc. v. City of Lebanon, 885 S.W.2d 63, 1994 Tenn. App. LEXIS 82 (Tenn. Ct. App. 1994).

14. Other Remedies.

There is no statutory predicate for a suit for forgiveness of taxes, penalty, or interest. Taxpayers must pay taxes under protest before they are entitled to evoke chancery court's equitable powers to relieve against forfeiture and penalty. State v. Delinquent Taxpayers, 526 S.W.2d 453, 1975 Tenn. LEXIS 597 (Tenn. 1975).

Appeal to the state board of equalization for obtaining a determination of tax exempt classification is not an exclusive remedy, and plaintiff is not prevented from paying the tax under protest pursuant to this section and suing in chancery court for a refund under § 67-1-903. Vanderbilt Univ. v. Ferguson, 554 S.W.2d 128, 1976 Tenn. App. LEXIS 265 (Tenn. Ct. App. 1976).

T.C.A. § 67-8-116 does not require the exhaustion of administrative remedies before a taxpayer can pay his taxes under protest and bring suit under title 67, ch. 1, part 9. Reeves v. Olsen, 691 S.W.2d 527, 1985 Tenn. LEXIS 599 (Tenn. 1985).

15. Time for Bringing Suit.

Where a suit for recovery of city taxes was brought almost one year after payment under protest, such suit was barred under this part and was accordingly dismissed. Holloway v. Putnam County, 534 S.W.2d 292, 1976 Tenn. LEXIS 591 (1976).

16. Payment of Tax by Third Party.

So long as the assessment is properly paid under protest, the fact that the assessed party is not the party who actually paid the tax is irrelevant. Austin Co. v. Woods, 620 S.W.2d 73, 1981 Tenn. LEXIS 471 (Tenn. 1981).

Company which pursuant to a provision in its contract with a second company paid sales and use taxes incurred by the second party had standing to contest assessment of tax against second company. Austin Co. v. Woods, 620 S.W.2d 73, 1981 Tenn. LEXIS 471 (Tenn. 1981).

17. Jury Trial.

Jury trials are not available in suits for the recovery of taxes paid the state of Tennessee pursuant to title 67, ch. 1, part 9. Only an express grant by the general assembly can create that right. Jernigan v. Jackson, 704 S.W.2d 308, 1986 Tenn. LEXIS 649 (Tenn. 1986).

Collateral References.

Construction and operation of statutory time limit for filing claim for state tax refund. 14 A.L.R.6th 119.

Grounds stated in protest against payment of property tax as a limitation of grounds upon which recovery back of tax may be claimed. 113 A.L.R. 1479.

67-1-902. Notice.

Upon the person's making such payment, the officer or collector shall pay such revenue into the state treasury, giving notice at the time of payment to the commissioner of revenue that the payment was paid under protest.

Acts 1873, ch. 44, § 1; Shan., § 1060; Code 1932, § 1791; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), § 67-2304.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

Cited: Fort v. Dixie Oil Co., 170 Tenn. 183, 93 S.W.2d 1260, 1935 Tenn. LEXIS 124 (1936); Lyons v. Lay, 179 Tenn. 388, 166 S.W.2d 778, 1942 Tenn. LEXIS 35 (1942); Third Nat'l Bank v. King, 215 Tenn. 528, 387 S.W.2d 800, 1965 Tenn. LEXIS 630 (Tenn. Mar. 4, 1965); R.C. Owen Co. v. Butler, 215 Tenn. 599, 387 S.W.2d 830, 1965 Tenn. LEXIS 670 (Tenn. Mar. 4, 1965); Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983).

67-1-903. Action against collecting officer.

  1. The person paying the revenue may, at any time within six (6) months after making the payment, but not thereafter, sue the officer who collected the sum, for the recovery thereof.
  2. This section shall not apply after January 1, 1986, to any tax collected or administered by the commissioner of revenue.

Acts 1873, ch. 44, § 1; Shan., § 1061; Code 1932, § 1792; Acts 1968, ch. 588, § 1; T.C.A. (orig. ed.), § 67-2305; Acts 1984, ch. 972, § 19; 1986, ch. 749, § 13; 1987, ch. 92, § 3.

Cross-References. Division of claims and risk management, title 9, ch. 8, part 4.

Jurisdiction of Tennessee claims commission, § 9-8-307.

Taxpayer remedies for disputed taxes, title 67, ch. 1, part 18.

Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 17; 23 Tenn. Juris., Taxation, § 50.

Law Reviews.

Claims Against the State in Tennessee — The Board of Claims, 4 Vand. L. Rev. 875 (1951).

Cited: Quick Serv. Tire Co. v. Smith, 156 Tenn. 96, 299 S.W. 807, 1927 Tenn. LEXIS 89 (1927); Fort v. Dixie Oil Co., 170 Tenn. 183, 93 S.W.2d 1260, 1935 Tenn. LEXIS 124 (1936); Bergeda v. State, 179 Tenn. 460, 167 S.W.2d 338, 1942 Tenn. LEXIS 43, 144 A.L.R. 696 (1942); Brent v. Greeneville, 203 Tenn. 60, 309 S.W.2d 121, 1957 Tenn. LEXIS 464 (1957); Jack Cole Co. v. MacFarland, 206 Tenn. 694, 337 S.W.2d 453, 1960 Tenn. LEXIS 421 (1960); Memphis Peabody Corp. v. MacFarland, 211 Tenn. 384, 365 S.W.2d 40, 1963 Tenn. LEXIS 357 (1963); Seagle—Paddock Pools, Inc. v. Benson, 503 S.W.2d 93, 1973 Tenn. LEXIS 431 (Tenn. 1973); Electric Power Bd. v. Woods, 558 S.W.2d 821, 1977 Tenn. LEXIS 660 (Tenn. 1977); Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982); Lunceford v. King, 633 S.W.2d 761, 1982 Tenn. LEXIS 410 (Tenn. 1982); Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Dixon v. King, 655 S.W.2d 900, 1983 Tenn. LEXIS 666 (Tenn. 1983); Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983); Reeves v. Olsen, 691 S.W.2d 527, 1985 Tenn. LEXIS 599 (Tenn. 1985); Jack Daniel Distillery, Lem Motlow Prop., Inc. v. Olsen, 716 S.W.2d 496, 1986 Tenn. LEXIS 787 (Tenn. 1986); Comdata Network, Inc. v. State Dep't of Revenue, 852 S.W.2d 223, 1993 Tenn. LEXIS 112 (Tenn. 1993).

NOTES TO DECISIONS

1. Application.

Where a tax is levied in excess of the limit allowed by law and such excess is easily ascertainable, the entire tax is not void and only the illegal excess may be recovered. Bright v. Halloman, 75 Tenn. 309, 1881 Tenn. LEXIS 121 (1881).

This section is not a limitation upon suits to recover county taxes. Swift & Co. v. State, 165 Tenn. 256, 55 S.W.2d 267, 1932 Tenn. LEXIS 43 (1932).

This section read in conjunction with § 67-1-911 establishes the time limit for filing suit for taxes paid under protest to a municipality as well as the state government. Woods v. Equity Servs., Inc., 536 S.W.2d 333, 1976 Tenn. LEXIS 626 (Tenn. 1976).

The legislative intent was to require payment of the whole tax liability asserted before an action may be instituted for collection of the refund. Griffith Motors, Inc. v. King, 641 S.W.2d 200, 1982 Tenn. LEXIS 361 (Tenn. 1982).

In order to properly request a refund of taxes paid under protest to a county or municipality, an action for recovery must be instituted within six months of the payment. Roberts v. Sullivan County (In re Penking Trust), 196 B.R. 389, 1996 Bankr. LEXIS 658 (Bankr. E.D. Tenn. 1996).

In order to invoke the jurisdiction of a court to hear a claim that collection of a tax would be unjust or illegal, the taxpayer must first pay the tax, and a party is not excused from the requirement of T.C.A. § 67-1-901 based on the nature of the party's challenge or the manner in which the unjustness or illegality of the tax is raised; there is no language in any of the remaining statutes which could be read to suggest that the requirement is dependent on the nature of the challenge. Nashville Metro Gov't v. New Orleans Manor, Inc., — S.W.3d —, 2014 Tenn. App. LEXIS 415 (Tenn. Ct. App. July 16, 2014), appeal denied, — S.W.3d —, 2014 Tenn. LEXIS 994 (Tenn. Nov. 19, 2014).

Taxpayers'  recovery was not limited by the statute because T.C.A. § 67-1-1807 applied, and thus, T.C.A. § 67-1-1801 et seq., governed the taxpayers'  action seeking a refund of inspection fees a city erroneously calculated. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).

2. Nature of Suit.

A suit to recover an allegedly illegal state tax although nominally brought against the collecting officer is a suit against the state. Automobile Sales Co. v. Johnson, 174 Tenn. 38, 122 S.W.2d 453, 1938 Tenn. LEXIS 61, 120 A.L.R. 370 (1938).

A tax suit against a collecting officer, though nominally against the officer, is a suit against the state and can be maintained only in the manner and form consented to by the state. Lyons v. Lay, 179 Tenn. 388, 166 S.W.2d 778, 1942 Tenn. LEXIS 35 (1942).

3. Sufficiency of Remedy.

This statute affords the taxpayer a sufficient remedy. Tennessee v. Sneed, 96 U.S. 69, 24 L. Ed. 610, 1877 U.S. LEXIS 1627 (1877).

4. Remedy Independent of Statute.

The payment of illegal taxes, under protest, entitles the taxpayer to sue for so much as was illegal, independent of this statute. Bright v. Halloman, 75 Tenn. 309, 1881 Tenn. LEXIS 121 (1881); Alexander v. Henderson, 105 Tenn. 431, 58 S.W. 648, 1900 Tenn. LEXIS 87 (1900). See State Nat'l Bank v. Memphis, 116 Tenn. 641, 94 S.W. 606, 1906 Tenn. LEXIS 17, 7 L.R.A. (n.s.) 663 (1906).

A tax that is illegal in the sense of being unauthorized by any law, if exacted and paid under protest and to save seizure of property, may, upon common law principles, be recovered back by the taxpayer, and the 30 day [now six month] limit will not apply in such case. The taxes recovered under the general principle stated were the county and city taxes. Railroad v. Williams, 101 Tenn. 146, 46 S.W. 448, 1898 Tenn. LEXIS 44 (1898); State Nat'l Bank v. Memphis, 116 Tenn. 641, 94 S.W. 606, 1906 Tenn. LEXIS 17, 7 L.R.A. (n.s.) 663 (1906); Cincinnati, N.O. & T.P.R.R. v. Hamilton County, 120 Tenn. 1, 113 S.W. 361, 1907 Tenn. LEXIS 35 (1907).

5. Complaint Before Board of Equalization as Prerequisite to Suit.

When, by a valid statute, a board of assessors or equalizers is created with power to act, a taxpayer who fails to make application to such board for release when it has power to act cannot pay under protest, and then recover the tax so paid in an action for that purpose. Ward v. Alsup, 100 Tenn. 619, 46 S.W. 573, 1898 Tenn. LEXIS 25 (1898).

Where the assessment is void or fraudulent, as having been made without authority of law, and not merely irregular or informal, a taxpayer who has paid his taxes under protest can maintain an action to recover the same, although he has not applied to the board of equalization for relief. Union & Planters' Bank v. Memphis, 107 Tenn. 66, 64 S.W. 13, 1901 Tenn. LEXIS 59 (1901). See Railroad v. Harris, 99 Tenn. 684, 43 S.W. 115, 1897 Tenn. LEXIS 81, 53 L.R.A. 921 (1897), appeal dismissed, Knoxville & O. R. Co. v. Harris, 20 S. Ct. 1026, 44 L. Ed. 1221 (1900); Southern Express Co. v. Patterson, 122 Tenn. 279, 123 S.W. 353, 1909 Tenn. LEXIS 23 (1909).

Appeal to the state board of equalization for obtaining a determination of tax exempt classification is not an exclusive remedy, and plaintiff is not prevented from paying the tax under protest and suing in chancery court for a refund under this section. Vanderbilt Univ. v. Ferguson, 554 S.W.2d 128, 1976 Tenn. App. LEXIS 265 (Tenn. Ct. App. 1976).

6. Voluntary Payments — Right to Recovery.

Unconstitutionally assessed taxes voluntarily paid are not recoverable, especially after the collector has paid over the same. Dickins v. Jones, 14 Tenn. 483, 1834 Tenn. LEXIS 121, 27 Am. Dec. 488 (1834); Friedman Bros. v. Mathes, 55 Tenn. 488, 1872 Tenn. LEXIS 113 (1872). See Cauvin & Duprez v. Mayor of Nashville, 62 Tenn. 453, 1874 Tenn. LEXIS 78 (1874); Galbraith v. State, 78 Tenn. 568, 1882 Tenn. LEXIS 225 (1882); Franklin County v. Nashville, C. & St. L. Ry., 80 Tenn. 521, 1883 Tenn. LEXIS 206 (1883).

While illegal taxes, voluntarily paid under threats of litigation or apprehension of the levy of distress warrants, will not make the payment compulsory, so as to entitle the taxpayer to recover the same, yet the certificates of indebtedness, issued by a city upon its own ordinance to repay such illegal taxes so collected, are valid and binding upon it. Lea v. City of Memphis, 68 Tenn. 103, 1877 Tenn. LEXIS 3 (1877); State Nat'l Bank v. Memphis, 116 Tenn. 641, 94 S.W. 606, 1906 Tenn. LEXIS 17, 7 L.R.A. (n.s.) 663 (1906); Cincinnati, N.O. & T.P.R.R. v. Hamilton County, 120 Tenn. 1, 113 S.W. 361, 1907 Tenn. LEXIS 35 (1907).

A taxpayer's payment of a special county tax illegally levied and assessed, made to the county trustee the day before it became delinquent, and without demand therefor by the county trustee, was voluntary and without duress, and cannot be recovered by such taxpayer, though the tax was paid under protest, in order to avoid the imposition of the penalty and interest, which would accrue unless the tax was paid prior to its delinquency, and in order to avoid the cost and expense incident to any attempt that the proper authorities might make under the law to collect the tax, by levy and sale of the taxpayer's property. Cincinnati, N.O. & T.P.R.R. v. Hamilton County, 120 Tenn. 1, 113 S.W. 361, 1907 Tenn. LEXIS 35 (1907); Nashville, C. & St. L. Ry. v. Marion County, 120 Tenn. 347, 108 S.W. 1058, 1907 Tenn. LEXIS 52 (1907).

The payment of taxes to the county trustee, previous to the time when he is authorized by statute to distrain for the nonpayment thereof, is not a payment under duress, and illegal taxes so paid cannot be recovered by the taxpayer, merely because he paid the same under protest and took a receipt so showing. The question whether the payment was made under duress or protest is a question of law, arising upon proved facts, and its solution does not depend upon the county trustee's receipt. Nashville, C. & St. L. Ry. v. Marion County, 120 Tenn. 347, 108 S.W. 1058, 1907 Tenn. LEXIS 52 (1907).

Taxes and license fees voluntarily paid under unconstitutional statutes or invalid ordinances cannot be recovered. Carr v. City of Memphis, 22 F.2d 678, 1927 U.S. App. LEXIS 3424 (6th Cir. 1927).

Where plaintiff voluntarily paid tax prior to January 1, 1986, right to recover taxes from commissioner of revenue was gone forever. Northern Telecom, Inc. v. Taylor, 781 S.W.2d 837, 1989 Tenn. LEXIS 526 (Tenn. 1989), cert. denied, Northern Telecom, Inc. v. Taylor, 496 U.S. 905, 110 S. Ct. 2587, 110 L. Ed. 2d 268, 1990 U.S. LEXIS 2907 (1990).

7. Payment Under Protest — Right to Recovery.

One paying taxes illegally assessed under protest may recover, in one and the same action, state, county and city taxes. Railroad v. Williams, 101 Tenn. 146, 46 S.W. 448, 1898 Tenn. LEXIS 44 (1898).

Where a streetcar company pays, under protest and to prevent a levy of a distress warrant upon its property, the privilege tax imposed upon its lessees as an advertising company, and files a bill to recover the same, it is entitled to recover such taxes so unlawfully required to be paid, for the statutory provision making the lessor liable for the privilege tax imposed on the lessee is unconstitutional. Knoxville Traction Co. v. McMillan, 111 Tenn. 521, 77 S.W. 665, 1903 Tenn. LEXIS 42, 65 L.R.A. 296 (1903).

8. Bank Paying Tax on Stock — Right to Sue.

A bank may properly pay the taxes assessed against its stock in the hands of its stockholders, and if the payment is made under protest, it can sue for and recover such taxes, if illegally collected, and may maintain the suit in its own name, without the joinder of the stockholders therein. State Nat'l Bank v. Memphis, 116 Tenn. 641, 94 S.W. 606, 1906 Tenn. LEXIS 17, 7 L.R.A. (n.s.) 663 (1906).

9. Double Tax Paid Without Levy — Recovery.

Where a claim in issue in a civil action was resisted on the ground that it arose from the exercise of a taxable privilege for which plaintiff had not paid the tax due the state and the county, and where, to avoid such obstacles to the claim in suit, plaintiff paid double the tax and penalties, with knowledge that the county had not levied such a tax, and was making no demand therefor, and plaintiff sued to recover such payment within 30 days after payment, a suit for recovery of the state's part of the payment could not be maintained against the state officers, but recovery could be had against the county for its part of the payment, where the county clerk knew the circumstances of the payment. Bell v. Clay County, 168 Tenn. 6, 73 S.W.2d 685, 1933 Tenn. LEXIS 76 (1933).

10. Parties and Venue.

Except in those cases arising under the income tax law or under the General Revenue Law, all cases for recovery of taxes under the provisions of these sections must be brought against the commissioner of revenue in the courts of Davidson County. Lyons v. Lay, 179 Tenn. 388, 166 S.W.2d 778, 1942 Tenn. LEXIS 35 (1942).

Suit by resident of Campbell County against commissioner and against the sheriff of such county and his deputy who had executed distress warrant placed in the hands of the sheriff by the commissioner was improperly instituted in Campbell County and should have been commenced in Davidson County. Lyons v. Lay, 179 Tenn. 388, 166 S.W.2d 778, 1942 Tenn. LEXIS 35 (1942).

In a suit by a taxpayer to recover tobacco tax paid under protest, sheriff and deputy who simply executed distress warrant issued by the commissioner were neither necessary nor proper parties to the case. Lyons v. Lay, 179 Tenn. 388, 166 S.W.2d 778, 1942 Tenn. LEXIS 35 (1942).

11. When Limitations Period Begins.

Where payment is made by the state taking money due the taxpayer and applying it against a state claimed tax deficiency, the period of limitation begins to run when the taxpayer knows or reasonably should know of the state's action. Jack Daniel Distillery v. Jackson, 740 S.W.2d 413, 1987 Tenn. LEXIS 1014 (Tenn. 1987).

The triggering event for the statute of limitations is the payment of taxes, not the time of assessment. Jack Daniel Distillery v. Jackson, 740 S.W.2d 413, 1987 Tenn. LEXIS 1014 (Tenn. 1987).

12. Actions Time-Barred.

Action to recover certain taxes held time-barred. Jack Daniel Distillery v. Jackson, 740 S.W.2d 413, 1987 Tenn. LEXIS 1014 (Tenn. 1987).

13. Sufficiency of Complaint.

A complaint alleging payment of taxes collected under an unconstitutional act, in ignorance of such unconstitutionality, is insufficient. Carr v. City of Memphis, 22 F.2d 678, 1927 U.S. App. LEXIS 3424 (6th Cir. 1927).

14. —Subsequent Assessments.

The filing of a complaint attacking the legality of tax rates within six months of the first payment of the tax made under protest is not sufficient to recover all subsequent assessments paid under protest. Jack Daniel Distillery, Lem Motlow Prop., Inc. v. Olsen, 716 S.W.2d 496, 1986 Tenn. LEXIS 787 (Tenn. 1986).

15. Death of Trustee Defendant — Effect on Action.

An action against a county trustee to recover state taxes collected by such officer does not abate with his death but is properly revived against his successor in office. Tamble v. Pullman Co., 207 F. 30, 1913 U.S. App. LEXIS 1599 (6th Cir. 1913).

16. Dismissal of Suit — Effect.

Where a suit to recover gasoline taxes paid under protest was brought within the 30-day (now six month) period allowed by this section but was dismissed without prejudice, the taxpayer was not entitled to invoke the provisions of § 28-1-105 so as to be allowed to bring another suit after the expiration of the 30-day period since § 28-1-105 only has application to statutes of limitation of a general nature which relate to remedy only while this section provides a condition precedent which is essential in order to confer jurisdiction and for this reason affects the right as well as the remedy. Automobile Sales Co. v. Johnson, 174 Tenn. 38, 122 S.W.2d 453, 1938 Tenn. LEXIS 61, 120 A.L.R. 370 (1938).

17. Sales Tax.

A taxpayer was allowed to recover a sales tax refund even though he had not commenced his action within six months as required by this section where the action was commenced within six months after the right to refund accrued. Tidwell v. RCA Corp., 528 S.W.2d 179, 1975 Tenn. LEXIS 620 (Tenn. 1975).

67-1-904. Jurisdiction of suit — Certification and repayment.

  1. The suit may be tried in any court in the county of the taxpayer's residence or in the county of the location of the defendant having jurisdiction of the amount and parties, and if it be determined that the tax was wrongfully collected as not being due from the party to the state, for any reason going to the merits of the tax, then the court trying the case may certify of record that the tax was wrongfully paid and ought to be refunded, together with such interest as the court may determine to be proper, not exceeding the legal rate, and thereupon the commissioner of finance and administration shall issue a warrant for the refund, which shall be paid in preference to other claims on the state treasury.
  2. For the purpose of suits brought under this chapter, the commissioner of revenue shall be considered a resident of each of the several counties of the state.
  3. This section shall not apply after January 1, 1986, to any tax collected or administered by the commissioner of revenue.
  4. Notwithstanding any other provisions of this section, suits to recover ad valorem taxes wrongfully collected by a city or county must be tried in the county wherein the taxes are collected.

Acts 1873, ch. 44, § 1; Shan., § 1062; Code 1932, § 1793; impl. am. Acts 1937, ch. 33, §§ 24, 29; Acts 1937, ch. 197, § 1; C. Supp. 1950, § 1793; impl. am. Acts 1959, ch. 9, § 3; impl. am. Acts 1961, ch. 97, § 3; Acts 1971, ch. 44, §§ 1, 2; T.C.A. (orig. ed.), § 67-2306; Acts 1984, ch. 972, § 19; 1986, ch. 749, § 14; 1987, ch. 92, § 4; 2002, ch. 680, § 1.

Cross-References. Division of claims and risk management, title 9, ch. 8, part 4.

Jurisdiction of Tennessee claims commission, § 9-8-307.

Taxpayer remedies for disputed taxes, title 67, ch. 1, part 18.

Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 970.

Law Reviews.

Claims Against the State in Tennessee — The Board of Claims, 4 Vand. L. Rev. 875 (1951).

Cited: Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983); Reeves v. Olsen, 691 S.W.2d 527, 1985 Tenn. LEXIS 599 (Tenn. 1985).

NOTES TO DECISIONS

1. Right of Recovery.

It is not required that the entire amount demanded be paid before suit can be brought. Any sum wrongfully exacted may be recovered, after payment thereof. Fort v. Dixie Oil Co., 170 Tenn. 464, 95 S.W.2d 931, 1936 Tenn. LEXIS 16 (1936), cert. denied, Dixie Oil Co. v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 362 (1936).

2. Taxes Comprehended.

T.C.A. §§ 67-1-904, 67-1-908 and 67-1-909 make no distinction between excise tax and ad valorem taxes. Illinois C. R. Co. v. Garner, 193 Tenn. 91, 241 S.W.2d 926, 1951 Tenn. LEXIS 327 (1951), appeal dismissed, Illinois C. R. Co. v. Garner, 342 U.S. 900, 72 S. Ct. 295, 96 L. Ed. 674, 1952 U.S. LEXIS 2581 (1952).

3. Allowance of Interest.

The matter of allowing interest on the amount of unemployment compensation taxes paid under protest from the date of their payment is left to the sound discretion of the chancellor or judge. Wolfe v. Bryant, 181 Tenn. 357, 181 S.W.2d 343, 1944 Tenn. LEXIS 380 (1944).

4. —Decision Prior to 1937 Amendment.

In a suit by a taxpayer to recover taxes paid under protest, interest on such payments could not be recovered in absence of statutory provisions so providing. New England Mut. Life Ins. Co. v. Reece, 169 Tenn. 84, 83 S.W.2d 238, 1935 Tenn. LEXIS 19 (1935).

5. Courts.

Circuit and chancery courts have concurrent jurisdiction under T.C.A. § 67-1-904. Tidwell v. Goodyear Tire & Rubber Co., 520 S.W.2d 721, 1975 Tenn. LEXIS 702 (Tenn. 1975).

Circuit court is authorized to apply equitable principles and remedies to relieve against penalties under the sales and use tax act. Tidwell v. Goodyear Tire & Rubber Co., 520 S.W.2d 721, 1975 Tenn. LEXIS 702 (Tenn. 1975).

A claim for refund may be heard in chancery or circuit court, and is thus appealable through the state process through the state supreme court and thereafter, if constitutional issues are involved, to the United States supreme court. Independent Baptist Church v. Tennessee, 468 F. Supp. 71, 1978 U.S. Dist. LEXIS 14258 (E.D. Tenn. 1978).

67-1-905. Costs paid by state.

  1. In all such cases, if the court shall certify of record in the cause that it appears from the evidence before the court that the officer against whom the suit is brought has acted in good faith and has defended the suit with proper diligence and care, the necessary cost of the cause shall be taxed as provided by law in criminal cases, and be paid by the state.
  2. This section shall not apply after January 1, 1986, to any tax collected or administered by the commissioner of revenue.

Acts 1873, ch. 44, § 3; Shan., § 1065; Code 1932, § 1796; T.C.A. (orig. ed.), § 67-2307; Acts 1984, ch. 972, § 19; 1986, ch. 749, § 15; 1987, ch. 92, § 5.

Cross-References. Division of claims and risk management, title 9, ch. 8, part 4.

Jurisdiction of Tennessee claims commission, § 9-8-307.

Taxpayer remedies for disputed taxes, title 67, ch. 1, part 18.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 50.

Cited: Independent Baptist Church v. Tennessee, 468 F. Supp. 71, 1978 U.S. Dist. LEXIS 14258 (E.D. Tenn. 1978); Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983); Reeves v. Olsen, 691 S.W.2d 527, 1985 Tenn. LEXIS 599 (Tenn. 1985).

67-1-906. [Repealed.]

Compiler's Notes. Former § 67-1-906 (Acts 1873, ch. 44, § 4; Shan., §§ 1066, 1067; Code 1932, §§ 1797, 1798; T.C.A. (orig. ed.), §§ 67-2308, 67-2309), concerning the district attorney general representing collectors, and his fee, was repealed by Acts 1984, ch. 832, § 36, effective July 1, 1984.

67-1-907. [Repealed.]

Compiler's Notes. Former § 67-1-907 (Acts 1873, ch. 44, § 4; Shan., §§ 1066, 1067; Code 1932, §§ 1797, 1798; T.C.A. (orig. ed.), §§ 67-2308, 67-2309), concerning the district attorney general representing collectors, and his fee, was repealed by Acts 1984, ch. 832, § 36, effective July 1, 1984.

67-1-908. Remedy exclusive.

  1. There shall be no other remedy in any case of the collection of revenue, or attempt to collect revenue illegally, or attempt to collect revenue in funds only receivable by the officer under the law, the same being other or different funds than such as the taxpayer may tender, or claim the right to pay, than that provided by this part.
  2. Subsection (a) shall not apply after January 1, 1986, to any tax collected or administered by the commissioner of revenue.

Acts 1873, ch. 44, § 2; Shan., § 1063; Code 1932, § 1794; T.C.A. (orig. ed.), § 67-2310; Acts 1984, ch. 972, § 19; 1986, ch. 749, § 16; 1987, ch. 92, § 6.

Cross-References. Division of claims and risk management, title 9, ch. 8, part 4.

Jurisdiction of Tennessee claims commission, § 9-8-307.

Taxpayer remedies for disputed taxes, title 67, ch. 1, part 18.

Textbooks. Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 17.

Law Reviews.

Claims Against the State in Tennessee — The Board of Claims, 4 Vand. L. Rev. 875 (1951).

Cited: Bergeda v. State, 179 Tenn. 460, 167 S.W.2d 338, 1942 Tenn. LEXIS 43, 144 A.L.R. 696 (1942); Southern Coal Co. v. McCanless, 183 Tenn. 457, 192 S.W.2d 1003, 1946 Tenn. LEXIS 225 (1946); Seagle—Paddock Pools, Inc. v. Benson, 503 S.W.2d 93, 1973 Tenn. LEXIS 431 (Tenn. 1973); Independent Baptist Church v. Tennessee, 468 F. Supp. 71, 1978 U.S. Dist. LEXIS 14258 (E.D. Tenn. 1978); Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982); Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Griffith Motors, Inc. v. King, 641 S.W.2d 200, 1982 Tenn. LEXIS 361 (Tenn. 1982); Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983); Beare Co. v. Olsen, 711 S.W.2d 603, 1986 Tenn. LEXIS 663 (Tenn. 1986); Jack Daniel Distillery, Lem Motlow Prop., Inc. v. Olsen, 716 S.W.2d 496, 1986 Tenn. LEXIS 787 (Tenn. 1986); Angel v. Jackson, 724 S.W.2d 736, 1987 Tenn. LEXIS 822 (Tenn. 1987); Roberts v. Sullivan County (In re Penking Trust), 196 B.R. 389, 1996 Bankr. LEXIS 658 (Bankr. E.D. Tenn. 1996).

NOTES TO DECISIONS

1. Constitutionality.

This section and § 67-1-909 providing exclusive remedy for taxes wrongfully or illegally collected are not unconstitutional since such sections afford the taxpayer an adequate remedy to protect his rights. Fort v. Dixie Oil Co., 170 Tenn. 183, 93 S.W.2d 1260, 1935 Tenn. LEXIS 124 (1935), cert. denied, Dixie Oil Co. v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 362 (1936); Fort v. Hudson, 170 Tenn. 192, 93 S.W.2d 1263, 1935 Tenn. LEXIS 125 (1935), cert. denied, Hudson v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 363 (1936).

2. Legislative Intent.

The 1986 amendment was not intended to reopen claims for taxes not paid under protest in earlier years. Aluminum Co. of Am. v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).

3. Applicability.

The provisions of the 1986 amendment dispensing with the requirement of payment under protest do not apply to taxes paid prior to January 1, 1986. Aluminum Co. of Am. v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).

4. Sufficiency of Remedy.

This part affords an ample remedy for the citizen who conceives himself wronged by an improper exercise of the taxing power. Louisville & N.R.R. v. State, 55 Tenn. 663, 1875 Tenn. LEXIS 5 (1874), aff'd, American Airways v. Wallace, 287 U.S. 565, 53 S. Ct. 15, 77 L. Ed. 498, 1932 U.S. LEXIS 40 (1932). But see Mayor of Chattanooga v. Nashville, C. & St. L.R.R., 75 Tenn. 561, 1881 Tenn. LEXIS 153 (1881). See also Tennessee v. Sneed, 96 U.S. 69, 24 L. Ed. 610, 1877 U.S. LEXIS 1627 (1877).

Where the commissioner has issued a distress warrant against the property of an oil company for gasoline tax alleged to be due and unpaid by the company, which the oil company asserts is illegal and void, the chancery court of the state has no authority to prohibit the collection of such taxes by the commissioner, since the complainant has an adequate remedy provided by this section and § 67-1-909. Fort v. Dixie Oil Co., 170 Tenn. 183, 93 S.W.2d 1260, 1935 Tenn. LEXIS 124 (1935), cert. denied, Dixie Oil Co. v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 362 (1936).

5. Exclusiveness of Remedy.

The remedy provided the taxpayer by this section is exclusive. Shelton v. Platt, 139 U.S. 591, 11 S. Ct. 646, 35 L. Ed. 273, 1891 U.S. LEXIS 2411 (1891).

The owner of a motel operated by others under a lease was not the operator required to collect a privilege tax levied by a private act and was thus a person other than taxpayer under T.C.A. § 67-1-1434. Oxford Invest., Inc. v. Mashburn, 729 S.W.2d 96, 1985 Tenn. App. LEXIS 2949 (Tenn. Ct. App. 1985).

6. Construction.

In order to invoke the jurisdiction of a court to hear a claim that collection of a tax would be unjust or illegal, the taxpayer must first pay the tax, and a party is not excused from the requirement of T.C.A. § 67-1-901 based on the nature of the party's challenge or the manner in which the unjustness or illegality of the tax is raised; there is no language in any of the remaining statutes which could be read to suggest that the requirement is dependent on the nature of the challenge. Nashville Metro Gov't v. New Orleans Manor, Inc., — S.W.3d —, 2014 Tenn. App. LEXIS 415 (Tenn. Ct. App. July 16, 2014), appeal denied, — S.W.3d —, 2014 Tenn. LEXIS 994 (Tenn. Nov. 19, 2014).

67-1-909. Writs to prevent collection of tax prohibited.

  1. No writ for the prevention of the collection of any revenue claimed, or to hinder and delay the collection of revenue, shall by either injunction, supersedeas, prohibition, or any other writ or process whatsoever; but in all cases in which, for any reason, any person shall claim that the tax so collected was wrongfully or illegally collected, the remedy for the party shall be as provided in § 67-1-908, and in no other manner.
  2. This section shall not apply after January 1, 1986, to any tax collected or administered by the commissioner of revenue.

Acts 1873, ch. 44, § 2; Shan., § 1064; Code 1932, § 1795; T.C.A. (orig. ed.), § 67-2311; Acts 1986, ch. 749, § 17.

Cross-References. Division of claims and risk management, title 9, ch. 8, part 4.

Jurisdiction of Tennessee claims commission, § 9-8-307.

Taxpayer remedies for disputed taxes, title 67, ch. 1, part 18.

Textbooks. Gibson's Suits in Chancery (7th ed., Inman), § 587.

Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 17; 23 Tenn. Juris., Taxation, § 53.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

Cited: Taylor v. Louisville & N. R. Co., 88 F. 350, 1898 U.S. App. LEXIS 2089 (6th Cir. 1898); Bergeda v. State, 179 Tenn. 460, 167 S.W.2d 338, 1942 Tenn. LEXIS 43, 144 A.L.R. 696 (1942); Southern Coal Co. v. McCanless, 183 Tenn. 457, 192 S.W.2d 1003, 1946 Tenn. LEXIS 225 (1946); Seagle—Paddock Pools, Inc. v. Benson, 503 S.W.2d 93, 1973 Tenn. LEXIS 431 (Tenn. 1973); Independent Baptist Church v. Tennessee, 468 F. Supp. 71, 1978 U.S. Dist. LEXIS 14258 (E.D. Tenn. 1978); Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982); Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Griffith Motors, Inc. v. King, 641 S.W.2d 200, 1982 Tenn. LEXIS 361 (Tenn. 1982); Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).

NOTES TO DECISIONS

1. Constitutionality.

The provisions prohibiting the use of writs of certiorari and supersedeas to stay collection of any tax is not violative of the constitution. Louisville & N.R.R. v. State, 55 Tenn. 663, 1875 Tenn. LEXIS 5 (1875). But see Mayor of Chattanooga v. Nashville, C. & St. L.R.R., 75 Tenn. 561, 1881 Tenn. LEXIS 153 (1881); Mayor of Nashville v. Smith, 86 Tenn. 213, 6 S.W. 273, 1887 Tenn. LEXIS 40 (1887); American Airways, Inc. v. Wallace, 57 F.2d 877, 1932 U.S. Dist. LEXIS 1156 (M.D. Tenn. 1932), aff'd, American Airways v. Wallace, 287 U.S. 565, 53 S. Ct. 15, 77 L. Ed. 498, 1932 U.S. LEXIS 40 (1932).This section and § 67-1-908 providing exclusive remedy for taxes wrongfully or illegally collected are not unconstitutional since such sections afford the taxpayer an adequate remedy to protect his rights. Fort v. Dixie Oil Co., 170 Tenn. 183, 93 S.W.2d 1260, 1935 Tenn. LEXIS 124 (1935), cert. denied, Dixie Oil Co. v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 362 (1936); Fort v. Hudson, 170 Tenn. 192, 93 S.W.2d 1263, 1935 Tenn. LEXIS 125 (1935), cert. denied, Hudson v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 363 (1936).

2. Remedies Not Available to Taxpayer.

The state courts have no power, by injunction or supersedeas, to stay the collection of taxes due the state, where the taxpayers' contention is that the tax levy is excessive. Fort v. Dixie Oil Co., 170 Tenn. 183, 93 S.W.2d 1260, 1935 Tenn. LEXIS 124 (1935), cert. denied, Dixie Oil Co. v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 362 (1936).

State courts could not issue injunction to arrest levy of distress warrant for collection of privilege tax even though the amount of such tax might exceed the value of the property. Fort v. Hudson, 170 Tenn. 192, 93 S.W.2d 1263, 1935 Tenn. LEXIS 125 (1935), cert. denied, Hudson v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 363 (1936).

Averment by taxpayer that it was not in fact engaged in the distribution of gasoline so as to be subject to gasoline tax did not entitle such taxpayer to writs of certiorari and supersedeas to stay levy of distress warrant to collect such tax but merely raised an issue of fact between the taxpayer and the commissioner which could be litigated only after the tax was paid. Fort v. Hammett Oil Co., 170 Tenn. 195, 93 S.W.2d 1264, 1935 Tenn. LEXIS 126 (1935).

A writ of injunction will not be issued to prevent the levy of a distress warrant for the seizure of chattels for nonpayment by defendant of gasoline taxes, since such seizure will not work an irreparable injury to the taxpayer, where the taxpayer has a simple remedy by single suit to recover the value of the property so taken under a distress warrant. Fort v. Dixie Oil Co., 170 Tenn. 464, 95 S.W.2d 931, 1936 Tenn. LEXIS 16 (1936), cert. denied, Dixie Oil Co. v. Fort, 299 U.S. 595, 57 S. Ct. 121, 81 L. Ed. 439, 1936 U.S. LEXIS 362 (1936).

Collection officer of state cannot be enjoined from collection of taxes. American Can Co. v. McCanless, 183 Tenn. 491, 193 S.W.2d 86, 1946 Tenn. LEXIS 229 (1946).

With respect to taxpayers, this part provides an exclusive remedy (other than an administrative remedy set forth in § 67-1-707). That remedy is payment of the tax under protest and suit for recovery. Dominion Nat'l Bank v. Olsen, 651 S.W.2d 215, 1983 Tenn. LEXIS 778 (Tenn. 1983).

3. Inadequate Legal Remedy — Right to Injunction.

The collection of an illegal and void tax may be enjoined when the taxpayer has no remedy at law. Elgin v. Hessen, 282 F. 281, 1921 U.S. Dist. LEXIS 1596 (W.D. Tenn. 1921).

A court of equity has jurisdiction to enjoin collection of a tax alleged to be illegal, where plaintiff has not a full, free, complete, and adequate remedy at law. American Airways, Inc. v. Wallace, 57 F.2d 877, 1932 U.S. Dist. LEXIS 1156 (M.D. Tenn. 1932), aff'd, American Airways v. Wallace, 287 U.S. 565, 53 S. Ct. 15, 77 L. Ed. 498, 1932 U.S. LEXIS 40 (1932).

4. Matters Determining Right to Injunction.

A court, in determining whether it will entertain a suit in equity to enjoin collection of a tax, must look to the probable consequences or damages resulting to plaintiff if the injunction is not granted. American Airways, Inc. v. Wallace, 57 F.2d 877, 1932 U.S. Dist. LEXIS 1156 (M.D. Tenn. 1932), aff'd, American Airways v. Wallace, 287 U.S. 565, 53 S. Ct. 15, 77 L. Ed. 498, 1932 U.S. LEXIS 40 (1932).

The courts of Tennessee have authority to grant injunctions prohibiting the illegal assessment of taxes, as it is one of the primary duties of the judiciary to check other branches of the government (here the revenue commissioner) when they exceed their constitutional or statutory authority. Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983).

5. Matters Not Warranting Preventive Process.

No writ of injunction, certiorari and supersedeas, prohibition, or other process can lawfully issue for the prevention of the collection of revenue claimed to be due the state. The only remedy is to pay the same under protest, and then sue for the recovery. Mayor of Nashville v. Smith, 86 Tenn. 213, 6 S.W. 273, 1887 Tenn. LEXIS 40 (1887); Railroad v. Williams, 101 Tenn. 146, 46 S.W. 448, 1898 Tenn. LEXIS 44 (1898); Briscoe v. McMillan, 117 Tenn. 115, 100 S.W. 111, 1906 Tenn. LEXIS 36 (1906).

A suit in equity will not lie to restrain collection of a tax on the sole ground that the tax is illegal, but there must exist, in addition, special circumstances bringing the case under some recognized head of equity jurisdiction. Shelton v. Platt, 139 U.S. 591, 11 S. Ct. 646, 35 L. Ed. 273, 1891 U.S. LEXIS 2411 (1891). To same effect, Allen v. Pullman's Palace Car Co., 139 U.S. 658, 11 S. Ct. 682, 35 L. Ed. 303, 1891 U.S. LEXIS 2421 (1891).

The fact that a tax law may be unconstitutional does not give a court of equity jurisdiction to restrain its collection. Shelton v. Platt, 139 U.S. 591, 11 S. Ct. 646, 35 L. Ed. 273, 1891 U.S. LEXIS 2411 (1891).

The fact that property is used in conducting interstate commerce does not, in itself, give equity jurisdiction to restrain collection of a tax levied thereon which is alleged to be illegal. Shelton v. Platt, 139 U.S. 591, 11 S. Ct. 646, 35 L. Ed. 273, 1891 U.S. LEXIS 2411 (1891).

6. Time for Objection to Equity Jurisdiction.

Ordinarily the objection of adequacy of remedy at law should be taken at the earliest opportunity and before defendant enters upon a full defense, but if the court, in looking at the proof, find none of the matters which would make it a proper case for equity, a decree for equitable relief may be reversed, although the objection is taken for the first time on appeal. Allen v. Pullman's Palace Car Co., 139 U.S. 658, 11 S. Ct. 682, 35 L. Ed. 303, 1891 U.S. LEXIS 2421 (1891).

7. Enjoining Void Assessments and Proceedings.

Injunction lies against void process for the collection of state and county taxes, although there may also be a remedy at law by certiorari. Alexander v. Henderson, 105 Tenn. 431, 58 S.W. 648, 1900 Tenn. LEXIS 87 (1900); Briscoe v. McMillan, 117 Tenn. 115, 100 S.W. 111, 1906 Tenn. LEXIS 36 (1906).

The statute does not prevent maintenance of a bill in equity to restrain the assessment and collection of taxes on an assessment equalized by the state board of equalization, where it is claimed that the acts of the board were absolutely void. Briscoe v. McMillan, 117 Tenn. 115, 100 S.W. 111, 1906 Tenn. LEXIS 36 (1906).

Suit by citizens and taxpayers of a county against county and city officers within the county, to enjoin such officers from assessing and collecting taxes on property on a basis of assessments made by the state board of equalization on the theory that such assessments were illegal and absolutely void, is not a suit against this state. Briscoe v. McMillan, 117 Tenn. 115, 100 S.W. 111, 1906 Tenn. LEXIS 36 (1906).

Where the decision of the state board of equalization, in a proceeding for the reassessment of property for taxation, is void, because there was no quorum present to hear the appeal before such board, a bill is maintainable to enjoin the enforcement of such judgment and to enjoin the county trustee from collecting the taxes. Smoky Mt. Land, Lumber & Imp. Co. v. Lattimore, 119 Tenn. 620, 105 S.W. 1028, 1907 Tenn. LEXIS 26 (1907).

Void proceedings for back assessment may be perpetually enjoined by property owner. Southern Express Co. v. Patterson, 122 Tenn. 279, 123 S.W. 353, 1909 Tenn. LEXIS 23 (1909).

A bill will lie to enjoin the enforcement of a void assessment and the collection of taxes levied thereunder. Southeastern Greyhound Lines v. City of Knoxville, 181 Tenn. 622, 184 S.W.2d 4, 1944 Tenn. LEXIS 284 (1944).

8. Enjoining Certification of Assessment.

This statute applies to the collection of state taxes only, and does not prevent the maintenance of a bill to declare the action of the state board of equalization to be illegal and void, and to enjoin the certification of its action in the assessment. Briscoe v. McMillan, 117 Tenn. 115, 100 S.W. 111, 1906 Tenn. LEXIS 36 (1906); Smoky Mt. Land, Lumber & Imp. Co. v. Lattimore, 119 Tenn. 620, 105 S.W. 1028, 1907 Tenn. LEXIS 26 (1907); Southern Express Co. v. Patterson, 122 Tenn. 279, 123 S.W. 353, 1909 Tenn. LEXIS 23 (1909); Tennessee Fertilizer Co. v. McFall, 128 Tenn. 645, 163 S.W. 806, 1913 Tenn. LEXIS 78 (1913).

The action of the state board of equalization, in the assessment of taxes, within its jurisdiction and without fraud, is not subject to collateral attack by a bill in chancery to restrain the certification of the assessment and extension of taxes according to its action, for irregularities in the modes of procedure or for not hearing any evidence, but for such irregularity in procedure, the remedy is by certiorari in a court of law. Briscoe v. McMillan, 117 Tenn. 115, 100 S.W. 111, 1906 Tenn. LEXIS 36 (1906); Smoky Mt. Land, Lumber & Imp. Co. v. Lattimore, 119 Tenn. 620, 105 S.W. 1028, 1907 Tenn. LEXIS 26 (1907).

9. County and City Taxes — Restraining Collection.

Writs of certiorari and supersedeas may be used to test the validity of county and city taxes, and to restrain their collection until the judicial determination of their validity. Mayor of Nashville v. Smith, 86 Tenn. 213, 6 S.W. 273, 1887 Tenn. LEXIS 40 (1887); Railroad v. Williams, 101 Tenn. 146, 46 S.W. 448, 1898 Tenn. LEXIS 44 (1898).

Bill which sought to obtain a decree that city ordinance imposing tax on buses operated on streets of city was in the nature of a bill for declaratory judgment, but even if construed to be a bill for injunction of void tax it was proper since bill was filed prior to the time the tax became due. Southeastern Greyhound Lines v. City of Knoxville, 181 Tenn. 622, 184 S.W.2d 4, 1944 Tenn. LEXIS 284 (1944).

10. Federal Equity Jurisdiction.

The illegality or unconstitutionality of a tax imposed by a state is, standing alone, insufficient ground for equitable relief in a federal court; other circumstances must be shown which bring the case under some recognized head of equity jurisdiction and show an inadequate remedy at law. Pullman Co. v. Tamble, 173 F. 200, 1909 U.S. App. LEXIS 5870 (M.D. Tenn. 1909).

Collateral References.

Financial hardship or inability to pay taxes as rendering inapplicable statutes denying remedy by injunction against assessment or collection of tax. 65 A.L.R.2d 550.

67-1-910. Refusal of unrecognized money.

Nothing in this part shall be construed to subject any officer of the state to any suit for a refusal on the officer's part to accept, in payment of revenue of the state, any kind or description of funds or securities or papers other than such as the officer may be authorized and required to receive for the time being by law.

Acts 1873, ch. 44, § 5; Shan., § 1068; Code 1932, § 1799; T.C.A. (orig. ed.), § 67-2312.

Cross-References. Types of money receivable, § 67-1-704.

Cited: Volunteer Structures, Inc. v. Olsen, 640 S.W.2d 221, 1982 Tenn. LEXIS 346 (Tenn. 1982); Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983).

67-1-911. Provisions applicable to municipal taxes.

  1. Sections §§ 67-1-901 — 67-1-905 and 67-1-908 — 67-1-910 apply to the recovery of all taxes collected by any of the municipalities of this state.
  2. In order to carry out the legislative intent that all of such sections, which now apply to the recovery of state taxes erroneously paid, be conformed to apply also to the recovery of taxes erroneously paid to municipalities, the following provisions are added:
    1. The municipal officer collecting any municipal taxes paid under protest shall pay such revenue into the municipal treasury and, at the time of payment, shall give notice to the mayor and board of commissioners or other governing body of such municipality that the taxes were paid under protest;
    2. If it be finally determined by any court having jurisdiction of any suit brought within thirty (30) days after such payment under protest against the municipality to recover such taxes that the taxes were wrongfully collected as not being due from the party to the municipality, the municipality shall refund such taxes with such interest as the court may determine to be proper, not exceeding the legal rate, and shall pay the costs of the cause; and
    3. The city attorney or other legal officer of such municipality shall conduct the defense of such suit.

Acts 1959, ch. 324, § 1; T.C.A., § 67-2313.

Cross-References. Applicability to metropolitan government areas, § 7-4-108.

Textbooks. Tennessee Jurisprudence, 19 Tenn. Juris., Municipal Corporations, § 95.

Law Reviews.

Recovering Erroneously Paid Property Taxes in Tennessee: An Epic Journey, 10 Mem. St. U.L. Rev. 279 (1980).

Cited: Woods v. Equity Servs., Inc., 536 S.W.2d 333, 1976 Tenn. LEXIS 626 (Tenn. 1976); McDowell Dev. Corp. v. Ferguson, 579 S.W.2d 863, 1978 Tenn. App. LEXIS 341 (Tenn. Ct. App. 1978); Goldsmith's Div. v. City of Memphis, 631 S.W.2d 396, 1982 Tenn. LEXIS 399 (Tenn. 1982); Lebanon Liquors v. City of Lebanon, 885 S.W.2d 63, 1994 Tenn. App. LEXIS 82 (Tenn. Ct. App. 1994); Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009).

NOTES TO DECISIONS

1. Application and Scope.

Excess municipal inspection fees paid on the wholesale purchase of liquor were not recoverable by taxpayers because the payments were not made involuntarily and under protest. Lebanon Liquors, Inc. v. City of Lebanon, 885 S.W.2d 63, 1994 Tenn. App. LEXIS 82 (Tenn. Ct. App. 1994).

2. Court Review.

The court, acting under this section, could not review the finding of value by the Memphis board of equalization. Goldsmith's Div. v. City of Memphis, 484 S.W.2d 538, 1972 Tenn. LEXIS 379 (Tenn. 1972).

Banking institutions seeking to challenge assessment of local taxes on the outstanding capital stock of the banks had no access to the courts without first either paying the taxes under protest and then filing suit for their refund or going through local and state boards of equalization for administrative review of the assessment without first paying the disputed taxes. Fentress County Bank v. Holt, 535 S.W.2d 854, 1976 Tenn. LEXIS 586 (Tenn. 1976).

3. Limitation of Actions.

Where a suit for recovery of city taxes was brought almost one year after payment under protest, such suit was barred under this section and also under § 67-1-903. Holloway v. Putnam County, 534 S.W.2d 292, 1976 Tenn. LEXIS 591 (Tenn. 1976).

Since § 67-1-903 is by express language made part of this section, a taxpayer who pays municipal taxes under protest has six months in which to file suit for recovery of such taxes. Woods v. Equity Servs., Inc., 536 S.W.2d 333, 1976 Tenn. LEXIS 626 (Tenn. 1976).

In order to properly request a refund of taxes paid under protest to a municipality, an action for recovery must be instituted within six months of the payment. Roberts v. Sullivan County (In re Penking Trust), 196 B.R. 389, 1996 Bankr. LEXIS 658 (Bankr. E.D. Tenn. 1996).

4. Effect of Other Statutes.

Title 50, together with the procedures of this part, provide plaintiffs an adequate, speedy, and efficient method for determining whether the state's unemployment tax has been assessed in violation of their constitutional rights. Therefore, court was without jurisdiction to grant plaintiffs' request for injunctive relief. Independent Baptist Church v. Tennessee, 468 F. Supp. 71, 1978 U.S. Dist. LEXIS 14258 (E.D. Tenn. 1978).

5. Payment Under Protest.

Even though a municipal ordinance covering the collection of inspection fees on the wholesale purchase of liquor contained a criminal penalty for noncompliance, the sanction fell upon the wholesalers and not the retailers, and it did not create a sense of immediacy for payment by the latter sufficient to justify a claim that payments were made under protest. Lebanon Liquors, Inc. v. City of Lebanon, 885 S.W.2d 63, 1994 Tenn. App. LEXIS 82 (Tenn. Ct. App. 1994).

A bankruptcy trustee could make a “proper request” for a refund of city and county real property taxes paid postpetition under protest, even though he did not exhaust his administrative remedies. Roberts v. Sullivan County (In re Penking Trust), 196 B.R. 389, 1996 Bankr. LEXIS 658 (Bankr. E.D. Tenn. 1996).

Trial court had jurisdiction to determine the constitutionality of an occupancy tax under T.C.A. § 67-4-1425, because several taxpayers were not required to pay the tax “under protest” before filing a challenge. Admiralty Suites & Inns, LLC v. Shelby County, 138 S.W.3d 233, 2003 Tenn. App. LEXIS 835 (Tenn. Ct. App. Nov. 24, 2003), appeal denied, — S.W.3d —, 2004 Tenn. LEXIS 406 (Tenn. May 10, 2004).

Supreme court presumes that the requirement of payment under protest in T.C.A. § 67-1-901(a), applicable to municipalities through T.C.A. § 67-1-911, has meaning and purpose and should be given full effect; supreme court is not free to add the language § 67-1-901(b) to expand the scope of T.C.A. §§ 67-1-1801 et seq., restrict the scope of T.C.A. §§ 67-1-901 et seq., or substitute its judgment for that of the Legislature. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

Legislature, by enacting T.C.A. §§ 67-1-1807 and 67-1-901(b), specifically removed the payment-under-protest requirement for disputed state taxes collected by the commissioner of revenue but did not eliminate this requirement for municipal taxes, and it enacted these statutes together as part of the same statutory scheme; under the doctrine of in pari materia, the supreme court reads these provisions together to give the intended effect to the entire statutory scheme. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

67-1-912. Provisions applicable to county taxes.

  1. Sections 67-1-901 — 67-1-905 and 67-1-908 — 67-1-910 apply to the recovery of all taxes collected by any of the counties of this state.
    1. The county officer collecting any county taxes paid under protest shall pay such revenue into the county treasury and, at the time of payment, shall give notice to the county mayor and board of commissioners, or other governing body of a county, that the same were paid under protest.
    2. If it be finally determined by any court having jurisdiction of any suit brought within six (6) months after such payment under protest against the county to recover such taxes that the same were wrongfully collected, as not being due from a party to the county, the county shall refund such taxes with such interest as the court may determine to be proper, not exceeding the legal rate, and shall pay the costs of the cause.

Acts 1981, ch. 274, § 1; T.C.A., § 67-2314; Acts 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Cited: Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983).

NOTES TO DECISIONS

1. Application and Scope.

Excess mineral severance taxes previously paid to a county were not recoverable by taxpayers because the payments were not made involuntarily and under protest. Hoover, Inc. v. Rutherford County, 885 S.W.2d 67, 1994 Tenn. App. LEXIS 152 (Tenn. Ct. App. 1994).

2. Limitation of Actions.

Any action to recover taxes paid under protest to a county must be brought within six months of the payment. Roberts v. Sullivan County (In re Penking Trust), 196 B.R. 389, 1996 Bankr. LEXIS 658 (Bankr. E.D. Tenn. 1996).

3. Payment Under Protest.

A bankruptcy trustee could make a “proper request” for a refund of city and county real property taxes paid postpetition under protest, even though he did not exhaust his administrative remedies. Roberts v. Sullivan County (In re Penking Trust), 196 B.R. 389, 1996 Bankr. LEXIS 658 (Bankr. E.D. Tenn. 1996).

Part 10
Back Assessment and Reassessment Generally

67-1-1001. Part definitions.

  1. As used in this part, unless the context otherwise requires:
    1. “Back assessment” means the assessment of property, including land or improvements not identified or included in the valuation of the property, that has been omitted from or totally escaped taxation; and
    2. “Reassessment” means the assessment of property that has been assessed at less than its actual cash value by reason of connivance, fraud, deception, misrepresentation, misstatement, or omission of the property owner or the owner's agent.
  2. This section shall not be construed to affect in any manner the operation of § 67-1-1004, relative to the protection of a bona fide purchaser.

Acts 1907, ch. 602, § 30; Shan., § 822a1; Code 1932, § 1496; modified; Acts 1982, ch. 774, § 3; T.C.A. (orig. ed.), § 67-1201(b); Acts 1988, ch. 723, §§ 1, 2.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 36.

Law Reviews.

Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).

Cited: Burress v. Woodward, 665 S.W.2d 707, 1984 Tenn. LEXIS 743 (Tenn. 1984).

NOTES TO DECISIONS

1. Connivance.

Where property had been assessed below its actual cash value by the regularly constituted assessing authorities, failure of the taxpayer to report such underassessment even though grossly underassessed did not constitute connivance within the meaning of this section or former § 67-1-1003 nor afford a basis of back assessment. Garner v. Rhea Realty Corp., 494 S.W.2d 783, 1971 Tenn. App. LEXIS 239 (Tenn. Ct. App. 1971).

Under this section and former § 67-1-1003 “connivance” means conduct by the taxpayer similar to but short of actual fraud which caused or induced the low assessment. Garner v. Rhea Realty Corp., 494 S.W.2d 783, 1971 Tenn. App. LEXIS 239 (Tenn. Ct. App. 1971).

Collateral References. Taxation 371

67-1-1002. Grounds.

  1. Any property or properties included in this part or chapter 5 of this title shall be back assessed or reassessed for the period provided by law, viz.:
    1. When the property or properties have been omitted from or escaped taxation;
    2. When the property or properties have been assessed by the assessor or computed by the board of equalization at less than actual cash value by reason of any fraud, deception, misrepresentation, misstatement, or omission of full statements of the owner of the property or the owner's agent or attorney; or
    3. When the owner of the property connives at or fraudulently procures or induces an assessment to be made by the assessor or computed by the board of equalization at less than its actual cash value; provided, that in all cases where there is a grossly inadequate assessment, fraud shall be presumed.
  2. In all cases where any taxes or assessments may be set aside or declared void by any court by reason of any irregularity or neglect to comply with the law in the proceedings; by reason of the illegality of the act constituting the power or authority to assess and levy such taxes or assessments; for want of authority in the board or authority acting in lieu of the county legislative bodies or the duly authorized and legally constituted authorities of the state, for state and county purposes; and such other purposes as may be authorized by law, and the taxes still remain unpaid, the county legislative body of any county, whenever such taxes or assessments have been made or attempted to be made, shall have the power to reassess back taxes upon any lot or parcel of lots or parcels of land subject to or chargeable with taxes for state and county purposes, and relevy the lots or parcels, and the reassessment and levies for such purposes shall be and remain liens upon the lots or parcels of land, with interest from the date when the taxes were properly leviable and assessable where such original assessments remain due and unpaid.

Acts 1873, ch. 40, § 1; 1907, ch. 602, § 30; Shan., §§ 820a1, 822a1; Code 1932, §§ 1493, 1496; modified; impl. am. Acts 1978, ch. 934, §§ 7, 36; Acts 1982, ch. 774, § 3; T.C.A. (orig. ed.), §§ 67-1201(a), 67-1220.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 36.

Cited: Book Agents of Methodist Episcopal Church, South v. State Board of Equalization, 513 S.W.2d 514, 1974 Tenn. LEXIS 467 (Tenn. 1974).

NOTES TO DECISIONS

1. Back Assessment Provision Is Exclusive.

This is the only law for the back assessment of any property covered by it, and property cannot be back assessed under Acts 1903, ch. 258. Nashville R. & L. Co. v. Norvell, 122 Tenn. 613, 124 S.W. 613, 1909 Tenn. LEXIS 34 (1910).

2. Rebuttable Presumption of Fraud.

The presumption of fraud, declared by the statute to arise from a grossly inadequate assessment, is not conclusive, but rebuttable. Eastland v. Sneed, 134 Tenn. 599, 185 S.W. 717, 1915 Tenn. LEXIS 180 (1915).

3. Omitted Property.

Acts 1907, ch. 602, in so far as it provides for the back assessment of taxes, merely undertakes to provide a new remedy for the collection of taxes already delinquent at the time of its passage, and hence taxes on omitted property accruing prior to the adoption of the Act were recoverable thereunder. Tennessee Fertilizer Co. v. McFall, 128 Tenn. 645, 163 S.W. 806, 1913 Tenn. LEXIS 78 (1913).

4. Decedents' Estates.

Administrator of estate is liable for back taxes assessed against estate notwithstanding compromise with county attorney where county attorney had no authority to compromise. Hamilton Nat'l Bank v. Richardson, 42 Tenn. App. 486, 304 S.W.2d 504, 1957 Tenn. App. LEXIS 93 (Tenn. Ct. App. 1957).

5. Reassessment Where Void Tax.

Where taxes have been declared void by any court, by reason of the illegality of the legislative act authorizing them, they may be relevied and reassessed by the county, under the statute compiled in this section. Boyd, Mosby & Co. v. Hunt, 81 Tenn. 252, 1884 Tenn. LEXIS 33 (1884).

6. Special Appeal.

The court of appeals could not consider the relevancy and application of this section on the record before it where the city prayed a special appeal from the chancellor's decree only calling in question that part of the decree which denied recovery of interest and penalties on the taxes which he allowed. City of Bristol v. Delinquent Taxpayers, 179 Tenn. 604, 168 S.W.2d 782, 1942 Tenn. LEXIS 60 (1942).

7. Notification.

County does not have to notify each individual taxpayer before making reassessments under this section. Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964).

8. Standards.

This section does not define the method by which assessments are to be made by the county nor does it establish standards by which the purposes of the statute may be accomplished by the county. Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964).

9. Reassessment of Entire County.

County acting under this section was not only authorized to make individual reassessments but to provide an entire assessment roll for the county. Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964).

10. Contracts for Reassessment.

County acting in capacity of tax assessor (now assessor of property) under this section may contract with individuals, firms or corporations for advice and assistance as provided by statute. Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964).

11. Questions on Appeal.

Taxpayers, who honestly undertook to raise question of validity of assessment under this section but who did not raise question of whether penalty provided by § 67-1-801 would apply to assessment, could not raise the question of right to be relieved therefrom on appeal but court of appeals in affirming decree of chancellor that assessment was valid would do so without prejudice to right of taxpayers to subsequently raise such question. Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964).

67-1-1003. Qualifying municipalities for reassessments — Appeals by owners.

  1. Any municipality that lies within the boundaries of two (2) or more counties and maintains an assessment office separate from the assessment offices of the counties in which the municipality lies may make back assessments and reassessments upon property located within the municipality and subject to municipal taxation through the offices of the municipal assessor in the manner otherwise provided in this part.
  2. A property owner whose property has been assessed under subsection (a) and who disputes the assessment, or who claims exemption from the tax, may appeal the assessment to the municipal board of equalization within thirty (30) days of receipt of notice of the assessment. The municipal board of equalization shall hear the appeal within fifteen (15) days and issue a written decision within five (5) days of the hearing. If the board does not issue a decision within five (5) days of the hearing, the appeal may be taken to the state board of equalization. A decision of the municipal board of equalization may be appealed by the property owner or the municipality to the state board of equalization in the same manner as other appeals from action of the county boards of equalization.

Acts 1915, ch. 124, § 1; 1917, ch. 98, § 1; Shan., § 822a2; Code 1932, § 1497; Acts 1983, ch. 298, § 1; T.C.A. (orig. ed.), § 67-1202; Acts 2001, ch. 176, § 1.

Textbooks. Tennessee Jurisprudence, 18 Tenn. Juris., Mandamus, § 7.

NOTES TO DECISIONS

Decisions Under Prior Law

1. Constitutionality.

This statute does not violate the constitutional provision in Tenn. Const., art. II, § 28, requiring all property to be taxed according to its value, to be ascertained as the legislature shall direct, so that taxes shall be equal and uniform. Swift & Co. v. Haley, 142 Tenn. 382, 219 S.W. 1039, 1919 Tenn. LEXIS 66 (1919).

2. Construction.

The words “any property” appearing in this section are sufficiently broad in meaning to cover any character of property subject to taxation under our laws. State ex rel. Woolen v. Pearson, 137 Tenn. 253, 192 S.W. 164, 1917 Tenn. LEXIS 159 (1917).

This statute, before its amendment in 1917, was held to allow reassessment and taxation of property only where it had entirely escaped assessment and taxation. State ex rel. Woolen v. Pearson, 137 Tenn. 253, 192 S.W. 164, 1917 Tenn. LEXIS 159 (1917).

The prohibition imposed by this section is upon the taxing officials. McCord v. Southern R. Co., 187 Tenn. 247, 213 S.W.2d 184, 1948 Tenn. LEXIS 428 (1948).

3. Application.

Where a suit was commenced before this statute, to compel, by mandamus, a back assessment or reassessment of property previously assessed, upon the ground that it was inadequately assessed and the issuance of a peremptory writ of mandamus was decreed, and thereafter, before final relief, the statute in this section was enacted, which stands as a clear inhibition of the back assessment or reassessment of such property, the supreme court denied the relief sought by such peremptory writ of mandamus. State ex rel. Woolen v. Pearson, 137 Tenn. 253, 192 S.W. 164, 1917 Tenn. LEXIS 159 (1917).

This statute is not limited to taxes assessed by the county tax assessor (now assessor of property), but applies also to the ad valorem taxes on merchants' capital which are assessed as well as collected by the county clerk. Swift & Co. v. Haley, 142 Tenn. 382, 219 S.W. 1039, 1919 Tenn. LEXIS 66 (1919).

4. Connivance.

Under § 67-1-1001 and this section, “connivance” means conduct by the taxpayer similar to but short of actual fraud which caused or induced the low assessment. Garner v. Rhea Realty Corp., 494 S.W.2d 783, 1971 Tenn. App. LEXIS 239 (Tenn. Ct. App. 1971).

Under this section, where property had been assessed below its actual cash value by the regularly constituted assessing authorities, failure of the taxpayer to report such underassessment did not constitute connivance within the meaning of the statute. Garner v. Rhea Realty Corp., 494 S.W.2d 783, 1971 Tenn. App. LEXIS 239 (Tenn. Ct. App. 1971).

Collateral References.

Construction and application of statute prohibiting or restricting reassessment after assessment and payment of taxes. 85 A.L.R. 107.

67-1-1004. Ineffective against bona fide purchaser.

  1. In no case shall the back assessment or reassessment of real estate constitute a lien on the real estate that has, by bona fide sale, passed into the hands of innocent purchasers, but shall be a liability against the person owning the real estate at the time of the inadequate assessment.
  2. The burden of proving a bona fide sale shall be upon the person owning such real estate at the time of such back assessment or reassessment.
  3. Subsection (a) shall not apply to property that has wholly escaped taxation.

Acts 1907, ch. 602, § 30; Shan., § 822a3; Code 1932, § 1498; T.C.A. (orig. ed.), § 67-1203.

67-1-1005. Duty to back assess or reassess — Citation.

  1. A back assessment or reassessment must be initiated on or before September 1 of the year following the tax year for which the original assessment was made, unless the omission or underassessment resulted from failure of the taxpayer to file the reporting schedule required by law, from actual fraud or fraudulent misrepresentation of the property owner or the property owner's agent, or from collusion between the property owner or the property owner's agent and the assessor. In the latter cases, a back assessment or reassessment must be initiated on or before three (3) years from September 1 of the tax year for which the original assessment was made. Additional taxes due as the result of a back assessment or reassessment shall not be deemed delinquent until sixty (60) days after the date notice of taxes arising from the back assessment or reassessment is sent to the taxpayer, unless the back assessment or reassessment resulted from failure of the taxpayer to file the reporting schedule required by law, from actual fraud or fraudulent misrepresentation of the property owner or the property owner's agent, or from collusion between the property owner or the property owner's agent and the assessor. In the latter cases, such taxes shall become delinquent as of the date of delinquency of the original assessment.
  2. A back assessment or reassessment may be initiated by certification of the assessor of property to the appropriate collecting officials identifying the property and stating the basis of the back assessment or reassessment and the tax years and amount of any additional assessment for which the owner or taxpayer is responsible. The assessor shall send a copy of the certification to the owner or taxpayer. The collecting official shall then send a notice of taxes due based on the back assessment and reassessment. Any person aggrieved by a back assessment or reassessment may appeal directly to the state board of equalization within sixty (60) days from the date that a copy of the certification is sent to the taxpayer, in the manner provided in § 67-5-1412, and such person may be assisted or represented in the appeal as provided in § 67-5-1514. Accrual of delinquency penalty and interest otherwise applicable is suspended while the appeal is pending; but, during such period, simple interest shall accrue in the amount provided in § 67-5-1512.
  3. A back assessment or reassessment for merchants' taxes and delinquent privilege taxes pursuant to this part may be initiated by a chief administrative officer of a tax jurisdiction to which the tax is payable, any citizen of such jurisdiction, or by the department of revenue. The back assessment or reassessment shall be initiated by the filing of a sworn, written complaint to the county clerk stating the basis of the complaint. The clerk may require a complainant, other than a public official acting in the official's capacity, to post a reasonable bond for payment of costs of the proceeding if the back assessment or reassessment is unsuccessful. An aggrieved party may appeal the clerk's disposition of the complaint to the department.
  4. Notwithstanding the deadline in this section for initiating a back assessment or reassessment, the issuance of a notice of tangible personal property audit by the assessor tolls the running of the deadline during the period of the audit from the issuance of the notice until issuance of the audit findings.

Acts 1879, ch. 79, § 1; 1883, ch. 181, § 1; 1885, ch. 23, § 1; 1907, ch. 602, § 30; Shan., §§ 814, 823, 823a1; Code 1932, §§ 1486, 1499, 1500; modified; impl. am. Acts 1978, ch. 934, §§ 7, 16, 22, 36; T.C.A. (orig. ed.), §§ 67-1204, 67-1205, 67-1213; Acts 1990, ch. 898, § 2; 1990, ch. 1052, § 1; 1993, ch. 315, § 12; 2000, ch. 934, § 1; 2002, ch. 752, §§ 1-3; 2007, ch. 132, § 1.

Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 789.

Tennessee Jurisprudence, 18 Tenn. Juris., Limitations of Actions, § 3; 23 Tenn. Juris., Taxation, § 36.

Law Reviews.

The Tennessee Court Systems — Prosecution, 8 Mem. St. U.L. Rev. 477 (1978).

Cited: Garner v. Rhea Realty Corp., 494 S.W.2d 783, 1971 Tenn. App. LEXIS 239 (Tenn. Ct. App. 1971); Roberts v. State Board of Equalization, 557 S.W.2d 502, 1977 Tenn. LEXIS 677 (Tenn. 1977).

NOTES TO DECISIONS

1. Constitutionality.

Statutes concerning the assessment and collection of back taxes have been held constitutional. Grundy County v. Tennessee C., I. & R.R., 94 Tenn. 295, 29 S.W. 116, 1894 Tenn. LEXIS 46 (1895); Tennessee Fertilizer Co. v. McFall, 128 Tenn. 645, 163 S.W. 806, 1913 Tenn. LEXIS 78 (1913).

2. Due Process.

Where defendants got notice of a reassessment of their property in 1980 or 1981 and were served with process in 1986, they had two chances to protest and challenge the reassessment; and such notice and opportunity to be heard complied with the due process requirements of the state and federal constitutions. State v. Delinquent Taxpayers, 785 S.W.2d 819, 1989 Tenn. App. LEXIS 732 (Tenn. Ct. App. 1989).

3. Strict Construction.

The Act of 1882 providing for the collection of back taxes was construed as giving a special remedy which had to be strictly followed, and a purchaser at a sale made under the act was entitled to be relieved of his purchase unless the requirements of the act were pursued. State v. Woodruff, 79 Tenn. 300, 1883 Tenn. LEXIS 63 (1883).

4. “Collector” Defined.

The word “collector” includes any person entrusted with the collection of public revenue. State v. Memphis & C. R.R., 82 Tenn. 56, 1884 Tenn. LEXIS 105 (1884); State v. Railroad, 96 Tenn. 385, 34 S.W. 1023, 1895 Tenn. LEXIS 41 (1895).

The word “collector” includes a county trustee. McHenderson v. Anderson County, 105 Tenn. 591, 59 S.W. 1016, 1900 Tenn. LEXIS 110 (1900).

5. Back Assessment of Privilege Taxes.

Under Acts 1903, ch. 258, relative to privilege taxes, the word “assess” meant simply the listing of names of persons exercising privileges, with the designation of the privilege; it might or might not include an extension of the amount fixed by statute for exercising such privilege; in this sense the county clerk might “back assess or reassess” privilege taxes that had escaped listing and collection. Foppiano v. Speed, 113 Tenn. 167, 82 S.W. 222, 1904 Tenn. LEXIS 11 (1904), aff'd, 199 U.S. 501, 26 S. Ct. 138, 50 L. Ed. 288, 1905 U.S. LEXIS 994 (1905), aff'd, Foppiano v. Speed, 199 U.S. 501, 26 S. Ct. 138, 50 L. Ed. 288, 1905 U.S. LEXIS 994 (1905).

It is not necessary that there should be a back assessment or reassessment of privilege taxes where the statute fixes the amount and makes it the duty of all persons exercising privileges to come forward and obtain a license from the clerk, and pay therefor the amount fixed by law. Foppiano v. Speed, 113 Tenn. 167, 82 S.W. 222, 1904 Tenn. LEXIS 11 (1904), aff'd, 199 U.S. 501, 26 S. Ct. 138, 50 L. Ed. 288, 1905 U.S. LEXIS 994 (1905), aff'd, Foppiano v. Speed, 199 U.S. 501, 26 S. Ct. 138, 50 L. Ed. 288, 1905 U.S. LEXIS 994 (1905).

6. Reassessment.

The fact that property has been regularly assessed in the first instance, the assessments passed upon by the county board of equalization, in turn, by the state board, and by the latter certified back to the county and taxes paid by complainant will not prevent a reassessment in a proper case. Smoky Mt. Land, Lumber & Imp. Co. v. Lattimore, 119 Tenn. 620, 105 S.W. 1028, 1907 Tenn. LEXIS 26 (1907).

7. Review.

While Acts 1879, ch. 79, originally covered only the back assessment of property that had been omitted from assessment and gave the taxpayer a right of appeal from such back assessment to the chairman of the county court (now county mayor), its provisions concerning appeals have been so extended by subsequent legislation as to include taxpayers whose property has been reassessed upon the ground that it was originally assessed for an inadequate valuation. Warner Iron Co. v. Pace, 89 Tenn. 707, 15 S.W. 1077, 1890 Tenn. LEXIS 93 (1891).

Where circuit court upon certiorari determined that action of city board of equalization was illegal this section had no bearing with regard to remandment of proceeding to board for proper hearing. Cox v. Bristol, 28 Tenn. App. 136, 187 S.W.2d 637, 1944 Tenn. App. LEXIS 73 (Tenn. Ct. App. 1944).

Tennessee State Board of Equalization's (Board) back assessment was affirmed because (1) the taxpayer was timely notified of the assessment but did not timely appeal, (2) the assessment was not time-barred, as the taxpayer's failure to file a required annual reporting schedule gave the Board three years to initiate the assessment, which the Board did, and (3) an official's statement based on partial information that the taxpayer would owe no taxes for that year did not justify reliance and nonpayment. Volunteer Princess Cruises, LLC v. Tenn. State Bd. of Equalization, — S.W.3d —, 2016 Tenn. App. LEXIS 820 (Tenn. Ct. App. Oct. 31, 2016).

8. Jurisdiction of Trustee.

Where a county trustee possesses jurisdiction of a proceeding for the back assessment or reassessment of property, and declines to take jurisdiction and refuses to hear such proceeding because of the alleged want of jurisdiction, a writ of mandamus will lie to compel such trustee to take jurisdiction of the proceeding and to hear the same, and to render some judgment on the merits. State ex rel. Bond v. Taylor, 119 Tenn. 229, 104 S.W. 242, 1907 Tenn. LEXIS 7 (Tenn. Sep. 1907).

9. Injunction Proceedings.

Where the proceeding pending before the trustee for the back assessment or reassessment of the intangible property of a foreign corporation lawfully doing business in this state, with its domicile in another state, is void, because there is no statute fixing the situs of such property in this state, or because there is no statute providing for ascertaining the value and assessment of such property, for taxation in this state, such corporation may invoke the jurisdiction of the chancery court to have the same enjoined. Southern Express Co. v. Patterson, 122 Tenn. 279, 123 S.W. 353, 1909 Tenn. LEXIS 23 (1909); Tennessee Fertilizer Co. v. McFall, 128 Tenn. 645, 163 S.W. 806, 1913 Tenn. LEXIS 78 (1913). See Briscoe v. McMillan, 117 Tenn. 115, 100 S.W. 111, 1906 Tenn. LEXIS 36 (Tenn. Sep. 1906).

Fact that other taxpayers along with complainant had been purposely omitted from taxation in the past and that suit was now being brought against complainant alone was not grounds for an injunction against trustee to prevent back assessment of tax on personal property as an alleged failure of taxing officers to perform their duty in the past cannot now be used to prevent present trustee from proceeding as the law requires since any question of inequality is for the board of equalization. Siegel v. Holland, 171 Tenn. 327, 102 S.W.2d 1028, 1936 Tenn. LEXIS 94 (Tenn. Mar. 27, 1937).

Injunction will not lie to restrain trustee from making back assessment of taxes on omitted personalty on grounds that it was intention of trustee to assess exempt property manufactured from the produce of the state where the citation showed no such intent on the part of the trustee as the court will entertain no presumption that there is to be an assessment on exempt property. Siegel v. Holland, 171 Tenn. 327, 102 S.W.2d 1028, 1936 Tenn. LEXIS 94 (Tenn. Mar. 27, 1937).

Where citation by trustee for back assessment of personalty showed no intent by trustee to levy on personalty exempt from such taxation as being manufactured from produce of the state the question was prematurely raised on an appeal from the dismissal of an injunction which had been sought on such basis and the proper place for such question to be brought up on appeal is before the board of equalization after hearing before the trustee. Siegel v. Holland, 171 Tenn. 327, 102 S.W.2d 1028, 1936 Tenn. LEXIS 94 (Tenn. Mar. 27, 1937).

10. Form of Citation.

Citation by county trustee substantially in the form prescribed in this section was not insufficient for failure to describe omitted personal property which was to be back assessed. Siegel v. Holland, 171 Tenn. 327, 102 S.W.2d 1028, 1936 Tenn. LEXIS 94 (Tenn. Mar. 27, 1937).

11. Notice.

The notice required to be given to a taxpayer is sufficient, and not in violation of U.S. Const., amend. 14. The taxpayer knows what property he owns, and its value, and should come prepared to prove the same. Tennessee Fertilizer Co. v. McFall, 128 Tenn. 645, 163 S.W. 806, 1913 Tenn. LEXIS 78 (1913).

Where the property owner actually participated in the back assessment proceedings against his property omitted from assessment, he cannot thereafter complain that the statute did not provide for a sufficient notice of the proceedings. Tennessee Fertilizer Co. v. McFall, 128 Tenn. 645, 163 S.W. 806, 1913 Tenn. LEXIS 78 (1913).

67-1-1006. Obtaining evidence.

  1. The officials having power to back assess or reassess property are vested with full authority to administer oaths, send for and examine witnesses, and take such steps as may be deemed necessary or material to obtain information and evidence as to the value of the property.
  2. Such witnesses, when properly summoned, shall be amenable to existing laws for nonattendance or failure to give evidence that is in their knowledge.

Acts 1907, ch. 602, § 30; Shan., §§ 823a2, 823a3; Code 1932, §§ 1501, 1502; T.C.A. (orig. ed.), §§ 67-1206, 67-1207.

67-1-1007. Authority for back assessment or reassessment — Finality.

  1. The officials vested with the power to make back assessments or reassess have full authority, in a proceeding to back assess or reassess such property, to make proper, correct, and adequate assessment of the property at its actual cash value, which, when entered upon the tax book or filed in writing with the authorized tax collecting authority, shall become a final and valid assessment of the property and collectible as such as fully and amply as if originally entered upon the assessment roll.
  2. The assessment, when made by the official authorized to make the assessment, shall have the force and effect of a judgment against the person liable for the taxes for the year for which the reassessment is made.

Acts 1907, ch. 602, § 30; Shan., § 823a4; Code 1932, § 1503; T.C.A. (orig. ed.), § 67-1208.

Cited: Roberts v. State Board of Equalization, 557 S.W.2d 502, 1977 Tenn. LEXIS 677 (Tenn. 1977).

67-1-1008. Penalty and costs.

If the back assessment or reassessment is sustained, the cost of the proceeding shall be added to the taxes and collectible as such. If the back assessment or reassessment is set aside, the cost shall be paid by the jurisdiction to which the taxes would have been payable, or by the complainant if the board determines the complaint was filed or prosecuted by the complainant without good cause. In a case of connivance, fraud, deception, misrepresentation, or failure to file a personal property schedule, the board may impose a penalty not to exceed fifteen percent (15%) of the taxes due, which shall be added to the taxes due and be collectible as such.

Acts 1907, ch. 602, § 30; Shan., §§ 823a5, 823a6; Code 1932, §§ 1504, 1505; T.C.A. (orig. ed.), §§ 67-1209, 67-1210; Acts 1993, ch. 315, § 13.

Cross-References. Duty to back assess or reassess, § 67-1-1005.

Rate of penalty and interest, § 67-1-801.

NOTES TO DECISIONS

1. Disallowance of Penalty.

In a taxpayer's suit to enjoin the collection of the county trustee's judgment in a back assessment proceeding assessing intangible personalty, evidence of which is physically held or located in another state, but which belonged to a deceased resident of this state, the chancery court's disallowance of this statutory penalty allowed by the trustee, in the back assessment proceedings, is erroneous, and will be corrected by the supreme court. McKennon v. McFall, 127 Tenn. 393, 155 S.W. 158, 1912 Tenn. LEXIS 38 (1912).

2. Aggrieved Parties.

A county trustee is not an “aggrieved” party so as to entitle him, independently of the county, to maintain a petition to review the final action of the state board of equalization equalizing back-assessments made by the trustee. Roberts v. State Board of Equalization, 557 S.W.2d 502, 1977 Tenn. LEXIS 677 (Tenn. 1977).

3. Review of Back Assessments.

Fact that provisions for appeal to state board of equalization from back assessment of taxes provides that such hearing shall be from the record as made up from the hearing before the trustee does not deprive the taxpayer of his constitutional right of trial by an impartial tribunal since the taxpayer is entitled to file any and all evidence he may desire and the fact that a hearing on oral evidence is not provided before the board does not deprive him of a hearing de novo since all the evidence is before the board and oral testimony is not an essential element of a hearing de novo. Siegel v. Holland, 171 Tenn. 327, 102 S.W.2d 1028, 1936 Tenn. LEXIS 94 (Tenn. Mar. 27, 1937).

Where citation by trustee for back assessment of personalty showed no intent by trustee to levy on personalty exempt from such taxation as being manufactured from produce of the state the question was prematurely raised on an appeal from the dismissal of an injunction which had been sought on such basis and the proper place for such question to be brought up on appeal is before the board of equalization after a hearing before the trustee. Siegel v. Holland, 171 Tenn. 327, 102 S.W.2d 1028, 1936 Tenn. LEXIS 94 (Tenn. Mar. 27, 1937).

67-1-1009. Estates — Examination of inventories and reports.

It is the duty of the county clerk to examine and compare the assessment rolls of the county with the inventories or reports of administrators and executors as soon as filed with the county clerk, for the purpose of ascertaining whether any personal property of any estate is subject under this chapter to back assessment or reassessment. In case such examination shows any personalty subject to such back assessment or reassessment, the clerk shall so report to the county trustee, who shall back assess or reassess the personalty under this part, and add the penalty previously designated.

Acts 1907, ch. 602, § 30; Shan., § 823a7; Code 1932, § 1506; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A. (orig. ed.), § 67-1211.

Cited: Hamilton Nat'l Bank v. Richardson, 42 Tenn. App. 486, 304 S.W.2d 504, 1957 Tenn. App. LEXIS 93 (Tenn. Ct. App. 1957).

67-1-1010. Failure or refusal of clerk or trustee to perform duties.

In case the county clerk or county trustee fails or refuses to perform the duty imposed, such clerk or trustee shall become liable on the clerk's or trustee's official bond for the amount of taxes that might have been recovered had the duty been properly performed, together with the penalty of fifteen percent (15%) added to the taxes, the liability and penalty to be recovered in any court of record or before any general sessions court, at the instance of any district attorney general or proper agent of the state, by suit or by motion, on five (5) days' notice.

Acts 1907, ch. 602, § 30; Shan., § 823a8; mod. Code 1932, § 1507; modified; impl. am. Acts 1978, ch. 934, §§ 22, 36; impl. am. Acts 1979, ch. 68, § 3; T.C.A. (orig. ed.), § 67-1212.

67-1-1011. Records and reports.

  1. Every collector of taxes, making assessments and collecting taxes under this chapter, shall keep a book upon which the collector shall enter all property assessed by the collector, giving a description of the property so assessed, the amount of taxes so collected and, upon the collector's final settlement with the commissioner and with the county legislative body, shall file a copy of the settlement, under oath, stating that the copy contains a true and a perfect list of all taxes so collected by the collector.
  2. Should the property in any district or ward, or any part of the district or ward, escape assessment or fail in any manner to be assessed, the trustee is required to assess the property at its actual cash value, and report the amount of the taxes collected on the property to the county legislative body as “picked up” taxes at the same time the trustee reports lists of errors, etc., giving a description of the property, district, or ward in which located.
    1. The county clerk is required to certify copies of the report to the officers with whom the trustee is required by law to settle.
    2. The trustee shall account for the property in making final settlements of the trustee's various accounts, but no assessment authorized by this part shall be made for any other years than for the years in which the assessments shall be made and for three (3) years preceding the assessment.

Acts 1879, ch. 79, § 5; 1907, ch. 602, § 38; Shan., §§ 819, 820; Code 1932, §§ 1491, 1492; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; impl. am. Acts 1978, ch. 934, §§ 7, 22, 36; T.C.A. (orig. ed.), §§ 67-1218, 67-1219.

Part 11
Challenges to Back Assessments or Reassessments [Repealed]

67-1-1101 — 67-1-1104. [Repealed.]

Compiler's Notes. Former title 67, ch. 1, part 11, §§ 67-1-110167-1-1104 (Acts 1879, ch. 79, §§ 1-4; 1883, ch. 181, § 1; 1885, ch. 23, § 2; Shan. §§ 815-818; Code 1932, §§ 1487-1490; T.C.A. (orig. ed.) §§ 67-1214 — 67-1217), concerning taxpayer challenges to back assessments or reassessments, was repealed by Acts 1993, ch. 315, § 14, effective May 17, 1993.

Part 12
Enforcement by Distress Warrant

67-1-1201. Issuance of warrant.

  1. An officer charged with the duty of collecting state revenues is empowered and authorized to issue a distress warrant for the collection of any state taxes, fees, fines, interest, penalties or other revenues, whenever in the officer's discretion the collecting officer deems it necessary to issue a distress warrant to safeguard the revenues of the state.
  2. The distress warrant may be addressed and delivered to the sheriff, any deputy sheriff or constable of the county in which the taxpayer has the taxpayer's office or principal place of business, or to the sheriff or any deputy sheriff or constable of any county in which the collecting officer has reason to believe property of such taxpayer may be found.

Acts 1941, ch. 36, § 1; C. Supp. 1950, § 1613.6 (Williams, § 1613.11); T.C.A. (orig. ed.), § 67-2201.

Cross-References. Distress tax on gift sales, § 67-8-113.

Distress warrant on income taxes, § 67-2-116.

Distress warrant on property taxes, § 67-5-1333.

Tax Enforcement Procedures Act, title 67, ch. 1, part 14.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

NOTES TO DECISIONS

1. Exceptions.

There is no exception in T.C.A. § 67-1-1201 or § 67-1-1202 that would exempt indigent persons from execution of a distress warrant; however, a different case may be presented if the distress warrant was facially invalid or otherwise illegal. Fletcher v. State, 9 S.W.3d 103, 1999 Tenn. LEXIS 678 (Tenn. 1999).

Decisions Under Prior Law

1. Withdrawal of Process.

The comptroller of the state having placed a distress warrant in the hands of a sheriff, may withdraw it before a levy is made, and the sheriff is not entitled to commissions on the amount paid by the taxpayer under protest. Hill v. Allen, 39 S.W. 892, 1896 Tenn. Ch. App. LEXIS 100 (Tenn. Ch. App. Dec. 19, 1896).

Collateral References.

Enforcement against tax exempt property of tax on nonexempt property or on owner of tax exempt property. 159 A.L.R. 461.

Sale under distress warrant, right of officer conducting, to refuse to accept best bid because inadequate. 110 A.L.R. 1077.

Taxation 371

67-1-1202. Execution of warrant.

  1. The sheriff, any deputy sheriff or constable into whose hands such warrant may come may execute it by distraint and sale of personal property belonging to the taxpayer. The proceedings with respect to the sale shall be the same as are provided by law for proceedings under an execution at law from a court of record. The executing officer shall be entitled to the same fees, commissions, and necessary expenses of removing and keeping the property distrained as in the case of an execution from a court of record.
  2. It is the duty of the sheriff, any deputy sheriff or constable into whose hands such distress warrant may come, to make a return on the distress warrant within thirty (30) days from the date received. In the event any such officer fails to make the return as required by this section, the officer and the officer's bondspersons shall be personally liable for the amount set forth in the distress warrant.

Acts 1941, ch. 36, § 2; C. Supp. 1950, § 1613.7 (Williams, § 1613.12); T.C.A. (orig. ed.), § 67-2202.

NOTES TO DECISIONS

1. Exceptions.

There is no exception in T.C.A. § 67-1-1201 or § 67-1-1202 that would exempt indigent persons from execution of a distress warrant; however, a different case may be presented if the distress warrant were facially invalid or otherwise illegal. Fletcher v. State, 9 S.W.3d 103, 1999 Tenn. LEXIS 678 (Tenn. 1999).

67-1-1203. Garnishments.

Garnishments may be issued and executed by the sheriff, any deputy sheriff or constable in the same manner as garnishments are issued and executed on executions at law. Before issuing a garnishment, the sheriff, any deputy sheriff or constable shall cause such distress warrant to be entered on the docket of any court of general sessions or circuit court of the county, and the procedure in the execution of such garnishment shall be the same as now provided by the statute for the execution of garnishments in civil cases.

Acts 1941, ch. 36, § 2; C. Supp. 1950, § 1613.7 (Williams, § 1613.12); impl. am. Acts 1979, ch. 68, § 3; T.C.A. (orig. ed.), § 67-2203.

Cross-References. Attachment by garnishment, title 29, ch. 7.

Execution, garnishment, title 26, ch. 2.

Garnishment to collect delinquent taxes, §§ 67-5-2003, 67-5-2004.

67-1-1204. Levy on real estate.

If the officer cannot find personal property to satisfy the distress warrant, the officer may levy the distress warrant upon any real estate in the officer's county belonging to the taxpayer. If levying on land, the distress warrant, together with the officers' return on the distress warrant, shall be returned to the circuit court of the county in which the land lies, and the land shall be condemned and sold under the orders of the circuit court in the same manner as in the case of the levy on land of an execution issued by a general sessions court.

Acts 1941, ch. 36, § 3; C. Supp. 1950, § 1613.8 (Williams, § 1613.13); impl. am. Acts 1979, ch. 68, § 3; T.C.A. (orig. ed.), § 67-2204.

Cross-References. Levy of execution, title 26, ch. 3.

Tax Enforcement Procedures Act, title 67, ch. 1, part 14.

Law Reviews.

The Tennessee Court System — Circuit Court (Frederic S. Le Clercq), 8 Mem. St. U.L. Rev. 241 (1978).

67-1-1205. Levy on equitable interest.

  1. If the officer cannot find personal or real property belonging to the taxpayer to satisfy the distress warrant, the officer shall levy the distress warrant upon any equitable interest owned by the taxpayer in either personal or real property in the officer's county, the levy to be made on the equitable interest owned in personal property first and on the equitable interest owned in real property last.
  2. The officer shall serve a copy of the distress warrant levied upon the equitable interest, together with the officer's return on the distress warrant, on the holder of the legal title and the secured creditor of record, which may be done by registered mail, notifying them of the intention to request an order of sale by the chancery court. Thereafter, the officer shall return the distress warrant, which shall show notice to the legal title holder and to the secured creditor of record of the levy and intent to return, to the chancery court of the county in which the equitable interest was levied upon, and the equitable interest or the property, whichever is deemed necessary by the court, shall be sold under the orders of that court for the satisfaction of any indebtedness that is a prior lien on the property and for the satisfaction of the distress warrant.
  3. The distress warrant and return, together with any reply to the warrant, shall be heard before the chancellor after the second rule day after the distress warrant has been returned, the hearing on the distress warrant, which shall be subject to review by appeal, to have precedence over all other causes except those affecting state revenue. At the hearing, such orders of reference or of sale or otherwise, as may be necessary, shall be made to the end that the creditor's right shall be protected and the tax due the state may be collected as expeditiously as possible. The legality of the tax cannot be inquired into in this proceeding for any reason, the remedy of the taxpayer being expressly limited to that afforded under part 9 of this chapter.
  4. Nothing in this part shall allow a levy on estates held in realty by a husband and wife as tenants by the entireties, unless liability for the tax is joint with the husband and wife.

Acts 1949, ch. 186, § 1; C. Supp. 1950, § 1613.9 (Williams, § 1613.13a); T.C.A. (orig. ed.), § 67-2205.

Cross-References. Certified mail in lieu of registered mail, § 1-3-111.

67-1-1206. Remedy supplemental.

The remedy and procedure prescribed in this part is cumulative to any other remedies or procedures now prescribed with reference to any particular state taxes, fees, fines, penalties, interest and revenues. No other remedy prescribed by any particular taxing statute shall be held to be exclusive or to prevent the collecting officer from proceeding with the collection of the revenues under this part.

Acts 1941, ch. 36, § 4; C. Supp. 1950, § 1613.10 (Williams, § 1613.14); T.C.A. (orig. ed.), § 67-2206.

Part 13
General Powers to Obtain Evidence

67-1-1301. Power of commissioner and comptroller of the treasury to determine correctness of taxes and fees.

For the purpose of ascertaining the correctness of any tax return, making an assessment where no tax return has been made, determining the liability of any person, firm or corporation for any taxes or fees of any nature whatsoever that may be due or owing to the state of Tennessee, or for determining the liability at law or in equity of any transferee or fiduciary of any person, firm or corporation with respect of any taxes or fees due or owing to the state of Tennessee, or collecting any such liability, the commissioner of revenue, the comptroller of the treasury, or their duly authorized representatives, are authorized to:

  1. Examine any books, papers, records or other data that may be relevant or material to such inquiry;
  2. Summon the person, firm or corporation liable for taxes or fees or any officer or employee of such person, firm or corporation, or any person, firm or corporation having possession, custody or care of books of account containing entries relating to the business of the person, firm or corporation liable for taxes or fees, or any other person, firm or corporation the commissioner, the comptroller of the treasury, or their duly authorized representatives, may deem proper, to appear before the commissioner, comptroller of the treasury, or their duly authorized representatives, at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry; and
  3. Take such testimony of the person, firm or corporation concerned, under oath, as may be relevant to such inquiry.

Acts 1963, ch. 90, § 1; T.C.A., § 67-5501.

Cross-References. Obtaining evidence, § 67-1-1437.

Law Reviews.

Administrative Subpoenas and the Grand Jury: Converging Streams of Criminal and Civil Compulsory Process (Graham Hughes), 47 Vand. L. Rev. 573 (1994).

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

NOTES TO DECISIONS

1. Construction with Other Law.

T.C.A. §§ 67-1-1301, 67-1-1302 and 67-1-1437 are less specific and less restrictive than title 45, ch. 10, and thus have been impliedly amended by that chapter. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).

2. Form of Summons.

Tennessee Const., art. VI, § 12 does not require that an investigative summons be signed by a clerk of an issuing court. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).

3. Unreasonable Demands.

Whether issued pursuant to T.C.A. § 67-1-1301, § 67-1-1302, § 67-1-1437 or title 45, ch. 10, if the subpoenaed party is of the opinion the requests contained in the demand are unreasonable, he can refuse to comply with the demand and raise the issue as a defense to any action brought by the issuer to enforce compliance, and where contested, the production of documents pursuant to an administrative subpoena cannot be compelled without approval of the chancellor. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).

Collateral References. Taxation 371

67-1-1302. Persons subject to subpoena power.

It is the declared intent of this part that all persons, firms or corporations whatsoever having any knowledge pertaining to liabilities for taxes or fees due the state of Tennessee, and any books, papers, records or other data pertaining to liabilities for taxes or fees due the state of Tennessee, shall be subject to the subpoena power granted under this part.

Acts 1963, ch. 90, § 2; T.C.A., § 67-5502.

Law Reviews.

Administrative Subpoenas and the Grand Jury: Converging Streams of Criminal and Civil Compulsory Process (Graham Hughes), 47 Vand. L. Rev. 573 (1994).

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

NOTES TO DECISIONS

1. Construction with Other Law.

T.C.A. §§ 67-1-1301, 67-1-1302, and 67-1-1437 are less specific and less restrictive than title 45, ch. 10, and thus have been impliedly amended by that chapter. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).

2. Unreasonable Demands.

Whether issued pursuant to T.C.A. § 67-1-1301, § 67-1-1302, § 67-1-1437 or title 45, ch. 10, if the subpoenaed party is of the opinion the requests contained in the demand are unreasonable, he can refuse to comply with the demand and raise the issue as a defense to any action brought by the issuer to enforce compliance, and where contested, the production of documents pursuant to an administrative subpoena cannot be compelled without approval of the chancellor. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).

67-1-1303. Failure to appear when subpoenaed — Penalty.

Failure of any person, firm or corporation so subpoenaed to attend shall be certified by the commissioner of revenue or the comptroller of the treasury to the chancery court in whose judicial district such person, firm or corporation resides, and such chancery court shall exercise authority granted by law in the treating of contempt of court matters, including those powers granted in §§ 29-9-10329-9-105; all to the end that the person, firm or corporation shall be compelled to appear at a time and place to be named by the chancery court.

Acts 1963, ch. 90, § 3; T.C.A., § 67-5503.

Cross-References. Failure of witness to honor comptroller of the treasury's subpoena, § 8-4-204.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1304. Failure to testify when subpoenaed — Penalty.

Any person, firm or corporation who appears as summoned, but upon appearance refuses to testify on matters not privileged by law, shall be punished as prescribed in § 67-1-1303.

Acts 1963, ch. 90, § 4; T.C.A., § 67-5504.

Cross-References. Failure of witness to testify for comptroller of the treasury § 8-4-205.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1305. Compensation of witness.

Any persons, firms or corporations so subpoenaed shall be reimbursed necessary traveling expenses from their homes to the place of hearing and other necessary expenses, as determined by the commissioner or the comptroller of the treasury, and those persons, firms or corporations not employees of the state shall be paid at the rate of five dollars ($5.00) per day for each day or portion of a day in attendance at such hearings.

Acts 1963, ch. 90, § 5; T.C.A., § 67-5505.

Cross-References. Witness' traveling expenses and compensation when subpoenaed by comptroller of the treasury, § 8-4-206.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

NOTES TO DECISIONS

1. Construction with Other Law.

The provisions of T.C.A. § 67-1-1305 and § 45-10-109, relating to bearing expenses of the production of records subject to a subpoena, are not necessarily inconsistent. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).

Part 14
Tax Enforcement Procedures Act

67-1-1401. Short title.

This part shall be known and may be cited as the “Tax Enforcement Procedures Act.”

Acts 1972, ch. 762, § 1; T.C.A., § 67-6001.

Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 961.

Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 53.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

Attorney General Opinions. Enforcement of Kingsport hotel/motel tax.  OAG 13-97, 2013 Tenn. AG LEXIS 98 (11/27/13).

Cited: Brown Oil Co. v. Johnson, 689 S.W.2d 149, 1985 Tenn. LEXIS 509 (Tenn. 1985); Soloff v. Dollahite, 779 S.W.2d 57, 1989 Tenn. App. LEXIS 499 (Tenn. Ct. App. 1989).

NOTES TO DECISIONS

1. Purpose of Chapter.

The Tax Enforcement Procedures Act, § 67-1-1401 et seq., was designed to reorganize, modernize and make systematic procedures for the collection of state taxes and the enforcement of liens. Barrow v. Tennessee Dep't of Revenue, 647 S.W.2d 232, 1983 Tenn. LEXIS 628 (Tenn. 1983).

2. Construction with Other Law.

To the extent that the procedures for obtaining financial records from a financial institution are more exacting and restrictive, title 45, ch. 10 impliedly amends this previously enacted part, regardless of T.C.A. § 67-1-1402. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).

Title 45, ch. 10, has more specific and restrictive requirements for issuing subpoenas than title 67, ch. 1, part 14. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).

Collateral References. Taxation 371

67-1-1402. Application and construction.

  1. This part shall apply to every public tax, license or fee, and/or any penalty or interest payable thereon, levied under any existing or later enacted law that is codified in this or any other title and is collectible by the commissioner of revenue.
  2. The purpose of this part is to supplement and clarify existing provisions of the general law relating to the enforcement of state taxes and to compile in a single part the principal enforcement procedures previously enacted and codified in numerous other chapters of this title.
  3. In the event of any conflict between the provisions of this part and those of any other specific statutory provisions contained elsewhere in this title or in any other title, it is declared to be the legislative intent that, to the extent such other specific provisions are inconsistent with or different from this part, the provisions of this part shall prevail. There shall be preserved and prevail over this part such other provisions of this title or of any other title that govern, restrict, or confer special authority or powers upon the commissioner or the commissioner's delegate in the exercise of each of their responsibilities to enforce the collection of public taxes and that are not inconsistent with the provisions of this part, such as, but not limited to, such other provisions relating to confiscation and/or seizure and sale of contraband beer and/or other such beverages and tobacco products as set forth in title 57, chapter 2, and chapter 4, part 10 of this title.

Acts 1972, ch. 762, § 1; T.C.A., § 67-6002.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

Cited: Oxford Invest., Inc. v. Mashburn, 729 S.W.2d 96, 1985 Tenn. App. LEXIS 2949 (Tenn. Ct. App. 1985); Soloff v. Dollahite, 779 S.W.2d 57, 1989 Tenn. App. LEXIS 499 (Tenn. Ct. App. 1989).

NOTES TO DECISIONS

1. Construction with Other Law.

To the extent that the procedures for obtaining financial records from a financial institution are more exacting and restrictive, title 45, ch. 10 impliedly amends this part, regardless of T.C.A. § 67-1-1402. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).

67-1-1403. Lien for taxes in favor of state.

  1. If any person liable to pay any state tax or fee administered by the commissioner of revenue neglects or refuses to pay the tax or fee, the amount, including additionally incurred taxes, fees, penalties, interest, and costs, shall be a lien in favor of the state. Such lien shall arise at the time an initial proposed assessment of any liability is made, and it shall continue until the amounts of the original proposed assessment and any subsequent assessments of liability for taxes, fees, penalties, interest, or costs are fully paid. The lien shall attach to all interests in property, either real or personal, tangible or intangible, in this state then owned or subsequently acquired by the person against whom the proposed assessment is made. For purposes of this section, the definition of “assessment” is as provided in this part and the rules promulgated pursuant to this part.
  2. The commissioner shall cause a notice of such lien to be recorded in the office of the county register of deeds in the county or counties in which the taxpayer's business or residence is located, or in any county in which the taxpayer has an interest in property, and such notice shall be recorded in the same manner as liens are recorded in that office. There shall be no fees collected by the county register at the time such a notice is recorded, but the county register shall extend credit to the department for such fees as are chargeable, and submit the county register's bill at the end of each month to the department in order to obtain payment. Such recordation shall constitute notice of both the original proposed assessment and all subsequent assessments of liability against the same taxpayer. Upon request, the department shall disclose the specific amount of liability at a given date to any interested party legally entitled to such information.
  3. The lien of the state of Tennessee for taxes or fees, or both, shall be superior to all liens and security interests created under Tennessee law except:
    1. County and municipal ad valorem taxes;
    2. Deeds of trust that are recorded prior to the recordation of notice of the state lien;
    3. Security interests created pursuant to Article 9 of the Uniform Commercial Code, compiled in title 47, chapter 9, that require filing for perfection and that are properly filed prior to recordation of the notice of the state lien;
    4. Security interests perfected under the Uniform Commercial Code without filing, as provided in title 47, chapter 9, that are properly perfected prior to recordation of the notice of the state lien; and
    5. Vendors' liens on real estate provided for in title 66, chapter 10 that are recorded prior to the recordation of notice of the state lien.
  4. Notwithstanding any other law to the contrary, the lien for taxes imposed by chapter 8, parts 2-5 of this title shall arise at the date of death, and the lien for taxes imposed by chapter 8, part 1 of this title shall arise at the date of gift and shall attach to any interest in property transferred and to any interest in property acquired in exchange or substitution for any property transferred.
  5. Nothing in this section shall be interpreted to give the state priority over any deed of trust or any security interest perfected under the Uniform Commercial Code, compiled in title 47, that is filed prior to the filing of the notice of state tax lien, regardless of when such taxes are assessed.
    1. The notice of lien required to be filed under subsection (b), or any renewal of the lien, shall be effective for ten (10) years from the date of filing. Any such notice of lien that has remained on file for more than ten (10) years, without renewal, shall be null and void against all persons.
    2. The commissioner may cause a renewal of such notice of lien to be filed prior to the expiration of ten (10) years from the filing of the original notice, if a lien in favor of the state under subsection (a) continues to exist against the taxpayer. If such renewal is filed prior to the expiration of the ten-year period, the priority of the state lien for taxes covered by the notice shall continue to be determined under subsection (c), based on the date of filing of the original notice of lien.
  6. Any right to redemption referred to in this part shall not be affected by subsection (f).

Acts 1978, ch. 686, § 1; T.C.A., § 67-6046; Acts 1984, ch. 781, § 1; 1985, ch. 453, § 7; 1994, ch. 640, § 1; 2000, ch. 846, § 30; 2014, ch. 854, § 4.

Compiler's Notes. Acts 1994, ch. 640, § 3 provided that the amendment by that act, which added (f) and (g), is applicable to all liens existing on and after March 21, 1994.

Amendments. The 2014 amendment, effective January 1, 2015,  inserted “proposed” between “initial” and “assessment” and between “original” and “assessment” in the second sentence of subsection (a); inserted “proposed” between “the” and “assessment” in the third sentence of subsection (a); and inserted “proposed” between “original” and “assessment” in the third sentence of subsection (b).

Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.

Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 982.

Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 45.

Law Reviews.

1985 Tennessee Survey: Selected Developments in Tennessee Law, 53 Tenn. L. Rev. 389 (1986).

Cited: Barrow v. Tennessee Dep't of Revenue, 647 S.W.2d 232, 1983 Tenn. LEXIS 628 (Tenn. 1983); Wicker v. Comm'r, Tenn. Dep't of  Revenue, 342 S.W.3d 35, 2010 Tenn. App. LEXIS 397 (Tenn. Ct. App. June 23, 2010).

NOTES TO DECISIONS

1. Construction.

Although a wife who signed an assumption of liability agreement assuming liability for her husband's business debts was not a “dealer” as defined in T.C.A. § 67-6-102, she was a “person liable to pay any state tax” within the meaning of T.C.A. § 67-1-1403(a). Brown Oil Co. v. Johnson, 689 S.W.2d 149, 1985 Tenn. LEXIS 509 (Tenn. 1985).

2. Applicability.

The description in T.C.A. § 67-1-1403(c) of the interests that will be defeated by a state tax lien does not include the interest of a holder in due course of a negotiable instrument. Soloff v. Dollahite, 779 S.W.2d 57, 1989 Tenn. App. LEXIS 499 (Tenn. Ct. App. 1989).

3. Priority.

Local filing of notice of a tax lien under T.C.A. § 67-1-1403 defeats a bankruptcy trustee's power under 11 U.S.C. § 545(2). Newport v. Tennessee Dep't of Revenue (In re Boat Land Co.), 169 B.R. 47, 1994 Bankr. LEXIS 943 (Bankr. M.D. Tenn. 1994).

67-1-1404. “Levy” defined.

“Levy,” as used in this title, includes the power of distraint and seizure by any means.

Acts 1972, ch. 762, § 1; 1981, ch. 65, § 2; T.C.A., § 67-6004(a).

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 53.

Cited: Wicker v. Comm'r, Tenn. Dep't of  Revenue, 342 S.W.3d 35, 2010 Tenn. App. LEXIS 397 (Tenn. Ct. App. June 23, 2010).

67-1-1405. Collection by levy authorized.

If any person liable to pay any tax neglects or refuses to pay the tax within ten (10) days after notice and demand, it shall be lawful for the commissioner or the commissioner's delegate to collect the tax, and any further sum as shall be sufficient to cover the expenses of the levy, by levy upon all property, and rights to property, belonging to the person or on which there is a lien provided by law for the payment of the tax.

Acts 1972, ch. 762, § 1; 1981, ch. 65, § 1; T.C.A., § 67-6003.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 53.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

Attorney General Opinions. Enforcement of Kingsport hotel/motel tax.  OAG 13-97, 2013 Tenn. AG LEXIS 98 (11/27/13).

67-1-1406. Notice and demand.

  1. If the commissioner or the commissioner's delegate makes a finding that the collection of such tax is in jeopardy, notice and demand for immediate payment of such tax may be made by the commissioner or the commissioner's delegate, and, upon failure or refusal to pay such tax, collection of the tax by levy shall be lawful without regard to the ten-day period provided in § 67-1-1405.
  2. Before a levy is made under § 67-1-1405 upon the salary or wages of a person with respect to any unpaid tax, the commissioner or the commissioner's delegate shall notify the person in writing of an intention to do so. The notice shall be given not less than ten (10) days before the date of the levy by delivering it in person, or by leaving it at the dwelling or usual place of business of the person, or by mailing it to the person's last known address.
  3. The ten-day period provided for in subsection (b) does not apply to a levy, if the commissioner or the commissioner's delegate has made a finding pursuant to subsection (a) that the collection of the tax is in jeopardy.

Acts 1972, ch. 762, § 1; 1981, ch. 65, §§ 1, 2; T.C.A., §§ 67-6003, 67-6004(b)(1), (c).

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1407. Property subject to levy — Exemptions.

  1. A levy shall extend only to property possessed and obligations existing at the time of the levy. In any case in which the commissioner or the commissioner's delegate may levy upon property or rights to property, the commissioner or the commissioner's delegate may seize and sell such property or rights to property, whether real or personal, tangible or intangible. Personal property exemptions provided in title 26, chapter 2 shall not be applicable.
    1. Enumeration.  There shall be exempt from levy:
      1. Wearing Apparel and School Books.  Such items of wearing apparel and such school books as are necessary for the taxpayer or for members of the taxpayer's family;
      2. Fuels, Provisions, Furniture, and Personal Effects.  If the taxpayer is the head of the family, so much of the fuel, provisions, furniture, and personal effects in the taxpayer's household, and of the arms for personal use, livestock, and poultry of the taxpayer, as does not exceed five hundred dollars ($500) in value;
      3. Books and Tools of a Trade, Business, or Profession.  So many of the books and tools necessary for the trade, business or profession of the taxpayer as do not exceed in the aggregate two hundred fifty dollars ($250) in value; and
      4. Unemployment Benefits.  Any amount payable to an individual with respect to the individual's unemployment, including any portion of the amount payable with respect to dependents, under the unemployment compensation law of the state of Tennessee.
    2. Appraisal.  The officer seizing property of the type described in subdivision (b)(1) shall appraise and set aside to the owner the amount of such property declared to be exempt. If the taxpayer objects at the time of the seizure to the valuation fixed by the officer making the seizure, the commissioner or the commissioner's delegate shall summon three (3) disinterested individuals who shall make the valuation.
    3. No Other Property Exempt.  Notwithstanding any other law of the state of Tennessee, no property or rights to property shall be exempt from levy other than the property specifically made exempt by subdivision (b)(1).

Acts 1972, ch. 762, §§ 1, 2; 1981, ch. 65, § 2; T.C.A., § 67-6004(a), 67-6007.

Cross-References. Homestead Act, title 7, ch. 66.

Employment security law, title 50, ch. 7.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1408. Levy on pay — Duration, release, and renewal.

  1. The effect of a levy on salary or wages payable to or receivable by a taxpayer shall be continuous from the date a levy is made until the liability out of which the levy arose is satisfied or becomes unenforceable by reason of lapse of time, or until the expiration of the employer's payroll period that ends immediately prior to three (3) calendar months after the levy is made, whichever occurs first.
  2. With respect to a levy made under this section, the commissioner or the commissioner's delegate shall promptly release the levy when the liability out of which it arose is satisfied or becomes unenforceable by reason of lapse of time, and shall promptly notify the person upon whom the levy was made that it has been released.
  3. If, pursuant to subsection (a), the period of effectiveness for a levy expires prior to the time the liability out of which the levy arose is satisfied or becomes unenforceable by reason of lapse of time, the commissioner or the commissioner's delegate may subsequently proceed to levy on salary or wages in like manner as often as may be necessary until the liability out of which the levy arose is fully satisfied or becomes unenforceable by reason of lapse of time.

Acts 1972, ch. 762, § 1; 1981, ch. 65, § 2; T.C.A., § 67-6004(b)(2)-(b)(4).

67-1-1409. Successive seizures under levy.

Whenever any property or right to property upon which levy has been made by virtue of § 67-1-1405 is not sufficient to satisfy the claim of the state for which levy is made, the commissioner or the commissioner's delegate may, thereafter, as often as may be necessary, proceed to levy in like manner upon any other property liable to levy of the person against whom such claims exist, until the amount due from the taxpayer, together with all expenses, is fully paid.

Acts 1972, ch. 762, § 1; T.C.A., § 67-6005.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1410. Levy — Padlocking premises.

  1. If the commissioner or the commissioner's delegate, at the time of the levy, shall determine that it is in the best interest of both the state and taxpayer, the commissioner or the commissioner's delegate may place padlocks on the doors of any business enterprise that is delinquent in filing and/or paying state taxes. The commissioner or the commissioner's delegate shall also post notices of levy and distraint on each of the doors so padlocked.
  2. If, within three (3) working days, the tax deficiency has not been satisfied or satisfactory arrangements for payment made, the commissioner or the commissioner's delegate shall obtain written permission from the owner of the premises, or remove the property levied upon from the premises.
  3. It is a Class C misdemeanor for anyone to enter the padlocked premises without prior approval of the commissioner or the commissioner's delegate.

Acts 1972, ch. 762, § 1; T.C.A., § 67-6006; Acts 1989, ch. 591, § 113.

Cross-References. Penalty for Class C misdemeanor, § 40-35-111.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1411. Levy — Taxpayer's bond pending appeal.

In the event the person against whom the levy and distraint, as provided in this part, has appealed the ruling of the commissioner on the tax sought to be collected or a suit contesting the collection of the subject tax is pending in a court of competent jurisdiction, the person shall have the right to post bond equaling the amount of the tax liability in lieu of payment until the appeal or suit is finalized. Further, if the taxpayer is successful in the taxpayer's appeal, then the state shall pay the taxpayer interest at the rate of six percent (6%) per annum on the amount of tax liability in question.

Acts 1972, ch. 762, § 1; T.C.A., § 67-6008.

Cross-References. Payment of tax under protest, title 67, ch. 1, part 9.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

NOTES TO DECISIONS

1. Remedy Not Exclusive.

Court rejected contention only remedy taxpayer had to avoid levy was to pay tax under protest or post bond under this section while taxpayer was exhausting his administrative remedies. Carter v. Olsen, 660 S.W.2d 483, 1983 Tenn. LEXIS 732 (Tenn. 1983).

67-1-1412. Levy — Surrender of property required.

  1. Requirement.  Any person in possession of, or obligated with respect to, property or rights to property subject to levy upon which a levy has been made shall, upon demand of the commissioner or the commissioner's delegate, surrender such property or rights, or discharge such obligation, to the commissioner or the commissioner's delegate, except such part of the property or rights as is, at the time of such demand, subject to an attachment or execution under any judicial process.
  2. Enforcement of Levy.
    1. Extent of Personal Liability.  Any person who fails or refuses to surrender any property or rights to property, subject to levy, upon demand by the commissioner or the commissioner's delegate, shall be liable in that person's own person and estate to the state in a sum equal to the value of the property or rights not so surrendered, but not exceeding the amount of taxes for the collection of which such levy has been made, together with costs and interest on such sum at the rate of six percent (6%) per annum from the date of such levy. Any amount other than costs recovered under this subdivision (b)(1) shall be credited against the tax liability for the collection of which such levy was made.
    2. Penalty for Violation.  In addition to the personal liability imposed by subdivision (b)(1), if any person required to surrender property or rights to property fails or refuses to surrender such property or rights to property without reasonable cause, such person shall be liable for a penalty equal to fifty percent (50%) of the amount recoverable under subdivision (b)(1). No part of such penalty shall be credited against the tax liability for the collection of which such levy was made. Such amount shall be paid into the general fund.
  3. Effect of Honoring Levy.  Any person in possession of, or obligated with respect to, property or rights to property subject to levy upon which a levy has been made who, upon demand by the commissioner or the commissioner's delegate, surrenders such property or rights to property or discharges such obligation to the commissioner or the commissioner's delegate or who pays a liability under subdivision (b)(1) shall be discharged from any obligation or liability to the delinquent taxpayer with respect to such property or rights to property arising from such surrender or payment. In the case of a levy that is satisfied pursuant to subsection (b), such person shall also be discharged from any obligation or liability to any beneficiary arising from such surrender or payment.
  4. “Person” Defined.  “Person,” as used in subsection (a), includes an officer or employee of a corporation or a member or employee of a partnership who, as such officer, employee or member, is under a duty to surrender the property or rights to property, or to discharge the obligation.

Acts 1972, ch. 762, § 2; T.C.A., § 67-6009.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1413. Levy — Production of books.

If a levy has been made or is about to be made on any property or right to property, any person having custody or control of any books or records, containing evidence or statements relating to the property or right to property subject to levy shall, upon demand of the commissioner or the commissioner's delegate, exhibit such books or records to the commissioner or the commissioner's delegate.

Acts 1972, ch. 762, § 3; T.C.A., § 67-6010.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1414. Notice of seizure.

As soon as practicable after seizure of property, notice in writing shall be given by the commissioner or the commissioner's delegate to the owner of the property, or, in the case of personal property, the possessor of the personal property, or shall be left at the owner's or possessor's usual place of abode or business if the owner or possessor has such within the state. If the owner cannot be readily located, or has no dwelling or place of business within the state, the notice may be mailed to the owner's last known address. Such notice shall specify the sum demanded and shall contain, in the case of personal property, an account of the property seized and, in the case of real property, a description, with reasonable certainty, of the property seized.

Acts 1972, ch. 762, § 4; T.C.A., § 67-6011.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 53.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1415. Notice of sale.

The commissioner or the commissioner's delegate shall, as soon as practicable after the seizure of the property, give notice to the owner, in the manner prescribed in § 67-1-1414. The notice shall be given not less than thirty (30) days before the date the property seized is sold, and cause a notification to be published in some newspaper published or generally circulated within the county in which such seizure is made, or if there is no newspaper published or generally circulated in such county, post such notice at the county courthouse, and in not less than two (2) other public places. Such notice shall specify the property to be sold, and the time, place, manner and conditions of the sale of the property. Whenever levy is made without regard to the ten-day period provided in § 67-1-1405, public notice of sale of the property seized shall not be made within such ten-day period unless § 67-1-1419, relating to sale of perishable goods, is applicable.

Acts 1972, ch. 762, § 4; T.C.A., § 67-6012; Acts 1992, ch. 857, § 4.

Compiler's Notes. Acts 1992, ch. 857, § 6 provided that the amendment by that act, in the first sentence, requiring notice be given not less than 30 days before the date the property seized is sold, applies only to the state government of Tennessee.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 53.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1416. Sale of indivisible property.

If any property liable to levy is not divisible so as to enable the commissioner or the commissioner's delegate by sale of a part of the property to raise the whole amount of the tax and expenses, the whole of such property shall be sold.

Acts 1972, ch. 762, § 4; T.C.A., § 67-6013.

67-1-1417. Time and place of sale.

The time of sale shall not be less than ten (10) days nor more than forty (40) days from the time of giving public notice under § 67-1-1415. The place of sale shall be within the county in which the property is seized, except by special order of the commissioner or the commissioner's delegate.

Acts 1972, ch. 762, § 4; T.C.A., § 67-6014.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1418. Manner and conditions of sale.

  1. Minimum Price.  Before the sale, the commissioner or the commissioner's delegate shall determine a minimum price for which the property shall be sold, and if no person offers for such property at the sale the amount of the minimum price, the property shall be declared to be purchased at such price for the state; otherwise, the property shall be declared to be sold to the highest bidder. In determining the minimum price, the commissioner or the commissioner's delegate shall take into account the expense of making the levy and sale.
  2. Additional Rules Applicable to Sale.  The commissioner shall by regulations prescribe the manner and other conditions of the sale of property seized by levy. If one (1) or more alternative methods or conditions are permitted by regulations, the commissioner or the commissioner's delegate shall select the alternatives applicable to the sale. Such regulations shall provide:
    1. That the sale shall not be conducted in any manner other than:
      1. By public auction;
      2. By public Internet auction; or
      3. By public sale under sealed bids;
    2. In the case of the seizure of several items of property, whether such items shall be offered separately, in groups, or in the aggregate; and whether, those items shall be sold under whichever method produces the highest aggregate amount;
    3. Whether the announcement of the minimum price determined by the commissioner or the commissioner's delegate may be delayed until the receipt of the highest bid;
    4. Whether payment in full shall be required at the time of acceptance of a bid, or whether a part of such payment may be deferred for such period, not to exceed one (1) month, as may be determined by the commissioner or the commissioner's delegate to be appropriate;
    5. The extent to which methods, including advertising, in addition to those prescribed in § 67-1-1415, may be used in giving notice of the sale; and
    6. Under what circumstances the commissioner or the commissioner's delegate may adjourn the sale from time to time, but such adjournments shall not be for a period to exceed in total one (1) month.
  3. Payment of Amount Bid.  If payment in full is required at the time of acceptance of a bid and is not then and there paid, the commissioner or the commissioner's delegate shall forthwith proceed to again sell the property in the manner provided in this section. If the conditions of the sale permit part of the payment to be deferred, and if such part is not paid within the prescribed period, suit may be instituted against the purchaser for the purchase price of such part of the purchase price as has not been paid, together with interest at the rate of six percent (6%) per annum from the date of the sale; or, in the discretion of the commissioner or the commissioner's delegate, the sale may be declared by the commissioner or the commissioner's delegate to be null and void for failure to make full payment of the purchase price, and the property may again be advertised and sold as provided in §§ 67-1-1415, 67-1-1416 and this section. In the event of such readvertisement and sale, any new purchaser shall receive such property, or rights to property, free and clear of any claim or right of the former defaulting purchaser, of any nature whatsoever, and the amount paid upon the bid price by such defaulting purchaser shall be forfeited.

Acts 1972, ch. 762, § 4; T.C.A., § 67-6015; Acts 2005, ch. 499, § 9.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1419. Appraisal and disposition of perishable property.

If the commissioner or the commissioner's delegate determines that any property seized is liable to perish or become greatly reduced in price or value by keeping, or that such property cannot be kept without great expense, the commissioner or the commissioner's delegate shall appraise the value of such property and:

  1. Return to Owner.  If the owner of the property can be readily found, the commissioner or the commissioner's delegate shall give such owner notice of such determination of the appraised value of the property. The property shall be returned to the owner if, within such time as may be specified in the notice, the owner:
    1. Pays to the commissioner or the commissioner's delegate an amount equal to the appraised value; or
    2. Gives bond in such form with such sureties, and, in such amount as the commissioner or the commissioner's delegate shall prescribe, to pay the appraised amount at such time as the commissioner or the commissioner's delegate determines to be appropriate in the circumstances.
  2. Immediate Sale.  If the owner does not pay such amount or furnish such bond in accordance with this section, the commissioner or the commissioner's delegate shall as soon as practicable make public sale of the property in accordance with such regulations as may be prescribed by the commissioner.

Acts 1972, ch. 762, § 5; T.C.A., § 67-6016.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1420. Sale — Redemption of property.

  1. Before Sale.  Any person whose property has been levied upon shall have the right to pay the amount due, together with the expenses of the proceeding, if any, to the commissioner or the commissioner's delegate at any time prior to the sale of the property, and, upon such payment, the commissioner or the commissioner's delegate shall restore such property to the person, and all further proceedings in connection with the levy on such property shall cease from the time of such payment.
  2. Redemption of Real Estate After Sale.
    1. Period.  The owners of any real property sold as provided in §§ 67-1-1414 — 67-1-1418, their heirs, executors or administrators, or any person having any interest in the property, or a lien on the property, or any person in their behalf, shall be permitted to redeem the property sold, or any particular tract of such property, at any time within one hundred twenty (120) days after the sale of the property.
    2. Price.  Such property or tract of property shall be permitted to be redeemed upon payment to the purchaser, or in case the purchaser cannot be found in the county in which the property to be redeemed is situated, then to the commissioner or the commissioner's delegate, for the use of the purchaser, the purchaser's heirs, or assigns, the amount paid by such purchaser and interest on the amount paid at the current composite prime rate as published by the federal reserve board as of the date of purchase.
    3. Record.  When any lands sold are redeemed as provided in this section, the commissioner or the commissioner's delegate shall cause entry of the fact to be made upon the record provided for in § 67-1-1424, and such entry shall be evidence of such redemption.

Acts 1972, ch. 762, § 6; 1983, ch. 182, § 4; T.C.A., § 67-6017.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1421. Certificate of sale.

  1. In the case of property sold as provided in §§ 67-1-1414 — 67-1-1418, the commissioner or the commissioner's delegate shall give to the purchaser a certificate of sale upon payment in full of the purchase price. In the case of real property, such certificate shall set forth the real property purchased, for those taxes the property was sold, the name of the purchaser, and the price paid for the property.
  2. In all cases of sale pursuant to §§ 67-1-1414 — 67-1-1418 of property other than real property, the certificate of such sale:
    1. As Evidence.  Shall be prima facie evidence of the right of the officer to make such sale and conclusive evidence of the regularity of the officer's proceedings in making the sale;
    2. As Conveyances.  Shall transfer to the purchaser all right, title, and interest of the party delinquent in and to the property sold;
    3. As Authority for Transfer of Corporate Stock.  If such property consists of stocks, shall be notice, when received, to any corporation, company, or association of such transfer, and shall be authority to such corporation, company, or association to record the transfer on its books and records in the same manner as if the stocks were transferred or assigned by the party holding the same, in lieu of any original or prior certificate, which shall be void, whether cancelled or not;
    4. As Receipts.  If the subject of sale is securities or other evidences of debt, it shall be a good and valid receipt to the person holding the same, as against any person holding or claiming to hold possession of such securities or other evidences of debt; and
    5. As Authority for Transfer of Title to Motor Vehicle.  If such property consists of a motor vehicle, shall be notice, when received, to any public official charged with the registration of title to motor vehicles, of such transfer and shall be authority to such official to record the transfer on the official's books and records in the same manner as if the certificate of title to such motor vehicle were transferred or assigned by the party holding the registration of title, in lieu of any original or prior certificate, which shall be void, whether cancelled or not.

Acts 1972, ch. 762, §§ 7, 8; T.C.A., §§ 67-6018, 67-6019.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1422. Sale of real property — Deed.

    1. In the case of any real property sold as provided in §§ 67-1-1414 — 67-1-1418 and not redeemed in the manner and within the time provided in § 67-1-1420, the commissioner or the commissioner's delegate shall execute to the purchaser of such real property at such sale, upon the purchaser's surrender of the certificate of sale, a deed of the real property so purchased by the purchaser, reciting the facts set forth in the certificate.
    2. If real property is declared purchased by the state at a sale pursuant to §§ 67-1-1414 — 67-1-1418, the commissioner or the commissioner's delegate shall at the proper time execute a deed for the property and without delay cause such deed to be duly recorded in the proper registry of deeds.
  1. In the case of the sale of real property pursuant to §§ 67-1-1414 — 67-1-1418, the deed of such sale:
    1. As Evidence.  The deed of sale given pursuant to subsection (a) shall be prima facie evidence of the facts stated in the deed; and
    2. As Conveyance of Title.  If the proceedings of the commissioner or the commissioner's delegate as set forth have been substantially in accordance with the provisions of law, such deed shall be considered and operate as a conveyance of all the right, title, and interest the party delinquent had in and to the real property thus sold at the time the lien of the state attached to the property.

Acts 1972, ch. 762, §§ 7, 8; T.C.A., §§ 67-6020, 67-6021.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 61.

67-1-1423. Effect of certificate or deed on junior encumbrances.

A certificate of sale of personal property given or a deed to real property executed pursuant to § 67-1-1421 or § 67-1-1422 shall discharge such property from all liens, encumbrances, and titles over which the lien of the state with respect to which the levy was made had priority.

Acts 1972, ch. 762, § 8; T.C.A., § 67-6022.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1424. Records of sales and redemptions.

  1. Requirement.  The commissioner or the commissioner's delegate shall keep a record of all sales of real property under §§ 67-1-1414 — 67-1-1418 and of redemptions of such property. The record shall set forth the tax for which any such sale was made, the dates of seizure and sale, the name of the party assessed and all proceedings in making such sale, the amount of expenses, the names of the purchasers, and the date of the deed.
  2. Copy as Evidence.  A copy of such record, or any part of the record, certified by the commissioner or the commissioner's delegate shall be evidence in any court of the truth of the facts stated in the record.

Acts 1972, ch. 762, § 9; T.C.A., § 67-6023.

67-1-1425. Expenses of levy and sale.

The commissioner or the commissioner's delegate shall determine the expenses to be allowed in all cases of levy and sale.

Acts 1972, ch. 762, § 10; T.C.A., § 67-6024.

67-1-1426. Application of proceeds of levy and sale.

  1. Collection of Liability.  Any money realized by proceedings under this chapter, whether by seizure, by surrender under § 67-1-1412, except pursuant to § 67-1-1412(b)(2), or by sale of seized property, or by sale of property redeemed by the state, if the interest of the state in such property was a lien arising under this title, shall be applied as follows:
    1. Expense of Levy and Sale.  The expenses of the proceedings should be deducted from the money received first;
    2. Specific Tax Liability on Seized Property.  If the property seized and sold is subject to a tax imposed by any revenue law that has not been paid, the amount remaining after applying subdivision (a)(1) shall then be applied against such tax liability and, if such tax was not previously assessed, a notice of proposed assessment shall then be issued; and
    3. Liability of Delinquent Taxpayer.  The amount, if any, remaining after applying subdivisions (a)(1) and (2) shall then be applied against the liability with respect to which the levy was made or the sale was conducted.
  2. Surplus Proceeds.  Any surplus proceeds remaining after the application of subsection (a) shall, upon application and satisfactory proof in support of a surplus, be credited or refunded by the commissioner or the commissioner's delegate to the person or persons legally entitled to the surplus.

Acts 1972, ch. 762, § 11; T.C.A., § 67-6025; Acts 2014, ch. 854, § 5.

Amendments. The 2014 amendment, effective January 1, 2015, substituted “a notice of proposed assessment shall then be issued; and” for “it shall then be assessed; and” at the end of (a)(2).

Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1427. Release of levy.

It is lawful for the commissioner or the commissioner's delegate under regulations prescribed by the commissioner, to release the levy upon all or part of the property or rights to property levied upon where the commissioner or the commissioner's delegate determines that such action will facilitate the collection of the liability, but such release shall not operate to prevent any subsequent levy.

Acts 1972, ch. 762, § 12; T.C.A., § 67-6026.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1428. Return of wrongfully levied property.

  1. If the commissioner or the commissioner's delegate determines that property has been wrongfully levied upon, it shall be lawful for the commissioner or the commissioner's delegate to return:
    1. The specific property levied upon;
    2. An amount of money equal to the amount levied upon; or
    3. An amount of money equal to the amount of money received by the state from a sale of such property.
  2. An amount equal to the amount of money levied upon or received from such sale may be returned at any time before the expiration of nine (9) months from the date of such levy. For purposes of subdivision (a)(3), if property is declared purchased by the state at a sale pursuant to § 67-1-1418(a), relating to manner and conditions of sale, the state shall be treated as having received an amount of money equal to the minimum price determined pursuant to such section or, if larger, the amount received by the state from the resale of such property.

Acts 1972, ch. 762, § 12; T.C.A., § 67-6027.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1429. Time limit for making levy — Release of lien.

  1. Length of Period.
    1. Where the assessment of any tax imposed by this or any other title has been made within the applicable period of limitation, such tax may be collected by levy or by a proceeding in court, but only if the levy is made or the proceeding begun:
      1. Within six (6) years after the assessment of the tax becomes final; or
      2. Prior to the expiration of any period for collection agreed upon in writing by the commissioner or the commissioner's delegate and the taxpayer before the expiration of such six-year period; or, if there is a release of levy under § 67-1-1427 after such six-year period, then before such release. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the previously agreed upon period.
    2. The period provided by this subsection (a) during which a tax may be collected by levy shall not be extended or curtailed by reason of a judgment against the taxpayer.
    3. The period for collection provided in subdivision (a)(1)(A) shall not apply if the tax liability has been reduced to judgment in a suit begun within such period. Such tax may be collected at any time subsequent to assessment without limitation after such judgment.
    4. Nothing in this section shall apply to the collection of ad valorem taxes assessed against real or personal property by any county or municipality in this state.
  2. Date When Levy Is Considered Made.  The date on which a levy on property or rights is made shall be the date on which the notice of seizure provided in § 67-1-1414 is given.
  3. Release of Lien.  At any time after the expiration of the period specified in subsection (a), the person holding title to the property on which the lien is placed may request the department to release the lien. If the department does not release the lien within sixty (60) days of the request, it shall be liable for court costs in any action to remove the lien.

Acts 1972, ch. 762, § 13; 1973, ch. 368, § 3; 1974, ch. 484, § 3; T.C.A., § 67-6028; Acts 1986, ch. 799, § 2; 1999, ch. 162, § 2; 2014, ch. 854, § 6.

Compiler's Notes. Acts 1999, ch. 162, § 1 provided that the general assembly declares that the statute of limitations for collection of ad valorem taxes assessed against real or personal property by any county or municipality in Tennessee is and heretofore has been, since the date of original enactment of such statute, as set forth in § 67-5-1806, and that the purpose of Acts 1999, ch. 162, adding §§ 67-1-1429(a)(4) and 67-1-1501(d), was to clarify this intent.

Amendments. The 2014 amendment, effective January 1, 2015, substituted “the assessment of the tax becomes final” for “assessment of the tax” at the end of (a)(1)(A).

Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.

Cross-References. Venue for action against state concerning real property lien, § 20-13-110.

Textbooks. Pritchard on Wills and Administration of Estates (4th ed. Phillips and Robinson), § 962.

Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 54.

Law Reviews.

Selected Tennessee Legislation of 1986, 54 Tenn. L. Rev. 457 (1987).

NOTES TO DECISIONS

1. Tax Action Not Barred.

Because the Tennessee Department of Revenue obtained a judgment against a corporation for the unpaid franchise and excise taxes, thus establishing that such judgment could be collected at any time pursuant to T.C.A. § 67-1-1429(a)(3), and because T.C.A. §§ 67-4-2016 and 67-4-2117 permitted collection from a stockholder, the Department's lawsuit against a former stockholder was not barred by T.C.A. § 67-1-1429(a)(1)(A). Bookstaff v. Gerregano, — S.W.3d —, 2017 Tenn. App. LEXIS 821 (Tenn. Ct. App. Dec. 20, 2017).

67-1-1430. [Repealed.]

Compiler's Notes. Former § 67-1-1430 (Acts 1972, ch. 762, § 14; T.C.A., § 67-6029), concerning paying tax with a bad check, was repealed by Acts 1988, ch. 526, § 20.

67-1-1431. Action where tax in jeopardy.

  1. State Tax in Jeopardy.
    1. In General.  If the commissioner or the commissioner's delegate finds that a taxpayer designs to depart quickly from the state or to remove the taxpayer's property from the state, or to conceal the taxpayer or the taxpayer's property in the state, or to do any other act tending to prejudice or to render wholly or partly ineffectual proceedings to collect the state tax for the current or the preceding taxable periods unless such proceedings be brought without delay, the commissioner or the commissioner's delegate shall declare the taxable period for such taxpayer immediately terminated, and shall cause notice of such finding and declaration to be given the taxpayer, together with a demand for immediate payment of the tax for the taxable period so declared terminated and of the tax for the preceding taxable period or so much of such tax as is unpaid, whether or not the time otherwise allowed by law for filing return and paying the tax has expired; and such taxes shall then become immediately due and payable. In any proceeding in court brought to enforce payment of taxes made due and payable by virtue of this section, the finding of the commissioner or the commissioner's delegate, made as provided in this section, whether made after notice to the taxpayer or not, shall be for all purposes presumptive evidence of jeopardy.
    2. Corporation in Liquidation.  If the commissioner or the commissioner's delegate finds that the collection of the tax of a corporation for the current or the preceding taxable period will be jeopardized by the distribution of all or a portion of the assets of such corporation in the liquidation of the whole or any part of its capital stock, the commissioner or the commissioner's delegate shall declare the taxable period for such taxpayer immediately terminated and shall cause notice of such finding and declaration to be given the taxpayer, together with a demand for immediate payment of the tax for the taxable period so declared terminated and of the tax for the preceding taxable period or so much of such tax as is unpaid, whether or not the time otherwise allowed by law for filing a return and paying the tax has expired. Such taxes shall then become immediately due and payable.
  2. Reopening of Taxable Period.  Notwithstanding the termination of the taxable period of the taxpayer by the commissioner or the commissioner's delegate, as provided in subsection (a), the commissioner or the commissioner's delegate may reopen such taxable period each time the taxpayer is found by the commissioner or the commissioner's delegate to have a taxable occurrence within the taxable period since a termination of the period under subsection (a). A taxable period so terminated by the commissioner or the commissioner's delegate may be reopened by the taxpayer if the taxpayer files with the commissioner or the commissioner's delegate a true and accurate return for such taxable period, together with such other information as the commissioner may by regulation prescribe.
  3. Furnishing of Bond Where Taxable Period Is Closed by the Commissioner or the Commissioner's Delegate.  Payment of taxes shall not be enforced by any proceedings under this section prior to the expiration of the time otherwise allowed for paying such taxes if the taxpayer furnishes, under regulations prescribed by the commissioner, a bond to ensure the timely making of returns with respect to, and payment of, such taxes.
  4. Jeopardy Assessments.  If the commissioner or the commissioner's delegate believes that the collection of any tax under any provision of this or any other title will be jeopardized by delay, the commissioner or the commissioner's delegate shall, whether or not the time otherwise prescribed by law for making return and paying such tax has expired, immediately assess such tax, together with all interest, penalties, and any other additions to the tax provided for by law. Such tax, interest, penalties and additions to the tax shall then become immediately due and payable, and immediate notice and demand shall be made by the commissioner or the commissioner's delegate for the payment thereof.

Acts 1972, ch. 762, §§ 15, 16; T.C.A., §§ 67-6030, 67-6031.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1432. Civil action — Assertion of state's lien.

  1. Filing.  In any case where there has been a refusal or neglect to pay any tax, or to discharge any liability with respect to any tax, whether or not levy has been made, the attorney general and reporter or the attorney general and reporter's delegate, or the staff attorney of the department of revenue or the staff attorney's delegate, at the request of the commissioner or the commissioner's delegate, may direct a civil action to be filed in chancery court to enforce the lien of the state under this title with respect to such tax or liability or to subject any property, of whatever nature, of the delinquent, or in which the delinquent has any right, title, or interest, to the payment of such tax or liability.
  2. Parties.  All persons having liens upon or claiming any interest in the property involved in such action shall be made parties to the case.
  3. Adjudication and Decree.  The court shall, after the parties have been duly notified of the action, proceed to adjudicate all matters involved in the action and finally determine the merits of all claims to and liens upon the property, and, in all cases where a claim or interest of the state in the action is established, may decree a sale of such property, by the proper officer of the court, and a distribution of the proceeds of such sale according to the findings of the court with respect to the interests of the parties and of the state. If the property is sold to satisfy a first lien held by the state, the state may bid at the sale such sum, not exceeding the amount of such lien with expenses of sale, as the commissioner or the commissioner's delegate directs.
  4. Receivership.  In any such proceeding, at the instance of the state, the court may appoint a receiver to enforce the lien or, upon certification by the commissioner or the commissioner's delegate during the pendency of such proceedings that it is in the public interest, may appoint a receiver with all the powers of a receiver in equity.
  5. Intervention by State.  If the state is not a party to a civil action or suit, the state may intervene in such action or suit to assert any lien arising under this title on the property that is the subject of such action or suit. In any case in which the application of the state to intervene is denied, the adjudication in such action or suit shall have no effect upon such lien.

Acts 1972, ch. 762, §§ 17, 18; T.C.A., §§ 67-6032, 67-6033.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

67-1-1433. Enforcement of other liens.

  1. If the state is not joined as a party, a judgment in any civil action or suit, or a judicial sale pursuant to such a judgment, with respect to property on which the state has or claims a lien under this title:
    1. Shall be made subject to and without disturbing the lien of the state, if notice of such lien has been filed in the place provided by law for such filing at the time such action or suit is commenced; or
    2. If a judicial sale of property pursuant to a judgment in any civil action or suit to which the state is not a party discharges a lien of the state arising under this title, the state may claim, with the same priority as its lien had against the property sold, the proceeds, exclusive of costs, of such sale at any time before the distribution of such proceeds is ordered.
    1. Notwithstanding subsection (a), a sale of property on which the state has or claims a lien, or a title derived from enforcement of a lien, under this title, made pursuant to an instrument creating a lien on such property, pursuant to a confession of judgment on the obligation secured by such an instrument, or pursuant to a nonjudicial sale under a statutory lien on such property shall, except as otherwise provided, be made subject to and without disturbing such lien or title, if notice of such lien was filed or such title recorded in the place provided by law for such filing or recording more than thirty (30) days before such sale, and the state is not given notice of such sale in the manner prescribed in subdivision (b)(2).
    2. Special Rules.
      1. Notice of Sale.  Notice of a sale to which subdivision (b)(1) applies shall be given, in accordance with regulations prescribed by the commissioner, in writing, by registered or certified mail or by personal service, not less than twenty-five (25) days prior to such sale, to the commissioner or the commissioner's delegate.
      2. Consent to Sale.  Notwithstanding the notice requirement of this subsection (b), a sale described in subdivision (b)(1) of property shall discharge or divest such property of the lien or title of the state, if the state consents to the sale of such property free of such lien or title.
      3. Sale of Perishable Goods.  Notwithstanding the notice requirement of this section, a sale described in subdivision (b)(1) of property liable to perish or become greatly reduced in price or value by keeping, or that cannot be kept without great expense, shall discharge or divest such property of the lien or title of the state if notice of such sale is given, in accordance with regulations prescribed by the commissioner, in writing, by registered or certified mail or by personal service, to the commissioner or the commissioner's delegate before such sale. The proceeds, exclusive of costs, of such sale shall be held as a fund subject to the liens and claims of the state, in the same manner and with the same priority as such liens and claims had with respect to the property sold, for not less than thirty (30) days after the date of such sale.
    1. Right to Redeem.  In the case of a sale of real property to which subdivision (b)(1) applies, to satisfy a lien prior to that of the state, the commissioner or the commissioner's delegate may redeem such property within the period allowable for redemption under law, as provided in § 67-1-1420.
    2. Amount to Be Paid.  In any case in which the state redeems real property pursuant to subdivision (c)(1), the amount to be paid for such property shall be the amount paid by the purchaser, plus six percent (6%) interest per annum.
    3. Certificate of Redemption.
      1. In General.  In any case in which real property is redeemed by the state pursuant to this subsection (c), the commissioner or the commissioner's delegate shall execute a certificate of redemption for the property.
      2. Filing.  The commissioner or the commissioner's delegate shall, without delay, cause such certificate to be duly recorded in the proper registry of deeds.
      3. Effect.  A certificate of redemption executed by the commissioner or the commissioner's delegate shall constitute prima facie evidence of the regularity of such redemption and shall, when recorded, transfer to the state all the rights, title, and interest in and to such property acquired by the person from whom the state redeems such property by virtue of the sale of such property.

Acts 1972, ch. 762, § 19; T.C.A., §§ 67-6034 — 67-6036; Acts 1994, ch. 640, § 2.

Cross-References. Advertisement or notice, § 35-5-104.

Certified mail in lieu of registered mail, § 1- 3-111.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 46.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

Simple Real Estate Foreclosures Made Complex: The Byzantine Tennessee Process (John A. Walker, Jr.), 62 Tenn. L. Rev. 231 (1995).

NOTES TO DECISIONS

1. Effect of Failure to Give Notice.

A state tax lien is not extinguished or disturbed by the foreclosure of prior recorded deeds of trust when notice by the foreclosing creditors is not given to the state as required by this section. Barrow v. Tennessee Dep't of Revenue, 647 S.W.2d 232, 1983 Tenn. LEXIS 628 (Tenn. 1983).

2. Tax Lien as Junior Lien.

The fact that a state tax lien was junior did not relieve the senior creditor from complying with the notice requirements of this section. Barrow v. Tennessee Dep't of Revenue, 647 S.W.2d 232, 1983 Tenn. LEXIS 628 (Tenn. 1983).

67-1-1434. Civil action by person other than taxpayer.

  1. Actions Permitted.
    1. Wrongful Levy.  If a levy has been made on property, or property has been sold pursuant to a levy, any person, other than the person against whom is assessed the tax out of which such levy arose, who claims an interest in or lien on such property and that such property was wrongfully levied upon may file a claim with the state board of claims.
    2. Surplus Proceeds.  If property has been sold pursuant to a levy, any person, other than the person against whom is assessed the tax out of which such levy arose, who claims an interest in or lien on such property junior to that of the state and to be legally entitled to the surplus proceeds of such sale may bring a civil action against the commissioner in chancery court.
    3. Substituted Sale Proceeds.  If property has been sold pursuant to an agreement whereby the commissioner has released that property from the liens and claims of the state of Tennessee in return for liens and claims of the same priority against the proceeds of the sale of the released property, any person who claims to be legally entitled to all or any amount of such substituted sale proceeds held as a fund pursuant to such agreement may bring a civil action against the commissioner in the chancery court.
  2. Adjudication.  The chancery court shall have jurisdiction to grant only such of the following forms of relief as may be appropriate in the circumstances:
    1. Injunction.  If a levy or sale would irreparably injure rights in property that the court determines to be superior to rights of the state in such property, the court may grant an injunction to prohibit the enforcement of such levy or to prohibit such sale;
    2. Recovery of Property.
      1. If the court determines that such property has been wrongfully levied upon, the court may:
        1. Order the return of specific property, if the state is in possession of such property;
        2. Grant a judgment for the amount of money levied upon; or
        3. Grant a judgment for an amount not exceeding the amount received by the state from the sale of such property;
      2. For purposes of subdivision (b)(2)(A)(iii), if the property was declared purchased by the state at a sale pursuant to § 67-1-1418(a), relating to manner and conditions of sale, the state shall be treated as having received an amount equal to the minimum price determined pursuant to such section or, if larger, the amount received by the state from the resale of such property;
    3. Surplus Proceeds.  If the court determines that the interest or lien of any party to an action under this section was transferred to the proceeds of a sale of such property, the court may grant a judgment in an amount equal to all or any part of the amount of the surplus proceeds of such sale; or
    4. Substituted Sale Proceeds.  If the court determines that a party has an interest in or lien on the amount held as a fund pursuant to an agreement, the court may grant a judgment in an amount equal to all or any part of the amount of such fund.
  3. Validity of Assessment.  For purpose of an adjudication under this section, the assessment of tax upon which the interest or lien of the state is based shall be conclusively presumed to be valid.
  4. Limitation on Rights of Action.  No action may be maintained against any officer or employee of the state, or former officer or employee, or the officer's or employee's personal representative with respect to any acts for which an action could be maintained under this section.
  5. Requirements for Beginning or Proceeding with Action.
    1. No suit or proceeding under this section shall be begun unless a request is made by certified mail, within nine (9) months of the date of the levy, for the return of money or property pursuant to § 67-1-1428.
    2. No suit or proceeding under this section shall be begun after twelve (12) months from the date of filing the request required under subdivision (e)(1) or after six (6) months from the date of mailing, by certified mail, of a notice to the person making the request, of disallowance by the commissioner or the commissioner's delegate, whichever period ends sooner.

Acts 1972, ch. 762, § 20; 1981, ch. 65, § 3; T.C.A., § 67-6037.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

NOTES TO DECISIONS

1. In General.

The owner of a motel operated by others under a lease was not the operator required to collect a privilege tax levied by a private act and was thus a person other than the taxpayer under T.C.A. § 67-1-1434. Oxford Invest., Inc. v. Mashburn, 729 S.W.2d 96, 1985 Tenn. App. LEXIS 2949 (Tenn. Ct. App. 1985).

67-1-1435. Sale of personal property by state.

Any personal property acquired by the state in payment of or as security for debts arising under any provision of this or any other title may be sold by the commissioner or the commissioner's delegate in accordance with regulations as may be prescribed by the commissioner.

Acts 1972, ch. 762, § 21; T.C.A., § 67-6038.

Collateral References. Actions to enforce lien on personal property 371.599.

67-1-1436. Administration of real estate acquired by state.

The commissioner or the commissioner's delegate shall have charge of all real estate that is or shall become the property of the state by judgment of forfeiture under any provision of this or any other title, or that has been or shall be assigned, set off, or conveyed by purchase or otherwise to the state in payment of debts or penalties arising thereunder, or that has been or shall be vested in the state by mortgage or other security for the payment of such debts, or that has been redeemed by the state, and of all trusts created for the use of the state in payment of such debts due them.

Acts 1972, ch. 762, § 22; T.C.A., § 67-6039.

67-1-1437. Obtaining evidence.

  1. Examination of Books and Witnesses.  For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any amount under this or any other title, the commissioner or the commissioner's delegate is authorized to:
    1. Examine any books, papers, records, or other data that may be relevant or material to such inquiry;
    2. Summon the person liable for tax or required to perform the act, or any officer or employee of such person, or any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for tax or required to perform the act, or any other person the commissioner or the commissioner's delegate may deem proper, to appear before the commissioner or the commissioner's delegate at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry; and
    3. Take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry.
  2. Summons.
    1. Service.  A summons issued under subdivision (a)(2) shall be served by the commissioner or the commissioner's delegate by an attested copy delivered in hand to the person to whom it is directed or left at that person's last and usual place of abode; and the certificate of service signed by the person serving the summons shall be evidence of the facts it states on the hearing of an application for the enforcement of the summons. When the summons requires the production of books, papers, records or other data, it shall be sufficient if such books, papers, records or other data are described with reasonable certainty.
    2. Time and Place.  The time and place of examination shall be such as may be fixed by the commissioner or the commissioner's delegate and as are reasonable under the circumstances. In no event shall the time be less than ten (10) days to appear to testify, or to produce books, papers, records or other data. The chancery court for the district in which such person resides or is found shall have jurisdiction by appropriate process to compel such attendance, testimony, or production of books, papers, records or other data.
    3. Enforcement.  Whenever any person summoned under subdivision (a)(2) neglects or refuses to obey such summons, or to produce books, papers, records or other data, or to give testimony, as required, the commissioner or the commissioner's delegate may apply to the judge of the chancery court for the judicial district within which the person so summoned resides or is found for an attachment against that person as for a contempt. It is the duty of the chancellor to hear the application, and, if satisfactory proof is made, to issue an attachment, directed to some proper officer, for the arrest of such person, and upon such person being brought before the chancellor to proceed to a hearing of the case. Upon such hearing, the chancellor shall have the power to make such order as the chancellor deems proper, not inconsistent with the law for the punishment of contempt, to enforce obedience to the requirements of the summons and to punish such person for that person's default or disobedience.
  3. Oaths.  Every officer or employee of the department designated by the commissioner for that purpose is authorized to administer such oaths or affirmations and to certify to such papers as may be necessary under this or any other title or any regulations made under this or any other title.

Acts 1972, ch. 762, §§ 23-25; T.C.A., §§ 67-6040 — 67-6042.

Cross-References. General powers to obtain evidence, title 67, ch. 1, part 13.

Law Reviews.

Administrative Subpoenas and the Grand Jury: Converging Streams of Criminal and Civil Compulsory Process (Graham Hughes), 47 Vand. L. Rev. 573 (1994).

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

Cited: L.L. Bean, Inc. v. Bracey, 817 S.W.2d 292, 1991 Tenn. LEXIS 346 (Tenn. 1991).

NOTES TO DECISIONS

1. Construction with Other Law.

T.C.A. §§ 67-1-1301, 67-1-1302 and 67-1-1437 are less specific and less restrictive than title 45, ch. 10, and thus have been impliedly amended by that chapter. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).

To the extent that the procedures for obtaining financial records from a financial institution are more protective, exacting and restrictive than T.C.A. § 67-1-1437, the Financial Records Privacy Act, compiled in title 45, ch. 10, impliedly amends the previously enacted Tax Enforcement Procedures Act, regardless of T.C.A. § 67-1-1402. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).

2. Form of Summons.

Tennessee Const., art. VI, § 12 does not require that an investigative summons be signed by a clerk of an issuing court. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).

3. Unreasonable Demands.

Whether issued pursuant to T.C.A. § 67-1-1301, § 67-1-1302, § 67-1-1437, or title 45, ch. 10, if the subpoenaed party is of the opinion the requests contained in the demand are unreasonable, he can refuse to comply with the demand and raise the issue as a defense to any action brought by the issuer to enforce compliance, and where contested, the production of documents pursuant to an administrative subpoena cannot be compelled without approval of the chancellor. State, Dep't of Revenue v. Moore, 722 S.W.2d 367, 1986 Tenn. LEXIS 846 (Tenn. 1986).

67-1-1438. Assessments by commissioner.

  1. When the commissioner determines that any person has failed to pay the correct amount of any tax administered by the commissioner under this or any other title, the commissioner shall promptly issue to such taxpayer a notice of proposed assessment, together with notice that the taxpayer shall have the right to an informal conference with the commissioner or the commissioner's designee as set forth in subsection (b) and that the proposed assessment shall become a final assessment as set forth herein. The notice shall also state that, upon an assessment becoming final, the taxpayer shall have the right, as set forth in § 67-1-1801, to file suit to challenge the final assessment and collection of the tax in the appropriate chancery court of this state within ninety (90) days from the date such assessment becomes final. The commissioner may authorize any division, unit, or official within the department to issue notices of proposed assessment on the commissioner's behalf.
  2. Any taxpayer to whom a notice of proposed assessment is issued shall have the right to an informal conference with the commissioner or the commissioner's designee to discuss the proposed assessment and to present such matters as may be relevant to the proposed assessment; provided, that written request for such conference is made within thirty (30) days after the date of the notice of proposed assessment. If a timely request for a conference is made, the commissioner or the commissioner's designee shall set a time and place for the conference within ten (10) days from the date of the request and shall give the taxpayer written notice of the conference. Upon written request by the taxpayer, the commissioner or the commissioner's designee may grant, in the commissioner's or designee's discretion, a continuation of the conference in writing for a period of time reasonably necessary for the taxpayer to provide additional information or documentation relevant to the proposed assessment. A continuation may be granted either before or after the conference is held, and the conference shall not be deemed to be concluded until the expiration of any such period of continuation. Within ten (10) days after the conclusion of the conference, the commissioner or the commissioner's designee shall give the taxpayer written notification of the commissioner's decision. If the commissioner's decision does not result in an adjustment to the proposed assessment, the proposed assessment shall become a final assessment as of the date of such decision. If the commissioner's decision results in an adjustment to the proposed assessment, the commissioner shall issue to the taxpayer a written determination setting forth the amount of tax that is due, if any, and such amount shall be a final assessment.
  3. If the taxpayer does not request an informal conference within the time period prescribed in subsection (b), the proposed assessment shall become a final assessment on the thirty-first day after the date of the notice of proposed assessment. In addition, any taxpayer that has requested a conference as provided in subsection (b) may cancel the request, in writing, at any time before, during, or after such conference; in which case the proposed assessment shall become a final assessment on the date of the written notification by the taxpayer of such cancellation or on the thirty-first day after the date of the notice of proposed assessment, whichever is later.
  4. Except as provided in subsection (c), the taxpayer shall not be prejudiced in any manner by either seeking or failing to seek an informal conference. The informal conference shall not be considered to be an administrative remedy and shall not constitute a contested case subject to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. The commissioner shall not be prejudiced in any manner as a result of such conference, including any failure to issue a final assessment within the ten-day period prescribed in subsection (b); provided, however, that no interest shall accrue on any deficiency during the period beginning on the eleventh day after conclusion of the conference and ending upon issuance of the final assessment.
  5. The informal conference process shall have all of the following characteristics:
    1. Personnel conducting informal conferences shall exercise independent judgment with the objective of resolving disputed proposed assessments without litigation;
    2. Informal conferences shall be conducted in an informal manner either by telephone or in person, at the taxpayer's option;
    3. The taxpayer may participate in an informal conference without representation; may be represented by an officer, employee, partner, or member of the taxpayer; or may be represented by a third party of the taxpayer's choice;
    4. Informal conference personnel shall make determinations regarding individual issues based on the facts and the law;
    5. Informal conference personnel shall consider arguments as to the applicability of the tax laws and any new evidence presented; provided, that if the new evidence is substantial and should have been presented at the time of audit, the informal conference personnel may request the audit division to examine the evidence and to make a recommendation as to the effect of the evidence on the relevant issue;
    6. The taxpayer shall have the right to bring witnesses to an in-person conference;
    7. Informal conference personnel shall not engage in ex parte communications with audit division personnel regarding the issue under review; provided, however, that informal conference personnel may, on an ex parte basis, ask questions that involve ministerial, administrative, or procedural matters and that do not address the substance of the issues or the positions taken in the audit;
    8. Informal conference decisions shall not be considered as precedent; and
    9. Informal conference personnel may recommend to the commissioner that the department compromise a proposed assessment in accordance with § 67-1-102(b)(8).
  6. When an assessment becomes final by operation of subsection (b) or (c), the taxpayer shall have the rights and remedies provided in part 18 of this chapter.
  7. The commissioner or the commissioner's designee, in such person's discretion, may hold an informal conference with a taxpayer to discuss an assessment that has become final by operation of subsection (c) or to discuss the denial or deemed denial of a claim for refund under § 67-1-1802. Any such conference shall not toll any period of limitation or otherwise affect any remedy provided in part 18 of this chapter.
  8. The commissioner may publish or otherwise publicize guidance to taxpayers, practitioners, and departmental personnel resulting from conference decisions; provided, however, that nothing in this subsection (h) shall be construed as authorizing the disclosure of return or tax information as defined in § 67-1-1701 and provided further that no conference decision shall be referenced or cited as:
    1. Precedence in any instance; or
    2. Guidance unless such guidance has been published or publicized as provided in this subsection (h).

Acts 1972, ch. 762, § 26; 1974, ch. 484, § 4; T.C.A., § 67-6043; Acts 2003, ch. 418, § 9; 2014, ch. 854, § 7.

Compiler's Notes. Acts 2003, ch. 418, § 16(c) provided that § 9 of the act shall apply to all currently pending or future suits except for those currently pending suits in which a challenge to the assessment based on the department's recording procedures was specifically alleged in either the plaintiff's complaint, interrogatories, requests for production of documents, or requests for admissions prior to May 1, 2003.

Amendments. The 2014 amendment, effective January 1, 2015, rewrote the section which read: “(a) When any person shall fail to file any statement, report or return required to be filed with the commissioner by any law levying a public tax, license or fee, after being given written notice of the assessment, the commissioner is authorized to determine that liability of such person from whatever source of information may be available to the commissioner. An assessment made by the commissioner pursuant to this authority shall be binding as if made upon the sworn statement, report or return of the person liable for the payment of any such tax, license or fee. Any such assessment that is lawfully made against such person shall be presumed accurate, unless records are submitted evidencing otherwise.“(b) An assessment of any tax by the commissioner shall be deemed to be made by recording the liability of the taxpayer in the office of the department in accordance with existing procedures of the department or as such may be established by rules and regulations prescribed by the commissioner. No claim, cause of action or other proceeding to challenge an assessment or seek a refund shall arise based on the department's procedures for signing or recording the liability of the taxpayer in the office of the department under this section, regulations promulgated by the commissioner, or bulletins issued by the commissioner.”

Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 29.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

Cited: James v. Huddleston, 795 S.W.2d 661, 1990 Tenn. LEXIS 308 (Tenn. 1990).

NOTES TO DECISIONS

1. Exhaustion of Remedies.

Where a city alleged that Internet travel companies (ITCs) purchased rooms from hotels which paid the hotel occupancy tax based on the wholesale rates charged to the ITCs, but resold the rooms to consumers and collected the tax based on the retail rate paid by the consumers without remitting the taxes to the city, exhaustion of administrative remedies by actually assessing the taxes was not required since the ITCs challenged whether they were required to pay any tax as a matter of law, and a determination of the precise amount the city claimed was owed would not resolve the disputed issue. City of Goodlettsville v. Priceline Com, Inc., 605 F. Supp. 2d 982, 2009 U.S. Dist. LEXIS 28302 (M.D. Tenn. Mar. 31, 2009).

67-1-1439. Rulemaking by commissioner.

The commissioner is authorized to prescribe all rules and regulations necessary for the administration of this chapter. Rules and regulations not inconsistent with this chapter shall have the force and effect of law when promulgated by the commissioner and approved by the attorney general and reporter. A copy of all such rules and regulations, in printed form, shall be furnished every collector of state taxes and shall be furnished to any other person upon request.

Acts 1972, ch. 762, § 27; T.C.A., § 67-6044.

Cross-References. Powers of commissioner, §§ 67-1-101, 67-1-102.

67-1-1440. Crimes against revenue officers.

  1. It is a Class E felony for any person to assault any officer or employee of the department while performing duties as such officer or employee, or to assault any such officer or employee or a member of such officer's or employee's immediate family at any other time, if it is shown that such assault was by reason of the fact that such officer or employee had at some time performed an official duty as an officer or employee of the department with respect to any person. Any violation of this subsection (a) committed by any person with a pistol or other deadly weapon is a Class C felony. Each act done in violation of this subsection (a) is a separate offense.
  2. It is a Class E felony for any person to corruptly obstruct, delay, hinder, impede or intimidate, or to attempt to corruptly obstruct, delay, hinder, impede or intimidate, any officer or employee of the department from performing the officer's or employee's duty while acting in an official capacity under this part or any other laws of this state. It is also a Class E felony for any person in any other way to corruptly obstruct, delay, hinder or impede the administration of this part or any other revenue laws of this state. Each act done in violation of this subsection (b) is a separate offense.
  3. It is a Class C misdemeanor for any person to rescue or cause to be rescued, either forcibly or by any unlawful manner, any property after it shall have been seized under this part or any other revenue laws of this state, or to attempt or endeavor so to do. Each act done in violation of this subsection (c) is a separate offense.
  4. It is a Class E felony for any person to delay, hamper, hinder, impede, obstruct or thwart the state of Tennessee in the collection of any of its lawful revenue, or to deprive the state of the realization of such revenue at the time it is lawfully entitled thereto by any artifice, design, false weight or measure, stratagem, or by the falsification of any record, report or return required by law. Each act done in violation of this subsection (d) is a separate offense.
  5. It is a Class E felony for any two (2) persons to conspire to delay, hamper, hinder, impede, obstruct or thwart the state of Tennessee in the collection of any of its lawful revenue, or to deprive the state of the realization of such revenue at the time it is lawfully entitled thereto by any artifice, design, false weight or measure, stratagem, or by the falsification of any record, report or return required by law. Each act done in violation of this subsection (e) is a separate offense.
  6. It is a Class E felony for any person to falsely, corruptly, or knowingly misrepresent any material statement of fact while testifying under oath as a witness at any hearing held by the commissioner or the commissioner's delegate while acting in an official capacity under this part or any other laws of this state. Each act done in violation of this subsection (f) is a separate offense.
  7. It is a Class E felony for any person willfully to attempt in any manner to evade or defeat any tax due the state of Tennessee; provided, that if use tax of less than five hundred dollars ($500) is involved, the offense is a Class A misdemeanor. Each act done in violation of this subsection (g) is a separate offense.

Acts 1973, ch. 368, § 4; T.C.A., § 67-6045(a)-(f); Acts 1984, ch. 734, § 2; 1989, ch. 591, §§ 90-94, 113; 1999, ch. 406, § 6; 2000, ch. 982, § 44.

Cross-References. Penalties for Class A and C misdemeanors, § 40-35-111.

Penalties for Class C and E felonies, § 40-35-111.

Law Reviews.

Amendments to the Tax Revision and Reform Act (J. Leigh Griffith), 36 Tenn. B.J. 23 (2000).

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

Cited: Sanders v. Freeman, 221 F.3d 846, 2000 FED App. 237P, 2000 U.S. App. LEXIS 17307 (6th Cir. Tenn. 2000), cert. denied, 531 U.S. 1014, 121 S. Ct. 571, 148 L. Ed. 2d 489, 2000 U.S. LEXIS 7843, (2000).

NOTES TO DECISIONS

1. Violation.

Sales of gold and silver coins and bullion were subject to sales tax and failure of defendant to collect and remit tax on those sales violated T.C.A. § 67-1-1440. State v. Sanders, 923 S.W.2d 540, 1996 Tenn. LEXIS 358 (Tenn. May 28, 1996).

67-1-1441. Revenue officers — Weapons — Execution of search warrants.

  1. Inspectors, agents, representatives or officers appointed by the commissioner shall be cloaked with and have the duty, power, and authority as sheriffs, police officers and other peace officers to enforce this part.
  2. Any duly authorized officer or employee of the department who has been specifically designated by the commissioner to enforce this part is authorized and empowered to go armed or carry a pistol while on active duty engaged in enforcing this part. Any such person is also authorized and empowered to execute search warrants and to do all acts incident to search warrants, in the same manner as search warrants may be executed by sheriffs, police officers and other peace officers.
    1. Any duly authorized agent or officer of the department of revenue who retires after twenty-five (25) years of honorable armed service shall be issued a retired commission card by the department, which shall identify the agent or officer and the fact that the agent or officer is retired. Cards issued under this subdivision (c)(1) shall bear the inscription, in print of equal or larger size than the rest of the printing on the card, the words “Not a handgun permit.” After twenty-five (25) years of honorable armed service by an authorized agent or officer of the department, the department shall authorize such agent or officer, upon retirement, to retain the agent or officer's service weapon and badge, in recognition of the agent or officer's many years of good and faithful public service.
    2. Any authorized agent or officer of the department, who is issued a retired commission card pursuant to this subsection (c) but who has not completed twenty-five (25) years of honorable armed service, may retain the agent or officer's service weapon and badge in recognition of the agent or officer's years of good and faithful public service; provided, that the agent or officer reimburses the department for the cost of the service weapon and badge.
    3. This subsection (c) shall be retroactive to include officers from the department of safety that were transferred to the department of revenue effective July 1, 2006.

Acts 1973, ch. 368, § 4; T.C.A., § 67-6045(g); Acts 2005, ch. 499, § 8; 2013, ch. 434, § 1.

Amendments. The 2013 amendment added (c).

Effective Dates. Acts 2013, ch. 434, § 2. May 16, 2013.

67-1-1442. Continuation of business to satisfy delinquent tax liability.

When a taxpayer is engaged in business as a sole proprietor, a partnership, or as a corporation, and that taxpayer is delinquent in paying a liability to the state for any tax or fee, then the commissioner or the commissioner's designee may permit the business taxpayer to continue in operation in order to pay to the state any tax or fee owed to the state. Such an arrangement shall be pursuant to rules and regulations promulgated by the commissioner. The commissioner or the commissioner's designee may permit such continued operation of a business, unless such designee finds there is a danger of the taxpayer doing any act to prejudice or render wholly or partly ineffectual the collection of the tax or fee due to the state.

Acts 1986, ch. 907, § 1.

67-1-1443. Failure to pay taxes collected from taxpayer's customers.

  1. Any person required to collect, truthfully account for, and pay over any tax collected from customers of any taxpayer, who willfully fails to truthfully account for and pay over any such tax collected, or who willfully attempts in any manner to evade or defeat any such tax or the payment of those taxes, shall, in addition to other penalties provided by law, be liable for the total amount of the tax evaded, or not accounted for and paid over, along with penalties and interest.
  2. As used in this section:
    1. “Person” includes an officer or employee of a corporation, who, as such officer or employee, is under a duty to perform the act with respect to which the violation occurs; and
    2. “Willfully” is limited to material and informed participation in the diversion of such collected funds to a source other than to the state.
  3. The liability imposed by this section shall be collected as otherwise provided in this chapter.

Acts 1988, ch. 614, § 1; 1996, ch. 563, § 1.

Law Reviews.

1996 Real Estate Legislation: What You Don't Know Can  Hurt You (William R. Bruce), 32 Tenn. B.J. 12 (1996).

NOTES TO DECISIONS

1. Liability.

A bankruptcy debtor, a full-time medical doctor, was not responsible for the payment of delinquent sales taxes owed by a restaurant where he had nothing to do with the company except a financial investment. In re Young, 215 B.R. 366, 1997 Bankr. LEXIS 1946 (Bankr. W.D. Tenn. 1997).

67-1-1444. Collection of tax debt from transferee — Liability of transferee.

  1. When assets are conveyed or obligations are created by a person owing taxes to the state, on or after the date any such taxes are incurred, and such conveyance of assets or creation of obligations is in violation of title 66, chapter 3, then the commissioner may proceed to collect such tax debt from the transferee, pursuant to this part, in the same manner as the commissioner otherwise could have collected such debt from the transferor.
  2. The liability of any such transferee shall be limited to the fair market value of the assets conveyed at the time of the transfer from the original taxpayer or the amount of any such obligation at the time the obligation is created.

Acts 1988, ch. 829, § 1.

67-1-1445. Collection of tax debt outside state.

  1. The commissioner may contract with any debt collection agency or attorney to collect unpaid taxes, licenses, fees and/or interest and penalty, or any other amount otherwise collectible by the commissioner.
  2. Any amounts collected pursuant to the contract shall be remitted to the state of Tennessee; provided, that the contract may provide for amounts to be received by the contractor as compensation for collection services. The amount of such compensation shall be added to the unpaid amount due from the taxpayer and shall be collectible in the same manner as taxes under this part.
  3. The commissioner shall require a bond from any person contracting under this section in an amount not in excess of one hundred thousand dollars ($100,000) guaranteeing compliance with the terms of the contract and all applicable laws.
  4. All persons seeking to contract under this section shall demonstrate, to the satisfaction of the commissioner, their good moral character and ability to perform effectively the terms of the contract. In addition to the specific requirements of this section, the commissioner may impose additional requirements tending to ensure the good moral character and effective performance of persons contracting under this section.
  5. This section shall only apply after the department has completed all administrative notices and actions under this part and the taxpayer has exhausted or not exercised the taxpayer's rights under part 18 of this chapter.

Acts 1991, ch. 79, § 1; 2003, ch. 118, §§ 1, 2.

Attorney General Opinions. Governmental entity's authority to contract with private firm to audit, assess, or collect taxes, OAG 05-181 (12/20/05).

No specific statutory authority exists that would authorize local or state governments to outsource non-delinquent revenue administration beyond the statutes discussed in Opinion No. 05-181, OAG 06-039 (2/23/06).

Part 15
Statute of Limitations

67-1-1501. Limitation on assessment and collection of taxes.

  1. Locally Collected Privilege Taxes.  All state, county or municipal privilege taxes, including, but not limited to, business, litigation, real estate transfer and mortgage taxes collected by the state or by local officials for the benefit of cities, counties or the state, shall be barred, and any lien for such taxes shall be cancelled and extinguished, unless the liens are collected or suits for the collection shall have been instituted within six (6) years from January 1 of the year for which such taxes accrued.
  2. State Taxes Requiring the Filing of Returns — Assessment.  Notwithstanding subsection (a), the amount of any tax imposed under any title, in which the filing of a return is required by the state, shall be assessed within three (3) years from December 31 of the year in which the return was filed, and no levy or other proceeding to enforce the collection of such tax without assessment shall be made or begun after expiration of such period; provided, that:
    1. In the case of a failure to file a return, the tax may be assessed or a levy or other proceeding to enforce the collection of such tax may be begun, with or without assessment, at any time;
    2. In the case of a false or fraudulent return with the intent to evade the tax, the tax may be assessed or a levy or other proceeding to enforce collection of such tax may be begun, with or without assessment, at any time;
    3. In the case of a redetermination of net income by the internal revenue service resulting in a taxpayer owing the state additional franchise or excise tax, the statutory period for the assessment of additional franchise or excise tax resulting from such revision shall not expire prior to the expiration of two (2) years from the date the commissioner or the commissioner's delegate is notified in writing by the taxpayer of such revision;
    4. In the case of a revision of any federal estate tax resulting from an examination by the internal revenue service that results in an estate owing the state additional estate or inheritance tax, the statutory period for the assessment of additional estate or inheritance tax resulting from such revision shall not expire prior to the expiration of two (2) years from the date the commissioner or the commissioner's delegate is notified in writing by the taxpayer of such revisions; and
    5. In the case of an agreement in writing entered into by the commissioner or the commissioner's delegate and the taxpayer within the time prescribed in this subsection (b) for assessment, consenting to an assessment after such time, the tax may be assessed or a levy or other proceeding to enforce collection of such tax may be made or begun with or without assessment at any time within the agreed upon period. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the previously agreed upon period.
  3. State Taxes Requiring the Filing of Returns — Collection.  The amount of any tax assessed as prescribed by subsection (b) may be collected within the period of limitation provided in § 67-1-1429.
  4. Non-applicable to ad valorem taxes.  Nothing in this section shall apply to the collection of ad valorem taxes assessed against real or personal property by any county or municipality in this state.
  5. For purposes of this section, the term “assessed” or “assessment” shall be deemed to include any notice of proposed assessment issued by the commissioner or any other authorized person under § 67-1-1438, and the time periods set forth in subsection (b) are met if the commissioner issues a notice of proposed assessment within the period of time prescribed for an assessment.

Acts 1885, ch. 24, § 1; Shan., § 821; mod. Code 1932, § 1494; Acts 1949, ch. 229, § 1; impl. am. Acts 1949, ch. 236, § 1; C. Supp. 1950, § 1494; Acts 1972, ch. 492, § 1; 1973, ch. 368, § 3; 1974, ch. 484, § 2; T.C.A. (orig. ed.), § 67-1323; Acts 1985, ch. 373, § 1; 1988, ch. 526, § 1; 1999, ch. 162, § 3; 1999, ch. 406, § 7; 2008, ch. 1106, § 33; 2014, ch. 854, § 8.

Compiler's Notes. Acts 1999, ch. 162, § 1 provided that the general assembly hereby declares that the statute of limitations for collection of ad valorem taxes assessed against real or personal property by any county or municipality in Tennessee is and heretofore has been, since the date of original enactment of such statute, as set forth in § 67-5-1806, and that the purpose of Acts 1999, ch. 162, adding § 67-1-1429(a)(4) and (d), was to clarify this intent.

Amendments. The 2014 amendment, effective January 1, 2015, added (e).

Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.

Cross-References. Bar to collection after ten years, § 67-5-1806.

Refunds and adjustments, § 67-1-707.

Suspension of statute of limitations for inheritance tax assessment and collection extension, § 67-8-419.

Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 962.

Tennessee Jurisprudence, 17 Tenn. Juris., Licenses, § 22; 18 Tenn. Juris., Limitations of Actions, §§ 3, 31; 22 Tenn. Juris., Special Assessments, § 9; 23 Tenn. Juris., Taxation, §§ 28, 30, 54.

Law Reviews.

Preferences, Priorities, and Powers of the State in the Collection of Delinquent Revenue: Tennessee's Tax Enforcement Procedures Act (Donald J. Serkin), 8 Mem. St. U.L. Rev. 707 (1978).

Cited: Knoxville v. Gervin, 169 Tenn. 532, 89 S.W.2d 348, 1935 Tenn. LEXIS 80, 103 A.L.R. 877 (1936); Williams v. Williams, 25 Tenn. App. 290, 156 S.W.2d 363, 1941 Tenn. App. LEXIS 108 (Tenn. Ct. App. 1941).

NOTES TO DECISIONS

1. Construction.

This statute being in derogation of sovereignty will be construed in favor of the state. Hake v. Warren, 184 Tenn. 372, 199 S.W.2d 102, 1947 Tenn. LEXIS 389 (1947), superseded by statute as stated in, Griggs v. Peerless Ins. Co., 528 S.W.2d 182, 1975 Tenn. LEXIS 621 (Tenn. 1975).

A law imposing a statute of limitation on the collection of taxes is liberally construed in favor of the state's right to collect the tax. R.J. Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, 1948 Tenn. LEXIS 422 (1948), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).

2. Prescriptive Period.

The right to collect the tax is extinguished, as is also the lien, after six years. State v. Collier, 160 Tenn. 403, 23 S.W.2d 897, 1929 Tenn. LEXIS 120 (1930), superseded by statute as stated in, Toler by Lack v. City of Cookeville, 952 S.W.2d 831, 1997 Tenn. App. LEXIS 89 (Tenn. Ct. App. 1997).

The excise tax imposed upon corporations is subject to the general limitation of six years provided by this section and not to the three-year limitation provided by § 67-1-1101 (repealed). Memphis Natural Gas Co. v. Pope, 178 Tenn. 580, 161 S.W.2d 211, 1940 Tenn. LEXIS 71 (1941), aff'd, Memphis Natural Gas Co. v. Beeler, 315 U.S. 649, 62 S. Ct. 857, 86 L. Ed. 1090, 1942 U.S. LEXIS 782 (1942), aff'd sub nom. Memphis Natural Gas Co. v. Beeler, 315 U.S. 649, 62 S. Ct. 857, 86 L. Ed. 1090, 1942 U.S. LEXIS 782 (1942).

In suit by state against estate of surety for bond to cover taxes accruing from wholesaling malt beverages, it was held that this was a privilege tax governed by six-year statute of limitations. In re Estate of Darwin, 503 S.W.2d 511, 1973 Tenn. LEXIS 443 (Tenn. 1973).

Where the ad valorem taxes ranged from 10 to 30 years overdue, evidencing gross laches on the part of county, such taxes were barred by this section. Holloway v. Putnam County, 534 S.W.2d 292, 1976 Tenn. LEXIS 591 (Tenn. 1976).

3. Taxes Not Covered.

This section does not apply to inheritance taxes. Miller v. Wolfe, 115 Tenn. 234, 89 S.W. 398, 1905 Tenn. LEXIS 56 (1905).

Paving assessments levied on abutting property, under Acts 1905, ch. 278, are not taxes under this section barring collection of taxes after six years. City of Knoxville v. Lee, 159 Tenn. 619, 21 S.W.2d 628, 1929 Tenn. LEXIS 20 (1929).

Six-year period for collection of property, privilege, and poll taxes does not include unemployment compensation taxes, since so-called taxes are not for support of government but for special purpose to wit unemployment relief, and are not considered taxes but contributions, and furthermore the general assembly did not write into the Unemployment Compensation Act any limitation of time as a bar to an action by the commissioner to recover contributions. Hake v. Warren, 184 Tenn. 372, 199 S.W.2d 102, 1947 Tenn. LEXIS 389 (1947), superseded by statute as stated in, Griggs v. Peerless Ins. Co., 528 S.W.2d 182, 1975 Tenn. LEXIS 621 (Tenn. 1975).

This section does not apply to a claim for delinquent contributions made by the commissioner of the department of employment security against the employer's surety. Griggs v. Peerless Ins. Co., 528 S.W.2d 182, 1975 Tenn. LEXIS 621 (Tenn. 1975).

Only state taxes must meet the three-year statute of limitations on assessment under this section. Business taxes which fall under classification 1-3 of T.C.A. § 67-4-708 are not state taxes, but are instead local privilege taxes which each county and/or municipality is permitted to levy. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).

4. Running of Statute.

The statute runs from the time taxes become delinquent. Grant Bond & Mortg. Co. v. Ogle, 17 Tenn. App. 112, 65 S.W.2d 1091, 1933 Tenn. App. LEXIS 49 (Tenn. Ct. App. 1933); Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).

Suit by city of Knoxville to foreclose lien on unpaid paving assessments levied under Private Acts 1925, ch. 348 was not governed by this section, since paving assessments are not taxes, and cause of action did not start running until 30 days after confirmation of assessment, though special act providing that assessment was lien from the time of the first reading. Knoxville v. Keith, 182 Tenn. 48, 184 S.W.2d 162, 1944 Tenn. LEXIS 299 (1944).

Where, for period of time between commencement of suit for collection of delinquent taxes and filing of subsequent bill joining subsequent owner, a tax moratorium was in effect, and where suit was instituted within three years of tax delinquency of record owner, suit was not barred by six-year statute of limitations. State ex rel. City of Chattanooga v. Bayless, 30 Tenn. App. 621, 209 S.W.2d 504, 1947 Tenn. App. LEXIS 116 (1947).

Six-year limitation period did not bar assessment on November 18, 1946 of franchise and excise taxes against corporation due July 1, 1941, as limitation period did not start to run until January 1, 1941. R.J. Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, 1948 Tenn. LEXIS 422 (1948), superseded by statute as stated in, Howard Cotton Co. v. Olsen, 675 S.W.2d 154, 1984 Tenn. LEXIS 932 (Tenn. 1984).

Where answer in ejectment suit showed that complainant failed to get title at illegal tax sale, subrogation to liens securing taxes paid by complainant could have been granted as general relief so that amendment of complaint after remand claiming subrogation related back to time of filing bill for ejectment and running of statute of limitations respecting subrogation was suspended. Williams v. Cravens, 31 Tenn. App. 246, 214 S.W.2d 57, 1948 Tenn. App. LEXIS 88 (Tenn. Ct. App. 1948).

Tax suits are proceedings in rem so that the filing of such suits can toll the running of the period of limitation even in absence of personal service. Moore v. City of Chattanooga, 52 Tenn. App. 76, 371 S.W.2d 815, 1963 Tenn. App. LEXIS 91 (1963).

The 1973 amendment reducing the time for institution of proceedings to three years was not retrospective. Woods v. TRW, Inc., 557 S.W.2d 274, 1977 Tenn. LEXIS 671 (Tenn. 1977).

The statute of limitations in this section, as to classification 2 business taxes, did not begin to run when the taxes were payable under § 67-4-714, but rather on January 1 of the year in which they became delinquent, which for 1972 taxes was March 1, 1973, the last date the taxpayer was permitted to file a return under § 67-4-715. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).

The statute of limitations begins to run only after the accrual of a complete right of action, which generally accrues when the complainant can bring suit to recover a sum of money alleged to be due and unpaid. Westinghouse Elec. Corp. v. King, 678 S.W.2d 19, 1984 Tenn. LEXIS 940 (Tenn. 1984), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985), appeal dismissed, Westinghouse Electric Corp. v. King, 470 U.S. 1075, 105 S. Ct. 1830, 85 L. Ed. 2d 131, 1985 U.S. LEXIS 1529 (1985).

Collateral References.

Application of general statute of limitations to real estate tax lien foreclosure action. 59 A.L.R.2d 1144.

Taxation 371

67-1-1502. Dismissal of action after expiration of limitation.

It is the duty of the court in which proceedings concerning the collection of taxes may be brought, where the collection of taxes shall be claimed to be barred under § 67-1-1501, when this statute is pleaded, and the truth of the plea appears to the satisfaction of the court, to dismiss the cause, and order that the officer having the respective tax books in charge, enter on the tax books, opposite the name of the taxpayer, a memorandum of the judgment of the court.

Acts 1885, ch. 24, § 2; Shan., § 822; Code 1932, § 1495; T.C.A. (orig. ed.), § 67-1324.

Textbooks. Tennessee Jurisprudence, 18 Tenn. Juris., Limitations of Actions, § 3.

Law Reviews.

Trial, 4 Mem. St. U.L. Rev. 335 (1974).

Part 16
Officers Charged with Delinquent Taxes

67-1-1601. Commissions disallowed on failure to settle or pay over.

Commissions shall not be allowed any collecting officer for collecting and paying over any public money, unless the officer makes settlement and payment as required by law.

Code 1858, § 668; Shan., § 961; Code 1932, § 1671; T.C.A. (orig. ed.), § 67-1424.

Cross-References. Interest and damages, § 67-1-1610.

Penalty for failure to pay over taxes, § 67-1-1616.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 52.

NOTES TO DECISIONS

1. Construction.

This statute is not so explicit as to require all commissions to be absolutely disallowed, and it would be a harsh construction to disallow all commissions where the tax collector correctly discharged his duties for the greater part of his term, and, according to law, paid over the greater part of the money, but failed to pay a small part, or in some respect failed to settle according to law. Where the lower court has allowed the commissions, or the comptroller of the treasury has done so though the lower court disallowed the commissions, the supreme court will allow the commissions. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).

Collateral References. Taxation 371

67-1-1602. Action against collector for failure to settle or pay over.

  1. For any neglect or refusal to settle the collector's accounts, the commissioner and county mayor shall proceed against the collector and the collector's sureties, by motion, which shall not be abated, quashed, or delayed by any want of form or informality in prosecuting the accounts.
  2. Any officer concerned in the collection of revenue who has failed to collect, make returns or settlement, or pay over moneys of the state received by such officer, at the time and in the manner required by law, may be proceeded against summarily, on motion, in the circuit court, by the proper law officer of the state, pursuant to the instructions of the commissioner.

Code 1858, §§ 670, 730 (deriv. Acts 1835-1836, ch. 12, § 20; 1839-1840, ch. 160, § 7); Shan., §§ 963, 1043; Code 1932, §§ 1672, 1772; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; impl. am. Acts 1978, ch. 934, §§ 16, 36; T.C.A. (orig. ed.), §§ 67-1425, 67-1601; Acts 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 52.

Law Reviews.

The Tennessee Court System — Circuit Court (Frederic S. Le Clercq), 8 Mem. St. U.L. Rev. 241 (1978).

NOTES TO DECISIONS

1. Construction.

Laws relative to the bonds of tax collectors and their sureties should be strictly enforced. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).

By whatever name the officer may be called, he and his sureties fall within the law, if he be “concerned in the collection of revenue.” Such a general law applies to officers subsequently created as well as to those in existence; therefore, the county trustee, upon whom the duty of collecting revenue was imposed, is included. Derrick v. State, 71 Tenn. 396, 1879 Tenn. LEXIS 96 (1879).

The term “revenue” includes not only money raised by some of the modes of taxation, but in one sense all moneys belonging to the state. Donelson v. State, 71 Tenn. 692, 1879 Tenn. LEXIS 132 (1879).

2. Motions.

The county judge or chair (now county mayor) is the proper officer to make the motion for county revenue, in the name of the state of Tennessee, for the use of the county. Dulaney v. Dunlap, 43 Tenn. 306, 1866 Tenn. LEXIS 56 (1866); Waters v. Edmondson, 55 Tenn. 384, 1874 Tenn. LEXIS 5 (1874).

The failure of the county clerk to keep a revenue docket, as required by law, does not affect the right of the county to proceed, by motion, upon other evidence. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).

The motion should be made “on behalf of the state of Tennessee” for state revenue, but the omission of this phrase is not fatal to the proceeding. Carlton v. State, 55 Tenn. 16, 1873 Tenn. LEXIS 2 (1873).

The comptroller of the treasury's statement constitutes the basis for the motion. State v. Ballentine, 2 Shan. 140 (1876); State v. Harkreader, 80 Tenn. 456, 1883 Tenn. LEXIS 196 (1883).

A motion by the state against the clerk of a criminal court and his sureties, for failure to pay over revenue, may be properly made in the circuit court. Donelson v. State, 71 Tenn. 692, 1879 Tenn. LEXIS 132 (1879).

A motion may be maintained in the name of the state, for the use of a county, to recover of a delinquent trustee school moneys collected by him. Jernegan v. Gray, 82 Tenn. 536, 1884 Tenn. LEXIS 156 (1884); State use of Anderson County v. Hays, 99 Tenn. 542, 42 S.W. 266, 1897 Tenn. LEXIS 66 (1897).

3. Necessary Parties.

The school children of a county are not necessary parties to an action on the official bond of the county trustee to recover the school tax for which he has failed to account. State use of Anderson County v. Hays, 99 Tenn. 542, 42 S.W. 266, 1897 Tenn. LEXIS 66 (1897).

4. Credits.

The revenue collector is not entitled to credit for payment to state treasurer, unless the payment is made as required by law. Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873).

5. Right of State Revenue Agent to Intervene.

The state revenue agent has no authority, under this section, to intervene, except by direction of the comptroller of the treasury, and where the application filed fails to aver that the revenue agent has been directed by the comptroller to intervene, it is properly denied. Fidelity Trust Co. v. Tennessee Charcoal Iron Co., 3 F.2d 857, 1925 U.S. App. LEXIS 3818 (6th Cir. 1925) (decision prior to Acts 1937, ch. 33 transferring duties to commissioner of revenue and taxation).

67-1-1603. Entry of motion against delinquent.

On receipt of the commissioner's statement, under the commissioner's official seal, of the sum claimed by the state against the delinquent, in cases in which a statement can be made out, or of the delinquent's official bond, accompanied by the commissioner's instructions, the district attorney general or county auditor shall move the court for judgment against the delinquent.

Code 1858, § 731 (deriv. Acts 1835-1836, ch. 12, § 20; 1839-1840, ch. 160, § 7); Acts 1907, ch. 602, § 77; integrated in Shan., § 1044; Acts 1923, ch. 109, § 8; mod. Code 1932, § 1773; impl. am. Acts 1937, ch. 33, § 50; modified; T.C.A. (orig. ed.), § 67-1602.

67-1-1604. Time of trial.

If the motion is made at a term requiring notice, and the notice is served five (5) days before the sitting of the court, the cause shall stand for trial at the first term.

Code 1858, § 737; Shan., § 1050; Code 1932, § 1779; T.C.A. (orig. ed.), § 67-1603.

NOTES TO DECISIONS

1. Service of Notice.

The service of notice from the attorney general and reporter must be considered in the nature of the service of leading process and the institution of a suit; and if, after the service of such notice and before the entry of the motion, the delinquent pays the amount in default, the state is entitled to a judgment for full costs against the defendants. State v. Dail, 50 Tenn. 272, 1871 Tenn. LEXIS 95 (1871).

2. Sufficiency of Notice.

Notice specifying the court in which the nature of the demand and the time and place that the motion would be made against the clerk of the circuit court, for jail fees due plaintiff, is sufficient. Young v. Hare, 30 Tenn. 303, 1850 Tenn. LEXIS 119 (1850).

The notice of the motion, specifying the term of court, but not the day of the term on which the motion will be made, is sufficient. State v. Allison, 55 Tenn. 1, 1872 Tenn. LEXIS 111 (1872).

Notice that “I will move the circuit court for judgment against you and your securities for state revenue due the state of Tennessee,” when addressed to the delinquent collector, sufficiently describes the cause of action. Brown v. State, 55 Tenn. 871, 1874 Tenn. LEXIS 14 (1874).

Notice that a motion will be made before the circuit judge holding the circuit court of Lewis County, stating the time of the motion, is not defective for failing to specify the place of holding the court. Brown v. State, 55 Tenn. 871, 1874 Tenn. LEXIS 14 (1874). See Curry v. Munford, 52 Tenn. 61, 1871 Tenn. LEXIS 233 (1871).

3. Motion.

The motion must be made and entered of record, on the day designated in the notice, or at the term specified, if the day be not specified; and such motion cannot be made afterwards, without a new notice, unless the want of notice is cured by the appearance of the parties. Cheatham v. Howell, 14 Tenn. 310, 14 Tenn. 311, 1834 Tenn. LEXIS 81 (1834); State v. Allison, 55 Tenn. 1, 1872 Tenn. LEXIS 111 (1872).

General appearance and defense to a motion cures any defects therein, or waives objections thereto or absence thereof. Young v. Hare, 30 Tenn. 303, 1850 Tenn. LEXIS 119 (1850); Watkins v. Barnes, 33 Tenn. 201, 1853 Tenn. LEXIS 30 (1853); Chaffin v. Crutcher, 34 Tenn. 360, 1854 Tenn. LEXIS 53 (1854); State v. Allison, 55 Tenn. 1, 1872 Tenn. LEXIS 111 (1872); Shepherd v. Hamilton County, 55 Tenn. 380, 1874 Tenn. LEXIS 4 (1874); Brown v. State, 55 Tenn. 871, 1874 Tenn. LEXIS 14 (1874).

67-1-1605. Precedence on docket.

In all cases, motions or suits in favor of the state shall have precedence over other causes on the docket of any of the courts.

Code 1858, § 738; Shan., § 1051; Code 1932, § 1780; T.C.A. (orig. ed.), § 67-1604.

67-1-1606. Commissioner's statement as evidence — Copy of bond.

The statement of the commissioner of the amount due the state from any delinquent shall be prima facie evidence of such amount and a copy of the delinquent's bond, from the commissioner's office, shall be received as evidence of the facts appearing on its face, unless, for sufficient reason, suggested on oath, the court require the production of the original.

Code 1858, § 732 (deriv. Acts 1839-1840, ch. 160, § 7; 1843-1844, ch. 103, § 7); Shan., § 1045; Code 1932, § 1774; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), § 67-1605.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 52.

NOTES TO DECISIONS

1. Statement as Evidence.

The comptroller of the treasury's statement is only prima facie evidence upon the trial of a motion against a defaulting revenue collector. Anderson v. State, 55 Tenn. 13, 1873 Tenn. LEXIS 1 (1872); Carlton v. State, 55 Tenn. 16, 1873 Tenn. LEXIS 2 (1873); McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873); Allison v. State, 55 Tenn. 312, 1873 Tenn. LEXIS 4 (1873); Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873); Wood v. State, 55 Tenn. 329, 1873 Tenn. LEXIS 6 (1873); Chadwell v. State, 55 Tenn. 340, 1874 Tenn. LEXIS 3 (1874); Chandler v. State, 69 Tenn. 296, 1878 Tenn. LEXIS 89 (1878).

Such construction does not interfere with the constitutional functions of the comptroller of the treasury, while the contrary construction, giving conclusiveness to the comptroller's statement, would materially interfere with the constitutional functions of the courts. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873). See Anderson v. State, 55 Tenn. 13, 1873 Tenn. LEXIS 1 (1872).

2. Authentication of Statement.

Objection to the admissibility of the comptroller of the treasury's statement, without pointing out the specific ground of objection, does not enable the defendant to assign for error, in the supreme court, that the certificate to the statement was not given under the official seal of the comptroller. Carlton v. State, 55 Tenn. 16, 1873 Tenn. LEXIS 2 (1873).

67-1-1607. Judgment against collector.

The court shall render judgment against the delinquent and the delinquent's sureties for the amount appearing due from the statement of the commissioner, or for the penalty of the bond, where there is no statement.

Code 1858, § 733; Shan., § 1046; Code 1932, § 1775; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), § 67-1606.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 52.

NOTES TO DECISIONS

1. Motion Against Collector.

Judgment rendered on motion against a revenue collector and part only of his living sureties is a nullity. Fry v. Britton, 49 Tenn. 606, 1871 Tenn. LEXIS 50 (1871).

Motion against a delinquent revenue collector, with the required notice thereof given to him, but without notice to his sureties, carries with it the right to judgment against both him and his sureties appearing on his bond. Brown v. State, 55 Tenn. 871, 1874 Tenn. LEXIS 14 (1874); State v. Ballentine, 2 Shan. 140 (1876).

2. Amount of Judgment.

The judgment shall be for the amount of the comptroller of the treasury's statement, in the absence of other satisfactory rebutting evidence, and sufficient evidence may prevent the rendition of the judgment on the comptroller's statement. Anderson v. State, 55 Tenn. 13, 1873 Tenn. LEXIS 1 (1872); McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873); Chandler v. State, 69 Tenn. 296, 1878 Tenn. LEXIS 89 (1878).

67-1-1608. Amount of judgment in absence of commissioner's statement.

If there be no statement of the commissioner, a judgment nisi shall be rendered for the penalty of the bond, and the defendant may have an issue made up to prove the amount due, and judgment final shall be given for such amount.

Code 1858, § 734 (deriv. Acts 1843-1844, ch. 103, § 7); Shan., § 1047; Code 1932, § 1776; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), § 67-1607.

NOTES TO DECISIONS

1. Credit for Payments.

The notice of motion is a leading process, and its service is the beginning of a suit; and if, after notice and before the motion, the delinquent pays the amount in default, the state is entitled to a judgment for full costs against the defendants. State v. Dail, 50 Tenn. 272, 1871 Tenn. LEXIS 95 (1871).

The receipts of the state treasurer or of an authorized state depository for revenue, as a defense to a motion against a delinquent revenue collector, must show the year for which the payments were made, which must be for the proper year. Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873).

A revenue collector is not entitled to credit for payment made to the state treasurer, where he fails to comply with the requirements of the law that he must settle with the comptroller of the treasury, and upon his receivable warrant pay the money to the state treasurer, and take his receipt in duplicate, retaining one, and filing the other with the comptroller, for money paid to the treasurer otherwise than in the manner required by law is in his hands as an individual, and not as state treasurer, and is, therefore, at the risk of the revenue collector. Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873); Wood v. State, 55 Tenn. 329, 1873 Tenn. LEXIS 6 (1873); State v. Rust, 3 Cooper's Tenn. Ch. 718 (1878).

2. Evidence of Payment.

Certified transcripts from the records of the county legislative body, allowing the revenue collector releases of taxes for the proper year, are admissible for the allowance of credits in a motion against the collector. Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873).

The state treasurer's receipt to the revenue collector is the statutory evidence of the payment of the money, and parol evidence of the payment cannot be received, without accounting, in the regular way, for the absence of the receipt. Wood v. State, 55 Tenn. 329, 1873 Tenn. LEXIS 6 (1873).

Oral evidence of the results of the examination of the tax books and vouchers, showing the amount of taxes charged against the collector, without the production of such books and vouchers, is not admissible on the trial of a motion against the revenue collector and his sureties, for his alleged default, because such books and papers, or copies thereof, are the best evidence. Shepherd v. Hamilton County, 55 Tenn. 380, 1874 Tenn. LEXIS 4 (1874).

3. Evidence of Admissions.

As against the surety objecting to evidence of admissions of his principal, the admissions were held prima facie evidence. Young v. Hare, 30 Tenn. 303, 1850 Tenn. LEXIS 119 (1850); Montgomery v. Coldwell, 82 Tenn. 29, 1884 Tenn. LEXIS 100 (1884).

In an action brought against a surety on a sheriff's official bond, to which the sheriff is not a party, for money collected on an execution and not paid over, the sheriff's admission after the return day of the execution, “that he had not paid over to plaintiff the money he had collected on the execution,” is not admissible because it was not a part of the res gestae. Trousdale ex rel. McNickol v. Philips, 32 Tenn. 384, 1852 Tenn. LEXIS 88 (1852); White v. German Nat'l Bank, 56 Tenn. 475, 1872 Tenn. LEXIS 163 (1872).

In an action against a notary public and his sureties on his official bond, his sworn statements as a witness in another lawsuit are not admissible against his sureties. Wheeler v. State, 56 Tenn. 393, 1872 Tenn. LEXIS 152 (1872).

4. Evidence on Appeal.

Where the motion against a revenue collector for his alleged default is tried by the circuit judge, without the intervention of a jury, the supreme court is bound to assume that the trial judge considered all the relevant evidence offered, unless the contrary distinctly appears from the bill of exceptions, and a mere statement that he excluded certain evidence does not import that he did not consider the evidence, and such statement constitutes no ground of reversal if there be any ground upon which such exclusion might be proper. Carlton v. State, 55 Tenn. 16, 1873 Tenn. LEXIS 2 (1873).

An offer by the defendant revenue collector, made on the trial, to prove “some” receipts for “some” payments of the amount specified in the comptroller of the treasury's statement, and to read the tax book, is not such an offer as will enable him to assign error for the refusal of the trial court to hear such evidence, where the statement of the comptroller merely shows the balance due, and the bill of exceptions shows neither the dates nor the amounts of the receipts. Carlton v. State, 55 Tenn. 16, 1873 Tenn. LEXIS 2 (1873).

It will be presumed that certified transcripts of the records of the county, offered as evidence to show the releases of taxes, were legally rejected, where the record does not show the ground of the action of the trial court. Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873).

67-1-1609. Judgment against surviving principal and sureties.

If the delinquent, or either of the delinquent's sureties, has died before the motion is made, the court shall give judgment against the sureties alone, in case of the death of the principal, or against the principal and surviving sureties on the bond, in case of the death of either of the sureties.

Code 1858, § 735 (deriv. Acts 1839-1840, ch. 160, § 13); Shan., § 1048; Code 1932, § 1777; T.C.A. (orig. ed.), § 67-1608.

NOTES TO DECISIONS

1. Nature of Remedy.

The legislature intended to take the bonds of revenue collectors out of the ordinary rule, and to give the state the summary remedy in all contingencies. Derrick v. State, 71 Tenn. 396, 1879 Tenn. LEXIS 96 (1879).

2. Scope of Remedy.

Notice of motion against a revenue collector for judgment on his bond for one year, with appearance and defense, will sustain a judgment on his bond of another year. Shepherd v. Hamilton County, 55 Tenn. 380, 1874 Tenn. LEXIS 4 (1874).

3. Judgment Against Principal and Sureties.

A judgment by motion, rendered against a revenue collector and only part of his living sureties, is void and the sheriff and attorney for the state may be enjoined from collecting the judgment. The state cannot prosecute a writ of error in the injunction suit, where it is not a party. Such judgment interposes no bar to such new proceeding as the state may institute. Fry v. Britton, 49 Tenn. 606, 1871 Tenn. LEXIS 50 (1871); State v. Ballentine, 2 Shan. 140 (1876).

Where a motion is made against a revenue collector and his sureties, and one of the sureties dies pending the motion, it is optional whether the motion be revived against the personal representative of the decedent, or dismissed as to him; and if no revivor, judgment may be rendered against the principal and the surviving sureties. Shepherd v. Hamilton County, 55 Tenn. 380, 1874 Tenn. LEXIS 4 (1874).

For the official default of a county trustee as collector, the motion for official default lies against the sureties alone, though the trustee died before the motion was made or notice of default was given. Derrick v. State, 71 Tenn. 396, 1879 Tenn. LEXIS 96 (1879).

4. Determination by Supreme Court.

Upon reversal in these motion cases, a proper judgment, such as the circuit judge should have rendered, will be rendered in the supreme court without remand of the case, where the record is in a condition to authorize such judgment. Lay v. State, 37 Tenn. 604, 1858 Tenn. LEXIS 73 (1858); State v. Dail, 50 Tenn. 272, 1871 Tenn. LEXIS 95 (1871).

Upon reversal, the supreme court cannot render final judgment without remand, where the collector's official bond, the comptroller of the treasury's authenticated statement of the collector's account, the other documentary evidence, and the oral testimony are not properly made a part of the record by bill of exceptions. State v. Allison, 55 Tenn. 1, 1872 Tenn. LEXIS 111 (1872); Allison v. State, 55 Tenn. 312, 1873 Tenn. LEXIS 4 (1873); Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873).

In cases tried by the judge, without the intervention of a jury, the supreme court is bound to presume that he considered all the relevant evidence offered, unless the contrary distinctly appears from the bill of exceptions, and a mere statement that he excluded certain evidence does not import that he did not consider such evidence, and is not a ground of reversal, if there be any ground on which such evidence could have been properly excluded. Carlton v. State, 55 Tenn. 16, 1873 Tenn. LEXIS 2 (1873).

Where, in action against officer, lower court rejected as evidence, certified transcripts of record of county allowing releases of taxes as evidence and there was nothing in record to show that circuit judge was in error, the grounds of his action not being shown, the supreme court will presume in favor of the correctness of his action. Petitt v. State, 55 Tenn. 320, 1873 Tenn. LEXIS 5 (1873).

67-1-1610. Interest and damages.

In taking judgment against a delinquent officer, interest at the rate of six percent (6%) on the amount that the delinquent officer has failed to pay over shall be added, and twelve and one-half percent (12.5%) damages on the delinquency.

Code 1858, § 736 (deriv. Acts 1835-1836, ch. 15, §§ 14, 15; 1843-1844, ch. 103, § 5); Shan., § 1049; Code 1932, § 1778; T.C.A. (orig. ed.), § 67-1609.

Cross-References. Commissions disallowed on failure to settle or pay over, § 67-1-1601.

Penalty for failure to pay over taxes, § 67-1-1616.

NOTES TO DECISIONS

1. Application.

This section relates to judgments on motion in circuit court against officers who have collected state revenue and have failed to account for it and is without application to a suit by the state against a county trustee and his surety for the balance due the county at the expiration of his term. State v. Miner, 176 Tenn. 158, 138 S.W.2d 766, 1938 Tenn. LEXIS 148 (1940).

2. Damages.

The damages are given as an incident to the judgment, and need not be demanded in express terms in the entry of the motion of record; and where, after the motion was entered, the sum with which the delinquent revenue collector was properly chargeable is paid, the damages are still recoverable on that sum. Newman v. Thompson, 25 Tenn. 24, 1845 Tenn. LEXIS 5 (1845).

The recovery shall be for the amount not paid over, with the interest accrued on the delinquency, and the damages calculated on this gross amount, and all costs, against both the delinquent principal and his sureties. Newman v. Thompson, 25 Tenn. 24, 1845 Tenn. LEXIS 5 (1845); Lay v. State, 37 Tenn. 604, 1858 Tenn. LEXIS 73 (1858); McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).

67-1-1611. Credit for claims due collector.

Where a judgment has been obtained against a delinquent officer, all bona fide claims due the delinquent officer, properly authenticated, shall be allowed by the commissioner upon settlement of the judgment.

Code 1858, § 742 (deriv. Acts 1843-1844, ch. 168, § 1); Shan., § 1052; Code 1932, § 1784; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), § 67-1610.

NOTES TO DECISIONS

1. Claims Covered by Section.

The provisions of this section have reference to such claims as have arisen since the rendition of the judgment, and not to claims that existed before, of which latter claims, the judgment is conclusive. State v. Allison, 55 Tenn. 1, 1872 Tenn. LEXIS 111 (1872); Anderson v. State, 55 Tenn. 13, 1873 Tenn. LEXIS 1 (1872).

It was intended by this section to provide for just credits being afterwards obtained, where, for any reason, the collector failed to obtain them upon the trial. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).

67-1-1612. Receipt of revenues due state.

No district attorney general, either before or after suit is brought or judgment rendered, shall receive any money due the state. The clerk of the circuit court alone shall, for the clerk's county, receive moneys due the state from delinquent revenue collectors.

Code 1858, §§ 739, 740 (deriv. Acts 1843-1844, ch. 103, §§ 8, 9); Shan., §§ 1051a1, 1051a2; Code 1932, §§ 1781, 1782; modified; T.C.A. (orig. ed.), § 67-1611.

NOTES TO DECISIONS

1. Commission of Clerk.

It was held that where, after the motion was made, but before judgment, the amount of the defalcation was paid to the comptroller of the treasury and the case abandoned by the state, the clerk was not entitled to commissions on the same. State v. Harkreader, 80 Tenn. 456, 1883 Tenn. LEXIS 196 (1883).

2. Commission of Supreme Court Clerk.

The clerk of the supreme court was not entitled to this commission on moneys received by him from delinquent collectors and reported to the comptroller of the treasury and paid into the treasury. Baxter v. Comptroller of State, 82 Tenn. 122, 1884 Tenn. LEXIS 113 (1884).

67-1-1613. Report and deposit of revenues by clerk of court.

The clerk of the circuit court, immediately after receiving any money due to the state from delinquent collectors of revenue, shall report the amount, and from whom and when received, and immediately deposit the money in the state treasury.

Code 1858, § 743 (deriv. Acts 1843-1844, ch. 103, § 9); Shan., § 1052a1; Code 1932, § 1785; T.C.A. (orig. ed.), § 67-1612.

67-1-1614. Clerk's commission.

The clerk's commission upon all moneys received by the clerk from delinquent collectors, and reported to the commissioner and paid into the state treasury, shall be six percent (6%).

Code 1858, § 741; Shan., § 1051a3; Code 1932, § 1783; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; T.C.A. (orig. ed.), § 67-1613.

67-1-1615. Penalties for violations paid into school fund.

Any and all officers entrusted with the collection and disbursement of public funds or revenues violating this part, parts 7, 10 or 15 of this chapter, chapter 5, parts 4, 18, 19 or 20 of this title, or § 67-1-107, § 67-5-301, § 67-5-302, § 67-5-306, § 67-5-507 or § 67-5-513, upon whom no penalty has been imposed for so doing, commits a Class C misdemeanor, the fine portion of which shall be placed in the state treasury for the benefit of the public school fund.

Acts 1907, ch. 602, § 71; Shan., § 928; Code 1932, § 1634; T.C.A. (orig. ed.), § 67-1614; Acts 1989, ch. 591, § 113.

Cross-References. Penalty for Class C misdemeanor, § 40-35-111.

67-1-1616. Monthly penalty for failure to pay over taxes — Forfeiture of office.

Where such trustee or other officer, whose duty it is to collect any taxes under this part, part 7, 10 or 15 of this chapter, chapter 5, parts 4, 18, 19 or 20 of this title, or § 67-1-107, § 67-5-301, § 67-5-302, § 67-5-306, § 67-5-507 or § 67-5-513, fails to account for any and all taxes that the trustee or officer has collected to the proper officer, in addition to the penalty  in § 67-1-1615, the trustee or officer shall be liable to a penalty of two percent (2%) per month on the taxes from the time the taxes should have been paid, which is in addition to the attorney's fees provided for in § 67-1-1619, none of which shall in any way be remitted after the matter is placed in the hands of the attorney; and the trustee or officer shall, in addition, forfeit the trustee's or officer's respective office.

Acts 1907, ch. 602, § 71; Shan., § 928a1; mod. Code 1932, § 1635; Acts 1933, ch. 95, § 1; C. Supp. 1950, § 1635; T.C.A. (orig. ed.), § 67-1615.

Cross-References. Commission disallowed on failure to settle or pay over, § 67-1-1601.

Interest and damages, § 67-1-1610.

Liability of collectors to city, § 6-55-101.

NOTES TO DECISIONS

1. Construction.

As originally enacted, this section and § 67-1-1623 conferred on state revenue agents power to investigate the condition of any trustee's official account, whether in office or not, for the purpose of ascertaining whether he had duly collected and accounted for state and county revenue. State ex rel. Stewart v. Follis, 140 Tenn. 513, 205 S.W. 444, 1917 Tenn. LEXIS 157 (1918).

2. Determination of Penalty.

Where there was a difference of opinion over the commissions properly allowable to the county trustee and the question of whether or not the trustee had properly accounted for revenue in his hands could not be determined until the controversy was settled, the penalty provided by this section could only be applied after the ascertainment of the amount due from the trustee and under such circumstances such drastic penalty ought not to be applied. State v. Miner, 176 Tenn. 158, 138 S.W.2d 766, 1938 Tenn. LEXIS 148 (1940).

Where there was a controversy between the county trustee and the county as to the amount of money due the county, the surety of the trustee was not liable for the two percent penalty until the controversy was settled as there could be no proper demand until that time. State v. Miner, 176 Tenn. 158, 138 S.W.2d 766, 1938 Tenn. LEXIS 148 (1940).

67-1-1617. Action on collector's bond.

  1. A motion or suit lies in favor of the state, county, or municipality against the trustee and sureties on the trustee's official bonds for any moneys, in the trustee's hands officially, not paid over or accounted for according to law or for failure to collect.
  2. No surety on the bond of any trustee or other officer shall be liable for any penalty or attorney's fees until after demand has been made on the surety or sureties, and the surety or sureties have failed or refused to perform the duties required by law of the surety's or sureties' principal, or have failed or refused to pay over the sums of money due from such trustee or other officer.
  3. Where a judgment has been obtained against any collector of revenue or other such officer, either alone or with a part of such collector's or officer's sureties, a similar motion may be made against the sureties against whom no judgment has been obtained, whether the suretyship appears in the same or another bond.
  4. The person moved against shall have five (5) days' notice of the motion; provided, that this applies only to cumulative bonds, or where two (2) or more bonds have been given to secure the same object, and only to bonds already executed.

Acts 1875, ch. 86, §§ 1, 2; 1907, ch. 602, § 71; Shan., §§ 928a1, 928a2, 965, 966; mod. Code 1932, §§ 1635, 1636, 1674, 1675; Acts 1933, ch. 95, § 1; C. Supp. 1950, § 1635; T.C.A. (orig. ed.), §§ 67-1615, 67-1616, 67-1622, 67-1623.

Cross-References. Rights of collector's sureties, § 67-1-1629.

NOTES TO DECISIONS

1. Suit upon Resolution of County.

Where suit on official bond is authorized by resolution of the county, it may properly be brought in the name of state for use of county, notwithstanding statute authorizing suits to be brought against delinquent officers by the county judge or chair (now county mayor), or by the commissioner of finance (now commissioner of finance and administration) under prescribed conditions. State use of Giles County v. Abernathy, 159 Tenn. 175, 17 S.W.2d 17, 1928 Tenn. LEXIS 73 (1929).

2. Time of Notice.

This notice is not required to be given five days before the first day of the term at which the motion is made, but only five days before the motion is to be entered, and the cause stands for trial at the term of citation. Gray v. State, 95 Tenn. 317, 32 S.W. 201, 1895 Tenn. LEXIS 90 (1895).

3. Scope of Judgment.

In a proceeding by motion for a judgment against the trustee and the sureties on his official bond, the judgment must be limited to the liability for the year specified in the notice. Gray v. State, 95 Tenn. 317, 32 S.W. 201, 1895 Tenn. LEXIS 90 (1895).

67-1-1618. Officials by whom suit brought.

  1. The motion or suit in favor of the state may be in the name of the state, and shall be brought by the county auditors or by the district attorney general of the district where it is instituted upon the request of the county auditors made upon direction of the commissioner and state treasurer.
  2. The motion or suit by the county may be brought in the name of the state, for the use of the county, by the district attorney general or by counsel employed for that purpose.
  3. A motion or suit in favor of the municipality may be in the name of the state for the use of such municipality by the mayor of the city or the city attorney.

Acts 1907, ch. 602, § 71; Shan., §§ 928a3-928a5; Code 1932, §§ 1637-1639; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; modified; T.C.A. (orig. ed.), § 67-1617.

Law Reviews.

The Tennessee Court Systems — Prosecution, 8 Mem. St. U.L. Rev. 477 (1978).

67-1-1619. Attorney's fee.

In each case, the counsel making the motion and conducting the suit shall be allowed ten percent (10%) on the recovery as compensation as fixed by § 67-1-1620, to be added to and become a part of the judgment; provided, that no such attorney's fee shall be chargeable to any surety on the bond of any such trustee or other officer whose duty it is to collect taxes under this title, until after demand has been made on such surety or sureties, and the surety or sureties have failed or refused to perform the duties required by law of the surety's or sureties' principal, or have failed or refused to pay over the sums of money due from such trustee or other officer.

Acts 1907, ch. 602, § 71; Shan., § 928a6; mod. Code 1932, § 1640; Acts 1933, ch. 95, § 1; C. Supp. 1950, § 1640; T.C.A. (orig. ed.), § 67-1618.

67-1-1620. Collection and accounting for attorney's and auditor's fees.

  1. The fees allowed to the counsel for the state shall be collected by the county auditor and reported and accounted for as provided in subsections (b) and (c).
  2. The fees allowed to the counsel or county auditor for the county shall be collected by the counsel or county auditor and reported to the county mayor.
  3. The fees allowed to the city attorney shall be collected by the city attorney and reported to the mayor of the city or other chief official.

Acts 1907, ch. 602, § 71; Shan., §§ 928a7-928a9; Code 1932, §§ 1641-1643; impl. am. Acts 1978, ch. 934, §§ 16, 36; T.C.A. (orig. ed.), § 67-1619; Acts 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

67-1-1621. Taxpayer's action against collector.

  1. In case the county mayor refuses to make the motion or bring the suit, after the written request of any taxpayer to do so, then any taxpayer of the county may make such motion or bring suit in the name of the state, for the use of the county, and employ counsel to conduct the cause; provided, however, that before making such motion or bringing suit, the taxpayer shall obtain leave of the judge of the court in which the motion is to be made or the suit brought to do so. The taxpayer shall make such application in writing, stating fully the grounds for the application, of which application the county mayor shall have five (5) days' written notice, stating the time and place of application.
  2. The judge shall hear the application at chambers or in term time, and may adjudge the costs of the application against the applicant, against the county mayor, or against the county as the judge shall deem just, and the judge shall enter judgment upon the record of the judge's court accordingly.

Acts 1907, ch. 602, § 71; Shan., § 928a10; Code 1932, § 1644; impl. am. Acts 1978, ch. 934, §§ 36; T.C.A. (orig. ed.), § 67-1620; Acts 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

67-1-1622. Release of collector's liability prohibited.

No power shall exist, either in the court or in any other official, to release any officer charged with the collection of revenue or the officer's sureties from the payment of any revenue, penalties or fees for which the officer or the officer's sureties may be liable.

Acts 1907, ch. 602, § 71; Shan., § 928a11; Code 1932, § 1645; T.C.A. (orig. ed.), § 67-1621.

NOTES TO DECISIONS

1. Release by County.

County's release of any further liability against trustee, whose books were audited and the auditor's report of which was approved, was probably of no effect. State use of Giles County v. Abernathy, 159 Tenn. 175, 17 S.W.2d 17, 1928 Tenn. LEXIS 73 (1929).

67-1-1623. Actions against state officers.

  1. The district attorney general or state agent may move the circuit court for judgment against the state treasurer, or other state officer, for any neglect, default, misprision, misfeasance, or malfeasance in office, for which such officer and the officer's sureties, or either of them, might be sued upon any bond or other obligation executed for the due and lawful discharge of the duties of the officer's office.
  2. The motion shall be in writing, shall be signed by the district attorney general or state agent and shall be in the name of the state.
  3. A copy of the motion left at the dwelling house of the defendant, or the defendant's last usual place of residence, or place of abode or place of doing business, five (5) days previous to the motion, shall be sufficient service of notice of the motion.
  4. The court shall hear and determine the case without any declaration, or the formality of regular pleadings, according to the right of the case, and give judgment against the officer and the officer's sureties, and award execution as effectually as may be done by regular suit at law.

Code 1858, §§ 744-747; integrated in Acts 1907, ch. 602, § 77; Shan., §§ 1053-1056; Acts 1923, ch. 109, § 8; mod. Code 1932, §§ 1786-1789; modified; T.C.A. (orig. ed.), §§ 67-1624 — 67-1627.

Law Reviews.

The Tennessee Court Systems — Prosecution, 8 Mem. St. U.L. Rev. 477 (1978).

NOTES TO DECISIONS

1. Construction.

This section and § 67-1-1616 as originally enacted conferred on state revenue agents' power of investigating the condition of any trustee's official account, whether in office or out, for the purpose of ascertaining whether he had duly collected and accounted for state and county revenue. State ex rel. Stewart v. Follis, 140 Tenn. 513, 205 S.W. 444, 1917 Tenn. LEXIS 157 (1918).

2. Scope of Bond.

The bond covers taxes collected where no assessments have been made, commonly designated as “picked up” taxes. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).

3. Blank Bond.

A blank bond, signed and sealed, and afterwards filled up as an official bond, without consent, acknowledgment, or redelivery, is not binding upon the parties so signing. Wynne v. Governor, 9 Tenn. 149, 1829 Tenn. LEXIS 30 (1829); Gilbert v. Anthony, 9 Tenn. 69, 1821 Tenn. LEXIS 13, 24 Am. Dec. 439 (1823); Mosby v. Arkansas, 36 Tenn. 324, 1857 Tenn. LEXIS 3 (1857).

4. Date of Bond.

The collector's bond is binding only from the date of its execution, unless it be retrospective in its terms. Galbraith v. State, 78 Tenn. 568, 1882 Tenn. LEXIS 225 (1882); State v. Polk, 82 Tenn. 1, 1884 Tenn. LEXIS 95 (1884).

Additional bonds bind the sureties for the official term in its entirety. Longmire v. Fain, 89 Tenn. 393, 18 S.W. 70, 1890 Tenn. LEXIS 61 (1890).

5. Motions on Bonds.

Motions can be made and maintained on common law bonds, since the distinction between statutory and common law bonds in this respect was abolished by statute. Lay v. State, 37 Tenn. 604, 1858 Tenn. LEXIS 73 (1858); McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).

6. Sufficiency of Bond.

A bond omitting a word that may be supplied to make the bond comply with the law is sufficient. Kincannon v. Carroll, 17 Tenn. 11, 1836 Tenn. LEXIS 3, 30 Am. Dec. 391 (1836).

A bond conditioned to pay over the revenue at a time later than that fixed by law will sustain a motion, for the error is in favor of the obligors. Kincannon v. Carroll, 17 Tenn. 11, 1836 Tenn. LEXIS 3, 30 Am. Dec. 391 (1836). But see Mallory v. Miller, 10 Tenn. 113, 1825 Tenn. LEXIS 8 (1825).

A bond given for less than the penalty required by law, where the penalty is to be fixed by estimate and computation, is good for the penalty named. Mabry v. Tarver, 20 Tenn. 94, 1839 Tenn. LEXIS 23 (1839).

Bond for two years, the official term, is good, for such bond covers the entire term, even though the statute provides for a separate bond for each year; and one that is given for the second year of the term covers that year, and the sureties on each bond will be jointly liable for any default occurring during the second year. Mabry v. Tarver, 20 Tenn. 94, 1839 Tenn. LEXIS 23 (1839); Nevill & Secs. v. Day, 22 Tenn. 37, 1842 Tenn. LEXIS 17 (1842); Governor v. Porter & Surs., 24 Tenn. 165, 1844 Tenn. LEXIS 51 (1844); McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873); Allison v. State, 55 Tenn. 312, 1873 Tenn. LEXIS 4 (1873).

A bond that does not appear to have been taken by and before the county legislative body, acknowledged, approved, and recorded, is sufficient and will sustain a motion, since this is a matter of defense that must be shown negatively not to have been done. Miller v. Moore, 21 Tenn. 421, 1841 Tenn. LEXIS 34 (1841).

A bond which does not state to whom the payment of taxes is to be made is sufficient, for the law designates to whom they shall be paid. Miller v. Moore, 21 Tenn. 421, 1841 Tenn. LEXIS 34 (1841); Governor v. Porter & Surs., 24 Tenn. 165, 1844 Tenn. LEXIS 51 (1844); Kincannon v. Carroll, 17 Tenn. 11, 1836 Tenn. LEXIS 3, 30 Am. Dec. 391 (1836).

A bond executed at a term subsequent to that prescribed by law is sufficient. Lay v. State, 37 Tenn. 604, 1858 Tenn. LEXIS 73 (1858).

A bond taken by the county commissioners acting in lieu of the county legislative body, under an unconstitutional act, is sufficient to maintain a motion against collectors and their sureties. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873); Waters v. Edmondson, 55 Tenn. 384, 1874 Tenn. LEXIS 5 (1874); Huffaker v. State, 2 Shan. 342 (1877).

Where a bond is given for the entire official term of two years, after which the legislature grants an extension of time for the payment of the taxes of the first year and requires this bond to be reacknowledged, or a new bond to be made for the taxes of that year, and, in default of such reacknowledgment, a new bond is made as required for the taxes of the first year, the sureties on the first bond are liable for the taxes of the second year, since they were not affected by the legislative act extending the time of payment as to the first year. Chandler v. State, 69 Tenn. 296, 1878 Tenn. LEXIS 89 (1878); Mayor of Nashville v. Knight, 80 Tenn. 700, 1883 Tenn. LEXIS 232 (1883).

In such case, where the second bond is made for both years, judgment may be rendered against both sets of sureties for a default occurring during the second year. Mayor of Nashville v. Knight, 80 Tenn. 700, 1883 Tenn. LEXIS 232 (1883).

7. Liability of Collector and Sureties.

The revenue collector and his sureties are liable for his failure to collect taxes, and for receipts given for taxes, without in fact making the collection. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).

A statute fixing a limit of time for the delivery of the tax books to the revenue collector is not an extension of time to him, and does not release his sureties from liability. McLean v. State, 55 Tenn. 22, 1873 Tenn. LEXIS 3 (1873).

The collector and his sureties are liable, on motion, for taxes collected under an unconstitutional statute. Phillips v. Lewis, 3 Shan. 230 (1877).

Collector and his sureties are liable on motion for taxes and penalties imposed and collected under a repealed or illegal statute, where collections were made without protest from taxpayers. Chandler v. State, 69 Tenn. 296, 1878 Tenn. LEXIS 89 (1878); Galbraith v. State, 78 Tenn. 568, 1882 Tenn. LEXIS 225 (1882); State use of Anderson County v. Hays, 99 Tenn. 542, 42 S.W. 266, 1897 Tenn. LEXIS 66 (1897).

8. Judgment.

Judgments upon motion are sufficient where they assume the existence of all the facts necessary to give the courts jurisdiction of the motions, and are regular in every respect. Carlton v. State, 55 Tenn. 16, 1873 Tenn. LEXIS 2 (1873).

A judgment upon motion reciting that “the district attorney produced the statement of the comptroller of the treasury, showing the amount due and not paid into the treasury of the state, and it appearing that Milton D. Brown was elected revenue collector for 1868, and that he entered into bond (which is set out), and it further appearing that Milton D. Brown, as such revenue collector, failed to pay over or account for $687.25, due the state of Tennessee, as taxes for the year 1868,” sufficiently recites every jurisdictional fact, and leaves no ambiguity or uncertainty as to any fact necessary to be stated. Brown v. State, 55 Tenn. 871, 1874 Tenn. LEXIS 14 (1874).

67-1-1624. Willful failure of county clerk to perform duties — Assumption of duties by commissioner.

  1. Whenever the commissioner has reason to believe that any county clerk or the county clerk's agent or employee has failed, neglected or refused to perform any duty enjoined upon the county clerk by law relative to the collection, accounting for or paying over of any state revenue with the collection of which the county clerk is charged by law, the commissioner shall so notify the comptroller of the treasury and request in writing that an audit be made of such clerk's accounts, whereupon the comptroller of the treasury shall cause such audit to proceed within thirty (30) days.
  2. When any audit made by the comptroller of the treasury, whether under this section or otherwise, shall reveal willful failure upon the part of a county clerk to collect lawful state revenue, or to account for or pay over such revenue within the time allowed by law, the comptroller of the treasury shall certify such fact to the commissioner. Thereupon, the commissioner may issue to such clerk a citation by registered mail to appear within ten (10) days before the commissioner and show cause why the county clerk should not be relieved of the duties of collecting, reporting and paying over of such revenue, and all emoluments flowing from those duties.
  3. The commissioner is empowered to compel the appearance of witnesses and their testimony, and all parties to such proceeding shall have the right to have issued subpoenas for that purpose. All testimony and exhibits shall be preserved. Witnesses shall be allowed the same fees for attendance and travel as are allowed for witnesses before the circuit court. The commissioner shall provide a transcript of the proceedings before the commissioner in such cases.
    1. In the event that it is determined by the commissioner that a county clerk has willfully failed to collect, account for or pay over any such revenue, the commissioner may issue an order divesting such clerk of any or all duties respecting the handling of such revenue during such time as the office of county clerk may be held by such person, together with all emoluments appertaining to the office of county clerk. A copy of such order shall be posted in a conspicuous place in the courthouse of the county served by such clerk, and published for four (4) consecutive weeks in a newspaper of general circulation in such county.
    2. Such order of the commissioner shall be reviewable de novo within ten (10) days upon a petition for statutory certiorari addressed to the chancery court of the county where such county clerk resides, and shall not be superseded pending judicial review.
    3. Upon delivery of such order, the clerk shall immediately deliver to the commissioner or the commissioner's agent all state property, moneys, records, reports, forms and the like in the clerk's possession. Failure to do so is a Class C misdemeanor. Each day of such refusal is a separate offense.
  4. Following such order, the commissioner shall proceed through the commissioner's own agents and employees to collect state revenues formerly collected by the county clerk, to issue licenses, registrations and the like, and to be solely accountable therefor, as in the case of revenues collectible solely by the commissioner. All statutory fees and emoluments ordinarily inuring to the clerk shall be retained by the commissioner as expendable receipts and used to defray the expenses of collecting state revenues ordinarily collectible by county clerks, and providing public services incidental thereto.

Acts 1963, ch. 95, § 1; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A., §§ 67-1628 — 67-1632; Acts 1989, ch. 591, § 113.

Cross-References. Certified mail in lieu of registered mail, § 1-3-111.

Penalty for Class C misdemeanor, § 40-35-111.

Law Reviews.

Criminal Law and Procedure — 1963 Tennessee Survey (Robert E. Kendrick), 17 Vand. L. Rev. 977 (1964).

67-1-1625. Willful failure of collector to pay over — Felony.

    1. Any tax collector who willfully fails or refuses to pay into the state treasury the revenue that the tax collector has collected commits a Class E felony.
    2. It is the duty of the district attorney general of the district in which such defaulting revenue collector may reside to prosecute such collector for such offense.
    3. Such tax collector shall be imprisoned in the state penitentiary for a period of not less than five (5) nor more than twenty (20) years.
  1. “Tax collector,” as used in this section, includes and embraces all persons entrusted with the collection of the public revenue.

Acts 1867-1868, ch. 79, § 14; Shan., § 964; Code 1932, § 1673; modified; T.C.A. (orig. ed.), § 67-1426; Acts 1989, ch. 591, §§ 1, 6.

Cross-References. Penalty for Class E felony, § 40-35-111.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 52.

NOTES TO DECISIONS

1. Nature of Offense.

The offense is one of the will, and its commission is to be ascertained from the action or conduct of the accused in failing to pay the revenue by him collected into the state treasury, within a reasonable time. Gibbs v. State, 50 Tenn. 72, 1871 Tenn. LEXIS 66 (1871).

The offense is included in the offense of embezzlement, and although it requires more evidence to convict of embezzlement, when the money collected has been lent or invested contrary to law, than it does to convict of the offense of failing or refusing to pay over, yet the conversion of the fund, by the collector, to his own use, is, when it is not paid into the treasury, under either statute, a felony; and, although the evidence of the collection and failure to pay into the state treasury would support an indictment under this section, and might not be sufficient to embrace a case of lending and investing without authority of law, the offense is, in law, the same felony under either statute, when there is a conversion. State v. Cameron, 50 Tenn. 78, 1871 Tenn. LEXIS 67 (1871).

2. Venue of Offense.

The venue of the felony in failing and refusing to pay revenue into the state treasury is in the county in which the defaulting collector resides, and not in the county in which the state treasurer is required by law to keep his office. Gibbs v. State, 50 Tenn. 72, 1871 Tenn. LEXIS 66 (1871).

3. Indictment.

It may well be doubted, whether, even under the curative provisions of the code, the indictment is not defective in not charging that the failure or refusal to pay over the money was “feloniously” done. State v. Cameron, 50 Tenn. 78, 1871 Tenn. LEXIS 67 (1871).

4. Defenses.

The acquittal of embezzlement of state revenue is a bar to a subsequent indictment for failing to pay over the same moneys, under this section. State v. Cameron, 50 Tenn. 78, 1871 Tenn. LEXIS 67 (1871).

5. Evidence.

Failing and refusing to pay over the money, when unexplained, is evidence of a conversion to the collector's own use, and if proved, will establish conversion to his own use. State v. Leonard, 46 Tenn. 307, 1869 Tenn. LEXIS 59 (1869); State v. Cameron, 50 Tenn. 78, 1871 Tenn. LEXIS 67 (1871).

67-1-1626. Refund to collector on proof of deficiencies in collections.

When the collector has duly accounted with the commissioner or county mayor for the full amount of the year's revenue, and paid it into the treasury, without obtaining a credit for insolvencies or deficiencies of payment, and the collector afterwards, in the manner and within the time prescribed by law, procures the proper evidence to authorize the commissioner or county mayor to credit the collector with the evidence, such officers shall respectively issue to the collector a warrant for the amount of such insolvencies or deficiencies of payment.

Code 1858, § 656; Shan., § 934; Code 1932, § 1649; impl. am. Acts 1937, ch. 33, § 50; impl. am. Acts 1959, ch. 9, § 14; impl. am. Acts 1978, ch. 934, §§ 16, 36; T.C.A. (orig. ed.), § 67-1427; Acts 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

67-1-1627. Collector's action for reimbursement of tax paid by collector.

Any tax collector who has failed to collect any tax, but who has paid the tax to the state, county, or municipality to which the tax was due and payable, shall, in addition to the remedies provided by law, have a right to sue a defaulting taxpayer for the amount of the tax, as upon an account for money paid to the collector's use, and recover judgment for the tax, together with six percent (6%) interest per annum on the judgment for the time the tax should have been paid; provided, that the suit is brought within one (1) year after the collector has paid the tax.

Acts 1875, ch. 88, § 1; Shan., § 958; Code 1932, § 1668; T.C.A. (orig. ed.), § 67-1501.

67-1-1628. Powers of collector after expiration of term.

Revenue collectors whose terms of office have expired, and whose successors have been elected, and who have not collected the taxes due for the time during which they held such office, shall, whenever they have paid into the treasury the amount charged against them on account of state and county revenue, have the same privileges, and be subject to the same laws, in the collection of the uncollected taxes, that are applicable to other revenue collectors.

Acts 1873, ch. 6, § 1; Shan., § 953; Code 1932, § 1662; T.C.A. (orig. ed.), § 67-1502.

NOTES TO DECISIONS

1. Relation of Section to Limitations.

The time of two years given to tax collectors and their sureties in which to collect the arrearages of taxes was merely an extension of official existence, and was not a repeal or modification of the statutes of limitation, so as to require all suits, growing out of their responsibilities and liabilities, to be commenced within that time. Deberry v. Brown, 3 Shan. 465 (1875).

Decisions Under Prior Law

1. Relation of Section to Limitations.

The statute did not interfere with the operation of any of the statutes of limitation; and, therefore, did not warrant the revenue collector's collection of any unpaid taxes, which would have been barred in the courts by any statutes of limitation then in force. Brown v. Porter, 26 Tenn. 373, 1846 Tenn. LEXIS 140 (1846).

67-1-1629. Rights of collector's sureties.

  1. If a collector leaves the state without accounting for the county and state taxes, whereby the collector's sureties become liable for the taxes, or dies shortly before or during the time appointed for the collection of public taxes, so that a successor cannot be appointed in time to collect the taxes, it is lawful for the sureties of such collector to go before the county legislative body of the county for which their principal was elected, and prove to the court the existence of such absence or death of their principal. It shall then be the duty of the county legislative body to make a record of such proof, and upon it to make an order authorizing the sureties of such dead or absent collector to collect all arrearages of taxes not collected by their principal, and that it was the principal's duty to collect. Such order, when made, shall be made ample authority for such sureties to collect all such arrearages of taxes; and for this purpose the order shall vest them with all rights and powers to distrain and sell the property, whether real or personal, of those in arrears for taxes, the same as their principal could have done, if the principal had not been absent or died; and they shall have all the powers, authorities, privileges, and emoluments in and for the receipt and collection of the public taxes that the absent or deceased collector possessed and enjoyed.
  2. In case of such death or absence, as is contemplated in subsection (a), it shall and may be competent for the sureties of such dead or absent principal, or, in case of the death of any of the sureties, then their representatives, to go before the county legislative body and agree for any one (1) of such sureties to be appointed to collect such arrearages of taxes, and upon such agreement, it shall be competent for the county legislative body to appoint such surety so agreed upon to collect such arrearages of taxes, and a record shall be made of such agreement and choice, which appointment shall be as ample power to that surety as if all were authorized to collect them; but nothing in subsection (a) or this subsection (b) shall have the effect to release any of such sureties or their representatives from liability as such.
  3. If any person liable to pay such taxes fails to pay them to such designated surety, they may make distress and sale for such arrears in the same manner as the collector could have done. But no such distress or sale shall be made until public notice be first given in the manner prescribed in former § 67-5-1801 and § 67-5-2005.
  4. The sureties of such defaulting collectors, or the authorized agents of such sureties, in all cases where they have paid the amount charged against such defaulting collectors, may sue for the collection of such delinquent taxes in the name of the state for their use, and in all cases where they have not paid, but have become liable for, such uncollected revenue, they may sue in their names, or the names of their duly authorized agents, for the use of the state, county, or municipality, to enforce the collection of such uncollected revenue or any revenues due the state, county, or municipality for which they, in any way, may have become liable.
  5. When a collector is deprived of the power of office, and suspended from acting as collector, on account of the collector's failure or refusal to give sureties in place of sureties discharged, the sureties may receive and collect all taxes not already paid to their principal that the principal was bound to collect; and, for such purpose, they shall have all the powers, authorities, privileges and emoluments that belong officially to the collector so suspended.
  6. Sureties, or the duly authorized agents of sureties of revenue collectors whose terms of office have expired, and whose successors in office have been elected, or, where two (2) years or more have elapsed after the expiration of the terms of office of such collectors, leaving uncollected taxes due the state, county, or municipality for the time during which such trustees held such office, whenever the trustees have paid into the treasury the amount charged against such collectors, on account of the state, county, or municipal revenue, or have become liable for the amount because of the collector's default, shall have the same privileges and rights in enforcing the collection of such uncollected revenue that are applicable by law to revenue collectors.

Code 1858, §§ 663-667 (deriv. Acts 1770, ch. 6, § 2; 1815, ch. 14, § 2); Acts 1859-1860, ch. 17, §§ 1, 2; 1875, ch. 135, §§ 1, 2; Shan., §§ 954-957, 957a1, 959, 960; Code 1932, §§ 1663-1667, 1669, 1670; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A. (orig. ed.), §§ 67-1503 — 67-1508.

Compiler's Notes. The public notice provisions of § 67-5-1801, referred to in this section, were deleted by Acts 1984, ch. 346, § 1, which deleted former § 67-5-1801 in its entirety and replaced it with current version of § 67-5-1801.

Law Reviews.

Tax Delinquency in Tennessee — Legislative Aspects (Charles P. White), 12 Tenn. L. Rev. 71 (1934).

NOTES TO DECISIONS

1. Running of Limitation Period.

The right of action by the sureties against the defaulting taxpayer accrued at the date of payment of the judgment of the state against them for the principal's failure to make collection, and the statute of limitations did not begin to run against them until then. Deberry v. Brown, 3 Shan. 465 (1875).

Part 17
Disclosure of Tax Returns and Tax Information

67-1-1701. Part definitions.

As used in this part, unless the context otherwise requires:

  1. “Commissioner” means the commissioner of revenue;
  2. “Department” means the department of revenue;
  3. “Officer or employee” includes former officers and employees;
  4. “Person” means every individual, firm, association, joint-stock company, syndicate, partnership, corporation, or state or federal agency;
  5. “Return” means any tax or information return, declaration of estimated tax, claim for refund, or petition for waiver of penalty required by, or provided for, or permitted under, any law, that is filed with or submitted to the commissioner by, on behalf of, or with respect to, any person, and any amendment or supplement thereto, including supporting schedules, attachments, or lists which are supplemental to, or part of, any return so filed or submitted;
  6. “Tax administration” means the administration, management, conduct, direction, and supervision of the execution and application of the state tax laws, rules, or related statutes or rules and reciprocity agreements with the several states or federal government to which the state of Tennessee is a party. “Tax administration” also means the development and formulation of state tax policy relating to existing or proposed tax laws, related statutes and reciprocity agreements and includes assessments, collection, enforcement, litigation, publication, and statistical gathering functions under such laws, statutes, rules or reciprocity agreements;
  7. “Tax administration information” means criteria or standards used or to be used for the selection of returns or persons for audit or examination, or data used or to be used for determining such criteria or standards; audit procedures; and any other information relating to tax administration;
  8. “Tax information” means a taxpayer's identity, the nature, source, or amount of the taxpayer's income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax collected, deficiencies, overassessments, or tax payments, whether the taxpayer's return was, is being, or will be, examined or subject to other investigation or processing, or any other data, received by, recorded by, prepared by, furnished to, or collected by, the commissioner with respect to a return or with respect to the determination of the existence, or possible existence, of liability, or the amount of the liability, of any person for any tax, penalty, interest, fine, forfeiture, or other penalty, imposition or offense, administered by or collected by the commissioner, either directly or indirectly. “Tax information” does not include data in a form that cannot, either directly or indirectly, be associated with, or otherwise be used to identify, directly or indirectly, a particular taxpayer;
  9. “Taxpayer identity” means the name of a person subject to a tax collected or administered by the commissioner, the person's mailing address, the person's taxpayer identifying number or account number, or a combination thereof; and
  10. “Unit of local government” means any county enumerated in § 5-1-101, any incorporated municipality, or any consolidated unit of any such counties and municipalities.

Acts 1977, ch. 152, § 1; T.C.A., § 67-131; Acts 2000, ch. 982, § 39.

Attorney General Opinions. Identifying numbers obtained by the state, county, or city for reporting and enforcing the business tax, including federal employer identification numbers, social security numbers, or state sales tax numbers, are not considered public information, OAG 01-165 (11/15/01).

Confidentiality of hotel/motel and gross receipts tax information.  OAG 12-20, 2012 Tenn. AG LEXIS 20 (2/22/12).

Disclosure of Returns and Tax Information to Officials of Local Government. OAG 15-44, 2015 Tenn. AG LEXIS 44 (5/6/15).

Cited: Coleman v. Kisber, 338 S.W.3d 895, 2010 Tenn. App. LEXIS 619 (Tenn. Ct. App. Oct. 4, 2010).

Collateral References. Taxation 371

67-1-1702. Confidentiality.

  1. Notwithstanding any law to the contrary, returns, tax information and tax administration information shall be confidential and, except as authorized by this part, no officer or employee of the department or of any office of a district attorney general or any state or local law enforcement agency, and no other person, or officer or employee of the state, who has or had access to such information shall disclose any such information obtained by such officer or employee in any manner in connection with such officer's or employee's service as an officer or employee, or obtained pursuant to this part, or obtained otherwise.
  2. Notwithstanding any other law to the contrary, the confidentiality and disclosure of any record or document pertaining to a motor vehicle registration or motor vehicle title for which the department has responsibility under title 55, chapters 1-6, title 65, chapter 15, or any other applicable statute shall be controlled by title 55, chapter 25.
  3. This part does not apply to any record, document, or other information pertaining to a tax on the privilege of occupancy in a hotel imposed by a city, town, or county pursuant to an ordinance, resolution, or private act.

Acts 1977, ch. 152, § 1; T.C.A., § 67-132; Acts 2000, ch. 982, § 40; 2007, ch. 484, § 110; 2013, ch. 400, § 1; 2016, ch. 796, § 5.

Amendments. The 2013 amendment inserted “or of any office of a district attorney general or any state or local law enforcement agency,” in the middle of the first sentence of (a).

The 2016 amendment added (c).

Effective Dates. Acts 2013, ch. 400, § 3. May 6, 2013.

Acts 2016, ch. 796, § 6. April 14, 2016.

Cross-References. Confidentiality of public records, § 10-7-504.

Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), §§ 944, 975.

Tennessee Law of Evidence (2nd ed., Cohen, Paine and Sheppeard), § 501.21.

Attorney General Opinions. Disclosure of Returns and Tax Information to Officials of Local Government. OAG 15-44, 2015 Tenn. AG LEXIS 44 (5/6/15).

In general, a district attorney turning over information to defense counsel pursuant to a mandate from the court will not be liable for the disclosure of confidential or privileged information. OAG 18-01, 2018 Tenn. AG LEXIS 1 (1/4/2018).

Cited: Pfizer, Inc. v. Farr, — S.W.3d —, 2012 Tenn. App. LEXIS 416 (Tenn. Ct. App. June 22, 2012).

NOTES TO DECISIONS

1. Access Denied.

Citizen's petition for access to public records relative to the selection process of candidates for a special business tax credit under a program to encourage business organizations to locate in Tennessee was properly denied because the records constituted tax administration and tax information which, pursuant to T.C.A. § 67-1-1702 were not subject to disclosure under the Tennessee Public Records Act, T.C.A. § 10-7-503 et seq.Coleman v. Kisber, 338 S.W.3d 895, 2010 Tenn. App. LEXIS 619 (Tenn. Ct. App. Oct. 4, 2010), review or rehearing denied, — S.W.3d —, 2011 Tenn. LEXIS 422 (Tenn. Apr. 14, 2011).

“Assessments, collection, enforcement, litigation, publication, and statistical gathering” language represents a part of the larger whole denoted by “the development and formulation of state tax policy relating to existing or proposed tax laws, related statutes and reciprocity agreements,” and the word “includes” is not limiting; therefore, a public records request for tax study documents was denied because the definition of “tax administration” encompassed the documents at issue and made them confidential. Moreover, this interpretation did not extend the definition beyond the executive function of administration of tax laws into the legislative function; the department of revenue could formulate and recommend laws to the governor. Carter v. Martin, — S.W.3d —, 2016 Tenn. App. LEXIS 175 (Tenn. Ct. App. Mar. 3, 2016).

67-1-1703. Disclosure to taxpayer or fiduciary.

  1. The commissioner shall, subject to such requirements and conditions as may be prescribed by rules, disclose the return of any taxpayer, or tax information with respect to such taxpayer, to such person or persons as the taxpayer may designate in a written request for or consent to such disclosure, or to any other person at the taxpayer's request to the extent necessary to comply with a request for information or assistance made by the taxpayer to such other person. Tax information shall not, however, be disclosed to such person or persons if the commissioner determines that such disclosure would be seriously burdensome to tax administration.
    1. The return of a person shall, upon written request, be open to inspection by or disclosure to:
      1. In the case of the return of an individual, that individual;
      2. In the case of the return of a partnership, any person who was a member of such partnership during any part of the period covered by the return;
      3. In the case of the return of a corporation or a subsidiary of a corporation:
        1. Any person designated by resolution of its board of directors or other similar governing body;
        2. Any officer or employee of such corporation upon written request signed by any principal officer and attested to by the secretary or other appropriate officer; or
        3. If the corporation has been dissolved, any person authorized by applicable state law to act for the corporation or any person who the commissioner finds to have a material interest that will be affected by information contained in the return;
      4. In the case of the return of an estate, the administrator, executor, or trustee of such estate; and
      5. In the case of the return of a trust, the trustee or trustees, jointly or separately.
    2. If an individual described in subdivision (b)(1) is legally incompetent, the applicable return shall, upon written request, be open to inspection by or disclosure to the guardian of the individual's estate.
    3. The return of a decedent shall, upon written request, be open to inspection by or disclosure to an administrator, executor, trustee or beneficiary of the decedent's estate. However, in order to obtain the return, a beneficiary must submit a sworn affidavit stating that: the affiant was a beneficiary of the estate who received a distribution of assets from the estate in kind; the affiant needs the return to accurately determine the federal income tax basis of such assets; and the affiant has requested the return from the personal representative who could not or would not provide it.
    4. If substantially all of the property of the person with respect to whom the return is filed is in the hands of a trustee in bankruptcy or receiver, such person's return or returns for prior years, upon written request, shall be open to inspection by or disclosure to such trustee or receiver, but only if the commissioner finds that such trustee or receiver, in the trustee's or receiver's fiduciary capacity, has a material interest that will be affected by information contained in the return.
    5. Any return to which this subsection (b) applies shall, upon written request, also be open to inspection by or disclosure to the attorney in fact or at law duly authorized in writing by any of the persons described in subdivisions (b)(1)-(4), who are themselves entitled to the return, to inspect the return or receive the information on their behalf, subject to the conditions provided in subdivisions (b)(1)-(4).
    6. Tax information with respect to any taxpayer that may otherwise be open to inspection by or disclosure to any person authorized by this subsection (b) to inspect any return of such taxpayer shall not be disclosed if the commissioner determines that such disclosure would seriously impair tax administration.

Acts 1977, ch. 152, § 1; T.C.A., § 67-133; Acts 1997, ch. 269, § 1.

Textbooks. Tennessee Law of Evidence (2nd ed., Cohen, Paine and Sheppeard), § 501.21.

Cited: Coleman v. Kisber, 338 S.W.3d 895, 2010 Tenn. App. LEXIS 619 (Tenn. Ct. App. Oct. 4, 2010).

67-1-1704. Disclosure for administrative purposes — Tax collection.

  1. Returns and tax information shall, without written request, be open to inspection by or disclosure to officers and employees of the department whose official duties require such inspection or disclosure for tax administration purposes.
    1. A return or tax information may be disclosed in a federal or state judicial or administrative proceeding pertaining to tax administration, but only if:
      1. The taxpayer is a party to such proceeding;
      2. The treatment of an item reflected on such return is directly related to the resolution of an issue in the proceedings; or
      3. Such return or tax information directly relates to a transactional relationship between a person who is a party to the proceeding and the taxpayer that directly affects the resolution of an issue in the proceeding.
    2. Such return or tax information shall not be disclosed as provided in subsections (a) and (b) and in §§ 67-1-1705(a) and 67-1-1707(a), however, if the commissioner determines that such disclosure would identify a confidential informant or seriously impair a civil or criminal tax investigation.
  2. Returns and tax information may be disclosed to any person to the extent necessary in connection with the processing, storage, transmission, and reproduction of returns and tax information, and the programming, maintenance, repair, testing and procurement of equipment and software, for purposes of tax administration.
  3. Upon request in writing, returns and tax information may be disclosed to duly authorized officials of a unit of local government of this state for the purpose of ascertaining whether proper local taxes or the tax imposed by § 67-4-704 is being paid. Upon written request, tax information may also be disclosed to duly authorized officials of a unit of local government of this state to the extent necessary to ascertain whether allocations from state levied taxes are being distributed to the correct unit of local government; provided, that such information shall not include the taxpayer's returns, receipts, income, tax liability, tax payments, or other financial information. For purposes of ascertaining whether proper local severance taxes are being paid pursuant to chapter 7, part 2 of this title, “authorized officials of a unit of local government” means the county mayor or a member of the county governing body. No unit of local government nor any official or employee of a unit of local government who receives returns or tax information under this subsection (d) shall disclose such information to any person other than the person to whom it relates, except as otherwise may be authorized by law. Any official or employee of a unit of local government who has or has had, at any time, access to any return or tax information under this subsection (d) shall be subject to all of the penalties and restrictions applicable to an officer or employee of the state under § 67-1-1709.
  4. A unit of local government receiving tax information under subsection (d) may disclose to a contractor or consultant the name, address, and situs of one (1) or more taxpayers for the purpose of ascertaining whether allocations of state and local taxes are being distributed to the correct unit of local government. Such information shall not include the taxpayer's returns, receipts, income, tax liability, tax payments, or other financial information. No consultant or contractor of a unit of local government who receives tax information under this subsection (e) shall disclose such information to any other person. Any consultant or contractor of a unit of local government who has or has had, at any time, access to any tax information under this subsection (e) shall be subject to all the penalties and restrictions applicable to an officer or employee of the state under § 67-1-1709.
  5. Returns and tax information may be disclosed for the purposes of tax administration to either house of the general assembly, or to any committee or subcommittee of the general assembly, but only upon a lawfully executed subpoena being served on the commissioner who demands such returns or information.
  6. Returns and tax information shall be open to inspection by, and/or disclosure to, any person contracting for the collection of unpaid taxes under part 14 of this chapter. This disclosure is authorized only to the extent necessary for the collection of unpaid taxes by that person. Any person receiving returns and/or tax information under this section shall be subject to the confidentiality provisions, including penalties, provided by this part.
  7. Returns, tax information and tax administration information may, in the commissioner's discretion, be disclosed for the exclusive purpose of participating in the multistate tax commission joint audit program. Any person receiving returns, tax information or tax administration information under this subsection (h) shall be subject to the confidentiality provisions, including penalties, set out in this part; and the commissioner is authorized to take such actions as deemed necessary to ensure that any such persons receiving returns, tax information or tax administration information shall maintain the confidentiality provisions set out in this part.
  8. Tax information may, in such form and manner as prescribed by the commissioner, be disclosed to the extent reasonably necessary to facilitate accurate reporting by entities required to file duplicate information returns pursuant to §  67-6-411. Such tax information shall not be used by the recipient for any purpose other than producing and filing duplicate information returns pursuant to §  67-6-411. Any person who receives such tax information under this subsection (i) is prohibited from disclosing such information and shall be subject to the confidentiality provisions, including penalties, set out in this part. The commissioner is authorized to take such actions as deemed necessary to ensure that any persons receiving such tax information shall maintain the confidentiality provisions set out in this part.

Acts 1977, ch. 152, § 1; T.C.A., § 67-134; Acts 1991, ch. 79, § 2; 2006, ch. 553, § 1; 2009, ch. 530, § 96; 2014, ch. 764, § 3; 2015, ch. 273, § 1; 2015, ch. 342, § 5; 2016, ch. 705, § 1; 2018, ch. 1011, § 3.

Amendments. The 2014 amendment substituted “or the tax imposed by § 67-4-704 is being paid” for “are being paid” in the first sentence in (d).

The 2015 amendment, by ch. 273 added “and software” after “equipment” in (c).

The 2015 amendment by ch. 342 added (h).

The 2016 amendment added the present second sentence in (d).

The 2018 amendment added present (e) and redesignated former (e) through (h) as present (f) through (i).

Effective Dates. Acts 2014, ch. 764, § 4. April 24, 2014.

Acts 2015, ch. 273, § 7. April 28, 2015.

Acts 2015, ch. 342, § 6. May 4, 2015.

Acts 2016, ch. 705, § 2. April 6, 2016.

Acts 2018, ch. 1011, § 5. May 21, 2018.

Cross-References. Confidentiality of public records, § 10-7-504.

Textbooks. Tennessee Law of Evidence (2nd ed., Cohen, Paine and Sheppeard), § 501.21.

Attorney General Opinions. Disclosure of Returns and Tax Information to Officials of Local Government. OAG 15-44, 2015 Tenn. AG LEXIS 44 (5/6/15).

NOTES TO DECISIONS

1. Confidentiality of Tax Information.

Where Tennessee's Commissioner of Revenue moved under Tenn. Sup. Ct. R. 19 to allow an out-of-state attorney to assist him in a tax appeal, the prospect that counsel would reveal confidential information learned during the litigation was not grounds to disqualify him or deny him permission to appear pro hac vice, as the court was obliged to assume, unless shown otherwise, that counsel would comply with T.C.A. § 67-1-1704, Tenn. Sup. Ct. R. Prof. Conduct 8, and any protective orders the court issued. Pfizer, Inc. v. Farr, — S.W.3d —, 2012 Tenn. App. LEXIS 416 (Tenn. Ct. App. June 22, 2012).

67-1-1705. Disclosure for tax enforcement.

  1. A return or tax information shall be open to inspection by or disclosure to the attorney general and reporter, and to any of the several district attorneys general, when officially engaged in, and solely for their use in, preparation for any proceeding, or investigation that may result in such a proceeding, before a grand jury or any court of law or equity in a civil or criminal matter involving tax administration, collection or prosecution for violation of the state tax laws, but only if:
    1. The taxpayer is or may be a party to such proceeding;
    2. The treatment of an item reflected on such return is or may be related to the resolution of an issue in the proceeding or investigation; or
    3. Such return or tax information relates or may relate to a transactional relationship between a person who is or may be a party to the proceeding and the taxpayer that affects, or may affect, the resolution of an issue in such proceeding or investigation.
  2. An officer or employee of the department may, in connection with the officer's or employee's official duties relating to an audit, collection activity, or civil or criminal tax investigation or the investigation of any offense or matter under the tax laws of this state, disclose tax information to the extent that such disclosure is necessary in obtaining information, that is not otherwise reasonably available, with respect to the correct determination of tax, liability for tax, or the amount to be collected. Such officer or employee may also disclose tax information when disclosure is required to assure compliance with the tax laws of this state through:
    1. The release of specific tax information; or
    2. Publishing of a bulletin or list identifying persons recognized by the department as qualified sellers, limited users, dealers, and distributors qualified to receive taxable substances, indicating the extent to which they are bonded, or listing similar categories of persons and kinds of data.
  3. Investigative records of the special investigations unit of the department relating to potential criminal prosecutions of persons for violation of the tax laws of this state are confidential and may not be disclosed to any person, notwithstanding any provision of this part to the contrary, except in the exercise of the discretion of the commissioner so as not to seriously impair tax administration.

Acts 1977, ch. 152, § 1; T.C.A., § 67-135.

Cross-References. Confidentiality of public records, § 10-7-504.

Textbooks. Tennessee Law of Evidence (2nd ed., Cohen, Paine and Sheppeard), § 501.21.

67-1-1706. Disclosure to parties in interest.

  1. If a notice of lien has been filed pursuant to law, the amount of the outstanding obligation secured by such lien may be disclosed to any person or that person's agent who has a right in the property subject to such lien or intends to obtain a right in such property.
  2. If any taxpayer is required to submit a bond to secure the payment of any taxes that may be due to the department, the amount of the outstanding obligation of the taxpayer may be disclosed to any person who stands as surety on the bond for such taxpayer.

Acts 1977, ch. 152, § 1; T.C.A., § 67-136.

Textbooks. Tennessee Law of Evidence (2nd ed., Cohen, Paine and Sheppeard), § 501.21.

67-1-1707. Disclosure for miscellaneous purposes.

  1. Returns and tax information shall, without written request, be open to inspection by or disclosure to the comptroller of the treasury or the comptroller's designated representative for purposes of audit.
    1. Such disclosure shall only be applicable to state tax returns and state tax information.
    2. Disclosure of federal tax returns and federal tax information may be made if permitted by federal law or any prohibition of disclosure is waived by the appropriate federal agency.
  2. A return or tax information may be disclosed to a competent authority of another state or the federal government that agrees to disclose returns or tax information to this state.
  3. Upon request in writing, the commissioner may, in the commissioner's discretion, furnish tax information to officers and employees of an agency of this state or of the federal government engaged in tax or economic analysis, if such tax information is relevant to the functions and duties of the requesting agency; but no agency, or officer or employee of the agency, who receives tax information under this subsection (c) shall disclose such information to any person other than the person to whom it relates, except in a form that cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer.
  4. Returns and tax information may be disclosed to any person to whom the department is authorized to provide such returns and information by any other law.
  5. Nothing in this part shall restrict the disclosure of tax returns or tax information by a private firm engaged in the business of tax return preparation; provided, that such disclosure is in connection with the purchase or sale of a firm engaged in the business of tax return preparation or in connection with the review of such a firm by an affiliated firm or in connection with the offering of services to individual taxpayers.
  6. Nothing in this part shall restrict the public disclosure of the name and address of an owner of a business tax license under chapter 4, part 7 of this title.
  7. Upon request in writing, the commissioner may, in the commissioner's discretion, furnish tax information to officers or employees of an agency of this state, if such tax information is relevant to the functions and duties of the requesting agency. No agency or employee of the agency who receives tax information under this subsection (g) shall disclose such information to any person other than the person to whom it relates, except as otherwise may be authorized by law.
  8. The commissioner may provide tax information to an official of any state agency or other state entity, for the purpose of ensuring compliance with title 12, chapter 4, part 1, requiring that persons contracting with the state or other state entities register themselves and their affiliates to collect and remit taxes. No agency or employee of the agency who receives tax information under this subsection (h) shall disclose such information to any person other than the person to whom it relates, except as otherwise may be authorized by law.
  9. A return or tax information may be disclosed in response to a subpoena that is duly authorized and properly served under the Federal Rules of Criminal Procedure or the Tennessee Rules of Criminal Procedure.
  10. The commissioner shall, without written request, provide tax information to officers or employees of a claimant as defined in § 67-1-1808, if such tax information is necessary to accomplish and effectuate the purposes of § 67-1-1808. No officer or employee who receives tax information under this subsection (j) shall disclose such information to any person other than the person to whom it relates, except as otherwise may be authorized by law.
  11. The commissioner may, in the commissioner's discretion, disclose tax information to a unit of local government of this state for purposes of effectuating distributions of tax revenues under the Border Region Retail Tourism Development District Act, compiled in title 7, chapter 40. No unit of local government that receives tax information under this subsection (k) shall disclose the information to any person. However, nothing in this part shall prohibit the unit of local government from making payment or reimbursement to a private party out of distributions received under the Border Region Retail Tourism Development District Act, even if the funds are derived from sales and use taxes collected from a single parcel of property, and such payment or reimbursement shall not be a violation of this part.

Acts 1977, ch. 152, §§ 1, 2; 1980, ch. 769, § 1; T.C.A., § 67-137; Acts 1988, ch. 882, § 3; 2000, ch. 982, § 43; 2002, ch. 614, § 1; 2010, ch. 1113, § 4; 2015, ch. 405, § 4.

Compiler's Notes. Acts 2010, ch. 1113, § 8 provided that any claimant may promulgate rules to effectuate the provisions of the act relating to internal procedures for reporting debts and conducting administrative hearings. The department of revenue may promulgate such other rules to carry out the remaining provisions of the act.

Acts 2010, ch. 1113, § 9 provided that the act, which added subsection (j), shall apply to any claim for refund filed with the department of revenue on or after July 1, 2009, that has not been finally determined.

Amendments. The 2015 amendment added (k).

Effective Dates. Acts 2015, ch. 405, § 5. May 8, 2015.

Textbooks. Tennessee Law of Evidence (2nd ed., Cohen, Paine and Sheppeard), § 501.21.

67-1-1708. Manner of disclosure — Legal effect.

  1. Requests for the inspection or disclosure of a return or tax information and such inspection or disclosure shall be made in such manner and at such time and place as shall be prescribed by the commissioner.
  2. A reproduction or certified reproduction of a return shall, upon written request, be furnished to any person to whom disclosure or inspection of such return is authorized by law. A reasonable fee may be prescribed by the commissioner for furnishing such reproduction or certified reproduction.
  3. Tax information disclosed to any person under the provisions of law may be provided in the form of written documents, reproductions of such documents, films or photo impressions, or electronically produced tapes, discs or records, or by any other mode or means which the commissioner determines is necessary or appropriate. A reasonable fee may be prescribed by the commissioner for furnishing such tax information.
  4. Any reproduction of any return, document or other material made in accordance with this section shall have the same legal status as the original, and any such reproduction shall, if properly authenticated, be admissible in evidence in any judicial or administrative proceeding as if it were the original, whether or not the original is in existence.

Acts 1977, ch. 152, § 1; T.C.A., § 67-138.

67-1-1709. Violations — Penalties.

  1. It is a Class E felony for any person who has, or had at any time, access to any return or tax information to disclose to any person, except as authorized by law, any such return or tax information. If such offense is committed by any officer or employee of the state or any other officer or employee described in § 67-1-1702(a), the officer or employee shall, in addition to any other punishment, be dismissed from office or discharged from employment upon conviction for such offense.
  2. It is a Class E felony for any person to offer any item of material value in exchange for any return or tax information and to receive as a result of such solicitation any such return or tax information.
  3. It is a Class E felony for any employee of the department willfully to inspect any return or tax information, except when the employee has a good faith and objectively reasonable basis for believing such inspection is in furtherance of the employee's duties or responsibilities.

Acts 1977, ch. 152, § 1; T.C.A., § 67-139; Acts 2000, ch. 982, § 41; 2013, ch. 400, § 2.

Amendments. The 2013 amendment inserted “or any other officer or employee described in § 67-1-1702(a)” in the last sentence of (a).

Effective Dates. Acts 2013, ch. 400, § 3. May 6, 2013.

Cross-References. Penalty for Class E felony, § 40-35-111.

Attorney General Opinions. Disclosure of Returns and Tax Information to Officials of Local Government. OAG 15-44, 2015 Tenn. AG LEXIS 44 (5/6/15).

Cited: Coleman v. Kisber, 338 S.W.3d 895, 2010 Tenn. App. LEXIS 619 (Tenn. Ct. App. Oct. 4, 2010).

67-1-1710. Confidentiality of attorney-client communications.

  1. In determining taxpayer liability of any professional practitioner licensed by the state of Tennessee, the commissioner shall have no authority to obtain access to legally privileged information, as provided for in § 23-3-105 or to confidential client information, as provided for in statute or professional rules, including the rules of the Tennessee supreme court. Confidential client information includes, but is not limited to, the identity of a client, the nature of the matter for which representation was sought, or any information obtained by counsel in the course of the client's representation.
  2. When the provisions of subsection (a) are asserted, the disclosure of any information shall be made only after a court order compelling disclosure of such information is final. In an action to compel such disclosure, the client affected by the disclosure has the right to intervene anonymously; any examination of the information shall be conducted in camera; and the commissioner shall have the burden of proof to show, by clear and convincing evidence, that the information sought is not privileged or confidential client information.

Acts 1999, ch. 406, § 16.

Cross-References. Confidentiality of public records, § 10-7-504.

67-1-1711. Disclosure by commissioner.

The commissioner is authorized to disclose tax administration information, other than returns and tax information, if the commissioner determines that such disclosure is in the best interests of the state; provided, that no law shall be construed to require disclosure of criteria or standards used or to be used for the selection of returns or persons for audit or examination, or data used or to be used for determining such criteria or standards, if the commissioner determines that such disclosure will impair assessment, collection, or enforcement under state tax laws.

Acts 2000, ch. 982, § 42.

Cited: Coleman v. Kisber, 338 S.W.3d 895, 2010 Tenn. App. LEXIS 619 (Tenn. Ct. App. Oct. 4, 2010).

67-1-1712. Certified service provider.

  1. A certified service provider and the department shall comply with the privacy policy of the Streamlined Sales and Use Tax Agreement, and the policy is enforceable by the attorney general and reporter.
  2. Returns and tax information of a Model 1 seller may be disclosed to the seller's certified service provider.

Acts 2003, ch. 357, § 1; 2004, ch. 959, §§ 50, 68; 2005, ch. 311, §§ 1, 2; 2007, ch. 602, §§ 51, 55.

Compiler's Notes. Acts 2007, ch. 602, § 51 provided that Acts 2003, ch. 357, § 1, as amended by Acts 2004, ch. 959, §§ 50 and 68, as amended by Acts 2005, ch. 311, §§ 1 and 2, was repealed in its entirety, effective June 28, 2007.

Cross-References. Definition of Model 1 seller, § 67-6-102.

Part 18
Taxpayer Remedies for Disputed Taxes

67-1-1801. Enumeration of remedies.

    1. In all cases in which any officer, charged by law with the authority to assess taxes that are collected or administered by the commissioner of revenue, shall finally assess a tax alleged or claimed to be due, if the taxpayer against whom the final assessment is made believes the final assessment to be unjust, illegal or incorrect, the taxpayer's remedies shall be as follows:
      1. The taxpayer may pay the tax and file a claim for refund of the tax and proceed as provided in this part; or
      2. The taxpayer may file suit against the commissioner in chancery court in the appropriate county in this state, challenging all or any portion of the final assessment of such tax, including any interest and penalty associated with the tax. Until the earlier of the expiration of ninety (90) days after an assessment becomes final, or the filing of a suit by the taxpayer as provided in subsection (b), no levy as defined in § 67-1-1404 shall be made, begun or prosecuted by the commissioner. The commissioner may, however, initiate and pursue any other action to collect an assessed deficiency under part 14 of this chapter or otherwise, including, but not limited to, the filing of a notice of lien as provided in § 67-1-1403 and the collection of a jeopardy assessment.
    2. Subdivision (a)(1)(B) shall not apply to those cases where the final assessment is based on:
      1. Bad checks;
      2. Debit memos based on mathematical errors caused by the taxpayer's own figures; and
      3. Delinquent partial payment agreements.
  1. A suit challenging the final assessment of a tax or seeking a stay of collection of an inheritance or gift tax deficiency pending a final determination of a timely proceeding for review of an appraisal filed by the taxpayer before the appropriate board must be:
    1. Filed within ninety (90) days from the date the assessment becomes final, with a copy of the notice of proposed assessment issued pursuant to § 67-1-1438 attached to the notice as an exhibit; and
    2. Signed by the taxpayer under the penalties of perjury, affirming that the taxpayer or affiant believes that the final assessment, or the portion of the final assessment being challenged, is unjust, illegal or incorrect and that the suit is brought in good faith and not solely for the purpose of delay.
    1. A suit filed by a taxpayer under subsection (b) shall operate to continue the stay of collection of the tax, or portion of the tax challenged, as provided in subdivision (a)(1)(B), except as otherwise provided in subsection (d), until dismissal or final determination of the tax, if the taxpayer also files with the taxpayer's suit one (1) of the following:
      1. A corporate surety bond or an irrevocable letter of credit, in the form prescribed by regulations issued by the commissioner, issued by a qualified surety company or bank, in a principal amount equal to one hundred fifty percent (150%) of the amount of the final assessment or portion of the final assessment that is challenged by the suit;
      2. A pledge or collateral assignment of assets in an amount and form satisfactory to the commissioner as evidenced by the commissioner's written consent to the pledge or collateral assignment; or
        1. An affidavit executed by or on behalf of the taxpayer, which lists and describes with particularity:
          1. All of the taxpayer's assets, the respective fair market values and present location of those assets, all of the liabilities and the amount of the liabilities, and the person's or persons' address to whom such liability is owing, that are an encumbrance or lien against such assets; and
          2. All transfers and assignments of the taxpayer's assets, whether such transfer was by gift, as collateral security, or otherwise, within the one-year period preceding the date of the final assessment, together with a description of the asset, its value, and the name and address of the transferee or assignee of the asset, except those transfers or assignments that were bona fide, arm's length sales or pledges of noninventory assets of a value of less than one thousand dollars ($1,000), or sales from inventory occurring in the ordinary course of a taxpayer's trade or business, and for which the taxpayer received full and adequate consideration in money or money's worth; and
        2. A certified copy of each notice of lien, in the form prescribed by regulations issued by the commissioner, required to be filed herein. A notice of lien in favor of the commissioner on all of the taxpayer's real property, wherever situated, shall be filed in the office of the secretary of state and in the office of the register of deeds in the county of the taxpayer's domicile or principal place of business in this state. A notice of lien in favor of the commissioner shall also be filed in other states, in the county in which the taxpayer's real estate is situated.
    2. For purposes of this subsection (c):
      1. In the case of a corporate taxpayer, no distribution to a shareholder of the corporation by way of a dividend, redemption, liquidation or partial liquidation, nor principal repayment of a debt by the corporate taxpayer to the shareholder shall be deemed as having been made for full and adequate consideration;
      2. A corporate surety company shall be qualified to issue a surety bond, if it is authorized by the commissioner of commerce and insurance to engage in the surety insurance business in this state, and a bank shall be qualified to issue its irrevocable letter of credit if it has been designated by the state treasurer as an authorized depository bank for the deposit of state funds, unless it has been determined by the commissioner to be not qualified for this purpose, based on reasonable standards uniformly applied;
      3. An asset of a taxpayer may include property assigned to the taxpayer for the limited purpose of having such asset pledged, collaterally assigned, or subjected to the lien in favor of the commissioner;
      4. A notice of lien filed as provided in subsection (b) constitutes a lien against taxpayer's property, including after-acquired property and replacement property, to the extent of the amount of the final assessment or portion of the final assessment challenged by the taxpayer's suit, including all penalties and interest associated with the final assessment or imposed by the court, and shall have priority over all subsequent liens filed and perfected against the taxpayer's property, and may be collected and enforced by the commissioner in the same manner as a judicial lien or judgment, or in accordance with part 14 of this chapter; and
      5. A notice of lien, whether filed by the commissioner under § 67-1-1403 or filed by the taxpayer under this subsection (c), against any inventory, stock in trade, or trade receivables of the taxpayer shall not operate to or be construed so as to preclude the sale of such inventory or stock in trade by the taxpayer to customers in the ordinary course of the taxpayer's trade or business, nor to prevent the taxpayer from using the proceeds from the sale of inventory or stock in trade to customers in the ordinary course of the taxpayer's trade or business, and the proceeds from collection of trade receivables for the ordinary and necessary conduct and continuation of the taxpayer's trade or business.
    3. [Deleted by 2014 amendment, effective January 1, 2015.]
  2. If the taxpayer has filed a qualified corporate surety bond or bank irrevocable letter of credit in the amount equal to one hundred fifty percent (150%) of the amount of the final assessment or portion of the final assessment that is challenged by the suit, or has entered into a pledge or collateral assignment of assets in an amount and form satisfactory with the commissioner as evidenced by the commissioner's written consent to the pledge or collateral assignment, or has filed certified copies of notices of liens on all of the taxpayer's property, or on unencumbered property of the taxpayer located in this state equal in value to at least one hundred fifty percent (150%) of the amount of the final assessment, or the portion of the final assessment challenged by the suit, proceedings or actions for the collection of the assessed tax or challenged portion of the assessed tax, including an action to enforce the lien in favor of the commissioner under part 14 of this chapter, shall be stayed pending final determination of the suit; provided, that, unless the taxpayer has filed a qualified corporate surety bond or bank irrevocable letter of credit in the amount provided in this subsection (d), the commissioner shall not be prohibited or stayed from taking action to enforce or collect a jeopardy assessment as provided in §§ 67-1-1406 and 67-1-1431. In the event the suit is withdrawn or dismissed, or final judgment on the suit is rendered in favor of the commissioner as to all or any portion of the challenged assessment, the commissioner shall be entitled to collect the amount of the final assessment, interest accrued on the final assessment, and any penalty assessed against the taxpayer, by enforcement of the bond, the letter of credit, the pledge or collateral assignment of assets, or the lien.
  3. In the event the commissioner commences a jeopardy proceeding under §§ 67-1-1406 and 67-1-1431, a taxpayer who has filed suit under this section and who has filed a pledge or collateral assignment of assets in an amount and form acceptable and consented to by the commissioner, or has filed notices of lien on all of such taxpayer's property or on unencumbered property of the taxpayer located in this state, equal in value to at least one hundred fifty percent (150%) of the assessment or portion of the assessment challenged by the suit, shall have the right to seek a stay by the court of such jeopardy proceeding. The court shall not have jurisdiction to issue an ex parte stay or temporary restraining order. A stay or temporary order restraining such jeopardy proceeding may be issued by the court only after a hearing held upon not less than fifteen (15) nor more than thirty (30) days prior notice to the commissioner. At a hearing for stay or temporary order restraining jeopardy proceedings, the commissioner's basis for such proceeding shall be presumed to be correct, and the burden of proof shall be on the taxpayer to establish by clear and convincing evidence that the commissioner does not have a reasonable basis in fact for finding that collection of the tax is in jeopardy.
  4. If the taxpayer files an amendment to the taxpayer's complaint challenging the final assessment of additional taxes, for purposes of staying action for collection under subsection (d), such amended complaint shall be treated as an original complaint, and no stay of collection shall apply, unless or until an additional qualified corporate surety bond, bank letter of credit, pledge or collateral assignment of assets consented to by the commissioner is filed, or notices of lien are filed on all taxpayer's property or on additional property of the taxpayer located in the United States, to the extent required to equal or exceed one hundred fifty percent (150%) of the amount of additional assessment challenged. The filing of an amendment to a complaint in a pending suit challenging the final assessment of additional taxes shall be deemed to be the filing of a suit as provided in subsection (b).
  5. The commissioner may at any time file a motion with the court challenging the qualification, sufficiency, or validity and accuracy of any bond, letter of credit, affidavit, or notice of lien filed by a taxpayer. Such motion may also seek to increase the amount of any bond, letter of credit, pledge or collateral assignment of assets, or notice of lien, which shall be granted, if it reasonably appears to the court that the amount is not sufficient to protect the state adequately. The commissioner shall be entitled to discover any and all matters, not privileged, pursuant to the Rules of Civil Procedure. If a bond, letter of credit, or notice of lien is determined, after hearing, to be disqualified or insufficient to stay a levy or action to collect the final assessment, or portion of the final assessment challenged, such stay shall be lifted, unless made qualified or sufficient within the time, not to exceed ten (10) days, prescribed by the court. If the court, after hearing, determines that an affidavit filed by the taxpayer contains material omissions, misrepresentations, overvaluation of assets or understatement of liabilities, the court shall dismiss the taxpayer's suit with prejudice, unless the court also finds, from the preponderance of the evidence, that such omission, misrepresentation, overvaluation or understatement was not intentional and was not made for the purpose of misleading the commissioner or the court, or of concealing or disguising assets, transfer of assets, or the value of those assets.
  6. The commissioner shall be entitled, upon motion with notice to the transferee or assignee of a taxpayer's assets, to have the court set aside and order restored to the taxpayer for the benefit of the commissioner all transfers and assignments of the taxpayer's assets occurring subsequent to or within one (1) year preceding the filing of suit by the taxpayer challenging an assessment by the commissioner, except those transfers or assignments that were bona fide, arm's length sales or pledges of noninventory assets of a value of less than one thousand dollars ($1,000), or sales from inventory occurring in the ordinary course of the taxpayer's trade or business, and for which the taxpayer received full and adequate consideration in money or money's worth. The commissioner shall be entitled to discover any and all matters, not privileged, pursuant to the Rules of Civil Procedure. The court may order the restored assets sold and liquidated under the procedures established in part 14 of this chapter, and shall apply the net proceeds of the sale to the payment of all amounts assessed by the commissioner against the taxpayer, and shall return the balance of the proceeds, pro rata, to the person or persons from whom the assignment or transfer of such assets was set aside.
  7. To the extent of any amounts collected by or paid to the commissioner with respect to an assessment, or any portion of the assessment, challenged by suit by the taxpayer, whether such collection was pursuant to a jeopardy proceeding, by application of assets restored to the taxpayer pursuant to subsection (h), or otherwise, the suit shall proceed as a timely suit for refund of taxes paid, as if a timely claim for refund had been filed by the taxpayer and denied by the commissioner.
  8. Any notice of a proposed or final assessment issued by the department shall include notice that the taxpayer has the right to file suit in the appropriate chancery court of this state in accordance with this section to challenge the final assessment and collection of the tax within ninety (90) days from the date such assessment becomes final.

Acts 1986, ch. 749, § 5; 1987, ch. 91, § 1; 1998, ch. 637, § 1; 1998, ch. 641, § 5; 2014, ch. 854, § 9.

Amendments. The 2014 amendment, effective January 1, 2015, substituted “the final assessment” for “the assessment” wherever it appeared in (a), (b), (c), (d), (f) and (g); inserted “finally” between “shall” and  “assess” in (a)(1); substituted “after an assessment becomes final” for “following the mailing of a notice of assessment to the taxpayer” in (a)(1)(B); substituted “the assessment becomes final, with a copy of the notice of proposed assessment issued pursuant to § 67-1-1438 attached” for “of the mailing of the notice of assessment to the taxpayer by the commissioner, with a copy of the notice of assessment attached” in (b)(1); deleted (c)(3) which read: “(3) During the period of running of the ninety-day period for filing suit as provided in subdivision (b)(1), and before suit is filed, the taxpayer shall have the right to an informal conference with the commissioner to discuss the assessment and to present such matters as may be relevant to the assessment; provided, that written request for such conference is made within thirty (30) days from the date of the notice of assessment. If a timely request for a conference is made, the commissioner shall set a time and place for the conference within twenty (20) days from the date of the request, and shall give the taxpayer written notice of the conference. Within ten (10) days after the conference, the commissioner shall give the taxpayer written notification of the commissioner's decision. Upon the filing of a timely request for a conference, the ninety-day period for the filing of suit challenging a tax assessment and the ninety-day period for stay of collection activity as provided in subdivision (a)(1)(B) shall cease running until an informal conference decision is issued. No other provision of this section, nor any other action or inaction by the taxpayer or the commissioner shall be construed to extend or toll the running of the ninety-day period for filing suit, nor shall the taxpayer be prejudiced in any other manner by either seeking or failing to seek or pursue an informal conference. The informal conference provided in this subdivision (c)(3) shall not be considered to be an administrative remedy and shall not constitute a contested case subject to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. The commissioner shall not be prejudiced in any manner by failing to act within the time periods prescribed in this section, except that no interest shall accrue on any deficiency during any period in which the commissioner has not acted within the time limits prescribed in this section, until the earlier of such time as suit is filed by the taxpayer or the ninety-day period for filing suit has expired. At any time prior to the filing of suit by the taxpayer, the commissioner, in the commissioner's discretion, may hold informal conferences with the taxpayer without the requirement of timely written request for the conference.”; and rewrote (j) which read: “(j) Upon assessing a tax, the commissioner shall give prompt written notice of the assessment to the taxpayer, together with notice that the taxpayer has the right to file suit in the appropriate chancery court of this state in accordance with this section to challenge the assessment and collection of such tax within ninety (90) days from the date of such notice, and the right to have an informal conference with the commissioner upon written request made within thirty (30) days from the date of such notice.”

Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.

Law Reviews.

A Revolution in Tennessee Tax Procedure (S. Gale Graham), 22 Tenn. B.J. 13 (1986).

Cited: Angel v. Jackson, 724 S.W.2d 736, 1987 Tenn. LEXIS 822 (Tenn. 1987); Pan Am World Services, Inc. v. Jackson, 754 S.W.2d 53, 1988 Tenn. LEXIS 139 (Tenn. 1988); Nutritional Support Services, Ltd. v. Taylor, 803 S.W.2d 213, 1991 Tenn. LEXIS 48 (Tenn. 1991); GMC v. Taylor, 811 S.W.2d 897, 1991 Tenn. LEXIS 251 (Tenn. 1991); Bloomingdale's by Mail, Ltd. v. Huddleston, 848 S.W.2d 52, 1992 Tenn. LEXIS 703 (Tenn. 1992); Carl Clear Coal Corp. v. Huddleston, 850 S.W.2d 140, 1992 Tenn. App. LEXIS 1027 (Tenn. Ct. App. 1992); Comdata Network, Inc. v. State Dep't of Revenue, 852 S.W.2d 223, 1993 Tenn. LEXIS 112 (Tenn. 1993); Heath v. Creson, 949 S.W.2d 690, 1997 Tenn. App. LEXIS 16 (Tenn. Ct. App. 1997); Colemill Enters. v. Huddleston, 967 S.W.2d 753, 1998 Tenn. LEXIS 192 (Tenn. 1998); Gehl Corp. v. Johnson, 991 S.W.2d 246, 1998 Tenn. App. LEXIS 820 (Tenn. Ct. App. 1998); J.C. Penney Nat. Bank v. Johnson, 19 S.W.3d 831, 1999 Tenn. App. LEXIS 826 (Tenn. Ct. App. 1999); Saturn Corp. v. Johnson, 236 S.W.3d 156, 2007 Tenn. App. LEXIS 66 (Tenn. Ct. App. Jan. 31, 2007); Hilloak Realty Co. v. Chumley, 233 S.W.3d 816, 2007 Tenn. App. LEXIS 170 (Tenn. Ct. App. Mar. 29, 2007); Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009); Scholastic Book Clubs, Inc. v. Farr, 373 S.W.3d 558, 2012 Tenn. App. LEXIS 57 (Tenn. Ct. App. Jan. 27, 2012).

NOTES TO DECISIONS

1. Legislative Intent.

T.C.A. § 67-1-1801 was not intended to reopen claims for taxes not paid under protest in earlier years. Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).

Supreme court presumes that the requirement of payment under protest in T.C.A. § 67-1-901(a), applicable to municipalities through T.C.A. § 67-1-911, has meaning and purpose and should be given full effect; supreme court is not free to add the language § 67-1-901(b) to expand the scope of T.C.A. §§ 67-1-1801 et seq., restrict the scope of T.C.A. §§ 67-1-901 et seq., or substitute its judgment for that of the Legislature. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

2. Applicability.

The provisions of T.C.A. § 67-1-1801 dispensing with the requirement of payment under protest do not apply to taxes paid prior to January 1, 1986. Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).

The exclusive remedy afforded by title 67, ch. 1, part 18 is adequate for purposes of determining any liability taxpayer, a Maine corporation engaged in retail sales, would have for Tennessee sales taxes. In a proceeding brought pursuant to such provisions, taxpayer could raise its constitutional objections to the application to it of T.C.A. § 67-6-102(6)(J) (now § 67-6-102(23)(J)). L.L. Bean, Inc. v. Bracey, 817 S.W.2d 292, 1991 Tenn. LEXIS 346 (Tenn. 1991).

T.C.A. § 67-1-1801(b) specifically limits the time to file suit challenging a tax assessment action; therefore, T.C.A. § 28-1-105, the general savings statute, does not apply in an action against the state. In addition, a general statute does not apply to the state unless the state is specifically named in the statute. Construing the language of the savings statute strictly, it cannot be applied against the state. AMC Mortg. Co. v. Tennessee Dep't of Revenue (In re AMC Mortg. Co.), 213 F.3d 917, 2000 FED App. 175P, 2000 U.S. App. LEXIS 11751 (6th Cir. Tenn. 2000).

Because the Taxpayer Remedies Statute, T.C.A. § 67-1-1801 et seq., required strict construction and did not contemplate the maintenance of a class action, a grant of class certification in taxpayers'  suit for a refund of a Drug Tax that was declared unconstitutional was improper. Wicker v. Comm'r, Tenn. Dep't of  Revenue, 342 S.W.3d 35, 2010 Tenn. App. LEXIS 397 (Tenn. Ct. App. June 23, 2010), appeal denied, Wicker v. Comm'r, Tenn. Dep't of Revenue, — S.W.3d —, 2010 Tenn. LEXIS 1047 (Tenn. Nov. 15, 2010).

Trial court did not err in granting an attorney fee award because the statute applied to taxpayers'  action seeking a refund of inspection fees a city erroneously calculated, and thus, T.C.A. § 67-1-1801 et seq. governed. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).

Taxpayers'  recovery was not limited by T.C.A. § 67-1-903 because T.C.A. § 67-1-1807 applied, and thus, T.C.A. § 67-1-1801 et seq., governed the taxpayers'  action seeking a refund of inspection fees a city erroneously calculated. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).

T.C.A. §§ 67-1-901 et seq., rather than T.C.A. §§ 67-1-1801 et seq., applies to a suit to recover municipal taxes; T.C.A. §§ 67-1-901 et seq. governs actions to recover disputed municipal taxes, and under T.C.A. § 67-1-901(a), a taxpayer must pay under protest disputed municipal taxes before filing suit for a refund. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

3. Time Limitations.

Taxpayer's due process rights were not violated by the dismissal of his suit seeking a refund for an unauthorized substances tax that had been declared unconstitutional as the suit was time-barred under T.C.A. § 67-1-1802, and both pre-deprivation and post-deprivation processes were available to challenge the tax assessment in that the tax could have been challenged under T.C.A. § 67-1-1801(a)(1), or by filing a timely declaratory judgment action challenging the facial constitutionality of former T.C.A. § 67-4-2801 et. seq. Swafford v. Comm'r of Revenue, — S.W.3d —, 2012 Tenn. App. LEXIS 163 (Tenn. Ct. App. Mar. 13, 2012).

Trial court properly dismissed a taxpayer's suit against the State challenging an assessment for business taxes owed because, the taxpayer did not timely file an assessment challenge within 90 days from the date of mailing of the assessment as required by T.C.A. § 67-1-1801(b)(1). Higdon v. State, 404 S.W.3d 478, 2013 Tenn. App. LEXIS 17 (Tenn. Ct. App. Jan. 11, 2013), appeal denied, — S.W.3d —, 2013 Tenn. LEXIS 450 (Tenn. May 8, 2013).

Collateral References.

What constitutes plain, speedy, and efficient state remedy under Tax Injunction Act (28 U.S.C. § 1341), prohibiting federal district courts from interfering with assessment, levy, or collection of state business taxes. 31 A.L.R. Fed. 2d 237.

Taxation 371

67-1-1802. Refunds — Report of debts.

      1. The commissioner of revenue, with the approval of the attorney general and reporter, except as provided in subdivision (a)(4), is empowered and directed to refund to taxpayers all taxes collected or administered by the commissioner that are, on the date of payment, paid in error or paid against any statute, rule, regulation or clause of the constitution of this state or of the United States. Such refunds shall include, but not be limited to, credit carryovers generated after an audit review of returns, reports, or other documents filed by the taxpayer, including amendments to the returns, reports, or other documents. Such refunds do not, however, include credits generated by mechanical processing or mechanical mathematical verification processes. The commissioner is also authorized to automatically issue a credit or refund, without the necessity of the approval processes set out in this subsection (a), for the portion of estimated taxes paid in excess of the actual liability established by the initial and subsequently filed return for the tax period. The authority granted in this subdivision (a)(1)(A) extends only to taxes for which a claim is filed, with the commissioner under penalties of perjury, within three (3) years from December 31 of the year in which the payment was made. The claim must set forth each ground upon which a refund is claimed, the amount of such refund, the tax period, the tax type, and information reasonably sufficient to apprise the commissioner of the general basis for the claim. A refund requested on a franchise and excise tax return, or amended return, properly filed with the commissioner is deemed to comply with those requirements. The entire disputed amount of tax, penalty and interest must be paid before any claim for refund can be filed. Sales or use taxes which were collected from or passed on to customers by the taxpayer shall not be refunded, unless the taxpayer has refunded or credited the sales or use tax to its customers.
        1. Any taxpayer requesting a refund in the amount of two hundred dollars ($200) or more that is not eligible for automatic credit or refund pursuant to subdivision (a)(1)(A) shall complete and submit a written report of debts owed to a claimant as defined in § 67-1-1808 on a form prescribed by the commissioner to accompany the claim for refund. If a debt is reported and if the claim for refund is approved, any or all of the refund amount shall be subject to offset to recover the amount of such debt, subject to the requirements of § 67-1-1808. Any person who, with intent to deceive, provides false information on such report commits the Class A misdemeanor offense of perjury pursuant to § 39-16-702. Such report shall state whether or not such person owes or does not owe any of the following debts as of the date of the claim:
          1. State tax liabilities;
          2. Child support;
          3. Overpayment of unemployment compensation benefits;
          4. Overpayment of medical assistance benefits owed the bureau of TennCare;
          5. Student loan or other obligation due to the Tennessee student assistance corporation;
          6. Fees, costs or restitution owed to a clerk who serves a court of criminal jurisdiction;
          7. Costs of incarceration;
          8. Judgments or liens in favor of a state agency, department, commission, or bureau;
          9. All other debts owed to any other claimant.
        2. Each of the debts in subdivision (a)(1)(B)(i) that are listed in the report shall be preceded by the words “Yes” and “No” and a taxpayer shall make a cross mark (X) or other similar mark opposite the debt the taxpayer owes or does not owe. If a taxpayer marks “Yes” for any such debt, the taxpayer shall attach documentation identifying the claimant to whom the debt is owed and the outstanding balance of the debt. The report shall clearly state in bold face type that a person who, with intent to deceive, provides false information on the report is guilty of the Class A misdemeanor offense of perjury. The report required by this subdivision (a)(1)(B) shall be made on a paper writing in substantially the following form:

        REPORT OF DEBTS Pursuant to Tennessee Code Annotated §§ 67-1-1802 and 67-1-1808, if you are seeking a refund of $200.00 or more you are required to complete and attach this report to your claim for refund. Make a “X” in the “Yes” box if you owe any of the debts listed below to any state agency, department, bureau, commission or other state authority (“claimant”). For each debt that you report, attach documentation identifying the claimant to whom you owe the debt and the outstanding balance of such debt as of the date you submit the refund claim. If your refund claim is approved, any or all of your refund payment will be subject to offset and reduced by the amount of any debt owed. If you do not owe any of the debts listed below to a claimant, make a “X” in the “No” box. After completion, please read the paragraphs below and provide a signature and date on the lines provided. Any person who, with intent to deceive, provides false information on this report is guilty of the Class A misdemeanor offense of perjury. Yes   No   State tax liabilities; Yes   No   Child support; Yes   No   Overpayment of unemployment         compensation benefits; Yes   No   Overpayment of medical assistance benefits         owed the bureau of TennCare; Yes   No   Student loan or other obligation due to the         Tennessee student assistance corporation; Yes   No   Fees, costs or restitution owed to a clerk         who serves a court of criminal jurisdiction; Yes   No   Costs of incarceration; Yes   No   Judgments or liens in favor of a state agency,         department, commission, or bureau; Yes   No   Any other debt owed to any other claimant. I certify that the foregoing report is true and correct to the best of my knowledge and understanding. I further acknowledge that providing false information on this report constitutes the offense of perjury under Tennessee Code Annotated § 39-16-702 and is punishable under the laws of the state of Tennessee. Signature of Taxpayer, Officer or Authorized Representative: Date:

        Click to view REPORT OF DEBTS

    1. The commissioner is authorized to make refunds without a claim being filed if the commissioner is in possession of proper proof and facts that a refund is due within three (3) years from December 31 of the year in which the payment was made.
    2. The commissioner is authorized to refund excise taxes due a taxpayer because of a decrease in net income divulged by an examination by the internal revenue service; provided, that  a claim is filed with the commissioner, supported by proper proof, within three (3) years from the date of such redetermination of net income by the internal revenue service.
    3. The commissioner is authorized to refund estate or inheritance taxes due a taxpayer because of a decrease in federal estate tax resulting from an examination by the internal revenue service; provided, that a claim is filed with the commissioner, supported by proper proof, within two (2) years from the date of such redetermination of the estate by the internal revenue service.
    4. The commissioner is authorized to refund, without the necessity of a claim having been filed, inheritance taxes due a taxpayer because of a decrease in inheritance tax resulting from an examination by the commissioner.
      1. The commissioner is authorized and empowered, in the commissioner's discretion, to designate subordinate officials in the department to approve, on the commissioner's behalf, claims for refunds in amounts of five thousand dollars ($5,000) or less. Only one (1) such subordinate official and one (1) alternate subordinate official shall be designated to approve any one (1) class of claims. The commissioner shall notify, in writing, the commissioner of finance and administration and the attorney general and reporter as to the names of any such subordinate officials so designated.
      2. The commissioner is also authorized and empowered, in the commissioner's discretion, to approve claims for refunds in amounts of more than five thousand dollars ($5,000) but not more than fifteen thousand dollars ($15,000).  The commissioner is authorized and empowered to designate, in the commissioner's discretion, subordinate officials in the department to initially review claims for refund. Such subordinate official shall make a finding in regard to each claim recommending either approval or disapproval.  This finding shall be reviewed by the legal office of the department of revenue, which shall make its own recommendation approving or disapproving the claim.  Both these findings shall be submitted to the commissioner, or the commissioner's designated subordinate official, who shall make a final determination, either approving or disapproving the claim in the commissioner's or the commissioner's designated subordinate official's discretion, based on all information available to the commissioner or the commissioner's designated subordinate official. The findings of the designated subordinate official and legal office shall be advisory only and shall not be construed to limit the discretion of the commissioner in making refunds under this subsection (a). The commissioner is authorized and empowered to designate subordinate officials in the department to approve, on the commissioner's behalf, claims for refund under this subdivision (a)(6)(B).
      3. The commissioner is also authorized and empowered to approve claims for refunds in amounts of more than fifteen thousand dollars ($15,000); provided, that the attorney general and reporter may require that the refund of such claims or any class of such claims be subject to the attorney general and reporter's prior review and approval.
    5. A refund which is authorized solely by a final court adjudication shall not be made to any person who is not either a party to such action or a party to another similar action.
    6. In any case in which the statute of limitations on the assessment of tax is extended by agreement in writing pursuant to § 67-1-1501(b)(5), the periods specified in this subsection (a) which limit the ability of the commissioner to refund taxes may also be extended for an equivalent period of time by agreement in writing entered into by the commissioner or the commissioner's delegate and the taxpayer.
    1. All claims for refund filed pursuant to this section shall be finally determined within six (6) months following receipt of the claim. If the claim for refund is denied, the commissioner shall promptly notify the claimant of the denial and the claimant's right to file a suit for refund in the appropriate chancery court of this state within one (1) year from the date that the claim for refund was filed with the commissioner.
    2. If a claim is not determined within the six-month period following receipt by the commissioner of such claim, the claim shall be deemed to be denied for the purpose of filing suit in chancery court.
    1. A suit challenging the denial or deemed denial of a claim for refund shall be filed in the appropriate chancery court of this state within one (1) year from the date that the claim for refund was filed with the commissioner; provided, that a taxpayer and the commissioner or the commissioner's delegate may enter into an agreement in writing within one (1) year from the date the taxpayer filed a claim for refund in which the taxpayer and the commissioner or the commissioner's delegate consent to suit being filed in chancery court beyond the one-year period provided in this subdivision (c)(1) and that, in the case of an agreement, the taxpayer may file suit in the appropriate chancery court challenging the denial or deemed denial of a claim for refund within the agreed upon period.
    2. In a suit challenging the denial or deemed denial of a claim for refund, the chancery court shall conduct a de novo trial of the suit; provided, that the court shall have no jurisdiction in cases in which the issue is the existence, continued existence, or amount of a debt set off against a tax refund, or in which the issue is the validity of an assessment made pursuant to § 67-1-1808(i). The remedies established in § 67-1-1808 are a taxpayer's sole and exclusive remedies to challenge the existence, continued existence, or amount of a debt set off against a tax refund, or to challenge the validity of an assessment made pursuant to § 67-1-1808(i).
    3. The commissioner, by written notice promptly delivered to the taxpayer, may waive the requirement that the taxpayer file a claim for refund, in which case the taxpayer may file suit in the appropriate chancery court of this state for a refund within one (1) year following the date of such waiver by the commissioner, and such suit shall proceed in all respects, including for the purpose of determining the date from which interest thereon should be calculated, as if proper and timely claim for refund had been filed by the taxpayer, and either denied or not acted upon by the commissioner within the period specified herein.
  1. This section is specifically made applicable to a refund arising from the application of § 67-6-507(e)(6). If a certified service provider, as defined in § 67-6-102, has assumed sales and use tax return filing responsibilities of the seller, the provider shall have the right to claim, on behalf of the seller, any bad debt allowance or refund available to the seller under § 67-6-507.

Acts 1986, ch. 749, § 6; 1988, ch. 526, §§ 2, 3; 1989, ch. 127, § 1; 1989, ch. 236, § 6; 1991, ch. 80, § 2; 1992, ch. 626, §§ 2, 3; 1998, ch. 595, § 1; 1999, ch. 406, § 8; 2003, ch. 357, § 2; 2004, ch. 721, § 1; 2004, ch. 959, §§ 51, 68; 2005, ch. 311, §§ 1, 2; 2005, ch. 499, § 27; 2007, ch. 602, §§ 31-33, 51, 56; 2008, ch. 1106, § 34; 2010, ch. 1113, §§ 5, 6; 2011, ch. 343, § 1.

Code Commission Notes.

Former subsection (e), concerning procedures for purchasers and sellers regarding refund requests for sales tax collected by the taxpayer from customers on Internet access charges,  was deleted as obsolete by authority of the code commission in 2006.

Compiler's Notes. Acts 1996, ch. 739, § 3 provided that, notwithstanding the provisions of this section, sales or use taxes paid prior to April 12, 1996, on purchases or sales to a contractor whose principal business is the improvement of real property shall not be refunded when based upon the industrial machinery exemption provided by § 67-6-206, the energy fuels, electricity and water reduced rates or exemption provided by § 67-6-206 or the industrial materials exemption provided in § 67-6-102(23)(E) unless a properly documented refund claim is filed within ninety (90) days of April 12, 1996.

Acts 2010, ch. 1113, § 8 provided that any claimant may promulgate rules to effectuate the provisions of the act relating to internal procedures for reporting debts and conducting administrative hearings. The department of revenue may promulgate such other rules to carry out the remaining provisions of the act.

Acts 2010, ch. 1113, § 9 provided that the act, which added subdivision (a)(1)(B) and amended subdivision (c)(1), shall apply to any claim for refund filed with the department of revenue on or after July 1, 2009, that has not been finally determined.

Cross-References. Penalty for Class A misdemeanor, § 40-35-111.

Attorney General Opinions. State statutes and case law make plain that costs associated with researching, applying for, and distributing a tax refund may not be recovered from consumers, OAG 04-169 (11/29/04).

Businesses in Tennessee are liable for the burden of researching, requesting, and distributing tax refunds without the possibility of recovering costs incurred to the extent that refunds to consumers may not be reduced in order to recover such costs, OAG 04-169 (11/29/04).

Constitutionality, application and construction of provisions of proposed SB 603 [HB644/SB603 enacted as 2015 Acts ch. 514]. OAG 15-37, 2015 Tenn. AG LEXIS 38  (4/22/15).

Cited: American Tel. & Tel. Co. v. Cardwell, 798 S.W.2d 761, 1990 Tenn. LEXIS 408 (Tenn. 1990); Southern Ry. Co. v. Taylor, 812 S.W.2d 577, 1991 Tenn. LEXIS 250 (Tenn. 1991); Lowe's Companies, Inc. v. Cardwell, 813 S.W.2d 428, 1991 Tenn. LEXIS 294 (Tenn. 1991); Sherwin-Williams Co. v. Johnson, 989 S.W.2d 710, 1998 Tenn. App. LEXIS 701 (Tenn. App. 1998); Wachovia Bank of N.Carolina, N.A. v. Johnson, 26 S.W.3d 621, 2000 Tenn. App. LEXIS 6 (Tenn. Ct. App. 2000); Suntrust Bank v. Johnson, 46 S.W.3d 216, 2000 Tenn. App. LEXIS 807 (Tenn. Ct. App. 2000); Hollingsworth, Inc. v. Johnson, 138 S.W.3d 863, 2003 Tenn. App. LEXIS 799 (Tenn. Ct. App. 2003)Hilloak Realty Co. v. Chumley, 233 S.W.3d 816, 2007 Tenn. App. LEXIS 170 (Tenn. Ct. App. Mar. 29, 2007); Wicker v. Comm'r, Tenn. Dep't of  Revenue, 342 S.W.3d 35, 2010 Tenn. App. LEXIS 397 (Tenn. Ct. App. June 23, 2010); Higdon v. State, 404 S.W.3d 478, 2013 Tenn. App. LEXIS 17 (Tenn. Ct. App. Jan. 11, 2013).

NOTES TO DECISIONS

1. Constitutionality.

The provision of T.C.A. § 67-1-1802 allowing only a taxpayer (the retailer or vendor) to claim a refund and not the consumers who bear the actual burden of the tax did not unconstitutionally deprive consumers of a remedy for the unlawful exaction of the sales tax on warranty contracts. It is the taxpayer who must be afforded the opportunity to challenge the validity or legality of the tax; the consumer's remedy is against the taxpayer, i.e., the vendor of the warranty contracts, to recover the amounts paid. Reimann v. Huddleston, 883 S.W.2d 135, 1993 Tenn. App. LEXIS 756 (Tenn. Ct. App. 1993), cert. denied, 513 U.S. 825, 115 S. Ct. 91, 130 L. Ed. 2d 42, 1994 U.S. LEXIS 5647 (1994).

2. Legislative Intent.

T.C.A. § 67-1-1802 was not intended to reopen claims for taxes not paid under protest in earlier years. Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).

3. Applicability.

The provisions of T.C.A. § 67-1-1802 dispensing with the requirement of payment under protest do not apply to taxes paid prior to January 1, 1986. Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).

4. Taxpayer Suit.

The commissioner's authority to issue tax refunds is limited in cases where the refund claim results from an adverse decision in a lawsuit brought by other taxpayers. Northern Telecom, Inc. v. Taylor, 781 S.W.2d 837, 1989 Tenn. LEXIS 526 (Tenn. 1989), cert. denied, 496 U.S. 905, 110 S. Ct. 2587, 110 L. Ed. 2d 268, 1990 U.S. LEXIS 2907 (1990), cert. denied, Northern Telecom, Inc. v. Taylor, 496 U.S. 905, 110 S. Ct. 2587, 110 L. Ed. 2d 268, 1990 U.S. LEXIS 2907 (1990).

Taxpayers complied with the pre-suit requirements because the city's written notice to the taxpayers of its decision not to refund the overpayment waived the requirement for the taxpayers to file a claim for a refund before filing suit; the statute then permitted the taxpayers to file suit in chancery court, which they timely did. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).

5. Time Limitations.

Taxpayer's due process rights were not violated by the dismissal of his suit seeking a refund for an unauthorized substances tax that had been declared unconstitutional as the suit was time-barred under T.C.A. § 67-1-1802, and both pre-deprivation and post-deprivation processes were available to challenge the tax assessment in that the tax could have been challenged under T.C.A. § 67-1-1801(a)(1), or by filing a timely declaratory judgment action challenging the facial constitutionality of former T.C.A. § 67-4-2801 et. seq. Swafford v. Comm'r of Revenue, — S.W.3d —, 2012 Tenn. App. LEXIS 163 (Tenn. Ct. App. Mar. 13, 2012).

6. Proper Proof.

Trial court did not err in finding that proper proof was not supplied until March 14, 2014 because the data originally provided was not sufficient for the Commissioner of Revenue to conduct the review of the refund claim; the review process was uniquely within the purview of the Commissioner and his auditing staff, as the trial court was ill equipped to conduct such an audit and conclude that a refund was or was not due. Mobility II LLC v. Roberts, — S.W.3d —, 2016 Tenn. App. LEXIS 743 (Tenn. Ct. App. Sept. 30, 2016), appeal denied, AT&T Mobility II, LLC v. Roberts, — S.W.3d —, 2017 Tenn. LEXIS 121 (Tenn. Feb. 15, 2017).

Collateral References.

Recovery of sales taxes paid on bad debts. 38 A.L.R.6th 255.

67-1-1803. Jurisdiction — Certification of refunds — Attorneys' fees — Statute of limitation tolled — Appeals — Expedited proceedings.

  1. Subject matter jurisdiction shall be, and the venue of suits filed pursuant to this part shall lie, in the chancery court in either Davidson County or in the county in Tennessee of the taxpayer's domicile or in the county in which the taxpayer has the taxpayer's principal place of business in Tennessee.
  2. If it is determined that the taxes for which a claim for refund was made pursuant to § 67-1-1802, or as to which suit proceeded as a timely suit for refund pursuant to § 67-1-1801(i), were not due from the taxpayer to the commissioner of revenue for any reason going to the merits of the tax, then the court shall certify of record that the tax was wrongfully paid and ought to be refunded, together with interest on the tax calculated forty-five (45) days from the date of filing a claim for refund or date of waiver by the commissioner pursuant to § 67-1-1802(c)(2), or on the date of payment in the case of any tax collected after suit was filed under § 67-1-1801, in accordance with § 67-1-1801(d). Thereupon, the commissioner of finance and administration shall issue such commissioner's warrant for the refund, which shall be paid in preference to all other claims on the state treasury.
  3. For the purpose of suits brought under this part, the commissioner of revenue shall be considered a resident of each of the several counties of the state.
  4. The court shall award to the prevailing party reasonable attorneys' fees and expenses of litigation up to twenty percent (20%) of the amount finally assessed or denied, including interest after payment. For purposes of this subsection (d), attorneys' fees shall not exceed fees calculated on the basis of reasonable hourly rates multiplied by a reasonable number of hours expended in the case and shall not be calculated by application of any premium, enhancement, or contingency. For purposes of this subsection (d), the state shall be deemed the prevailing party where the taxpayer is found by a court to be the transferee of assets conveyed in violation of title 66, chapter 3, or the tax, penalty or interest at issue in the case arises from the same underlying activity with respect to which the taxpayer or one of its officers, owners or employees was found to have committed fraud.
  5. The filing of the suit by the taxpayer tolls all statutes of limitations as to other persons potentially liable to the taxpayer due to the occurrence from which the claim before the court arises until the final determination of the suit.
  6. Appeals of any decision of the chancery court of suits brought under this part shall be under the Tennessee Rules of Appellate Procedure.
  7. Hearings and determination of all proceedings brought under this part, shall be expedited to the extent feasible and proper.

Acts 1986, ch. 749, § 7; 1991, ch. 402, § 1; 1992, ch. 952, § 9; 1994, ch. 956, § 1; 2007, ch. 602, § 34; 2008, ch. 1106, § 60; 2009, ch. 530, § 102; 2014, ch. 854, § 10.

Amendments. The 2014 amendment, effective January 1, 2015, inserted “finally” between “amount” and “assessed” in the first sentence in (d).

Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015.

Cited: Angel v. Jackson, 724 S.W.2d 736, 1987 Tenn. LEXIS 822 (Tenn. 1987); South Cent. Bell Tel. Co. v. Celauro, 754 S.W.2d 605, 1988 Tenn. LEXIS 141 (Tenn. 1988); Warner-Tamble Co. v. Taylor, 778 S.W.2d 440, 1989 Tenn. LEXIS 456 (Tenn. 1989); Graphic Sys. v. Taylor, 791 S.W.2d 27, 1990 Tenn. LEXIS 214 (Tenn. 1990); James v. Huddleston, 795 S.W.2d 661, 1990 Tenn. LEXIS 308 (Tenn. 1990); Hearthstone, Inc. v. Moyers, 809 S.W.2d 888, 1991 Tenn. LEXIS 136 (Tenn. 1991); GMC v. Taylor, 811 S.W.2d 897, 1991 Tenn. LEXIS 251 (Tenn. 1991); Southern Ry. Co. v. Taylor, 812 S.W.2d 577, 1991 Tenn. LEXIS 250 (Tenn. 1991); Lowe's Companies, Inc. v. Cardwell, 813 S.W.2d 428, 1991 Tenn. LEXIS 294 (Tenn. 1991); SC & T Properties v. Huddleston, 823 S.W.2d 541, 1992 Tenn. LEXIS 25 (Tenn. 1992); Covington Pike Toyota, Inc. v. Cardwell, 829 S.W.2d 132, 1992 Tenn. LEXIS 221 (Tenn. 1992); Eusco, Inc. v. Huddleston, 835 S.W.2d 576, 1992 Tenn. LEXIS 431 (Tenn. 1992); AFG Indus., Inc. v. Cardwell, 835 S.W.2d 583, 1992 Tenn. LEXIS 429 (Tenn. 1992); Nashville Golf & Athletic Club v. Huddleston, 837 S.W.2d 49, 1992 Tenn. LEXIS 487 (Tenn. 1992); Federated Stores Realty, Inc. v. Huddleston, 852 S.W.2d 206, 1992 Tenn. LEXIS 359 (Tenn. 1992); Mast Adv. & Publishing, Inc. v. Moyers, 865 S.W.2d 900, 1993 Tenn. LEXIS 406 (Tenn. 1993); Hutton v. Johnson, 956 S.W.2d 484, 1997 Tenn. LEXIS 569 (Tenn. 1997); Colemill Enters. v. Huddleston, 967 S.W.2d 753, 1998 Tenn. LEXIS 192 (Tenn. 1998); Gehl Corp. v. Johnson, 991 S.W.2d 246, 1998 Tenn. App. LEXIS 820 (Tenn. Ct. App. 1998); J.C. Penney Nat. Bank v. Johnson, 19 S.W.3d 831, 1999 Tenn. App. LEXIS 826 (Tenn. Ct. App. 1999); Nashville Clubhouse Inn v. Johnson, 27 S.W.3d 542, 2000 Tenn. App. LEXIS 163 (Tenn. Ct. App. 2000); Suntrust Bank v. Johnson, 46 S.W.3d 216, 2000 Tenn. App. LEXIS 807 (Tenn. Ct. App. 2000); Hawkins v. Tenn. Dep't of Corr., 127 S.W.3d 749, 2002 Tenn. App. LEXIS 536 (Tenn. Ct. App. 2002); Hardcastle v. Harris, 170 S.W.3d 67, 2004 Tenn. App. LEXIS 827 (Tenn. Ct. App. 2004); Corp. v. Chumley, 190 S.W.3d 652, 2005 Tenn. App. LEXIS 664 (Tenn. Ct. App. 2005); Bellsouth Adver. & Publ. Corp. v. Chumley, 308 S.W.3d 350, 2009 Tenn. App. LEXIS 576 (Tenn. Ct. App. Aug. 26, 2009); ADT Sec. Servs. v. Johnson, 329 S.W.3d 769, 2009 Tenn. App. LEXIS 775 (Tenn. Ct. App. Nov. 19, 2009); Cao Holdings, Inc. v. Trost, 333 S.W.3d 73, 2010 Tenn. LEXIS 1149 (Tenn. Dec. 15, 2010); Wicker v. Comm'r, Tenn. Dep't of  Revenue, 342 S.W.3d 35, 2010 Tenn. App. LEXIS 397 (Tenn. Ct. App. June 23, 2010); Blue Bell Creameries, LP v. Roberts, 333 S.W.3d 59, 2011 Tenn. LEXIS 6 (Tenn. Jan. 24, 2011); Scholastic Book Clubs, Inc. v. Farr, 373 S.W.3d 558, 2012 Tenn. App. LEXIS 57 (Tenn. Ct. App. Jan. 27, 2012); Boote v. Roberts, — S.W.3d —, 2013 Tenn. App. LEXIS 222 (Tenn. Ct. App. Mar. 28, 2013).

NOTES TO DECISIONS

1. Attorneys' Fees.

The appropriate factors to be used in determining a reasonable attorney's fee in Tennessee are set forth in Connors v. Connors, 594 S.W.2d 672, 1980 Tenn. LEXIS 402 (Tenn. 1980) and DR 2-106 of the Code of Professional Responsibility (now see the Rules of Professional Conduct). Nutritional Support Services, Ltd. v. Taylor, 803 S.W.2d 213, 1991 Tenn. LEXIS 48 (Tenn. 1991).

The trial court incorrectly denied prevailing tax litigant, department of revenue's motion for attorneys' fees and costs of litigation. Carson Creek Vacation Resorts v. Department of Revenue, 865 S.W.2d 1, 1993 Tenn. LEXIS 370 (Tenn. 1993).

Trial court did not err in granting an attorney fee award because the statute applied to taxpayers'  action seeking a refund of inspection fees a city erroneously calculated, and thus, T.C.A. § 67-1-1801 et seq. governed. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).

2. —Limitations.

To the extent that T.C.A. § 67-1-1803(d) did not conflict with 42 U.S.C. § 1988, the provisions of T.C.A. § 67-1-1803 were applicable, but the court could not rely on the Tennessee statute to limit the amount of attorneys' fees that would otherwise be awarded under the federal statute. Bloomingdale's by Mail, Ltd. v. Huddleston, 848 S.W.2d 52, 1992 Tenn. LEXIS 703 (Tenn. 1992), rehearing denied, Bloomingdale's by Mail v. Huddleston, — S.W.2d —, 1993 Tenn. LEXIS 52 (Tenn. Feb. 22, 1993), cert. denied, Huddleston v. Bloomingdale's by Mail, 509 U.S. 907, 113 S. Ct. 3002, 125 L. Ed. 2d 694, 1993 U.S. LEXIS 4298 (1993), cert. denied, Huddleston v. Bloomingdale's by Mail, 509 U.S. 907, 113 S. Ct. 3002, 125 L. Ed. 2d 694, 1993 U.S. LEXIS 4298 (1993).

To determine the “reasonableness” of attorney's fees under T.C.A. § 67-1-1803(d), courts are directed to follow the guidelines listed in Tenn. R. Sup. Ct. 8, Code Prof. Resp., D.R. 2-106 (now see the Rules of Professional Conduct). Carson Creek Vacation Resorts v. Department of Revenue, 865 S.W.2d 1, 1993 Tenn. LEXIS 370 (Tenn. 1993).

T.C.A. § 67-5-2103(h) makes clear that T.C.A. § 67-1-1803(d) does not apply in property tax assessment challenges, and therefore § 67-1-1803(d) could not serve as a basis for upholding the trial court's assessment of attorney's fees in this case; as the General Assembly has not enacted a statute expressly authorizing the assessment of attorney's fees against a county in a property tax assessment challenge, the trial court had no authority to assess attorney fees against the county. Zumstein v. Roane Cty. Executive/Mayor, — S.W.3d —, 2017 Tenn. App. LEXIS 573 (Tenn. Ct. App. Aug. 21, 2017).

3. Evidence.

Commissioner of revenue failed to show that the trial court made $50,000 fee award upon inadequate proof by the taxpayer, or that he was denied the opportunity to offer proof in opposition to the fee sought. Nutritional Support Services, Ltd. v. Taylor, 803 S.W.2d 213, 1991 Tenn. LEXIS 48 (Tenn. 1991).

4. Interest After Payment.

Since corporation's capital gains from divestitures were “nonbusiness earnings” under former § 67-4-804(a)(5), and since the parties stipulated that the capital gains could not be “allocated” to Tennessee under former § 67-4-810 if found to be “nonbusiness earnings,” corporation was entitled to a refund of corporate excise taxes plus statutory interest. Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 1993 Tenn. LEXIS 160 (Tenn. 1993).

5. Miscellaneous.

Where Tennessee Department of Revenue (TDOR) levied upon account of the reorganized debtor but district court had determined that the levy was untimely, Chapter 11 trustee's request for damages or sanctions against state taxing authority was denied because no damages or sanctions were warranted under the facts and circumstances of this case and the question of damages for untimely levy was within the sole and exclusive jurisdiction of the Tennessee courts. In re Faye Foods, Inc., — B.R. —, 2017 Bankr. LEXIS 899 (Bankr. W.D. Tenn. Mar. 29, 2017).

67-1-1804. Exclusivity of procedures.

The procedure established by this part is the sole and exclusive jurisdiction for determining liability for all taxes collected or administered by the commissioner of revenue, except that the state board of equalization shall have jurisdiction concurrent with the chancery court in inheritance tax cases in which only issues of valuation are raised, as provided by § 67-8-411, and the board designated in § 67-8-116 shall have jurisdiction concurrent with the chancery court in gift tax cases in which only issues of valuation are raised, as provided by § 67-8-116.

Acts 1986, ch. 749, § 8.

Cited: Bloomingdale's by Mail, Ltd. v. Huddleston, 848 S.W.2d 52, 1992 Tenn. LEXIS 703 (Tenn. 1992); Heath v. Creson, 949 S.W.2d 690, 1997 Tenn. App. LEXIS 16 (Tenn. Ct. App. 1997); Colonial Pipeline Co. v. Morgan, 263 S.W.3d 827, 2008 Tenn. LEXIS 589 (Tenn. Sept. 9, 2008); Wicker v. Comm'r, Tenn. Dep't of  Revenue, 342 S.W.3d 35, 2010 Tenn. App. LEXIS 397 (Tenn. Ct. App. June 23, 2010); Swafford v. Comm'r of Revenue, — S.W.3d —, 2012 Tenn. App. LEXIS 163 (Tenn. Ct. App. Mar. 13, 2012).

NOTES TO DECISIONS

1. Jurisdiction.

In addition to case law, the exclusivity provision of T.C.A. § 67-1-1804 establishes an independent basis for holding that the chancery court should not have jurisdiction to issue a declaratory judgment pursuant to T.C.A. § 29-14-102 in an action involving state revenue. L.L. Bean, Inc. v. Bracey, 817 S.W.2d 292, 1991 Tenn. LEXIS 346 (Tenn. 1991).

With respect to judicial determinations that have the effect, directly or indirectly, of determining liability for taxes that are collected by the Department of Revenue, T.C.A. § 67-1-1804 overrides the jurisdiction that a chancery court would otherwise have under T.C.A. § 16-11-103. L.L. Bean, Inc. v. Bracey, 817 S.W.2d 292, 1991 Tenn. LEXIS 346 (Tenn. 1991).

Jurisdiction under 42 U.S.C. § 1983 is not recognized in state courts over a matter that would not be cognizable in federal court on the basis of 42 U.S.C. § 1983. To do otherwise would undermine the exclusive authority provided in T.C.A. § 67-1-1804 for determining liability with respect to taxes collected or administered by the department of revenue. L.L. Bean, Inc. v. Bracey, 817 S.W.2d 292, 1991 Tenn. LEXIS 346 (Tenn. 1991).

Whatever jurisdiction the Davidson County chancery court may have to issue a declaratory judgment regarding the constitutionality of a statute pursuant to former T.C.A. § 4-5-224 (now § 4-5-225), that authority should not be exercised regarding a statute dealing with state tax revenue if such exercise of jurisdiction would be in conflict with, and undermine, the exclusive jurisdiction for determining liability for taxes that is bestowed by T.C.A. § 67-1-1804. L.L. Bean, Inc. v. Bracey, 817 S.W.2d 292, 1991 Tenn. LEXIS 346 (Tenn. 1991).

Where Tennessee Department of Revenue (TDOR) levied upon account of the reorganized debtor but district court had determined that the levy was untimely, Chapter 11 trustee's request for damages or sanctions against state taxing authority was denied because no damages or sanctions were warranted under the facts and circumstances of this case and the question of damages for untimely levy was within the sole and exclusive jurisdiction of the Tennessee courts. In re Faye Foods, Inc., — B.R. —, 2017 Bankr. LEXIS 899 (Bankr. W.D. Tenn. Mar. 29, 2017).

2. Time Limitations.

Trial court properly dismissed a taxpayer's suit against the State challenging an assessment for business taxes owed because, the taxpayer did not timely file an assessment challenge within 90 days from the date of mailing of the assessment as required by T.C.A. § 67-1-1801(b)(1). Higdon v. State, 404 S.W.3d 478, 2013 Tenn. App. LEXIS 17 (Tenn. Ct. App. Jan. 11, 2013), appeal denied, — S.W.3d —, 2013 Tenn. LEXIS 450 (Tenn. May 8, 2013).

3. Refund.

Statute does not vest sole and exclusive jurisdiction over refund claims that have been deemed denied due to the passage of time because the statute is not internally inconsistent and does not operate to divest the Commissioner of Revenue, once suit has been filed, of the authority to continue to review a refund claim. Mobility II LLC v. Roberts, — S.W.3d —, 2016 Tenn. App. LEXIS 743 (Tenn. Ct. App. Sept. 30, 2016), appeal denied, AT&T Mobility II, LLC v. Roberts, — S.W.3d —, 2017 Tenn. LEXIS 121 (Tenn. Feb. 15, 2017).

67-1-1805. [Obsolete.]

Code Commission Notes.

Former § 67-1-1805 (Acts 1986, ch. 749, § 9), concerning transfer of pending actions to chancery court, was removed by the Code Commission in 1998 as obsolete.

67-1-1806. Rules and regulations.

The commissioner of revenue is authorized to promulgate rules and regulations and to prescribe forms to implement this part.

Acts 1986, ch. 749, § 10.

67-1-1807. Applicable laws — Conditions precedent for recovery — Conflicting laws.

  1. All taxes paid on or after January 1, 1986, shall be governed by the laws regarding refunds and suits for the recovery of taxes as set out in this part.
    1. It shall not be a condition precedent for suit for recovery of taxes paid on or after January 1, 1986, that the taxes be paid under protest, involuntarily, or under duress.
    2. No suit for the recovery of any tax paid prior to January 1, 1986, shall be allowed unless such tax was paid under protest.
  2. To the extent that this section conflicts with any other law, this section shall control and supersede all such laws.

Acts 1986, ch. 749, § 11; 1987, ch. 92, § 1.

Code Commission Notes.

Former subsections (a) and (c), concerning the laws governing all taxes paid prior to January 1, 1986 and all taxes paid on or after January 1, 1986, but prior to April 15, 1986, and for which suit for the recovery thereof was filed prior to April 15, 1986, were deleted as obsolete by the code commission in 2003.

Cross-References. Payment under protest, involuntarily, or under duress, § 67-1-901.

Cited: Wicker v. Comm'r, Tenn. Dep't of  Revenue, 342 S.W.3d 35, 2010 Tenn. App. LEXIS 397 (Tenn. Ct. App. June 23, 2010); Swafford v. Comm'r of Revenue, — S.W.3d —, 2012 Tenn. App. LEXIS 163 (Tenn. Ct. App. Mar. 13, 2012).

NOTES TO DECISIONS

1. Legislative Intent.

T.C.A. § 67-1-1807 was not intended to reopen claims for taxes not paid under protest in earlier years. Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).

Wording of the statute is sufficiently broad to encompass claims involving taxes paid to local entities such as counties and municipalities. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).

Legislature, by enacting T.C.A. §§ 67-1-1807 and 67-1-901(b), specifically removed the payment-under-protest requirement for disputed state taxes collected by the commissioner of revenue but did not eliminate this requirement for municipal taxes, and it enacted these statutes together as part of the same statutory scheme; under the doctrine of in pari materia, the supreme court reads these provisions together to give the intended effect to the entire statutory scheme. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

Provision in T.C.A. § 67-1-1807(a) that removed the requirement of payment under protest for state taxes is self-limiting; “as set out in this part” necessarily references a claim for refund under T.C.A. §§ 67-1-1801 to 67-1-1808, not a claim for refund under T.C.A. §§ 67-1-901 to 67-1-912, and because there is no conflict between § 67-1-1807 and T.C.A. § 67-1-901 et seq., § 67-1-1807 does not supersede the payment-under-protest requirement of § 67-1-901(a). Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

2. Applicability.

The provisions of T.C.A. § 67-1-1807 dispensing with the requirement of payment under protest do not apply to taxes paid prior to January 1, 1986. Aluminum Co. of America v. Celauro, 762 S.W.2d 107, 1988 Tenn. LEXIS 198 (Tenn. 1988).

Trial court did not err in granting an attorney fee award because the statute applied to taxpayers'  action seeking a refund of inspection fees a city erroneously calculated, and thus, T.C.A. § 67-1-1801 et seq. governed. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).

Taxpayers'  recovery was not limited by T.C.A. § 67-1-903 because T.C.A. § 67-1-1807 applied, and thus, T.C.A. § 67-1-1801 et seq., governed the taxpayers'  action seeking a refund of inspection fees a city erroneously calculated. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).

Statutory changes in T.C.A. §§ 67-1-901(b) and 67-1-1807(b) do not eliminate the requirement of payment under protest in § 67-1-901(a) for disputed municipal taxes; the 1986 enactments of § 67-1-901(b) and T.C.A. §§ 67-1-1801 et seq., that removed the requirement of payment under protest reference only taxes collected by the commissioner of revenue, and there is no mention of taxes collected by a municipality. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

Before January 1, 1986, under T.C.A. § 67-1-901, a taxpayer was required to pay under protest both state and municipal taxes before filing suit for a refund, and on or after January 1, 1986, under T.C.A. §§ 67-1-901(b) and 67-1-1807(b)(1), a taxpayer is not required to pay under protest disputed state taxes collected or administered by the commissioner of revenue before filing suit for a refund. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2018 Tenn. LEXIS 59 (Tenn. Feb. 6, 2018).

3. Payment Under Protest.

Where payment of corporate excise tax was made after January 1, 1986, as a result of an audit conducted after that date, payment under protest of the tax was not a prerequisite to taxpayer's action to recover taxes paid after that date. GMC v. Taylor, 811 S.W.2d 897, 1991 Tenn. LEXIS 251 (Tenn. 1991), aff'd, Comdata Network, Inc. v. State Dep't of Revenue, 852 S.W.2d 223, 1993 Tenn. LEXIS 112 (Tenn. 1993), aff'd sub nom. Comdata Network, Inc. v. State Dep't of Revenue, 852 S.W.2d 223, 1993 Tenn. LEXIS 112 (Tenn. 1993), rehearing denied, — S.W.2d —, 1993 Tenn. LEXIS 153 (Tenn. Apr. 26, 1993).

Since taxes were not paid under protest and were not actually paid after January 1, 1986, suit was properly dismissed. Comdata Network, Inc. v. State Dep't of Revenue, 852 S.W.2d 223, 1993 Tenn. LEXIS 112 (Tenn. 1993), rehearing denied, — S.W.2d —, 1993 Tenn. LEXIS 153 (Tenn. Apr. 26, 1993).

Trial court had jurisdiction to determine the constitutionality of an occupancy tax under T.C.A. § 67-4-1425, because several taxpayers were not required to pay the tax “under protest” before filing a challenge. Admiralty Suites & Inns, LLC v. Shelby County, 138 S.W.3d 233, 2003 Tenn. App. LEXIS 835 (Tenn. Ct. App. Nov. 24, 2003), appeal denied, — S.W.3d —, 2004 Tenn. LEXIS 406 (Tenn. May 10, 2004).

In taxpayers'  action seeking a refund of inspection fees a city erroneously calculated, the trial court did not err by applying the statute because payment under protest was not a condition precedent to a suit for the recovery of a tax paid to a municipality; the tax at issue provided no explicit requirement to pay “under protest” but only provided that the inspection fee was to be paid to a municipality. Chuck's Package Store v. City of Morristown, — S.W.3d —, 2016 Tenn. App. LEXIS 446 (Tenn. Ct. App. Feb. 10, 2016).

67-1-1808. Offset of the taxpayer's refund of taxes by the amount of debt owed to a claimant.

  1. As used in this section, unless the context otherwise requires:
    1. “Claimant” means any state agency, department, board, bureau, commission, or authority to which a taxpayer owes any debt listed in subsection (d) or that acts on behalf of a person to collect such debt. Such term may also include a clerk who serves a court of criminal jurisdiction, if the clerk has determined to participate in the offset provisions of this section;
    2. “Debt” means any money, unpaid account, or sum due and owing any claimant by a taxpayer, or any money, unpaid account, or sum that is due and owing any person and is legally enforceable by the claimant;
    3. “Debtor” means a person owing a debt to a claimant and who files a claim for a tax refund, subject to the further requirements of this section;
    4. “Offset” or “set off” means the application of all or part of a taxpayer's refund of taxes to pay a taxpayer's debt owed to a claimant; and
    5. “Person” or “taxpayer” means every individual, firm, partnership, joint venture, association, corporation, limited liability company, cooperative, trust, regulated investment company, receiver, and syndicate.
  2. Whenever a taxpayer has, on the date of payment, paid taxes in error or paid taxes against any statute, rule, regulation or clause of the constitution of the state or of the United States, and is due a refund pursuant to this part, and the taxpayer reports to be a debtor in the manner provided by § 67-1-1802(a)(1)(B)(ii), the commissioner shall offset the taxpayer's refund of taxes by the amount of the debt as provided in this section.
  3. This section shall apply to any claim for refund of state taxes filed by any taxpayer in the amount of two hundred dollars ($200) or more that is not eligible for automatic credit or refund pursuant to § 67-1-1802(a)(1)(A). A tax refund shall not be offset to pay the debt of any person who is not the taxpayer due the refund. Whenever a claim for refund is filed by two (2) or more persons, who were jointly and severally liable for the taxes paid, the entire refund amount shall be subject to offset to pay the debt or debts of one (1) or more of the taxpayers.
  4. The following debts shall be used to offset a refund of taxes:
    1. State tax liabilities due pursuant to this title;
    2. Child support due pursuant to title 36, chapters 2, 5, or 6, or pursuant to title 37, chapter 1;
    3. Amounts owed to the unemployment compensation fund pursuant to title 50, chapter 7;
    4. Obligations owing to the bureau of TennCare for overpayment of medical assistance benefits pursuant to title 71, chapter 5;
    5. Student loan or other obligation due to the Tennessee student assistance corporation pursuant to title 49, chapter 4;
    6. Fees, costs or restitution collected by a clerk who serves a court of criminal jurisdiction, if reported pursuant to subsection (f);
    7. Costs of incarceration due pursuant to title 41, chapter 21, part 9;
    8. Judgments and liens in favor of a claimant; and
    9. All other debts owed to any other claimant.
  5. In the event that a taxpayer owes debts to several claimants, priority of set off against any refund shall be as follows:
    1. State tax liabilities;
    2. Child support;
    3. Judgments and liens in favor of a claimant in order of the date entered or perfected; and
    4. All other debts owed to any other claimant in the order in which the debt was incurred.
    1. When a taxpayer reports that any debt is owed to a claimant in the manner provided by § 67-1-1802(a)(1)(B)(ii), and if the commissioner determines such taxpayer is entitled to a refund, then the commissioner shall notify the treasurer and each claimant identified in the documentation accompanying the claim for refund of the department's intent to issue a refund. Such notification shall also include:
      1. The name and address of the taxpayer;
      2. The original tax refund amount;
      3. The proposed offset amount; and
      4. The proposed net tax refund amount.
    2. The notification to the treasurer may include any other information that would assist the treasurer in determining whether the taxpayer may be the owner of unclaimed property held in trust on the owner's behalf. Following receipt of the notification, the treasurer shall verify to the department whether or not the taxpayer is the owner of unclaimed property. The amount of the debt owing to a claimant shall be set off against the amount of the unclaimed property otherwise due the taxpayer.
    3. Following receipt of the notification provided in subdivision (f)(1) and prior to an offset of a tax refund, a claimant shall provide written notice to the debtor, and to the commissioner of revenue, of the claimant's intent to set off all or part of the tax refund to pay the debt. Such notice shall set forth the:
      1. Original tax refund amount;
      2. Proposed offset amount;
      3. Proposed net tax refund amount;
      4. Basis for a claim to the debt and set off;
      5. Taxpayer's right to appeal the proposed offset as provided in subsection (g); and
      6. A toll-free telephone number or other contact information which the debtor may use in obtaining information from the claimant concerning the debt and the proposed offset action.
      1. If any debt has been previously determined to exist and to be due and owing as a result of a final order issued pursuant to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, or a judgment entered by any court of record, then a debtor shall be afforded an opportunity for a hearing to determine the continued existence of the debt and whether it remains outstanding. No hearing shall be conducted as provided in this subdivision (g)(1)(A) unless the time limits for appealing any prior final order or judgment have expired as provided by law.
      2. Any debtor who desires a hearing shall submit to the department of revenue a written request for a hearing within twenty (20) days of receipt of the notice provided in subdivision (f)(3). If a hearing is requested, then it shall be held by the commissioner of revenue or the commissioner's designee as provided in the Uniform Administrative Procedures Act. The commissioner may request that an administrative judge or hearing officer employed in the office of the secretary of state conduct the hearing as provided in the Uniform Administrative Procedures Act.
      1. If any debt has not been determined to exist, or to be due and owing as a result of a prior final order or judgment, as provided in subdivision (g)(1)(A), then a debtor shall be afforded an opportunity for a hearing, in accordance with subdivision (g)(2)(B), to determine the existence of the debt, and if so, whether the claimed debt asserted as due and owing is correct.
      2. Any debtor who desires a hearing shall submit to the claimant a written request for a hearing within twenty (20) days of receipt of the notice provided in subdivision (f)(3). The claimant shall notify the department of revenue as to whether the taxpayer filed a timely request for hearing upon the expiration of the twenty-day period for filing such request or receipt of a request for a hearing. If a hearing is requested, then it shall be held by the claimant or the claimant's designee as provided in the Uniform Administrative Procedures Act. If the amount due is incorrect, a proper adjustment shall be made. After entry of a final order following any hearing, the claimant shall send a copy of the final order to the commissioner of revenue.
    1. All final orders issued pursuant to the Uniform Administrative Procedures Act, as provided in subdivision (g)(1) or (g)(2), shall set forth the amount owed by the taxpayer to the claimant that is subject to set off.
    1. The commissioner of revenue shall set off the appropriate amount of a debt against the tax refund if a taxpayer fails to file a timely request for a hearing, or upon receipt of a final order, or as soon thereafter as practicable. Any portion of a tax refund remaining after the offset shall be refunded or credited to a taxpayer, as requested in the claim for refund. The commissioner shall ensure that the appropriate amount of the refund subject to set off is used to satisfy any debts owed by the taxpayer.
    2. The commissioner of revenue shall notify the taxpayer in writing and provide an accounting of the action taken on any refund whenever the commissioner sets off a taxpayer's refund pursuant to this section.
    3. The commissioner of revenue may require a claimant to pay a fee to reimburse the department of revenue's costs of collecting the debt on behalf of a claimant; provided, that the fee shall not exceed five dollars ($5.00) per offset action.
    1. On an annual basis, the department of revenue shall submit to the following claimants a list of taxpayers for the previous year who filed claims for refunds and received such refunds in the amount of two hundred dollars ($200) or more and for which no debts were reported in accordance with § 67-1-1802(a)(1)(B)(i):
      1. Department of human services;
      2. Department of labor and workforce development;
      3. Bureau of TennCare;
      4. Tennessee student assistance corporation;
      5. Administrative office of the courts; and
      6. Attorney general and reporter.
    2. If any such claimant receiving such list has information in its records verifying that a named taxpayer owed a debt as of the date of the claim for refund, such claimant shall notify the department of revenue of the name of the debtor, the amount of the debt, and the date on which the debt was incurred. The clerk who serves a court of criminal jurisdiction shall notify the department if the clerk has determined to participate in the offset provisions of this section. Notwithstanding any other law to the contrary, the department of revenue shall make an assessment against the taxpayer to recover the amount of the debt that would have otherwise been offset against the refund payment. The procedures established in subsection (g) to challenge a proposed offset shall be the sole and exclusive remedies for challenging an assessment made pursuant to this subsection (i); provided, that the debtor is provided information in the notice of assessment about the procedures for challenging such assessment and the twenty-day period for requesting a hearing shall begin from the date of the notice of assessment. Nothing in this section shall require any state agency or its employees or officers to violate strict standards of confidentiality set forth in applicable federal or state law or regulations.
  6. Notwithstanding part 17 of this chapter, or any other law prohibiting disclosure of a taxpayer's identity or tax information, all information exchanged among the department of revenue, the department of treasury, and any claimant necessary to accomplish the purpose of this section is lawful.

Acts 2010, ch. 1113, § 7.

Compiler's Notes. Acts 2010, ch. 1113, § 8 provided that any claimant may promulgate rules to effectuate the provisions of the act relating to internal procedures for reporting debts and conducting administrative hearings. The department of revenue may promulgate such other rules to carry out the remaining provisions of the act.

Acts 2010, ch. 1113, § 9 provided that the act, which added this section, shall apply to any claim for refund filed with the department of revenue on or after July 1, 2009, that has not been finally determined.

Former subsection (k), concerning a performance audit of the implementation and enforcement of Acts 2010, ch. 1113, was deleted as obsolete by authority of the code commission in 2013.

Cross References. Confidentiality of public records, § 10-7-504.

Cross-References. Confidentiality of offsets for refund of taxes of debt owned to claimant, § 67-1-1808.

Chapter 2
Income Taxation

67-2-101. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

    1. “Bond” means all obligations issued by any person, firm, joint-stock company, business trust or corporation organized and doing business under the laws of this state, or any other state, evidenced by an instrument whereby the obligor is bound to pay interest to the obligee regardless of whether the obligor is doing business in this state, or whether the obligation under the terms of which the interest accrues is a mortgage or lien on property located in this state or beyond the jurisdiction of the state;
    2. “Bond” does not include:
      1. Ordinary commercial paper, trade acceptance, etc., maturing in six (6) months or less from the date of issuance; or
      2. Certificates of deposit, repurchase agreements or similar evidences of indebtedness;
  1. “Commissioner” means the commissioner of revenue;
  2. “Corporate property” means the franchise, corporate excess or intangible value of the corporation as well as all other property;
  3. “Deficiency” means:
    1. The amount by which the tax imposed by this chapter exceeds the amount shown as the tax by the taxpayer upon the taxpayer's return; or
    2. If no amount is shown as the tax by the taxpayer upon the taxpayer's return, or if no return is made, the correct amount of the tax;
  4. “Person,” “it,” or any other singular pronoun means every natural person, inhabitant, resident, beneficiary of every trust or estate, partnership, joint-stock company, business trust, corporation or any other form of organization in receipt of dividends from corporate stocks and/or interest on bonds as defined in this section, regardless of the sources from which such income is derived, except as otherwise expressly provided. Any person who has a legal domicile in Tennessee shall be subject to the tax imposed; every person who maintains a place of residence in Tennessee for more than six (6) months in the tax year shall be subject to the tax imposed by this chapter, regardless of what place such person may claim as a legal domicile;
  5. “Stocks” means shares of stock issued by corporations chartered and organized under the laws of the state of Tennessee, or of any other state, or of the United States, or of any foreign government, and all interests in partnerships, associations, or trusts represented by transferable evidence of such interest; and
  6. “Taxpayer's tax year” means the calendar year, unless a fiscal year is elected by the taxpayer when the first fiscal year return is due to be filed.

Acts 1931 (2nd Ex. Sess.), ch. 20, § 3; 1933, ch. 60, § 1; 1949, ch. 185, § 3; C. Supp. 1950, § 1123.3; Acts 1959, ch. 290, § 1; 1963, ch. 271, § 2; 1967, ch. 176, § 1; 1982, ch. 652, § 1; T.C.A. (orig. ed.), §§ 67-2601, 67-2624; Acts 1985, ch. 58, § 1; 1985, ch. 364, § 1; 1989, ch. 186, § 1.

Compiler's Notes. Former § 67-2-101(1)(B)(ii) was held to be unconstitutional. See casenote under 1. Constitutionality, Notes to Decisions, Dominion Nat'l Bank v. Olsen, 771 F.2d 108 (6th Cir. 1985).

Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), § 789.

Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 16.

Law Reviews.

Comptroller v. Wynne and the Futile Search for Non-Discriminatory State Taxation, 67 Vand. L. Rev. En Banc 283 (2014).

The Dormant Coordination Clause, 67 Vand. L. Rev. En Banc 269 (2014).

The Personal Income Tax as a Component of State Tax Structure (William F. Fox), 39 Vand. L. Rev. 1081 (1986).

Key Tax Aspects of the Tennessee Limited Liability Company Act (Andrée Sophia Blumstein), 30 Tenn. B.J. 14 (1994).

The Debt-Equity Distinction in a Second-Best World, 53 Vand. L. Rev. 1055 (2000).

Why Wynne [Maryland State Comptroller of the Treasury v. Wynne , 64 A.3d 453 (Md. 2013)], Worries Me, 67 Vand. L. Rev. En Banc 207 (2014).

Why Wynne Should Win, 67 Vand. L. Rev. En Banc 217 (2014).

Wynne: Lose Or Draw?, 67 Vand. L. Rev. En Banc 245 (2014).

Comparative Legislation. Income taxation:

Ala.  Code § 40-18-1 et seq.

Ark.  Code § 26-51-101 et seq.

Ga. O.C.G.A. § 48-7-1 et seq.

Ky. Rev. Stat. Ann. § 141.010 et seq.

Miss.  Code Ann. § 27-7-1 et seq.

Mo. Rev. Stat. § 143.005 et seq.

N.C. Gen. Stat. § 105-130 et seq.

Va. Code § 58.1-300 et seq.

Cited: Tidwell v. Berke, 532 S.W.2d 254, 1975 Tenn. LEXIS 611 (Tenn. 1975); Mote v. Olsen, 648 S.W.2d 942, 1983 Tenn. LEXIS 638 (Tenn. 1983); Boone v. Chumley, 372 S.W.3d 104, 2011 Tenn. App. LEXIS 640 (Tenn. Ct. App. Nov. 30, 2011).

NOTES TO DECISIONS

1. Constitutionality.

Enactment of this chapter was authorized by Tenn. Const., art. II, § 28. Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).

The power to tax incomes is restricted to those referred to in Tenn. Const., art. II, § 28. Gallagher v. Butler, 214 Tenn. 129, 378 S.W.2d 161, 1964 Tenn. LEXIS 457 (1964).

Former § 67-2-101(1)(B)(ii), which had the effect of levying a state tax on the earnings from certificates of deposits issued by out-of-state financial institutions but owned by residents of the state of Tennessee violated the commerce clause. Dominion Nat'l Bank v. Olsen, 771 F.2d 108, 1985 U.S. App. LEXIS 22613 (6th Cir. 1985).

2. Bonds.

By this section the legislature enlarged the meaning of the word “bond” to include all obligations issued by any person, firm, stock company, business trust, or corporation, and such definite and classifying phrase cannot be construed to confine the tax imposed by statute to mere obligations of persons, firms, joint stock companies, business trusts, or corporations contrary to the express provision of § 67-2-102 which includes within its levy interest on bonds of each person, partnership, association, trust and corporation within the state of Tennessee who received or to whom has accrued during any year income from such source. Union & Planters Bank & Trust Co. v. Fort, 170 Tenn. 285, 95 S.W.2d 39, 1935 Tenn. LEXIS 133 (1935).

The six-month maturity requirement for bonds began to run from the date of execution. Shackleford v. Olsen, 675 S.W.2d 171, 1984 Tenn. LEXIS 838 (Tenn. 1984).

Bonds issued by a city and county government containing a “liquidity demand” provision, giving bondholders the right to demand payment earlier than the maturity date, were bonds within the meaning of T.C.A. § 67-2-101, and interest on the bonds was subject to state income tax. Steele v. Industrial Dev. Bd. of the Metro. Gov't, 950 S.W.2d 345, 1997 Tenn. LEXIS 409 (Tenn. 1997).

3. Deposits.

Money on deposit in bank, being subject to ad valorem tax, is not subject to the income tax as from stocks or bonds. Hamilton Nat'l Bank v. Chattanooga, 165 Tenn. 283, 54 S.W.2d 943, 1932 Tenn. LEXIS 47 (1932) (decision under prior law).

A certificate of deposit which matures less than six months from the date of its making escapes taxation altogether. Templeton v. Bartlett, 190 Tenn. 347, 229 S.W.2d 509, 1950 Tenn. LEXIS 491 (1950).

4. Notes.

The mere fact that payment may be demanded on a past due note does not make it a demand note so as to exempt it from taxation under this section. Hamilton Nat'l Bank v. McCanless, 176 Tenn. 570, 144 S.W.2d 768, 1940 Tenn. LEXIS 102 (1940).

5. Stocks.

The stocks referred to in this section do not have to be the stocks of a corporation but may be any stocks so long as the certificates are alienable. Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).

6. Standing.

Three Virginia banks, not qualified to do business in this state and not in fact doing business herein, had no standing to seek declaratory or injunctive relief to have the validity of the tax imposed by this chapter determined, where such banks were not subject to the tax or required to file a return on behalf of their depositors, merely on grounds that they were adversely affected by the tax because Tennessee depositors might remove their funds from out-of-state banks and deposit them in domestic banks to avoid payment of the tax. Dominion Nat'l Bank v. Olsen, 651 S.W.2d 215, 1983 Tenn. LEXIS 778 (Tenn. 1983).

7. Commercial Paper.

A provision for payment 30 days after demand does not alter the character of an instrument from a demand note to a time instrument. Shackleford v. Olsen, 675 S.W.2d 171, 1984 Tenn. LEXIS 838 (Tenn. 1984).

Instruments of indebtedness which paid interest and were payable within 30 days of demand were thus capable of maturity within six months of issuance were not bonds, but rather ordinary commercial paper, and the interest thereon was not taxable. Shackleford v. Olsen, 675 S.W.2d 171, 1984 Tenn. LEXIS 838 (Tenn. 1984).

Collateral References. 71 Am. Jur. 2d State and Local Taxation § 382 et seq.

85 C.J.S. Taxation § 1693 et seq.

Taxation 371

67-2-102. Imposition, rate and collection of tax.

An income tax shall be levied and collected annually on incomes derived by way of dividends from stocks or by way of interest on bonds of each person, partnership, association, trust and corporation in the state of Tennessee who received, or to whom accrued, or to whom was credited during any year income from the sources enumerated in this section, except as otherwise provided in this chapter. The rate of the tax imposed by this chapter shall be:

  1. For any tax year that begins on or after January 1, 2017, and prior to January 1, 2018, four percent (4%);
  2. For any tax year that begins on or after January 1, 2018, and prior to January 1, 2019, three percent (3%);
  3. For any tax year that begins on or after January 1, 2019, and prior to January 1, 2020, two percent (2%);
  4. For any tax year that begins on or after January 1, 2020, and prior to January 1, 2021, one percent (1%); and
  5. For any tax year that begins on or after January 1, 2021, and for subsequent tax years, zero percent (0%).

Acts 1931 (2nd Ex. Sess.), ch. 20, § 1; 1937, ch. 117, § 1; 1937, ch. 297, § 1; C. Supp. 1950, § 1123.1; modified; Acts 1967, ch. 176, § 2; T.C.A. (orig. ed.), §§ 67-2602, 67-2603; Acts 1985, ch. 395, § 2; 2016, ch. 1064, § 1; 2017, ch. 181, § 13.

Compiler's Notes. Acts 2016, ch. 1064, § 4, provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2016.

Acts 2017, ch. 181, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act” or the “2017 Tax Cut Act.”

Acts 2017, ch. 181, § 38 provided that the act, which amended this section, shall apply to tax years beginning on or after January 1, 2017.

Amendments. The 2016 amendment substituted “five percent (5%)” for “six percent (6%)” near the beginning of the section.

The 2017 amendment, in the present introductory paragraph, substituted “shall be levied and collected annually” for “in the amount of five percent (5%) per annum shall be levied and collected” in the first sentence, and added the introductory clause; and added (1)-(5).

Effective Dates. Acts 2016, ch. 1064, § 4. May 20, 2016.

Acts 2017, ch. 181, § 38. April 26, 2017.

Cross-References. Receipt and distribution of tax revenues from annexed areas, § 6-51-115.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 16.

Law Reviews.

Comptroller v. Wynne and the Futile Search for Non-Discriminatory State Taxation, 67 Vand. L. Rev. En Banc 283 (2014).

In the Trade or Business of an Isolated Sale of Real Estate (Mark A. Rentenbach and Joseph A. Sowell III), 51 Tenn. L. Rev. 319 (1984).

The Dormant Coordination Clause, 67 Vand. L. Rev. En Banc 269 (2014).

Why Wynne [Maryland State Comptroller of the Treasury v. Wynne , 64 A.3d 453 (Md. 2013)], Worries Me, 67 Vand. L. Rev. En Banc 207 (2014).

Why Wynne Should Win, 67 Vand. L. Rev. En Banc 217 (2014).

Wynne: Lose Or Draw?, 67 Vand. L. Rev. En Banc 245 (2014).

Attorney General Opinions. Inapplicability of Hall Income Tax to withdrawals from IRA's or Keogh plan accounts, OAG 99-136 (7/8/99).

Applicability of Hall income tax to capital gain distributions from investment trusts and mutual funds, OAG 99-164 (8/19/99).

NOTES TO DECISIONS

1. Construction.

This section and § 67-2-104 must be construed in pari materia. Gallagher v. Butler, 214 Tenn. 129, 378 S.W.2d 161, 1964 Tenn. LEXIS 457 (1964).

2. Accrual of Tax.

The tax falls on the stockholder when the dividend is declared by the directors, and the income then accrues to the stockholder individually. Fidelity-Bankers Trust Co. v. McCanless, 181 Tenn. 476, 181 S.W.2d 747, 1944 Tenn. LEXIS 266 (1944).

3. Annuities.

An annuity is a fixed amount payable absolutely and without contingency and is not taxable as income while income as distinguished from annuity represents profits to be earned, the amount of which is not fixed, but is contingent on the amount of earnings realized. Sanborn v. McCanless, 181 Tenn. 150, 178 S.W.2d 765, 1944 Tenn. LEXIS 353 (1944).

4. Bonds.

Trustee who invested funds of trust in purchase of high grade bonds at a premium price was required to pay income tax on interest received from bonds regardless of amount he paid for the bonds. First Nat'l Bank v. McCanless, 186 Tenn. 1, 207 S.W.2d 1007, 1948 Tenn. LEXIS 510 (1948).

5. Certificates of Deposit.

Certificates of deposits which matured more than six months from date were taxable under this chapter, hence were not subject to ad valorem tax by county trustee. Templeton v. Bartlett, 190 Tenn. 347, 229 S.W.2d 509, 1950 Tenn. LEXIS 491 (1950).

6. Dividends.

In determining whether a distribution of funds is taxable, the court will look at the transaction with respect to its substantial and practical effect rather than the form in which it was handled and will give the term “dividends” its ordinary meaning unless the specific terms of the statute require otherwise. Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).

The taxing portion of the statute levies a tax against income derived by way of dividends only and is not applicable to gains realized by stockholders on sales and transfers of their stock. Gallagher v. Butler, 214 Tenn. 129, 378 S.W.2d 161, 1964 Tenn. LEXIS 457 (1964).

Entire distribution was a “dividend” within the meaning of taxing statute which imposes the tax on “incomes derived by way of dividends from stock,” including portion of distribution in excess of corporation's current earned surplus. Dobson v. Huddleston, 863 S.W.2d 392, 1993 Tenn. LEXIS 290 (Tenn. 1993), rehearing denied, — S.W.2d —, 1993 Tenn. LEXIS 347 (Tenn. Oct. 4, 1993).

Tennessee residents who owned stock in South Carolina Sub S corporations could be taxed on dividend distributions under T.C.A. § 67-2-102 and were not entitled to a credit for paying South Carolina income tax under T.C.A. § 67-2-122 because there was no reciprocal agreement between Tennessee and South Carolina. Boone v. Chumley, 372 S.W.3d 104, 2011 Tenn. App. LEXIS 640 (Tenn. Ct. App. Nov. 30, 2011), appeal denied, — S.W.3d —, 2012 Tenn. LEXIS 449 (Tenn. June 20, 2012).

7. Income from Trust.

Where a trust agreement does not impose an absolute duty on the trustee to pay interest to the trustors, the trust agreement itself cannot be classed an interest-bearing obligation or bond. It then becomes necessary to look to the underlying legal obligation by which the interest was derived in order to characterize the income for purposes of this section. Mote v. Olsen, 648 S.W.2d 942, 1983 Tenn. LEXIS 638 (Tenn. 1983).

8. Commercial Paper.

Instruments of indebtedness which paid interest and were payable within 30 days of demand were thus capable of maturity within six months of issuance were not bonds, but rather ordinary commercial paper, and the interest thereon was not taxable. Shackleford v. Olsen, 675 S.W.2d 171, 1984 Tenn. LEXIS 838 (Tenn. 1984).

Decisions Under Prior Law

1. Constitutionality.

Tax on incomes from stocks and bonds not taxed ad valorem is constitutional. Shields v. Williams, 159 Tenn. 349, 19 S.W.2d 261, 1928 Tenn. LEXIS 92 (1929).

The constitutional grant of power to the legislature to levy a tax upon incomes derived from stocks and bonds that are not taxed ad valorem is by way of exception; courts are precluded from curtailing the rule or adding to the exceptions by implication. Evans v. McCabe, 164 Tenn. 672, 52 S.W.2d 159, 1931 Tenn. LEXIS 69 (1931).

2. Beneficiary of Trust.

The tax is imposed on stocks and bonds held by natural persons; the fact that the income is derived through the medium of a trustee is immaterial, since the beneficiary of the income is the one against whom the statute is directed. Ross v. McCabe, 166 Tenn. 314, 61 S.W.2d 479, 1932 Tenn. LEXIS 135 (Tenn. 1932), appeal dismissed, Ross v. Fort, 290 U.S. 603, 54 S. Ct. 347, 78 L. Ed. 529, 1933 U.S. LEXIS 520 (1933), appeal dismissed, Ross v. Fort, 290 U.S. 603, 54 S. Ct. 347, 78 L. Ed. 529, 1933 U.S. LEXIS 520 (1933).

3. Income from Trust.

Statement in this section that the word person should include every natural person, partnership, joint-stock company, business trust, corporation or other form of organization in receipt of taxable income conveys no implication of an intent to exclude executors and administrators. Union Planters Nat'l Bank & Trust Co. v. Beeler, 172 Tenn. 317, 112 S.W.2d 11, 1937 Tenn. LEXIS 81 (1938).

Collateral References.

Corporate earnings returned to stockholding customers in proportion to business transacted. 109 A.L.R. 969.

Distribution by corporation to its stockholders, of stock of other corporation, as taxable income. 56 A.L.R.2d 474.

Distribution on reduction of par value of capital stock as taxable income to stockholder. 173 A.L.R. 688.

Dividends on corporate stock, time when dividends become taxable as income to a taxpayer making his returns on a cash basis. 120 A.L.R. 1280.

Dividends, tax on privilege of declaring and receiving, construction and application of. 146 A.L.R. 1219.

Liquidation of corporation, income tax in respect of amounts received by stockholder upon. 65 A.L.R. 148.

Massachusetts or business trusts. 88 A.L.R.3d 704.

Stock dividend as taxable dividend when received. 105 A.L.R. 784, 130 A.L.R. 408, 143 A.L.R. 230, 144 A.L.R. 1337, 167 A.L.R. 554.

What gains are to be treated as “dividends,” within provisions of the Income Tax Law. 56 A.L.R. 383.

67-2-103. Tax for state purposes only.

Subject to § 67-2-119, the tax provided for in this part is for state purposes only, and no county or municipality shall have power to levy the tax.

Acts 1931 (2nd Ex. Sess.), ch. 20, § 2; mod. C. Supp. 1950, § 1123.2; modified; T.C.A. (orig. ed.), § 67-2604.

Textbooks. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 16.

Law Reviews.

Tax Limitations of Counties and Municipalities (M. P. O'Connor), 12 Tenn. L. Rev. 174 (1934).

67-2-104. Exemptions.

  1. The tax imposed by this chapter does not apply to the first one thousand two hundred fifty dollars ($1,250) for each individual return or two thousand five hundred dollars ($2,500) of combined income for persons who file jointly, of income otherwise taxable under this chapter.
  2. For tax years beginning January 1, 2000, and thereafter, any person sixty-five (65) years of age or older having a total annual income derived from any and all sources of sixteen thousand two hundred dollars ($16,200) or less, or any persons who file a joint return and either spouse is sixty-five (65) years of age or older having a total annual joint income derived from any and all sources of not more than twenty seven thousand dollars ($27,000), are exempt from the income tax imposed by this chapter upon submission of evidence deemed acceptable by the commissioner to establish the age and income limitations stated in this subsection (b). For tax years beginning January 1, 2012, and thereafter, the income levels specified in the previous sentence in this subsection (b) shall change to twenty-six thousand two hundred dollars ($26,200) for single filers and to thirty-seven thousand dollars ($37,000) for persons filing jointly. For tax years beginning January 1, 2013, and thereafter, the income levels specified in the previous sentence in this subsection (b) shall change to thirty-three thousand dollars ($33,000) for single filers and to fifty-nine thousand dollars ($59,000) for persons filing jointly. For tax years beginning January 1, 2015, and thereafter, the income levels under this subsection (b) shall change to thirty-seven thousand dollars ($37,000) for single filers and to sixty-eight thousand dollars ($68,000) for persons filing jointly.
  3. The income from stocks and bonds, mortgages, and notes owned and held by blind persons, or by persons certified, in writing, by a medical doctor to be a quadriplegic, and where such income is derived from circumstances resulting in the individual becoming a quadriplegic, are exempt from the tax imposed by this chapter.
  4. No Tennessee citizen declared by the United States department of defense to be a prisoner of war is liable for payment of the tax provided for by this chapter during the time of such person's capture and imprisonment, nor for sixty (60) days upon such person's release, whenever it should occur.
    1. Nothing contained in this chapter shall be construed or held to authorize the levy of an income tax on obligations of the United States, whether evidenced by bonds or otherwise and/or on shares of stock in corporations that are arms and agencies directly of the United States, insofar as such bonds and stocks are exempt from such taxation by the constitution or laws of the United States; or on the income derived from bonds of the state of Tennessee, or any county or municipality or other political subdivision of the state of Tennessee not subject to ad valorem taxation.
    2. Nothing contained in this chapter shall be construed or held to authorize the levy of an income tax on dividends from a regulated investment company qualified as such under Subtitle A, chapter 1, subchapter M of the Internal Revenue Code, compiled in 26 U.S.C. §  851 et seq.; provided, that a part of the value of the investments of such regulated investment company shall be in any combination of bonds or securities of the United States government or any agency or instrumentality of the United States government or in bonds of the state of Tennessee, or any county or any municipality or political subdivision of the state of Tennessee, including any agency, board, authority or commission of the United States or the state of Tennessee. Such dividends shall be exempt from the levy of an income tax only in proportion to the income of the regulated investment company attributable to interest on bonds or securities of the United States government or any agency or instrumentality of the United States government or on bonds of the state of Tennessee, or any county or any municipality or political subdivision of the state of Tennessee, including any agency, board, authority or commission of the United States or the state of Tennessee.
    3. No corporation shall be required to pay any income tax that otherwise would be assessable under this chapter on any stocks and/or bonds that constitute a part of the aggregate of its corporate property on which it is now assessed or shall be assessed for ad valorem taxes; nor when such stocks and/or bonds constitute a part of the assets that determine the value of the shares that are now or shall hereafter be assessed for ad valorem taxes to the stockholder.
    4. No person shall be assessed with this tax on income from any stock in any corporation where the value of the shares is assessed ad valorem to the stockholder by this state.
    5. No person shall be assessed with this tax on income from any stock in any corporation licensed to do business in this state as an insurance company.
    6. No person shall be assessed with this tax on income from any stock in any bank, state or federally chartered, doing business in this state.
    7. No distribution of capital shall be taxed as income under this chapter, and no distribution of surplus by way of stock dividend shall be taxable in the year such distribution is made; but all other distributions out of earned surplus shall be taxed as income when and in whatever manner made, regardless of when such surplus was earned. Stock dividends issued within one (1) year of liquidation shall be taxable in the year received to the extent made out of earned surplus; provided, that gains over and above the par or original pro rata capital value of original shares held shall be taxed to the shareholder upon any transfer of stock to nonresidents in the year of such transfer, when such transfer occurs within one (1) year prior to liquidation or redemption. There shall, however, be exempt from taxation under this section distribution made pursuant to decrees ordering divestiture of stock in enforcement of antitrust statutes.
    8. The income from stocks and bonds of educational, religious or other like institutions organized for the general welfare and not for profit or individual gain that are exempt from taxation under the Assessment Act, codified in § 67-5-212, shall be exempt from the taxes imposed by this chapter; provided, that if any educational, religious or other like institution issues stocks or bonds, the income or profit or any part of which goes to private individuals or corporations for profit or gain and not purely for educational, religious or charitable purposes, such income or profit shall be subject to the tax imposed in this chapter.
    9. The income from stocks and bonds of pension trusts and profit sharing trusts that are exempt from federal income taxation is exempt from the taxes imposed by this chapter.
    10. The income from stocks and bonds held by a fiduciary and paid to or irrevocably set aside for the benefit of educational, religious, or other like institutions organized for the general welfare and not for profit or individual gain that are exempt from taxation under the Assessment Act, codified in § 67-5-212, is exempt from the taxes imposed by this chapter.
    11. All income from interest on loans to qualified businesses for improvements, expansions, operations, or real property within an enterprise zone, as defined in title 13, chapter 28, part 2 shall be exempt from tax.
    12. The income derived from the trust funds in a trust created for the perpetual care of a cemetery pursuant to title 46 shall be exempt from the taxes imposed by this chapter.
    13. Nothing contained in this chapter shall be construed or held to authorize the levy of any tax on earnings or distributions from an investment fund organized as a unit investment trust taxable as a grantor trust under 26 U.S.C. §§ 671-677, or organized as a limited partnership taxable under 26 U.S.C. §§ 701-761 and registered under the Investment Company Act of 1940, compiled in 15 U.S.C. § 80a-1 et seq.; provided, that a part of the value of the investments of such investment fund shall be in any combination of bonds or securities of the United States government, or any agency or instrumentality of the United States government, or in bonds of the state of Tennessee, or any county or any municipality or political subdivision of the state of Tennessee, including any agency, board, authority or commission of the United States or the state of Tennessee. Such earnings or distributions shall be exempt from the levy of an income tax only in proportion to the income of the investment fund attributable to interest on bonds or securities of the United States government, or any agency or instrumentality of the United States government, or on bonds of the state of Tennessee, or any county or any municipality or political subdivision of the state of Tennessee, including any agency, board, authority or commission of the United States or the state of Tennessee.
    14. Nothing contained in this chapter shall be construed or held to authorize the levy of any tax on earnings or distributions from an education individual retirement account as defined in § 213 of Public Law 105-34, so long as such earnings or distributions were not subject to federal income tax.
    15. Nothing contained in this chapter shall be construed or held to authorize the levy of any tax on earnings or distributions from a Roth IRA as defined in Section 302 of Public Law 105-34, so long as such earnings or distributions are not subject to federal income tax.
    16. The tax imposed by this chapter does not apply to an entity that satisfies both of the following requirements:
      1. It:
        1. Is classified as a partnership or trust in accordance with 26 U.S.C. § 7701, and the federal regulations and rulings promulgated under 26 U.S.C. § 7701;
        2. Has elected to be treated as a real estate mortgage investment conduit (REMIC) under 26 U.S.C. § 860D;
        3. Has elected to be treated as a financial asset securitization investment trust (FASIT) under 26 U.S.C. § 860L; or
        4. Is a business trust, as defined in § 48-101-202(a), or is classified as a trust under the laws of the state in which it is created and is disregarded for federal income tax under 26 U.S.C. § 7701, and the federal regulations and rulings promulgated under 26 U.S.C. § 7701, when the commercial domicile of the trustee is not in this state; and
        1. The sole purpose of the entity, except for foreclosures and dispositions of the assets of foreclosures, is the asset-backed securitization of debt obligations, such as first or second mortgages, including home equity loans, trade receivables, whether an open account or evidenced by a note or installment or conditional sales contract, obligations substituted for trade receivables, credit card receivables, personal property leases treated as debt for purposes of the Internal Revenue Code of 1986, compiled in 26 U.S.C., home equity loans, automobile loans or similar debt obligations.
        2. “Trade receivables” as used in subdivision (e)(16)(B)(i) means obligations arising from the sale of inventory in the ordinary course of business.
    17. The income from stock in any publicly traded real estate investment trust, as defined in § 67-4-2004, is exempt from the tax imposed by this chapter.
    18. The income from stocks and bonds of trusts for perpetual care or improvement of private cemeteries, graves, or burial grounds are exempt from the taxes imposed by this chapter.
  5. For tax years beginning January 1, 2018, and thereafter, any person one hundred (100) years of age or older, or any persons who file a joint return and either spouse is one hundred (100) years of age or older, are exempt from the income tax imposed by this chapter.

Acts 1931 (2nd Ex. Sess.), ch. 20, §§ 4, 5, 16; 1933, ch. 60, § 2; 1937, ch. 117, § 2; 1949, ch. 221, § 1; mod. C. Supp. 1950, §§ 1123.1, 1123.4, 1123.5, 1123.32; Acts 1953, ch. 199, § 1 (Williams, § 1123.5); 1953, ch. 238, § 1; 1955, ch. 135, § 4; impl. am. Acts 1959, ch. 9, § 14; Acts 1963, ch. 167, § 1; 1963, ch. 271, § 3; 1963, ch. 273, § 1; 1968, ch. 431, § 8; 1972, ch. 484, § 1; 1976, ch. 638, § 1; 1977, ch. 140, § 8; 1977, ch. 347, § 1; 1978, ch. 849, § 1; modified; T.C.A. (orig. ed.), §§ 67-2605 — 67-2607, 67-2609 — 67-2612, 67-2635; Acts 1985, ch. 395, §§ 3, 5; 1987, ch. 378, § 1; 1988, ch. 1008, §§ 1, 2; 1989, ch. 222, § 6; 1989, ch. 524, § 2; 1989, ch. 560, § 18; 1992, ch. 931, §§ 1, 2; 1995, ch. 535, § 1; 1998, ch. 1013, § 1; 1998, ch. 1032, § 1; 1999, ch. 236, § 1; 2006, ch. 1019, § 21; 2008, ch. 1106, § 39; 2011, ch. 396, § 1; 2011, ch. 490, §§ 2, 3; 2012, ch. 667, § 1; 2013, ch. 322, § 1; 2015, ch. 434, § 1; 2017, ch. 453, § 1.

Compiler's Notes. Acts 1989, ch. 222, § 8 provided that subsection (p) shall only apply to trust corporations which have fiscal years ending on or after May 2, 1989.

Acts 1992, ch. 931, § 3 provided that the amendments by that act apply to all income received on or after January 1, 1992.

Acts 1995, ch. 535, § 2 provides that that act shall apply to all Tennessee income tax returns filed for tax years ended after June 13, 1995.

Acts 1999, ch. 236, § 2 provided that subsection (t) shall apply to tax years beginning on or after December 15, 1998.

Public Law 105-34, § 213, referred to in this section, regarding education individual retirement accounts, is codified mainly in 26 U.S.C. § 530.

Public Law 105-34, § 302, referred to in this section, regarding Roth IRAs, is codified mainly in 26 U.S.C. § 408A.

Amendments. The 2013 amendment rewrote (b) which read: “For tax years beginning January 1, 1999, any person sixty-five (65) years of age or older having a total annual income derived from any and all sources of fourteen thousand dollars ($14,000) or less, or any persons who file a joint return and either spouse is sixty-five (65) years of age or older having a total annual joint income derived from any and all sources of not more than twenty-three thousand dollars ($23,000), are exempt from the income tax imposed by this chapter upon submission of evidence deemed acceptable by the commissioner to establish the age and income limitations stated in this subsection (b). For tax years beginning January 1, 2000, and thereafter, the income limitations stated in this subsection (b) shall change to sixteen thousand two hundred dollars ($16,200) for single filers and to twenty-seven thousand dollars ($27,000) for persons filing jointly. For tax years beginning January 1, 2012, and thereafter, the income levels specified in the previous sentence in this subsection (b) shall change to twenty-six thousand two hundred dollars ($26,200) for single filers and to thirty-seven thousand dollars ($37,000) for persons filing jointly.”

The 2015 amendment added the last sentence in (b).

The 2017 amendment added (f).

Effective Dates. Acts 2013, ch. 322, § 2. May 13, 2013.

Acts 2015, ch. 434, § 2. May 18, 2015.

Acts 2017, ch 453, § 2. May 25, 2017.

Cross-References. Nonseverability of certain sections, § 67-5-1208.

Law Reviews.

State and Local Taxation — 1964 Tennessee Survey (Paul J. Hartman), 18 Vand. L. Rev. 1255 (1967).

Attorney General Opinions. Inapplicability of Hall Income Tax to withdrawals from IRA's or Keogh plan accounts, OAG 99-136 (7/8/99).

Cited: Steele v. Industrial Dev. Bd. of the Metro. Gov't, 950 S.W.2d 345, 1997 Tenn. LEXIS 409 (Tenn. 1997); In re Vandeberg, 276 B.R. 581, 2001 Bankr. LEXIS 1870 (Bankr. E.D. Tenn. 2001).

NOTES TO DECISIONS

1. Legislative Intent.

Intent of the general assembly was to provide for assessment and collection of tax upon property which paid no ad valorem tax. First Nat'l Bank v. McCanless, 186 Tenn. 1, 207 S.W.2d 1007, 1948 Tenn. LEXIS 510 (1948); Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).

2. Construction.

This section and § 67-2-102 must be construed in pari materia. Gallagher v. Butler, 214 Tenn. 129, 378 S.W.2d 161, 1964 Tenn. LEXIS 457 (1964).

3. Transfers Not Taxable.

The taxing portion of the statute levies a tax against income derived by way of dividends only and is not applicable to gains realized by stockholders on sales and transfers of their stock. Gallagher v. Butler, 214 Tenn. 129, 378 S.W.2d 161, 1964 Tenn. LEXIS 457 (1964).

4. Capital.

“Capital” means “invested in the corporation by the stockholder.” Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).

5. Dividends.

A dividend is taxable if it is payable out of “reserve” or “accumulated surplus.” Fidelity-Bankers Trust Co. v. McCanless, 181 Tenn. 476, 181 S.W.2d 747, 1944 Tenn. LEXIS 266 (1944).

Resolution of board of directors declaring dividends is prima facie evidence of nature of dividend and the intention of the corporation so declaring it. Fidelity-Bankers Trust Co. v. McCanless, 181 Tenn. 476, 181 S.W.2d 747, 1944 Tenn. LEXIS 266 (1944).

The court will give the term “dividends” its ordinary meaning unless the specific terms of the statute require otherwise. Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).

Whether the distribution made by dividends is from capital or profits is determined from the standpoint of the corporation making the distribution rather than the standpoint of the stockholder receiving the same. Lawrence v. MacFarland, 209 Tenn. 376, 354 S.W.2d 78, 1962 Tenn. LEXIS 368 (1962).

Entire distribution was a “dividend” within the meaning of taxing statute which imposes the tax on “incomes derived by way of dividends from stock,” including portion of distribution in excess of corporation current earned surplus. Dobson v. Huddleston, 863 S.W.2d 392, 1993 Tenn. LEXIS 290 (Tenn. 1993), rehearing denied, — S.W.2d —, 1993 Tenn. LEXIS 347 (Tenn. Oct. 4, 1993).

Tennessee residents who owned stock in South Carolina Sub S corporations coul