State Supreme Court Rules That Disputed Municipal Taxes Must Be Paid Under Protest Before Seeking Refund

Tuesday, February 6, 2018

In a unanimous opinion, the Tennessee Supreme Court ruled that a taxpayer must pay disputed municipal taxes under protest before suing for a refund.

The city of Morristown, based on a state statute, adopted an ordinance imposing an inspection fee on licensed alcoholic beverage retailers. The city set the fee at 8 percent of the wholesale price based on the county’s population. By 2011, the county’s population increased, and under the ordinance, the inspection fee should have decreased to a maximum fee of 5 percent of the wholesale price. However, from 2011–2014, the city of Morristown continued to charge alcoholic beverage retailers 8 percent inspection fees instead of the authorized 5 percent fees.

A group of retailers, Chuck’s Package Store; The Cellar, Inc.; T & T Package Store, LLC; Morristown Beverage Associates, Inc., d/b/a Cork & Keg Package Store; The Package Store; and C & C Package, Inc., after learning of the overcharges, asked the city for refunds. The city denied the requests. The retailers sued the city of Morristown in the Hamblen County Chancery Court to collect the overchargedfees. The city asked the chancery court to dismiss the case because the retailers had not paid the taxes under protest, as required by state statute. Payment under protest is a form of payment by which a taxpayer pays taxes and notifies the governmental entity that the taxpayer disputes all or part of the taxes that are owed. The chancery court ruled that the retailers were not required to pay the taxes under protest and awarded the retailers a tax refund of $452,120.51 plus interest. The Court of Appeals affirmed the decision.

The Tennessee Supreme Court granted the city of Morristown’s request for review. After a thorough analysis and examination of the relevant statutes, the Supreme Court concluded that on or after January 1, 1986, the process for taxpayer recovery of state taxes is different than the process for recovery of municipal taxes. Before January 1, 1986, a taxpayer was required to pay under protest both state and municipal taxes before commencing refund proceedings. Because of a change in state law, as of January 1, 1986, a taxpayer is not required to pay under protest disputed state taxes collected or administered by the commissioner of revenue before seeking a refund. However, the change in state law did not affect taxpayer lawsuits to recover disputed municipal taxes. After January 1, 1986, a taxpayeris still required to pay under protest disputed municipal taxes before suing for a refund.

In an opinion authored by Justice Sharon G. Lee, the Supreme Court reversed the decisions of the chancery court and the Court of Appeals and ruled that based on state law, a taxpayer must first pay under protest municipal taxes before seeking a refund. Here, because the retailers did not pay the taxes under protest, they were not entitled to a refund.

To read the unanimous opinion in Chuck’s Package Store et al. v. City of Morristown, authored by Justice Sharon G. Lee, visit the Opinions section of

Dalton Police Seeking Information On Shoplifting Suspect

The Dalton Police Department is asking for the public’s help identifying a woman who managed to get away from loss prevention employees at Belk. The woman escaped in a red Ford Mustang with a white canvas top. The incident happened at the Belk store at Walnut Square Mall on Feb. 10 . Loss prevention employees noticed the suspect pulling tags off of clothing items in the store ... (click for more)

Feb. 28 Is Last Day To Pay 2017 Property Taxes Without Interest

Hamilton County Trustee Bill Hullander is reminding taxpayers that Feb. 28, will be the last day to pay the 2017 property taxes without interest.   The normal office hours are Monday-Friday, from 8 a.m. through 4 p.m. Mr. Hullander will be extending office hours during the last week of February. As an added convenience for the taxpayer the Courthouse Office and the Preservation ... (click for more)

MLK Boulevard TIF Is A Public Scam From People You Should be Able To Trust

TIFs (Tax Incremental Financing) were created to allow cities to do projects they cannot afford.  A TIF project also allows various private construction costs to be subsidized by sequestered  future  property taxes that normally would go into the general fund for running a city. It’s credit card spending with a new fancy name. Politicians love it because it sounds ... (click for more)

Roy Exum: Want To Buy An AK-47?

On Sunday night I got an email from a reader who I enjoy that read, “How about, ‘Don’t sell assault weapons to 18-year-olds.’ The blood is on your hands (and all the other gun and violence idolaters)!” While I beg to disagree with him, this is a nation where – right now, this minute -- there are an estimated ONE TRILLION rounds of ammunition and over 300 million firearms. I can ... (click for more)

Howard Nips Red Bank In McGary's Final Home Game

Two consolation games were played in the District 6-AA basketball tournament Monday night at Howard’s Henry Bowles Gymnasium and one was much more significant than the other. The Brainerd Lady Panthers had a strong fourth quarter to finally pull away from Tyner en route to a 48-34 victory while the Howard Hustlin’ Tigers escaped a hungry Red Bank team by a 71-68 final that was ... (click for more)

Howard Plays Like A "Miss Basketball" As Bradley Rips Lady Canes For 5-3A Title

CLEVELAND, Tenn. – In each of the last eight seasons, Bradley Central coach Jason Reuter hasn’t come close to winning the District 5-3A Coach of the Year award, an award voted on by the league coaches. In those eight years, however, Reuter has directed the Bearettes to a district tournament championship. Every year. Just like clockwork. That’s a tradeoff Reuter ... (click for more)