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Reference Documents:
Text of Document: September 10, 1996
Your question is, why was the 1939 insolvency board contained in Tennessee Code Annotated, section 67-5-2601, abolished by Public Acts 1992, Chapter 926? The answer appears that the sponsors of Public Acts 1992, Chapter 926, generally thought it had the potential to become an instrument for the forgiveness of legally assessed property taxes, and specifically thought it had the potential to become an instrument for the forgiveness of property taxes with respect to a particular property owner or owners in Hamilton County. My conclusion is based on personally listening to the tapes on the legislative debates on Senate Bill 2000 sponsored by Sen. Crutchfield and House Bill No. 2756 sponsored by Rep. Davidson, from which Public Acts 1992, Chapter 926 derives. Virtually all the legislative debate occurred in the Senate and House Finance Ways and Means Committees. However, Rep. Davidson made some comments about House Bill 2756 in the Whole House, after which it immediately passed. There were no comments made on the bill in the Whole Senate because it passed on the consent calendar.
It was not clear to me from the tapes whether Senate Bill 2000 initially proposed an amendment to, or a repeal of, Tennessee Code Annotated, Section 67-5-2601. Whatever the case, on March 31, 1992, in the Senate Finance Ways and Means Committee, Sen. Crutchfield proposed that one insolvency board be created to hear appeals for forgiveness of both city and county taxes. His complaint was that while Tennessee Code Annotated, section 67-5-2601 had been used only around four times, the city insolvency board could forgive both city and county taxes. The debate indicates no source for the figure of four.
Sen. Jones commented that only the county trustee sat on the city insolvency board, and declared that the board ought to be reconstituted to reflect a city-county membership balance.
Sen. Rochelle asked how many such boards were in existence, and short inconclusive debate on that question followed. Sen. Rochelle then stated that property taxes in Tennessee were not very high, and that if the assessment and appraisal were correct, they ought to be paid. The "law is dangerous," he declared. It allows a group of people who are legally assessed taxes not to pay those taxes. The problem was not that couples owing a lot would take advantage of the law, but that corporations would do so. He came out for repeal of the law.
On April 7, 1992, in the House Finance Ways and Means Committee, Rep. Davidson pointed to Hamilton County where one person owning 21 parcels of property and who owed several hundred thousand dollars in back property taxes, could through a quirk in the law obtain forgiveness for the taxes and still hold the property. Whether that property owner had actually obtained forgiveness for those taxes was not clear.
On the same day in the Senate Finance Ways and Means Committee, Sen Crutchfield also pointed to Hamilton County as the specific source of the problem with the law, declaring that the city could incorporate a board to forgive county taxes, and that in Chattanooga a corporation got an "intelligent law firm" to use the law to its advantage. There is no indication whether the corporation and the owner of the 21 parcels of land mentioned by Rep. Davidson are the same person, or whether the corporation successfully used the law. In any event, Sen. Crutchfield now proposed the law be repealed.
In the Whole House on April 28, 1992, Rep. Davidson declared that in 1939 the law was passed to allow settlement boards to compromise taxes, that property owners could have city and county taxes forgiven. That, he said, "happens all over Tennessee." The bill would reverse that, and "entities could collect taxes without going to settlement boards."
As I said, there was no debate on the bill in the Whole Senate; it was passed unanimously on the consent calendar.
Sincerely,
Sidney D. Hemsley
Senior Law Consultant
SDH/ |