|Legal Opinion: |
Text of Document: April 19, 2006
Via fax no. 731-658-1877, and U.S. Mail
Re: Requirement that vendors pay higher fees and post bonds
Dear City Attorney,
Your Management Consultant informed me that the governing body of your City is considering passing an ordinance levying higher fees on transient vendors, and requiring that vendors post bonds. In my opinion, there is no legal authority for such action.
Tennessee cities can only regulate businesses and charge fees which are specifically provided for in the general laws. Our tax laws define those persons who are considered to be transient vendors as follows:
"Transient vendor" means any person who brings into temporary premises and exhibits stocks of merchandise to the public for the purpose of selling or offering to sell the merchandise to the public. "Transient vendor" does not include any person selling goods by sample, brochure or sales catalog for future delivery; or to sales resulting from the prior invitation to the seller by the owner or occupant of a residence. For purposes of this definition, "merchandise" means any consumer item that is or is represented to be new or not previously owned by a consumer, and "temporary premises" means any public or quasi-public place, including a hotel, rooming house, storeroom, building or part of a building, tent, vacant lot, railroad car or motor vehicle which is temporarily occupied for the purpose of exhibiting stocks of merchandise to the public. Premises are not temporary if the same person has conducted business at those premises for more than six (6) consecutive months or has occupied the premises as the person's permanent residence for more than six (6) months. T.C.A. ' 67-4-702(21).
Any ordinance the City adopts to regulate vendors should contain this definition.
The privilege tax or licensing fees which a city may charge vendors is limited to $50 by T.C.A. ' 67-4-710(a)(2):
Transient vendors shall pay a fee of fifty dollars ($50.00) for each fourteen-day period in each county or municipality,or both, in which such vendors sell or offer to sell merchandise or for which they are issued a license. Notwithstanding any law to the contrary, the fee shall be paid prior to the first day of engaging in business. Transient vendors shall not be liable for the tax levied under 67-4-709.
Cities may not charge licensing fees higher than the amounts authorized by the state laws. Tennessee cities are creations of the legislature, and may only regulate and tax those businesses specifically identified in statutes. It has long been the law in Tennessee that the State legislature alone has the power to create privileges subject to licensing, and cities cannot through their police powers designate certain practices or businesses as being subject to inspection and licensing, absent express authority contained in state law. Mayor of Columbia v. Guest, 40 Tenn. 413 (1859); Nashville v. Althrop, 45 Tenn. 554 (1868); Vosse v. City of Memphis , 77 Tenn. 294 (1882).
There is no authority for local governments to require vendors to post bonds. Such action impacts commerce, as it limits the persons who would qualify for licensing based on ability to post a bond. Under such an ordinance, vendors who cannot post a bond would be denied a license or permit, which would violate Tennessee law. Cities cannot impose additional requirements on individuals seeking to conduct business, other than those regulations authorized by the general laws.
If your City does pass an ordinance to regulate vendors, I suggest that the City stick to the statutory framework and charge only a $50 permit fee. Fees charged in excess of that amount, and the requirement that vendors post bonds, are not authorized by law and may subject the City to litigation.
I hope this information is helpful. Thank you for consulting with MTAS.
Melissa A. Ashburn