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Collecting State and Local Litigation Tax on Actions Filed in Municipal Court

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Reviewed Date: June 26, 2017

Original Author: 
Moore, Todd
Date Created: 
Nov 12, 1995


Subjects:
Courts--Municipal
Laws and regulations--State
Taxes--Litigation

Collecting State and Local Litigation Tax on Actions Filed in Municipal Court

Summary: 
MTAS was asked when the city must collect state and local litigation tax on actions filed in municipal court.

Knowledgebase-Collecting State and Local Litigation Tax on Actions Filed in Municipal Court November 12, 1995

This letter is in response to your question regarding when the city must collect state and local litigation tax on actions filed in municipal court. As we discussed, the city does not collect the tax on all cases, but only when a judgment is entered against the defendant, the defendant pleads or is found guilty of a criminal law, or the defendant submits to a criminal fine.

Tennessee Code Annotated § 67-4-603(a) provides:

The clerks of the various courts shall collect the various privilege taxes imposed by § 67-4-602 in the following manner:

(2) Upon a finding of guilt, plea of guilty, or submission to fine in a criminal action, from the defendant; . . .

(4)Upon judgment against the defendant in any original civil action brought by a city or county of the state of Tennessee or by the state of Tennessee, from the defendant; . . .

Subsection (2) of this statute only applies if the defendant is charged with violation of a state criminal statute. Subsection (4) applies if the defendant is charged with a municipal ordinance violation.

Therefore, the litigation tax is collected in three situtations: (1) When the city court renders a judgment against a defendant for violation of a municipal ordinance; (2) When a defendant is found guilty or pleads guilty to a state criminal violation; and (3) When a defendant submits to a fine for violation of a state criminal statute. Litigation tax should not be collected for a defendant's forfeiture of an appearance bond for failure to appear in court for either a municipal ordinance violation of a violation of a criminal statute. Also, litigation tax should not be collected when municipal or state charges are dismissed in court against a defendant.

I have enclosed a copy of a Notice from the State Department of Revenue which discusses this issue. Please feel free to contact me if I can be of any further assistance. Thanks for asking MTAS to help.
Sincerely,

Todd Moore
MTAS Legal Consultant

TM/


About Our Knowledgebase

MTAS letters and publications were written based upon the law at the time and/or a specific sets of facts. The laws referenced in the letters and publications may have changed and/or the technical advice provided may not be applicable to your city or circumstances. Always consult with your city attorney or an MTAS consultant before taking any action based on information contained in this database.