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Litigation Taxes

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Reviewed Date: June 26, 2017

Original Author: 
Darden, Don
Date Created: 
Oct 25, 2001


Subjects:
Courts--Municipal
Litigation--Municipal
Taxes--Litigation

Litigation Taxes

Summary: 
Answers a question about the legality of a city collecting local litigation tax, as well as the state litigation tax, from city court defendants.

Knowledgebase-Litigation TaxesDear Maven,
Along with collecting the state tax from city court defendants, a neighboring city also assesses a local litigation tax. Is this legal?
Alderman Seeking Verdict

Dear Verdict Seeker,
Almost all Tennessee cities with municipal courts are aware that a state litigation tax of $13.75 is levied on all civil and criminal cases. The tax is collected when the city court renders a judgment against a defendant for violation of a city ordinance, when a defendant is found guilty or pleads guilty to a state criminal violation, or when a defendant submits to a fine for violation of a state criminal case. The litigation tax is not collected for a defendant’s forfeiture of an appearance bond or when a municipal or state charge against a defendant is dismissed in court.
Many Tennessee cities are apparently not aware that Public Chapter 488 of the Public Acts of 1981 also authorizes a city to levy alocallitigation tax that is not to exceed the state litigation tax of $13.75. The collection rules are the same for both the state and local assessments. In very small cities, the amount of litigation taxes collected may be minimal. But in medium to large cities with heavier caseloads, that figure could be significant.
Some cities feel that it is unfair to levy a local litigation tax on top of the state tax. From a fairness standpoint, it might not be fair to levy a property tax on a Social Security recipient receiving $565 per month who has to shuffle pennies around to pay for utilities, prescription medicine, food, and housing. From a fairness point of view, a local litigation tax permits the defendant to help pay for police, court personnel, and facilities.
Please call your MTAS consultant for a sample ordinance levying a local litigation tax.

Don Darden
Municipal Management Consultant

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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.