September 20, 1995
This letter is in response to your question regarding whether the city may levy personal property taxes on privately-owned property at the airport. You stated that the tax assessor's office has assessed both county and municipal personal property taxes against such property because the airport was jointly run by the county and city. However, since the airport is located outside the municipal limits of the city, only county property taxes should be assessed against personal property at the airport.
Tennessee Code Annotated § 67-5-101 provides that "All property, real and personal, shall be assessed for taxation for state, county, and municipal purposes, except as is declared exempt in part 2 of this chapter, or unless otherwise provided. Municipalities are to tax property for municipal purposes "on the value thereof as the same is ascertained by the assessment for state taxation, and shall be collected in the same manner prescribed for the collection of the state revenue, except as herein provided." T.C.A. § 67-5-103.
As a general rule, persons and property must be within the jurisdiction of the taxing power to authorize its exercise. 16 McQuillin, Municipal Corporations, § 44.86. This rule is supported by Section 55 of the City's Charter: "All property, real, personal, mixed, situated within the corporate limits of the city and subject to taxation for State and County purposes, except where prohibited by the General Law, shall also be subject to taxation for municipal purposes." The General Assembly expressly limited the city's power to tax property to the corporate limits of the city. It is not clear that the legislature would have the authority to extend municipal taxing power beyond the city limits even if it so desired.
Although I could not find any Tennessee cases that addressed this issue, the Missouri Supreme Court has held that a city's ownership and operation of an airport outside of its corporate limits and use of the airport by airline companies does not constitutionally support the statutory apportionment to the city of aircraft valuation for property taxation. Therefore, the city's extraterritorial imposition of a tangible personal property tax on the companies' aircraft pursuant to the apportionment was held to be invalid as unreasonable, arbitrary and violative of due process. American Airlines, Inc. v. St. Louis, 368 S.W.2d 161(Mo.).
Please feel free to contact me if you have any questions regarding this or any other matter.
MTAS Legal Consultant