Original Author: Huffer, Dennis
Date of Material: 06/13/2003
Purchasing--Laws and regulations--Municipal ordinances
Purchasing--Laws and regulations
Reviewed Date: 07/29/2021
MTAS was asked to research laws implicated when councilmember makes personal purchase through city, receiving discounted price and avoiding sales tax.
FROM: Dennis Huffer
DATE: June 13, 2003
RE: Purchase by councilmember through city
You asked what laws would be implicated by a member of the City Council making a personal purchase by piggybacking on a purchase made by the City. As a result of the Councilmember purchasing through the City, he received a discounted price and avoided sales tax since municipalities are exempt from sales taxes. Here are the major provisions implicated:
1. Tennessee Code Annotated, § 67-1-1440(d) and (e), makes it a Class E felony for a person to fraudulently avoid state taxes, or for two (2) persons to conspire to do so. The exact wording of this provision:
(d) It is a Class E felony for any person to delay, hamper, hinder, impede, obstruct or thwart the state of Tennessee in the collection of any of its lawful revenue, or deprive the state of the realization of such revenue at the time it is lawfully entitled thereto by any artifice, design, false weight or measure, stratagem, or by the falsification of any record, report or return required by law. Each act done in violation hereof is a separate offense.
(e) It is a Class E felony for any two (2) persons to conspire to delay, hamper, hinder, impede, obstruct or thwart the state of Tennessee in the collection of any of its lawful revenue, or deprive the state of the realization of such revenue at the time it is lawfully entitled thereto by any artifice, design, false weight or measure, stratagem, or by the falsification of any record, report or return required by law. Each act done in violation hereof is a separate offense.
This statute has been used to prosecute for sales tax fraud. See the unreported case of State v. Bryant, 1991 WL 44221 (Tenn. Cr. App. 1991).
2. T.C.A. § 39-16-402 makes it a Class E felony for any public servant to receive any benefit not conferred by law or to engage in other activities denominated official misconduct:
(a) A public servant commits an offense who, with intent to obtain a benefit or to harm another, intentionally or knowingly:
(1) Commits an act relating to the servant’s office or employment that constitutes an unauthorized exercise of official power;
(2) Commits an act under color of office or employment that exceeds the servant’s official power;
* * *
(4) Violates a law relating to the public servant’s office or employment; or
(5) Receives any benefit not otherwise authorized by law.
3. Section 4-406 of the Municipal Code prohibits the use of city offices for personal gain:
No city officer or employee shall make or attempt to make private purchases, for cash or otherwise, in the name of the city, nor shall he otherwise use or attempt to use his position to secure unwarranted privileges or exemptions for himself or others.
4. Article III, §14 of the City’s charter (Chapter No. 568, Private Acts of 1939, as amended) provides that the Mayor or any Alderman may be removed from office for crimes and misdemeanors or for grave misconduct in office. This is done by a majority vote of the remaining members of the City Council.
5. T.C.A. § 8-47-101, et seq., is a general law providing for ouster of public officials who commit misconduct in office. This is a judicial proceeding, and a complaint must be filed by the city attorney, the district attorney, or by ten (10) or more citizen relators.
I do not give an opinion on which, if any, of these provisions could be brought to bear successfully or otherwise in your situation, nor would I want to. This is simply a listing of those that seem relevant.
Purchase by Councilmember Through City public.doc