From: Ashburn, Melissa Ann
Sent: Friday, January 04, 2013 9:00 AM
Subject: tax penalty/bad check question
Dear Sir,
You asked which statute applies to taxes the County collects for the City, regarding
penalties that apply for bad checks used for payment of taxes – either T.C.A. § 67-1-804
or T.C.A. § 9-1-109. Your county follows T.C.A. § 9-1-109, and this statute has different
penalty provisions from those noted in Title 67.
T.C.A. § 67-1-804 sets penalties that far exceed what may be charged for delinquent
property taxes. On the issue of a bad check or money order being used for payment,
this statute contains the following:
(d)(1) If any check or money order in payment of any amount receivable under
any law administered by the commissioner is dishonored, there shall be imposed
a penalty upon the taxpayer in an amount equal to one percent (1%) of the
amount of such check; provided, that the penalty imposed shall be in an amount
equal to ten percent (10%) of the amount of such check for each dishonored
check in excess of two (2) issued by any one (1) person within one (1) calendar
year. The minimum amount of the penalty imposed under this subdivision (d)(1)
shall be fifteen dollars ($15.00). This subdivision (d)(1) does not apply if the
person tendered such check in good faith and with reasonable cause to believe
that it would be duly paid.
Tenn. Code Ann. § 67-1-804 (West)
This is different than the statute followed by your County, T.C.A. § 9-1-109, which
contains the following:
If any check or money order so received is not duly paid, in addition to other
penalties provided by law, there shall be paid as a penalty by the person who
tendered such check or money order, upon written notice and demand by the
state, county or municipal officer to whom such check was tendered, an amount
equal to one percent (1%) of the amount of such check or money order, except
that if the amount of the check or money order is less than two thousand dollars
($2,000), the penalty under this section shall be twenty dollars ($20.00) or the
amount of the check, whichever is lesser.
Tenn. Code Ann. § 9-1-109 (West)
It is important to note where in our code these statutes appear, and the subject matter
covered in those chapters. Title 9, chapter 1 discusses the fiscal year for counties and
the state, and then contains provisions about the county collecting taxes for
municipalities, in T.C.A. § 9-1-108. Title 67, chapter 1 is titled “Miscellaneous
Provisions,” and contains sections addressing the statewide tax system and reports filed
with the Commissioner of Revenue. Property taxes are not addressed in this chapter,
but rather in chapter 5 of title 67.
When reviewing these statutes, and the cases brought under each, it appears to me that
T.C.A. § 67-1-804 contains penalties assessed by the Commissioner of Revenue for
failure to file reports, or filing inaccurate reports, for sales and use taxes, probate taxes,
and other taxes paid directly to the Commissioner of Revenue. This statute does not
apply to property taxes as a separate statute exists setting penalties for delinquent real
property taxes (T.C.A. § 67-5-2010).
This leads me to conclude that your County is acting legally if they do follow T.C.A. § 91-109 in assessing those penalties for bad checks when collecting taxes for your City. In
my opinion, T.C.A. § 67-1-804 does not apply to those taxes the county is collecting for
the city.
I hope this is helpful,
Melissa
Melissa A. Ashburn
Legal Consultant
University of Tennessee
Institute for Public Service
Municipal Technical Advisory Service
(865)974-0411