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Pay the Piper, Sings Davidson County Clerk
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Pay the Piper, Sings Davidson County Clerk

03.05.12
From Una to Belle Meade, restaurant and bar owners across Metro Nashville Davidson County are getting letters that remind us of a famous Beatles song:

If you drive a car, I'll tax the street;
If you try to sit, I'll tax your seat;
If you get too cold, I'll tax the heat; 
If you take a walk, I'll tax your feet. 

The letters from the Taxman demand payment for two or three years of the obscure "liquor by the ounce permit." Based on what we know, Metro has not invoiced the tax in the past couple of years, because of a computer glitch. All of a sudden, Metro is demanding payment for several years of the tax.

Here is a letter many folks are receiving:
 
The taxman has some baggage he is not sharing.

First, state law only authorizes the taxman to collect a tax equal to the 2003 ABC license fee. The law is not entirely clear, but if the taxman collects the current ABC license fee amount, the taxman has to pay some of the tax back to the ABC.

For example, the letter above demands $1,200 for three years.  We believe the city is only entitled to $1,000 for each year. 

Second, the privilege tax is not a mandatory tax, like sales and LBD taxes. Since the city failed to ask for the tax for the past couple of years, we question if the city can ask for the optional tax retroactively. To our knowledge, no law requires a licensee to pay the tax, unless the city assesses the tax.

Last but not least, Nashville, like most cities and counties, refers to the tax as a liquor by the ounce "permit." It is not a permit; it is only a tax. Although Nashville can sue a taxpayer for delinquent taxes, the city cannot prevent a restaurant or bar from serving liquor, unless the Tennessee ABC takes action. 

We are recommending that licensees keep the notices, but not pay them until these issues are resolved. Stay tuned and if you want specific advice, email me at will@willcheek.com.





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