KIMBALL, Tenn. -- After Kimball Mayor David Jackson read recent newspaper articles about several Tennessee cities owing county school systems millions of dollars from liquor-by-the-drink sales taxes, he wondered if his city owed money, too.
After some investigation, city officials found that Tennessee Code Annotated requires the state to collect the tax, and it keeps 50 percent of that money.
"[The state] sends 50 percent back to the city," Jackson said. "Then, we're supposed to take that 50 percent, cut it in half, and send that to the [county] trustee's office for the school system."
Since 2010, the state has returned $5,588 to Kimball, he said, so $2,794 is owed to the Marion County school system.
The Kimball Board of Mayor and Aldermen voted late last week to pay the money to the county trustee's office.
"We owe it," Alderman Johnny Sisk said. "We pay it."
Jackson said he has received information from one accounting firm that says the state comptroller's office "really has not enforced this."
"It's one of the few taxes where the state doesn't handle the division [of money] among the ultimate recipients," City Attorney Billy Gouger said.
He said the statute specifically says that the city is responsible for appropriation to the local school system.
"Kimball doesn't have its own school system in the town, so it defaults back to the county school system," Gouger said.
Alderman Mark Payne said he voted to pay the money now because if the board put it off, the number would just continue to grow.
"If we owe the money, then we need to pay it," Jackson said. "We don't want to leave a future board tens of thousands of dollars to be paid."
City leaders have set up a system to pay what Kimball owes to the county trustee every October to avoid the problem in the future.
Ryan Lewis is based in Marion County. Contact him at email@example.com.
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