published Tuesday, June 3rd, 2014

Hamilton County Schools can press liquor tax suit

Hamilton County Schools can proceed with their lawsuit against Chattanooga without involvement of the state or county government.

The city had contended that the suit seeking more than $11 million in unpaid state-mandated liquor taxes requires state intervention because the tax revenues are the state’s property.

But Chancellor Jeffrey Atherton found that Tennessee law gives jurisdiction to the board of education and the argument that the taxes are the state’s property fails. In a notice of intent not to intervene, the state earlier said it had no interest or role in the case.

The school system filed a lawsuit in April after leaders said talks with Mayor Andy Berke’s administration over more than $11.7 million in past-due taxes were getting nowhere. Berke then offered to pay nearly $12 million over the next five years with multiple conditions. The mayor’s administration later balked when the school system asked for a deal that acknowledged back taxes spanning more than three decades.

Now the schools have asked for a summary judgment of $15.2 million in unpaid taxes dating back to 1980, said school board attorney Scott Bennett.

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