Attorney General: Schools must be paid back for liquor taxes

A nonbinding opinion released by Tennessee Attorney General Robert Cooper says the law requires cities across the state to pay any unremitted liquor taxes to school districts.

The Chattanooga Times Free Press reports that the opinion says municipalities can't negotiate a lesser payment or offset costs with local-option sales tax revenue. However, it says cities don't have to pay all at once- they can set up a payment plan.

MORE: Knox schools owed over $1 million in mixed drink taxes

State law says that 50 percent of the mixed drink tax has to go to education. Neither Farragut, which passed an ordinance in 1988 to allow establishment to serve mixed drinks, nor Knox County, which approved its ordinance in 2009, has ever paid the tax.

Knox County more than likely owes as much as $350,000. Farragut could be on the hook for at least $1.1 million dating back to 1999. The town has an annual budget of $6 million a year, so it could be difficult for Farragut to pay what's owed to the school system at one time.

The City of Knoxville is up-to-date on its payments.


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