Lawsuit seeks back liquor-tax revenues

By Abby Frye

Alcohol sales have caused an uproar in the county, though not in the usual way.
On Thursday, the Carter County Board of Education filed suit against the City of Elizabethton, saying the city has withheld tax revenues from the sale of alcoholic beverages which are due to the county school system under state law. The suit was filed in Carter County Chancery Court.
In the complaint for declaratory judgment, the school system alleges the city has failed to turn over the portion of collected liquor-by-the-drink tax revenues which is due to the county school system.
“The Tennessee Department of Revenue collects a 15 percent state-imposed tax on the sale of alcoholic beverages consumed on premises,” states the complaint. “(State law) provides a statutory formula by which the Tennessee Department of Revenue distributes a portion of the liquor-by-the-drink tax revenues to local municipalities which have authorized liquor-by-the-drink sales within their corporation limits. Each such municipality is then required to remit a portion of their liquor-by-the-drink tax revenue to the County school fund of the county in which the municipality is located.”
The Board of Education further alleges in its complaint that the City of Elizabethton has received the redistribution of tax revenue from the state. “The Defendant, City of Elizabethton, has not paid over to the Carter County Board of Education the funds required by statute, but has spent these funds without regard to its statutory duty to distribute same to the Carter County Board of Education.”