A judge has ruled Cookeville Boat Dock & Resort, Inc. must pay the ad valorem (property) taxes on the boat dock property that it has refused to pay since 1998. The total tax bill owed comes to more than $200,000 including interest and penalties
Circuit Court Judge Amy V. Hollers has found the boat dock’s claims that such a tax was a violation of the U.S. Constitution’s Supremacy Clause and was discriminatory under Tennessee’s Constitution are not valid.
(CLICK LINK BELOW TO VIEW JUDGE AMY HOLLARS' OPINION AND ORDER ON COOKEVILLE BOAT DOCK)
2011cv42opinionandorder_rad66098.pdf (1.28 MB)
In her ruling, Judge Hollars wrote “neither the Supremacy Clause nor any principle of state law prevents DeKalb County from assessing Cookeville Boat Dock for its ownership interest in the boat dock facilities. The court must reject Cookeville Boat Dock’s constitutional challenge to the assessment of ad valorem taxes on its property.”
The boat dock had argued such a tax could be characterized as “double taxation” since it pays fees to the United States Army Corps of Engineers which are used, in part, to pay DeKalb County a sum in lieu of taxes. The owners of the dock further argued a section of Tennessee’s Constitution “violates the Supremacy Clause of the Constitution of the United States by discriminating against a lessee of the United States in favor of lessees of the State of Tennessee.
The judge said the boat dock’s attempt to “raise a ‘double taxation’ argument fails because the amount received by DeKalb County from the lease payments to the federal government is not a tax by the county.”
She went on to rule that “it is well-established that the Supremacy Clause does not prevent a state or local government from imposing a tax on an individual or a corporation ‘using government property in connection with a business conducted for its own private gain.’”
In conclusion, Judge Hollars ordered that the boat dock “pay the unpaid ad valorem taxes assessed for all years in question, together with all applicable penalties and interest.”
From 1998 through the 2013 tax year, owners of Cookeville Boat Dock & Resort, Inc. have been named as defendants in DeKalb County Chancery Court lawsuits filed against delinquent taxpayers. The amount Cookeville Boat Dock & Resort, Inc. owes through 2013 in delinquent taxes comes to $195,959.89 (taxes on personal property and leased property including the base tax plus interest and penalty, attorneys fees, and court costs). Further penalties are assessed each month. Additionally for the 2014 tax year, the Trustee's Office reports that Cookeville Boat Dock & Resort Inc. owes a total $8,460 (including interest and penalty for April)
In a Chancery Court delinquent tax lawsuit, the marina owners claim that they can't be forced to pay ad valorem (property) taxes on constitutional grounds. But in 2013, Tennessee Attorney General Robert E. (Bob) Cooper, Jr. gave an opinion that the marina's claim is without merit and should be dismissed by the court.
The attorney for Cookeville Boat Dock, Jon E. Jones of Cookeville contends the owners of the marina are being discriminated against in that the county is trying to force them to pay ad valorem taxes on the boat dock facility which is leased from the U.S. Army Corps of Engineers (federal government property) while other properties in Tennessee leased from the state or local government entities (under Article II, Section 28 of the Tennessee Constitution) are exempt from payment of ad valorem taxes. This, he claims is a violation of the Supremacy Clause of the U.S. Constitution making the tax assessment against Cookeville Boat Dock & Resort, Inc. invalid. In 2013 Jones filed an amended answer to the county's Chancery Court lawsuits against delinquent taxpayers including Cookeville Boat Dock & Resort along with a counter complaint seeking a declaratory judgment for his clients.
In her "Opinion and Order", Judge Hollars gave a narrative of the case as follows:
"Cookeville Boat Dock, Inc. owns and operates a commercial boat dock and concession on land that is leased from the federal government, Cookeville Boat Dock has been assessed ad valorem taxes on the boat dock property since 1998. Because Cookeville Boat Dock has not paid these taxes, the boat dock property has been included in the delinquent tax proceedings covering years 1998 through 2011. Cookeville Boat Dock has not been assessed for the underlying real estate, which is owned by the federal government, or for any leasehold interest in the real estate. Instead, Cookeville Boat Dock has been assessed only for the buildings and other structures that make up the boat dock property. Public records list Cookeville Boat Dock as the owner of this property."
"Cookeville Boat Dock has not challenged the tax assessments before the county board of equalization or appealed any county board action to the state board of equalization. Cookeville Boat Dock has not paid the taxes under protest or instituted a suit against the taxing authority to challenge the imposition of the tax as "unjust or illegal, or against any statute or clause of the constitution of this state."
"Instead, Cookeville Boat Dock moved to dismiss "all claims for collection of real property taxes against it", arguing that, for tax years prior to the effective date of the statute's 2004 amendment, Tennessee Code Annotated (state law) did not apply "to boat docks, marinas, or other related structures, and such properties were not taxable as real property". Cookeville Boat Dock also raised what might be characterized as a "double taxation" or "taxation equivalence" defense in these delinquent tax proceedings. In support of this argument, Cookeville Boat Dock noted that, pursuant to its lease for commercial concession purposes, it must "pay fees to the United States Army Corps of Engineers which are used, in part, to pay DeKalb County a sum in lieu of taxes". Much later, in June of 2013. Cookeville Boat Dock filed an Answer and Counter Complaint for Declaratory Judgment, wherein it asserted that Article II, Section 28 of the Constitution of Tennessee violates the Supremacy Clause of the Constitution of the United States by discriminating against a lessee of the United States and in favor of lessees of the State of Tennessee, its counties, its municipalities, or other local governmental entities. Cookeville Boat Dock asks the court to declare (1) that Article II, Section 28 of the Constitution of Tennessee is invalid, and (2) that the real property subject to Cookeville Boat Dock's lease for commercial concession purposes is exempt from ad valorem taxation. The State of Tennessee, through the office of the Attorney General, answered Cookeville Boat Dock's Counter-Complaint and submitted a Brief defending the constitutionality of Article II, Section 28 of the Tennessee Constitution. Therein, the State asserted that Cookeville Boat Dock's constitutional challenge is without merit and procedurally barred. After submitting trial briefs, DeKalb County and Cookeville Boat Dock requested that the court decide the legal issues based upon the briefs submitted."