Locality Does Not Meet Municipality Requirements

1. Law
2. Tennessee Code
3. Taxes and Licenses
4. Property Taxes
5. Levy of Tax
6. Locality Does Not Meet Municipality Requirements

1. Notwithstanding any provisions of title 6 or any other law to the contrary:

   If, after July 1, 1998, a locality is deemed by the state to be a municipality for purposes of distributing grants or state-shared taxes; and

   If, thereafter the locality, acting in good faith and under color of law and for municipal purposes, collects and expends or obligates municipal property tax revenues; and

   If, thereafter it is judicially determined that the locality was not incorporated in accordance with the requirements of law and, therefore, is not a municipality; then

   neither the locality nor any person who acted on behalf of the locality is required to return or repay such municipal property tax revenues; however, any portion of such municipal property tax revenues, that remains unexpended and unobligated, shall be returned to the municipal property taxpayers on a pro rata basis.

2. As used in subsection (a), “the locality, acting in good faith and under color of law and for municipal purposes, collects and expends” includes, but is not limited to, reimbursement paid from municipal property tax revenues for documented, reasonable expenses of municipal incorporation that were paid out-of-pocket by one (1) or more residents acting on behalf of the locality and its incorporation.
3. Notwithstanding any law to the contrary:

   If, grants, state-shared taxes and municipal property tax revenues were co-mingled by the locality, then

   for purposes of subsection (a) and §9-4-5306(a), there shall be a rebuttable presumption that the locality expended or obligated all such grants and state-shared taxes before it expended or obligated any such municipal property tax revenues.

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