Moscheo v. Polk County, No. E2008-01969-COA-R3-CV (Tenn. App. 9/2/2009)
| Decision Date | 02 September 2009 |
| Docket Number | No. E2008-01969-COA-R3-CV.,E2008-01969-COA-R3-CV. |
| Parties | JOHN MOSCHEO v. POLK COUNTY, TENNESSEE. |
| Court | Tennessee Court of Appeals |
Appeal from the Chancery Court for Polk County; No. 7356; Jerri S. Bryant, Chancellor.
Judgment of the Chancery Court Affirmed; Case Remanded.
Ginger Wilson Buchanan, Cleveland, Tennessee, for Appellant, Polk County, Tennessee.
Christopher W. Connor and Trey Jackson, Maryville, Tennessee, for Appellee, John Moscheo.
OPINION
This appeal relates to another installment in the saga of the privilege tax on whitewater amusements in Polk County, Tennessee. The trial court granted summary judgment, finding, pursuant to 33 U.S.C. §5(b), that the Ocoee River is a navigable waterway subject to the authority of the United States and that the county's privilege tax is preempted by federal law and is, therefore, invalid. We affirm.
This is a case involving a locally authorized privilege tax imposed by Polk County ("County"). Originally enacted in 1981 and amended several times thereafter by various acts, the local tax was reenacted and restated in 2001. The 2001 Private Act ("Private Act") imposes a tax at the rate of $2.50 "upon the privilege of a consumer participating in an amusement." In the recent case of High Country Adventures, Inc. v. Polk County, No. E2007-02678-COA-R3-CV, 2008 WL 4853105 (Tenn. Ct. App. E.S., Nov. 10, 2008)1 ("High Country"), this court summarized the history of the statute:
In 1981, the Tennessee legislature enacted a private act ("the 1981 Act") authorizing Polk County to levy a privilege tax on consumers participating in activities that included commercial whitewater rafting excursions in Polk County. . . . [T]he 1981 Act included the following sections, beginning with Section 2, which stated:
The legislative body of Polk County is hereby authorized to levy a privilege tax upon the privilege of a consumer paying consideration for admission for an amusement. Such tax shall be imposed on the consideration charged by the operator at a rate equivalent to the combined rate imposed by the state and Polk County under the "Retailers' Sales Tax Act" and the "1963 Local Option Revenue Act" pursuant to Tennessee Code Annotated, Title 67, Chapter 30, as the same may be amended and adopted. Such tax so imposed is a privilege tax upon the consumer enjoying the amusement and is to be collected and distributed as provided in this act.
The term "operator" as used in the 1981 Act was defined as ". . . the person operating an amusement," and the term "amusement" was further defined as follows:
"amusement" means any ride, excursion, or float trip by canoe, raft, or similar floating device on a whitewater river where a fee is charged by any person for such ride, excursion, or float trip, which charge is otherwise not included as a taxable privilege under the "Retailers' Sales Tax Act" imposed by Tennessee Code Annotated, Title 67, Chapter 30. FN1
FN1. The Retailers' Sales Tax Act provides that activities such as the whitewater rafting in this case shall be exempt from taxation as an amusement as follows:
There is exempt from the sales tax on admission, dues or fees imposed by §67-6-212: . . . Events or activities conducted upon rivers and waterways in this state whose continued use for recreational purposes is contingent upon revenue produced pursuant to agreements entered into between the State of Tennessee and the federal government, or an agency thereof, which agreements provide for the establishment of a trust fund for such purposes; provided, that this exemption shall prevail only if the annual distribution of funds to the state from such trust fund exceeds that amount of revenue to the state that would otherwise be produced if the amusement tax under the provisions of § 67-6-212 were impose[d] on such events or activities, as determined by the fiscal review committee.
Tenn. Code Ann. §67-6-330(a)(8).2
As to collection of the tax from the consumer and remittance of such taxes to Polk County, the 1981 Act further provided at Section 3 that
Finally, Section 9 of the 1981 Act provided as follows with respect to remedies for recovery of allegedly erroneous tax payments:
Upon any claim of illegal assessment and collection, the operator liable for collecting and remitting the tax shall have the remedy provided in Tennessee Code Annotated, Title 67, Chapter 23 for recovery of erroneous tax payments, it being the intent of this act that the provisions of law which apply to the recovery of taxes illegally assessed and collected shall apply to the tax collected under the authority of this act; provided, the county trustee shall possess those powers and duties provided in Tennessee Code Annotated, Section 67-2301, with respect to the adjustment and settlement with such operators of all errors of taxes collected by him under the authority of this act and direct the refunding of the same. Notice of any tax paid under protest shall be paid to the county trustee, and suit for recovery shall be brought against him.
Section 2 of the 1981 Act was amended in 1997 to delete the first sentence and substitute therefor: "The Legislative Body of Polk County is hereby authorized to levy a privilege tax upon the privilege of a consumer participating in an amusement for which an admission fee is charged."
In April of 2001, the legislature, again by private act, reenacted and restated the 1981 Act. This reenactment/restatement ("the 2001 Act") changed certain aspects of the 1981 Act. Of note, . . . Section 7 of the 2001 Act restated Section 9 of the 1981 Act, pertaining to remedies with respect to erroneous payments, as follows:
Upon any claim of illegal assessment and collection, the operator liable for collecting and remitting the tax shall have the remedy provided in Tennessee Code Annotated, Title 67, Chapter 1, Part 9, for recovery of erroneous tax payments, it being the intent of this act that the provisions of law which apply to recovery of taxes illegally assessed and collected shall apply to the tax collected under the authority of this act; provided, the county trustee shall possess those powers and duties as provided in Tennessee Code Annotated, Section 67-1-707, with respect to the adjustment and settlement with such operators of all errors of taxes collected by him under the authority of this act and direct the refunding of the same. Notice of any tax paid under protest shall be paid to the county trustee, and suit for recovery shall be brought against him.
High Country, 2008 WL 4853105, at *1-2 (citing Tenn. Code Ann. §§67-1-1405 and 67-4-716).
In October 2007, John Moscheo ("Moscheo") participated in a rafting trip on the Ocoee River3 conducted by Outland Expeditions, a commercial whitewater rafting company.4 Subsequent to the rafting trip, Moscheo paid the $2.50 tax imposed by the Private Act under protest directly to Polk County. In January 2008, Moscheo filed suit against Polk County. In his complaint, he alleged the following:
6. The tax as levied is in violation of the Mari[time] Transportation Security Act of 2002 as codified in 33 U.S.C. §5(b) . . . .
7. The Ocoee River is a navigable waterway, subject to the authority of the United States.
8. Taxpayer was assessed the tax as a passenger on a vessel or watercraft on the Ocoee River.
9. The tax levied upon Taxpayer does not meet any exception as outlined in 33 U.S.C. §5(b).
Moscheo subsequently filed a motion for summary judgment in which he asserted that there were no material facts in dispute — that the tax being levied against participants in rafting trips was in contravention of § 445 the Maritime Transportation Security Act of 2002 ("MARSEC"),5 which amended 33 U.S.C. §5(b) of the Rivers and Harbors Appropriations Act of 1884. The pertinent section provides as follows:
(b) No taxes, tolls, operating charges, fees, or any other impositions whatever shall be levied upon or collected from any vessel or other water craft, or from its passengers or crew, by any non-Federal interest, if the vessel or water craft is operating on any navigable waters subject to the authority of the United States, or under the right to freedom of navigation on those waters, except for
(1) fees charged under section 22366 of this title;
(2) reasonable fees charged on a fair and equitable basis that —
(A) are used solely to pay the cost of a service7 to the vessel or water craft;
(B) enhance the safety and efficiencyof interstate and foreign commerce; and
(C) do not impose more than a small burden on interstate or foreign commerce; or
(3) property taxes on vessels or watercraft, other than vessels or watercraft that are primarily engaged in foreign commerce if those taxes are permissible under the United States Constitution.
In response, as relevant to this appeal, Polk County noted the following:
1. Since the determination by the U.S. Army Corp[s] of Engineers that the Ocoee River was a navigable waterway of the United States, such determination made in 1977, there have not been any locks constructed for navigation around Ocoee Dams 1, 2 and 3 on the river. . . .
2. There are not any forest products that are transported in commerce upon the Ocoee River. . . .
3. Downstream from Ocoee Dam No. 3 and Ocoee Dam No. 2, there are constructed pipelines or flume line through which the waters that normally flow in the Ocoee River are carried for the purpose of T.V.A. to generate electricity. At the time that water is flowing through the pipelines and flume line,...
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