Blogs

Search Blogs
Search by date
Choose From Date
Choose To Date
SearchClear

Tennessee Tax Has One Company Over a Barrel

The Tennessee Attorney General recently opined that the General Assembly may allow counties to impose a tax on liquor barrels. The proposed privilege tax on the use of liquor barrels would be imposed on any manufacturer of intoxicating liquor that ope

August 11, 2011

The Tennessee Attorney General recently opined that the General Assembly may allow counties to impose a tax on liquor barrels. The proposed privilege tax on the use of liquor barrels would be imposed on any manufacturer of intoxicating liquor that operated before 1950. Tenn. Att’y Gen. Op. No. 11-49 (May 31, 2011).  If this proposed tax sounds strange, that is because it is—only one company began distilling whiskey in Tennessee prior to 1950: Jack Daniel’s. Old No. 7 may be to Tennessee what apple pie is to America, but Moore County, the home of the Jack Daniel’s distillery, is expected to generate approximately $5 million per year from the tax.

Despite concluding that a proposed barrel tax would be valid, the Attorney General acknowledged that restricting this tax to particular counties could raise constitutional concerns.  Classifications drawn with respect to the barrel tax will not violate the equal protection clause of the Tennessee Constitution if they are drawn for purposes having a reasonable relationship to a legitimate interest, a level of scrutiny similar to rational basis review under the United States Constitution.  The Attorney General found a rational basis for restricting the tax to counties that approved liquor manufacturing before 1950 because they are more likely to be the site of large manufacturers that place a heavy burden on local government services. However, the Attorney General did not address the constitutionality of imposing the tax on a single taxpayer, Jack Daniel’s, and not other Tennessee liquor manufacturers. Despite the Attorney General’s approval, ultimately it will be up to the citizens of Moore County to decide whether Jack Daniel’s is a hand they want to bite.

Our Story

Sutherland Asbill & Brennan LLP is an international law firm helping the Fortune 100, industry leaders, sector innovators and business entrepreneurs solve their biggest challenges and reach their business goals. Dedicated to unfaltering excellence in client service, we are known for our business savvy and industry intelligence, providing creative and custom solutions for each of our clients. Industry and business experience makes the difference for our clients.

click to watch Videocast: Sutherland SALT Scoreboard – 2nd Quarter Highlights
Videocast: Sutherland SALT Scoreboard – 2nd Quarter Highlights
Washington, DC
Elizabeth S. Cha, Associate
Washington, DC
© 2016 Sutherland Asbill & Brennan LLP / Sutherland (Europe) LLP
MYBRIEFCASE
Add this page to MYBRIEFCASE
Add Page to MYBRIEFCASE
News/Commentary - Tennessee Tax Has One Company Over a Barrel
Current MYBRIEFCASE Pages
Save ChangesDownload MYBRIEFCASEClear All