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But when I sold the property in 2007, we prorated taxes at closing, and the buyer was supposed to take care of the balance.  Shouldn’t the buyer be the one who is responsible?

White v. Kelley, 387 S.W.2d 821, 824 (Tenn.1965):  “To hold in the absence of a specific statute to that effect that the tax collectors had the authority of prorating or apportioning taxes would put upon the county the burden of making the segregations and enforcing collections of proportionate shares.  Chaos in the collection of real estate tax revenues would result.”

Hamilton National Bank v. Richardson, 394 S.W.2d 504, 507 (Tenn.App.1957):  “The general rule is that the power to tax does not include the power to remit or compromise taxes.  A tax is not predicated on contract and cannot be discharged by reason of contractual considerations.  Where taxes are legally assessed, the taxing authority is without power to compromise, release, or abate them except as specifically authorized by statute, and this is for the reason that, if such contracts can be made and performed on the part of a municipality, uniformity and equality are destroyed, and the burden of the obligation so remitted is inequitably cast upon the payers of general taxes in the taxing district … The courts are in virtually unanimous agreement that neither a political subdivision nor an officer thereof has the power to compromise, remit, or release a claim for taxes, in the absence of specific statutory authorization.”

Dunn v. Dunn, 42 S.W. 259, 261 (Tenn.1897):  “the provision in the statute that such lien shall remain upon real estate necessarily implies that it is to fasten upon and continue to attach to the land, no matter whether it may be transferred, or remain on the hands of the original owner, or become incumbered.” 

 Tennessee Code Annotated § 67-5-2102(a):  “This lien shall extend to each and every part of all tracts of lots of land, and to every species of taxable property, notwithstanding any division or alienation thereof …”

Tax Assessor
1320 W. Main Street
Franklin, TN 37064
(615) 790-5708

Swartz v. Akins, 315 S.W.2d 393, 395 (Tenn.1958):  “Of course none of us likes to pay taxes, and particularly penalties that are imposed for failure to make this payment. All citizens know that the Government and everything connected therewith is supported by taxes too numerous to mention and consequently those of us that are in business should know that it is our obligation to inquire as to whether or not there is a tax on this or that.”

Hamilton National Bank v. Richardson, 394 S.W.2d 504, 507 (Tenn.App.1957):  “The general rule is that the power to tax does not include the power to remit or compromise taxes.  A tax is not predicated on contract and cannot be discharged by reason of contractual considerations.  Where taxes are legally assessed, the taxing authority is without power to compromise, release, or abate them except as specifically authorized by statute, and this is for the reason that, if such contracts can be made and performed on the part of a municipality, uniformity and equality are destroyed, and the burden of the obligation so remitted is inequitably cast upon the payers of general taxes in the taxing district … The courts are in virtually unanimous agreement that neither a political subdivision nor an officer thereof has the power to compromise, remit, or release a claim for taxes, in the absence of specific statutory authorization.”  

White v. Kelley, 387 S.W.2d 821, 823-24 (Tenn.1965):  “When property has been thus assessed for the whole year’s taxes, and the owners have become liable therefore in the full amount as of January 10 (now January 1) of the tax year; the City and County authorities have no authority to accept less than the whole of the taxes assessed in satisfaction of the tax … the power to tax does not include the power to remit or compromise taxes.  The reason, of course, back of this is perfectly obvious because if Trustees, and those who have the authority and duty to collect taxes, could remit or compromise taxes there would never be any uniformity in the collection of these taxes.” 

You have probably been named as a Defendant because the public records show that you hold an interest in the property that is subject to the tax lien.  You may have recorded a mortgage on real property, or a UCC security interest in personal property.  You may have recorded a judgment lien, mechanic’s lien, or other statutory lien on the taxpayer’s property.  You may have an interest in real property such as an easement or a remainder interest, which is subject to the lien. 

This is an important notice to you because the tax lien is, by statute, the First Lien on the property, and is superior to your rights in the property.  If the property is sold for delinquent taxes, you may lose your rights or interest in the property.  You may want to discuss you rights in your particular circumstances with your attorney.  We can not provide you with legal advice as to your rights with regard to your relationship with others who may own or have an interest in the property.

Dunn v. Dunn, 42 S.W. 259, 262 (Tenn.1897):  “Taxes are by this act made a prior charge and lien upon the thing taxed, and override all liens, mortgages, and incumbrances, of whatever kind there might be upon the property”

If the County and/or City did not have notice of your Bankruptcy, then the taxes are completely unaffected by anything that happens in the Bankruptcy Court, and the discharge is irrelevant. 

If your Bankruptcy was filed before the taxes were assessed, the taxes are considered “post-petition” and are completely unaffected by anything that happens in the Bankruptcy Court, and the discharge is irrelevant. 

If your Bankruptcy was filed after the taxes were assessed, the taxes are considered “pre-petition”, and there are rare situations where your personal debt for the taxes may be dischargeable.  In a Chapter 7, the only tax debts that are dischargeable are those that were at least three years old at the time the Bankruptcy case was filed.  In other words, if your Bankruptcy was filed in 2008, personal debt for taxes from 2004 and earlier may be dischargeable.  In a Chapter 11 or 13, any tax debts that were included in your plan are dischargeable, although given the fact that taxes are both secured by the statutory lien, and a priority claim, it is virtually impossible to confirm a plan or receive a discharge without the taxes being paid in full.  

Even if your taxes are of the rare category that are dischargeable, it may not matter.  The Delinquent Tax Suit is both an action to collect the personal debt for the taxes AND an action to enforce the lien on the taxed property.  Although the personal debt may have been discharged, the lien remains on the property and is enforceable unless the lien was specifically avoided by order of the Bankruptcy Court.  This can only happen if you prevailed in an adversarial action against the County and/or City.  Therefore, if you have been served with process in the Delinquent Tax Suit regarding discharged tax debt, please promptly bring the matter to the attention of the Delinquent Tax Attorney, and we will make sure that pleadings are worded so as to semantically fit within the discharge.

Williamson County Clerk
1320 W. Main Street
Franklin, TN 37064
(615) 790-5732

Hamilton National Bank v. Richardson, 394 S.W.2d 504, 507 (Tenn.App.1957):  “The general rule is that the power to tax does not include the power to remit or compromise taxes.  A tax is not predicated on contract and cannot be discharged by reason of contractual considerations.  Where taxes are legally assessed, the taxing authority is without power to compromise, release, or abate them except as specifically authorized by statute, and this is for the reason that, if such contracts can be made and performed on the part of a municipality, uniformity and equality are destroyed, and the burden of the obligation so remitted is inequitably cast upon the payers of general taxes in the taxing district … The courts are in virtually unanimous agreement that neither a political subdivision nor an officer thereof has the power to compromise, remit, or release a claim for taxes, in the absence of specific statutory authorization.”

Because taxes are almost never dischargeable in Bankruptcy.  This depends on three factors.  First, did the County have notice of your Bankruptcy?  Second, was the Bankruptcy filed before or after the taxes were assessed?  Third, was your Bankruptcy was a Chapter 7, 11, or 13?  

If the County did not have notice of your Bankruptcy, then the taxes are completely unaffected by anything that happens in the Bankruptcy Court, and the discharge is irrelevant. 

If your Bankruptcy was filed before the taxes were assessed, the taxes are considered “post-petition” and are completely unaffected by anything that happens in the Bankruptcy Court, and the discharge is irrelevant. 

If your Bankruptcy was filed after the taxes were assessed, the taxes are considered “pre-petition”, and there are rare situations where your personal debt for the taxes may be dischargeable.  In a Chapter 7, the only tax debts that are dischargeable are those that were at least three years old at the time the Bankruptcy case was filed.  In other words, if your Bankruptcy was filed in 2008, personal debt for taxes from 2004 and earlier may be dischargeable.  In a Chapter 11 or 13, any tax debts that were included in your plan are dischargeable, although given the fact that taxes are a priority claim, it is unlikely that you would have been able to confirm a plan or receive a discharge without the taxes being paid in full.