Ruling on Corbin tax lawsuit could come in December

Attorneys representing the City of Corbin recently filed a motion for summary judgment seeking a ruling from the Knox Circuit Court that would allow taxpayers who live in Corbin but work in the Knox County section of Corbin to a one percent occupational tax credit.

The motion, filed Oct. 30, was accompanied by a “memorandum in support of petitioner’s motion for summary judgment” that outlines the City of Corbin’s position.

In the introduction of the memorandum, Patrick R. Hughes of the law firm of Dressman Benzinger Lavelle of Crestview Hills, claims that Knox County is “once again refusing to recognize the right of taxpayers (this time Corbin taxpayers) to the occupational license fee credit guaranteed them by KRS 68.197(7).

The motion is the latest action in a suit filed April 7. The seven- page document, officially titled a “petition for declaratory relief” names as respondents both Knox County and the City of Barbourville. The suit came after a March 10 meeting, including a 20-minute executive session, during which members of the Corbin Board of Commissioners voted unanimously to file the suit in an attempt to end speculation over how the tax issue between Corbin and Knox County would be resolved.

At that meeting, Corbin commissioner Phil Gregory said, “We’ve been talking about this since I’ve been here. That’s the last thing we wanted to do is file suit. We just feel people in the city should be paying city occupational tax. We just want to be fair about it.”

Corbin Mayor Willard McBurney said the move was “in the best interest of the citizens of Corbin.”

In the latest motion, Hughes claims that facts show that the population of Knox County in 1999, when Knox County’s occupational tax was levied, was over 30,000. He also claims that the county has been collecting occupational license fees from Corbin taxpayers and unlawfully distributing a portion of those proceeds to the City of Barbourville. The motion points out that Knox County levied a one percent occupational license fee on Oct. 15, 1999. A similar occupational fee of one percent was later levied by the City of Corbin on Aug. 11, 2005. Hughes noted that some taxpayers who work in Corbin are subject to both the Knox County and Corbin occupational license and that, due to Knox County’s refusal to provide a credit taxes paid by Corbin taxpayers against the Knox County fees, Corbin instituted the suit in an attempt to compel Knox County to provide the credit.

The motion states that the City of Barbourville and Knox County were involved in a similar action in 1999 after Knox County levied the Knox County fee only days after Barbourville enacted a one percent occupational tax fee.

After the matter went before the Kentucky Court of Appeals, the court sided with Barbourville. Following the Appeals Court decision, Barbourville and Knox County leaders reached a Settlement Agreement governing the collection and allocation of license fees from Sept. 2003 through June 2012. As part of the settlement, Hughes noted that Knox County was required to pay Barbourville 32 percent of the first $1.8 million of fees collected in each 12-month period and 25 percent of all additional funds collected above the $1.8 million. However, Hughes notes that the agreement does not exempt funds paid by Corbin taxpayers, and asserts that the Knox County-Barbourville settlement is unlawful because it “allows Barbourville to tax Corbin taxpayers.”

In the final section of the memo, Hughes notes that if Knox County were to allow the credit for Corbin taxpayers, the Barbourville issue would be moot.

A Dec. 15 motion hour has been set in the case.