Opinion ID: 1755473
Heading Depth: 1
Heading Rank: 1

Heading: The Privilege License Tax

Text: North Courtland's original complaint alleged that Courtland was liable for a privilege license tax because Courtland was furnishing electricity within the corporate limits and the police jurisdiction of North Courtland. As noted earlier, the United States District Court for the Northern District of Alabama held that North Courtland could not impose the license tax on Courtland. Town of Courtland, Alabama v. Town of North Courtland, Alabama, No. 90-L-1346-NE (N.D.Ala., Dec. 28, 1990). In so holding, the federal district court relied on City of Sheffield, Alabama v. Town of Cherokee, Alabama, No. 89-AR-5073-NW (N.D.Ala., Oct. 12, 1989). In City of Sheffield, the court held that a municipality may not levy a tax against another municipal corporation which operates an electric operation on a non-profit basis pursuant to the TVA Act. In reaching its conclusion, the court in City of Sheffield recognized 16 U.S.C. § 831 l (1988), which provides, in pertinent part, the following: In order to render financial assistance to those States and local governments in which the power operations of the Corporation are carried on and in which the Corporation has acquired properties previously subject to State and local taxation, the board is authorized and directed to pay to said States, and the counties therein, for each fiscal year, beginning July 1, 1940, ... percentages of the gross proceeds derived from the sale of power by the Corporation for the preceding fiscal year.... The payments herein authorized are in lieu of taxation, and the Corporation, its property, franchises and income, are expressly exempted from taxation in any manner or form by any State, county, municipality, or any subdivision or district thereof.  Id. (emphasis added). The trial court was clearly justified in relying on City of Sheffield and the district court's recognition therein that § 831 l prohibits a municipality from levying a tax against another municipal corporation which operates an electric operation on a non-profit basis pursuant to the TVA Act. Therefore, because Courtland was entitled to a judgment as a matter of law on the issue regarding the privilege license tax, we affirm the summary judgment as to that issue.