Request By:
Elmer Cunnagin, Jr., Esq.
Laurel County Attorney
Laurel County Courthouse
London, Kentucky 40741
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter raising a question concerning taxes collected by the sheriff on behalf of a volunteer fire protection district.
You state that in 1976 the Bush Volunteer Fire Protection District was created pursuant to the provisions of KRS Chapter 75 and began performing the functions of a fire district. Later the fire district imposed a property tax on the residents within the district which led to a number of those residents filing a civil action in the Laurel Circuit Court challenging the legality of the Bush Volunteer Fire Department District. The civil action is still pending in court.
The property tax enacted by the fire protection district was placed on the tax bills of those persons living within the district and is being collected by the Laurel County Sheriff. The sheriff is presently withholding payment of the collected fire protection district tax and has placed the money in an escrow account pending the disposition of the civil suit. An attorney for the Bush Volunteer Fire Department District has demanded that the sheriff pay the tax money collected to the district.
Your question is whether the county or the sheriff may incur liability if the tax money collected is paid to the fire department district at this time and the court subsequently declares that the Bush Volunteer Fire Department is not a valid legal entity.
Presumably the fire district levied the tax in question on property in the district pursuant to KRS 75.040. Subsections two and three of that statute provide:
"(2) The property valuation administrator of the county or counties involved with the cooperation of the board of trustees, shall note on the tax rolls the taxpayers and valuation of the property subject to such assessment. The county clerk shall compute the tax on the regular state and county tax bills in such manner as may be directed by regulation of the department of revenue.
(3) Such taxes shall be subject to the same delinquency date, discounts, penalties and interest as are applied to the collection of ad valorem taxes and shall be collected by the sheriff of the county or counties involved and accounted for to the treasurer of the district. The sheriff shall be entitled to a fee of one percent (1%) of the amount collected by him."
The statute specifically requires the sheriff to collect the tax imposed by the fire district and to account for the money to the treasurer of the fire district. In OAG 78-491, copy enclosed, we said in part that in the collection of taxes and the turning over of the taxes to the tax authorities for whom the taxes are collected, the sheriff must follow the directions and requirements of the statutes. Furthermore, in Knox County v. Lewis' Adm'r, 253 Ky. 652, 69 S.W.2d 1000 (1934), the Court said in part that the sheriff must account for and pay the proper authority the amount of taxes shown by the county clerk's tax books or his receipts therefor.
In 72 Am.Jur.2d State and Local Taxation §§ 881 and 882, it is stated that a tax collector must pay over moneys collected as taxes to the proper fiscal officer. Statutory provisions must be complied with as to the duty and the time of making settlement and paying over collections. A tax collector must pay over to the proper authorities all funds which come into his hands officially, regardless of whether the tax collected by him was a constitutional tax or whether it was illegal or void or improperly collected. Whatever the tax collector actually collects as taxes by virtue of his office must be paid to the body politic for which he was acting. He cannot escape liability for failure to comply with his duty by alleging the invalidity of the tax. He is estopped to deny the validity of the tax or the legality of the assessment after he has collected the taxes. It would be contrary to public policy and contrary to both law and right to hold that a tax collector receiving money by virtue of his authority as such could deny the right of the state or county to receive the same when the tax has been voluntarily paid and is still in his possession.
In 84 C.J.S. Taxation § 664, it is stated that a tax collector or a sheriff or county treasurer in his ex officio capacity of tax collector is bound to settle his accounts before the proper court, board or officer pursuant to all statutory requirements. No previous demand for an accounting is necessary. Furthermore, in 84 C.J.S. Taxation § 666 that authority states that the liability for taxes collected is to the public bodies to which the taxes belong and not to the persons paying the taxes. In addition, the tax collector must pay over the money punctually at the time required by law or where no time is specified by statute, immediately on collecting the money and ascertaining the amount collected.
In Chappell v. Morris, 247 Ky. 476, 57 S.W.2d 486 (1933), an action by taxpayers against a sheriff, the Court said that taxes even though wrongfully collected cannot be recovered from the collecting or disbursing officers unless the taxes so collected are still within their hands. In Fiscal Court v. F. & A. Cox Co., 132 Ky. 738, 117 S.W. 296 (1909), the Court stated that no action can be maintained by a taxpayer against a county for taxes wrongfully collected. It does not matter whether the taxes have been paid out by the county or not. However, where taxes have been wrongfully collected and are still in the hands of the collecting or disbursing offices, a district action may be brought against the persons holding the tax. See also 14 ALR 2d 397 and 84 C.J.S. Taxation § 667. In Kentucky, of course, a county is still clothed with sovereign immunity from tort liability. Cullinan v. Jefferson County, Ky., 418 S.W.2d 407 (1967); George M. Eady Co. v. Jefferson County, Ky., 551 S.W.2d 571 (1977).
Therefore, in conclusion, in the collection of taxes and the turning over of the taxes to the taxing authority for whom the taxes are collected, the sheriff must follow the directions and requirements of the statutes. KRS 75.040 specifically requires that the sheriff collect the tax imposed and account for the money to the treasurer of the fire district. A tax collector must pay over to the proper authority all funds he has collected even if the tax collected was an unconstitutional tax or whether it was illegal or void or improperly collected. Taxpayers cannot recover the taxes paid from the tax collector even if wrongfully collected unless those taxes collected are still in the tax collector's hands.