Tennessee's attorney general says the state constitution doesn't exempt whiskey barrels from property taxes.
Attorney General Herbert Slatery's opinion comes as Jack Daniel's and others push barrel exemption legislation in Tennessee's General Assembly this year to exempt whiskey barrels from being taxed by local government. That bill says the constitution already exempts them by saying, "No article, manufactured of the produce of this State shall be taxed otherwise than to pay inspection fees."
FILE - In this Dec. 5, 2011 photo, bottles of Jack Daniel's Old No. 7 brand whiskey line the shelves of a liquor outlet, in Montpelier, Vt. Jack Daniel's has turned back the latest challenge to a Tennessee state law that determines which spirits can be marketed as "Tennessee Whiskey." (AP Photo/Toby Talbot, File)But Slater's opinion concludes whiskey barrels aren't "manufactured articles" because they aren't converted into different items.
The Tennessee Distillers Guild contends aging whiskey converts barrels into different products sold for different purposes, exempting them.
A local audit in Moore County, where Jack Daniel's operates its distillery in Lynchburg, Tenn., deemed Jack Daniel's barrels taxable. The company said it hasn't had to pay the tax at least since Prohibition ended eight decades ago.
A legislative analysis said the tax would cost Jack Daniel's $2.8 million this year.
"We strongly feel like this tax is anti-tourism, anti-business, anti-jobs tax," said Tennessee Distilleries Guild President Kris Tatum. "I think we'd lose significant numbers of our members in the state in our industry. This is a new tax."