Knox County Man Pleads Guilty to Cheating Tennessee Taxpayers Out of Money by Failing to Pay Taxes on Vehicle

Friday, June 10, 2022 | 01:12pm

Knoxville, Tennessee – The Special Investigations Section of the Tennessee Department of Revenue conducted the investigation that led James Russell Rice, 77, to plead guilty to tax charges in Knox County Criminal Court Friday.  He will be sentenced on July 21, 2022.

Rice violated Tennessee law by failing to pay sales and use tax on a vehicle purchased by his Montana LLC, then signing an affidavit that the vehicle purchased in Tennessee would be removed from the state within three days. However, Rice kept his car in Tennessee.

Rice’s case is not unique to Tennessee. Many states have seen similar cases where their residents are accused of registering cars in Montana because that state does not charge sales tax on cars.

“All Tennesseans need to know it’s against the law to evade sales tax by using out of state companies, falsifying registration documents and failing to register vehicles properly,” Special Investigations Director Tommy Sneed said. “Tennessee citizens who engage in this type of fraudulent activity will be held accountable.  Tennessee law says any vehicle sold, used, or stored for use in Tennessee is subject to tax.”

The department pursued this criminal case in cooperation with District Attorney General Charme Allen’s office. Citizens who suspect violations of Tennessee's revenue laws should call the toll-free tax fraud hot line at (800) FRAUDTX (372-8389).

The Department of Revenue is responsible for the administration of state tax laws and motor vehicle title and registration laws and the collection of taxes and fees associated with those laws. The department collects about 87 percent of total state revenue. During the 2021 fiscal year, it collected $18.4 billion in state taxes and fees and more than $3.7 billion in taxes and fees for local governments.  To learn more about the department, visit