Group taxonomy terms alphabetically

group-terms.php

/**
 * Snippet Name: List taxonomies by initial letter
 * Snippet URL: http://www.wpcustoms.net/snippets/list-taxonomies-by-initial-letter/
 */

$list = '';
$args = array(
  'hide_empty' => true,
);
$tags = get_terms('CUSTOM-TAXONOMY',$args);
$groups = array(  );

if( $tags && is_array( $tags ) ) {
  foreach( $tags as $tag ) {
    $first_letter = strtoupper( $tag->name[0] );
    $groups[ $first_letter ][] = $tag;
  }
  if( !empty( $groups ) ) {
    $index_line = '';
    foreach( $groups as $letter => $tags ) {
      $list .= '<ul><li><a href="#"><strong>' . apply_filters( 'the_title', $letter ) . '</strong></a></li>';
      foreach( $tags as $tag ) {
        $name = apply_filters( 'the_title', $tag->name );
        $list .= '<li><a href="' . get_term_link( $tag ) . '" title="' . sprintf(__('View all posts tagged with %s', 'yourtheme'), $tag->name) . '">' . $tag->name . ' <small>(' . $tag->count . ')</small></a></li>';
      }
      $list .= '</ul><hr>';
    }
    $list .= '';
  }
} else $list .= '<p>Sorry, but no tags were found</p>';

print ($index_line);
print ($list);