Refunds and Releases

Refunds and Releases Chris McLaughlin Assistant Professor, UNC SOG

NCGS 105-380:No taxes to be released, refunded, or compromised. • The governing body of a taxing unit is prohibited from releasing, refunding, or compromising taxes levied against any property within its jurisdiction except as expressly provided in this Subchapter. • Personal liability

NCGS 105-381:Three Justifications for Release/Refund • A tax imposed through clerical error • An illegal tax • A tax levied for an illegal purpose.

NCGS 105-381:Illegal Tax / Tax for Illegal Purpose • Double taxation • Tax on property with no situs in taxing unit • Tax levied for non-public purpose • Tax levied w/out required referendum • Tax in excess of statutory cap of $1.50

NCGS 105-381:Clerical Error • Does the assessment reflect the intent of the assessor?

NCGS 105-381: Clerical Error • Ammons v. Wake County • 127 N.C. App. 426 (1997) • Assessor tells taxpayer that property would not qualify for PUV • Taxpayer applies for PUV following year • E&R grants exemption • Taxpayer claims “clerical error” for missed year of PUV

NCGS 105-381: Clerical ErrorAmmons v. Wake County (1997) • Clerical error = transcription error • Unintended • Apparent on the face of the documents • Capable of being corrected by reference to the record only

Mike K. pays his 2010 Durham County taxes in September, forgetting that his mortgage company is escrowing the taxes for him. Two weeks later he demands a refund, explaining that the mortgage company will pay the taxes in December. Should he get one? • Yes. He just won the national championship, for goodness sakes! • No.

Hurricane House • House damaged by 2003 hurricane. • Tax value reduced for 2004. • Major renovation begins in 2004. • Renovations abandoned in late 2004 after house torn down to studs. • Assessor lists property as 100% renovated for 2005 taxes. Visual inspection from street would have proved otherwise. • Owner pays 2005 taxes – no value appeal.

In 2009, taxpayer seeks refund of 2005 taxes claiming that it was illegal to tax him on a completed house when all he owned was a shell. Is a refund justified? • Yes. • No.

Low-Income PropertyNCGS 105-277.16 • “The assessor must use the income approach as the method of valuation for property classified under this section and must take rent restrictions that apply to the property into consideration in determining the income attributable to the property.” • Blue Devil Hills was L.I.P. as of 1/1/09. • Appraised as “regular” property for 2009. • No appeal—taxes paid in 12/2009.

In March 2010, Blue Devil Hills seeks adjustment of 2009 appraisal and refund of excess 2009 taxes under 105-381. Is a refund authorized? • Yes • No

“Ghost” Assets • Tar Heel Turkeys (“THT”) lists $1 million in taxable business property, mainly poultry processing equipment, for 2009 taxes. • In March 2010, THT realizes that it included in its 2009 listing a $200,000 machine that had sold in 2008. • THT seeks a refund of the taxes it paid on the $200,000 in asset value that it mistakenly listed for 2009 taxes.

Is THT entitled to a refund of the taxes on the $200,000 asset it did not own as of 1/1/2009? • Yes • No

NCGS 105-381:Timeframe for Refunds/Releases • Release: • NO time limit • Refund: • Request made before the later of • 5 years after tax first due (Sept. 1) • 6 months after payment of tax

How many boats?? • Tina listed her boat for taxation in Carolina County for 10 years. • In 2002 she moved to Wolfpack County and listed her boat there for taxation. • She received and paid tax bills on the boat from both Carolina County and Wolfpack County for 2003-2009. • In 2010 she realizes her mistake and demands a refund from Carolina County.

Is Tina entitled to a refund of any taxes on the boat paid to Carolina County? • Yes, for 2003-2009, if she made the request w/in 6 months of paying her 2009 taxes. • Yes, for 2005-09. • No.

Refunds and Releases