GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1999

S	1 

SENATE BILL 1100

Short Title:  Property Tax Clerical Error.	(Public)

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Sponsors: Senator Odom.

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Referred to:  Finance.

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April 15, 1999

A BILL TO BE ENTITLED
AN ACT TO EXTEND THE NUMBER OF YEARS FOR WHICH A TAXPAYER CAN REQUEST A PROPERTY TAX REFUND FOR TAXES IMPOSED AS THE RESULT OF A CLERICAL OR MATHEMATICAL ERROR AND TO ALLOW LOCAL UNITS OF GOVERNMENT TO INCREASE THE ASSESSED VALUE OF PROPERTY FOR THE SAME NUMBER OF YEARS WHEN THE VALUE WAS DETERMINED BY ERROR.
The General Assembly of North Carolina enacts:
Section 1.  Article 21 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-325.2. Clerical and mathematical errors.
(a)	Scope. – This section governs changes in the appraised value of, or the amount of tax due on, real and personal property resulting from the correction of a clerical or mathematical error.
(b)	Definition. – As used in this section, the term 'clerical or mathematical error' means any of the following errors that result in a material overstatement or understatement of value or tax:
(1)	An error in calculating units of measurement, such as square footage, linear footage, or acreage.
(2)	An error in the transposition or recording of numbers for real or personal property.
(3)	An error in determining the zoning classification of real property.
(4)	An error in the description or calculation of component parts of real property improvements.
(5)	An error in listing or appraising categories of personal property such as machinery and equipment, computers, molds and dies, or other similar categories.
(6)	An objective error in listing or appraising real or personal property, similar to the errors listed in this subdivision.
The term does not include an error that results from an appraisal judgment in applying the schedules, standards, and rules used in a county's most recent general reappraisal or horizontal adjustment, or from an appraisal judgment in calculating costs, in making comparative sales analyses, in applying capitalization rates, in determining obsolescence and depreciation factors, in determining actual or effective ages, in determining base rates, in determining the highest and best use of property, or in applying other similar valuation methods used in the appraisal process.
(c)	Tax Increase. – A correction of a clerical or mathematical error that results in an increase in tax due is considered a discovery under G.S. 105-312.  In the case of personal property, no late listing penalty applies unless the error was made by the taxpayer or by an agent or officer of the taxpayer and the error resulted in the property being listed at a substantial understatement of value, quantity, or other measurement.  In the case of real property, the discovery does not apply to any year that precedes the year of the county's most recent general reappraisal or horizontal adjustment, or to any year that precedes January 1 of the year the current owner acquired title to the property.  In the case of real property, the provisions of G.S. 105-303(b) apply to a county that has adopted a permanent listing system under that section.
(d)	Tax Decrease. – A correction of a clerical or mathematical error that results in a decrease in tax due entitles the taxpayer to a release or refund of the principal amount of the decrease for the tax year in which the correction is made and for up to five prior tax years.  In the case of real property, the release or refund is not allowed for any year in that five-year period that precedes the year of the county's most recent general reappraisal or horizontal adjustment, or for any year that precedes January 1 of the year the current owner acquired title to the property.
(e)	Procedure. –  Errors concerning real property may be corrected under G.S. 105-287 and errors concerning both real and personal property may be corrected under G.S. 105-322 and G.S. 105-325.  If a taxpayer seeking a refund or release of tax due to a clerical or mathematical error is denied relief under those provisions, the taxpayer may proceed under G.S. 105-381.
A release or refund on taxes due to correction of a clerical or mathematical error under G.S. 105-287 or G.S. 105-325 must be approved by the governing body of the taxing unit.  The governing body may, however, delegate this authority to the assessor.  A release or refund of taxes due to correction of a clerical or mathematical error under G.S. 105-322(g)	must be approved by the board of equalization and review.  When directed by the governing body, the board of equalization and review, or an assessor to whom the authority was delegated, the finance officer of the taxing unit must refund or release the taxes."
Section 2.  G.S. 105-273 is amended by adding a new subdivision to read:
"(4a)	Clerical or mathematical error. – Defined in G.S. 105-325.2."
Section 3.  G.S. 105-287(c) reads as rewritten:
"(c)	An increase or decrease in the appraised value of real property authorized by this section shall be made in accordance with the schedules, standards, and rules used in the county's most recent general reappraisal or horizontal adjustment. An increase or decrease in appraised value due to correction of a clerical or mathematical error is governed by G.S. 105-325.2.  Any other increase or decrease in appraised value made under this section is effective as of January 1 of the year in which it is made and is not retroactive. This section does not modify or restrict the provisions of G.S. 105-312 concerning the appraisal of discovered property."
Section 4.  G.S. 105-322(g)(1) reads as rewritten:
"(g)	(1)	Powers and Duties. –The board of equalization and review shall examine and review the tax lists of the county for the current year to the end that all taxable property shall be listed on the abstracts and tax records of the county and appraised according to the standard required by G.S. 105-283, and the board shall correct the abstracts and tax records to conform to the provisions of this Subchapter.  In carrying out its responsibilities under this subdivision (g)(1), the board, on its own motion or on sufficient cause shown by any person, shall:
a.	List, appraise, and assess any taxable real or personal property that has been omitted from the tax lists.
b.	Correct all errors in the names of persons and in the description of properties subject to taxation.
c.	Increase or reduce the appraised value of any property that, in the board's opinion, has been listed and appraised at a figure that is below or above the appraisal required by G.S. 105-283; however, the board shall not change the appraised value of any real property from that at which it was appraised for the preceding year except in accordance with the terms of G.S. 105-286 and 105-287.
c1.	Correct appraisals, assessments, and amounts of taxes appearing erroneously on the abstracts or tax records as the result of a clerical or mathematical error.  Changes in the amount of tax due resulting from the correction of these errors are governed by G.S. 105-325.2.
d. 	Cause to be done whatever else is necessary to make the lists and tax records comply with the provisions of this Subchapter.
e.	Embody actions taken under the provisions of subdivisions (g)(1)a through (g)(1)d, above, in appropriate orders and have the orders entered in the minutes of the board.
f.	Give written notice to the taxpayer at the taxpayer's last-known address in the event the board, by appropriate order, increases the appraisal of any property or lists for taxation any property omitted from the tax lists under the provisions of this subdivision (g)(1)."
Section 5.  G.S. 105-325(a) reads as rewritten:
"(a)	After the board of equalization and review has finished its work and the changes it effected or ordered have been entered on the abstracts and tax records as required by G.S. 105-323, the board of county commissioners shall not authorize any changes to be made on the abstracts and tax records except as follows:
(1)	To give effect to decisions of the Property Tax Commission on appeals taken under G.S. 105-290.
(2)	To add to the tax records any valuation certified by the Department of Revenue for property appraised in the first instance by the Department or to give effect to corrections made in these appraisals by the Department.
(3)	Subject to the provisions of subdivisions (a)(3)a and (a)(3)b, below, to correct the name of any taxpayer appearing on the abstract or tax records erroneously; to substitute the name of the person who should have listed property for the name appearing on the abstract or tax records as having listed the property; and to correct an erroneous description of any property appearing on the abstract or tax records.
a.	Any correction or substitution made under the provisions of this subdivision (a)(3) shall have the same force and effect as if the name of the taxpayer or description of the property had been correctly listed in the first instance, but the provisions of this subdivision (a)(3)a shall not be construed as a limitation on the taxation and penalization of discovered property required by G.S. 105-312.
b.	If a correction or substitution under this subdivision (a)(3) will adversely affect the interests of any taxpayer, the taxpayer shall be given written notice thereof and an opportunity to be heard before the change is entered on the abstract or tax records.
(4)	To correct appraisals, assessments, and amounts of taxes appearing erroneously on the abstracts or tax records as the result of clerical or mathematical errors. Changes in the amount of tax due resulting from the correction of these errors are governed by G.S. 105-325.2. 
(5)	To add to the tax records and abstracts or to correct the tax records and abstracts to include property discovered under the provisions of G.S. 105-312 or property exempted or excluded from taxation pursuant to G.S. 105-282.1(a)(4).
(6)	Subject to the provisions of subdivisions (a)(6)a, (a)(6)b, (a)(6)c, and (a)(6)d, below, to appraise or reappraise property when the assessor reports to the board that, since adjournment of the board of equalization and review, facts have come to the assessor's attention that render it advisable to raise or lower the appraisal of some particular property of a given taxpayer in the then current calendar year.
a.	The power granted by this subdivision (a)(6) does not authorize appraisal or reappraisal because of events or circumstances that have taken place or arisen since the day as of which property is to be listed.
b.	No appraisal or reappraisal shall be made under the authority of this subdivision (a)(6) unless it could have been made by the board of equalization and review had the same facts been brought to the attention of that board.
c.	If a reappraisal made under the provisions of this subdivision (a)(6) demonstrates that the property was listed at a substantial understatement of value, quantity, or other measurement, the provisions of G.S. 105-312 apply.
d.	If an appraisal or reappraisal made under the provisions of this subdivision (a)(6) will adversely affect the interests of any taxpayer, the taxpayer shall be given written notice thereof and an opportunity to be heard before the appraisal or reappraisal becomes final.
(7)	To give effect to decisions of the board of county commissioners on appeals taken under G.S. 105-322(a)."
Section 6.  G.S. 105-381 reads as rewritten:
"§ 105-381.  Taxpayer's remedies.
(a)	Statement of Defense. – Any taxpayer asserting a valid defense to the enforcement of the collection of a tax assessed upon the taxpayer's property shall proceed as provided in this section.
	(1)	For the purpose of this subsection, a valid defense includes any of the following:
		a. 	A tax imposed as the result of a clerical or mathematical error in appraisal, assessment, or calculation of tax.
		b. 	An illegal tax.
		c. 	A tax levied for an illegal purpose.
	(2) 	If a tax has not been paid, the taxpayer may, at any time before paying the tax, make a demand for the release of the tax claim by submitting to the governing body of the taxing unit a written statement of the defense to payment or enforcement of the tax and a request for release of the tax.
	(3) 	If a tax has been paid, the taxpayer, at any time within five years after the tax first became due or within six months after the date of payment of the tax, whichever is later, may make a demand for a refund of the tax paid by submitting to the governing body of the taxing unit a written statement of the defense and a request for refund of the tax.
(b)	Action of Governing Body. – Upon receiving a taxpayer's written statement of defense and request for release or refund, the governing body of the taxing unit shall within 90 days after receipt of such request determine whether the taxpayer has a valid defense to the tax imposed or any part thereof and shall either release or refund that portion of the amount that is determined to be in excess of the correct tax liability or notify the taxpayer in writing that no release or refund will be made. The provisions of G.S. 105-325.2 govern a release or refund of tax under subdivision (a)(1) of this subsection.
The governing body may, by resolution, delegate its authority to determine requests for a release or refund of tax of less than one hundred dollars ($100.00) to the finance officer, manager, or attorney of the taxing unit. A finance officer, manager, or attorney to whom this authority is delegated shall monthly report to the governing body the actions taken by him on requests for release or refund. All actions taken by the governing body or finance officer, manager, or attorney on requests for release or refund shall be recorded in the minutes of the governing body. If a release is granted or refund made, the tax collector shall be credited with the amount released or refunded in his annual settlement.
(c)	Suit for Recovery of Property Taxes. –
(1)	Request for Release before Payment. – If within 90 days after receiving a taxpayer's request for release of an unpaid tax claim under (a) above, the governing body of the taxing unit has failed to grant the release, has notified the taxpayer that no release will be granted, or has taken no action on the request, the taxpayer shall pay the tax. The taxpayer may then within three years after the date of payment bring a civil action against the taxing unit for the amount claimed.
(2)	Request for Refund. – If within 90 days after receiving a taxpayer's request for refund under (a) above, the governing body has failed to refund the full amount requested by the taxpayer, has notified the taxpayer that no refund will be made, or has taken no action on the request, the taxpayer may bring a civil action against the taxing unit for the amount claimed. The action may be brought at any time within three years after the expiration of the period in which the governing body is required to act.
(d)	Civil Actions. – Civil actions brought pursuant to subsection (c) of this section shall be brought in the appropriate division of the general court of justice of the county in which the taxing unit is located. If, upon the trial, it is determined that the tax or any part of it was illegal or levied for an illegal purpose, or excessive as the result of a clerical or mathematical error, judgment shall be rendered therefor with interest thereon at six percent (6%) per annum, plus costs, and the judgment shall be collected as in other civil actions."
Section 7.  This act is effective for taxes imposed for taxable years beginning on or after July 1, 1999.