MEMORANDUM
TO: Mayor
Lawrence and Members of the Town Council
FROM: Scott
E. Hildebran, Town Manager
SUBJECT: Property Tax Release
DATE: September 9, 2008
______________________________________________________________________
Attached please find Tax Release #2007-17 for board
consideration. Tax Collector
I have enclosed a legal summary regarding property tax releases/refunds for your information.
Releases and Refunds
Pursuant to N.C.G.S. 105-381(b), the governing board, upon receiving a taxpayer's written statement of defense and request for release or refund, 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.
A release refers to the elimination of a tax claim by a
unit prior to the bill being paid. Refunds are essentially the same except that
they are made after the bill has been paid. In either case, it is the taxpayer
who, by protesting the tax claim, initiates the process of obtaining a release
or refund. The statutes are quite rigid regarding the refund or release of the
tax claim. Any board member who votes to release or refund taxes in violation
of the statutes in this area becomes personally responsible for the amount of
the tax, including any costs to recover it [G.S. 105-380(c)].
G.S. 105-381(a)(1) gives the
taxpayer specific defenses to the enforcement of the collection of taxes. These
include: (1) a tax imposed through a clerical error; (2) an illegal tax; (3) a
tax levied for an illegal purpose. Examples of specific instances in which
releases or refunds should be granted are as follows:
1. The assessed valuation of the property
taxed has been reduced under proper exercise of legal authority;
2. The property in question is not
taxable by the unit;
3. The property in question has been
listed twice;
4. The rate of tax or any part of it has
been illegally levied, such as taxes levied for something other than a public
purpose, taxes levied without a vote of the people when such a vote was
required, or taxes levied in an amount greater than is authorized by the N.C.
Constitution, the statutes, or a vote of the people; or
5. The amount of the tax has been
erroneously computed through a clerical or mathematical error, resulting in a
higher amount owed than is proper.
A taxpayer must file a written request for a release or
refund. There is no time limit on the filing of a request for a release other
than, as stated earlier, a request for a release can only be filed before the
tax is paid. There are statutory limits on the time period in which a request
for a refund can be filed. Refunds must be requested within five years of the
date the tax first became due or within six months from the date of payment of
the tax, whichever is later. Once a request for a refund or release has been
filed, the board must review it to determine if the taxpayer has legal grounds
for a release or refund. If so, then the request is granted, provided the
request for refund has been filed within the allowed time.