GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

H	1 

HOUSE BILL 1194

Short Title:  Rental Car User Surcharge.	(Public)

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Sponsors: Representative McMahan.

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Referred to:  Finance.

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May 1, 1997

A BILL TO BE ENTITLED
AN ACT TO IMPOSE A USER SURCHARGE ON CERTAIN SHORT-TERM CAR RENTALS, TO USE THE PROCEEDS OF THE TAX TO COMPENSATE RENTAL CAR COMPANIES FOR THE AMOUNT OF VEHICLE REGISTRATION FEES AND PROPERTY TAXES PAID ON THEIR RENTAL CARS, AND TO DISTRIBUTE ANY REMAINING PROCEEDS TO THE HIGHWAY FUND AND THE HIGHWAY TRUST FUND.
The General Assembly of North Carolina enacts:
Section 1.  The heading to Article 5A of Chapter 105 of the General Statutes reads as rewritten:
"North Carolina Highway Use Tax and Rental User Surcharge."
Section 2.  G.S. 105-187.1 reads as rewritten:
"§ 105-187.1.  Definitions.
The following definitions and the definitions in G.S. 105-164.3 apply to this Article:
(1)	Commissioner. – The Commissioner of Motor Vehicles.
(2)	Division. – The Division of Motor Vehicles, Department of Transportation.
(3)	Long-term lease or rental. – A lease or rental made under a written agreement to lease or rent property to the same person for a period of at least 365 continuous days.
(4)	Short-term lease or rental. – A lease or rental that is not a long-term lease or rental.
(5)	Thirty-day lease or rental. – A lease or rental made under a written agreement to lease or rent property to the same person for a period of no more than 30 consecutive days.
(6)	U-drive-it passenger vehicle. – A passenger vehicle that is registered under G.S. 20-87(2) and has a passenger capacity of no more than 15 passengers."
Section 3.  Article 5A of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-187.5A.  User surcharge on 30-day leases or rentals of u-drive-it passenger vehicles.
(a)	User Surcharge. – A user surcharge is levied on a retailer who elects under G.S. 105-187.5 to pay tax on the gross receipts of the lease or rental of a motor vehicle.  The user surcharge is four percent (4%) of the retailer's gross receipts from 30-day leases or rentals of u-drive-it passenger vehicles.  Except as provided in this section, the Department of Revenue shall administer the user surcharge in the same manner as the alternate gross receipts tax levied under G.S. 105-187.5.
The user surcharge is imposed on the retailer, but is to be added to the lease or rental price of a u-drive-it passenger vehicle and thereby be paid by the person who leases or rents the vehicle.
(b)	Amount Retained by Retailer. – A retailer who is subject to the user surcharge imposed by this section must report the following information to the Secretary of Revenue by July 1 of each year:
(1)	The amount of vehicle registration fees paid under G.S. 20-87(2) by the retailer on u-drive-it passenger vehicles during the preceding fiscal year.
(2)	The amount of property taxes paid under Subchapter II of this Chapter by the retailer on u-drive-it passenger vehicles during the preceding fiscal year.
(3)	Any information required by the Secretary of Revenue to verify the amount of vehicle registration fees and property taxes reported by the retailer.
The Secretary of Revenue shall review each report filed under this subsection, determine the accuracy of the amounts reported, and notify each retailer of the amount of user surcharge the retailer may retain from user surcharge collections in the current fiscal year.  Each retailer may retain from current user surcharge collections the amount, as determined by the Secretary of Revenue, of vehicle registration fees and property taxes paid by the retailer on u-drive-it passenger vehicles during the preceding fiscal year.
(c)	Amount for Highway Use. –  When the amount of user surcharge collected by a retailer during a fiscal year exceeds the amount the retailer may retain, the retailer must remit the excess when remitting the alternate gross receipts tax imposed by G.S. 105-187.5.  A retailer who fails to remit the excess as required by this subsection is subject to the penalties in G.S. 105-236.  Amounts remitted under this subsection shall be credited to the Highway Fund and the Highway Trust Fund in accordance with the percentages of gas tax revenue that are credited to those Funds under G.S. 105-445."
Section 4.  G.S. 105-187.9 reads as rewritten:
"§ 105-187.9.  Disposition of tax proceeds.
The alternate gross receipts tax imposed by G.S. 105-187.5 on long-term leases or rentals shall be credited to the General Fund.  The alternate gross receipts tax on short-term leases or rentals imposed by G.S. 105-187.5 and the highway use tax imposed by this Article shall be credited to the North Carolina Highway Trust Fund.  The user surcharge on the gross receipts from 30-day leases or rentals shall be credited to the Highway Fund and the Highway Trust Fund in accordance with G.S. 105-187.5A.   In each fiscal year the State Treasurer shall transfer the sum of one hundred seventy million dollars ($170,000,000) of the taxes deposited in the Trust Fund to the General Fund.  The transfer of funds authorized by this section may be made by transferring one-fourth of the amount at the end of each quarter in the fiscal year or by transferring the full amount annually on July 1 of each fiscal year, subject to the availability of revenue."
Section 5.  G.S. 105-130.5(a) is amended by adding a new subdivision to read:
"(14)	The amount of personal property taxes deducted under section 164 of the Code, to the extent this amount is retained by the taxpayer under G.S. 105-187.5A."
Section 6.  G.S. 105-134.6(c) is amended by adding a new subdivision to read:
"(8)	The amount of personal property taxes deducted under section 164 of the Code, to the extent this amount is retained by the taxpayer under G.S. 105-187.5A."
Section 7.  This act becomes effective July 1, 1998, and expires on June 30, 2000.  The repeal of the user surcharge does not affect the rights or liabilities of the State, a taxpayer, or another person that arose during the time the user surcharge was in effect.  Notwithstanding G.S. 105-187.5A(b), as enacted by this act, a retailer must submit the report required by that subsection to the Department of Revenue by July 15, 1998.