GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

H	1 

HOUSE BILL 514*

Short Title:  Property Tax Clerical Error.	(Public)

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Sponsors: Representative McMahan.

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Referred to:  Finance.

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March 13, 1997

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.  G.S. 105-273 is amended by adding a new subdivision to read:
"§ 105-273.  Definitions.
When used in this Subchapter (unless the context requires a different meaning):
(4a)	Clerical or mathematical error' means any of the following errors that result in a material overstatement or understatement of value or tax:
a.	An error in calculating units of measurement, such as square footage, linear footage, or acreage.
b.	An error in the transposition or recording of numbers.
c.	An error in determining the zoning classification of real property.
d.	An error in the description or calculation of component parts of real property improvements.
e.	An error similar to the ones listed in this subdivision.
	The term does not include an error that results from the misapplication of the schedules, standards, and rules used in a county's most recent general reappraisal or horizontal adjustment or from an appraisal judgment in applying the schedules, standards, and rules, in calculating costs, in making comparative sales analyses, in applying capitalization rates, or in determining obsolescence and depreciation factors, actual or effective ages, or the highest and best use, or in other similar valuation methods used in the appraisal process."
Section 2.  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 made under this section, other than under subdivision (a)(1) of this section, is effective as of January 1 of the year in which it is made and is not retroactive.
An increase in appraised value made under subdivision (a)(1) of this section is considered a discovery under G.S. 105-312 except that the discovery does not apply to any year that precedes the year of the county's most recent general reappraisal or horizontal adjustment.  In addition, no late listing penalty applies unless the clerical or mathematical error was made by the taxpayer or an agent or officer of the taxpayer and resulted in the property being listed at a substantial understatement of value, quantity, or other measurement.
A decrease in appraised value made under subdivision (a)(1) of this section entitles the taxpayer to a release or refund of the principal amount of the tax for the current tax year in which the decrease is made and for up to five prior tax years; 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.
The appropriate finance officer of a taxing unit must make the refund required by this subsection when notified by the assessor.  Except as stated in this section, this section does not modify or restrict the provisions of G.S. 105-312 concerning the appraisal of discovered property."
Section 3.  G.S. 105-322(g)(1) reads as rewritten:
"(g)	(1)	Powers and Duties. – It shall be the duty of the board of equalization and review to 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 to be treated the same as those under G.S. 105-287(a)(1).
d. 	Cause to be done whatever else shall be 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 his last-known address in the event the board shall, by appropriate order, increase the appraisal of any property or list for taxation any property omitted from the tax lists under the provisions of this subdivision (g)(1)."
Section 4.  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 such 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, he 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 to be treated the same as those under G.S. 105-287(a)(1). 
(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 his 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) shall 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 shall 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 shall become final.
(7)	To give effect to decisions of the board of county commissioners on appeals taken under G.S. 105-322(a)."
Section 5.  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. A release or refund made under subdivision (a)(1) of this subsection may not apply to a year that precedes the year of the county's most recent general reappraisal or horizontal adjustment.
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 6.  This act is effective for taxes imposed for taxable years beginning on or after July 1, 1997.