A BILL TO BE ENTITLED
AN ACT TO ESTABLISH A CONTRACT RIGHT REGARDING THE TIMING OF PAYMENTS UNDER CONTRACTS REQUIRING REIMBURSEMENT OF FEDERAL FUEL EXCISE TAXES.
The General Assembly of North Carolina enacts:
SECTION 1.  Chapter 119 of the General Statutes is amended by adding a new Article to read:
"Article 6.
"Contract Rights Regarding Tax Reimbursement.
"§ 119-65.  Timing of reimbursement payments under contract.
(a)	Right. – When a contract calls for one party to reimburse a second party for the federal manufacturer's excise taxes levied on petroleum products in Part III of Subchapter A of Chapter 32 of the Internal Revenue Code, whether as a separate item or as part of the price, the party making the reimbursement has the following contractual right relating to the timing of that payment: the party making the reimbursement is not required to tender payment for the taxes more than one business day before the day the second party is required to remit the taxes to the federal Internal Revenue Service. The party making the reimbursement has the option of exercising this right as provided in this section. Exercise of this right does not relieve the party of the obligation to make the reimbursement as provided for in the contract, but affects only the timing of when that reimbursement must be tendered.
(b)	Procedure. – In order to exercise the contractual right established in subsection (a) of this section, the party making the reimbursement must notify the second party in writing of the intent to exercise the payment option and the effective date of the exercise, which must be no earlier than the beginning of the next federal tax quarter or 30 days after the notice of intent is received, whichever is later.
(c)	Security – If the party making the reimbursement exercises the contractual right provided in this section, the second party may require security for the payment of the taxes in proportion to the amount the taxes represent compared to the security required on the contract as a whole. The second party may not, however, change the other payment terms of the contract without a valid business reason other than the exercise of the contractual right, except to require the payment of the taxes under the contractual right to be made by electronic funds transfer."
SECTION 2.(a)  This act becomes effective September 1, 2002, and applies to contracts entered into or renewed on or after that date. This act also applies to all contracts in effect on that date that have no expiration date and are continuing contracts. This act does not apply to a contract in effect on September 1, 2002, that, by its terms, will terminate on a later date.
SECTION 2.(b)  This act does not impair the obligation arising under any contract executed before September 1, 2002.