January 10, 2017
MEMO TO: Mayor Barber and Board of Commissioners
FROM: Frank A. Rush, Jr., Town Manager
SUBJECT: Tax Refunds – Public Service / Utility Companies
The Board of Commissioners is asked to approve the attached list of tax refunds for public service / utility companies that were mistakenly charged Secondary Benefit District (for beach nourishment; all non-oceanfront and non-inlet-front properties) taxes on personal property for tax years 2011 (FY 11-12), 2012 (FY 12-13), and 2013 (FY 13-14). The total amount to be refunded is $5,251.66, and this amount will be charged to the Future Beach Nourishment Fund during FY 16-17.
During work on an unrelated property tax issue with the NC Department of Revenue last fall, Town staff learned that NC General Statutes specifically exempt personal property owned by public service / utility companies from municipal service district taxes. Real property owned by public service / utility companies is taxable within municipal service districts, and the personal property of public service / utility companies is taxable in the General Fund, but for some unknown reason personal property is not. Once an error is discovered, NC General Statutes require a local government to refund for the current year and 5 prior years, thus the refunds on the attached list go back to 2011. The reason there are no refunds for tax years 2014 (FY 14-15; there is actually a very small amount associated with a prior year shown on the attached sheet for 2014), 2015 (FY 15-16), and 2016 (FY 16-17) is that the Town eliminated the Secondary Benefit District altogether in FY 14-15, and simply combined the Secondary Benefit District property tax rate into the General Fund property tax rate. The personal property of public service / utility companies is taxable under the General Fund property tax rate, thus no refunds are due for these years, and the Town continues to collect General Fund property taxes on this personal property.
The attached refunds amount to approximately $1,700 per year for 3 years, and were collected from 17 different property tax accounts. Most are very small annual payments, with the two largest associated with Carolina Telephone and Carteret-Craven Electric Cooperative, and are probably inconsequential for these public service / utility companies. The attached refunds are also of little consequence to the Future Beach Nourishment Fund, and have no negative impact on future revenues in this fund. The Board should note that the Town actually collected Secondary Benefit District property taxes on the personal property of public service / utility companies from 2002 through 2013, however, the Town is only required to issue refunds back to tax year 2011.
I recommend approval of the attached tax refunds.