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HomeMy WebLinkAboutAgenda - 04-03-2001-8dORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: April 3, 2001 Action Agenda Item No. ~- o~ SUBJECT: Amendment to Ordinance Implementing a Gross Receipts Tax on Rental Vehicles Exem t from Pro ert Tax DEPARTMENT: Revenue/Attorney PUBLIC HEARING: (Y/N) No ATTACHMENT(S): Amended Ordinance 6/6/00 Original Adopted Resolution Draft Interlocal Agreement INFORMATION CONTACT: Geof Gledhill, ~T32-2196 Jo Roberson, ext 2725 TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 336-227-2031 PURPOSE: To consider amending an ordinance adopted by the Board on June 6, 2000 that implemented a gross receipts tax on certain rental vehicles to replace the ad valorem tax on such vehicles that was rescinded by the North Carolina General Assembly during its 2000 legislative session. BACKGROUND: The County Attorney has rewritten an ordinance that incorporates technical corrections, definitions, and an appeal mechanism into the gross receipts tax ordinance that the Board approved on June 6, 2000. On May 17, 2000 Governor Hunt signed legislation (Senate Bill 1076) enacted by the General Assembly that substituted a gross receipts tax for property taxes on leased or rented motor vehicles. The law authorizes counties to levy a gross receipts tax of up to 1'/2 % on short-term leases or rentals, and repeals the property tax on vehicles subject to such lease or rental. Municipalities have been granted authority to levy the same amount of tax, in addition to any levied by counties. The law provides that permission to levy the gross receipts tax takes effect on July 1, 2000. As a result of the short timeframe between the bill's approval and the date when the Board needed to implement the ordinance, the County relied on the North Carolina Association of County Commissioners' model resolution as the basis for its action to implement the ordinance. Since that time, it has been noted that several provisions of the ordinance needed correction or amplification. For example, the original ordinance provided for the imposition of a penalty of $10 per day for willful failure to file required reports and/or to pay the required taxes. The amended ordinance incorporates the statutory provision that the penalty shall be 10% of the tax due. Another provision of the amended ordinance would permit the Tax Collector, for good cause shown, to hear appeals from taxpayers and to compromise or forgive any portion of the tax. A copy of the ordinance as originally approved by the Board is provided for comparison with the amended ordinance. The Tax Collector has been collecting gross receipts taxes since July 2000 on behalf of the Towns of Chapel Hill and Hillsborough (at latest report, Carrboro does not have any establishments that would be subject to the gross receipts tax) at no charge to the Towns. This has been an arrangement that reciprocates the action of the Towns of Carrboro and Chapel Hill to collect County school impact fees at no charge to the County. The County Attorney has prepared a draft interlocal agreement that would formalize this arrangement between the County and any of the Towns that implement a gross receipts tax and request that the County collect their taxes on the Town's behalf. FINANCIAL IMPACT: There is no significant financial impact associated with this action, as the County has already implemented the gross receipts tax and the technical changes in the amended ordinance will have a minimal effect on revenue collected. RECOMMENDATION(S): The Manager recommends that: 1) the Board adopt the attached amended ordinance; and 2) subject to final review by the staff and County Attorney, authorize the Chair to sign interlocal agreements, in substantially the form of the attached draft, with any of the municipalities that wish the County to collect gross receipts taxes on their behalf. AN ORDINANCE LEVYING A TAX ON GROSS RECEIPTS DERIVED FROM RETAIL SHORT-TERM LEASE OR RENTAL OF MOTOR VEHICLES IN ORANGE COUNTY WHEREAS, the North Carolina General Assembly has ratified Senate Bill 1076, signed into law as Session Law 2000-2 (S.L. 2000-2) and amended by Senate Bill 1335, and effective for taxable years beginning on or after July 1, 2000; and WHEREAS, this Act repealed the property tax on certain vehicles leased or rented under retail short-term leases or rentals and authorized counties to replace the lost tax revenue through enactment of a local tax on gross receipts derived from retail short- term leases or rentals; and WHEREAS, The County of Orange on June 6, 2000 adopted AN ORDINANCE LEVYING A TAX ON GROSS RECEIPTS DERIVED FROM RETAIL SNORT-TERM LEASE OR RENTAL OF MOTOR VEHICLES IN ORANGE COUNTY (the Ordinance); and WHEREAS, it is in the best interests of the citizens of Orange County to amend the Ordinance by rewriting as follows. NOW, THEREFORE, BE IT RESOLVED by the Orange County Board of Commissioners that the following Ordinance is enacted: SECTION 1. Definitions. The following definitions shall apply in this Ordinance: A. Long-term lease or rental means 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. B. Short-teen lease or rental means a lease or rental that is not a long- term lease or rental. C. Vehicle. A vehicle is defined as any of the following: 1. A motor vehicle of the private passenger type, including a passenger van, minivan, or sport utility vehicle. 2. A motor vehicle of the cargo type, including cargo van, pickup truck, or truck with a gross vehicle weight of 26,2000 pounds or less used predominately in the transportation of property for other than commercial freight and that does not require the operator to possess a commercial drivers license. 3. A trailer or semitrailer with a gross vehicle weight of 6,000 pounds or less. SECTION 2. Tax on Gross Receipts Derived from Retail Short Term Motor Vehicle Purchases or Rentals. Orange County hereby imposes and levies a tax of one and one half percent (l %Z %) of the gross receipts from the short-term lease or rental of vehicles at retail to the general public. SECTION 3. Administration. A. Pursuant to N.C.G.S. § 153A-156, the County will administer and collect a gross receipts tax on vehicles owned by operators of leasing and rental establishments that offer vehicles for short-term lease or rental to the public within the jurisdiction of the County. This tax is substituted for and replaces the ad valorem tax previously levied on these vehicles. B. The transaction giving rise to the tax shall be deemed to have occurred at the location of the entity from which the customer takes delivery of the vehicle. The tax shall be collected at the time of lease or rental and placed in a segregated account until remitted to the County. .SECTION 4. Payment of Tax and Filing of Returns. The tax levied hereby is due and payable to the County in monthly installments on or before the fifteenth (15t") day of each month following the month in which the tax accrues. Every taxable establishment required to collect the tax shall, on or before the fifteenth (15th) day of each month, prepare and render a return to the County. The County shall design, print, and furnish to all taxable establishments all necessary forms far filing returns and instructions to ensure the full collection of the tax. A return filed for this purpose is not a public record as defined by North Carolina General Statute § 132-1 and may not be disclosed except as required by law. SECTION 5. Penalties. A. Failure to File Return. In case of failure or refusal to file a return or pay the tax for a period of thirty (30) days after the time required for filing the return or paying the tax, the County may charge interest on the amount owed at a rate of nine per cent (9%) per year. S. Failure to Pav Tax When Due. In the case of failure to pay any tax when due, without intent to evade the tax, the Tax Collector shall assess a penalty equal to ten percent (10%) of the tax, except that the penalty shall in no event be less than five dollars ($5.00). This penalty does not apply in any of the following circumstances: 2 1. When the amount of tax shown as due on an amended return is paid when the return is filed. 2. When a tax due but not shown on a return is assessed by the tax Collector and is paid within 30 days after the date of the proposed notice of assessment of the tax C. Ne licence. 1. Finding of negligence. For negligent failure to comply with the provisions of this Ordinance, without intent to defraud, the Tax Collector shall assess a penalty equal to ten percent (10%) of the deficiency due to the negligence. 2. Large tax deficiency. If a taxpayer understates their tax liability pursuant to this Ordinance by twenty-five percent (25%) or more, the Tax Collector shall assess a penalty equal to twenty-five percent (25%) of the deficiency. 3. No double penalty. If a penalty is assessed under this Ordinance for fraud, no additional penalty for negligence shall be assessed with respect to the same deficiency. D. Fraud. If there is a deficiency or delinquency in payment of the gross receipt vehicle tax because of fraud with intent to evade the tax, the Tax Collector shall assess a penalty equal to fifty percent (50%) of the total deficiency. E. Attempt to Evade or Defeat Tax. Any person who willfully attempts, or any person who aids or abets any person to attempt in any manner to evade or defeat the tax or its payment, shall, in addition to other penalties provided by law, be guilty of a Class H felony. SECTION 6. Misdemeanor for Willful Violation. Any person, firm, corporation or association who willfully attempts in any manner to evade a tax imposed herein or who willfully refuses to pay the tax and file a return shall, in addition to the penalties provided by law herein, be guilty of a Class 3 Misdemeanor and shall pay a $50 fine. SECTION 7. Appeals. The Tax Collector is authorized to hear requests from taxpayers for relief from or compromise of penalties and other administrative matters involving the collection of this tax. The Tax Collector is authorized, for good cause shown, to compromise or forgive any portion of the tax. The Tax Collector will consider such requests and will inform the Taxpayer of the decision in writing within 10 working days. 3 Adopted 6!6/00 ORANGE COUNTY BOARD OF COMMISSIONERS A RESOLUTION AUTHORIZING ESTABLISHMENT OF AN ORDINANCE LEVYING A TAX ON GROSS RECEIPTS DERIVED FROM RETAIL SHORT-TERM LEASE OR RENTAL OF MOTOR VEHICLES WHEREAS, the North Carolina General Assembly has ratified Senate Bill 1076, signed into law as Session Law 2000-2 (S.L. 2000-2) and effective far taxable years beginning on or after July I, 2000; and WHEREAS, this act repealed the property tax on certain vehicles leased or rented under retail short-term leases or rentals and authorized counties to replace the lost tax revenue through enactment of a local tax on gross receipts derived from retail short-term leases or rentals. NOW, THEREFORE BE IT RESOLVED, by the Orange County Board of Commissioners that the following ordinance is enacted: SECTION 1. Tax on Grass Receipts derived from retail short term motor vehicle leases or rentals. The County of Orange hereby imposes and levies a tax of one and one half percent (1 1/2 %) of the gross receipts from the short-term lease or rental of vehicles at retail to the general public. SECTION 2. Administration. The County will administer and collect from operators of leasing and rental establishments the taxes levied hereby and the county may promulgate additional rules and regulations necessary for implementation of the taxes. SECTION 3. Past of Taxes and _Filing of Returns. The taxes levied hereby are due and payable to the County in monthly installments on or before the fifteenth (15th) day of the month following the month in which the tax accrues. Every taxable establishment required to collect the tax shall, on or before the fifteenth (15th) day of each month, prepare and render a return to the County. The County shall design, print, and furnish to all taxable establishments the necessary forms for filing returns and instructions to insure the full collection of the tax. A return filed for this purpose is not a public record as defined by Section 132-1 of the North Carolina General Statutes and may not be disclosed except as required by law. SECTION 4. Penalties. A person, firm, corporation or association who fails or refuses to file a return and pay the tax levied herein shall pay a penalty of ten dollars ($10.00) for each day's omission up to a maximum of two thousand dollars ($2,000.00.) for each retum. In case of failure or refusal to file a return or pay the tax for a period of thirty (30) days after the time required for filing the return or paying the tax, there shall be an additional tax, as a penalty, of five percent (5%) of the tax due, with an additional tax of five percent (5%) for each additional month or fraction thereof until the tax is paid. The Orange County Board of Commissioners, for goad .cause shown, may compromise or forgive any penalty or additional tax imposed hereunder. SECTION 5. Misdemeanor for Willful Violation. Any person, firm, corporation or association who willfully attempts in any manner to evade a tax imposed herein or who willfully fails to pay the tax or make and file a return shall, in addition to the penalties provided by law and herein, be guilty of a misdemeanor punishable as provided by law. SECTION 6. Effective Date. The short term rental or leased vehicle gross receipts tax levied herein shall become effective July 1, 2000. DRAFT NORTH CAROLINA GROSS RECEIPT VEHICLE TAX INTERLOCAL AGREEMENT ORANGE COUNTY THIS AGREEMENT, made and entered into this the _ day of , 200_, between The County of Orange, a political subdivision of the State of North Carolina (hereinafter referred to as "Orange County"), and the Town of (hereinafter referred to as "the Town"). WITNESSETH WHEREAS, on the Orange County Boazd of Commissioners adopted An Ordinance Levying a Tax on Gross Receipts Derived from Retail Short-Term Lease or Rental of Motor Vehicles in Orange County; and WHEREAS, on _ the Town of (name of Town's Ordinance); and Boazd adopted WHEREAS, it is in the best interests of the citizens of Orange County and the Town to be able to pay the gross receipt vehicle tax to a single entity where the taxpayer is located in both Orange County and the Town; and WHEREAS, Orange County has been collecting the gross receipt vehicle tax for the Town of since July, 2000, and is willing to continue to provide collection services to the Town . NOW THEREFORE, the County and the Town adopt the following agreement for the purpose of establishing collection of gross receipt vehicle taxes by Orange County for the Town: 1. The County agrees to collect the Town Gross Receipt Vehicle Tax (hereinafter "the tax") that is levied pursuant to North Cazolina General Statute § 160A-215.1 on those taxpayers located in Orange County and the Town. 2. The tax collected by the County will be due and payable to the County in monthly installments on or before the fifteenth (15th) day of each month following the month in which the tax accrues. 3. The County agrees to design, print, and furnish to all taxable establishments all necessary forms for filing returns and instructions to ensure the full collection of the tax: 4. When a tax is collected, a receipt for payment shall be delivered to the person paying the tax, and a copy of the receipt shall be delivered to the Town with the tax collected by the County. DRAFT 5. All taxes collected by the County pursuant to this agreement shall be delivered quarterly to the Town along with the receipts for collection. 6. This agreement maybe terminated at the conclusion of any fiscal year by either party. The terminating party shall give the other party six months notice of its decision to do so. 7. This agreement shall become effective when properly executed by Orange County and the Town pursuant to resolutions adopted by the governing board of each. The parties hereto have caused this agreement to be executed in .accordance with resolutions of their respective governing bodies. ORANGE COUNTY, NORTH CAROLINA By: Stephen H. Halkiotis, Chair Orange County Boazd of Commissioners ATTEST: Beverly A. Blythe, Clerk to the Orange County Board of Commissioners TOWN OF Name Title . ~. Attest: