HomeMy WebLinkAboutAgenda - 06-06-2000-5aORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: June 6, 2000
Action Agenda
Item No. JC-Gt
SUBJECT: Resolution Implementing a Gross Receipts Tax on Rental Vehicles Exempted
from Pro ert Tax
DEPARTMENT: County Manager PUBLIC HEARING: (Y/N) No
ATTACHMENT(S):
Resolution
Senate Bill 1076
INFORMATION CONTACT:
Rod Visser, ext 2300
TELEPHONE NUMBERS:
Hillsborough 732-8181
Chapel HIII 968-4501
Durham 688-7331
Mebane 336-227-2031
PURPOSE: To consider enacting an ordinance implementing a gross receipts tax on certain
rental vehicles to replace the ad valorem tax on such vehicles that was recently rescinded by
the North Carolina General Assembly.
BACKGROUND: 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'/Z % 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.
In order to substitute the new gross receipts tax for the repealed property tax on rental vehicles,
local governments are required to take action to levy the tax. The North Carolina Association of
County Commissioners has developed a model resolution to carry out this action. That
resolution has been modified to apply to Orange County and is attached for the Board's
consideration. In view of the newness of this law, the logistic and administrative details of how
the tax will be collected and receipts disbursed are still being worked out.
FINANCIAL IMPACT: An Orange County ordinance must be in place before July 1, 2000 if
the County wishes to collect all the revenue available to it to replace that which will be lost by
the exemption of rental motor vehicles from ad valorem property taxes. No definitive
assessment has been developed regarding the financial impact of the new law because it was
so recently enacted. Preliminary indications are that there should be no dramatic positive or
negative impact on overall Orange County revenue, assuming the Board of Commissioners
decides to proceed with the new gross receipts tax on rental vehicles. Staff estimates that the
revenue that will be lost by the County because of the exemption of rental vehicles from ad
valorem taxation will be on the order of $100,000 more or less. We expect that the revenue
that will come instead from the gross receipts tax will be roughly on the same scale. The law
provides that the Fiscal Research Division will report to the 2003 General Assembly with an
analysis of the amount of revenue generated by the new gross receipts tax compared to what
the revenue would have been under an ad valorem tax.
RECOMMENDATION(S): The Manager recommends that subject to final review by the County
Attorney, the Board adopt the attached resolution implementing the gross receipts tax on rental
vehicles.
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 for 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 6E IT RESOLVED, by the Orange County Board of Commissioners
that the following ordinance is enacted:
SECTION 1. Tax on Gross Receipts Derived from Retail Short Tenm 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. Payment 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 ensure 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 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, 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
good 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 ale a return shall, in addition to the penalties provided by law
and herein, be guilty of a misdemeanor punishable as provided by law.
4
SECTION 6. Effective Date. The short term rental or leased vehicle gross receipts tax
levied herein shall become effective July 1, 2000.
This, the 6~' day of June, 2000.
~.
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 1999
SESSION LAW 2000-2
SENATE BILL 1076
AN ACT TO REPEAL THE PROPERTY TAX ON CERTAIN VEHICLES LEASED OR
RENTED UNDER RETAIL SHORT-TERM LEASES OR RENTALS AND TO REPLACE
THE TAX REVENUE WITH A LOCAL TAX ON GROSS RECEIPTS DERIVED FROM
RETAIL SHORT-TERM LEASES OR RENTALS.
The General Assembly of North Carolina enacts:
Section 1. G.S. 105-275 is amended by adding a new
subdivision to read: ,
"(41) A vehicle that is offered at retail
for short-term lease or rental and is owned or leased b an
_entity engaged in the business of leasing or renting
vehicles to the -_c~eneral-public for short-term__ lease or
rental. For the ur oses of this subdivision the term
'short-team ], or rental' shall have the same meanin as
i, ecei is tax as set forth b
an is substituted for and
replaces the ad valorem tax previously levied on these
vehicles . " ~ ~ ~~~ ~ '
Section 2. Chapter 153A of the General Statutes is
amended by adding a new section to read:
"§ 153A-156. Gross recea.~s_tax on short-term leases or
rentals . - -- - - ~...~...
~a)- As_a_substitute for and in replacement of the ad
valorem tax, which is excluded by G.S. 105-275(41), a county may
levy a gross receipts tax an the gross receipts from the short-
term lease or rental of vehicles at
The tax rate shall nots of
~+-+/ ii a ~.vui+~Y aiia~.:~o _~iiv oua.i~~i~u~~ a11U icNlac.:~au~i1~
~~ss recei is tax ursuant to this section an entit re uired
o collect the tax shall include a-provision in each retail short-
- •- -
t-e_rm-_1_ease_or rental agreement.n_oting that the percentage amount
enacted by the county of the total lease or rental nrice._
uainct sales tax
For ur oses of this section tFi"e transaction ivin rise to the
tax shall be deemed to have occurred at the location of the
placed in a segre4ated account until remitted to the county.
(_c~- The collection and use of taxes under this section
are not subject to sales tax and are not included in the gross
receipts of the en_tty._ The proceeds collected under this
section belon to the count and are not subject to creditor
li_e_ns _ against the entity,
(d) A tax levied under this section shall be collected
the county but_ otherwise administered in t_he same manner as
the tax levied under G.S. 105-164.4 a 2 ~~~
~eZ__The following definitions apply_ in this section:
Vehicle. --.An of the followin
a. A motor vehicle of the rivate
assen er t e includin a assen er van minivan or
5
_s~ort utility vehicle. ~
b. A motor vehicle of the car o
t e includin car o van icku truck or truck with
____ a gross vehicle weight of 26,000 pounds or less used
redominantl in the trans ortation of ro ert for
other than commercial frei ht and that does not re wire
the o erator to assess a commercial drivers
license.
c. A trailer or semitrailer with a
._ _ gross vehicle wei~htof 6,.0.0_0 pounds or less .
(2) Short-term lease or rental. --
Defined in G.S. 105-187.1(4).
Sf)_The penalties and remedies that apply to local sales
and_.use taxes levied under Subchapter VIII of this Chapter_applx
to a tax levied under this section._ The county board of
commissioners may exercise any power the Secretary of Revenue may
exercise in collectin local sales and use taxes." ~~~
Section 3. Chapter 160A of the General Statutes is
amended by adding a new section to read:
"~ 160A-215.1. Gross receipts tax on short-term leases or
rentals . , ~.,...,...,.... ~....
(a )__ As_ a substitute for and in replacement of_ the ad
valorem__ta_x, _which is excluded_by G.S. 105-275(41), a city may
levy a cross receipts tax on the gross receipts from the short-
term lease or rental of vehicles .at retail to the general~ublic.
The tax rate shall not exceed one and one-half Dercent (1.5~) of
tax on ross recei is is in addition to the rivile a taxes
authorized by G.S. 160A-211.
(b) I_f a city enacts the substitute and replacement dross
recei is tax ursuant to this section an entit re wired to
collect the tax shall include a rovision in each retail short=
term lease or rental__agreement noting that the percentage amount
enacted_by_ the city of the tot a_1 lease or rental price, excluding
sales tax, is being charged as a tax on Gross receipts. For
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
se~e~cated_ account until _remitted to the cit,~, ~~~-~~~~~~~~
!c) The collection and use of taxes under this section
are not subject to sales tax and are not included in_the gross
receipts of the entity. The proceeds collected under _this
section belon to the cit and are not subject to cred9.tor liens
against the entity.
(d) A tax levied under this section shall be collected
by the city but otherwise administered in the same manner as the
tax levied under G.S. 105-164.4(a)(2).
(e)_The following_defin__it_ions__ap~l_y in_ this section:
(1) Vehicle. -- Any of the following:
a. A motor vehicle of the private
__ passenger_ typ~,_ including_a_pas_senger__van, minivan or
sport utility vehicle. ~ ~.
b. A motor vehicle of the cargo
_ _. ___ types _in.cluding cargo van, _pickup truck, or truck with
a gross vehicle weight of 26,000 pounds or less used
._ ..._ ......predominantly in the transportation _of_ property for
other than commercial freight and that does not require
T the o erator to assess a commercial drivers
license.
c. A trailer or semitrailer with a
ross vehicle wei ht of 6 000 ounds or less.
(2) Short-term lease or rental. --
_ Defined in G.S. 105-187.1.
f( ) The penalties and remedies that a ly to local sales ~
a_nd use _taxes levied under Subcha ter VIII of this Chapter apply
to a tax levied under this section. The aoverninq body.,_.of the
city may exercise any power the Secretary of Revenue may exercise
in collecting local sales and use taxes."
Section 4. The Fiscal Research Division of the North
Carolina General Assembly shall compare the revenue generated
statewide by the substitute and replacement gross receipts tax
authorized by this act with the revenue that would have been
generated by an ad valorem tax. The Fiscal Research Division
shall report its findings to the 2003 Session of the 2003-2004
General Assembly.
Section 5. Section 1 of this act becomes effective for
taxes imposed for taxable years beginning on or after July 1,
2000. The remainder of this act becomes effective July 1, 2000.
In the General Assembly read three times and ratified
this the 11th day of May, 2000.
s/ Dennis A. Wicker
President of the Senate
s/ James B. Black
Speaker of the House of Representatives
s/ James B. Hunt, Jr.
Governor
Approved 8:30 a.m. this 17th day of May, 2000