On October 20, 2008, the Cumberland County Board of Commissioners adopted the “Resolution Imposing a Gross Receipts Tax on Heavy Equipment In Lieu Of Property Tax” pursuant to Session Law 2008-144 and N.C.G.S. §105-275(42a). The tax so levied is a one and two-tenths percent (1.2%) tax of the gross receipts from the short-term lease or rental of heavy equipment by a person whose principal business is the short-term lease or rental of heavy equipment at retail. The legislation designates the qualified heavy equipment as a special class of property which is exempted from property taxation and shall not be listed, appraised, assessed or taxed after January 1, 2009.
N.C.G.S. §160A-215.2 authorizes a municipality to levy a gross receipts tax in the amount of eight tenths percent (0.8%). This is in addition to the privilege taxes authorized by N.C.G.S. §160A-211. The Cumberland County Tax Collector will assess and collect this tax for any municipality in Cumberland County with which there is a contract for collection of taxes, which has adopted a comparable resolution taxing gross receipts from short-term lease or rental of heavy equipment.
The Cumberland County Tax Collector hereby publicizes the following procedures for enforcement of the Cumberland County Heavy Equipment Tax Resolution and directs all persons subject to the tax imposed by the resolution and all persons entrusted with the enforcement of the resolution to comply with such procedures.
GENERAL ADMINISTRATION
The Cumberland County Tax Collector shall administer and collect the taxes levied from every person whose primary business is the short-term rental or lease of heavy equipment at retail. The levy and collection of the tax shall be administered in the same manner as the sales and use tax as provided in Article 5 of Chapter 105 of the General Statutes.
DETERMINATION OF PERSONS SUBJECT TO THE TAX
The Tax Collector or designated representative thereof shall compile a list of persons, firms, corporations, and associations subject to collect the heavy equipment tax. Such list shall be compiled from any and all reliable sources of information; including, but not limited to, names, addresses and other identifying information obtained from various advertising or other informational media or sources of persons, firms, corporations and associations which hold themselves out as entities engaged in the primary business of short-term rental or leasing of heavy equipment to the general public in Cumberland County and who are determined to potentially be subject to the tax pursuant to N.C.G.S. §105-164.4(a)(2).
All persons, firms, corporations, or associations requesting designation of property as a special class excluded from the tax base in accordance with N.C.G.S. §105-275(42a) must make application annually during the regular listing period pursuant to the provisions of N.C.G.S. §105-282.1. An application must contain a complete and accurate statement of the facts that entitle the property to the exclusion and must indicate the municipality, if any, in which the property is located. Upon determination that a person, firm, corporation or association is subject to the heavy equipment tax, a heavy equipment tax account shall be created for the taxpayer to which tax payments shall be credited and to which debits shall be deducted.
DEFINITIONS
The following definitions apply in the collection of the Heavy Equipment Tax:
CUSTOMER shall mean any person that leases or rents heavy equipment on a short-term lease or rental basis.
GROSS RECEIPTS shall mean the amount that is or would be reported as gross receipts on a business’ state income tax return, or on the federal income tax return filed with the state income tax return if the state return does not separately state gross receipts for the most recently completed tax year. Taxes collected hereunder are not subject to the tax imposed and are not included in gross receipts. Rental charges of the heavy equipment and all accessories, attachments and miscellaneous administration fees (i.e. maintenance agreements, fuel charges, etc.)
The following items are not part of the gross receipts derived from the lease or rental of heavy equipment and are not subject to the heavy equipment tax:
- Any allowance for heavy equipment taken in trade as partial payment on the lease or rental amount.
- Returned check fees which the lessor bills separately to the lessee.
- Penalties charged for late or delinquent lease payments which the lessor bills separately to the lessee.
- Insurance premiums paid by the lessee directly to the insurer, or to the lessor as agent for the insurer, when the premium amounts are separately stated from the lease or rental charges.
- Optional maintenance agreements.
HEAVY EQUIPMENT shall mean earthmoving, construction, or industrial equipment that is mobile, weighs at least 1,500 pounds, and is either:
- A self-propelled vehicle that is not designed to be driven on a highway; or
- Industrial lift equipment, industrial material handling equipment, industrial electrical generation equipment, or a similar piece of industrial equipment. The term includes an attachment for heavy equipment, regardless of the weight of the attachment. [N.C.G.S. §160A-215.2(a)(1)]
LEASE OR RENTAL shall mean a transfer of possession or control of tangible personal property for a fixed or indeterminate term for consideration. The term does not include any of the following:
- A transfer of possession or control of property under a security agreement or deferred payment plan that requires the transfer of title upon completion of the required payments.
- A transfer of possession or control of property under an agreement that requires the transfer of title upon completion of required payments and payment of an option price that does not exceed the greater of one hundred dollars ($100.00) or one percent (1%) of the total required payments.
- The providing of tangible property along with an operator for a fixed or indeterminate period of time if the operator is necessary for the equipment to perform as designed. For the purpose of this subparagraph, an operator must do more than maintain, inspect, or set up the tangible personal property. [N.C.G.S. § 105-164.3(17)]
LONG TERM LEASE OR RENTAL shall mean a lease or rental made under a written agreement to lease or rent property to the same person for a period of at least three hundred sixty-five (365) continuous days. [N.C.G.S. §105-187.1(3)]
RESOLUTION shall mean the “Resolution Imposing a Gross Receipts Tax on Heavy Equipment In Lieu Of Property Tax” adopted by the Cumberland County Board of Commissioners on October 20, 2008.
SHORT TERM LEASE OR RENTAL shall mean any lease or rental that is not a long-term lease or rental. [N.C.G.S. §160A-215.2(a)(2) and N.C.G.S. §105-187.1(7)]
TAXPAYER shall mean any person liable for the taxes imposed by the Resolution.
COLLECTION OF THE TAX
Every person whose principal business is the short-term lease or rental of heavy equipment at retail shall collect, at the time of the lease or rental, or at the time of the payment of the consideration therefore, the gross receipts tax on heavy equipment. A person is not considered to be in the short-term lease or rental business if the majority of the person’s lease and rental gross receipts are derived from leases and rentals to a person who is a related person as defined under N.C.G.S. §105-163.010.
The tax collected shall be placed in a segregated account, and thereafter remitted to the Cumberland County Tax Collector in accordance with these Administrative Procedures. The taxpayer shall include a provision in each retail short-term lease or rental agreement, or other documentation evidencing the transaction, stating that the percentage amount enacted by the Resolution of the total lease or rental price, excluding sales tax, is being charged as a tax on gross receipts. The amount of the tax shall be stated separately from the lease or rental and shown separately on the taxpayer’s records. The tax shall be paid by the customer to the taxpayer as trustee for and on account of Cumberland County and any municipality in Cumberland County with which there is a contract for collection of taxes, which has adopted a comparable resolution.
The taxpayer shall be liable for the collection of the heavy equipment tax and for its payment to the Cumberland County Tax Collector and the taxpayer’s failure to charge or to collect said tax from the customer shall not affect such liability.
REPORT AND PAYMENT OF TAX
Taxes levied under the Resolution are due and payable when a return is required to be filed. Returns are due to the Cumberland County Tax Collector by the last day of the month following the end of the calendar quarter in which the tax accrues. Every taxpayer shall, within the time specified, submit a return to the Cumberland County Tax Collector on the form prescribed by the collector. A return must be signed by the taxpayer or the taxpayer’s agent.
The return may be filed by personal delivery to the office of the Tax Collector or by mail to the Cumberland County Tax Collector, PO Box 449, Fayetteville, NC 28302-0449. Returns submitted by mail shall be deemed to be filed as of the date shown on the postmark affixed by the United States Postal Service. If no date is shown on the postmark, or if the postmark is not affixed by the United States Postal Service, the return shall be deemed to be filed when received in the office of the Tax Collector.
As provided in N.C.G.S. §160A-208.1, a return shall not be considered a public record and information contained in a return may be disclosed only in accordance therewith.
TAXPAYER TO KEEP RECORDS
The taxpayer shall keep and preserve suitable records of the gross receipts received by such taxpayer in the conduct of business and such other books or accounts as may be necessary to determine the amount of the tax for which such taxpayer is liable under the provisions of the Resolution. It shall be the duty of the taxpayer to keep and preserve for a period of three years all such records of gross receipts and other books and accounts described. All records, books and accounts herein described shall be open for examination at all reasonable hours during the day by the Cumberland County Tax Collector or the Tax Collector’s duly authorized agent.
TAX COLLECTOR TO PROVIDE FORMS
The Cumberland County Tax Collector shall design, prepare, print and make available to all taxpayers operating within the boundaries of Cumberland County, forms and instructions for filing returns to insure a full collection of, and an accounting for, taxes due. The failure of any taxpayer to obtain or receive forms shall not relieve such taxpayer from the payment of the tax at the time and in the manner provided.
SITUS
Gross receipts from the short-term lease or rental of heavy equipment are subject to the tax imposed by the Resolution if the place of business from which the heavy equipment is delivered is located within Cumberland County. The transaction giving rise to the tax levied shall be deemed to have occurred at the location of the person from whom the customer taxes delivery of the heavy equipment. [N.C.G.S. §160A-215.2(b)]
PENALTIES, INTEREST AND REMEDIES
The provisions with respect to penalties and collection remedies that apply to the payment of sales and use taxes under Article 5 of Chapter 105 of the General Statutes shall be applicable in like manner to the tax authorized to be levied and collected under the Resolution, to the extent that the same are not inconsistent with the provisions hereof. The Cumberland County Tax Collector may exercise any power the Secretary of Revenue may exercise in imposing these penalties and remedies. [N.C.G.S. §160A-215.2(d)]
Any taxpayer who fails to file a return on the date it is due shall pay a penalty equal to five percent (5%) of the amount of the tax if the failure to file is for not more than one month, with an additional five percent (5%) for each additional month, or fraction thereof, during which the failure continues, not exceeding twenty-five percent (25%) in the aggregate, or $5.00, whichever is greater.
Any taxpayer who fails to pay the tax levied herein when due, without intent to evade the tax, shall pay a penalty equal to ten percent (10%) of the tax, except that the penalty shall in no event be less than $5.00.
Taxes shall be payable at par if paid on or before the filing date as set forth above. Taxes paid after the filing date will be delinquent and shall be subject to interest charges. Interest shall accrue at the rate of three-fourths percent (3/4%) a month, or fraction thereof, until the principal amount of the taxes, the accrued interest, and penalties are paid.
If a check is returned for insufficient funds on deposit, a service charge in the amount authorized by N.C.G.S. §105-357 shall be added to the amount of tax due, and a processing fee in the amount authorized by N.C.G.S. §25-3-512 shall be added to the amount of the tax due.
Any taxpayer who willfully attempt, or any person who aids or abets any taxpayer to attempt in any manner to evade or defeat a tax imposed herein or its payment, shall, in addition to other penalties provided by law, be guilty of a Class H felony.
Any taxpayer required to collect, withhold, account for, and pay over any tax who willfully fails to collect or truthfully account for and pay over the tax shall, in addition to other penalties provided by law, be guilty of a Class I misdemeanor.
Any taxpayer required to pay any tax, to make a return, to keep any records, or to supply any information, who willfully fails to pay the tax, make the return, keep the records, or supply the information, at the time or times as required by law, or rules issued pursuant thereto, shall, in addition to other penalties provided by law, be guilty of a class I misdemeanor.
The Cumberland County Tax Collector shall have the rights of attachment and garnishment as set forth in N.C.G.S. §105-242 and N.C.G.S. §105-368 in enforcing the collection of taxes imposed by the Resolution, and any other remedies authorized by law.
ASSESSMENT PROCEDURE
If the Cumberland County Tax Collector discovers that any return or tax is due from a taxpayer, the taxpayer shall be notified in writing of the failure to file and of the proposed assessment, if known. The assessment may be made on the best information of the Tax Collector. A proposed assessment is presumed to be correct. The notice shall be delivered either in person or by the United States Postal Service sent to the taxpayer’s last known address. The notice is presumed to have been received by the taxpayer unless the taxpayer makes an affidavit to the contrary within 90 days after the notice was mailed. If the taxpayer makes this affidavit, the time limitations for a request for hearing as hereafter provided apply as if the notice had been delivered on the date the taxpayer makes the affidavit.
A taxpayer who objects to the proposed assessment or to the requirement to file a return is entitled to a hearing upon written request within 30 days after the date the notice was mailed, or within 30 days after the date of personal delivery. If no request for a hearing is timely made, the proposed assessment becomes final without further notice.
If a taxpayer files a timely request for hearing, the Cumberland County Tax Collector shall set a hearing date within 90 days, and notify the taxpayer at least 10 days prior to the hearing date. Within 90 days after the hearing, the Tax Collector shall notify the taxpayer of the final decision. The taxpayer may then appeal the decision as set forth in the Appeals section of these Administrative Procedures. The Cumberland County Tax Collector shall have no authority to waive or compromise any interest or penalty imposed by these Administrative Procedures.
APPEALS
The Cumberland County Board of Commissioners, exercising the powers of the Secretary of Revenue in collecting sales and use taxes, designates the Cumberland County Manager, or their designee, to act as deputy for the purpose of compromising or forgiving for good cause shown any penalty or additional tax imposed herein, and for conducting any hearings and making decisions to determine the validity of a tax imposed by the Cumberland County Tax Collector. If a taxpayer claims that a tax, additional tax, penalty or interest is excessive, a notice of appeal must be filed by the taxpayer within 30 days after the final notice of the Tax Collector is mailed or personally delivered to the taxpayer as provided above. The final decision of the deputy shall be made and mailed or delivered to the taxpayer within 30 days after the hearing. The taxpayer shall pay the tax, additional tax, penalty or interest without prejudice to any defense the taxpayer has. The taxpayer may file suit for a refund in the Superior Court of Cumberland County pursuant to the provisions of Section 1, Article 9 of Chapter 105 of the North Carolina General Statutes.
EFFECTIVE DATE
The effective date of these Administrative Procedures shall be January 1, 2009.