GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2001
SESSION LAW 2002-184
SENATE BILL 1161
AN ACT TO AMEND THE PRESENT-USE VALUE STATUTES, TO CREATE A
PROPERTY TAX SUBCOMMITTEE OF THE REVENUE LAWS STUDY
COMMITTEE, TO CLARIFY THE SALES AND USE TAX EXEMPTION
REGARDING CERTAIN AGRICULTURAL SUBSTANCES, AND TO MAKE
VARIOUS ADMINISTRATIVE CHANGES IN THE TAX LAWS.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 105-277.2 reads as rewritten:
"§ 105-277.2. Agricultural, horticultural, and forestland -
Definitions.
The following definitions apply in G.S. 105-277.3 through
G.S. 105-277.7:
(1) Agricultural land. - Land that is a part of a farm
unit that is actively engaged in the commercial
production or growing of crops, plants, or animals
under a sound management program. Agricultural land
includes woodland and wasteland that is a part of
the farm unit, but the woodland and wasteland
included in the unit shall must
be appraised under the use-value schedules as
woodland or wasteland. A farm unit may consist of
more than one tract of agricultural land, but at
least one of the tracts must meet the requirements
in G.S. 105-277.3(a)(1), and each tract must be
under a sound management program. If the
agricultural land includes less than 20 acres of
woodland, then the woodland portion is not required
to be under a sound management program. Also,
woodland is not required to be under a sound
management program if it is determined that the
highest and best use of the woodland is to diminish
wind erosion of adjacent agricultural land, protect
water quality of adjacent agricultural land, or
serve as buffers for adjacent livestock or poultry
operations.
(1a) Business entity. - A corporation, a general
partnership, a limited partnership, or a limited
liability company.
(2) Forestland. - Land that is a part of a forest unit
that is actively engaged in the commercial growing
of trees under a sound management program.
Forestland includes wasteland that is a part of the
forest unit, but the wasteland included in the unit
shall must be appraised
under the use-value schedules as wasteland. A
forest unit may consist of more than one tract of
forestland, but at least one of the tracts must
meet the requirements in G.S. 105-277.3(a)(3), and
each tract must be under a sound management
program.
(3) Horticultural land. - Land that is a part of a
horticultural unit that is actively engaged in the
commercial production or growing of fruits or
vegetables or nursery or floral products under a
sound management program. Horticultural land
includes woodland and wasteland that is a part of
the horticultural unit, but the woodland and
wasteland included in the unit shall
must be appraised under the
use-value schedules as woodland or wasteland. A
horticultural unit may consist of more than one
tract of horticultural land, but at least one of
the tracts must meet the requirements in G.S.
105-277.3(a)(2), and each tract must be under a
sound management program. If the horticultural
land includes less than 20 acres of woodland, then
the woodland portion is not required to be under a
sound management program. Also, woodland is not
required to be under a sound management program if
it is determined that the highest and best use of
the woodland is to diminish wind erosion of
adjacent horticultural land or protect water
quality of adjacent horticultural land.
(4) Individually owned. - Owned by one of the
following:
a. A natural person. For the purpose of this
section, a natural person who is an income
beneficiary of a trust that owns land may
elect to treat the person's beneficial share
of the land as owned by that person. If the
person's beneficial interest is not an
identifiable share of land but can be
established as a proportional interest in the
trust income, the person's beneficial share of
land is a percentage of the land owned by the
trust that corresponds to the beneficiary's
proportional interest in the trust income. For
the purpose of this section, a natural person
who is a member of a business entity, other
than a corporation, that owns land may elect
to treat the person's share of the land as
owned by that person. The person's share is a
percentage of the land owned by the business
entity that corresponds to the person's
percentage of ownership in the entity.
b. A business entity having as its principal
business one of the activities described in
subdivisions (1), (2), and (3) and whose
members are all natural persons who meet one
or more of the following conditions:
1. The member is actively engaged in the
business of the entity.
2. The member is a relative of a member who
is actively engaged in the business of
the entity.
3. The member is a relative of, and
inherited the membership interest from, a
decedent who met one or both of the
preceding conditions after the land
qualified for classification in the hands
of the business entity.
c. A trust that was created by a natural person
who transferred the land to the trust and each
of whose beneficiaries who is currently
entitled to receive income or principal meets
one of the following conditions:
1. Is the creator of the trust or the
creator's relative.
2. Is a second trust whose beneficiaries who
are currently entitled to receive income
or principal are all either the creator
of the first trust or the creator's
relatives.
d. A testamentary trust that meets all of the
following conditions:
1. It was created by a natural person who
transferred to the trust land that
qualified in that person's hands for
classification under G.S. 105-277.3.
2. At the time of the creator's death, the
creator had no relatives as defined in
this section as of the date of death.
3. The trust income, less reasonable
administrative expenses, is used
exclusively for educational, scientific,
literary, cultural, charitable, or
religious purposes as defined in G.S.
105-278.3(d).
e. Tenants in common, if each tenant is
either a natural person or a business entity
described in sub-subdivision b. of this
subdivision. Tenants in common may elect to
treat their individual shares as owned by them
individually in accordance with G.S.
105-302(c)(9). The ownership requirements of
G.S. 105-277.3(b) apply to each tenant in
common who is a natural person, and the
ownership requirements of G.S. 105-277.3(b1)
apply to each tenant in common who is a
business entity.
(4a) Member. - A shareholder of a corporation, a partner
of a general or limited partnership, or a member of
a limited liability company.
(5) Present-use value. - The value of land in its
current use as agricultural land, horticultural
land, or forestland, based solely on its ability to
produce income, using a rate of nine
percent (9%) to capitalize the expected net income
of the property and assuming an average level of
management. income and assuming an
average level of management. A rate of nine percent
(9%) shall be used to capitalize the expected net
income of forestland. The capitalization rate for
agricultural land and horticultural land is to be
determined by the Use-Value Advisory Board as
provided in G.S. 105-277.7.
(5a) Relative. - Any of the following:
a. A spouse or the spouse's lineal ancestor or
descendant.
b. A lineal ancestor or a lineal descendant.
c. A brother or sister, or the lineal descendant
of a brother or sister. For the purposes of
this sub-subdivision, the term brother or
sister includes stepbrother or stepsister.
d. An aunt or an uncle.
e. A spouse of a person listed in paragraphs a.
through d.
For the purpose of this subdivision, an adoptive
or adopted relative is a relative and the term
"spouse" includes a surviving spouse.
(6) Sound management program. - A program of production
designed to obtain the greatest net return from the
land consistent with its conservation and long-term
improvement.
(7) Unit. - One or more tracts of
agricultural land, horticultural land, or
forestland. Multiple tracts must be under the same
ownership. If the multiple tracts are located
within different counties, they must be within 50
miles of a tract qualifying under G.S. 105-277.3(a)
and share one of the following characteristics:
a. Type of classification.
b. Use of the same equipment or labor
force."
SECTION 2. G.S. 105-277.3 reads as rewritten:
"§ 105-277.3. Agricultural, horticultural, and forestland -
Classifications.
(a)Classes Defined. - The following classes of property
are designated special classes of property under authority of
Section 2(2) of Article V of the North Carolina Constitution and
shall must be appraised, assessed, and
taxed as provided in
G.S. 105-277.2 through G.S. 105-277.7.
(1) Agricultural land. - Individually owned
agricultural land consisting of one or more tracts,
one of which consists of at least 10 acres that are
in actual production and that, for the three years
preceding January 1 of the year for which the
benefit of this section is claimed, have produced
an average gross income of at least one thousand
dollars ($1,000). Gross income includes income from
the sale of the agricultural products produced from
the land and any payments received under a
governmental soil conservation or land retirement
program. Land in actual production includes land
under improvements used in the commercial
production or growing of crops, plants, or animals.
(2) Horticultural land. - Individually owned
horticultural land consisting of one or more
tracts, one of which consists of at least five
acres that are in actual production and that, for
the three years preceding January 1 of the year for
which the benefit of this section is claimed, have
met the applicable minimum gross income
requirement. Land in actual production includes
land under improvements used in the commercial
production or growing of fruits or vegetables or
nursery or floral products. Land that has been used
to produce evergreens intended for use as Christmas
trees must have met the minimum gross income
requirements established by the Department of
Revenue for the land. All other horticultural land
must have produced an average gross income of at
least one thousand dollars ($1,000). Gross income
includes income from the sale of the horticultural
products produced from the land and any payments
received under a governmental soil conservation or
land retirement program.
(3) Forestland. - Individually owned forestland
consisting of one or more tracts, one of which
consists of at least 20 acres that are in actual
production and are not included in a farm unit.
(b) Natural Person Ownership Requirements. - In order to come
within a classification described in subsection (a) of this
section, the land must, if owned by a natural person, also
satisfy one of the following conditions:
(1) It is the owner's place of residence.
(2) It has been owned by the current owner or a
relative of the current owner for the four years
preceding January 1 of the year for which the
benefit of this section is claimed.
(3) At the time of transfer to the current owner, it
qualified for classification in the hands of a
business entity or trust that transferred the land
to the current owner who was a member of the
business entity or a beneficiary of the trust, as
appropriate.
(b1)Entity Ownership Requirements. - In order to come within
a classification described in subsection (a) of this section,
the land must, if owned by a business entity or trust, have been
owned by the business entity or trust or by one or more of its
members or creators, respectively, for the four years
immediately preceding January 1 of the year for which the
benefit of this section is claimed.
(b2)Exception to Ownership Requirements. - G.S.
105-277.4(c) provides that deferred taxes are payable if land
fails to meet any condition or requirement for classification.
Accordingly, if land fails to meet an ownership requirement due
to a change of ownership, G.S. 105-277.4(c) applies. Despite
this failure and the resulting liability for taxes under G.S.
105-277.4(c), theNotwithstanding the provisions of
subsections (b) and (b1) of this section, land may qualify
for classification in the hands of the new owner if both
all of the conditions listed in this subsection
are met, even if the new owner does not meet all of the
ownership requirements of subsections (b) and (b1) of this
section with respect to the land. If the land qualifies for
classification in the hands of the new owner under the
provisions of this subsection, then the deferred taxes remain
a lien on the land under G.S. 105-277.4(c), the new owner
becomes liable for the deferred taxes, and the deferred taxes
become payable if the land fails to meet any other condition or
requirement for classification.
(1) The land was appraised at its present use value or
was eligible for appraisal at its present use value
at the time title to the land passed to the new
owner.
(2) At the time title to the land passed to the new
owner, the new owner acquires the land for the
purposes of and continues to use the land for the
purposes it was classified under subsection (a) of
this section while under previous ownership.
(3) The new owner has timely filed an
application as required by
G.S. 105-277.4(a) and has certified that the new
owner accepts liability for the deferred taxes and
intends to continue the present use of the
land.
(c) Repealed by Session Laws 1995, c. 454, s. 2.
(d) Exception for Conservation Reserve Program. - Land
enrolled in the federal Conservation Reserve Program authorized
by 16 U.S.C. § 1381Chapter 58 is
considered to be in actual production, and income derived from
participation in the federal Conservation Reserve Program may be
used in meeting the minimum gross income requirements of this
section either separately or in combination with income from
actual production. Land enrolled in the federal Conservation
Reserve Program shall must be assessed
as agricultural land if it is planted in vegetation other than
trees, or as forestland if it is planted in trees.
(d1) Exception for Easements on Qualified
Conservation Lands Previously Appraised at Use Value. - Property
that is appraised at its present-use value under G.S. 105-
277.4(b) shall continue to qualify for appraisal, assessment,
and taxation as provided in G.S. 105-277.2 through G.S. 105-
277.7 as long as the property is subject to an enforceable
conservation easement that would qualify for the conservation
tax credit provided in G.S. 105-130.34 and G.S. 105-151.12,
without regard to actual production or income requirements of
this section. Notwithstanding G.S. 105-277.3(b) and (b1),
subsequent transfer of the property does not extinguish its
present-use value eligibility as long as the property remains
subject to an enforceable conservation easement that qualifies
for the conservation tax credit provided in G.S. 105-130.34 and
G.S. 105-151.12. The exception provided in this subsection
applies only to that part of the property that is subject to the
easement.
(e) Exception for Turkey Disease. - Agricultural land that
meets all of the following conditions is considered to be in
actual production and to meet the minimum gross income
requirements:
(1) The land was in actual production in turkey growing
within the preceding two years and qualified for
present use value treatment while it was in actual
production.
(2) The land was taken out of actual production in
turkey growing solely for health and safety
considerations due to the presence of Poult
Enteritis Mortality Syndrome among turkeys in the
same county or a neighboring county.
(3) The land is otherwise eligible for present use
value treatment.
(f) Sound Management Program for Agricultural Land
and Horticultural Land. - If the property owner demonstrates any
one of the following factors with respect to agricultural land
or horticultural land, then the land is operated under a sound
management program:
(1) Enrollment in and compliance with an
agency-administered and approved farm management
plan.
(2) Compliance with a set of best
management practices.
(3) Compliance with a minimum gross income
per acre test.
(4) Evidence of net income from the farm
operation.
(5) Evidence that farming is the farm
operator's principal source of income.
(6) Certification by a recognized
agricultural or horticultural agency within the
county that the land is operated under a sound
management program.
Operation under a sound management program may also be
demonstrated by evidence of other similar factors. As long as a
farm operator meets the sound management requirements, it is
irrelevant whether the property owner received income or rent
from the farm operator.
(g) Sound Management Program for Forestland. - If
the owner of forestland demonstrates that the forestland
complies with a written sound forest management plan for the
production and sale of forest products, then the forestland is
operated under a sound management program."
SECTION 3. G.S. 105-277.4 reads as rewritten:
"§ 105-277.4. Agricultural, horticultural and forestland -
Application; appraisal at use value; appeal; deferred
taxes.
(a)Application. - Property coming within one of the
classes defined in
G.S. 105-277.3 shall be is eligible for
taxation on the basis of the value of the property in its
present use if a timely and proper application is filed with the
assessor of the county in which the property is located. The
application shall must clearly show that
the property comes within one of the classes and shall
must also contain any other relevant information
required by the assessor to properly appraise the property at
its present-use value. An initial application shall
must be filed during the regular listing period
of the year for which the benefit of this classification is
first claimed, or within 30 days of the date shown on a notice
of a change in valuation made pursuant to G.S. 105-286 or G.S.
105-287. A new application is not required to be submitted
unless the property is transferred or becomes ineligible for
use-value appraisal because of a change in use or acreage. An
application required due to transfer of the land may be
submitted at any time during the calendar year but must be
submitted within 60 days of the date of the property's
transfer.
(b) Appraisal at Present-use Value. - Upon receipt of a
properly executed application, the assessor shall
must appraise the property at its present-use
value as established in the schedule prepared pursuant to G.S.
105-317. In appraising the property at its present-use value,
the assessor shall must appraise the
improvements located on qualifying land according to the
schedules and standards used in appraising other similar
improvements in the county. If all or any part of a qualifying
tract of land is located within the limits of an incorporated
city or town, or is property annexed subject to G.S. 160A-37(f1)
or G.S. 160A-49(f1), the assessor shall must
furnish a copy of the property record showing both the
present-use appraisal and the valuation upon which the property
would have been taxed in the absence of this classification to
the collector of the city or town. He
shallThe assessor must also notify the tax
collector of any changes in the appraisals or in the eligibility
of the property for the benefit of this classification. Upon a
request for a certification pursuant to G.S. 160A-37(f1) or
G.S.160A-49(f1), or any change in the certification, the
assessor for the county where the land subject to the annexation
is located shall, must, within 30 days,
determine if the land meets the requirements of G.S.
160A-37(f1)(2) or G.S. 160A-49(f1)(2) and report the results of
its findings to the city.
(b1)Appeal. - Decisions of the assessor regarding the
qualification or appraisal of property under this section may be
appealed to the county board of equalization and review or, if
that board is not in session, to the board of county
commissioners. Decisions of the county board may be appealed to
the Property Tax Commission.
(c) Deferred Taxes. - Land meeting the conditions for
classification under
G.S. 105-277.3 shall must be taxed on
the basis of the value of the land for its present use. The
difference between the taxes due on the present-use basis and
the taxes that would have been payable in the absence of this
classification, together with any interest, penalties, or costs
that may accrue thereon, are a lien on the real property of the
taxpayer as provided in G.S. 105-355(a). The difference in taxes
shall must be carried forward in the
records of the taxing unit or units as deferred taxes. The taxes
become due and payable when the land fails to meet any condition
or requirement for classification. Failure to have an
application approved is ground for disqualification. The tax
for the fiscal year that opens in the calendar year in which
deferred taxes become due is computed as if the land had not
been classified for that year, and taxes for the preceding three
fiscal years that have been deferred are immediately payable,
together with interest as provided in G.S. 105-360 for unpaid
taxes. Interest accrues on the deferred taxes due as if they had
been payable on the dates on which they originally became due.
If only a part of the qualifying tract of land fails to meet a
condition or requirement for classification, a
determination shall be made of the assessor must
determine the amount of deferred taxes applicable to that
part and that amount becomes payable with interest as provided
above. Upon the payment of any taxes deferred in accordance with
this section for the three years immediately preceding a
disqualification, all liens arising under this subsection are
extinguished. The deferred taxes for any given year may be paid
in that year without the qualifying tract of land becoming
ineligible for deferred status.
(d) Exceptions. - Notwithstanding the provisions of
subsection (c) of this section, if property loses its
eligibility for present use value classification solely due to
one of the following reasons, no deferred taxes are due and the
lien for the deferred taxes is extinguished:
(1) There is a change in income caused by enrollment of
the property in the federal conservation reserve
program established under 16 U.S.C. Chapter 58.
(2) The property is conveyed by gift to a nonprofit
organization and qualifies for exclusion from the
tax base pursuant to G.S. 105-275(12) or G.S.
105-275(29).
(3) The property is conveyed by gift to the State, a
political subdivision of the State, or the United
States.
(e) Repealed by Session Laws 1997-270, s. 3, effective July
3, 1997."
SECTION 4. G.S. 105-277.7 reads as rewritten:
"§ 105-277.7. Use-Value Advisory Board.
(a) Creation and Membership. - The
Use-Value Advisory Board is established under the supervision of
the Agricultural Extension Service of North Carolina State
University. The Board shall annually submit to the
Department of Revenue a recommended use-value manual developed
in accordance with the guidelines in G.S. 105-289(a)(5). In
developing the manual, the Board may consult with federal and
State agencies as needed. The Board shall submit to the
Department of Revenue recommendations concerning requirements
for horticultural land used to produce evergreens intended for
use as Christmas trees when requested to do so by the
Department.
The Board shall be chaired by the Director
of the Agricultural Extension Service of North Carolina State
University shall serve as the chair of the Board. The
Board and shall consist of the following
additional members:members, to serve ex
officio:
(1) A a
representative of the Department of
Agriculture and Consumer Services, designated by
the Commissioner of
Agriculture;Agriculture.
(2) A a
representative of the Forest Resources Division of
the Department of Environment and Natural
Resources, designated by the Director of that
Division; and aDivision.
(3) A representative of the
Agricultural Extension Service at North Carolina
Agricultural and Technical State University,
designated by the Director of the Extension
Service.
(4) A representative of the North Carolina
Farm Bureau, designated by the President of the
Bureau.
(5) A representative of the North Carolina
Association of Assessing Officers, designated by
the President of the Association.
(6) The Director of the Property Tax
Division of the North Carolina Department of
Revenue or the Director's designee.
(7) A representative of the North Carolina
Association of County Commissioners, designated by
the President of the Association.
(8) A representative of the North Carolina
Forestry Association, designated by the President
of the Association.
(b) Staff. - All members shall serve
ex officio. The Agricultural Extension Service at North
Carolina State University shall must
provide clerical assistance to the Board.
(c) Duties. - The Board must annually submit to
the Department of Revenue a recommended use-value manual. In
developing the manual, the Board may consult with federal and
State agencies as needed. The manual must contain all of the
following:
(1) The estimated cash rental rates for
agricultural lands and horticultural lands for the
various classes of soils found in the State. The
rental rates must recognize the productivity levels
by class of soil or geographic area. The rental
rates must be based on the rental value of the land
to be used for agricultural or horticultural
purposes when those uses are presumed to be the
highest and best use of the land. The recommended
rental rates may be established from individual
county studies or from contracts with federal or
State agencies as needed.
(2) The recommended net income ranges for
forestland furnished to the Board by the Forestry
Section of the North Carolina Cooperative Extension
Service. These net income ranges may be based on up
to six classes of land within each Major Land
Resource Area designated by the United States Soil
Conservation Service. In developing these ranges,
the Forestry Section must consider the soil
productivity and indicator tree species or stand
type, the average stand establishment and annual
management costs, the average rotation length and
timber yield, and the average timber stumpage
prices.
(3) The capitalization rates adopted by
the Board prior to February 1 for use in
capitalizing incomes into values. The
capitalization rate for forestland shall be nine
percent (9%). The capitalization rate for
agricultural land and horticultural land must be no
less than six percent (6%) and no more than seven
percent (7%). The incomes must be in the form of
cash rents for agricultural lands and horticultural
lands and net incomes for forestlands.
(4) The value per acre adopted by the
Board for the best agricultural land. The value may
not exceed one thousand two hundred dollars
($1,200).
(5) Recommendations concerning any changes
to the capitalization rate for agricultural land
and horticultural land and to the maximum value per
acre for the best agricultural land based on a
calculation to be determined by the Board. The
Board shall annually report these recommendations
to the Revenue Laws Study Committee and to the
President Pro Tempore of the Senate and the Speaker
of the House of Representatives.
(6) Recommendations concerning
requirements for horticultural land used to produce
evergreens intended for use as Christmas trees when
requested to do so by the Department."
SECTION 5. G.S. 105-289(a) reads as rewritten:
"(a)It shall beis the duty of the
Department of Revenue:
(1) To discharge the duties prescribed by law and to
enforce the provisions of this Subchapter.
(2) To exercise general and specific supervision over
the valuation and taxation of property by taxing
units throughout the State.
(3) To appraise the property of public service
companies.
(4) To keep full and accurate records of the
Commission's official proceedings.
(5) To prepare and distribute annually to each assessor
a the manual developed
by the Use-Value Advisory Board under G.S.
105-277.7 that establishes five
expected net income per acre ranges for
agricultural land, horticultural land, and
forestland, and establishes a method for appraising
nonproductive land as a percentage of the lowest
use-value established for productive land. The high
and low net income amount in each range may differ
by no more than fifteen dollars ($15.00). The basis
for establishing each range shall be soil
productivity.
For agricultural land, the expected net
income per acre ranges shall be based on the actual
yields and prices of corn and soybeans over a
period of at least the five previous years, and the
actual fixed and variable costs, including an
imputed management cost, incurred in growing corn
and soybeans over the same period of time. The
manual shall contain recommended adjustments to the
net income per acre ranges for the growing of crops
subject to acreage or poundage allotments.
Expected net income per acre ranges
shall be similarly established for horticultural
land and forestland, using typical horticultural or
forest products in various growing regions of the
State instead of corn and soybeans. the
cash rental rates for agricultural lands and
horticultural lands and the net income ranges for
forestland.
(6) To establish requirements for horticultural land,
used to produce evergreens intended for use as
Christmas trees, in lieu of a gross income
requirement until evergreens are harvested from the
land, and to establish a gross income requirement
for this type horticultural land, that differs from
the income requirement for other horticultural
land, when evergreens are harvested from the land.
(7) To conduct studies of the cash rents
for agricultural lands on a county or a regional
basis, such as the Major Land Resource Area map
designated and developed by the U.S. Department of
Agriculture. The results of the studies must be
furnished to the North Carolina Use-Value Advisory
Board. The studies may be conducted on any
reasonable basis and timetable that will be
reflective of rents and values for each local area
based on the productivity of the land."
SECTION 6. G.S. 105-296(j) reads as rewritten:
"(j)The assessor shall must annually
review at least one eighth of the parcels in the county
classified for taxation at present-use value to verify that
these parcels qualify for the classification. By this method,
the assessor shall must review the
eligibility of all parcels classified for taxation at
present-use value in an eight-year period. The period of the
review process is based on the average of the preceding three
years' data. The assessor may request assistance from the Farm
Service Agency, the Cooperative Extension Service, the Forest
Resources Division of the Department of Environment and Natural
Resources, or other similar organizations.
The assessor may require the owner of classified property to
submit any information information,
including sound management plans for forestland, needed by
the assessor to verify that the property continues to qualify
for present-use value taxation. The owner has 60 days from the
date a written request for the information is made to submit the
information to the assessor. If the assessor determines the
owner failed to make the information requested available in the
time required without good cause, the property loses its
present-use value classification and the property's deferred
taxes become due and payable as provided in G.S. 105-277.4(c).
The assessor must reinstate the property's use-value
classification when the owner submits the requested information
unless the information discloses that the property no longer
qualifies for present-use value classification. When a
property's present-use value classification is reinstated, it is
reinstated retroactive to the date the classification was
revoked and any deferred taxes that were paid as a result of the
revocation must be refunded to the property owner.
In determining whether property is operating under a sound
management program, the assessor must consider any weather
conditions or other acts of nature that prevent the growing or
harvesting of crops or the realization of income from cattle,
swine, or poultry operations. The assessor must also allow the
property owner to submit additional information before making
this determination."
SECTION 7. G.S. 105-299 reads as rewritten:
"§ 105-299. Employment of experts.
The board of county commissioners may employ appraisal
firms, mapping firms or other persons or firms having expertise
in one or more of the duties of the assessor to assist
him or her the assessor in the
performance of such these duties. The
county may also assign to county agencies, or contract with
State or federal agencies, for any duties involved with the
approval or auditing of use-value accounts. The county may
make available to such these persons any
information it has that will facilitate the performance of a
contract entered into pursuant to this section. Persons
receiving such this information
shall beare subject to the provisions of
G.S. 105-289(e) and
G.S. 105-259 regarding the use and disclosure of information
provided to them by the county. Any person employed by an
appraisal firm whose duties include the appraisal of property
for the county shall must be required to
demonstrate that he or she is qualified to carry out
such these duties by achieving a passing
grade on a comprehensive examination in the appraisal of
property administered by the Department of Revenue. In the
employment of such these firms, primary
consideration shall must be given to the
firms registered with the Department of Revenue pursuant to
the provisions of
G.S. 105-289(i). A copy of the specifications to be submitted to
potential bidders and a copy of the proposed contract may be
sent by the board to the Department of Revenue for review before
the invitation or acceptance of any bids. Contracts for the
employment of these such firms or
persons shall be deemed to be are
contracts for personal services and shall not
beare not subject to the provisions of Article
8, Chapter 143, of the General Statutes."
SECTION 8. Article 12L of Chapter 120 of the
General Statutes is amended by adding a new section to read:
"§ 120-70.108. Property Tax Subcommittee.
(a) The Revenue Laws Study Committee shall
establish a Property Tax Subcommittee consisting of six members.
The Senate cochair of the Committee shall designate three
members appointed by the President Pro Tempore of the Senate to
serve on the Subcommittee and shall name one of those members a
cochair of the Subcommittee. The House cochair of the Committee
shall designate three members appointed by the Speaker of the
House of Representatives to serve on the Subcommittee and shall
name one of those members a cochair of the Subcommittee. The
Subcommittee shall meet upon the call of the Subcommittee
cochairs.
(b) The Property Tax Subcommittee shall study,
examine, and, if necessary, recommend changes to the property
tax system. The Subcommittee shall include in its study an
examination of all classes of property, including exemptions and
exclusions of property from the property tax base. The
Subcommittee shall also study the present-use value system,
including the following:
(1) Examine the implementation and
application of the current present-use value
statutes.
(2) Evaluate other tax credits, including
adjustments to and credits for ad valorem taxes, to
encourage agricultural, forestry, horticultural,
and conservation use of land.
(3) Evaluate the treatment of undeveloped
land in ad valorem tax.
(4) Evaluate the possibility of amending
the present-use value system and developing other
tax incentives to encourage conservation and
environmental protection of land. The study shall
include the feasibility of allowing lands managed
for conservation and the preservation of water
quality, wildlife habitats, and other conservation
purposes to be taxed at their present-use
value.
(5) Evaluate the possibility of adding
more specific land and resource management criteria
to the sound management programs required for all
lands enrolled in the present-use value system.
(6) Review other issues related to the
taxation of agricultural land, horticultural land,
and forestland, including reducing the acreage
requirement for land to qualify as forestland.
(c) The Subcommittee shall report any
recommendations to the Revenue Laws Study Committee."
SECTION 9. G.S. 105-164.13(2a) reads as
rewritten:
"(2a) Any of the following substances when
purchased for use on animals or plants, as
appropriate, held or produced for commercial
purposes:purposes. This
exemption does not apply to any equipment or
devices used to administer, release, apply, or
otherwise dispense these substances:
a. Remedies, vaccines, medications, litter
materials, and feeds for animals.
b. Rodenticides, insecticides, herbicides,
fungicides, and pesticides.
c. Defoliants for use on cotton or other crops.
d. Plant growth inhibitors, regulators, or
stimulators, including systemic and contact or
other sucker control agents for tobacco and
other crops."
SECTION 10. G.S. 105-164.16(b) reads as
rewritten:
"(b)Quarterly. - A taxpayer who is consistently liable for
less than one hundred dollars ($100.00) a month in State and
local sales and use taxes must file a return and pay the taxes
due on a quarterly basis. A quarterly return covers a calendar
quarter and is due by the 15thlast day
of the month following the end of the quarter."
SECTION 11. G.S. 105-164.16(b2) reads as
rewritten:
"(b2) Semimonthly. - A taxpayer who is consistently liable
for at least ten thousand dollars ($10,000) a month in State and
local sales and use taxes must pay the tax twice a month and
must file a return on a monthly basis. One semimonthly payment
covers the period from the first day of the month through the
15th day of the month. The other semimonthly payment covers the
period from the 16th day of the month through the last day of
the month. The semimonthly payment for the period that ends on
the 15th day of the month is due by the 25th day of that month.
The semimonthly payment for the period that ends on the last day
of the month is due by the 10th day of the following month.
A return covers both semimonthly payment periods. The return
is due by the 20th day of the month following the month of the
payment periods covered by the return. A taxpayer is not subject
to interest on or penalties for an underpayment for a
semimonthly payment period if the taxpayer timely pays at least
ninety-five percent (95%) of the amount due for each
semimonthly payment period lesser of the following
and includes the underpayment with the monthly return for
those semimonthly payment
periods.periods:
(1) The amount due for each semimonthly
payment period.
(2) The average semimonthly payment for
the prior calendar year."
SECTION 12. Part 5 of Article 5 of Chapter 105
of the General Statutes is amended by adding a new section to
read:
"§ 105-164.28A. Other exemption certificates.
(a) Authorization. - The Secretary may
require a person who purchases tangible personal property that
is exempt from tax or is subject to a preferential rate of tax
depending on the status of the purchaser or the intended use of
the property to obtain an exemption certificate from the
Department to receive the exemption or preferential rate. An
exemption certificate authorizes a retailer to sell tangible
personal property to the holder of the certificate and either
collect tax at a preferential rate or not collect tax on the
sale, as appropriate. A person who purchases tangible personal
property under an exemption certificate is liable for any tax
due on the sale if the Department determines that the person is
not eligible for the certificate or the property was not used as
intended.
(b) Scope. - This section does not apply to a
direct pay permit or a certificate of resale. G.S. 105-164.27A
addresses a direct pay permit, and G.S. 105-164.28 addresses a
certificate of resale."
SECTION 13. Sections 1 through 7 of this act are
effective for taxes imposed for taxable years beginning on or
after July 1, 2003. Section 10 becomes effective October 1,
2002, and applies to taxes levied on or after that date.
Section 11 becomes effective October 1, 2002, and applies to
payments due on or after that date. Sections 8, 9, 12, and 13
are effective when they become law.
In the General Assembly read three times and ratified
this the 24th day of September, 2002.
s/ Beverly E. Perdue
President of the Senate
s/ James B. Black
Speaker of the House of
Representatives
s/ Michael F. Easley
Governor
Approved 4:42 p.m. this 31st day of October, 2002