1991-12-16 Work Session
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MINUTES' OF SPECIAL WORK SESSION, DECEMBER'16, 1991
PAGE 759
ASSEMBLY
The New Hanover County Board of Commissioners met in a Special
Work Session on Monday, December 16, 1991, at 1:25 o'clock P.M. in
Room 501 of the New Hanover County Administration Building, 320
Chestnut Street, Wilmington, North Carolina.
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Members present were: Commissioners Jonathan Barfield, Sr.;
Fred Retchin; William H. sutton; Vice-Chairman Robert G. Greer;
Chairman E. L. Mathews, Jr.; County Manager, Allen O'Neal; County
Attorney, Robert W. Pope; and Clerk to the Board, Lucie F. Harrell.
Chairman Mathews called the meeting to order and stated the
purpose of the meeting is to discuss the intent of the State law
repealing the inventory tax relative to contractors' inventories.
He requested Tax Administrator, Roland Register, to proceed with
the discussion.
DISCUSSION OF INTENT OF THE STATE LAW REPEALING THE INVENTORY TAX
Tax Administrator, Roland Register commented on the State law
and stated the question to be answered is how inventories of a
business are to be treated when not specifically identified by the
State law. He introduced Mr. Jim Wagner, Personal Property
Specialist for the N. C. Department of Revenue, to briefly present
the interpretation of this law by the N. C. Department of Revenue.
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Mr. Wagner presented background information on the legislation
and stated the key issue involved is that the State law did not
specifically address contractors; therefore, the N. C. Department
of Revenue feels that inventories for contractors are not tax
exempt. The Department of Revenue uses The Standard Industrial
Classification Manual as its reference for the classification of
construction trades, retail businesses, wholesale businesses, and
manufacturing. The law has been in existence since August 7, 1987,
with no case presented to the N. C. Property Tax Commission for a
ruling involving exemption for inventories of contractors.
commissioner Retchin inquired as to why a specific product
would be exempt from taxation if the product is inventory in a
retail outlet and not exempt from taxation if the same product is
in the hands of the contractor?
Mr. Wagner stated if a business can prove that it is operating
in two marketing channels as a contractor and a retailer or
wholesaler of equipment, an allocation can be made.
Attorney Alex Hall, a former member of the N. C. House of
Representatives and a member of a special subcommittee of the
Finance Committee who drafted the bill, stated the intent of the
bill was to repeal all classifications of business inventory. He
stated the N. C. Department of Revenue scrutinizes tax laws and
does an excellent job of collecting revenues for the State;
however, if an item does not fall within a specific category, the
Department of Revenue will usually take the position that the item
should be taxed. In this case, the intent of the law was to repeal
the inventory tax.
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Senator Franklin Block stated the package came to the Senate
with a corporation tax increase in order to cover, the Better
Schools Program in North Carolina with elimination of the inventory
tax to counter balance this increase. At that time, no discussion
was held on any classifications whereby the inventory tax would not
be eliminated.
A lengthy discussion was held on the intent of the law and the
logic of the law.
Motion: After further discussion, Commissioner Sutton MOVED to
uphold the appeal of Hanover Iron Works, Inc. with no application
of the inventory tax. The floor was opened for discussion.
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MINUTES OF SPECIAL WORK.SESSION,. DECEMBER 16, 1991
PAGE 76.0"
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County Attorney Pope expressed concern for the motion since
the Board of County Commissioners is not the proper forum for
correction of a state law.
Mr. Wagner stated the N. C. Department of Revenue does not
feel their interpretation of the law is incorrect; however, if
there is a problem with the law, the General Assembly can remedy
this situation by adding the word "contractors".
County Manager O'Neal recommended requesting the local
legislators to introduce a bill for clarification of the law.
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Senator Block offered to immediately prepare legislation to
introduce a bill to provide that contractors' inventories will
receive the same property tax exemption as manufacturers',
retailers' and wholesalers' inventories.
Motion withdrawn: commissioner Sutton withdrew the MOTION.
Motion: After further discussion, commissioner Retchin MOVED,
SECONDED by Commissioner Sutton to request Senator Franklin Block
to prepare a bill to exempt inventories of contractors as currently
exempted for manufacturers, wholesalers, and retailers. Any
matters before the Board of County Commissioners with respect to
this type of tax levy shall remain open until the law is further
defined. Upon vote, the MOTION CARRIED UNANIMOUSLY.
Chairman Mathews, on behalf of the Board, expressed
appreciation to Mr. Wagner for attending the Work Session and
discussing the law.
BREAK
Chairman Mathews convened from Regular Session for a break
from 2:10 o'clock P.M. until 2:20 o'clock P.M.
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FINAL DECISION ON 1986-1990 DISCOVERY FOR COMMERCIAL PARTY BOAT
OWNED BY ROBERT E. WOLFE
Tax Administrator, Roland Register, stated the marine
appraiser valued the boat in its present condition (1991) at
$16,000. The appraiser could not go back to 1987, at which time
the boat would have been valued at $30,000 to $40,000; therefore,
in order to be fair, the Board should continue to uphold the
discovered values; adjust the 1991 value to $16,800 (5% above the
high-side estimate provided by M. B. Ward Marine Surveyors); apply
the $16,000 value to 1992 due to the time of the appraisal; and
apply a 5% deprecation factor to 1993.
Motion: Chairman Retchin MOVED, SECONDED by Commissioner Sutton to
approve the recommendation as presented and authorize the Tax
Administrator to forward a letter to Mr. Wolfe advising him of the
proposed recommendation. Upon vote, the MOTION CARRIED
UNANIMOUSLY.
ADJOURNMENT
Motion: commissioner Barfield MOVED, SECONDED by Commissioner
Sutton to adjourn. Upon vote, the MOTION CARRIED UNANIMOUSLY.
Chairman Mathews adjourned the meeting at 2:51 o'clock P.M.
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Lucie F. Harrell
Clerk to the Board