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N.C. House bill would provide 2020 property tax deferral for business owners
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N.C. House bill would provide 2020 property tax deferral for business owners

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A state House bill would offer some business owners a COVID-19 related deferment on their 2020 property tax payment through the end of 2021.

House Bill 119, filed Friday, has four Republican primary sponsors, including Rep. Jon Hardister, R-Guilford. Rep. Pricey Harrison, D-Guilford, is listed as a co-sponsor.

Business owners would have to demonstrate two primary economic impacts from COVID-19 for the period of March to December 2020.

The first is at least a 25% reduction in their gross revenues for the 10-month period.

The second is focused on retail businesses that collect and remit sales tax. Their collections would have to be down at least 25% during the same period.

Hardister said that HB119 "is intended to be a broader relief measure."

"This is not a panacea, but hopefully it will provide some level of financial relief for businesses that are having a tough time making ends meet," he said.

Harrison said she has heard from small business owners "who have really been hurting due to revenue declines relating to the necessary public health measures put in place to limit the impact of the pandemic."

"I hope we will be able to use CARES Act funds to hold local governments harmless, since they have also been hit hard by revenue declines," she said.

Bill sponsors said the proposed legislation "is to recognize revenue interruptions to businesses in North Carolina during the COVID-19 pandemic, and balance both the provision of property tax relief to those businesses and the fiscal and budgeting needs of local governmental units."

Bill sponsors also wrote that "while economic or market fluctuations are not typically accounted for on a year-to-year basis for real property tax values, our property tax laws allow for changing appraised value of real property in a year in which a general reappraisal is not made where the legally permitted use of the property is changed."

"Moreover, recognition of unprecedented market conditions in the years in which those conditions materially affect the businesses using the property warrants a deviation from the state standard valuation cycle and the authority to modify property values during that cycle."

Property owners would have until May 1 to apply for the property-tax relief.

If they fail to adhere to the bill's requirements, they could be declared delinquent in their tax obligations.

Although the bill is focused on the pandemic's economic impact for 2020, it contains language that allows similar deferrals to be provided "for any subsequent year ... for the period of time the normal operations at the property were restricted by a government response to the COVID-19 pandemic."

That section of HB119 not only factors in executive orders from Gov. Roy Cooper, but also "local regulations that required closures, forced reductions in building occupancy capacity, modified hours of operation, or included other public-safety measures affecting normal business operations."

Initial reaction

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Dudley Watts, Forsyth County's manager, said his first reaction to HB119 is that "I am concerned about how to make up the revenue loss and the difficulty in the equitable administration of the program."

Dave Plyler, Forsyth commission chairman, acknowledged Watts' concerns, saying "the proposal means to help those who need it, as long as unintended results are legally avoided."

Rep. Lee Zachary, R-Forsyth, said that while "I don’t know how taxing authorities will look at it, but it’s a pretty good bill."

"There needs to be a way to officially give people time to catch up their taxes. Not forgiveness, but time to pay," Zachery said.

"Counties and towns need to collect taxes to provide the services they provide. Hopefully, this bill will help taxpayers and taxing authorities."

Mitch Kokai, senior policy analyst with Libertarian think tank John Locke Foundation, said that "it’s good to see government officials looking for ways to provide government relief to businesses shuttered by government action."

"It’s not clear how far this proposal would advance since property taxes affect local government finances," he said. "That adds a whole different wrinkle beyond the state writing a check or relaxing rule.

"If nothing else, this idea is likely to be part of the ongoing discussions about how best to help the economy recover from COVID-19."

Following on HB4

HB119 was filed on the heels of an apparently successful legislative effort in House Bill 4 that extends for bars the payment deadline for certain ABC permit renewals.

The Senate cleared HB 4 by a 47-0 vote and the House by a 116-1 vote. Cooper has until Feb. 27 to sign HB4, veto it or let it become law without his signature.

The legislation would become effective retroactively to June 30, 2020.

The fees would not be required to be paid until 90 days after all executive orders affecting ABC permittees are rescinded or allowed to expire.

ABC permittees are required to request a delay to paying their permit fees. They also can request a temporary refund of paid fees.

HB4 also directs the ABC Commission to reinstate or reactivate select ABC permits that were canceled or moved to inactive status during 2020.

The ABC permit renewal fees issue became a focal point in early January when about 120 bar owners found out that their private bar permits had been canceled for non-payment, even though the owners were not able to operate their businesses.

“Many businesses have been hit hard by government restrictions tied to the pandemic," Kokai said.

"This type of bill (HB119) would boost more than just one particular sector.”

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