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PROPERTY TAX BULLETIN NO. 153 1 APRIL 2010 <br />Refunds and Releases <br />Christopher B. McLaughlin <br />Few issues carry a greater potential for conflict between taxpayers and tax offices than do <br />requests for refunds or waivers of property taxes. This is true in large part because the Machin- <br />ery Act allows refunds and waivers only under two very limited circumstances. Unless the <br />disputed tax is imposed due to clerical error or is illegal, the Machinery Act prohibits the refund <br />of a tax payment or the waiver — called a "release" in the Machinery Act —of an unpaid tax <br />obligation. Contrary to what many taxpayers believe, the refund and release process is not the <br />venue for a re- examination of a property's value or taxable status. Although some governing <br />boards desire to be more forgiving on these issues, they do so at their peril: board members who <br />approve refunds or releases that violate the Machinery Act can be held personally responsible <br />for the lost taxes.' <br />1. Who may approve refunds and releases? <br />The governing board, always. The local government's manager, attorney, or finance officer, some- <br />times. But the tax collector, never. <br />G.S. Section 105- 381(b) of the North Carolina General Statutes (hereinafter G.S.) gives the <br />governing board primary responsibility for approving refund and release requests. For refunds <br />and releases of less than $100, the board may delegate this responsibility to the manager, attor- <br />ney, or finance officer, who must then report monthly to the board on the actions taken. Con- <br />spicuously absent from this list is the tax collector. In practice some tax collectors grant small <br />refunds or releases and then seek approval from the board, but this is a risky approach. <br />Once a refund or release is approved by the board or its delegate, the tax collector should be <br />credited with that amount in the next annual settlement .2 <br />Christopher B. McLaughlin is a School of Government faculty member who specializes in local taxation. <br />1. N.C. GEN. STnT. (hereinafter G.S.) § 105- 380(c). <br />2. G.S. 105- 381(b). <br />© 2010 School of Government. The University of North Carolina at Chapel Hill <br />