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2 Property Tax Bulletin 11 2.When are refunds and releases authorized? Technically,refunds and releases are authorized in three situations:when a tax is(1) imposed through clerical error, (2)illegal, or (3) levied for an illegal purpose.3 However,because reasons 2 and 3 overlap substantially, if not entirely,in practice there are only two situations that justify a refund:when a tax is imposed due to clerical error or is illegal. Clerical Error The General Assembly has not defined the term"clerical error,"but state courts have. In 1997, the North Carolina Court of Appeals tackled this issue in Ammons v Wake County.' In this case, the taxpayer asked the assessor if his forest land qualified for present-use value (PUV) tax deferrals for the 1993 tax year. The assessor answered no and the taxpayer did not apply for the PUV program. One year later,the taxpayer ignored the assessor's opinion and applied for a PUV deferral. The assessor denied the application,but the taxpayer won his appeal to the board of equalization and review and was granted PUV status for the 1994 tax year. The taxpayer then requested a refund for the 1993 taxes he would have been able to defer had the assessor provided accurate advice about the property's eligibility for the PUV program.After the board of county commissioners denied the refund request,the taxpayer turned to the courts. The superior court ruled that the assessor's incorrect advice did not constitute a clerical error under G.S. 105-381 and dismissed the taxpayer's claim. The court of appeals affirmed this decision,which became final when the North Carolina Supreme Court declined to hear the taxpayer's appeal. According to the court of appeals,to qualify as a clerical error under G.S. 105-381 the tax office's error "must ordinarily be apparent on the face of the instrument," "must be capable of being corrected by reference to the record only,"and must produce an unintended result. Prime examples are transcription errors,such as when an additional zero is added to tax valuation or when two numbers are transposed on a tax bill. The definition of clerical error adopted in Ammons excludes a factual or judgment error by an appraiser,which must be addressed during the assessment appeal period and not in a refund and release request.For example,assume that in 2007 an appraiser values a lakefront lot with the understanding that it is buildable. Three years later,the taxpayer applies for a building permit and is denied based on the size and slope of the lot. The taxpayer immediately asks the tax office for a retroactive decrease in the tax value of the lot and a tax refund,based on the fact that the lot was never buildable.Applying the Ammons test,this error does not justify a refund under G.S. 105-381 because it is a judgment error and not a clerical error. First,the error is apparent and correctable only through an examination of the property and a decision by the county inspections department, not by reference to the appraisal documents.Second, the error has not caused an unintended result.In 2007,the appraiser intended to value the house as a buildable lot, and it was so valued. The judgment error by the appraiser can be corrected under G.S. 105- 287(a)(2) for current and future tax years,but it does not justify a retroactive change to the tax value or a refund for past years under G.S. 105-381. For a terrific analysis of the Ammons case and its definition of clerical error, please see William A. Campbell's Property Tax Bulletin No. 111.5 3.G.S. 105-381(a)(1). 4.490 S.E.2d 569, 127 N.C.App.426(1997),cert.denied,500 S.E.2d 84,347 N.C.670(1998). 5.William A.Campbell,"Ammons a Wake County:Some Light on Clerical Errors," Property Tax Bulletin No.111 (October 1997),available online at www.sog.unc.edu/pubs/electronicversions/pdfs/ ptblll.pdf. ©2010 School of Government.The University of North Carolina at Chapel Hill