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<br /> 2 PropertyTax Bulletin C
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<br /> 2.When are refunds and releases authorized? �'
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<br /> Technically, refunds and releases are authorized in three situations:when a tax is (1) imposed a
<br /> through clerical error, (2) illegal, or(3)levied for an illegal purpose.3 However,because reasons 2 '
<br /> and 3 overlap substantially, if not entirely,in practice there are only two situations that justify a �I
<br /> refund:when a tax is imposed due to clerical error or is illegal. �
<br /> Clerical Error �
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<br /> The General Assembly has not defined the term"clerical error,"but state courts have. In 1997, '
<br /> the North Carolina Court of Appeals tacicled this issue in Ammons v,Walce County.'� In this ;�
<br /> case, the taxpayer asl<ed the assessor if his forest land qualified for present-use value(PUV) tax
<br /> deferrals for the 1993 tax year. The assessor answered no and the taxpayer did not apply for the �
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<br /> PUV program. One year later,the taxpayer ignored the assessor's opinion and applied for a PUV �
<br /> deferral. The assessor denied the application,but the taxpayer won his appeal to the board of �
<br /> equalization and review and was granted PUV status for the 1994 tax year. The taxpayer then 1
<br /> requested a refund for the 1993 taxes he would have been able to defer had the assessor provided
<br /> accurate advice about the property's eligibility for the PUV program.After the board of county
<br /> commissioners denied the refund request,the taxpayer turned to the courts.The superior court ,
<br /> ruled that the assessor's incorrect advice did not constitute a clerical error under G.S. 105-381 �
<br /> and dismissed the taxpayer's claim. The court of appeals affirmed this decision,which became �
<br /> final when the North Carolina Supreme Court declined to hear the taxpayer's appeal.
<br /> According to the court of appeals, to qualify as a clerical error under G.S. 105-381 the tax
<br /> office's error"must ordinarily be apparent on the face of the instrument,""must be capable of
<br /> being corrected by reference to the record only,"and must produce an unintended result. Prime
<br /> examples are transcription errors, such as when an additional zero is added to tax valuation or
<br /> when two numbers are transposed on a tax bill.
<br /> The definition of clerical error adopted in Ammons excludes a factual or judgment error by an
<br /> appraiser,which must be addressed during the assessment appeal period and not in a refund and
<br /> release request. For example, assume that in 2007 an appraiser values a lal<efront lot with the
<br /> understanding that it is buildable.Three years later,the taxpayer applies for a building permit
<br /> and is denied based on the size and slope of the lot. lhe taxpayer immediately asl<s the tax office
<br /> for a retroactive decrease in the tax value of the lot and a tax refund,based on the fact that the
<br /> lot was never buildable.Applying the Ammons test,this error does not justify a refund under
<br /> G.S. 105-381 because it is a judgment error and not a clerical error. First,the error is apparent
<br /> and correctable only through an examination of the property and a decision by the county
<br /> inspections department,not by reference to the appraisal documents, Second,the error has not
<br /> caused an unintended result.In 2007,the appraiser intended to value the house as a buildable
<br /> lot, and it was so valued.The judgment error by the appraiser can be corrected under G.S. 105-
<br /> 287(a)(2)for current and future tax years,but it does not justify a retroactive change to the tax
<br /> . value or a refund for past years under G.S. 105-381.
<br /> For a terrific analysis of the Ammons case and its definition of clerical error, please see
<br /> William A. Campbell's Property Tax Bulletin No. 111.5
<br /> 3.G.S, 105-381(a)(1).
<br /> 4,490 S.E.2d 569,127 N.C.App.426(1997),cert,denied,500 S,E.2d 84,347 N.C.670(1998). �
<br /> 5.William A, Campbell,`Ammons u Wake County:5ome Light on Clerical Errors," Property Tax
<br /> Bulletin No.111 (October 1997),available online at www.sog.unc.edu/pubs/electronicversions/pdfs/ `
<br /> ptblll.pdf, E
<br /> O 2010 School of Government.The University of North Carolina at Chapel Hill
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