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0 <br />Memorandum # 1045 <br />November 28, 2005 <br />Page 2 <br />county and the LEA under the provisions of G.S. 160A-4B0. The inter-iacal cooperation <br />agreement should state that the county will contract for the const~.-uction of school facilities <br />and will purchase tangible school property. In either case the county must have title to the <br />asset at the time the consti~xetian or purchase tapes place and payments are made. Title to <br />school facilities may pass fram the county to the LEA once construction is complete and all <br />payments under the contract have been made. Ownership of tangible property may pass <br />Flom the county to the LEA once the purchase has been completed. ' <br />Since the issuance of Memorandum No. 859, schools became eligible for sales tax refunds <br />under G.S. 164.4(c) and have recently lost that eligibility. The North Carolina Department <br />of Revenue has reconfirmed to us that these two options are still valid provisions under <br />which a county may claim a sales tax refund far school capital expenditures. Unless a <br />county undertakes to malce contracts far eonsti-uction of school facilities or far purchase of <br />tangible property under ane of the two methods described in the preceding paragraph, a <br />county should not claim a sales tax refund for taxes paid. <br />At the time Memarandum No. 859 was issued, not all counties were authorized to use the <br />provisions of G. S. 153A-158.1. Other counties had to use inter-local cooperation <br />agreements to become eligible for sales tax refunds far school expenditures. All 100 <br />counties are now eligible to use G.S. 153A-15$.1. <br />Intexest ou Uupaid lYtotar Vehicle Property Taxes <br />The General Assembly enacted House Bill 17'79 which provides £or the creation of a <br />combined motor vehicle registration renewal and property tax collectian system. The Bill <br />calls far an increase in the first month's interest on uncollected property taxes on registered <br />motor vehicles. This will apply to all property taxes levied on the registered motor vehicle: <br />those levied by the county, any municipality and any special districts. The additional <br />interest collected will be remitted to the Department of State Treasurer to be used by the <br />Division of Motor Vehicles to create the combined registratian and collection system. <br />A memorandum providing greater detail about the provisions of House Bill 1779 will be <br />issued by the Department. Counties slaould be aware that effective January 1, 2006, the <br />interest rate charged for the first month that registered motor vehicles taxes are delinquent <br />will increase fiom the etuzent rate of 2% to 5%. The interest rate for subsequent months <br />will remain at three-fourths of a percent (3/4%)- <br />The additional interest collected and aemitted to the State should be accounted for in an <br />agency fund, similar to the motor vehicle property taxes collected for municipalities and <br />special districts. The additional interest would not be included in the county's budget. <br />If you have questions or comments regarding this memorandum, please contact Vance <br />Holloman at (919) 807-2380. <br />