Agenda 8-d - Refund Request – Sports Endeavors, Inc.

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fir ORANGE COUNTY TAX ADMINISTRATION 228 S CHURTON STREET, SUITE 200, PO BOX 8181 HILLSBOROUGH, NORTH CAROLINA 27278 Telephone (919) 245 -2100 Fax (919) 644 -3332 T. Dwane Brinson, Director Memorandum To: Orange County Board of Commissioners Cc: Bonnie Hammersley, County Manager Travis Myren, Deputy County Manager John Roberts, County Attorney From: Dwane Brinson, Tax Administrator- Date: May 23, 2018 Re: Refund Request: Sports Endeavors Inc. On Tuesday, April 3, 2018 the Orange County Tax Office received a refund request from Sports Endeavors Inc (SEI). The refund request totaled approximately $1,200,000 and was based on a claim that SEI had been taxed on millions of dollars of non - taxable software pursuant to a law change for tax year 2014. By law the Board has 90 days to respond to this request. Should the Board deny the refund SEI's legal remedy is to bring suit against the County within three years of the expiration of the 90 -day period. This memorandum provides details of the case and support for the Orange County Tax Administrator's and Orange County Attorney's recommendation to deny the refund request. Background The North Carolina General Assembly passed Senate Bill 490, which went into effect for tax year 2014. This bill, in summary, excludes certain customized computer software from property tax. Beginning with tax year 2014, the Orange County Tax Office (hereinafter "tax office ") proactively modified its annual listing form instructions to advise taxpayers of the law change. Specifically, the tax office added the following note in bold font: "Note: The dei,eloprnent cost of sofiware or any modification cost to sofN)are, whether done internally or externally by a third party to meet the customer's specified needs is excluded and should not be reported. "