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