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7 <br /> GUIDELINES FOR OCCUPANCY TAX LEGISLATION <br /> Since 1983, the General Assembly has authorized many units of local government to <br /> levy a room occupancy tax. In several instances, the General Assembly has authorized <br /> both a county and a city within that county to impose an occupancy tax. The rate of <br /> tax, the use of the tax proceeds, the administration of the tax, and the body with the <br /> authority to determine how the tax proceeds will be spent vary considerably. <br /> Over the past several years, there has been a greater effort to make the occupancy <br /> taxes uniform. In 1997, the General Assembly enacted uniform municipal and county <br /> administrative provisions for occupancy tax legislation - G.S. 153A-155 and G.S. <br /> 160A-215. These provisions provide uniformity in the areas of levy, administration, <br /> collection, repeal, and penalties. <br /> The North Carolina Travel and Tourism Coalition (NCTTC) has a policy statement for <br /> legislation authorizing local occupancy taxes. Many of the principles contained in its <br /> statement are similar to the ones established by the House Finance Committee in <br /> 1993. Subsequently, the House Finance Committee established the Occupancy Tax <br /> Subcommittee, which regularly reviews occupancy tax legislation and looks for the <br /> inclusion of the following uniform provisions in the bills it considers: <br /> ♦ Rate - The county tax rate cannot exceed 6% and the city tax rate, when combined <br /> with the county rate, cannot exceed 6%. <br /> ♦ Use - At least two-thirds of the proceeds must be used to promote travel and <br /> tourism and the remainder must be used for tourism-related expenditures, which <br /> may include beach nourishment. However, local governments in coastal counties <br /> may allocate up to 50% of occupancy tax proceeds for beach nourishment, so long <br /> as all remaining proceeds are used for tourism promotion and provided that the <br /> use of occupancy tax proceeds for beach nourishment is limited by either a <br /> statutory cap or sunset provision.I <br /> ♦ Definitions The terms "net proceeds", "promote travel and tourism", "tourism- <br /> related expenditures", and "beach nourishment" are defined terms: <br /> ➢ Net proceeds - Gross proceeds less the costs to the city/county of <br /> administering and collecting the tax, as determined by the finance officer, not to <br /> exceed 3% of the first $500,000 of gross proceeds collected each year and 1% of <br /> the remaining gross receipts collected each year. <br /> ➢ Promote travel and tourism - To advertise or market an area or activity, <br /> publish and distribute pamphlets and other materials, conduct market <br /> research, or engage in similar promotional activities that attract tourists or <br /> business travelers to the area; the term includes administrative expenses <br /> incurred in engaging in these activities. <br /> ➢ Tourism-related expenditures - Expenditures that, in the judgment of the <br /> Tourism Development Authority, are designed to increase the use of lodging <br /> facilities, meeting facilities, and convention facilities in a city/county by <br /> 'In May 2013, the North Carolina Travel and Tourism Coalition passed a resolution supporting a <br /> modification to the Occupancy Tax Guidelines to allow local governments in coastal counties to allocate <br /> up to 50% of occupancy tax proceeds for Beach Nourishment, so long as all remaining proceeds are used <br /> for tourism promotion and provided that the use of occupancy tax proceeds for Beach Nourishment is <br /> limited by either a statutory cap or sunset provision. <br />