August 15, 1994
Carol Howard, Assistant Director Vehicle Registration Department of Transportation Division of Motor Vehicles 1100 New Bern Avenue Raleigh, North Carolina 27697-0001
RE: Advisory Opinion; Division of Motor Vehicles’ Official Bulletin No. 136; North Carolina Highway Use Tax, Article 5A of Chapter 105; Soldiers’ and Sailors’ Civil Relief Act of 1940, 56 Stat. 777, as amended
Dear Ms. Howard:
I write to advise that our office disagrees with the Department of Motor Vehicles’ Official Bulletin No. 136, dated August 1, 1994, which concludes that non-resident servicemen stationed in North Carolina are exempt from the highway use tax on motor vehicles registered in North Carolina.
It is our opinion that the United States Supreme Court in Sullivan v. U.S., 395 U.S. 169 (1969) made crystal clear that such taxes are not exempt under the Soldiers’ and Sailors’ Civil Relief Act of 1940, 56 Stat. 777, as amended (hereinafter "the Act"). The Court in Sullivan held that because a sales or use tax was not a tax "in respect of" personal property, but rather a tax on a single transaction, such taxes were not exempted by the Act. Id. at 177. The Court found the congressional intent clear: the protection of the Act extended only to "annually reoccurring taxes on property . . .[as opposed to taxes] imposed only once and then only when there [had] been a retail sales transaction." Id. at 176-177. The Court concluded that "Congress considered the occasional sales and use taxes that servicemen might have to pay an insignificant burden, as compared with annual ad valorem property taxes, and consequently not deserving of the same exemption." Id. at 179.
Although clearly no fault of yours, Official Bulletin No. 136 mischaracterizes the advice you received as "the Attorney General’s Office has ruled." The Attorney General’s Office has never ruled that members of the military are exempt from payment of the highway use tax on vehicles registered in North Carolina, unless North Carolina is the member’s home state. Unfortunately, a member of our staff in an advisory letter to you dated March 23, 1993, did give you that advice. However, in that same advisory letter to you, that attorney made clear that: "This is an advisory letter. It has not been reviewed and approved in accordance with procedures for issuing an Attorney General’s opinion."
As a matter of fact, in a 1969 formal opinion issued by the Attorney General concerning whether the Soldiers’ and Sailors’ Civil Relief Act exempts non-resident servicemen stationed in North Carolina from payment of the North Carolina Use Tax, we concluded that "(s)uch servicemen are liable for payment of the North Carolina Use Tax so levied on the use of such property." See, 40
N.C.A.G. 887 (1969), copy of which is enclosed.
In conclusion, it is clear that the United States Supreme Court in the 1969 Sullivan v. U.S. decision upheld the right of a state to levy a use tax upon non-resident servicemen stationed in North Carolina. Our law also provides a credit to the non-resident servicemen who have "paid a sales tax, an excise tax, or a tax substantially equivalent to the tax imposed by this Article on the vehicle to a taxing jurisdiction outside this (North Carolina) state . . . ." N.C.G.S. §105-187.7.
Should you have any questions, please contact me.
Andrew A. Vanore, Jr. Chief Deputy Attorney General