Highway Use Tax Refunds

August 13, 1996

Ms. Carol Howard, Director Registration Section

N.C. Division of Motor Vehicles 1100 New Bern Avenue Raleigh, N.C. 27697

Re: Advisory Opinion: Highway Use Tax Refunds

Dear Ms Howard:

I am writing in response to your request for an advisory opinion regarding the obligation of the State of North Carolina to refund overpayment of highway use tax collected as a result of the Division of Motor Vehicle’s prior interpretation that no trailers are Class A or B Commercial Motor Vehicles. After examining the relevant provisions of law, we conclude that the State would be obligated to refund any such overpayment of the highway use tax under two provisions of law.

First, G.S. §105-266.1 would require a refund where the tax refund is requested within six months of the overpayment.

G.S.

§§ 105-187.1 through 105-187.9 provide for the collection of the highway use tax by the Division of Motor Vehicles. This tax is imposed on the privilege of using the highways of this State and is assessed at the rate of three percent of the retail value of the vehicle. Generally, the maximum tax is $l,500 per vehicle. However, the maximum tax which may be collected on Class A or B Commercial Motor Vehicles as defined in G.S. § 20-4.01 is $l,000. This tax is collected at the time of transfer of title.

The highway use tax is collected by agents of the Division of Motor Vehicles each time a certificate of title is issued as the result of transfer of a motor vehicle. The tax due is computed and paid at the time of application for the certificate of title.

G.S.

§ 105-187.9(c) provides for an appeal of an overpayment of this tax only when the taxpayer disagrees with the Division over the value of the vehicle. This is the only appeal of right set forth within this Article, and reads as follows:

(c) Appeals. — A taxpayer who disagrees with the presumed value of a motor vehicle must pay the tax based on the presumed value, but may appeal the value to the Commissioner. A taxpayer who appeals the value must provide two estimates of the value of the vehicle to the Commissioner. If the Commissioner finds that the value vehicle is less than the presumed value of the vehicle, the Commissioner shall refund any overpayment of tax made by the taxpayer with interest at the rate specified in G.S. § 105-241.1 from the date of the overpayment.

However, G.S. § 105-228.90 et. seq. provides more general rules for remedies regarding dispute resolution of tax matters other than the valuation of the vehicle. The remedies outlined therein are made applicable to protests of overpayment of the highway use tax by G.S. § 105-228.90(a). This statute specifies that the remedy provisions found in that Article are applicable to Subchapter 1 of Chapter 105, which includes the Highway Use Tax Provisions.

G.S. § 105-266.1 governs requests for refunds and states in pertinent part that:

(a)

If a taxpayer claims that a tax or an additional tax paid by the taxpayer was excessive or incorrect, the taxpayer may apply to the Secretary for refund of the tax or additional tax at any time within the period set by the statute of limitation in G.S. § 105-266.

The statute of limitations provisions of G.S. § 105-266 read as follows:

(c)

Statute of Limitations. — The period in which a refund must be demanded or discovered under this section is determined as follows:

(1)

General Rule. — No overpayment shall be refunded, whether upon discovery or receipt of written demand, if the discovery is not made or the demand is not received within three years after the date set by the statute for the filing of the return or within six months after the payment of the tax alleged to be an overpayment, whichever is later.

Since the highway use tax is collected at the time of transfer of title, no return is filed. Therefore, a refund should be considered only if requested within six months of the overpayment. G.S. § 105-266.1(c).

A second provision concerning refunds is somewhat more limited in scope and is pursuant to a provision of H.B. 376, which was enacted by the .General Assembly on July 23, 1993. This bill amended G.S. § 105-187.3 to allow for the $1,000 maximum tax for Class A and B Commercial Motor Vehicles effective August 1, 1993. In addition, a provision which was not codified, provided for refunds of overpayment of the highway use tax which may have occurred prior to the amendment of G.S. § 105-187.3. It states in pertinent part that:

A person who paid highway use tax on a Class A or Class B motor vehicle that is a commercial motor vehicle as defined in G.S. § 4-01, at the maximum rate of one thousand five hundred dollars ($l,500) instead of the maximum rate of one thousand dollars ($1,000) set by section three of this Act may apply to the Division of Motor Vehicles of the Department of Transportation for a refund of the difference of the tax paid at the higher maximum rate and the amount that would have been paid had Section 3 of this Act been in effect when the title to the vehicle was issued. To obtain a refund, a person must submit an application to the Division of Motor Vehicles by January 1, 1994 and provide any information required by the Division to verify the accuracy of the application.

1993 N.C. Sess. Laws ch. 468, §§ 3 & 6.

Pursuant to this provision, anyone who had timely requested a refund for a Class A or B Commercial Motor Vehicle, and who was denied a refund based on the Division’s earlier position, should be eligible for reconsideration.

Reginald L. Watkins Senior Deputy Attorney General

C. Norman Young

Assistant Attorney General