REIMBURSE LATE AUDIT COSTS WITH SALES TAX REV.

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View NCGA Bill Details2023-2024 Session
House Bill 122 (Public) Filed Tuesday, February 14, 2023
AN ACT TO INCREASE COMPLIANCE BY COUNTIES AND MUNICIPALITIES THAT FAIL TO TIMELY SUBMIT AN ANNUAL AUDIT REPORT.
Intro. by Warren.
Status: Re-ref to Finance. If fav, re-ref to Rules and Operations of the Senate (Senate action) (May 18 2023)

SOG comments (1):

Long title change

Submitted by ddecamillis@sog... on

House committee substitute to the 1st edition changed the long title. Original title was AN ACT TO INCREASE COMPLIANCE BY UNITS OF LOCAL GOVERNMENT THAT FAIL TO TIMELY SUBMIT AN ANNUAL AUDIT.

Bill History:

H 122

Bill Summaries:

  • Bill H 122 (2023-2024)
    Summary date: Feb 28 2023 - View Summary

    House committee substitute to the 1st edition makes the following changes. Changes the act’s long title and makes conforming changes to refer to counties and municipalities, instead of local governments, throughout the act. Makes technical change to GS 159-34(e). Shifts responsibility for providing notice of warning from the Local Government Commission (LGC) more specifically to the secretary of the Local Government Commission. Amends notice requirements to specify method of delivery as first-class mail and to no longer require posting on the Department of State Treasurer’s website. Enacts new GS 159-34(f) governing appeals of notices of noncompliance under GS 159-34(e). Deletes 45-day deadline for municipality or county to submit a notice of appeal. Sets forth requirements for content of notice of appeal. Requires the LGC to establish guidelines outlining specific criteria that would warrant a successful appeal. Requires the Secretary of Revenue (Secretary) to delay any withholding authorized by GS 159-34 if an appeal is taken before the Secretary takes action to withhold any portion of its sales tax distributions under GS 159-34(g). If an appeal is taken after withholding occurs under GS 159-34(g) the Commission must notify the Secretary to release any withheld funds if the Commission determines that the county or municipality’s failure to submit a copy of their annual audit report is due to the circumstances established by the commission. 

    Makes technical, clarifying, and reorganizational changes to withholding provisions of the act, now GS 159-34(g). Amends the provisions concerning the release of funds and the timing of the release of funds, to account for a successful appeal by the county or municipality.

    Requires the LGC to establish and make available the appeal guidelines discussed above before the Secretary of the LGC sends out any notice of noncompliance to a county or municipality for failure to provide a copy of its annual audit report. Permits the LGC to establish these guidelines prior to January 1, 2024, but specifies that they may not become effective until on or after that date.

    Makes technical changes to the effective date and other organizational changes to account for new subsections GS 159-34(f)-(g) and new sections two and three.

    Government, Local Government
    GS 159
  • Bill H 122 (2023-2024)
    Summary date: Feb 14 2023 - View Summary

    Amends GS 159-34 to add new subsection (e) requiring the Local Government Commission (LGC) to provide a warning to every local governmental unit that does not submit an audit within nine months of unit’s fiscal year end. Sets out additional requirements for the warning notice. Establishes that a unit will be deemed to consent to the sales and use tax withholding penalty in GS 159-34(f) if the unit does not comply with the warning and fails to submit an audit within 12 months of fiscal year end. Allows a local government to notify LGS of its plan to appeal the action, with notice of appeal due within 45 days of receiving notice of the warning. 

    Adds new subsection (f) establishing a sales and use tax withholding penalty for failure to comply with the warning provided under subsection (e). Permits the LGC to request the Secretary of Revenue withhold 150% of the cost of the required annual audit for the local governmental unit from the unit’s quarterly sales and use tax distributions, and allows the withholding to occur in subparts if the amount to be withheld exceeds 5% of the unit’s monthly general fund budget. Establishes a procedure for the Secretary of Revenue to release the funds to the governmental unit after the LGC receives the required annual audit report, or two years have passed since the notice from the LGC to begin withholding funds. 

    Effective January 1, 2024, and applies to audits for fiscal years ending on or after June 30, 2023. 

    Government, Local Government
    GS 159
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