GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

S	5 

SENATE BILL 1360*
Finance Committee Substitute Adopted 6/28/90
Finance Committee Substitute #2 Adopted 7/5/90
Ways & Means Committee Substitute #3 Adopted 7/12/90
House Committee Substitute Favorable 7/18/90

Short Title:  Highway Use Tax/Sales Tax Changes.	(Public)
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Sponsors:
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Referred to:  
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May 23, 1990

A BILL TO BE ENTITLED
AN ACT TO REINSTATE SALES TAX ON CERTAIN VEHICLES AND VEHICLE PARTS, TO MODIFY THE HIGHWAY USE TAX AND THE ALTERNATE GROSS RECEIPTS TAX, TO INCREASE CERTAIN FEES TO OFFSET THE LOSS OF REVENUE RESULTING FROM THE MODIFICATIONS TO THE HIGHWAY USE TAX, TO PROVIDE ASSISTANCE TO DISADVANTAGED BUSINESSES, AND TO MAKE TECHNICAL CHANGES IN THE LAWS AFFECTED BY THE HIGHWAY TRUST FUND.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 105-164.3(8b) reads as rewritten:
"(8b)	‘Motor vehicle' means a vehicle that is designed primarily for use upon the highways and is either self-propelled or propelled by a self-propelled vehicle, but does not include:
a.	A moped as defined in G.S. 20-4.01(27)(d1).
b.	Special mobile equipment as defined in G.S. 20-4.01(44).
c.	A tow dolly that is exempt from motor vehicle title and registration requirements under G.S. 20-51(10) or (11).
d.	A farm tractor or other implement of husbandry.
e.	A manufactured home.
f.	Road construction or road maintenance machinery or equipment."
Sec. 2.  G.S. 105-164.13(32) reads as rewritten:
"(32)	Sales of motor vehicles, the sale of a motor vehicle body to be mounted on a motor vehicle chassis when a certificate of title has not been issued for the chassis, and the sale of a motor vehicle body mounted on a motor vehicle chassis that temporarily enters the State so the manufacturer of the body can mount the body on the chassis. "
Sec. 3.  G.S. 105-164.3(7a) reads as rewritten:
"(7a)	‘Lease or rental' means a transfer, for consideration, of the use but not the ownership of property to another for a period of time."
Sec. 4.  G.S. 105-187.1 reads as rewritten:
"§ 105-187.1.  Definitions.
The following definitions and the definitions in G.S. 105-164.3 apply to this Article:
(1)	‘Commissioner' means the Commissioner of Motor Vehicles.
(2)	‘Division' means the Division of Motor Vehicles, Department of Transportation.
(3)	‘Long-term lease or rental' means a lease or rental made under a written agreement to lease or rent property to the same person for a period of at least 365 continuous days.
(4)	‘Short-term lease or rental' means a lease or rental that is not a long-term lease or rental."
Sec. 5.  G.S. 105-187.5(b) reads as rewritten:
"(b)	Rate.  The tax rate on the gross receipts from the short-term lease or rental of a motor vehicle is eight percent (8%) and the tax rate on the gross receipts from the long-term lease or rental of a motor vehicle is three percent (3%).  The maximum tax in G.S. 105-187.3(a) applies to a continuous lease or rental of a motor vehicle to the same person.."
Sec. 6.  G.S. 105-187.3(a) reads as rewritten:
"(a)	Amount.  The rate of the use tax imposed by this Article is three percent (3%) of the retail value of a motor vehicle for which a certificate of title is issued.  The tax is payable as provided in G.S. 105-187.4.  The tax may not be less than thirty dollars ($30.00) for each motor vehicle for which a certificate of title is issued, unless the issuance of a title for the vehicle is exempt from tax under G.S. 105-187.6(a).  The tax may not be more than one thousand dollars ($1,000) for each motor vehicle for which a certificate of title is issued."
Sec. 7.  G.S. 105-187.7 reads as rewritten:
"§ 105-187.7.  Credit for tax paid in another state.
A person who, within 90 days before applying for a certificate of title for a motor vehicle on which the tax imposed by this Article is due, has 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 State is entitled to a credit against the tax due under this Article for the amount of tax paid to the other jurisdiction.  The credit may not reduce the person's liability under this Article below the minimum tax set in G.S. 105-187.3."
Sec. 8.  G.S. 105-187.8 reads as rewritten:
"§ 105-187.8.  Refund for return of purchased motor vehicle.
When a purchaser of a motor vehicle returns the motor vehicle to the seller of the motor vehicle within 90 days after the purchase and receives a vehicle replacement for the returned vehicle or a refund of the price paid the seller, whether from the seller or the manufacturer of the vehicle, the purchaser may obtain a refund of the privilege tax paid on the certificate of title issued for the returned motor vehicle, less the minimum tax set in G.S. 105-187.3.
To obtain a refund, the purchaser must apply to the Division for a refund within 30 days after receiving the replacement vehicle or refund of the purchase price.  The application must be made on a form prescribed by the Commission and must be supported by documentation from the seller of the returned vehicle."
Sec. 9.  G.S. 105-187.4(b) reads as rewritten:
"(b)	Sale by Retailer.  When a certificate of title for a motor vehicle is issued because of a sale of the motor vehicle by a retailer, the applicant for the certificate of title must attach a copy of the bill of sale for the motor vehicle to the application.  A retailer who sells a motor vehicle may collect from the purchaser of the vehicle the tax payable upon the issuance of a certificate of title for the vehicle, apply for a certificate of title on behalf of the purchaser, and remit the tax due on behalf of the purchaser. If a check submitted by a retailer in payment of taxes collected under this section is not honored by the financial institution upon which it is drawn because the retailer's account did not have sufficient funds to pay the check or the retailer did not have an account at the institution, the Division may suspend or revoke the license issued to the retailer under Article 12 of Chapter 20 of the General Statutes."
Sec. 10.  G.S. 20-294 reads as rewritten:
"§ 20-294. Grounds for denying, suspending or revoking licenses.
A license may be denied, suspended or revoked on any one or more of the following grounds:
(1)	Material misstatement in application for license.
(2)	Willful and intentional failure to comply with any provision of this Article or Article 15 or the willful and intentional violation of G.S. 20-52.1, 20-75, 20-79, 20-82, 20-108, 20-109 or rescission and cancellation of dealer's license and dealer's plates under G.S. 20-110(e) or 20-110(f) or any lawful rule or regulation promulgated by the Division under this Article.
(3)	Being a motor vehicle dealer, failure to have an established place of business as defined in this Article.
(4)	Willfully defrauding any retail buyer, to the buyer's damage, or any other person in the conduct of the licensee's  business.
(5)	Employment of fraudulent devices, methods or practices in connection with compliance with the requirements under the laws of this State with respect to the retaking of motor vehicles under retail installment contracts and the redemption and resale of such motor vehicles.
(6)	Having used unfair methods of competition or unfair deceptive acts or practices.
(7)	Knowingly advertising by any means, any assertion, representation or statement of fact which is untrue, misleading or deceptive in any particular relating to the conduct of the business licensed or for which a license is sought.
(8)	Knowingly advertising a used motor vehicle for sale as a new motor vehicle.
(9)	Conviction of an offense set forth under G.S. 20-106, 20-106.1, 20-107, 20-112 while holding such a license or within five years next preceding the date of filing the application; or conviction of a felony involving moral turpitude under the laws of this State, any other state, territory or the District of Columbia or of the United States.
(10)	Submitting a bad check to the Division of Motor Vehicles in payment of highway use taxes collected by the licensee."
Sec. 11.  G.S. 105-187.5(d) reads as rewritten:
"(d)	Administration.  The Division shall notify the Secretary of Revenue of a retailer who makes the election under this section.  A retailer who makes this election shall report and remit to the Secretary the tax on the gross receipts of the lease or rental of the motor vehicle.  The Secretary shall administer the tax imposed by this section on gross receipts in the same manner as the tax levied under G.S. 105-164.4(a)(2).  The administrative provisions and powers of the Secretary that apply to the tax levied under G.S. 105-164.4(a)(2) apply to the tax imposed by this section.  In addition, the Division may request the Secretary to audit a retailer who elects to pay tax on gross receipts under this section.  When the Secretary conducts an audit at the request of the Division, the Division shall reimburse the Secretary for the cost of the audit, as determined by the Secretary.  In conducting an audit of a retailer under this section, the Secretary may audit any sales of motor vehicles made by the retailer."
Sec. 12.  G.S. 105-187.6 reads as rewritten:
"§ 105-187.6.  Exemptions from highway use tax.
(a)	Full Exemptions. –  The tax imposed by this Article does not apply when a certificate of title is issued as the result of a transfer of a motor vehicle:
(1)	To the insurer of the motor vehicle under G.S. 20-109.1 because the vehicle is a salvage vehicle.
(2)	To either a manufacturer, as defined in G.S. 20-285, or a motor vehicle retailer for the purpose of resale other than lease or rental.
(3)	To the same owner to reflect a change or correction in the owner's name.
(4)	To the Department of Human Resources to be equipped by the Department for use by the handicapped and then transferred to a handicapped person.
(5)	To a local board of education when the motor vehicle is to be used in the driver education program of a public school to train students to drive.
(6)	By will or intestacy.
(b)	Partial Exemptions. –  Only the minimum tax imposed by this Article applies when a certificate of title is issued as the result of a transfer of a motor vehicle:
(1)	By a gift between a husband and wife or a parent and child.
	(2)	By a distribution of marital property as a result of a divorce.
(3)	To a secured party who has a perfected security interest in the motor vehicle.
(4)	To a partnership or corporation as an incident to the formation of the partnership or corporation and no gain or loss arises on the transfer under section 351 or section 721 of the Internal Revenue Code, or to a corporation by merger or consolidation in accordance with G.S. 55-110.
	(c)	Out-of-state Vehicles. –  A maximum tax of one hundred dollars ($100.00) applies when a certificate of title is issued for a motor vehicle that, at the time of applying for a certificate of title, is and has been titled in another state for at least 90 days."
Sec. 13.  Article 5A of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-187.11.  Transition from sales tax to highway use tax for lessors and renters of motor vehicles.  
A tax at the rate set in G.S. 105-187.5(b)	is levied on the gross receipts derived by a retailer from the lease or rental of a motor vehicle owned by the retailer before October 1, 1989, and leased or rented on or after that date.  A retailer subject to this tax may elect to pay highway use tax at the rate set in G.S. 105-187.3(a) on a motor vehicle owned by the retailer before October 1, 1989, and leased or rented on or after that date.  The retail value of a motor vehicle for which a retailer makes an election under this section is the value of the motor vehicle that would apply under G.S. 105-187.3(b) if the retailer received the vehicle because of a reason other than the sale of the motor vehicle on the date the retailer makes the election.
To make the election allowed by this section, a retailer shall complete a form provided by the Division, pay the tax due, and pay the fee set in G.S. 20-85(a)(9).  A retailer who makes this election may not receive credit for any tax paid on the motor vehicle under Article 5 of this Chapter or for any tax on gross receipts paid under this Article.  The Division shall notify the Secretary of Revenue of a retailer who makes an election under this section."
Sec. 14.  Section 4 of Chapter 753 of the 1989 Session Laws reads as rewritten:
"Sec. 4.  Refunds for taxable periods ending before October 1, 1989, shall be drawn from the Highway Fund.  Refunds for taxable periods ending after September 30, 1989, shall be drawn from the Highway Fund and the Highway Trust Fund in the same percentage amounts that refunds are drawn from these Funds under G.S. 105-445."
Sec. 15.  G.S. 20-57(b) reads as rewritten:
"(b)	The registration card shall be delivered to the owner and shall contain upon the face thereof the name and address of the owner, space for the owner's signature, the registration number assigned to the vehicle, and a description of the vehicle as determined by the Commissioner, provided that if there are more than two owners the Division may show only two owners on the registration card and indicate that additional owners exist by placing after the names listed ‘et al.' An owner may obtain a copy of a registration card issued in the owner's name by applying to the Division for a copy and paying the fee set in G.S. 20-85."
Sec.  16.   G.S. 20-85 reads as rewritten:
"§ 20-85.  Schedule of fees.
	(a)	The following fees are imposed concerning a certificate of title, a registration card, or a registration plate for a motor vehicle.  These fees are payable to the Division and are in addition to the tax imposed by Article 5A of Chapter 105 of the General Statutes.
(1)	Each application for certificate of title	$35.00
(2)	Each application for duplicate
	or corrected certificate of title	 10.00
(3)	Each application of repossessor for
	certificate of title	 10.00
(4)	Each transfer of registration	 10.00
(5)	Each set of replacement registration
	plates	 10.00
(6)	Each application for duplicate registration
	card	 10.00
(7)	Each application for recording supplementary
	lien	 10.00
(8)	Each application for removing a lien from a
	certificate of title	 10.00
(9)	Each application for certificate of title
	for a motor vehicle transferred to a
	manufacturer, as defined in G.S. 20-285,
	or a motor vehicle retailer for the purpose
	of resale	 10.00.
(b)	Ninety-three and three-tenths percent (93.3%) of the revenue collected under this section shall be credited to the North Carolina Highway Trust Fund; the remaining revenue shall be credited to the Highway Fund.  Fifteen dollars ($15.00) of the fee imposed under subdivision (a)(1) shall be added to the amount allocated for secondary roads under G.S. 136-176 and used in accordance with G.S. 136-44.5."
Sec. 17.  G.S. 20-85.1(c) reads as rewritten:
"(c)	All funds collected under this section shall be credited to the Highway Fund."
Sec. 18.  G.S. 105-436 is repealed.
Sec. 19.  G.S. 20-7(l) reads as rewritten:
"(l)	Any person who except for lack of instruction in operating a motor vehicle would be qualified to obtain an operator's license under this Article may obtain a learner's permit.  A  learner's permit authorizes the permittee, while having the permit in his immediate possession, to drive a specified type or class of motor vehicle upon the highways for a period of 18 months. The fee for issuance of a learner's permit is ten dollars ($10.00).  A learner's permit may be renewed, or a second learner's permit may be issued, for an additional period of 18 months. The permittee must, while operating a motor vehicle over the highways, be accompanied by a person who is licensed to operate the class or type of vehicle being operated and who is seated in the seat beside the permittee.
The fee for the issuance of a renewal or a second learner's permit is ten dollars ($10.00)."
Sec. 20.  G.S. 20-11(b) reads as rewritten:
"(b)	The Division may grant an application for a limited learner's permit of any minor under the age of 16, who otherwise meets the requirements of licensing under this section, when such application is signed by both the applicant and his or her parent or guardian or some other responsible adult with whom the applicant resides and is approved by the Division of Motor Vehicles. The limited learner's permit shall entitle the applicant, while having the permit in his immediate possession, to drive a motor vehicle of the specified type or class upon the highways while accompanied by a parent, guardian, or other person approved by the Division, who is licensed under this Chapter to operate a motor vehicle (of the type or class being operated by the permittee) and who is actually occupying a seat beside the driver. The limited learner's permit is valid for a period of 18 months and the fee for issuance of a limited learner's permit is ten dollars ($10.00). Provided, however, a limited learner's permit as herein provided shall be issued only to those applicants who have reached the age of 15 years. In the event a minor who has been issued a limited learner's permit under this subsection operates a motor vehicle in violation of any provision herein, the permit shall be canceled.
Provided a driver who holds a limited learner's permit only shall not be deemed a male operator under age 25 for the purpose of determining the insurance premium rate for persons insured under automobile property damage and bodily injury liability insurance policies."
Sec. 21.  G.S. 20-14 reads as rewritten:
"§ 20-14. Duplicate licenses.
A licensee may obtain a duplicate license by paying a fee of ten dollars ($10.00) and giving the Division satisfactory proof that:
(1)	The license has been lost or destroyed;
	(2)	It is necessary to change the name or address on the license; or
(3)	Because of the licensee's age, the licensee is entitled to a license with a different color photographic background."
Sec. 22. G.S. 20-37.7(d) reads as rewritten:
"(d)	A special identification card issued under this section shall expire on the birth date of the holder in the fourth year of issuance. The fee for the issuance or reissuance of a special identification card is the same as the fee set in G.S. 20-14 for issuing a duplicate license.  A  special identification card may be issued without fee to a resident of North Carolina who is legally blind or has attained the age of 70. The fees collected for the issuance of special identification cards to persons under the age of 16 shall be placed in a reserve fund to cover the cost of the operation of the program required by this Article."
Sec. 23. G.S. 20-37.9 reads as rewritten:
"§ 20-37.9. Notification of change of address.
Whenever the holder of a special identification card issued under the provisions of G.S. 20-37.7 has a change in the address as shown on the special identification card, he or she shall apply for reissuance of a special identification card within 60 days after the address has been changed. The fee for reissuance of a special identification card is the same as the fee set in G.S. 20-37.7 for issuing a special identification card. Provided that in those instances in which the change of address is through governmental action and there is no actual change of geographical location, no change of address on the card shall be required until the expiration thereof or reissuance is applied for by the holder thereof."
Sec. 24.  G.S. 20-26(c) reads as rewritten:
	"(c) The Division shall furnish copies of license records required to be kept by subsection (a) of this section to other persons, firms and corporations for uses other than official upon prepayment of the fee therefor, according to the following schedule:
(1)	Limited extract copy of license record,
for period up to three years		$5.00  
(2)	Complete extract copy of license record		5.00  
(3)	Certified true copy of complete license record	7.00.
All fees received by the Division under the provisions of this subsection shall be paid into and become a part of the ‘Highway Fund.'"
Sec. 25.  G.S. 20-42(b) reads as rewritten:
"(b)	The Commissioner and officers of the Division designated by the Commissioner may prepare under the seal of the Division and deliver upon request a certified copy of any record of the Division, charging a fee of five dollars ($5.00) for each document so certified, and every such certified copy shall be admissible in any proceeding in any court in like manner as the original thereof, without further certification. Provided that any copy of any record of the Division furnished to State, county, municipal and court officials of this State for official use shall be furnished without charge."
Sec. 26.  G.S. 20-74 reads as rewritten:
"§ 20-74. Penalty for failure to make timely application for title or for making false statement.
(a)	Every new owner or purchaser of a vehicle previously registered shall make application for transfer of title within 30 days after acquiring the vehicle, or see that an application is sent in by the lienholder with proper fees, and responsibility for the transfer shall rest on the purchaser. Any person, firm or corporation failing to do so shall pay a penalty of ten dollars ($10.00) in addition to the fees otherwise provided in this Article.
(b)	A dealer who applies for a title for a vehicle sold by the dealer on behalf of the buyer of the vehicle shall apply within 30 days of the date of sale.  A dealer who fails to apply for a title within this time limit shall pay a penalty in the amount set in subsection (a) for a late application.
(c)	A dealer or owner of a vehicle who knowingly makes a false statement in any application required by this Division as to the date a vehicle was sold or acquired shall be guilty of a misdemeanor, and upon conviction shall be fined not more than fifty dollars ($50.00) or imprisoned not more than 30 days.
(d)	All moneys collected under this section shall go to the State Highway Fund."
Sec. 27.  G.S. 20-119(b) reads as rewritten:
"(b)	Upon the issuance of a special permit for an oversize or overweight vehicle by the Department of Transportation in accordance with this section, the applicant shall pay to the Department a fee of ten dollars ($10.00) for a single trip permit and fifty dollars ($50.00) for an annual permit issued for a single vehicle. Any person, firm or corporation who operates more than one vehicle may apply for, and the Department may issue, an annual permit for all oversize or overweight vehicles operated by the person, firm or corporation, upon payment of an annual fee based on the following schedule: 

No. of Vehicles	Annual Permit Rate per Vehicle

First 50		$50.00
51 to 100		40.00
101 to 150		30.00
Over 150		20.00
Any vehicle required to obtain an overweight permit shall not be charged an additional fee for oversize. Any vehicle required to obtain an oversize permit shall not be charged an additional fee for overweight. This subsection shall not apply to farm equipment or machinery being used at the time for agricultural purposes, nor to the moving of a house as provided for by the license and permit requirements of Article 16 of this Chapter. Fees will not be assessed for permits for oversize and overweight vehicles issued to any agency of the United States Government or the State of North Carolina, its agencies, institutions, subdivisions or municipalities, provided the vehicle is registered in the name of such governmental body."
Sec. 28.  G.S. 20-289(a) reads as rewritten:
"(a)	The license fee for each fiscal year, or part thereof, shall be as follows:
(1)	For motor vehicle dealers, distributors, and wholesalers, fifty dollars ($50.00) for each principal place of business, plus eight dollars ($8.00) for a supplementary license for each car lot not immediately adjacent thereto;
	(2)	For manufacturers, one hundred dollars ($100.00), and for each factory branch in this State, seventy dollars ($70.00);
	(3)	For motor vehicle salesmen, five dollars ($5.00) for each license or transfer of license;
	(4)	For factory representatives, or distributor branch representatives, six dollars ($6.00) for each license or transfer of license;
	(5) 	Manufacturers, wholesalers, and distributors may operate as a motor vehicle dealer, without any additional fee or license."
Sec. 29.  G.S. 20-291 reads as rewritten:
"§ 20-291. Salesman and other licensees to carry license and display it on request; license to name employer.
Every salesman, factory representative and distributor representative shall carry his license when engaged in his business, and shall display the same upon request. The license of a salesman, a factory representative, or a distributor representative shall state the name of the licensee's employer.  A licensee who changes employers shall immediately apply to the Division for a license that states the licensee's new employer.  The licensee shall pay the fee set in G.S. 20-289 for the transfer of license."
Sec. 30.  Five million six hundred twenty-four thousand five hundred thirty-six dollars ($5,624,536) of the fees collected under G.S. 20-85 during fiscal year 1990-91 shall be considered highway use tax revenue deposited in the Highway Trust Fund under G.S. 105-173, as enacted by Chapter 692 of the 1989 Session Laws and codified as G.S. 105-187.9.
Sec. 31.  Chapter 136 of the General Statutes is amended by adding a new section to Article 2 of that Chapter to read:
"§ 136-28.4A.  Assistance for disadvantaged businesses.
(a)	Appropriation.  Of the amount that is appropriated to the Highway Trust Fund each year and may be used for administrative expenses of the Trust Fund, the Department shall use the sum of two million dollars ($2,000,000) to provide matching capital to the Center for Community Self-Help, Inc. for a program of lending to disadvantaged businesses, as defined in 49 C.F.R. § 23.62, that receive or apply for highway contracts with the Department, whether directly as a contractor or indirectly as a subcontractor.  The Center may not use State funds to make a loan or guarantee under the program unless the Center finds that a loan or guarantee for the same purpose is not available from a private lender upon reasonably equivalent terms and conditions.  
(b)	Reports.  The Center for Community Self-Help must make quarterly reports to the State Controller and an annual report to both the State Controller and the Joint Legislative Highway Oversight Committee concerning its use of State funds under this section.  The Center must submit a quarterly report within 30 days after the end of a quarter and must submit an annual report within 180 days after the end of a fiscal year.  A report must state the amount of State funds received by the Center under this section for the period covered by the report, the amount of State funds loaned during the period, and the number of jobs created or maintained as a result of the loans.
(c)	Audit.  At the end of each fiscal year, the Department of the State Auditor may audit the Center's program of lending conducted with State funds under this section."
Sec. 32.  G.S 136-176(a) reads as rewritten:
"(a)	A special account, designated the North Carolina Highway Trust Fund, is created within the State treasury.  The Trust Fund consists of the following revenue:
(1)	Motor fuel, special fuel, and road tax revenue deposited in the Fund under G.S. 105-445, 105-449.16, and 105-449.43, respectively.
(2)	Motor vehicle use tax deposited in the Fund under G.S. 105-187.9.
(3)	Revenue from the certificate of title fee and other fees payable under G.S. 20-85.
(4)	Revenue available from the retirement of refunding bonds issued to repay highway construction bonds and deposited in the Fund under G.S. 136-183.
(5)	Interest and income earned by the Fund."
Sec. 33.  Sections 1 through 8, Section 12, Section 16, Sections 19 through 27, and Section 29 shall become effective October 1, 1990.  The remaining sections of this act are effective upon ratification. Section 28 applies retroactively to July 1, 1990.  Section 31 of this act expires July 1, 1995.