§ 105-243.1. Collection of tax debts. - North Carolina Statutes

§ 105‑243.1.  Collectionof tax debts.

(a)        Definitions. – Thefollowing definitions apply in this section:

(1)        Overdue tax debt. –Any part of a tax debt that remains unpaid 90 days or more after it becomescollectible under G.S. 105‑241.22. The term does not include a tax debtfor which the taxpayer entered into an installment agreement for the tax debtunder G.S. 105‑237 within 90 days after the tax debt became collectible,if the taxpayer has not failed to make any payments due under the installmentagreement.

(2)        Tax debt. –  Thetotal amount of tax, penalty, and interest collectible under G.S. 105‑241.22.

(b)        Outsourcing. – TheSecretary may contract for the collection of tax debts owed by nonresidents andforeign entities. At least 30 days before the Department submits a tax debt toa contractor for collection, the Department must notify the taxpayer by mailthat the debt may be submitted for collection if payment is not received within30 days after the notice was mailed.

(c)        Secrecy. – Acontract for the collection of tax debts is conditioned on compliance with G.S.105‑259. If a contractor violates G.S. 105‑259, the contract isterminated, and the Secretary must notify the contractor of the termination. Acontractor whose contract is terminated for violation of G.S. 105‑259 isnot eligible for an award of another contract under this section for a periodof five years from the termination. These sanctions are in addition to thecriminal penalties set out in G.S. 105‑259.

(d)        Fee. – A collectionassistance fee is imposed on an overdue tax debt that remains unpaid 30 days ormore after the fee notice required by this subsection is mailed to thetaxpayer. In order to impose a collection assistance fee on a tax debt, theDepartment must notify the taxpayer that the fee will be imposed if the taxdebt is not paid in full within 30 days after the date the fee notice wasmailed to the taxpayer. The Department may not mail the fee notice earlier than60 days after the tax debt becomes collectible under G.S. 105‑241.22. Thefee is collectible as part of the debt. The Secretary may waive the feepursuant to G.S. 105‑237 to the same extent as if it were a penalty.

The amount of the collectionassistance fee is twenty percent (20%) of the amount of the overdue tax debt.If a taxpayer pays only part of an overdue tax debt, the payment is creditedproportionally to fee revenue and tax revenue.

(e)        Use. – The fee is areceipt of the Department and must be applied to the costs of collectingoverdue tax debts. The proceeds of the fee must be credited to a specialaccount within the Department and may be expended only as provided in thissubsection. The proceeds of the fee may not be used for any purpose that is notdirectly and primarily related to collecting overdue tax debts. The Departmentmay apply the proceeds of the fee for the purposes listed in this subsection.The remaining proceeds of the fee may be spent only pursuant to appropriationby the General Assembly. The fee proceeds do not revert but remain in the specialaccount until spent for the costs of collecting overdue tax debts. TheDepartment and the Office of State Budget and Management must account for allexpenditures using accounting procedures that clearly distinguish costsallocable to collecting overdue tax debts from costs allocable to otherpurposes and must demonstrate that none of the fee proceeds are used for anypurpose other than collecting overdue tax debts.

The Department may apply thefee proceeds for the following purposes:

(1)        To pay contractorsfor collecting overdue tax debts under subsection (b) of this section.

(2)        To pay the fee theUnited States Department of the Treasury charges for setoff to recover tax owedto North Carolina.

(3)        To pay for taxpayerlocater services, not to exceed one hundred fifty thousand dollars ($150,000) ayear.

(4)        To pay for postageor other delivery charges for correspondence directly and primarily relating tocollecting overdue tax debts, not to exceed five hundred thousand dollars($500,000) a year.

(5)        To pay for operatingexpenses for Project Collection Tax and the Taxpayer Assistance Call Center.

(6)        To pay for expensesof the Examination and Collection Division directly and primarily relating tocollecting overdue tax debts.

(f)         Reports. – Thereport of Department activities required by G.S. 105‑256 containsinformation on the Department's efforts to collect tax debts and its use of theproceeds of the collection assistance fee. (2001‑380, ss. 2, 8; 2002‑126, s. 22.2;2003‑349, s. 3; 2004‑124, ss. 23.2(a), 23.3(c); 2004‑170, s.22.5; 2005‑276, ss. 22.1(a), 22.1(b), 22.6(a); 2006‑66, ss. 19.2,19.3(a); 2007‑323, s. 6.9(a); 2007‑491, s. 33.)