§ 119-65. Timing of reimbursement payments under contract. - North Carolina Statutes

Article 6.

Contract Rights Regarding Tax Reimbursement.

§ 119‑65.  Timing of reimbursement paymentsunder contract.

(a)        Right. – When a contract calls for one party to reimburse asecond party for the federal manufacturer's excise taxes levied on petroleumproducts in Part III of Subchapter A of Chapter 32 of the Internal RevenueCode, whether as a separate item or as part of the price, the party making thereimbursement has the right to choose to tender payment for the taxes no morethan one business day before the day the second party is required to remit thetaxes to the federal Internal Revenue Service. The party making thereimbursement has the option of exercising this right. Exercise of this rightdoes not relieve the party of the obligation to make the reimbursement asprovided for in the contract, but affects only the timing of when thatreimbursement must be tendered.

(b)        Procedure. – In order to exercise the contractual rightestablished in subsection (a) of this section, the party making the reimbursementmust notify the second party in writing of the intent to exercise the paymentoption and the effective date of the exercise. The effective date must be noearlier than the beginning of the next federal tax quarter or 30 days after thenotice of intent is received, whichever is later.

(c)        Security. – If the party making the reimbursement exercisesthe contractual right provided in this section, the second party may requiresecurity for the payment of the taxes in proportion to the amount the taxes representcompared to the security required on the contract as a whole. The second partymay not, however, change the other payment terms of the contract without avalid business reason other than the exercise of the contractual right, exceptto require the payment of the taxes under the contractual right to be made byelectronic funds transfer. (2002‑108, s. 1.)