Tuesday, November 06, 2007, 1:01 PM

COA Majority Narrows Immaterial Irregularity Statute Allowing Belated Tax Assessments

In In the Matter the Appeal of Tyleta W. Morgan, the COA split today over whether taxes belatedly assessed on property mistakenly not previously assessed was proper as an "immaterial irregularity" under N.C. Gen. Stat. sec. 105-394.

In Morgan, the property owners listed a residence on their tax forms, but when the residence was appraised in 1999 and 2003, it went unassessed. Then, in 2004, the county tax assessor's office assessed back taxes on the residence for 1995-2003. An appeal ensued.

N.C. Gen. Stat. sec. 105-394 states that "[i]mmaterial irregularities in the listing, appraisal, or assessment of property for taxation or in the levy or collection of the property tax ... shall not invalidate the tax imposed upon any property or any process of listing, appraisal, assessment, levy, collection, or any other proceeding...." The statute provides examples of immaterial irregularities, including "[t]he failure to list, appraise, or assess any property for taxation or to levy any tax within the time prescribed by law."

The COA majority indicated that even though a failure to list and assess within the prescribed time period was expressly listed as an immaterial irregularity, N.C. Gen. Stat. sec. 105-394 is meant to cover only cases where the tax assessment would have been valid but for a clerical or administrative error. The majority indicated that here the tax assessor's failure to timely assess the Morgan residence was not merely due to a clerical or administrative error, was therefore not immaterial, and that the failure therefore could not now be rectified.

Judge Geer dissented. Judge Geer stated that the majority was inserting language into the statute by requiring that the "failure to list, appraise, or assess any property for taxation or to levy any tax within the time prescribed by law" be due to clerical or administrative errors, whatever exactly those might be. Judge Geer acknowledged competing policy concerns, e.g., fairness to the individual tax payer versus equity in taxing all property of all taxpayers. Judge Geer underscored that the legislature, not the court, is to choose amongst those policies in crafting the law that the judiciary applies. In the end, while "it may well be troubling that a taxing authority can, under the immaterial irregularity provisions ... go back 10 years to assess property that the authority has neglected to assess in a timely fashion through no fault of the taxpayer", Judge Geer would hold that "[w]hether a County should be able to do so is ... a question for the General Assembly and not for the courts."

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