Finance officials with the State of North Carolina are having some sort of mystery problem doing the math on sales tax refunds for local governments and non-profits.
The problem is thwarting the ability of public and private entities across the state to plan for coming budgets or even know the amount of money they have access to at the current time.
Guilford County Manager Mike Halford recently revealed the problem to the Guilford County Board of Commissioners at a work session, explaining that the snafu was making it difficult to do financial planning or to know how much money the county has to spend.
Here’s how the state’s tax system works. You make a purchase and the sales tax is tacked on. If you’re just a regular person, you never see that money again. However, if you’re a non-profit agency or a county government, you have to pay the sales tax but then you apply for a refund.
“The state is continuing to have issues with sales tax refunds,” Halford told the commissioners at a Thursday, March 16 meeting in the first-floor conference room of the Old Guilford County Court House. “What should be happening is, each month, there should be an accurate accounting of what those refunds are for some period.”
The county should know what revenue from that source it has available. But now it doesn’t.
“We learned recently that the state has some issues with calculating those sales tax refunds,” Halford said. “We don’t know what that problem is. What I will tell you is that, in past years, there could be a swing of four, five, six, or seven million dollars from one month to the next for the refunds – depending on when the state caught up.”
The county manager added that it makes knowing current and future revenues from that source very difficult.
“So, what that’s telling me is we can’t have as high confidence as we did in current sales tax revenues for this year, and, going into next year, it’s going to be harder to predict that,” he added.
Halford said that, in the meantime, the county needed to err on the side of caution.
“So, our ability to be aggressive in those projections is going to be limited until the state figures out what’s going on,” he told the board.
Imagine, the county having to err on the side of caution! Why start now?
It is not a “snafu”. I worked for 35 years in a healthcare facility and we had to apply for the refund providing information as to which counties were charged with our refund. The state would receive the application and within a few days the refund was received.
Once a year a state auditor came in and audited our records to insure the charge to each county was correct.
The problem today with the revenue dept is the same problem as with other state agencies. Total employee incompetence! And we have to put up with employees totally unable to add 2+2 and come up with 4 without a calculator.
You go Roy! That kind of money, just in an overnight account, can generate a serious amount of interest. Just what are you doing with that money Roy?
Local governments and so called non-profits should be paying Sales Tax like everyone else.
There should not be a regressive sales tax on unprepared food.
Dead right ! Very few states tax groceries, but we’re one on them. Then again we shouldn’t worry: “Food Tax Terry” Sanford promised us that taxing food would be a temporary measure… in 1961.
Hard to imagine Guilford county complaining about taxes it has to pay even though they get refunded.
Why are nonprofits receiving sales tax refunds? Just think of all those retirement homes receiving a refund, like the one Councilman Hoffman lives in, River Landing, Abbotswood at Irving Park and Friends Home. Why are these facilities that house those who are able to pay not paying NC sales tax? NC Legislature, are you listening? Do the right thing and eliminate the statutes that give tax exempt status to these high-end retirement homes. I am happy that the wealthier over 55ers can live in luxury, looked after on a level that the rest of us are not, that an ambulance is call when a toenail is broken. However, I do not want to subsidize their lifestyle choice by paying higher property tax because the facilities are “nonprofit” and do not pay property tax. I do not want such a facility to pay zero NC sales tax by receiving a refund from NC. NC legislatures, do your job and pass laws that protect and benefit all North Carolinians, not just a special few.
You’re absolutely right, Termlimits. “Non-Profits” are more accurately described as ‘Non Taxpaying” because they’re exempted from paying so many taxes. It’s a rip-off. The people who work at these organizations are invariably overpaid, so as to erase any profit. They live like Kings – and get huge tax breaks. What a scam on the regular taxpayers who are forced to make up the difference.
ALL organizations, corporations, governments and charities should pay the same taxes as the rest of us on the money they make.