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NORTH CAROLINA REGISTER Volume 18, Issue 19 Pages 1635 - 1759 April 1, 2004 This issue contains documents officially filed through March 11, 2004. Office of Administrative Hearings Rules Division 424 North Blount Street (27601) 6714 Mail Service Center Raleigh, NC 27699-6714 (919) 733-2678 FAX (919) 733-3462 Julian Mann III, Director Camille Winston, Deputy Director Molly Masich, Director of APA Services Ruby Creech, Publications Coordinator Linda Dupree, Editorial Assistant Dana Sholes, Editorial Assistant Julie Brincefield, Editorial Assistant IN THIS ISSUE I. IN ADDITION Voting Rights Letters.....................................................1635 - 1636 Tax Review Board Decisions.......................................1637 - 1662 Notice of Intent to Redevelop A Brownsfield Property – Estate of Katherine C Bell ........................1663 Notice of Intent to Redevelop A Brownsfield Property – Wede Corporation, LLC...........................1664 II. PROPOSED RULES Administration State Energy Office ...................................................1665 - 1670 Environment and Natural Resources Coastal Resources Commission...............................1673 - 1678 Water Treatment Facility Operators Certification Board ..............................................1678 - 1684 Health and Human Services Facility Services..........................................................1670 - 1673 Licensing Boards Cosmetic Art Examiners ...........................................1684 III. APPROVED RULES ...................................................1685 - 1730 Agriculture Plant Industry Board of Elections Departmental Rules Election Protests Voting Equipment Partisan Elections Filing of Notice of Candidacy for Office of Superior Court Judge Conduct of Vote Recounts by County Boards of Elections Ballot Rotation Rules for Primary Election Ballots Rules for Military & Overseas Citizens Absentee Voting Procedures Environment and Natural Resources Departmental Rules Health and Human Services Medical Assistance Insurance Consumer Services Division Justice Criminal Justice Education & Training Standards Alarm Systems Licensing Board Licensing Boards Funeral Service, Board of Locksmith Licensing Board Pharmacy, Board of Real Estate Commission Respiratory Care Board Transportation Highways Division of IV. RULES REVIEW COMMISSION..........................1731 - 1738 V. CONTESTED CASE DECISIONS Index to ALJ Decisions .....................................................1739 - 1745 Text of Selected Decisions 03 DHR 0505.................................................................1746 - 1759 For the CUMULATIVE INDEX to the NC Register go to: http://oahnt.oah.state.nc.us/register/CI.pdf North Carolina Register is published semi-monthly for $195 per year by the Office of Administrative Hearings, 424 North Blount Street, Raleigh, NC 27601. North Carolina Register (ISSN 15200604) to mail at Periodicals Rates is paid at Raleigh, NC. POSTMASTER: Send Address changes to the North Carolina Register, 6714 Mail Service Center, Raleigh, NC 27699-6714. NORTH CAROLINA ADMINISTRATIVE CODE CLASSIFICATION SYSTEM The North Carolina Administrative Code (NCAC) has four major classifications of rules. Three of these, titles, chapters, and sections are mandatory. The major classification of the NCAC is the title. Each major department in the North Carolina executive branch of government has been assigned a title number. Titles are further broken down into chapters which shall be numerical in order. Subchapters are optional classifications to be used by agencies when appropriate. NCAC TITLES TITLE 21 LICENSING BOARDS TITLE 24 INDEPENDENT AGENCIES 1 ADMINISTRATION 2 AGRICULTURE & CONSUMER SERVICES 3 AUDITOR 4 COMMERCE 5 CORRECTION 6 COUNCIL OF STATE 7 CULTURAL RESOURCES 8 ELECTIONS 9 GOVERNOR 10A HEALTH AND HUMAN SERVICES 11 INSURANCE 12 JUSTICE 13 LABOR 14A CRIME CONTROL & PUBLIC SAFETY 15A ENVIRONMENT &NATURAL RESOURCES 16 PUBLIC EDUCATION 17 REVENUE 18 SECRETARY OF STATE 19A TRANSPORTATION 20 TREASURER 21* OCCUPATIONAL LICENSING BOARDS 22 ADMINISTRATIVE PROCEDURES (REPEALED) 23 COMMUNITY COLLEGES 24* INDEPENDENT AGENCIES 25 STATE PERSONNEL 26 ADMINISTRATIVE HEARINGS 27 NC STATE BAR 28 JUVENILE JUSTICE AND DELINQUENCY PREVENTION 1 Acupuncture 2 Architecture 3 Athletic Trainer Examiners 4 Auctioneers 6 Barber Examiners 8 Certified Public Accountant Examiners 10 Chiropractic Examiners 11 Employee Assistance Professionals 12 General Contractors 14 Cosmetic Art Examiners 16 Dental Examiners 17 Dietetics/Nutrition 18 Electrical Contractors 19 Electrolysis 20 Foresters 21 Geologists 22 Hearing Aid Dealers and Fitters 25 Interpreter/Transliterator (Reserved) 26 Landscape Architects 28 Landscape Contractors 29 Locksmith Licensing 30 Massage & Bodywork Therapy 31 Marital and Family Therapy 32 Medical Examiners 33 Midwifery Joint Committee 34 Funeral Service 36 Nursing 37 Nursing Home Administrators 38 Occupational Therapists 40 Opticians 42 Optometry 44 Osteopathic Examination (Repealed) 45 Pastoral Counselors, Fee-Based Practicing 46 Pharmacy 48 Physical Therapy Examiners 50 Plumbing, Heating & Fire Sprinkler Contractors 52 Podiatry Examiners 53 Professional Counselors 54 Psychology 56 Professional Engineers & Land Surveyors 57 Real Estate Appraisal 58 Real Estate Commission 60 Refrigeration Examiners 61 Respiratory Care 62 Sanitarian Examiners 63 Social Work Certification 64 Speech & Language Pathologists & Audiologists 65 Therapeutic Recreation Certification 66 Veterinary Medical 68 Substance Abuse Professionals 69 Soil Scientists 1 Housing Finance 2 Agricultural Finance Authority 3 Safety & Health Review Board 4 Reserved 5 State Health Plan Purchasing Alliance Board Note: Title 21 contain s the chapters of the various occupational licensing boards and Title 24 contains the chapters of independent agencies. NORTH CAROLINA REGISTER Publication Schedule for January 2004 – December 2004 FILING DEADLINES NOTICE OF TEXT PERMANENT RULE TEMPORARY RULES Volume & issue number Issue date Last day for filing Earliest date for public hearing End of required comment period Deadline to submit to RRC for review at next meeting Earliest Eff. Date of Permanent Rule Delayed Eff. Date of Permanent Rule (first legislative day of the next regular session) 270th day from publication in the Register 18:13 01/02/04 12/08/03 01/17/04 03/02/04 03/22/04 05/01/04 05/10/04 09/28/04 18:14 01/15/04 12/19/03 01/30/04 03/15/04 03/22/04 05/01/04 05/10/04 10/11/04 18:15 02/02/04 01/09/04 02/17/04 04/02/04 04/20/04 06/01/04 01/26/05 10/29/04 18:16 02/16/04 01/26/04 03/02/04 04/16/04 04/20/04 06/01/04 01/26/05 11/12/04 18:17 03/01/04 02/09/04 03/16/04 04/30/04 05/20/04 07/01/04 01/26/05 11/26/04 18:18 03/15/04 02/23/04 03/30/04 05/14/04 05/20/04 07/01/04 01/26/05 12/10/04 18:19 04/01/04 03/11/04 04/16/04 06/01/04 06/21/04 08/01/04 01/26/05 12/27/04 18:20 04/15/04 03/24/04 04/30/04 06/14/04 06/21/04 08/01/04 01/26/05 01/10/05 18:21 05/03/04 04/12/04 05/18/04 07/02/04 07/20/04 09/01/04 01/26/05 01/28/05 18:22 05/17/04 04/26/04 06/01/04 07/16/04 07/20/04 09/01/04 01/26/05 02/11/05 18:23 06/01/04 05/10/04 06/16/04 08/02/04 08/20/04 10/01/04 01/26/05 02/26/05 18:24 06/15/04 05/24/04 06/30/04 08/16/04 08/20/04 10/01/04 01/26/05 03/12/05 19:01 07/01/04 06/10/04 07/16/04 08/30/04 09/20/04 11/01/04 01/26/05 03/28/05 19:02 07/15/04 06/23/04 07/30/04 09/13/04 09/20/04 11/01/04 01/26/05 04/11/05 19:03 08/02/04 07/12/04 08/17/04 10/01/04 10/20/04 12/01/04 01/26/05 04/29/05 19:04 08/16/04 07/26/04 08/31/04 10/15/04 10/20/04 12/01/04 01/26/05 05/13/05 19:05 09/01/04 08/11/04 09/16/04 11/01/04 11/22/04 01/01/05 01/26/05 05/29/05 19:06 09/15/04 08/24/04 09/30/04 11/15/04 11/22/04 01/01/05 01/26/05 06/12/05 19:07 10/01/04 09/10/24 10/16/04 11/30/04 12/20/04 02/01/05 05/00/06 06/28/05 19:08 10/15/04 09/24/04 10/30/04 12/14/04 12/20/04 02/01/05 05/00/06 07/12/05 19:09 11/01/04 10/11/04 11/16/04 12/31/04 01/20/05 03/01/05 05/00/06 07/29/05 19:10 11/15/04 10/22//04 11/30/04 01/14/05 01/20/05 03/01/05 05/00/06 08/12/05 19:11 12/01/04 11/05/04 12/16/04 01/31/05 02/21/05 04/01/05 05/00/06 08/28/05 19:12 12/15/04 11/22/04 12/30/04 02/14/05 02/21/05 04/01/05 05/00/06 09/11/05 EXPLANATION OF THE PUBLICATION SCHEDULE This Publication Schedule is prepared by the Office of Administrative Hearings as a public service and the computation of time periods are not to be deemed binding or controlling. Time is computed according to 26 NCAC 2C .0302 and the Rules of Civil Procedure, Rule 6. GENERAL The North Carolina Register shall be published twice a month and contains the following information submitted for publication by a state agency: (1) temporary rules; (2) notices of rule-making proceedings; (3) text of proposed rules; (4) text of permanent rules approved by the Rules Review Commission; (5) notices of receipt of a petition for municipal incorporation, as required by G.S. 120-165; (6) Executive Orders of the Governor; (7) final decision letters from the U.S. Attorney General concerning changes in laws affecting voting in a jurisdiction subject of Section 5 of the Voting Rights Act of 1965, as required by G.S. 120-30.9H; (8) orders of the Tax Review Board issued under G.S. 105-241.2; and (9) other information the Codifier of Rules determines to be helpful to the public. COMPUTING TIME: In computing time in the schedule, the day of publication of the North Carolina Register is not included. The last day of the period so computed is included, unless it is a Saturday, Sunday, or State holiday, in which event the period runs until the preceding day which is not a Saturday, Sunday, or State holiday. FILING DEADLINES ISSUE DATE: The Register is published on the first and fifteen of each month if the first or fifteenth of the month is not a Saturday, Sunday, or State holiday for employees mandated by the State Personnel Commission. If the first or fifteenth of any month is a Saturday, Sunday, or a holiday for State employees, the North Carolina Register issue for that day will be published on the day of that month after the first or fifteenth that is not a Saturday, Sunday, or holiday for State employees. LAST DAY FOR FILING: The last day for filing for any issue is 15 days before the issue date excluding Saturdays, Sundays, and holidays for State employees. NOTICE OF TEXT EARLIEST DATE FOR PUBLIC HEARING: The hearing date shall be at least 15 days after the date a notice of the hearing is published. END OF REQUIRED COMMENT PERIOD An agency shall accept comments on the text of a proposed rule for at least 60 days after the text is published or until the date of any public hearings held on the proposed rule, whichever is longer. DEADLINE TO SUBMIT TO THE RULES REVIEW COMMISSION: The Commission shall review a rule submitted to it on or before the twentieth of a month by the last day of the next month. FIRST LEGISLATIVE DAY OF THE NEXT REGULAR SESSION OF THE GENERAL ASSEMBLY: This date is the first legislative day of the next regular session of the General Assembly following approval of the rule by the Rules Review Commission. See G.S. 150B- 21.3, Effective date of rules. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1635 This Section contains public notices that are required to be published in the Register or have been approved by the Codifier of Rules for publication. U.S. Department of Justice Civil Rights Division JDR:TCH:VNR:jdh Voting Section – NWB. DJ 166-012-3 950 Pennsylvania Ave., NW 2003-4542 Washington, D.C. 20530 February 10, 2004 Mr. Gary O. Bartlett Executive Director State Board of Elections P.O. Box 27255 Raleigh, North Carolina 27611-7255 Dear Mr. Bartlett: This refers to revisions to the English and Spanish versions of the voter registration application/update forms for the State of North Carolina, submitted to the Attorney General pursuant to Section 5 of the Voting Rights Act, 42 U.S.C. 1973c. We received your submission on December 12, 2003; supplemental information was received on February 2, 2004. The Attorney General does not interpose any objection to the specified changes. However, we note that Section 5 expressly provides that the failure of the Attorney General to object does not bar subsequent litigation to enjoin the enforcement of the changes. See procedures for the Administration of Section 5 of the Voting Rights Act (28 C.F.R. 51.41). Sincerely, Joseph D. Rich Chief, Voting Section IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1636 U.S. Department of Justice Civil Rights Division JDR:JBG:JEM:par Voting Section – NWB. DJ 166-012-3 950 Pennsylvania Ave., NW 2003-0205 Washington, D.C. 20530 February 17, 2004 Mr. Gary O. Bartlett Executive Director State Board of Elections P.O. Box 27255 Raleigh, North Carolina 27611-7255 Dear Mr. Bartlett: This refers to the schedule for the March 23, 2004, special vacancy election for the City of Goldsboro in Wayne County, North Carolina, submitted to the Attorney General pursuant to Section 5 of the Voting Rights Act, 42 U.S.C. 1973c. We received your submission on January 21, 2004. The Attorney General does not interpose any objection to the specified changes. However, we note that Section 5 expressly provides that the failure of the Attorney General to object does not bar subsequent litigation to enjoin the enforcement of the changes. In addition, as authorized by Section 5, we reserve the right to reexamine this submission if additional information that would otherwise require an objection comes to our attention during the reminder of the sixty-day review period. See the Procedures for the Administration of Section 5 (28 C.F.R. 51.41 and 51.43). Sincerely, Joseph D. Rich Chief, Voting Section IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1637 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: The Proposed Assessment of Unauthorized ) Substance Tax dated March 13, 2002 by the ) Secretary of Revenue of North Carolina ) 1996 by the Secretary of Revenue ) ADMINISTRATIVE DECISION vs. ) Number: 415 ) Karen Leigh Lawing Bostic ) Taxpayer ) This Matter was heard before the Regular Tax Review Board (hereinafter “Board”) in the City of Raleigh, Wake County, North Carolina, on Tuesday, April 22, 2003, upon a petition filed by Karen Leigh Lawing Bostic (hereafter “Taxpayer”) for administrative review of the Final Decision of the Assistant Secretary of Revenue entered on August 29, 2002, sustaining the proposed assessment of unauthorized substance tax for the period at issue. Pursuant to N.C. Gen. Stat. § 105-113.111(a) and N.C. Gen. Stat. § 105-241.1, a Notice of Unauthorized Substance Tax Assessment was issued to the Taxpayer by Agent E. T. Brown, Enforcement Agent of the Unauthorized Substance Tax Division, assessing $8,008.00 tax, $3,203.20 penalty and $40.04 interest, for a total liability of $11,251.24. The assessment alleged that on March 8, 2002, the Taxpayer possessed 2,288 grams of marijuana without the proper tax stamps affixed to the substance. ISSUES 1. Did the Taxpayer have actual/or constructive possession of marijuana without proper tax stamps affixed? 2. Is the Taxpayer subject to the assessment of unauthorized substance excise tax? FINDINGS OF FACT After considering the petition, brief, record and matters of record, the Board makes the following finding of fact: 1. An Assessment of Unauthorized Substance Tax was made against the Taxpayer on March 13, 2002, in the sum of $8,008.00 tax, $3,203.20 penalty and $40.04 interest, for a total liability of $11,251.24, based upon the possession of 2,288 grams of marijuana. 2. The Taxpayer made a timely objection and application for hearing. 3. The Taxpayer did not submit any arguments or evidence in support of her objection to the assessment. 4. On March 8, 2002, the Taxpayer possessed 2,288 grams of marijuana. 5. No tax stamps were purchased for or affixed to the marijuana as required by law. CONCLUSIONS OF LAW The Board reviewed the following conclusions of law made by the Assistant Secretary in his decision regarding this matter: 1. An assessment of tax is presumed to be correct. 2. The burden is upon the Taxpayer who objects to an assessment to overcome that presumption. 3. The Taxpayer had constructive possession of 2,288 grams of marijuana on March 8, 2002, and was therefore a dealer as that term is defined in N.C.G.S. 105-106 (3). 4. The Taxpayer is liable for tax in the sum of $8,008.00 tax, $3,203.20 penalty and interest until date of full payment. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Board conducts a hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1638 The Board having conducted an administrative hearing in this matter, and having considered the petition, the brief, the record and the final decision, concludes that the findings of fact contained in the Assistant Secretary’s final decision are supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law are fully supported by the findings of fact; therefore the Assistant Secretary’s final decisions should be confirmed. WHEREFORE, THE TAX REVIEW BOARD ORDERS that the Assistant Secretary final decision sustaining the proposed tax assessment together with interest against the Taxpayer be and is hereby Confirmed. Made and entered into the 18th day of November 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Attorney at Law Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1639 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: The Proposed Assessment of Unauthorized ) Substance Tax date January 7, 2002 by the ) Secretary of Revenue of North Carolina ) ADMINISTRATIVE DECISION vs. ) Number: 416 ) Charles Edward Rice, II ) Taxpayer ) This Matter was heard before the Regular Tax Review Board (here inafter “Board”) in the City of Raleigh, Wake County, North Carolina, on Tuesday, April 22, 2003, upon a petition filed by Charles Edward Rice, II (hereafter “Taxpayer”) for administrative review of the Final Decision of the Assistant Secretary of Revenue entered on August 15, 2002, sustaining the proposed assessment of unauthorized substance tax for the period at issue. Pursuant to N.C. Gen. Stat. § 105-113.111(a) and N.C. Gen. Stat. § 105-241.1, a Notice of Unauthorized Substance Tax Assessment was issued to the Taxpayer on January 7, 2002 by Enforcement Agent T. L. Staley, of the Unauthorized Substance Tax Division, assessing $500.00 tax, $200.00 penalty and $1.89 interest, for a total liability of $701.89. The assessment alleged that Taxpayer possessed 9.5 grams of crack cocaine on January 7, 2002, without the proper tax stamps affixed to the substance. ISSUES 1. Did the Taxpayer have actual/or constructive possession of crack cocaine without proper tax stamps affixed? 2. Is the Taxpayer subject to the assessment of unauthorized substance excise tax? FINDINGS OF FACT After considering the petition, brief, record and matters of record, the Board makes the following finding of fact: 1. An Assessment of Unauthorized Substance Tax was made against the Taxpayer on January 7, 2002, in the sum of $500.00 tax, $200.00 penalty and $1.89 interest, for a total proposed liability of $701.89, based upon the possession of 9.5 grams of crack cocaine on December 14, 2001. 2. The Taxpayer made a timely objection and application for hearing. 3. The State Bureau of Investigation’s lab analysis reported that the evidence submitted for testing was 7.7 grams of crack cocaine. 4. The Taxpayer was in constructive possession of 7.7 grams of crack cocaine on December 14, 2001, without proper tax stamps affixed to the substance. CONCLUSIONS OF LAW The Board reviewed the following conclusions of law made by the Assistant Secretary in his decision regarding this matter: 1. An assessment of tax is presumed to be correct. 2. The burden is upon the Taxpayer who objects to an assessment to overcome that presumption. 3. The Taxpayer constructively possessed 7.7 grams of crack cocaine on December 14, 2001, and was therefore a dealer as that term is defined in N.C.G.S. 105-106. 4. The Taxpayer is liable for tax in the sum of $400.00, penalty in the sum of 160.00, and accrued interest until date of full payment. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Board conducts a hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1640 The Board having conducted an administrative hearing in this matter, and having considered the petition, the brief, the record and the final decision, concludes that the findings of fact contained in the Assistant Secretary’s final decision are supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law are fully supported by the findings of fact; therefore the Assistant Secretary’s final decisions should be confirmed. WHEREFORE, THE TAX REVIEW BOARD ORDERS that the Assistant Secretary final decision sustaining the proposed tax assessment together with interest against the Taxpayer be and is hereby Confirmed. Made and entered into the 18th day of November 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Attorney at Law Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1641 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: The proposed Assessment of Sales and ) Use Tax for the periods of June 1, 1997 ) Through March 31, 2000 by the Secretary of Revenue ) ADMINISTRATIVE DECISION vs. ) Number: 417 ) Coreslab Structure, Inc. ) Taxpayer ) This matter was heard before the Regular Tax Review Board (hereinafter “Board” in the City of Raleigh, Wake County, North Carolina on Tuesday, June 17, 2003 upon a petition filed pursuant to N.C. Gen. Stat. § 105-241.2(a)(2) by Coreslab Structure, Inc. (hereinafter “Taxpayer”) for administrative review of the adverse decision entered by the Secretary of Revenue on October 21, 2003, sustaining the Department’s denial of Taxpayer’s claim for refund of sales and use tax for the period of June 1, 1997 through March 31, 2000. STATEMENT OF CASE Pursuant to G.S. §105-241.2(a)(2), Coreslab Structure, Inc. (hereinafter “Taxpayer”) petitions the Tax Review Board (hereinafter “Board”) for administrative review of the adverse decision entered by the Secretary of Revenue on October 21, 2002 upon remand of Taxpayer’s original appeal. On March 20, 2002, the Board conducted a hearing on the petition filed for administrative review of the final decision of the Secretary of Revenue entered on August 28, 2001 sustaining the denial of refund of sales and use tax for the period of June 1, 1997 through March 31, 2000. On June 17, 2002, the Board issued Administrative Decision No. 384 and remanded this matter to the Secretary for a further proceeding. Without conducting a hearing on the above referenced remand, the Assistant Secretary issued a final decision on October 21, 2002. In that decision, the Assistant Secretary made findings that the Taxpayer’s invoices “match” the dates upon its applications for progress payments, but that the “dollar amount” for the invoices were different because the greater number of invoices. The Assistant Secretary also found that $23,926 of a possible $26,468 had been refunded to nonprofits. The Assistant Secretary also determined that any refunds allowed to the Taxpayer would be subject to income tax in the year received. Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, and other materials that the Secretary of Revenue received prior to issuing the October 21, 2002 final decision. From a review of this record, the Board finds that the Assistant Secretary issued his final decision without conducting a formal hearing on the remand of this matter. The record also reflects that the Assistant Secretary received additional documentation, which the Taxpayer did not review or respond to prior to the Assistant Secretary’s issuance of the October 21, 2002 final decision. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Tax Review Board conducts an administrative hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” In the October 21, 2002 final decision, the Assistant Secretary made findings that Taxpayer’s invoices “match” the dates upon its applications for progress payments, but that the “dollar amount” for the invoices were different because the greater number of invoices. The Assistant Secretary also found that $23,926 of a possible $26,468 had been refunded to nonprofits. The Assistant Secretary also determined that any refunds allowed the Taxpayer would be subject to income tax in the year received. The Taxpayer is a corporation that produces and erects customized concrete structural buildings and components, such as those used in buildings, stadiums, and parking garages. Taxpayer is basically a manufacturer and subcontractor and produces these items for general contractors and erects them for the general contractors. Taxpayer submits a bid to the general contractor that only lists the total contract price for the project and finished materials. The Taxpayer calculated “sales tax” on manufacturing labor and marked-up the cost of the tangible personal property used in the performance contracts. The sales tax was separately stated on the IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1642 invoices that the Taxp ayer provided to its customers. The Taxpayer submitted a refund claim in the amount of $79,100.88 for sales tax billed and collected on tangible personal property used in its performance contracts. N.C. Gen. Stat. § 105-164.11, “Excessive and erroneous collections” provides that “When the tax collected for any period is in excess of the total amount that should have been collected, the total amount collected must be paid to the Secretary. When tax is collected for any period on exempt or nontaxable sales the tax erroneously collected shall be remitted to the Secretary and no refund shall be made to the taxpayer unless the purchaser has received credit for or has been refunded the amount of tax erroneously charged. The provision shall be constructed with other provisions of this Article and given effect so as to result in the payment to the Secretary of the total amount collected as tax if it is in excess of the amount that should have been collected.” In its Petition, the Taxpayer argues that it did not collect any excise tax from the general contractors under the performance contracts. The Taxpayer contends that when it calculated the tax due, it failed to use the actual cost of the raw materials that were used to perform the contracts. Instead, the Taxpayer used a lump sum, which was equal to the actual cost of raw materials, labor, overhead and profit. Thus, the Taxpayer is requesting a refund in the amount of $79,100.88. For sales and use tax purposes, the Taxpayer is a contractor consuming tangible personal property through its execution of performance contracts. Under N.C. Gen. Stat. § 105-164.6, it is required to pay a “use” tax to the Secretary based upon the cost price of the personal property consumed in its construction projects. Even though this statute directs the Taxpayer to pay use tax, the Taxpayer collected “sales” taxes from its customers with respect to its lump sum performance contracts. From a review of the record, the Taxpayer added and collected sales tax to the invoices delivered to the customers. The Board, after reviewing this matter on Taxpayer’s petition regarding the Assistant Secretary’s October 21, 2002 final decision, remands this matter back to the Assistant Secretary and Orders that a formal hearing be conducted for the limited purpose of rendering a determination regarding the following issues: 1. If the Taxpayer issued specific invoices simultaneously with the applications for payment when it billed its customers under the performance contracts, and 2. The specific amo unt that the Secretary has already refunded to nonprofits, and the income tax consequences of the amount of refund claimed by the taxpayer for the period at issue. In remanding this matter, the Board grants the Taxpayer an opportunity to present evidence regarding the above referenced issues and allows the Taxpayer an opportunity to review and respond to the documentation that the Assistant Secretary received and considered prior to issuing the October 21, 2002 final decision. THEREFORE, it is the decis ion of the Board to Remand this matter to the Assistant Secretary for a Hearing to address the issues set forth above. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1643 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: The Refund Claims for Installment Paper ) Dealer Tax for the period beginning July 1,) 1997 through June 30, 2000 filed by ) ) CONSECO FINANCE SERVICING ) CORP. ) ADMINISTRATIVE DECISION vs. ) Number: 418 ) NORTH CAROLINA DEPARTMENT OF REVENUE ) Taxpayer ) This matter was heard before the Regular Tax Review Board (hereinafter “Board” in the City of Raleigh, Wake County, North Carolina on Tuesday, June 17, 2003 upon a petition filed pursuant to N.C. Gen. Stat. § 105-241.2(a)(2) by Conseco Finance Servicing Corporation (hereinafter “Taxpayer”) for administrative review of the adverse decision entered by the Secretary of Revenue on April 4, 2002, sustaining the auditors’ adjustment of the refund claimed on installment paper purchased from out-of-state dealers. Conseco Finance Servicing Corporation (“Taxpayer”) is engaged in the business of buying installment paper. Taxpayer is a subsidiary of Conseco Finance Corporation (“Finance”) which is in business of financing mobile homes and other tangible personal property. Taxpayer has several offices in North Carolina, including Winston-Salem, Charlotte, Raleigh and Asheville. Taxpayer filed installment paper dealer tax returns for the period beginning July 1, 1997 through June 30, 2000. Conseco (“Taxpayer”) appeals from an adverse decision of the Assistant Secretary of Revenue entered on April 4, 2002 that sustained the Department of Revenue’s partial denial of Taxpayer’s claims for refund of installment paper dealer tax. Taxpayer submitted claims for a partial refund totaling $313,425.68 for the overpayment of “Installment Paper Tax” purportedly assessed and paid pursuant to N.C. Gen. Stat. § 105-83 for the period at issue. During the course of examining Taxpayer’s claim, the auditors discovered certain errors and reduced the claim by $5,201.27. The Taxpayer does not dispute the adjustment. The auditors also discovered that the Taxpayer had under-reported its tax liability on its installment paper dealer tax returns by failing to include the face value of certain installment paper it had purchased. The refund claim was further reduced by $129,220.67. The Taxpayer timely protested this adjustment and requested a hearing that was held by the Assistant Secretary on December 4, 2001. On April 4, 2002, the Assistant Secretary issued his final decision that sustained the partial denial of the refund claim. Thereafter, the Taxpayer timely filed a petition for administrative review of the final decision with the Tax Review Board. ISSUE Is the Taxpayer required to include the face value of installment paper on property located in North Carolina and secured by a lien in this State in the calculation of the installment paper dealer tax if the property is purchased from an out-of-state retailer? EVIDENCE Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, evidence and other materials that the parties presented at the hearing before the Assistant Secretary. Based upon the Board’s review of the documentation, that evidence is incorporated by reference and is made a part of this administrative decision. FINDINGS OF FACT The Board reviewed and considered the following findings of fact entered by the Assistant Secretary in his decision regarding this matter: 1. Taxpayer (f/k/a Green Tree Financial Servicing Corporation) is a Delaware corporation engaged in the business of financing and leasing various types of tangible personal property, and purchasing installment paper. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1644 2. Taxpayer is a subsidiary of Conseco Finance Corporation (“Conseco”), which is in the business of financing mobile homes and other tangible personal property. 3. Taxpayer has several offices in North Carolina, including Winston-Salem, Charlotte, Raleigh, and Asheville. 4. The Department conducted an audit at the corporate headquarters of Conseco in St. Paul, Minnesota. 5. During the audit, the Taxpayer provided copies of its Installment Paper Dealer Tax returns for the quarters ending September 1997 through 2000 along with the details for the tax returns including: listing region, territory, account number, state code, date of transaction, loan type, proceeds, and total amount financed. 6. Taxpayer also submitted two claims for partial refund of taxe s paid during the period beginning July 1, 1997 through September 30, 1997 and the period beginning October 1, 1997 through June 30, 2000 in the amount of $21,367.60 and $292,058.08, respectively, pursuant to N.C. Gen. Stat. § 105-266.1. 7. Taxpayer claimed there were three categories of overpayment and provided the auditor with three separate schedules (A, B, and C) for each category, described as follows: Schedule A lists payments of tax on contracts in which the buyer resided outside of North Carolina (property must be located in this State to be subject to the Installment Paper Dealer tax on the contract for the property); Schedule B lists payments of tax on contracts with no dealer involvement (refinancing of existing contracts, where no third party from whom contract is purchased exists); and Schedule C lists payments of tax on the finance charges on the installment contract (finance charges are not part of the face value or amount financed, upon which tax is due.) 8. The auditors requested a sample of contracts to confirm which type of overpayment was represented and examined the original installment paper tax returns to verify that the value of the installment paper had actually been included in those returns. 9. The auditors also examined motor vehicle titles registered with the North Carolina Division of Motor Vehicles (DMV). These motor vehicle titles showed the existence of a lien on the tangible personal property, and their title numbers were used to obtain names and dates of liens in order to request additional contracts to examine. 10. During the examination, the auditors determined that some of the installment paper in Taxpayer’s Schedule A had been included in that refund category in error, since examination of the relevant documents showed that the purchaser had a North Carolina address. 11. An additional sample of that type of contract was requested and examined, and an error rate was determined on the basis of the errors found in the sample. The rate was applied to that refund category and the refund was reduced by $5,201.37. 12. The auditors also discovered a number of liens associated with installments paper, which had not been reported on any of the Taxpayer’s installment paper tax returns. The installment paper in this group involved property purchased by North Carolina residents from out-of-state dealers. 13. The auditors concluded that the unreported installment paper should have been included in Taxpayer’s return since the property upon which the lien is taken was located in this State. 14. The auditors then further reduced the refund by $129,220.67, the amount of the computed tax on the improperly excluded contracts. 15. In the final audit report dated August 14, 2001, the claim for refund was partially denied in the total amount of $134,422.04. 16. The Taxpayer accepted the $5,201.37 adjustment, but timely protested the adjustment of $129,220.67 in its letter dated September 12, 2001. CONCLUSIONS OF LAW The Board reviewed and considered the following conclusions of law made by the Assistant Secretary in his decision regarding this matter: 1. N.C. Gen. Stat. § 105-83 states: “Every person engaged in the business of dealing in, buying, or discounting installment paper, notes, bonds, contracts, or evidences of debt for which, at the time of or in connection with the execution of the instruments, a lien is reserved or taken upon personal property located in this State to secure the payment of the obligations, shall submit to the Secretary…a full, accurate, and complete statement, verified by the officer, agent, or person making the statement, of the total face value of the obligations dealt in, bought, or discounted within the preceding three calendar months and, at the same time, shall pay a tax of two hundred seventy-seven thousandths of one percent (.277%) of the face value of these obligations.” 2. Pursuant to N.C. Gen. Stat. § 105-33(a), taxes imposed under Article 2 are imposed for the privilege of carrying on the business, exercising the privilege, or doing the act named. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1645 3. The installment paper dealer tax levied under N.C. Gen. Stat. § 105-83 is a privilege tax imposed upon persons engaged in the business of dealing in, buying or discounting installment paper for the privilege of engaging in such business. 4. The business of “dealing in, buying, or discounting installment paper” neither begins nor ends with Taxpayer’s formal acceptance of the installment paper. Instead, it encompasses the entire range of conduct in furtherance of Taxpayer’s financing business. 5. The installment paper dealer tax is not a transactional tax. 6. Neither the underlying consumer purchase or the purchase of installment paper is the incidence of the tax. 7. The imposition of the privilege tax must be upheld if activity incident to and in furtherance of the business is conducted within the State notwithstanding that documents necessary to the business are executed, accepted, or transferred elsewhere. 8. N.C. Gen. Stat. § 105-83 does not require that the property securing the obligation be purchased in North Carolina. 9. Taxpayer is engaged in the business of dealing in, buying, or discounting installment paper in North Carolina. 10. At the time of or in connection with the execution of all of the instruments included in the calculation of the tax, a lien was reserved or taken upon personal property located in this State to secure the payment of the obligations. 11. Taxpayer is subject to the installment paper dealer tax under N.C. Gen. Stat. § 105-83. 12. Taxpayer is required to include the total face value of all obligations bought which are secured by property located in this State in the calculation of the installment paper dealer tax. 13. A finding that Taxpayer is entitled to a refund of taxes paid on installment paper purchased from out-of-state dealers because the tax violates the Commerce Clause requires a ruling or declaration by the Secretary that N. C. Gen. Stat. § 105-83 operates in an unconstitutional manner as to the Taxpayer. 14. The Secretary has no authority under N.C. Gen. Stat. § 105-266.1 to order the refund of an invalid or illegal tax, since questions of constitutionality are for the courts. 15. N.C. Gen. Stat. § 105-266.1 does not provide an exception to the general rule that voluntary payments of unconstitutional tax are not refundable. 16. The only remedy for challenging a tax provision as being unlawful or invalid as opposed to being excessive or incorrect is found in N.C. Gen. Stat. § 105-267. 17. Taxpayer has the burden of establishing that its claim for refund under N.C. Gen. Stat. § 105-266.1 results from paying an incorrect or excessive tax computed in accordance with the applicable statutory provisions. 18. Taxpayer has not established that the auditors’ $129,220.67 reduction of the refund claim was incorrect. 19. The auditors properly adjusted the refund claim to include installment paper purchased from out-of-state dealers secured by property located in North Carolina. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105-241.2(b2). After the Tax Review Board conducts an administrative hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” This case involves the question of whether the face value of installment paper on property located in North Carolina and secured by a lien in this State is includible in the calculation of the installment paper dealer tax imposed under N.C. Gen. Stat. § 105- 83 if the property is purchased from an out-of-state retailer. Taxpayer is in the business of financing and leasing various types of tangible personal property, and purchasing installment paper. Taxpayer has several offices in North Carolina, including Winston Salem, Charlotte, Raleigh, and Asheville. The Taxpayer contends that the installment paper purchased from mobile home retailers located outside of North Carolina is beyond the reach of the statute notwithstanding that the property securing the obligation is located in the state. The Taxpayer also contends that, concerning the sales of installment paper at issue, it conducted no activity in North Carolina, which is “incident to the buying and selling of such installment payer.” The Taxpayer argues that the incidence of the tax is the assignment of the installment paper, which it contends occurred outside of North Carolina. Thus, the Taxpayer argues that the face value of the installment paper that was assigned to it outside the state should be excluded from the calculation of the tax imposed by N.C. Gen. Stat. § 105-83. The Department of Revenue, through counsel, argues that the Assistant Secretary properly found that, as an installment paper dealer engaged in business in this state, the Taxpayer was required to include the face value of all installment obligations it bought which were secured by property located in North Carolina in the calculation of the tax imposed by N.C. Gen. Stat. § 105-83. In support of this argument, the Department of Revenue notes that the Court of Appeals has rejected the very same argument raised by the Taxpayer in its Petition in Chrysler Financial Company v. Offerman, 138 N.C. App. 268, 531 S.E.2d 223, rev. denied, 352 N.C. 588, 544 S.E.2d 777 (2000). In that case, the Court recognized that where the assignment of the installment paper occurs is not determinative; and that the activity triggering the tax is not limited to the actual transfer of the paper. The “tax is to be assessed for engaging in the business of dealing in installment paper in North Carolina.” Id., 138 N.C. App. at 273, 531 S.E.2d at 226. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1646 It is the function of this Board, upon administrative review, to review the record and determine whether the final decision is proper based upon the evidence presented at the hearing before the Assistant Secretary. Thus, the Board having conducted an administrative hearing in this matter, and having considered the petition, the briefs, the whole record and the Assistant Secretary’s final decision, concludes that the findings of fact made by the Assistant Secretary were supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law were fully supported by the findings of fact; therefore the decision of the Assistant Secretary should be confirmed. WHEREFORE, THE BOARD ORDERS that the Assistant Secretary’s final decision be confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1647 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: The Proposed Assessment of Withholding ) Tax, Penalty and Interest for the Quarters ) Ending December 31, 1999, March 31, and ) June 30, 2001 by the Secretary of Revenue ) ADMINISTRATIVE DECISION vs. ) Number: 419 ) DeHaven's Transfer & Storage of Raleigh ) Taxpayer ) This matter was heard before the Regular Tax Review Board (hereinafter “Board” in the City of Raleigh, Wake County, North Carolina on Tuesday, June 13, 2003 upon a petition filed pursuant to N.C. Gen. Stat. § 105-241.2(a)(2) by DeHaven’s Transfer & Storage of Raleigh (hereinafter “Taxpayer”) for administrative review of the adverse decision entered by the Secretary of Revenue on April 11, 2002, (Docket Number 2001-611) sustaining the proposed assessment of withholding tax, penalty and interest for the quarters ending December 31, 1999, March 31, 2001 and June 30, 2001 in the total amount of $36,415.18. During calendar year 1999, Taxpayer paid North Carolina income tax withheld of $460.30. On February 29, 2000, the Taxpayer filed its annual withholding reconciliation for 1999 reflecting total North Carolina income tax withheld of $23,609.46. A Notice of Tax Assessment for the underpayment of tax withheld of $23,149.16 ($23,609.46-$460.30) plus accrued interest was mailed to the Taxpayer on June 27, 2001. Because the Taxpayer did not pay the proposed assessment and did not request a hearing within 30 days, the late payment penalty of ten percent of the tax was assessed under N.C. Gen. Stat. § 105-236(4). Taxpayer also filed income tax withholding returns for the quarters ended March 31, and June 30, 2001, reflecting income tax withheld of $4,348.01 and $5,348.48 respectively, but did not include payment with the returns. On August 1, 2001, Taxpayer made a payment of $4,348.01 for the taxes withheld for the quarter ended March 31, 2001. Thereafter the Department issued Notices of Withholding-Immediate Jeopardy Tax Assessment for the periods at issue. Taxpayer objected to the proposed assessment and timely requested a hearing before the Secretary of Revenue. The Taxpayer also objected to the reasonableness of the jeopardy assessment and requested the Secretary to review that matter pursuant to N.C. Gen. Stat. § 105-241.1(g). Upon review, the Secretary ruled that the jeopardy assessments were reasonable and proper and issued the final assessment on October 18, 2001. On April 11, 2002, the Assistant Secretary issued the final decision sustaining the proposed assessment against the Taxpayer. Thereafter, the Taxpayer filed a petition for administrative review of the April 11, 2002 final decision with the Board. ISSUE Are the withholding tax assessments proposed against the Taxpayer lawful and proper? EVIDENCE Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, and evidence that the parties presented at the hearing before the Assistant Secretary. The Board, after reviewing these documents, incorporates the documents by reference in this decision. FINDINGS OF FACT The Board reviewed and considered the findings of fact entered by the Assistant Secretary in his decision regarding this matter and upon review; the Board incorporates the findings of fact by reference in this decision. CONCLUSIONS OF LAW The Board reviewed and considered the conclusions of law made by the Assistant Secretary in his decision regarding this matter and upon review; the Board incorporates the conclusions of law by reference in this decision. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Tax Review Board conducts an administrative hearing, this statute provides in pertinent part: IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1648 (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” Pursuant to N.C. Gen. Stat. § 105-241.1(a), a proposed tax assessment is presumed to be correct and the burden is on the Taxpayer to rebut that presumption. In order to rebut the presumption, the Taxpayer must offer evidence to show that the assessment is not proper. N.C. Gen. Stat. § 105-236(4) provides that the Secretary may assess a ten percent penalty for the failure to pay tax when due, provided there is no intent to evade the tax. The penalty does not apply in connection with an amended return if the tax is paid when the return is filed, or if a tax due but not shown on a return, is paid within 30 days after the proposed notice of assessment. N.C. Gen. Stat. § 105-237 states that the Secretary may reduce or waive penalties but does not mandate reduction or waiver of penalties under any circumstances. In the Petition, the Taxpayer argues that since reasonable cause for late payment is present, the Taxpayer should be excused from the late payment penalty assessed. The Taxpayer also argues that there were no grounds for issuance of a jeopardy assessment in this case and that since the Assistant Secretary found that the late payment penalties on the jeopardy assessment of tax were improperly assessed, the entire jeopardy assessment should be found incorrect. The record shows that the Taxpayer withheld certain amounts of income tax and failed to remit payment of the tax to the Department of Revenue. The record also shows that the Taxpayer has not presented any substantial basis for its objection to the proposed assessment. Thus, the Taxpayer failed to provide evidence to show that the assessment, including the late payment penalty, was not properly assessed in this matter. The Board will not address Taxpayer’s jeopardy assessment argument because it does not have jurisdiction over that issue. Thus, the Board having conducted an administrative hearing in this matter, and having considered the petition, the briefs, the documents of record and the Assistant Secretary’s final decision, concludes that the findings of fact made by the Assistant Secretary were supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law were fully supported by the findings of fact; therefore the decision of the Assistant Secretary should be confirmed. WHEREFORE, THE BOARD ORDERS that the Assistant Secretary’s final decision be confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1649 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: ) The Proposed Assessment of Individual ) Income Tax and Interest for the 2000 tax ) year by the Secretary of Revenue ) ) ADMINISTRATIVE DECISION vs. ) Number: 420 ) David A. McGowan, ) Taxpayer ) This matter was heard before the Regular Tax Review Board (hereinafter “Board” in the City of Raleigh, Wake County, North Carolina on Tuesday, June 17, 2003 upon a petition filed pursuant to N.C. Gen. Stat. § 105-241.2(a)(2) by David A. McGowan (hereinafter “Taxpayer”) for administrative review of the adverse decision entered by the Assistant Secretary of Revenue on November 25, 2002, sustaining the proposed assessment of individual income tax and interest in the total amount of $1,249.83 for the period at issue. Taxpayer was employed by Procter & Gamble Paper Products Company, (hereinafter “Procter”) at its plant located in Greenville, NC. Procter sold the plant to Paper-Pak Products, Inc. (hereinafter “Buyer”). Some employees were not retained by Buyer and were paid severance wages. Others employees, including the Taxpayer, were retained by the Buyer and signed an “Incentive to Stay Agreement and Release.” Under this contract, an employee was paid one-half of an incentive stay allowance as soon as practical after the employee signed the agreement and the remaining one-half was paid as soon as practical after the employee’s last day of employment, provided the employee’s employment had started with the Buyer. Effective January 1, 2000, the Taxpayer was employed by the Buyer at the Greenville plant. Taxpayer’s returns show that he received the first payment of $16,184 from the Employer in tax year 1999 and the second payment of $15,996 in tax year 2000. Taxpayer had claimed a deduction for severance wages of these amounts on his 1999 and 2000 tax returns. Upon examination of the Taxpayer’s 2000 individual income tax return, the Department of Revenue adjusted Taxp ayer’s tax return to disallow the deduction that he claimed for severance wages. On April 12, 2002, a Notice of Individual Income Tax Assessment was mailed to the Taxpayer. Taxpayer objected to the proposed assessment and timely requested a hearing before the Secretary of Revenue. On October 16, 2002, Eugene J. Cella, Assistant Secretary, conducted a hearing upon Taxpayer’s timely application and objection to the proposed assessment. On November 25, 2002, Assistant Secretary issued a final decision sustaining the proposed assessment against the Taxpayer. Thereafter, the Taxpayer timely filed a petition for administrative review of the final decision with the Board. ISSUES 1. Is the Taxpayer entitled to the deduction for severance wages for tax year 2000? 2. Is the individual income tax assessment proposed against the Taxpayer for taxable year 2000 lawful and proper? EVIDENCE Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, evidence and other materials that the parties presented at the hearing before the Assistant Secretary. The Board, after reviewing these documents, incorporates the documents by reference in this decision. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Tax Review Board conducts an administrative hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1650 Assessments of tax are presumed to be correct and the taxpayer has the burden to show that the assessment is not proper. It is the function of this Board, upon administrative review, to review the record and determine whether the final decision is proper based upon the evidence presented at the hearing before the Assistant Secretary. Pursuant to N.C. Gen. Stat. § 105-241.1(a), a proposed tax assessment is presumed to be correct and the burden is on the Taxpayer to rebut that presumption. In order to rebut the presumption, the Taxpayer must offer evidence to show that the assessment is not proper. N.C. Gen. Stat. § 105-134.6(b)(11) provides that “severance wages received by a taxpayer from an employer as the result of the taxpayer’s permanent, involuntary termination from employment through no fault of the employee” shall be deducted from taxable income in order to determine North Carolina taxable income. The Taxpayer contends that all of the money received from Procter & Gamble was severance wages, regardless of how it was referenced in the agreement between Procter & Gamble and the Taxpayer, and is therefore deductible from federal adjusted gross income under the provisions of N.C. Gen. Stat. § 105-134.6(b)(11). The Department of Revenue allowed the first payment received by the Taxpayer in tax year 1999 as a severance wage deduction because that payment was contingent upon Taxpayer ceasing employment with Procter & Gamble. The Department of Revenue disallowed the second payment because it was due, pursuant to the agreement, only if the Taxpayer started work with the new employer. In disallowing the second payment, the Department of Review noted that the second payment was characterized as “incentive to stay” allowance, not as a “severance allowance” in the agreement between the Taxpayer and Procter & Gamble. Upon review of the record, the Board concludes that the Taxpayer failed to furnish evidence to show that the assessment is not proper. Thus, the Board having conducted an administrative hearing in this matter, and having considered the petition, the documents of record and the Assistant Secretary’s final decision, concludes that the findings of fact made by the Assistant Secretary were supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law were fully supported by the findings of fact; therefore the decision of the Assistant Secretary should be confirmed. WHEREFORE, THE BOARD ORDERS that the Assistant Secretary’s final decision be confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1651 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: ) The Proposed Assessment of Unauthorized ) Substance Tax date d February 8, 2002 ) By the Secretary of Revenue ) ADMINISTRATIVE DECISION vs. ) Number: 421 ) Juan Carlos Ramirez Sales ) Taxpayer ) This matter was heard before the Regular Tax Review Board (hereinafter “Board” in the City of Raleigh, Wake County, North Carolina on Tuesday, June 17, 2003 upon a petition filed pursuant to N.C. Gen. Stat. § 105-241.2(a)(2) by Juan Carlos Ramirez Sales (hereinafter “Taxpayer”) for administrative review of the adverse decision entered by the Secretary of Revenue on December 20, 2002, that reduced the proposed assessment of unauthorized substance tax imposed against the Taxpayer for the period at issue. Pursuant to G.S. § 105-113.111(a) and G.S. § 105-241.1, a Notice of Unauthorized Substance Tax Assessment was issued to the Taxpayer by Enforcement Agent Brian Zieverink of the Unauthorized Substance Tax Division, assessing $1,650.00 tax, $660.00 penalty and $6.33 interest, for a total liability of $2,316.33. The assessment alleged that on June 7, 2002, the Taxpayer had unauthorized possession of 33 grams of cocaine without the proper tax stamps affixed to the substance. The Taxpayer protested the assessment and requested a hearing before the Secretary of Revenue. On September 18, 2002, Eugene J. Cella, Assistant Secretary conducted a hearing upon Taxpayer’s timely application and objection to the proposed assessment. The Assistant Secretary issued a final decision reducing the proposed assessment against the Taxpayer to $1,500.00 plus penalty and interest for unauthorized possession of 30 grams of cocaine. Thereafter, the Taxpayer timely filed a petition for administrative review of the final decision with the Board. ISSUES 1. Did the Taxpayer have actual and/or constructive possession of cocaine without the proper tax stamps affixed? 2. Is the Taxpayer subject to the assessment of unauthorized substance excise tax? EVIDENCE Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, evidence and other materials that the parties presented at the hearing before the Assistant Secretary. Based upon the Board’s review of the documentation, that evidence is incorporated by reference and is made a part of this administrative decision. FINDINGS OF FACT The Board reviewed and considered the following findings of fact entered by the Assistant Secretary in his decision regarding this matter: 1. Assessment of Unauthorized Substance Tax was made against the Taxpayer on June 12, 2002, in the sum of $1,650.00 tax, $660.00 penalty and $6.33 interest, for a total proposed liability of $2,316.33, based upon possession of 33 grams of cocaine on June 7, 2002. 2. The Taxpayer made timely objection and application for a hearing. 3. The Taxpayer was present at the apartment when Suspect #1 came to the apartment with the cocaine. The Taxpayer said Suspect #1 had purchased jewelry, but no jewelry was found on Suspect #1 upon his apprehension. 4. After the call from Suspect #1 to the Taxpayer’s apartment, while Suspect #1 was being chased by the police, the Taxpayer and all the occupants of his apartment were seen leaving the apartment in haste. 5. The crime lab determined the substance at issue was cocaine weighing 30 grams. 6. The Taxpayer had actual and/or constructive possession of 30 grams of cocaine on June 7, 2002, without proper tax stamps affixed to the substance. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1652 CONCLUSIONS OF LAW 1. An assessment of tax is presumed to be correct. 2. The burden is upon the Taxpayer who objects to an assessment to overcome that presumption, and that burden was not met. 3. The Taxpayer had actual and/or constructive possession of 30 grams of cocaine on June 7, 2002, and was therefore a dealer as that term is defined in G.S. 105-113.106. 4. The Taxpayer is liable for tax in the sum of $1,500.00, penalty in the sum of $600.00, and accrued interest until date of full payment. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Tax Review Board conducts an administrative hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” Assessments of tax are presumed to be correct and the taxpayer has the burden to show that the assessment is not proper. It is the function of this Board, upon administrative review, to review the record and determine whether the final decision is proper based upon the evidence presented at the hearing before the Assistant Secretary. Pursuant to N.C. Gen. Stat. § 105-241.1(a), a proposed tax assessment is presumed to be correct and the burden is on the Taxpayer to rebut that presumption. In order to rebut the presumption, the Taxpayer must offer evidence to show that the assessment is not proper. The Board having conducted an administrative hearing in this matter, and having considered the petition, the briefs, the whole record and the Assistant Secretary’s final decision, concludes that the findings of fact made by the Assistant Secretary were supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law were fully supported by the findings of fact; therefore the decision of the Assistant Secretary should be confirmed. WHEREFORE, THE BOARD ORDERS that the Assistant Secretary’s final decision be confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1653 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: ) The Proposed Assessment of Unauthorized ) Substance Tax dated August 9, 2002 by ) the Secretary of Revenue of North Carolina ) 1996 by the Secretary of Revenue ) ADMINISTRATIVE DECISION vs. ) Number: 422 ) Delcina McMillion ) Taxpayer ) This Matter was heard before the Regular Tax Review Board (hereinafter “Board”) in the City of Raleigh, Wake County, North Carolina, on Tuesday, June 17, 2003, upon a petition filed by Delcina McMillion (hereafter “Taxpayer”) for administrative review of the Final Decision of the Assistant Secretary of Revenue entered on November 27, 2002, sustaining the proposed assessment of unauthorized substance tax for the period at issue. Pursuant to N.C. Gen. Stat. § 105-113.111(a) and N.C. Gen. Stat. § 105-241.1, a Notice of Unauthorized Substance Tax Assessment was issued to the Taxpayer on August 9, 2002 by Enforcement Agent Dennis O’ Dell of the Unauthorized Substance Tax Division, assessing $500.00 tax, $200.00 penalty and $4.50 interest, for a total liability of $704.50. The assessment alleged that on June 16, 2002, the Taxpayer was in unauthorized possession 9.27 grams of cocaine without the proper tax stamps affixed to the substance. ISSUES 1. Did the Taxpayer have actual/or constructive possession of cocaine without proper tax stamps affixed? 2. Is the Taxpayer subject to the assessment of unauthorized substance excise tax? FINDINGS OF FACT The Board reviewed and considered the following findings of fact entered by the Assistant Secretary in his decision regarding this matter: 1. An Assessment of Unauthorized Substance Tax was made against the Taxpayer on August 9, 2002, in the sum of $500.00 tax, $200.00 penalty and $4.50 interest, for a total proposed liability of $704.50, based upon the possession of 9.7 grams of cocaine. 2. The Taxpayer made a timely objection and application for hearing. 3. Neither the Taxpayer nor anyone representing the Taxpayer appeared at the hearing to offer arguments or evidence in support of the obligation to the assessment. 4. The weight of the cocaine at issue is 7.7 grams. 5. On June 16, 2002, the Taxpayer possessed 7.77 grams of cocaine. 6. No tax stamps were purchased for or affixed to the cocaine as required by law. CONCLUSIONS OF LAW The Board reviewed the following conclusions of law made by the Assistant Secretary in his decision regarding this matter: 1. An assessment of tax is presumed to be correct. 2. The burden is upon the Taxpayer who objects to an assessment to overcome that presumption, and that burden was not met. 3. The Taxpayer constructively possessed 7.7 grams of cocaine on June 16, 2002, and was therefore a dealer as that term is defined in N.C. Gen. Stat. § 105-106(3). 4. The Taxpayer is liable for tax in the sum of $400.00, penalty in the sum of 160.00, and accrued interest until date of full payment. DECISION IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1654 The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Board conducts a hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” The Board having conducted an administrative hearing in this matter, and having considered the petition, the brief, the record and the final decis ion, concludes that the findings of fact contained in the Assistant Secretary’s final decision are supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law are fully supported by the findings of fact; therefore the Assistant Secretary’s final decisions should be confirmed. WHEREFORE, THE TAX REVIEW BOARD ORDERS that the Assistant Secretary’s final decision be and is hereby confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1655 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: ) The Proposed Assessment of Unauthorized ) Substance Tax dated March 7, 2002 by the ) Secretary of Re venue of North Carolina ) ADMINISTRATIVE DECISION vs. ) Number: 423 ) Kip Aaron Bartlett and Laura M. Bartlett ) Taxpayer ) This matter was heard before the Regular Tax Review Board (hereinafter “Board” in the City of Raleigh, Wake County, North Carolina on Tuesday, June 17, 2003 upon a petition filed pursuant to N.C. Gen. Stat. § 105-241.2(a)(2) by Kip Aaron Bartlett and Laura M. Bartlett (hereinafter “Taxpayers”) for administrative review of the adverse decision entered by the Secretary of Revenue on November 27, 2002, sustaining the proposed assessment of unauthorized substance tax in the total amount of $24,717.00, plus penalty and interest for the period at issue. Pursuant to N.C. Gen. Stat. § 105-113.111(a) and N.C. Gen. Stat. § 105-241.1, a Notice of Unauthorized Substance Tax Assessment was issued to the Taxpayers by Enforcement Agent Tim Townsend, of the Unauthorized Substance Tax Division, assessing $24,717.00 tax, $9,886.80 penalty and $123.59, interest, for a total liability of $34,727.39. The assessment alleged that on March 4, 2002, the Taxpayers had actual and/or constructive possession of 7,062 grams of marijuana that did not have the proper stamps affixed thereto. This assessment was an amendment to a prior assessment that was issued on March 5, 2002, which reflected the weight of marijuana to be 8,896 grams. The Taxpayers objected to the assessment and requested a hearing before the Secretary of Revenue. After conducting a hearing, the Assistant Secretary issued his final decis ions affirming the proposed assessment against the Taxpayers on November 27, 2002. Thereafter, the Taxpayers timely filed a petition for administrative review of the final decisions with the Board. ISSUES 1. Did the Taxpayers have actual and/or constructive possession of marijuana without proper tax stamps affixed? 2. Are the Taxpayers subject to the assessment of unauthorized substance excise tax? EVIDENCE Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, evidence and other materials that the parties presented at the hearing before the Assistant Secretary. The evidence is listed as follows: 1. US-1 Form BD-10, “Notice of Unauthorized Substance Tax Assessment,” dated March 7, 2002. 2. US-2 Letter from the Taxpayers’ attorney, dated March 13, 2002, requesting a hearing. 3. US-3 Letter to the Taxpayers’ attorney, dated March 26, 2002, requesting a hearing. 4. US-4 Form BD-4, “Report of Arrest and/or Seizure Involving Nontaxpaid (Unstamped) Controlled Substances,” naming the Taxpayer as the possessor of the controlled substance. 5. US-5 Case report by the New Hanover County Sheriff’s Office and a statement by Enforcement Agent Tim Townsend of the Unauthorized Substances Tax Division. 6. US-6 Memorandum from E. Norris Tolson, Secretary of Revenue, dated May 16, 2002, delegating to Eugene J. Cella, Assistant Secretary of Administrative Hearings, the authority to hold any hearing required or allowed under Chapter 105 of the North Carolina General Statutes. FINDINGS OF FACT The Board reviewed and considered the following findings of fact entered by the Assistant Secretary in his decisions regarding these matters: 1. Assessment of Unauthorized Substance Tax was made against the Taxpayers on March 7, 2002, in the sum of $24,717.00 tax, $9,886.80 penalty and $123.59 interest, for a total proposed liability of $34,727.39, based on possession of 7,062 grams of marijuana. 2. The Taxpayers made timely objection and application for a hearing. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1656 3. The correct method of determining the weight of growing marijuana plants is to cut off the root ball and weigh the rest of the plant. The stems and stalks of intact, growing marijuana plants clearly are not “separated from and …not mixed with any other parts of the … plant” in such a way that would confer on those stems and stalks the tax rate of $.40 per gram authorized in N.C. Gen. Stat. § 105-113.107(a)(1). 4. The unauthorized substance tax is imposed on the quantity of controlled substance possessed by a dealer. The marijuana at issue was weighed the day after its seizure on calibrated scales at a company that manufactures calibrated scales. The weight determined on these scales was 7,062 grams. The SBI lab weighed the marijuana 65 days after it was seized and concluded it weighed 1,905 grams. Clearly the 79 growing marijuana plants dried out during the 65-day period before the SBI weighed the plants. Therefore, the best information available indicates the quantity of marijuana possessed by the Taxpayer was 7,062 grams. 5. The Taxpayers’ briefs contained a critical misstatement of law on Page 5. The brief states that G.S. 105-241.2- 1(g)(sic) requires that within five working days after a jeopardy assessment is made under Article 2D the Secretary must provide the Taxpayer with a written statement of the information upon which the Secretary relied in making the assessment. On the contrary, N.C. Gen. Stat. § 105-241.1(g) specifically excludes Article 2D assessments from the “written statement” provision. 6. Although exempt from the aforementioned “written statement” requirement, the taxpayer was issued such a document. Form BD-4, “Report of Arrest and/or Seizure Involving Nontaxpaid (Unstamped) Controlled Substances,�� serve as the “written statement” for the assessment proposed against Mr. Bartlett. A copy of Form BD- 4 was provided to the Taxpayer with his notice of assessment and a letter that accompanied the notice advised the Taxpayer that Form BD-4 constituted the written statement. 7. The Taxpayers’ briefs further allege that the Taxpayers were not notified that the assessment was a jeopardy assessment. On the contrary, the notice of assessment, Form BD-10, expressly states the following: “In the event you fail to respond immediately to this proposed assessment by remitting the full amount shown due or by posting a bond, collection may proceed pursuant to G.S. 105-241.1(g) or G.S. § 105-242 without regard to whether you have requested a hearing.” 8. On March 4, 2002, the Taxpayers had actual and/or constructive possession of 7,062 grams of marijuana. 9. No tax stamps were purchased for or affixed to the marijuana as required by law. CONCLUSIONS OF LAW The Board reviewed and considered the conclusions of law entered by the Assistant Secretary in his decisions regarding these matters: 1. An assessment of tax is presumed to be correct. 2. The burden is upon the Taxpayers who object to an assessment to overcome that presumption, and that burden was not met. 3. An Administrative Tax Hearing lacks the statutory authority to rule on alleged constitutional violations. 4. Per N.C. Gen. Stat. § 105-241.1(a), the Secretary must base a proposed assessment on the best information available. While one can argue that the SBI lab’s scales are more accurate than the calibrated scales upon which the marijuana was first weighed, the possible difference in accuracy is offset by the fact that the two scales essentially did not weigh the same substance. The calibrated scales weighed marijuana plants that had been harvested the previous day. The SBI scales weighed dried vegetable matter that two months earlier had been freshly harvested marijuana plants. The best information regarding the weight of the marijuana possessed by the Taxpayers is clearly the 7,062 grams determined by the calibrated scales on March 5, 2002. 5. The Taxpayers received all notices required by statute as well as a “written statement of information” that was not required by statute. 6. The Taxpayers had actual and/or constructive possession of 7,062 grams of marijuana on March 5, 2002, and were therefore dealers as that term is defined in N.C. Gen. Stat. § 105-113.106(3). 7. The Taxpayers are liable for $24,717.00 tax, $9,886.80 penalty and interest until date of full payment. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Ge n. Stat. § 105- 241.2(b2). After the Tax Review Board conducts an administrative hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” It is the function of this Board, upon administrative review, to review the record and determine whether the final decision is proper based upon the evidence presented at the hearing before the Assistant Secretary. Pursuant to N.C. Gen. Stat. § 105-241.1(a), a IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1657 proposed tax assessment is presumed to be correct and the burden is on the Taxpayer to rebut that presumption. In order to rebut the presumption, the Taxpayer must offer evidence to show that the assessment is not proper. Thus, the Board having conducted an administrative hearing in this matter, and having considered the petition, the briefs, the whole record and the Assistant Secretary’s final decisions, concluded that the findings of fact made by the Assistant Secretary were supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law were fully supported by the findings of fact; therefore the decisions of the Assistant Secretary should be confirmed. WHEREFORE, THE BOARD ORDERS that the Assistant Secretary’s final decisions be confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1658 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: ) The Proposed Assessment of Unauthorized ) Substance Tax dated February 8, 2002 by ) the Secretary of Revenue of North Carolina ) ADMINISTRATIVE DECISION vs. ) Number: 424 ) Lillian Rena Fishback ) Taxpayer ) This Matter was heard before the Regular Tax Review Board (hereinafter “Board”) in the City of Raleigh, Wake County, North Carolina, on Friday September 26, 2003, upon a petition filed by Lillian Rena Fishback (hereafter “Taxpayer”) for administrative review of the Final Decision of the Assistant Secretary of Revenue entered on February 28, 2003, sustaining the proposed assessment of unauthorized substance tax for the period at issue. Pursuant to N.C. Gen. Stat. § 105-113.111(a) and N.C. Gen. Stat. § 105-241.1, a Notice of Unauthorized Substance Tax Assessment was issued to the Taxpayer on February 8, 2002 by Enforcement Agent Buddy Mozingo of the Unauthorized Substance Tax Division, assessing $60,368.00 tax, $24,147.20 penalty and $301.48 interest, for a total liability of $84,817.04. The assessment alleged that on February 8, 2002, the Taxpayer was in unauthorized possession of 17,248 grams of marijuana without the proper tax stamps affixed to the substance. EVIDENCE Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, evidence and other materials that the parties presented at the hearing before the Assistant Secretary. Based upon the Board’s review of the documentation, the evidence presented is incorporated by reference and is made a part of this decision. ISSUES 1. Did the Taxpayer have actual/or constructive possession of cocaine without proper tax stamps affixed? 2. Is the Taxpayer subject to the assessment of unauthorized substance excise tax? FINDINGS OF FACT The Board reviewed and considered the following findings of fact entered by the Assistant Secretary in his decision regarding this matter: 1. Assessment of Unauthorized Substance Tax was made against the Taxpayer on February 8, 2002, in the sum of $60,368.00 tax, $24,147.20 penalty and $301.84 interest, for a total proposed liability of $84,817.04, based upon possession of 17,248 grams of marijuana on February 8. 2002. 2. The Taxpayer made timely objection and application for a hearing. 3. The marijuana was located in a vehicle operated by the Taxpayer. 4. The Taxpayer’s nervousness and the inconsistencies between her statements and those of her passenger as to their travels and the nature of their relationship tend to corroborate the presumption that the Taxpayer, as driver, was fully aware of the contents of the vehicle. 5. The Taxpayer was in constructive possession of the vehicle and the marijuana on February 8, 2002. 6. The SBI lab confirmed the substance at issue as marijuana weighing 36.9 pounds (16,737.84 grams ). 7. The Taxpayer was in constructive possession of 16,737.84 grams of marijuana on February 8, 2002, without proper tax stamps affixed to the substance. CONCLUSIONS OF LAW The Board reviewed and considered the following conclusions of law made by the Assistant Secretary in his decision regarding this matter: 1. An assessment of tax is presumed to be correct. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1659 2. The burden is upon the Taxpayer who objects to an assessment to overcome that presumption, and that burden was not met. 3. The Taxpayer had constructive possession of 16,737.84 grams of marijuana on February 8, 2002, and was therefore a dealer as that term is defined in G.S. 105-113.106. 4. The Taxpayer is liable for tax in the sum of $58,583.00, penalty in the sum of $23,433.20, and accrued interest until date of full payment. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Board conducts a hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” Pursuant to G.S. 105-241.1(a), a proposed tax assessment is presumed to be correct and the burden is on the Taxpayer to rebut that presumption. In order to rebut that presumption, the Taxpayer must offer evidence to show that the assessment is not proper. It is the function of this Board, upon administrative review, to review the record and determine whether the final decision is proper based upon the evidence presented at the hearing before the Assistant Secretary. Thus, the Board having conducted an administrative hearing in this matter, and having considered the petition, the brief, the record and the final decision, concludes that the findings of fact contained in the Assistant Secretary’s final decision are supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law are fully supported by the findings of fact; therefore the Assistant Secretary’s final decisions should be confirmed. WHEREFORE, THE TAX REVIEW BOARD ORDERS that the Assistant Secretary’s final decision be and is hereby confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Attorney at Law Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1660 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: ) The Proposed Assessment of Unauthorized ) Substance Tax dated June 5, 2002 by ) the Secretary of Revenue of North Carolina ) ) ADMINISTRATIVE DECISION vs. ) Number: 425 ) Sherry J. Roberts ) Taxpayer ) This Matter was heard before the Regular Tax Review Board (hereinafter “Board”) in the City of Raleigh, Wake County, North Carolina, on Friday September 26, 2003, upon a petition filed by Sherry J. Roberts (hereafter “Taxpayer”) for administrative review of the Final Decision of the Assistant Secretary of Revenue entered on March 6, 2003, sustaining the proposed assessment of unauthorized substance tax for the period at issue. Pursuant to N.C. Gen. Stat. § 105-113.111(a) and N.C. Gen. Stat. § 105-241.1, a Notice of Unauthorized Substance Tax Assessment was issued to the Taxpayer on June 5, 2002 by Enforcement Agent James Spence of the Unauthorized Substance Tax Division, assessing $82,512.50 tax, $33,005.00 penalty and $0 interest, for a total liability of $115,517.50. The assessment alleged that on June 5, 2002, the Taxpayer was in unauthorized possession of 528 grams of cocaine 15,875 grams of marijuana and 102 dosages of ecstasy without the proper tax stamps affixed to the substance. ISSUES 1. Did the Taxpayer have actual/or constructive possession of cocaine, marijuana and ecstasy without proper tax stamps affixed? 2. Is the Taxpayer subject to the assessment of unauthorized substance excise tax? EVIDENCE Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, evidence and other materials that the parties presented at the hearing before the Assistant Secretary. Based upon the Board’s review of the documentation, the evidence presented is incorporated by reference and is made a part of this decision. FINDINGS OF FACT The Board reviewed and considered the following findings of fact entered by the Assistant Secretary in his decision regarding this matter: 1. Assessment of Unauthorized Substance Tax was made against the Taxpayer on June 5, 2002, in the sum of $82,512.50 tax, $33,005.00 penalty and $0 interest, for a total proposed liability of $115,517.50 based upon possession of 528 grams of cocaine, 15,875 grams of marijuana and 102 dosages of ecstasy. 2. The Taxpayer made timely objection and application for a hearing. 3. The codefendant’s claim that he had taken the drugs and weapons to the Taxpayer’s house on June 5, 2002, after 8:00 a.m., with the intention of removing them before the Taxpayer returned from work at 4:00 p.m., is not credible since: · The drugs were located in numerous locations about the house: three baggies of tan, rock-like substance, one baggie of white powder, one baggie of 2 1/2 white pills, and the .38 caliber Smith and Wesson in the top dresser drawer in the master bedroom; an 11 1/2 pound taped bundle of marijuana, four one-pound packages of marijuana and two quarter-pound packages of marijuana in the computer room closet; 16 one-pound packages of marijuana in a duffel bag on the computer room floor; two baggies of tan rock-like substance and two baggies of white pills in a plastic box in the computer desk in the computer room; and the shotgun in the master bedroom closet. · Not counting the duffel bag containing marijuana on the floor in the computer room, there were 16 individual packages of controlled substances in three different locations. It is illogical to believe that the codefendant would bring the drug and weapons to the Taxpayer’s house and spread them all over the place if he intended to remove them later the same day. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1661 · The codefendant’s statement indicates he expected the Taxpayer to return from work at about 4:00 p.m., by which time he intended to have the drugs and weapons removed from the house. Law enforcement did not make entry to execute the search warrant until 7:21 p.m., meaning that the codefendant did not just miss his alleged deadline, but that nearly 3 ½ hours later there was still no sign of him. Not only is there no reliable evidence that the codefendant ever returned to the Taxpayer’s home on June 5, 2002, there is no evidence that he was ever there to begin with. · The Taxpayer pleaded guilty to possession of the same weapons that the codefendant stated she knew nothing about, further detracting from the statement’s credibility. 4. The informant whose information provided probable cause for the search warrants indicated that the codefendant kept controlled substances at several residences, which further tends to refute any claim that the presence of controlled substance at the Taxpayer’s home on June 5, 2002, was a one-time event. 5. The Department has the authority to levy upon and seize a Taxpayer’s assets for the purpose of selling them at auction and applying the proceeds to the tax debt. Whether the assets were purchased with legitimate income or proceeds from the drugs sales is irrelevant. 6. On June 5, 2002, the Taxpayer had constructive possession of 528 grams of cocaine, 15,875 grams of marijuana and 102 dosages of ecstasy. 7. No tax stamps were purchased for or affixed to the controlled substances as required by law. CONCLUSIONS OF LAW The Board reviewed and considered the following conclusions of law made by the Assistant Secretary in his decision regarding this matter: 1. An assessment of tax is presumed to be correct. 2. The burden is upon the Taxpayer who objects to an assessment to overcome that presumption, and that burden was not met. 3. The Taxpayer had constructive possession of 528 grams of cocaine, 15,875 grams of marijuana and 102 dosages of ecstasy on June 5, 2002, and was therefore a dealer as that term is defined in G.S. 105-113.106(3). 4. The Taxpayer is liable for tax in the sum of $82,512.50, penalty in the sum of $33,005.00, and accrued interest until date of full payment. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Board conducts a hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” Pursuant to G.S. 105-241.1(a), a proposed tax assessment is presumed to be correct and the burden is on the Taxpayer to rebut that presumption. In order to rebut that presumption, the Taxpayer must offer evidence to show that the assessment is not proper. It is the function of this Board, upon administrative review, to review the record and determine whether the final decision is proper based upon the evidence presented at the hearing before the Assistant Secretary. Thus, the Board having conducted an administrative hearing in this matter, and having considered the petition, the brief, the record and the final decision, concludes that the findings of fact contained in the Assistant Secretary’s final decision are supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law are fully supported by the findings of fact; therefore the Assistant Secretary’s final decisions should be confirmed. WHEREFORE, THE TAX REVIEW BOARD ORDERS that the Assistant Secretary’s final decision be and is hereby confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1662 Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1663 SUMMARY OF NOTICE OF INTENT TO REDEVELOP A BROWNFIELDS PROPERTY The Estate of Katherine C. Bell Pursuant to N.C.G.S. § 130A-310.34, the Estate of Katherine C. Bell has filed with the North Carolina Department of Environment and Natural Resources (“DENR”) a Notice of Intent to Redevelop a Brownfields Property (“Property”) in Charlotte, Mecklenburg County, North Carolina. The Property consists of 0.6 acres and is located at 2935 Griffith Street (a.k.a. 111 New Bern Street). Known environmental contamination, in excess of applicable standards, exists on the Property in groundwater. The Estate of Katherine C. Bell has committed itself to make no use of the Property other than for commercial uses such as warehouse space. The Notice of Intent to Redevelop a Brownfields Property includes: (1) a proposed Brownfields Agreement between DENR and Estate of Katherine C. Bell, which in turn includes (a) a map showing the location of the Property, (b) a description of the contaminants involved and their concentrations in the media of the Property, (c) the above-stated description of the intended future use of the Property, and (d) proposed investigation and remediation; and (2) a proposed Notice of Brownfields Property prepared in accordance with G.S. 130A-310.35. The new Notice of Intent to Redevelop a Brownfields Property is a second one regarding this Property; it has been filed because it was determined that three underground storage tanks could be addressed by the state Brownfields Program, which led to changes in the proposed Brownfields Agreement. The full Notice of Intent to Redevelop a Brownfields Property may be reviewed at City of Charlotte, Economic Development, located at 600 East Trade Street, Charlotte, NC 28202 by contacting Carolyn Minnich at that address, at cminnich@ci.charlotte.nc.us, or at (704)336-3499; or at 401 Oberlin Rd., Raleigh, NC 27605 by contacting Shirley Liggins at that address, at shirley.liggins@ncmail.net, or at (919) 733-2801, ext. 336, where DENR will provide auxiliary aids and services for persons with disabilities who wish to review the documents. Written public comments, and/or requests for a public meeting, may be submitted to DENR within 30 days after the date this Notice is published in a newspaper of general circulation serving the area in which the brownfields property is located, or in the North Carolina Register, whichever is later. All such comments and requests should be addressed as follows: Mr. Bruce Nicholson Brownfields Program Manager Division of Waste Management NC Department of Environment and Natural Resources 401 Oberlin Road, Suite 150 Raleigh, North Carolina 27605 IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1664 SUMMARY OF NOTICE OF INTENT TO REDEVELOP A BROWNFIELDS PROPERTY Wede Corporation, LLC Pursuant to N.C.G.S. § 130A-310.34, Wede Corporation, LLC has filed with the North Carolina Department of Environment and Natural Resources (“DENR”) a Notice of Intent to Redevelop a Brownfields Property (“Property”) in Bessemer City, Gaston, County, North Carolina. The Property consists of 10.7 acres and is located at 1111 Oates Road. Environmental contamination exists on the Property groundwater. Wede Corporation, LLC has committed itself to redevelop the Property exclusively for industrial light manufacturing and commercial use. The Notice of Intent to Redevelop a Brownfields Property includes: (1) a proposed Brownfields Agreement between DENR and Wede Corporation, LLC, which in turn includes (a) a map showing the location of the Property, (b) a description of the contaminants involved and their concentrations in the media of the Property, (c) the above-stated description of the intended future use of the Property, and (d) proposed investigation and remediation; and (2) a proposed Notice of Brownfields Property prepared in accordance with G.S. 130A-310.35. The full Notice of Intent to Redevelop a Brownfields Property may be reviewed offices of the City of Charlotte, Neighborhood Development Key Business, Employment & Business Service, located at 600 East Trade Street, by contacting Carolyn Minnich at that address, at cminnich@ci.charlotte.nc.us, or at (704) 336-3499; or at 401 Oberlin Rd., Raleigh, NC 27605 by contacting Shirley Liggins at that address, at shirley.liggins@ncmail.net, or at (919) 733-2801, ext. 336, where DENR will provide auxiliary aids and services for persons with disabilities who wish to review the documents. Written public comments may be submitted to DENR within 60 days after the date this Notice is published in a newspaper of general circulation serving the area in which the brownfields property is located, or in the North Carolina Register, whichever is later. Written requests for a public meeting may be submitted to DENR within 30 days after the period for written public comments begins. All such comments and requests should be addressed as follows: Mr. Bruce Nicholson Brownfields Program Manager Division of Waste Management NC Department of Environment and Natural Resources 401 Oberlin Road, Suite 150 Raleigh, North Carolina 27605 PROPOSED RULES 18:19 NORTH CAROLINA REGISTER April 1, 2004 1665 Note from the Codifier: The notices published in this Section of the NC Register include the text of proposed rules. The agency must accept comments on the proposed rule(s) for at least 60 days from the publication date, or until the public hearing, or a later date if specified in the notice by the agency. If the agency adopts a rule that differs substantially from a prior published notice, the agency must publish the text of the proposed different rule and accept comment on the proposed different rule for 60 days. Statutory reference: G.S. 150B-21.2. TITLE 1 – DEPARTMENT OF ADMINISTRATION Notice is hereby given in accordance with G.S. 150B-21.2 that the Department of Administration, State Energy Office intends to adopt the rules cited as 01 NCAC 41C .0101-.0104, .0201-.0211, .0301-.0303. Proposed Effective Date: July 1, 2004 Public Hearing: Date: April 21, 2004 Time: 2:00 p.m.-4:00 p.m. Location: Auditorium/NC Archives and History/State Library, 109 E. Jones St, Raleigh, NC. Reason for Proposed Action: Legislation section: G.S. 143- 345.16; 143-345.17; 143-345.18 Procedure by which a person can object to the agency on a proposed rule: Written objections may be submitted to the Director of State Energy Office. Objections will be received by mail, delivery service, hand delivery or facsimile transmission. Objections may be directed to: Larry Shirley, Director, NC State Energy Office. Mail Service Center 1340, Raleigh, NC 27699- 1340, Phone (919)733-2230, Fax (919)733-2953, Email larry.shirley@ncmail.net. Written comments may be submitted to: Larry Shirley, NC State Energy Office, MSC 1340, Raleigh, NC 27699-1340, Phone (919)733-2230, Fax (919)733-2953, Email larry.shirley@ncmail.net. Comment period ends: June 1, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commission receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None CHAPTER 41-STATE ENERGY OFFICE SUB CHAPTER 41C-ENERGY IMPROVEMENT LOAN PROGRAM SECTION .0100-GENERAL PROVISIONS 01 NCAC 41C .0101 RESPONSIBILITY The Department of Administration is responsible for adopting rules as specified in G.S. 143-345.18(b)(3) to facilitate this program and to adopt rules to allow State-regulated financial institutions to provide secured loans for this program pursuant to G.S. 143-345.18(b)(2a). Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0102 SCOPE This Subchapter shall apply to the revolving loan program mandated by G.S. 143-345.18. Sectors served by the Program are local government organizations, nonprofit organizations, and commercial and industrial businesses pursuant to G.S. 143B, Article 10, Part 14. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0103 RULE MAKING AUTHORITY Authority for adopting these Rules is found in G.S. 143-18(b)(3) and G.S. 143-345.18(b)(2a). Authority G.S. 143-345.18(b)(3); 143-345.18(b)(2a). 01 NCAC 41C .0104 DEFINITIONS For the purposes of this Chapter, the following definitions apply: (1) "Allowable Costs," origination cost, up front cost, letter of credit fee (first year), engineering design fee, and implementation of eligible energy conservation measure. All allowable costs to be included in the loan must be incurred after the execution date of the Letter of Intent; (2) "Applicant," any commercial or industrial business applying for a loan under the Program; (3) "Btu," British thermal unit; the amount of heat required to raise the temperature of one pound PROPOSED RULES 18:19 NORTH CAROLINA REGISTER April 1, 2004 1666 of water one degree Fahrenheit at or near 39.2 degrees F; (4) "Btu/sq. ft/yr.," Btu per square foot per year; an index of building energy use, calculated by dividing the total annual energy use of a building by its square foot area; (5) "Commercial or industrial business," a commercial or industrial concern which provides goods or services for profit from a location in North Carolina; (6) "Credit worthiness", ability of applicant to meet lending institution's standard lending criteria. (7) "DOA Fiscal Department," the Fiscal Management Department, N. C. Department of Administration; (8) "Energy conservation measure," a commercially available energy efficient device, technique or technology, designed to reduce energy consumption, peak demand, and/or utility costs at an existing or proposed commercial or industrial business; (9) "Letter of Intent," written notification of the intent of the Department to originate the Loan, subject to the conditions and limitations of the Program; (10) "Payback," the total energy conservation measure costs (including installation, equipment and engineering design) divided by the annual estimated utility cost savings; (11) "Program," the Energy Improvement Loan Program authorized by G.S. 143B, Article 10, Part 14. (12) "Recycling Projects," projects which extract and reprocess energy, water and/or materials for reuse in buildings, transportation systems, environmental management, consumer products and/or outreach; (13) "Renewables," solar, wind, biomass and/or hydropower resources; (14) "Repayment Schedule," a schedule of periodic payments based upon simple payback as projected in the TA, rounded to the next quarter. Prepayments shall reduce the term of the loan with periodic payments remaining unchanged; (15) "State Energy Office," the State Energy Office, N. C. Department of Administration; (16) "Technical Analysis," a report that identifies and analyzes in detail cost-effective capital energy conservation improvements that the applicant wishes to implement. The Technical Analysis need address only the specific energy conservation measures for which the loan is being requested. Each energy conservation measure analyzed should be the subject of a single, focused recommendation incorporating technical and economic analyses of the measure, considering building, process and equipment characteristics and energy use patterns pertinent to the improvement. The Technical Analysis must include the estimated cost of the implementation, a construction schedule, and expected energy savings; (17) "Technical analyst," a professional engineer or architect registered in accordance with the provis ions of G. S. 89C or G. S. 83A as applicable having demonstrated experience in energy conservation to conduct technical analysis for the purposes of this article; (18) "Third Party Technical Analyst", a technical analysis performed by a professional engineer or registered architect who has neither financial interest in the commercial business, non-profit institution, local government institution, or industrial business nor in the sale and installation of any proposed energy conservation measure; however, the Technical Analyst is permitted to provide construction management services to an approved applicant. (19) "Unallowable costs," costs associated with Technical Analysis preparation, costs associated with pre-application conference, costs incurred prior to execution date of Letter of Intent, costs associated with loan application (i.e., consultation fees, Technical Analysis modifications); and (20) "Up front cost," the prepaid charge, if any, at a rate to be determined by the DOA Fiscal Department sufficient to cover the costs of administering and servicing the program. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). SECTION .0200 – LOANS 01 NCAC 41C .0201 ELIGIBILITY The following classes of applicants in descending order of priority are eligible to apply for loans: (1) A local government organization, nonprofit organization, commercial or industrial business located in North Carolina that owns the existing building or site of planned construction where the energy conservation measures will be made, or which has a lease or management agreement for such proposed building site or building extending beyond the term of the loan; provided, however, that where the owner of the building authorizes the approved energy conservation measures, the lease or management agreement need not extend beyond the term of the loan. (2) A local government organization, nonprofit organization, commercial or industrial business translocating to North Carolina that owns the site of planned construction where the energy conservation measures will be made, or which has a lease or management agreement for such proposed building or PROPOSED RULES 18:19 NORTH CAROLINA REGISTER April 1, 2004 1667 building site extending beyond the term of the loan; provided, however, that where the owner of the building or building site authorizes the approved energy conservation measures, the lease or management agreement need not extend beyond the term of the loan. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0202 CRITERIA FOR ENERGY CONSERVATION LOANS Energy conservation projects for which the loans are desired must meet the following criteria: (1) The building site where the measures are to be installed must be in North Carolina; (2) The project must demonstrate the ability to conserve energy through efficient energy use or the utilization of renewable energy resources which results in energy savings based upon a net reduction in the use of nonrenewable resources; (3) To keep interest rates low, with a maximum total loan indebtedness of five hundred thousand dollars ($500,000) for a single local government organization, nonprofit organizations, commercial business or industrial business at any given time; (4) The project must utilize existing, proven reliable commercially available technologies recognized by the State Energy Office; (5) Experimental or research-related technologies are not eligible for funding; (6) Each energy conservation measure must address energy efficiency; (7) The installation of the energy conservation measure may, at the discretion of the applicant, commence after DOA Fiscal Office issues the Letter of Intent; however, the applicant places itself at risk and is reminded that origination of the Loan is subject to the conditions and limitations of the Program; (8) The energy conservation measure must demonstrate a simple payback period of 10 years or less; (9) Each energy conservation measure must have a useful life at least equal to its estimated simple payback; (10) Eligible energy conservation measures shall fall under one of the following categories: (a) lighting systems; (b) heating, ventilation, and air conditioning systems; (c) electrical distribution systems (motors, variable speed drives, fans, etc.); (d) energy management systems; (e) boiler efficiency systems; (f) energy recovery systems, including on-site generation of electricity; (g) alternate/renewable energy systems; (h) building envelope (doors, windows, roofs, etc.); (i) industrial process or fabrication systems; (j) load management systems; (k) fuel conversion projects provided that the simple payback calculations shall be based on the cost of the current fuel; (l) other cost-effective demand or rate-based improvements; and (m) recycling projects; (11) The energy conservation measure shall meet applicable state air and water quality standards; and (12) The energy conservation measure shall be based on a current Technical Analysis report as defined in Section .0300 of this Subchapter. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0203 CONDITIONS AND LIMITATIONS Loans are made subject to the following conditions and limitations: (1) Interest shall be charged at the rate of 3% per annum and 1% for renewable and recycling projects; (2) The amount of the loan shall not exceed allowable costs; (3) The repayment schedule shall be based on the estimated payback as shown in the Technical Analysis report; (4) Payments shall be made at a frequency of not less than once per month; (5) The total amount of the loan, or any portion thereof may be repaid at any time without penalty; (6) Rebates received through other program offerings of the State Energy Office for projects undertaken from loan proceeds shall be used to reduce the amount of principal; (7) The borrower shall warrant that all work or construction done with the proceeds of a loan under this program shall comply with all building codes and standards; (8) Project implementation should begin within 90 days after approval of the application. If delays are encountered following loan closing, any arbitrage profits will be repaid to the revolving fund; (9) Loans may not be used to replace an existing loan; (10) Loan payments or drafts shall be sent or delivered to the DOA Fiscal Department at its current address as stated in the loan agreement; (11) A letter of credit from a bank approved to do business in North Carolina and acceptable to the Secretary of Administration shall secure PROPOSED RULES 18:19 NORTH CAROLINA REGISTER April 1, 2004 1668 the loan against non-payment and also serve as a quarterly drafting mechanism for loan repayment from the bank; and (12) No loans shall be forgiven. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0204 PRE-APPLICATION CONFERENCE (a) At least one week prior to submission of a project application a pre-application conference will be convened by email, telephone or office visit. (b) Parties present at the pre-application conference will include representatives from the DOA Fiscal Division, the State Energy Office, the applicant, and/or the applicant’s engineer. (c) The purpose of the conference is to help ensure the application procedures are clearly understood and that the application and technical analysis, when accepted, will be complete. (d) The applicant shall offer verbal, and if available, written project descriptions. (e) The applicant will address environmental impact of the project. (f) When final, copies of water and air permits will be provided in addition to the technical analysis. (g) Another purpose of this conference will be to reach an understanding among all parties that the project is of the type that may be considered for approval. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0205 APPLICATION PROCEDURES Application forms are provided by the DOA Fiscal Department and must contain, at a minimum, the following information: (1) The name and complete mailing address, including the county, of the applicant; (2) The address, building name (where applicable) or site description including photographs to locate where the energy conservation measure(s) will be installed; (3) The name of a contact person, including title and telephone number; (4) The amount of the loan requested; (5) The estimated dates of start and completion of the project; (6) A copy of the Technical Analysis approved by the State Energy Office as fulfilling the energy aspects of the proposed energy conservation measures; (7) Identification of the commercial lending institution that is providing letter of credit, depository and repayment services; (8) All applicants shall provide financial data on which to base a determination of the applicant’s creditworthiness. Documentation may include the following: (a) Recent financial statements; and (b) Profit and loss statements. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0206 APPLICATION REVIEW Application review shall consist of the following two phases: (1) The administrative review shall be conducted by the DOA Fiscal Department and may include any data or information needed to complete that review. (2) The technical review shall be conducted of the Technical Analysis by the State Energy Office. (3) The technical review may occur concurrently with application submittal to the DOA Fiscal Department. (4) The technical review shall consider each energy conservation measure for which funding is requested and shall include the accuracy and sufficiency of calculations, engineering principles considered, and labor and material costs relative to the current local market. (5) Following acceptance, the State Energy Office will approve those Energy Conservation Measures that were found to meet the energy aspects of the Program. (6) No application shall be accepted for consideration by the DOA Fiscal Department without the acceptance of the Technical Analysis by the State Energy Office. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0207 LOAN APPROVAL Applications shall be considered for loan approval upon completion of the administrative and technical review. Approval shall be based upon the following: (1) Results of the administrative and technical review documenting energy efficiency; and (2) Creditworthiness of the applicant. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0208 LOAN AGREEMENT AND PROMISSORY NOTE After an application for a loan is approved, a loan agreement shall be executed between the DOA Fiscal Department and the borrower. The loan agreement shall include a standard North Carolina promissory note and other necessary documents including, but not limited to, security agreements, mortgages, recordings; and shall contain the covenants and representations as to the borrower's qualification to borrow for the loan, intended use of the loan proceeds, conditions under which the loan will be repaid and events requiring the acceleration, rights and responsibilities of the parties and the terms and conditions of the loan. The requirements to secure the loan shall be included in the loan agreement. Loans shall be secured through bank Letter of Credit. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0209 REPORTS Reports must be submitted as follows: PROPOSED RULES 18:19 NORTH CAROLINA REGISTER April 1, 2004 1669 (1) Progress reports must be submitted quarterly to the State Energy Office during the period implementation or construction is in progress and must include a description of the current status, any problems, and forecast of expectations or deviations from the planned schedule; and (2) A final report certified by the technical analyst with professional registration seal affixed must be submitted to the State Energy Office upon completion of the project. The report must include a description of the measures implemented; the actual cost of each measure, and the adjusted estimated payback, based on the actual cost. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0210 MONITORING The DOA Fiscal Department shall monitor the use of the funds under this program through continuous review of reports. The State Energy Office shall monitor those buildings/projects where the energy conservation projects are in progress to verify the installation of the energy conservation measures conforms to the original Technical Analysis. At least one visit shall be made to the site of each energy conservation project during the life of the loan. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0211 DEFAULT If the borrower violates any of the terms of the loan agreement, the DOA Fiscal Department may place the borrower in default. Borrowers determined to be in default shall be notified by certified mail and the letter of credit provided as security invoked to protect the interest of the State of North Carolina. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). SECTION .0300 - TECHNICAL ANALYSIS 01 NCAC 41C .0301 TECHNICAL ANALYSIS REQUIRED An application for an energy conservation loan must be accompanied by a Technical Analysis that has been conducted by a qualified third party technical analyst and certified by the State Energy Office as fulfilling the energy aspects of the Program. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0302 TECHNICAL ANAYLYST QUALIFICATIONS To be qualified to conduct the Technical Analysis required by this article, a technical analyst must meet the following requirements: (1) Have experience in energy conservation in building construction, mechanical systems and/or manufacturing processes; (2) Be a registered architect or registered professional engineer licensed under the regulatory authority of the State of North Carolina, or be an architect-engineer team, the principal members of which are licensed under the regulatory authority of the State of North Carolina; (3) Comply with the licensing provisions of the "Architects" Act (G.S. 83A) and/or the "Engineering and Land Surveying" Act (G.S. 89C), to the extent to which one or both may be applicable; and (4) Have neither financial interest in the commercial business, non-profit institution, local government institution, or industrial business nor in the sale and installation of any proposed energy conservation measure; however, the Technical Analyst is permitted to provide construction management services to an approved applicant. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0303 REPORT REQUIRED A qualified third party technical analyst shall submit three copies of the results of a Technical Analysis in writing in a format acceptable to the State Energy Office. The report must include the following: (1) A description of facility characteristics and energy data, including the operational characteristics of the energy-using systems; (2) A description and engineering analysis of each identified energy conservation measure, including the following: (a) A detailed estimate of the cost of design, acquisition, and installation, including monitoring equipment to assess the performance of the measure discussing pertinent assumptions as necessary; (b) An estimate of the annual energy and energy cost savings by fuel type using generally accepted engineering standards and practices, including all formulae, data and assumptions clearly presented in arriving at the estimate; (c) The results of a combustion efficiency test, if furnace or boiler modifications or replacements are being imp lemented; (d) The simple payback period of each energy conservation measure, calculated by dividing the estimated total cost of the measure by the estimated annual energy cost saving; (e) A proposed construction schedule for each energy conservation measure; and PROPOSED RULES 18:19 NORTH CAROLINA REGISTER April 1, 2004 1670 (f) The payback period of each energy conservation measure; (3) The energy use and cost data for each fuel type used for the prior 12-month period, by month or in accordance with the usual billing cycle; (4) A certification bearing the registration seal, number and original signature and stating that the contents of the Technical Analysis conform to the provisions of the Program; and (5) An outline of qualifications of the analyst documenting previous experience in energy conservation in building construction, mechanical systems, and/or manufacturing processes. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). * * * * * * * * * * * * * * * * * * * * TITLE 10A – DEPARTMENT OF HEALTH AND HUMAN SERVICES Notice is hereby given in accordance with G.S. 150B-21.2 that the Division of Facility Services (DFS) intends to adopt the rules cited as 10A NCAC 14C .3801-.3805 and amend the rule cited as 10A NCAC 14C .0203. Proposed Effective Date: October 1, 2004 Public Hearing: Date: May 28, 2004 Time: 10:00 a.m. Location: Council Building, Room 201, Dorothea Dix Campus, 701 Barbour Dr., Raleigh, NC Reason for Proposed Action: One of the subject matters contained in the 2004 State Medical Facilities Plan (SMFP) is the filing deadline for Certificate of Need (CON) applications. The 2004 SMFP notes that deadline to be 5:30 p.m. 10A NCAC 14C .0203 must be amended to ensure that its reference to the filing deadline be consistent with the SMFP. The other subject matter pertains to the SMFP in relation to acute care beds. Certificate of Need (CON) rules are needed to implement the new need determinations for acute care beds in the 2004 SMFP. Procedure by which a person can object to the agency on a proposed rule: A person may object to the agency on the proposed rule by submitting written comments on the proposed rule. They may also object by attending the public hearing and personally voice their objections during that time. Written comments may be submitted to: Nadine Pfeiffer, NCDFS, 2711 Mail Service Center, Raleigh, NC 27699-2711, phone (919) 733-7461, fax (919) 733-8274, and email Nadine.pfeiffer@ncmail.net. Comment period ends: June 1, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commission receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None CHAPTER 14 - DIRECTOR, DIVISION OF FACILITY SERVICES SUBCHAPTER 14C - CERTIFICATE OF NEED REGULATIONS SECTION .0200 - APPLICATION AND REVIEW PROCESS 10A NCAC 14C .0203 FILING APPLICATIONS (a) An application shall not be reviewed by the agency until it is filed in accordance with this Rule. (b) An original and a copy of the application shall be received by the agency no later than 5:00 5:30 p.m. on the 15th day of the month preceding the scheduled review period. In instances when the 15th of the month falls on a weekend or holiday, the filing deadline is 5:00 5:30 p.m. on the next business day. An application shall not be included in a scheduled review if it is not received by the agency by this deadline. Each applicant shall transmit, with the application, a fee to be determined according to the following formula: (1) With each application proposing the addition of a sixth bed to an existing or approved five bed intermediate care facility for the mentally retarded, the proponent shall transmit a fee in the amount of two thousand dollars ($2,000). (2) With each application, other than those referenced in Subparagraph (b)(1) of this Rule, proposing no capital expenditure or a capital expenditure of up to, but not including, one million dollars ($1,000,000), the proponent shall transmit a fee in the amount of three thousand five hundred dollars ($3,500). (3) With each application, other than those referenced in Subparagraph (b)(1) of this Rule, proposing a capital expenditure of one million dollars ($1,000,000) or greater, the proponent shall transmit a fee in the amount of three thousand five hundred dollars ($3,500), plus PROPOSED RULES 18:19 NORTH CAROLINA REGISTER April 1, 2004 1671 an additional fee equal to .003 of the amount of the proposed capital expenditure in excess of one million dollars ($1,000,000). The additional fee shall be rounded to the nearest whole dollar. In no case shall the total fee exceed seventeen thousand five hundred dollars ($17,500). (c) After an application is filed, the agency shall determine whether it is complete for review. An application shall not be
Object Description
Description
Title | North Carolina register |
Date | 2004-04-01 |
Description | Volume 18, Issue 19, (April 1, 2004) |
Digital Characteristics-A | 620 KB; 129 p. |
Digital Format |
application/pdf |
Pres Local File Path-M | \Preservation_content\StatePubs\pubs_borndigital\images_master\ |
Full Text | NORTH CAROLINA REGISTER Volume 18, Issue 19 Pages 1635 - 1759 April 1, 2004 This issue contains documents officially filed through March 11, 2004. Office of Administrative Hearings Rules Division 424 North Blount Street (27601) 6714 Mail Service Center Raleigh, NC 27699-6714 (919) 733-2678 FAX (919) 733-3462 Julian Mann III, Director Camille Winston, Deputy Director Molly Masich, Director of APA Services Ruby Creech, Publications Coordinator Linda Dupree, Editorial Assistant Dana Sholes, Editorial Assistant Julie Brincefield, Editorial Assistant IN THIS ISSUE I. IN ADDITION Voting Rights Letters.....................................................1635 - 1636 Tax Review Board Decisions.......................................1637 - 1662 Notice of Intent to Redevelop A Brownsfield Property – Estate of Katherine C Bell ........................1663 Notice of Intent to Redevelop A Brownsfield Property – Wede Corporation, LLC...........................1664 II. PROPOSED RULES Administration State Energy Office ...................................................1665 - 1670 Environment and Natural Resources Coastal Resources Commission...............................1673 - 1678 Water Treatment Facility Operators Certification Board ..............................................1678 - 1684 Health and Human Services Facility Services..........................................................1670 - 1673 Licensing Boards Cosmetic Art Examiners ...........................................1684 III. APPROVED RULES ...................................................1685 - 1730 Agriculture Plant Industry Board of Elections Departmental Rules Election Protests Voting Equipment Partisan Elections Filing of Notice of Candidacy for Office of Superior Court Judge Conduct of Vote Recounts by County Boards of Elections Ballot Rotation Rules for Primary Election Ballots Rules for Military & Overseas Citizens Absentee Voting Procedures Environment and Natural Resources Departmental Rules Health and Human Services Medical Assistance Insurance Consumer Services Division Justice Criminal Justice Education & Training Standards Alarm Systems Licensing Board Licensing Boards Funeral Service, Board of Locksmith Licensing Board Pharmacy, Board of Real Estate Commission Respiratory Care Board Transportation Highways Division of IV. RULES REVIEW COMMISSION..........................1731 - 1738 V. CONTESTED CASE DECISIONS Index to ALJ Decisions .....................................................1739 - 1745 Text of Selected Decisions 03 DHR 0505.................................................................1746 - 1759 For the CUMULATIVE INDEX to the NC Register go to: http://oahnt.oah.state.nc.us/register/CI.pdf North Carolina Register is published semi-monthly for $195 per year by the Office of Administrative Hearings, 424 North Blount Street, Raleigh, NC 27601. North Carolina Register (ISSN 15200604) to mail at Periodicals Rates is paid at Raleigh, NC. POSTMASTER: Send Address changes to the North Carolina Register, 6714 Mail Service Center, Raleigh, NC 27699-6714. NORTH CAROLINA ADMINISTRATIVE CODE CLASSIFICATION SYSTEM The North Carolina Administrative Code (NCAC) has four major classifications of rules. Three of these, titles, chapters, and sections are mandatory. The major classification of the NCAC is the title. Each major department in the North Carolina executive branch of government has been assigned a title number. Titles are further broken down into chapters which shall be numerical in order. Subchapters are optional classifications to be used by agencies when appropriate. NCAC TITLES TITLE 21 LICENSING BOARDS TITLE 24 INDEPENDENT AGENCIES 1 ADMINISTRATION 2 AGRICULTURE & CONSUMER SERVICES 3 AUDITOR 4 COMMERCE 5 CORRECTION 6 COUNCIL OF STATE 7 CULTURAL RESOURCES 8 ELECTIONS 9 GOVERNOR 10A HEALTH AND HUMAN SERVICES 11 INSURANCE 12 JUSTICE 13 LABOR 14A CRIME CONTROL & PUBLIC SAFETY 15A ENVIRONMENT &NATURAL RESOURCES 16 PUBLIC EDUCATION 17 REVENUE 18 SECRETARY OF STATE 19A TRANSPORTATION 20 TREASURER 21* OCCUPATIONAL LICENSING BOARDS 22 ADMINISTRATIVE PROCEDURES (REPEALED) 23 COMMUNITY COLLEGES 24* INDEPENDENT AGENCIES 25 STATE PERSONNEL 26 ADMINISTRATIVE HEARINGS 27 NC STATE BAR 28 JUVENILE JUSTICE AND DELINQUENCY PREVENTION 1 Acupuncture 2 Architecture 3 Athletic Trainer Examiners 4 Auctioneers 6 Barber Examiners 8 Certified Public Accountant Examiners 10 Chiropractic Examiners 11 Employee Assistance Professionals 12 General Contractors 14 Cosmetic Art Examiners 16 Dental Examiners 17 Dietetics/Nutrition 18 Electrical Contractors 19 Electrolysis 20 Foresters 21 Geologists 22 Hearing Aid Dealers and Fitters 25 Interpreter/Transliterator (Reserved) 26 Landscape Architects 28 Landscape Contractors 29 Locksmith Licensing 30 Massage & Bodywork Therapy 31 Marital and Family Therapy 32 Medical Examiners 33 Midwifery Joint Committee 34 Funeral Service 36 Nursing 37 Nursing Home Administrators 38 Occupational Therapists 40 Opticians 42 Optometry 44 Osteopathic Examination (Repealed) 45 Pastoral Counselors, Fee-Based Practicing 46 Pharmacy 48 Physical Therapy Examiners 50 Plumbing, Heating & Fire Sprinkler Contractors 52 Podiatry Examiners 53 Professional Counselors 54 Psychology 56 Professional Engineers & Land Surveyors 57 Real Estate Appraisal 58 Real Estate Commission 60 Refrigeration Examiners 61 Respiratory Care 62 Sanitarian Examiners 63 Social Work Certification 64 Speech & Language Pathologists & Audiologists 65 Therapeutic Recreation Certification 66 Veterinary Medical 68 Substance Abuse Professionals 69 Soil Scientists 1 Housing Finance 2 Agricultural Finance Authority 3 Safety & Health Review Board 4 Reserved 5 State Health Plan Purchasing Alliance Board Note: Title 21 contain s the chapters of the various occupational licensing boards and Title 24 contains the chapters of independent agencies. NORTH CAROLINA REGISTER Publication Schedule for January 2004 – December 2004 FILING DEADLINES NOTICE OF TEXT PERMANENT RULE TEMPORARY RULES Volume & issue number Issue date Last day for filing Earliest date for public hearing End of required comment period Deadline to submit to RRC for review at next meeting Earliest Eff. Date of Permanent Rule Delayed Eff. Date of Permanent Rule (first legislative day of the next regular session) 270th day from publication in the Register 18:13 01/02/04 12/08/03 01/17/04 03/02/04 03/22/04 05/01/04 05/10/04 09/28/04 18:14 01/15/04 12/19/03 01/30/04 03/15/04 03/22/04 05/01/04 05/10/04 10/11/04 18:15 02/02/04 01/09/04 02/17/04 04/02/04 04/20/04 06/01/04 01/26/05 10/29/04 18:16 02/16/04 01/26/04 03/02/04 04/16/04 04/20/04 06/01/04 01/26/05 11/12/04 18:17 03/01/04 02/09/04 03/16/04 04/30/04 05/20/04 07/01/04 01/26/05 11/26/04 18:18 03/15/04 02/23/04 03/30/04 05/14/04 05/20/04 07/01/04 01/26/05 12/10/04 18:19 04/01/04 03/11/04 04/16/04 06/01/04 06/21/04 08/01/04 01/26/05 12/27/04 18:20 04/15/04 03/24/04 04/30/04 06/14/04 06/21/04 08/01/04 01/26/05 01/10/05 18:21 05/03/04 04/12/04 05/18/04 07/02/04 07/20/04 09/01/04 01/26/05 01/28/05 18:22 05/17/04 04/26/04 06/01/04 07/16/04 07/20/04 09/01/04 01/26/05 02/11/05 18:23 06/01/04 05/10/04 06/16/04 08/02/04 08/20/04 10/01/04 01/26/05 02/26/05 18:24 06/15/04 05/24/04 06/30/04 08/16/04 08/20/04 10/01/04 01/26/05 03/12/05 19:01 07/01/04 06/10/04 07/16/04 08/30/04 09/20/04 11/01/04 01/26/05 03/28/05 19:02 07/15/04 06/23/04 07/30/04 09/13/04 09/20/04 11/01/04 01/26/05 04/11/05 19:03 08/02/04 07/12/04 08/17/04 10/01/04 10/20/04 12/01/04 01/26/05 04/29/05 19:04 08/16/04 07/26/04 08/31/04 10/15/04 10/20/04 12/01/04 01/26/05 05/13/05 19:05 09/01/04 08/11/04 09/16/04 11/01/04 11/22/04 01/01/05 01/26/05 05/29/05 19:06 09/15/04 08/24/04 09/30/04 11/15/04 11/22/04 01/01/05 01/26/05 06/12/05 19:07 10/01/04 09/10/24 10/16/04 11/30/04 12/20/04 02/01/05 05/00/06 06/28/05 19:08 10/15/04 09/24/04 10/30/04 12/14/04 12/20/04 02/01/05 05/00/06 07/12/05 19:09 11/01/04 10/11/04 11/16/04 12/31/04 01/20/05 03/01/05 05/00/06 07/29/05 19:10 11/15/04 10/22//04 11/30/04 01/14/05 01/20/05 03/01/05 05/00/06 08/12/05 19:11 12/01/04 11/05/04 12/16/04 01/31/05 02/21/05 04/01/05 05/00/06 08/28/05 19:12 12/15/04 11/22/04 12/30/04 02/14/05 02/21/05 04/01/05 05/00/06 09/11/05 EXPLANATION OF THE PUBLICATION SCHEDULE This Publication Schedule is prepared by the Office of Administrative Hearings as a public service and the computation of time periods are not to be deemed binding or controlling. Time is computed according to 26 NCAC 2C .0302 and the Rules of Civil Procedure, Rule 6. GENERAL The North Carolina Register shall be published twice a month and contains the following information submitted for publication by a state agency: (1) temporary rules; (2) notices of rule-making proceedings; (3) text of proposed rules; (4) text of permanent rules approved by the Rules Review Commission; (5) notices of receipt of a petition for municipal incorporation, as required by G.S. 120-165; (6) Executive Orders of the Governor; (7) final decision letters from the U.S. Attorney General concerning changes in laws affecting voting in a jurisdiction subject of Section 5 of the Voting Rights Act of 1965, as required by G.S. 120-30.9H; (8) orders of the Tax Review Board issued under G.S. 105-241.2; and (9) other information the Codifier of Rules determines to be helpful to the public. COMPUTING TIME: In computing time in the schedule, the day of publication of the North Carolina Register is not included. The last day of the period so computed is included, unless it is a Saturday, Sunday, or State holiday, in which event the period runs until the preceding day which is not a Saturday, Sunday, or State holiday. FILING DEADLINES ISSUE DATE: The Register is published on the first and fifteen of each month if the first or fifteenth of the month is not a Saturday, Sunday, or State holiday for employees mandated by the State Personnel Commission. If the first or fifteenth of any month is a Saturday, Sunday, or a holiday for State employees, the North Carolina Register issue for that day will be published on the day of that month after the first or fifteenth that is not a Saturday, Sunday, or holiday for State employees. LAST DAY FOR FILING: The last day for filing for any issue is 15 days before the issue date excluding Saturdays, Sundays, and holidays for State employees. NOTICE OF TEXT EARLIEST DATE FOR PUBLIC HEARING: The hearing date shall be at least 15 days after the date a notice of the hearing is published. END OF REQUIRED COMMENT PERIOD An agency shall accept comments on the text of a proposed rule for at least 60 days after the text is published or until the date of any public hearings held on the proposed rule, whichever is longer. DEADLINE TO SUBMIT TO THE RULES REVIEW COMMISSION: The Commission shall review a rule submitted to it on or before the twentieth of a month by the last day of the next month. FIRST LEGISLATIVE DAY OF THE NEXT REGULAR SESSION OF THE GENERAL ASSEMBLY: This date is the first legislative day of the next regular session of the General Assembly following approval of the rule by the Rules Review Commission. See G.S. 150B- 21.3, Effective date of rules. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1635 This Section contains public notices that are required to be published in the Register or have been approved by the Codifier of Rules for publication. U.S. Department of Justice Civil Rights Division JDR:TCH:VNR:jdh Voting Section – NWB. DJ 166-012-3 950 Pennsylvania Ave., NW 2003-4542 Washington, D.C. 20530 February 10, 2004 Mr. Gary O. Bartlett Executive Director State Board of Elections P.O. Box 27255 Raleigh, North Carolina 27611-7255 Dear Mr. Bartlett: This refers to revisions to the English and Spanish versions of the voter registration application/update forms for the State of North Carolina, submitted to the Attorney General pursuant to Section 5 of the Voting Rights Act, 42 U.S.C. 1973c. We received your submission on December 12, 2003; supplemental information was received on February 2, 2004. The Attorney General does not interpose any objection to the specified changes. However, we note that Section 5 expressly provides that the failure of the Attorney General to object does not bar subsequent litigation to enjoin the enforcement of the changes. See procedures for the Administration of Section 5 of the Voting Rights Act (28 C.F.R. 51.41). Sincerely, Joseph D. Rich Chief, Voting Section IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1636 U.S. Department of Justice Civil Rights Division JDR:JBG:JEM:par Voting Section – NWB. DJ 166-012-3 950 Pennsylvania Ave., NW 2003-0205 Washington, D.C. 20530 February 17, 2004 Mr. Gary O. Bartlett Executive Director State Board of Elections P.O. Box 27255 Raleigh, North Carolina 27611-7255 Dear Mr. Bartlett: This refers to the schedule for the March 23, 2004, special vacancy election for the City of Goldsboro in Wayne County, North Carolina, submitted to the Attorney General pursuant to Section 5 of the Voting Rights Act, 42 U.S.C. 1973c. We received your submission on January 21, 2004. The Attorney General does not interpose any objection to the specified changes. However, we note that Section 5 expressly provides that the failure of the Attorney General to object does not bar subsequent litigation to enjoin the enforcement of the changes. In addition, as authorized by Section 5, we reserve the right to reexamine this submission if additional information that would otherwise require an objection comes to our attention during the reminder of the sixty-day review period. See the Procedures for the Administration of Section 5 (28 C.F.R. 51.41 and 51.43). Sincerely, Joseph D. Rich Chief, Voting Section IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1637 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: The Proposed Assessment of Unauthorized ) Substance Tax dated March 13, 2002 by the ) Secretary of Revenue of North Carolina ) 1996 by the Secretary of Revenue ) ADMINISTRATIVE DECISION vs. ) Number: 415 ) Karen Leigh Lawing Bostic ) Taxpayer ) This Matter was heard before the Regular Tax Review Board (hereinafter “Board”) in the City of Raleigh, Wake County, North Carolina, on Tuesday, April 22, 2003, upon a petition filed by Karen Leigh Lawing Bostic (hereafter “Taxpayer”) for administrative review of the Final Decision of the Assistant Secretary of Revenue entered on August 29, 2002, sustaining the proposed assessment of unauthorized substance tax for the period at issue. Pursuant to N.C. Gen. Stat. § 105-113.111(a) and N.C. Gen. Stat. § 105-241.1, a Notice of Unauthorized Substance Tax Assessment was issued to the Taxpayer by Agent E. T. Brown, Enforcement Agent of the Unauthorized Substance Tax Division, assessing $8,008.00 tax, $3,203.20 penalty and $40.04 interest, for a total liability of $11,251.24. The assessment alleged that on March 8, 2002, the Taxpayer possessed 2,288 grams of marijuana without the proper tax stamps affixed to the substance. ISSUES 1. Did the Taxpayer have actual/or constructive possession of marijuana without proper tax stamps affixed? 2. Is the Taxpayer subject to the assessment of unauthorized substance excise tax? FINDINGS OF FACT After considering the petition, brief, record and matters of record, the Board makes the following finding of fact: 1. An Assessment of Unauthorized Substance Tax was made against the Taxpayer on March 13, 2002, in the sum of $8,008.00 tax, $3,203.20 penalty and $40.04 interest, for a total liability of $11,251.24, based upon the possession of 2,288 grams of marijuana. 2. The Taxpayer made a timely objection and application for hearing. 3. The Taxpayer did not submit any arguments or evidence in support of her objection to the assessment. 4. On March 8, 2002, the Taxpayer possessed 2,288 grams of marijuana. 5. No tax stamps were purchased for or affixed to the marijuana as required by law. CONCLUSIONS OF LAW The Board reviewed the following conclusions of law made by the Assistant Secretary in his decision regarding this matter: 1. An assessment of tax is presumed to be correct. 2. The burden is upon the Taxpayer who objects to an assessment to overcome that presumption. 3. The Taxpayer had constructive possession of 2,288 grams of marijuana on March 8, 2002, and was therefore a dealer as that term is defined in N.C.G.S. 105-106 (3). 4. The Taxpayer is liable for tax in the sum of $8,008.00 tax, $3,203.20 penalty and interest until date of full payment. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Board conducts a hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1638 The Board having conducted an administrative hearing in this matter, and having considered the petition, the brief, the record and the final decision, concludes that the findings of fact contained in the Assistant Secretary’s final decision are supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law are fully supported by the findings of fact; therefore the Assistant Secretary’s final decisions should be confirmed. WHEREFORE, THE TAX REVIEW BOARD ORDERS that the Assistant Secretary final decision sustaining the proposed tax assessment together with interest against the Taxpayer be and is hereby Confirmed. Made and entered into the 18th day of November 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Attorney at Law Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1639 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: The Proposed Assessment of Unauthorized ) Substance Tax date January 7, 2002 by the ) Secretary of Revenue of North Carolina ) ADMINISTRATIVE DECISION vs. ) Number: 416 ) Charles Edward Rice, II ) Taxpayer ) This Matter was heard before the Regular Tax Review Board (here inafter “Board”) in the City of Raleigh, Wake County, North Carolina, on Tuesday, April 22, 2003, upon a petition filed by Charles Edward Rice, II (hereafter “Taxpayer”) for administrative review of the Final Decision of the Assistant Secretary of Revenue entered on August 15, 2002, sustaining the proposed assessment of unauthorized substance tax for the period at issue. Pursuant to N.C. Gen. Stat. § 105-113.111(a) and N.C. Gen. Stat. § 105-241.1, a Notice of Unauthorized Substance Tax Assessment was issued to the Taxpayer on January 7, 2002 by Enforcement Agent T. L. Staley, of the Unauthorized Substance Tax Division, assessing $500.00 tax, $200.00 penalty and $1.89 interest, for a total liability of $701.89. The assessment alleged that Taxpayer possessed 9.5 grams of crack cocaine on January 7, 2002, without the proper tax stamps affixed to the substance. ISSUES 1. Did the Taxpayer have actual/or constructive possession of crack cocaine without proper tax stamps affixed? 2. Is the Taxpayer subject to the assessment of unauthorized substance excise tax? FINDINGS OF FACT After considering the petition, brief, record and matters of record, the Board makes the following finding of fact: 1. An Assessment of Unauthorized Substance Tax was made against the Taxpayer on January 7, 2002, in the sum of $500.00 tax, $200.00 penalty and $1.89 interest, for a total proposed liability of $701.89, based upon the possession of 9.5 grams of crack cocaine on December 14, 2001. 2. The Taxpayer made a timely objection and application for hearing. 3. The State Bureau of Investigation’s lab analysis reported that the evidence submitted for testing was 7.7 grams of crack cocaine. 4. The Taxpayer was in constructive possession of 7.7 grams of crack cocaine on December 14, 2001, without proper tax stamps affixed to the substance. CONCLUSIONS OF LAW The Board reviewed the following conclusions of law made by the Assistant Secretary in his decision regarding this matter: 1. An assessment of tax is presumed to be correct. 2. The burden is upon the Taxpayer who objects to an assessment to overcome that presumption. 3. The Taxpayer constructively possessed 7.7 grams of crack cocaine on December 14, 2001, and was therefore a dealer as that term is defined in N.C.G.S. 105-106. 4. The Taxpayer is liable for tax in the sum of $400.00, penalty in the sum of 160.00, and accrued interest until date of full payment. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Board conducts a hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1640 The Board having conducted an administrative hearing in this matter, and having considered the petition, the brief, the record and the final decision, concludes that the findings of fact contained in the Assistant Secretary’s final decision are supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law are fully supported by the findings of fact; therefore the Assistant Secretary’s final decisions should be confirmed. WHEREFORE, THE TAX REVIEW BOARD ORDERS that the Assistant Secretary final decision sustaining the proposed tax assessment together with interest against the Taxpayer be and is hereby Confirmed. Made and entered into the 18th day of November 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Attorney at Law Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1641 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: The proposed Assessment of Sales and ) Use Tax for the periods of June 1, 1997 ) Through March 31, 2000 by the Secretary of Revenue ) ADMINISTRATIVE DECISION vs. ) Number: 417 ) Coreslab Structure, Inc. ) Taxpayer ) This matter was heard before the Regular Tax Review Board (hereinafter “Board” in the City of Raleigh, Wake County, North Carolina on Tuesday, June 17, 2003 upon a petition filed pursuant to N.C. Gen. Stat. § 105-241.2(a)(2) by Coreslab Structure, Inc. (hereinafter “Taxpayer”) for administrative review of the adverse decision entered by the Secretary of Revenue on October 21, 2003, sustaining the Department’s denial of Taxpayer’s claim for refund of sales and use tax for the period of June 1, 1997 through March 31, 2000. STATEMENT OF CASE Pursuant to G.S. §105-241.2(a)(2), Coreslab Structure, Inc. (hereinafter “Taxpayer”) petitions the Tax Review Board (hereinafter “Board”) for administrative review of the adverse decision entered by the Secretary of Revenue on October 21, 2002 upon remand of Taxpayer’s original appeal. On March 20, 2002, the Board conducted a hearing on the petition filed for administrative review of the final decision of the Secretary of Revenue entered on August 28, 2001 sustaining the denial of refund of sales and use tax for the period of June 1, 1997 through March 31, 2000. On June 17, 2002, the Board issued Administrative Decision No. 384 and remanded this matter to the Secretary for a further proceeding. Without conducting a hearing on the above referenced remand, the Assistant Secretary issued a final decision on October 21, 2002. In that decision, the Assistant Secretary made findings that the Taxpayer’s invoices “match” the dates upon its applications for progress payments, but that the “dollar amount” for the invoices were different because the greater number of invoices. The Assistant Secretary also found that $23,926 of a possible $26,468 had been refunded to nonprofits. The Assistant Secretary also determined that any refunds allowed to the Taxpayer would be subject to income tax in the year received. Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, and other materials that the Secretary of Revenue received prior to issuing the October 21, 2002 final decision. From a review of this record, the Board finds that the Assistant Secretary issued his final decision without conducting a formal hearing on the remand of this matter. The record also reflects that the Assistant Secretary received additional documentation, which the Taxpayer did not review or respond to prior to the Assistant Secretary’s issuance of the October 21, 2002 final decision. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Tax Review Board conducts an administrative hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” In the October 21, 2002 final decision, the Assistant Secretary made findings that Taxpayer’s invoices “match” the dates upon its applications for progress payments, but that the “dollar amount” for the invoices were different because the greater number of invoices. The Assistant Secretary also found that $23,926 of a possible $26,468 had been refunded to nonprofits. The Assistant Secretary also determined that any refunds allowed the Taxpayer would be subject to income tax in the year received. The Taxpayer is a corporation that produces and erects customized concrete structural buildings and components, such as those used in buildings, stadiums, and parking garages. Taxpayer is basically a manufacturer and subcontractor and produces these items for general contractors and erects them for the general contractors. Taxpayer submits a bid to the general contractor that only lists the total contract price for the project and finished materials. The Taxpayer calculated “sales tax” on manufacturing labor and marked-up the cost of the tangible personal property used in the performance contracts. The sales tax was separately stated on the IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1642 invoices that the Taxp ayer provided to its customers. The Taxpayer submitted a refund claim in the amount of $79,100.88 for sales tax billed and collected on tangible personal property used in its performance contracts. N.C. Gen. Stat. § 105-164.11, “Excessive and erroneous collections” provides that “When the tax collected for any period is in excess of the total amount that should have been collected, the total amount collected must be paid to the Secretary. When tax is collected for any period on exempt or nontaxable sales the tax erroneously collected shall be remitted to the Secretary and no refund shall be made to the taxpayer unless the purchaser has received credit for or has been refunded the amount of tax erroneously charged. The provision shall be constructed with other provisions of this Article and given effect so as to result in the payment to the Secretary of the total amount collected as tax if it is in excess of the amount that should have been collected.” In its Petition, the Taxpayer argues that it did not collect any excise tax from the general contractors under the performance contracts. The Taxpayer contends that when it calculated the tax due, it failed to use the actual cost of the raw materials that were used to perform the contracts. Instead, the Taxpayer used a lump sum, which was equal to the actual cost of raw materials, labor, overhead and profit. Thus, the Taxpayer is requesting a refund in the amount of $79,100.88. For sales and use tax purposes, the Taxpayer is a contractor consuming tangible personal property through its execution of performance contracts. Under N.C. Gen. Stat. § 105-164.6, it is required to pay a “use” tax to the Secretary based upon the cost price of the personal property consumed in its construction projects. Even though this statute directs the Taxpayer to pay use tax, the Taxpayer collected “sales” taxes from its customers with respect to its lump sum performance contracts. From a review of the record, the Taxpayer added and collected sales tax to the invoices delivered to the customers. The Board, after reviewing this matter on Taxpayer’s petition regarding the Assistant Secretary’s October 21, 2002 final decision, remands this matter back to the Assistant Secretary and Orders that a formal hearing be conducted for the limited purpose of rendering a determination regarding the following issues: 1. If the Taxpayer issued specific invoices simultaneously with the applications for payment when it billed its customers under the performance contracts, and 2. The specific amo unt that the Secretary has already refunded to nonprofits, and the income tax consequences of the amount of refund claimed by the taxpayer for the period at issue. In remanding this matter, the Board grants the Taxpayer an opportunity to present evidence regarding the above referenced issues and allows the Taxpayer an opportunity to review and respond to the documentation that the Assistant Secretary received and considered prior to issuing the October 21, 2002 final decision. THEREFORE, it is the decis ion of the Board to Remand this matter to the Assistant Secretary for a Hearing to address the issues set forth above. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1643 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: The Refund Claims for Installment Paper ) Dealer Tax for the period beginning July 1,) 1997 through June 30, 2000 filed by ) ) CONSECO FINANCE SERVICING ) CORP. ) ADMINISTRATIVE DECISION vs. ) Number: 418 ) NORTH CAROLINA DEPARTMENT OF REVENUE ) Taxpayer ) This matter was heard before the Regular Tax Review Board (hereinafter “Board” in the City of Raleigh, Wake County, North Carolina on Tuesday, June 17, 2003 upon a petition filed pursuant to N.C. Gen. Stat. § 105-241.2(a)(2) by Conseco Finance Servicing Corporation (hereinafter “Taxpayer”) for administrative review of the adverse decision entered by the Secretary of Revenue on April 4, 2002, sustaining the auditors’ adjustment of the refund claimed on installment paper purchased from out-of-state dealers. Conseco Finance Servicing Corporation (“Taxpayer”) is engaged in the business of buying installment paper. Taxpayer is a subsidiary of Conseco Finance Corporation (“Finance”) which is in business of financing mobile homes and other tangible personal property. Taxpayer has several offices in North Carolina, including Winston-Salem, Charlotte, Raleigh and Asheville. Taxpayer filed installment paper dealer tax returns for the period beginning July 1, 1997 through June 30, 2000. Conseco (“Taxpayer”) appeals from an adverse decision of the Assistant Secretary of Revenue entered on April 4, 2002 that sustained the Department of Revenue’s partial denial of Taxpayer’s claims for refund of installment paper dealer tax. Taxpayer submitted claims for a partial refund totaling $313,425.68 for the overpayment of “Installment Paper Tax” purportedly assessed and paid pursuant to N.C. Gen. Stat. § 105-83 for the period at issue. During the course of examining Taxpayer’s claim, the auditors discovered certain errors and reduced the claim by $5,201.27. The Taxpayer does not dispute the adjustment. The auditors also discovered that the Taxpayer had under-reported its tax liability on its installment paper dealer tax returns by failing to include the face value of certain installment paper it had purchased. The refund claim was further reduced by $129,220.67. The Taxpayer timely protested this adjustment and requested a hearing that was held by the Assistant Secretary on December 4, 2001. On April 4, 2002, the Assistant Secretary issued his final decision that sustained the partial denial of the refund claim. Thereafter, the Taxpayer timely filed a petition for administrative review of the final decision with the Tax Review Board. ISSUE Is the Taxpayer required to include the face value of installment paper on property located in North Carolina and secured by a lien in this State in the calculation of the installment paper dealer tax if the property is purchased from an out-of-state retailer? EVIDENCE Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, evidence and other materials that the parties presented at the hearing before the Assistant Secretary. Based upon the Board’s review of the documentation, that evidence is incorporated by reference and is made a part of this administrative decision. FINDINGS OF FACT The Board reviewed and considered the following findings of fact entered by the Assistant Secretary in his decision regarding this matter: 1. Taxpayer (f/k/a Green Tree Financial Servicing Corporation) is a Delaware corporation engaged in the business of financing and leasing various types of tangible personal property, and purchasing installment paper. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1644 2. Taxpayer is a subsidiary of Conseco Finance Corporation (“Conseco”), which is in the business of financing mobile homes and other tangible personal property. 3. Taxpayer has several offices in North Carolina, including Winston-Salem, Charlotte, Raleigh, and Asheville. 4. The Department conducted an audit at the corporate headquarters of Conseco in St. Paul, Minnesota. 5. During the audit, the Taxpayer provided copies of its Installment Paper Dealer Tax returns for the quarters ending September 1997 through 2000 along with the details for the tax returns including: listing region, territory, account number, state code, date of transaction, loan type, proceeds, and total amount financed. 6. Taxpayer also submitted two claims for partial refund of taxe s paid during the period beginning July 1, 1997 through September 30, 1997 and the period beginning October 1, 1997 through June 30, 2000 in the amount of $21,367.60 and $292,058.08, respectively, pursuant to N.C. Gen. Stat. § 105-266.1. 7. Taxpayer claimed there were three categories of overpayment and provided the auditor with three separate schedules (A, B, and C) for each category, described as follows: Schedule A lists payments of tax on contracts in which the buyer resided outside of North Carolina (property must be located in this State to be subject to the Installment Paper Dealer tax on the contract for the property); Schedule B lists payments of tax on contracts with no dealer involvement (refinancing of existing contracts, where no third party from whom contract is purchased exists); and Schedule C lists payments of tax on the finance charges on the installment contract (finance charges are not part of the face value or amount financed, upon which tax is due.) 8. The auditors requested a sample of contracts to confirm which type of overpayment was represented and examined the original installment paper tax returns to verify that the value of the installment paper had actually been included in those returns. 9. The auditors also examined motor vehicle titles registered with the North Carolina Division of Motor Vehicles (DMV). These motor vehicle titles showed the existence of a lien on the tangible personal property, and their title numbers were used to obtain names and dates of liens in order to request additional contracts to examine. 10. During the examination, the auditors determined that some of the installment paper in Taxpayer’s Schedule A had been included in that refund category in error, since examination of the relevant documents showed that the purchaser had a North Carolina address. 11. An additional sample of that type of contract was requested and examined, and an error rate was determined on the basis of the errors found in the sample. The rate was applied to that refund category and the refund was reduced by $5,201.37. 12. The auditors also discovered a number of liens associated with installments paper, which had not been reported on any of the Taxpayer’s installment paper tax returns. The installment paper in this group involved property purchased by North Carolina residents from out-of-state dealers. 13. The auditors concluded that the unreported installment paper should have been included in Taxpayer’s return since the property upon which the lien is taken was located in this State. 14. The auditors then further reduced the refund by $129,220.67, the amount of the computed tax on the improperly excluded contracts. 15. In the final audit report dated August 14, 2001, the claim for refund was partially denied in the total amount of $134,422.04. 16. The Taxpayer accepted the $5,201.37 adjustment, but timely protested the adjustment of $129,220.67 in its letter dated September 12, 2001. CONCLUSIONS OF LAW The Board reviewed and considered the following conclusions of law made by the Assistant Secretary in his decision regarding this matter: 1. N.C. Gen. Stat. § 105-83 states: “Every person engaged in the business of dealing in, buying, or discounting installment paper, notes, bonds, contracts, or evidences of debt for which, at the time of or in connection with the execution of the instruments, a lien is reserved or taken upon personal property located in this State to secure the payment of the obligations, shall submit to the Secretary…a full, accurate, and complete statement, verified by the officer, agent, or person making the statement, of the total face value of the obligations dealt in, bought, or discounted within the preceding three calendar months and, at the same time, shall pay a tax of two hundred seventy-seven thousandths of one percent (.277%) of the face value of these obligations.” 2. Pursuant to N.C. Gen. Stat. § 105-33(a), taxes imposed under Article 2 are imposed for the privilege of carrying on the business, exercising the privilege, or doing the act named. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1645 3. The installment paper dealer tax levied under N.C. Gen. Stat. § 105-83 is a privilege tax imposed upon persons engaged in the business of dealing in, buying or discounting installment paper for the privilege of engaging in such business. 4. The business of “dealing in, buying, or discounting installment paper” neither begins nor ends with Taxpayer’s formal acceptance of the installment paper. Instead, it encompasses the entire range of conduct in furtherance of Taxpayer’s financing business. 5. The installment paper dealer tax is not a transactional tax. 6. Neither the underlying consumer purchase or the purchase of installment paper is the incidence of the tax. 7. The imposition of the privilege tax must be upheld if activity incident to and in furtherance of the business is conducted within the State notwithstanding that documents necessary to the business are executed, accepted, or transferred elsewhere. 8. N.C. Gen. Stat. § 105-83 does not require that the property securing the obligation be purchased in North Carolina. 9. Taxpayer is engaged in the business of dealing in, buying, or discounting installment paper in North Carolina. 10. At the time of or in connection with the execution of all of the instruments included in the calculation of the tax, a lien was reserved or taken upon personal property located in this State to secure the payment of the obligations. 11. Taxpayer is subject to the installment paper dealer tax under N.C. Gen. Stat. § 105-83. 12. Taxpayer is required to include the total face value of all obligations bought which are secured by property located in this State in the calculation of the installment paper dealer tax. 13. A finding that Taxpayer is entitled to a refund of taxes paid on installment paper purchased from out-of-state dealers because the tax violates the Commerce Clause requires a ruling or declaration by the Secretary that N. C. Gen. Stat. § 105-83 operates in an unconstitutional manner as to the Taxpayer. 14. The Secretary has no authority under N.C. Gen. Stat. § 105-266.1 to order the refund of an invalid or illegal tax, since questions of constitutionality are for the courts. 15. N.C. Gen. Stat. § 105-266.1 does not provide an exception to the general rule that voluntary payments of unconstitutional tax are not refundable. 16. The only remedy for challenging a tax provision as being unlawful or invalid as opposed to being excessive or incorrect is found in N.C. Gen. Stat. § 105-267. 17. Taxpayer has the burden of establishing that its claim for refund under N.C. Gen. Stat. § 105-266.1 results from paying an incorrect or excessive tax computed in accordance with the applicable statutory provisions. 18. Taxpayer has not established that the auditors’ $129,220.67 reduction of the refund claim was incorrect. 19. The auditors properly adjusted the refund claim to include installment paper purchased from out-of-state dealers secured by property located in North Carolina. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105-241.2(b2). After the Tax Review Board conducts an administrative hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” This case involves the question of whether the face value of installment paper on property located in North Carolina and secured by a lien in this State is includible in the calculation of the installment paper dealer tax imposed under N.C. Gen. Stat. § 105- 83 if the property is purchased from an out-of-state retailer. Taxpayer is in the business of financing and leasing various types of tangible personal property, and purchasing installment paper. Taxpayer has several offices in North Carolina, including Winston Salem, Charlotte, Raleigh, and Asheville. The Taxpayer contends that the installment paper purchased from mobile home retailers located outside of North Carolina is beyond the reach of the statute notwithstanding that the property securing the obligation is located in the state. The Taxpayer also contends that, concerning the sales of installment paper at issue, it conducted no activity in North Carolina, which is “incident to the buying and selling of such installment payer.” The Taxpayer argues that the incidence of the tax is the assignment of the installment paper, which it contends occurred outside of North Carolina. Thus, the Taxpayer argues that the face value of the installment paper that was assigned to it outside the state should be excluded from the calculation of the tax imposed by N.C. Gen. Stat. § 105-83. The Department of Revenue, through counsel, argues that the Assistant Secretary properly found that, as an installment paper dealer engaged in business in this state, the Taxpayer was required to include the face value of all installment obligations it bought which were secured by property located in North Carolina in the calculation of the tax imposed by N.C. Gen. Stat. § 105-83. In support of this argument, the Department of Revenue notes that the Court of Appeals has rejected the very same argument raised by the Taxpayer in its Petition in Chrysler Financial Company v. Offerman, 138 N.C. App. 268, 531 S.E.2d 223, rev. denied, 352 N.C. 588, 544 S.E.2d 777 (2000). In that case, the Court recognized that where the assignment of the installment paper occurs is not determinative; and that the activity triggering the tax is not limited to the actual transfer of the paper. The “tax is to be assessed for engaging in the business of dealing in installment paper in North Carolina.” Id., 138 N.C. App. at 273, 531 S.E.2d at 226. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1646 It is the function of this Board, upon administrative review, to review the record and determine whether the final decision is proper based upon the evidence presented at the hearing before the Assistant Secretary. Thus, the Board having conducted an administrative hearing in this matter, and having considered the petition, the briefs, the whole record and the Assistant Secretary’s final decision, concludes that the findings of fact made by the Assistant Secretary were supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law were fully supported by the findings of fact; therefore the decision of the Assistant Secretary should be confirmed. WHEREFORE, THE BOARD ORDERS that the Assistant Secretary’s final decision be confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1647 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: The Proposed Assessment of Withholding ) Tax, Penalty and Interest for the Quarters ) Ending December 31, 1999, March 31, and ) June 30, 2001 by the Secretary of Revenue ) ADMINISTRATIVE DECISION vs. ) Number: 419 ) DeHaven's Transfer & Storage of Raleigh ) Taxpayer ) This matter was heard before the Regular Tax Review Board (hereinafter “Board” in the City of Raleigh, Wake County, North Carolina on Tuesday, June 13, 2003 upon a petition filed pursuant to N.C. Gen. Stat. § 105-241.2(a)(2) by DeHaven’s Transfer & Storage of Raleigh (hereinafter “Taxpayer”) for administrative review of the adverse decision entered by the Secretary of Revenue on April 11, 2002, (Docket Number 2001-611) sustaining the proposed assessment of withholding tax, penalty and interest for the quarters ending December 31, 1999, March 31, 2001 and June 30, 2001 in the total amount of $36,415.18. During calendar year 1999, Taxpayer paid North Carolina income tax withheld of $460.30. On February 29, 2000, the Taxpayer filed its annual withholding reconciliation for 1999 reflecting total North Carolina income tax withheld of $23,609.46. A Notice of Tax Assessment for the underpayment of tax withheld of $23,149.16 ($23,609.46-$460.30) plus accrued interest was mailed to the Taxpayer on June 27, 2001. Because the Taxpayer did not pay the proposed assessment and did not request a hearing within 30 days, the late payment penalty of ten percent of the tax was assessed under N.C. Gen. Stat. § 105-236(4). Taxpayer also filed income tax withholding returns for the quarters ended March 31, and June 30, 2001, reflecting income tax withheld of $4,348.01 and $5,348.48 respectively, but did not include payment with the returns. On August 1, 2001, Taxpayer made a payment of $4,348.01 for the taxes withheld for the quarter ended March 31, 2001. Thereafter the Department issued Notices of Withholding-Immediate Jeopardy Tax Assessment for the periods at issue. Taxpayer objected to the proposed assessment and timely requested a hearing before the Secretary of Revenue. The Taxpayer also objected to the reasonableness of the jeopardy assessment and requested the Secretary to review that matter pursuant to N.C. Gen. Stat. § 105-241.1(g). Upon review, the Secretary ruled that the jeopardy assessments were reasonable and proper and issued the final assessment on October 18, 2001. On April 11, 2002, the Assistant Secretary issued the final decision sustaining the proposed assessment against the Taxpayer. Thereafter, the Taxpayer filed a petition for administrative review of the April 11, 2002 final decision with the Board. ISSUE Are the withholding tax assessments proposed against the Taxpayer lawful and proper? EVIDENCE Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, and evidence that the parties presented at the hearing before the Assistant Secretary. The Board, after reviewing these documents, incorporates the documents by reference in this decision. FINDINGS OF FACT The Board reviewed and considered the findings of fact entered by the Assistant Secretary in his decision regarding this matter and upon review; the Board incorporates the findings of fact by reference in this decision. CONCLUSIONS OF LAW The Board reviewed and considered the conclusions of law made by the Assistant Secretary in his decision regarding this matter and upon review; the Board incorporates the conclusions of law by reference in this decision. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Tax Review Board conducts an administrative hearing, this statute provides in pertinent part: IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1648 (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” Pursuant to N.C. Gen. Stat. § 105-241.1(a), a proposed tax assessment is presumed to be correct and the burden is on the Taxpayer to rebut that presumption. In order to rebut the presumption, the Taxpayer must offer evidence to show that the assessment is not proper. N.C. Gen. Stat. § 105-236(4) provides that the Secretary may assess a ten percent penalty for the failure to pay tax when due, provided there is no intent to evade the tax. The penalty does not apply in connection with an amended return if the tax is paid when the return is filed, or if a tax due but not shown on a return, is paid within 30 days after the proposed notice of assessment. N.C. Gen. Stat. § 105-237 states that the Secretary may reduce or waive penalties but does not mandate reduction or waiver of penalties under any circumstances. In the Petition, the Taxpayer argues that since reasonable cause for late payment is present, the Taxpayer should be excused from the late payment penalty assessed. The Taxpayer also argues that there were no grounds for issuance of a jeopardy assessment in this case and that since the Assistant Secretary found that the late payment penalties on the jeopardy assessment of tax were improperly assessed, the entire jeopardy assessment should be found incorrect. The record shows that the Taxpayer withheld certain amounts of income tax and failed to remit payment of the tax to the Department of Revenue. The record also shows that the Taxpayer has not presented any substantial basis for its objection to the proposed assessment. Thus, the Taxpayer failed to provide evidence to show that the assessment, including the late payment penalty, was not properly assessed in this matter. The Board will not address Taxpayer’s jeopardy assessment argument because it does not have jurisdiction over that issue. Thus, the Board having conducted an administrative hearing in this matter, and having considered the petition, the briefs, the documents of record and the Assistant Secretary’s final decision, concludes that the findings of fact made by the Assistant Secretary were supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law were fully supported by the findings of fact; therefore the decision of the Assistant Secretary should be confirmed. WHEREFORE, THE BOARD ORDERS that the Assistant Secretary’s final decision be confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1649 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: ) The Proposed Assessment of Individual ) Income Tax and Interest for the 2000 tax ) year by the Secretary of Revenue ) ) ADMINISTRATIVE DECISION vs. ) Number: 420 ) David A. McGowan, ) Taxpayer ) This matter was heard before the Regular Tax Review Board (hereinafter “Board” in the City of Raleigh, Wake County, North Carolina on Tuesday, June 17, 2003 upon a petition filed pursuant to N.C. Gen. Stat. § 105-241.2(a)(2) by David A. McGowan (hereinafter “Taxpayer”) for administrative review of the adverse decision entered by the Assistant Secretary of Revenue on November 25, 2002, sustaining the proposed assessment of individual income tax and interest in the total amount of $1,249.83 for the period at issue. Taxpayer was employed by Procter & Gamble Paper Products Company, (hereinafter “Procter”) at its plant located in Greenville, NC. Procter sold the plant to Paper-Pak Products, Inc. (hereinafter “Buyer”). Some employees were not retained by Buyer and were paid severance wages. Others employees, including the Taxpayer, were retained by the Buyer and signed an “Incentive to Stay Agreement and Release.” Under this contract, an employee was paid one-half of an incentive stay allowance as soon as practical after the employee signed the agreement and the remaining one-half was paid as soon as practical after the employee’s last day of employment, provided the employee’s employment had started with the Buyer. Effective January 1, 2000, the Taxpayer was employed by the Buyer at the Greenville plant. Taxpayer’s returns show that he received the first payment of $16,184 from the Employer in tax year 1999 and the second payment of $15,996 in tax year 2000. Taxpayer had claimed a deduction for severance wages of these amounts on his 1999 and 2000 tax returns. Upon examination of the Taxpayer’s 2000 individual income tax return, the Department of Revenue adjusted Taxp ayer’s tax return to disallow the deduction that he claimed for severance wages. On April 12, 2002, a Notice of Individual Income Tax Assessment was mailed to the Taxpayer. Taxpayer objected to the proposed assessment and timely requested a hearing before the Secretary of Revenue. On October 16, 2002, Eugene J. Cella, Assistant Secretary, conducted a hearing upon Taxpayer’s timely application and objection to the proposed assessment. On November 25, 2002, Assistant Secretary issued a final decision sustaining the proposed assessment against the Taxpayer. Thereafter, the Taxpayer timely filed a petition for administrative review of the final decision with the Board. ISSUES 1. Is the Taxpayer entitled to the deduction for severance wages for tax year 2000? 2. Is the individual income tax assessment proposed against the Taxpayer for taxable year 2000 lawful and proper? EVIDENCE Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, evidence and other materials that the parties presented at the hearing before the Assistant Secretary. The Board, after reviewing these documents, incorporates the documents by reference in this decision. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Tax Review Board conducts an administrative hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1650 Assessments of tax are presumed to be correct and the taxpayer has the burden to show that the assessment is not proper. It is the function of this Board, upon administrative review, to review the record and determine whether the final decision is proper based upon the evidence presented at the hearing before the Assistant Secretary. Pursuant to N.C. Gen. Stat. § 105-241.1(a), a proposed tax assessment is presumed to be correct and the burden is on the Taxpayer to rebut that presumption. In order to rebut the presumption, the Taxpayer must offer evidence to show that the assessment is not proper. N.C. Gen. Stat. § 105-134.6(b)(11) provides that “severance wages received by a taxpayer from an employer as the result of the taxpayer’s permanent, involuntary termination from employment through no fault of the employee” shall be deducted from taxable income in order to determine North Carolina taxable income. The Taxpayer contends that all of the money received from Procter & Gamble was severance wages, regardless of how it was referenced in the agreement between Procter & Gamble and the Taxpayer, and is therefore deductible from federal adjusted gross income under the provisions of N.C. Gen. Stat. § 105-134.6(b)(11). The Department of Revenue allowed the first payment received by the Taxpayer in tax year 1999 as a severance wage deduction because that payment was contingent upon Taxpayer ceasing employment with Procter & Gamble. The Department of Revenue disallowed the second payment because it was due, pursuant to the agreement, only if the Taxpayer started work with the new employer. In disallowing the second payment, the Department of Review noted that the second payment was characterized as “incentive to stay” allowance, not as a “severance allowance” in the agreement between the Taxpayer and Procter & Gamble. Upon review of the record, the Board concludes that the Taxpayer failed to furnish evidence to show that the assessment is not proper. Thus, the Board having conducted an administrative hearing in this matter, and having considered the petition, the documents of record and the Assistant Secretary’s final decision, concludes that the findings of fact made by the Assistant Secretary were supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law were fully supported by the findings of fact; therefore the decision of the Assistant Secretary should be confirmed. WHEREFORE, THE BOARD ORDERS that the Assistant Secretary’s final decision be confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1651 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: ) The Proposed Assessment of Unauthorized ) Substance Tax date d February 8, 2002 ) By the Secretary of Revenue ) ADMINISTRATIVE DECISION vs. ) Number: 421 ) Juan Carlos Ramirez Sales ) Taxpayer ) This matter was heard before the Regular Tax Review Board (hereinafter “Board” in the City of Raleigh, Wake County, North Carolina on Tuesday, June 17, 2003 upon a petition filed pursuant to N.C. Gen. Stat. § 105-241.2(a)(2) by Juan Carlos Ramirez Sales (hereinafter “Taxpayer”) for administrative review of the adverse decision entered by the Secretary of Revenue on December 20, 2002, that reduced the proposed assessment of unauthorized substance tax imposed against the Taxpayer for the period at issue. Pursuant to G.S. § 105-113.111(a) and G.S. § 105-241.1, a Notice of Unauthorized Substance Tax Assessment was issued to the Taxpayer by Enforcement Agent Brian Zieverink of the Unauthorized Substance Tax Division, assessing $1,650.00 tax, $660.00 penalty and $6.33 interest, for a total liability of $2,316.33. The assessment alleged that on June 7, 2002, the Taxpayer had unauthorized possession of 33 grams of cocaine without the proper tax stamps affixed to the substance. The Taxpayer protested the assessment and requested a hearing before the Secretary of Revenue. On September 18, 2002, Eugene J. Cella, Assistant Secretary conducted a hearing upon Taxpayer’s timely application and objection to the proposed assessment. The Assistant Secretary issued a final decision reducing the proposed assessment against the Taxpayer to $1,500.00 plus penalty and interest for unauthorized possession of 30 grams of cocaine. Thereafter, the Taxpayer timely filed a petition for administrative review of the final decision with the Board. ISSUES 1. Did the Taxpayer have actual and/or constructive possession of cocaine without the proper tax stamps affixed? 2. Is the Taxpayer subject to the assessment of unauthorized substance excise tax? EVIDENCE Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, evidence and other materials that the parties presented at the hearing before the Assistant Secretary. Based upon the Board’s review of the documentation, that evidence is incorporated by reference and is made a part of this administrative decision. FINDINGS OF FACT The Board reviewed and considered the following findings of fact entered by the Assistant Secretary in his decision regarding this matter: 1. Assessment of Unauthorized Substance Tax was made against the Taxpayer on June 12, 2002, in the sum of $1,650.00 tax, $660.00 penalty and $6.33 interest, for a total proposed liability of $2,316.33, based upon possession of 33 grams of cocaine on June 7, 2002. 2. The Taxpayer made timely objection and application for a hearing. 3. The Taxpayer was present at the apartment when Suspect #1 came to the apartment with the cocaine. The Taxpayer said Suspect #1 had purchased jewelry, but no jewelry was found on Suspect #1 upon his apprehension. 4. After the call from Suspect #1 to the Taxpayer’s apartment, while Suspect #1 was being chased by the police, the Taxpayer and all the occupants of his apartment were seen leaving the apartment in haste. 5. The crime lab determined the substance at issue was cocaine weighing 30 grams. 6. The Taxpayer had actual and/or constructive possession of 30 grams of cocaine on June 7, 2002, without proper tax stamps affixed to the substance. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1652 CONCLUSIONS OF LAW 1. An assessment of tax is presumed to be correct. 2. The burden is upon the Taxpayer who objects to an assessment to overcome that presumption, and that burden was not met. 3. The Taxpayer had actual and/or constructive possession of 30 grams of cocaine on June 7, 2002, and was therefore a dealer as that term is defined in G.S. 105-113.106. 4. The Taxpayer is liable for tax in the sum of $1,500.00, penalty in the sum of $600.00, and accrued interest until date of full payment. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Tax Review Board conducts an administrative hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” Assessments of tax are presumed to be correct and the taxpayer has the burden to show that the assessment is not proper. It is the function of this Board, upon administrative review, to review the record and determine whether the final decision is proper based upon the evidence presented at the hearing before the Assistant Secretary. Pursuant to N.C. Gen. Stat. § 105-241.1(a), a proposed tax assessment is presumed to be correct and the burden is on the Taxpayer to rebut that presumption. In order to rebut the presumption, the Taxpayer must offer evidence to show that the assessment is not proper. The Board having conducted an administrative hearing in this matter, and having considered the petition, the briefs, the whole record and the Assistant Secretary’s final decision, concludes that the findings of fact made by the Assistant Secretary were supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law were fully supported by the findings of fact; therefore the decision of the Assistant Secretary should be confirmed. WHEREFORE, THE BOARD ORDERS that the Assistant Secretary’s final decision be confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1653 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: ) The Proposed Assessment of Unauthorized ) Substance Tax dated August 9, 2002 by ) the Secretary of Revenue of North Carolina ) 1996 by the Secretary of Revenue ) ADMINISTRATIVE DECISION vs. ) Number: 422 ) Delcina McMillion ) Taxpayer ) This Matter was heard before the Regular Tax Review Board (hereinafter “Board”) in the City of Raleigh, Wake County, North Carolina, on Tuesday, June 17, 2003, upon a petition filed by Delcina McMillion (hereafter “Taxpayer”) for administrative review of the Final Decision of the Assistant Secretary of Revenue entered on November 27, 2002, sustaining the proposed assessment of unauthorized substance tax for the period at issue. Pursuant to N.C. Gen. Stat. § 105-113.111(a) and N.C. Gen. Stat. § 105-241.1, a Notice of Unauthorized Substance Tax Assessment was issued to the Taxpayer on August 9, 2002 by Enforcement Agent Dennis O’ Dell of the Unauthorized Substance Tax Division, assessing $500.00 tax, $200.00 penalty and $4.50 interest, for a total liability of $704.50. The assessment alleged that on June 16, 2002, the Taxpayer was in unauthorized possession 9.27 grams of cocaine without the proper tax stamps affixed to the substance. ISSUES 1. Did the Taxpayer have actual/or constructive possession of cocaine without proper tax stamps affixed? 2. Is the Taxpayer subject to the assessment of unauthorized substance excise tax? FINDINGS OF FACT The Board reviewed and considered the following findings of fact entered by the Assistant Secretary in his decision regarding this matter: 1. An Assessment of Unauthorized Substance Tax was made against the Taxpayer on August 9, 2002, in the sum of $500.00 tax, $200.00 penalty and $4.50 interest, for a total proposed liability of $704.50, based upon the possession of 9.7 grams of cocaine. 2. The Taxpayer made a timely objection and application for hearing. 3. Neither the Taxpayer nor anyone representing the Taxpayer appeared at the hearing to offer arguments or evidence in support of the obligation to the assessment. 4. The weight of the cocaine at issue is 7.7 grams. 5. On June 16, 2002, the Taxpayer possessed 7.77 grams of cocaine. 6. No tax stamps were purchased for or affixed to the cocaine as required by law. CONCLUSIONS OF LAW The Board reviewed the following conclusions of law made by the Assistant Secretary in his decision regarding this matter: 1. An assessment of tax is presumed to be correct. 2. The burden is upon the Taxpayer who objects to an assessment to overcome that presumption, and that burden was not met. 3. The Taxpayer constructively possessed 7.7 grams of cocaine on June 16, 2002, and was therefore a dealer as that term is defined in N.C. Gen. Stat. § 105-106(3). 4. The Taxpayer is liable for tax in the sum of $400.00, penalty in the sum of 160.00, and accrued interest until date of full payment. DECISION IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1654 The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Board conducts a hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” The Board having conducted an administrative hearing in this matter, and having considered the petition, the brief, the record and the final decis ion, concludes that the findings of fact contained in the Assistant Secretary’s final decision are supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law are fully supported by the findings of fact; therefore the Assistant Secretary’s final decisions should be confirmed. WHEREFORE, THE TAX REVIEW BOARD ORDERS that the Assistant Secretary’s final decision be and is hereby confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1655 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: ) The Proposed Assessment of Unauthorized ) Substance Tax dated March 7, 2002 by the ) Secretary of Re venue of North Carolina ) ADMINISTRATIVE DECISION vs. ) Number: 423 ) Kip Aaron Bartlett and Laura M. Bartlett ) Taxpayer ) This matter was heard before the Regular Tax Review Board (hereinafter “Board” in the City of Raleigh, Wake County, North Carolina on Tuesday, June 17, 2003 upon a petition filed pursuant to N.C. Gen. Stat. § 105-241.2(a)(2) by Kip Aaron Bartlett and Laura M. Bartlett (hereinafter “Taxpayers”) for administrative review of the adverse decision entered by the Secretary of Revenue on November 27, 2002, sustaining the proposed assessment of unauthorized substance tax in the total amount of $24,717.00, plus penalty and interest for the period at issue. Pursuant to N.C. Gen. Stat. § 105-113.111(a) and N.C. Gen. Stat. § 105-241.1, a Notice of Unauthorized Substance Tax Assessment was issued to the Taxpayers by Enforcement Agent Tim Townsend, of the Unauthorized Substance Tax Division, assessing $24,717.00 tax, $9,886.80 penalty and $123.59, interest, for a total liability of $34,727.39. The assessment alleged that on March 4, 2002, the Taxpayers had actual and/or constructive possession of 7,062 grams of marijuana that did not have the proper stamps affixed thereto. This assessment was an amendment to a prior assessment that was issued on March 5, 2002, which reflected the weight of marijuana to be 8,896 grams. The Taxpayers objected to the assessment and requested a hearing before the Secretary of Revenue. After conducting a hearing, the Assistant Secretary issued his final decis ions affirming the proposed assessment against the Taxpayers on November 27, 2002. Thereafter, the Taxpayers timely filed a petition for administrative review of the final decisions with the Board. ISSUES 1. Did the Taxpayers have actual and/or constructive possession of marijuana without proper tax stamps affixed? 2. Are the Taxpayers subject to the assessment of unauthorized substance excise tax? EVIDENCE Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, evidence and other materials that the parties presented at the hearing before the Assistant Secretary. The evidence is listed as follows: 1. US-1 Form BD-10, “Notice of Unauthorized Substance Tax Assessment,” dated March 7, 2002. 2. US-2 Letter from the Taxpayers’ attorney, dated March 13, 2002, requesting a hearing. 3. US-3 Letter to the Taxpayers’ attorney, dated March 26, 2002, requesting a hearing. 4. US-4 Form BD-4, “Report of Arrest and/or Seizure Involving Nontaxpaid (Unstamped) Controlled Substances,” naming the Taxpayer as the possessor of the controlled substance. 5. US-5 Case report by the New Hanover County Sheriff’s Office and a statement by Enforcement Agent Tim Townsend of the Unauthorized Substances Tax Division. 6. US-6 Memorandum from E. Norris Tolson, Secretary of Revenue, dated May 16, 2002, delegating to Eugene J. Cella, Assistant Secretary of Administrative Hearings, the authority to hold any hearing required or allowed under Chapter 105 of the North Carolina General Statutes. FINDINGS OF FACT The Board reviewed and considered the following findings of fact entered by the Assistant Secretary in his decisions regarding these matters: 1. Assessment of Unauthorized Substance Tax was made against the Taxpayers on March 7, 2002, in the sum of $24,717.00 tax, $9,886.80 penalty and $123.59 interest, for a total proposed liability of $34,727.39, based on possession of 7,062 grams of marijuana. 2. The Taxpayers made timely objection and application for a hearing. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1656 3. The correct method of determining the weight of growing marijuana plants is to cut off the root ball and weigh the rest of the plant. The stems and stalks of intact, growing marijuana plants clearly are not “separated from and …not mixed with any other parts of the … plant” in such a way that would confer on those stems and stalks the tax rate of $.40 per gram authorized in N.C. Gen. Stat. § 105-113.107(a)(1). 4. The unauthorized substance tax is imposed on the quantity of controlled substance possessed by a dealer. The marijuana at issue was weighed the day after its seizure on calibrated scales at a company that manufactures calibrated scales. The weight determined on these scales was 7,062 grams. The SBI lab weighed the marijuana 65 days after it was seized and concluded it weighed 1,905 grams. Clearly the 79 growing marijuana plants dried out during the 65-day period before the SBI weighed the plants. Therefore, the best information available indicates the quantity of marijuana possessed by the Taxpayer was 7,062 grams. 5. The Taxpayers’ briefs contained a critical misstatement of law on Page 5. The brief states that G.S. 105-241.2- 1(g)(sic) requires that within five working days after a jeopardy assessment is made under Article 2D the Secretary must provide the Taxpayer with a written statement of the information upon which the Secretary relied in making the assessment. On the contrary, N.C. Gen. Stat. § 105-241.1(g) specifically excludes Article 2D assessments from the “written statement” provision. 6. Although exempt from the aforementioned “written statement” requirement, the taxpayer was issued such a document. Form BD-4, “Report of Arrest and/or Seizure Involving Nontaxpaid (Unstamped) Controlled Substances,�� serve as the “written statement” for the assessment proposed against Mr. Bartlett. A copy of Form BD- 4 was provided to the Taxpayer with his notice of assessment and a letter that accompanied the notice advised the Taxpayer that Form BD-4 constituted the written statement. 7. The Taxpayers’ briefs further allege that the Taxpayers were not notified that the assessment was a jeopardy assessment. On the contrary, the notice of assessment, Form BD-10, expressly states the following: “In the event you fail to respond immediately to this proposed assessment by remitting the full amount shown due or by posting a bond, collection may proceed pursuant to G.S. 105-241.1(g) or G.S. § 105-242 without regard to whether you have requested a hearing.” 8. On March 4, 2002, the Taxpayers had actual and/or constructive possession of 7,062 grams of marijuana. 9. No tax stamps were purchased for or affixed to the marijuana as required by law. CONCLUSIONS OF LAW The Board reviewed and considered the conclusions of law entered by the Assistant Secretary in his decisions regarding these matters: 1. An assessment of tax is presumed to be correct. 2. The burden is upon the Taxpayers who object to an assessment to overcome that presumption, and that burden was not met. 3. An Administrative Tax Hearing lacks the statutory authority to rule on alleged constitutional violations. 4. Per N.C. Gen. Stat. § 105-241.1(a), the Secretary must base a proposed assessment on the best information available. While one can argue that the SBI lab’s scales are more accurate than the calibrated scales upon which the marijuana was first weighed, the possible difference in accuracy is offset by the fact that the two scales essentially did not weigh the same substance. The calibrated scales weighed marijuana plants that had been harvested the previous day. The SBI scales weighed dried vegetable matter that two months earlier had been freshly harvested marijuana plants. The best information regarding the weight of the marijuana possessed by the Taxpayers is clearly the 7,062 grams determined by the calibrated scales on March 5, 2002. 5. The Taxpayers received all notices required by statute as well as a “written statement of information” that was not required by statute. 6. The Taxpayers had actual and/or constructive possession of 7,062 grams of marijuana on March 5, 2002, and were therefore dealers as that term is defined in N.C. Gen. Stat. § 105-113.106(3). 7. The Taxpayers are liable for $24,717.00 tax, $9,886.80 penalty and interest until date of full payment. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Ge n. Stat. § 105- 241.2(b2). After the Tax Review Board conducts an administrative hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” It is the function of this Board, upon administrative review, to review the record and determine whether the final decision is proper based upon the evidence presented at the hearing before the Assistant Secretary. Pursuant to N.C. Gen. Stat. § 105-241.1(a), a IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1657 proposed tax assessment is presumed to be correct and the burden is on the Taxpayer to rebut that presumption. In order to rebut the presumption, the Taxpayer must offer evidence to show that the assessment is not proper. Thus, the Board having conducted an administrative hearing in this matter, and having considered the petition, the briefs, the whole record and the Assistant Secretary’s final decisions, concluded that the findings of fact made by the Assistant Secretary were supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law were fully supported by the findings of fact; therefore the decisions of the Assistant Secretary should be confirmed. WHEREFORE, THE BOARD ORDERS that the Assistant Secretary’s final decisions be confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1658 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: ) The Proposed Assessment of Unauthorized ) Substance Tax dated February 8, 2002 by ) the Secretary of Revenue of North Carolina ) ADMINISTRATIVE DECISION vs. ) Number: 424 ) Lillian Rena Fishback ) Taxpayer ) This Matter was heard before the Regular Tax Review Board (hereinafter “Board”) in the City of Raleigh, Wake County, North Carolina, on Friday September 26, 2003, upon a petition filed by Lillian Rena Fishback (hereafter “Taxpayer”) for administrative review of the Final Decision of the Assistant Secretary of Revenue entered on February 28, 2003, sustaining the proposed assessment of unauthorized substance tax for the period at issue. Pursuant to N.C. Gen. Stat. § 105-113.111(a) and N.C. Gen. Stat. § 105-241.1, a Notice of Unauthorized Substance Tax Assessment was issued to the Taxpayer on February 8, 2002 by Enforcement Agent Buddy Mozingo of the Unauthorized Substance Tax Division, assessing $60,368.00 tax, $24,147.20 penalty and $301.48 interest, for a total liability of $84,817.04. The assessment alleged that on February 8, 2002, the Taxpayer was in unauthorized possession of 17,248 grams of marijuana without the proper tax stamps affixed to the substance. EVIDENCE Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, evidence and other materials that the parties presented at the hearing before the Assistant Secretary. Based upon the Board’s review of the documentation, the evidence presented is incorporated by reference and is made a part of this decision. ISSUES 1. Did the Taxpayer have actual/or constructive possession of cocaine without proper tax stamps affixed? 2. Is the Taxpayer subject to the assessment of unauthorized substance excise tax? FINDINGS OF FACT The Board reviewed and considered the following findings of fact entered by the Assistant Secretary in his decision regarding this matter: 1. Assessment of Unauthorized Substance Tax was made against the Taxpayer on February 8, 2002, in the sum of $60,368.00 tax, $24,147.20 penalty and $301.84 interest, for a total proposed liability of $84,817.04, based upon possession of 17,248 grams of marijuana on February 8. 2002. 2. The Taxpayer made timely objection and application for a hearing. 3. The marijuana was located in a vehicle operated by the Taxpayer. 4. The Taxpayer’s nervousness and the inconsistencies between her statements and those of her passenger as to their travels and the nature of their relationship tend to corroborate the presumption that the Taxpayer, as driver, was fully aware of the contents of the vehicle. 5. The Taxpayer was in constructive possession of the vehicle and the marijuana on February 8, 2002. 6. The SBI lab confirmed the substance at issue as marijuana weighing 36.9 pounds (16,737.84 grams ). 7. The Taxpayer was in constructive possession of 16,737.84 grams of marijuana on February 8, 2002, without proper tax stamps affixed to the substance. CONCLUSIONS OF LAW The Board reviewed and considered the following conclusions of law made by the Assistant Secretary in his decision regarding this matter: 1. An assessment of tax is presumed to be correct. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1659 2. The burden is upon the Taxpayer who objects to an assessment to overcome that presumption, and that burden was not met. 3. The Taxpayer had constructive possession of 16,737.84 grams of marijuana on February 8, 2002, and was therefore a dealer as that term is defined in G.S. 105-113.106. 4. The Taxpayer is liable for tax in the sum of $58,583.00, penalty in the sum of $23,433.20, and accrued interest until date of full payment. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Board conducts a hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” Pursuant to G.S. 105-241.1(a), a proposed tax assessment is presumed to be correct and the burden is on the Taxpayer to rebut that presumption. In order to rebut that presumption, the Taxpayer must offer evidence to show that the assessment is not proper. It is the function of this Board, upon administrative review, to review the record and determine whether the final decision is proper based upon the evidence presented at the hearing before the Assistant Secretary. Thus, the Board having conducted an administrative hearing in this matter, and having considered the petition, the brief, the record and the final decision, concludes that the findings of fact contained in the Assistant Secretary’s final decision are supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law are fully supported by the findings of fact; therefore the Assistant Secretary’s final decisions should be confirmed. WHEREFORE, THE TAX REVIEW BOARD ORDERS that the Assistant Secretary’s final decision be and is hereby confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Attorney at Law Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1660 STATE OF NORTH CAROLINA BEFORE THE TAX REVIEW BOARD COUNTY OF WAKE IN THE MATTER OF: ) The Proposed Assessment of Unauthorized ) Substance Tax dated June 5, 2002 by ) the Secretary of Revenue of North Carolina ) ) ADMINISTRATIVE DECISION vs. ) Number: 425 ) Sherry J. Roberts ) Taxpayer ) This Matter was heard before the Regular Tax Review Board (hereinafter “Board”) in the City of Raleigh, Wake County, North Carolina, on Friday September 26, 2003, upon a petition filed by Sherry J. Roberts (hereafter “Taxpayer”) for administrative review of the Final Decision of the Assistant Secretary of Revenue entered on March 6, 2003, sustaining the proposed assessment of unauthorized substance tax for the period at issue. Pursuant to N.C. Gen. Stat. § 105-113.111(a) and N.C. Gen. Stat. § 105-241.1, a Notice of Unauthorized Substance Tax Assessment was issued to the Taxpayer on June 5, 2002 by Enforcement Agent James Spence of the Unauthorized Substance Tax Division, assessing $82,512.50 tax, $33,005.00 penalty and $0 interest, for a total liability of $115,517.50. The assessment alleged that on June 5, 2002, the Taxpayer was in unauthorized possession of 528 grams of cocaine 15,875 grams of marijuana and 102 dosages of ecstasy without the proper tax stamps affixed to the substance. ISSUES 1. Did the Taxpayer have actual/or constructive possession of cocaine, marijuana and ecstasy without proper tax stamps affixed? 2. Is the Taxpayer subject to the assessment of unauthorized substance excise tax? EVIDENCE Pursuant to N.C. Gen. Stat. § 105-241.2(b), the Board reviewed all the documents, records, data, evidence and other materials that the parties presented at the hearing before the Assistant Secretary. Based upon the Board’s review of the documentation, the evidence presented is incorporated by reference and is made a part of this decision. FINDINGS OF FACT The Board reviewed and considered the following findings of fact entered by the Assistant Secretary in his decision regarding this matter: 1. Assessment of Unauthorized Substance Tax was made against the Taxpayer on June 5, 2002, in the sum of $82,512.50 tax, $33,005.00 penalty and $0 interest, for a total proposed liability of $115,517.50 based upon possession of 528 grams of cocaine, 15,875 grams of marijuana and 102 dosages of ecstasy. 2. The Taxpayer made timely objection and application for a hearing. 3. The codefendant’s claim that he had taken the drugs and weapons to the Taxpayer’s house on June 5, 2002, after 8:00 a.m., with the intention of removing them before the Taxpayer returned from work at 4:00 p.m., is not credible since: · The drugs were located in numerous locations about the house: three baggies of tan, rock-like substance, one baggie of white powder, one baggie of 2 1/2 white pills, and the .38 caliber Smith and Wesson in the top dresser drawer in the master bedroom; an 11 1/2 pound taped bundle of marijuana, four one-pound packages of marijuana and two quarter-pound packages of marijuana in the computer room closet; 16 one-pound packages of marijuana in a duffel bag on the computer room floor; two baggies of tan rock-like substance and two baggies of white pills in a plastic box in the computer desk in the computer room; and the shotgun in the master bedroom closet. · Not counting the duffel bag containing marijuana on the floor in the computer room, there were 16 individual packages of controlled substances in three different locations. It is illogical to believe that the codefendant would bring the drug and weapons to the Taxpayer’s house and spread them all over the place if he intended to remove them later the same day. IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1661 · The codefendant’s statement indicates he expected the Taxpayer to return from work at about 4:00 p.m., by which time he intended to have the drugs and weapons removed from the house. Law enforcement did not make entry to execute the search warrant until 7:21 p.m., meaning that the codefendant did not just miss his alleged deadline, but that nearly 3 ½ hours later there was still no sign of him. Not only is there no reliable evidence that the codefendant ever returned to the Taxpayer’s home on June 5, 2002, there is no evidence that he was ever there to begin with. · The Taxpayer pleaded guilty to possession of the same weapons that the codefendant stated she knew nothing about, further detracting from the statement’s credibility. 4. The informant whose information provided probable cause for the search warrants indicated that the codefendant kept controlled substances at several residences, which further tends to refute any claim that the presence of controlled substance at the Taxpayer’s home on June 5, 2002, was a one-time event. 5. The Department has the authority to levy upon and seize a Taxpayer’s assets for the purpose of selling them at auction and applying the proceeds to the tax debt. Whether the assets were purchased with legitimate income or proceeds from the drugs sales is irrelevant. 6. On June 5, 2002, the Taxpayer had constructive possession of 528 grams of cocaine, 15,875 grams of marijuana and 102 dosages of ecstasy. 7. No tax stamps were purchased for or affixed to the controlled substances as required by law. CONCLUSIONS OF LAW The Board reviewed and considered the following conclusions of law made by the Assistant Secretary in his decision regarding this matter: 1. An assessment of tax is presumed to be correct. 2. The burden is upon the Taxpayer who objects to an assessment to overcome that presumption, and that burden was not met. 3. The Taxpayer had constructive possession of 528 grams of cocaine, 15,875 grams of marijuana and 102 dosages of ecstasy on June 5, 2002, and was therefore a dealer as that term is defined in G.S. 105-113.106(3). 4. The Taxpayer is liable for tax in the sum of $82,512.50, penalty in the sum of $33,005.00, and accrued interest until date of full payment. DECISION The scope of administrative review for petitions filed with the Tax Review Board is governed by N.C. Gen. Stat. § 105- 241.2(b2). After the Board conducts a hearing, this statute provides in pertinent part: (b2). “The Board shall confirm, modify, reverse, reduce or increase the assessment or decision of the Secretary.” Pursuant to G.S. 105-241.1(a), a proposed tax assessment is presumed to be correct and the burden is on the Taxpayer to rebut that presumption. In order to rebut that presumption, the Taxpayer must offer evidence to show that the assessment is not proper. It is the function of this Board, upon administrative review, to review the record and determine whether the final decision is proper based upon the evidence presented at the hearing before the Assistant Secretary. Thus, the Board having conducted an administrative hearing in this matter, and having considered the petition, the brief, the record and the final decision, concludes that the findings of fact contained in the Assistant Secretary’s final decision are supported by competent evidence in the record; that based upon the findings of fact, the Assistant Secretary’s conclusions of law are fully supported by the findings of fact; therefore the Assistant Secretary’s final decisions should be confirmed. WHEREFORE, THE TAX REVIEW BOARD ORDERS that the Assistant Secretary’s final decision be and is hereby confirmed in every respect. Made and entered into the 31st day of December 2003. TAX REVIEW BOARD Signature Richard H. Moore, Chairman State Treasurer Signature IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1662 Jo Anne Sanford, Member Chair, Utilities Commission Signature Noel L. Allen, Appointed Member IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1663 SUMMARY OF NOTICE OF INTENT TO REDEVELOP A BROWNFIELDS PROPERTY The Estate of Katherine C. Bell Pursuant to N.C.G.S. § 130A-310.34, the Estate of Katherine C. Bell has filed with the North Carolina Department of Environment and Natural Resources (“DENR”) a Notice of Intent to Redevelop a Brownfields Property (“Property”) in Charlotte, Mecklenburg County, North Carolina. The Property consists of 0.6 acres and is located at 2935 Griffith Street (a.k.a. 111 New Bern Street). Known environmental contamination, in excess of applicable standards, exists on the Property in groundwater. The Estate of Katherine C. Bell has committed itself to make no use of the Property other than for commercial uses such as warehouse space. The Notice of Intent to Redevelop a Brownfields Property includes: (1) a proposed Brownfields Agreement between DENR and Estate of Katherine C. Bell, which in turn includes (a) a map showing the location of the Property, (b) a description of the contaminants involved and their concentrations in the media of the Property, (c) the above-stated description of the intended future use of the Property, and (d) proposed investigation and remediation; and (2) a proposed Notice of Brownfields Property prepared in accordance with G.S. 130A-310.35. The new Notice of Intent to Redevelop a Brownfields Property is a second one regarding this Property; it has been filed because it was determined that three underground storage tanks could be addressed by the state Brownfields Program, which led to changes in the proposed Brownfields Agreement. The full Notice of Intent to Redevelop a Brownfields Property may be reviewed at City of Charlotte, Economic Development, located at 600 East Trade Street, Charlotte, NC 28202 by contacting Carolyn Minnich at that address, at cminnich@ci.charlotte.nc.us, or at (704)336-3499; or at 401 Oberlin Rd., Raleigh, NC 27605 by contacting Shirley Liggins at that address, at shirley.liggins@ncmail.net, or at (919) 733-2801, ext. 336, where DENR will provide auxiliary aids and services for persons with disabilities who wish to review the documents. Written public comments, and/or requests for a public meeting, may be submitted to DENR within 30 days after the date this Notice is published in a newspaper of general circulation serving the area in which the brownfields property is located, or in the North Carolina Register, whichever is later. All such comments and requests should be addressed as follows: Mr. Bruce Nicholson Brownfields Program Manager Division of Waste Management NC Department of Environment and Natural Resources 401 Oberlin Road, Suite 150 Raleigh, North Carolina 27605 IN ADDITION 18:19 NORTH CAROLINA REGISTER April 1, 2004 1664 SUMMARY OF NOTICE OF INTENT TO REDEVELOP A BROWNFIELDS PROPERTY Wede Corporation, LLC Pursuant to N.C.G.S. § 130A-310.34, Wede Corporation, LLC has filed with the North Carolina Department of Environment and Natural Resources (“DENR”) a Notice of Intent to Redevelop a Brownfields Property (“Property”) in Bessemer City, Gaston, County, North Carolina. The Property consists of 10.7 acres and is located at 1111 Oates Road. Environmental contamination exists on the Property groundwater. Wede Corporation, LLC has committed itself to redevelop the Property exclusively for industrial light manufacturing and commercial use. The Notice of Intent to Redevelop a Brownfields Property includes: (1) a proposed Brownfields Agreement between DENR and Wede Corporation, LLC, which in turn includes (a) a map showing the location of the Property, (b) a description of the contaminants involved and their concentrations in the media of the Property, (c) the above-stated description of the intended future use of the Property, and (d) proposed investigation and remediation; and (2) a proposed Notice of Brownfields Property prepared in accordance with G.S. 130A-310.35. The full Notice of Intent to Redevelop a Brownfields Property may be reviewed offices of the City of Charlotte, Neighborhood Development Key Business, Employment & Business Service, located at 600 East Trade Street, by contacting Carolyn Minnich at that address, at cminnich@ci.charlotte.nc.us, or at (704) 336-3499; or at 401 Oberlin Rd., Raleigh, NC 27605 by contacting Shirley Liggins at that address, at shirley.liggins@ncmail.net, or at (919) 733-2801, ext. 336, where DENR will provide auxiliary aids and services for persons with disabilities who wish to review the documents. Written public comments may be submitted to DENR within 60 days after the date this Notice is published in a newspaper of general circulation serving the area in which the brownfields property is located, or in the North Carolina Register, whichever is later. Written requests for a public meeting may be submitted to DENR within 30 days after the period for written public comments begins. All such comments and requests should be addressed as follows: Mr. Bruce Nicholson Brownfields Program Manager Division of Waste Management NC Department of Environment and Natural Resources 401 Oberlin Road, Suite 150 Raleigh, North Carolina 27605 PROPOSED RULES 18:19 NORTH CAROLINA REGISTER April 1, 2004 1665 Note from the Codifier: The notices published in this Section of the NC Register include the text of proposed rules. The agency must accept comments on the proposed rule(s) for at least 60 days from the publication date, or until the public hearing, or a later date if specified in the notice by the agency. If the agency adopts a rule that differs substantially from a prior published notice, the agency must publish the text of the proposed different rule and accept comment on the proposed different rule for 60 days. Statutory reference: G.S. 150B-21.2. TITLE 1 – DEPARTMENT OF ADMINISTRATION Notice is hereby given in accordance with G.S. 150B-21.2 that the Department of Administration, State Energy Office intends to adopt the rules cited as 01 NCAC 41C .0101-.0104, .0201-.0211, .0301-.0303. Proposed Effective Date: July 1, 2004 Public Hearing: Date: April 21, 2004 Time: 2:00 p.m.-4:00 p.m. Location: Auditorium/NC Archives and History/State Library, 109 E. Jones St, Raleigh, NC. Reason for Proposed Action: Legislation section: G.S. 143- 345.16; 143-345.17; 143-345.18 Procedure by which a person can object to the agency on a proposed rule: Written objections may be submitted to the Director of State Energy Office. Objections will be received by mail, delivery service, hand delivery or facsimile transmission. Objections may be directed to: Larry Shirley, Director, NC State Energy Office. Mail Service Center 1340, Raleigh, NC 27699- 1340, Phone (919)733-2230, Fax (919)733-2953, Email larry.shirley@ncmail.net. Written comments may be submitted to: Larry Shirley, NC State Energy Office, MSC 1340, Raleigh, NC 27699-1340, Phone (919)733-2230, Fax (919)733-2953, Email larry.shirley@ncmail.net. Comment period ends: June 1, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commission receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None CHAPTER 41-STATE ENERGY OFFICE SUB CHAPTER 41C-ENERGY IMPROVEMENT LOAN PROGRAM SECTION .0100-GENERAL PROVISIONS 01 NCAC 41C .0101 RESPONSIBILITY The Department of Administration is responsible for adopting rules as specified in G.S. 143-345.18(b)(3) to facilitate this program and to adopt rules to allow State-regulated financial institutions to provide secured loans for this program pursuant to G.S. 143-345.18(b)(2a). Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0102 SCOPE This Subchapter shall apply to the revolving loan program mandated by G.S. 143-345.18. Sectors served by the Program are local government organizations, nonprofit organizations, and commercial and industrial businesses pursuant to G.S. 143B, Article 10, Part 14. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0103 RULE MAKING AUTHORITY Authority for adopting these Rules is found in G.S. 143-18(b)(3) and G.S. 143-345.18(b)(2a). Authority G.S. 143-345.18(b)(3); 143-345.18(b)(2a). 01 NCAC 41C .0104 DEFINITIONS For the purposes of this Chapter, the following definitions apply: (1) "Allowable Costs," origination cost, up front cost, letter of credit fee (first year), engineering design fee, and implementation of eligible energy conservation measure. All allowable costs to be included in the loan must be incurred after the execution date of the Letter of Intent; (2) "Applicant," any commercial or industrial business applying for a loan under the Program; (3) "Btu," British thermal unit; the amount of heat required to raise the temperature of one pound PROPOSED RULES 18:19 NORTH CAROLINA REGISTER April 1, 2004 1666 of water one degree Fahrenheit at or near 39.2 degrees F; (4) "Btu/sq. ft/yr.," Btu per square foot per year; an index of building energy use, calculated by dividing the total annual energy use of a building by its square foot area; (5) "Commercial or industrial business," a commercial or industrial concern which provides goods or services for profit from a location in North Carolina; (6) "Credit worthiness", ability of applicant to meet lending institution's standard lending criteria. (7) "DOA Fiscal Department," the Fiscal Management Department, N. C. Department of Administration; (8) "Energy conservation measure," a commercially available energy efficient device, technique or technology, designed to reduce energy consumption, peak demand, and/or utility costs at an existing or proposed commercial or industrial business; (9) "Letter of Intent," written notification of the intent of the Department to originate the Loan, subject to the conditions and limitations of the Program; (10) "Payback," the total energy conservation measure costs (including installation, equipment and engineering design) divided by the annual estimated utility cost savings; (11) "Program," the Energy Improvement Loan Program authorized by G.S. 143B, Article 10, Part 14. (12) "Recycling Projects," projects which extract and reprocess energy, water and/or materials for reuse in buildings, transportation systems, environmental management, consumer products and/or outreach; (13) "Renewables," solar, wind, biomass and/or hydropower resources; (14) "Repayment Schedule," a schedule of periodic payments based upon simple payback as projected in the TA, rounded to the next quarter. Prepayments shall reduce the term of the loan with periodic payments remaining unchanged; (15) "State Energy Office," the State Energy Office, N. C. Department of Administration; (16) "Technical Analysis," a report that identifies and analyzes in detail cost-effective capital energy conservation improvements that the applicant wishes to implement. The Technical Analysis need address only the specific energy conservation measures for which the loan is being requested. Each energy conservation measure analyzed should be the subject of a single, focused recommendation incorporating technical and economic analyses of the measure, considering building, process and equipment characteristics and energy use patterns pertinent to the improvement. The Technical Analysis must include the estimated cost of the implementation, a construction schedule, and expected energy savings; (17) "Technical analyst," a professional engineer or architect registered in accordance with the provis ions of G. S. 89C or G. S. 83A as applicable having demonstrated experience in energy conservation to conduct technical analysis for the purposes of this article; (18) "Third Party Technical Analyst", a technical analysis performed by a professional engineer or registered architect who has neither financial interest in the commercial business, non-profit institution, local government institution, or industrial business nor in the sale and installation of any proposed energy conservation measure; however, the Technical Analyst is permitted to provide construction management services to an approved applicant. (19) "Unallowable costs," costs associated with Technical Analysis preparation, costs associated with pre-application conference, costs incurred prior to execution date of Letter of Intent, costs associated with loan application (i.e., consultation fees, Technical Analysis modifications); and (20) "Up front cost," the prepaid charge, if any, at a rate to be determined by the DOA Fiscal Department sufficient to cover the costs of administering and servicing the program. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). SECTION .0200 – LOANS 01 NCAC 41C .0201 ELIGIBILITY The following classes of applicants in descending order of priority are eligible to apply for loans: (1) A local government organization, nonprofit organization, commercial or industrial business located in North Carolina that owns the existing building or site of planned construction where the energy conservation measures will be made, or which has a lease or management agreement for such proposed building site or building extending beyond the term of the loan; provided, however, that where the owner of the building authorizes the approved energy conservation measures, the lease or management agreement need not extend beyond the term of the loan. (2) A local government organization, nonprofit organization, commercial or industrial business translocating to North Carolina that owns the site of planned construction where the energy conservation measures will be made, or which has a lease or management agreement for such proposed building or PROPOSED RULES 18:19 NORTH CAROLINA REGISTER April 1, 2004 1667 building site extending beyond the term of the loan; provided, however, that where the owner of the building or building site authorizes the approved energy conservation measures, the lease or management agreement need not extend beyond the term of the loan. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0202 CRITERIA FOR ENERGY CONSERVATION LOANS Energy conservation projects for which the loans are desired must meet the following criteria: (1) The building site where the measures are to be installed must be in North Carolina; (2) The project must demonstrate the ability to conserve energy through efficient energy use or the utilization of renewable energy resources which results in energy savings based upon a net reduction in the use of nonrenewable resources; (3) To keep interest rates low, with a maximum total loan indebtedness of five hundred thousand dollars ($500,000) for a single local government organization, nonprofit organizations, commercial business or industrial business at any given time; (4) The project must utilize existing, proven reliable commercially available technologies recognized by the State Energy Office; (5) Experimental or research-related technologies are not eligible for funding; (6) Each energy conservation measure must address energy efficiency; (7) The installation of the energy conservation measure may, at the discretion of the applicant, commence after DOA Fiscal Office issues the Letter of Intent; however, the applicant places itself at risk and is reminded that origination of the Loan is subject to the conditions and limitations of the Program; (8) The energy conservation measure must demonstrate a simple payback period of 10 years or less; (9) Each energy conservation measure must have a useful life at least equal to its estimated simple payback; (10) Eligible energy conservation measures shall fall under one of the following categories: (a) lighting systems; (b) heating, ventilation, and air conditioning systems; (c) electrical distribution systems (motors, variable speed drives, fans, etc.); (d) energy management systems; (e) boiler efficiency systems; (f) energy recovery systems, including on-site generation of electricity; (g) alternate/renewable energy systems; (h) building envelope (doors, windows, roofs, etc.); (i) industrial process or fabrication systems; (j) load management systems; (k) fuel conversion projects provided that the simple payback calculations shall be based on the cost of the current fuel; (l) other cost-effective demand or rate-based improvements; and (m) recycling projects; (11) The energy conservation measure shall meet applicable state air and water quality standards; and (12) The energy conservation measure shall be based on a current Technical Analysis report as defined in Section .0300 of this Subchapter. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0203 CONDITIONS AND LIMITATIONS Loans are made subject to the following conditions and limitations: (1) Interest shall be charged at the rate of 3% per annum and 1% for renewable and recycling projects; (2) The amount of the loan shall not exceed allowable costs; (3) The repayment schedule shall be based on the estimated payback as shown in the Technical Analysis report; (4) Payments shall be made at a frequency of not less than once per month; (5) The total amount of the loan, or any portion thereof may be repaid at any time without penalty; (6) Rebates received through other program offerings of the State Energy Office for projects undertaken from loan proceeds shall be used to reduce the amount of principal; (7) The borrower shall warrant that all work or construction done with the proceeds of a loan under this program shall comply with all building codes and standards; (8) Project implementation should begin within 90 days after approval of the application. If delays are encountered following loan closing, any arbitrage profits will be repaid to the revolving fund; (9) Loans may not be used to replace an existing loan; (10) Loan payments or drafts shall be sent or delivered to the DOA Fiscal Department at its current address as stated in the loan agreement; (11) A letter of credit from a bank approved to do business in North Carolina and acceptable to the Secretary of Administration shall secure PROPOSED RULES 18:19 NORTH CAROLINA REGISTER April 1, 2004 1668 the loan against non-payment and also serve as a quarterly drafting mechanism for loan repayment from the bank; and (12) No loans shall be forgiven. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0204 PRE-APPLICATION CONFERENCE (a) At least one week prior to submission of a project application a pre-application conference will be convened by email, telephone or office visit. (b) Parties present at the pre-application conference will include representatives from the DOA Fiscal Division, the State Energy Office, the applicant, and/or the applicant’s engineer. (c) The purpose of the conference is to help ensure the application procedures are clearly understood and that the application and technical analysis, when accepted, will be complete. (d) The applicant shall offer verbal, and if available, written project descriptions. (e) The applicant will address environmental impact of the project. (f) When final, copies of water and air permits will be provided in addition to the technical analysis. (g) Another purpose of this conference will be to reach an understanding among all parties that the project is of the type that may be considered for approval. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0205 APPLICATION PROCEDURES Application forms are provided by the DOA Fiscal Department and must contain, at a minimum, the following information: (1) The name and complete mailing address, including the county, of the applicant; (2) The address, building name (where applicable) or site description including photographs to locate where the energy conservation measure(s) will be installed; (3) The name of a contact person, including title and telephone number; (4) The amount of the loan requested; (5) The estimated dates of start and completion of the project; (6) A copy of the Technical Analysis approved by the State Energy Office as fulfilling the energy aspects of the proposed energy conservation measures; (7) Identification of the commercial lending institution that is providing letter of credit, depository and repayment services; (8) All applicants shall provide financial data on which to base a determination of the applicant’s creditworthiness. Documentation may include the following: (a) Recent financial statements; and (b) Profit and loss statements. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0206 APPLICATION REVIEW Application review shall consist of the following two phases: (1) The administrative review shall be conducted by the DOA Fiscal Department and may include any data or information needed to complete that review. (2) The technical review shall be conducted of the Technical Analysis by the State Energy Office. (3) The technical review may occur concurrently with application submittal to the DOA Fiscal Department. (4) The technical review shall consider each energy conservation measure for which funding is requested and shall include the accuracy and sufficiency of calculations, engineering principles considered, and labor and material costs relative to the current local market. (5) Following acceptance, the State Energy Office will approve those Energy Conservation Measures that were found to meet the energy aspects of the Program. (6) No application shall be accepted for consideration by the DOA Fiscal Department without the acceptance of the Technical Analysis by the State Energy Office. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0207 LOAN APPROVAL Applications shall be considered for loan approval upon completion of the administrative and technical review. Approval shall be based upon the following: (1) Results of the administrative and technical review documenting energy efficiency; and (2) Creditworthiness of the applicant. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0208 LOAN AGREEMENT AND PROMISSORY NOTE After an application for a loan is approved, a loan agreement shall be executed between the DOA Fiscal Department and the borrower. The loan agreement shall include a standard North Carolina promissory note and other necessary documents including, but not limited to, security agreements, mortgages, recordings; and shall contain the covenants and representations as to the borrower's qualification to borrow for the loan, intended use of the loan proceeds, conditions under which the loan will be repaid and events requiring the acceleration, rights and responsibilities of the parties and the terms and conditions of the loan. The requirements to secure the loan shall be included in the loan agreement. Loans shall be secured through bank Letter of Credit. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0209 REPORTS Reports must be submitted as follows: PROPOSED RULES 18:19 NORTH CAROLINA REGISTER April 1, 2004 1669 (1) Progress reports must be submitted quarterly to the State Energy Office during the period implementation or construction is in progress and must include a description of the current status, any problems, and forecast of expectations or deviations from the planned schedule; and (2) A final report certified by the technical analyst with professional registration seal affixed must be submitted to the State Energy Office upon completion of the project. The report must include a description of the measures implemented; the actual cost of each measure, and the adjusted estimated payback, based on the actual cost. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0210 MONITORING The DOA Fiscal Department shall monitor the use of the funds under this program through continuous review of reports. The State Energy Office shall monitor those buildings/projects where the energy conservation projects are in progress to verify the installation of the energy conservation measures conforms to the original Technical Analysis. At least one visit shall be made to the site of each energy conservation project during the life of the loan. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0211 DEFAULT If the borrower violates any of the terms of the loan agreement, the DOA Fiscal Department may place the borrower in default. Borrowers determined to be in default shall be notified by certified mail and the letter of credit provided as security invoked to protect the interest of the State of North Carolina. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). SECTION .0300 - TECHNICAL ANALYSIS 01 NCAC 41C .0301 TECHNICAL ANALYSIS REQUIRED An application for an energy conservation loan must be accompanied by a Technical Analysis that has been conducted by a qualified third party technical analyst and certified by the State Energy Office as fulfilling the energy aspects of the Program. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0302 TECHNICAL ANAYLYST QUALIFICATIONS To be qualified to conduct the Technical Analysis required by this article, a technical analyst must meet the following requirements: (1) Have experience in energy conservation in building construction, mechanical systems and/or manufacturing processes; (2) Be a registered architect or registered professional engineer licensed under the regulatory authority of the State of North Carolina, or be an architect-engineer team, the principal members of which are licensed under the regulatory authority of the State of North Carolina; (3) Comply with the licensing provisions of the "Architects" Act (G.S. 83A) and/or the "Engineering and Land Surveying" Act (G.S. 89C), to the extent to which one or both may be applicable; and (4) Have neither financial interest in the commercial business, non-profit institution, local government institution, or industrial business nor in the sale and installation of any proposed energy conservation measure; however, the Technical Analyst is permitted to provide construction management services to an approved applicant. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). 01 NCAC 41C .0303 REPORT REQUIRED A qualified third party technical analyst shall submit three copies of the results of a Technical Analysis in writing in a format acceptable to the State Energy Office. The report must include the following: (1) A description of facility characteristics and energy data, including the operational characteristics of the energy-using systems; (2) A description and engineering analysis of each identified energy conservation measure, including the following: (a) A detailed estimate of the cost of design, acquisition, and installation, including monitoring equipment to assess the performance of the measure discussing pertinent assumptions as necessary; (b) An estimate of the annual energy and energy cost savings by fuel type using generally accepted engineering standards and practices, including all formulae, data and assumptions clearly presented in arriving at the estimate; (c) The results of a combustion efficiency test, if furnace or boiler modifications or replacements are being imp lemented; (d) The simple payback period of each energy conservation measure, calculated by dividing the estimated total cost of the measure by the estimated annual energy cost saving; (e) A proposed construction schedule for each energy conservation measure; and PROPOSED RULES 18:19 NORTH CAROLINA REGISTER April 1, 2004 1670 (f) The payback period of each energy conservation measure; (3) The energy use and cost data for each fuel type used for the prior 12-month period, by month or in accordance with the usual billing cycle; (4) A certification bearing the registration seal, number and original signature and stating that the contents of the Technical Analysis conform to the provisions of the Program; and (5) An outline of qualifications of the analyst documenting previous experience in energy conservation in building construction, mechanical systems, and/or manufacturing processes. Authority G.S. 143-345.18(b)(2a); 143-345.18(b)(3). * * * * * * * * * * * * * * * * * * * * TITLE 10A – DEPARTMENT OF HEALTH AND HUMAN SERVICES Notice is hereby given in accordance with G.S. 150B-21.2 that the Division of Facility Services (DFS) intends to adopt the rules cited as 10A NCAC 14C .3801-.3805 and amend the rule cited as 10A NCAC 14C .0203. Proposed Effective Date: October 1, 2004 Public Hearing: Date: May 28, 2004 Time: 10:00 a.m. Location: Council Building, Room 201, Dorothea Dix Campus, 701 Barbour Dr., Raleigh, NC Reason for Proposed Action: One of the subject matters contained in the 2004 State Medical Facilities Plan (SMFP) is the filing deadline for Certificate of Need (CON) applications. The 2004 SMFP notes that deadline to be 5:30 p.m. 10A NCAC 14C .0203 must be amended to ensure that its reference to the filing deadline be consistent with the SMFP. The other subject matter pertains to the SMFP in relation to acute care beds. Certificate of Need (CON) rules are needed to implement the new need determinations for acute care beds in the 2004 SMFP. Procedure by which a person can object to the agency on a proposed rule: A person may object to the agency on the proposed rule by submitting written comments on the proposed rule. They may also object by attending the public hearing and personally voice their objections during that time. Written comments may be submitted to: Nadine Pfeiffer, NCDFS, 2711 Mail Service Center, Raleigh, NC 27699-2711, phone (919) 733-7461, fax (919) 733-8274, and email Nadine.pfeiffer@ncmail.net. Comment period ends: June 1, 2004 Procedure for Subjecting a Proposed Rule to Legislative Review: Any person who objects to the adoption of a permanent rule may submit written comments to the agency. A person may also submit written objections to the Rules Review Commission. If the Rules Review Commission receives written and signed objections in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the 6th business day preceding the end of the month in which a rule is approved. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff attorney at 919-733-2721. Fiscal Impact State Local Substantive (>$3,000,000) None CHAPTER 14 - DIRECTOR, DIVISION OF FACILITY SERVICES SUBCHAPTER 14C - CERTIFICATE OF NEED REGULATIONS SECTION .0200 - APPLICATION AND REVIEW PROCESS 10A NCAC 14C .0203 FILING APPLICATIONS (a) An application shall not be reviewed by the agency until it is filed in accordance with this Rule. (b) An original and a copy of the application shall be received by the agency no later than 5:00 5:30 p.m. on the 15th day of the month preceding the scheduled review period. In instances when the 15th of the month falls on a weekend or holiday, the filing deadline is 5:00 5:30 p.m. on the next business day. An application shall not be included in a scheduled review if it is not received by the agency by this deadline. Each applicant shall transmit, with the application, a fee to be determined according to the following formula: (1) With each application proposing the addition of a sixth bed to an existing or approved five bed intermediate care facility for the mentally retarded, the proponent shall transmit a fee in the amount of two thousand dollars ($2,000). (2) With each application, other than those referenced in Subparagraph (b)(1) of this Rule, proposing no capital expenditure or a capital expenditure of up to, but not including, one million dollars ($1,000,000), the proponent shall transmit a fee in the amount of three thousand five hundred dollars ($3,500). (3) With each application, other than those referenced in Subparagraph (b)(1) of this Rule, proposing a capital expenditure of one million dollars ($1,000,000) or greater, the proponent shall transmit a fee in the amount of three thousand five hundred dollars ($3,500), plus PROPOSED RULES 18:19 NORTH CAROLINA REGISTER April 1, 2004 1671 an additional fee equal to .003 of the amount of the proposed capital expenditure in excess of one million dollars ($1,000,000). The additional fee shall be rounded to the nearest whole dollar. In no case shall the total fee exceed seventeen thousand five hundred dollars ($17,500). (c) After an application is filed, the agency shall determine whether it is complete for review. An application shall not be |
OCLC number | 13686205 |