Turner Business Appraisers, Inc

Pender County, NC wins at NC Supreme Court on amusement company audit appeal

NC Supreme Court says Pender County can tax the assets of NC State Fair midway operator working out of Burgaw, NC

Posted September 22, 2010

On August 26, 2010, the North Carolina Supreme Court formally declined to hear Amusements of Rochester, Inc’s (ARI) appeal of the business personal property audit discovery that Pender County, NC had made on the amusement rides and other assets owned by ARI. This decision definitively confirmed the taxable situs of ARI’s assets within Pender County, and Pender’s legal standing to tax ARI’s assets.

The saga began when Turner Business Appraisers, Pender County’s agent, noticed a cover story in Business North Carolina magazine on Powers Great American Midways (ARI) and how it had been selected to run the 2006 NC State Fair. (It has run the NC State Fair every year since then as well). The article mentioned that the company was based in Burgaw, NC, which is in Pender County. Upon researching county business personal property accounts, it was determined that the company had never filed a tax listing with Pender County, although they had been operating from Pender County since 1993. Therefore, an audit was commenced in September 2006.

In 2007, Pender County issued the discovery resulting from the audit. ARI ended up appealing the discovery through every level of appeal available: the Pender County Board of Equalization and Review in 2007, the NC Property Tax Commission in 2008, the NC Court of Appeals in 2009, and the NC Supreme Court in 2010. At each level of appeal, the decision was unanimous in Pender County’s favor and against the taxpayer, ultimately culminating with the Supreme Court refusing to hear ARI’s appeal, and affirming the Court of Appeals’ 3 – 0 decision upholding the discovery.

The Court of Appeals' decision can be found here: http://www.aoc.state.nc.us/www/public/coa/opinions/2009/pdf/090234-1.pdf

Once the Assessor’s Conference stage had passed, Pender County retained the services of Mr. Charles Meeker as legal counsel, to assist with the audit appeal from that point forward. Mr. Meeker is a Partner with the law firm Parker Poe Adams & Bernstein LLP, Attorneys & Counselors at Law, out of Raleigh, NC. Mr. Meeker began representing Pender County at the Board of Equalization and Review level in 2007. He has provided invaluable legal expertise and advice throughout this appeal process these last few years.

This appeal process enabled Turner Business Appraisers to gain valuable experience as an audit firm. Bill Smoak, Vice President and Senior Auditor, performed the audit analysis and research. The information that Bill compiled as part of this audit was used extensively in Pender County’s legal filings at the Board of E&R level and the Property Tax Commission level. The firm’s President, Jim Turner, CPA, served as an expert witness before the Property Tax Commission. Additionally, Bill accompanied Coby Heath, the Pender County Assessor at the time, to observe the Court of Appeals hearing.

On a side note, after the Court of Appeals issued their unanimous decision upholding the discovery, Christopher McLaughlin, Assistant Professor of Public Law and Government at the UNC Chapel Hill School of Government, wrote a January 28, 2010 blog post entitled Jet Planes and Carnival Games: Who Gets to Tax Them, in which he correctly opined that Pender County would prevail at the Supreme Court level.
His blog post can be found here: http://sogweb.sog.unc.edu/blogs/localgovt/?p=1727

While most audit appeals are resolved at the local level, this appeal has given our firm valuable experience at both the administrative levels (Board of E&R, PTC) and the judicial levels (Court of Appeals, Supreme Court) of the statutory appeal process.