CHEC board takes action on anticipated DOR refund
Time has run out for the North Carolina Department of Revenue to
petition the state Supreme Court for discretionary review of the Court
of Appeals ruling in favor of the Cape Hatteras Electric Cooperative
regarding the payment of sales and franchise taxes from 2000 until
Accordingly, CHEC’s board of directors took action at its meeting on
April 21, regarding the anticipated refund.
The board unanimously voted that upon receipt of the $3,625,896.97
judgment, CHEC will refund those sales taxes, plus accrued interest to
the members who paid those taxes from the years 2000 until 2009.
The sales tax refund will be processed using a program custom designed
by the cooperative’s consumer billing software company.
When the refunds are calculated they will first be applied to any
balance due on a member’s electric account. Remaining
will be refunded by check to all current and past members who paid
sales tax to CHEC from 2000-2009.
In addition to the sales taxes that were paid by members, the
cooperative also paid franchise taxes from 2001-2009 totaling
$3,669,807.81. Since the franchise taxes paid reduced margins
those years, the anticipated refund must be recognized as income and
allocated to members in the form of capital credits.
The CHEC Board unanimously voted to allocate $3,669,807.81, plus
accrued interest to CHEC members that had electric accounts during the
The refunds and allocations to customers will not be made until CHEC
receives the funds from the state Department of Revenue.
favor of CHEC is final; co-op members will share about $10 million
The Cape Hatteras Electric Cooperative’s lawsuit against the North
Carolina Department of Revenue is apparently over after more than 10
years of litigation, and co-op members will share in the nearly $10
million judgment against the department.
Susan Flythe, CHEC general manager, said this week that the Department
of Revenue did not file a petition by the April 5 deadline, asking the
North Carolina Supreme Court for a discretionary review of a March
Court of Appeals decision in favor of the co-op.
CHEC sued the Department of Revenue in 2000 after the department
announced that it would start collecting sales and franchise taxes on
The electric co-op collected the taxes until a trial court ruled in
November, 2009, in favor of CHEC. The Dare County Superior Court found
that the cooperative and its members did not owe the taxes and ordered
the DOR to refund of more than $3.6 million in sales taxes and nearly
$3.7 million in franchise taxes, along with accrued interest.
The Department of Revenue appealed the decision, and last month the
Court of Appeals upheld the trial court decision, again ordering DOR to
repay the taxes with interest.
DOR had until April 5 to petition for Supreme Court review, which it
did not do.
Flythe said the CHEC attorney, Norm Shearin, of the Black Vandeventer
law firm, will focus on obtaining payment from the Department of
Revenue that will, with interest, total almost $10 million.
After attorneys’ fees, Flythe said the money will be refunded to co-op
CHEC has been working with a software company on a program that will
tally the amount owed to active members from 2000-2009, including
Flythe said the software is almost ready, so the question will be when
the cash-strapped state of North Carolina pays up.
Currently, CHEC has 5,574 individual members and about 7,500 accounts,
she said, adding that people who had accounts from 2000-2009 but do not
have them now will also get refunds.
“We want to write check to people,” Flythe said. Sales tax and
interest, she said, will add up over nine years’ time, even on modest