April 25, 2011


UPDATE:  CHEC board takes action on anticipated DOR refund

By IRENE NOLAN





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 2009.  

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 balances 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 in 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 years 2001-2009.

The refunds and allocations to customers will not be made until CHEC receives the funds from the state Department of Revenue.










April 8, 2011

Judgment in favor of CHEC is final; co-op members will share about $10 million

By IRENE NOLAN



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 co-op bills.

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 members.

CHEC has been working with a software company on a program that will tally the amount owed to active members from 2000-2009, including interest.

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 bills.



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