House Bill 1164 would change North Carolina’s penalty for tax payments made by check or electronic transfer that are returned unpaid because of insufficient funds or a nonexistent account. Under current law, the penalty is the greater of $25 or 10% of the payment amount, which can become very large on substantial property tax bills. The bill replaces that structure with a tiered penalty system: for the first two violations within the past five years, the penalty would be $25 plus 1% of the amount of the check or electronic invoice; for later violations, the penalty would be $50 plus 2% of the amount. The total penalty would remain capped at $1,000.
The bill also keeps the existing framework that treats the underlying taxes as unpaid when a payment is returned or not completed, requires the tax collector to correct records and notify the taxpayer, and allows collection through ordinary tax-collection remedies or civil action. It retains an exception where no penalty applies if the taxpayer actually had sufficient funds in a North Carolina account and simply made an inadvertent mistake in drawing the check or initiating the transfer.
In addition to changing the penalty formula, the bill appropriates $15,000 in nonrecurring General Fund money to the Department of Revenue for educational materials and assistance to the public and county tax collectors about the new rule. The act would apply prospectively to tax payments made on or after the date it becomes law, while the appropriation and other provisions take effect when enacted.
The stated policy rationale is to make the penalty more proportional and less punitive, especially for large annual property tax payments, while still allowing counties to recover costs associated with returned payments. Because the bill was referred to the House Rules, Calendar, and Operations Committee and no votes or committee transcripts are available, there is no recorded legislative debate or formal vote history in the provided materials.
Overall, the available context suggests the bill is framed as a taxpayer-fairness and administrative-cost-recovery measure rather than a major revenue change. The main point of potential contention is the balance between reducing penalties for taxpayers and preserving deterrence and reimbursement for counties and tax collectors handling failed payments.
HB1164 would amend G.S. 105-357(b), the statute governing penalties for tax payments returned for insufficient funds or noncompleted electronic transfers. It changes the penalty schedule from a flat greater-of-$25-or-10%-of-payment formula to a lower, tiered percentage-based system with a $1,000 cap, while leaving intact the tax collector’s authority to treat the taxes as unpaid and pursue collection remedies. The bill also adds a $15,000 appropriation to the Department of Revenue for outreach and implementation support, affecting state spending and county tax administration practices.
The bill’s stated purpose and framing indicate generally favorable sentiment toward reducing what sponsors describe as overly harsh penalties on taxpayers, particularly for large property tax bills. The measure is presented as a fairness and proportionality fix, with support implied for aligning penalties more closely with administrative costs. No committee transcript or vote record is provided, so there is no direct evidence of opposition or support from members beyond the bill’s text and sponsorship.
The main policy tension is between taxpayer relief and county revenue protection. Supporters of the change appear to argue that the current penalty can be excessive relative to the cost of processing a returned payment, while opponents might be concerned that lowering penalties could weaken deterrence against bounced tax payments and reduce cost recovery for counties. The bill’s tiered structure and $1,000 cap suggest an attempt to preserve some deterrent effect while moderating the burden on taxpayers.