§ 96-10. Collection of contributions.
§ 96‑10. Collection ofcontributions.
(a) Interest on Past‑DueContributions. Contributions unpaid on the date on which they are due andpayable, as prescribed by the Commission, shall bear interest at the rate setunder G.S. 105‑241.21 per month from and after that date until paymentplus accrued interest is received by the Commission. An additional penalty inthe amount of ten percent (10%) of the taxes due shall be added. The clearproceeds of any civil penalties levied pursuant to this section shall beremitted to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C‑457.2.Interest collected pursuant to this subsection shall be paid into the SpecialEmployment Security Administration Fund. If any employer, in good faith, payscontributions to another state or to the United States under the FederalUnemployment Tax Act, prior to a determination of liability by this Commission,and the contributions were legally payable to this State, the contributions,when paid to this State, shall be deemed to have been paid by the due dateunder the law of this State if they were paid by the due date of the otherstate or the United States.
(b) Collection.
(1) If, after duenotice, any employer defaults in any payment of contributions or interest thereon,the amount due shall be collected by civil action in the name of theCommission, and the employer adjudged in default shall pay the costs of suchaction. Civil actions brought under this section to collect contributions orinterest thereon from an employer shall be heard by the court at the earliestpossible date, and shall be entitled to preference upon the calendar of thecourt over all other civil actions, except petitions for judicial review underthis Chapter and cases arising under the Workers' Compensation Law of thisState; or, if any contribution imposed by this Chapter, or any portion thereof,and/or penalties duly provided for the nonpayment thereof shall not be paidwithin 30 days after the same become due and payable, and after due notice andreasonable opportunity for hearing, the Commission, under the hand of itschairman, may certify the same to the clerk of the superior court of the countyin which the delinquent resides or has property, and additional copies of saidcertificate for each county in which the Commission has reason to believe thedelinquent has property located. If the amount of a delinquency is less thanfifty dollars ($50.00), the Commission may not certify the amount to the clerkof court until a field tax auditor or another representative of the Commissionpersonally contacts, or unsuccessfully attempts to personally contact, thedelinquent and collect the amount due. A certificate or a copy of a certificateforwarded to the clerk of the superior court shall immediately be docketed andindexed on the cross index of judgments, and from the date of such docketingshall constitute a preferred lien upon any property which said delinquent mayown in said county, with the same force and effect as a judgment rendered bythe superior court. The Commission shall forward a copy of said certificate tothe sheriff or sheriffs of such county or counties, or to a duly authorizedagent of the Commission, and when so forwarded and in the hands of such sheriffor agent of the Commission, shall have all the force and effect of an executionissued to such sheriff or agent of the Commission by the clerk of the superiorcourt upon a judgment of the superior court duly docketed in said county.Provided, however, the Commission may in its discretion withhold the issuanceof said certificate or execution to the sheriff or agent of the Commission fora period not exceeding 180 days from the date upon which the originalcertificate is certified to the clerk of superior court. The Commission isfurther authorized and empowered to issue alias copies of said certificate orexecution to the sheriff or sheriffs of such county or counties, or to a dulyauthorized agent of the Commission in all cases in which the sheriff or dulyauthorized agent has returned an execution or certificate unsatisfied; when soissued and in the hands of the sheriff or duly authorized agent of theCommission, such alias shall have all the force and effect of an aliasexecution issued to such sheriff or duly authorized agent of the Commission bythe clerk of the superior court upon a judgment of the superior court dulydocketed in said county. Provided, however, that notwithstanding any provisionof this subsection, upon filing one written notice with the Commission, thesheriff of any county shall have the sole and exclusive right to serve allexecutions and make all collections mentioned in this subsection and in suchcase no agent of the Commission shall have the authority to serve anyexecutions or make any collections therein in such county. A return of suchexecution, or alias execution, shall be made to the Commission, together withall moneys collected thereunder, and when such order, execution, or alias isreferred to the agent of the Commission for service the said agent of theCommission shall be vested with all the powers of the sheriff to the extent ofserving such order, execution or alias and levying or collecting thereunder.The agent of the Commission to whom such order or execution is referred shallgive a bond not to exceed three thousand dollars ($3,000) approved by theCommission for the faithful performance of such duties. The liability of saidagent shall be in the same manner and to the same extent as is now imposed onsheriffs in the service of executions. If any sheriff of this State or anyagent of the Commission who is charged with the duty of serving executionsshall willfully fail, refuse, or neglect to execute any order directed to himby the said Commission and within the time provided by law, the official bondof such sheriff or of such agent of the Commission shall be liable for thecontributions, penalty, interest, and costs due by the employer.
(2) Any representativeof the Employment Security Commission may examine and copy the county taxlistings, detailed inventories, statements of assets or similar informationrequired under General Statutes, Chapter 105, to be filed with the taxsupervisor of any county in this State by any person, firm, partnership, orcorporation, domestic or foreign, engaged in operating any business enterprisein such county. Any such information obtained by an agent or employee of theCommission shall not be divulged, published, or open to public inspection otherthan to the Commission's employees in the performance of their public duties.Any employee or member of the Commission who violates any provision of thissection shall be fined not less than twenty dollars ($20.00), nor more than twohundred dollars ($200.00), or imprisoned for not longer than 90 days, or both.
(3) When the Commissionfurnishes the clerk of superior court of any county in this State a writtenstatement or certificate to the effect that any judgment docketed by theCommission against any firm or individual has been satisfied and paid in full,and said statement or certificate is signed by the chairman of the Commissionand attested by its secretary, with the seal of the Commission affixed, itshall be the duty of the clerk of superior court to file said certificate andenter a notation thereof on the margin of the judgment docket to the effectthat said judgment has been paid and satisfied in full, and is in consequencecanceled of record. Such cancellation shall have the full force and effect of acancellation entered by an attorney of record for the Commission. It shall alsobe the duty of such clerk, when any such certificate is furnished him by theCommission showing that a judgment has been paid in part, to make a notation onthe margin of the judgment docket showing the amount of such payment so certifiedand to file said certificate. This paragraph shall apply to judgments alreadydocketed, as well as to the future judgments docketed by the Commission. Forthe filing of said statement or certificate and making new notations on therecord, the clerk of superior court shall be paid a fee of fifty cents (50¢) bythe Commission.
(c) Priorities underLegal Dissolution or Distributions. In the event of any distribution of anemployer's assets pursuant to an order of any court under the laws of thisState, including any receivership, assignment for benefit of creditors,adjudicated insolvency, composition, or similar proceeding, contributions thenor thereafter due shall be paid in full prior to all other claims except taxes,and claims for remuneration of not more than two hundred and fifty dollars($250.00) to each claimant, earned within six months of the commencement of theproceeding. In the event of an employer's adjudication in bankruptcy,judicially confirmed extension proposal, or composition, under the FederalBankruptcy Act of 1898, as amended, contributions then or thereafter due shallbe entitled to such priority as is provided in section 64(a) of that act(U.S.C., Title 11, section 104(a)), as amended.
A receiver of any coveredemployer placed into an operating receivership pursuant to an order of anycourt of this State shall pay to the Commission any contributions, penalties orinterest then due out of moneys or assets on hand or coming into his possessionbefore any such moneys or assets may be used in any manner to continue theoperation of the business of the employer while it is in receivership.
(d) Collections ofContributions upon Transfer or Cessation of Business. The contribution or taximposed by G.S. 96‑9, and subsections thereunder, of this Chapter shallbe a lien upon the assets of the business of any employer subject to theprovisions hereof who shall lease, transfer or sell out his business, or shallcease to do business and such employer shall be required, by the next reportingdate as prescribed by the Commission, to file with the Commission all reportsand pay all contributions due with respect to wages payable for employment upto the date of such lease, transfer, sale or cessation of the business and suchemployer's successor in business shall be required to withhold sufficient ofthe purchase money to cover the amount of said contributions due and unpaiduntil such time as the former owner or employer shall produce a receipt fromthe Commission showing that the contributions have been paid, or a certificatethat no contributions are due. If the purchaser of a business or a successor ofsuch employer shall fail to withhold purchase money or any money due to suchemployer in consideration of a lease or other transfer and the contributionsshall be due and unpaid after the next reporting date, as above set forth, suchsuccessor shall be personally liable to the extent of the assets of thebusiness so acquired for the payment of the contributions accrued and unpaid onaccount of the operation of the business by the former owner or employer.
(e) Refunds. If notlater than five years from the last day of the calendar year with respect towhich a payment of any contributions or interest thereon was made, or one yearfrom the date on which such payment was made, whichever shall be the later, anemployer or employing unit who has paid such contributions or interest thereonshall make application for an adjustment thereof in connection with subsequentcontribution payments, or for a refund, and the Commission shall determine thatsuch contributions or any portion thereof was erroneously collected, theCommission shall allow such employer or employing unit to make an adjustmentthereof, without interest, in connection with subsequent contribution paymentsby him, or if such an adjustment cannot be made in the next succeeding calendarquarter after such application for such refund is received, a cash refund maybe made, without interest, from the fund: Provided, that any interest refundedunder this subsection, which has been paid into the Special Employment SecurityAdministration Fund established pursuant to G.S. 96‑5(c), shall be paidout of such fund. For like cause and within the same period, adjustment orrefund may be so made on the Commission's own initiative. Provided further,that nothing in this section or in any other section of this Chapter shall beconstrued as permitting the refund of moneys due and payable under the law andregulations in effect at the time such moneys were paid. In any case, where theCommission finds that any employing unit has erroneously paid to this Statecontributions or interest upon wages earned by individuals in employment inanother state, refund or adjustment thereof shall be made, without interest,irrespective of any other provisions of this subsection, upon satisfactoryproof to the Commission that such other state has determined the employing unitliable under its law for such contributions or interest.
(f) No injunctionshall be granted by any court or judge to restrain the collection of any tax orcontribution or any part thereof levied under the provisions of this Chapternor to restrain the sale of any property under writ of execution, judgment,decree or order of court for the nonpayment thereof. Whenever any employer,person, firm or corporation against whom taxes or contributions provided for inthis Chapter have been assessed, shall claim to have a valid defense to theenforcement of the tax or contribution so assessed or charged, such employer, person,firm or corporation shall pay the tax or contribution so assessed to theCommission; but if at the time of such payment he shall notify the Commissionin writing that the same is paid under protest, such payment shall be withoutprejudice to any defenses or rights he may have in the premises, and he may, atany time within 30 days after such payment, demand the same in writing from theCommission; and if the same shall not be refunded within 90 days thereafter, hemay sue the Commission for the amount so demanded; such suit against theEmployment Security Commission of North Carolina must be brought in theSuperior Court of Wake County, or in the county in which the taxpayer resides,or in the county where the taxpayer conducts his principal place of business;and if, upon the trial it shall be determined that such tax or contribution orany part thereof was for any reason invalid, excessive or contrary to theprovisions of this Chapter, the amount paid shall be refunded by the Commissionaccordingly. The remedy provided by this subsection shall be deemed to becumulative and in addition to such other remedies as are provided by othersubsections of this Chapter. No suit, action or proceeding for refund or torecover contributions or payroll taxes paid under protest according to theprovisions of this subsection shall be maintained unless such suit, action orproceeding is commenced within one year after the expiration of the 90 daysmentioned in this subsection, or within one year from the date of the refusalof said Commission to make refund should such refusal be made before theexpiration of said 90 days above mentioned. The one‑year limitation hereimposed shall not be retroactive in its effect, shall not apply to pendinglitigation nor shall the same be construed as repealing, abridging or extendingany other limitation or condition imposed by this Chapter.
(g) Upon the motion ofthe Commission, any employer refusing to submit any report required under thisChapter, after 10 days' written notice sent by the Commission by registered orcertified mail to the employer's last known address, may be enjoined by anycourt of competent jurisdiction from hiring and continuing in employment anyemployees until such report is properly submitted. When an execution has beenreturned to the Commission unsatisfied, and the employer, after 10 days'written notice sent by the Commission by registered mail to the employer's lastknown address, refuses to pay the contributions covered by the execution, suchemployer shall upon the motion of the Commission be enjoined by any court ofcompetent jurisdiction from hiring and continuing in employment any employeesuntil such contributions have been paid.
An employer who fails to filea report within the required time shall be assessed a late filing penalty offive percent (5%) of the amount of contributions due with the report for eachmonth or fraction of a month the failure continues. The penalty may not exceedtwenty‑five percent (25%) of the amount of contributions due. An employerwho fails to file a report within the required time but owes no contributionsshall not be assessed a penalty unless the employer's failure to file continuesfor more than 30 days.
(h) When anyuncertified check is tendered in payment of any contributions to the Commissionand such check shall have been returned unpaid on account of insufficient fundsof the drawer of said check in the bank upon which same is drawn, a penaltyshall be payable to the Commission, equal to ten percent (10%) of the amount ofsaid check, and in no case shall such penalty be less than one dollar ($1.00)nor more than two hundred dollars ($200.00).
(i) Except asotherwise provided in this subsection, no suit or proceedings for thecollection of unpaid contributions may be begun under this Chapter after fiveyears from the date on which the contributions become due, and no suit orproceeding for the purpose of establishing liability and/or status may be begunwith respect to any period occurring more than five years prior to the firstday of January of the year within which the suit or proceeding is instituted.This subsection shall not apply in any case of willful attempt in any manner todefeat or evade the payment of any contributions becoming due under thisChapter. A proceeding shall be deemed to have been instituted or begun upon thedate of issuance of an order by the chairman of the Commission directing ahearing to be held to determine liability or nonliability, and/or status underthis Chapter of an employing unit, or upon the date notice and demand forpayment is mailed by certified mail to the last known address of the employingunit. The order shall be deemed to have been issued on the date the order ismailed by certified mail to the last known address of the employing unit. Therunning of the period of limitations provided in this subsection for the makingof assessments or collection shall, in a case under Title II of the UnitedStates Code, be suspended for the period during which the Commission isprohibited by reason of the case from making the assessment or collection andfor a period of one year after the prohibition is removed.
(j) Waiver of Interestand Penalties. The Commission may, for good cause shown, reduce or waive anyinterest assessed on unpaid contributions under this section. The Commissionmay reduce or waive any penalty provided in G.S. 96‑10(a) or G.S. 96‑10(g).The late filing penalty under G.S. 96‑10(g) shall be waived when themailed report bears a postmark that discloses that it was mailed by midnight ofthe due date but was addressed or delivered to the wrong State or federalagency. The late payment penalty and the late filing penalty imposed by G.S. 96‑10(a)and G.S. 96‑10(g) shall be waived where the delay was caused by any ofthe following:
(1) The death or seriousillness of the employer or a member of his immediate family, or by the death orserious illness of the person in the employer's organization responsible forthe preparation and filing of the report;
(2) Destruction of theemployer's place of business or business records by fire or other casualty;
(3) Failure of theCommission to furnish proper forms upon timely application by the employer, byreason of which failure the employer was unable to execute and file the reporton or before the due date;
(4) The inability of theemployer or the person in the employer's organization responsible for thepreparation and filing of reports to obtain an interview with a representativeof the Commission upon a personal visit to the central office or any localoffice for the purpose of securing information or aid in the proper preparationof the report, which personal interview was attempted to be had within the timeduring which the report could have been executed and filed as required by law hadthe information at the time been obtained;
(5) The entrance of oneor more of the owners, officers, partners, or the majority stockholder into theArmed Forces of the United States, or any of its allies, or the United Nations,provided that the entrance was unexpected and is not the annual two weekstraining for reserves; and
(6) Other circumstanceswhere, in the opinion of the Chairman, the Assistant Administrator, or theirdesignees, the imposition of penalties would be inequitable.
In the waiver of any penalty, theburden shall be upon the employer to establish to the satisfaction of theChairman, the Assistant Administrator, or their designees, that the delinquencyfor which the penalty was imposed was due to any of the foregoing facts orcircumstances.
The waiver or reduction ofinterest or a penalty under this subsection shall be valid and binding upon theCommission. The reason for any reduction or waiver shall be made a part of thepermanent records of the employing unit to which it applies. (Ex. Sess. 1936, c. 1, s. 14;1939, c. 27, ss. 9, 10; 1941, c. 108, ss. 14‑16; 1943, c. 377, ss. 24‑28;1945, c. 221, s. 1; c. 288, s. 1; c. 522, ss. 17‑20; 1947, c. 326, ss. 18‑20;c. 598, s. 9; 1949, c. 424, ss. 14‑16; 1951, c. 332, ss. 8, 20; 1953, c.401, s. 15; 1959, c. 362, s. 9; 1965, c. 795, s. 11; 1971, c. 673, s. 21; 1973,c. 108, s. 43; c. 172, s. 4; 1977, c. 727, s. 50; 1979, c. 660, s. 16; 1981, c.160, s. 16; 1989, c. 770, s. 21; 1991, c. 422, s. 1; 1995, c. 463, ss. 4‑6;1997‑398, ss. 1‑3; 2001‑207, ss. 2, 3; 2005‑276, s.6.37(k); 2007‑491, s. 44(1)a.)