Case Name: In the Matter the Appeal of Tyleta W. MORGAN from the decision of the Henderson County Board of Equalization and Review concerning the taxation of certain real property for tax years 1995 through 2003.
Court: Court of Appeals of North Carolina
Jurisdiction: North Carolina
Decision Date: 2007-11-06
Citations: 652 S.E.2d 655
Docket Number: No. COA06-1423.
Parties: In the Matter the Appeal of Tyleta W. MORGAN from the decision of the Henderson County Board of Equalization and Review concerning the taxation of certain real property for tax years 1995 through 2003.
Judges: 
Reporter: South Eastern Reporter 2d
Volume: 652
Pages: 655–660

Head Matter:
In the Matter the Appeal of Tyleta W. MORGAN from the decision of the Henderson County Board of Equalization and Review concerning the taxation of certain real property for tax years 1995 through 2003.
No. COA06-1423.
Court of Appeals of North Carolina.
November 6, 2007.
Appeal by Henderson County from final decision entered 17 July 2006 by Chairman Terry L. Wheeler for the North Carolina Property Tax Commission. Heard in the Court of Appeals 23 May 2007.
DeVore, Acton & Stafford, PA, by Fred W. DeVore, III, Charlotte, for taxpayer-appellee Tyleta W. Morgan.
Parker Poe Adams & Bernstein, L.L.P., by Charles C. Meeker and Benn A. Brewington, III, Raleigh, for appellant Henderson County.
Paul A. Meyer, Raleigh, for amicus curiae North Carolina Association of County Commissioners.

Opinion:
TYSON, Judge.
Henderson County ("the County") appeals from final decision entered prohibiting it from attempting to collect unpaid back taxes and interest on real property owned by Tyleta W. Morgan ("Mrs. Morgan"). We affirm.
I. Background
Mrs. Morgan has owned approximately eighty-five acres of rural land in the County since 1972. In 1991, the property was placed in the Forestry Management Program as "forestry" land and as a result was assessed at a relatively low present use tax value.
Mrs. Morgan and her husband, now deceased, began building a house on this property in 1986 that was finished in approximately 1993. Mr. Morgan obtained all required permits from the County to build the home, and the County inspected the construction in 1986.
In 1993, when the residence was eighty percent complete, Mr. Morgan listed the house on his county tax listing form. The County performed countywide reappraisals effective 1 January 1999 and 1 January 2003. An appraiser with the County Tax Assessor's Office visited the Morgans' property during those reappraisals. The listed residence remained unassessed.
In 2004, the County Tax Assessor's Office finally assessed taxes on the Morgans' residence and asserted that Mrs. Morgan owed back taxes and interest in the amount of $8,533.61 for tax years 1995 through 2003. Mrs. Morgan paid the sum and appealed to the Henderson County Board of Equalization and Review. The Board upheld the decision of the County Tax Assessor's Office and Mrs. Morgan appealed to the North Carolina Property Tax Commission ("the Commission").
The Commission found that Mrs. Morgan did not question the tax valuation of the property, but the County should have "ascertained values for the subject residence prior to the notice . . . to recover back[] taxes associated with the subject residence." Based upon its findings of fact, the Commission concluded "the failure of the Tax Assessor to include upon Taxpayer's 1995 through 2003 tax bills valuation assessments for the subject residence was not an immaterial irregularity" and barred the County from attempting to collect the back taxes. The County appeals.
II. Issue
The County argues the Commission erred by concluding that it improperly issued assessment notices for the years 1995 through 2003 because the failure to assess the Morgans' residence was an immaterial irregularity pursuant to N.C. Gen.Stat. § 105-394.
III. Standard of Review
This Court reviews the Commission's decision under the whole record test. The whole record test is not a tool of judicial intrusion and this Court only considers whether the Commission's decision has a rational basis in the evidence. We may not substitute our judgment for that of the Commission even when reasonably conflicting views of the evidence exist.
In re Weaver Inv. Co., 165 N.C.App. 198, 201, 598 S.E.2d 591, 593 (internal citations and quotations omitted), disc. rev. denied, 359 N.C. 188, 606 S.E.2d 695 (2004).
IV. Immaterial Irregularities
The County argues the failure by the County Tax Assessor's Office to include valuation assessments for Mrs. Morgan's residence on her 1995 through 2003 tax bills was an "immaterial irregularity" pursuant to N.C. Gen.Stat. § 105-394, and it is not barred from collecting nearly a decade's worth of back taxes. We disagree.
N.C. Gen.Stat. § 105-394 (2005) states, in relevant part:
Immaterial irregularities in the listing, appraisal, or assessment of property for taxation or in the levy or collection of the property tax or in any other proceeding or requirement of this Subchapter shall not invalidate the tax imposed upon any property or any process of listing, appraisal, assessment, levy, collection, or any other proceeding under this Subchapter.
The following are examples of immaterial irregularities:
.
(3) The failure to list, appraise, or assess any property for taxation or to levy any tax within the time prescribed by law.
The County and dissenting opinion cite In re Appeal of Dickey, 110 N.C.App. 823, 431 S.E.2d 203 (1993), to support the position that the County's failure to assess Mrs. Morgan's house for eleven years falls within the definition of "immaterial irregularities." We disagree.
In In re Appeal of Dickey, the tax assessor accidentally removed a portion of the Dickeys' property from the 1989 tax listing form. 110 N.C.App. at 825, 431 S.E.2d at 204. This Court reversed the Commission's decision to relieve the Dickeys from their 1989 tax obligation. This Court stated, "a clerical error by a tax supervisor's office is an immaterial irregularity under G.S. 105-394 so as not to invalidate the tax levied on the property." Id. at 829, 431 S.E.2d at 207 (citation omitted) (emphasis supplied). We held:
Based on the clear and unambiguous language of Section 105-394, we conclude that the failure by the Assessor due to an administrative error to include on the Dickeys' 1989 tax bill an assessment for the improvements to the lot is an immaterial irregularity and does not, contrary to the Dickeys' contention, invalidate the tax owed on the house.
Id. (emphasis supplied).
The Commission's final decision did not ignore In re Appeal of Dickey, but expressly distinguished that case from the facts here. The Commission found substantial evidence was presented to support its finding that "the Tax Assessor could have obtained valuations for the subject residence prior to issuing the Notices of Immaterial Irregularity for tax years 1995 through 2003." This finding of fact was based upon the Commission's recitation of the evidence Mrs. Morgan presented:
(1) the Taxpayer's husband listed the subject residence with the Henderson County Tax Office, effective January 1, 1993, as eighty percent (80%) complete and instructed the Tax Assessor to contact him if there were questions regarding his listing; (2) The Taxpayer's husband obtained all necessary permits during the construction of the subject residence; (3) After the subject property's original listing in January 1, 1993, the Tax Assessor conducted at least two countywide reappraisals, effective as of January 1, 1999 and January 1, 2003; and (4) An appraiser with the Henderson County Tax Office visited the site of the subject property during the time of the county's reappraisals. Thus, the Tax Assessor had ample information to know that a house was situated on the property.
The Commission concluded "the action of the Tax Assessor, under the facts and circumstances at issue . [is not] an immaterial irregularity since his action in the matter does not constitute a clerical or administrative error."
Mrs. Morgan presented, and the Commission found, substantial evidence tending to show the County was provided multiple opportunities to assess the property, but failed to do so. This evidence supports the Commission's conclusion that the action of the County Tax Assessor's Office was neither a "clerical or administrative error." Id.
V. Adding Interest to Past Taxes
Presuming arguendo, the dissenting opinion's application of In re Appeal of Dickey, correctly categorizes the actions of the County Tax Assessor's Office as an immaterial irregularity and the County may levy taxes upon Mrs. Morgan's residence for years 1995 through 2003, the County is barred from collecting any interest accrued during this time period. N.C. Gen.Stat. § 105-394 provides that immaterial regularities do not "invalidate taxes imposed upon any property." (Emphasis supplied). No provision in this statute supports the County's assertion that it is entitled to recover interest in addition to the property taxes, when non-payment was due to the gross and repeated failures to assess by the County Tax Assessor's Office.
In In re Nuzum-Cross Chevrolet, the taxpayer's business personal property was taxed at a lower rate than it should have been for three years due to a clerical error. 59 N.C.App. 332, 333, 296 S.E.2d 499, 500 (1982), disc. rev. denied, 307 N.C. 576, 299 S.E.2d 645 (1983). The tax assessor issued a notice of attachment and garnishment upon the taxpayer and the garnishee, First National Bank of Catawba County, which included the amount of unpaid taxes, plus penalties and interest fees. Id. After a hearing, the trial court issued an order directing the garnishee to remit the total taxes due "minus any penalty and interest." Id. (emphasis supplied). This Court affirmed the trial court's order. Id.
Nothing in this statute allows the County to attempt to collect interest and penalties in addition to back taxes allegedly owed, when the County grossly and repeatedly failed to assess the listed property. Id.
VI. Conclusion
"N.C. Gen.Stat. § 105-394 . . . is intended to cover cases where there is no dispute that but for the clerical error, the tax would have been valid." In re Nuzum-Cross Chevrolet, 59 N.C.App. at 334, 296 S.E.2d at 500 (emphasis supplied). Under our standard of review, the Commission's findings of fact are based upon substantial evidence in the whole record and those findings support its conclusion that the failure by the County Tax Assessor's Office to assess the value of the Morgans' residence for more than ten years after it was properly listed by Mr. Morgan, was not a minor clerical or administrative error. The Commission could properly conclude N.C. Gen.Stat. § 105-394 is inapplicable to these facts.
As a reviewing Court, we only consider "whether the Commission's decision has a rational basis in the evidence." Weaver, 165 N.C.App. at 201, 598 S.E.2d at 593. "We may not substitute our judgment for that of the Commission even when reasonably conflicting views of the evidence exist." Id. The Commission's final decision holding that the County is barred from recovering property taxes and the interest and penalties thereon for tax years 1995 through 2003 is affirmed.
Affirmed.
Judge ELMORE concurs.
Judge GEER dissents by separate opinion.