NC S299

Secretary of the Local Government Commission must issue a notice of noncompliance to counties or municipalities that fail to submit annual audit reports within nine months of fiscal year end, sent by first-class mail within 30 days of the deadline.

Counties or municipalities failing to file audit reports within 12 months of fiscal year end are deemed to have consented to withholding a portion of their sales tax distributions.

Counties or municipalities may appeal noncompliance notices in writing to the Local Government Commission, which must establish appeal guidelines prior to January 1, 2024; successful appeals delay or release any withheld funds.

Sales tax distributions may be withheld in quarterly installments at 5% of one-twelfth of the entity's annual general fund budget until reaching a cumulative total of 150% of the audit cost, with withholding beginning at least 45 days after notification to the Secretary of Revenue.

Withheld funds must be released within 30 days of the secretary notifying the Secretary of Revenue that the audit report was filed and accepted or an appeal was successful, or two years from the withholding notification date, whichever is earlier.