Can a North Carolina city and the county it sits in enter into an interlocal cooperation agreement under which the city designates the county tax collector to also serve as the city tax collector, consolidating tax collection duties for both governments?
Plain-English summary
The City Attorney for Fayetteville asked the AG a straightforward shared-services question. The City wanted to enter an interlocal cooperation agreement with Cumberland County under which the City would designate the county tax collector to also serve as the city tax collector. The arrangement was meant to consolidate the tax-collection function across the two governments, presumably reducing administrative overhead. Was this lawful under North Carolina law?
The 1978 AG said yes.
The opinion rests on two statutory provisions read together.
Chapter 160A, Article 20 (Interlocal Cooperation) authorizes the arrangement. G.S. 160A-460 defines the key term "undertaking" as "the joint exercise by two or more units of local government, or the contractual exercise by one unit for one or more other units, or any administrative or governmental power, function, public enterprise, right, privilege, or immunity of local government." Cities and counties are both "units of local government" within the definition. Tax collection is undeniably a "governmental power and function." So a contractual arrangement under which the county exercises the city's tax collection power fits the statutory definition of an undertaking, and the Interlocal Cooperation Act expressly authorizes it.
G.S. 160A-146 does not defeat the arrangement. G.S. 160A-146 governs the city council's authority over the allocation of duties within municipal government. It "in no way defeats the conclusion" that the interlocal arrangement is proper. The AG offered two reasons:
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Different scope. G.S. 160A-146 relates to internal city organization. The interlocal arrangement is not internal city organization; it is contractual cooperation with an outside unit of government. The matter is governed by G.S. 160A-460 et seq., which is the specific statute on interlocal cooperation.
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No actual conflict even if scope were the same. Even if G.S. 160A-146 applied, the arrangement would not violate it. The office of city tax collector is not abolished by the agreement. The duties of the city tax collector are not assigned elsewhere. The office continues to exist; it is simply occupied by an individual who happens also to serve as county tax collector. One person can hold both offices under the interlocal cooperation contract.
The AG's conclusion: the city can enter the agreement.
Currency note
This opinion was issued in 1978. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The Interlocal Cooperation Act has been amended and expanded since 1978, and many North Carolina cities and counties have entered shared tax collection arrangements under it. The Machinery Act (Subchapter II of Chapter 105) governing tax collection procedure has also evolved. Anyone evaluating a current shared-tax-collection arrangement should consult current Article 20 of Chapter 160A and the current Machinery Act provisions on tax collector qualifications and duties.
Historical context: what the AG concluded
The opinion is a clean application of the Interlocal Cooperation Act. The General Assembly enacted Article 20 of Chapter 160A to give local governments broad authority to share services and consolidate functions. The "undertaking" definition in G.S. 160A-460 is intentionally broad ("any administrative or governmental power, function, public enterprise, right, privilege, or immunity") so that local governments have flexibility to identify and structure shared arrangements.
The AG's analytical move is to read the broad "undertaking" definition as covering tax collection. The two prongs of the analysis are textual: (1) tax collection is a governmental power and function, and (2) one unit of local government exercising that power for another fits the contractual-exercise prong of the definition. Both prongs follow from the statutory text.
The AG also disposed of a potential objection based on G.S. 160A-146 (city council's organizational authority). That statute governs internal city organization, not interlocal contracts, and even applied, the city tax collector office remains intact. The objection has no force.
For cities and counties in 1978 considering shared tax-collection arrangements, the takeaway was that the legal authority existed and the arrangement could proceed. The structure would be: a written interlocal cooperation agreement specifying the terms (compensation flow between the units, scope of duties, term, termination provisions, oversight), and a city council designation of the county tax collector as the city's tax collector for purposes of the agreement.
The opinion does not address rate calculation issues, ad valorem tax base issues, or the Machinery Act's specific tax collector duties under Chapter 105. Those substantive matters would be governed by their own statutory frameworks; the interlocal agreement would specify how the shared tax collector would handle them.
Common questions
Can a North Carolina city and county share a tax collector?
Yes. Under Chapter 160A, Article 20 (Interlocal Cooperation), a city and county can enter a contractual arrangement under which one unit's official performs the tax-collection function for the other.
What is the statutory authority?
G.S. 160A-460 defines "undertaking" broadly to include any contractual exercise by one local government for one or more others of any governmental power, function, public enterprise, right, privilege, or immunity. Tax collection fits the definition.
Does this require any voter approval?
The opinion does not address voter approval. The Interlocal Cooperation Act generally does not require a referendum for shared-services arrangements unless one of the underlying powers (like a property tax levy for advertising) independently requires one.
Does the city tax collector position have to be abolished?
No. The AG specifically pointed out that the city tax collector office continues to exist; it is simply occupied by the same person who serves as county tax collector. The arrangement is a personnel-sharing contract, not an abolition.
Can other local government functions be shared this way?
Yes, under the same statute. The G.S. 160A-460 definition is broad ("any administrative or governmental power, function, public enterprise, right, privilege, or immunity") and covers many types of local government functions. Common examples include water and sewer services, animal control, libraries, recreation, and various enforcement functions.
Does the arrangement need a written contract?
The Interlocal Cooperation Act requires written agreements with specified contents (term, financing, termination, etc.). The opinion does not detail those requirements; the relevant statutes in Article 20 of Chapter 160A specify them.
Background and statutory framework
The Interlocal Cooperation Act. Chapter 160A, Article 20, authorizes any unit of local government to enter agreements with other units to carry out an "undertaking." G.S. 160A-460 defines unit of local government (which includes cities and counties) and undertaking (the joint or contractual exercise of any administrative or governmental power, function, public enterprise, right, privilege, or immunity).
The municipal organizational statute. G.S. 160A-146 governs the city council's authority to organize municipal government and allocate duties within it. The AG concluded that this statute is not implicated by an interlocal cooperation arrangement.
The Machinery Act framework. Chapter 105, Subchapter II governs ad valorem tax collection procedures. The opinion does not directly engage with the Machinery Act, but a shared tax collector would carry out his collection duties under that framework regardless of which government employs him for the function.
Citations
- Chapter 160A, Article 20 (Interlocal Cooperation)
- G.S. 160A-146
- G.S. 160A-460
- G.S. 160A-460 et seq.
Source
- Landing page: https://ncdoj.gov/opinions/counties-cities-collection-of-taxes-interlocal-cooperation/
Original opinion text
Requested By: Robert C. Cogswell, Jr. City Attorney City of Fayetteville
Question: May a city and the county in which it is situated enter into an interlocal undertaking under which the city agrees to designate the county tax collector as city tax collector?
Conclusion: Yes.
Article 20 of Chapter 160A of the North Carolina General Statutes, entitled Interlocal Cooperation, authorizes any unit of local government (defined in G.S. 160A-460 to include cities and counties) to enter into an agreement with any other such unit or units for the purpose of carrying on an undertaking. G.S. 160A-460 defines an undertaking as
"the joint exercise by two or more units of local government, or the contractual exercise by one unit for one or more other units, or any administrative or governmental power, function, public enterprise, right, privilege, or immunity of local government."
Since taxation is a governmental power and function, a contractual arrangement for the collection of taxes-including an agreement whereby one unit of local government designates another unit's tax collector as its own, would seem to be the very kind of interlocal undertaking contemplated by Article 20.
G.S. 160A-146, Council to organize city government, in no way defeats the conclusion that such an agreement is a proper one. G.S. 160A-146 relates only to the powers of the city council with respect to the allocation of duties within municipal government. It has no application to the matter of interlocal cooperation, which is governed exclusively by G.S. 160A-460 et seq. Moreover, even if G.S. 160A-146 were applicable, it would not be violated by the agreement in question. The office of city tax collector is not abolished by the agreement, nor are the duties of the city tax collector assigned elsewhere. The position continues to exist; it is simply occupied by an individual who happens also to serve as county tax collector.
Rufus L. Edmisten
Attorney General
Marilyn R. Rich
Associate Attorney