As a child of the 80’s, questions about the Machinery Act’s treatment of burial grounds immediately bring to mind the classic horror movie Poltergeist. (TL;DR for younger readers: don’t buy a house built on an old cemetery.)  I don’t have any great ideas about how to deal with malevolent ghosts. But I do have thoughts on how to apply the revised exemption for private burial property that took effect starting with the 2022 tax year.

Under the old version of GS 105-278.2(b), private burial property not held for sale was taxable but could qualify for a lower valuation depending on factors such as whether the property was “irrevocably dedicated for human burial purposes by plat recorded with the Register of Deeds” and whether the owner was “prohibited or restricted by law . . . from selling, mortgaging, leasing, or encumbering” the property.

The new version of GS 105-278.2(b) makes private burial property not held for sale fully exempt from taxation.  This exemption does not require an application, nor can it be denied to the lack of “a survey or plat detailing the exempt property.”

These changes present at least two potentially problematic administrative challenges.

The first challenge is the provision’s ambiguous language.  It applies only to property “set apart for burial purposes.”  What exactly does this phrase mean? Under the old provision, an assessor could demand proof from the taxpayer that the property was subject to use and transfer restrictions via a plat, deed, or other legal instrument.  But the new provision explicitly eliminates that option.

Determining what property is “set apart” is now much more of a subjective decision for the assessor. Obviously, any portion of a parcel that contains human graves should qualify.  So too should tombs, vaults, and monuments, as the statute explicitly covers these types of structures.  Conversely, it also seems clear that any portion of a parcel being used for other purposes (farming, parking, storage, etc.) should not qualify.

But what if a parcel has a grave or two on it and the rest is vacant, unused land? Should some reasonable amount of property around the graves also be exempt (similar to the “buffer zone” concept applied in religious exemption cases)? What would the taxpayer have to show to demonstrate that the entire parcel has been “set apart for burial purposes” and therefore exempt?  Is the taxpayer’s promise that they will use the entire parcel only for burial purposes sufficient?

There are no perfect answers to these questions.  To be sure, I don’t think a single grave should be enough to exempt a 10-acre parcel.  But a single grave might be enough to exempt a smaller parcel, if the taxpayer can show that they do not use any of it for other purposes and promises only to use it for burial purposes in the future.  Ideally the taxpayer would demonstrate that intent by separating off the burial portion of the property with a fence or similar dividers.  Or the assessor might require the taxpayer to sign a notarized statement to that effect. Different assessors might demand different levels of proof, given the ambiguity in the statute.  As always when it comes to these discretionary decisions, my advice is to be as consistent as possible.  Tax offices should treat similarly situated taxpayers similarly.

The second administrative challenge with this new(ish) exemption is the lack of an application requirement.  This feature opens the door for retroactive refunds from taxpayers who own private burial property did not receive the exemption in prior years.

Normally, the fact that a property did not receive an exemption for which it could have qualified would not justify a refund under GS 105-381 because it would not constitute an illegal tax or a tax levied due to a clerical error by the tax office. The error in such a situation would have been that of the taxpayer (in failing to apply for the exemption in a timely fashion), and such an error does not satisfy GS 105-381.  (Read this bulletin for much more on refunds and releases under GS 105-381.)

However, the lack of an application requirement for burial property essentially makes it illegal for a county to tax such property even if the assessor had no knowledge that the property was being used for burial purposes.  If a taxpayer can show that they have been taxed on property set apart for burial purposes from 2022 forward, I think that would constitute an illegal tax that should be refunded under GS 105-381. (Remember that refunds are limited to 5 years, so those refunds would start to be time-limited as of 2027.)

The financial impact of such refunds on the county is likely to be minimal.  But the administrative burden might not be trivial if lots of little gravesites exist throughout your county.

One final note: the original version of the burial property exemption explicitly limited it to “human” burials.  The new version of the exemption omits the word “human.” Does that mean the new burial exemption also covers pet cemeteries? I don’t think that was the intent, but courts usually place great importance on the addition or removal of particular terms when a statute is revised.  Absent additional guidance from the General Assembly, it would not be  unreasonable to argue that property used for the burial of pets is now exempt.  Stephen King might have some thoughts.