Sec. 29. - [Levied; exceptions.]

(a)

Authorization and scope. The Chapel Hill Town Council may, by ordinance, levy a room occupancy tax of no more than three (3) per cent on the gross receipts derived from the rental of any room, lodging, or similar accommodation subject to sales tax under G.S. 105-164.4(3).

This tax does not apply to accommodations furnished by nonprofit charitable, educational, benevolent, or religious organizations when furnished in furtherance of their nonprofit purpose. This tax is in addition to any state or local sales tax.

(b)

Collection. Every operator of a business subject to the tax levied under this section shall, on and after the effective date of the levy of the tax, collect the tax. This tax shall be collected as part of the charge for furnishing a taxable accommodation. The tax shall be stated and charged separately on the sales records, and shall be paid by the purchaser to the operator of the business as trustee for and on account of the Town of Chapel Hill. The tax shall be added to the sales price and shall be passed on to the purchaser instead of being borne by the operator of the business. The town shall design, print, and furnish to all appropriate businesses and persons in the town the necessary forms for filing returns and instructions to ensure the full collection of the tax.

An operator of a business who collects the occupancy tax levied under this section may deduct from the amount remitted by him to the Town a discount of one percent of the amount collected as reimbursement for the expenses incurred in collecting the tax.

(c)

Administration. The town shall administer a tax levied under this section. A tax levied under this section is due and payable to the town revenue collector in monthly installments on or before the 15th day of the month following the month in which the tax accrues. Every person, firm, corporation, or association liable for the tax shall, on or before the 15th day of each month, prepare and render a return on a form prescribed by the town. The return shall state the total gross receipts derived in the preceding month from rentals and sales upon which the tax is levied.

(d)

Penalties. A person, firm, corporation, or association who fails or refuses to file the return required by this section shall pay a penalty of ten dollars ($10.00) for each day's omission. In case of failure or refusal to file the return or pay the tax for a period of thirty (30) days after the time required for filing the return or for paying the tax, there shall be an additional tax, as a penalty, of five (5) per cent of the tax due in addition to any other penalty, with an additional tax of five (5) per cent for each additional month or fraction thereof until the tax is paid.

Any person who willfully attempts in any manner to evade a tax imposed under this section or who willfully fails to pay the tax or make and file a return shall, in addition to all other penalties provided by law, be guilty of a misdemeanor and shall be punishable by a fine not to exceed one thousand dollars ($1,000.00) and imprisonment not to exceed thirty (30) days.

(e)

Use and distribution of tax revenue. The town council of the Town of Chapel Hill shall decide on the allocation of the revenues collected from this tax annually during its budgeting process with particular consideration given to providing funding for visitor information services and support for cultural events, and not less than ten (10) per cent of the annual revenues shall be used for those purposes.

The town may contract with nonprofit organizations to undertake or carry out the activities and programs for which the revenue may be expended. All contracts entered into with nonprofit organizations shall require an annual financial audit of any funds expended and a performance audit of contractual obligations.

(f)

Repeal. A tax levied under this section may be repealed by ordinance adopted by the Chapel Hill Town Council. Repeal of a tax levied under this section shall become effective on the first day of a month and may not become effective until the end of the fiscal year in which the repeal ordinance was adopted. Repeal of a tax levied under this section does not affect a liability for a tax that attached before the effective date of the repeal, nor does it affect a right to a refund of a tax that accrued before the effective date of the repeal.

[g. Exceptions.] Any tax enacted pursuant to this title shall not apply to the Durham County portion of the Town of Chapel Hill.

(Acts 1987, Ch. 460, §§ 1, 2)