AN ACT TO ENACT THE NORTH CAROLINA COMPETES ACT. Enacted September 30, 2015. Effective September 30, 2015, except as otherwise provided.
Summary date: Oct 6 2015 - View summary
Summary date: Sep 21 2015 - View summary
The conference report makes the following changes to the 6th edition.
Deletes the provisions of Part III, concerning phasing in of a single sales factor. Makes conforming changes by renumbering the remaining Part and section numbers.
Changes the effective date of the changes concerning the datacenter infrastructure act from October 1, 2015, to January 1, 2016.
Effective when the act becomes law, adds a provision allowing an interstate passenger air carrier a refund of sales tax it paid on fuel in excess of $1.25 million for the period beginning July 1, 2015, and ending December 31, 2015.
Amends GS 105-164.4 as follows. Deletes the provision that set the tax rate on the sale of a boat at 4.75%, with a maximum of $1,500 per article and reinstates the current rate of 3%, with a maximum of $1,500 per article. Makes clarifying changes.
Deletes the provisions of Part VI, concerning the distribution of sales tax revenue to local governments.
Adds a new Part V to the bill exempting mother vehicle service contracts from sales tax as follows.
Amends GS 105-164.13 to exempt from taxes under Article 5 (sales and use tax) a replacement item, a repair part, or repair, maintenance, and installation services to maintain or repair tangible personal property or a motor vehicle under a manufacturer's warranty or a dealer's warranty. Defines dealer's warranty and manufacturer's warranty. Provides that if H97 (2015 Appropriations Act) becomes law, then GS 105-164.13 is amended to make conforming changes and to provide that the exemption from sales tax does not apply to an item or repair, maintenance, and installation services provided for a motor vehicle under a service contract exempt from tax unless the purchaser of the contract is not charged for the item or services.
Amends GS 105-187.3(a) to provide that the highway use tax does not apply to the sales price of a service contract, provided the charge is separately stated on the bill of sale or similar document given to the purchaser at the time of the sale.
Amends GS 105-187.5(a) to make conforming changes and provide that if a retailer does not separately state any portion of a lease, rental billing, or payment that represents an amount applicable to the sales price of a service contract, the amount is deemed to be part of the gross receipts of a lease or rental of a vehicle.
This new Part V becomes effective March 1, 2016, and applies to service contracts purchased on or after that date, if H97 is enacted.
Adds a new Part VI, extending the sales tax preferences for motorsports parts and fuel as follows.
Adds and defines the term operator in GS 105-164.3 for use in Article 5, Sales and Use Tax. Amends GS 105-164.13 to exempt the sale of an engine provided with an operator to a professional motorsports racing team or a related member of a team for use in competition in a sanctioned race series from sales and use tax; expires January 1, 2020. Amends GS 105-164.4I to provide that the sales and use tax on service contracts does not apply to a transmission, an engine, rear-end gears, and any other item purchased by a professional motorsports racing team or related member of a professional motorsports racing team for which the team may receive a sales tax refund. Effective January 1, 2014, and applies to services contracts purchased on or after that date and expires January 1, 2020. Amends GS 105-164.14A, concerning sales and use tax refunds, to extend the sunset on the refund for motorsports teams or sanctioning bodies on aviation fuel and for professional motorsports teams on tangible personal property from January 1, 2016, to January 1, 2020.
Adds a new Part VII, concerning tax compliance and tax fraud prevention.
Makes certain changes to the requirement in GS 105-163.7 that employers deducting and withholding from an employee's wages under GS 105-163.2 furnish a report to the employee on an annual basis and makes certain changes to GS Chapter 105, Article 4A, concerning withholding, to bring various types of payments under this reporting requirement, effective for taxable years beginning on or after January 1, 2015. The changes to the reporting requirement include provision of the employee's address along with certain other identifying information already required. Also removes the discretion of the Secretary of Revenue (Secretary) to require additional information on this report or require its provision at a different time than authorized in the subsection. Brings under this reporting requirement (1) pension payers, under GS 105-163.2A; (2) the North Carolina State Lottery Commission, under GS 105-163.2B; and (3) payers of a contractor's compensation, under GS 105-163.3, by substituting this requirement for other reporting requirements and making certain conforming changes. Changes the date by which employers must submit an annual report to the Secretary under GS 105-163.7 to January 31 of the succeeding year (was, the same date the employer's federal income tax return is due) and requires that the report be submitted in electronic format, though the Secretary is allowed to waive the electronic submission requirement. Requires that the Secretary give at least 90 days' notice when requiring that additional information be included in the report. These provisions are effective for taxable years beginning on or after January 1, 2015.
Amends GS 105-236 to assess a $50 penalty for failure to file an information return required by Article 4A (Withholding; Estimated Income Tax for Individuals). Effective for taxable years beginning on or after January 1, 2016, and applies to information returns required to be filed with the Secretary in 2017 for the 2016 taxable year.
Amends GS 105-237 to provide the Secretary with discretion to reduce or waive any interest on taxes imposed prior to or during a period for which a taxpayer has declared bankruptcy.
Enacts new GS 105-251.2 requiring occupational licensing boards and specified types of alcohol vendors to give information to the Secretary when requested and limits the Secretary to requesting information only once a calendar year. Sets out information that the Secretary may request. Defines the term occupation licensing board as it is defined in GS 93B-1. This section becomes effective July 1, 2016.
Beginning March 1, 2016, and every six months thereafter, requires the Department of Revenue and the Government Data Analytics Center to make written progress reports to the Revenue Laws Study Committee on: (1) prevention or reduction of the occurrence of stolen identities and refund fraud; (2) elimination of fraudulent returns; (3) tax compliance by business professionals and alcohol vendors; and (4) coordination of efforts between those two entities to identify and integrate into the Department's operations and procedures the most effective and accurate processes and scalable tools available to reduce refund fraud, payment of fraudulent returns, and business tax compliance.
Summary date: Sep 18 2015 - View summary
The conference report is to be summarized.
Summary date: Aug 10 2015 - View summary
Senate amendments make the following changes to the 5th edition.
Amendment #1 makes the following changes.
Amends new GS 150-164.44M to require that the net proceeds of the aviation gas and jet fuel taxes be transferred to the Highway Fund within 75 days after the end of each fiscal year (was, transferred at the end of each fiscal year).
Provides that Section 6 of the act, concerning the distribution of sales tax revenue to local governments, becomes effective July 1, 2016, and applies to sales made on or after that date (was, and applies to sales tax revenues collected on or after that date and distributed to counties and cities on or after September 1, 2016).
Amendment #2 makes the following changes.
Amends the definition of high-yield project in GS 143B-437.51 to define it as a project for which the agreement requires that a business invest at least $500 million (was, at least $750 million) in private funds and creates at least 1,750 (was, 2,000) eligible positions.
Summary date: Aug 6 2015 - View summary
Senate committee substitute makes the following changes to the previous edition.
Except where indicated, deletes all of the provisions of the previous edition and replaces them with the following.
Amends the provisions of the Job Development Investment Grant Program (JDIG) as follows. Amends GS 143B-437.51, adding and defining the term high-yield project for the purposes of JDIG. Enacts new GS 143B-437.52(a)(6), adding a condition that must be met to receive grants from JDIG, requiring the local governments of projects that are located in a development tier three area to have participated in recruitment and offered incentives in a manner appropriate to the project. Amends the maximum yearly grant amount that can be awarded, capping it at $20 million (was, $15 million) for years when no high-yield project grant is awarded and increases the cap to $35 million for years in which a grant is awarded for a high-yield project. Provides that amounts awarded must be divided over two semiannual periods, with no more than 50% of the award amount being awarded in any one semiannual period. Provides that this limitation does not apply to high-yield projects. Amends GS 143B-437.53 to increase the minimum criteria for tier three areas to participate in JDIG, requiring 50 jobs to be created (was, 20 jobs). Amends the annual reporting requirement for the JDIG, now requiring a report, itemized by tier, of the number of unaccepted offers as well as the total award value of such offers, effective when the act becomes law. Amends calculations for determining JDIG awards amount moving to a tiered maximum award amount of withholding, such as 80% of withholding for projects in tier one areas and 75% for all other areas. Also amends amount required to be payable to Utility Accounts for specified tier ares. Sets out certain JDIG enhancements for high-yield projects if they meet job investment and creation benchmarks for three consecutive years, including increasing the amount that an award is calculated to 100% of withholdings and extending the term of the grant from 12 years to 20 years. Provides procedures for situations where a project fails to meet benchmarks after enhancements have been received. Amends the clawback provisions for when a project fails to maintain operations for at least 150% of the term of the grant to require appropriate portions of the grant to be recaptured (previously, only permitted the recapture). Also amends the basis for determining employment levels, requiring employment to be at the greater of the level of the employment on the date of the application for JDIG or the level on the date of the award (previously, was required to maintain levels of the year immediately preceding the base period). Extends the JDIG program until January 1, 2019 (was 2016). Makes changes to maximum grant liability the JDIG can take on; also expands the maximum amount to $50 million for the specified time period if a grant is awarded for a high-yield project, effective when the act becomes law. Directs the Department of Commerce to study factors that contribute to grant termination as compared to other states and report to specified legislative entities by March 1, 2016. Unless otherwise specified, the above provisions are effective July 1, 2015.
Amends GS 143B-437.72(c) concerning matching requirements by local governments for funds disbursed from the One NC Fund, transitioning to a tiered system depending on the development tier area the local government is located in.
Amends GS 105-130.4(i) to phase in a single sales factor apportionment of taxable income for all corporations (previously, excluded public utilities) by the 2018 calendar year with changes to the formula taking place on January 1 of 2016 and 2017. Repeals specified provisions of GS 105-130.4 to conform to the phase-in.
Retains all the provisions for Part IV from the previous edition, making technical changes and changing the effective date of the Part to October 1, 2015 (was, effective July 1, 2015).
Amends GS 105-164.3 to add and define the terms aviation gasoline and jet fuel for use in GS Chapter 105, Article 5, Sales and Use Tax. Further amends the Article to provide that the combined general rate of tax, as defined in this Article, applies to the gross receipts from the sale of both aviation gasoline and jet fuel. Provides that sales of aviation gasoline and jet fuel made to an interstate air business for use in commercial aircraft are exempt from retail sales and use tax, with this tax exemption expiring on January 1, 2020. Unless otherwise specified, effective January 1, 2016.
Enacts new GS 105-164.44M, Transfer to Division of Aviation, directing all tax proceeds collected from the sale of aviation gasoline and jet fuel to be transferred to the Highway Fund at the end of each fiscal year. Specifies permissible uses of these tax proceeds. Effective January 1, 2016.
Amends GS 105-164.3, adding and defining the terms qualified aircraft and qualified jet engine. Also amends GS 105-164.4, tax imposed on retailers to make the 4.75% sales tax applicable to boats, with a maximum tax amount of $1,500; an aircraft, with a maximum tax amount of $2,500; and a qualified jet engine. Deletes provisions that provided that aircraft or boats were only taxed at a rate of 3%, with a maximum amount of $1,500. Makes conforming changes to GS 105-467(a), removing boats, aircraft, and qualified jet engines from being subject to local sales tax. Adds provisions exempting service contracts for qualified aircraft or qualified jet engines from general sales tax. Also provides that parts and accessories for use in the repair or maintenance of qualified aircraft or jet engines are exempt from the retail sales and use tax. Amends GS 105-164.27A to allow purchasers of qualified jet engines to apply for a direct pay permit for taxes owed. Provides that the maximum tax imposed on qualified jet engines is $2,500. Requires permit holders to file a tax return and remit owed taxes monthly to the Secretary of the Department of Revenue. Unless otherwise specified, above provisions are effective October 1, 2015.
Requires the Secretary of Revenue to allocate the net proceeds of local government sales and use taxes according to a uniform formula located at amended GS 105-472(a). The formula requires half of net tax proceeds to be allocated to taxing counties according to where the tax was collected (point of collection) and the remaining half of proceeds to be allocated to taxing counties according to their population (per capita).
The bill makes conforming changes so that local sales tax revenues, on food and non-food items alike, will be allocated according to this formula, including sales tax levied under SL 1967-1096, as amended; GS 105-469(a) (First One-Cent Local Government Sales and Use Tax); GS 105-486 (First One-Half Cent Local Government Sales and Use Tax); and GS 105-501 (Second One-Half Cent Local Government Sales and Use Tax).
Creates new GS 105-472(a1) to require counties to use the proceeds of the per capita allocation for public education and community colleges and to use the remaining proceeds of the point of collection allocation for any public purpose. The bill repeals the use provisions of GS 105-487 (First One-Half Cent Local Government Sales and Use Tax) and GS 105-502 (Second One-Half Cent Local Government Sales and Use Tax).
The bill also makes conforming changes to the hold harmless provisions of GS 105-522 and GS 105-523(b) and other technical changes.
This section becomes effective July 1, 2016, and applies to sales tax revenues collected on or after that date and distributed to counties and cities on or after September 1, 2016.
This act is effective when it becomes law, except as otherwise provided.
Summary date: Mar 4 2015 - View summary
House amendment #2 makes the following changes to the 3rd edition:
Adds new Part III-A to the act, titled "Industrial Development Fund Utility Account."
Amends GS 143B-437.01(a) to require that funds from the Industrial Development Fund Utility Account (Account) be used in the most economically distressed counties of North Carolina to retain as well as expand the existing job base (previously, only required the funds to be provided to create jobs in the distressed counties). Makes conforming changes to the rules for the program funds reflecting the need to use funds to expand the job base and the retention of existing jobs. Effective when the act becomes law, applying to grants awarded on or after that date.
House committee substitute to the 2nd edition makes the following changes.
Adds a requirement that the Department of Commerce study the factors that have contributed to the termination of grants awarded under the Job Development Investment Grant Program. Requires examining other states' efforts that have allowed similar economic development programs to incent businesses to create jobs in order to determine best practices for remediating business underperformance to lower the number of terminated community economic development agreements. Requires a report to be submitted to specified legislative committees and the Fiscal Research Division by March 1, 2016.
House committee substitute makes the following changes to the 1st edition.
Enacts new GS 143B-437.52(a)(6) adding a condition that must be met to receive grants from the Job Growth Reimbursement Opportunities - People Program, requiring the local governments of projects that are located in a development tier three area to have participated in recruitment and offered incentives in a manner appropriate to the project.
Amends GS 143B-437.53, which establishes the minimum number of positions needed, according to development tier, in order to qualify for a grant, to provide that projects in tier three development tiers must have 50 (was, 20) eligible positions to qualify for a grant.
Amends GS 143B-437.56(d) providing that for any eligible position that is located in a development tier three area, 70 percent (was, 75 percent) of the annual grant must be payable to the business and 30 percent (was, 25 percent) must be payable to the Utility Account pursuant to GS 143B-437.61.
Amends GS 143B-437.57(a)(10) concerning the terms of the development agreements and grants, providing that the agreement must contain a provision that requires the Economic Investment Committee to recapture an appropriate portion of the grant if the business does not remain at the site for the required term (previously, required a provision that permitted the committee to recapture all or part of the grant at its discretion).
Summary date: Feb 25 2015 - View summary
Amends Section 15.19(a1) of SL 2013-360, concerning the Job Development Investment Grant Program (Program). Provides that regardless of the provisions of subsection (c) of GS 143B-437.52, for July 1, 2013 through December 31, 2015, the maximum total amount for grants awarded under the Program, including the amounts transferred to the Utility Account under GS 143B-437.61, is $45 million.
Changes the title of Part 2G of Article 10 of GS Chapter 143B to Job Growth Reimbursement Opportunities-People Program (was, Job Development Investment Grant Program).Directs the Revisor of Statutes to make the necessary conforming changes to reflect the renaming of the Program as provided in this section.
Repeals GS 143B-437.52(b), which gave priority in selecting between applicants for grants under the Program to a project located in an Eco-Industrial Park (Park) certified under GS 143B-437.08 over a comparable project not located in a certified Park.
Amends GS 143B-437.53(c) to provide that for the purposes of this subsection (Health Insurance), a business provides health insurance for employees if it pays at least 50% of the premiums for health care coverage for its employees.
Amends GS 143B-437.57(a) to require that each community economic development agreement must include a requirement that the business maintain employment levels in North Carolina at whichever is greater: (1) the level of employment on the date of the application, or (2) the level of employment on the date of the award.
Amends GS 143B-437.62 to provide that the authority of the Committee to award new grants expires January 1, 2020 (was, January 1, 2016).
Changes the title of Part 2H of Article 10 of GS Chapter 143B to Job Growth Reimbursement Opportunities-Capital Program (was, One North Carolina Fund) and changes the title of Part I to Job Growth Reimbursement Opportunities-Capital Small Business Program (was, One North Carolina Small Business Program).Directs the Revisor of Statutes to make the necessary conforming changes to reflect the renaming as provided in this section.
Directs $20 million of the funds appropriated to the Department of Commerce for the 2014-15 fiscal year to be transferred to the Site Infrastructure Development Fund for uses consistent with GS 143B-437.02, Site infrastructure development. Requires the Office of State Budget and Management along with the Office of the State Controller and the Department of Commerce to transfer the unencumbered cash balance of the Job Catalyst Fund to the Site Infrastructure Development Fund.
Amends the catchline of GS 143B-437.02 to read as 'Site Acceleration Fund', was 'Site infrastructure development'. Further amends the section to provide that a business is considered to be providing health insurance, for the purposes of this subsection, if it pays at least 50% of the premiums for health coverage (was, if it pays at least 50% of the premiums for health coverage or exceeds the minimum provisions of the basic care plan of coverage recommended by the Small Employer Carrier Committee pursuant to GS 58-50-125).
Directs the Revisor of Statutes to make the necessary conforming statutory changes necessary to the General Statutes to reflect the renaming of the Site Infrastructure Development Fund to the Site Acceleration Fund.
Amends GS 105-130.4(s1), concerning the allowable allocation and apportionment of income for corporations that meet certain conditions of this section. Deletes language which previously provided that if a corporation fails to invest $1 billion dollars in private funds within nine years, then the benefit of GS 105-130.4(s1) and the corporation must apportion income as it would otherwise be required to without the benefit of this section. Enacts new language that provides that if a corporation fails to satisfy the specified conditions of GS 105-130.4(s1), any benefit provided under GS 105-130.3(s1) will be forfeited and income must be apportioned as otherwise required. Additionally provides that the corporation which forfeits the benefits will also be liable for all past taxes which had been previously avoided, plus interest at the specified rate. Requires that all past taxes and interest be due 30 days after any benefit has been forfeited. If such payment is not received specified penalties will be enforced. Further provides that if a corporation does forfeit the benefits then the period for proposing an assessment of any tax due as a result of such forfeiture is three years after the date of discovery of the forfeiture.Deletes certain conditions that are required to be met for a corporation to be considered a 'qualified capital intensive corporation', including language which detailed how income should be apportioned by multiplying the income by specified sales factor and that certain facilities be located in counties that are designated as development tier one or tier two area at the time construction of the facility began. Clarifies that the wage standard condition in GS 105-130.4(s1)(5)is satisfied if the corporation pays an average weekly wage at least equal to the lesser of 110% of the average wage for all insured private employers in the State and 90% of the average wage for all insured private employers in the county. Makes clarifying changes.
Repeals Section 4 of SL 2009-54, which provided that qualified capital intensive corporations are not eligible for grants from the Job Development Investment Grant or the One North Carolina Fund.
The above portions of this Part are effective when it becomes law and applies to corporations receiving a written determination from the Secretary of Commerce on or after that date.
Amends Section 6 of SL 2009-54, deleting language that provided that GS 105-130.4(s1) will be repealed for taxable years beginning on or after January 1, 2019 if no corporation has qualified as a qualified capital intensive corporation under GS 105-130.4(s1). Effective when it becomes law.
Amends GS 105-164.14A(a)(1) to extend the sales tax refund for fuel purchased by passenger air carriers until January 1, 2020 (was, repealed for purchases made on or after January 1, 2016).
Amends GS 105-164.13 to provide that the sales of electricity for use at a qualifying datacenter and datacenter support equipment that is to be located and used at the qualifying datacenter are exempt from the tax imposed by GS Chapter 105, Article 5, Sales and Use Tax. Specifies what types of capitalized property is considered to be "datacenter-support equipment" for tax purposes.
Amends GS 105-164.3, the definitions section for the the sales and use tax article, adding language to definequalifying datacenteras a datacenter that (1) meets the wage standard and health insurance requirements of GS 143B-437.08A and (2) has been certified by the Secretary of Commerce, by way of written determination, that at least $75 million in private funds has or will be invested in the datacenter by the owners, users, or tenants within five years of the date the same make the first real or tangible property investment in the datacenteron or after January 1, 2012. Makes conforming technical changes to the statute.
Sets out in GS 105-164.13(55a) when the tax exemption can be forfeited including: the level of investment specified above is not timely, investment is timely but specific datacenter support equipment is not located or used at the qualifying datacenter, or portions of the electricity are not used at the datacenter. Specifies that a taxpayer that forfeits such an exemption is liable for all past taxes avoided as a result of the exemption, computed from the date the taxes would have been due if the exemption was not allowed, plus interest established pursuant to GS 105-241.21. Sets out formula for calculating the interest due depending on the way in which the forfeiture was triggered.
This part is effective July 1, 2015, applying to sales made on or after that date.
Unless otherwise indicated, effective when the act become law.
Summary date: Feb 24 2015 - View summary
To be summarized.