AN ACT TO MAKE TECHNICAL AND CLARIFYING CHANGES TO VARIOUS REVENUE LAWS, AS RECOMMENDED BY THE REVENUE LAWS STUDY COMMITTEE. Enacted April 9, 2015. Effective April 9, 2015, except as otherwise provided.
Summary date: Apr 13 2015 - View summary
Summary date: Apr 1 2015 - View summary
Conference report makes the following changes to the 3rd edition.
Deletes Part I of the bill concerning IRC updates.
Adds that utility refunds resulting from the reduction of the corporate income tax that are subject to interest do not include any amounts to be refunded arising from excess deferred income taxes due to the reduction in the corporate income tax rate effective for taxable years beginning on or after January 1, 2014. Makes clarifying changes.
Adds that if Senate Bill 20 becomes law, then Section 2.3 (which amends the sales price and the cost price of motor fuel to be used in determining the amount to deduct in GS 105-449.107(c)) of the act is repealed.
Summary date: Mar 18 2015 - View summary
Senate committee substitute makes the following changes to the 2nd edition.
Changes the short and long titles.
Under current law, North Carolina's tax law tracks many of the provisions of the federal Internal Revenue Code (IRC) by reference to the IRC.
Amends GS 105-228.90(b)(1b) to update the reference to the IRC from December 31, 2013, to January 1, 2015, thereby including any provisions of the IRC enacted as of January 1, 2015, that became effective before or after that date.
Amends GS 105-130.5B(c) and GS 105-153.6(c) to update and provide that for the purposes of those provisions, the definition ofsection 179 propertyhas the same meaning as under section 179 of the federal internal revenue code as of January 1, 2015 (was, January 2, 2013).
Decouples North Carolina's tax law from extensions under the federal Tax Increase Prevention Act of 2014 (TIPA) for the 2014 tax year. Amends GS 105-130.5B(c) and GS 105-153.6(c), regarding the adjustments made when the state decouples from federal accelerated depreciation and expensing, to provide that for the 2014 tax year, North Carolina tax law sets the deduction and investment limits of the enhanced section 179 expensing provision at $25,000 and $200,000.
Amends GS 105-153.5, modifications to adjusted gross income, adding new language that provides that in calculating the itemized deduction amount for taxable year 2014, when electing to take the income exclusion under section 408(d)(8) of the revenue code for qualified charitable distribution from an individual retirement plan, a person 70 1/2 years old or older can deduct the amount that would have been allowed as a charitable deduction under section 170 of the revenue code had the taxpayer not elected to take the income exclusion. Also adds that in calculating the itemized deduction amount for taxable year 2014, the amount allowed as a deduction for interest paid or accrued during the taxable year under section 163(h) of the Code with respect to any qualified residence must not include the amount for mortgage insurance premiums treated as qualified residence interest.
Additionally, amends GS 105-153.5, enacting new subsection (d), which provides that North Carolina tax law does not conform to the extension of: (1) the income exclusion for the discharge of qualified residence indebtedness as provided under the IRC and (2) the federal qualified tuition and expenses deduction for tax year 2014. Additionally, this act provides that North Carolina's tax law does not conform with the IRC provision that allows taxpayers who are age 70�_ or older to contribute up to $100,000 from their IRA to a charity tax free.
Effective when this act becomes law. Provides that any amendments to the IRC enacted after December 31, 2013, that increase North Carolina taxable income for the 2014 taxable year become effective for taxable years beginning on or after January 1, 2015.
Summary date: Mar 5 2015 - View summary
House committee substitute to the 1st edition makes the following changes.
Adds that the purpose of Section 4 (which amends Section 4.2(a) of SL 2013-316) of the act is to clarify the intent of the 2013 General Assembly that the Utilities Commission must adjust the rate for sales of electricity, piped natural gas, and water and wastewater services to reflect all of the tax changes enacted in SL 2013-316. Clarifies that the Utilities Commission must order a utility to add interest to money refunded to its customers for refunds resulting from the reduction of the corporate income tax rate effective for taxable years beginning January 1, 2014, as provided in Section 4(b) of the act. Makes conforming and technical changes.
Amends GS 105-164.13E(b) to provide that a conditional exemption certificate issued to person who does not meet the definition of a qualifying farmer is valid for the taxable year in which the certificate is issued and the following two taxable years if the person is engaged in farming and provides copies of applicable income tax returns within 90 days following the due date of an income tax return for each taxable year covered by the certificate, including an extension of the due date (was, if the person to whom the certificate is issued provides copies of income tax returns within 90 days following the end of each taxable year covered by the certificate and if the person is engaged in farming operations).
Amends GS 105-164.16A by deleting proposed (b), which required a retailer to report gross receipts derived from a prepaid meal plan on a accrual basis, despite specified circumstances. Adds that the retailer must report the gross receipts on an accrual basis of accounting, as required under GS 105-164.20. Makes conforming changes. Amends GS 105-164.20 to add that the following retailers must report the gross receipts it derives from the taxable transaction listed on an accrual basis of accounting: (1) a retailer who sells electricity, piped natural gas, or telecommunications service (was, electricity or telecommunications service); (2) a retailer who derives gross receipts from a prepaid meal plan; and (3) a retailer who sells or derives gross receipts from a service contract. Makes all of the changes in Section 23 of the act effective October 1, 2014.
Adds a new Section 24 to the act, the purpose of which is to extend the statute of limitations for requesting a refund of state income taxes to conform to federal tax treatment of the rollover of an airline payment amount by a qualified airline employee to a traditional or Roth IRA to prevent double taxation. Allows a qualified airline employee, or the employee's surviving spouse, that meets the specified conditions to apply for a refund of the state income tax paid on the airline payment amount that was transferred to a traditional IRA. Requires a request for a refund to be made on or before October 15, 2015; requests after that date are barred.
Makes technical changes throughout.
Summary date: Feb 3 2015 - View summary
Identical to S19, filed 2/03/15.
Effective January 1, 2015, Section 7.1.(c) of SL 2014-3 enacts a new GS 105-164.4H applicable to real property contractors and retailor-contractors when they are acting as real property contractors. Amends Section 7.2(a) of SL 2014-3 to clarify that the changes related to real property contractors and retailer-contractors are not retroactive and are not to be construed to affect the interpretation of any statute that is the subject of a state tax audit for taxable years beginning before the effective date of January 1, 2015. Also amends Section 7.3 of SL 2014-3 to provide that this part applies to items withdrawn from inventory for contracts entered into on or after January 1, 2015.
Amends Section 8.1(c) of SL 2014-3 regarding the rental of a private residence, cottage, or similar accommodation that is (1) rented for fewer than 15 days in a calendar year, and (2) listed with a real estate broker or agent. Clarifies that a retailer is liable for an over collection of sales or occupancy tax for the rental of such an accommodation occupied or available to be occupied beginning June 1, 2012, and ending June 30, 2014, and must remit the tax that is collected. Also provides that a retailer is not liable for an under collection of the sales or occupancy tax on the rental of such an accommodation occupied or available to be occupied beginning June 1, 2014, and ending June 30, 2014, if the retailer made a good-faith effort to comply with the law and collect the proper amount of tax. Becomes effective June 1, 2014.
Deletes changes to GS 105-114(b)(4), in Section 14.26 of SL 2014-3 because the change exists elsewhere in SL 2014-3
Amends Section 4.2(a) of SL 2013-316, Tax Simplification and Reduction Act, to direct the Utilities Commission (Commission) to adjust the utility rates for electricity and piped natural gas to reflect the reduction in the corporate income tax rate imposed under GS 105-130.3. Additionally directs the Commission to adjust the rates for public water and wastewater companies to reflect the repeal of GS 105-116 and the resulting liability of public water and wastewater companies under GS 105-122, and the reduction in the corporate income tax imposed under GS 105-130.3. Becomes effective January 1, 2014.
Requires the Commission to order a utility to add interest, at a rate set in accordance with GS 62-130, to refunds to customers resulting from the reduction of the corporate income tax. Effective when this section becomes law and applies to refunds issued on or after that date.
Amends GS 105-113.35(d) to permit manufacturers of vapor products to apply to the Secretary of Revenue to be relieved of paying the tax on vapor products shipped to wholesale or retail dealers. Becomes effective June 1, 2015.
Amends GS 105-129.16A(a) to clarify that a taxpayer seeking a credit for constructing, purchasing, or leasing renewable energy property must place the property in service in North Carolina during the taxable year in order to receive the allowed credit.
Amends Section 1.1(a) of SL 2014-3 to clarify the deductions from federal taxable income that are to be made in determining state net income include (1) any used portions of a net economic loss as allowed under GS 105-130.8A(e), expires for taxable years beginning on or after January 1, 2030; and (2) a state net loss as allowed under GS 105-130.8A, limits a corporation to deducting its allocable and apportionable state net loss only from total income allocable and apportionable to the state.
Amends GS 105-134.6A, effective January 1, 2013, and GS 105-153.6, effective January 1, 2014, each as amended by SL 2014-3, to clarify that a beneficiary of a transferor is subject to tax under Part 2 or 3 of Article 4 of GS Chapter 105.
Provides that regardless of the provisions of GS 105-163.15, an individual or a withholding agent cannot be penalized for an underpayment of income tax that resulted from changes made in Section 2.2 of SL 2014-3, which clarified that a person ineligible for a federal standard deduction is also not eligible for a state standard deduction. Effective when the section becomes law and applies to taxable years beginning on or after January 1, 2014, and before January 1, 2015, and to payroll periods beginning on or after January 1, 2014, and before January 1, 2015.
Amends GS 105-164.3(35), as amended by Section 14.7 of SL 2014-3, to clarify that the definition for “retailer” applies to any person, other than a facilitator, required to collect sales tax imposed under GS 105-164.4(a).
Makes technical changes to GS 105-164.4G, concerning entertainment activity.
Amends GS 105-164.13, as amended by Section 6.1(f) of SL 2014-3, to provide that the exemption to the sales and use tax that applies to fuel also includes piped natural gas.
Amends GS 105-164.13E regarding the sales and use tax exemption for farmers. Clarifies criteria to be a “qualifying farmer” under this section and defines the term income from farming operations. Clarifies that the exemption expires upon the occurrence of either of the following, whichever occurs earlier: (1) the person fails to meet the income threshold for three consecutive taxable years, or (2) the person no longer engages in farming. Includes piped natural gas in the exemption for qualifying farmers. Provides that a new farmer seeking a conditional exemption must be engaged in farming operations in addition to submitting the applicable income tax returns to the Department of Revenue (Department). Provides that certain tangible property listed in subdivisions (5), (8), and (9) of subsection (a) of GS 105-164.13E, which is purchased to fulfill a contract with a person with either a qualifying farmer exemption certificate or a conditional farmer exemption certificate is exempt from the sales and use tax to the same extent as the qualifying farmer or conditional farmer who holds the exemption certificate. Requires the person contracting with the qualifying or conditional farmer to provide an exemption certificate to the retailer that identifies the certificate holder and the number issued to that holder. Effective July 1, 2014. Provides that a contractor who paid sales and use tax on an item exempt from that tax under GS 105-164.13(c) may ask for a refund from the retailer. Permits the retailer, upon issuing a refund or credit, to request a refund of the tax overpayment under GS 105-164.11(a)(1).
Amends GS 105-164.16A, as enacted by SL 2014-3, to clarify that a retailer who offers a prepaid meal plan has an option as to the method for remitting the sales tax to the Secretary of Revenue (Secretary) and a return filed under GS 105-164.16. Requires that tax payments received by a food service contractor (contractor) from a retailer to be held in trust by the contractor for remittance to the Secretary. Directs the contractor to remit the tax payment received from a retailer to the Secretary. Provides that if the retailer does not pay the tax due to the contractor, the contractor is not liable for the tax that is due, and the retailer is liable for the amount of tax the retailer failed to send to the food service contractor. Requires a retailer to report the gross receipts from a prepaid meal plan on an accrual basis of accounting.
Amends GS 105-164.29(a), as amended by Section 14.9(b) of SL 2014-3, regarding the requirements for a person to obtain a certificate of registration from the Department prior to engaging in business as a retailer or wholesale merchant, or acting as a facilitator liable for tax under GS 105-164.4F. Amends the requirements for signing the registration application to provide that the application be signed by a manager, member, or company official, if the owner is a limited liability company; or by a manager, member, or partner if the owner is a partnership.
Makes clarifying changes to GS 105-241.6(b)(5) regarding a “contingent event” as a basis for obtaining an exception to the general statute of limitations for obtaining a refund of an overpayment of tax.
Effective for taxes imposed for taxable years beginning on or after July 1, 2015, amends GS 105-338(c), as amended by Section 11.1(e) of SL 2014-3, deleting subdivision (4), which allocated the appraised value of the tangible personal property of mobile telecommunications companies, excluding towers, based only on original cost. Amends GS 105-339, as amended by Section 11.1(f) of SL 2014-3, to clarify that the Department is to include mobile telecommunications property in those properties appraised at “true value,” as defined in GS 105-283, which includes consideration of its original cost with deductions made for depreciation to determine the property’s fair market value. Also provides for the certification of appraised valuations of the tangible personal property (was, towers) of mobile telecommunications companies in accordance with subsections (c) and (d) of GS 105-336 (was, included the certification of the appraised valuations of the towers of mobile telecommunications companies in accordance with GS 105-336(d)) with appraised valuations assigned to the taxing unit where the property is situated. Effective when it becomes law, makes a conforming change, repealing Section 11.1(g) of SL 2014-3.
Amends GS 160A-206, regarding the taxing authority of a city, and GS 153A-146, regarding the taxing authority of a county, to clarify that both cities and counties are prohibited from imposing a license, franchise, or privilege tax on a person engaged in any of the following businesses: (1) supplying piped natural gas, (2) providing telecommunications service taxed under GS 105-164.4(a)(4c), (3) providing video programming taxed under GS 105-164.4(a)(6), and (4) providing electricity.
Authorizes the Department to draw the funds necessary to make distributions from the sales and use tax collected under Article 5 of GS Chapter 105 for the September 15, 2014, distribution of the franchise tax to cities under GS 105-116.1 and to cities under GS 105-187.44 for the calendar quarter that begins April 1, 2014.
Effective for taxable years beginning on or after January 1, 2014, amends GS 105-153.3 and GS 105-153(a)(1) to conform the state Individual Income Tax Act to the federal Internal Revenue Code (Code) with regards to the deduction amount for a surviving spouse as defined in section 2(a) of the Code. Makes the same conforming changes in GS 105-134.1 and GS 105-134.6(a2), effective retroactively for taxable years beginning on or after January 1, 2012, and before January 1, 2014.
Amends GS 105-164.13B(a)(4) to delete a reference to a repealed statute and to add a definition for “related person” that was included in the repealed statute. Defines related person as the term is defined in section 267(b) or 707(b) of the Code.
Amends GS 105-153.4, which defines North Carolina taxable income for residents, nonresidents, part-year residents, and S Corporations and Partnerships. Deletes references to a repealed statute, GS 105-134.6A. Adds a new subsection (c1) to GS 105-153.5 to require S Corporations, partnerships, and estates and trusts to add back any amount that was deducted under section 164 of the Code as state, local, or foreign income tax. Effective for taxable years beginning on or after January 1, 2015.
Amends subdivision (62) of GS 105-164.13, as amended by Section 6.1(f) of SL 2014-3, to clarify that the exemption from the retail sales and use tax for items used to maintain or repair tangible personal property or a motor vehicle, applies to an item used under a service contract, if (1) the service contract is subject to sales tax, and (2) the purchaser of the service contract is not charged for the item. Makes a conforming change to GS 105-187.52(c), clarifying that the exemption in GS 105-164.13(62) does not apply to an item used to maintain or repair tangible personal property under a service contract that is exempt from tax under GS 105-164.4I(b)(4). Becomes effective October 1, 2014.
Provides that the sales and use tax exemption in GS 105-164.13(62), as amended, applies to a “service contract” as defined in GS 105-164.3(38b) regardless whether the service contract was sold before January 1, 2014, and effective on, before, or after January 1, 2014.
Except as otherwise indicated, this act is effective when it becomes law.