AN ACT TO ENACT THE NORTH CAROLINA COMPETES ACT.
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.
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