Bill Summary for H 14 (2013-2014)

Summary date: 

Jul 17 2013
S.L. 2013-414

Bill Information:

View NCGA Bill Details2013-2014 Session
House Bill 14 (Public) Filed Wednesday, January 30, 2013
A BILL TO BE ENTITLED AN ACT TO MAKE TECHNICAL, CLARIFYING, AND ADMINISTRATIVE CHANGES TO THE REVENUE LAWS AND RELATED STATUTES, AS RECOMMENDED BY THE REVENUE LAWS STUDY COMMITTEE.
Intro. by Howard.

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Bill summary

Senate committee substitute makes the following changes to the 3rd edition.

Amends GS 105-236(a)(9) and GS 105-258(a), making technical changes.

Amends GS 105-263(b), concerning extensions for filing returns or reports, deleting any language regarding requesting an extension for the filing of reports with the Secretary of Revenue.

Amends GS 105-134.6(d), concerning modifications to adjusted gross income; GS 105-151(a), concerning tax credits for taxes paid outside North Carolina; and GS 105-160.2, concerning the imposition of taxes, updating statutory references to include references to GS 105-134.6A.

Amends GS 105-160.1, concerning tax definitions, providing that taxable income is meant to be used as defined in sections 641 through 692 of the Code (was, section 63 of the Code).

Recodifies the first sentence of GS 105-134.7(a)(3) as GS 105-134.6(c)(20) [previously, was recodified as GS 105-134.6(c)(17)].

Recodifies GS 105-134.7(a)(6) as GS 105-134.6(c)(21) [previously, was recodified as GS 105-134.6(c)(18)].

Recodifies GS 105-134.7(a)(7) as GS 105-134.6(d)(11) [previously, recodified GS 134.7(a)(7) as GS 105-134.6(d)(9)].

Recodifies GS 105-134.7(b) as GS 105-134.6(d)(12) [previously, recodified GS  134.7(b) as GS 105-134.6(d)(10)].

Amends GS 105-151.18(b), concerning credit for the disabled, providing that the amount of credit is determined by calculating the difference between the adjusted gross income and the correlating income amount in the included table (previously, utilized taxable income and not adjusted gross income in calculating the credit). Makes conforming changes.

Amends GS 105-164.6(c), making technical changes.

Amends GS 105-164.14(b) to add that sales and use tax liability indirectly incurred by a nonprofit through reimbursement to an authorized person (was, employee) of the entity for the purchase of tangible personal property and services other than electricity, telecommunication service, and ancillary services for use in carrying on the work of the nonprofit is considered a direct purchase by the entity.

Amends GS 105-164.27A, concerning direct payment of taxes, providing that a person who purchases direct mail under a direct pay permit must file a return and pay the tax due monthly or quarterly to the Secretary.

Amends GS 105-164.42L(c), concerning liability relief for erroneous information, changing one of the conditions required to be satisfied in order to qualify for liability relief providing the retailer's failure to collect tax at the newly effective rate does not extend beyond 30 days after the date of enactment of the new rate or the effective date applicable under GS 105-164.15A (previously, only included if the failure does not extend beyond 30 days after the date of enactment).

Provides that the repeal of GS 105-256(a)(9) is effective when the act becomes law and applies to cases filed on or after January 1, 2012.

Amends GS 105-164.3, definitions for the sales and use tax article, adding a new definition, other direct mail, meaning any direct mail that is not advertising and promotional mail regardless of whether advertising and promotional direct mail is included in the same mailing. Makes technical changes.

Amends the provisions of GS 105-164.4B(d) regarding direct mail, to provide that the provisions of GS 105-164.4B(d) do not apply to direct mail that is sourced in accordance with GS 105-164.4E. Also amends the statute to remove the provisions stating that direct mail is sourced to the location where the direct mail is delivered pursuant to a direct pay permit, when the purchaser provides the seller with information to show the jurisdictions to which the direct mail is to be delivered, and to the location from which the direct mail was shipped if it is advertising and promotional direct mail.

Enacts new section GS 105-164.4E, Direct mail, providing sourcing principles that apply to advertising and promotional direct mail, including the above deleted sourcing principles. Includes sourcing principles that apply to other direct mail as well as provisions detailing what the seller is relieved of in the absence of bad faith, including all obligations to collect, pay, or remit any tax on certain direct mail transactions.

Deletes Section 24 of the previous edition, which included the following proposed changes and amended provisions: SL 2011-296, concerning registers of deeds; SL 2012-79, deleting a sunset provision included in the lead-in language of Section 2.16 of the Session Law; the repeal of GS 161-11.4, fees for floodplain mapping; the repeal of GS 161-11.6, fees for archival of records; GS 143-215.56A, concerning the Floodplain Mapping Fund; and the effective date clause.

Amends proposed section GS 105-130.5B, concerning tax adjustments when North Carolina decouples from federal depreciation and expensing, deleting a subsection concerning the transfer of assets, which allowed a taxpayer that transfers an asset, where the basis of the asset transferred carries over from the transferor to the transferee for federal income tax purposes, to fully deduct the amount of accelerated depreciation added in a prior year. Further amends the proposed section by adding new subsections concerning a bonus asset basis, requiring the transferee of an asset transfer to add any remaining deductions to the basis of the transferred asset and depreciate the adjusted basis over any remaining life of the asset, and prior transactions, providing that for any transaction meeting specified requirements prior to January 1, 2013, the transferor and transferee can make certain elections regarding the tax adjustment allowed. Makes clarifying changes.

Amends GS 105-134.6, modifications to AGI, making technical changes.

Amends proposed section GS 105-134.6A, concerning tax adjustments when North Carolina decouples from federal accelerated depreciation and expensing, deleting a subsection concerning the transfer of assets, which allowed a taxpayer that transfers an asset, where the basis of the asset transferred carries over from the transferor to the transferee for federal income tax purposes, to fully deduct the amount of accelerated depreciation added in a prior year. Further amends the proposed section by adding new subsections concerning a bonus asset basis, requiring the transferee of an asset transfer to add any remaining deductions to the basis of the transferred asset and depreciate the adjusted basis over any remaining life of the asset, and prior transactions, providing that for any transaction meeting specified requirements prior to January 1, 2013, the transferor and transferee can make certain elections regarding the tax adjustment allowed. Also adds subsections regarding the tax basis, providing that for certain transactions AGI must be increased or decreased to account for any difference in the amount of depreciation, amortization, or gains or losses applicable to specified property; and definitions, which defines the terms transferor and owner in a transferor for use in this section. Changes the effective date of the proposed changes of the section to being effective for taxable years beginning on or after January 1, 2013 (was, January 1, 2012).

Adds an effective date for the proposed changes to GS 105-134.6(d)(23) and to GS 105-151.26, Credit for charitable contributions by nonitemizers, providing that the changes are effective for taxable years beginning on or after January 1, 2013.

Amends GS 105-159, Federal corrections, making clarifying changes.

Amends GS 105-164.28(e), concerning certificates of exemption, making a clarifying change.

Amends GS 105-164.28A(b), concerning other exemption certificates, providing that this section does not apply to a direct pay permit or a certificate of exemption (previously, provided that it did not apply to direct pay permits or certificates of resale). Makes conforming changes.

Amends GS 105-241.7(b), concerning refunds of tax overpayment, providing that a taxpayer can request a refund of overpayment of taxes based on a contingent event as defined in GS 105-241.6(b)(5) only after the event is finalized and an accurate and definite request for the refund can be determined (previously, did not provide language regarding refunds based on contingent events).

Amends GS 105-134.5, NC taxable income defined, updating statutory references to include GS 105-134.6A.

Amends GS 105-242.2(b), providing that each responsible person in a business entity is personally and individually liable for the principal amount of taxes that are owed by the business entity and listed in this subsection. Makes clarifying and conforming changes. Changes effective when the act becomes law and applies to assessments proposed on or after that date.

Amends GS 20-79.4(b) to add a special registration plate for the North Carolina Paddle Festival (Festival). Provides that the plate may bear a phrase and logo representing the festival. Amends GS 20-79.7 to establish a special plate fee of $30. Distributes $10 of the fee amount to the Special Registration Plate Account and $20 to the Collegiate and Cultural Attraction Plate Account (CCAPA). Amends GS 20-81.12 to direct the Division of Motor Vehicles to make a quarterly transfer of the money in the CCAPA earned from the sale of these plates to the Friends of the Hammocks and Bear Island Inc. Provides that the development of the plate is contingent on receiving at least 300 plate applications. Authorizes the Revisor of Statutes to ensure that all of the special registration plates listed in GS 20-81.12(b2) are listed in alphabetical order and numbered accordingly.

Provides that if House Bill 998 (HB 998), Tax Simplification and Reduction Act, 2013 Regular Session, becomes law, then GS 105-153.6, regarding adjustments when the state decouples from federal accelerated depreciation and expensing as enacted by HB 998 is amended as follows.  Amends subsection (d) to provide that the adjustments made in this section do not result in a difference in basis of the affected assets for state and federal income tax purposes, except as modified in new subsection (e) of GS 105-153.6.  Adds four new subsections to this section: (1) Subsection (e), bonus asset basis, regarding an actual or deemed transfer of an asset occurring on or after January 1, 2013, where the tax basis of the asset carries over from the transferor to the transferee for federal income tax purposes; (2) Subsection (f), prior transactions, providing that in any transaction meeting the requirements of subsection (e) of this section prior to January 1, 2013, the transferor and transferee can make an election to make the basis adjustment allowed in that subsection on the transferee's 2013 tax return subject to specified occurrences; (3) Subsection (g), tax basis, providing that for transactions described in subsections (e) or (f) of this section, adjusted gross income must be increased or decreased to account for any difference in the amount of depreciation, amortization, or gains or losses applicable to property due to the use of a different basis or rate for state income tax purposes than used for federal income tax purposes before the effective date of this section; and (4) Subsection (h), definitions, which defines the terms transferor and owner in a transferor for purposes of this section. Effective January 1, 2014, and applies to taxable years that begin on or after that date.

Provides that if HB 998 becomes law, GS 105-134.6A, 113A-256(g) (tax credit certification), and 160A-211(a) (city's authority to levy privilege license taxes), are repealed. If HB 998 becomes law, makes technical corrections to GS 105-153.3(9) and (12) as enacted by HB 998, defining limited liability company to reference a domestic or foreign limited liability company organized under GS Chapter 57D (was, 57C) and North Carolina taxable income as defined in GS 105-153.4. Provides that if HB 998 becomes law, GS 160A-211(a), regarding a city's authority to levy privilege license taxes, is amended to add GS 105-37.1, Amusements-Live entertainment and ticket resales, to the businesses, formerly taxed by the state under specified sections of Article 2 of GS Chapter 105, on which a city has the authority to levy privilege license taxes. Effective January 1, 2014, and applies to taxable years that begin on or after that date.

Amends GS 105-330.4, as amended, effective July 1, 2013, to prohibit issuing the registration for a classified motor vehicle unless (1) a temporary registration for the vehicle is issued under GS 20-79.1A or (2) the taxes for the motor vehicle's tax year that starts after the issuance of the registration are paid upon registration. Prohibits renewing the registration for a classified motor vehicle unless the taxes for the motor vehicle's tax year that begins after the registration expires are paid upon registration. Amends subsection (b) to provide that interest on unpaid taxes and registration fees  for registered classified motor vehicles does not accrue for the first month following the due date. Amends subsection (c) to provide that the enforcement remedies in this Subchapter apply to unpaid taxes on a registered classified motor vehicle for which the tax year begins prior to October 1, 2013 (was, provided that the unenforcement remedies did not apply to unpaid taxes on a registered classified motor vehicle for which the tax year begins on or after October 1, 2013).

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