AN ACT TO MAKE VARIOUS TECHNICAL, CLARIFYING, AND ADMINISTRATIVE CHANGES TO THE REVENUE LAWS, AS RECOMMENDED BY THE DEPARTMENT OF REVENUE.
Senate committee substitute replaces the content of the 3rd edition with the following.
Amends GS 105-122, which sets parameters for determining the net worth of a corporation for tax purposes, establishing that a foreign corporation that files a federal income tax return's net worth is based on the value of assets deemed to be in the United States. Effective for taxable years beginning on or after January 1, 2023, and applicable to the calculation of franchise tax reported on the 2022 and later caproate income tax return.
Further amends GS 105-122 to require corporations calculating their net worth to add the amount of indebtedness the corporation owes to a parent, subsidiary, affiliate, or noncorporate entity in which the corporation or group of corporations owns directly or indirectly more than 50% of the capital interest of the noncorporate entity, unless the debt creates qualified interest expense, as defined by state law.
Revises and adds to defined terms in GS 105-130.7B, which sets a limitation on qualified interest for certain indebtedness. Amends qualified interest expense to more specifically exclude from the described limitation the proportionate share of interest paid or accrued to a related member that is the ultimate payee (was, the interest paid or accrued to a related member) if one of four specified criteria are met. Adds and defines ultimate payee as a related member that receives or accrues interest directly from a related member or indirectly through related members.
Amends GS 105-130.8A to specify that the Secretary of Revenue (Secretary) must apply specified standards contained in regulations adopted pursuant to the Internal Revenue Code (Code) on a separate entity basis in determining the extent to which a loss survives a merger or an acquisition (previously did not provide for application on a separate entity basis). Makes a technical change to subsection (e) to account for other provisions of the statute.
Amends GS 105-130.11 to exempt insurance companies subject to the tax on gross premiums from corporate income tax imposed under Part 1, Article 4, which are exempt from federal income tax under the Code.
Corrects a statutory cross-reference in GS 105-228.5(d)(3) regarding taxes on the gross premiums of insurance companies and prepaid health plans.
Amends GS 105-153.5(c2), which provides decoupling adjustments for state individual taxable income. Specifies that for taxable years 2021 through 2025, a taxpayer must add an amount equal to the amount by which the taxpayer's exclusion from their gross income for the discharge of a student loan under the specified section of the Code exceeds the exclusion that would have been allowed under the Code as enacted as of May 1, 2020. Adds that if the taxpayer is insolvent, as defined by the Code, then this addition is limited to the amount of discharge of student loan debt excluded from adjusted gross income under 108(f)(2) of the Code that exceeds the amount of discharge of debt that would have been excluded under 108(a)(1)(B) of the Code. Effective for taxable years beginning on or after January 1, 2021.
Amends GS 105-153.5A, which defines state net operating loss, to set the amount as that by which business deductions for the year exceed gross income (rather than gross business income) for the year as determined by the Code. Effective for taxable years beginning on or after January 1, 2021.
Amends GS 105-154 to require a business owed by a nonresident individual or by a partnership having one or more nonresident members to report information required by the Secretary (previously required reporting by the business manager). Adds new authority for the Secretary to enforce a business's liability for the tax on each nonresident owner or partner's share of the income by sending the business a notice of the proposed assessment pursuant to state law. Provides that when the nonresident partner is not an individual and has executed either an affirmation that the partner will pay its appropriate tax return or is not subject to state income tax, the business (rather than the business manager) is not required to pay the partner's share and must include such affirmation with its required report to the Secretary. Makes further changes to the section to replace manager with business regarding tax liability of such businesses.
Repeals GS 105-164.3(161), which defines the term operator for purposes of Article 5, Sales and Use Tax.
Updates the term Streamlined Agreement under Article 5 to mean the Streamlined Sales and Use Tax Agreement as amended as of December 21, 2021.
Amends the term State under the Uniform Sales and Use Tax Administration Act, Part 7A, Article 5, to include any territory of the United States, including American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the US Virgin Islands.
Repeals GS 105-164.4F(c1), which requires annual reporting by accommodation facilitators to the Secretary on accommodation rentals made during the prior calendar year.
Enacts GS 105-113.4L to require persons required to be licensed under the Tobacco Products Tax Act, Article 2A, to file reports with the Department of Revenue (Department) in the form required by the Secretary.
Updates the definition of International Fuel Tax Agreement under Article 36B, Tax on Motor Carriers, to mean the Articles of Agreement adopted by the International Fuel Tax Association Inc. as amended as of January 1, 2022.
Amends GS 105-236(a)(10) to specify that the civil penalties provided of $50 per day, up to $1,000, apply to any failure to file a report when due to the Secretary, and includes reports required by Article 2A, 2C, 4, 4A, 5, 9, 36C, and 36D of the Chapter.
Amends GS 105-241.6(a)(2), which sets the general statute of limitations for obtaining a refund of an overpayment at two years after payment of the tax, to specify that the amount refunded cannot exceed the portion of the tax paid during the two years immediately preceding the taxpayer's request for refund.
Amends GS 105-241.13A, expanding the effect of inaction by a taxpayer after timely filing a request for review. Now provides that such inaction results in the proposed Departmental action becoming final, and including as a Departmental action, a proposed revocation of a certificate of registration, in addition to the proposed denial of a refund or the proposed assessment currently provided for. Makes conforming changes to make the statute's procedures applicable to all three Departmental actions.
Amends GS 105-241.21(c)(1), which sets the date at which interest accrues on an overpayment of franchise, income, and gross premium taxes, to specify that the date the final return was due to be filed excludes the consideration of extensions.
Limits the application of extension of federal returns, reports, and payment under section 7508A of the Code due to a presidentially declared disaster, as provided for in GS 105-249.2(b). Specifies that any such extension only applies to the corresponding State tax return and payment, with State returns and payments without corresponding federal returns and payments subject to the extension granted for individual income tax returns and payments by the IRS under section 7508A of the Code.
Amends GS 105-263(c), which provides for automatic extensions to file State income tax returns and franchise tax returns that correspond with federal income tax returns granted an automatic extension. Limits the subsection's application to extension applications filed with the Commissioner of Internal Revenue, and excludes extensions granted under section 7508A of the Code allowable under GS 105-249.2(b).
Amends GS 105-277.3(d1) regarding conservation exceptions for property taxes as agricultural, horticultural, and forestland classifications. Allows property appraised at its present use value to continue to qualify for taxation as agricultural, horticultural, and forestland classifications, without regard to actual production or income requirements of the statute, so long as (1) the property is subject to a qualifying conservation easement that meets the requirements of GS 113A-235(a) (was, that meets the requirements of GS 113A-232, without regard to actual production or income requirements of the statute) and (2) the taxpayer received no more than 75 percent of the fair market value of the donated property interest in compensation.
Changes the act's titles.