AN ACT TO MAKE VARIOUS CHANGES TO THE REVENUE LAWS.
House amendment #1 makes the following changes to the 4th edition.
Part I. Business Tax Changes
Moves part of the proposed changes to GS 105-122(d)(3) in current Section 1.3(a) to Section 1.3(b), concerning the calculation of a corporation's total actual investment in tangible property. Maintains the proposed changes providing that the calculation of the corporation's total actual investment in tangible property in this State includes the total original purchase price or consideration to the reporting taxpayer of its tangible properties and additions and improvements thereto, less reserve for depreciation as permitted for income tax purposes, and any indebtedness specifically incurred and existing solely for and as the result of the purchase of any real estate and any permanent improvements made on the real estate from. Provides that these changes, now set out in Section 1.3(b), are effective for taxable years beginning on or after January 1, 2020, and are applicable to the calculation of franchise tax reported on the 2019 and later corporate income tax returns. Further provides that the remaining proposed changes to GS 105-122(a) and (d), and proposed subsection (d2), set forth in Section 1.3(a), are effective when the act becomes law (previously, all changes to GS 105-122 were effective for taxable years beginning on or after January 1, 2020, and applicable to the calculation of franchise tax reported on the 2019 and later income tax returns). Makes conforming changes.
Adds new Section 1.3(c), amending Section 38.6(a) of SB 257 of the 2017 Regular Session, which amends GS 105-122, if SB 257 becomes law. Deletes the proposed changes to GS 105-122. Instead amends GS 105-122(d2), as enacted by this act, providing that the enacted tax rate of $1.50 per $1,000 of the corporation's tax base applies to C corporations, as defined in GS 105-130.2. Adds that for an S corporation, as defined in GS 105-130.2, the tax rate is $200 for the first $1 million of the corporation's tax base and $1.50 per $1,000 of its tax base that exceeds $1 million. Makes technical changes to clarify that in no event is the tax imposed to exceed $200. As currently provided in Section 38.6(b) of SB 257, these changes are effective for taxable years beginning on or after January 1, 2019, and are applicable to the calculation of franchise tax reported on the 2018 and later corporate income tax returns.
Adds to the proposed changes to GS 105-228.4A(f), set out in Section 1.10(a), concerning total tax liability for a captive insurance company. Adds that the maximum tax liability attributed to any one cell or series of the insurance company is limited to $100,000, while a $500,000 maximum tax liability applies to any one cell or series that acts as a direct-writing, risk-pooling mechanism for other cells, series, or captive insurers.
Amends Section 1.14, directing the Department of Revenue (Department) to study the feasibility and cost of allowing the pass-through of a federal extension of time for filing a federal income tax return (previously, for filing a federal corporate income or individual income tax return) to serve as an application for a State extension of time for filing a corporate franchise and other income tax returns (previously, for filing a corporate franchise and income tax return or an individual income tax return). Directs the Department to report its findings, along with any legislative recommendations, to the Revenue Laws Study Committee on or before January 1, 2018 (previously, on or before March 1, 2018), specifically regarding options to eliminate the mandatory State extension time filing for corporate franchise and other income tax returns beginning January 1, 2019, for the tax year 2018 (previously, did not specify content of the report).
Part II. Sales and Use Tax
Adds to proposed GS 105-164.4G(f)(6), set out in Section 2.10(a), exempting from sales and use tax an event sponsored by a farmer that takes place on farmland and is related to farming activities (previously, did not require the event to be related to farming activities). Adds that examples of the events under the new exemption include a corn maze or a tutorial on raising crops or animals.
Part IV. Administrative Changes
Further amends GS 105-259(b) set out in Section 4.7, to refer to GS 143B-1385 instead of GS 143B-1381 in subdivision (45), concerning disclosure of tax information to the State Chief Information Officer.
Makes technical change to the introductory language in Section 4.8.
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