A BILL TO BE ENTITLED AN ACT TO REFORM THE CORPORATE INCOME TAX AND REDUCE THE CORPORATE INCOME TAX RATE BY MOVING TO SINGLE SALES FACTOR APPORTIONMENT AND ELIMINATING CORPORATE TAX EXPENDITURES.
Amends GS 105-130.3 (Corporations) toimpose a tax on the state net income of every C Corporation doing business in the state at the following percentages: (1) 6.9% in 2013, (2) 6.5% in 2014, (3) 6.25% in 2015, and (4) 6% after 2015. Effective for taxable years beginning on or after January 1, 2014.
Current law provides for apportioning the apportionable income of corporations other than public utilities, excluded corporations, and qualified capital intensive corporations to the state by multiplying the income by a fraction. Amends GS 105-130.4(i) to provide that the numerator of the fraction is the property factor plus the payroll factor plus three times the sales factor (was, two time the sales factor) and the denominator is five (was, four). Provides that if the payroll or property factor does not exist, but there is a sales factor, then the denominator is the number of existing factors plus two (was, plus one). Effective for taxable years beginning on or after January 1, 2014.
Further amendsGS 105-130.4(i), as amended in this act, to again modify the calculations for apportioning the apportionable income of corporations other than public utilities, excluded corporations, and qualified capital intensive corporations effective for taxable years beginning on or after January 1, 2015. Provides that the numerator of the fraction is the property factor plus the payroll factor plusfive times the sales factor (was, three times the sales factor) and the denominator isseven (was, five). Provides that if the payroll or property factor does not exist, but there is a sales factor, then the denominator is the number of existing factors plusfour (was, plus two).
Amends GS 105-130.4(i), as amended in this act, to make additional changes to this provision effective for taxable years beginning on or after January1, 2016. Provides that all apportionable income of corporations other than public utilities (exceptions previously included excluded corporations, and qualified capital intensive corporations) be apportioned to this state by multiplying the income by the sales factor as determined under subsection (1) of this section(was, required multiplying the income by a fraction).Makes conforming changes, repealing GS 105-130.4(a)(4), (r), and (s1).
Rewrites GS 105-130.5, Adjustments to federal taxable income in determining state net income,as amended by SL 2013-10, to delete the adjustment to federal taxable income for any amount allowed as a net operating loss deduction under the Code. Also deletes adjustments for the applicable percentage amount allowed as a special accelerated depreciation deduction under section 168(k) or section 1400L of the Code [subdivisions (15), (15a), and (15b)] and for the taxpayers' expense deduction for section 179 of the Code for property. Adds an adjustment for the amount required to be paid under GS 105-130.5B when the state decouples from federal accelerated depreciation and expensing. Modifies the adjustment for royalty payments to include interest expenses.
Subsection (b) of GS 105-130.5 allows for deductions from federal taxable income to be made in determining state net income; amends this subsection to delete deductions from federal taxable income in the following subdivisions: (4) through (8), (12), (13), (15), (18), (19), (21), (21a), (21b), (22), (24), (26), and (26a). Adds as a deduction the amount allowed as a deduction under GS 105-130.5B as a result of add-back for federal accelerated depreciation and expensing. Deletes provision of subsection (c)(3) providing that GS 105-130.6A applies to the adjustment for expenses related to dividends received that are not taxed under this Part (Corporation Income Tax Act).
Enacts new GS 105-130.5B to GS Chapter 105, Article 4, Part 1,to provide for adjustments when the state decouples from federal accelerated depreciation and expensing. Includes a depreciation exception for a taxpayer who placed property into service during the 2009 taxable year and whose North Carolina taxable income forthe 2009 taxable year had a special depreciation deduction allowed for the property under section 168(k) of the Code. Defines section 179 property as having the same meaning as under the Code. Effective for taxable years beginning on or after January 1, 2014.
Amends GS 105-130A.7A to provide that the reporting options in this section apply to interest expense and royalty income (was, applied only to royalty income). Amends subsection (b) to add a definition for interest expense to mean an amount directly or indirectly allowed as a deductionunder section 163 of the Code. Effective for taxable years beginning on or after January 1, 2014.
Repeals Article 3C (Tax Incentives for Recycling Facilities) and Article 3K (Tax Incentives for Railroad Intermodal Facilities) of GS Chapter 105.
Section 6.(b) of this act lists several statutes from GS Chapter 105 that are repealed dealing with tax credits, adjustments for expenses, net economic loss, contributions and amoritization. Section 7.(a) of this act repeals (1) GS 105-259(b)(24), regarding furnishing qualifying information to the Department of Commerce and the Division of Employment Securityas required in GS 105'129.7(b) or GS 105'129.86(b);(2) GS 105-259(b)(37) regarding providing information to the Department of Commerce to complete the study required under GS 105-129.82; and (3) GS 105-259(b)(38) regarding verifying eligibility for a credit under GS 105'129.16Hwitha nonprofit organizationor unit of local or state government.
Enacts new GS 143B-437.08A regarding wage, health insurance, environmental impact,and employee safety and health standardsapplicable toeconomic development incentives. Sets out the standards to be met and the criteriato be examined in determining ifthe standardshave beenmet.
Makes conforming changes to GS 143B-437.01(a) and amends the definitions in subsection (a1) for (1) air courier services, (2) company headquarters, (3) information technology and services, (4) manufacturing, (5) warehousing, and (6) wholesale trade. Adds a definition for NAICS to mean as defined in GS 105-228.90.
Except as otherwise indicated, this act becomes effective for taxable years beginning on or after January 1, 2014.
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