Bill Summary for S 715 (2017-2018)

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Summary date: 

May 17 2018

Bill Information:

View NCGA Bill Details2017-2018 Session
Senate Bill 715 (Public) Filed Wednesday, May 16, 2018
Intro. by Tillman, Tucker.

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Bill summary

Senate committee substitute makes the following changes to the 1st edition.

Amends the proposed changes to GS 105-130.4(l)(3), regarding the determination of the sales factor in apportioning corporate income. Provides that sales are in this state when receipts are from real or tangible property located in the State, specifically including receipts from incidental services sold as part of, or in connection with, the sale of tangible personal property in the State. Removes the proposed language defining "receipts from services" as it relates to the inclusion of receipts from services with income-producing activities in the State as sales in this State. Instead, explains that receipts from income-producing activities performed within and without this State are attributed to this State in proportion to the income-producing activities performed in this State to total income-producing activities performed everywhere that generate the sale of service. 

Adds a new section amending GS 105-130.11 to exempt from nonprofit corporations' income tax amounts paid or incurred by 501(c)(3) organizations for a parking facility that would otherwise be included as taxable unrelated business expenses under section 512(a)(7) of the Internal Revenue Code (Code; concerning qualified transportation fringe). Effective for taxable years beginning on or after January 1, 2018.

Makes technical correction to the effective date provision for the proposed changes to GS 105-164.3(20b), clarifying the term mixed transaction contract.

Amends the provision permitting an individual to apply to the Department of Revenue for a refund of excess taxes paid on an item exempt from sales and use tax due to changes made to GS 105-164.13E regarding farmer exemption certificates, clarifying that the refund must be for a return period ending prior to the date the amendments to GS 105-164.13E become law.

Modifies the proposed changes to GS 105-244.3, regarding the grace period for levying taxes on certain retailers, adding persons that failed to collect sales tax on repair, maintenance, and installation services for tangible personal property, motor vehicles, and digital property (previously, did not include RMI services for motor vehicles) to those to which the grace period may be applicable. 

Adds a new section amending GS 105-164.4G regarding the taxation of entertainment activities. Adds to the exemptions set out in subsection (f), providing that gross receipts derived from portions of a membership charge that are as described in section 170(l)(2) of the Code or donations that are as described in section 170(l)(2) of the Code are exempt from sales and use tax. Section 170(l)(2) of the Code describes amounts paid to an educational institution of higher learning where the taxpayer receives the right to purchase athletic event tickets, whether directly or indirectly (as amended by the Federal Tax Cuts and Jobs Act (TCJA) in 2017, Pub. L. 115–97, the Code prohibits these charitable donations from being deducted for income tax purposes).

Adds a new section to amend GS 105-164.7, incorporating the sales tax expansion to taxable services by Article 5 of GS Chapter 105. Makes conforming and technical changes.

Adds a new section amending GS 105-471, requiring retailers to collect sales tax, to now refer to "a person liable for tax" instead of a "retailer." Specifies that the requirement for the sales tax to be charged separately from the sales price and be shown separately in the person liable for the tax's records does not apply to vending machine sales or where a retailer displays a statement indicating the sales price includes the tax, as provided in existing GS 105-164.7. Further modifies the statute to now direct the Secretary of Revenue to design the necessary forms for persons liable for collecting sales tax to file returns (previously, required the Secretary to design, print and furnish the necessary forms to all retailers in taxing counties).