AN ACT TO SPECIFY THE SECRETARY OF REVENUE'S AUTHORITY TO ADJUST THE NET INCOME OF A CORPORATION OR TO REQUIRE A CORPORATION TO FILE A COMBINED RETURN. Summarized in Daily Bulletin 6/9/11 and 6/16/11. Enacted June 30, 2011. Sections 1–6 are effective January 1, 2012. The remainder is effective June 30, 2011.
Bill Summaries: H619 FORCED COMBINATIONS (NEW).
Summary date: Jul 1 2011 - View Summary
Summary date: Jun 16 2011 - View Summary
Senate amendments make the following changes to 3rd edition.
Amendment # 1 amends proposed GS 105-130.5A(n), clarifying that the statute does not limit or negate the Secretary of Revenue’s authority to make tax adjustments as otherwise permitted by law, except that the Secretary must not make adjustments pursuant to the statute that limit a corporation’s options for reporting royalty payments.
Amendment # 2 authorizes the Revenue Laws Study Committee to review the law enacted by the act and recommend any changes needed, as detailed. Changes the act’s effective date to make the substantive sections effective January 1, 2012, and makes specified provisions apply to assessments proposed for taxable years beginning on or after that date.
Amendment # 3 amends proposed GS 105-130.5A(i)(2) to make clarifying changes to insurance companies, other than captive insurance companies, that are not included in a combined return.
Amendment # 4 amends proposed GS 105-130.5A(c), requiring a corporation to submit the combined return within 90 days (was, 60 days) of the date the Secretary provides written notice.
Summary date: Jun 9 2011 - View Summary
Senate committee substitute reported in on 6/8/11 makes the following changes to 2nd edition. Deletes all provisions of the previous edition and replaces them with AN ACT TO SPECIFY THE SECRETARY OF REVENUES’ AUTHORITY TO ADJUST THE NET INCOME OF A CORPORATION OR TO REQUIRE A CORPORATION TO FILE A COMBINED RETURN. Repeals GS 105-130.6, concerning the taxation of net income of a corporation that is a parent, subsidy, or is affiliated with another corporation. Enacts new GS 105-130.5A to provide the Secretary of Revenue (Secretary) the authority to adjust net income or require a combined return of corporations under specified circumstances. Provides procedure for the Secretary to acquire information from a corporation when he or she has reason to believe that any corporation has failed to accurately report state income properly attributed to its business. Provides that upon review of such information, if the Secretary finds a corporation is failing to accurately report its state income properly attributed to its business, the Secretary may adjust the corporation’s net income, or if such adjustments are inadequate, require the corporation to file a return that reflects the net income on a combined basis of all members of its affiliated group that are conducting a unitary business. Details authority of the Secretary, procedure, requirements, definitions, and rights of the taxpayer, for the combined return and adjustment of income. Enacts new GS 105-264(d) to allow the Secretary to charge a fee, not less than $100 and not more than $5,000, for providing specific written advice at the request of the taxpayer. Makes conforming changes. Extends the date by which the Department of Revenue (Department) must issue a final determination under GS 105-241.14 for any request for review pending as of the effective date of the act under GS 105-130.6 to June 30, 2012. Effective when the act becomes law and applies to assessments and requests for refunds which have not become final by the issuance of a final decision of the Department in a contested case commenced at the Office of Administrative Hearings pursuant to GS 105-241.15 as of the effective date. Does not apply to taxes and penalties that are the subject of pending litigation in the General Court of Justice as of the effective date and is not to be construed to affect the interpretation of any statute that is the subject of pending litigation in the General Court of Justice or an appeal from a final decision by the Court of General Justice, or to affect any other aspect of such pending litigation.
Summary date: May 26 2011 - View Summary
House committee substitute makes the following changes to 1st edition. Deletes the provisions of the 1st edition and replaces them with AN ACT TO STIMULATE ECONOMIC ACTIVITY AND JOB GROWTH BY TEMPORARILY REDUCING THE INCOME TAX BURDEN ON BUSINESS.
Amends GS 105-134.1 to define adjusted gross income as the term is defined in section 62 of the Internal Revenue Code (Code) and deletes definitions for the terms taxable income (as defined in section 63 of the Code) and this state (meaning the state of North Carolina). Amends GS 105-134.5 to define taxable income for (1) residents of this state as adjusted gross income as modified in GS 105-134.6 and for (2) nonresidents as adjustable gross income as modified in GS 105-134.6, multiplied by a fraction based on the taxpayer’s adjusted gross income as modified. Specifies that a taxpayer must compute NC taxable income on the basis of the taxable year used to compute the taxpayer’s tax liability under the code.
Rewrites modifications to adjusted gross income under GS 105-134.6, as amended by SL 2011-5 (updating the reference to the Internal Revenue Code). Allows a taxpayer to deduct an exemption, based on filing status and adjusted gross income, as specified. Allows a taxpayer to take a personal income tax deduction for the first $50,000 of net business income that the taxpayer receives during a taxable year. This deduction expires for taxable years beginning on or after January 1, 2014. Changes the starting point for calculating North Carolina’s taxable income from federal taxable income to federal adjusted gross income. Permits a taxpayer to deduct either the standard deduction as specified in GS 105-134.6 (based on filing status) or the itemized deductions amount under section 63 of the Code. Provides that the term business income does not include income that is considered passive income under the Code (for example, any rental, lease, or business activity in which the taxpayer does not materially participate). Also amends provisions regarding additions to taxable income and other adjustments to taxable income. Makes a conforming change repealing GS 105-134.4. Includes General Assembly findings.
Amends GS 105-151.26 (Credit for charitable contributions by non-itemizers) to allow a taxpayer who elects the standard deduction under GS 105-134.6(a2) (was, under section 63 of the Code for federal tax purposes) a credit equal to 7% of the taxpayer’s excess charitable contributions. Also deletes provision disallowing credit for amounts deducted from gross income in calculating taxable income under the Code. Changes become effective for taxable years beginning on or after January 1, 2012.
Except as otherwise indicated, effective when the act becomes law.
Summary date: Apr 5 2011 - View Summary
Adds physical therapy to the list of “professional services” regulated under the Professional Corporation Act, authorizing professional corporations comprised of licensed orthopedic physicians and physical therapists. Also authorizes, under GS 90, Article 18B, professional corporations of physical therapists themselves. Clarifies the definition of “physical therapy aide” under GS 90-270.24 to make explicit provision for physical therapists that supervise licensed athletic trainers. Provides for criminal background checks, through the Department of Justice, on applicants for physical therapy licenses. Expands the provisions of GS 90-270.39 to permit any licensed physicians, chiropractors, or podiatrists (was, osteopaths, chiropractors, or podiatrists) to use physical therapy modalities.