AN ACT TO AMEND THE REVENUE LAWS, AS RECOMMENDED BY THE REVENUE LAWS STUDY COMMITTEE. Enacted May 29, 2014. Effective May 29. 2014, except as otherwise provided.
Summary date: Jun 2 2014 - More information
Summary date: May 29 2014 - More information
Senate amendment #6 makes the following change to the 4th edition. Makes a technical correction regarding the lines selected to be rewritten in amendment #2 to the 4th edition.
Senate amendment #2 makes the following changes to the 4th edition.
Adds a new subsection (b) to GS 105-164.13E and makes an organizational change labeling the existing content of this section as subsection (a). Makes additional technical corrections, identifying subsection (a) with the title "Exemption" and subsection (b) as "Conditional Exemption." Rewrites the title of GS 105-164.13E as "Exemption for Farmers" (was, "Exemption for Qualifying Farmers").Clarifies the meaning of the term "farming operations" as it is used in this section.
Subsection (b) identifies a conditional exemption which is available to a person who doesn't meet the definition of a qualifying farmer in subsection (a). Provides that a person not meeting the definition of a qualifying farmer may apply to the Department of Agriculture (Department) for a conditional exemption certificate under GS 105-164.28A. Allows a person with a conditional exemption certificate to purchase items that are exempt from the sales and use tax to the same extent as a qualifying farmer under subsection (a) of this statute. Provides that to receive a conditional exemption certificate, the person must certify his or her intent (1) to engage in farming operations as that term is defined in subsection (a) of this section and (2) to file in a timely manner state and federal income tax returns that reflect income and expenses incurred from farming operations during the taxable years that the conditional exemption certificate (certificate) applies.
Designates a certificate issued under this section as valid for the taxable year in which it is issued and the following two taxable years provided that the person to whom the certificate is issued provides copies of applicable state and federal income tax returns to the Department within 90 days following the end of each taxable year covered by the certificate.
Imposes the following restrictions on a certificate issued under this subsection: (1) it may not be renewed or extended beyond the original three-year period and (2) the Department may not issue the certificate to a person who has a conditional exemption certificate issued under this subsection during the previous 15 taxable years.
Requires that a person who purchases items with a conditional exemption certificate has to maintain documentation of the items purchased and copies of state and federal income tax returns for three years following the expiration of the certificate. Permits the Secretary to require a person with a certificate to provide any information requested in a timely manner by the Secretary to be used to verify that the person has met the requirements of this section.Imposes penalties on a person who fails to provide the requested information in a timely manner or fails to meet the requirements of this subsection. Makes technical and conforming changes to GS 105-164.28A.
Makes conforming changes to GS 105-236(a)(5a) regarding civil penalties for the misuse of an exemption certificate.
Senate committee substitute to the 3rd edition makes the following changes:
Enacts new GS 105-130.5B(g), concerning adjustments when the state decouples from federal accelerated depreciation and expensing, providing that for certain transactions AGI must be increased or decreased to account for any difference in the amount of depreciation, amortization, or gains or losses applicable to specified property.
Amends previously repealed GS 105-134.6A(g) and GS 105-153.6, concerning adjustments when the state decouples from federal accelerated depreciation and expensing, making clarifying and conforming changes.
Amends GS 105-164.28A(a), deleting proposed language that required the issued preferential rate or use-based exemption number to be included on a person's certificate of exemption.
Amends effective dates provided in Section 5.1(g) of the act, clarifying that when effective, provisions apply to gross receipts derived from an admission charge sold at retail on or after the effective date.
Amends proposed language in GS 105-187.5(a), making clarifying changes. Also clarifies that when effective, the provisions apply to gross receipts derived from a service contract sold at retail on or after the effective date.
Amends GS 105-164.3(35), making a technical change.
Amends GS 105-164.4(a), making technical and clarifying changes.
Deletes proposed language and changes to GS 105-164.13 that were to be effective July 1, 2014, concerning tax exemption for modular or manufactured homes.
Amends GS 105-449.52, deleting changes made to subsection (a) of the previous edition and instead amends subsection (b) to provide that the Secretary of Revenue can reduce or waive the specified penalty as provided in GS 105-449.119. Makes technical changes.
Amends proposed GS 105-339A, renumbering it as GS 105-339.1.
Amends GS 160A-211(a), which was reenacted by Section 12.1(a) of this act, provided that the occupations and professions that can have a tax levied against them must be physically located in the city (previously, stated occupations and professions carried on in the city). Effective when it becomes law and applies to taxable years beginning on or after July 1, 2014.
Provides that for fiscal year 2014-15, a city can only apply any privilege license tax ordinance that was in effect for that city in the 2013-14 fiscal year. If no tax was enacted, the city is prohibited from enacting a privilege license tax ordinace for 2014-15. Effective when the act becomes law and applies to taxable years beginning on or after July 1, 2014.
Repeals GS 160A-211 concerning privilege taxes, effective for taxable years beginning on or after July 1, 2015.
Also repeals GS 105-88(e), 105-109(e), 130A-294(r), 160A-211.1, and 153A-152.1 which authorized specified privilege license taxes.
Amends GS 160A-194, concerning licensing for business and trades, and GS 160A-215.1, concerning the gross receipts tax on short-term leases or rentals, making technical and conforming changes in both sections.
Makes conforming and technical changes.
Amends the enactment clause for Section 12.3 of the bill, providing clarifying language and setting out certain limitations of the provisions enacted.
Deletes proposed changes to GS 105-163.5(b).
Amends GS 105-163.2, concerning the withholding of taxes due by employers, requiring employers to allow for additions that the employee is required to make in regards to income tax liability.
Amends GS 105-163.5(b), making clarifying changes. Also provides that changes to this subsection are effective for taxable years beginning on or after January 1, 2014.
Provides that proposed changes to GS 105-163.2A(c) are to become effective January 1, 2015, applying to payments made on or after that date.
Amends changes to GS 105-164.44L(c), making clarifying changes in regards to the ad valorem share a city can receive from excise taxes.
Amends GS 105-309(d), making clarifying changes regarding additional information that can be requested by the Department of Revenue.
Amends GS 14-344.1(a)(3), concerning Internet sale of admission tickets, clarifying that the person who has obtained a certification of registration under GS 105-164.29 collects and remits to the state the sales and use tax (previously, the person reselling the ticket collected and remitted the privilege tax). Effective December 1, 2014.
Amends GS 105-163.22, concerning reciprocity of tax withholding statutes, making clarifying and technical changes.
Amends GS 105-113.4 and GS 148-23.1(d), updating the definition of vapor products, clarifying that they are nonlighted, noncombustible products that employ a mechanical heating element (previously, did not include nonlighted in the description/definition).
Amends GS 105-113.37(b), updating statutory references.
Amends GS 105-113.40A, to provide that the Secretary of Revenue is required to transfer proceeds from the tax on vapor products to the General Fund.
Amends the effective date for the provisions concerning vapor products to June 1, 2015 (was, February 1, 2015).
Deletes Part XVI of the act, Reinstate Hospital Set-Off Debt Collection, which amended GS 105A-2.
Summary date: May 27 2014 - More information
Senate committee substitute to the 3d edition to be summarized.
Summary date: May 21 2014 - More information
House Amendments make the following changes to the 2nd edition.
Amendment #8 amends Amendment #7 to add that a business location does not include an automated teller machine or a cash dispenser.
Amendment #9 makes technial corrections to Amendment #6.
Summary date: May 20 2014 - More information
House amendments make the following changes to the 2nd edition:
Amends GS 105-134.6A and 105-134.6 to add in the word "corporation" into the definition for the term transferor, providing that a corporation can be described as a transferor if it does not fully distribute income to its beneficiaries.
Amends newly enacted GS 105-164.11A, Refund of tax paid on rescinded sale or cancellation of service, making clarifying changes that the refund due on a rescinded sale is a pro rata refund of the amount of sales tax based on the taxable amount of the sales price refunded for the item or cancelled service contract and not a full refund of all the sales tax imposed. Makes technical and conforming changes.
Amends GS 105-187.5(a), concerning the alternate tax for those who rent or lease motor vehicles, providing clarifying language on how the tax on gross receipts of the lease or rental of the vehicle is to be calculated and what portions of a lease or rental payment is subject to the tax imposed by this section.
Amends GS 105-164.3(45a), definition for streamlined agreement, updating its definition to reference the Streamlined Sales and Use Tax Agreement as amended as of October 30, 2013 (was, May 24, 2012).
Deletes newly enacted GS 20-79.1B, Additional limited registration plates, and instead amends GS 20-79.1A, Limited registration plates, making technical and organizational changes. Also enacts new GS 20-79.1A(a)(2), providing that a person who has applied for a plate for a vehicle that was previously registered with the DMV but has not had a current registration for at least a year due to plate being surrendered or expiration of the registration for over a year can be issued a limited registration plate.
Amends GS 105-114(b)(4), definitions for Article on franchise taxes, providing that the term "income year" is used in accordance with how it is defined in GS 105-130.2(10) (previously, referred to income year as being defined in GS 105-130.2(4b), which was an incorrect reference).
Enacts new Part XVI, titled "Reinstate Hospital Setoff Debt Collection," which amends GS 105A-2(9), the definition for state agency in the Setoff Debt Collection Act, deleting language which provided that any school of medicine, clinical program, facility, or practice affiliated with one of the institutions of UNC that provides medical care to the general public or the UNC Health Care System and other entities affiliated with or under the control of the UNC Health Care System could not be considered a state agency. Changes now allow these entitities to participate and benefit from setoff debt collection. Part XVI becomes effective when it becomes law and applies to tax refunds determined by the Department of Revenue on or after that date.
Makes organizational changes.
Amends GS 105-113.4, definitions for the Tobacco Products Act, providing that the term and definition for tobacco product does include vapor products (previously, vapor products were not included in the definition for a tobacco product).
Makes conforming changes.
Amends GS 148-23.1(d), regarding tobacco products and prison regulations, providing that the term "tobacco products" for use in this Article does include vapor products. Also adds a definition for vapor products to GS 148-23.1(d). Effective July 1, 2014.
Amends GS 14-258.1 to provide that knowingly giving or selling vapor products to an inmate in the custody of the NC Division of Adult Correction or of a local confinement facility is a crime, specifically a Class 1 misdemeanor. Further provides that any inmate of a local confinement facility who has vapor products other than for approved purposes is guilty of a Class 1 misdemeanor. Makes conforming changes. Effective December 1, 2014, and applies to offenses committed on or after that date.
Clarifies that the proposed regulations for vapor products or anything in that section will not be construed to circumvent future US FDA regulation of tobacco products or vapor products.
Amends proposed GS 160A-211.2, Local business tax, providing a city can levy an annual tax on each business located and operating within the city (was, each business operating in the city). Also amends the definition of location in the same section, providing that for the purposes of a business that manages rental property or engages in real estate brokering, the location of rental property or brokered real estate does not constitute a separate business location.
The House committee substitute to the 1st edition deletes the amendments to GS 105-130.4(i) which changed the corporate apportionment formula to four times the sales factor.
Part I. Deduction for State Net Loss
Amends GS 105-130.5(b), designating that the following deductions from federal taxable income be made in determining state net income: (1) any unused portion of a net economic loss of as allowed under GS 105-130.8A(e), expires for taxable years beginning on or after January 1, 2030 and (2) a state net loss as allowed under GS 105-130.8A. Provides that a corporation may deduct its state net loss only from total income allocable and apportionable to this state.
Repeals GS 105-130.8, which allowed corporations to take a deduction for certain net economic losses sustained over a specified time period.
Enacts new GS 105-130.8A, Net loss provisions. Defines a taxpayer’s state net loss for a taxable year to mean the amount by which deductions allowed for the year, excluding prior year losses, exceed gross income under the Code for the year adjusted as provided in GS 105-130.5. Additionally provides that if a corporation has income from business activity within and without this state, the loss must be allocated and apportioned in this state in the year of the loss in accordance with GS 105-130.4.
Also sets out provisions governing when a taxpayer may carry forward a state net loss incurred by the taxpayer in a prior taxable year and deduct it in the current taxable year. Limitations on such deductions are set out in subsection (b) of GS 105-130.8A. Provides criteria relevant to mergers and acquisitions in subsection (c) and administration in subsection (d).
Subsection (e) provides that for taxable years beginning before January 1, 2015, a taxpayer is allowed a net economic loss as calculated under GS 105-130.8. Provides that any net economic loss carried forward to taxable years on or after January 1, 2015, is to be administered under new GS 105-130.8A.This subsection expires for taxable years beginning on or after January 1, 2030.
This Part becomes effective for taxable years beginning on or after January 1, 2015.
Part II. Other Income Tax Changes
Amends GS 105-130.5B and GS 105-153.6 regarding Section 179 expenses. Current law provides that section 179 property has the same meaning as under section 179 of the Code as of January 2, 2013. Changes the amount of the investment limitation which a taxpayer may use in calculating expense deductions under section 179 of the code from $125,000 to $200,000. Also amends subsection (f) of GS 105-130.5B and GS 105-153.6 regarding prior transactions. Amends the definition for transferor and adds a definition for owner in a transferor. Subsection (c) ,which amends GS 105-153.6, becomes effective for taxable years beginning on or after January 1, 2014. The remainder of this section becomes effective for taxable years beginning on or after January 1, 2013.
Amends GS 105-153.5, Modifications to adjusted gross income, to delete the prohibition that a married couple filing separate returns may not deduct the standard deduction amount if the taxpayer or the taxpayer’s spouse claims the itemized deduction amount. Makes the standard deduction amount zero for a person who is not eligible for a standard deduction under Section 63 of the Code. Provides that for spouses filing as married filing separately or married filing jointly, the combined mortgage interest and real estate taxes claimed by both spouses may not exceed $20,000. For spouses who elect to file as married filing separately with a joint obligation for mortgage interest and real estate taxes, the deduction is allowed to the spouse who actually paid these expenses. However, if these expenses as paid by both spouses is more than $20,000, the deductions must be prorated based on the percentage paid by each spouse, and for joint obligations from joint accounts, the prorated amount is based on the income reported by each spouse for that taxable year. Effective for taxable years beginning on or after January 1, 2014.
Makes conforming changes to GS 105-106.2, Imposition of tax, effective for taxable years beginning on or after January 1, 2014.
Part III. Agricultural Exemption Certificate
Rewrites GS 105-164.13E to clarify the exemption for qualifying farmers. Defines a qualifying farmer to be a person (1) who has an annual gross income for the preceding taxable year of $10,000 or more from farming operations or (2) who has an average annual gross income for the three preceding taxable years of $10,000 or more from farming operations. Provides additional detail as to who is included as a qualifying farmer. Provides that a qualifying farmer may apply for an exemption certificate under this section to the Secretary. The exemption certificate expires when a person fails to meet the income requirement for three consecutive years or stops farming.
Amends GS 105-164.28A(a) to direct the Department of Agriculture to issue a preferential rate or use-based exemption number to a person who qualifies for the exemption or preferential rate. Requires the exemption number to be included on the exemption certificate and directs that a person who no longer qualifies for the exemption must notify the Secretary within 30 days of no longer qualifying for the exemption. Also requires a person who no longer qualifies for an exemption certificate to give notice to each seller that may rely on the exemption certificate on or before the next purchase. Provides additional rules and qualifications regarding the use of and qualifications for an agricultural exemption certificate number.
Makes this Part effective July 1, 2014, and applies to purchases made after that date.
Part IV. Prepaid Meal Plans
Amends GS 105-164.3 to add a definition for prepaid meal plan as a plan offered by an institution of higher education that meets all of the following requirements: (1) entitles a person to food or prepared food, (2) must be billed or paid in advance, and (3) provides for predetermined units or unlimited access to food or prepared food but does not include a dollar value that declines with use. Makes additional conforming changes.
Amends GS 105-164.4 to provide that the sales price of gross receipts derived from a prepaid meal plan is taxed at the general rate of tax (4.75%). Provides that a bundle that includes a prepaid meal plan is taxable under GS 105-164.4D. Amends GS 105-164.4B to provide that the gross receipts from a prepaid meal plan are sourced to the location where the food or prepared food is available to be consumed.
Amends GS 105-164.4D(a) to include prepaid meal plans and tuition, room, and meals as bundled transactions to which certain tax application exceptions apply, explaining the application of the tax.
Amends GS 105-164.13, which exempts certain tangible personal property, digital property, and services from the sales and use tax imposed under Article 5, GS Chapter 105. Clarifies that for the purposes of the food and prepared food exemption, “school” is an entity regulated under GS Chapter 115C. Also exempts food and prepared food provided to a person under a prepaid food plan from the sales and use tax imposed under this section.
Enacts a new GS 105-164.16A to provide a taxpayer who offers to sell a prepaid meal plan with an option concerning the method by which the sales tax is to be remitted to the Secretary and a return filed under GS 105-164.16A.
This Part is effective when it becomes law and applies to gross receipts derived from a prepaid meal plan sold or billed on or after July 1, 2014.
Part V. Admissions
Amends GS 105-164.4(a) to provide that for purposes of this section, “gross receipts” has the same meaning as the term “sales price.” Applies the general tax rate, 4.75%, to the gross receipts obtained from an admission charge to an entertainment activity. Makes gross receipts derived from an admission charge to an entertainment activity taxable in accordance with GS 105-164.4G. Amends GS 105-164.4B to make a conforming change, adding subsection (g), providing the gross receipts derived from an admission charge, as defined in GS 105-164.4G are sourced in accordance with GS 105-164.4G.
Adds new GS 105-164.4G, Entertainment activity, to Article 5 of GS Chapter 105. Defines the following terms as they apply in this section: (1) admission charge, (2) amenity, (3) entertainment activity, and (4) facilitator. Provides that the gross receipt derived from an admission charge to an entertainment activity is taxed at the general rate set in GS 105-164.4. Makes the tax due and payable by the retailer as provided in GS 105-164.16. Defines the retailer as: (1) the operator of the venue where the entertainment activity occurs, except when the retailer and the facilitator have a contract allowing for dual remittance as provided in subsection (d) of this section or (2) the person that provides the entertainment and receives admission charges directly from a purchaser.
Requires a facilitator to report to the retailer with whom the facilitator has a contract the admission charge paid by the consumer to the facilitator for an entertainment activity. Imposes additional requirements on the contractual relationship between a facilitator and a retailer. Provides criteria for what constitutes dual remittance involving the tax due on gross receipts derived from an admission charge that may be partially reported and remitted to the operator of the venue for remittance to the Department of Revenue and partially reported and remitted by the facilitator directly to the Department. Provides that a facilitator is subject to the provisions of Article 9 of GS Chapter 105.
Provides exceptions to which the taxes on admissions imposed by this section do not apply. Makes certain specified gross receipts from an admission charge to an entertainment activity exempt from the tax imposed by this Article. Exemptions for school events and nonprofit events that meet specified conditions are effective January 1, 2015. Provides that admission to an entertainment activity is sourced to the location where admission to the entertainment activity is accessible by a person. If the location where admission may be gained is not known at the time of the receipt of the gross receipts for an admission charge, the sourcing principles in GS 105-164.4B(a) apply.
Rewrites GS 105-164.13(60) to provide that gross receipts derived from an admission charge to an entertainment activity are exempt as provided in GS 105-164.4G.
Amends GS 105-164.13 to provide that certain exemptions from the retail sales and use tax for sales of items by nonprofit civic, charitable, educational, scientific, or literary organization under specified conditions do not apply to gross receipts derived from an admission charge to an entertainment activity. Effective January 1, 2015.
Makes gross receipts from an admission charge sold at retail to a live event taking place on or after January 1, 2015, taxable under GS 105-164-46, regardless of when the initial sale of a ticket to the event occurred. Effective January 1, 2014, and applies to gross receipts derived from an admission charge sold at retail on or after that date.
Except as otherwise indicated, Part V becomes effective when it becomes law.
Part VI. Service Contracts
Clarifies and amends the definition for service contract under GS 105-164.3(38b), including extending it to include motor vehicles. Amends GS 105-164.4(a)(11) to provide that the general rate of tax applies to the sales price of, or the gross receipts derived from, a service contract. Provides that a service contract is taxed in accordance with GS 105-164.4I.
Enacts new GS 105-164.4I on service contracts. Provides that the sales price or the gross receipts derived from a service contract sold at retail or a renewal of a service contract is subject to the general rate of tax set in GS 105-164.4 and is sourced under the principles in GS 105-164.4B. Requires the retailer of a service contract to collect the tax due at the time of the retail sale of the contract and to be liable for payment of the tax. Makes the tax due and payable in accordance with GS 105-164.16. Provides criteria for determining the retailer of a service contract. Specifies exemptions and exceptions to which the tax imposed by this section does not apply. Provides the basis for reporting by a retailer who sells or derives gross receipts from a service contract. Defines facilitator for the purposes of this section to mean a person who contracts with the obligor of the service contract to market the service contract and accepts payment from the purchaser for the service contract.
Enacts new GS 105-164.11A, Refund of tax paid on rescinded sale or cancellation of service. Delineates when a retailer is allowed a refund of sales tax remitted on a rescinded sale or cancelled service. Also provides that when a service contract is cancelled and the purchaser receives a refund, in whole or part, which the sales price paid for the service contract, the purchaser may receive a refund of the sales tax based on the taxable amount of the refund as provided in this subsection. Provides criteria for a refund from a retailer and a refund application.
Amends GS 105-164.13(61) to provide that a service contract for tangible personal property may be exempt as provided in GS 105-164.4I.
Amends GS 105-164.13, Retail sales and use tax, subdivision (62), regarding the exemption of an item used to maintain or repair tangible personal property or a motor vehicle under a service contract if the purchaser is not charged for the item. Provides that this exemption does not include an item used to maintain or repair tangible personable property under a service contract exempt from tax under GS 105-164.4I(b).
Amends GS 105-187.3, making organizational changes. Provides that the tax rate does not apply to the sales price of a service contract and that the sales price of a service contract is subject to the sales tax imposed under Article 5 of GS Chapter 105. Declares that the tax rate is 3%. Amends GS 105-467(b) to provide that a refund of an excessive or erroneous state sales tax collection allowed under GS 105-164.11 and a refund of state sales tax paid on a rescinded sale or cancelled service contract under GS 105-164.11A apply to the local sales and use tax authorized to be levied and imposed under this Article.
This Part becomes effective October 1, 2014.
Part VII. Retailer-Contractors
Amends GS 105-164.3 to add definitions for the following: (1) real property contractor and (2) retailer-contractor. Modifies the definitions for consumer and for retailer.
Amends GS 105-164.4(a) to add a new subdivision (13) to provide that the general rate of tax applies to the sales price of tangible personal property sold to a real property contractor for use by the real property contractor in erecting structures, building on, or otherwise improving, altering, or repairing real property. Makes these sales taxed in accordance with GS 105-164.4H.
Enacts new GS 105-164.4H, regarding real property contractors. Provides that a real property contractor is a consumer of the tangible personal property that the real property contractor installs or applies for others and that becomes a part of real property. Provides guidelines for the collection of tax on the sales price of tangible personal property sold at retail. Also provides criteria regarding collection of use tax when the retailer-contractor acts as a real property contractor. Provides that it is an erroneous collection if an invoice or other documentation issued to a consumer at the time of sale by a real property contractor separately states any amount for tax.
Provides that this act is not to be construed to affect the interpretation of any statute that is the subject of a state audit pending as of the effective date of this act or litigation that is a direct result of such audit. Provides that a seller who collected and remitted sales or use tax in accordance with an interpretation of the law by the Secretary of Revenue in the form of a rule, bulletin, or directive published before this act’s effective date is not liable to a purchaser for any over-collected sales or use tax that was collected under the rule, bulletin, or directive.
This Part becomes effective January 1, 2015, and applies to sales on or after that date and contracts entered into on or after that date.
Part VIII. Other Sales Tax Changes
Amends GS 105-164.4(a)(3), concerning the privilege tax imposed on the rental of accommodations, deleting all the substantive provisions of the subsection and replacing them with language that states that these types of rentals are to be taxed in accordance with newly enacted GS 105-164.4F, Accommodation rentals. New GS 105-164.4F states that gross receipts from accommodation rentals are to be taxed at the general rate set in GS 105-164.4, 4.75%. GS 105-164.4F includes language and provisions that were previously found in GS 105-164.4(a)(3), with a few changes that clarify that the tax does not apply to private residences, cottages or similar accommodations that are rented for less than 15 days and that are not listed with a real estate broker or agent. Defines rental agent for use in this section, term was not set out and defined in GS 105-164.4(a)(3). All other language and provisions are identical to the deleted language from GS 105-164.4(a)(3). Effective June 1, 2014, applying to gross receipts derived from the rental of an accommodation that a person occupies or has the right to occupy on or after that date. However, a retailer is not liable for an over or under collection of sales or occupancy taxes, from June 14, 2012 to July 1, 2014, if the retailer has made good faith efforts to comply with and collect the proper tax amount that is due and the collection error is due to changes to the law.
Amends GS 105-164.14(b), 105-164.14(c), and 105-467(b), concerning refunds of certain sales and use taxes given to non-profit entities, hospitals, certain governmental entities, and local government sales and use tax, updating the sections to provide that the refunds do not apply to taxes paid on piped natural gas, video programming, or prepaid meal plans (previously, the refund only did not apply to purchases of electricity, telecommunication services, or ancillary services). Effective July 1, 2014, applying to purchases on or after that date.
Repeals GS 105-164.13(30), which previously exempted taxes from being imposed on items from vending machines when sale price was 1¢.
Amends GS 105-164.13(50), providing that newspapers sold through coin-operated machines are subject to the imposition of sales and use tax (previously, such newspapers received a 50% off sales prices tax break). Effective October 1, 2014.
Enacts new GS 105-164.13(63), providing that modular home or manufactured homes, including all accessories attached when delivered, will receive a 50% of the sales prices tax break. Effective July 1, 2014, applying to all sales on or after that date.
Part IX. Excise Tax Changes
Amends GS 105-113.13(b) and 105-113.38, concerning distributors and wholesale dealers of the tobacco, providing that for the purposes of these sections an irrevocable letter of credit can be accepted in lieu of a secured bond as long as it is issued by an approved commercial bank and available to the State as a beneficiary. Makes technical and conforming changes.
Amends GS 105-113.86, concerning bonds and letters of credit for wholesalers and importers of the alcohol industry, establishing that the amount of required bonds can be periodically reviewed and increased not to exceed $50,000 and likewise can be decreased accordingly. Makes technical and conforming changes. Also allows for the substitution of an irrevocable letter of credit for the secured bond.
Amends GS 105-113.39(b), concerning the tobacco products tax refund, providing that the application for requesting such a refund can be accompanied by a written certificate signed under penalty of perjury (previously, required that an affidavit accompany the application).
Amends GS 105-259(b), concerning the confidentiality of tax information, to allow the disclosure of confidential tax information for the purposes of providing a data clearinghouse with required information agreed to be released under a prior State agreement regarding annual tobacco product sales by a nonparticipating manufacturer. Sets out certain terms for use in this subsection. Also, provides for the disclosure of such information for use when collection on a bond or letter of credit is necessary in cases of noncompliance with the tax laws by the taxpayer covered by the bond or letter of credit.
Amends GS 105-260.1, providing that the Secretary of Revenue can delegate authority to hold a hearing (previously, provided that the authority could only be delegated to a Deputy or Assistant Secretary).
Amends the heading to Article 36B of GS 105 to read Tax on Motor Carriers (was, Tax on Carriers Using Fuel Purchased Outside State). Amends GS 105-449.37, the definitions section of Article 36B, updating certain references and providing that a motor carrier that operates a qualified motor vehicle in NC must register the vehicle as specified in this Article and obtain appropriate credentials for the vehicle. Makes conforming and technical changes to GS 105-449.47(a).
Amends GS 105-449.61(a), to provide that a city or county can only impose a tax on the sale, distribution, and use of motor fuel when that motor fuel is allowed a per gallon excise tax refund under GS 105-449.105A or 105-449.107.
Amends GS 105-449.81, providing for an excise tax on biodiesel fuel if the fuel meets specified criteria. Amends GS 105-449.83A, updating provisions for biodiesel tax payment, providing that the tax levied on biodiesel is payable by the refiner or biodiesel provider. Effective October 1, 2014.
Amends GS 105-449.52, Civil penalties applicable to motor carriers, making technical changes.
Amends GS 105-449.119, concerning reviews of civil penalties, deleting a requirement that a person assessed with a penalty yet denies liability must pay the penalty and then request a review and follow the specified procedures for requesting such a review. Now provides that a person that denies liability can request that the penalty be waived without having to pay the penalty first. Also provides that the Secretary of Revenue can reduce or waive any penalty per Article 9 of GS Chapter 105.
Amends GS 105-449.115(b) to provide that the required shipping document to transport motor fuel by transport truck or railroad is a permanent record. Effective October 1, 2014.
Amends GS 105-449.106(c) and 105-449.107 deleting any reference to privilege tax. Also makes technical changes and updates to certain statutory references.
Part X. Tax Law Compliance Changes.
Amends GS 18B-900, qualifications for an ABC permit, providing a new requirement that to be eligible to receive and hold a permit a person must be current as far as all applicable tax returns to NC as well as all taxes, interest, and penalties due under GS 105-241.22. Exempts special occasion permits, limited special occasion permits, special one-time permits, and salesman permits from these requirements. Also adds provisions detailing the procedure for confirming state tax compliance, requiring the Department of Revenue to provide information to confirm a person’s compliance. Makes conforming changes. Effective May 1, 2015.
Amends GS 18B-906(a), making conforming changes and updating statutory references. Effective May 1, 2015.
Amends GS 105-259(b) to authorize the disclosure of tax information to the Alcoholic Beverage Control Commission for use in issuing permits. Effective May 1, 2015.
Amends GS 105-243.1(e), concerning the use of proceeds from the collection assistance fee, providing that the fee can be used to taxpayer locater services not to exceed $500,000 (was, not to exceed $150,000).
Part XI. Property Tax Changes.
Amends GS 105-333, the definitions section for taxation on public service companies, providing new terms and definitions, including mobile telecommunications company, tangible personal property of a mobile telecommunications company, tangible personal property of a tower aggregator company, and tower aggregator company. Deletes the term and definition for telegraph company. Makes conforming changes.
Amends GS 105-335, concerning the appraisal of property belonging to public service companies, adding mobile telecommunication and tower aggregator companies to the category of companies that are to have specified properties appraised for tax purposes according to the procedures provided in GS 105-335(c) (previously, only bus lines, motor freight carriers, and airlines were appraised according to this subsection). Provides new procedures for how and what property of the mobile telecommunication and tower aggregator companies will be appraised for tax purposes. Makes technical and conforming changes.
Amends GS 105-336, concerning the methods of appraising certain properties of public service companies, providing new provisions for the appraisal of tangible personal property of mobile telecommunication and tower aggregator companies. Makes conforming and technical changes.
Amends GS 105-337, Apportionment of taxable values to this State, and GS 105-338, Allocation of appraised valuation of public service property among local taxing units, making technical and conforming changes, makes additional changes reflecting the addition of mobile telecommunication and tower aggregator companies as public service companies. Enacts new provision that provides that the appraised valuation of the tangible personal property of mobile telecommunication companies will be proportionately allocated among the local taxing units in which the company is situated on January 1 of each year.
Amends the title of GS 105-339 to read Certification of appraised valuations of nonsytem property and locally assigned stock, tangible property of tower aggregator companies, and certain tangible personal property of mobile telecommunications companies. Makes technical and conforming changes to the subsection.
Enacts new GS 105-339A, Certification of appraised valuations of mobile telecommunications companies, providing that the Department of Revenue will assign each local taxing unit’s appraised valuation by certifying the valuations to the appropriate counties and municipalities. Local taxing units receiving these certified valuations are then directed to assess them at the values certified.
Part XI effective for taxes imposed for taxable years beginning on or after July 1, 2015.
Part XII. Privilege License Tax Changes
Effective when the act becomes law, reenacts GS 160A-211(a), as amended (gives the cities power to levy a privilege tax generally and on specified businesses previously taxed by the state to the extent the statutes allowed taxation by the cities before repeal; the reenactment includes changes made to add live entertainment and ticket resales to those specified businesses).
Effective July 1, 2015, repeals GS 160A-211 entirely. Enacts new GS 160A-211.2 allowing cities to levy an annual tax on business operating within the city, on each business location, at a rate not to exceed $100. Prohibits a city from imposing a license, franchise, privilege, or business tax on business (1) supplying piped natural gas, (2) providing telecommunications service, (3) providing video programming, or (4) providing electricity. These businesses are subject to sales tax at the combined general rate for which the city receives a share of the tax revenue or they are subject to the local sales tax. Provides for the administration and collection of the tax, as well as penalties. Specifies and defines terms used the statute.
Repeals GS 105-41(h) (prohibiting counties and cities from levying a privilege tax on 12 specified professionals, including attorneys, doctors, and real estate brokers), GS 105-83(e) (prohibiting the levy of a local license tax on installment paper dealers), GS 105-88(e) (prohibiting the levy of a local licensing tax on loan agencies), GS 105-109(e) (providing that the licensing tax penalty and collection provisions apply to taxes levied by counties of the State under the authority of this Article in the same manner and to the same extent as they apply to taxes levied by the State), and GS 106-65.40 (prohibiting city privilege license tax).
Amends GS 105-113.3 to remove the prohibition on cities and counties levying a privilege license tax on the sale of tobacco products.
Amends GS 105-102.3 to remove the prohibition on cities and counties levying a privilege license tax on banks taxed under GS 105-102.3. Makes clarifying changes.
Amends GS 160A-194 and GS 160A-215.1(a) to make conforming changes.
Unless otherwise indicated, the above provisions are effective July 1, 2015.
Repeals GS 153A-152 (giving counties the power to levy a privilege tax generally and on specified businesses previously taxed by the state to the extent the statutes allowed taxation by the counties before repeal). Makes conforming changes to GS 153A-49. Effective July 1, 2015.
Part XIII. License Plate Agent Compensation
Extends the timeframe during which the $1.06 transaction rate applies to the collection of property tax by commission contractors so that it applies to collection for vehicles with registration renewals expiring on or between September 30, 2013, and June 30, 2014 (was, February 28, 2014). Requires the Division of Motor Vehicles (DMV) to compensate license plate agents the additional fee for the collection of property taxes, as provided for. Specifies that between March 1, 2014, and the date the DMV is able to implement the additional fee, the DMV must calculate the difference in the fee for agents contracting with DMV under this section and the fee authorized in SL 2013-372. Requires the difference to be calculated by September 1, 2014. Specifies the process for paying out the difference. Effective March 1, 2014.
Amends GS 20-63(h) to increase the compensation rate for the collection of the property tax associated with a limited registration “T” sticker collected through a commission contract from $0.71 to $1.06. Effective July 1, 2014, and applies to collections of property tax on or after that date.
Amends GS 105-330.5(b) (concerning the combined tax and registration collection) to provide that the amount of the fee that may be charged for collecting local government taxes and fees for an agent contracting with the DMV must equal at least the applicable amount under GS 220-63(h). Specifies that the amount of the fee for DMV is the amount set by the memorandum of understanding entered into under GS 105-330.11, but the amount cannot exceed the amount set in GS 20-63. Effective July 1, 2014, and applies to collections of property tax on or after that date.
Requires the Department of Transportation (DOT) to report on the results of its evaluation of current models and compensation for branch agents contracting with the DMV to provide registration, title, tax collection and other transactions. DOT must report to the Revenue Laws Study Committee and the Committee is required to examine the report and make an interim report on recommendations on the per transaction compensation amounts to the 2015 Regular Session of the General Assembly and make a final report to the 2016 Regular Session of the General Assembly.
Part XIV. Technical, Clarifying, and Administrative Changes
Amends GS 105-114(b)(4) to correct the cross-reference to the definition of income year.
Amends GS 105-129.26(a) to amend the conditions that must be met in order for a recycling facility to qualify for tax benefits, to require that it be located in an area that at the time construction began, was a development tier one area (was, an enterprise development tier). Also amend these conditions to remove the requirement that the jobs at the facility meet the wage standard in effect under GS 105-129.4(b) as of the date that construction began.
Amends GS 105-130.5(b) to specify that when calculating deductions from federal income for corporate income tax for net economic losses, a corporation required to allocate and apportion its net income under GS 105-130.4 must deduct its allocable and apportionable (was, its allocable) net economic loss only from total income allocable and apportionable (was, income allocable) to the state.
Repeals GS 105-163.1(3), the definition of dependent. Amends GS 105-163.5 to make clarifying changes and replace the phrase "exemption certificate" with "allowance certificate."
Amends GS 105-163.2 to clarify that in calculating an employee’s anticipated income tax liability, the employer must allow for the additions (was, exemptions), deductions, and credits to which the employee is entitled. Makes similar conforming changes. Amends GS 105-163.5 to provide that an employee that receives wages is entitled to the withholding allowances that would result in the employer withholding approximately the employee’s income tax liability. Makes conforming changes; replaces the term "exemptions" with "allowances."
Amends GS 105-163.2A(c) to remove the requirement that if the recipient of periodic payments does not file an exemption certificate, the pension payer compute the amount to be withheld as if the recipient were married and claiming three withholding exemptions.
Amends GS 105-164.3 to make clarifying changes.
Amends GS 105-164.4 to specify that a privilege tax is imposed on a retailer who is engaged in business in the state. Provides that a person who sells tangible personal property at a specialty market or other event (was, at a specialty market) is considered a retailer. Specifies that the general rate applies to the gross receipts derived from the sale or recharge of prepaid telephone classing service (was, the sale or recharge of prepaid telephone calling service is taxable at the general rate of tax). Provides that a person engaging in business (was, engaging or continuing in business) as a retailer must pay the tax on the net taxable sales of the business at the specified rate when property books are kept showing separately the gross proceeds of taxable and nontaxable sales of items subject to tax. Requires a facilitator that is liable for tax under GS 105-164.4F (accommodation rentals) to obtain a certificate of registration. Makes additional technical changes and makes language gender neutral.
GS 105-164.6(f) to require a person to obtain a certificate of registration (1) before engaging in business in the state selling or delivering tangible personal property, digital property, or a service for storage, use, or consumption in this state or (2) if the person is a facilitator liable for tax. Deletes provisions concerning the voiding and revocation of a certificate. Makes conforming language to GS 105-164.29 (application for certificate of registration) adding language to include facilitators. Adds that for the purposes of the statute, “person” means a wholesale merchant, a retailer, or a facilitator.
Enacts new GS 105-164.45 to provide that when the last day for doing an act required or allowed by this Article (Sales and Use Tax) or Subchapter VIII (Local Government Sales and Use Tax) falls on a weekend, holiday, or when the Federal Reserve Bank is closed, the act is considered timely, or payment timely made, if it is done or made on the next business day, or next day the Federal Reserve Bank is open, as applicable.
Amends GS 105-228.4A to change the due date of the report by captive insurance companies from March 1 to March 15.
Amends GS 105-236.1 to add GS 14-118.7 (possession, transfer, or use of automated sales suppression device) to those offenses for which the Secretary of Revenue may appoint employees of the Criminal Investigations Section of the Tax Enforcement Division to serve as revenue law enforcement officers. Also corrects a statutory cross-reference.
Requires amended returns under GS 105-116 and GS 105-118.41 be filed within three years from the original due date and requires DOR to process the returns within six months. Provides that when DOR processes an amended franchise tax return or excise tax return that changes the taxable gross receipts of electricity derived within a city (or in the case of excise tax returns, the amount of the tax attributable to a city) so that the amount that should have been distributed to that city for distributions made on or before September 30, 2014, is greater than or less than the amount actually distributed, DOR must adjust the next quarterly distribution by the applicable amount and redetermine the franchise tax or excise tax share for that city based on the amended return. Sets out requirements for DOR in determining the quarterly franchise tax or excise tax share for a city. These provisions expire July 1, 2018. Amends GS 105-164.44K and GS 105-164.44L to provide that only cities that received a franchise tax share under (b) of the statute are eligible to receive an ad valorem share.
Amends GS 105-277.3(d1), GS 113-77.9(d), GS 113A-231, and GS 113A-233 to remove references to repealed statutes and make related conforming changes concerning conservation tax credits. Amends GS 113A-232 to add the following to the conditions that must be met in order for property to be subject to a conservation grant: (1) that the property be useful for one or more of these purposes: public beach access or use, public access to public waters or trails, fish and wildlife conservation, forestland or farmland conservation, watershed protection, conservation of natural areas, or conservation of predominantly natural parkland and (2) that the property be donated in perpetuity to and accepted by the state, a local government, or a body that is organized to receive and administer lands for conservation purposes and qualified to receive charitable contributions. Makes conforming changes.
Amends SL 2013-360 to delete the January 1, 2013, effective date for GS 105-159.2, therefore making it effective at the same time as the remainder of the section, July 1, 2013.
Amends GS 105-228.90(b)(1b) to amend the definition of code so that is the Internal Revenue Code as enacted as of December 31, 2013 (was, January 2, 2013). Provides that any amendments to the Internal Revenue Code enacted after January 2, 2013, that increase North Carolina taxable income for 2013 become effective for taxable years beginning on or after January 1, 2014.
Amends GS 105-242(g) to provide that if the Secretary of Revenue finds that the filing of the certificate of tax liability was erroneous, the Secretary must withdraw the lien as quickly as possible by issuing a certificate of withdrawal (was, Secretary must issue a certificate of release of the lien as quickly as possible).
Amends GS 105-242.2 (personal liability when certain taxes not paid) to amend the definition of responsible person or add a company official of a limited liability company.
Amends GS 105-296(m) to update statutory references.
Amends GS 105-309(d) to remove the requirement that personal property also be listed to indicate which property is subject to a tax credit under GS 105-151.21, which has been repealed. Repeals GS 105-320(a)(16), which also refers to the repealed statute.
GS 105-315(a)(2) to amend the requirements for persons having custody of tangible personal property of others to make clarifying changes, add to inventories exempted from the statute, and add to the items that must be included in the report.
Repeals GS 105-537(d), which prohibited a tax levied under the Article (1/4 cent county sales and use tax) from being in effect at the same time as a tax under Article 60 (land transfer tax).
Amends SL 2013-414, Section 60(l), to update and correct session law references.
Enacts new GS 20-79.1B to provide that when the DMV or a license plate agency issues a plate other than a renewal for a vehicle whose registration has been expired for at least one year, a customer who disputes the amount of tax owed for the current year may opt for a limited registration plate until the tax issue is resolved. Requires the customer to pay all taxes due within 12 months of the date the limited plate is issued before the customer is issued a new registration and year sticker to be placed on the plate.
Amends GS 105-113.107 to add a $50 excise tax for each gram of any low-street-value drug that is sold by weight.
Part XV. Tax Vapor Products and Prohibit Use of Vapor Products in Jails
Amends GS 105-113.3 to add vapor products to those that are subject to the tobacco products tax; local governments are prohibited from levying a privilege tax on vapor products.
Amends GS 105-113.4 to add and define consumable product as any nicotine liquid solution or other material containing nicotine that is depleted as a vapor product is used. Adds and defines vapor product. Amends the definitions of integrated wholesale dealer, manufacturer, retail dealer, and wholesale dealer to add vapor products. Amends the definition of tobacco product to exclude a vapor product. Amends GS 105-113.4D to incorporate reference to the vapor products tax. Amends GS 105-113.35 to levy an excise tax on vapor products of 5 cents per fluid milliliter of consumable product. Requires vapor products to state the amount of consumable product in milliliters. Makes conforming and organizational changes throughout the statute. Amends GS 105-113.36 (wholesale dealer and retail dealer must obtain licenses), GS 105-113.37 (payment of tax), GS 105-113.39 (discount; refund), and GS 105-113.40 (records of sales, inventories, and purchases to be kept) to make the statutes applicable to vapor products and make conforming changes.
Above provisions are effective February 1, 2015.
Amends GS 148-23.1 to prohibit using vapor products on the premises of state correctional facilities. Adds a definition of vapor products. Effective July 1, 2014. Amends GS 14-258.1 to make it a Class 1 misdemeanor to give or sell a vapor product to an inmate in the custody of the Division of Adult Correction and on the premises of a correctional facility or to an inmate in the custody of a local confinement facility, or to give a vapor product to another for delivery to an inmate. Makes it a Class 1 misdemeanor for an inmate of a local confinement facility to possess a vapor product. Effective for offenses committed on or after December 1, 2014.
Part XVI. Change Corporate Apportionment Formula to Four Times the Sales Factor
Amends GS 105-130.4(i) to provide that all apportionable income of corporations (other than those excluded in the statute ) must be apportioned by multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus four times (was, plus twice) the sales factor, and the denominator of which is six (was, four). Provides that if the sales factor exists but the payroll factor or the property factor does not exist, the denominator of the fraction is the number of existing factors plus three (was, plus one). Effective for taxable years beginning on or after January 1, 2015.
Part XVII. Effective Date
Unless otherwise noted, the act is effective when it becomes law.
Summary date: May 15 2014 - More information
Committee substitute to the 1st edition to be summarized.
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