TAX MODERNIZATION AND SIMPLIFICATION.

View NCGA Bill Details2013-2014 Session
House Bill 961 (Public) Filed Wednesday, April 17, 2013
A BILL TO BE ENTITLED AN ACT TO MODERNIZE AND SIMPLIFY THE TAX CODE OF NORTH CAROLINA.
Intro. by Alexander, R. Moore.

Status: Ref to the Com on Rules, Calendar, and Operations of the House, if favorable, Finance (House Action) (Apr 18 2013)
H 961

Bill Summaries:

  • Summary date: Apr 18 2013 - More information

    Part I, Franchise Tax

    Repeals GS 105, Article 3, Subchapter I (Franchise Tax).

    Amends GS 58-6-7 (Licenses; perpetual licensing, annual license continuation fees for insurance companies), making conforming changes, deleting an exemption for mutual burial associations as they were previously taxed under GS 105-121.1, which is now repealed as stated above.

    Amends GS 105-130.6A(a) (Definitions), making conforming changes to the definition of Electric power holding company, and providing that it is now defined as a holding company with an affiliate or a subsidiary that is an electric power company engaged in the business of furnishing electricity, electric lights, current or power. Makes a conforming change to the definition of holding company, incorporating the definition from GS 105-120.2, now repealed (deletes option that the company has no assets other than ownership interests in corporations in which it owns more than 50% of the outstanding voting stock or voting capital interests.

    Amends GS 105-241(b) and GS 105-259(b), making conforming changes.

    Amends GS 159B-27 (Taxes; payments in lieu of taxes), repealing subsections (b), (c), (d), (e), and (f), regarding payments made in lieu of taxes by municipalities.

    Amends GS 160A-675 (Tax exemption), making a conforming change.

    Part I becomes effective for taxable years beginning on or after January 1, 2014.

    Part II, Sales Tax Modifications

    Amends GS 105-164.3 (Definitions), adding and defining service contract as a warranty agreement, a maintenance agreement, a repair contract, or a similar agreement or contract by which the seller agrees to maintain or repair tangible personal property.

    Amends GS 105-164.4 (Tax imposed on retailers), providing that the general rate of tax for a privilege tax imposed on a retailer is 3.5% (was, 4.75%) of the retailer's net taxable sales or gross receipts.

    Reenacts and rewrites GS 105-164.4A (Tax imposed on service providers), to establish that a privilege tax is imposed on a service provider as a percentage rate of its gross receipts.  The rate is the general rate set in GS 105-164.4, amended above to be 3.5%. Provides that for this article a service provider is considered a retailer and a service contract is a service. Establishes exemptions to the tax imposed in this section for a service provided to a business for use in that business, services taxed under GS 105-164.4, and medical services.

    Amends GS 105-467 (Scope of sales tax), making conforming changes to GS 105-467(a), including a reference to GS 105-164.4A, as amended and enacted above. Makes conforming changes to GS 105-467(b), incorporating into this section the state exemptions and exclusions found in GS 105-164.4A.

    Part II becomes effective January 1, 2014, and applies to sales made on or after that date.

    Part III, Personal Income Tax Changes

    The following statutes are repealed:

    GS 105-134.7 (Transitional adjustments).

    GS 105-151.1 (Credit for construction of dwelling units for handicapped persons).

    GS 105-151.11 (Credit for child care and certain employment‑related expenses).

    GS 105-151.12 (Credit for certain real property donations).

    GS 105-151.13 (Credit for conservation tillage equipment).

    GS 105-151.14 (Credit for gleaned crop).

    GS 105-151.18 (Credit for the disabled).

    GS 105-151.20 (Credit or partial refund for tax paid on certain federal retirement benefits).

    GS 105-151.21 (Credit for property taxes paid on farm machinery).

    GS 105-151.24 (Credit for children).

    GS 105-151.25 (Credit for construction of a poultry composting facility).

    GS 105-151.26  (Effective for taxable years beginning before January 1, 2012) (Credit for charitable contributions by nonitemizers).

    GS 105-151.31(c) (Earned income tax credit), deleting the sunset provision for that section, which is set for January 1, 2014.

    GS 105-151.33 (Education expenses credit).

    Amends GS 105-134.2(a), abolishing the tiered individual income taxes imposed on NC taxable income in lieu of a flat 6% tax on the NC taxable income of every individual payable each year.

    Amends GS 105-134.6 (Modifications to adjusted gross income), to establish that a taxpayer may deduct an exemption amount of $6,000, in lieu of the numerous deductions previously permitted. Repeals GS 105-134.6(a2), (b)(6), (b)(11), (b)(14-22), (c)(2)-(8a), (c)(14), and (d), subsections containing provisions in regards to allowable deductions, additions, and adjustments to adjusted gross income. Amends GS 105-134.6(b) (Other deductions), providing that an individual can deduct up to $10,000 of benefits received under Title II of the Social Security Act and amounts received from retirement annuities or pensions paid under the provisions of the Railroad Retirement Act of 1937 (previously, could deduct all of the specified benefits received). Creates new GS 105-134.6(b23), establishing that individuals can deduct up to $5,000 per year for costs incurred for funeral services and for tangible personal property used for human burial purposes or as a repository for human remains.

    Part III is effective for taxable years beginning on or after January 1, 2014.

    Part IV, Economic Incentives Tax Changes

    GS Chapter 105, Article 3C, Tax Incentives For Recycling Facilities, is repealed.

    Amends GS 105-129.39 (Sunset), providing that this article (Historic Rehabilitation Tax Credits) expires for qualified rehabilitation expenditures and rehabilitation expenses incurred on or after January 1, 2014, (was, January 1, 2015).

    Amends GS 105-129.51(b) providing that this article (Technology Development) will be repealed for taxable years beginning on or after January 1, 2016 (was, January 1, 2014).

    Amends GS 105-129.75 (Sunset), providing that the article (Mill Rehabilitation Tax Credit) expires January 1, 2014 (was, January 1, 2015), for rehabilitation projects for which an application for an eligibility certification is submitted on or after that date.

    Amends GS 105-129.99 (Sunset), providing that this article (Tax Incentives for Railroad Intermodal Facilities) is repealed effective for taxable years beginning on or after January 1, 2014 (was, January 1, 2038).

    Part V, Corporate Income Tax Changes

    Repeals the following statutes:

    GS 105-130.9 (Contributions).

    GS 105-130.22 (Tax credit for construction of dwelling units for handicapped persons).

    GS 105-130.25 (Credit against corporate income tax for construction of cogenerating power plants).

    GS 105-130.34 (Credit for certain real property donations).

    GS 105-130.36 (Credit for conservation tillage equipment).

    GS 105-130.37 (Credit for gleaned crop).

    GS 105-130.39 (Credit for certain telephone subscriber line charges).

    GS 105-130.43 (Credit for savings and loan supervisory fees).

    GS 105-130.44 (Credit for construction of poultry composting facility).

    GS 105-130.45 (Repealed effective January 1, 2018) (Credit for manufacturing cigarettes for exportation).

    GS 105-130.46 (Credit for manufacturing cigarettes for exportation while increasing employment and utilizing State Ports).

    Amends GS 105-130.3 (Corporations), establishing that the tax imposed on a C corporation's state net income is 4% (previously, a 6.9% tax was imposed after 1999; that language is now deleted).

    Amends GS 105-130.5, Adjustments to federal taxable income in determining state net income, repealing subsections GS 105-130.5(a)(3), (10), (11), (15), (15a), (20), (22); GS 105-130.5(b)(5), (7), (8), (12), (13), (15), (19), (21), (22), (24); and GS 105-130.5(c)(1) and (2), subsections containing provisions in regards to additions to federal taxable income in determining state net income and deductions and adjustments to federal taxable income in determining state net income. Makes technical and conforming changes.

    This part is effective for taxable years beginning on or after January 1, 2014.

    Part VI, Motor Fuels Tax Changes

    Amends GS 105-449.80(a), establishing that the motor fuel excise tax rate will be a flat rate of 13 1/8¢ (was, 17 1/2¢) per gallon plus a variable wholesale component of either 2 5/8¢ (was, 3 1/2¢) a gallon or 5.25% (was, 7%) of the average wholesale price of motor fuel for the applicable base period, whichever is greater.

    This Part becomes effective January 1, 2014.

    Part VII, Tax Credit for Department of Labor Apprentice Hires

    Enacts new GS 105-129K (Credit for employing apprentices), establishing that a taxpayer who employs an apprentice in accord with an apprenticeship agreement registered with the Apprenticeship and Training Bureau of the North Carolina Department of Labor is allowed a credit equal to $1,000 for each apprentice they employ. The credit is allowed if the apprentice was in the employ of the taxpayer for at least seven full months of the taxable year and is available for a taxpayer for up to four taxable years.  In order to claim this credit, the taxpayer must submit to the Department of Revenue a written certification from the Apprenticeship and Training Bureau of the North Carolina Department of Labor, which contains the name and taxpayer identification number of each registered apprentice employed by the taxpayer during that taxable year.

    This Part becomes effective for taxable years beginning on or after January 1, 2014.

    Except as otherwise provided in the parts of this act, this act is effective when it  becomes law. This act does not affect the rights or liabilities of the State, a taxpayer, or another person arising under a statute amended or repealed by this act before the effective date of its amendment or repeal; nor does it affect the right to any refund or credit of a tax that accrued under the amended or repealed statute before the effective date of its amendment or repeal.


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