Bill Summary for H 1224 (2013-2014)

Summary date: 

Aug 1 2014

Bill Information:

View NCGA Bill Details2013-2014 Session
House Bill 1224 (Public) Filed Tuesday, May 27, 2014
A BILL TO BE ENTITLED AN ACT TO LIMIT THE TOTAL LOCAL GOVERNMENT SALES AND USE TAX RATE TO TWO AND ONE‑HALF PERCENT; TO GIVE COUNTIES THE FLEXIBILITY TO USE UP TO ONE‑HALF PERCENT OF THE LOCAL SALES AND USE TAX FOR PUBLIC TRANSPORTATION, FOR PUBLIC EDUCATION, FOR GENERAL PURPOSES, OR FOR A COMBINATION THEREOF; AND TO MAKE VARIOUS CHANGES TO TAX AND ECONOMIC DEVELOPMENT LAWS.
Intro. by Presnell.

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Bill summary

The conference report makes the following changes to the 4th edition.

Amendssubsection (b) of proposed GS 105-506.4(GS Chapter 105, Article 43, Part 1) to provide that regardless of subsection (a), which limits the rate of the local sales and use tax to a maximum of 21/2 percent, the local sales and use tax rate may exceed 2 1/2 percent if all of the conditions specified in subsection (b) are met. However, in no event may a county's local sales and use tax rate be more than 2 3/4 percent. Specifies the following conditions, all of which must be met, for a county's tax rate to permissibly exceed 2 1/2 percent: (1) the county is Durham, Forsyth, Guilford, Orange, Mecklenburg or Wake; (2) the county levies a tax authorized under Part 2 of Article 43 of GS Chapter 105 or the county levies a tax at the rate of 1/2 percent under Part 5 of Article 43 of GS Chapter 105, or the county is part of a special district authorized to levy a tax under Part 4 of Article 43 of GS Chapter 105; and (3) the county has conducted one or more advisory referendums on or before December 31, 2014, in which a majority of the voters approved the levy of a local sales and use tax rate of 1/4 percent under Article 46 of GS Chapter 105.

Adds new subsection (c) to proposed GS 105-506.4 to provide that if the tax levied under Article 43 or Article 46 of GS Chapter 105 is repealed, and the repeal results in a decrease of the local sales and use tax rate to less than 2 3/4 percent in a county that is listed in subdivision (b)(1) of GS 105-506.4, as amended in this edition, the county may not enact a local sales and use tax rate under this Subchapter that is more than 2 1/2 percent.

Amends GS Chapter 105, Article 46, One-Quarter Cent (1/4) or One-Half Cent (1/2) County Sales and Use Tax Act, addingsubsection (e) to GS 105-537 to provide that regardless of theprovisionsof subsection (a), which requires a tax levied under Article 46 to be approved in a referendum and that the applicable rate meet specified conditions, the local sales and use tax rate in the counties of Durham, Forsyth,Guilford, Orange, Mecklenburg, and Wake may exceed 2 1/2 percent if all of the conditions listed in this subsection are met. Prohibits the local sales and use tax rate in these counties from exceeding 2 3/4 percent. Provides specified conditions that are identical to those listed in subsection (b) ofproposed GS 105-506.4. Provides that Durham and Orange counties levy a local sale and use tax at the rate of 2 3/4 percent as of August 1, 2013. Also provides that as of August 1, 2014, Forsyth, Guilford,Mecklenburg, and Wake Countieslevy a local sales and use tax at the rate of 2 1/2 percent or less but are authorized to levy the tax at a rate of up to 2 3/4 percent.

Enacts new subsection (f)to GS 105-537 to provide that if the tax levied under Article 43 or Article 46 of GS Chapter 105 is repealed, and the repeal results in a decrease of the local sales and use tax rate to less than 2 3/4 percent in a county that is listed in subsection (e) of GS 105-537, the county may not enact a local sales and use tax rate under this Subchapter that is more than 2 1/2 percent.

Under current law, GS 158-7.1 authorizes each county and city in this state to makeappropriations, funded by the levy of property taxes under GS 153A-149 and GS 160A-209,for the purpose of aiding and encouraging local development. Amends subsection (b) of GS 158-7.1 to expand the list of activities in the subsection that may be funded by the levy of property taxesunder GS 153A-149 and GS 160A-209 to include authorizing a county or city toprovidegrants or loans for the rehabilitation ofunderutilized mills, other industrial structures, or historic structures.

Directs the Revenue Laws Study Committee (Committee) to conduct an economic analysis of rehabilitating both income-producing and non-income producing historic structures, including historic mill property. Requires the Committee to report its findings, along with any legislative recommendations, to the Regular Session of the 2015 General Assembly upon its convening. Lists topics and issues that may be examined in the study.

Amends GS 96-4(x) regarding the confidentiality of unemployment compensation information. Defines confidential informationas the term is used in this section, to mean any unemployment compensation information in the records of the Division of Employment Security (DES) applicable to the administration of the Employment Security Law required to be kept confidential under 20 CFR Part 603. Includes any claim information and any other information that could reveal the name or identifying particulars about any past or present employer oremployingunit or that could beforeseeablycombined with other information publicly available that could be usedto reveal any such particulars.

Exempts confidential information from the public records disclosure requirements of GS Chapter 132. Specifies that confidential information may only be disclosed as permitted in this subsection. Clarifies that any disclosure or re-disclosure of confidential information must be consistent with 20 CFR Part 603. Provides that DES may disclose final decisions and the records of hearings that led to those decisions only after the expiration of the appeal rights as provided under GS 96-15.

Amends Section 7.2(a) and 7.3 of SL 2014-3, concerning retailer-contractors, providing clarification that the act does not affect any interpretation of a statute which is the subject of a state tax audit for taxable years beginning before January 1, 2015, as well as clarifying that the changes that are effective January 1, 2015, apply to withdrawals of items from inventory for contracts entered into on or after that date.

Amends Section 8.1(c) of SL 2014-3, effective June 1, 2014, clarifying that a retailer of a rental of a private residence, cottage, or similar accommodation, which is rented for fewer than 15 days in a calendar year and listed with a real estate broker or agent, is liable for any over-collection of sales tax or occupancy tax for any such rental that is occupied or available to be occupied for nights beginning June 14, 2012, and ending June 30, 2013, and must remit the tax collected. Also provides that a retailer is not liable for an undercollection of sales tax or occupancy tax for such rental which is occupied or available to be occupied between June 1, 2014, and June 30, 2014, if a good-faith effort to comply with the law was made. Deletes language which states the section applied during June 14, 2012, and July 1, 2014.

Repeals Section 14.26 of SL 2014-3, concerning the definition of anincome year.

Amends GS 105-113.35(d), effective June 1, 2015, to provide that a manufacturer who ships vapor products to either a wholesale dealer or retail dealer can apply to the Secretary of Revenue to be relieved of paying the tax imposed by this section on those vapor products.

Amends GS 105-129.16A, concerning tax credits for investing in renewable energy property, providing that a taxpayer that has constructed, purchased, or leased renewable energy property is allowed a credit equal to 35 percent of the cost of the property if the property is placed in service in North Carolina during the taxable year.

Amends Section 1.1(a) of SL 2014-3, concerning federal taxable income deductions, making a clarifying change.

Amends GS 105-134.6A, concerning definitions for provisions concerning the decoupling from federal accelerated depreciation, making organizational changes and setting out and defining the termowner in a transferor. Effective for taxable years beginning on or after January 1, 2013.

Amends GS 105-153.6, concerning definitions for provisions concerning the decoupling from federal accelerated depreciation, making organizational changes and setting out and defining the termowner in a transferor. Effective for taxable years beginning on or after January 1, 2014.

Prohibits the Secretary of Revenue from imposing interest with respect to an underpayment of income tax to the extent that the underpayment was created or increased by the changes in Section 2.2 of SL 2014-3. Provides that a withholding agent is not liable for the amount of tax the agent fails to withhold to the extent the amount not withheld was created or increased by those same changes. Effective when the section becomes law and apples to taxable years beginning on or after January 1, 2014, and before January 1, 2015, and to payroll periods beginning on or after January 1, 2014, and before January 1, 2015.

Amends GS 105-164.3(35), making technical changes and adding new language that provides that a person, other than a facilitator, required to collect the tax levied under GS 105-164.4(a) is defined as aretailerfor the purposes of GS Chapter 105, Article 5.

Amends GS 105-164.4G, clarifying that the sale at retail and the use, storage, or consumption in North Carolina of specified gross receipts from an entertainment activity admission charge are exempt from the tax imposed by GS Chapter 105, Article 5 (previously, did not include the sale at retail and the use, storage, or consumption language). Clarifies that an admission charge (was, admission) to an entertainment activity is sourced to the location where admission to the activity may be gained by person.

Amends GS 105-164.13, Retail sales and use tax, adding piped natural gas to exemptions detailed in GS 105-164.13(8a), (10), and (57). Effective July 1, 2014.

Amends GS 105-164.13E, as amended by SL 2014-3, to add piped natural gas to the list of tangible personal property, digital property, and services that are exempt from sales and use tax if purchased by the qualifying farmer for use in farming operations. Defines the term taxable yearas having the same meaning as defined in GS 105-153.3.

Amends Section 3.1(d) of SL 2014-3 to provide a person who has an agricultural exemption certificate number issued before July 1, 2014, meeting the requirements of GS 105-164.13E for a qualifying farmer should apply for a new agricultural exemption certificate number before July 1, 2014, for use for qualifying purchases made on or after January 1, 2015 (was, October 1, 2014). Makes conforming changes.

Amends GS 105-164.16A, as enacted by SL 2014-3, creating a subsection (a) and adding a new subsection (b). Amends subsection (a) to provide a retailer (was, taxpayer) that offers (was, that offers to sell)a prepaid meal plan subject to the tax imposed by GS 105-164.4 an option as to how the sales tax will be remitted to the Secretary of Revenue (Secretary) and a return filed under GS 105-164.16. Provides that when a retailer enters into an agreement with a food service contractor who agrees to provide food under a prepaid meal plan, and the food service contractor is also a retailer under this Article, then the retailer may include in the agreement that the food service contractor is liable for reporting (was, collecting) and remitting the sales tax due on the gross receipts from the prepaid meal plan on the behalf of the retailer. Directs that tax payments received by a food service contractor from a retailer are held in trust by the food service contractor for remittance to the Secretary. Requires a food service contractor to remit the amount of a tax payment received from a retailer to the Secretary. Provides that a food service contractor is not liable for tax due but not received from a retailer. Makes a retailer liable for the tax due on the gross receipts derived from a prepaid meal plan if the retailer fails to send the tax due to the food service contractor. Enacts new subsection (b) of GS 105-164.16A to add provisions regarding the basis of reporting gross receipts derived from a prepaid meal plan.

Amends GS 105-164.20 to require a retailer of electricity, telecommunications service, piped natural gas, and prepaid meal plans to report its sales on an accrual basis (was, retailers of electricity and telecommunications service must report sales on an accrual basis) for the purposes of this Article. Provides that the tax on the sales price or gross receipts derived from the sale accrues when the retailer bills its customer for the sale or gross receipts (was, for the sale).

Amends GS 105-164.29(a), as amended by Section 14.9(b) of SL 2014-3, to provide that a certificate of registration must be signed by a manager, member, or company official (was, partner) if the owner is a limited liability company (was, if the owner is an association, a partnership, or a limited liability company). Provides that if the owner is a partnership, the certificate of registration must be signed by a manager, member, or partner.

Amends GS 105-241.6(b)(5) to make clarifying and organizational changes regarding exceptions to the general statute of limitations for obtaining a refund of an overpayment in the case of a contingent event.

Amends GS 105-338(c), as amended by Section 11.1(e) of SL 2014-3, regarding the allocation of appraised valuation of public service property among local taxing units. Deletes the appraised valuation of the tangible personal property of a mobile telecommunications company from the tangible personal property that is appraised under the provisions of this subsection. Instead provides for the appraised valuations of the tangible personal property of mobile telecommunications companies pursuant to GS 105-339 as amended by Section 11.1(f) of SL 2014-3. Effective for taxes imposed for taxable years beginning on or after July 1, 2015. Makes a technical change.

Repeals Section 11.1(g) of SL 2014-3 regarding certification of appraised valuations of mobile telecommunications companies.

Enacts new subsection (b) to GS 160A-206. Prohibits a city from imposing a license, franchise, or privilege tax on a person engaged in any of the following businesses: (1) supplying piped natural gas, (2) providing telecommunications service taxed under GS 105-164.4(a)(4c), (3) Providing video programming taxed under GS 105-164.4(a)(6), and (4) providing electricity. Provides that these businesses are either 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. Enacts new subsection (b) to GS 153A-146 to prohibit a county from imposing a license, franchise, or privilege tax on a person engaged in any of the businesses as listed in new subsection (b) of GS 160A-206.

Clarifies that the Department of Revenue can draw the funds needed from sales tax to make distributions of the repealed franchise tax on electricity and excise tax on piped natural gas, specifically the September 15, 2014, distributions, for the calendar quarter that begins April 1, 2014, to cities under GS 105-116.1 and GS 105-187.44.

Amends GS 105-153.3 and GS 105-153.5(a)(1), to add and define the termsurviving spousefor the purposes of theIndividual Income Tax Act and to add that term to the standard deduction amount table in GS 105-153.5(a)(1).Effective for taxable years beginning on or after January 1, 2014.

Amends GS 105-134.1 and GS 105-134.6(a2) to add and definesurviving spouseand add it to the standard deduction table found in GS 105-134.6(a2). Effective retroactively for taxable years beginning on or after January 1, 2012, and before January 1, 2014.

Amends GS 105-164.13B(a)(4) to delete a reference to a previously repealed statute. Adds language defining, for the purpose of the subdivision, arelated person,meaning a person described in one of the relationships set out in section 267(b) or 707(b) of the Tax Code.

Includes a severability clause. Makes conforming changes to the bill title.

 

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