A BILL TO BE ENTITLED AN ACT TO REDUCE AND SIMPLIFY BUSINESS TAXES AND TO TAX ALL BUSINESS ENTITIES WITH LIMITED LIABILITY PROTECTION THE SAME.
Repeals the following state and local privilege taxes: GS 105-33(b), 105-41, 105-83, 105-88, 105-102.3, 105-102.6, 105-103, 105-105, 105-106, 105-108, and 105-109. Effective January 1, 2015, and applies to taxes payable under GS 105-41 (licenses for certain professions), GS 105-88 (loan agencies), or GS 105-102.3 ((banks) beginning July 1, 2015; and applies to taxes payable under GS 105-83 (installment paper dealers) regarding obligations dealt in, bought, or discounted on or after January 1, 2015.
Amends GS 153A-152, deleting a county's general authority to impose privilege license taxes on certain trades, occupations, professions, businesses, and franchises .Prohibits acounty from levying a privilege tax on any of those entities carrying out business in that county unless a statute or an act of the General Assembly authorizes the county to do so. Amends GS160A-211, deleting a city's general authority to impose privilege license taxes on certain trades, occupations, professions, businesses, and franchises.Prohibits a city from levying a privilege tax on any of those entities carrying out business in that city unless a statute or an act of the General Assembly authorizes the city to do so. Effective January 1, 2015, and applies to taxes imposed for fiscal years beginning on or after that date.
Amends Article 3 of GS Chapter 105 to repeal the franchise tax and replace it with a business privilege tax applicable to all businesses with limited liability. Renames Article 3 as Business Privilege Tax (was, Franchise Tax). Repeals the following provisions in Article 3: GS 105-114, 105-114.1, 105-120.2, 105-121.1, 105-122, 105-122.1, 105-125, 105-127, 105-128, and 105-129.
Addsdefinitions for termsas they apply in amended Article 3. Includes a comprehensive definition for business entityas meaning any of the following: (1) a domestic corporation organized under GS Chapter 55 or a foreign corporation that has received a certificate of authority under that Chapter authorizing it todo business in this state,(2) an electric membership corporation organized under GS Chapter 117, (3) a domestic liability company formed under GS Chapter 57C or a foreign limited liability company authorized under that Chapter to do business in this state, (4) a domestic limited partnership or a foreign limited partnership authorized under Article 5of GS Chapter 59, (5) a domestic limited liability partnership registered under Article 3B of GS Chapter 59 or a foreign limited liability partnership registered under Article 4A of that Chapter, (6) a domestic or foreign limited liability limited partnership registered under GS 59-210, or (7) any other business organized to confer limited liability on one or more of its owners.
Provides that a business entity doing business in North Carolina and organized so as to confer limited liability on one or more owners of the businessincurs a privilege tax as a condition of the right to do business in thisstate. Provides that in the case of a noncorporate business entity doing business in this state, each owner of the noncorporate business entity is doing business in this state.
Imposes a business privilege tax at a rate of $1.35 per $1,000 of the business entity's adjustednet worth tax base as determined under proposed GS105-114.5. Provides that the tax payable by a business entity may not be less than $500. Also provides that the tax payable by a business entity that is not a corporation may not be more that $5,000. Limits the tax payable by a holding company to no more than $75,000. Provides that the tax imposed under this section does not apply to a company subject to tax under GS 105-116 unless that tax is less than the tax imposed under this section. Provides that a business entity is not subject to the tax levied under this Article after the end of the taxable year in which the entity is dissolved unless the Secretary of Revenue finds that the entity has engaged in business activities in this state that were not appropriate to dissolving its business. Provides criteria governing the determination of a business entity's adjusted net worth tax base and for determining exclusions in calculating certain business entities' tax liability under this Article.
Additionally provides criteria for (1) determining ownership of the capital interests ofnoncorporate and corporate business entitiesafter certain transfersand (2) apportioning the net worth of a business entitydoing business inNorth Carolina when thebusiness is also doing business inone or more other states.
Provides that the tax imposed by proposed GS 105-114.4 is due when the return is due, on or before the 15th day of the fourth month following the end of the business entity's income year. Provides guidelines for requesting an extension for filing and the signing of the return.
Lists business entities that are exempt from the privilege tax imposed by this Article. Provides thata listed business isexempt unless it has unrelated business income. Requires the business entity to establish its claim for exemption in writing upon request from the Secretary. Provides that the following entities are exempt from the privilege tax under this Article: (1) a business entity exempt from federal income tax under the Code; (2) an insurance company subject to tax under Article 8B of GS Chapter 105; (3) a single member limited liability company that is a corporation, disregarded for federal tax purposes, and whose net worth is included in that of its single member; and (4) a real estate mortgage investment conduit as defined in section 860D of the Code.
Makes changes to Article 3 effective for taxable years beginning on or after January 1, 2015, and for which taxes are due on or after that date.
Amends GS 57C-1-22(a)(25), GS 59-35.2(a)(18), and GS 59-1106(a)(22) to reduce annual report filing fees for unincorporated businesses with limited liability to $25 (was, $200) and sets an $18 electronic reporting fee. Repeals GS 105-122.1 to delete the credit for limited liability companies for annual report fees paid under the franchise tax. Effective January 1, 2015, and applies to annual reports due on or after that date.
Makes conforming changes to reflect changes to Article 3 replacing the franchise tax with the business privilege tax, repealing GS 93-12(12) and GS 105-259(b)(4) and amending the definitions section in GS 53-165 (Article 15 of GS Chapter 53, North Carolina Consumer Finance Act). Amends GS 53-172(a) to clarify that the business of making loans includes acting as an installment paper dealer and collecting a loan made by a government regulated lender. Makes additional conforming changes to GS 53-191 and GS 105-130.6A(a)(2). Effective January 1, 2015.
Makes conforming changes to GS Chapter 105 to be consistent with the privilege tax as providedin Article 3 of GS Chapter 105.Provides that an electric power company that collects the privilege tax (was, franchise or privilege tax) under GS 105-116(a) is not subject to any additional franchise or privilege tax imposed upon it by any city or county. Amends GS 105-120.2 to provide for a privilege tax on holding companies (was, franchise or privilege tax) and sets the tax rate at $1.35 (was, $1.50)per $1,000 and provides that the tax is not to be less than $500 (was, not to be less than $35). Effective for taxable years beginning on or after January 1, 2014.
Amends GS 105-230 to provide for suspension of a business entity's right to do business if that entity, as defined in GS 105-114.2, fails to file a report or return or to pay any requiredtax or fee for 90 days after it is due. Prescribes the limitations in effect on the business entity for the duration of the suspension. Amends GS 105-232 to provide the procedure for the reinstatement of a business entity's authority to do business after a suspension for noncompliance. Requires the business entity to resolve the noncompliance issue that led to the suspension and to pay a reinstatement fee of $50 (was, $25). Deletes provisions regarding receivership and liquidation of a business entity. Effective for taxable years beginning on or after January 1, 2014.
Provides that this act does not affect any rights or liabilities arising under a statute amended or repealed by this act before the effective date of the amendment or repeal. Also providesthat this act does not affect the right to any refund or credit of a tax that accrued under the repealed or amended statute prior to the effective date of the repeal or amendment.
Part I of this act includes general findings and intent of the General Assembly as to the purposes of this act.
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