House committee substitute to the 1st edition makes the following changes.

Section 2.2 of the act, previously Section 2.5, amends GS 105-164.3 by amending the definition of the Streamlined Agreement to now refer to the Streamlined Sales and Use Tax Agreement as amended as of November 7, 2023.

Removes the remaining content of the 1st edition and replaces it with following new content.

Part I.

Repeals GS 105-160.4(f), which, effective for taxable years beginning on or after January 1, 2022, did not allow fiduciaries and beneficiaries of estates and trusts who are shareholders of a taxed S Corporation a credit for taxes paid by the estates and trusts or by the taxed S Corporation to another state or country on income that is taxed to the taxed S Corporation. Also repeals (g), which effective for taxable years beginning on or after January 1, 2022, did not allow fiduciaries and beneficiaries of estates and trusts who are partners of a taxed partnership a credit for taxes paid by the estates and trusts or by the taxed partnership to another state or country on income that is taxed to the taxed partnership. Effective for taxable years beginning on or after January 1, 2023.

Adds and defines the following terms in GS 105-153.3, as they apply to the Individual Income Tax Act. Defines income attributable to the State as either (1) with respect to a partnership, all items of income, loss, deduction, or credit of the partnership apportioned and allocated to this State under GS 105-130.4 (allocation and apportionment of income for corporations) or (2) with respect to an S Corporation. Defines income not attributable to the State as either: (1) with respect to a partnership, all items of income, loss, deduction, or credit of the partnership other than income attributable to the State or (2) with respect to an S Corporation. Effective for taxable years beginning on or after January 1, 2023.

Amends GS 105-153.8 by amending the provisions concerning the filing of joint income tax returns to require two lawfully married individuals who are required to file an income tax return and whose adjusted gross income is determined on a joint federal return to file a joint state income tax return. Provides that if two lawfully married individuals file a joint federal return, but only one is required to file a state income tax return, that individual must file the income tax return as either: (1) jointly based on the filing status of married, filing jointly/surviving spouse or (2) separately based on the filing status of married filing separately. Makes conforming and clarifying changes.

Amends the following statutes to provide that a taxpayer or fiduciary (as applicable) may receive an extension of time to file a tax return (was, may ask the Secretary for an extension of time): GS 105-155, GS 105-160.6, GS 105-130.17, and GS 105-129.

Part II.

Amends GS 105-164.8 by amending two of the ten triggers for when a retailer makes a remote sale is engaged in business in this State and subject to sales tax, to now include: (1) a retailer who makes gross sales in excess of $100,000 from remote sales sourced to this State, including sales as a marketplace seller, for the previous or current calendar year (no longer includes remote sales sourced into this State that are in 200 or more separate transactions) and (2) a marketplace facilitator who makes gross sales in excess of $100,000, including all marketplace-facilitated sales for all marketplace sellers, from sales sourced to this State for the previous or current calendar year (no longer includes sales sourced into this State that are in 200 or more separate transactions). Effective July 1, 2024. Specifies that a person holding a certificate of registration with the Department as of June 30, 2024, and is solely engaged in business in the State because the person exceeds the 200 transaction threshold may close their certificate of registration. Requires the person to collect tax, file returns, and remit tax for periods ending before the later of (1) July 1, 2024, or (2) the date the person cancels their certificate of registration.

Amends GS 105-241.8 by setting the statute of limitation for proposing an assessment against the customer of any refunded tax, when the purchaser receives a refund from a seller of sales tax paid to the seller, at three years after the date of the refund. Applies to assessments not barred by the statute of limitations before July 1, 2024.

Amends GS 105-236 by setting the penalty for the misuse of an affidavit of capital improvement at $250. Specifies that an affidavit of capital improvement substantiates that a contract, or a portion of work to be performed to fulfill a contract, must be taxed for sales and use tax as a real property contract.

Amends GS 105-164.4H by amending the conditions under which a person who receives an affidavit of capital improvements from another person is not liable for any additional tax on the gross receipts from the transaction if it is determined that the transaction is not a capital improvement, to require that the affidavit be received within 90 days of the sale or within 120 days of a substantiation request by the Secretary of Revenue.

Part III.

Amends GS 105-113.83 to requires the excise tax on alcohol to be paid when a report is due, as specified below, and requires the report to be filed regardless of whether alcoholic beverages were sold or otherwise disposed of in this State. Specifies that the report covers liabilities that accrue in the reporting period and that liabilities accrue in the reporting period in which the alcoholic beverage is first sold or otherwise disposed of in this State. Sets the following reporting deadlines: (1) liquor--monthly for the local ABC Board and distillery, (2) malt beverages and wine—monthly for the wholesaler or importer, (3) brewery and winery—monthly, (4) wine shipper permittee—yearly, and (5) railroad sales—monthly for person operating a railroad train in this State. Specifies that the agreement in which a wholesaler agrees to be responsible for the tax on transferred malt beverages must be provided to the Secretary when requested. Makes additional conforming changes.

Amends GS 105-449.45 by adding that the motor carrier’s quarterly report to the Secretary on its operations is due even if the person did not operate or cause to be operated a qualified motor vehicle during the reporting period.

Amends GS 105-449.60 by amending the definition of diesel fuel as it is used in Article 36C, concerning the taxation of Gasoline, Diesel, and Blends, so that the term "diesel fuel" incudes renewable diesel. Adds and defines the term renewable diesel.

Part IV.

Amends Section 5.6 of SL 2022-13 by delaying the effective date of the changes to GS 105-236, which decreased the penalty for failure to pay a tax when it is due from 5% to 2%, with an additional 2% for each month after one month, not exceeding 10% in aggregate. Now makes the change effective July l, 2027, instead of 2024.

Part V.

Amends GS 108A-147.7 by amending the calculation of the State administration subcomponent, and the county administration subcomponent, of the Medicaid hospital assessments to specify that it is to be increased by a percentage that is the sum of each monthly percentage change in the Consumer Price Index: All Urban Consumers for the most recent twelve months available on the first day of the current quarter (was, increased by the Consumer Price Index: All Urban Consumers).

Amends GS 108A-145.3 by amending the following definitions as they apply to the Hospital Assessment Act. Defines private hospital historical assessment share as 80.17% instead of 80.2%. Defines public hospital historical assessment share as 19.83% instead of 19.8%.

Amends GS 108A-145.3 by adding and defining the term rural emergency hospital as it is used in the Hospital Assessment Act. Amends the definitions of private acute care hospital and public acute care hospital to specify that they cannot be a rural emergency hospital. Amends GS 108A-146.9, concerning the fee-for-service component, by providing that the subcomponent pertaining to claims for which there is third-party coverage is the product of the total fee-for-service payments for claims not attributable to newly eligible individuals for which there is third-party coverage made for inpatient hospital services and outpatient services to rural emergency hospitals (along with already included public acute care and private acute care hospitals and critical access hospitals) multiped by the nonfederal share for not newly eligible individuals.

Treats rural emergency hospitals the same as critical access hospitals in (1) the calculation of the UNC Health Care System share and East Carolina University share in GS 108A-147.9 and (2) the calculation of the share of public hospital costs under GS 108A-14.11.

Part VI.

Amends GS 24-1.1E, concerning restrictions and limitations on high-cost home loans by amending the calculation of items that are excluded from the calculation of the total points and fees payable by the borrower, under the definition of the term thresholds; now refers to the average prime offer rate instead of the required net yield for comparable loans from Fannie Mae or the Federal Home Loan Mortgage Corporation. Effective June 1, 2024.

Amends the act's long title.