Part I.

Amends GS 105-153.5 to allow a taxpayer to deduct from their adjusted gross income the amount by which the aggregate amount of losses or deductions of an S Corporation taken into account by a shareholder do not exceed the combined adjusted bases of the shareholder in the stock and indebtedness of the S Corporation. Requires a taxpayer to add to their adjusted gross income the amount by which the aggregate amount of losses or deductions of an S Corporation taken into account by a shareholder exceed the combined adjusted bases of the shareholder in the stock and indebtedness of the S Corporation. Effective for taxable years beginning on or after January 1, 2025.

Amends GS 105-153.5A, the net operating loss provisions, by adding that the statute applies only to individuals, estates, and trusts, applicable retroactively to taxable years beginning on or after January 1, 2022. Further amends GS 105-153.5A, effective for taxable years beginning on or after January 1, 2025, by adding to the modifications that apply when a taxpayer calculates their State net operating loss, so that the amount of their excess business loss is fully allowed as a State net operating loss.

Amends GS 105-160.2, concerning the income tax on estates, trusts, and beneficiaries, as follows. No longer requires that the income of an estate or trust that is being taxed, be for the benefit of a resident of this state or for the benefit of a nonresident to the extent that the income meets specified conditions, now requiring that tax be computed on the amount of the taxable income of the estate or trust that is (1) derived from NC sources and is attributable to the ownership of any interest in real or tangible personal property in North Carolina or (2) is derived from a business, trade, profession, or occupation carried on in North Carolina. Requires that the taxable income and gross income be apportioned and allocated to this State under GS 105-130.4 (allocation and apportionment of income for corporations). Makes additional clarifying and technical changes. Effective for taxable years beginning on or after January 1, 2025.

Amends GS 105-153.3 by amending the definition of resident as it applies to individual income tax, to now provide as follows. A resident who moves from the State during a taxable year is considered a resident until the resident has both established a definite domicile elsewhere and abandoned any domicile in this state. The fact of marriage does not raise any presumption as to domicile or residence. A resident individual is either of the following: (1) an individual who is domiciled in this state at any time during the taxable year or who resides in this state during the taxable year for other than a temporary or transitory purpose or (2) an individual who maintains a place of abode within the state and spends more than 183 days, including partial days, of the taxable year within the state (the absence of an individual from the state for more than 183 days raises no presumption that the individual is not a resident).

Amends GS 105-163.6, concerning when an employer must file returns and pay withheld taxes, as follows. Requires employers withholding an average of at least $2,000 of State income taxes from wages each month to file a return on a quarterly basis (was, by the date set under the Code for filing a return for federal employment taxes attributable to the same wages). Removes provisions related to extensions of time for filing a return. Sets out specified due dates for the withheld State income taxes based on the employer’s payday. Allows the Secretary of Revenue (Secretary) to close a taxpayer's withholding account if the taxpayer files on withholding returns or files returns showing no withholding of State income taxes for a period of 18 months.

Part II.

Enacts new GS 105-154.2, concerning federal partnership adjustments, as follows. Defines federal partnership adjustment as a change or correction arising from a partnership level audit or an administrative adjustment request that affects the calculation of a taxpayer's State tax. Defines additional terms as they apply to Part 2 (individual income tax) of Article 4 of GS Chapter 105. Requires that except in the case of a final federal partnership adjustment (as defined) required to be reported to the Secretary under the newly specified procedures, a partner must report and pay any State income tax due under GS 105-130.20 or GS 105-159 (both concerning federal determinations and amended returns). Requires, except for the distributive share of adjustments that have been reported as required above and an audited partnership that has made a timely election, a partnership and partner must report a final federal partnership as follows: (1) no later than 90 days after the final federal partnership adjustment, a partnership doing business in this state must: a. file an income tax return reflecting the partnership's final federal partnership adjustments, as modified by GS 105-153.5 and GS 105-153.6, and any other information required by the Secretary, and pay the additional amount due under GS 105-154(d) and GS 105-154.1, and b. notify each of its direct partners of the direct partner's distributive share of the final federal partnership adjustments, including any information necessary for the direct partner to properly file a State income tax return and (2) no later than six months after the final federal partnership adjustment, each direct partner subject to tax under this Article must file a State income tax return reporting the direct partner's distributive share of the adjustments reported to the direct partner under b above, as modified by GS 105-153.5 and GS 105-153.6, and any other information required by the Secretary, and pay any additional amount of tax due as if the final federal partnership adjustments had been properly reported. Allows an audited partnership to elect to report a final federal partnership adjustment arising from a partnership level audit, in a manner prescribed by the Secretary; makes such an election irrevocable and can’t be made if the required income tax return is not filed within the required period. Sets out additional provisions that apply to an audited partnership that makes this election, concerning reporting and payment of tax, and exceptions. Sets out provisions applying to the collection of taxes for failure to pay when this election is made. Makes direct and indirect partners of an audited partnership that are tiered partners, and all owners and beneficiaries of those tiered partners that are subject to taxation, subject to the reporting and payment requirements and entitles the tiered partners to make the election. Allows the Secretary to propose an assessment against a direct or indirect partner for tax due, if a partnership or tiered partner fails to timely make any report or payment. Binds the partnership’s direct and indirect partners to the actions of the State partnership representative and sets out actions the partnership representative has sole authority to do. Requires the Secretary to assess additional State tax arising from a final federal partnership adjustment.

Amends GS 105-228.90 by excluding a final federal partnership adjustment from the definition of federal determination. Amends GS 105-153.5 to require when calculating NC taxable income, that: (1) a taxpayer must add the amount by which the taxpayer's distributive share of partnership income, subject to the specified adjustments, is increased as a result of a final federal partnership adjustment and (2) a taxpayer may deduct the amount by which the taxpayer's distributive share of partnership income, as modified by the specified provisions, is decreased as a result of a final federal partnership adjustment. Requires the same additional deductions to federal taxable income under GS 105-130.5.

Amends GS 105-241.6, concerning the statute of limitations for refunds, to provide that if a taxpayer files a return reflecting a final federal partnership adjustment and the return is filed within the required time, the period for requesting a refund is the later of one year after the return reflecting the final federal partnership adjustment is filed or three years after the original return was filed or due to be filed. Makes the same changes to the timing for proposing an assessment under GS 105-241.8 but also adds that if there is a final federal partnership adjustment and the taxpayer does not file the return within the required time, the period for proposing an assessment of any tax due is six years after the date the Secretary received the final report of the final federal partnership adjustment.

Effective for taxable years beginning on or after January 1, 2025, and applies to federal partnership adjustments that become final on or after that date.

Part III.

Amends two of the conditions that can be met in order for a retailer who makes a remote sale to be considered engaged in business in North Carolina and subject to sales tax under GS 105-164.8 by specifying that a retailer who: (1) solely meets the condition of making gross sales in excess of $100,000 from remote sales sourced to this State, including sales as a marketplace seller, for the previous or the current calendar year, or meets both this condition and the one below, is engaged in business on the first day of the first calendar month occurring at least 60 days after the retailer's gross sales exceed the threshold and (2) solely meets the condition of being a marketplace facilitator that 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 the current calendar year, or meets this condition and the one above, is engaged in business on the first day of the first calendar month occurring at least 60 days after the retailer's gross sales exceed the threshold.

Amends GS 105-164.3, which defines terms for sales tax purposes, by defining the Streamlined Sales and Use Tax Agreement as the one amended as of October 9, 2024 (was, November 7, 2023).

Amends GS 105-187.90 by changing the term "shared for hire ground transport" to "shared-ride service." Amends GS 105-187.95 by no longer specifying that the proceeds of the transportation commerce tax must be credited to the Highway Fund on a quarterly basis. Effective July 1, 2025.

Part IV.

Amends GS 105-113.39A to no longer require a wholesale dealer or retail dealer to obtain a vapor products license for locations where a remote seller receives or stores non-tax-paid products for delivery sales.

Amends GS 105-113.83A to no longer require the holder of a nonresident spirituous liquor vendor permit to register with the Secretary.

Amends GS 105-449.42 by changing the due date of tax for a motor carrier who is exempt from filing a return, to the last day of the month following the quarter in which the motor fuel or alternative fuel was used by the motor carrier (was, due when the tax is collectible under GS 105-241.22). Applies to taxes due on or after July 1, 2025.

Amends GS 105-449.60, which sets out definitions applicable to the taxation of gasoline, diesel, and blends, by (1) adding and defining the term renewable diesel; (2) amending the definition of diesel fuel so that it includes renewable diesel; and (3) expanding upon the definition of supplier to also include a purchaser of tax-paid motor fuel who introduces the respective tax-paid motor fuel into the terminal transfer system at a location other than an IRS-registered terminal, and a person who owns tax-paid motor fuel at the time it is placed in the terminal transfer system at a location other than an IRS-registered terminal. Amends GS 105-449.97 to also allow a licensed supplier to take a credit for tax-paid motor fuel in the terminal transfer system if: (1) the supplier is the original purchaser of tax-paid motor fuel placed in the terminal transfer system at a location other than an IRS-registered terminal or (2) the supplier owns tax-paid motor fuel at the time it is placed in the terminal transfer system at a location other than an IRS-registered terminal. Effective July 1, 2025.

Amends GS 105-449.69 to allow the Secretary to cancel an exporter license if the Secretary determines that an exporter is no longer operating in this state and has failed to comply with GS 105-449.75 (notification of discontinuation of business). Makes conforming changes to GS 105-449.76.

Amends GS 105-449.87 by updating a statutory cross-reference.

Amends GS 105-449.139, related to alternative fuel taxation and licensure, to allow the Secretary or their designee to inspect the records subject to audit and take three specified actions to determine tax liability.

Amends GS 150B-2, defining terms for GS Chapter 150B, by amending the definition of license to exclude licenses issued under Subchapter V of GS Chapter 105 (motor fuel taxes).

Amends the definition of gross wagering revenue under GS 18C-901, by specifying that it includes the cash value of any bonuses or promotional credits when returned to an interactive sports wagering operator in the form of a deposit or sports wager.

Part V.

Amends GS 105-228.90 by updating references to the Internal Revenue Code. Also amends the definitions of person, tax, and taxpayer to correct references to Article 84 (Primary Forest Product Assessment Act) of GS Chapter 106 instead of Article 81 (Corporations for Protection and Development of Forests).

Amends GS 105-23 to no longer allow the Secretary to waive the penalty for making payments in the wrong form, and changes the penalty for filing a frivolous return from up to $500 to up to $2,000.

Amends GS 105-249.2 to refer to when the period of time for returns and payments was disregarded instead of referring to extensions of time.

Amends GS 1-339.1 by amending the provision providing that a judicial sale is a sale of property made under an order in an action or proceeding in the superior or district court, but not a tax foreclosure sale, specifying that for the purposes of federal law, this should not be construed to mean that a tax foreclosure sale is a non-judicial sale. Amends GS 160A-233 and GS 153A-200 by no longer making the lien of special assessments inferior to prior and subsequent liens for federal taxes, effective October 1, 2025.

Makes a technical change to GS 14-313. Amends GS 143B-245.10 by adding a definition of ALE Division. Amend GS 143B-245.15 by making the ALE Division responsible for the unannounced compliance checks of retailers, distributors, and wholesalers of consumable products or vapor products, instead of the Secretary of the Department of Revenue or his designees. Makes conforming changes and requires the ALE Division to report on violations to the Secretary when civil penalties are authorized, and allows any products identified for sale that are not on the registry to be seized, forfeited, and destroyed. Amend GS 143B-245.16 by no longer allowing the fees under Part 3 (Certification and Directory of Vapor Products and Consumable Products) to be used for enforcement and requires all fees under the part to be remitted to the Civil Penalty and Forfeiture Fund. Makes conforming changes to reporting requirements. Amends GS 143B-218 to add to the Department of Revenue's duties performing other non-tax related functions as enacted by the NCGA. Amends GS 143B-219 by making conforming changes. Removes the functions of the State Board of Assessment from those that are transferred to the Department of Revenue.

Part VI.

Amends GS 105-278.2 by clarifying that the real property being exempted from taxation must be used for human burial purposes.

Part VII.

Amends GS 105-187.1, by (1) adding and defining the term peer-to-peer vehicle sharing provider; (2) amending the definition of retailer to be those engaged in the business of offering short-term leases or rentals, long-term leases or rentals, or vehicle subscriptions for motor vehicles; and (3) amending the definition of short-term lease or rental to include peer-to-peer vehicle sharing providers. Amends GS 105-187.5 to require the payment of a tax on the gross receipts of a limited possession commitment by: (1) a retailer that purchases a motor vehicle for use as a limited possession commitment and makes an election under this statute and (2) a peer-to-peer vehicle sharing provider. Allows a retailer that has purchased a motor vehicle for a limited possession commitment to elect to pay this tax instead of the tax under GS 105-187.3 when applying for a certificate of title and sets out additional provisions related to this election. Makes organizational, conforming, and technical changes. Makes conforming changes to GS 105-187.3 and GS 105-187.4.

Amends GS 153A-156 and GS 160A-215.1 by no longer specifying that the county’s/city’s levy of a gross receipts tax on short-term leases or rental of vehicles is a substitute and replacement of the ad valorem tax excluded by GS 105-275. Makes conforming and clarifying changes. Makes clarifying changes to GS 105-550. Amends GS 105-551 to also allow levying a privilege tax on a peer-to-peer vehicle sharing provider if the customer takes delivery of the vehicle within the Authority’s territorial jurisdiction. Amends GS 105-552 by making conforming and clarifying changes.

Amends GS 20-280.15 by amending the definitions that apply to Peer‑to‑Peer Vehicle Sharing, as follows: (1) removes the definition of peer-to-peer vehicle sharing and the definition of shared vehicle owner; (2) changes the definition of peer-to-peer vehicle sharing program to refer to a business platform that connects registered vehicle owners that have not made an election under GS 105-187.5 with drivers to enable the sharing of vehicles for financial consideration; and (3) replaces the term "vehicle sharing provider" with peer-to-peer vehicle sharing provider and defines it as a person or entity that operates, facilitates, or administers a peer-to-peer vehicle sharing program. Amends GS 20-208.17 to allow airports to charge the fee and collect data for peer-to-peer vehicle sharing providers (was, programs).

Applies to gross receipts derived from rentals or leases billed on or after October 1, 2025.