GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

H	1 

HOUSE BILL 2232

Short Title:  Enhance State Revenue/Conforming Changes.     	(Public)
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Sponsors: Representative Hall; and Warner.
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Referred to:  Finance.
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June 1, 1990

A BILL TO BE ENTITLED
AN ACT TO ENHANCE STATE REVENUE AND TO CONFORM THE STATUTES TO RECENT COURT DECISIONS.
The General Assembly of North Carolina enacts:

CONTENTS
I.	PAYMENTS BY UTILITIES
II.	PAYMENTS BY EMPLOYERS
III.	TAX ON CIGARETTE MANUFACTURERS
IV.	EVENLY-WEIGHTED CORPORATE APPORTIONMENT FORMULA
V.	TAX ON HIGHER-INCOME TAXPAYERS
VI.	SOFT DRINK TAX CHANGES
VII.	CONFORMING CHANGES
VIII.	EFFECTIVE DATES
PART I.
PAYMENTS BY UTILITIES.
Section 1.  G.S. 105-164.16 reads as rewritten:
"§ 105-164.16.  Report and payment of taxes.
(a)	Payment. – Taxes levied under this Article are due when a return is required to be filed. Every taxpayer liable for the tax imposed by this Article shall, within the specified time after the end of the appropriate reporting period, submit a return to the Secretary, on a form prescribed by the Secretary, stating the taxpayer's gross sales for the reporting period, the amount and type of sales made in the period that are exempt from tax under G.S. 105-164.13 or are elsewhere excluded from tax, the amount of tax due, and  any other information required by the Secretary. Each return shall be  accompanied by a payment to the Secretary for the amount of taxes shown to be due on the return and shall be signed by the taxpayer or his agent. Returns that do not contain the required information shall not be accepted. When an unacceptable return is submitted, the Secretary shall require a corrected return to be filed.
(b)	Reporting Periods. – Returns of taxpayers who are required to report on a monthly or quarterly basis are due within 15 days after the end of each monthly or quarterly period. Returns of taxpayers who are required to report on a semimonthly basis are due within 10 days after the end of each semimonthly period.
A taxpayer who is consistently liable for less than twenty-five dollars ($25.00) a month in State and local sales and use taxes may, with the approval of the Secretary, file a return on a quarterly basis. A taxpayer who is consistently liable for at least twenty thousand dollars ($20,000) a month in State and local sales and use taxes shall, when directed to do so by the Secretary, file a return on a semimonthly basis. All other taxpayers shall file a return on a monthly basis. Quarterly reporting periods end on the last day of March, June, September, and December; monthly reporting periods end on the last day of the month; and semimonthly reporting periods end on the 15th of each month and the last day of each month.
The Secretary shall monitor the amount of tax remitted by a taxpayer and shall direct a taxpayer who consistently remits at least twenty thousand dollars ($20,000) each month to file a return on a semimonthly basis. In determining the amount of tax due from a taxpayer for a reporting period the Secretary shall consider the total amount due from all places of business owned or operated by the same person as the amount due from that person.
A taxpayer who is directed to remit sales and use taxes on a semimonthly basis but who is unable to gather the information required to submit a complete return for either the first reporting period or both the first and second semimonthly reporting periods may, upon written authorization by the Secretary, file an estimated return for that first reporting period or both periods on the basis prescribed by the Secretary. Once a taxpayer is authorized to file an estimated return for the first period or both periods, the taxpayer may continue to file an estimated return for the first or both periods until the Secretary, by written notification, revokes the taxpayer's authorization to do so. When filing a return for the second semimonthly reporting period, a taxpayer who files an estimated return for the first period but not both periods shall remit the amount of tax due for both the first and second reporting periods, less the amount he remitted with his estimated return.
A taxpayer who files an estimated return for both periods is considered to have been granted an extension for both the first and second reporting periods. Notwithstanding G.S. 105-164.19, if a taxpayer who files an estimated return for both periods files a reconciling return for those periods within ten days of the due date of the return for the second period and any underpayment of estimated taxes remitted with the reconciling return is less than ten percent (10%) of the amount of taxes due for both the first and second reporting periods, no interest shall be charged. Otherwise, a taxpayer who files an estimated return for both periods shall be charged interest at the statutory rate from the due date of the return for the first reporting period to the date the reconciling return is filed.
	."
Sec. 2.  G.S. 105-164.21A reads as rewritten:
"§ 105-164.21A. Deduction for municipalities that sell electric power.
A municipality that pays the retail sales tax imposed by this Article on electricity may deduct from the amount of tax payable by the municipality an amount equal to three percent (3%) of the difference between its gross receipts from sales of electricity for the preceding reporting period and the amount paid by the municipality for purchased power and related services during that reporting period."
Sec. 3.  G.S. 105-116 reads as rewritten:
"§ 105-116. Franchise or privilege tax on electric power, natural gas, water, and sewerage companies.
													”(a)	Tax.  An annual franchise or privilege tax is imposed on a person, firm, or corporation, other than a municipal corporation, that is:
(1)	An electric power company engaged in the business of furnishing electricity, electric lights, current, or power.
(2)	A natural gas company engaged in the business of furnishing piped natural gas.
(3)	A water company engaged in owning or operating a water system subject to regulation by the North Carolina Utilities Commission.
(4)	A public sewerage company engaged in owning or operating a public sewerage system.
The tax on an electric power company is three and twenty-two hundredths percent (3.22%) of the company's taxable gross receipts from the business of furnishing electricity, electric lights, current, or power.  The tax on a natural gas company is three and twenty-two hundredths percent (3.22%) of the company's taxable gross receipts from the business of furnishing piped natural gas.  The tax on a water company is four percent (4%) of the company's taxable gross receipts from owning or operating a water system subject to regulation by the North Carolina Utilities Commission.  The tax on a public sewerage company is six percent (6%) of the company's taxable gross receipts from owning or operating a public sewerage company.  A company's taxable gross receipts are its gross receipts from business inside the State less the amount of gross receipts from sales reported under subdivision (b)(2).  A company that engages in more than one business taxed under this section shall pay tax on each business.  A company is allowed a credit against the tax imposed by this section for the company's investments in certain entities in accordance with Division V of Article 4 of this Chapter.
(b)	Payment.  The tax imposed by this section is payable when a report is required to be filed.  An electric power company or a natural gas company shall file a report on a monthly basis.  A water company or a public sewerage company shall file a report on a quarterly basis.  A monthly report covers a calendar month and is due within 25 days after the end of the month covered by the report.  A quarterly report covers a calendar quarter and is due within 25 days after the end of the quarter covered by the report.  A company shall submit a report on a form provided by the Secretary.  The report shall include the company's gross receipts from all property it owned or operated during the reporting period in connection with its business taxed under this section and shall contain the following information:
(1)	The company's gross receipts for the reporting period from business inside and outside this State, stated separately.
(2)	The company's gross receipts from commodities or services described in subsection (a) that are sold to a vendee subject to the tax levied by this section or to a joint agency established under G.S. Chapter 159B or a municipality having an ownership share in a project established under that Chapter.
(3)	The amount of and price paid by the company for commodities or services described in subsection (a) that are purchased from others engaged in business in this State and the name of each vendor.
(4)	For an electric power company or a natural gas company, the company's gross receipts from the sale within each municipality of the commodities and services described in subsection (a).
A company shall report its gross receipts on an accrual basis.
(c)	Gas Surcharges.  Gross receipts of a natural gas company do not include special charges collected within this State by the company pursuant to drilling and exploration surcharges approved by the North Carolina Utilities Commission, if the surcharges are segregated from the other receipts of the company and are devoted to drilling, exploration, and other means to acquire additional supplies of natural gas for the account of natural gas customers in North Carolina and the beneficial interest in the surcharge collections is preserved for the natural gas customers paying the surcharges under rules established by the Commission.
(d)	Distribution.  Each municipality shall receive three and nine hundredths percent (3.09%) of the taxable gross receipts derived by an electric company and a natural gas company from sales within the municipality of the commodities and services described in subsection (a).  At the end of each calendar quarter, the Secretary of Revenue shall calculate the amount to be distributed to each municipality based on the taxable gross receipts derived within the municipality during that quarter and shall certify the amount to the State Controller. The Secretary shall then distribute the amounts to the municipalities.  If a company's report does not state the company's taxable gross receipts derived within a municipality, the Secretary of Revenue shall determine a practical method of allocating part of the company's taxable gross receipts to the municipality.
As used in this subsection, the term ‘municipality' includes an urban service district defined by the governing board of a consolidated city-county.  The amount due an urban service district shall be distributed to the governing board of the consolidated city-county.
(e)	No Local Tax.  Counties and cities may not impose a license, franchise, or privilege tax on a company taxed under this section."
Sec. 4.  G.S. 105-120 reads as rewritten:
"§ 105-120.  Franchise or privilege tax on telephone companies.
(a)	Tax.  An annual franchise or privilege tax is imposed on a person, firm, or corporation, that owns or operates a business entity for the provision of local telecommunications service.  The tax is three and twenty-two hundredths percent (3.22%) of the company's taxable gross receipts.  A company's taxable gross receipts are its receipts from providing local telecommunications service, including receipts from rentals and other similar charges, less its receipts from telecommunications access charges.  A company is allowed a credit against the tax imposed by this section for the company's investments in certain entities in accordance with Division V of Article 4 of this Chapter. 
(b)	Payment.  The tax imposed by this section is payable when a report is required to be filed.  A company that is liable for an average of less than three thousand dollars ($3,000) a month in taxes imposed by this section may, with the approval of the Secretary of Revenue, file a report on a quarterly basis.  All other companies shall file a report on a monthly basis.  A monthly report covers a calendar month and is due within 25 days after the month covered by the report.  A quarterly report covers a calendar quarter and is due within 25 days after the end of the quarter covered by the report.  A company shall submit a report on a form provided by the Secretary.  The report shall state the company's gross receipts for the reporting period from providing local telecommunications service and from providing local telecommunications service within each municipality served.  A company shall report its gross receipts on an accrual basis.
(c)	Distribution.  Each municipality shall receive three and nine hundredths percent (3.09%) of the taxable gross receipts derived from local telecommunications service provided within the municipality.  At the end of each calendar quarter, the Secretary of Revenue shall calculate the amount to be distributed to each municipality based on the taxable gross receipts derived within the municipality during that quarter and shall certify the amount to the State Controller.  The Secretary shall then distribute the amounts to the municipalities.  If a company's report does not state the company's taxable gross receipts from local telecommunications service provided within a municipality, the Secretary of Revenue shall determine a practical method of allocating part of the company's taxable gross receipts to the municipality.
As used in this subsection, the term ‘municipality' includes an urban service district defined by the governing board of a consolidated city-county.  The amount due an urban service district shall be distributed to the governing board of the consolidated city-county.
(d)	No Local Tax.  Counties and cities may not impose a license, franchise, or privilege tax on a company taxed under this section or under G.S. 105-164.4(4c).
(e)	Definitions. For purposes of this section:
(1)	‘Local telecommunications service' means telecommunications service provided wholly within a LATA entitling the user to access to a local telephone exchange for the privilege of telephonic quality communication with substantially all persons in the local telephone exchange.  Provided, however, local telecommunications service does not include intraLATA or interLATA toll telecommunications service, or private telecommunications service.
(2)	‘LATA' is a Local Access and Transport Area representing a geographical area comprising one or more telephone exchange areas.
(3)	‘InterLATA telecommunications' is telecommunications service provided between two or more LATAs.
(4)	‘Toll telecommunications service' means:
a.	A telephonic quality communication for which:
1.	There is a toll charge that varies in amount with the distance and elapsed transmission time of each individual communication; and
2.	The charge is paid within the United States.
b.	A service that entitles the subscriber, upon payment of a periodic charge (determined as a flat amount or upon the basis of total elapsed transmission time), to the privilege of an unlimited number of telephonic communications to or from all or a substantial portion of the persons having telephone or radiotelephone stations in a specified area that is outside the local telephone exchange.
(5)	‘Private telecommunications service' means a service furnished to a subscriber that entitles the subscriber to exclusive or priority use of a communications channel or group of channels.
(6)	‘Telecommunications access charges' means charges paid to a provider of local telecommunications service for access to an interconnection with the local telephone exchange.
					)."
PART II.
PAYMENTS BY EMPLOYERS.
Sec. 5.  G.S. 105-163.1 reads as rewritten:
"§ 105-163.1. Definitions.
The following definitions apply in this Article:
(1)	 ” ‘Code.'–The Internal Revenue Code as enacted as of January 1, 1990, including any provisions enacted as of that date which become effective either before or after that date.
(2)	 ” 
(3)	 ” ‘Dependent.'– An individual with respect to whom an income tax exemption is allowed under the Code.
(4)	” ‘Employee.'– An individual, whether a resident or a nonresident of this State, who performs services in this State for wages or an individual who is a resident of this State and performs services outside this State for wages. The ”term includes an ordained or licensed clergyman who elects to be considered an employee under G.S. 105-163.1A, an officer of a corporation, and an elected public official.
(5)	” ‘Employer.'–  A person for whom an individual performs 
	”	”services for wages.  In applying the requirements to withhold income taxes from wages and pay the withheld taxes, the term includes a person who:
a.	Controls the payment of wages to an individual for services performed for another.
b.	Pays wages on behalf of a person who is not engaged in trade or business in this State.
c.	Pays wages on behalf of a unit of government that is not located in this State.
d.	Pays wages for any other reason.
	”										”””(8)	 ” ‘Fiduciary.'– A guardian, a trustee, an executor, an administrator, a receiver, a conservator, or another person acting in a fiduciary capacity for another.
(9)	 ” ‘Fiscal year.'– Defined in section 441(e) of the Code.
(10)	 ” ‘Individual.'– A natural person.
(11)	 ” ‘Miscellaneous payroll period.'–  A payroll period other than a daily, weekly, biweekly, semimonthly, monthly, quarterly, semiannual, or annual payroll period.
(12)	 ” ‘Payroll period.'– A period for which ”an employer ordinarily pays wages to an employee of the employer.
(13)	” ‘Person.'–  An individual, a fiduciary, a partnership, a corporation, or a unit of government.  The term includes an officer or employee of a corporation, a member or employee of a partnership, and an employee of an individual proprietorship who, as officer, employee, or member, is under a duty to perform an act in meeting the requirements of this Division.
(14)	 ”” ‘Taxable year'.– Defined in section 441(b) of the Code.
(14a)	‘Secretary.'– The Secretary of Revenue.
(15)	” ‘Wages.'– The term has the same meaning as in section 3401 of the Code except it does not include remuneration paid by a farmer for services performed on the farmer's farm in producing or harvesting agricultural products or in transporting the agricultural products to market."
Sec. 6.  G.S. 105-163.1A reads as rewritten:
"§ 105-163.1A. Ordained or licensed clergyman may elect to be considered.  An ordained or licensed clergyman who performs services for a church of any religious denomination may file an election with the Secretary and the church he serves to be considered an employee of the church instead of self-employed.  Until a clergyman files an election, amounts paid by a church to a clergyman are not subject to withholding. A church shall withhold taxes from a clergyman's wages after the clergyman files an election with it under this section."
Sec. 7.  G.S. 105-163.2(a) reads as rewritten:
"(a)	
An employer shall deduct and withhold from the wages of each employee the State income taxes payable by the employee on the wages.  For each payroll period, the employer shall withhold from the employee's wages an amount that would approximate the employee's income tax liability under Article 4 of this Chapter if the employer withheld the same amount from the employee's wages for each similar payroll period in a calendar year.  In calculating an employee's anticipated income tax liability, the employer shall allow for the exemptions, deductions, and credits to which the employee is entitled under Article 4 of this Chapter.  The amount of State income taxes withheld by an employer is held in trust for the Secretary."
Sec. 8.  G.S. 105-163.3 reads as rewritten:
"§ 105-163.3. Withholding in accordance with regulations.
The manner of withholding and the amount to be deducted and withheld under G.S. 105-163.2 shall be determined in accordance with tables, rules, and regulations adopted by the Secretary.  The withholding exemption allowed by these tables, rules, and regulations shall, as nearly as possible, approximate the exemptions to which an employee would be entitled under Article 4 of this Chapter."
Sec. 9.  G.S. 105-163.4 reads as rewritten:
"§ 105-163.4. No withholding from reimbursement for expenses.
The amount an employer pays an employee as reimbursement for ordinary and necessary expenses incurred by the employee on behalf of the employer and in the furtherance of the business of the employer is not wages and is not subject to withholding under this Article."
Sec. 10.  G.S.  105-163.6 reads as rewritten:
"§ 105-163.6. When employer must file returns and pay withheld taxes.
(a)	General.– A return is due quarterly or monthly as specified in this section.  A return shall be filed with the Secretary on a form prepared by the Secretary, shall report any payments of withheld taxes made during the period covered by the return, and shall contain any other information required by the Secretary.
Withheld taxes are payable quarterly, monthly, or within three banking days after paying wages, as specified in this section.  Withheld taxes shall be paid to the Secretary or to a financial institution with which the Secretary has entered a contract to receive payment of withheld taxes.
If the Secretary finds that collection of the amount of taxes this Article requires an employer to withhold is in jeopardy, the Secretary may require the employer to file a return or pay withheld taxes at a time other than that specified in this section.
(b)	Quarterly.–  An employer who withholds an average of less than five hundred dollars ($500.00) of State income taxes from wages each month shall file a return and pay the withheld taxes on a quarterly basis.  A quarterly return covers a calendar quarter and is due by the last day of the month following the end of the quarter.
(c)	Monthly.–  An employer who withholds an average of at least five hundred dollars ($500.00) but less than three thousand dollars ($3,000) from wages each month shall file a return and pay the withheld taxes on a monthly basis.  A return for the months of January through November is due by the 15th day of the month following the end of the month covered by the return.   A return for the month of December is due the following January 31.
	(d)	Three Banking Days.– An employer who withholds an average of at least three thousand dollars ($3,000) of State income taxes from wages each month shall file a return by the date set under the Code for filing a return for federal income taxes withheld from the same wages and shall pay the withheld State taxes by the date set under the Code for depositing or paying federal income taxes withheld from the same wages.  An extension of time granted to file a return for federal income taxes withheld from wages is an automatic extension of time for filing a return for State income taxes withheld from the same wages, and an extension of time granted to pay federal income taxes withheld from wages is an automatic extension of time for paying State income taxes withheld from the same wages.  An employer who pays withheld State income taxes under this subsection is not subject to interest on or penalties for an underpayment of an amount due if the employer timely pays at least ninety-five percent (95%) of the amount due and includes the underpayment with the next payment the employer makes.
(e)	Category.–  The Secretary shall monitor the amount of taxes withheld by an employer or estimate the amount of taxes to be withheld by a new employer and shall direct each employer to pay withheld taxes in accordance with the appropriate schedule.  An employer shall file a return and pay withheld taxes in accordance with the Secretary's direction until notified in writing to file and pay under a different schedule.
	."
Sec. 11.  G.S. 105-163.7(b) reads as rewritten:
"(b)	The Secretary may require an employer to include information not listed in subsection (a) on the employer's written statement to an employee and to file the statement at a time not required by subsection (a). Every employer shall file an annual report with the Secretary that contains the information given on each of the employer's written statements to an employee and other information required by the Secretary.  The annual report is due on the same date the employer's federal information return of federal income taxes withheld from wages is due under the Code. The report required by this subsection is in lieu of the report required by G.S. 105-154."
Sec. 12.  G.S. 105-163.8 reads as rewritten:
"§ 105-163.8. Liability of employer and others.
(a)	Employer.  An employer who withholds the proper amount of taxes under G.S. 105-163.2 and pays the withheld amount to the Secretary is not liable to any person for the amount paid.  An employer who fails to withhold the proper amount of taxes or pay the amount withheld to the Secretary is liable for the amount not withheld or not paid.  An employer who fails to withhold the amount of income taxes required by this Article or who fails to pay withheld taxes by the due date for paying the taxes is subject to a penalty equal to twenty-five percent (25%) of the amount of taxes not withheld or not timely paid to the Secretary.
(b)	Others.  A person who has a duty to deduct, account for, or pay taxes required to be withheld under G.S. 105-163.2 and who fails to do so is liable for the amount not deducted, not accounted for, or not paid."
Sec. 13.  G.S. 105-163.9 reads as rewritten:
"§ 105-163.9. Refund of overpayment to employer.
	An employer who pays the Secretary more under this Article than the Article requires the employer to pay may obtain a refund of the overpayment by filing an application for a refund with the Secretary.  No refund is allowed, however, if the employer withheld the amount of the overpayment from the wages of the employer's employees.  An employer must file an application for a refund within the time period set in G.S. 105-266.  Interest accrues on a refund as provided in G.S. 105-266.
	."
Sec. 14.  G.S. 105-163.17 reads as rewritten:
"§ 105-163.17. Administration.
The provisions of Article 9 of this Chapter 
apply to the amount of State income taxes this Article requires an employer to withhold and pay to the Secretary."
Sec. 15.  G.S. 105-259 reads as rewritten:
"§ 105-259.  Secrecy required of officials; penalty for violation.
With respect to any one of the following persons: (i)	the Secretary of Revenue and all other officers or employees, and former officers and employees, of the Department of Revenue; (ii) local tax officials, as defined in G.S. 105-273, and former local tax officials; (iii) members and former members of the Property Tax Commission; (iv) any other person authorized in this section to receive information concerning any item contained in any report or return, or authorized to inspect any report or return; and (v) the Commissioner of Insurance and all other officers or employees and former officers and employees of the Department of Insurance with respect to State and federal income tax returns filed with the Commissioner of Insurance by domestic insurance companies; and except in accordance with proper judicial order or as otherwise provided by law, it shall be unlawful for any of these persons to divulge or make known in any manner the amount of income, income tax or other taxes of any taxpayer, or information relating thereto or from which the amount of income, income tax or other taxes or any part thereof might be determined, deduced or estimated, whether it is set forth or disclosed in or by means of any report or return required to be filed or furnished under this Subchapter, or in or by means of any audit, assessment, application, correspondence, schedule or other document relating to the taxpayer, notwithstanding the provisions of Chapter 132 of the General Statutes or of any other law or laws relating to public records.  It shall likewise be unlawful to reveal whether or not any taxpayer has filed a return, and to abstract, compile or furnish to any person, firm or corporation not otherwise entitled to information relating to the amount of income, income tax or other taxes of a taxpayer, any list of names, addresses, social security numbers or other personal information concerning the taxpayer, whether or not the list discloses a taxpayer's income, income tax or other taxes, or any part thereof, except that when an election is made by a husband and wife under G.S. 105-152.1 to file a joint return, any information given to one spouse concerning the income or income tax of the other spouse reported or reportable on the joint return shall not be a violation of the provisions of this section.
Nothing in this section shall be construed to prohibit the publication of statistics, so classified as to prevent the identification of particular reports or returns, and the items thereof; the inspection of these reports or returns by the Governor, Attorney General, or their duly authorized representative; or the inspection by a legal representative of the State of the report or return of any taxpayer who shall bring an action to set aside or review the tax based thereon, or against whom an action or proceeding has been instituted to recover any tax or penalty imposed by this Subchapter; nor shall the provisions of this section prohibit the Department of Revenue furnishing information to other governmental agencies of persons and firms properly licensed under Schedule B, G.S. 105-33 to 105-113.  The Department of Revenue may exchange information with the officers of organized associations of taxpayers under Schedule B, G.S. 105-33 to 105-113, with respect to parties liable for these taxes and as to parties who have paid these license taxes.
When any record of the Department of Revenue has been photographed, photocopied, or microphotocopied pursuant to the authority contained in G.S. 8-45.3, the original of that record may thereafter be destroyed at any time upon the order of the Secretary of Revenue, notwithstanding the provisions of G.S. 121-5, G.S. 132-2, or any other law relating to the preservation of public records.  Any record that has not been so photographed, photocopied, or microphotocopied shall be preserved for three years, and thereafter until the Secretary of Revenue orders it destroyed.
Any person, officer, agent, clerk, employee, or local tax official or any former officer, employee, or local tax official who violates the provisions of this section shall be guilty of a misdemeanor and fined not less than two hundred dollars ($200.00) nor more than one thousand dollars ($1,000) and/or imprisoned, in the discretion of the court; and if the person committing the violation is a public officer or employee, that person shall be dismissed from such office or employment, and may not hold any public office or employment in this State for a period of five years thereafter.
Notwithstanding the provisions of this section, the Secretary of Revenue may permit the Commissioner of Internal Revenue of the United States, or the revenue officer of any other state imposing any of the taxes imposed in this Subchapter, or the duly authorized representative of either, to inspect the report or return of any taxpayer; or may furnish that person an abstract of the report or return of any taxpayer; or supply that person with information concerning any item contained in any report or return, or disclosed by the report of any investigation of any report or return of any taxpayer.  The permission, however, may be granted or the information furnished to the officer or agent only if the statutes of the United States or of the other state grant substantially similar privilege to the Secretary of Revenue of this State or the Secretary's duly authorized representative.  Notwithstanding any other provision of law, the Secretary may also furnish names, addresses, and account and identification numbers of (i)	taxpayers who may be entitled to property held in the Escheat Fund to the Department of State Treasurer when that Department requests the information for the purpose of administering Chapter 116B of the General Statutes, and (ii) taxpayers to the Employment Security Commission when that Commission requests the information for the purpose of administering Article 2 of Chapter 96 of the General Statutes.  Neither this section nor any other law prevents the exchange of information between the Department of Revenue and the Department of Transportation's Division of Motor Vehicles when the information is needed by either to administer the laws with which they are charged.  Notwithstanding any other provision of law, State officers and employees who perform computerized data processing functions pursuant to G.S. 143-341(9) for the Department of Revenue are authorized to receive and process for the Department of Revenue information in reports and returns and are subject to the criminal provisions of this section.
Notwithstanding the provisions of this section, the Secretary of Revenue may contract with any person, firm or corporation to receive and address, sort, bag, or deliver to the United States Postal Service any bulk mailing originated by the Department of Revenue, and may deliver the mail to the contractor pursuant to the contract.  To ensure performance of the contract, the contractor shall furnish a bond in a form and amount acceptable to the Secretary.
Notwithstanding the provisions of this section, the Secretary of Revenue may contract with a financial institution for the receipt of withheld income tax payments under G.S. 105-163.6."
PART III.
TAX ON CIGARETTE MANUFACTURERS.
Sec. 16.  Article 2 of Chapter 105 of the General Statutes is amended by inserting a new section before G.S. 105-103 to read:
"§ 105-102.6.  Cigarette manufacturers.
(a)	Tax.  Every person engaged in the business of manufacturing cigarettes shall apply for and obtain from the Secretary of Revenue a license for the privilege of doing business in this State.  The manufacturer shall pay a tax of five dollars ($5.00) for this license.  In addition, the manufacturer shall, within 10 days after the last day of each month, report to the Secretary the number of cigarettes made by the manufacturer during the month and pay a tax at the rate of one-fourth of a  mill for each cigarette manufactured.  This additional tax is due when the report is filed.  No county, city, or town may impose a license tax on the business taxed under this section.
(b)	Cigarette Defined.  As used in this section, ‘cigarette' means:
(1)	A roll of tobacco wrapped in paper or another substance that does not contain tobacco.
(2)	A roll of tobacco wrapped in a substance that contains tobacco and that, because of its appearance, the type of tobacco used in the filler, or its packaging or labeling, is likely to be offered to or purchased by a consumer as a cigarette described in subdivision (1)."
Sec. 17.  G.S. 105-109.1 reads as rewritten:
"§ 105-109.1. Interest.
The taxes on gross receipts levied in G.S. 105-37.1(a), 105-38(f), and 105-65.1(b)(2), the tax on installment paper dealers levied in G.S. 105-83(b), and the tax on cigarette manufacturers levied in G.S. 105-102.6 shall bear interest at the rate established under G.S. 105-241.1(i) from the time the taxes were due until the taxes are paid."
Sec. 18.  Article 2A of Chapter 105 of the General Statutes is repealed.
Sec. 19.  The Secretary of Revenue shall redeem any unused or mutilated but identifiable tax stamps purchased pursuant to Article 2A of Chapter 105 of the General Statutes that a taxpayer presents for redemption and shall refund the face value of the stamps, less the discount allowed at the time of the purchase of the stamps by the taxpayer.
PART IV.
EVENLY-WEIGHTED CORPORATE APPORTIONMENT FORMULA.
Sec. 20.  G.S.  105-130.4(i) reads as rewritten:
"(i)	All business income of corporations other than public utilities and excluded corporations shall be apportioned to this State by multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus the sales factor, and the denominator of which is three. If one or more of these factors does not exist, the denominator of the fraction shall be the number of existing factors."
PART V.
TAX ON HIGHER-INCOME TAXPAYERS.
Sec. 21.  G.S. 105-134.2 reads as rewritten:
"§ 105-134.2.  Individual income tax imposed.
	A tax is imposed upon the North Carolina taxable income of every individual.  The tax shall be levied, collected, and paid annually and shall be computed at the following percentages of the taxpayer's North Carolina taxable income.
(1)	For married individuals who file a joint return under G.S. 105-152.1 and for surviving spouses, as defined in section 2(a) of the Code:
	On the North Carolina taxable income up to twenty-one thousand two hundred fifty dollars ($21,250), six percent (6%).
	On the amount over twenty-one thousand two hundred fifty dollars ($21,250) and up to one hundred thousand dollars ($100,000), seven percent (7%).
	On the amount over one hundred thousand dollars ($100,000), eight percent (8%).
(2)	For heads of households, as defined in section 2(b) of the Code:
	On the North Carolina taxable income up to seventeen thousand dollars ($17,000), six percent (6%).
	On the amount over seventeen thousand dollars ($17,000) and up to eighty thousand dollars ($80,000), seven percent (7%).
	On the amount over eighty thousand dollars ($80,000), eight percent (8%).
(3)	For unmarried individuals other than surviving spouses and heads of households:
	On the North Carolina taxable income up to twelve thousand seven hundred fifty dollars ($12,750), six percent (6%).
	On the amount over twelve thousand seven hundred fifty dollars ($12,750) and up to sixty thousand dollars ($60,000), seven percent (7%).
	On the amount over sixty thousand dollars ($60,000), eight percent (8%).
(4)	For married individuals who do not file a joint return under G.S. 105-152.1:
	On the North Carolina taxable income up to ten thousand six hundred twenty-five dollars ($10,625), six percent (6%).
	On the amount over ten thousand six hundred twenty-five dollars ($10,625) and up to fifty thousand dollars ($50,000), seven percent (7%).
	On the amount over fifty thousand dollars ($50,000), eight percent (8%)."
Sec. 22.  Notwithstanding G.S. 105-163.15, no addition to tax may be made under that statute for a taxable year beginning on or after January 1, 1990, and before January 1, 1991, with respect to an underpayment of individual income tax to the extent the underpayment was created or increased by Section 21 of this act.
PART VI.
SOFT DRINK TAX CHANGES.
Sec. 23.  G.S. 105-113.44 reads as rewritten:
"§ 105-113.44. Definitions.
The following definitions apply in this Article:
(1)	‘Base product.'  A powder, syrup, or other product to which liquid is added to complete a soft drink.
(2)	 ‘Bottled.'  Enclosed in a sealed container of any kind.
			(6)	 ‘Distributor.'  A person who manufactures bottled soft drinks or base products or who purchases bottled soft drinks or base products for sale to another.
		(9)	‘Natural undiluted fruit juice.'  One of the following forms of undiluted fruit juice:
a.	The liquid that results from pressing fruit.
b.	The concentrate that results from dehydrating undiluted fruit juice.
c.	The liquid that results from adding water to dehydrated undiluted fruit juice.
(10)	‘Natural undiluted milk.'  One of the following forms of milk:
a.	Undiluted milk, regardless of butterfat content.
b.	The powder that results from dehydrating undiluted milk.
c.	The liquid that results from adding water to dehydrated undiluted milk.
(11)	‘Natural undiluted vegetable juice.'  One of the following forms of undiluted vegetable juice:
a.	The liquid that results from pressing vegetables.
b.	The concentrate that results from dehydrating undiluted vegetable juice.
c.	The liquid that results from adding water to dehydrated undiluted vegetable juice.
(12)	 ‘Person.'  An individual, a firm, a partnership, an association, a corporation, or any other organization or group acting as a unit.
(13)	 ‘Powder.'  Crystals, granules, tablets, and other dry products.
(14)	‘Retail dealer.'  A person who sells at retail bottled soft drinks and soft drinks made by that person from base products.
(15)	 ‘Sale.'  A transfer, a trade, an exchange, or a barter, in any manner or by any means, for consideration.
(16)	 ‘Secretary.'  The Secretary of Revenue.
(17)	 ‘Soft drink.'  A beverage that is not an alcoholic beverage, as defined in G.S. 105-113.68.
	(19)	 ‘Undiluted.'  Without added ingredients of any kind other than vitamins.  Added ingredients include sugar, salt, preservatives, and coloring.
(20)	‘Wholesale dealer.'  A person who sells bottled soft drinks or base products to another for resale."
Sec. 24.  G.S. 105-113.45 reads as rewritten:
"§ 105-113.45. Excise taxes on soft drinks and base products.
(a)	Bottled Soft Drinks.  An excise tax of ten cents (10¢) a gallon is levied on the sale of bottled soft drinks.
	(c)	Liquid Base Products.  An excise tax of one dollar ($1.00) a gallon, or four-fifths cents (4/5¢) an ounce, is levied on the sale of a liquid base product.
(d)	Dry Base Products.  An excise tax is levied on the sale of a dry base product at the rate:
(1)	Of one cent (1¢) an ounce if the dry base product is not converted into a syrup or other liquid base product before it is used to make a soft drink.
(2)	That would apply under subsection (c) to the resulting liquid base product if the dry base product is converted into a liquid base product before it is used to make a soft drink.
	."
Sec. 25. G.S. 105-113.46 reads as rewritten:
"§ 105-113.46. Exemptions.
(a)	Items.  The taxes imposed by this Article do not apply to:
(1)	Natural undiluted fruit juice.
(2)	Natural undiluted milk.
(3)	Natural undiluted vegetable juice.
(4)	A base product used to make a bottled soft drink subject to tax under this Article.
(5)	A bottled soft drink or base product made or acquired for sale outside the State.
(6)	Coffee and tea in any form.
(7)	A bottled soft drink or base product for which federal law prohibits collection of the tax imposed by this Article.
(8)	Uncarbonated water.
(b)	Registration.  The Secretary may require a distributor, wholesale dealer, or retail dealer who claims a bottled soft drink is exempt from the tax imposed by this section to file an affidavit stating that the bottled soft drink qualifies for exemption and the reason why it qualifies for exemption."
Sec. 26.  G.S. 105-113.50 reads as rewritten:
"§ 105-113.50. Soft drink licenses required.
(a)	Distributors And Wholesale Dealers.  Distributors and wholesale dealers shall obtain for each place of business a continuing soft drink license for which a fee of twenty-five dollars ($25.00) shall be paid. For the purpose of this section, ‘place of business' means any place where soft drinks are manufactured by a distributor, or any place where bottled soft drinks or base products are received or stored by a distributor or wholesale dealer.
	(c)	Retail Dealers. Each retail dealer manufacturing or purchasing not previously taxed base products shall secure a continuing soft drink license for which a fee of five dollars ($5.00) shall be paid for each place of business at which the retail dealer manufactures or receives the base products.
	."
Sec. 27.  G.S. 105-113.50A reads as rewritten:
"§ 105-113.50A. Local taxation.
A county or city may not levy a privilege license tax upon the business of bottling, manufacturing, producing, purchasing, selling at wholesale or retail, jobbing, consigning, using, shipping, or distributing for the purpose of sale within this State bottled soft drinks."
Sec. 28.  G.S. 105-113.51 reads as rewritten:
"§ 105-113.51. Payment of excise taxes.
					The excise taxes levied by this Article on bottled soft drinks and base products are payable monthly to the Secretary by the distributor, wholesale dealer, or retail dealer who first handles the bottled soft drinks or base products in this State.  The taxes on bottled soft drinks and base products shall be paid only once on the same bottled soft drinks or base products.  The taxes shall be paid on or before the 15th day of the month following the month in which the bottled soft drinks or base products are first manufactured in this State, brought into this State for distribution, or sold in this State.  A retail dealer, however, is liable for any tax due but not paid on bottled soft drinks or base products acquired by the retail dealer.
When paying excise taxes, a distributor, wholesale dealer, or retail dealer shall submit to the Secretary verified reports on forms provided by the Secretary detailing sales records for the month for which the taxes are paid.  The report shall indicate the amount of excise tax due, contain the information required by the Secretary, and indicate separately any transactions to which the excise tax does not apply."
Sec. 29.  G.S. 105-113.52 reads as rewritten:
"§ 105-113.52. Discount.
				Each distributor, wholesale dealer, or retail dealer who remits the excise taxes on bottled soft drinks or base products may deduct from the amount payable a discount of two percent (2%). This discount covers losses due to spoilage and breakage, expenses incurred in preparing the records and reports required by this Article, and the expense of furnishing a bond. No discount is allowed on taxpaid beverages given as free goods for advertising."
Sec. 30.  G.S. 105-113.53 reads as rewritten:
"§ 105-113.53. Bonds.
The Secretary may require a distributor, wholesale dealer, or retail dealer to furnish a bond in an amount that adequately protects the State in the collection of taxes levied by this Article.  A bond shall be conditioned on compliance with this Article, shall be payable to the State, and shall be in a form acceptable to the Secretary.  The Secretary shall proportion a bond amount to the anticipated tax liability of the distributor, wholesale dealer, or retail dealer.  The Secretary shall periodically review the sufficiency of bonds required of distributors, wholesale dealers, and retail dealers and shall increase the amount of a required bond when the amount of the bond furnished no longer covers the distributor's wholesale dealer's, or retail dealer's anticipated tax liability."
Sec. 31. G.S. 105-113.57 reads as rewritten:
"§ 105-113.57. Records required of ingredients received.
Every person engaged in the business of making bottled soft drinks or base products shall keep a record of the ingredients purchased to make the bottled soft drinks or base products and shall retain invoices on the purchases for at least three years.  The records shall show the quantity of ingredients purchased, the date received, and the name of the person from whom they were received."
Sec. 32.  G.S. 105-113.58 reads as rewritten:
"§ 105-113.58. Records of sale to be kept.
Every distributor, wholesale dealer, and retail dealer shall keep an accurate account of all daily sales, sales slips, bills, invoices, delivery slips, statements, bills of lading, freight bills, credit memoranda, and similar documents for a period of not less than three years from the date shown on the document.  These records shall be open at all times for inspection by the Secretary or his duly authorized representative."
Sec. 33.  G.S. 105-113.43, 105-113.47, 105-113.48, 105-113.49, 105-113.54 through 105-113.56C, 105-113.59 through 105-113.62, 105-113.66, and 105-113.67 are repealed.
Sec. 34.  The Secretary of Revenue shall redeem any unused or mutilated but identifiable tax stamps or crowns purchased pursuant to Article 2B of Chapter 105 of the General Statutes that a taxpayer presents for redemption and shall refund the face value of the stamps or crowns, less the discount allowed at the time of the purchase of the stamps or crowns by the taxpayer.
PART VII.
CONFORMING CHANGES.
Sec. 35.  G.S. 105-134.6(b)(4) is repealed.
Sec. 36.  G.S. 105-164.13(14) is repealed.
PART VIII.
EFFECTIVE DATES.
Sec. 37.  This act does not affect the rights or liabilities of the State, a taxpayer, or other person arising under a statute repealed by this act before its repeal; nor does it affect the right to any refund or credit of a tax that would otherwise have been available under the repealed statute before its repeal.  Prosecutions for offenses committed before the effective date of this act are not abated or affected by this act, and the statutes that would be applicable but for this act remain applicable to those prosecutions.
Sec. 38.  Part I of this act shall become effective July 1, 1990.  Part II of this act shall become effective January 1, 1991, and shall apply to gross receipts earned from services and commodities provided on or after that date and to sales of electricity, piped natural gas, or local telecommunications  service made on or after that date.  Part III of this act shall become effective September 1, 1990.   Part IV of this act is effective for taxable years beginning on or after January 1, 1990.  Part V of this act is effective for taxable years beginning on or after January 1, 1990.  Part VI of this act shall become effective September 1, 1990.  Section 35 of Part VII of this act is effective for taxable years beginning on or after January 1, 1990.  Section 36 of Part VII is effective upon ratification.  Part VIII of this act is effective upon ratification.