GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

H	1 

HOUSE BILL 263

Short Title:  Revenue Enhancement/Debt Collection.	(Public)
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Sponsors: Representative Wood.
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Referred to:  Government.
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February 16, 1989

A BILL TO BE ENTITLED
AN ACT TO ENHANCE REVENUES AND COLLECT STATE DEBTS BY CREATING A ONE-TIME TAX AMNESTY PROGRAM, INCREASING PENALTIES FOR WILLFUL VIOLATION OF THE REVENUE LAWS, AND APPROPRIATING FUNDS TO THE DEPARTMENT OF REVENUE TO ENHANCE ENFORCEMENT CAPABILITIES AND INCREASE TAXPAYER COMPLIANCE.
The General Assembly of North Carolina enacts:
PART I:  AMNESTY PROGRAM
Section 1.  Amnesty program established; scope.  The Department of Revenue shall administer a tax amnesty program to be conducted during the period September 1, 1989, through December 31, 1989.  During the tax amnesty period, the Department of Revenue may not initiate a criminal prosecution for failure to report or pay taxes within the scope of the Program and shall waive all penalties assessed for such failure when the taxes, plus interest, are paid in full.
The taxes within the scope of the tax amnesty program are:
	(1)	Inheritance taxes levied under Article 1 of Chapter 105 of the General Statutes;
(2)	License taxes levied under Articles 2, 2A, 2B, and 2C of Chapter 105 of the General Statutes;
(3)	Franchise taxes levied under Article 3 of Chapter 105 of the General Statutes;
(4)	Income taxes levied under Articles 4, 4A, 4B, and 4C of Chapter 105 of the General Statutes;
(5)	Sales and use taxes levied under Articles 5, 39, 40, 41, and 42 of Chapter 105 of the General Statutes, and under Chapter 1096 of the 1967 Session Laws;
(6)	Gift taxes levied under Article 6 of Chapter 105 of the General Statutes;
(7)	Intangibles taxes levied under Article 7 of Chapter 105 of the General Statutes; and
(8)	Motor fuels taxes levied under Articles 36, 36A, and 36B of Chapter 105 of the General Statutes.
The program shall apply to inheritance tax liabilities, license tax liabilities, gift tax liabilities, withholding tax liabilities, sales and use tax liabilities, and motor fuels tax liabilities for taxable periods ending on or before December 31, 1988, and to income tax liabilities, franchise tax liabilities, and intangibles tax liabilities for taxable periods ending on or before December 31, 1987.  The program does not apply to any matter that is the subject of a pending court proceeding.
Sec. 2.  Effect of payment under program.  A taxpayer who pays unreported, underreported, or assessed but unpaid taxes as part of the program is not subject to criminal prosecution for not reporting, underreporting, or not paying the taxes, but must pay interest on the amount due at the rate established under G.S. 105-241.1(i).
Sec. 3.  Requirements for participation.  To be eligible to participate in the program, a taxpayer shall:
(1)	File an application to participate before the end of the amnesty period;
(2)	File a return for all reporting periods for which the taxpayer has not previously filed a return but was required to file a return;
(3)	File an amended tax return for all reporting periods for which the taxpayer underreported tax liability; and
(4)	Pay the taxpayer's previously assessed taxes or unreported or underreported taxes for all reporting periods in full plus any interest due by December 1, 1989.
Sec. 4.  Administration.  The Secretary of Revenue shall issue forms and instructions to implement the amnesty program and shall publicize the tax amnesty period to maximize public awareness of and participation in the program.  The Secretary may establish a toll-free amnesty "hotline”to enable taxpayers and the Department of Revenue to communicate easily about the amnesty program.
Sec. 5.  Appropriation.  There is appropriated from the General Fund to the Department of Revenue the sum of five hundred thousand dollars ($500,000) for the 1989-90 fiscal year to be used to implement Sections 1 through 5 of this act.
PART II:  INCREASED PENALTIES
Sec. 6.  G.S. 105-236(7) reads as rewritten:
"(7)	Attempt to Evade or Defeat Tax. – Any person who willfully attempts, or any person who aids or abets any person to attempt in any manner to evade or defeat any tax imposed by this Subchapter of the General Statutes, or the payment thereof, shall, in addition to other penalties provided by law, be guilty of a Class I felony punishable by imprisonment up to five years, a fine up to twenty-five thousand dollars ($25,000), or both."
Sec. 7.  G.S. 105-236(8) reads as rewritten:
"(8)	Willful Failure to Collect, Withhold, or Pay Over Tax. – Any person required under this Subchapter to collect, withhold, account for, and pay over any tax imposed by this Subchapter who willfully fails to collect or truthfully account for and pay over such tax shall, in addition to other penalties provided by law, be guilty of a misdemeanor.  Notwithstanding any other provision of law, no prosecution for a violation brought under this subdivision shall be barred before the expiration of three years after the date of the violation."
Sec. 8.  G.S. 105-236(9) reads as rewritten:
"(9)	Willful Failure to File Return, Supply Information, or Pay Tax.  – Any person required under this Subchapter to pay any tax, to make a return, to keep any records, or to supply any information, who willfully fails to pay such tax, make such return, keep such records, or supply such information, at the time or times required by law, or regulations issued pursuant thereto, shall, in addition to other penalties provided by law, be guilty of a misdemeanor.  Notwithstanding any other provision of law, no prosecution for a violation brought under this subdivision shall be barred before the expiration of three years after the date of the violation."
Sec. 9.  G.S. 105-236(9a) reads as rewritten:
"(9a)	Aid or Assistance.  – Any person, pursuant to or in connection with the revenue laws, who willfully aids, assists in, procures, counsels, or advises the preparation, presentation, or filing of a return, affidavit, claim, or any other document that he knows is fraudulent or false as to any material matter, whether or not the falsity or fraud is with the knowledge or consent of the person authorized or required to present or file the return, affidavit, claim, or other document, shall be guilty of a Class J felony punishable by imprisonment up to three years, a fine up to ten thousand dollars ($10,000), or both."
PART III:  ENFORCEMENT/COMPLIANCE FUNDS
Sec. 10.  There is appropriated from the General Fund to the Department of Revenue the sum of four million nine hundred fifty-seven thousand five hundred forty-two dollars ($4,957,542) for the 1989-90 fiscal year and the sum of four million eight hundred twenty-seven thousand ten dollars ($4,827,010) for the 1990-91 fiscal year to be allocated as follows:
(1)	The sum of three million seven hundred twenty  thousand two hundred thirty-six dollars ($3,720,236) for the 1989-90 fiscal year and the sum of three million forty-seven thousand three hundred thirty-one dollars ($3,047,331) for the 1990-91 fiscal year shall be used to upgrade data processing equipment to enhance information processing;
(2)	The sum of four hundred ninety-nine thousand one hundred six dollars ($499,106) for the 1989-90 fiscal year and the sum of two hundred ninety- seven thousand five hundred forty-five dollars ($297,545) for the 1990-91 fiscal year shall be used to increase the number of field auditors and clerical personnel to keep up with the increase in the number of returns filed;
(3)	The sum of five hundred eight thousand six hundred fourteen dollars ($508,614) for the 1989-90 fiscal year and the sum of seventy-six thousand three dollars ($76,003) for the 1990-91 fiscal year shall be used for additional equipment to enhance timely remittance and processing of tax returns;
(4)	The sum of three hundred ninety-six thousand nine hundred sixty-three dollars ($396,963) for the 1989-90 fiscal year and the sum of four hundred sixty-four thousand two hundred sixty dollars ($464,260) for the 1990-91 fiscal year shall be used for additional personnel to meet remittance processing needs caused by the increase in the number of tax returns;
(5)	The sum of forty-six thousand three hundred sixty- nine dollars ($46,369) for the 1989-90 fiscal year and the sum of one hundred twenty-two thousand nine hundred thirty-nine dollars ($122,939) for the 1990-91 fiscal year shall be used for additional clerical personnel to free audit personnel from clerical duties;
(6)	The sum of one hundred thirty-two thousand six hundred sixty-nine dollars ($132,669) for the 1989-90 fiscal year and the sum of one hundred forty-six thousand eight hundred twenty-seven dollars ($146,827) for the 1990-91 fiscal year shall be used for additional audit and clerical personnel to enhance sales tax compliance.
PART IV:  EFFECTIVE DATES
Sec. 11.  Sections 5 and 10 of this act shall become effective July 1, 1989; Sections 6 through 9 shall become effective December 2, 1989, and shall apply to violations occurring on or after that date; the remainder of this act is effective upon ratification.