GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

S	3 

SENATE BILL 210
Second Edition Engrossed 6/7/89
Appropriations Committee Substitute Adopted 6/28/89

Short Title:  Tax Amnesty/Penalties.	(Public)
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Sponsors:
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Referred to:  
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February 20, 1989

A BILL TO BE ENTITLED
AN ACT TO CREATE A TAX AMNESTY PROGRAM AND IMPROVE STATE TAX ENFORCEMENT AND COMPLIANCE TO ASSURE FAIRNESS IN THE COLLECTION OF TAXES FROM ALL TAXPAYERS.
The General Assembly of North Carolina enacts:
Part I.
Amnesty Program.
Section 1.  The enactment of this act, coupled with authorization for the Department of Revenue to expend the sum of $5,071,142 for the 1989-90 fiscal year and the sum of $4,914,908 for the 1990-91 fiscal year for additional tax enforcement and compliance personnel, will provide net additional recurring revenue for the General Fund of $37,000,000 for the 1989-90 fiscal year and $64,100,000 for the 1990-91 fiscal year.  In addition, this act will provide $25,000,000 of one-time revenue for the General Fund for the 1989-90 fiscal year.
Sec. 2.  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 1, 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 any interest due, 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;
(8)	Motor fuels taxes levied under Articles 36, 36A, and 36B of Chapter 105 of the General Statutes; and
(9)	Inspection taxes levied under Article 3 of Chapter 119 of the General Statutes.
The program applies to inheritance tax liabilities due for the estates of decedents dying prior to December 1, 1988; license tax liabilities for taxable periods ending on or before June 30, 1988; gift tax liabilities due and remaining unpaid after December 31, 1987; individual income withholding tax liabilities, sales and use tax liabilities, motor fuels tax liabilities, and inspection tax liabilities for taxable periods ending on or before December 31, 1988; income tax liabilities and intangibles tax liabilities for taxable periods ending on or before December 31, 1987; and franchise tax liabilities for taxable periods beginning on or before January 1, 1988.  The program does not apply to any matter that is the subject of a pending court proceeding.
Sec. 3.  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 the interest due on the taxes at the rate established under G.S. 105-241.1(i).  An attorney, accountant, paid preparer of a tax return, or other person who would otherwise be subject to criminal prosecution under G.S. 105-236(9a) for his actions concerning returns prepared for unreported or underreported taxes paid pursuant to the amnesty program is not subject to criminal prosecution under that subdivision on the basis of those actions.
Sec. 4.  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 on the taxes by December 1, 1989.
Sec. 5.  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.
Sec. 6.  Funds.  To pay for the amnesty program provided in Part I of this act, the Secretary of Revenue may draw up to one million one hundred thousand dollars ($1,100,000) from collections received by the Department during July 1989 under Division II of Article 4 of Chapter 105 of the General Statutes.
Part II.
Increased Penalties.
Sec. 7.  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. 8.  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. 9.  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. 10.  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.
Effective Dates
Sec. 11.  Part II of this act 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.