GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

S	2 

SENATE BILL 1010
Finance Committee Substitute Adopted 6/25/92

Short Title:  Electronic Funds Transfer.	(Public)
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Sponsors:
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Referred to:  
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May 28, 1992

A BILL TO BE ENTITLED
AN ACT TO AUTHORIZE THE DEPARTMENT OF REVENUE TO ALLOW OR REQUIRE PAYMENT OF TAXES BY ELECTRONIC FUNDS TRANSFER.
The General Assembly of North Carolina enacts:
Section 1.  Article 9 of Chapter 105 of the General Statutes is amended by adding at the beginning a new section to read:
"§ 105-228.90. Scope and definitions.
(a)	Scope. – This Article applies to Subchapters I, V, and VIII of this Chapter and to inspection fees levied under Article 3 of Chapter 119 of the General Statutes.
(b)	Definitions. – The following definitions apply in this Article:
(1)	Code. – The Internal Revenue Code as enacted as of January 1, 1992, including any provisions enacted as of that date which become effective either before or after that date.
(2)	Reserved.
(3)	Electronic funds transfer. – A transfer of funds initiated by using an electronic terminal, a telephone, a computer, or magnetic tape to instruct or authorize a financial institution or its agent to credit or debit an account.
(4)	Reserved.
(5)	Person. – An individual, a fiduciary, a firm, a partnership, an association, a corporation, a unit of government, or another group acting as a unit.
(6)	Secretary. – The Secretary of Revenue.
(7)	Tax. – A tax levied under Subchapter I, V, or VIII of this Chapter or an inspection fee levied under Article 3 of Chapter 119 of the General Statutes.  Unless the context clearly requires otherwise, the terms ‘tax' and ‘additional tax' include penalties and interest as well as the principal amount.
(8)	Taxpayer. – A person subject to the tax or reporting requirements of Subchapter I, V, or VIII of this Chapter or of Article 3 of Chapter 119 of the General Statutes."
Sec. 2.  G.S. 105-241 reads as rewritten:
"§ 105-241. Where and how taxes payable; tax period; liens.
(a)	Form of Payment. – Taxes are payable in the national currency.  The Secretary shall prescribe where taxes are to be paid and whether taxes must be paid in cash, by check, by electronic funds transfer, or by another method.
(b)	Electronic Funds Transfer. – The Secretary may not require a taxpayer to pay a tax by electronic funds transfer unless, during the applicable period for that tax, the average amount of each of the taxpayer's required payments of the tax was at least twenty thousand dollars ($20,000).  The applicable period for a tax is a 12-month period, designated by the Secretary, preceding the imposition of the payment requirement.  The requirement that a taxpayer pay a tax by electronic funds transfer remains in effect for 12 months.  After 12 months, the Secretary may require a taxpayer to continue to pay a tax by electronic funds transfer only if the Secretary could have required the taxpayer to begin making payments of the tax in accordance with this subsection.
(c)	Tax Period. – Except as otherwise provided in this Chapter, taxes are levied for the fiscal year of the State in which they became due.
(d)	Lien. – This subsection applies except when another Article of this Chapter contains contrary provisions with respect to a lien for a tax levied in that Article.  The lien of a tax attaches to all real and personal property of a taxpayer on the date a tax owed by the taxpayer becomes due.  The lien continues until the tax and any interest, penalty, and costs associated with the tax are paid.  A tax lien is not extinguished by the sale of the taxpayer's property.  A tax lien, however, is not enforceable against a bona fide purchaser for value or the holder of a duly recorded lien unless:
(1)	In the case of real property, a certificate of tax liability or a judgment was first docketed in the office of the clerk of superior court of the county in which the real property is located.
(2)	In the case of personal property, there has already been a levy on the property under an execution or a tax warrant.
The priority of these claims and liens is determined by the date and time of recording, docketing, levy, or bona fide purchase.
If a taxpayer executes an assignment for the benefit of creditors or if insolvency proceedings are instituted against a taxpayer who owes a tax, the tax lien attaches to all real and personal property of the taxpayer as of the date and time the taxpayer executes the assignment for the benefit of creditors or the date and time the insolvency proceedings are instituted.  In these cases, the tax lien is subject only to a prior recorded specific lien and the reasonable costs of administering the assignment or the insolvency proceedings.  
."
Sec. 3.  G.S. 105-130.19 reads as rewritten:
"§ 105-130.19.  Time and place of payment of tax.
	Except as provided in Article 4C of this Chapter, the full amount of the tax payable as shown on the return shall be paid to the Secretary within the time allowed for filing the return.  An extension of time granted for filing the return under G.S. 105-130.17(d) is not an extension of time for payment of the full amount of the tax payable.  The tax shall be paid at the place and in the form required by the Secretary pursuant to G.S. 105-241(a).
(c)		."
Sec. 4.  G.S. 105-157 reads as rewritten:
"§ 105-157.  Time and place of payment of tax.
	Except as otherwise provided in this section and in Article 4A of this Chapter, the full amount of the tax payable as shown on the return shall be paid to the Secretary within the time allowed for filing the return.  An extension of time granted for filing the return under G.S. 105-155 is not an extension of time for payment of the full amount of the tax payable.  If the amount shown to be due is less than one dollar ($1.00), no payment need be made.  The tax shall be paid at the place and in the form required by the Secretary pursuant to G.S. 105-241(a).
	."
Sec. 5.  G.S. 105-160.7 reads as rewritten:
"§ 105-160.7. Time and place of payment of tax.
	The full amount of the tax payable as shown on the return shall be paid to the Secretary within the time allowed for filing the return.  However, if the amount shown to be due after all credits is less than one dollar ($1.00), no payment need be made.  An extension of time granted for filing the return under G.S. 105-160.6 is not an extension of time for payment of the full amount of the tax payable.  The tax shall be paid at the place and in the form required by the Secretary pursuant to G.S. 105-241(a).
	."
Sec. 6.  G.S. 105-163.6(a) reads as rewritten:
"(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, as specified in this section.  Withheld taxes shall be paid at the place and in the form required by the Secretary pursuant to G.S. 105-241(a).
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."
Sec. 7.  G.S. 105-164.18 is repealed.
Sec. 8.  G.S. 105-236 is amended by adding the following new subdivisions to read:
"(1a)	Penalty for Bad Electronic Funds Transfer. – When an electronic funds transfer cannot be completed due to insufficient funds or the nonexistence of an account of the transferor, the Secretary shall assess an additional tax, as a penalty, equal to ten percent (10%) of the amount of the transfer, subject to a minimum of one dollar ($1.00) and a maximum of one thousand dollars ($1,000).  This subdivision applies to all taxes levied or assessed by the State.
(1b)	Making Payment in Wrong Form. – For making a payment of tax in a form other than the form required by the Secretary pursuant to G.S. 105-241(a), the Secretary shall assess an additional tax, as a penalty, equal to five percent (5%) of the amount of the tax, subject to a minimum of one dollar ($1.00) and a maximum of one thousand dollars ($1,000)."
Sec. 9.  G.S. 105-239.1(a) reads as rewritten:
"(a)	Property transferred for an inadequate consideration to a donee, heir, legatee, devisee, distributee, stockholder of a liquidated corporation, or any other person at a time when the transferor is insolvent or is rendered insolvent by reason of the transfer shall be subject to a lien for any taxes owing by the transferor to the State of North Carolina at the time of the transfer whether or not the amount of the taxes has been ascertained or assessed at the time of the transfer. G.S. 105-241 applies to this tax lien.  In the event the transferee has disposed of the property so that it cannot be subjected to the State's tax lien, the transferee shall be personally liable for the difference between the fair market value of the property at the time of the transfer and the actual consideration, if any, paid to the transferor by the transferee.
Upon a foreclosure of the State's tax lien upon property in the hands of a transferee, the value of any consideration that the transfer proves has been given to the transferor shall be paid to the transferee out of the proceeds of the foreclosure sale before applying the proceeds toward the satisfaction of the State's tax lien.
In order to proceed against the transferee or property in the transferee's hands, the Secretary shall cause to be docketed in the office of the clerk of the superior court of the county wherein the transferee resides or the property is located, as the case may be, a certificate of tax liability as provided in G.S. 105-242 or a lien certificate which shall set forth the amount of the lien as determined by the Secretary or as finally determined upon appeal and a description of the property subject to the lien. Thereafter, execution may be issued against the transferee as in the case of other money judgments except that no homestead or personal exemption shall be allowable or, upon a lien certificate, an execution may be issued directing the sheriff to seize the property subject to the lien and sell same in the same manner as property is sold under execution. Such procedure and collection shall be subject to the provisions of subsection (c)	of this section."
Sec. 10.  G.S. 105-251 reads as rewritten:
"§ 105-251. Information must be furnished.
Every person shall give the Secretary all information the Secretary requires to fulfill a duty delegated to the Secretary.  The information must be in the form required by the Secretary.  The Secretary may require the information to be furnished electronically or on paper."
Sec. 11.  G.S. 105-252 reads as rewritten:
"§ 105-252. Returns required.
A person who receives from the Secretary any form requiring information shall fill the form out properly and answer each question fully and correctly.  If unable to answer a question, the person shall explain why in writing. The person shall return the form
to the Secretary at the time and place required by the Secretary.  The person shall also furnish an oath or affirmation verifying the return; the oath or affirmation shall be in the form required by the Secretary."
Sec. 12.  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 financial institutions for the receipt of withheld income tax payments under G.S. 105-163.6 and for electronic funds transfers under G.S. 105-241.  The Secretary may provide the financial institutions information necessary to identify payments made by taxpayers."
Sec. 13.  G.S. 105-269.3 reads as rewritten:
"§ 105-269.3.  Administration and enforcement of Subchapter V and fuel inspection fee.
The State Highway Patrol and law enforcement officers and other appropriate personnel in the Division of Motor Vehicles of the Department of Transportation may assist the Department of Revenue in enforcing Subchapter V of this Chapter and Article 3 of Chapter 119 of the General Statutes.  The State Highway Patrol and law enforcement officers of the Division of Motor Vehicles have the power of peace officers in matters concerning the enforcement of Subchapter V of this Chapter and Article 3 of Chapter 119 of the General Statutes."
Sec. 14.  This act becomes effective July 1, 1992.  Notwithstanding the provisions of G.S. 105-241(a) as amended by this act, the Secretary of Revenue may not begin to require payment by electronic funds transfer of motor fuels taxes levied under Subchapter V of Chapter 105 of the General Statutes or of the inspection fee levied under Article 3 of Chapter 119 of the General Statutes until July 1, 1994.