GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

S	1 

SENATE BILL 115

Short Title:  Simplify Business License Tax.	(Public)
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Sponsors: Senators Winner, Kincaid, and Staton.
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Referred to:  Finance.
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February 20, 1991

A BILL TO BE ENTITLED
AN ACT TO SIMPLIFY LICENSE TAX FILING FOR RETAILERS AND WHOLESALERS.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 105-164.16(b) reads as rewritten:
"(b)	General Reporting Periods. – Returns of taxpayers who are required by this subsection 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 fifty dollars ($50.00) 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. 105-102.5 reads as rewritten:
"§  105-102.5.  Merchant's privilege license.
(a)	License.  Every retailer or wholesale merchant (i) engaged in business selling or leasing motor vehicles, motor fuel, or special fuel or (ii) engaged in a business required to be licensed under G.S. 105-164.4(c) or 105-164.6(f) of the Sales and Use Tax Act shall obtain from the Secretary of Revenue a merchant's privilege license for the privilege of engaging in business as a retailer or a wholesale merchant.  The tax for each merchant's privilege license is fifty dollars ($50.00) and one license shall be obtained for each location at which the retailer or wholesale merchant is engaged in business.  The retailer or wholesale merchant shall keep the merchant's privilege license displayed conspicuously at the location for which it was issued.
(b)	Exemptions.  This section does not apply to:
(1)	A distributor or operator of merchandising dispensers licensed under G.S. 105-65.1.
(2)	A specialty market vendor, a peddler, or an itinerant merchant as defined in G.S. 105-53.
(c)	Local Licenses.  Counties may levy a license tax of up to thirty-five dollars ($35.00) on a wholesale merchant licensed under this section.  Counties may not levy a license tax on a retailer licensed under this section unless the retailer is also a wholesale merchant licensed under this section.  Municipalities may levy a license tax on retailers and wholesale merchants licensed under this section as provided in G.S. 105-102.6.
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Sec. 3.  Article 2 of Chapter 105 of the General Statutes is amended by adding after G.S. 105-102.5 a new section to read:
"§ 105-102.6  Municipal merchant's privilege license.
(a)	License Tax.  A municipality may levy a license tax on a retailer or wholesale merchant required to be licensed under G.S. 105-102.5.  The tax shall be measured on the the gross receipts derived during the preceding year from the retail and wholesale business conducted in the municipality.  The municipality may provide that the preceding year is the preceding calendar year, the license holder's preceding income tax year, or another 12-month period preceding the license year.  The license tax shall be at a rate of up to fifty cents (50¢) for every one thousand dollars ($1,000) of gross receipts, subject to a minimum tax of up to thirty dollars ($30.00) and a maximum tax of up to two thousand dollars ($2,000).
(b)	Scope.  If a person operates at the same location both a wholesale or retail business and another business not required to be licensed under G.S. 105-102.5, this section applies only to the gross receipts derived from the retail or wholesale business.  The tax applies to the entire gross receipts derived from the retail or wholesale business, including the receipts derived from the sale of items exempt from sales and use tax.  Except as otherwise authorized in this Article, a municipality may not levy a license tax on:
(1)	A retailer or wholesale merchant that is exempt from federal income tax under section 501 of the Code.
(2)	The gross receipts derived from wholesale sales of alcoholic beverages.
(c)	Multiple Taxation Prohibited.  A retailer or wholesale merchant engaged in business in more than one municipality is not subject to more than one municipal tax on the same gross receipts.  If a taxpayer has gross receipts derived from one or more places of business in municipalities in this State, only a municipality in which a place of business is located may tax the gross receipts derived from that place of business.  If a taxpayer has gross receipts derived from a place of business not located in a municipality in this State, each municipality may tax the gross receipts to the extent they are derived from business conducted within that municipality.  As used in this subsection, the term ‘place of business' means a fixed place at which the retailer or wholesale merchant maintains the business."
Sec. 4.  Article 2 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-33.1 Definitions.
The following definitions apply in this Article:
(1)	Code.  The Internal Revenue Code as enacted as of January 1, 1991, including any provisions enacted as of that date which become effective either before or after that date.
(2)	Motor fuel.  Defined in G.S. 105-430.
(3)	Municipality.  A municipal corporation organized under the laws of this State.
(4)	Person.  An individual, a firm, a partnership, an association, a corporation, or another organization or group acting as a unit.
(5)	Retailer.  Defined in G.S. 105-164.3.
(6)	Secretary.  The Secretary of Revenue.
(7)	Special fuel.  Fuel as defined in G.S. 105-449.2.
(8)	Wholesale merchant.  Defined in G.S. 105-164.3."
Sec. 5.  G.S. 105-46, 105-51.1, 105-61, 105-62, 105-70, 105-74, 105-80, 105-85, 105-89, 105-89.1, 105-97, 105-98, 105-99, and 105-102.1 are repealed.
Sec. 6.  G.S. 105-164.5 reads as rewritten:
"§ 105-164.5. Imposition of tax; wholesale merchant.
There is hereby levied and imposed, in addition to all other taxes of every kind now imposed by law, a privilege or license tax upon every person who engages in the business of selling tangible personal property at wholesale in this State as follows:
	(1)	Every wholesale merchant is subject to the license requirement in G.S. 105-164.4(c).
	(2)	The sale of any tangible personal property by any wholesale merchant to anyone other than to a registered retailer, wholesale merchant or nonresident retail or wholesale merchant as defined for resale shall be taxable at the rate of tax provided in this Article upon the retail sale of tangible personal property.
	(3) 	The sale of any tangible personal property by any wholesale merchant to a nonresident retail or wholesale merchant must be in compliance with regulations promulgated by the Secretary. Any sale which does not conform to such regulations shall be taxable at the rate of tax provided in this Article upon the retail sale of tangible personal property.
	(4) 	Every wholesale merchant who sells tangible personal property to retailers or nonresident retail or wholesale merchants for resale shall deliver to such customer a bill of sale for each sale of such tangible personal property whether sold for cash or on credit and shall make and retain a duplicate or carbon copy of each such bill of sale and shall keep on file all such duplicate bills of sale for at least three years from the date of sale. Failure to comply with the provisions of this subsection shall subject the wholesale merchant to liability for tax upon such sales at the rate of tax levied in this Article upon retail sales.
	(5) 	The tax levied is and shall be in addition to all other taxes whether levied in the form of excise, license or privilege or other taxes."
Sec. 7.  G.S. 105-36 reads as rewritten:
"§ 105-36.  Amusements – Manufacturing, leasing, or distributing moving picture films.
Every person engaged in the business of manufacturing, leasing, furnishing and/or distributing films to be used in this State in places, other than institutions of learning, at which an admission fee is charged shall apply for and obtain from the Secretary of Revenue a statewide license for the privilege of engaging in such business in this State, and shall pay for such license a tax of six hundred twenty-five dollars ($625.00).
Every person engaged in the business of leasing, furnishing, or distributing movies, including video cassette movies, for use in this State in institutions of learning at which an admission fee is charged shall apply for and obtain from the Secretary of Revenue a statewide license for the privilege of engaging in that business in this State, and shall pay for the license a tax of fifty dollars ($50.00).
Counties, cities, and towns shall not levy a license tax on the business taxed under this section."
Sec. 8.  G.S. 105-37.1(a) reads as rewritten:
	"(a) Every person engaged in the business of giving, offering or managing any form of entertainment or amusement not otherwise taxed or specifically exempted under G.S. 105-36, 105-36.1, 105-37, 105-38, or 105-40, for which an admission is charged, shall pay an annual license tax of fifty dollars ($50.00) for each room, hall, tent or other place where such admission charges are made.
In addition to the license tax levied above, the person shall pay an additional tax upon the gross receipts of such business at the rate of three percent (3%).  Reports shall be made to the Secretary of Revenue, in such form as he may prescribe, within the first 10 days of each month covering all such gross receipts for the previous month, and the gross receipts tax shall be paid monthly at the time such reports are made. The annual license tax shall be treated as an advance payment of the gross receipts tax and shall be applied as a credit upon or advance payment of the gross receipts tax.
Every person giving, offering, or managing any dance or athletic contest of any kind, except high school and elementary school athletic contests, for which an admission fee in excess of fifty cents (50¢) is charged, shall pay an annual license tax of fifty dollars ($50.00) for each location where such charges are made, and, in addition, a tax upon the gross receipts derived from admission charges at the rate of three percent (3%). The additional tax upon gross receipts shall be levied and collected in accordance with such regulations made by the Secretary.  No tax shall be levied on admission fees for high school and elementary school contests.
Dances and other amusements actually promoted and managed by civic organizations and private and public secondary schools are not subject to the license tax imposed by this section and the first one thousand dollars ($1,000) of gross receipts derived from such events shall be exempt from the gross receipts tax herein levied when the entire proceeds of the event are used exclusively for the school or civic and charitable purposes of the organization and not to defray the expenses of the organization conducting the event.  The mere sponsorship of a dance or other amusement by such a school, civic, or fraternal organization does not exempt the dance or other amusement as provided in this paragraph, but the exemption shall apply only when the dance or amusement is actually managed and conducted by the school, civic, or fraternal organization and the proceeds are used as required in this section.
Dances and other amusements promoted and managed by a qualifying corporation that operates a center for the performing and visual arts are exempt from the license tax and the gross receipts tax imposed under this section if the dance or other amusement is held at the center. ‘Qualifying corporation' means a corporation that is exempt from income tax under G.S. 105-130.11(a)(3). ‘Center for the performing and visual arts' means a facility, having a fixed location, that provides space for dramatic performances, studios, classrooms and similar accommodations to organized arts groups and individual artists. This exemption does not apply to athletic events.
The license and gross receipts taxes imposed by this section do not apply to a person that is exempt from income tax under Article 4 of this Chapter and is engaged in the business of operating a teen center.  A ‘teen center' is a fixed facility whose primary purpose is to provide recreational activities, dramatic performances, dances, and other amusements exclusively for teenagers."
Sec. 9.  G.S. 105-53(a) and (b) read as rewritten:
"(a)	Peddler. – Every person engaged in business or employed as a peddler shall obtain a statewide license from the Secretary of Revenue for the privilege of peddling goods and shall pay a tax of fifty dollars ($50.00) for the license. A ‘peddler' is a person who travels from place to place with an inventory of goods, who sells the goods at retail or offers the goods for sale at retail, and who delivers the identical goods he carries with him.  
(b)	Itinerant Merchant. – Every person engaged in business as an itinerant merchant shall obtain a statewide license from the Secretary of Revenue for the privilege of engaging in business and shall pay a tax of one hundred dollars ($100.00) for the license.  An ‘itinerant merchant' is a merchant, other than a merchant with an established retail store in the county, who transports an inventory of goods to a building, vacant lot, or other location in a county and who, at that location, displays the goods for sale and sells the goods at retail or offers the goods for sale at retail.  An itinerant merchant's license is not required to engage in the business of a specialty market vendor at a location licensed as a specialty market under subsection (c) of this section or at a specialty market that is exempt from the license requirement under subsection (c) because the specialty market operator is the State or a unit of local government.  A merchant who sells goods, other than farm products, in a county for less than six consecutive months is considered an itinerant merchant unless he stopped selling goods in that county because of his death or disablement, the insolvency of his business, or the destruction of his inventory by fire or other catastrophe."
Sec. 10. This act becomes effective July 1, 1992.