GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1993

H	1 

HOUSE BILL 174

Short Title:  Electronic Funds Transfer.	(Public)
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Sponsors: Representatives Luebke, Gamble, Jarrell, Justus, and Tallent.
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Referred to:  Finance.
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February 17, 1993

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.  G.S. 105-228.90(b) is amended by adding a new subdivision to read:
"(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."
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 the taxpayer's required payments of the tax was at least twenty thousand dollars ($20,000) a month.  The twenty thousand dollar ($20,000) threshold applies separately to each tax.  The applicable period for a tax is a 12-month period, designated by the Secretary, preceding the imposition or review of the payment requirement.  The requirement that a taxpayer pay a tax by electronic funds transfer remains in effect until suspended by the Secretary.  Every 12 months after requiring a taxpayer to pay a tax by electronic funds transfer, the Secretary shall determine whether, during the applicable period for that tax, the average amount of the taxpayer's required payments of the tax was at least twenty thousand dollars ($20,000) a month.  If it was not, the Secretary shall suspend the requirement that the taxpayer pay the tax by electronic funds transfer and shall notify the taxpayer in writing that the requirement has been suspended.
(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. 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.  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. 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 transferee 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.  This act becomes effective July 1, 1993.  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, 1995.