GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1993

S	1 

SENATE BILL 155

Short Title:  Revenue Laws Technical Changes.	(Public)
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Sponsors: Senators Plexico, Kerr, Seymour, and Winner of Buncombe.
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Referred to:  Finance.
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February 15, 1993

A BILL TO BE ENTITLED
AN ACT TO MAKE TECHNICAL AND CONFORMING CHANGES TO THE REVENUE LAWS AND RELATED STATUTES.
The General Assembly of North Carolina enacts:
Section 1.  Section 7 of Chapter 1007 of the 1991 Session Laws is repealed.
Sec. 2.  The catch line of G.S. 20-81.12 reads as rewritten:
"§ 20-81.12.  Collegiate insignia plates and historical attraction plates."
Sec. 3. G.S. 105-23(b) reads as rewritten:
"(b)	Exception. – An inheritance tax return is not required to be filed for an estate (i) whose beneficiaries are all either Class A beneficiaries, as described in G.S. 105-4(a), or the surviving spouse, and (ii) whose gross value, including the value of transfers over which the decedent retained an interest and the value of gifts made within three years before the decedent's death, as provided in G.S. 105-2(a)(3), is less than the amount specified in the following table: 
Estates of Decedents Dying
On or After	Gross Value of Estates
July 1, 1985 	$100,000
August 1, 1985 	75,000
July 1, 1986 	150,000
January 1, 1987 	250,000."
Sec. 4.  G.S. 105-113.82(e) reads as rewritten:
"(e)	Population Estimates. – To determine the population of a city or county for purposes of the distribution required by this section, the Secretary shall use the most recent annual estimate of population certified by the State Planning Officer."
Sec. 5.  G.S. 105-125 reads as rewritten:
"§ 105-125.  Exempt corporations.
(a)	Exemptions. – The following corporations are exempt from the taxes levied by this Article.  Upon request of the Secretary, an exempt corporation must establish its claim for exemption in writing:
(1)	A charitable, religious, fraternal, benevolent, scientific, or educational corporation not operated for profit.
(2)	An insurance company subject to tax under Article 8B of this Chapter.
(3)	A mutual ditch or irrigation association, a mutual or cooperative telephone association or company, a mutual canning association, a cooperative breeding association, or a similar corporation of a purely local character deriving receipts solely from assessments, dues, or fees collected from members for the sole purpose of meeting expenses.
(4)	A cooperative marketing association that operates solely for the purpose of marketing the products of members or other farmers and returns to the members and farmers the proceeds of sales, less the association's necessary operating expenses, including interest and dividends on capital stock, on the basis of the quantity of product furnished by them.  The association's operations may include activities directly related to these marketing activities.
(5)	A production credit association organized under the federal Farm Credit Act of 1933.
(6)	A club organized and operated exclusively for pleasure, recreation, or other nonprofit purposes, a civic league operated exclusively for the promotion of social welfare, a business league, or a board of trade.
(7)	A chamber of commerce or merchants' association not organized for profit, no part of the net earnings of which inures to the benefit of a private stockholder, an individual, or another corporation.
(8)	An organization, such as a condominium association, a homeowner association, or a cooperative housing corporation not organized for profit, the membership of which is limited to the owners or occupants of residential units in the condominium, housing development, or cooperative housing corporation.  To qualify for the exemption, the organization must be operated exclusively for the management, operation, preservation, maintenance, or landscaping of the residential units owned by the organization or its members or of the common areas and facilities that are contiguous to the residential units and owned by the organization or by its members.  To qualify for the exemption, no part of the net earnings of the organization may inure, other than through the performance of related services for the members of the organization, to the benefit of any person.
(9)	Except as otherwise provided by law, an organization exempt from federal income tax under the Code.
(b)	Certain Investment Companies. – A corporation doing business in North Carolina that, qualifies as a 'regulated investment company' under section 851 of the Code or as a 'real estate investment trust' under section 856 of the Code and elects for federal income tax purposes to be treated as a 'regulated investment company' or as a 'real estate investment trust,' may, in determining its basis for franchise tax, deduct the aggregate market value of its investments in the stocks, bonds, debentures, or other securities or evidences of debt of other corporations, partnerships, individuals, municipalities, governmental agencies, or governments."
Sec. 6.  G.S. 105-114(a) reads as rewritten:
"(a)	Nature of Taxes.  The taxes levied in this Article upon persons and partnerships are for the privilege of engaging in business or doing the act named.  The taxes levied in this Article upon corporations are privilege or excise taxes levied upon:
(1)	Corporations organized under the laws of this State for the existence of the corporate rights and privileges granted by their charters, and the enjoyment, under the protection of the laws of this State, of the powers, rights, privileges and immunities derived from the State by the form of such existence; and
(2)	Corporations not organized under the laws of this State for doing business in this State and for the benefit and protection which such corporations receive from the government and laws of this State in doing business in this State.
If the corporation is organized under the laws of this State, the payment of the taxes levied by this Article shall be a condition precedent to the right to continue in such form of organization; and if the corporation is not organized under the laws of this State, payment of these taxes shall be a condition precedent to the right to continue to engage in doing business in this State.  The taxes levied in this Article or schedule shall be for the fiscal year of the State in which the taxes become due; except that the taxes levied in G.S. 105-122 shall be for the income year of the corporation in which the taxes become due.
G.S. 105-122 does not apply to street transportation systems taxed under G.S. 105-120.1 or holding companies taxed under G.S. 105-120.2.  G.S. 105-122 applies to a corporation taxed under another section of this Article only to the extent the taxes levied on the corporation in G.S. 105-122 exceed the taxes levied on the corporation in other sections of this Article."
Sec. 7.  G.S. 105-127 is amended by adding at the end a new subsection to read:
"( f)	After the end of the income year in which a domestic corporation is dissolved pursuant to Article 14 of Chapter 55 of the General Statutes, the corporation is no longer subject to the tax levied in this Article unless the Secretary of Revenue finds that the corporation has engaged in business activities in this State not appropriate to winding up and liquidating its business and affairs."
Sec. 8.  G.S. 105-130.40(c) reads as rewritten:
"(c)	County Designation. – A severely distressed county is a county designated as severely distressed by the Secretary of Commerce.  Each year, on or before December 31, the Secretary of Commerce shall designate which counties are considered severely distressed, and shall provide that information to the Secretary of Revenue.  A county is considered severely distressed if its distress factor is one of the thirty-three highest in the State.  The Secretary shall assign to each county in the State a distress factor that is the sum of the following:
(1)	The county's rank in a ranking of counties by rate of unemployment from lowest to highest.
(2)	The county's rank in a ranking of counties by per capita income from highest to lowest.
(3)	The county's rank in a ranking of counties by percentage growth in population from lowest to highest.
In measuring rates of unemployment and per capita income, the Secretary shall use the latest available data published by a State or federal agency generally recognized as having expertise concerning the data.  In measuring population growth, the Secretary shall use the most recent estimates of population certified by the State Planning Officer.  A designation as a severely distressed county is effective only for the calendar year following the designation."
Sec. 9.  G.S. 105-134.6(b) is amended by adding at the end a new subdivision to read:
"(10)	Income that is (i) earned or received by an enrolled member of a federally recognized Indian tribe and (ii) derived from activities on a federally recognized Indian reservation while the member resides on the reservation.  Income from intangibles having a situs on the reservation and retirement income associated with activities on the reservation are considered income derived from activities on the reservation."
Sec. 10.  G.S. 105-134.7(a)(5) reads as rewritten:
"(5)	If the taxpayer has a net operating loss for a taxable year beginning on or after January 1, 1989, that part of the loss that is carried back to and deducted in a taxable year beginning before January 1, 1989, pursuant to section 172 of the Code may be deducted from taxable income in the taxable year following the taxable year for which the loss occurred."
Sec. 11.  G.S. 105-151.17(c) reads as rewritten:
"(c)	County Designation. – A severely distressed county is a county designated as severely distressed by the Secretary of Commerce.  Each year, on or before December 31, the Secretary of Commerce shall designate which counties are considered severely distressed, and shall provide that information to the Secretary of Revenue.  A county is considered severely distressed if its distress factor is one of the thirty-three highest in the State.  The Secretary shall assign to each county in the State a distress factor that is the sum of the following:
(1)	The county's rank in a ranking of counties by rate of unemployment from lowest to highest.
(2)	The county's rank in a ranking of counties by per capita income from highest to lowest.
(3)	The county's rank in a ranking of counties by percentage growth in population from lowest to highest.
In measuring rates of unemployment and per capita income, the Secretary shall use the latest available data published by a State or federal agency generally recognized as having expertise concerning the data.  In measuring population growth, the Secretary shall use the most recent estimates of population certified by the State Planning Officer.  A designation as a severely distressed county is effective only for the calendar year following the designation."
Sec. 12.  G.S. 105-163.010(8) reads as rewritten:
"(8)	Qualified grantee business. – A North Carolina business that (i) has received during the preceding three years a grant or other funding from the North Carolina Technological Development Authority, The North Carolina Technological Development Authority, Inc., the North Carolina Biotechnology Center, the Microelectronics Center of North Carolina, or the Federal Small Business Innovation Research Program, and (ii) is registered with the Secretary of State under G.S. 105-163.013."
Sec. 13.  G.S. 105-163.013(c)(3) reads as rewritten:
"(3)	It has received during the preceding three years a grant or other funding from the North Carolina Technological Development Authority, The North Carolina Technological Development Authority, Inc., the North Carolina Biotechnology Center, the Microelectronics Center of North Carolina, or the Federal Small Business Innovation Research Program."
Sec. 14.  G.S. 105-187.19 reads as rewritten:
"§ 105-187.19.  Use of tax proceeds.
The Secretary shall distribute the taxes collected under this Article, less the cost of collecting the taxes, in accordance with this section.  The Secretary shall retain the cost of collection as reimbursement to the Department of Revenue.
Each quarter, the Secretary shall credit ten percent (10%) of the net tax proceeds to the Solid Waste Management Trust Fund and shall distribute ninety percent (90%) of the net tax proceeds among the counties on a per capita basis according to the most recent annual population estimates certified to the Secretary by the State Planning Officer.  A county may use funds distributed to it under this section only as provided in G.S. 130A-309.54."
Sec. 15. G.S. 105-266.1(c) reads as rewritten:
"(c)	Within 90 days after notification of the Secretary's decision with respect to a demand for refund of any tax or additional tax under this section, an aggrieved taxpayer may, instead of petitioning for administrative review by the Tax Review Board under G.S. 105-241.2, bring a civil action against the Secretary for recovery of the alleged overpayment.  If the alleged overpayment is more than two hundred dollars ($200.00), the taxpayer may bring the action either in the Superior Court of Wake County or in the superior court of the county in which the taxpayer resides; if the alleged overpayment is two hundred dollars ($200.00) or less, the taxpayer may bring the action in any State court of competent jurisdiction in Wake County.  If upon trial it is determined that there has been an overpayment of tax or additional tax, judgment shall be rendered therefor, with interest, and the State shall refund the amount due."
Sec. 16.  G.S. 105-269.3 reads as rewritten:
"§ 105-269.3.  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. 17.  G.S. 105-277A(e) reads as rewritten:
"(e)	Population Estimates. – In making the per capita calculations under this section, the Secretary shall use the most recent annual population estimates certified by the State Planning Officer."
Sec. 18.  G.S. 105-285(b) reads as rewritten:
"(b)	Personal Property; General Rule. – Except as otherwise provided in this Chapter, the value, ownership, and place of taxation of personal property, both tangible and intangible, shall be determined annually as of January 1."
Sec. 19.  Effective on and after January 1, 1993, G.S. 105-330.1 reads as rewritten:
"§ 105-330.1.  Classification of motor vehicles.
(a)	Classification. – All motor vehicles other than the motor vehicles listed in subsection (b) are designated a special class of property under authority of Article V, Sec. 2(2) of the North Carolina Constitution.  Classified motor vehicles shall be listed and assessed as provided in this Article and taxes on classified motor vehicles shall be collected as provided in this Article.
(b)	Exceptions. – The following motor vehicles are not classified under subsection (a):
(1)	Motor vehicles exempt from registration pursuant to G.S. 20-51.
(2)	Manufactured homes, mobile classrooms, and mobile offices.
(3)	Semitrailers registered on a multiyear basis under G.S. 20-88(c).
(4)	Motor vehicles owned or leased by a public service company and appraised under G.S. 105-335.
(5)	'U-drive-it' passenger vehicles registered under G.S. 20-87(2)."
Sec. 20.  G.S. 105-395(c) reads as rewritten:
"(c)	It is the intent of the General Assembly to make the provisions of this Subchapter uniformly applicable throughout the State, and to assure this objective all laws and clauses of laws, including private and local acts, other than local acts relating to the selection of tax collectors, in conflict with this Subchapter are repealed effective July 1, 1971.  As used in this section, the term 'local acts' means any acts of the General Assembly that apply to one or more counties by name, to one or more municipalities by name, or to all municipalities within one or more named counties."
Sec. 21.  G.S. 105-441(a) reads as rewritten:
"(a)	Acts. – Any distributor who commits one or more of the following acts is guilty of a misdemeanor:
(1)	Fails to obtain a license required by this Article.
(2)	Willfully fails to make a report required by this Article.
(3)	Willfully fails to pay a tax when due under this Article.
(4)	Makes a false statement in an application, a report, or a statement required under this Article.
(5)	Fails to keep records as required under this Article.
(6)	Refuses to allow the Secretary of Revenue or a representative of the Secretary of Revenue to examine the distributor's books and records concerning motor fuel.
(7)	Fails to disclose the correct amount of motor fuel sold or used in this State.
(8)	Fails to file a replacement bond or an additional bond as required under this Article.
On conviction, a distributor shall be fined not less than one hundred dollars ($100.00) and not more than five thousand dollars ($5,000) or, in the case of an individual or the officer or employee charged with the duty of making a report for a corporation, imprisoned not exceeding 24 months, or both."
Sec. 22.  G.S. 105-449.34 reads as rewritten:
"§ 105-449.34.  Acts and omissions declared to be misdemeanors.
A person who commits one or more of the following acts is guilty of a misdemeanor:
(1)	Fails to obtain a license required by this Article.
(2)	Willfully fails to make a report required by this Article.
(3)	Willfully fails to pay a tax when due under this Article.
(4)	Makes a false statement in an application, a report, or a statement required under this Article.
(5)	Fails to keep records as required under this Article.
(6)	Refuses to allow the Secretary of Revenue or a representative of the Secretary of Revenue to examine the licensee's books and records concerning fuel.
(7)	Fails to disclose the correct amount of fuel sold or used in this State.
(8)	Fails to file a replacement bond or an additional bond as required under this Article."
Sec. 23.  G.S. 105-466(d) reads as rewritten:
"(d)	Upon adoption of a resolution levying the tax, the board of county commissioners shall immediately deliver a certified copy of the resolution to the Secretary, accompanied by a certified statement from the county board of elections, if applicable, setting forth the results of any special election approving the tax in the county.  Upon receipt of these documents, the Secretary shall collect and administer the tax as provided in this Article."
Sec. 24.  G.S. 105-469 reads as rewritten:
"§ 105-469.  Secretary to collect and administer local sales and use tax.
The Secretary shall collect and administer a tax levied by a county pursuant to this Article.  ."
Sec. 25.  G.S. 105-472 reads as rewritten:
"§ 105-472.  Disposition and distribution of taxes collected.
(a)	County Allocation. – The Secretary shall, on a quarterly basis, allocate to each taxing county for which the Secretary collects the tax the net proceeds of the tax collected in that county under this Article.  For the purpose of this section, 'net proceeds' means the gross proceeds of the tax collected in each county under this Article less taxes refunded, the cost to the State of collecting and administering the tax in the county as determined by the Secretary, and other deductions that may be charged to the county.  If the Secretary collects local sales or use taxes in a month and the taxes cannot be identified as being attributable to a particular taxing county, the Secretary shall allocate the taxes among the taxing counties in proportion to the amount of taxes collected in each county under this Article during that month and shall include them in the quarterly distribution.
" (b)	Distribution Between Counties and Cities. – The Secretary shall divide the amount allocated to each taxing county among the county and its municipalities in accordance with the method determined by the county.  The board of county commissioners shall, by resolution, choose one of the following methods of distribution:
(1)	Per Capita Method. –The net proceeds of the tax collected in a taxing county shall be distributed to that county and to the municipalities in the county on a per capita basis according to the total population of the taxing county, plus the total population of the municipalities in the county.  In the case of a municipality located in more than one county, only that part of its population living in the taxing county is considered its 'total population.'  " In order to make the distribution, the Secretary shall determine a per capita figure by dividing the amount allocated to each taxing county by the total population of that county plus the total population of all municipalities in the county.  The Secretary shall then multiply this per capita figure by the population of the taxing county and by the population of each municipality in the county; each respective product shall be the amount to be distributed to the county and to each municipality in the county.  To determine the population of each county and each municipality, the Secretary shall use the most recent annual estimate of population certified by the State Planning Officer.  
(2) 	Ad Valorem Method. – The net proceeds of the tax collected in a taxing county shall be distributed to that county and the municipalities in the county in proportion to the total amount of ad valorem taxes levied by each on property having a tax situs in the taxing county during the fiscal year next preceding the distribution.  For purposes of this section, the amount of the ad valorem taxes levied by a county or municipality includes ad valorem taxes levied by the county or municipality in behalf of a taxing district and collected by the county or municipality.  In addition, the amount of taxes levied by a county includes ad valorem taxes levied by a merged school administrative unit described in G.S. 115C-513 in the part of the unit located in the county.  In computing the amount of tax proceeds to be distributed to each county and municipality, the amount of any ad valorem taxes levied but not substantially collected shall be ignored.  Each county and municipality receiving a distribution of the proceeds of the tax levied under this Article shall in turn immediately share the proceeds with each district in behalf of which the county or municipality levied ad valorem taxes in the proportion that the district levy bears to the total levy of the county or municipality.  Any county or municipality that fails to provide the Department of Revenue with information concerning ad valorem taxes levied by it adequate to permit a timely determination of its appropriate share of tax proceeds collected under this Article may be excluded by the Secretary from each quarterly distribution with respect to which the information was not provided in a timely manner, and those tax proceeds shall then be distributed only to the remaining counties or municipalities, as appropriate.  For the purpose of computing the distribution of the tax under this subsection to any county and the municipalities located in the county for any quarter with respect to which the property valuation of a public service company is the subject of an appeal and the Department of Revenue is restrained by law from certifying the valuation to the county and the municipalities in the county, the Department shall use the last property valuation of the public service company that has been certified.
The board of county commissioners in each taxing county shall, by resolution adopted during the month of April of each year, determine which of the two foregoing methods of distribution shall be in effect in the county during the next succeeding fiscal year.  In order for the resolution to be effective, a certified copy of it must be delivered to the Secretary in Raleigh within 15 calendar days after its adoption.  If the board fails to adopt a resolution choosing a method of distribution not then in effect in the county, or if a certified copy of the resolution is not timely delivered to the Secretary, the method of distribution then in effect in the county shall continue in effect for the following fiscal year.  The method of distribution in effect on the first of July of each fiscal year shall apply to every distribution made during that fiscal year.
(c)	Municipality Defined. – As used in this Article, the term 'municipality' means 'city' as defined in G.S. 153A-1."
Sec. 26. G.S. 105-482 reads as rewritten:
"§ 105-482.  Limitations.
This Article applies only to counties that levy one percent (1%) sales and use taxes under Article 39 of this Chapter or under Chapter 1096 of the 1967 Session Laws."
Sec. 27.  G.S. 105-483 reads as rewritten:
"§ 105-483.  Levy and collection of additional taxes.
Any county subject to this Article may levy one-half percent (1/2%) local sales and use taxes in addition to any other State and local sales and use taxes levied pursuant to law.  Except as provided in this Article, the adoption, levy, collection, distribution, administration, and repeal of these additional taxes shall be in accordance with Article 39 of this Chapter.  In applying the provisions of Article 39 of this Chapter to this Article, references to 'this Article' mean Article 40 of this Chapter.  The exemption for building materials in G.S. 105-468.1 does not apply to taxes levied under this Article."
Sec. 28.  G.S. 105-498 reads as rewritten:
"§ 105-498.  Levy and collection of additional taxes.
Any county subject to this Article may levy one-half percent (1/2%) local sales and use taxes in addition to any other State and local sales and use taxes levied pursuant to law.  Except as provided in this Article, the adoption, levy, collection, distribution, administration, and repeal of these additional taxes shall be in accordance with Article 39 of this Chapter. In applying the provisions of Article 39 of this Chapter to this Article, references to 'this Article' mean Article 42 of this Chapter.  The exemption for building materials in G.S. 105-468.1 does not apply to taxes levied under this Article."
Sec. 29.  G.S. 160A-623(h) reads as rewritten:
"(h)	Tax Situs. –The tax situs of a motor vehicle for the purpose of this section is its ad valorem tax situs.  If the vehicle is exempt from ad valorem tax, its tax situs for the purpose of this section is the ad valorem tax situs it would have if it were not exempt from ad valorem tax."
Sec. 30.  Except as otherwise provided in this act, this act is effective upon ratification.  Sections 21 and 22 of this act apply to offenses committed on or after the date of ratification.