GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

S	1 

SENATE BILL 1252

Short Title:  Simplify Privilege License Tax.	(Public)

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Sponsors: Senators Hoyle, Cochrane, Kerr, and Hartsell.

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Referred to:  Finance.

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May 21, 1998

A BILL TO BE ENTITLED
AN ACT TO SIMPLIFY AND MODIFY PRIVILEGE LICENSE AND EXCISE TAXES AND RELATED PERMIT FEES.
The General Assembly of North Carolina enacts:
Section 1.  The title of Article 2 of Chapter 105 of the General Statutes reads as rewritten:
"ARTICLE 2.
" Privilege Taxes."
Section 2.  G.S. 105-33 reads as rewritten:
"§ 105-33. Taxes under this Article.
(a)	 General. – Taxes in this Article are imposed for the privilege of carrying on the business, exercising the privilege, or doing the act named. 
(b)	License Taxes. – A license tax imposed by this Article is an annual tax.  The tax is due by July 1 of each year.  The tax is imposed for the privilege of engaging in a specified activity during the fiscal year that begins on the July 1 due date of the tax.  The full amount of a license tax applies to a person who, during a fiscal year, begins to engage in an activity for which this Article requires a license.  Before a person engages in an activity for which this Article requires a license, the person must obtain the required license.
(c)	Other Taxes. – The taxes imposed by this Article on a percentage basis or another basis are due as specified in this Article.
	(e)	Repealed by Session Laws 1989, c. 584, s. 1.
		(h)	 Liability Upon Transfer. –A grantee, transferee, or purchaser of any business or property subject to the State taxes imposed in this Article must make diligent inquiry as to whether the State tax has been paid.  If the business or property has been granted, sold, transferred, or conveyed to an innocent purchaser for value and without notice that the vendor owed or is liable for any of the State taxes imposed under this Article, the property, while in the possession of the innocent purchaser, is not subject to any lien for the taxes.
		(k)	Repealed by Session Laws 1987, c. 190."
Section 3.  G.S. 105-33.1 reads as rewritten:
"§ 105-33.1.  Definitions.
The following definitions apply in this Article:
(1)	City. – Defined in G.S. 105-228.90.
(1a)	Code. – Defined in G.S. 105-228.90.
	(3)	Person. – Defined in G.S. 105-228.90.
(4)	Secretary. –Defined in G.S. 105-228.90."
Section 4.  G.S.105-37.1 reads as rewritten:
"§ 105-37.1.  Amusements – Forms of amusement not otherwise taxed.
(a)	Every person engaged in the business of giving, offering, or managing any form of entertainment or amusement not otherwise taxed for which an admission is charged, shall pay 
a tax upon the gross receipts of the business at the rate of three percent (3%).  Reports shall be made to the Secretary within the first 10 days of each month covering all the gross receipts for the previous month, and the tax shall be paid monthly at the time the reports are made. 
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 a tax upon the gross receipts derived from admission charges at the rate of three percent (3%). The tax upon gross receipts shall be levied and collected as prescribed by the Secretary. 
" " " (b)	Counties shall not levy any license tax on the business taxed under this section, but cities may levy a license tax not in excess of twenty-five dollars ($25.00).
		" ."
Section 5.  G.S. 105-38 reads as rewritten:
"§ 105-38.  Amusements –Circuses and other traveling amusements.
(a)	Every person engaged in the business of exhibiting performances, such as a circus, menagerie, wild west show, dog and/or pony show, or any other similar show, exhibition, or performance not taxed in other sections of this Article, shall pay a tax upon the gross receipts of the business at the rate of three percent (3%).
(b)	Every person by whom any show or exhibition taxed under this section is owned or controlled shall file with the Secretary, not less than five days before entering this State for the purpose of the exhibitions or performances therein, a statement, under oath, setting out in detail the dates, times, and places for the exhibitions or performances.  
				(g)	Repealed.
(h)	Counties and cities may levy a license tax on the business taxed under this section not in excess of twenty-five dollars ($25.00) for each day or part of a day for each place where exhibitions or performances are to be given."
Section 6.  G.S. 105-40 reads as rewritten:
"§ 105-40. Amusements exempt from tax.
The following forms of amusement are exempt from the taxes imposed under this Article:
(1)	All exhibitions, performances, and entertainments, except as in this Article expressly mentioned as not exempt, produced by local talent exclusively, for the benefit of religious, charitable, benevolent or educational purposes, as long as no compensation is paid to the local talent.
(2)	The North Carolina Symphony Society, Incorporated, as specified in G.S. 140-10.1.
(3)	All exhibits, shows, attractions, and amusements operated by a society or association organized under the provisions of Chapter 106 of the North Carolina General Statutes where the society or association has obtained a permit from the Secretary to operate without the payment of taxes under this Article.
(4)	All outdoor historical dramas, as specified in Article 19C of Chapter 143 of the North Carolina General Statutes.
(5)	All high school and elementary school athletic contests.
(6)	The first one thousand dollars ($1,000) of gross receipts derived from dances and other amusements actually promoted and managed by civic organizations and private and public secondary schools when the entire proceeds of the dances or other amusements are used exclusively for the school or civic and charitable purposes of the organizations and not to defray the expenses of the organization conducting the dance or amusement.  The mere sponsorship of a dance or another amusement by a school, civic, or fraternal organization does not exempt the dance or other amusement, because the exemption applies only when the dance or amusement is actually managed and conducted by the school, civic, or fraternal organization.
(7)	All dances and other amusements promoted and managed by a qualifying corporation that operates a center for the performing and visual arts 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.
(8)	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.
(9)	All entertainments or amusements offered or given on the Cherokee Indian reservation when the person giving, offering, or managing the entertainment or amusement is authorized to do business on the reservation and pays the tribal gross receipts levy to the tribal council."
Section 7.  G.S. 105-41 reads as rewritten:
"§ 105-41.  Attorneys-at-law and other professionals.
(a)	Every individual in this State who practices a profession or engages in a business and is included in the list below must obtain from the Secretary a statewide license for the privilege of practicing the profession or engaging in the business.  A license required by this section is not transferable to another person.  The tax for each license is fifty dollars ($50.00).
(1)	An attorney-at-law.
(2)	A physician, a veterinarian, a surgeon, an osteopath, a chiropractor, a chiropodist, a dentist, an ophthalmologist, an optician, an optometrist, or another person who practices a professional art of healing.
(3)	A professional engineer, as defined in G.S. 89C-3.
(4)	A registered land surveyor, as defined in G.S. 89C-3.
(5)	An architect.
(6)	A landscape architect.
(7)	A photographer, a canvasser for any photographer, or an agent of a photographer in transmitting photographs to be copied, enlarged, or colored.
(8)	A real estate broker or a real estate salesman, as defined in G.S. 93A-2. A real estate broker or a real estate salesman who is also a real estate appraiser is required to obtain only one license under this section to cover both activities.
(9)	A real estate appraiser, as defined in G.S. 93E-1-4. A real estate appraiser who is also a real estate broker or a real estate salesman is required to obtain only one license under this section to cover both activities.
(10)	A person who solicits or negotiates loans on real estate as agent for another for a commission, brokerage, or other compensation.
(11)	A mortician or embalmer licensed under G.S. 90-210.25.
(b)	The following persons are exempt from the tax:
(1)	A person who is at least 75 years old.
(2)	A person practicing the professional art of healing for a fee or reward, if the person is an adherent of an established church or religious organization and confines the healing practice to prayer or spiritual means.
(3)	A blind person engaging in a trade or profession as a sole proprietor. A 'blind person' means any person who is totally blind or whose central visual acuity does not exceed 20/200 in the better eye with correcting lenses, or where the widest diameter of visual field subtends an angle no greater than 20 degrees.  This exemption shall not extend to any sole proprietor who permits more than one person other than the proprietor to work regularly in connection with the trade or profession for remuneration or recompense of any kind, unless the other person in excess of one so remunerated is a blind person.
(c)	Every person engaged in the public practice of accounting as a principal, or as a manager of the business of public accountant, shall pay for such license fifty dollars ($50.00), and in addition shall pay a license of twelve dollars and fifty cents ($12.50) for each person employed who is engaged in the capacity of supervising or handling the work of auditing, devising or installing systems of accounts.
	(e)	Licenses issued under this section are issued as personal privilege licenses and shall not be issued in the name of a firm or corporation.  A licensed photographer having a located place of business in this State is liable for a license tax on each agent or solicitor employed by the photographer for soliciting business. If any person engages in more than one of the activities for which a privilege tax is levied by this section, the person is liable for a privilege tax with respect to each activity engaged in.
(f)	Repealed by Session Laws 1981, c. 17.
	" (h)	Cities may not levy any license tax on the business or professions taxed under this section.  
(i)	Obtaining a license required by this Article does not of itself authorize the practice of a profession, business, or trade for which a State qualification license is required."
Section 8.  Chapter 93B of the General Statutes is amended by adding the following new section to read:
"§ 93B-15.  Members of armed forces and merchant marine exempt from license fees.
Any person entering into the armed forces of the United States or in the merchant marine shall be during the period of service exempt from paying any license fees to any licensing board or commission or to the State of North Carolina in which the payment of the license fees is by law required as a condition to the continuance of the privilege to engage in any trade or profession.  The person upon being discharged from service shall have all the rights and privileges to engage in that person's profession upon payment of any fees that become due."
Section 9.  G.S. 105-83 reads as rewritten:
"§ 105-83.  Installment paper dealers.
(a)	Every person engaged in the business of dealing in, buying, or discounting installment paper, notes, bonds, contracts, or evidences of debt for which, at the time of or in connection with the execution of the instruments, a lien is reserved or taken upon personal property located in this State to secure the payment of the obligations, 
	shall submit to the Secretary quarterly no later than the twentieth day of January, April, July, and October of each year, upon forms prescribed by the Secretary, a full, accurate, and complete statement, verified by the officer, agent, or person making the statement, of the total face value of the obligations dealt in, bought, or discounted within the preceding three calendar months and, at the same time, shall pay a tax of two hundred and seventy-five thousandths of one percent (.275%) of the face value of these obligations.
(c)	If any person deals in, buys, or discounts any obligations described in this section without paying a tax imposed by this section, the person may not bring an action in a State court to enforce collection of an obligation dealt in, bought, or discounted during the period of noncompliance with this section until the person pays the amount of tax, penalties, and interest due.
(d)	This section does not apply to corporations liable for the tax levied under G.S. 105-102.3.
(e)	Cities shall not levy any license tax on the business taxed under this section."
Section 10.  G.S. 105-102.3 reads as rewritten:
"§ 105-102.3.  Banks.
There is imposed upon every bank or banking association, including each national banking association, that is operating in this State as a commercial bank, an industrial bank, a savings bank created other than under Chapter 54B of the General Statutes or the Home Owners' Loan Act of 1933 (12 U.S.C. §§ 1461-68), a trust company, or any combination of such facilities or services, and whether such bank or banking association, hereinafter to be referred to as a bank or banks, is organized, under the laws of the United States or the laws of North Carolina, in the corporate form or in some other form of business organization, an annual privilege tax.  A report and the privilege tax are due by the first day of July of each year on forms provided by the Secretary.  The tax rate is thirty dollars ($30.00) for each one million dollars ($1,000,000) or fractional part thereof of total assets held as provided in this section. The assets upon which the tax is levied shall be determined by averaging the total assets shown in the four quarterly call reports of condition (consolidating domestic subsidiaries) for the preceding calendar year as required by bank regulatory authorities.  If a bank has been in operation less than a calendar year, then the assets upon which the tax is levied shall be determined by multiplying the average of the total assets by a fraction, the denominator of which is 365 and the numerator of which is the number of days of operation. If a bank operates an international banking facility, as defined in G.S. 105-130.5(b)(13), the assets upon which the tax is levied shall be reduced by the average amount for the taxable year of all assets of the international banking facility which are employed outside the United States, as computed pursuant to G.S. 105-130.5(b)(13)c. For an out-of-state bank with one or more branches in this State, or for an in-state bank with one or more branches outside this State, the assets of the out-of-state bank or of the in-state bank upon which the tax is levied shall be reduced by the average amount for the taxable year of all assets of the out-of-state bank or of the in-state bank which are employed outside this State. The tax imposed in this section shall be for the privilege of carrying on the businesses herein defined on a statewide basis regardless of the number of places or locations of business within the State. Cities may not levy a license or privilege tax on the businesses taxed under this section, nor on the business of an international banking facility as defined in subsection (b)(13) of G.S. 105-130.5."
Section 11.  G.S. 105-102.6(d) reads as rewritten:
"(d)	Tax. – Every publisher shall apply for and obtain from the Secretary a newsprint publisher tax reporting number and shall file an annual report with the Secretary by January 31 of each year. The report shall include the following information for the preceding calendar year:
(1)	Tonnage of virgin newsprint consumed.
(2)	Tonnage of nonvirgin newsprint consumed.
(3)	Gross tonnage of newsprint consumed.
(4)	Itemized percentages of recycled postconsumer recovered paper contained in tonnage of nonvirgin newsprint consumed.
(5)	Recycled content tonnage.
(6)	Recycled content percentage.
(7)	Recycling tonnage.
In addition, each publisher whose recycled content percentage for a calendar year is less than the applicable minimum recycled content percentage provided in subsection (c) shall pay a tax of fifteen dollars ($15.00) on each ton by which the publisher's recycled content tonnage falls short of the tonnage of recycled postconsumer recovered paper needed to achieve the applicable minimum recycled content percentage provided in subsection (c). This tax is due when the report is filed. No city may impose a license tax on the business taxed under this section."
Section 12.  G.S. 105-107 is repealed.
Section 13.  G.S. 105-109(a) is repealed.
Section 14.  G.S. 105-113.68(a)(6) reads as rewritten:
"(6)	'License' means a certificate, issued pursuant to this Article by a city or county, that authorizes a person to engage in a phase of the alcoholic beverage industry."
Section 15.  G.S. 105-113.69 reads as rewritten:
"§ 105-113.69. License tax; effect of license.
The taxes imposed in Part 3 of this Article are license taxes on the privilege of engaging in the activity authorized by the license. Licenses issued under this Article authorize the licensee to engage in only those activities that are authorized by the corresponding ABC permit. The activities authorized by each retail ABC permit are described in Article 10 of Chapter 18B of the General Statutes and the activities authorized by each commercial ABC permit are described in Article 11 of that Chapter."
Section 16.  G.S. 105-113.70 reads as rewritten:
"§ 105-113.70. Issuance, duration, transfer of license.
(a)	Issuance, Qualifications. – Each person who receives an ABC permit shall obtain the corresponding local license, if any, under this Article. All local licenses are issued by the city or county where the establishment for which the license is sought is located. The information required to be provided and the qualifications for a local license are the same as the information and qualifications required for the corresponding ABC permit. Upon proper application and payment of the prescribed tax, issuance of a local license is mandatory if the applicant holds the corresponding ABC permit. No local license may be issued under this Article until the applicant has received from the ABC Commission the applicable permit for that activity, and no county license may be issued for an establishment located in a city in that county until the applicant has received from the city the applicable license for that activity.
(b)	Duration. – All licenses issued under this section are annual licenses for the period from May 1 to April 30.
(c)	Transfer. – A license may not be transferred from one person to another or from one location to another.
(d)	License Exclusive. –A local government may not require a license for activities related to the manufacture or sale of alcoholic beverages other than the licenses stated in this Article."
Section 17.  G.S. 105-113.72 is repealed.
Section 18.  G.S. 105-113.74 is repealed.
Section 19.  G.S. 105-113.75 is repealed.
Section 20.  G.S. 105-113.76 is repealed.
Section 21.  G.S. 105-113.79 reads as rewritten:
"§ 105-113.79.  City wholesaler license.
A city may require city malt beverage and wine wholesaler licenses for businesses located inside the city, but may not require a license for a business located outside the city, regardless whether that business sells or delivers malt beverages or wine inside the city. The city may charge an annual tax of not more than thirty-seven dollars and fifty cents ($37.50) for a city malt beverage wholesaler or a city wine wholesaler license."
Section 22.  G.S. 105-113.80(a) reads as rewritten:
"(a)	Beer. – An excise tax of fifty-three and one hundred seventy-seven one thousandths cents (53.177¢) per gallon is levied on the sale of malt beverages.
		."
Section 23.  G.S. 105-113.83(c) reads as rewritten:
"(c)	Railroad Sales. –Each person operating a railroad train in this State on which alcoholic beverages are sold must submit monthly reports of the amount of alcoholic beverages sold in this State and must remit the applicable excise tax due on the sale of these beverages when the report is submitted.  The report is due on or before the 15th day of the month following the month in which the beverages are sold.  The report must be made on a form prescribed by the Secretary."
Section 24.  G.S. 105-113.84 reads as rewritten:
"§ 105-113.84. Invoices; report of resident brewery, resident winery, or nonresident vendor.
(a)	Invoice. –  A resident brewery, resident winery, or nonresident vendor that sells or delivers wine or malt beverages to a North Carolina wholesaler or importer shall give that wholesaler or importer two copies of the sales invoice and shall also file one copy with the Secretary. The invoice shall state all of the following:
(1)	The name and address of the permit holder making the sale or delivery.
(2)	The name, address, and permit number of the wholesaler or importer receiving the beverages.
(3)	The kind of beverage sold or delivered, including the number of cases.
(4)	The exact quantities of beverages sold or delivered, specified by size and type of containers.
(5)	The total gallons of malt beverages, the total liters of unfortified wine, and the total liters of fortified wine.
(b)	Monthly Report. – Each resident brewery, resident winery, or nonresident vendor that sells or delivers wine or malt beverages in North Carolina shall prepare and file with the Secretary a monthly report, on a form provided by the Secretary, stating the exact quantities of those beverages sold to North Carolina wholesalers or importers during the previous month. The report shall be filed on or before the 15th day of the month following the month in which the beverages are sold or delivered."
Section 25.  G.S. 105-113.86 reads as rewritten:
"§ 105-113.86. Bonds.
(a)	Wholesalers and Importers. –A wholesaler or importer shall furnish a bond in an amount of not less than five thousand dollars ($5,000) nor more than fifty thousand dollars ($50,000).  The bond shall be conditioned on compliance with this Article, shall be payable to the State, shall be in a form acceptable to the Secretary, and shall be secured by a corporate surety or by a pledge of obligations of the federal government, the State, or a political subdivision of the State. The Secretary shall proportion the bond amount to the anticipated tax liability of the wholesaler or importer. The Secretary shall periodically review the sufficiency of bonds furnished by wholesalers and importers, and shall increase the amount of a bond required of a wholesaler or importer when the amount of the bond furnished no longer covers the wholesaler's or importer's anticipated tax liability.
(b)	Nonresident Vendors. – The Secretary may require the holder of a nonresident vendor ABC permit to furnish a bond in an amount not to exceed two thousand dollars ($2,000). The bond shall be conditioned on compliance with this Article, shall be payable to the State, shall be in a form acceptable to the Secretary, and shall be secured by a corporate surety or by a pledge of obligations of the federal government, the State, or a political subdivision of the State."
Section 26.  G.S. 105-113.89 reads as rewritten:
"§ 105-113.89. Other applicable administrative provisions.
The administrative provisions of Article 9 of this Chapter apply to this Article." ."
Section 27.  G.S. 105-249 is repealed.
Section 28.  G.S. 105-249.1 is repealed.
Section 29.  G.S. 18B-902 reads as rewritten:
"§ 18B-902.  Application for permit; fees.
(a)	Form. – An application for an ABC permit shall be on a form prescribed by the Commission and shall be notarized. The application shall be signed and sworn to by each person required to qualify under G.S. 18B-900(c).
(b)	Investigation. – Before issuing a new permit, the Commission, with the assistance of the ALE Division, shall investigate the applicant and the premises for which the permit is requested. The Commission may request the assistance of local ABC officers in investigating applications. An applicant shall cooperate fully with the investigation.
(c)	False Information. – Knowingly making a false statement in an application for an ABC permit shall be grounds for denying, suspending, revoking or taking other action against the permit as provided in G.S. 18B-104 and shall also be unlawful.
(d)	Fees. – An application for an ABC permit shall be accompanied by payment of the following application fee:
(1)	On-premises malt beverage permit –$400.00.
(2)	Off-premises malt beverage permit –$400.00.
(3)	On-premises unfortified wine permit –$400.00.
(4)	Off-premises unfortified wine permit –$400.00.
(5)	On-premises fortified wine permit –$400.00.
(6)	Off-premises fortified wine permit –$400.00.
(7)	Brown-bagging permit –$400.00, unless the application is for a restaurant seating less than 50, in which case the fee shall be $200.00.
(8)	Special occasion permit –$400.00.
(9)	Limited special occasion permit –$50.00.
(10)	Mixed beverages permit –$1,000.
(11)	Culinary permit –$200.00.
(12)	Unfortified winery permit –$300.00.
(13)	Fortified winery permit –$300.00.
(14)	Limited winery permit –$300.00.
(15)	Brewery permit –$300.00.
(16)	Distillery permit –$300.00.
(17)	Fuel alcohol permit –$100.00.
(18)	Wine importer permit –$300.00.
(19)	Wine wholesaler permit –$300.00.
(20)	Malt beverage importer permit –$300.00.
(21)	Malt beverage wholesaler permit –$300.00.
(22)	Bottler permit –$300.00.
(23)	Salesman permit –$100.00.
(24)	Vendor representative permit –$50.00.
(25)	Nonresident malt beverage vendor permit –$100.00.
(26)	Nonresident wine vendor permit –$100.00.
(27)	Any special one-time permit under G.S. 18B-1002 –$50.00.
(28)	Winery special event permit –$200.00.
(29)	Mixed beverages catering permit –$200.00.
(30)	Guest room cabinet permit –$1,000.
(31)	Liquor importer/bottler permit –$500.00.
(32)	Cider and vinegar manufacturer permit –$200.00.
(33)	Brew on premises permit –$400.00.
	(f)	Fee Not Refundable. – The fee required by subsection (d) shall not be refunded.
(g)	Fees to Treasurer. – All fees collected by the Commission under this or any other section of this Chapter shall be remitted to the State Treasurer for the General Fund."
Section 30.  G.S. 18B-903(b) reads as rewritten:
"(b)	Renewal. – Application for renewal of an ABC permit shall be on a form provided by the Commission. An application for renewal shall be accompanied by an application fee of twenty-five percent (25%) of the original application fee set in G.S. 18B-902, except that the renewal application fee for each mixed beverages permit and each guest room cabinet permit shall be seven hundred fifty dollars ($750.00).  A renewal fee shall not be refundable."
Section 31.  Sections 1 through 13, 27, and 28 of this act become effective July 1, 1999.  The remaining sections of this act become effective May 1, 1999.