A BILL TO BE ENTITLED
AN ACT to Reform the State gift tax so that it is based on the federal gift tax, as recommended by the revenue Laws Study committee.
The General Assembly of North Carolina enacts:
SECTION 1.  Article 6 of Chapter 105 of the General Statutes is repealed.
SECTION 2.  Chapter 105 of the General Statutes is amended by adding a new Article to read:
"Article 1B.
"Gift Taxes.
"§ 105‑32.20.  Gift taxes; rates of tax.
(a)	Definitions. – As used in this Article, 'taxable gift' has the same meaning as under section 2503 of the Code.
(b)	Tax. – A gift tax is imposed on a gift when a federal gift tax is imposed on the gift under section 2501 of the Code and any of the following applies:
(1)	The donor was a resident of this State at the time the gift was made.
(2)	The donor was not a resident of this State at the time the gift was made and the gift consisted of either of the following:
a.	Real property or tangible personal property that was located in this State at the time the gift was made.
b.	Intangible personal property that had a tax situs in this State at the time the gift was made.
(c)	Rate. – The rates of tax, which are based on the value of the taxable gift, are as follows:
	Amount of Taxable Gift	Rate
	Up to $40,000	0%
	Over $40,000 up to $90,000	0.8%
	Over $90,000 up to $140,000	1.6%
	Over $140,000 up to $240,000	2.4%
	Over $240,000 up to $440,000	3.2%
	Over $440,000 up to $640,000	4.0%
	Over $640,000 up to $840,000	4.8%
	Over $840,000 up to $1,040,000	5.6%
	Over $1,040,000 up to $1,540,000	6.4%
	Over $1,540,000 up to $2,040,000	7.2%
	Over $2,040,000 up to $2,540,000	8.0%
	Over $2,540,000 up to $3,040,000	8.8%
	Over $3,040,000 up to $3,540,000	9.6%
	Over $3,540,000 up to $4,040,000	10.4%
	Over $4,040,000 up to $5,040,000	11.2%
	Over $5,040,000 up to $6,040,000	12.0%
	Over $6,040,000 up to $7,040,000	12.8%
	Over $7,040,000 up to $8,040,000	13.6%
	Over $8,040,000 up to $9,040,000	14.4%
	Over $9,040,000 up to $10,040,000	15.2%
	Over $10,040,000	16.0%
(d)	Value of Gift. – The value of a gift is determined in accordance with the Code. If any property composing part of the gift is located in a state other than North Carolina, the amount of tax payable depends on whether the donor was a resident of this State at the time of the gift. If the donor was a resident of this State at the time of the gift, the amount of tax due under this section is reduced by the lesser of the amount of the gift tax paid the other state or an amount computed by multiplying the amount otherwise due by a fraction, the numerator of which is the value of the taxable gift that was located or had a tax situs in another state at the time of the gift and the denominator of which is the value of the total taxable gift. If the donor was not a resident of this State at the time of the gift, the amount of tax due under this section is an amount computed by multiplying the amount otherwise due by a fraction, the numerator of which is the value of real or tangible personal property that was located in North Carolina at the time of the gift plus the value of any intangible property that had a tax situs in North Carolina at the time of the gift and the denominator of which is the value of the taxable gift.
"§ 105‑32.21.  Lien for tax; collection of tax.
The tax imposed by this Article is a lien upon all gifts that constitute the basis for the tax for a period of 10 years from the time they are made. If the tax is not paid by the donor when due, each donee is personally liable, to the extent of his or her respective gifts, for so much of the tax as has been assessed, or may be assessed, thereon. Any part of the property comprised in the gift that has been sold by the donee to a bona fide purchaser is divested of the lien imposed by this section and the lien, to the extent of the value of the gift, shall attach to all the property of the donee (including after‑acquired property) except any part sold to a bona fide purchaser.
If the tax is not paid within 30 days after it has become due, the Department of Revenue may use any of the methods authorized in this Subchapter for the collection of other taxes to enforce the payment of taxes assessed under this Article.
In any proceeding by warrant or otherwise to enforce the collection of the tax, the donor is liable for the full amount of the tax due by reason of all the gifts constituting the basis for the tax, and each donee is liable only for so much of the tax as may be due on account of his or her respective gift.
"§ 105‑32.22.  Death of donor within three years; time of assessment.
If a donor dies within three years after filing a return, gift taxes may be assessed at any time within those three years, or on or before the date of final settlement of the donor's State estate taxes, whichever is later.
"§ 105‑32.23.  When return required; due date of tax and return.
(a)	When Return Required. – A gift tax return must be filed under this Article if a federal gift tax return is required. The return must be filed on a form provided by the Secretary.
(b)	Due Date. – The gift tax imposed by this Article is due when the gift tax return is due. The gift tax return is due on the date a federal gift tax return is due. 
(c)	Extension. – An extension of time to file a federal gift tax return is an automatic extension of the time to file a gift tax return under this Article. The Secretary may, in accordance with G.S. 105‑263, extend the time for filing a gift tax return  or paying the tax imposed under this Article.
(d)	Administration. – Article 9 of this Chapter applies to this Article.
"§ 105‑32.24.  Federal corrections.
If the amount of a taxpayer's taxable gifts is corrected or otherwise determined by the federal government, the taxpayer must, within six months after being notified of the correction or final determination by the federal government, file a gift tax return with the Secretary of Revenue reflecting the corrected or determined taxable gifts. The Secretary of Revenue shall determine from all available evidence the taxpayer's correct tax liability for the taxable year. As used in this section, the term 'all available evidence' means evidence of any kind that becomes available to the Secretary from any source, whether or not the evidence was considered in the federal correction or determination.
The Secretary shall assess and collect any additional tax due from the taxpayer as provided in Article 9 of this Chapter. The Secretary shall refund any overpayment of tax as provided in Article 9 of this Chapter. A taxpayer who fails to comply with this section is subject to the penalties in G.S. 105‑236 and forfeits the right to any refund due by reason of the determination."
SECTION 3.  This act becomes effective January 1, 2008, and applies to gifts made on or after that date.