A BILL TO BE ENTITLED
AN ACT to make various changes to the revenue laws.
The General Assembly of North Carolina enacts:

part i. business tax changes
SECTION 1.1.  G.S. 105‑114 reads as rewritten:
"§ 105‑114.  Nature of taxes; definitions.
	
(a1)	Scope. – The tax levied in this Article upon corporations is a privilege tax 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 these corporations receive from the government and laws of this State in doing business in this State.
(a2)	Condition for Doing Business. – If the corporation is organized under the laws of this State, the payment of the tax levied by this Article is a condition precedent to the right to continue in the corporate form of organization. If the corporation is not organized under the laws of this State, payment of this tax is a condition precedent to the right to continue to engage in doing business in this State.
(a3)	Tax Year. – The tax levied in this Article is for the income year of the corporation in which the taxes become due.
(a4)	No Double Taxation. – G.S. 105‑122 does not apply to holding companies taxed under G.S. 105‑120.2.
…."
SECTION 1.2.  G.S. 105‑120.2(c) reads as rewritten:
"(c)	For purposes of this section, a "holding company" is a corporation that satisfies at least one of the following conditions:
…
(2)	It receives during its taxable year more than eighty percent (80%) of its gross income from corporations in which it owns directly or indirectly more than fifty percent (50%) of the outstanding voting stock, voting capital interests, or ownership interests."
SECTION 1.3.(a)  G.S. 105‑122 reads as rewritten:
"§ 105‑122.  Franchise or privilege tax on domestic and foreign corporations.
(a)	Tax Imposed. – An annual franchise or privilege tax is imposed on a corporation doing business in this State for the privilege of doing business in this State and for the continuance of articles of incorporation or domestication of each corporation in this State. The tax is determined on the basis of the books and records of the corporation as of the close of its income year. A corporation subject to the tax must file a return under affirmation with the Secretary at the place and in the manner prescribed by the Secretary. The return must be signed by the president, vice‑president, treasurer, or chief financial officer of the corporation. The return is due on or before the fifteenth day of the fourth month following the end of the corporation's income year.
…
(d)	Tax –Base. – A corporation's tax base is the greatest of the following:
(1)	The proportion of its net worth as set out in subsection (c1) of this section.
(2)	Fifty‑five percent (55%) of the corporation's appraised value as determined for ad valorem taxation of all the real and tangible personal property in this State. For purposes of this subdivision, the appraised value of tangible property, including real estate, is the ad valorem valuation for the calendar year next preceding the due date of the franchise tax return.
(3)	The corporation's total actual investment in tangible property in this State. For purposes of this subdivision, the total actual investment in tangible property in this State is the total original purchase price or consideration to the reporting taxpayer of its tangible properties, including real estate, in this State plus additions and improvements thereto less (i) reserve for depreciation as permitted for income tax purposes and (ii) any indebtedness specifically incurred and existing solely for and as the result of the purchase of any real estate and any permanent improvements made on the real estate.
…
(d2)	Tax Rate. – The tax rate is one dollar and fifty cents ($1.50) per one thousand dollars ($1,000) of the corporation's tax base as determined under subsection (d) of this section. The tax imposed in this section shall not be less than two hundred dollars ($200.00).
…."
SECTION 1.3.(b)  This section becomes effective for taxable years beginning on or after January 1, 2018, and is applicable to the calculation of franchise tax reported on the 2017 and later corporate income tax returns.
SECTION 1.4.(a)  G.S. 105‑129.106(b) reads as rewritten:
"(b)	Limitations. – The amount of credit allowed under this section with respect to rehabilitation expenses for a non‑income‑producing certified historic structure may not exceed twenty‑two thousand five hundred dollars ($22,500) per discrete property parcel. In the event that the taxpayer is the transferee of a State‑certified historic structure for which rehabilitation expenses were made, the taxpayer as transferee is allowed a credit under this section for the rehabilitation expenses made by the transferor only if the transfer takes place before the structure is placed in service. In this event, the transferor must provide the transferee with documentation detailing the amount of rehabilitation expenses and credit. No other taxpayer may claim such credit. A taxpayer is allowed to claim a credit under this section no more than once in any five‑year period, carryovers notwithstanding."
SECTION 1.4.(b)  This section becomes effective for taxable years beginning on or after January 1, 2017.
SECTION 1.5.(a)  G.S. 105‑130.4 reads as rewritten:
"§ 105‑130.4.  Allocation and apportionment of income for corporations.
(a)	Definition. – The following definitions apply in this section:
(1)	Apportionable income. – All income that is apportionable under the United States Constitution, including income that arises from either of the following:
a.	Transactions and activities in the regular course of the taxpayer's trade or business.
b.	Tangible and intangible property if the acquisition, management, employment, development, or disposition of the property is or was related to the operation of the taxpayer's trade or business.
(2)	Business activity. – Any activity by a corporation that would establish nexus, except as limited by 15 U.S.C. § 381.
(3)	Casual sale of property. – The sale of any property that was not purchased, produced, or acquired primarily for sale in the corporation's regular trade or business.
(4)	Commercial domicile. – The principal place from which the trade or business of the taxpayer is directed or managed.
(5)	Compensation. – Wages, salaries, commissions and any other form of remuneration paid to employees for personal services.
	
(6)	Nonapportionable income. – All income other than apportionable income.
	
(7)	Sales. – All gross receipts of the corporation except for the following receipts:
…
	
(8)	State. – A state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, and any foreign country or political subdivision thereof.
(b)	Multistate Corporations. – A corporation having income from business activity which is taxable both within and without this State shall allocate and apportion its net income or net loss as provided in this section. For purposes of allocation and apportionment, a corporation is taxable in another state if either of the following applies:
(1)	The corporation's business activity in that state subjects it to a net income tax or a tax measured by net income.
(2)	That state has jurisdiction based on the corporation's business activity in that state to subject the corporation to a tax measured by net income regardless whether that state exercises its jurisdiction.
(c)	Nonapportionable Income. – Rents and royalties from real or tangible personal property, gains and losses, interest, dividends, patent and copyright royalties and other kinds of income, to the extent that they constitute nonapportionable income, less related expenses shall be allocated as provided in subsections (d) through (h) of this section.
(d)	Rents and Royalties. – Net rents and royalties are allocable to this State as follows:
…
(e)	Gains and Losses. – Gains and losses are allocable to this State as follows:
…
(f)	Interest and Net Dividends. – Interest and net dividends are allocable to this State if the corporation's commercial domicile is in this State. For purposes of this section, the term "net dividends" means gross dividend income received less related expenses.
(g)	Intangible Property. – Intangible property is allocable to this State as follows:
…
(h)	Other Income. – The income less related expenses from any other activities producing nonapportionable income or investments not otherwise specified in this section is allocable to this State if the business situs of the activities or investments is located in this State.
…
(m)	Railroad Company. – All apportionable income of a railroad company shall be apportioned to this State by multiplying the income by a fraction, the numerator of which is the "railway operating revenue" from business done within this State and the denominator of which is the "total railway operating revenue" from all business done by the company as shown by its records kept in accordance with generally accepted accounting principles.
If the Secretary of Revenue finds, with respect to any particular company, that its accounting records are not kept so as to reflect with exact accuracy such division of revenue by State lines as to each transaction involving interstate revenue, the Secretary of Revenue may adopt such regulations, based upon averages, as will approximate with reasonable accuracy the proportion of interstate revenue actually earned upon lines in this State. Provided, that where a railroad is being operated by a partnership which is treated as a corporation for income tax purposes and pays a net income tax to this State, or if located in another state would be so treated and so pay as if located in this State, each partner's share of the net profits shall be considered as dividends paid by a corporation for purposes of this Part and shall be so treated for inclusion in gross income, deductibility, and separate allocation of dividend income.
The following definitions apply in this subsection:
(1)	Equal mileage proportion. – The proportion which the distance of movement of property and passengers over lines in this State bears to the total distance of movement of property and passengers over lines of the company receiving such revenue.
(2)	Interstate business. – Railroad operating revenue from the interstate transportation of persons or property into, out of, or through this State.
(3)	Railway operating revenue from business done within this State. – Railroad operating revenue from business wholly within this State, plus the equal mileage proportion within this State of each item of railway operating revenue received from the interstate business of the company.
	
(o)	Motor Carrier. – All apportionable income of a motor carrier of property or a motor carrier of people shall be apportioned by multiplying the income by a fraction, the numerator of which is the number of vehicle miles in this State and the denominator of which is the total number of vehicle miles of the company everywhere. The words "vehicle miles" shall mean miles traveled by vehicles owned or operated by the company based upon one of the following:
(1)	Miles on a scheduled route.
(2)	Miles hauling property for a charge.
(3)	Miles carrying passengers for a fare.

(r)	All apportionable income of an excluded corporation and of all other public utilities shall be apportioned by multiplying the income by the sales factor as determined under subsection (l) of this section. 
The following definitions apply in this subsection:
(1)	Excluded corporation. – Any corporation engaged in business as a building or construction contractor, a securities dealer, or a loan company or a corporation that receives more than fifty percent (50%) of its ordinary gross income from intangible property.
(2)	Public utility. – Any corporation that is subject to control of one or more of the following entities: the North Carolina Utilities Commission, the Federal Communications Commission, the Federal Energy Regulatory Commission, or the Federal Aviation Agency; and that owns or operates for public use any plant, equipment, property, franchise, or license for the transmission of communications, the transportation of goods or persons, or the production, storage, transmission, sale, delivery, or furnishing of electricity, water, steam, oil, oil products, or gas. The term also includes a motor carrier of property whose principal business activity is transporting property by motor vehicle for hire over the public highways of this State.
(s)	Transportation Corporation. – All apportionable income of an air transportation corporation or a water transportation corporation shall be apportioned by a fraction, the numerator of which is the corporation's revenue ton miles in this State and the denominator of which is the corporation's revenue ton miles everywhere. A qualified air freight forwarder shall use the revenue ton mile fraction of its affiliated air carrier. The following definitions apply in this subsection:
…
(s2)	Pipeline Company. – Receipts from transportation of a petroleum‑based liquids pipeline company shall be apportioned by multiplying the income by a fraction, the numerator of which is the number of barrel miles in this State during the tax year and the denominator of which is the total number of barrel miles everywhere during the tax year. For purposes of this section, the term "barrel mile" means one barrel of liquid property transported one mile.
…."
SECTION 1.5.(b)  G.S. 105‑130.4(s2), as enacted by subsection (a) of this section, reads as rewritten:
"(s2)	Pipeline Company. – Receipts from transportation of a petroleum‑based liquids pipeline company or a gas pipeline company subject to rate regulation by the Federal Energy Regulatory Commission shall be apportioned by multiplying the income by a fraction, the numerator of which is the number of traffic units in this State during the tax year, and the denominator of which is the total number of traffic units everywhere during the tax year. For purposes of this section, the term "traffic unit" means one of the following:
(1)	Barrel mile. – One barrel of liquid property transported one mile.
(2)	Cubic foot mile. – One cubic foot of gaseous property transported one mile."
SECTION 1.5.(c)  Subsection (a) of this section is effective for taxable years beginning on or after January 1, 2017. If Section 38.7(a) of Senate Bill 257 of the 2017 Regular Session of the 2017 General Assembly is enacted, then subsection (b) of this section becomes effective for taxable years beginning on or after January 1, 2018. The remainder of this section is effective when it becomes law.
SECTION 1.6.(a)  G.S. 105‑130.7B(b)(1) is repealed.
SECTION 1.6.(b)  G.S. 105‑130.7B(b) reads as rewritten:
"(b)	Definitions. – The definitions in G.S. 105‑130.7A apply in this section. In addition, the following definitions apply in this section:
…
(3a)	Proportionate share of interest. – The amount of taxpayer's net interest expense paid or accrued directly to or through a related member to an ultimate payer divided by the total net interest expense of all related members that is paid or accrued directly to or through a related member to the same ultimate payer, multiplied by the interest paid or accrued to a person who is not a related member by the ultimate payer. Any amount that is distributed, paid, or accrued directly or through a related member that is not treated as interest under this Part does not qualify. In determining whether a nominal debt instrument creates deductible interest allowable under this section, the Secretary will not apply the covered debt instrument rules contained in the regulations promulgated under section 385 of the Code.
(4)	Qualified interest expense. – The amount of net interest expense paid or accrued to a related member in a taxable year with the amount limited to the taxpayer's proportionate share of interest paid or accrued to a person who is not a related member during the same taxable year. This limitation does not apply to interest paid or accrued to a related member if one or more of the following applies:
…."
SECTION 1.6.(c)  This section is effective for taxable years beginning on or after January 1, 2017.
SECTION 1.7.(a)  G.S. 105‑131.5 reads as rewritten:
"§ 105‑131.5.  Part‑year resident shareholder.
If a shareholder of an S Corporation is both a resident and nonresident of this State during any taxable period, the shareholder's pro rata share of the S Corporation's income attributable to the State and income not attributable to the State for the taxable period shall be further prorated between the shareholder's periods of residence and nonresidence, in accordance with the number of days in each period, as provided in G.S. 105‑153.4."
SECTION 1.7.(b)  This section is effective for taxable years beginning on or after January 1, 2014.
SECTION 1.8.  G.S. 105‑131.7(a) reads as rewritten:
"(a)	An S Corporation incorporated or doing business in the State shall file with the Department an annual return, on a form prescribed by the Secretary, on or before the due date prescribed for the filing of C Corporation returns in G.S. 105‑130.17. The return shall show the name, address, and social security or federal identification number of each shareholder, income attributable to the State and the income not attributable to the State with respect to each shareholder as defined in G.S. 105‑131(b)(4) and (5), and such other information as the Secretary may require."
SECTION 1.9.(a)  G.S. 105‑134.1 is amended by adding a new subdivision to read:
"(5a)	Guaranteed payments. – Defined in section 707(c) of the Code."
SECTION 1.9.(b)  G.S. 105‑153.3 is amended by adding a new subdivision to read:
"(5a)	Guaranteed payments. – Defined in section 707(c) of the Code."
SECTION 1.9.(c)  G.S. 105‑134.5(d) reads as rewritten:
"(d)	S Corporations and Partnerships. – In order to calculate the numerator of the fraction provided in subsection (b) of this section, the amount of a shareholder's pro rata share of S Corporation income that is includable in the numerator is the shareholder's pro rata share of the S Corporation's income attributable to the State, as defined in G.S. 105‑131(b)(4). In order to calculate the numerator of the fraction provided in subsection (b) of this section for a partner in a partnership or a member of another unincorporated business that has one or more nonresident partners or members and operates in one or more other states, the amount of the partner's or member's distributive share of income of the business plus any guaranteed payments made to a partner from the partnership that is includable in the numerator is determined by multiplying the total net income of the business by the ratio ascertained under the provisions of G.S. 105‑130.4. As used in this subsection, total net income means the entire gross income of the business less all expenses, taxes, interest, and other deductions allowable under the Code that were incurred in the operation of the business."
SECTION 1.9.(d)  G.S. 105‑153.4(d) reads as rewritten:
"(d)	S Corporations and Partnerships. – In order to calculate the numerator of the fraction provided in subsection (b) of this section, the amount of a shareholder's pro rata share of S Corporation income that is includable in the numerator is the shareholder's pro rata share of the S Corporation's income attributable to the State, as defined in G.S. 105‑131(b)(4). In order to calculate the numerator of the fraction provided in subsection (b) of this section for a partner in a partnership or a member of another unincorporated business that has one or more nonresident partners or members and operates in one or more other states, the amount of the partner's or member's distributive share of income of the business plus any guaranteed payments made to a partner from the partnership that is includable in the numerator is determined by multiplying the total net income of the business by the ratio ascertained under the provisions of G.S. 105‑130.4. As used in this subsection, total net income means the entire gross income of the business less all expenses, taxes, interest, and other deductions allowable under the Code that were incurred in the operation of the business."
SECTION 1.9.(e)  G.S. 105‑153.4(d) reads as rewritten:
"(d)	S Corporations and Partnerships. – In order to calculate the numerator of the fraction provided in subsection (b) of this section, the amount of a shareholder's pro rata share of S Corporation income, as modified in G.S. 105‑153.5 and G.S. 105‑153.6, that is includable in the numerator is the shareholder's pro rata share of the S Corporation's income attributable to the State, as defined in G.S. 105‑131(b)(4). In order to calculate the numerator of the fraction provided in subsection (b) of this section for a partner in a partnership or a member of another unincorporated business that has one or more nonresident partners or members and operates in one or more other states, the amount of the partner's or member's distributive share of the total net income of the business, as modified in G.S. 105‑153.5 and G.S. 105‑153.6, plus any guaranteed payments made to a partner from the partnership that is includable in the numerator is determined in accordance with the provisions of G.S. 105‑130.4. As used in this subsection, total net income means the entire gross income of the business less all expenses, taxes, interest, and other deductions allowable under the Code that were incurred in the operation of the business."
SECTION 1.9.(f)  G.S. 105‑154 reads as rewritten:
"§ 105‑154.  Information at the source returns.
…
(c)	Information Returns of Partnerships. – A partnership doing business in this State and required to file a return under the Code shall file an information return with the Secretary. A partnership that the Secretary believes to be doing business in this State and to be required to file a return under the Code shall file an information return when requested to do so by the Secretary. The information return shall contain all information required by the Secretary. It shall state specifically the items of the partnership's gross income, the deductions allowed under the Code, each partner's distributive share of the partnership's income, and the adjustments required by this Part. A partner's distributive share of partnership net income includes any guaranteed payments made to the partner. The information return shall also include the name and address of each person who would be entitled to share in the partnership's net income, if distributable, and the amount each person's distributive share would be. The information return shall be signed by one of the partners under affirmation in the form required by the Secretary.
A partnership that files an information return under this subsection shall furnish to each person who would be entitled to share in the partnership's net income, if distributable, any information necessary for that person to properly file a State income tax return. The information shall be in the form prescribed by the Secretary and must be furnished on or before the due date of the information return.
(d)	Payment of Tax on Behalf of Nonresident Owner or Partner. – If a business conducted in this State is owned by a nonresident individual or by a partnership having one or more nonresident members, the manager of the business shall report information concerning the earnings of the business in this State, the distributive share of the income of each nonresident owner or partner, and any other information required by the Secretary. The distributive share of the income of each nonresident partner includes any guaranteed payments made to the partner. The manager of the business shall pay with the return the tax on each nonresident owner or partner's share of the income computed at the rate levied on individuals under G.S. 105‑153.7. The business may deduct the payment for each nonresident owner or partner from the owner or partner's distributive share of the income of the business in this State. If the nonresident partner is not an individual and the partner has executed an affirmation that the partner will pay the tax with its corporate, partnership, trust, or estate income tax return, the manager of the business is not required to pay the tax on the partner's share. In this case, the manager shall include a copy of the affirmation with the report required by this subsection.
…."
SECTION 1.9.(g)  Subsections (a) and (c) of this section are effective for taxable years beginning before January 1, 2014. Subsections (b) and (d) of this section are effective for taxable years beginning on or after January 1, 2014. Subsection (e) of this section is effective for taxable years beginning on or after January 1, 2015. The remainder of this section is effective when it becomes law, and subsection (f) of this section applies to all taxable years.
SECTION 1.10.(a)  G.S. 105‑228.4A reads as rewritten:
"§ 105‑228.4A.  Tax on captive insurance companies.
(a)	Tax Levied. – A tax is levied in this section on a captive insurance company doing business in this State. In the case of a branch captive insurance company, the tax levied in this section applies only to the branch business of the company. Two or more captive insurance companies, other than a protected cell captive insurance company or a special purpose captive insurance company that is structured in a manner similar to that of a protected cell captive insurance company, under common ownership and control are taxed under this section as a single captive insurance company.
…
(f)	Total Tax Liability. – The aggregate amount of tax payable under this section for a captive insurance company, other than a protected cell captive insurance company or a special purpose captive insurance company that has a cell or series structure similar to that of a protected cell captive insurance company, shall not be less than five thousand dollars ($5,000). The minimum tax under this section for a protected cell captive insurance company or a special purpose captive insurance company that has a cell or series structure similar to that of a protected cell captive insurance company, shall not be less than five thousand dollars ($5,000) and shall apply to the protected cell captive insurance company or special purpose captive insurance company as a whole and not to each cell or series. The maximum tax to be paid by a protected cell captive insurance company or a special purpose captive insurance company that has a cell or series structure, shall be the greater of either five thousand dollars ($5,000) or the aggregate of the tax liabilities of the core and each cell or series within the insurance company.

	

	
	
(g)	For the purposes of this section:
(1)	Common ownership and control shall mean ownership and control of two or more captive insurance companies by the same person.
(2)	Ownership and control shall mean:
a.	In the case of a stock corporation, the direct or indirect ownership of eighty percent (80%) or more of the outstanding voting stock and value of the corporation.
b.	In the case of a mutual or nonprofit corporation, the direct or indirect control of eighty percent (80%) or more of the surplus and voting power of such corporation.
c.	In the case of a limited liability company, the direct or indirect control of eighty percent (80%) or more of the membership interests in the limited liability company."
SECTION 1.10.(b)  This section becomes effective for taxable years beginning on or after January 1, 2017.

part II. sales and use tax
SECTION 2.1.  G.S. 105‑164.3 reads as rewritten:
"§ 105‑164.3.  Definitions.
The following definitions apply in this Article:
…
(1i)	Bundled transaction. – A retail sale of two or more distinct and identifiable products, at least one of which is taxable and one of which is exempt, for one nonitemized price. The term does not apply to real property and services to real property. Products are not sold for one nonitemized price if an invoice or another sales document made available to the purchaser separately identifies the price of each product. A bundled transaction does not include the retail sale of any of the following:
…
(2c)	Capital improvement. – An addition or alteration to real property that is permanently affixed or installed to real property. The term does not include activities listed in subdivision (33l) of this section as repair, maintenance, and installation services. The term does include the following:
a.	New construction, reconstruction, or remodeling.
b.	Performance of work that requires the issuance of a permit under the State Building Code, other than repair or replacement of electrical components, gas logs, water heater, and similar individual items that are not part of new construction, reconstruction, or remodeling.
c.	Installation of utilities on utility‑owned land, right‑of‑way, or easement, notwithstanding that charges for such are included in the gross receipts derived from services subject to the combined general rate under G.S. 105‑164.4.
d.	Installation of equipment or fixture that is attached to real property so that removal of the item would cause physical, functional, or economic damage to the property and that is capitalized under one or more of the following: the Code, generally accepted accounting principles, or International Financial Reporting Standards.
e.	Painting or wallpapering of real property, except where painting or wallpapering is incidental to the repair, maintenance, and installation service.
f.	Replacement or installation of a septic tank system, siding, roof, plumbing, electrical, commercial refrigeration, irrigation, sprinkler, or other similar system. The term does not include the repair, replacement, or installation of electrical or plumbing components, water heaters, gutters, and similar individual items that are not part of new construction, reconstruction, or remodeling.
g.	Replacement or installation of a heating, ventilation, and air conditioning unit or system. The term does not include the repair, replacement, or installation of gas logs, water heaters, pool heaters, and similar individual items that are not part of new construction, reconstruction, or remodeling.
h.	Replacement or installation of roads, driveways, parking lots, patios, decks, and sidewalks.
i.	Services performed to resolve an issue that was part of a real property contract if the services are performed within six months of completion of the real property contract or, for new construction, within 12 months of the new structure being occupied for the first time.
j.	Landscaping.
…
(11b)	Free‑standing appliance. – An appliance commonly thought of as a household machine operated by gas or electric current. Examples include installation of a dishwasher, washing machine, clothes dryer, refrigerator, freezer, microwave, and range, regardless of whether the range is slide‑in or drop‑in.
…
(16e)	Landscaping. – A service that modifies the living elements of an area of land. Examples include the installation of trees, shrubs, or flowers on land; tree trimming; mowing; and the application of seed, mulch, pine straw, pesticide, or fertilizer to an area of land. The term does not include services to trees, shrubs, flowers, and similar items in pots or in buildings.
…
(20b)	Mixed transaction contract. – A contract that includes both a real property contract for a capital improvement and a repair, maintenance, and installation service that is not related to the capital improvement.
…
(23a)	Motor vehicle service contract. – A service contract for a motor vehicle or for one or more components, systems, or accessories for a motor vehicle when sold by a motor vehicle dealer, by a motor vehicle service agreement company, or by a motor vehicle dealer on behalf of a motor vehicle service agreement company. For purposes of this subdivision, the term "motor vehicle dealer" has the same meaning as defined in G.S. 20‑286 and the term "motor vehicle service agreement company" is a person other than a motor vehicle dealer that is an obligor of a service contract for a motor vehicle or for one or more components, systems, or accessories for a motor vehicle and who is not an insurer.
…
(24a)	New construction. – Construction of or site preparation for a permanent new building, structure, or fixture on land or an increase in the square footage of an existing building, structure, or fixture on land.
…
(33d)	Real property. – Any one or more of the following:
a.	Land.
b.	Building or structure on land.
c.	Permanent fixture on land.
d.	A manufactured home or a modular home on land.
(33e)	Real property contract. – A contract between a real property contractor and another person to perform a capital improvement to real property.

(33f)	Real property contractor. – A person that contracts to perform a real property contract in accordance with G.S. 105‑164.4H. The term includes a general contractor, a subcontractor, or a builder for purposes of this Article.
(33g)	Reconstruction. – Rebuild or construct again a prior existing permanent building, structure, or fixture on land and may include a change in the square footage from the prior existing building, structure, or fixture on land.
(33h)	Related member. – Defined in G.S. 105‑130.7A.
(33i)	Remodeling. – A transaction comprised of multiple services to restore, improve, alter, or update real property that may otherwise be subject to tax as repair, maintenance, and installation services if separately performed. The term includes a transaction where the internal structure or design of one or more rooms or areas within a room or building are substantially changed and tangible personal property or digital property is installed or applied and becomes part of real property. The term does not include a single repair, maintenance, and installation service such as installation of carpet, flooring, floor coverings, floor refinishing, windows, doors, cabinets, countertops, and other installations where the item being installed may replace a similar existing item. The term does not include a transaction where the true purpose is a repair, maintenance, and installation service no matter that another repair, maintenance, and installation service is performed that is incidental to the true purpose of the transaction; examples include repair of sheetrock that includes applying paint, replacement of cabinets that includes installation of caulk or molding, and the installation of hardwood floors that includes installation of shoe molding.
(33j)	Remote sale. – A sale of tangible personal property or digital property ordered by mail, by telephone, via the Internet, or by another similar method, to a purchaser who is in this State at the time the order is remitted, from a retailer who receives the order in another state and delivers the property or causes it to be delivered to a person in this State. It is presumed that a resident of this State who remits an order was in this State at the time the order was remitted.
(33k)	Renovation. – Same meaning as the term "remodeling."
(33l)	Repair, maintenance, and installation services. – The term includes the activities listed in this subdivision and applies to tangible personal property, motor vehicle, digital property, and real property. The term does not include services defined as a capital improvement to real property taxed in accordance with G.S. 105‑164.4H:
a.	To keep or attempt to keep property or a motor vehicle in working order to avoid breakdown and prevent deterioration or repairs. Examples include to clean, wash, or polish property.
b.	To calibrate, refinish, restore, or attempt to calibrate, refinish, or restore property or a motor vehicle to proper working order or good condition. This activity may include replacing or putting together what is torn or broken.
c.	To troubleshoot, identify, or attempt to identify the source of a problem for the purpose of determining what is needed to restore property or a motor vehicle to proper working order or good condition. The term includes activities that may lead to the issuance of an inspection report.
d.	To install, apply, connect, adjust, or set into position tangible personal property, digital property, or a motor vehicle. The term includes the installation of carpet, flooring, floor coverings, floor refinishing, windows, doors, cabinets, countertops, and other installations where the item being installed replaces a similar existing item and the installation of the item is not part of a capital improvement.
e.	To inspect or monitor property or a motor vehicle, but does not include security or similar monitoring services for real property.
…
(38b)	Service contract. – A contract where the obligor under the contract agrees to maintain, monitor, inspect, repair, or provide another service included in the definition of repair, maintenance, and installation service to digital property, tangible personal property, or real property for a period of time or some other defined measure. The term does not include a single repair, maintenance, or installation service, but generally includes a contract where the obligor must provide a service included in the definition of repair, maintenance, and installation services as a condition of the contract. The term includes a service contract for a pool, fish tank, or similar aquatic feature and a home warranty. Examples include a warranty agreement other than a manufacturer's warranty or dealer's warranty provided at no charge to the purchaser, an extended warranty agreement, a maintenance agreement, a repair agreement, or a similar agreement or contract.
…."
SECTION 2.2.  G.S. 105‑164.4(a) reads as rewritten:
"(a)	A privilege tax is imposed on a retailer engaged in business in the State at the percentage rates of the retailer's net taxable sales or gross receipts, listed in this subsection. The general rate of tax is four and three‑quarters percent (4.75%). The percentage rates are as follows:
(1)	The general rate of tax applies to the sales price of each item or article of tangible personal property that is sold at retail and is not subject to tax under another subdivision in this section. A sale of a free‑standing appliance is a retail sale of tangible personal property. This subdivision does not apply to repair, maintenance, and installation services for real property; these services are taxable under subdivision (16) of this subsection.
…
	
…
(16)	The general rate applies to the sales price of or the gross receipts derived from repair, maintenance, and installation services and generally includes any tangible personal property or digital property that becomes a part of or is applied to a purchaser's property. A mixed transaction contract and a real property contract are taxed in accordance with G.S. 105‑164.4H."
SECTION 2.3.  G.S. 105‑164.4B(a) reads as rewritten:
"(a)	General Principles. – The following principles apply in determining where to source the sale of a product. Except as otherwise provided in this section, a service is sourced where the purchaser can potentially first make use of the service. These principles apply regardless of the nature of the product, except as otherwise noted in this section:
…."
SECTION 2.4.(a)  G.S. 105‑164.4H(b1) and (e) are repealed.
SECTION 2.4.(b)  G.S. 105‑164.4H, as amended by subsection (a) of this section, reads as rewritten:
"§ 105‑164.4H.  Real property contract.
(a)	Applicability. – A real property contractor is the consumer of the tangible personal property or digital property that the real property contractor purchases, installs, or applies for others to fulfill a real property contract and that becomes part of real property or used to fulfill the contract. A retailer engaged in business in the State shall collect tax on the sales price of the tangible personal property, digital property, or service sold at retail to a real property contractor unless a statutory exemption in G.S. 105‑164.13 or G.S. 105‑164.13E applies. Where a real property contractor purchases tangible personal property or digital property for storage, use, or consumption in this State, or a service sourced to this State, and the tax due is not paid at the time of purchase, the provisions of G.S. 105‑164.6 apply except as provided in subsection (b) of this section.
(a1)	Substantiation. – Generally, services to real property are retail sales of, or the gross receipts derived from, repair, maintenance, and installation services and subject to tax in accordance with G.S. 105‑164.4(a)(16) unless a person substantiates that a transaction is subject to tax as a real property contract in accordance with subsection (a) of this section, subject to tax as a mixed transaction in accordance with subsection (d) of this section, or the transaction is not subject to tax. A person may substantiate that a transaction is a real property contract or a mixed transaction by records that establish the transaction is a real property contract or by receipt of an affidavit of capital improvement or a mixed transaction. The receipt of an affidavit of capital improvement, absent fraud or other egregious activities, establishes that the subcontractor or other person receiving the affidavit should treat the transaction as a capital improvement, and the transaction is subject to tax in accordance with subsection (a) of this section. A person that issues an affidavit of capital improvement is liable for any additional tax due on the transaction, in excess of tax paid on related purchases under subsection (a) of this section, if it is determined that the transaction is not a capital improvement but rather the transaction is subject to tax as a retail sale. A person who receives an affidavit of capital improvement from another person, absent fraud or other egregious activities, is not liable for any additional tax on the gross receipts from the transaction if it is determined that the transaction is not a capital improvement.
The Secretary may establish guidelines for transactions where an affidavit of capital improvement is not required, but rather a person may establish by records that such transactions are subject to tax in accordance with subsection (a) of this section.
(b)	Retailer‑Contractor. – This section applies to a retailer‑contractor as follows:
(1)	Acting as a real property contractor. – A retailer‑contractor acts as a real property contractor when it contracts to perform a real property contract. A retailer‑contractor that purchases tangible personal property or digital property to be installed or applied to real property to fulfill the contract may purchase those items exempt from tax under a certificate of exemption pursuant to G.S. 105‑164.28 provided the retailer‑contractor also purchases inventory items or services from the seller for resale. When the property is withdrawn from inventory and installed or applied to real property, use tax must be accrued and paid on the retailer‑contractor's purchase price of the property. Property that the retailer‑contractor withdraws from inventory for use that does not become part of real property is also subject to the tax imposed by this Article.
(2)	Acting as a retailer. – A retailer‑contractor is acting as a retailer when it makes a sale at retail.
…
(d)	Mixed Transaction Contract. – A mixed transaction contract is taxable as follows:
(1)	If the sales price of the taxable repair, maintenance, and installation services included in the contract is less than or equal to twenty‑five percent (25%) of the contract price, then the repair, maintenance, and installation services portion of the contract, and the tangible personal property, digital property, or service used to perform those services, are taxable as a real property contract in accordance with this section.
(2)	If the sales price of the taxable repair, maintenance, and installation services included in the contract is greater than twenty‑five percent (25%) of the contract price, then sales and use tax applies to the sales price of or the gross receipts derived from the taxable repair, maintenance, and installation services portion of the contract. The person must determine an allocated price for the taxable repair, maintenance, and installation services in the contract based on a reasonable allocation of revenue that is supported by the person's business records kept in the ordinary course of business. Any purchase of tangible personal property or digital property to fulfill the real property contract is taxed in accordance with this section."
SECTION 2.4.(c)  G.S. 105‑164.6(b) reads as rewritten:
"(b)	Liability. – The tax imposed by this section is payable by the person who purchases, leases, or rents tangible personal property or digital property or who purchases a service. If the property purchased becomes a part of real property in the State, the real property contractor, the retailer‑contractor, the subcontractor, the lessee, and the owner are jointly and severally liable for the tax, except as provided in G.S. 105‑164.4H(a) regarding receipt of an affidavit of capital improvement. The liability of a real property contractor, a retailer‑contractor, a subcontractor, a lessee, or an owner who did not purchase the property is satisfied by receipt of an affidavit from the purchaser certifying that the tax has been paid."
SECTION 2.4.(d)  G.S. 105‑164.15A(a)(2) reads as rewritten:
"(a)	General Rate Items. – The effective date of a tax change for tangible personal property, digital property, or services taxable under this Article is administered as follows:
…
(2)	For a taxable item that is not billed on a monthly or other periodic basis, a tax change applies to amounts received for items provided on or after the effective date, except amounts received for items purchased to fulfill a real property contract for a capital improvement entered into or awarded before the effective date or entered into or awarded pursuant to a bid made before the effective date."
SECTION 2.4.(e)  G.S. 105‑468.1 reads as rewritten:
"§ 105‑468.1.  Certain building materials exempt from sales and use taxes.
The provisions of this Article shall not be applicable with respect to any tangible personal property or digital property purchased for the purpose of fulfilling a real property contract for a capital improvement entered into or awarded, or entered into or awarded pursuant to any bid made, before the effective date of the tax imposed by a taxing county when, absent the provisions of this section, such property would otherwise be subject to tax under the provisions of this Article."
SECTION 2.5.(a)  G.S. 105‑164.4I(b) is repealed.
SECTION 2.5.(b)  G.S. 105‑164.4I(c) reads as rewritten:
"(c)	Exceptions. – The tax imposed by this section does not apply to any of the following:
(1)	A security or similar monitoring contract for real property.
(2)	A contract to provide a certified operator for a wastewater system."
SECTION 2.6.  G.S. 105‑164.13 reads as rewritten:
"§ 105‑164.13.  Retail sales and use tax.
The sale at retail and the use, storage, or consumption in this State of the following tangible personal property, digital property, and services are specifically exempted from the tax imposed by this Article:
…
(61)	A motor vehicle service contract.
(61a)	The sales price of or the gross receipts derived from the repair, maintenance, and installation services and service contracts listed in this subdivision are exempt from tax. For purposes of this exemption, property and services used to fulfill either a repair, maintenance, or installation service or a service contract exempt from tax under this subdivision are taxable, other than property and services used to fulfill a service or contract exempt under sub‑subdivision a. of this subdivision.
a.	An item exempt from tax under this Article. This exemption does not apply to water for a pool, fish tank, or similar aquatic feature or to a motor vehicle, except as provided under subdivision (62a) of this section.
b.	A motor vehicle emissions and safety inspection fee imposed pursuant to G.S. 20‑183.7, provided the fee is separately stated on the invoice or other documentation provided to the purchaser at the time of the sale.
c.	Services performed for a person by a related member.
	
d.	Cleaning of real property, except where the service constitutes a part of the gross receipts derived from the rental of an accommodation subject to tax under G.S. 105‑164.4 or for a pool, fish tank, or other similar aquatic feature. Examples of cleaning of real property include custodial services, window washing, mold remediation services, carpet cleaning, removal of debris from gutters, removal of dust and other pollutants from ductwork, and power washing other than for a pool.
e.	Services on roads, driveways, parking lots, and sidewalks.
f.	Removal of waste, trash, debris, grease, snow, and other similar items from property, other than a motor vehicle. The exemption applies to household and commercial trash collection and removal services. The exemption applies to the removal of septage from property, including motor vehicles, but does not include removal of septage from portable toilets.
g.	The following inspection reports, including services required to prepare the reports:
1.	A home inspection related to the preparation for or the sale of real property.
2.	An inspection report prepared by a person who is required to obtain a State privilege license under G.S. 105‑41.
	
h.	Alteration and repair of clothing, except where the service constitutes a part of the gross receipts derived from the rental of clothing subject to tax under G.S. 105‑164.4 or for alteration and repair of belts and shoes.
i.	Pest control service.
j.	Moving services.
k.	Self‑service car washes and vacuums.
l.	A transmission, distribution, or other network asset contained on utility‑owned land, right‑of‑way, or easement.
m.	A qualified aircraft or a qualified jet engine.
…
(61c)	Installation charges that are a part of the sales price of tangible personal property purchased by a real property contractor to fulfill a real property contract for an item that is installed or applied to real property, provided the installation charges are separately stated and identified as such on the invoice or other documentation given to the real property contractor at the time of the sale. The exemption also applies to installation charges by a retailer‑contractor when performing installation services for a real property contract. The exemption includes any labor costs provided by the real property contractor, including employees' wages, or labor purchased from a third party that would otherwise be included in the definition of "purchase price."
…
(62)	An item or repair, maintenance, and installation services purchased or used to fulfill a service contract taxable under this Article if the purchaser of the contract is not charged for the item or services. For purposes of this exemption, the term "item" does not include a tool, equipment, supply, or similar tangible personal property that is not deemed to be a component or repair part of the tangible personal property, real property, or digital property for which a service contract is sold to a purchaser.
…
(65)	This subdivision expires January 1, 2020. Sales of the following to a professional motorsports racing team or a related member of a team for use in competition in a sanctioned race series:
a.	The sale, lease, or rental of an engine.
b.	The sales price of or gross receipts derived from a service contract on, or repair, maintenance, and installation services for, a transmission, an engine, rear‑end gears, and any other item that is purchased, leased, or rented and that is exempt from tax under this subdivision or that is allowed a sales tax refund under G.S. 105‑164.14A(a)(5).
c.	The gross receipts derived from an agreement to provide an engine to a professional motorsports racing team or related member of a team for use in competition in a sanctioned race series, where such agreement does not meet the definition of a "service contract" as defined in G.S. 105‑164.3 but may meet the definition of the term "lease or rental" as defined in G.S. 105‑164.3.
…."
SECTION 2.7.(a)  G.S. 105‑164.14(a) reads as rewritten:
"(a)	Interstate Carriers. – An interstate carrier is allowed a refund, in accordance with this section, of part of the sales and use taxes paid by it on the purchase in this State of railway cars and locomotives, and fuel, lubricants, repair parts, accessories, service contracts other than motor vehicle service contracts, and repair, maintenance, and installation services for a motor vehicle, railroad car, locomotive, or airplane the carrier operates. An "interstate carrier" is a person who is engaged in transporting persons or property in interstate commerce for compensation. The Secretary shall prescribe the periods of time, whether monthly, quarterly, semiannually, or otherwise, with respect to which refunds may be claimed, and shall prescribe the time within which, following these periods, an application for refund may be made.
An applicant for refund shall furnish the following information and any proof of the information required by the Secretary:
(1)	A list identifying the railway cars, locomotives, fuel, lubricants, repair parts, accessories, service contracts other than motor vehicle service contracts, and repair, maintenance, and installation services purchased by the applicant inside or outside this State during the refund period.
.…"
SECTION 2.7.(b)  This section becomes effective retroactively to March 1, 2016.
SECTION 2.8.(a)  If the Secretary of Revenue determines that a seller paid sales and use taxes on a product and the seller uses the product as part of a taxable repair, maintenance, and installation service to real property, the Secretary may allow the seller to offset the sales tax liability on the taxable repair, maintenance, and installation service with the sales and use tax paid on the products provided the retailer can support the amount of tax originally paid. A retailer entitled to a credit for tax originally paid under this provision may reduce taxable receipts by the taxable amount of the credit for the period in which the credit occurs.
SECTION 2.8.(b)  The Revenue Laws Study Committee is directed to study the feasibility of providing a seller of taxable repair, maintenance, and installation services to real property the option of paying sales tax on the property used to fulfill the repair, maintenance, and installation service at the time the property is purchased and offsetting the sales tax liability on the taxable repair, maintenance, and installation service with the sales and use tax paid on the products. Subsection (a) of this section provides sellers this option until July 1, 2018. The Revenue Laws Study Committee must recommend to the 2018 Regular Session of the 2017 General Assembly whether this option should be allowed on a permanent basis.
SECTION 2.8.(c)  Subsection (a) of this section becomes effective retroactively to January 1, 2017, and expires on July 1, 2018. The remainder of this section is effective when it becomes law.
SECTION 2.9.(a)  G.S. 105‑164.13 reads as rewritten:
"§ 105‑164.13.  Retail sales and use tax.
The sale at retail and the use, storage, or consumption in this State of the following tangible personal property, digital property, and services are specifically exempted from the tax imposed by this Article:
…
(43)	Custom computer software. Custom computer software and the portion of prewritten computer software that is modified or enhanced if the modification or enhancement is designed and developed to the specifications of a specific purchaser and the charges for the modification or enhancement are separately stated on the invoice or similar billing document given to the purchaser at the time of the sale.
…
(57a)	Fuel, piped natural gas, and electricity sold to a person subject to tax on certain tangible personal property pursuant to G.S. 105‑187.51B(a)(6) for use in recycling at its facility at which the primary activity is recycling.
…."
SECTION 2.9.(b)  G.S. 105‑164.14(b) reads as rewritten:
"(b)	Nonprofit Entities and Hospital Drugs. – A nonprofit entity is allowed a semiannual refund of sales and use taxes paid by it under this Article on direct purchases of tangible personal property and services for use in carrying on the work of the nonprofit entity. Sales and use tax liability indirectly incurred by a nonprofit entity through reimbursement to an authorized person of the entity for the purchase of tangible personal property and services for use in carrying on the work of the nonprofit entity is considered a direct purchase by the entity. Sales and use tax liability indirectly incurred by a nonprofit entity on building materials, supplies, fixtures, and equipment that become a part of or annexed to any building or structure that is owned or leased by the nonprofit entity and is being erected, altered, or repaired for use by the nonprofit entity for carrying on its nonprofit activities is considered a sales or use tax liability incurred on direct purchases by the nonprofit entity. The refund allowed under this subsection does not apply to purchases of electricity, telecommunications service, ancillary service, piped natural gas, video programming, or a prepaid meal plan. A request for a refund must be in writing and must include any information and documentation required by the Secretary. A request for a refund for the first six months of a calendar year is due the following October 15; a request for a refund for the second six months of a calendar year is due the following April 15. The aggregate annual refund amount allowed an entity under this subsection for the State's fiscal year may not exceed thirty‑one million seven hundred thousand dollars ($31,700,000).
The refunds allowed under this subsection do not apply to an entity that is owned and controlled by the United States or to an entity that is owned or controlled by the State and is not listed in this subsection. A hospital that is not listed in this subsection is allowed a semiannual refund of sales and use taxes paid by it on over‑the‑counter drugs purchased for use in carrying out its work. The following nonprofit entities are allowed a refund under this subsection:
.…"
SECTION 2.9.(c)  G.S. 105‑467 reads as rewritten:
"§ 105‑467.  Scope of sales tax.
…
(b)	Exemptions and Refunds. – The State exemptions and exclusions contained in Article 5 of Subchapter I of this Chapter, except for the exemption for food in G.S. 105‑164.13B, apply to the local sales and use tax authorized to be levied and imposed under this Article. The State refund provisions contained in G.S. 105‑164.14 and G.S. 105‑164.14A apply to the local sales and use tax authorized to be levied and imposed under this Article. A refund of an excessive or erroneous State sales tax collection allowed under G.S. 105‑164.11 and a refund of State sales tax paid on a rescinded sale or cancelled service contract under G.S. 105‑164.11A apply to the local sales and use tax authorized to be levied and imposed under this Article. The aggregate annual local refund amount allowed an entity under G.S. 105‑164.14(b) for the State's fiscal year may not exceed thirteen million three hundred thousand dollars ($13,300,000).
Except as provided in this subsection, a taxing county may not allow an exemption, exclusion, or refund that is not allowed under the State sales and use tax. A local school administrative unit and a joint agency created by interlocal agreement among local school administrative units pursuant to G.S. 160A‑462 to jointly purchase food service‑related materials, supplies, and equipment on their behalf is allowed an annual refund of sales and use taxes paid by it under this Article on direct purchases of tangible personal property and services. Sales and use tax liability indirectly incurred by the entity as part of a real property contract for real property that is owned or leased by the entity and is a capital improvement for use by the entity is considered a sales or use tax liability incurred on direct purchases by the entity for the purpose of this subsection. The refund allowed under this subsection does not apply to purchases of electricity, telecommunications service, ancillary service, piped natural gas, video programming, or a prepaid meal plan. A request for a refund is due in the same time and manner as provided in G.S. 105‑164.14(c). Refunds applied for more than three years after the due date are barred.
(c)	Sourcing. – The sourcing principles in Article 5 of Subchapter I of this Chapter apply in determining whether the local sales tax applies to a transaction."
SECTION 2.9.(d)  G.S. 105‑468 reads as rewritten:
"§ 105‑468.  Scope of use tax.
The use tax authorized by this Article is a tax at the rate of one percent (1%) of the purchase price of an item or transaction that is not sold in the taxing county but is for storage, use, or consumption in the taxing county and sourced in accordance with Article 5 of Subchapter I of this Chapter. The tax applies to the same items that are subject to tax under G.S. 105‑467. The collection and administration of this tax shall be in accordance with Article 5 of Subchapter I of this Chapter.
Where a local sales or use tax was due and has been paid on an item or transaction by the purchaser in another taxing county within the State, or where a local sales or use tax was due and has been paid in a taxing jurisdiction outside the State where the purpose of the tax is similar in purpose and intent to the tax which may be imposed pursuant to this Article, the tax paid may be credited against the tax imposed under this section by a taxing county upon the same property or transaction. If the amount of sales or use tax so paid is less than the amount of the use tax due the taxing county under this section, the purchaser shall pay to the Secretary an amount equal to the difference between the amount so paid in the other taxing county or jurisdiction and the amount due in the taxing county. The Secretary may require such proof of payment in another taxing county or jurisdiction as is deemed to be necessary. The use tax levied under this Article is not subject to credit for payment of any State sales or use tax not imposed for the benefit and use of counties and municipalities. No credit shall be given under this section for sales or use taxes paid in a taxing jurisdiction outside this State if that taxing jurisdiction does not grant similar credit for sales taxes paid under this Article."
SECTION 2.9.(e)  G.S. 105‑471 reads as rewritten:
"§ 105‑471.  Retailer to collect sales tax.
Every retailer whose place of business is in a taxing county shall on and after the levy of the tax herein authorized collect the one percent (1%) local sales tax provided by this Article. A retailer is required to collect a local use tax on a transaction if a local sales tax does not apply to the transaction in accordance with G.S. 105‑164.8(c).
The tax to be collected under this Article shall be collected as a part of the sales price of an item or transaction subject to tax in accordance with G.S. 105‑467. The tax shall be stated and charged separately from the sales price or purchase price and shall be shown separately on the retailer's sales record and shall be paid by the purchaser to the retailer as trustee for and on account of the State or county wherein the tax is imposed. It is the intent and purpose of this Article that the local sales and use tax herein authorized to be imposed and levied by a taxing county shall be added to the sales price and that the tax shall be passed on to the purchaser instead of being borne by the retailer. The Secretary of Revenue shall design, print and furnish to all retailers in a taxing county in which he shall collect and administer the tax the necessary forms for filing returns and instructions to insure the full collection from retailers, and the Secretary may adapt the present form used for the reporting and collecting of the State sales and use tax to this purpose."
SECTION 2.9.(f)  G.S. 105‑474 reads as rewritten:
"§ 105‑474.  Definitions; construction of Article; remedies and penalties.
The definitions set forth in Article 5 of Subchapter I of this Chapter shall apply to this Article insofar as such definitions are not inconsistent with the provisions of this Article, and all other provisions of Articles 5 and 9 of Subchapter I of this Chapter as the same relate to the North Carolina Sales and Use Tax Act shall be applicable to this Article unless such provisions are inconsistent with the provisions of this Article. The administrative interpretations made by the Secretary of Revenue with respect to the North Carolina Sales and Use Tax Act, to the extent not inconsistent with the provisions of this Article, may be uniformly applied in the construction and interpretation of this Article. It is the intention of this Article that the provisions of this Article and the provisions of the North Carolina Sales and Use Tax Act, insofar as practicable, shall be harmonized.
The provisions with respect to remedies and penalties applicable to the North Carolina Sales and Use Tax Act, as contained in Articles 5 and 9 of Subchapter I of this Chapter, shall be applicable in like manner to the tax authorized to be levied and collected under this Article, to the extent that the same are not inconsistent with the provisions of this Article."
SECTION 2.9.(g)  G.S. 105‑187.31 reads as rewritten:
"§ 105‑187.31.  Tax imposed.
A privilege tax is imposed on a dry‑cleaning solvent retailer at a flat rate for each gallon of dry‑cleaning solvent sold by the retailer to a dry‑cleaning facility. An excise tax is imposed on dry‑cleaning solvent purchased for storage, use, or consumption by a dry‑cleaning facility in this State. The rate of the privilege tax and the excise tax is ten dollars ($10.00) for each gallon of halogenated hydrocarbon‑based dry‑cleaning solvent and one dollar and thirty‑five cents ($1.35) for each gallon of hydrocarbon‑based dry‑cleaning solvent. These taxes are in addition to all other taxes."
SECTION 2.10.  Except as otherwise provided, Sections 2.1 through 2.8 of this part become effective retroactively to January 1, 2017, and apply to sales and purchases made on or after that date. Any amendments made in Sections 2.1 through 2.8 of this part that increase sales or use tax liability are effective when this act becomes law. The remainder of this part is effective when it becomes law.

part III. Tax collection and Enforcement
SECTION 3.1.(a)  G.S. 105‑236(a) is amended by adding a new subdivision to read:
"(a)	Penalties. – The following civil penalties and criminal offenses apply:
…
(9b)	Identity Theft. – A person who knowingly obtains, possesses, or uses identifying information of another person, living or dead, with the intent to fraudulently utilize that information in a submission to the Department to obtain anything of value, benefit, or advantage for themselves or another is guilty of a Class G felony. If the person whose identifying information is obtained, possessed, or used by another in this manner suffers any adverse financial impact as a proximate result of the offense, then the person who obtained, possessed, or used the identifying information is guilty of a Class F felony. Each person's identity obtained, possessed, or used in this manner shall count as a separate offense. The term "identifying information" as used in this subdivision includes the following:
a.	Legal name.
b.	Date of birth.
c.	Social Security Number.
d.	Taxpayer Identification Number.
e.	Federal Identification Number.
f.	Bank account numbers.
g.	Federal or State tax or tax return information.
…."
SECTION 3.1.(b)  This section becomes effective December 1, 2017, and applies to offenses committed on or after that date.
SECTION 3.2.  G.S. 105‑251.2 is amended by adding the following new subsections to read:
"(c)	Payment Settlement Entity. – For any year in which a payment settlement entity is required to make a return pursuant to section 6050W of the Code, the entity shall submit the information in the return to the Secretary at the time the return is made. For purposes of this subsection, the term "payment settlement entity" has the same meaning as provided in section 6050W of the Code.
(d)	Electronic Format. – All reports submitted to the Department of Revenue under this section shall be in an electronic format as requested by the Secretary. Any report not timely filed under this section is subject to a penalty of one thousand dollars ($1,000)."
SECTION 3.3.(a)  G.S. 39‑23.1 is amended by adding a new subdivision to read:
"(14)	Voidable transaction. – The term does not include payment to the State or a political subdivision of the State of taxes, debts, fines, penalties, or other obligations or amounts."
SECTION 3.3.(b)  G.S. 39‑23.8(e) reads as rewritten:
"(e)	A transfer is not voidable under G.S. 39‑23.4(a)(2) or G.S. 39‑23.5 if the transfer results from:
(1)	Termination of a lease upon default by the debtor when the termination is pursuant to the lease and applicable law; or
(2)	Enforcement of a security interest in compliance with Article 9 of Chapter 25 of the General Statutes, the Uniform Commercial Code, other than acceptance of collateral in full or partial satisfaction of the obligation it secures.
(3)	The payment of taxes, debts, fines, penalties, or other obligations or amounts to the State or to any political subdivision of the State."

part IV. administrative changes
SECTION 4.1.(a)  G.S. 105‑241.7 reads as rewritten:
"§ 105‑241.7.  Procedure for obtaining a refund.
…
(d)	Notice. – A notice of a proposed denial of a request for refund issued pursuant to subsection (c) of this section and a notice of denial of a request for a refund issued pursuant to subsection (c1) of this section must contain the following information:
(1)	The basis for the denial or the proposed denial. The statement of the basis of the denial does not limit the Department from changing the basis.
(2)	The circumstances under which a proposed denial will become final.
…
(f)	Effect of Denial or Refund. – A proposed denial of a refund and a denial of a refund by the Secretary are presumed to be correct. A refund does not absolve a taxpayer of a tax liability that may in fact exist. The Secretary may propose an assessment for any deficiency as provided in this Article."
SECTION 4.1.(b)  G.S. 105‑241.11 reads as rewritten:
"§ 105‑241.11.  Requesting review of a proposed denial of a refund or a proposed assessment.
(a)	Procedure. – A taxpayer who objects to a proposed denial of a refund or a proposed assessment of tax may request a Departmental review of the proposed action by filing a request for review. The request for review must be in the form prescribed by the Secretary and include an explanation for the request for review. The request must be filed with the Department as follows:
(1)	Within 45 days of the date the notice of the proposed denial of the refund or proposed assessment was mailed to the taxpayer, if the notice was delivered by mail.
(2)	Within 45 days of the date the notice of the proposed denial of the refund or proposed assessment was delivered to the taxpayer, if the notice was delivered in person.
(3)	At any time between the date that inaction by the Department on a request for refund is considered a proposed denial of the refund and the date the time periods set in the other subdivisions of this subsection expire.
(b)	Filing. – A request for a Departmental review of a proposed denial of a refund or a proposed assessment is considered filed on the following dates:
(1)	For a request that is delivered in person, the date it is delivered.
(2)	For a request that is mailed, the date determined in accordance with G.S. 105‑263.
(3)	For a request delivered by another method, the date the Department receives it.
(c)	FTP Penalty. – A request for a Departmental review of a proposed assessment is considered a request for a Departmental review of a failure to pay penalty that is based on the assessment. A taxpayer who does not request a Departmental review of a proposed assessment may not request a Departmental review of a failure to pay penalty that is based on the assessment but is assessed on a subsequent date in another notice."
SECTION 4.1.(c)  Article 9 of Chapter 105 of the General Statutes is amended by adding the following new section to read:
"§ 105‑241.13A.  Taxpayer inaction.
(a)	Consequence of Inaction. – If a taxpayer makes no response to the Department's request for additional information under G.S. 105‑241.13(a) by the requested response date, the proposed denial of a refund or the proposed assessment becomes final as provided in this section. The Department must send the taxpayer a notice stating that the proposed denial of a refund or the proposed assessment becomes final 10 days from the date of the notice of inaction unless the taxpayer responds to the Department. A proposed denial of a refund or a proposed assessment that becomes final is not subject to further administrative or judicial review. A taxpayer may not file another amended return or claim for refund to obtain the denied refund. Upon payment of the tax, the taxpayer may request a refund of the tax. 
(b)	Notice of Collection. – Before the Department collects a proposed assessment that becomes final under this section, the Department must send the taxpayer a notice of collection containing the information required under G.S. 105‑241.12."
SECTION 4.1.(d)  G.S. 105‑241.13 reads as rewritten:
"§ 105‑241.13.  Action on request for review.
(a)	Action on Request. – If a taxpayer files a timely request for a Departmental review of a proposed denial of a refund or a proposed assessment, the Department must conduct a review of the proposed denial or proposed assessment and do one or more of the following:
(1)	Grant the refund or remove the assessment.
(2)	Adjust the amount of tax due or refund owed.
(3)	Request additional information from the taxpayer concerning the requested refund or proposed assessment. If a taxpayer makes no response to the Department's request for additional information by the requested response date, the refund or assessment shall be subject to the provisions of G.S. 105‑241.13A.
(a1)	Payment by Taxpayer. – If a taxpayer timely requests a Departmental review of a proposed assessment and thereafter pays the amount due or the amount due as adjusted by the Department, the Department may accept payment and take no further action on the request for Departmental review, unless the taxpayer states in writing that the taxpayer wishes to continue the Departmental review. If the review is not continued, the taxpayer may request a refund of taxes paid pursuant to G.S. 105‑241.7(b).
(b)	Conference. – When the Department and the taxpayer agree that an action taken under subsection (a) or (a1) of this section resolves the taxpayer's objection to the Department's proposed denial of a refund or a proposed assessment, the Department does not need to take further action on the request for review. When an action taken under subsection (a) or (a1) of this section do not resolve the taxpayer's objection to the Department's proposed denial of a refund or a proposed assessment, the Department must schedule a conference with the taxpayer. The Department must set the time and place for the conference, which may include a conference by telephone, and must send the taxpayer notice of the designated time and place. The Department must send the notice at least 30 days before the date of the conference or, if the Department and the taxpayer agree, within a shorter period.
The conference is an informal proceeding at which the taxpayer and the Department must attempt to resolve the case. Testimony under oath is not taken, and the rules of evidence do not apply. A taxpayer may designate a representative to act on the taxpayer's behalf. The taxpayer may present any objections to the proposed denial of refund or proposed assessment at the conference and is not limited by the explanation set forth in the taxpayer's request for review.
(c)	After Conference. – One of the following must occur after the Department conducts a conference on a proposed denial of a refund or a proposed assessment:
(1)	The Department and the taxpayer agree on a resolution.
(2)	The Department and the taxpayer agree that additional time is needed to resolve the taxpayer's objection to the proposed denial of the refund or proposed assessment.
(3)	The Department and the taxpayer are unable to resolve the taxpayer's objection to the proposed denial of the refund or proposed assessment. If a taxpayer fails to attend a scheduled conference on the proposed denial of a refund or a proposed assessment without prior notice to the Department, the Department and the taxpayer are considered to be unable to resolve the taxpayer's objection."
SECTION 4.1.(e)  G.S. 105‑241.16 reads as rewritten:
"§ 105‑241.16.  Judicial review of decision after contested case hearing.
A party aggrieved by the final decision in a contested case commenced at the Office of Administrative Hearings may seek judicial review of the decision in accordance with Article 4 of Chapter 150B of the General Statutes. Notwithstanding G.S. 150B‑45, a petition for judicial review must be filed in the Superior Court of Wake County and in accordance with the procedures for a mandatory business case set forth in G.S. 7A‑45.4(b) through (f). Before filing a petition for judicial review, a taxpayer must pay the amount of tax, penalties, and interest the final decision states is due. A party may appeal a decision of the Business Court to the appellate division in accordance with G.S. 150B‑52."
SECTION 4.2.  G.S. 105‑241.22 reads as rewritten:
"§ 105‑241.22.  Collection of tax.
The Department may collect a tax in the following circumstances:
…
(2)	When the Department sends a notice of collection after a taxpayer does not file a timely request for a Departmental review of a proposed assessment of tax or based upon taxpayer inaction in accordance with G.S. 105‑241.13A.
…."
SECTION 4.3.(a)  G.S. 105‑113.4A reads as rewritten:
"§ 105‑113.4A.  Licenses.
…
(c)	Denial. – The Secretary may investigate an applicant for a license required under this Article to determine if the information the applicant submits with the application is accurate and if the applicant is eligible to be licensed under this Article. The Secretary may refuse to issue a license to an applicant that has done any of the following:
…
(2)	Had a license issued under this Article revoked by the Secretary.
(3)	Had a tobacco products license or registration issued by another state revoked.
(d)	Refund. – A refund of a license tax is allowed only when the tax was collected or paid in error. No refund is allowed when a licensee surrenders a license or the Secretary revokes a license.
(e)	Duplicate or Amended License. – Upon application to the Secretary, a licensee may obtain without charge a duplicate or amended license as provided in this subsection. A duplicate or amended license must state that it is a duplicate or amended license, as appropriate:
(1)	A duplicate license, if the licensee establishes that the original license has been lost, destroyed, or defaced.
(2)	An amended license, if the licensee establishes that the location of the place of business for which the license was issued has changed.
(f)	Information on License. – The Secretary must include the following information on each license required by this Article:
(1)	The legal name of the licensee.
(2)	The name under which the licensee conducts business.
(3)	The physical address of the place of business of the licensee.
(4)	The account number assigned to the license by the Department.
(g)	Records. – The Secretary must keep a record of the following:
(1)	Applicants for a license under this Article.
(2)	Persons to whom a license has been issued under this Article.
(3)	Persons that hold a current license issued under this Article, by license category.
(h)	Lists. – The Secretary must provide the list required under subsection (g) of this section upon request of a manufacturer that is a licensee under this Article. The list must state the name, account number, and business address of each licensee on the list."
SECTION 4.3.(b)  G.S. 105‑113.4B reads as rewritten:
"§ 105‑113.4B.  Cancellation or revocation of license.
(a)	Reasons. – The Secretary may cancel a license issued under this Article upon the written request of the licensee. The Secretary may summarily revoke a license issued under this Article when the Secretary finds that the licensee is incurring liability for the tax imposed under this Article after failing to pay a tax when due under this Article. In addition, the Secretary may revoke the license of a licensee that commits one or more of the following acts after holding a hearing on whether the license should be revoked:
(1)	Fails to obtain a license in a timely manner or for all places of business as required by this Article.
(2)	Willfully fails to file a return required by this Article.
(3)	Willfully fails to pay a tax when due under this Article.
(4)	Makes a false statement in an application or return required under this Article.
(5)	Fails to keep records as required by this Article.
(6)	Refuses to allow the Secretary or a representative of the Secretary to examine the person's books, accounts, and records concerning tobacco product.
(7)	Fails to disclose the correct amount of tobacco product taxable in this State.
(8)	Fails to file a replacement bond or an additional bond if required by the Secretary under this Article.
(9)	Violates G.S. 14‑401.18.
(b)	Procedure. – The Secretary must send a person whose license is summarily revoked a notice of the revocation and must give the person an opportunity to have a hearing on the revocation within 10 days after the revocation. The Secretary must give a person whose license may be revoked after a hearing at least 10 days' written notice of the date, time, and place of the hearing. A notice of a summary license revocation and a notice of hearing must be sent by registered mail to the last known address of the licensee.
(c)	Release of Bond. – When the Secretary cancels or revokes a license and the licensee has paid all taxes and penalties due under this Article, the Secretary must take one of the following actions concerning a bond or an irrevocable letter of credit filed by the licensee:
(1)	Return an irrevocable letter of credit to the licensee.
(2)	Return a bond to the licensee or notify the person liable on the bond and the licensee that the person is released from liability on the bond."
SECTION 4.4.(a)  G.S. 105‑449.44(c) reads as rewritten:
"(c)	Vehicles. – The number of qualified motor vehicles of a motor carrier that is licensed under this Article is the number of sets of decals issued to the carrier. The number of qualified motor vehicles of a carrier that is not licensed under this Article is the number of qualified motor vehicles licensed or registered by the motor carrier in the carrier's base state under the International Registration Plan."
SECTION 4.4.(b)  G.S. 105‑449.45(b) reads as rewritten:
"(b)	Exemptions. – A motor carrier is not required to file a quarterly return if any of the following applies:
(1)	All the motor carrier's operations during the quarter were made under a temporary permit issued under G.S. 105‑449.49.
(2)	The motor carrier is an intrastate motor carrier, as indicated on the motor carrier's application for licensure with the Secretary."
SECTION 4.4.(c)  G.S. 105‑449.47 reads as rewritten:
"§ 105‑449.47.  Licensure of vehicles.
(a)	Requirement. – A motor carrier may not operate or cause to be operated in this State a qualified motor vehicle unless both the motor carrier and at least one qualified motor vehicle are licensed as provided in this subsection. This subsection applies to a motor carrier that operates a recreational vehicle that is used in connection with any business endeavor. A motor carrier that is subject to the International Fuel Tax Agreement must be licensed with the motor carrier's base state jurisdiction. A motor carrier that is not subject to the International Fuel Tax Agreement must be licensed with the Secretary for purposes of the tax imposed by this Article.
(a1)	License and Decal. – When the Secretary licenses a motor carrier, the Secretary must issue a license for the motor carrier and a set of decals for each qualified motor vehicle. A motor carrier must keep records of decals issued to it and must be able to account for all decals it receives from the Secretary. Licenses and decals issued by the Secretary are for a calendar year. All decals issued by the Secretary remain the property of the State. The Secretary may revoke a license or a decal when a motor carrier fails to comply with this Article or Article 36C or 36D of this Subchapter.
A motor carrier must carry a copy of its license in each motor vehicle operated by the motor carrier when the vehicle is in this State. A motor vehicle must clearly display one decal on each side of the vehicle at all times. A decal must be affixed to the qualified motor vehicle for which it was issued in the place and manner designated by the authority that issued it.
(b)	Exemption. – This section does not apply to the operation of a qualified motor vehicle that is licensed in another state and is operated temporarily in this State by a public utility, a governmental or cooperative provider of utility services, or a contractor for one of these entities for the purpose of restoring utility services in an emergency outage."
SECTION 4.4.(d)  G.S. 105‑449.47A reads as rewritten:
"§ 105‑449.47A.  Denial of license application and decal issuance.
The Secretary may refuse to license and issue a decal to an applicant that does not meet the requirements set out in G.S. 105‑449.69(b) or that has done any of the following:
(1)	Had a license issued under Chapter 105 or Chapter 119 of the General Statutes revoked by the Secretary.
(2)	Had a license issued by another jurisdiction, pursuant to the International Fuel Tax Agreement, revoked.
(3)	Been convicted of fraud or misrepresentation.
(4)	Been convicted of any other offense that indicates that the applicant may not comply with this Article if licensed and issued a decal.
(5)	Failed to remit payment for a tax debt under Chapter 105 or Chapter 119 of the General Statutes. The term "tax debt" has the same meaning as defined in G.S. 105‑243.1.
(6)	Failed to file a return due under Chapter 105 or Chapter 119 of the General Statutes."
SECTION 4.4.(e)  G.S. 105‑449.49(a) reads as rewritten:
"(a)	Issuance. – Upon application to the Secretary and payment of a fee of fifty dollars ($50.00), a permitting service may obtain a temporary permit authorizing a motor carrier to operate a vehicle in the State for three days without licensing the vehicle in accordance with G.S. 105‑449.47. The permitting service may sell the temporary permit to a motor carrier. A motor carrier to whom a temporary permit has been issued may elect not to report its operation of the vehicle during the three‑day period. Fees collected under this subsection are credited to the Highway Fund."
SECTION 4.4.(f)  G.S. 105‑449.51 reads as rewritten:
"§ 105‑449.51.  Violations declared to be misdemeanors.
A person who operates or causes to be operated on a highway in this State a qualified motor vehicle that does not carry a license as required by this Article, does not properly display a decal as required by this Article, or is not licensed in accordance with this Article commits a Class 3 misdemeanor and is punishable by a fine of two hundred dollars ($200.00). Each day's operation in violation of this section constitutes a separate offense."
SECTION 4.4.(g)  G.S. 105‑449.52 reads as rewritten:
"§ 105‑449.52.  Civil penalties applicable to motor carriers.
(a)	Penalty. – A motor carrier who does any of the following is subject to a civil penalty:
(1)	Operates in this State or causes to be operated in this State a qualified motor vehicle that either fails to carry the license required by this Article or fails to display a decal in accordance with this Article. The amount of the penalty is one hundred dollars ($100.00).
(2)	Is unable to account for a decal the Secretary issues the motor carrier, as required by G.S. 105‑449.47. The amount of the penalty is one hundred dollars ($100.00) for each decal for which the carrier is unable to account.
(3)	Displays a decal on a qualified motor vehicle operated by a motor carrier that was not issued to the carrier by the Secretary under G.S. 105‑449.47. The amount of the penalty is one thousand dollars ($1,000) for each decal unlawfully obtained. Both the licensed motor carrier to whom the Secretary issued the decal and the motor carrier displaying the unlawfully obtained decal are jointly and severally liable for the penalty under this subdivision.
(a1)	Payment. – A penalty imposed under this section is payable to the agency that assessed the penalty. When a qualified motor vehicle is found to be operating without a license or a decal or with a decal the Secretary did not issue for the vehicle, the qualified motor vehicle may not be driven for a purpose other than to park it until the penalty imposed under this section is paid unless the officer that imposes the penalty determines that operating it will not jeopardize collection of the penalty.
(b)	Penalty Reduction. – The Secretary may reduce or waive the penalty as provided under G.S. 105‑449.119."
SECTION 4.5.(a)  G.S. 105‑449.68 reads as rewritten:
"§ 105‑449.68.  Restrictions on who can get a license as a distributor.
A bulk end‑user of motor fuel may not be licensed as a distributor unless the bulk end‑user also acquires motor fuel from a supplier or from another distributor for subsequent sale. This restriction does not apply to a bulk end‑user that was licensed as a distributor on January 1, 1996. If a distributor license held by a bulk end‑user on January 1, 1996, is subsequently revoked or cancelled, the bulk end‑user is subject to the restriction set in this section."
SECTION 4.5.(b)  G.S. 105‑449.72 reads as rewritten:
"§ 105‑449.72.  Bond or letter of credit required as a condition of obtaining and keeping certain licenses or of applying for certain refunds.
…
(c)	Adjustment to Bond. – When notified to do so by the Secretary, a person that has filed a bond or an irrevocable letter of credit and that holds a license listed in subdivision (a)(2) of this section must file an additional bond or irrevocable letter of credit in the amount requested by the Secretary. The person must file the additional bond or irrevocable letter of credit within 30 days after receiving the notice from the Secretary. The amount of the initial bond or irrevocable letter of credit and any additional bond or irrevocable letter of credit filed by the licensee, however, may not exceed the limits set in subdivision (a)(2) of this section.
(d)	Replacements. – When a licensee files a bond or an irrevocable letter of credit as a replacement for a previously filed bond or letter of credit and the licensee has paid all taxes and penalties due under this Article, the Secretary must take one of the following actions:
(1)	Return the previously filed bond or letter of credit.
(2)	Notify the person liable on the previously filed bond that the person is released from liability on the bond.
…."
SECTION 4.5.(c)  G.S. 105‑449.73 reads as rewritten:
"§ 105‑449.73.  Denial of license application.
The Secretary may refuse to issue a license to an applicant that has done any of the following:
(1)	Had a license or registration issued under this Article or former Article 36 or 36A of this Chapter revoked by the Secretary.
(1a)	Had a motor fuel license or registration issued by another state revoked.
…."
SECTION 4.5.(d)  G.S. 105‑449.74 reads as rewritten:
"§ 105‑449.74.  Issuance of license.
Upon approval of an application, the Secretary must issue a license to the applicant. A supplier's license must indicate the category of the supplier. An importer's license must indicate the category of the importer. A licensee must maintain and display a copy of the license issued under this Part in a conspicuous place at each place of business of the licensee. A license is not transferable and remains in effect until revoked or cancelled."
SECTION 4.5.(e)  G.S. 105‑449.75 reads as rewritten:
"§ 105‑449.75.  Licensee must notify the Secretary of discontinuance of business.
A licensee that stops engaging in this State in the business for which the license was issued must give the Secretary written notice of the change and must surrender the license to the Secretary. The notice must give the date the change takes effect and, if the licensee has transferred the business to another by sale or otherwise, the date of the transfer and the name and address of the person to whom the business is transferred.
The licensee is responsible for all taxes for which the licensee is liable under this Article but are not yet due. If the licensee has transferred the business to another and does not give the notice required by this section, the person to whom the licensee has transferred the business is liable for the amount of any tax the licensee owed the State on the date the business was transferred. The liability of the person to whom the business is transferred is limited to the value of the property acquired from the licensee."
SECTION 4.5.(f)  G.S. 105‑449.76 reads as rewritten:
"§ 105‑449.76.  Cancellation or revocation of license.
(a)	Reasons. – The Secretary may cancel a license issued under this Article upon the written request of the licensee. The Secretary may summarily revoke a license issued under this Article when the Secretary finds that the licensee is incurring liability for the tax imposed under this Article after failing to pay a tax when due under this Article. In addition, the Secretary may revoke the license of a licensee that commits one or more of the acts listed in G.S. 105‑449.120 after holding a hearing on whether the license should be revoked.
(b)	Procedure. – The Secretary must send a person whose license is summarily revoked a notice of the revocation and must give the person an opportunity to have a hearing on the revocation within 10 days after the revocation. The Secretary must give a person whose license may be revoked after a hearing at least 10 days' written notice of the date, time, and place of the hearing. A notice of a summary license revocation and a notice of hearing must be sent by registered mail to the last known address of the licensee.
(c)	Release of Bond. – When the Secretary cancels or revokes a license and the licensee has paid all taxes and penalties due under this Article, the Secretary must take one of the following actions concerning a bond or an irrevocable letter of credit filed by the licensee:
(1)	Return an irrevocable letter of credit to the licensee.
(2)	Return a bond to the licensee or notify the person liable on the bond and the licensee that the person is released from liability on the bond."
SECTION 4.5.(g)  G.S. 105‑449.77(b) reads as rewritten:
"(b)	Lists. – The Secretary must annually give a list to each licensee of all the licensees under this Article. The list must state the name, account number, and business address of each licensee on the list. The Secretary must send a monthly update of the list to each licensed refiner or licensed supplier and to any other licensee that requests a copy of the list."
SECTION 4.5.(h)  G.S. 105‑449.92 reads as rewritten:
"§ 105‑449.92.  Notice to suppliers of cancellation, revocation, or reissuance of certain licenses; effect of notice.
(a)	Notice to Suppliers. – If the Secretary cancels or revokes a distributor's license, an exporter's license, or an importer's license, the Secretary must notify all suppliers of the cancellation or revocation. If the Secretary issues a license to a distributor, an exporter, or an importer whose license was cancelled or revoked, the Secretary must notify all suppliers of the issuance.
(b)	Effect of Notice. – A supplier that sells motor fuel to a distributor after receiving notice from the Secretary that the Secretary has cancelled or revoked the distributor's license is jointly and severally liable with the distributor for any tax due on motor fuel the supplier sells to the distributor after receiving the notice. This joint and several liability does not apply to excise tax due on motor fuel sold to a previously unlicensed distributor after the supplier receives notice from the Secretary that the Secretary has issued another license to the distributor."
SECTION 4.5.(i)  G.S. 105‑449.97(a) reads as rewritten:
"(a)	Taxes Not Remitted. – When a supplier files a return, the supplier may deduct from the amount of tax payable with the return the amount of tax any of the following licensees owes the supplier but failed to remit to the supplier:
(1)	A licensed distributor.
(2)	A licensed importer that removed the motor fuel on which the tax is due from a terminal of an elective or a permissive supplier.
(3)	Repealed by Session Laws 1995, c. 647, s. 32.
A supplier is not liable for tax a licensee listed in this subsection owes the supplier but fails to pay. If a listed licensee pays tax owed to a supplier after the supplier deducts the amount on a return, the supplier must promptly remit the payment to the Secretary."
SECTION 4.5.(j)  G.S. 105‑449.98(b) reads as rewritten:
"(b)	Notice of Fuel Received. – A supplier must notify a licensed distributor, a licensed exporter, or a licensed importer that received motor fuel from the supplier during a reporting period of the number of taxable gallons received. The supplier must give this notice after the end of each reporting period and before the licensee must remit to the supplier the amount of tax due on the fuel."
SECTION 4.5.(k)  G.S. 105‑449.104 reads as rewritten:
"§ 105‑449.104.  Use of name and account number on return.
When a transaction with a person licensed under this Article is required to be reported on a return, the return must state the licensee's name and the account number used by the Department to identify the licensee. The name of a licensee and the licensee's account number is stated on the lists compiled under G.S. 105‑449.77."
SECTION 4.5.(l)  G.S. 105‑449.110(a) reads as rewritten:
"(a)	Decision. – Upon determining that an application for refund is correct, the Secretary must issue the applicant a warrant upon the State Treasurer for the amount of the refund. If the Secretary determines that an application for refund is incorrect, the Secretary must send the applicant a proposed denial of the request for a refund. The provisions of Article 9 of this Chapter apply to the procedure for requesting a review of proposed denial of a refund sought under this Article."
SECTION 4.6.(a)  G.S. 105‑449.134 reads as rewritten:
"§ 105‑449.134.  Denial, revocation, or cancellation of license.
The Secretary may deny an application for a license or cancel or revoke a license under this Article for the same reasons that the Secretary may deny an application for a license or cancel or revoke a license under Article 36C of this Chapter. The procedure in Article 36C for revoking a license applies to the revocation of a license under this Article."
SECTION 4.6.(b)  G.S. 105‑449.135 reads as rewritten:
"§ 105‑449.135.  Issuance of license; notification of changes.
(a)	Issuance. – The Secretary must issue a license to each applicant whose application is approved. A license is not transferable and remains in effect until revoked or cancelled.
(b)	Notice. – A licensee that stops engaging in this State in the business for which the license was issued must give the Secretary written notice of the change and must surrender the license. The notice must give the date the change takes effect and, if the licensee has transferred the business to another by sale or otherwise, the date of the transfer and the name and address of the person to whom the business is transferred.
All taxes for which the licensee is liable under this Article but are not yet due become due on the date of the change. If the licensee transfers the business to another and does not give the notice required by this section, the person to whom the business was transferred is liable for the amount of any tax the licensee owed the State on the date the business was transferred. The liability of the person to whom the business is transferred is limited to the value of the property acquired from the licensee."
SECTION 4.6.(c)  G.S. 105‑449.139 reads as rewritten:
"§ 105‑449.139.  Miscellaneous provisions.
(a)	Records. – A licensee must keep a record of all documents used to determine the information provided in a return filed under this Article. The records must be kept for three years from the due date of the return to which the records apply. The records are open to inspection during business hours by the Secretary or a person designated by the Secretary.
…
(c)	Lists. – The Secretary must give a list of licensed alternative fuel providers to each licensed bulk end‑user and licensed retailer. The Secretary must also give a list of licensed bulk end‑users and licensed retailers to each licensed alternative fuel provider. A list must state the name, account number, and business address of each licensee on the list. The Secretary must send an annual update of a list to each licensee, as appropriate."
SECTION 4.6.(d)  G.S. 119‑19 reads as rewritten:
"§ 119‑19.  Authority of Secretary to cancel or revoke a license.
(a)	Reasons. – The Secretary of Revenue may cancel a license issued under this Article upon the written request of the licensee. The Secretary may summarily revoke a license issued under this Article or under Article 36C or 36D of Chapter 105 of the General Statutes when the Secretary finds that the licensee is incurring liability for the tax imposed by this Article after failing to pay a tax when due under this Article. The Secretary may revoke the license of a licensee who files a false report under this Article or fails to file a report required under this Article after holding a hearing on whether the license should be revoked.
(b)	Procedure. – The Secretary must send a person whose license is summarily revoked a notice of the revocation and must give the person an opportunity to have a hearing on the revocation within 10 days after the revocation. The Secretary must give a person whose license may be revoked after a hearing at least 10 days' written notice of the date, time, and place of the hearing. A notice of a summary license revocation and a notice of hearing must be sent by registered mail to the last known address of the licensee.
(c)	Release of Bond. – When the Secretary cancels or revokes a license and the licensee has paid all taxes and penalties due under this Article, the Secretary must either return to the licensee the bond filed by the licensee or notify the person liable on the bond and the licensee that the person is released from liability on the bond."
SECTION 4.7.  G.S. 105‑259(b) is amended by adding a new subdivision to read:
"(53)	To provide to the Office of Child Support and Enforcement of the Department of Health and Human Services State tax information that relates to noncustodial parent location information as required under 45 C.F.R. § 303.3 and Title IV‑D of the Social Security Act."
SECTION 4.8.  Section 4.1(e) of this part becomes effective retroactively to January 1, 2012, and applies to contested cases commenced on or after that date. The remainder of this part is effective when it becomes law and applies to requests for review filed on or after that date and to requests for review pending on that date for which the Department reissues a request for additional information, allows the taxpayer time to respond by the requested response date, and provides notification to the taxpayer that failure to timely respond to the request will result in the request for review being subject to the provisions of G.S. 105‑241.13A.

PART V. PROPERTY TAX
SECTION 5.1.(a)  G.S. 105‑330.3(a1) reads as rewritten:
"(a1)	Unregistered Vehicles. – The owner of an unregistered classified motor vehicle must list the vehicle for taxes by filing an abstract with the assessor of the county in which the vehicle is located on or before January 31 following the date the owner acquired the unregistered vehicle or, in the case of a registration that is not renewed, January 31 following the date the registration expires, and on or before January 31 of each succeeding year that the vehicle is unregistered. If a classified motor vehicle required to be listed pursuant to this subsection is registered before the end of the fiscal year for which it was required to be listed, the following applies:
…
(2)	For any months for which the vehicle was not taxed between the date the registration expired and the start of the current registered vehicle tax year, the vehicle is taxed as an unregistered vehicle as follows:
a.	The value of the motor vehicle is determined as of January 1 of the year in which the taxes are computed.
…
d.	The taxes are due on September 1 following the date the notice was prepared. Taxes are payable at par or face amount if paid before January 6 following the due date. Taxes paid on or after January 6 following the due date are subject to interest charges. Interest accrues on taxes paid on or after January 6 pursuant to G.S. 105‑360.
	
.…"
SECTION 5.1.(b)  This section is effective for taxes imposed for taxable years beginning on or after July 1, 2017.
SECTION 5.2.  G.S. 105‑330.6(c) reads as rewritten:
"(c)	Surrender of Plates. – If the owner of a classified motor vehicle, who pays the tax as required by G.S. 105‑330.4(a), either transfers the motor vehicle to a new owner or moves out‑of‑state and registers the vehicle in another jurisdiction, and the owner surrenders the registration plates from the listed vehicle to the Division of Motor Vehicles, then the owner may apply for a release or refund of taxes on the vehicle for any full calendar months remaining in the vehicle's tax year after the date of surrender. To apply for a release or refund, the owner must present to the county tax collector within one year after surrendering the plates the receipt received from the Division of Motor Vehicles accepting surrender of the registration plates. The county tax collector shall then multiply the amount of the taxes for the tax year on the vehicle by a fraction, the denominator of which is the number of months in the tax year and the numerator of which is the number of full calendar months remaining in the vehicle's tax year after the date of surrender of the registration plates. The product of the multiplication is the amount of taxes to be released or refunded. If the taxes have not been paid at the date of application, the county tax collector shall make a release of the prorated taxes and credit the owner's tax notice with the amount of the release. If the taxes have been paid at the date of application, the county tax collector shall direct an order for a refund of the prorated taxes to the county finance officer, and the finance officer shall issue a refund to the vehicle owner."
SECTION 5.3.  G.S. 105‑338 reads as rewritten:
"§ 105‑338.  Allocation of appraised valuation of public service property among local taxing units.
(a)	State Board's Duty. – For purposes of taxation by local taxing units in this State, the Department of Revenue shall allocate the valuations of public service company property among the local taxing units in accordance with the provisions of this section. In no event, however, shall the State Board make an allocation to a taxing unit if, when computed, the valuation for that taxing unit amounts to less than five hundred dollars ($500.00).
…
(c)	Certain Property of Bus Line, Motor Freight Carrier, and Airline Companies. –
(1)	The appraised valuation of a bus line company's rolling stock is allocated for taxation to each local taxing unit according to the ratio of the company's scheduled miles during the calendar year preceding January 1 in each unit to the company's total scheduled miles in this State for the same period.
…."

part VI. severability and effective date
SECTION 6.1.  If any provision of this act or its application is held invalid, the invalidity does not affect other provisions or applications of this act that can be given effect without the invalid provisions or application, and, to this end, the provisions of this act are severable.
SECTION 6.2  Except as otherwise provided, this act is effective when it becomes law.