GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 554
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Short Title: Rev Laws Tech Chngs/BBA Chngs/P2P Tax Parity. |
(Public) |
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Sponsors: |
Representatives Howard, Setzer, and N. Jackson (Primary Sponsors). For a complete list of sponsors, refer to the North Carolina General Assembly web site. |
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Referred to: |
Finance, if favorable, Rules, Calendar, and Operations of the House |
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March 31, 2025
A BILL TO BE ENTITLED
AN ACT to make various technical, clarifying, and administrative changes to the revenue laws; TO CONFORM TO THE FEDERAL SYSTEM FOR AUDITING PARTNERSHIPS by imposing tax at the partnership level for federal changes and by authorizing refunds for federal changes; and to provide tax parity for short‑term car rentals by expanding alternate highway use tax to include peer‑to‑peer rentals.
The General Assembly of North Carolina enacts:
part i. personal income tax changes
SECTION 1.1.(a) G.S. 105‑153.5 reads as rewritten:
"§ 105‑153.5. Modifications to adjusted gross income.
(b) Other Deductions. In calculating North Carolina taxable income, a taxpayer may deduct from the taxpayer's adjusted gross income any of the following items that are included in the taxpayer's adjusted gross income:
(17) The amount by which the aggregate amount of losses or deductions of an S Corporation taken into account by a shareholder under G.S. 105‑131.1(b) do not exceed the combined adjusted bases, determined in accordance with G.S. 105‑131.3, of the shareholder in the stock and indebtedness of the S Corporation.
(c) Additions. In calculating North Carolina taxable income, a taxpayer must add to the taxpayer's adjusted gross income any of the following items that are not included in the taxpayer's adjusted gross income:
(8) The amount by which the aggregate amount of losses or deductions of an S Corporation taken into account by a shareholder under G.S. 105‑131.1(b) exceed the combined adjusted bases, determined in accordance with G.S. 105‑131.3, of the shareholder in the stock and indebtedness of the S Corporation.
."
SECTION 1.1.(b) This section is effective for taxable years beginning on or after January 1, 2025.
SECTION 1.2.(a) G.S. 105‑153.5A reads as rewritten:
"§ 105‑153.5A. Net operating loss provisions.
(g) Limitation. The provisions of this section apply only to individuals, estates, and trusts."
SECTION 1.2.(b) G.S. 105‑153.5A(a) reads as rewritten:
"(a) State Net Operating Loss. A taxpayer's State net operating loss for a taxable year is the amount by which business deductions for the year exceed gross income for the year as determined under the Code adjusted as provided in G.S. 105‑153.5 and G.S. 105‑153.6. The amount of a taxpayer's State net operating loss must also be determined in accordance with the following modifications:
(1) No State net operating loss deduction shall be allowed.
(2) The amount deductible on account of losses from sales or exchanges of capital assets shall not exceed the amount includable on account of gains from sales or exchanges of capital assets.
(3) The exclusion provided by Code section 1202 shall not be allowed.
(4) No deduction shall be allowed under G.S. 105‑153.5(a1) for the child deduction.
(5) The deductions which are not attributable to a taxpayer's trade or business shall be allowed only to the extent of the amount of the gross income not derived from such trade or business.
(6) Any deduction under Code section 199A shall not be allowed.
(7) The amount of the taxpayer's excess business loss, as defined under the provisions of section 461(l) of the Code, shall be fully allowed as a State net operating loss."
SECTION 1.2.(c) Subsection (a) of this section is effective when the Part becomes law and applies retroactively to taxable years beginning on or after January 1, 2022. Subsection (b) of this section is effective for taxable years beginning on or after January 1, 2025. The remainder of this section is effective when the Part becomes law.
SECTION 1.3.(a) G.S. 105‑160.2 reads as rewritten:
"§ 105‑160.2. Imposition of tax.
(a) Scope. The tax imposed by this Part
applies to the taxable income of estates and trusts as determined under the
provisions of the Code except as otherwise provided in this Part. The taxable
income of an estate or trust is the same as taxable income for such an estate
or trust under the provisions of the Code, adjusted as provided in
G.S. 105‑153.5 and G.S. 105‑153.6, except that the
adjustments provided in G.S. 105‑153.5 and G.S. 105‑153.6
are apportioned between the estate or trust and the beneficiaries based on the
distributions made during the taxable year. G.S. 105‑153.6.
(b) Tax Base. The tax is computed on the
amount of the taxable income of the estate or trust that is for the benefit
of a resident of this State, or for the benefit of a nonresident to the extent
that the income (i) is derived from North Carolina sources and is
attributable to the ownership of any interest in real or tangible personal
property in this State or (ii) is derived from a business, trade, profession,
or occupation carried on in this State. For purposes of the preceding sentence,
taxable income and gross income is computed subject to the adjustments provided
in G.S. 105‑153.5 and G.S. 105‑153.6. G.S. 105‑153.6
and is apportioned and allocated to this State under G.S. 105‑130.4.
(c) Tax Rate. The tax on the amount computed above is at the rate levied in G.S. 105‑153.7. The fiduciary responsible for administering the estate or trust shall pay the tax computed under the provisions of this Part.
(d) Adjustments. For the purposes of this section, the adjustments provided in G.S. 105‑153.5 and G.S. 105‑153.6 are apportioned between the estate or trust and the beneficiaries based on the distributions made during the taxable year."
SECTION 1.3.(b) This section is effective for taxable years beginning on or after January 1, 2025.
SECTION 1.4. G.S. 105‑153.3(15) reads as rewritten:
"(15) Resident. Either of the individuals listed below. A resident who removes from the State during a taxable year is considered a resident until the resident has both established a definite domicile elsewhere and abandoned any domicile in this State. The fact of marriage does not raise any presumption as to domicile or residence. A resident individual is either of the following:
a. An individual who is domiciled in this State at
any time during the taxable year or who resides in this State during the
taxable year for other than a temporary or transitory purpose. In the
absence of convincing proof to the contrary, an individual who is present
within the State for more than 183 days during the taxable year is presumed to
be a resident, but the
b. An individual who maintains a place of abode
within the State and spends more than 183 days, including partial days, of the
taxable year within the State. The absence of an individual from the State
for more than 183 days raises no presumption that the individual is not a
resident. A resident who removes from the State during a taxable year is
considered a resident until he has both established a definite domicile
elsewhere and abandoned any domicile in this State. The fact of marriage does
not raise any presumption as to domicile or residence."
SECTION 1.5. G.S. 105‑163.6 reads as rewritten:
"§ 105‑163.6. When employer must file returns and pay withheld taxes.
(c) Monthly. An employer who withholds an average of at least two hundred fifty dollars ($250.00) but less than two thousand dollars ($2,000) of State income taxes from wages each month must file a return and pay the withheld taxes on a monthly basis. A return for the months of January through November is due by the 15th day of the month following the end of the month covered by the return. A return for the month of December is due the following January 31.
(d) Semiweekly. An employer
who withholds an average of at least two thousand dollars ($2,000) of State
income taxes from wages each month shall must file a return by
the date set under the Code for filing a return for federal employment taxes
attributable to the same wages and shall on a quarterly basis. A
quarterly return covers a calendar quarter and is due by the last day of the
month following the end of the quarter. The employer also must pay the
withheld State income taxes by the date set under the Code for
depositing or paying federal employment taxes attributable to the same wages.
The date set by the Code for depositing or paying federal employment taxes
shall be determined without regard to § 6302(g) of the Code.
An extension of time granted to
file a return for federal employment taxes attributable to wages is an
automatic extension of time for filing a return for State income taxes withheld
from the same wages, and an extension of time granted to pay federal employment
taxes attributable to wages is an automatic extension of time for paying State
income taxes withheld from the same wages. An employer who pays withheld State
income taxes under this subsection is not subject to interest on or penalties
for a shortfall in the amount due if the employer would not be subject to a
failure‑to‑deposit penalty had the shortfall occurred in a deposit
of federal employment taxes attributable to the same wages and the employer
pays the shortfall by the date the employer would have to deposit a shortfall
in the federal employment taxes.forth
below:
(1) If an employer's payday falls on a Wednesday, Thursday, or Friday, the withheld taxes must be paid on or before the following Wednesday.
(2) If an employer's payday falls on a Saturday, Sunday, Monday, or Tuesday, the withheld taxes must be paid on or before the following Friday.
(3) If any of the three weekdays following the close of a semiweekly period is a legal holiday, the employer has an additional day for each day that is a legal holiday by which to pay the withheld taxes.
(f) The Secretary may close a taxpayer's withholding account if the taxpayer files no withholding returns or files returns showing no withholding of State income taxes for a period of 18 months."
SECTION 1.6. Except as otherwise provided, this Part is effective when this act becomes law.
part ii. conform to federal system for auditing partnerships
SECTION 2.(a) Part 2 of Article 4 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑154.2. Federal partnership adjustments.
(a) Definitions. The following definitions apply in this Part:
(1) Administrative adjustment request. An administrative adjustment request filed by a partnership under section 6227 of the Code.
(2) Audited partnership. A partnership subject to a partnership level audit resulting in a federal partnership adjustment.
(3) Corporate partner. A partner that is subject to tax under Part 1 of this Article.
(4) Direct partner. A partner that holds a direct interest in a partnership subject to a federal partnership adjustment.
(5) Exempt partner. A partner that is not subject to State income tax under this Article that holds a direct interest in a partnership subject to a federal partnership adjustment.
(6) Federal partnership adjustment. A change or correction arising from a partnership level audit or an administrative adjustment request that affects the calculation of a taxpayer's State tax.
(7) Federal partnership representative. The person the partnership designates for the taxable year as the partnership's representative, or the person the Internal Revenue Service has appointed to act as the federal partnership representative, pursuant to section 6223(a) of the Code.
(8) Final federal partnership adjustment. A federal partnership adjustment that is final. A federal partnership adjustment is final when the federal partnership adjustment is not subject to administrative or judicial review. If the federal partnership adjustment results from filing an administrative adjustment request, the federal partnership adjustment is final when the administrative adjustment request is filed. Additionally, a federal partnership adjustment relating to a partnership level audit is deemed final in the following circumstances:
a. The taxpayer has received a partnership level audit from the Internal Revenue Service for the tax period and the taxpayer does not timely file an administrative appeal with the Internal Revenue Service.
b. The taxpayer consented to any of the partnership level audit findings for the tax period and through a final decision or other written agreement with the Internal Revenue Service all rights of appeal have been waived or exhausted.
(9) Indirect partner. A beneficiary of an estate or trust or an owner in a partnership or pass‑through entity, where the estate, partnership, pass‑through entity, or trust holds, either itself or through another indirect partner, a direct interest, in a partnership or pass‑through entity subject to a final federal partnership adjustment.
(10) Partnership level audit. An audit of a partnership by the Internal Revenue Service pursuant to Subchapter C of Title 26, Subtitle F, Chapter 63 of the Code, as enacted by the Bipartisan Budget Act of 2015, Public Law 114‑74, which results in federal partnership adjustments.
(11) Reviewed year. The taxable year of a partnership that is subject to a partnership level audit from which federal partnership adjustments arise.
(12) State partnership representative. The federal partnership representative unless the partnership designates another person as its State partnership representative. The Secretary is authorized to establish procedures for designating a person, other than the federal partnership representative, to be a State partnership representative.
(13) Tiered partner. An estate, partnership, S Corporation, or trust that is a partner in a partnership subject to a federal partnership adjustment.
(b) General Rule. Except in the case of a final federal partnership adjustment that is required to be reported to the Secretary using the procedures in subsection (c) of this section, a partner must report and pay any State income tax due in accordance with the provisions of G.S. 105‑130.20 or G.S. 105‑159.
(c) Reporting a Final Federal Partnership Adjustment. Except for the distributive share of adjustments that have been reported as required by subsection (b) of this section and an audited partnership that has made a timely election under subsection (d) of this section, a partnership and a partner must report a final federal partnership adjustment as follows:
(1) No later than 90 days after the final federal partnership adjustment, a partnership doing business in this State must do both of the following:
a. File an income tax return reflecting the partnership's final federal partnership adjustments, as modified by G.S. 105‑153.5 and G.S. 105‑153.6, and any other information required by the Secretary, and pay the additional amount due under G.S. 105‑154(d) and G.S. 105‑154.1.
b. Notify each of its direct partners of the direct partner's distributive share of the final federal partnership adjustments, including any information necessary for the direct partner to properly file a State income tax return. The information must be in the form prescribed by the Secretary.
(2) No later than six months after the final federal partnership adjustment, each direct partner subject to tax under this Article must file a State income tax return reporting the direct partner's distributive share of the adjustments reported to the direct partner under sub‑subdivision b. of subdivision (1) of this subsection, as modified by G.S. 105‑153.5 and G.S. 105‑153.6, and any other information required by the Secretary, and pay any additional amount of tax due as if the final federal partnership adjustments had been properly reported.
(d) Election for Partnership to Pay; Exceptions. Except as otherwise provided in subdivision (2) of this subsection, an audited partnership may elect to report a final federal partnership adjustment arising from a partnership level audit in the manner prescribed by the Secretary. An election made under this subsection is irrevocable and cannot be made if the required income tax return is not filed within the period required by this subsection. The following provisions apply to an audited partnership that makes an election under this subsection:
(1) Reporting and payment of tax. The reporting and payment requirements are as follows:
a. No later than six months after the final federal partnership adjustment, the audited partnership must file an income tax return reflecting the partnership's final federal partnership adjustment, as modified by G.S. 105‑153.5 and G.S. 105‑153.6, and provide any other information required by the Secretary.
b. No later than six months after the final federal partnership adjustment, the audited partnership must pay the amount determined under this subdivision. If properly reported and paid by the audited partnership, the amount shall be treated as paid in lieu of taxes owed by the direct and indirect partners, to the extent applicable, on the same final federal adjustment. The direct partners or indirect partners may not take a deduction or credit for this amount on the State income tax return or claim a refund of the amount paid on the State income tax return. The amount in lieu of taxes is calculated as follows:
1. Exclude from the final federal adjustment the distributive share of all adjustments reported to an exempt partner not subject to tax under this Article.
2. For the total distributive shares of the final federal adjustment, as modified by G.S. 105‑153.5 and G.S. 105‑153.6, reported to direct corporate partners subject to tax under this Article, apportion and allocate the adjustments as provided under G.S. 105‑130.4 and multiply the resulting amount by the tax rate under G.S. 105‑130.3.
3. For the total distributive shares of the final federal adjustment, as modified by G.S. 105‑153.5 and G.S. 105‑153.6, reported to nonresident individual direct partners and estate and trust direct partners subject to tax under this Article, apportion and allocate such adjustments as provided under G.S. 105‑130.4 and multiply the resulting amount by the tax rate under G.S. 105‑153.7.
4. For the total distributive shares of the final federal adjustment, as modified by G.S. 105‑153.5 and G.S. 105‑153.6, reported to resident direct partners subject to tax under this Article, multiply that amount by the tax rate under G.S. 105‑153.7. For purposes of this sub‑sub‑subdivision, an audited partnership may deduct from each resident direct partner's distributive share the amount of the resident direct partner's share of distributive income not attributable to the State from the partnership to the extent the resident direct partner's share of distributive income not attributable to the State was included in the partnership's taxable income in another state or the District of Columbia and was subject to an entity‑level tax levied on the aggregate distributive share of the partnership's income allocable to one or more of its partners. A partnership is taxable in another state or the District of Columbia if the partnership's business activity in that state or the District of Columbia subjects the partnership to a net income tax or a tax measured by net income.
5. Add the amounts determined in sub‑sub‑subdivisions 1. through 4. of this sub‑subdivision.
(2) Exceptions. A partnership may not elect to pay tax under this subsection if any of the following apply:
a. The partnership made the election to be a taxed partnership under G.S. 105‑154.1(a) for the reviewed year.
b. The partnership's final federal partnership adjustment resulted from an administrative adjustment request.
c. The partnership was not required to file an information return under the provisions of G.S. 105‑154(c) for the reviewed year because the partnership was not doing business in this State for the reviewed year.
(e) Collection of Tax for Failure to Pay. If an audited partnership makes an election under subsection (d) of this section but does not pay the amount due, the Department may collect the tax from the audited partnership pursuant to G.S. 105‑241.22(1). The Secretary must issue a notice of collection for the amount of the tax debt to the audited partnership. If the tax debt is not paid to the Secretary within 60 days of the date the notice of collection is mailed to the audited partnership, the Secretary may assess the partners of the audited partnership for the partners' distributive share of the tax debt by sending the partners a notice of proposed assessment in accordance with G.S. 105‑241.9. For purposes of this subsection, the term "tax debt" has the same meaning as defined in G.S. 105‑243.1(a).
(f) Tiered Partners. The direct and indirect partners of an audited partnership that are tiered partners, and all of the owners or beneficiaries of those tiered partners that are subject to tax under this Article, are subject to the reporting and payment requirements of subsection (c) of this section, and the tiered partners are entitled to make the election provided in subsection (d) of this section. The tiered partners or their owners must make required reports and payments no later than 90 days after the time for filing and furnishing statements to tiered partners and their owners or beneficiaries as established under section 6226 of the Code and the regulations thereunder. The Secretary is authorized to establish procedures and interim time periods for the reports and payments required by tiered partners and their owners or beneficiaries and for making the election under this subsection.
(g) Failure of Audited Partnership or Tiered Partner to Report or Pay. Nothing in this section prevents the Secretary from proposing an assessment against a direct partner or indirect partner pursuant to G.S. 105‑241.9 for tax due, if a partnership or tiered partner fails to timely make any report or payment required by this section for any reason.
(h) State Partnership Representative. The partnership's direct partners and indirect partners are bound by the actions of the State partnership representative. In addition, with respect to any action required or permitted to be taken by a partnership under this section, the State partnership representative has the sole authority to:
(1) Act on behalf of the partnership.
(2) Bring a contested case hearing in accordance with G.S. 105‑241.15.
(3) Request a judicial review in accordance with G.S. 105‑241.16.
(i) Assessments of Additional State Tax Arising from a Final Federal Partnership Adjustment. The Secretary must assess additional State tax arising from a final federal partnership adjustment in accordance with G.S. 105‑241.9."
SECTION 2.(b) G.S. 105‑228.90(b) reads as rewritten:
"(b) Definitions. The following definitions apply in this Article:
(15) Federal determination. A
change or correction arising from an audit by the Commissioner of Internal
Revenue or an agreement of the U.S. competent authority, and the change or
correction has become final. final, but does not include a final
federal partnership adjustment as defined in G.S. 105‑154.2(a). A
federal determination is final when the determination is not subject to
administrative or judicial review. Additionally, audit findings made by the Internal
Revenue Service are deemed final in the following circumstances:
a. The taxpayer has received audit findings from the Internal Revenue Service for the tax period and the taxpayer does not timely file an administrative appeal with the Internal Revenue Service.
b. The taxpayer consented to any of the audit findings for the tax period through a form or other written agreement with the Internal Revenue Service.
(16) Final federal partnership adjustment. As defined in G.S. 105‑154.2(a).
."
SECTION 2.(c) G.S. 105‑153.5 reads as rewritten:
"§ 105‑153.5. Modifications to adjusted gross income.
(c2) Decoupling Adjustments. In calculating North Carolina taxable income, a taxpayer must make the following adjustments to the taxpayer's adjusted gross income:
(24) A taxpayer must add the amount by which the taxpayer's distributive share of partnership income, subject to the adjustments provided in this section and G.S. 105‑153.6, is increased as a result of a final federal partnership adjustment, as defined in G.S. 105‑154.2(a), reported to this State under G.S. 105‑154.2(c)(2).
(25) A taxpayer may deduct the amount by which the taxpayer's distributive share of partnership income, as modified by this section and G.S. 105‑153.6, is decreased as a result of a final federal partnership adjustment, as defined in G.S. 105‑154.2(a), reported to this State under G.S. 105‑154.2(c)(2).
."
SECTION 2.(d) G.S. 105‑130.5 reads as rewritten:
"§ 105‑130.5. Adjustments to federal taxable income in determining State net income.
(a) The following additions to federal taxable income shall be made in determining State net income:
(33) The amount by which the taxpayer's distributive share of partnership income, subject to the adjustments provided in this section and G.S. 105‑130.5B, is increased as a result of a final federal partnership adjustment, as defined in G.S. 105‑154.2(a), reported to this State under G.S. 105‑154.2(c)(2).
(b) The following deductions from federal taxable income shall be made in determining State net income:
(33) The amount by which the taxpayer's distributive share of partnership income, subject to the adjustments provided in this section and G.S. 105‑130.5B, is decreased as a result of a final federal partnership adjustment, as defined in G.S. 105‑154.2(a), reported to this State under G.S. 105‑154.2(c)(2).
."
SECTION 2.(e) G.S. 105‑241.6 reads as rewritten:
"§ 105‑241.6. Statute of limitations for refunds.
(b) Exceptions. The exceptions to the general statute of limitations for obtaining a refund of an overpayment are as follows:
(7) Final Federal Partnership Adjustment. If a taxpayer files a return reflecting a final federal partnership adjustment and the return is filed within the time required by this Subchapter, the period for requesting a refund is one year after the return reflecting the final federal partnership adjustment is filed or three years after the original return was filed or due to be filed, whichever is later."
SECTION 2.(f) G.S. 105‑241.8 reads as rewritten:
"§ 105‑241.8. Statute of limitations for assessments.
(a) General. The general statute of limitations for proposing an assessment applies unless a different period applies under subsection (b) of this section. The general statute of limitations for proposing an assessment is the later of the following:
(1) Three years after the due date of the return.
(2) Three years after the taxpayer filed the return.
(b) Exceptions. The exceptions to the general statute of limitations for proposing an assessment are as follows:
(6) Final federal partnership adjustment. If a taxpayer files a return reflecting a final federal partnership adjustment and the return is filed within the time required by this Subchapter, the period for proposing an assessment of any tax due is one year after the return is filed or three years after the original return was filed or due to be filed, whichever is later. If there is a final federal partnership adjustment and the taxpayer does not file the return within the required time, the period for proposing an assessment of any tax due is six years after the date the Secretary received the final report of the final federal partnership adjustment."
SECTION 2.(g) This Part is effective for taxable years beginning on or after January 1, 2025, and applies to federal partnership adjustments that become final on or after that date.
part iII. sales tax changes
SECTION 3.1.(a) G.S. 105‑164.8(b) reads as rewritten:
"(b) Remote Sales. A retailer who makes a remote sale is engaged in business in this State and is subject to the tax levied under this Article if at least one of the following conditions is met:
(9) The retailer makes gross sales in excess of one hundred thousand dollars ($100,000) from remote sales sourced to this State, including sales as a marketplace seller, for the previous or the current calendar year. A retailer that solely meets this condition, or both this condition and the condition in subdivision (10) of this subsection, is engaged in business on the first day of the first calendar month occurring at least 60 days after the retailer's gross sales exceed the threshold.
(10) The retailer is a marketplace facilitator that makes gross sales in excess of one hundred thousand dollars ($100,000), including all marketplace‑facilitated sales for all marketplace sellers, from sales sourced to this State for the previous or the current calendar year. A retailer that solely meets this condition, or both this condition and the condition in subdivision (9) of this subsection, is engaged in business on the first day of the first calendar month occurring at least 60 days after the retailer's gross sales exceed the threshold."
SECTION 3.1.(b) This section is effective when it becomes law and applies to retailers that exceed the threshold on or after that date.
SECTION 3.2. G.S. 105‑164.3(259) reads as rewritten:
"(259) Streamlined Agreement.
The Streamlined Sales and Use Tax Agreement as amended as of November 7,
2023.October 9, 2024."
SECTION 3.3.(a) G.S. 105‑187.90(9) reads as rewritten:
"(9) Shared for‑hire
ground transport Shared‑ride service. A for‑hire
ground transport service for which an individual has been matched with another
individual by a for‑hire ground transport service provider."
SECTION 3.3.(b) G.S. 105‑187.95 reads as rewritten:
"§ 105‑187.95. Use of tax proceeds.
Each quarter, the The Secretary shall
credit the net tax proceeds of the taxes collected under this Article to the
Highway Fund. The Secretary may retain the cost of administering this Article
as reimbursement to the Department."
SECTION 3.3.(c) This section becomes effective July 1, 2025.
SECTION 3.4. Except as otherwise provided, this Part is effective when this act becomes law.
part Iv. excise tax changes
SECTION 4.1. G.S. 105‑113.39A(a2) reads as rewritten:
"(a2) Vapor Products License. A wholesale dealer or a retail dealer must obtain a vapor products license for all of the following locations:
(1) Each location where a wholesale dealer makes vapor products.
(2) Each location where a wholesale dealer or a retail dealer receives or stores non‑tax‑paid vapor products.
(3) Each location from where
a retail dealer that is a delivery seller or a remote seller receives or
stores non‑tax‑paid vapor products for delivery sales if the
location is a location other than the location described in subdivision (2) of
this subsection."
SECTION 4.2. G.S. 105‑113.83A(a) reads as rewritten:
"(a) Registration Required. A person who holds a wine shipper permit issued under G.S. 18B‑1001.1 or one or more of the following ABC permits issued under Article 11 of Chapter 18B of the General Statutes must register with the Secretary:
(1) Unfortified winery.
(2) Fortified winery.
(3) Brewery.
(4) Distillery.
(5) Wine importer.
(6) Wine wholesaler.
(7) Malt beverages importer.
(8) Malt beverages wholesaler.
(9) Nonresident malt beverage vendor.
(10) Nonresident wine vendor.
(11) Wine Producer.
(12) Nonresident spirituous liquor vendor."
SECTION 4.3.(a) G.S. 105‑449.42 reads as rewritten:
"§ 105‑449.42. Payment of tax.
The tax levied by this Article is
due when a quarterly return is due under G.S. 105‑449.45. The amount
of tax due is calculated on the amount of motor fuel or alternative fuel used
by the motor carrier in its operations within this State during the quarter
covered by the return. If a motor carrier is exempt from filing a return under
G.S. 105‑449.45(b)(2), the tax levied by this Article is due when
the tax becomes collectible under G.S. 105‑241.22.by the last
day of the month following the quarter in which the motor fuel or alternative
fuel was used by the motor carrier."
SECTION 4.3.(b) This section becomes effective July 1, 2025, and applies to taxes due on or after that date.
SECTION 4.4.(a) G.S. 105‑449.60 reads as rewritten:
"§ 105‑449.60. Definitions.
The following definitions apply in this Article:
(43a) Renewable diesel. A motor fuel chemically equivalent to petroleum diesel that is manufactured from organic feedstocks using a hydrogenation process. Renewable diesel meets ASTM D975 specifications for diesel fuel.
."
SECTION 4.4.(b) G.S. 105‑449.60(12) reads as rewritten:
"(12) Diesel fuel. Any
liquid, other than gasoline, that is suitable for use as a fuel in a diesel‑powered
highway vehicle. The term includes biodiesel, fuel oil, heating oil, high‑sulfur
dyed diesel fuel, and kerosene. kerosene, and renewable diesel. The
term does not include jet fuel."
SECTION 4.5.(a) G.S. 105‑449.60(46) reads as rewritten:
"(46) Supplier. Any of the following:
a. A position holder or a person who receives motor fuel pursuant to a two‑party exchange.
b. A fuel alcohol provider.
c. A biodiesel provider.
d. Repealed by Session Laws 2017‑39, s. 12, effective June 21, 2017.
e. A purchaser of tax‑paid motor fuel who introduces the respective tax‑paid motor fuel into the terminal transfer system at a location other than an IRS‑registered terminal.
f. A person who owns tax‑paid motor fuel at the time it is placed in the terminal transfer system at a location other than an IRS‑registered terminal."
SECTION 4.5.(b) G.S. 105‑449.97(e) reads as rewritten:
"(e) Credit for Motor
Fuel in Terminal. Terminal Transfer System. When filing a
return, a licensed supplier who is the position holder may take a credit
for tax‑paid motor fuel in the terminal system.transfer system
if any of the following apply:
(1) The supplier is a position holder.
(2) The supplier is the original purchaser of tax‑paid motor fuel that is placed in the terminal transfer system at a location other than an IRS‑registered terminal.
(3) The supplier owns tax‑paid motor fuel at the time it is placed in the terminal transfer system at a location other than an IRS‑registered terminal."
SECTION 4.5.(c) This section is effective July 1, 2025.
SECTION 4.6.(a) G.S. 105‑449.69 reads as rewritten:
"§ 105‑449.69. How to apply for a license.
(e) Export Activity. An applicant for a license as an exporter or as a distributor must list on the application each state to which the applicant intends to export motor fuel received in this State by means of a transfer that is outside the terminal transfer system and, if required by a state listed, must be licensed or registered for motor fuel tax purposes in that state. If a state listed requires the applicant to be licensed or registered, the applicant must give the applicant's license or registration number in that state. If the Secretary determines that an exporter is no longer operating in this State, and the exporter has failed to comply with G.S. 105‑449.75, the Secretary may cancel the exporter license and send notice of the cancellation in accordance with G.S. 105‑449.76(b1)."
SECTION 4.6.(b) G.S. 105‑449.76(a) reads as rewritten:
"(a) Cancellation. The
Secretary may cancel a license issued under this Article upon the written
request of the licensee. licensee or as permitted under G.S. 105‑449.69(e).
The licensee's request must include a proposed effective date of
cancellation and must return the license to the Secretary on or before the
proposed effective date. If the licensee's request does not include a proposed
effective date of cancellation, the license is cancelled 15 days after the
Department receives the written request. If the license is unable to be
returned, the licensee must include a written statement of the reasons,
satisfactory to the Secretary, why the license cannot be returned. The
Secretary shall notify the licensee when the license is cancelled."
SECTION 4.7. G.S. 105‑449.87(a)(3) reads as rewritten:
"(3) Motor fuel that is
used to operate a highway vehicle after an application for a refund of tax paid
on the motor fuel is made or allowed under G.S. 105‑449.107(a) G.S. 105‑449.106(d)
on the basis that the motor fuel was used for an off‑highway
purpose."
SECTION 4.8. G.S. 105‑449.139 reads as rewritten:
"§ 105‑449.139. Miscellaneous provisions.
(a) Records. A person required to be licensed under this Article 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 the applicable period of statute of limitations as set forth under Article 9 of this Chapter. If the records apply to a transaction not required to be reported in a return, the records must be kept for three years from the date of the transaction. The Secretary or a person designated by the Secretary shall have the right at any reasonable time to inspect the records.
(b) Violations. The offenses listed in subdivisions (1) through (9) of G.S. 105‑449.120 apply to this Article. In applying those offenses to this Article, references to "this Article" are to be construed as references to Article 36D and references to "motor fuel" are to be construed as references to alternative fuel.
(c) Lists. The Secretary must make available a list of licensed alternative fuel providers to each licensed bulk end‑user and licensed retailer. The Secretary must also make available 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 update the lists required under this section annually.
(d) Inspection. The Secretary, or the Secretary's designee, shall have the right at any reasonable time to inspect the records subject to audit under this section and may do any of the following to determine tax liability under this Article:
(1) Audit a person who is required to have or elects to have a license under this Article.
(2) Audit a retailer, bulk‑end user, or a provider that is not licensed under this Article.
(3) Examine a tank or other equipment used to make, store, or transport alternative fuel."
SECTION 4.9. G.S. 150B‑2(3) reads as rewritten:
"(3) License. Any certificate, permit, or other evidence, by whatever name called, of a right or privilege to engage in any activity, except licenses issued under Chapter 20 and Subchapter I and Subchapter V of Chapter 105 of the General Statutes, occupational licenses, and certifications of electronic poll books, ballot duplication systems, or voting systems under G.S. 163‑165.7."
SECTION 4.10. G.S. 18C‑901(7) reads as rewritten:
"(7) Gross wagering revenue. The total of amounts received by an interactive sports wagering operator from sports wagers as authorized under this Article less the amounts paid as winnings before any deductions for expenses, fees, or taxes. Gross wagering revenue includes the cash value of any bonuses or promotional credits when returned to an interactive sports wagering operator in the form of a deposit or sports wager."
SECTION 4.11. Except as otherwise provided, this Part is effective when this act becomes law.
part v. administrative and other changes
SECTION 5.1. G.S. 105‑228.90 reads as rewritten:
"§ 105‑228.90. Scope and definitions.
(a) Scope. This Article applies to all of the following:
(3) The primary forest
product assessment levied under Article 81 84 of Chapter 106 of
the General Statutes.
(b) Definitions. The following definitions apply in this Article:
(7) Code. The Internal
Revenue Code as enacted as of January 1, 2023, January 1, 2025, including
any provisions enacted as of that date that become effective either before or
after that date.
(23) Person. An individual, a
fiduciary, a firm, an association, a partnership, a limited liability company,
a corporation, a unit of government, or another group acting as a unit. The
term includes an officer or employee of a corporation, a member, a manager, or
an employee of a limited liability company, and a member or employee of a
partnership who, as officer, employee, member, or manager, is under a duty to
perform an act in meeting the requirements of Subchapter I, V, or VIII of this
Chapter, of G.S. 55‑16‑22, of Article 81 84 of
Chapter 106 of the General Statutes, or of Article 3 of Chapter 119 of the
General Statutes.
(27) Tax. A tax levied under
Subchapter I, V, or VIII of this Chapter, the primary forest product assessment
levied under Article 81 84 of Chapter 106 of the General
Statutes, or an inspection tax levied under Article 3 of Chapter 119 of the
General Statutes. Unless the context clearly requires otherwise, the term
"tax" includes penalties and interest as well as the principal
amount.
(29) Taxpayer. A person
subject to the tax or reporting requirements of Subchapter I, V, or VIII of
this Chapter, of Article 81 84 of Chapter 106 of the General
Statutes, or of Article 3 of Chapter 119 of the General Statutes.
."
SECTION 5.2. G.S. 105‑236(a) reads as rewritten:
"(a) Penalties. The following civil penalties and criminal offenses apply:
(1b) Making Payment in Wrong
Form. For making a payment of tax in a form other than the form required by
the Secretary pursuant to G.S. 105‑241(a), the Secretary shall
assess a penalty equal to five percent (5%) of the amount of the tax, subject
to a minimum of one dollar ($1.00) and a maximum of one thousand dollars
($1,000). This penalty may be waived by the Secretary in accordance with
G.S. 105‑237.
(10a) Filing a Frivolous Return.
If a taxpayer files a frivolous return under Part 2 of Article 4 of this
Chapter, the Secretary shall assess a penalty in the amount of up to five
hundred dollars ($500.00). two thousand dollars ($2,000). A
frivolous return is a return that meets both of the following requirements:
a. It fails to provide sufficient information to permit a determination that the return is correct or contains information which positively indicates the return is incorrect, and
b. It evidences an intention to delay, impede or negate the revenue laws of this State or purports to adopt a position that is lacking in seriousness.
."
SECTION 5.3. G.S. 105‑249.2 reads as rewritten:
"§ 105‑249.2. Due date extended and penalties
waived Relief for certain military personnel or persons affected by
a presidentially declared disaster.
(a) Combat. The Secretary may not assess interest or a penalty against a taxpayer for any period that is disregarded under section 7508 of the Code in determining the taxpayer's liability for a federal tax. A taxpayer is granted an extension of time to file a return or take another action concerning a State tax for any period during which the Secretary may not assess interest or a penalty under this section.
(b) Disaster. The
penalties in G.S. 105‑236(a)(2), (3), (4), and (10)c. may not be
assessed for any period in which the time for filing a federal return or report
or for paying a federal tax is extended disregarded under section
7508A of the Code because of a presidentially declared disaster. The extension
of time granted period of time disregarded by the Internal Revenue
Service under section 7508A of the Code only applies to the corresponding State
tax return or payment. For State returns and payments without a corresponding
federal return and payment, the extension granted period of time
disregarded for individual income tax returns and payments by the Internal
Revenue Service under section 7508A of the Code applies. For the purpose of
this section, "presidentially declared disaster" has the same meaning
as in section 1033(h)(3) of the Code."
SECTION 5.4.(a) G.S. 1‑339.1(a) reads as rewritten:
"(a) A judicial sale is a sale of property made pursuant to an order of a judge or clerk in an action or proceeding in the superior or district court, including a sale pursuant to an order made in an action in court to foreclose a mortgage or deed of trust, but is not
(5) A tax foreclosure sale, but for the purposes of federal law, nothing herein shall be construed to mean that a tax foreclosure sale under G.S. 105‑374 is a non‑judicial sale, or
."
SECTION 5.4.(b) G.S. 160A‑233(c) reads as rewritten:
"(c) Assessment liens may
be foreclosed under any procedure prescribed by law for the foreclosure of
property tax liens, except that lien sales and lien sale certificates shall not
be required, and foreclosure may be begun at any time after 30 days after the
due date. The city shall not be entitled to a deficiency judgment in an action
to foreclose an assessment lien. The lien of special assessments shall be
inferior to all prior and subsequent liens for State, local, and federal State
and local taxes, and superior to all other liens."
SECTION 5.4.(c) G.S. 153A‑200(c) reads as rewritten:
"(c) A county may
foreclose assessment liens under any procedure provided by law for the
foreclosure of property tax liens, except that (i) lien sales and lien sale
certificates are not required and (ii) foreclosure may be begun at any time
after 30 days after the due date. The county is not entitled to a deficiency
judgment in an action to foreclose an assessment lien. The lien of special
assessments is inferior to all prior and subsequent liens for State, local,
and federal State and local taxes, and superior to all other
liens."
SECTION 5.4.(d) Subsections (b) and (c) of this section become effective October 1, 2025. The remainder of this section is effective when it becomes law.
SECTION 5.5.(a) G.S. 14‑313(h) reads as rewritten:
"(h) Fines and Civil Penalties. The following penalties shall apply to violations of the certification requirements for consumable products and vapor products required by Part 3 of Article 4 of Chapter 143B of the General Statutes:
(1) Retailer, distributor, or
wholesaler fines. A retailer, distributor, or wholesaler who offers for sale
a consumable product or vapor product intended for ultimate retail sale in this
State that is not included in the directory is subject to a warning with a
mandatory reinspection of the retailer within 30 days of the violation of Part
3 of Article 4 of Chapter 143B of the General Statutes. [The following
applies:]The following provisions apply:
a. For a second violation of this type within a 12‑month period, the fine shall be at least five hundred dollars ($500.00) but not more than seven hundred fifty dollars ($750.00) and, if licensed, the licensee's license shall be suspended for 30 days.
b. For a third or subsequent violation of this type within a 12‑month period, the fine shall be at least one thousand dollars ($1,000) but not more than one thousand five hundred dollars ($1,500) and, if licensed, the licensee's license shall be revoked.
c. Upon a second or
subsequent violation of this type, consumable products or vapor products that
are not on the directory as required by G.S. 143B‑245.12, and are
possessed by a retailer, distributor, or wholesaler, shall be subject to
seizure, forfeiture, and destruction. The cost of such seizure, forfeiture, and
destruction shall be borne by the person from whom the products are
confiscated, except that no products may be seized from a consumer who has made
a bona fide purchase of such product. The Secretary ALE Division may
store and dispose of the seized products as appropriate, in accordance with
federal, State, and local laws pertaining to storage and disposal of such
products.
."
SECTION 5.5.(b) G.S. 143B‑245.10 reads as rewritten:
The following definitions apply throughout this Part:
(1) ALE Division. As defined in G.S. 18B‑101.
(1a) Alternative nicotine product. As defined in G.S. 14‑313(a)(1).
(2) Consumable product. As defined in G.S. 14‑313(a)(1a).
(3) Distribute. As defined in G.S. 14‑313(a)(1b).
(4) FDA. As defined in G.S. 14‑313(a)(1c).
(5) Secretary. The Secretary of the Department of Revenue.
(6) Timely Filed Premarket Tobacco Product Application. As defined in G.S. 14‑313(a)(3c).
(7) Tobacco product. As defined in G.S. 14‑313(a)(4).
(8) Vapor product. As defined in G.S. 14‑313(a)(5)."
SECTION 5.5.(c) G.S. 143B‑245.15 reads as rewritten:
(a) Unannounced Compliance
Check. Each retailer, distributor, and wholesaler that sells or distributes
consumable products or vapor products in this State shall be subject to
unannounced compliance checks by the Secretary or its designee, which may
include State and local law enforcement officials, ALE Division for
purposes of enforcing this Part. Unannounced follow‑up compliance checks
of all noncompliant retailers, distributors, and wholesalers shall be conducted
within 30 days after any violation of this Part. [The following applies:]The
following provisions apply with respect to this section:
(1) Any person who observes a
violation described in G.S. 143B‑245.13 may alert the Secretary ALE
Division of such the violation, and the Secretary ALE
Division shall cause an unannounced compliance check to occur with respect
to the person alleged to be in violation.
(2) The Secretary ALE
Division shall publish the results of all compliance checks at least
annually and shall make the results available to the public on request.
(3) The ALE Division shall report to the Secretary any violation of this Chapter for which civil penalties are authorized and regardless of whether criminal charges have been filed.
(4) Any products identified for sale that are not on the registry in compliance with the provisions of this Chapter may be subject to seizure, forfeiture, and destruction in accordance with G.S. 14‑313(h)(1)c.
."
SECTION 5.5.(d) G.S. 143B‑245.16 reads as rewritten:
"§ 143B‑245.16. Rules; use of fees; report.
(a) Rules. The Secretary shall adopt rules for the implementation and enforcement of this Part.
(b) Use of Fees and
Penalties. Fees. The fees received under this Part and the
penalties collected under G.S. 14‑313(h) by the Department of
Revenue shall be used by the Department of Revenue exclusively for processing
the certifications, certifications and operating and maintaining
the directory, and enforcement directory of this Part.
(b1) Use of Penalties. The penalties collected under G.S. 14‑313(h) shall be remitted to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C‑457.2.
(c) Report. Beginning on
January 31, 2026, and annually thereafter, the Secretary shall provide a report
to the legislature regarding the status of the directory, manufacturers and
products included in the directory, revenue and expenditures related to
administration of this section [Article], and enforcement activities undertaken
pursuant to this section [Article], including the number of stores that have
been inspected and the results from such inspections.Article."
SECTION 5.5.(e) G.S. 143B‑218 reads as rewritten:
"§ 143B‑218. Department of Revenue duties.
It shall be is the
duty of the Department to collect and account for the State's tax funds, to
insure uniformity of administration of the tax laws and regulations, to conduct
research on revenue matters, and to exercise general and specific
supervision over the valuation and taxation of property throughout the State.State,
and to perform other non‑tax‑related functions as enacted by the
General Assembly."
SECTION 5.5.(f) G.S. 143B‑219 reads as rewritten:
"§ 143B‑219. Department of Revenue functions.
(a) The functions of the
Department of Revenue shall comprise, except as otherwise expressly provided by
the Executive Organization Act of 1973 or by the Constitution of North
Carolina, all executive functions of the State in relation to revenue
collection, tax research, tax settlement, and property tax supervision
including those prescribed powers, duties duties, and functions
enumerated in Article 16 of Chapter 143A of the General Statutes of this
State.Statutes. The Department of Revenue may also perform other non‑tax‑related
functions as enacted by the General Assembly.
(b) All functions, powers, duties, and obligations heretofore vested in any agency enumerated in Article 16 of Chapter 143A of the General Statutes are hereby transferred to and vested in the Department of Revenue, except as otherwise provided by the Executive Organization Act of 1973. They shall include, by way of extension and not of limitation, the functions of:
(1) The Commissioner Secretary
and Department of Revenue,Revenue.
(2) The Department of Tax Research,
andResearch.
(3) The State Board of Assessment."
SECTION 5.6. Except as otherwise provided, this Part is effective when this act becomes law.
part vi. property tax changes
SECTION 6.(a) G.S. 105‑278.2 reads as rewritten:
"§ 105‑278.2. Burial property.
(a) Commercial Property. Real property set apart for human burial purposes that is owned and held for purposes of (i) sale or rental or (ii) sale of burial rights therein is exempt from taxation. A single application is required under G.S. 105‑282.1 for property exempt under this subsection.
(b) Other Property. Real property set apart for human burial purposes not owned and held for a purpose listed in subsection (a) of this section is exempt from taxation. No application is required under G.S. 105‑282.1 for property exempt under this subsection. A local government cannot deny the exemption provided under this subsection to a taxpayer that lacks a survey or plat detailing the exempt property.
(c) Terms. For purposes of this section, the term "real property" includes land, tombs, vaults, monuments, and mausoleums, and the term "burial" includes entombment."
SECTION 6.(b) Except as otherwise provided, this Part is effective when this act becomes law.
part vIi. provide tax parity for short‑term car rentals to include peer‑to‑peer rentals
SECTION 7.1.(a) G.S. 105‑187.1(a) reads as rewritten:
"(a) The following definitions and the definitions in G.S. 105‑164.3 apply to this Article:
(3b) Peer‑to‑peer vehicle sharing provider. As defined in G.S. 20‑280.15.
(6) Retailer. A retailer as
defined in G.S. 105‑164.3 who is engaged in the business of selling,
leasing, renting, offering short‑term leases or rentals, long‑term
leases or rentals, or offering vehicle subscriptions for motor
vehicles.
(7) Short‑term lease or
rental. A lease or rental of a motor vehicle or motor vehicles, vehicles
by a person, including a vehicle sharing service, service or a
peer‑to‑peer vehicle sharing provider, that is not a long‑term
lease or rental or a vehicle subscription.
."
SECTION 7.1.(b) G.S. 105‑187.3(a) reads as rewritten:
"(a) Tax Base. The Except
as otherwise provided in G.S. 105‑187.5, the tax imposed by this
Article is applied to the sum of the retail value of a motor vehicle for which
a certificate of title is issued and any fee regulated by G.S. 20‑101.1.
The tax does not apply to the sales price of a service contract, provided the
charge is separately stated on the bill of sale or other similar document given
to the purchaser at the time of the sale."
SECTION 7.1.(c) G.S. 105‑187.4(a) reads as rewritten:
"(a) Method. The Except
as otherwise provided in G.S. 105‑187.5, the tax imposed by this
Article must be paid to the Commissioner when applying for a certificate of
title for a motor vehicle. The Commissioner may not issue a certificate of
title for a vehicle until the tax imposed by this Article has been paid. The
tax may be paid in cash or by check."
SECTION 7.1.(d) G.S. 105‑187.5 reads as rewritten:
"§ 105‑187.5. Alternate tax for Tax on a
limited possession commitment.
(a) Applicability. A retailer listed in this section shall pay a tax on the gross receipts of a limited possession commitment in accordance with this section. The tax is for the privilege of using the highways of this State and is imposed on a retailer but is to be added to a limited possession commitment and paid by the person who enters into a limited possession commitment with the retailer. The retailers are:
(1) A retailer that purchases a motor vehicle for use as a limited possession commitment and makes an election under this section.
(2) A peer‑to‑peer vehicle sharing provider.
(a1) Election. A retailer that has purchased a motor
vehicle for a limited possession commitment may elect not to pay to
pay the tax imposed by this section instead of the tax imposed by this
Article at the rate set in G.S. 105‑187.3 when applying for a
certificate of title for a motor vehicle purchased by the retailer for a
limited possession commitment. A retailer who makes this election shall pay a
tax on the gross receipts of the limited possession commitment of the vehicle. title.
To make the election, the retailer shall complete a form provided by the
Division providing the information needed to collect the alternate tax based on
gross receipts. Once made, an election is irrevocable. The Division shall
notify the Secretary of Revenue of a retailer who makes the election under this
subsection.
(a2) Gross Receipts. Gross receipts do not include
the amount of any allowance given for a motor vehicle taken in trade as a
partial payment on the limited possession commitment. The portion of a
limited possession commitment billing or payment that represents any amount
applicable to the sales price of a service contract as defined in G.S. 105‑164.3
should not be included in the gross receipts subject to the tax imposed by this
Article. section. The charge must be separately stated on
documentation given to the purchaser at the time the limited possession
commitment goes into effect, or on the monthly billing statement or other
documentation given to the purchaser. When a limited possession commitment is
sold to another retailer, the seller of the limited possession commitment
should provide to the purchaser of the limited possession commitment the
documentation showing that the service contract and applicable sales taxes were
separately stated at the time the limited possession commitment went into effect
effect, and the new retailer must retain the information to support
an allocation for tax computed on the gross receipts subject to highway use
tax. Like the tax imposed by G.S. 105‑187.3, this alternate tax
is a tax on the privilege of using the highways of this State. The tax is
imposed on a retailer, but is to be added to the limited possession commitment
of a motor vehicle and thereby be paid by the person who enters into a limited
possession commitment with a retailer.
(b) Rate. The applicable
tax rates on the gross receipts from a limited possession commitment are as
listed in this subsection. Gross receipts does not include the amount of any
allowance given for a motor vehicle taken in trade as a partial payment on the limited
possession commitment. The maximum tax in G.S. 105‑187.3(a1) on
certain motor vehicles applies to a continuous limited possession commitment of
such a motor vehicle to the same person. The applicable tax rates are as
follows:
Type of Limited Possession Commitment Tax Rate
Short‑term lease or rental 8%
Vehicle subscription 5%
Long‑term lease or rental 3%
(c) Method. A retailer who elects to pay tax on
the gross receipts of the limited possession commitment of a motor vehicle
shall make this election when applying for a certificate of title for the
vehicle. To make the election, the retailer shall complete a form provided by
the Division giving information needed to collect the alternate tax based on
gross receipts. Once made, an election is irrevocable.
(d) Administration. The
Division shall notify the Secretary of Revenue of a retailer who makes the
election under this section. A retailer who makes this election pays
the tax under this section shall report and remit to the Secretary the tax
on the gross receipts of the limited possession commitment of the motor
vehicle. The Secretary shall administer the tax imposed by this section on
gross receipts in the same manner as the tax levied under G.S. 105‑164.4(a)(2).
The administrative provisions and powers of the Secretary that apply to the tax
levied under G.S. 105‑164.4(a)(2) apply to the tax imposed by this section.
In addition, the Division may request the Secretary to audit a retailer who
elects to pay tax on gross receipts under this section. When the Secretary
conducts an audit at the request of the Division, the Division shall reimburse
the Secretary for the cost of the audit, as determined by the Secretary. In
conducting an audit of a retailer under this section, the Secretary may audit
any sales of motor vehicles made by the retailer."
SECTION 7.2.(a) G.S. 153A‑156 reads as rewritten:
"§ 153A‑156. Gross receipts tax on short‑term leases or rentals.
(a) As a substitute for
and in replacement of the ad valorem tax, which is excluded by G.S. 105‑275(42),
a A county may levy a gross receipts tax on the gross receipts from
the short‑term lease or rental of vehicles at retail to the general
public. The tax rate shall not exceed one and one‑half percent (1.5%) of
the gross receipts from such the short‑term leases or
rentals.
(b) If a county enacts the
substitute and replacement a gross receipts tax pursuant to this
section, any an entity required to collect the tax shall include
a provision in each retail short‑term lease or rental agreement noting
that the percentage amount enacted by the county of the total lease or rental
price, excluding highway use tax, is being charged as a tax on gross receipts.
For purposes of this section, the transaction giving rise to the tax shall
be deemed to have occurred occurs at the location of the entity
from which where the customer takes delivery of the vehicle. The tax
shall be collected at the time of lease or rental and placed in a segregated
account until remitted to the county.
(e) The following definitions
in G.S. 105‑187.1 apply in this section:section.
(1) Short‑term lease or rental. Defined in
G.S. 105‑187.1.
(2) Vehicle. Any of the following:
a. A motor vehicle of the passenger type,
including a passenger van, minivan, or sport utility vehicle.
b. A motor vehicle of the cargo type, including
cargo van, pickup truck, or truck with a gross vehicle weight of 26,000 pounds
or less used predominantly in the transportation of property for other than
commercial freight and that does not require the operator to possess a
commercial drivers license.
c. A trailer or semitrailer with a gross vehicle
weight of 6,000 pounds or less.
."
SECTION 7.2.(b) G.S. 160A‑215.1 reads as rewritten:
"§ 160A‑215.1. Gross receipts tax on short‑term leases or rentals.
(a) As a substitute for
and in replacement of the ad valorem tax, which is excluded by G.S. 105‑275(42),
a A city may levy a gross receipts tax on the gross receipts from
the short‑term lease or rental of vehicles at retail to the general
public. The tax rate shall not exceed one and one‑half percent (1.5%) of
the gross receipts from such the short‑term leases or
rentals.
(b) If a city enacts the
substitute and replacement a gross receipts tax pursuant to this
section, any an entity required to collect the tax shall include
a provision in each retail short‑term lease or rental agreement noting
that the percentage amount enacted by the city of the total lease or rental
price, excluding highway use tax, is being charged as a tax on gross receipts.
For purposes of this section, the transaction giving rise to the tax shall
be deemed to have occurred occurs at the location of the entity
from which where the customer takes delivery of the vehicle. The tax
shall be collected at the time of lease or rental and placed in a segregated
account until remitted to the city.
(e) The following definitions
in G.S. 105‑187.1 apply in this section:section.
(1) Short‑term lease or rental. Defined in
G.S. 105‑187.1.
(2) Vehicle. Any of the following:
a. A motor vehicle of the passenger type,
including a passenger van, minivan, or sport utility vehicle.
b. A motor vehicle of the cargo type, including
cargo van, pickup truck, or truck with a gross vehicle weight rating of 26,000
pounds or less used predominantly in the transportation of property for other
than commercial freight and that does not require the operator to posses a
commercial drivers license.
c. A trailer or semitrailer with a gross vehicle
weight of 6,000 pounds or less.
."
SECTION 7.2.(c) G.S. 105‑550 reads as rewritten:
"§ 105‑550. Definitions.
The definitions in G.S. 105‑164.3
G.S. 105‑164.3, G.S. 105‑187.1, and the
following definitions apply in this Article:
(1) Authority. A regional public transportation authority or a regional transportation authority created pursuant to Article 26 or Article 27 of Chapter 160A of the General Statutes.
(2) Long‑term lease or rental. Defined in
G.S. 105‑187.1.
(3) Motorcycle. Defined in G.S. 20‑4.01.
(4) Repealed by Session Laws 1998‑98, s. 33, effective August 14, 1998.
(5) Public transportation system. Any combination of real and personal property established for purposes of public transportation. The systems may include one or more of the following: structures, improvements, buildings, equipment, vehicle parking or passenger transfer facilities, railroads and railroad rights‑of‑way, rights‑of‑way, bus services, shared‑ride services, high‑occupancy vehicle facilities, car‑pool and vanpool programs, voucher programs, telecommunications and information systems, integrated fare systems, bus lanes, and busways. The term does not include, however, streets, roads, or highways except to the extent they are dedicated to public transportation vehicles or to the extent they are necessary for access to vehicle parking or passenger transfer facilities.
(6) Short‑term lease or rental. Defined in
G.S. 105‑187.1.
(7) U‑drive‑it vehicle. Defined in G.S. 20‑4.01."
SECTION 7.2.(d) G.S. 105‑551 reads as rewritten:
"§ 105‑551. Tax on gross receipts authorized.
(a) Tax. The board of
trustees of an Authority may levy a privilege tax on a retailer who is
engaged in the business of leasing or renting U‑drive‑it vehicles
or motorcycles described in this subsection based on the gross
receipts derived by the retailer from the short‑term lease or rental of these
vehicles. The tax rate must be a percentage and may not exceed five percent
(5%). A tax levied under this section applies to short‑term leases or
rentals made by a retailer whose place of business or inventory is located
within the territorial jurisdiction of the Authority. This tax is in
addition to all other taxes. The retailers subject to this section are:
(1) A retailer engaged in the business of leasing or renting U‑drive‑it vehicles or motorcycles and whose place of business or inventory is located within the territorial jurisdiction of the Authority.
(2) A peer‑to‑peer vehicle sharing provider if the customer takes delivery of the vehicle within the territorial jurisdiction of the Authority.
."
SECTION 7.2.(e) G.S. 105‑552 reads as rewritten:
"§ 105‑552. Collection and administration of gross receipts tax.
(b) Collection. A tax
levied by an Authority under this Article shall be collected by the Authority
but shall otherwise be administered in the same manner as the optional gross
receipts tax levied by under G.S. 105‑187.5. Like the optional
gross receipts tax, a tax levied under this Article is to be added to the
lease or rental price of a U‑drive‑it vehicle or motorcycle the
vehicle and thereby be paid by the person to whom it is leased or rented.
A tax levied under this Article
applies regardless of whether the a retailer who leases or
rents the U‑drive‑it vehicle or motorcycle has the option of
paying the gross receipts tax under G.S. 105‑187.5 has elected
to pay the optional gross receipts tax on the lease or rental receipts
from the vehicle. A tax levied under this Article must be paid to the Authority
that levied the tax by the date an optional the gross receipts
tax levied under G.S. 105‑187.5 is payable or would be
payable to the Secretary of Revenue under G.S. 105‑187.5 if the
retailer who leases or rents the U‑drive‑it vehicle or motorcycle
had elected to pay the optional gross receipts tax.
(c) Penalties and Remedies. The penalties and remedies that apply to local sales and use taxes levied under Subchapter VIII of this Chapter apply to a tax levied under this Article. The board of trustees of an Authority may exercise any power the Secretary of Revenue or a board of county commissioners may exercise in collecting local sales and use taxes."
SECTION 7.3.(a) G.S. 20‑280.15 reads as rewritten:
"§ 20‑280.15. Definitions.
The following definitions apply in this Article:
(1) Airport operator. As defined in G.S. 20‑280.1.
(2) Peer‑to‑peer vehicle sharing. The
authorized use of a shared vehicle by an individual other than the shared
vehicle owner through a peer‑to‑peer vehicle sharing program.
(3) Peer‑to‑peer
vehicle sharing program. A business platform that connects shared registered
vehicle owners that have not made an election under G.S. 105‑187.5
with drivers to enable the sharing of vehicles for financial consideration.
(4) Shared vehicle. A vehicle that is available for sharing through a peer‑to‑peer vehicle sharing program.
(5) Shared vehicle owner. The registered owner of
a shared vehicle that is made available for sharing through a peer‑to‑peer
vehicle sharing program.
(6) Vehicle Peer‑to‑peer
vehicle sharing provider. The A person or entity that
operates, facilitates, or administers the provision of personal vehicle
sharing through a peer‑to‑peer vehicle sharing program."
SECTION 7.3.(b) G.S. 20‑280.17 reads as rewritten:
"§ 20‑280.17. Airport operators.
An airport operator may (i) charge
peer‑to‑peer vehicle sharing programs providers a
reasonable fee for the use of the airport's facility, (ii) require an
identifying decal be displayed on all shared vehicles that operate on airport
property, (iii) require the purchase and use of equipment or establish other
appropriate mechanisms for monitoring and auditing compliance, including having
a peer‑to‑peer vehicle sharing program provider provide
data for purposes of monitoring and auditing compliance, and (iv) designate a
location where shared vehicles may stage on the airport operator's
facility."
SECTION 7.4. This Part becomes effective October 1, 2025, and applies to gross receipts derived from rentals or leases billed on or after that date.
part VIII. effective date
SECTION 8. Except as otherwise provided, this act is effective when it becomes law.