North Carolina Department of Revenue

XXII. GENERAL ADMINISTRATION

G.S. 105-228.90(b)(1a) - Reference to the Internal Revenue Code Updated: This subdivision was amended to update the reference to the Internal Revenue Code from September 1, 1998, to June 1, 1999. As a result, the changes included in the Tax and Trade Relief Extension Act of 1998, which was part of Public Law 105-277, and tax benefits extended to military personnel serving in Kosovo in Public Law 106-21 have been adopted for North Carolina income tax purposes.
(Effective August 5, 1999; HB 1476, S.L. 99-415.)

G.S. 105-236(1) - Waiver of Bad Check Penalty: This subdivision was amended to delete the prohibition against waiving or reducing the bad check penalty. With this amendment and the accompanying change to G.S. 105-237(a), the bad check penalty can be waived or reduced by the Secretary upon making a record of the reasons for the waiver.
(Effective October 1, 1999, for penalties assessed on or after that date; SB 1112, s. 15, S.L. 99-438.)

G.S. 105-236(5) - Negligence Penalty for Large Income Tax Deficiency: Subparts b. and c. of this subdivision were amended to limit the existing 25% negligence penalty in subpart b. for large income tax deficiencies to individual income tax. For corporate income tax purposes, the applicable negligence penalty percentage is determined using the "Other large tax deficiency" provisions of subpart c. These changes were made to eliminate the problems created by the requirement that the understatement of taxable income equal or exceed 25% of a corporate income taxpayer's gross income and to treat deficiencies of corporate income tax the same as deficiencies of franchise tax.
(Effective October 1, 1999, for penalties assessed on or after that date; SB 1112, s. 16, S.L. 99-438.)

G.S. 105-236(8) - Statute of Limitations Extended: This subdivision was amended to extend the statute of limitations for prosecution for a violation of the subdivision from 3 years to 6 years. Under this subdivision, it is a Class 1 misdemeanor to willfully fail to collect or truthfully account for and pay over a tax as required by law.
(Effective for prosecutions brought on or after December 1, 1999 for cases in which the 3-year limit had not already expired; HB 1476, s. 2, S.L. 99-415.)

G.S. 105-236 (9) - Statute of Limitations Extended: This subdivision was amended to extend the statute of limitations for prosecution for a violation of the subdivision from 3 years to 6 years. Under this subdivision, it is a Class 1 misdemeanor to willfully fail to pay a tax, file a return, keep records, or supply information as required by law.
(Effective for prosecutions brought on or after December 1, 1999 for cases in which the 3-year limit had not already expired; HB 1476, s. 3, S.L. 99-415.)

G.S. 105-237(a) - Waiver of Bad Check Penalty: This subsection was amended to delete the prohibition against waiving or reducing the bad check penalty. With this amendment and the accompanying change to G.S. 105-236(1), the Secretary has the same authority to waive or reduce the bad check penalty as any other penalty.
(Effective October 1, 1999, for penalties assessed on or after that date; SB 1112, s. 17, S.L. 99-438.)

G.S. 105-241(b) - EFT for Estimated Corporate Income Payments: This subsection was amended to refer to the exception to the $240,000 threshold that was added in new G.S. 105-163.40(d). Under that new subsection, a corporation must pay its estimated State corporate income tax installments by electronic funds transfer if it is required to make its estimated payments of federal income tax by electronic funds transfer.
(Effective for taxable years beginning on or after January 1, 2000; SB 251, s. 8, S.L. 99-389.)

G.S. 105-241.1(e) - Conforming Change: This subsection was amended to delete the reference to forfeiture of a tax credit "pursuant to G.S. 105-163.014 or Article 3A of this Chapter" and replace it with a reference to forfeiture of a tax credit or benefit "pursuant to forfeiture provisions of this Chapter." This change was made to reflect new forfeiture provisions added to statutes outside Article 3A, such as the new consolidated energy credit in G.S. 105-129.16A, the new credit for low-income housing in G.S. 105-129.16B, and the new sales and use tax refund for nonprofit insurance companies in G.S. 105-164.14(i).
(Effective for taxable years beginning on or after January 1, 2000; SB 1115, s. 16, S.L. 99-360.)

G.S. 105-253(a) - Limited Liability Company Clarification: This subsection was amended to make it clear that the personal liability imposed by this subsection on officers, trustees, or receivers applies to limited liability companies.
(Effective July 22, 1999; SB 55, s. 34, S.L. 99-337.)

G.S. 105-259(b) - Secrecy Provision Changes: The 1999 General Assembly revised three of the secrecy exceptions in this subsection and added four new exceptions. The changes are as follows:

IFTA - (b)(7): This exception was expanded to allow the Department to exchange information with the International Fuel Tax Association, Inc. when the information is needed to fulfill a duty imposed on the Department or on the Division of Motor Vehicles. This Association is the governing board for the International Fuel Tax Agreement.
(Effective October 1, 1999; HB 280; s. 28.1, S.L. 1999-452.)

NC WORKS Information - (b)(9a): The 1998 session of the General Assembly enacted new subdivision (b)(9a) authorizing the Department to give to the Employment Security Commission information needed to administer the NC WORKS program. The information that can be provided is identifying information about individual income taxpayers, their filing status, and their income. The 1999 session amended this subdivision to add additional information to be provided, including the number of exemptions for children, the amount of the credit for children, and the amount of the credit for child and dependent care expenses.
(Effective July 22, 1999; HB 276, s. 8, S.L. 99-340)

Excise Tax Information - (b)(15): This exception was expanded in two ways. First, it adds law enforcement agencies to the list of agencies with which the Department can exchange information on the excise taxes imposed on tobacco products, soft drinks, alcoholic beverages, and unauthorized substances. Second, it adds a new reason for allowing an exchange of information on these taxes with the listed agencies. The new reason is to enable the Department to fulfill a duty imposed on it. Before this change, the exchange was authorized only when it would help the other agency fulfill a duty imposed on it.
(Effective August 10, 1999; SB 1112, s. 18, S.L. 99-438.)

N.C. Self-Insurance Guaranty Association - (b)(16a): This new exception allows the Department to give this Association information on the self-insurers' premiums as determined under G.S. 105-228.5(b),(b1), and (c) to enable that Association to collect the assessments authorized in G.S. 97-133(a).
(Effective June 25, 1999; HB 306, s. 7.1, S.L. 99-219.)

Secretary of Administration - (b)(22): This new exception allows the Department of Revenue to provide the Secretary of Administration with a list of vendors that meet at least one condition in G.S. 105-164.8(b) but refuse to collect this State's sales and use tax.
(Effective July 1, 1999; HB 1433, s. 8, S.L. 99-341.)

Persons Not Required to Pay Sales Tax - (b)(23): This new exception allows the Department to provide public access to a database of names and account numbers of taxpayers who are not required to pay sales and use taxes because they are exempt or because they have a Certificate of Authority that authorizes them to pay the tax directly to the Department.
(Effective July 1, 1999; HB 1433, s. 8, S.L. 99-341.)

Information on Article 3A Credits - (b)(24): This new exception allows the Department to provide the Department of Commerce and the Employment Security Commission a copy of the qualifying information submitted by taxpayers who claim any of the tax credits in Article 3A of Chapter 105, such as the jobs tax credit and the credit for investing in machinery and equipment. This subdivision was designated as subdivision (22) in the legislation that enacted it. Another subdivision with the number (22) and a subdivision (23) were enacted by other legislation. The Department has asked the Codifier of Statutes, which is the Attorney General's Office, to designate this subdivision as subdivision (24).
(Effective January 1, 2000. SB 1115, s. 2.1, S.L. 99-360.)

G.S. 105-266(c)(1) - Same Time for Refunds and Assessments: G.S. 105-241.1(e) allows a taxpayer to extend the period of time in which an assessment of additional tax may be made. This is most often done when a taxpayer is being audited and the taxpayer cannot provide all pertinent information before the statute of limitations on assessments expires. Previously, the law did not extend the time for a refund if an audit results in a discovery that the taxpayer has overpaid tax but the discovery is not made within the statute of limitations. This subdivision was amended to correct this and to provide that an agreement by a taxpayer to extend the time in which the Department can assess the taxpayer automatically extends the period of time for refunds of overpayments by the taxpayer.
(Effective August 10, 1999; SB 1112, s. 19, S.L. 99-438.)

G.S. 105-267 - Time Period for Protesting Taxes: This statute was rewritten to extend the period of time in which a taxpayer may timely protest the payment of most taxes levied under Chapter 105 from one year to three years after payment. Taxes levied under Articles 2A, 2C, or 2D must still be protested within 30 days after payment.
(Effective for taxes paid on or after January 1, 1999; HB 1476, s. 5, S.L. 99-415.)

G.S. 105-269.14 - Payment of Use Tax with Individual Income Tax: This new statute provides a new method for payment of use tax due on out-of-State consumer purchases. The new method is to report and pay the tax on the individual income tax return. The statute stipulates what must be included on the income tax form and in the instructions. It also specifies how the amount of use tax collected through this method is to be distributed to the counties and cities. One-third of the collections are to be distributed to the counties and cities in proportion to their other distributions of local sales and use tax revenue. The collections are not sourced to a particular county.
(Effective for taxable years beginning on or after January 1, 1999; HB 1433, s. 2, S.L. 99-341.)