2019 General Administration Law Changes

This subdivision was amended to update the reference to the Internal Revenue Code from February 9, 2018 to January 1, 2019. Any amendments to the Internal Revenue Code enacted after February 9, 2018 that increase North Carolina taxable income for the 2018 taxable year become effective for tax year 2019.

(Effective March 20, 2019; SB 56, s. 1.1, S.L. 2019-6.)

This subdivision was amended to make several clarifying changes to the definition of the term “federal determination.” Additional language was also added to make it clear that a taxpayer must report a federal determination to the Secretary when the federal determination is “final.” 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 final in the following circumstances:

1. 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. 
2. 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.

(Effective July 26, 2019, and applies to a federal determination on or after that date; SB 523, s. 6.3.(a), S.L. 2019-169.)

This subdivision was amended to add three additional Articles to which a penalty for failure to file an informational return timely and a penalty for failure to file an informational return in the format prescribed by the Secretary apply.

Under prior law, the penalty for failure to file an informational return timely and the penalty for failure to file an informational return in the format prescribed by the Secretary applied to the following Articles:

• Article 4A, Withholding Tax 
• Article 5, Sales and Use Tax 
• Article 9, General Administration; Penalties and Remedies 
• Article 36C, Gasoline, Diesel, and Blends 
• Article 36D, Alternative Fuel

As amended, the penalty for failure to file an informational return timely and the penalty for failure to file an informational return in the format prescribed by the Secretary apply to the following Articles:

• Article 2A, Tobacco Products Tax 
• Article 2C. Alcoholic Beverage License and Excise Tax 
• Article 4, Income Tax 
• Article 4A, Withholding Tax 
• Article 5, Sales and Use Tax 
• Article 9, General Administration; Penalties and Remedies 
• Article 36C, Gasoline, Diesel, and Blends 
• Article 36D, Alternative Fuel

(Effective January 1, 2020, and applies to informational returns due to be filed on or after that date; SB 523, s. 5.2.(a), S.L. 2019-169.)

This subsection was amended to restore the venue provision of criminal tax law violations to the Office of the Secretary in Raleigh, which was the law prior to December 1, 2018. As rewritten, the new law provides that, “[a] violation of tax law is considered an act committed in part at the office of the Secretary in Raleigh.”

(Effective December 1, 2018, and applies to offenses committed on or after that date; SB 523, s. 6.8.(a), S.L. 2019-169.)

This subdivision was added and provides the Secretary may compromise the liability of a taxpayer for certain sales tax it failed to collect or use tax it failed to pay on repair, maintenance, and installation services provided by a real property manager under a property management contract. A complete explanation is located under Special Provisions of the Sales and Use Tax section of this document.

(Effective July 26, 2019, SB 523, s. 3.9.(f), S.L. 2019-169. The provisions of G.S. 105-164.15A apply to the implementation of this change as if it is a decrease in the tax rate; SB 557, s. 7.(a), S.L. 2019-246. Originally, the effective date referenced the date a real property management contract was entered into, however, this provision was eliminated in subsequent legislation; SB 557, s. 7.(a), S.L. 2019-246.)

This subdivision was amended to simplify the language used to explain the contingent event exception to the general statute of limitations for obtaining a refund. Additionally, the law was expanded to allow a taxpayer to use the contingent event exception to request a refund of an overpayment if the taxpayer files written notice with the Secretary prior to the expiration of the general statute of limitations or any exception provided under G.S. 105-241.6. Under prior law, a taxpayer could only use the contingent event exception if the taxpayer filed a written notice with the Secretary before expiration of the general statute of limitations.

(Effective July 26, 2019 and applies to a request for a refund of an overpayment filed on or after that date; SB 523, s. 6.1.(a), S.L 2019-169.)

This subdivision was amended to add language to specify that the date a taxpayer files an amended return with the Internal Revenue Service (“IRS”) is presumed to be the date the return was recorded by the IRS. This provision clarifies the calculation of the statute of limitations for the Department to propose an assessment of additional tax when a taxpayer files a federal amended return but does not timely file a State amended return.

(Effective July 26, 2019, and applies to an assessment proposed on or after that date; SB 523, s. 6.2.(a), S.L. 2019-169.)

This subsection was amended to clarify that an assessment remains a proposed assessment until a final determination is sent to the taxpayer.

(Effective March 20, 2019; SB 56, s. 5.7, S.L. 2019-6.)

This subdivision was amended to add a “notice of denial of refund” to the list of notices that the Department is required to deliver to taxpayers either in person or by United States mail to the taxpayers’ last known address.

(Effective July 26, 2019; SB 523, s. 6.5, S.L 2019-169.)

This subsection was amended to expand the circumstances under which the Department may collect a tax related to the dismissal of a contested case at the Office of Administrative Hearings. As amended, the Department may collect a tax when a petition for a contested case at the Office of Administrative Hearings is dismissed and the period for timely filing a petition has expired. Under prior law, the tax became collectible when the Office of Administrative Hearings dismissed a petition for a contested case for lack of jurisdiction because the sole issue was the constitutionality of a statute and not the application of a statute.

(Effective July 26, 2019; SB 523, s. 6.7, S.L 2019-169.)

This subsection was amended to allow the Department to impose a collection assistance fee 60 days after a tax debt is deemed collectible under G.S. 105-241.22. Under prior law, the collection assistance fee was assessed 90 days after the debt was deemed collectible. Additionally, the requirement that the Department mail a separate collection fee notice to the taxpayer earlier than 60 days after the debt becomes collectible has been removed.

(Effective January 1, 2020, and applies to tax debts that become collectible on or after that date; SB 523, s. 5.1.(a), S.L. 2019-169.)

This section was amended and provides certain relief from sales and use taxes due to the expansion of the sales tax base. A complete explanation is located under Special Provisions of the Sales and Use Tax section of this document.

(Effective March 20, 2019; SB 56, s. 5.8, S.L. 2019-6; and effective July 26, 2019; SB 523, s. 3.6, S.L. 2019-169.)

This subsection was amended to clarify the conditions under which a taxpayer may obtain relief from sales and use taxes on certain audits. A complete explanation is located under Special Provisions of the Sales and Use Tax section of this document.

(Effective July 26, 2019; SB 523, s. 3.7, S.L. 2019-169.)

G.S. 105-128, the statute authorizing the Secretary to require a power of attorney of each agent for any taxpayer under Article 3, was recodified to Article 9, the General Administration Article.

(Effective July 26, 2019; SB 523, s. 6.6.(a),(b), S.L 2019-169.)

This subdivision was amended to remove the word “Branch” and was substituted it with the word “Division.” The statute was revised to conform to other changes made in Session Law 2019-203.

(Effective October 1, 2019; HB 99, s. 9.(a), S.L. 2019-203.)

This subdivision was amended by adding new sub-subdivision (c1) to permit the disclosure of tax information associated with Articles 2A, 2C, or 2D to the Alcohol and Tobacco Tax and Trade Bureau of the United States Department of the Treasury.

(Effective March 20, 2019; SB 56, s. 4.10, S.L. 2019-6.)

The 2018 General Assembly modified this section to provide a method by which a taxpayer that is granted an automatic extension to file a federal income tax return is granted an automatic extension to file a state income or franchise tax return.

Under prior law, the Department required all taxpayers to timely submit a state extension application form to receive an extension of time to file a state income or franchise tax return. The Department did not accept a federal extension form in lieu of the North Carolina extension.

As amended, a person who is granted an automatic extension to file a federal income tax return, including a return of partnership income, is granted an automatic extension to file the corresponding state income tax return or franchise tax return. The person must certify on the North Carolina return that the person was granted a federal extension.

(Effective for taxable years beginning on or after January 1, 2019; SB 99, s. 38.4.(a), S.L. 2018-5.)

As amended, this subsection consolidates the sales and use tax distribution language for the consumer use tax collected on Form D-400, the individual income tax return.

(Effective March 20, 2019; SB 56, s. 5.9, S.L. 2019-6.)