2021 General Administration Tax Law Changes

State law defines the Internal Revenue Code as the Code enacted as of a certain date. When the General Statutes reference date to the Code is updated, North Carolina conforms to federal law that has been enacted as of that specified date, except for specific adjustments to the Code that are required by State law.

This subdivision was amended to update the reference to the Internal Revenue Code from May 1, 2020 to April 1, 2021. Any amendments to the Internal Revenue Code enacted after May 1, 2020 that increase North Carolina taxable income for the 2020 taxable year become effective for tax year 2021.

(Effective November 18, 2021; SB 105, s. 42.4.(a), S.L. 2021-180.)

This subdivision was amended to include additional licensees subject to the one thousand dollar ($1,000) penalty provision. As amended, if a person required to be licensed under Article 2A (the Tobacco Products Tax Act) fails to become licensed after written notification by the Department, the person is subject to a one thousand dollar ($1,000) penalty.

Note that there is a different penalty structure under Article 2A for delivery sellers and remote sellers who fail to obtain a license before accepting an order. See G.S. 105- 113.4F, 105-113.38C.

(Effective January 1, 2022 and applies to penalties assessed on or after that date; SB 105, s. 42.13E.(i), S.L. 2021-180.)

This subdivision was amended to replace the flat penalty amount assessed for failure to pay a tax when due to a graduated amount. The ten percent (10%) flat penalty is amended to a penalty of two percent (2%) of the tax due for the first month, with an additional two percent (2%) for each succeeding month, or fraction thereof, not to exceed ten percent (10%) in total.

(Effective July 1, 2022 and applies to tax assessed on or after that date; SB 105, s. 42.11.(a), S.L. 2021-180.)

In 2019, the General Assembly amended subdivision (b)(5) to simplify the language used to explain the contingent event exception to the general statute of limitations for obtaining a refund. In 2021, the General Assembly made additional changes to clarify that if the Secretary agrees to a taxpayer’s contingent event request for an “Other Event,” the period to file a request for refund of an overpayment is six months after the event concludes.

(Effective November 18, 2021; SB 105, s. 42.13A.(f), S.L. 2021-180.)

This subsection was amended to eliminate all the listed applications of the tax collection assistance fee by the Department of Revenue and is now subject to appropriation by the General Assembly. Previously, the statute provided a list of purposes that the collection fee could be used for by the Department. As amended, although the collection fee remains a receipt of the Department, its appropriation is now determined by the General Assembly.

(Effective July 1, 2021; SB 105, s. 34.1., S.L. 2021-180.)

This subsection states that a taxpayer must give information to the Secretary of Revenue when the Secretary requests it and lists the kinds of information on a return, report, or otherwise that the Secretary may request from a taxpayer.

As amended, the language under subdivision (5) was renumbered as subdivision (6) and new language was added to subdivision (5) in its place. This new language specifically states that the taxpayer must provide financial or tax documentation required to determine the appropriate adjustment under G.S. 105-130.5A (Secretary’s authority to adjust net income or require a combined return) and if such information is not timely provided as required under G.S. 105-130.5A(a), the Secretary may propose any adjustment allowable under Part 1 of Article 4 (Corporation Income Tax) of this Chapter.

(Effective November 18, 2021; SB 105, s. 42.13B.(f), S.L. 2021-180.)

This section was rewritten to provide the Secretary the authority to determine when a truncated taxpayer identification number may be used on any return, statement, or other document required to be filed with or furnished to the Department. Previously, G.S. 105-252.1 required the authorization to be specifically enacted in Chapter 105.

(Effective November 18, 2021; SB 105, s. 42.13A.(g), S.L. 2021-180.)

This subsection was amended to make changes to the following subdivisions:

Subdivision (6) requires the Secretary of Revenue to annually prepare and publish a report on the quality of services provided to taxpayers through the Taxpayer Assistance Call Center, walk-in assistance, and taxpayer education. As amended, the Joint Legislative Oversight Committee on General Government was added to the list of who must receive this annual report. Previously, it was only required to be submitted to the Joint Legislative Commission on Governmental Operations.

Subdivision (8) was amended to change the dates on which a semiannual report on the Department of Revenue’s activities listed within this subdivision must be submitted by. The due dates of this report were changed from January 1 and July 1 to February 15 and August 15 of each year. Also as amended, the Joint Legislative Oversight Committee on General Government was added to the list of who must receive this report. Prior to the amendment, it was required to only be submitted to the Joint Legislative Commission on Governmental Operations and the Revenue Laws Study Committee.

(Effective November 18, 2021 and applies to reports submitted on or after that date; SB 105, s. 37.10., S.L. 2021-180.)

This section was amended to remove all language referring to the “Section of Community Corrections of the Division of Adult Correction and Juvenile Justice of the Department of Public Safety” and replace with “Division of Community Supervision and Reentry of the Department of Adult Correction.” This change was made to refer to the new name of this division.

(Effective January 1, 2023; SB 105, s. 19C.9.(v1), S.L. 2021-180.)

This subsection was amended to remove subdivision (5b) which stated tax information may be disclosed for the purpose of furnishing “to the finance officials of a city a list of the utility taxable gross receipts and piped natural gas tax revenues attributable to the city under G.S. 105-116.1 and G.S. 105-187.44 or under former G.S. 105-116 and G.S. 105-120.” This subdivision was removed because it is no longer needed since the statutory references within it have previously been repealed.

(Effective November 18, 2021; SB 105, s. 42.13C.(b), S.L. 2021-180.)