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Sunset for Tax Credits – Effect on Future Installments and Carryforwards

In the past few years, several tax credits have been repealed. Taxpayers that qualified for these tax credits may continue to take any remaining installments and carryforwards of the tax credits after the sunset or repeal date if the taxpayer continues to meet the statutory eligibility requirements for each particular tax credit.

For example, the Article 3J credit for creating jobs was repealed for business activities that occurred on or after January 1, 2014. In tax year 2013, a taxpayer, who met all eligibility requirements set out in N.C. Gen. Stat §105-129.83 and satisfied the threshold requirement for job creation, created jobs in this State. The taxpayer claimed the jobs credit by filing Form NC-478J (the applicable NC-478 series form) and paying the fee of $500.00 with the 2013 tax return on April 15, 2014. The taxpayer claimed the first installment of the 2013 jobs credit on its 2014 tax return and the second installment on the 2015 return. Any unused portion of the first or second installment, if applicable, may be carried forward for the succeeding five years. The taxpayer is allowed to continue to take remaining installments as long as the taxpayer continues to meet the requirements of N.C. Gen. Stat. §105-129.83 and N.C. Gen. Stat. §105-129.87. If the taxpayer fails to maintain eligibility requirements, remaining installments are forfeited and only the carryforward amount of a previously accrued installment may be taken, subject to the carryforward provisions of N.C. Gen. Stat. §105-129.84.