Signed by Governor Roy Cooper III

Vote Smart's Synopsis:

Vote to pass a bill that amends state income and sales tax laws and regulations.

Highlights:

• Establishes the standard deduction amount as zero for an individual not eligible for a standard deduction under section 63 of the Code (Sec. 1).

• Establishes the standard deduction amount as the following for all other taxpayers (Sec. 1):

• $21,500 for those filing as married (filing jointly/surviving spouse);

• $16,125 for those filing as head of household;

• $10,750 for those filing as single; and

• $10,750 for those filing as married (filing separately).

• Specifies that the preceding highlight will become effective for taxable years beginning on or after January 1, 2020 (Sec. 1).

• Expands the conditions within the definition of a “holding company” to include the condition in which a corporation owns copyrights, patents, or trademarks that represent more than 80 percent of its total assets, or receives royalties and license fees that represent more than 80 percent of its gross income, and it is 100 percent directly owned by a corporation that meets all of the following conditions (Sec. 2):

• Is a manufacturer;

• Generates revenues in excess of $5 billion for income tax purposes from its manufactured goods; and

• Includes in its net worth an investment in a subsidiary that owns copyrights, patents, or trademarks.

• Specifies that the preceding highlight will become effective for taxable years beginning on or after January 1, 2020, and applicable to the calculation of franchise tax on the 2019 and later corporate income tax returns (Sec. 1).

• Specifies that sales receipts are considered in this state if the taxpayer’s market for the receipts is in this state (Sec. 3).

• Specifies that a taxpayer’s market for receipts is in this state under the following circumstances (Sec. 3):

• In the case of sale, rental, lease, or license of real property, if and to the extent the property is located in this state;

• In the case of rental, lease, or license of tangible personal property, if and to the extent the property is located in this state;

• In the case of sale of tangible personal property, if and to the extent the property is received in this state by the purchaser;

• In the case of sale of a service, if and to the extent the service is delivered to a location in this state;

• In the case of intangible property that is rented, leased, or licensed, if and to the extent the property is used in this state; and

• In the case of intangible property that is sold, if and to the extent the property is used in this state.

• Requires a corporation that does business in this state and in one or more other states to apportion its net worth to this state (Sec. 3).

• Defines “marketplace facilitator” as a person that, directly or indirectly and whether through one or more affiliates, does both of the following (Sec. 4):

• Lists or otherwise makes available for sale a marketplace seller’s items through a marketplace owned or operated by the marketplace facilitator; and

• Does one or more of the following:

• Collects the sales price or purchase price of a marketplace seller’s items or otherwise processes payment; and or

• Makes payment processing services available to purchasers for the sale of a marketplace seller’s items. 

• Expands the conditions in which a retailer who makes a remote sale will be considered engaged in business in this state and thus subject to the tax levied under this article, to include a retailer who is also a marketplace facilitator that makes sales, including all marketplace-facilitated sales for all marketplace sellers, sourced to this state for the previous or the current calendar year that meets either of the following (Sec. 4):

• Gross sales in excess of $100,000; or

• 200 or more separate transactions.

• Specifies that the following highlights apply to a marketplace facilitator that is described in the preceding highlight (Sec. 4).

• Requires a marketplace facilitator to hold itself liable for collecting and remitting the sales and use tax on each marketplace-facilitated sale, and to comply with the same requirements and procedures as all other retailers registered or required to be registered to collect and remit sales and use tax in this state (Sec. 4).

• Requires a marketplace facilitator to provide information on gross sales and the number of separate transactions to each marketplace seller in regards to marketplace-facilitated sales that are made on behalf of the marketplace seller and are sourced to this state (Sec. 4).

• Specifies that the purchaser may still be obligated to remit use tax for any taxable transaction for which a marketplace facilitator does not collect and remit sales or use tax (Sec. 4).

Full Bill Text