Bill Text: NC H1829 | 2010 | Regular Session | Amended
Bill Title: Renewable Energy Incentives
Spectrum: Slight Partisan Bill (Democrat 8-3)
Status: (Passed) 2010-08-02 - Ch. SL 2010-167 [H1829 Detail]
Download: North_Carolina-2010-H1829-Amended.html
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2009
H 3
HOUSE BILL 1829*
Committee
Substitute Favorable 6/3/10
Third Edition Engrossed 6/9/10
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Short Title: Econ. Devpt. and Tax Collection Changes. |
(Public) |
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Sponsors: |
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Referred to: |
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May 20, 2010
A BILL TO BE ENTITLED
AN ACT to extend the mill rehabilitation credit; to make changes to the credit for investing in renewable energy property; to establish a credit for constructing a renewable energy property facility; to lower the sales tax compliance burden on small retailers; to relieve the annual report compliance burden on small business; to reduce the franchise tax burden on construction companies; and to improve the tax and debt collection process, as recommended by the Revenue Laws Study Committee.
The General Assembly of North Carolina enacts:
extend mill rehabilitation credit
SECTION 1.(a) G.S. 105‑129.75 reads as rewritten:
"§ 105‑129.75. Sunset.
This Article expires January 1, 2011, January 1,
2014, for rehabilitation projects for which an application for an
eligibility certification is submitted on or after that date."
SECTION 1.(b) This section is effective when it becomes law.
changes to credit for investing in renewable energy property
SECTION 2.(a) G.S. 105‑129.15 reads as rewritten:
"§ 105‑129.15. Definitions.
The following definitions apply in this Article:
…
(2) Cost. – In the case of property owned by the
taxpayer, cost The cost of property is determined pursuant to
regulations adopted under section 1012 of the Code, subject to the limitation
on cost provided in section 179 of the Code. In the case of property the
taxpayer leases from another, cost is value as determined pursuant to G.S. 105‑130.4(j)(2).
…
(4b) Installation. – Renewable energy property that, standing alone or in combination with other machinery, equipment, or real property, is able to produce usable renewable energy on its own.
(4e) Pass‑through entity. – Defined in G.S. 105‑228.90.
...."
SECTION 2.(b) G.S. 105‑129.16A reads as rewritten:
"§ 105‑129.16A. Credit for investing in renewable energy property.
(a) Credit. – If a taxpayer that has constructed, purchased, or leased renewable energy property places it in service in this State during the taxable year, the taxpayer is allowed a credit equal to thirty‑five percent (35%) of the cost of the property. In the case of renewable energy property that serves a single‑family dwelling, the credit must be taken for the taxable year in which the property is placed in service. For all other renewable energy property, the entire credit may not be taken for the taxable year in which the property is placed in service but must be taken in five equal installments beginning with the taxable year in which the property is placed in service. Upon request of a taxpayer who leases renewable energy property, the lessor of the property must provide the taxpayer with a statement that describes the renewable energy property and states the cost of the property.
(b) Expiration. – If, in one of the years in which the installment of a credit accrues, the renewable energy property with respect to which the credit was claimed is disposed of, taken out of service, or moved out of State, the credit expires and the taxpayer may not take any remaining installment of the credit. The taxpayer may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105‑129.17. No credit is allowed under this section to the extent the cost of the renewable energy property was provided by public funds.
(c) Ceilings. – The credit allowed by this section may not exceed the applicable ceilings provided in this subsection.
(1) Nonresidential Property. – A ceiling of two million five hundred thousand dollars ($2,500,000) per installation applies to renewable energy property placed in service for any purpose other than residential.
(2) Residential Property. – The following ceilings apply to renewable energy property placed in service for residential purposes:
a. One thousand four hundred dollars ($1,400) per dwelling unit for solar energy equipment for domestic water heating, including pool heating.
b. Three thousand five hundred dollars ($3,500) per dwelling unit for solar energy equipment for active space heating, combined active space and domestic hot water systems, and passive space heating.
c. Ten thousand five hundred dollars ($10,500) per installation for any other renewable energy property for residential purposes.
d. Eight thousand four hundred dollars ($8,400) per installation for a geothermal heat pump or geothermal equipment.
(d) No Double Credit. – A taxpayer that claims any other credit allowed under this Chapter with respect to renewable energy property may not take the credit allowed in this section with respect to the same property. A taxpayer may not take the credit allowed in this section for renewable energy property the taxpayer leases from another unless the taxpayer obtains the lessor's written certification that the lessor will not claim a credit under this Chapter with respect to the property.
(e) Allocation. – Notwithstanding G.S.105‑131.8 and G.S. 105‑269.15, a pass‑through entity that qualifies for the credit provided in this section may allocate the credit among any of its owners in its discretion as long as an owner's adjusted basis in the pass‑through entity, as determined under the Code, at the end of the taxable year in which the renewable energy property is placed in service, is at least forty percent (40%) of the amount of credit allocated to that owner. Owners to whom a credit is allocated are allowed the credit as if they had qualified for the credit directly. A pass‑through entity and its owners must include with their tax returns for every taxable year in which an allocated credit is claimed a statement of the allocation made by the pass‑through entity and the allocation that would have been required under G.S. 105‑131.8 or G.S. 105‑269.15.
(f) Forfeiture for Change in Ownership. – If an owner of a pass‑through entity that has qualified for the credit allowed under this section disposes of all or a portion of the owner's interest in the pass‑through entity within five years from the date the renewable energy property is placed in service and the owner's interest in the pass‑through entity is reduced to less than two‑thirds of the owner's interest in the pass‑through entity at the time the renewable energy property was placed in service, the owner forfeits a portion of the credit. The amount forfeited is determined by multiplying the amount of credit by the percentage reduction in ownership and then multiplying that product by the forfeiture percentage. The forfeiture percentage equals the recapture percentage found in the table in section 50(a)(1)(B) of the Code. The remaining allowable credit is allocated equally among the five years in which the credit is claimed.
(g) Exceptions to Forfeiture. – Forfeiture as provided in subsection (e) of this section is not required if the change in ownership is the result of any of the following:
(1) The death of the owner.
(2) A merger, consolidation, or similar transaction requiring approval by the shareholders, partners, or members of the taxpayer under applicable State law, to the extent the taxpayer does not receive cash or tangible property in the merger, consolidation, or other similar transaction.
(h) Liability From Forfeiture. – A taxpayer or an owner of a pass‑through entity that forfeits a credit under this section is liable for all past taxes avoided as a result of the credit plus interest at the rate established under G.S. 105‑241.1(i), computed from the date the taxes would have been due if the credit had not been allowed. The past taxes and interest are due 30 days after the date the credit is forfeited. A taxpayer or owner of a pass‑through entity that fails to pay the taxes and interest by the due date is subject to the penalties provided in G.S. 105‑236.
(e)(i) Sunset. – This section is repealed
effective for renewable energy property placed into service on or after January
1, 2016."
SECTION 2.(c) G.S. 105-259(b) is amended by adding the following new subdivision:
"(40) To furnish to a taxpayer claiming a credit under G.S. 105-129.16A information used by the Secretary to adjust the amount of the credit claimed by the taxpayer."
SECTION 2.(d) This section is effective for taxable years beginning on or after January 1, 2010.
establish credit for constructing a renewable energy property facility
SECTION 3.(a) Article 3B of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑129.16I. Credit for constructing a renewable energy property facility.
(a) Credit. – A taxpayer that constructs and places in service in this State a commercial facility for the manufacture of renewable energy property is allowed a credit equal to twenty‑five percent (25%) of the cost to the taxpayer of constructing and equipping the facility. The entire credit may not be taken for the taxable year in which the facility is placed in service but must be taken in seven equal annual installments beginning with the taxable year in which the facility is placed in service. If, in one of the years in which the installment of a credit accrues, the facility with respect to which the credit was claimed is disposed of or taken out of service, the credit expires and the taxpayer may not take any remaining installment of the credit. The taxpayer may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105‑129.17. A taxpayer that claims any other credit allowed under this Chapter with respect to construction of a facility may not take the credit allowed in this section with respect to the same facility.
(b) Sunset. – This section is repealed effective for a renewable energy property facility placed in service on or after January 1, 2014."
SECTION 3.(b) This section becomes effective for taxable years beginning on or after January 1, 2011.
lower sales tax compliance burden on small retailers
SECTION 4.(a) G.S. 105‑164.16(b1) reads as rewritten:
"(b1) Monthly. – A taxpayer who is consistently
liable for at least one hundred dollars ($100.00) but less than ten thousand
dollars ($10,000) fifteen thousand dollars ($15,000) a month in
State and local sales and use taxes must file a return and pay the taxes due on
a monthly basis. A monthly return is due by the 20th day of the month following
the calendar month covered by the return."
SECTION 4.(b) G.S. 105‑164.16(b2) reads as rewritten:
"(b2) Prepayment. – A taxpayer who is consistently
liable for at least ten thousand dollars ($10,000) fifteen thousand
dollars ($15,000) a month in State and local sales and use taxes must make
a monthly prepayment of the next month's tax liability. The prepayment is due
on the date a monthly return is due. The prepayment must equal at least sixty‑five
percent (65%) of any of the following:
(1) The amount of tax due for the current month.
(2) The amount of tax due for the same month in the preceding year.
(3) The average monthly amount of tax due in the preceding calendar year."
SECTION 4.(c) G.S. 105‑164.16(b1), as rewritten by subsection (a) of this section, reads as rewritten:
"(b1) Monthly. – A taxpayer who is consistently
liable for at least one hundred dollars ($100.00) but less than fifteen
thousand dollars ($15,000) twenty thousand dollars ($20,000) a month
in State and local sales and use taxes must file a return and pay the taxes due
on a monthly basis. A monthly return is due by the 20th day of the month
following the calendar month covered by the return."
SECTION 4.(d) G.S. 105‑164.16(b2), as rewritten by subsection (b) of this section, reads as rewritten:
"(b2) Prepayment. – A taxpayer who is consistently
liable for at least fifteen thousand dollars ($15,000) twenty
thousand dollars ($20,000) a month in State and local sales and use taxes
must make a monthly prepayment of the next month's tax liability. The
prepayment is due on the date a monthly return is due. The prepayment must
equal at least sixty‑five percent (65%) of any of the following:
(1) The amount of tax due for the current month.
(2) The amount of tax due for the same month in the preceding year.
(3) The average monthly amount of tax due in the preceding calendar year."
SECTION 4.(e) When the Secretary of Revenue conducts a review of a taxpayer's sales and use tax payment schedule requirements under G.S. 105‑164.16(b3), the Secretary must identify the taxpayers who are no longer required to make a monthly prepayment of the next month's sales and use tax liability because of the reduction of the sales tax payment threshold under this section and must notify those taxpayers of the change in the taxpayer's payment requirement.
SECTION 4.(f) Subsections (a) and (b) of this section become effective October 1, 2010. Subsections (c) and (d) of this section become effective October 1, 2011. The remainder of this section is effective when it becomes law.
relieve annual report compliance burden on small business
SECTION 5.(a) G.S. 55‑16‑22(c) reads as rewritten:
"(c) Due Date. – An annual report eligible
to be delivered to the Secretary of Revenue is due by the due date for filing
the corporation's income and franchise tax returns. An extension of time to
file a return is an extension of time to file an annual report. At the option
of the filer, an annual report may be filed directly with the Secretary of
State in electronic form. An annual report required to be delivered to the
Secretary of State is due by the fifteenth day of the third fourth month
following the close of the corporation's fiscal year."
SECTION 5.(b) G.S. 57C‑2‑23 reads as rewritten:
"§ 57C‑2‑23. Annual report for Secretary of State.
(a) Requirement and Content. – Each domestic
limited liability company other than a professional limited liability company
governed by G.S. 57C‑2‑01(c) and each foreign limited
liability company authorized to transact business in this State, shall
deliver to the Secretary of State for filing an annual report, in State
must file an annual report with the Secretary of State on a form prescribed
by the Secretary of State, that sets forth all of the following:and
in the manner required by the Secretary. The annual report must specify the
year to which the report applies and must set out the information listed in
this subsection. The information must be current as of the date the company
completes the report. If the information in the company's most recent annual
report has not changed, the company may certify on its annual report that the
information has not changed in lieu of restating the information.
The following information must be included on an annual report of a limited liability company:
(1) The name of the limited liability or foreign limited liability company and the state or country under whose law it is formed.
(2) The street address, and the mailing address if different from the street address, of the registered office, the county in which the registered office is located, and the name of its registered agent at that office in this State, and a statement of any change of the registered office or registered agent, or both.
(3) The address and telephone number of its principal office.
(4) The names and business addresses of its managers or, if the limited liability company has never had members, its organizers.
(5) A brief description of the nature of its business.
If the information contained in the most recently filed
annual report has not changed, a certification to that effect may be made
instead of setting forth the information required by subdivisions (2) through
(5) of this subsection. The Secretary of State shall make available the form
required to file an annual report.
(b) Information in the annual report must be
current as of the date the annual report is executed on behalf of the limited
liability company or the foreign limited liability company.
(c) Notice and Due Date. – The Secretary of
State must notify limited liability companies of the annual report filing
requirement. The first annual report shall be delivered to the
Secretary of State of a limited liability company is due by April
15th of each year.the year following the calendar year in which the
company files its articles of organization with the Secretary of State. Each
subsequent annual report is due on April 15.
(d) Incomplete Report. – If an annual report does not contain the information required by this section, the Secretary of State shall promptly notify the reporting domestic or foreign limited liability company in writing and return the report to it for correction. If the report is corrected to contain the information required by this section and delivered to the Secretary of State within 30 days after the effective date of notice, it is deemed to be timely filed.
(e) Amendments. – Amendments to any previously filed annual report may be filed with the Secretary of State at any time for the purpose of correcting, updating, or augmenting the information contained in the annual report."
SECTION 5.(c) A limited liability company that was formed on or after September 1, 2001, but before January 1, 2010, and has filed an annual report in each calendar year after the calendar year in which it was formed is not required to file any additional annual reports for those years. A limited liability company that was formed on or after January 1, 2010, but before April 15, 2010, is not required to file an annual report until April 15, 2011. A limited liability company that has filed more annual reports than is required under this section is not allowed a refund of the annual report filing fee paid for filing the unnecessary report but is not required to pay the annual report filing fee when filing the annual report due April 15, 2011. The Secretary of State must provide a place on the annual report form for calendar year 2011 for a limited liability company to designate that it is not subject to the 2011 annual report filing fee in accordance with this section. The Secretary must also provide instructions that explain why some limited liability companies are subject to the 2011 annual report filing fee and some are not.
SECTION 5.(d) This section is effective when it becomes law.
reduce franchise tax burden on construction companies
SECTION 6.(a) Section 2 of S.L. 2009‑422 reads as rewritten:
"SECTION 2. This act is effective retroactively
for taxable years beginning on or after January 1, 2010.January
1, 2007."
SECTION 6.(b) A taxpayer that paid franchise tax in taxable years 2007, 2008, or 2009 and that included billings in excess of costs in its capital base may apply to the Department of Revenue for a refund of any excess tax paid to the extent the refund is the result of the change in the law enacted by this section. A request for a refund must be made on or before January 1, 2011. A request for refund received after that date is barred.
SECTION 6.(c) This section is effective when it becomes law.
improve tax and debt collection process
SECTION 7.(a) G.S. 147‑86.20(1) reads as rewritten:
"§ 147‑86.20. Definitions.
The following definitions apply in this Article:
(1) Account Receivable.receivable. – An
asset of the State reflecting a debt that is owed to the State and has not been
received by the State agency servicing the debt. The term includes claims,
damages, fees, fines, forfeitures, loans, overpayments, taxes, and
tuition as well as penalties, interest, and other costs authorized by law. The
term does not include court costs or fees assessed in actions before the
General Court of Justice or counsel fees and other expenses of representing
indigents under Article 36 of Chapter 7A of the General Statutes.
.…"
SECTION 7.(b) G.S. 147‑86.22 reads as rewritten:
"§ 147‑86.22. Statewide accounts receivable program.
(a) Program. – The State Controller shall implement a statewide accounts receivable program. As part of this program, the State Controller shall do all of the following:
(1) Monitor the State's accounts receivable collection efforts.
(2) Coordinate information, systems, and procedures between State agencies to maximize the collection of past‑due accounts receivable.
(3) Adopt policies and procedures for the management and collection of accounts receivable by State agencies.
(4) Establish procedures for writing off accounts receivable
and for determining when to end efforts to collect accounts receivable after
they have been written off.receivable.
(b) Electronic Payment. – Notwithstanding the provisions of G.S. 147‑86.20 and G.S. 147‑86.21, this subsection applies to debts owed a community college, a local school administrative unit, an area mental health, developmental disabilities, and substance abuse authority, and the Administrative Office of the Courts, and to debts payable to or through the office of a clerk of superior court or a magistrate, as well as to debts owed to other State agencies as defined in G.S. 147‑86.20.
The State Controller shall establish policies that allow accounts receivable to be payable under certain conditions by electronic payment. These policies shall be established with the concurrence of the State Treasurer. In addition, any policies that apply to debts payable to or through the office of a clerk of superior court or a magistrate shall be established with the concurrence of the Administrative Officer of the Courts. The Administrative Officer of the Courts may also establish policies otherwise authorized by law that apply to these debts as long as those policies are not inconsistent with the Controller's policies.
A condition of payment by electronic payment is receipt by the appropriate State agency of the full amount of the account receivable owed to the State agency. A debtor who pays by electronic payment may be required to pay any fee or charge associated with the use of electronic payment. Fees associated with processing electronic payments may be paid out of the General Fund and Highway Fund if the payment of the fee by the State is economically beneficial to the State and the payment of the fee by the State has been approved by the State Controller and State Treasurer.
The State Controller and State Treasurer shall consult with the Joint Legislative Commission on Governmental Operations before establishing policies that allow accounts receivable to be payable by electronic payment and before authorizing fees associated with electronic payment to be paid out of the General Fund and Highway Fund. A State agency must also consult with the Joint Legislative Commission on Governmental Operations before implementing any program to accept payment under the policies established pursuant to this subsection.
A payment of an account receivable that is made by electronic payment and is not honored by the issuer of the card or the financial institution offering electronic funds transfer does not relieve the debtor of the obligation to pay the account receivable.
(c) Collection Techniques. – The State Controller, in
conjunction with the Office of the Attorney General, shall establish policies
and procedures to govern techniques for collection of accounts receivable.
These techniques may include use of credit reporting bureaus, judicial remedies
authorized by law, and administrative setoff by a reduction of an individual'sa
tax refund pursuant to the Setoff Debt Collection Act, Chapter 105A of the
General Statutes, or a reduction of another payment, other than payroll, due
from the State to a person to reduce or eliminate an account receivable that
the person owes the State.
No later than January 1, 1999, theThe State
Controller shall negotiate a contract with a third party to perform an audit
and collection process of inadvertent overpayments by State agencies to vendors
as a result of pricing errors, neglected rebates and discounts, miscalculated
freight charges, unclaimed refunds, erroneously paid excise taxes, and related
errors. The third party shall be compensated only from funds recovered as a
result of the audit. Savings realized in excess of costs shall be transferred
from the agency to the Office of State Budget and Management and placed in a
special reserve account for future direction by the General Assembly. Any
disputed savings shall be settled by the State Controller. This paragraph does
not apply to the purchase of medical services by State agencies or payments
used to reimburse or otherwise pay for health care services."
SECTION 7.(c) G.S. 147‑86.25 reads as rewritten:
"§ 147‑86.25. Setoff debt collection.
The State Controller shall implement a statewide setoff debt
collection program to provide for collection of accounts receivable that
have been written off. The statewide program shall supplement the Setoff Debt
Collection Act, Chapter 105A of the General Statutes, and shall provide for
written‑offthe following accounts receivable to be set offby
setoff against payments the State owes to debtors, other than payments of
individual income tax refunds and payroll.payroll:
(1) Accounts receivable submitted to the Department of Revenue by a claimant agency under the Setoff Debt Collection Act, Chapter 105A of the General Statutes.
(2) An overdue tax debt, as defined in G.S. 105‑243.1.
A program shall provide that, before final setoff can
occur, the State agency servicing the debt must notify the debtor of the
proposed setoff and of the debtor's right to contest the setoff through an
administrative hearing and judicial review. A proposed setoff by a State agency
that is a "claimant agency" under Chapter 105A of the General
Statutes shall be conducted in accordance with the procedures the State agency
must follow under that Chapter. A proposed setoff by a State agency that is not
a "claimant agency" under Chapter 105A of the General Statutes shall
be conducted under Articles 3 and 4 of Chapter 150B of the General Statutes."
SECTION 7.(d) G.S. 105A‑2 reads as rewritten:
"§ 105A‑2. Definitions.
The following definitions apply in this Chapter:
…
(3) Debtor. – An individual A person who
owes a debt.
…
(8) Refund. – An individual's North Carolina income A
debtor's North Carolina tax refund.
(9) State agency. – Any of the following:
a. A unit of the executive, legislative, or judicial branch of State government.
b. A local agency, to the extent it administers a program supervised by the Department of Health and Human Services or it operates a Child Support Enforcement Program, enabled by Chapter 110, Article 9, and Title IV, Part D of the Social Security Act.
c. A community college."
SECTION 7.(e) G.S. 105A‑3(c) reads as rewritten:
"(c) Identifying Information. – All claimant
agencies shall whenever possible obtain the full name, social security number,number
or federal identification number, address, and any other identifying
information required by the Department from any person for whom the agencies
provide any service or transact any business and who the claimant agencies can
foresee may become a debtor under this Chapter."
SECTION 7.(f) G.S. 105A‑14(a) reads as rewritten:
"(a) Simultaneously with the transmittal of the
net proceeds collected to a claimant agency, the Department must provide the
agency with an accounting of the setoffs for which payment is being made. The
accounting must whenever possible,possible include the full names
of the debtors, the debtors' social security numbers,numbers or
federal identification numbers, the gross proceeds collected per setoff,
the net proceeds collected per setoff, and the collection assistance fee added
to the debt and collected per setoff."
SECTION 7.(g) G.S. 105‑259(b)(18) reads as rewritten:
"(b) Disclosure Prohibited. – An officer, an employee, or an agent of the State who has access to tax information in the course of service to or employment by the State may not disclose the information to any other person except as provided in this subsection. Standards used or to be used for the selection of returns for examination and data used or to be used for determining the standards may not be disclosed for any purpose. All other tax information may be disclosed only if the disclosure is made for one of the following purposes:
…
(18) To furnish to the Office of the State Controller the
name, address, and account and identification numbers of a taxpayer upon
request to enableinformation needed by the State Controller to implement
the setoff debt collection program established under G.S. 147‑86.25,
verify statewide vendor files files, or track debtors of the
State.
.…"
SECTION 7.(h) G.S. 105‑242(b) reads as rewritten:
"(b) Garnishment and Attachment.Attachment
and Garnishment. – Intangible property that belongs to a taxpayer, is owed
to a taxpayer, or has been transferred by a taxpayer under circumstances that
would permit it to be levied upon if it were tangible property is subject to
attachment and garnishment in payment of a tax that is due from the taxpayer
and is collectible under G.S. 105‑241.22. Intangible personal
property includes bank deposits, rent, salaries, wages, property held in the
Escheat Fund, and any other property incapable of manual levy or delivery. AG.S. 105‑242.1
sets out the procedure for attachment and garnishment of intangible property.
A person who is in possession of intangible property
that is subject to attachment and garnishment is the garnishee and is liable
for the amount the taxpayer owes. The liability applies only to the amount of
the taxpayer's property in the garnishee's possession, reduced by any amount
the taxpayer owes the garnishee. G.S. 105‑242.1 sets out the
procedure for attachment and garnishment of intangible property.
The Secretary may submit to a financial institution, as defined in G.S. 53B‑2, information that identifies a taxpayer who owes a tax debt that is collectible under G.S. 105‑241.22 and the amount of the debt. The Secretary may submit the information on a quarterly basis or, with the agreement of the financial institution, on a more frequent basis. A financial institution that receives the information must determine the amount, if any, of intangible property it holds that belongs to the taxpayer and must inform the Secretary of its determination. The Secretary must reimburse a financial institution for its costs in providing the information, not to exceed the amount payable to the financial institution under G.S. 110‑139 for providing information for use in locating a noncustodial parent.
No more than ten percent (10%) of a taxpayer's wages or salary is subject to attachment and garnishment. The wages or salary of an employee of the United States, the State, or a political subdivision of the State are subject to attachment and garnishment."
SECTION 7.(i) G.S. 105‑242.1 reads as rewritten:
"§ 105‑242.1. Procedure for attachment and garnishment.
(a) Notice. – G.S. 105‑242 specifies when
intangible property is subject to attachment and garnishment. Before the
Department attaches and garnishes intangible property in payment of a tax, the
Department must send the garnishee a notice of garnishment. The notice must be
sent in accordance with the methods authorized in G.S. 105‑241.20 or
by registered or certified mail.or, with the agreement of the garnishee,
by electronic means. The notice must contain all of the following information:information,
unless the notice is an electronic notice subject to subsection (a1) of this
section:
(1) The taxpayer's name, address, and social
security number or federal identification number.name.
(2) The type of tax the taxpayer owes and the tax
periods for which the tax is owed.taxpayer's social security number or
federal identification number.
(3) The amount of tax, interest, and penalties the taxpayer owes.
(4) An explanation of the liability of a garnishee for tax owed by a taxpayer.
(5) An explanation of the garnishee's responsibility concerning the notice.
(a1) Electronic Notice. – Before the Department sends an electronic notice of garnishment to a garnishee, the Department and the garnishee must have an agreement that establishes the protocol for transmitting the notice and provides the information required under subdivisions (4) and (5) of subsection (a) of this section. An electronic notice must contain the information required under subdivisions (1), (2), and (3) of subsection (a) of this section.
(b) Action. – Within 30 days after receiving a
notice of garnishment, aA garnishee must comply with the a
notice of garnishment or file a written response to the notice.notice
within the time set in this subsection. A garnishee that is a financial
institution must comply or file a response within 20 days after receiving a
notice of garnishment. All other garnishees must comply or file a response
within 30 days after receiving a notice of garnishment. A written response must
explain why the garnishee is not subject to garnishment and attachment. Upon
Upon receipt of the a written response,
the Department must contact the garnishee and schedule a conference to discuss
the response or inform the garnishee of the Department's position concerning
the response. If the Department does not agree with the garnishee on the
garnishee's liability, the Department may proceed to enforce the garnishee's
liability for the tax by sending the garnishee a notice of proposed assessment
in accordance with G.S. 105‑241.9.
(c) Release. – When the Department releases a
garnishee from liability, the Department must send the garnishee a letter of
release. The letter must identify the taxpayer to whom the release applies and
contain the identifying information about the taxpayer that is required under
subsection (a) on a notice of garnishment.A notice of garnishment sent
to a financial institution is released when the financial institution complies
with the notice. A notice of garnishment sent to all other garnishees is
released when the Department sends the garnishee a notice of release. A notice
of release must state the name and social security number or federal
identification number of the taxpayer to whom the release applies.
(d) Financial Institution. – As used in this section, the term 'financial institution' has the same meaning as in G.S. 53B‑2."
SECTION 7.(j) G.S. 53B‑4(2) reads as rewritten:
"§ 53B‑4. Access to financial records.
Notwithstanding any other provision of law, no government authority may have access to a customer's financial record held by a financial institution unless the financial record is described with reasonable specificity and access is sought pursuant to any of the following:
…
(2) Authorization under G.S. 105‑251G.S. 105‑242
or G.S. 105‑258."
SECTION 7.(k) Subsection (h) of this section becomes effective January 1, 2011. The remainder of this section is effective when it becomes law.
effective date
SECTION 8. Except as otherwise provided, this act is effective when it becomes law.
