Bill Text: NC S763 | 2013-2014 | Regular Session | Amended


Bill Title: Revenue Laws Tech. Changes and Other Changes

Spectrum: Partisan Bill (Republican 2-0)

Status: (Engrossed - Dead) 2014-08-02 - Ref To Com On Rules and Operations of the Senate [S763 Detail]

Download: North_Carolina-2013-S763-Amended.html

GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2013

S                                                                                                                                                     6

SENATE BILL 763*

Finance Committee Substitute Adopted 7/22/14

House Committee Substitute Favorable 7/30/14

House Committee Substitute #2 Favorable 7/31/14
Fifth Edition Engrossed 7/31/14
Sixth Edition Engrossed 8/1/14

 

Short Title:        Revenue Laws Tech. Changes and Other Changes.

(Public)

Sponsors:

 

Referred to:

 

May 15, 2014

 

A BILL TO BE ENTITLED

AN ACT to make TECHNICAL and clarifying changes to VARIOUS revenue laws; to modify the renewable energy tax credit; and to modify and extend the historic rehabilitation tax credit.

The General Assembly of North Carolina enacts:

SECTION 1.(a)  Section 7.2(a) of S.L. 2014‑3 reads as rewritten:

"SECTION 7.2.(a)  This act shall not be construed to affect the interpretation of any statute that is the subject of a State tax audit pending as of the effective date of this act for taxable years beginning before January 1, 2015, or litigation that is a direct result of such audit."

SECTION 1.(b)  Section 7.3 of S.L. 2014‑3 reads as rewritten:

"SECTION 7.3. This Part becomes effective January 1, 2015, and applies to withdrawals of items from inventory for contracts entered into on or after that date, sales on or after that date date, and contracts entered into on or after that date."

SECTION 2.(a)  Section 8.1(c) of S.L. 2014‑3 reads as rewritten:

"SECTION 8.1.(c)  With respect to the change in this section regarding the rental of a private residence, cottage, or similar accommodation that is rented for fewer than 15 days in a calendar year and that is listed with a real estate broker or agent, the following provisions apply:

(1)        A retailer is not liable for an overcollection or undercollection of sales tax or occupancy tax for the rental of such an accommodation that is occupied or available to be occupied for nights beginning June 14, 2012, and ending June 30, 2014, and must remit the tax collected.

(2)        A retailer is not liable for an undercollection of sales tax or occupancy tax for the rental of such an accommodation that is occupied or available to be occupied for nights beginning June 1, 2014, and ending June 30, 2014, if the retailer has made a good‑faith effort to comply with the law and collect the proper amount of tax and has, due to the change under this section, overcollected or undercollected the amount of sales tax or occupancy tax that is due. This subsection applies only to the period beginning June 14, 2012, and ending July 1, 2014.tax."

SECTION 2.(b)  This section becomes effective June 1, 2014.

SECTION 3.  Section 14.26 of S.L. 2014‑3 is repealed.

SECTION 4.(a)  G.S. 105‑113.35(d) reads as rewritten:

"(d)      Manufacturer's Option. – A manufacturer who is not a retail dealer and who ships tobacco products other than cigarettes to either a wholesale dealer or retail dealer licensed under this Part may apply to the Secretary to be relieved of paying the tax imposed by this section on the tobacco products. A manufacturer who ships vapor products to either a wholesale dealer or retail dealer licensed under this Part may apply to the Secretary to be relieved of paying the tax imposed by this section on the vapor products shipped to either a wholesale dealer or retail dealer. Once granted permission, a manufacturer may choose not to pay the tax until otherwise notified by the Secretary. To be relieved of payment of the tax imposed by this section, a manufacturer must comply with the requirements set by the Secretary.

Permission granted under this subsection to a manufacturer to be relieved of paying the tax imposed by this section applies to an integrated wholesale dealer with whom the manufacturer is an affiliate. A manufacturer must notify the Secretary of any integrated wholesale dealer with whom it is an affiliate when the manufacturer applies to the Secretary for permission to be relieved of paying the tax and when an integrated wholesale dealer becomes an affiliate of the manufacturer after the Secretary has given the manufacturer permission to be relieved of paying the tax.

If a person is both a manufacturer of cigarettes and a wholesale dealer of tobacco products other than cigarettes and the person is granted permission under G.S. 105‑113.10 to be relieved of paying the cigarette excise tax, the permission applies to the tax imposed by this section on tobacco products other than cigarettes. A cigarette manufacturer who becomes a wholesale dealer after receiving permission to be relieved of the cigarette excise tax must notify the Secretary of the permission received under G.S. 105‑113.10 when applying for a license as a wholesale dealer."

SECTION 4.(b)  This section becomes effective June 1, 2015.

SECTION 5.  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. A taxpayer that has constructed, purchased, or leased renewable energy property is allowed a credit equal to thirty‑five percent (35%) of the cost of the property if the property is placed in service in this State during the taxable year. In the case of renewable energy property that serves a nonbusiness purpose, 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 that leases renewable energy property, the lessor of the property must give the taxpayer a statement that describes the renewable energy property and states the cost of the property. No credit is allowed under this section to the extent the cost of the renewable energy property was provided by public funds. For the purposes of this section, "public funds" does not include grants made under section 1603 of the American Recovery and Reinvestment Tax Act of 2009.

…."

SECTION 6.  Section 1.1(a) of S.L. 2014‑3 is rewritten to read:

"SECTION 1.1.(a)  G.S. 105‑130.5(b), as amended by Section 14.3 of this act, reads as rewritten:

"(b)      The following deductions from federal taxable income shall be made in determining State net income:

(4)        Losses in the nature Any unused portion of a net economic loss as allowed under G.S. 105‑130.8A(e).losses sustained by the corporation in any or all of the 15 preceding years pursuant to the provisions of G.S. 105‑130.8. A corporation required to allocate and apportion its net income under the provisions of G.S. 105‑130.4 shall deduct its allocable and apportionable  net economic loss only from total income allocable and apportionable to this State pursuant to the provisions of G.S. 105‑130.8 This subdivision expires for taxable years beginning on or after January 1, 2030.

(4a)      A State net loss as allowed under G.S. 105‑130.8A. A corporation may deduct its allocable and apportionable State net loss only from total income allocable and apportionable to this State.

…."

SECTION 7.(a)  G.S. 105‑134.6A, as amended by S.L. 2014‑3, reads as rewritten:

"(h)       Definitions. – For purposes of this section, a "transferor" is an The following definitions apply in this section:

(1)        Transferor. – An individual, partnership, corporation, S Corporation, limited liability company, or an estate or trust that does not fully distribute income to its beneficiaries, and an "owner in a transferor" is a beneficiaries.

(2)        Owner in a transferor. – One or more of the following of a transferor:

a.         A partner, shareholder, member, or beneficiary or member.

b.         A beneficiary subject to tax under Part 2 or 3 of Article 4 of this Chapter of a transferor.Chapter."

SECTION 7.(b)  G.S. 105‑153.6, as amended by S.L. 2014‑3, reads as rewritten:

"(h)       Definitions. – For purposes of this section, a "transferor" is an The following definitions apply in this section:

(1)        Transferor. – An individual, partnership, corporation, S Corporation, limited liability company, or an estate or trust that does not fully distribute income to its beneficiaries, and an "owner in a transferor" is a beneficiaries.

(2)        Owner in a transferor. – One or more of the following of a transferor:

a.         A partner, shareholder, member, or beneficiary or member.

b.         A beneficiary subject to tax under Part 2 or 3 of Article 4 of this Chapter of a transferor.Chapter."

SECTION 7.(c)  Subsection (a) of this section is effective for taxable years beginning on or after January 1, 2013. Subsection (b) of this section is effective for taxable years beginning on or after January 1, 2014. The remainder of this section is effective when it becomes law.

SECTION 8.(a)  G.S. 105‑153.4 reads as rewritten:

"§ 105‑153.4.  North Carolina taxable income defined.

(a)        Residents. – For an individual who is a resident of this State, the term "North Carolina taxable income" means the taxpayer's adjusted gross income as modified in G.S. 105‑153.5 and G.S. 105‑153.6 and G.S. 105‑134.6A.G.S. 105‑153.6.

(b)        Nonresidents. – For a nonresident individual, the term "North Carolina taxable income" means the taxpayer's adjusted gross income as modified in G.S. 105‑153.5 and G.S. 105‑153.6 and G.S. 105‑134.6A, G.S. 105‑153.6, multiplied by a fraction the denominator of which is the taxpayer's gross income as modified in G.S. 105‑153.5 and G.S. 105‑153.6 and G.S. 105‑134.6A, G.S. 105‑153.6, and the numerator of which is the amount of that gross income, as modified, that is derived from North Carolina sources and is attributable to the ownership of any interest in real or tangible personal property in this State, is derived from a business, trade, profession, or occupation carried on in this State, or is derived from gambling activities in this State.

(c)        Part‑year Residents. – If an individual was a resident of this State for only part of the taxable year, having moved into or removed from the State during the year, the term "North Carolina taxable income" has the same meaning as in subsection (b) of this section except that the numerator includes gross income, as modified under G.S. 105‑153.5 and G.S. 105‑153.6 and G.S. 105‑134.6A, G.S. 105‑153.6, derived from all sources during the period the individual was a resident.

(d)        S Corporations and Partnerships. – In order to calculate the numerator of the fraction provided in subsection (b) of this section, the amount of a shareholder's pro rata share of S Corporation income income, as modified in G.S. 105‑153.5 and G.S. 105‑153.6, that is includable in the numerator is the shareholder's pro rata share of the S Corporation's income attributable to the State, as defined in G.S. 105‑131(b)(4). In order to calculate the numerator of the fraction provided in subsection (b) of this section for a member of a partnership or other unincorporated business that has one or more nonresident members and operates in one or more other states, the amount of the member's distributive share of the total net income of the business business, as modified in G.S. 105‑153.5 and G.S. 105‑153.6, that is includable in the numerator is determined by multiplying the total net income of the business by the ratio ascertained under the in accordance with the provisions of G.S. 105‑130.4. As used in this subsection, total net income means the entire gross income of the business less all expenses, taxes, interest, and other deductions allowable under the Code that were incurred in the operation of the business.

(e)        Tax Year. – A taxpayer must compute North Carolina taxable income on the basis of the taxable year used in computing the taxpayer's income tax liability under the Code."

SECTION 8.(b)  G.S. 105‑153.5 is amended by adding a new subsection to read:

"(c1)     Other Additions. – S Corporations subject to the provisions of Part 1A of this Article, partnerships subject to the provisions of this Part, and estates and trusts subject to the provisions of Part 3 of this Article must add any amount deducted under section 164 of the Code as state, local, or foreign income tax."

SECTION 8.(c)  This section becomes effective for taxable years beginning on or after January 1, 2014.

SECTION 9.(a)  Notwithstanding G.S. 105‑163.15, the Secretary of Revenue may not impose interest with respect to an underpayment of income tax to the extent the underpayment was created or increased by the changes made in Section 2.2 of S.L. 2014‑3. Notwithstanding G.S. 105‑163.8, a withholding agent is not liable for the amount of tax the agent fails to withhold to the extent the amount of tax not withheld was created or increased by the changes made in Section 2.2 of S.L. 2014‑3.

SECTION 9.(b)  This section is effective when it becomes law and applies to taxable years beginning on or after January 1, 2014, and before January 1, 2015, and to payroll periods beginning on or after January 1, 2014, and before January 1, 2015.

SECTION 10.  G.S. 105‑164.3(35), as amended by Section 14.7 of S.L. 2014‑3, reads as rewritten:

"§ 105‑164.3.  Definitions.

The following definitions apply in this Article:

(35)      Retailer. – A person engaged in business of any of the following:Any of the following persons:

a.         Making A person engaged in business of making sales at retail, offering to make sales at retail, or soliciting sales at retail of tangible personal property, digital property, or services for storage, use, or consumption in this State. When the Secretary finds it necessary for the efficient administration of this Article to regard any sales representatives, solicitors, representatives, consignees, peddlers, or truckers as agents of the dealers, distributors, consignors, supervisors, employers, or persons under whom they operate or from whom they obtain the items sold by them regardless of whether they are making sales on their own behalf or on behalf of these dealers, distributors, consignors, supervisors, employers, or persons, the Secretary may so regard them and may regard the dealers, distributors, consignors, supervisors, employers, or persons as "retailers" for the purpose of this Article.

b.         Delivering, A person engaged in business of delivering, erecting, installing, or applying tangible personal property for use in this State, regardless of whether the property is permanently affixed to real property or other tangible personal property.

c.         Making A person engaged in business of making a remote sale, if one of the conditions listed in G.S. 105‑164.8(b) is met.

d.         A person, other than a facilitator, required to collect the tax levied under G.S. 105‑164.4(a)."

SECTION 11.  G.S. 105‑164.4G, as enacted by S.L. 2014‑3, reads as rewritten:

"§ 105‑164.4G.  Entertainment activity.

(f)         Exemptions. – The sale at retail and the use, storage, or consumption in this State of the following gross receipts derived from an admission charge to an entertainment activity are specifically exempt from the tax imposed by this Article:

(g)        Sourcing. – Admission An admission charge to an entertainment activity is sourced to the location where admission to the entertainment activity may be gained by a person. When the location where admission may be gained is not known at the time of the receipt of the gross receipts for an admission charge, the sourcing principles in G.S. 105‑164.4B(a) apply."

SECTION 12.(a)  G.S. 105‑164.13, as amended by Section 6.1(f) of S.L. 2014‑3, reads rewritten:

"§ 105‑164.13.  Retail sales and use tax.

The sale at retail and the use, storage, or consumption in this State of the following tangible personal property, digital property, and services are specifically exempted from the tax imposed by this Article:

(8a)      Sales to a small power production facility, as defined in 16 U.S.C. § 796(17)(A), of fuel and piped natural gas used by the facility to generate electricity.

(10)      Sales of the following to commercial laundries or to pressing and dry cleaning establishments:

a.         Articles or materials used for the identification of garments being laundered or dry cleaned, wrapping paper, bags, hangers, starch, soaps, detergents, cleaning fluids and other compounds or chemicals applied directly to the garments in the direct performance of the laundering or the pressing and cleaning service.

b.         Laundry and dry‑cleaning machinery, parts and accessories attached to the machinery, and lubricants applied to the machinery.

c.         Fuel, other than electricity, Fuel and piped natural gas used in the direct performance of the laundering or the pressing and cleaning service. The exemption does not apply to electricity.

(57)      Fuel andFuel, piped natural gas, and electricity sold to a manufacturer for use in connection with the operation of a manufacturing facility. The exemption does not apply to electricity used at a facility at which the primary activity is not manufacturing.

…."

SECTION 12.(b)  G.S. 105‑164.13, as amended by Section 6.1(f) of S.L. 2014‑3, reads as rewritten:

"§ 105‑164.13.  Retail sales and use tax.

The sale at retail and the use, storage, or consumption in this State of the following tangible personal property, digital property, and services are specifically exempted from the tax imposed by this Article:

(62)      An item used to maintain or repair tangible personal property or a motor vehicle pursuant to a service contract taxable under this Article if the purchaser of the contract is not charged for the item. This exemption does not apply to an item used to maintain or repair tangible personal property pursuant to a service contract exempt from tax under G.S. 105‑164.4I(b). For purposes of this exemption, the term "item" does not include a tool, equipment, supply, or similar tangible personal property used to complete the maintenance or repair and that is not deemed to be a component or repair part of the tangible personal property or motor vehicle for which a service contract is sold to a purchaser."

SECTION 12.(c)  G.S. 105‑187.52(c) reads as rewritten:

"(c)       Exemption. – State agencies are exempted from the privilege taxes imposed by this Article. The exemption in G.S. 105‑164.13(62) does not apply to an item used to maintain or repair tangible personal property pursuant to a service contract exempt from tax under G.S. 105‑164.4I(b)(4)."

SECTION 12.(d)  Notwithstanding G.S. 105‑164.13(62), as amended by S.L. 2014‑3 and by subsection (b) of this section, the sales and use tax exemption in G.S. 105‑164.13(62) applies to an item used pursuant to a service contract that meets the definition of a "service contract" as defined in G.S. 105‑164.3(38b), notwithstanding that the service contract was sold before January 1, 2014, and effective on, before, or after January 1, 2014.

SECTION 12.(e)  Subsection (b) of this section becomes effective October 1, 2014. The remainder of this section is effective when it becomes law.

SECTION 13.  G.S. 105‑164.13E, as amended by S.L. 2014‑3, reads as rewritten:

"§ 105‑164.13E.   Exemption for farmers.

(a)        Exemption. – A qualifying farmer is a person who has an annual gross income for the preceding taxable year of ten thousand dollars ($10,000) or more from farming operations or who has an average annual gross income for the three preceding taxable years of ten thousand dollars ($10,000) or more from farming operations. A qualifying farmer includes a dairy operator, a poultry farmer, an egg producer, a livestock farmer, a farmer of crops, and a farmer of an aquatic species, as defined in G.S. 106‑758. A qualifying farmer may apply to the Secretary for an exemption certificate number under G.S. 105‑164.28A. The exemption certificate expires when a person fails to meet the income threshold for three consecutive taxable years or ceases to engage in farming operations.operations, whichever comes first.

The following tangible personal property, digital property, and services are exempt from sales and use tax if purchased by a qualifying farmer and for use by the farmer in farming operations. For purposes of this section, an item is used by a farmer for farming operations if it is used for the planting, cultivating, harvesting, or curing of farm crops or in the production of dairy products, eggs, or animals:

(1)        Fuel andFuel, piped natural gas, and electricity that is are measured by a separate meter or another separate device and used for a purpose other than preparing food, heating dwellings, and other household purposes.

(b)        Conditional Exemption. – A person who does not meet the definition of a qualifying farmer in subsection (a) of this section may apply to the Department for a conditional exemption certificate under G.S. 105‑164.28A. A person with a conditional exemption certificate is allowed to purchase items exempt from sales and use tax to the same extent as a qualifying farmer under subsection (a) of this section. To receive a conditional exemption certificate under this subsection, the person must certify that the person intends to engage in farming operations, as that term is described in subsection (a) of this section, and that the person will timely file State and federal income tax returns that reflect income and expenses incurred from farming operations during the taxable years that the conditional exemption certificate applies.

A conditional exemption certificate issued under this subsection is valid for the taxable year in which the certificate is issued and the following two taxable years, provided the person to whom the certificate is issued provides copies of applicable State and federal income tax returns to the Department within 90 days following the end of each taxable year covered by the conditional exemption certificate. certificate and provided the person is engaged in farming operations. A conditional exemption certificate issued under this subsection may not be extended or renewed beyond the original three‑year period. The Department may not issue a conditional exemption certificate to a person who has had a conditional exemption certificate issued under this subsection during the prior 15 taxable years.

A person who purchases items with a conditional exemption certificate must maintain documentation of the items purchased and copies of State and federal income tax returns that reflect activities from farming operations for the period of time covered by the conditional exemption certificate for three years following the expiration of the conditional exemption certificate. The Secretary may require a person who has a conditional exemption certificate to provide any other information requested by the Secretary to verify the person met the conditions of this subsection. A person who fails to provide the information requested by the Secretary in a timely manner or who fails to meet the requirements of this subsection becomes liable for any taxes for which an exemption under this subsection was claimed. The taxes become due and payable at the expiration of the conditional exemption certificate, and interest accrues from the date of the original purchase. Additionally, where the person does not timely provide the information requested by the Secretary, the misuse of exemption certificate penalty in G.S. 105‑236(a)(5a) applies to each seller identified by the Department from which the person made a purchase."

(c)        Definition. – For purposes of this section, the term "taxable year" has the same meaning as defined in G.S. 105‑153.3."

SECTION 14.  G.S. 105‑164.16A, as enacted by S.L. 2014‑3, reads as rewritten:

"§ 105‑164.16A.  Reporting option for prepaid meal plans.

(a)        Reporting Option. – This section subsection provides a taxpayer retailer that offers to sell a prepaid meal plan plan subject to the tax imposed by G.S. 105‑164.4 with an option concerning the method by which the sales tax will be remitted to the Secretary and a return filed under G.S. 105‑164.16. When the retailer enters into an agreement with a food service contractor by which the food service contractor agrees to provide food or prepared food under a prepaid meal plan, and the food service contractor with whom the retailer contracts is also a retailer under this Article, the retailer may include in the agreement that the food service contractor is liable for collecting reporting and remitting the sales tax due on the gross receipts derived from the prepaid meal plan on behalf of the retailer. The agreement must provide that the tax applies to the allocated sales price of the prepaid meal plan paid by or on behalf of the person entitled to the food or prepaid food under the plan and not the amount charged by the food service contractor to the retailer under the agreement for the food and prepared food for the person.

A retailer who elects this option must report to the food service contractor with whom it has an agreement the gross receipts a person pays to the retailer for a prepaid meal plan. The retailer must send the food service contractor the tax due on the gross receipts derived from a prepaid meal plan. Tax payments received by a food service contractor from a retailer are held in trust by the food service contractor for remittance to the Secretary. A food service contractor that receives a tax payment from a retailer must remit the amount received to the Secretary. A food service contractor is not liable for tax due but not received from a retailer. A retailer that does not send the food service contractor the tax due on the gross receipts derived from a prepaid meal plan is liable for the amount of tax the retailer fails to send to the food service contractor.

(b)        Basis of Reporting. – A retailer must report gross receipts derived from a prepaid meal plan on an accrual basis of accounting for purposes of this Article, notwithstanding that the retailer reports tax on the cash basis for other sales at retail and notwithstanding that the revenue has not been recognized for accounting purposes."

SECTION 15.  Section 4.1(g) of S.L. 2014‑3 reads as rewritten:

"SECTION 4.1.(g)  This Part is effective when it becomes law and applies to the following:

(1)        gross Gross receipts derived from a prepaid meal plan sold or billed on or after July 1, 2014.

(2)        Gross receipts derived from a prepaid meal plan sold or billed before July 1, 2014, if the prepaid meal plan is not authorized for use or available to the person until on or after August 1, 2014."

SECTION 16.  G.S. 105‑164.20 reads as rewritten:

"§ 105‑164.20.  Cash or accrual basis of reporting.

Any retailer, except a retailer who sells electricity or telecommunications service, Except as otherwise provided in this section, a retailer may report sales for purposes of this Article on either the cash or accrual basis of accounting upon making application to the Secretary for permission to use the basis selected. Permission granted by the Secretary to report on a selected basis continues in effect until revoked by the Secretary or the taxpayer receives permission from the Secretary to change the basis selected. A retailer who sells electricity or telecommunications service A retailer of the following must report its sales on an accrual basis. A sale of electricity or telecommunications service basis for purposes of this Article and the tax on the sales price or gross receipts derived from the sale is considered to accrue when the retailer bills its customer for the sale.sale or gross receipts:

(1)        Electricity.

(2)        Telecommunications service.

(3)        Piped natural gas.

(4)        Prepaid meal plans."

SECTION 17.  G.S. 105‑164.29(a), as amended by Section 14.9(b) of S.L. 2014‑3, reads as rewritten:

"(a)       Requirement and Application. – Before a person may engage in business as a retailer or a wholesale merchant or when a facilitator is liable for tax under G.S. 105‑164.4F, the person must obtain a certificate of registration. To obtain a certificate of registration, a person must register with the Department. A person who has more than one business is required to obtain only one certificate of registration for each legal entity to cover all operations of each business throughout the State. An application for registration must be signed as follows:

(1)        By the owner, if the owner is an individual.

(2)        By a manager, member, or company official, partner, if the owner is an association, a partnership, a limited liability company.

(2a)      By a manager, member, or partner, if the owner is a partnership.

(3)        By an executive officer or some other person specifically authorized by the corporation to sign the application, if the owner is a corporation. If the application is signed by a person authorized to do so by the corporation, written evidence of the person's authority must be attached to the application."

SECTION 18.  G.S. 105‑241.6(b)(5) reads as rewritten:

"(b)      Exceptions. – The exceptions to the general statute of limitations for obtaining a refund of an overpayment are as follows:

(5)        Contingent Event. – The period to request a refund of an overpayment may be extended as provided in this subdivision if an event or condition prevents the taxpayer from possessing the information necessary to file an accurate and definite request for a refund of an overpayment under this Chapter:

a.         If a taxpayer is subject to a contingent event and files written notice with the Secretary, the period to request a refund of an overpayment is six months after the contingent event concludes.

b.         For purposes of this subdivision, For purposes of this subdivision, a "contingent event" means litigation or a State state tax audit initiated prior to the expiration of the statute of limitations under subsection (a) of this section, the pendency of which prevents the taxpayer from possessing the information necessary to file an accurate and definite request for a refund of an overpayment under this Chapter.

c.         For purposes of this subdivision, "notice to the Secretary" means written notice The written notice to the Secretary must be filed with the Secretary prior to expiration of the statute of limitations under subsection (a) of this section for a return or payment in which a contingent event prevents a taxpayer from filing a definite request for a refund of an overpayment. The notice must identify and describe the contingent event, identify the type of tax, list the return or payment affected by the contingent event, and state in clear terms the basis for and an estimated amount of the overpayment.

d.b.      A If a taxpayer who contends that an event or condition other than litigation or a State tax audit a contingent event, as defined in this subdivision, has occurred that prevents the taxpayer from filing an accurate and definite request for a refund of an overpayment within the period under subsection (a) of this sectionsection, the taxpayer may submit a written request to the Secretary seeking an extension of the statute of limitations allowed under this subdivision. The request must establish by clear, convincing proof that the event or condition is beyond the taxpayer's control and that it prevents the taxpayer's timely filing of an accurate and definite request for a refund of an overpayment. The request must be filed within the period under subsection (a) of this section. The Secretary's decision on the request is final and is not subject to administrative or judicial review.

SECTION 19.(a)  G.S. 105‑338(c), as amended by Section 11.1(e) of S.L. 2014‑3, reads as rewritten:

"(c)       Certain Property of Bus Line, Motor Freight Carrier, Airline, and Mobile Telecommunications and Airline Companies. –

(4)        The appraised valuation of the tangible personal property of a mobile telecommunications company (excluding towers) that is appraised in accordance with the provisions of G.S. 105‑336(c) is allocated among the local taxing units in which the property of the company is situated on January 1 in the proportion that the original cost of the property in the taxing unit bears to the original cost of all such property in this State."

SECTION 19.(b)  G.S. 105‑339, as amended by Section 11.1(f) of S.L. 2014‑3, reads as rewritten:

"§ 105‑339.  Certification of appraised valuations of nonsystem property and locally assigned rolling stock, tangible personal property of tower aggregator companies, and certain tangible personal property of mobile telecommunications companies.

Having determined the appraised valuations of the nonsystem properties of public service companies in accordance with subdivisions (b)(2) and (b)(3) of G.S. 105‑335 and the appraised valuations of locally assigned rolling stock in accordance with subdivision (c)(1) of G.S. 105‑335, the appraised valuations of the tangible personal property of tower aggregator companies in accordance with G.S. 105‑336(d) and the appraised valuations of towers of the tangible personal property of mobile telecommunications companies in accordance with G.S. 105‑336(d),G.S. 105‑336(c) and (d), the Department of Revenue shall assign those appraised valuations to the taxing units in which such properties are situated by certifying the valuations to the appropriate counties and municipalities. Each local taxing unit receiving such certified valuations shall assess them at the figures certified and shall tax the assessed valuations at the rate of tax levied against other property subject to taxation therein."

SECTION 19.(c)  Section 11.1(g) of S.L. 2014‑3 is repealed.

SECTION 19.(d)  Subsection (c) of this section is effective when it becomes law. The remainder of this section is effective for taxes imposed for taxable years beginning on or after July 1, 2015.

SECTION 20.(a)  G.S. 160A‑206 reads as rewritten:

"§ 160A‑206.  General power to impose taxes.

(a)        Authority. – A city shall have power to impose taxes only as specifically authorized by act of the General Assembly. Except when the statute authorizing a tax provides for penalties and interest, the power to impose a tax shall include the power to impose reasonable penalties for failure to declare tax liability, if required, or to impose penalties or interest for failure to pay taxes lawfully due within the time prescribed by law or ordinance. In determining the liability of any taxpayer for a tax, a city may not employ an agent who is compensated in whole or in part by the city for services rendered on a contingent basis or any other basis related to the amount of tax, interest, or penalty assessed against or collected from the taxpayer. The power to impose a tax shall also include the power to provide for its administration in a manner not inconsistent with the statute authorizing the tax.

(b)        Prohibition. – A city may not impose a license, franchise, or privilege tax on a person engaged in any of the businesses listed in this subsection. These businesses are subject to sales tax at the combined general rate for which the city receives a share of the tax revenue or they are subject to the local sales tax:

(1)        Supplying piped natural gas.

(2)        Providing telecommunications service taxed under G.S. 105‑164.4(a)(4c).

(3)        Providing video programming taxed under G.S. 105‑164.4(a)(6).

(4)        Providing electricity."

SECTION 20.(b)  G.S. 153A‑146 reads as rewritten:

"§ 153A‑146.  General power to impose taxes.

(a)        Authority. – A county may impose taxes only as specifically authorized by act of the General Assembly. Except when the statute authorizing a tax provides for penalties and interest, the power to impose a tax includes the power to impose reasonable penalties for failure to declare tax liability, if required, and to impose penalties or interest for failure to pay taxes lawfully due within the time prescribed by law or ordinance. In determining the liability of any taxpayer for a tax, a county may not employ an agent who is compensated in whole or in part by the county for services rendered on a contingent basis or any other basis related to the amount of tax, interest, or penalty assessed against or collected from the taxpayer. The power to impose a tax also includes the power to provide for its administration in a manner not inconsistent with the statute authorizing the tax.

(b)        Prohibition. – A county may not impose a license, franchise, or privilege tax on a person engaged in any of the businesses listed in this subsection:

(1)        Supplying piped natural gas.

(2)        Providing telecommunications service taxed under G.S. 105‑164.4(a)(4c).

(3)        Providing video programming taxed under G.S. 105‑164.4(a)(6).

(4)        Providing electricity."

SECTION 21.  The Department of Revenue may draw the funds needed to make the following distributions from the sales and use tax collections under Article 5 of Chapter 105 of the General Statutes:

(1)        The September 15, 2014, distribution of the franchise tax to cities under G.S. 105‑116.1 for the calendar quarter than begins April 1, 2014.

(2)        The September 15, 2014, distribution of the excise tax to cities under G.S. 105‑187.44 for the calendar quarter than begins April 1, 2014.

SECTION 22.(a)  G.S. 105‑153.3 reads as rewritten:

"§ 105‑153.3.  Definitions.

The following definitions apply in this Part:

(18)      Surviving spouse. – Defined in section 2(a) of the Code.

(18)(19)     Taxable year. – Defined in section 441(b) of the Code.

(19)(20)     Taxpayer. – An individual subject to the tax imposed by this Part.

(20)(21)     This State. – The State of North Carolina."

SECTION 22.(b)  G.S. 105‑153.5(a)(1) reads as rewritten:

"(a)       Deduction Amount. –  In calculating North Carolina taxable income, a taxpayer may deduct from adjusted gross income either the standard deduction amount provided in subdivision (1) of this subsection or the itemized deduction amount provided in subdivision (2) of this subsection that the taxpayer claimed under the Code. In the case of a married couple filing separate returns, a taxpayer may not deduct the standard deduction amount if the taxpayer or the taxpayer's spouse claims the itemized deductions amount:

(1)        Standard deduction amount. –  An amount equal to the amount listed in the table below based on the taxpayer's filing status:

Filing Status                                                     Standard Deduction

Married, filing jointlyjointly/surviving spouse             $15,000

Head of Household                                                  12,000

Single                                                                         7,500

Married, filing separately                                            7,500."

SECTION 22.(c)  G.S. 105‑134.1 reads as rewritten:

"§ 105‑134.1.  Definitions.

The following definitions apply in this Part:

(15a)    Surviving spouse. – Defined in section 2(a) of the Code.

…."

SECTION 22.(d)  G.S. 105‑134.6(a2) reads as rewritten:

"(a2)     Deduction Amount. – In calculating North Carolina taxable income, a taxpayer may deduct either the North Carolina standard deduction amount for that taxpayer's filing status or the itemized deductions amount claimed under the Code. The North Carolina standard deduction amount is the lesser of the amount shown in the table below or the amount allowed under the Code. In the case of a married couple filing separate returns, a taxpayer may not deduct the standard deduction amount if the taxpayer or the taxpayer's spouse claims itemized deductions for State purposes.

A taxpayer that deducts the standard deduction amount under this subsection and is entitled to an additional deduction amount under section 63(f) of the Code for the aged or blind may deduct an additional amount under this subsection. The additional amount the taxpayer may deduct is six hundred dollars ($600.00) in the case of an individual who is married and seven hundred fifty dollars ($750.00) in the case of an individual who is not married and is not a surviving spouse. The taxpayer is allowed the same number of additional amounts that the taxpayer claimed under the Code for the taxable year.

Filing Status                           Standard Deduction

Married, filing jointlyjointly/

surviving spouse                                    $6,000

Head of Household                                4,400

Single                                                     3,000

Married, filing separately                        3,000."

SECTION 22.(e)  Subsections (a) and (b) of this section are effective for taxable years beginning on or after January 1, 2014. Subsections (c) and (d) of this section are effective retroactively for taxable years beginning on or after January 1, 2012, and before January 1, 2014. The remainder of this section is effective when it becomes law.

SECTION 23.  G.S. 105‑164.13B(a)(4) reads as rewritten:

"(a)       State Exemption. – Food is exempt from the taxes imposed by this Article unless the food is included in one of the subdivisions in this subsection. The following food items are subject to tax:

(4)        Prepared food, other than bakery items sold without eating utensils by an artisan bakery. The term "bakery item" includes bread, rolls, buns, biscuits, bagels, croissants, pastries, donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, and tortillas. An artisan bakery is a bakery that meets all of the following requirements:

a.         It derives over eighty percent (80%) of its gross receipts from bakery items.

b.         Its annual gross receipts, combined with the gross receipts of all related persons as defined in G.S. 105‑163.010, persons, do not exceed one million eight hundred thousand dollars ($1,800,000). For purposes of this subdivision, the term "related person" means a person described in one of the relationships set forth in section 267(b) or 707(b) of the Code."

SECTION 24.  G.S. 105‑129.16A reads as rewritten:

"§ 105‑129.16A.  Credit for investing in renewable energy property.

(e)        Sunset. – This Except for taxpayers covered by subsection (e1) of this section, this section is repealed effective for renewable energy property placed into service on or after January 1, 2016.

(e1)      Delayed Sunset. – For taxpayers that have incurred more than five percent (5%) of the cost of constructing renewable energy property on or before January 1, 2016, this section is repealed effective for renewable energy property placed into service after July 1, 2017."

SECTION 25.(a)  Article 3D of Chapter 105 of the General Statutes reads as rewritten:

"Article 3D.

"Historic Rehabilitation Tax Credits.Investment Program.

"§ 105‑129.35.  Credit for rehabilitating income‑producing historic structure.

(a)        Credit. – A taxpayer who is allowed a federal income tax credit under section 47 of the Code for making qualified rehabilitation expenditures for a certified historic structure located in this State is allowed a credit equal to twenty percent (20%) of the expenditures that qualify for the federal credit.the sum of the following:

(1)        Base amount. – An amount equal to fifteen percent (15%) of qualified rehabilitation expenditures up to ten million dollars ($10,000,000) and ten percent (10%) of qualified rehabilitation expenditures greater than ten million dollars ($10,000,000) and up to twenty million dollars ($20,000,000).

(2)        Development tier bonus. – An amount equal to five percent (5%) of qualified rehabilitation expenditures not exceeding twenty million dollars ($20,000,000) if the certified historic structure is located in a development tier one or two area.

(3)        Targeted investment bonus. – An amount equal to five percent (5%) of qualified rehabilitation expenditures not exceeding twenty million dollars ($20,000,000) if the certified historic structure is located in an eligible targeted investment site.

 If the certified historic structure is a facility that at one time served as a State training school for juvenile offenders, the amount of the credit is equal to forty percent (40%) of the expenditures that qualify for the federal credit. To claim the credit allowed by this subsection, the taxpayer must provide a copy of the certification obtained from the State Historic Preservation Officer verifying that the historic structure has been rehabilitated in accordance with this subsection. A claim for the targeted investment bonus must include in the materials submitted to the Secretary a copy of the eligibility certification.

(b)        Notwithstanding the provisions of 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 certified historic structure is placed in service, is at least forty percent (40%) of the amount of credit allocated to that owner.discretion. 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.

(c)        Definitions. – The following definitions apply in this section:

(1)        Certified historic structure. – Defined in section 47 of the Code.

(1a)      Development tier area. – Defined in G.S. 143B‑437.08.

(1b)      Eligibility certification. – A certification obtained from the State Historic Preservation Officer that the site comprises an eligible targeted investment site.

(1c)      Eligible targeted investment site. – A site located in this State that satisfies all of the following conditions:

a.         It was used as a manufacturing facility or for purposes ancillary to manufacturing, as a warehouse for selling agricultural products, or as a public or private utility.

b.         It is a certified historic structure.

c.         It has been at least sixty‑five percent (65%) vacant for a period of at least two years immediately preceding the date the eligibility certification is made.

(2)        Pass‑through entity. – Defined in G.S. 105‑228.90.

(3)        Qualified rehabilitation expenditures. – Defined in section 47 of the Code.

(4)        State Historic Preservation Officer. – Defined in G.S. 105‑129.36.The Deputy Secretary of the Office of Archives and History of the North Carolina Department of Cultural Resources, or the Deputy Secretary's designee, who acts to administer the historic preservation programs within the State.

"§ 105‑129.36.  Credit for rehabilitating nonincome‑producing historic structure.

(a)        Credit. – A taxpayer who is not allowed a federal income tax credit under section 47 of the Code and who makes rehabilitation expenses for a State‑certified historic structure located in this State is allowed a credit equal to thirty percent (30%) a percentage of the rehabilitation expenses.expenses, as follows:

(1)        Twenty percent (20%) of rehabilitation expenses incurred up to two hundred thousand dollars ($200,000) over any one 24‑month period per discrete property parcel with an assessed value equal to or less than the statewide median home value.

(2)        Fifteen percent (15%) of rehabilitation expenses incurred up to two hundred thousand dollars ($200,000) over any one 24‑month period per discrete property parcel with an assessed value greater than the statewide median home value but equal to or less than one hundred fifty percent (150%) of the statewide median home value; provided that the taxpayer's rehabilitation expenses exceed ten thousand dollars ($10,000) within the 24‑month period and the rehabilitation expenses have not been on a single State‑certified historic property for more than five years.

 If the certified historic structure is a facility that at one time served as a State training school for juvenile offenders, the amount of the credit is equal to forty percent (40%) of the expenditures that qualify for the federal credit. To qualify for the credit, the taxpayer's rehabilitation expenses must exceed twenty‑five thousand dollars ($25,000) within a 24‑month period. To claim the credit allowed by this subsection,subdivision (2) of this subsection, the taxpayer must provide a copy of the certification obtained from the State Historic Preservation Officer verifying that the historic structure has been rehabilitated in accordance with this subsection.

(b)        Definitions. – The following definitions apply in this section:

(1)        Assessed value. – The tax value of the property upon which the State‑certified historic structure is sited on the county listing as of the beginning of the year in which rehabilitation expenses on the State‑certified historical structure commence.

(1a)      Certified rehabilitation. – Repairs or alterations consistent with the Secretary of the Interior's Standards for Rehabilitation and certified as such by the State Historic Preservation Officer.

(2)        Rehabilitation expenses. – Expenses incurred in the certified rehabilitation of a certified historic structure and added to the property's basis.basis if the expense is incurred for any of the following of the historic structure: (i) the exterior, (ii) the interior of a window sash if work is done to the exterior of the same window sash, (iii) structural elements, (iv) heating or ventilation systems, (v) electrical or plumbing systems, other than fixtures, or (vi) insulation. The term does not include the cost of acquiring the property, the cost attributable to the enlargement of an existing building, the cost of sitework expenditures, or the cost of personal property.property, or the cost of any interior repair not specifically listed in this subdivision.

(3)        State‑certified historic structure. – A structure that is individually listed in the National Register of Historic Places or is certified by the State Historic Preservation Officer as contributing to the historic significance of a National Register Historic District or a locally designated historic district certified by the United States Department of the Interior.

(4)        State Historic Preservation Officer. – The Deputy Secretary of Archives and History or the Deputy Secretary's designee who acts to administer the historic preservation programs within the State.

(5)        Statewide median home value. – The median value of owner‑occupied housing units for the State, as determined by the five‑year American Community Survey estimates published by the United States Census Bureau in the year prior to the year in which the State Historic Preservation Officer issues the certification verifying that the historic structure has been rehabilitated in accordance with this Article.

(c)        Recodified as G.S. 105‑129.36A by Session Laws 2003‑284, s. 35A.2, effective July 15, 2003.

"§ 105‑129.36A.  Rules; fees.

(a)        Rules. – The North Carolina Historical Commission, in consultation with the State Historic Preservation Officer, may adopt rules needed to administer the any certification process required by this section.

(b)        Fees. – The North Carolina Historical Commission, in consultation with the State Historic Preservation Officer, may adopt a schedule of fees for providing certifications required by this Article. In establishing the fee schedule, the Commission shall consider the administrative and personnel costs incurred by the Department of Cultural Resources. An application fee may not exceed one percent (1%) of the completed qualifying rehabilitation expenditures. The proceeds of the fees are receipts of the Department of Cultural Resources and must be used for performing its duties under this Article.

"§ 105‑129.37.  Tax credited; credit limitations.

(a)        Tax Credited. – The credits provided in this Article are allowed against the franchise tax imposed in Article 3 of this Chapter, the income taxes levied in Article 4 of this Chapter, or the gross premiums tax imposed in Article 8B of this Chapter. The taxpayer may take the credits allowed by this Article against only one of the taxes against which it is allowed. The taxpayer must elect the tax against which a credit will be claimed when filing the return on which it is claimed, and this election is binding. The credit may be claimed in the year in which the certified historic structure is placed into service. When the certified historic structure is placed into service in two or more phases in different years, the amount of credit that may be claimed in a year is the amount based on the qualified rehabilitation expenditures associated with the phase placed into service during that year.

(b)        Credit Limitations. – 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. Any unused portion of the credit may be carried forward for the succeeding five years. A credit allowed under this Article may not exceed the amount of the tax against which it is claimed for the taxable year reduced by the sum of all credits allowed, except payments of tax made by or on behalf of the taxpayer. Any unused portion of the credit may be carried forward for the succeeding nine years. Any carryforwards of the credit must be claimed against the same tax.

(c)        Forfeiture for Disposition. – A taxpayer who is required under section 50 of the Code to recapture all or part of the federal credit for rehabilitating an income‑producing historic structure located in this State forfeits the corresponding part of the State credit allowed under G.S. 105‑129.35 with respect to that historic structure. If the credit was allocated among the owners of a pass‑through entity, the forfeiture applies to the owners in the same proportion that the credit was allocated.

(d)        Forfeiture for Change in Ownership. – If an owner of a pass‑through entity that has qualified for the credit allowed under G.S. 105‑129.35 disposes of all or a portion of the owner's interest in the pass‑through entity within five years from the date the rehabilitated historic structure 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 historic structure 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.

(e)        Exceptions to Forfeiture. – Forfeiture as provided in subsection (d) 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.

(f)         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. 105‑241.21, 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.

"§ 105‑129.38.  Report.Report; tracking.

(a)        The Department must include in the economic incentives report required by G.S. 105‑256 the following information itemized by taxpayer:

(1)        The number of taxpayers that took the credits allowed in this Article.

(2)        The amount of rehabilitation expenses and qualified rehabilitation expenditures with respect to which credits were taken.

(3)        The total cost to the General Fund of the credits taken.taken per taxpayer per project.

(b)        The Department shall track the credits, including credits carried forward, allowed to each taxpayer by use of a project number generated by the State Historic Preservation Office and shall develop a method for reporting the project number on North Carolina annual tax returns.

(c)        The Department shall include in the economic incentives report required by G.S. 105‑256 the following information:

(1)        The total amount of tax credits awarded and the total amount of tax credits claimed against current taxes, by type of tax, during the relevant tax year.

(2)        The total amount of tax credits carried forward, by type of tax.

"§ 105‑129.39.  Sunset.

This Article expires for qualified rehabilitation expenditures and rehabilitation expenses incurred on or after January 1, 2015.2020."

SECTION 25.(b)  This section becomes effective January 1, 2015, and applies to qualified rehabilitation expenditures and rehabilitation expenses incurred on or after that date.

SECTION 25.1.(a)  G.S. 143B‑437.012 reads as rewritten:

"§ 143B‑437.012.  Job Maintenance and Capital Development Fund.

(d)        Eligibility. – A business is eligible for consideration for a grant under this section if it satisfies the conditions of either subdivision (1) or (2) of this subsection and satisfies the conditions of both subdivisions (3) andsubdivision (4) of this subsection:

(1)        The business is a major employer. A business is a major employer if the business meets the following requirements:

a.         The Department certifies that the business has invested or intends to invest at least two hundred million dollars ($200,000,000) of private funds in improvements to real property and additions to tangible personal property in the project within a six‑year period beginning with the time the investment commences.

b.         The business employs at least 2,000 full‑time employees or equivalent full‑time contract employees at the project that is the subject of the grant at the time the application is made, and the business agrees to maintain at least 2,000 full‑time employees or equivalent full‑time contract employees at the project for the full term of the grant agreement.

c.         The project is located in a development tier one area at the time the business applies for a grant.

(2)        The business is a large manufacturing employer. A business is a large manufacturing employer if the business meets the following requirements:

a.         The business is in manufacturing, as defined in G.S. 143B‑437.01, and is converting its manufacturing process to change the product it manufactures.manufactures or is investing in its manufacturing process by enhancing pollution controls or transitioning the manufacturing process from using coal to using natural gas for the purpose of becoming more energy efficient or reducing emissions.

b.         The Department certifies that the business has invested or intends to invest at least sixty‑fivefifty million dollars ($65,000,000)($50,000,000) of private funds in improvements to real property and additions to tangible personal property in the project within a three‑yearfive‑year period beginning with the time the investment commences.

c.         The business meets one of the following employment requirements:

1.         If in a development tier one area, the business employs at least 320 full‑time employees at the project that is the subject of the grant at the time the application is made, and the business agrees to maintain at least 320 full‑time employees at the project for the full term of the grant.

2.         If in a development tier two area with a population of less than 60,000 as of July 1, 2013, the business employs at least 800 full‑time employees or equivalent full‑time contract employees at the project that is the subject of the grant at the time the application is made, and the business agrees to maintain at least 800 full‑time employees or equivalent full‑time contract employees at the project for the full term of the grant.

(3)        The project is located in a development tier one area at the time the business applies for a grant.

(4)        All newly hired employees of the business must be citizens of the United States,States or have proper identification and documentation of their authorization to reside and work in the United States.

(n)        Limitations. – The Department may enter into no more than five agreements under this section. The total aggregate cost of all agreements entered into under this section may not exceed sixty‑nine million dollars ($69,000,000).seventy‑nine million dollars ($79,000,000). The total annual cost of an agreement entered into under this section may not exceed six million dollars ($6,000,000)."

SECTION 25.1.(b)  This section becomes effective July 1, 2014.

SECTION 26.(a)  G.S. 105‑130.47 reads as rewritten:

"§ 105‑130.47.  Credit for qualifying expenses of a production company.

(b)        Credit. – A Subject to the limitation in subsection (c1) of this section, a taxpayer that meets the requirements of this subsectionis a production company and has qualifying expenses of at least two hundred fifty thousand dollars ($250,000) with respect to a production is allowed a credit against the taxes imposed by this Part equal to twenty‑five percent (25%) twenty‑two and one‑half percent (22.5%) of the production company'staxpayer's qualifying expenses. expenses. The applicable requirements are:

(1)        The taxpayer's taxable year is a calendar year.

(2)        The taxpayer files a timely return and does not apply for an extension of time to file a return.

(3)        The taxpayer is a production company.

(4)        The taxpayer has qualifying expenses of at least two hundred fifty thousand dollars ($250,000) with respect to a production. For the purposes of this subdivision, For the purposes of this section, in the case of an episodic television series, an entire season of episodes is one production. The credit is computed based on all of the taxpayer's qualifying expenses incurred with respect to the production, not just the qualifying expenses incurred during the taxable year.

(c1)      Credit Cap. – The total amount of all tax credits allowed to taxpayers under G.S. 105‑151.29 and this section for qualifying expenses incurred in a taxable year may not exceed forty million dollars ($40,000,000). The Secretary must calculate the total amount of all tax credits claimed under 105‑151.29 and under this section. If the total amount of all tax credits claimed exceeds this maximum amount, the Secretary must apportion the credits claimed by allocating the maximum amount in proportion to the size of the credit claimed by each taxpayer. The Secretary's allocations are final.

(j)         NC Film Office. – To claim a credit under this section, a taxpayer must notify the Division of Tourism, Film, and Sports Development in the Department of Commerce of the taxpayer's intent to claim the production tax credit. The notification must include the title of the production, the name of the production company, a financial contact for the production company, the proposed dates on which the production company plans to begin filming the production, and any other information required by the Division. For productions that have production credits, a taxpayer claiming a credit under this section must acknowledge all of the following in the production credits bothcredits:

(1)        the The North Carolina Film Office and the regional film office responsible for the geographic area in which the filming of the production occurred.

(2)        The identity of each location in the State in which the filming of the production occurred.

(3)        The phrase "Filmed in North Carolina" and a logo provided by the North Carolina Film Office.

(k)        Sunset. – This section is repealed for qualifying expenses occurring on or after January 1, 2015.January 1, 2016."

SECTION 26.(b)  G.S. 105‑151.29 reads as rewritten:

"§ 105‑151.29.  Credit for qualifying expenses of a production company.

(b)        Credit. – A Subject to the limitation in subsection (c1) of this section, a taxpayer that meets the requirements of this subsectionis a production company and has qualifying expenses of at least two hundred fifty thousand dollars ($250,000) with respect to a production is allowed a credit against the taxes imposed by this Part equal to twenty‑five percent (25%) twenty‑two and one‑half percent (22.5%) of the production company's taxpayer's qualifying expenses. expenses. The applicable requirements are:

(1)        The taxpayer's taxable year is a calendar year.

(2)        The taxpayer files a timely return and does not apply for an extension of time to file a return.

(3)        The taxpayer is a production company.

(4)        The taxpayer has qualifying expenses of at least two hundred fifty thousand dollars ($250,000) with respect to a production. For the purposes of this subdivision, For the purposes of this section, in the case of an episodic television series, an entire season of episodes is one production. The credit is computed based on all of the taxpayer's qualifying expenses incurred with respect to the production, not just the qualifying expenses incurred during the taxable year.

(c1)      Credit Cap. – The total amount of all tax credits allowed to taxpayers under G.S. 105‑130.47 and this section for qualifying expenses incurred in a taxable year may not exceed the amount set in G.S. 105‑130.47(c1). The Secretary must calculate the total amount of all tax credits claimed under G.S. 105‑130.47 and under this section. If the total amount of all tax credits claimed exceeds this maximum amount, the Secretary must apportion the credits claimed by allocating the maximum amount in proportion to the size of the credit claimed by each taxpayer. The Secretary's allocations are final.

(j)         NC Film Office. – To claim a credit under this section, a taxpayer must notify the Division of Tourism, Film, and Sports Development in the Department of Commerce of the taxpayer's intent to claim the production tax credit. The notification must include the title of the production, the name of the production company, a financial contact for the production company, the proposed dates on which the production company plans to begin filming the production, and any other information required by the Division. For productions that have production credits, a taxpayer claiming a credit under this section must acknowledge all of the following in the production credits bothcredits:

(1)        the The North Carolina Film Office and the regional film office responsible for the geographic area in which the filming of the production occurred.

(2)        The identity of each location in the State in which the filming of the production occurred.

(3)        The phrase "Filmed in North Carolina" and a logo provided by the North Carolina Film Office.

(k)        Sunset. – This section is repealed for qualifying expenses occurring on or after January 1, 2015.January 1, 2016."

SECTION 26.(c)  The Joint Legislative Program Evaluation Oversight Committee shall include in the 2014‑2015 Work Plan for the Program Evaluation Division of the General Assembly a study to evaluate the income tax credits for qualifying expenses of a production company provided in Chapter 105 of the General Statutes. The Program Evaluation Division shall include the following within this study:

(1)        Consideration of the return on investment of the credit to the State.

(2)        Consideration of methods to increase the benefit to the State resulting from the credit.

(3)        Consideration of programs in other states, best practices of other states, and other ways used by other states to compete for film investment in the State.

SECTION 26.(d)  The Program Evaluation Division shall submit its findings and recommendations from this section to the Joint Legislative Program Evaluation Oversight Committee and Revenue Laws Study Committee on or before February 1, 2016.

SECTION 26.(e)  Subsections (a) and (b) of this section become effective for taxable years beginning on or after January 1, 2015. The remainder of this section is effective when it becomes law.

SECTION 26.5.(a)  G.S. 74F‑16 reads as rewritten:

"§ 74F‑16.  Exemptions.

The provisions of this Chapter do not apply to:

(6)        A merchant, or retail or hardware store, when the merchant or store does not purport to be a locksmith and lawfully (i) rekeys a lock at the time of sale of the lock, (ii) duplicates a key, except for duplicating a transponder‑type key that requires programming, or (iii) installs as a service a lock on a door if both the door and lock were purchased from the same merchant.store, so long as all of the following apply:

a.         It is lawfully duplicating keys or installing, servicing, repairing, rebuilding, reprogramming, rekeying, or maintaining locks in the normal course of its business.

b.         It maintains a physical location in this State.

c.         It maintains a sales and use tax permit in accordance with G.S. 105‑164.16.

d.         It does not represent itself as a locksmith.

…."

SECTION 26.5.(b)  If Senate Bill 734, 2013 Regular Session, becomes law, Section 2.5 of that act is repealed.

SECTION 26.6.  G.S. 143B-131.7 is repealed.

SECTION 27.  Except as otherwise provided, this act is effective when it becomes law.

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