On June 30, the North Carolina Governor signed into law a wide-ranging tax bill that includes marketplace facilitator rules for meals taxes and clarifies sales tax for download codes. HB 1080 extends marketplace facilitator collection and remittance obligations to local meals taxes, effective July 1, 2020. In addition, the law clarifies that the sale of
North Carolina
Pump the Brakes: North Carolina Supreme Court Determines that Brake-Pad Manufacturer Does Not Qualify for Special Apportionment Rule for Public Utilities
By Michael Kerman & Eric Tresh on
Posted in Noteworthy Cases
The North Carolina Supreme Court affirmed a lower court decision that held that a manufacturer of brake pads used by railroads did not qualify for an exception to the state’s standard three-factor apportionment formula that allows “public utilities” to instead apportion their income using a single-sales factor formula.
In February 2019, the North Carolina Superior…
North Carolina Excludes Sales of Certain Digital Goods from Sales and Use Taxes
By Jonathan Feldman on
Posted in Digital Economy
On June 5, 2020, Governor Cooper signed HB 1079, which will exclude sales of certain digital audio and visual works from the state’s sales and use tax, and make other tax changes. The law exempts sales of digital educational services and the sales of digital audio or digital audiovisual works that consist of nontaxable…
North Carolina Legislature Approves Sales and Use Tax Exclusion for Digital Educational Services
By Jonathan Feldman on
Posted in Digital Economy
North Carolina HB 1079, providing a variety of sales tax changes, has been approved by both houses of the legislature and now awaits the Governor’s signature. In particular, the bill would exclude from sales and use tax sales of digital educational services and would exempt: (1) sales to home school operators of digital audio…
Proposed Legislation in North Carolina May Mitigate Tax on State Incentives
By Hanish Patel & Charlie Kearns on
Posted in In the News
The North Carolina legislature has introduced S.B. 622, which would make significant changes to a wide range of North Carolina taxes.
Among those changes, the legislation would allow a deduction, to the extent included in federal taxable income, for amounts received from specified economic incentive programs in North Carolina—the Job Maintenance and Capital Development…
North Carolina Supreme Court Decides in Favor of Taxpayer in Trust Nexus Dispute
By Jessica Eisenmenger & Charlie Kearns on
Posted in In the News, Noteworthy Cases
The North Carolina Supreme Court recently held that the presence in the state of a trust’s beneficiary is not sufficient to establish income tax nexus for the trust. In the Kimberly Rice Kaestner 1992 Family Trust case, the trust’s beneficiaries were residents of North Carolina. There were no other connections between the state and the…
North Carolina Supreme Court Determines that Bank’s Market Discount Income Is Not Deductible as Interest
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By Liz Cha and Open Weaver Banks
The North Carolina Supreme Court affirmed the North Carolina Business Court’s decision that Fidelity Bank was precluded from deducting “market discount income” from US bonds for North Carolina corporate income tax purposes. Fidelity Bank acquired US government bonds at a discount, held these bonds until maturity, and earned…
Keep It in the Family: North Carolina Appellate Court Finds Taxation of Trust Violates Due Process
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Posted in Noteworthy Cases, Southeast
By Ted Friedman and Madison Barnett
The North Carolina Court of Appeals held that it would violate Due Process to impose income tax on an out-of-state inter vivos trust because the trust lacked a sufficient connection with North Carolina. The trust was created and governed by laws outside of North Carolina, the Trustee resided outside…
Bueller? Bueller? MTC Still Calling on States to Join ALAS Program
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Posted in In the News, Policy and Legislation
The Multistate Tax Commission advanced several items of interest during its annual fall meetings held in Charleston, South Carolina, this week, including the creation of a new committee to continue gathering support for its transfer pricing program.
View the full Legal Alert.
Hubba, Hubba, Hubba! Money, Money, Money! Who Do You Trust? California and North Carolina Differ on the Constitutionality of Taxing Undistributed Foreign Trust Income
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By Michael Penza and Timothy Gustafson
The California Franchise Tax Board (FTB) issued an information letter explaining that a trust is taxable in California if any of the following three conditions are met: (1) the trust has income from California sources; (2) a trustee is a resident of California; or (3) a non-contingent beneficiary is…