North Carolina: Governor Signs Budget Enacting Tax Increases

The Governor of North Carolina has signed the budget bill (SB 202) into law.

The bill (SB 202) contains several tax law changes:

  1. A surtax (or additional income tax) equal to 2% or 3% of the tax payable by the taxpayer (would apply to corporations and individuals for calendar tax years 2009 and 2010).
  2. Sales tax rate would increase from 4.5% to 5.5% from 9/1/09 to 10/1/09.
  3. Sales tax rate would increase to 5.75% effective 10/1/09 and expire on 7/1/2011.
  4. The "Amazon Law" or affiliate nexus provision (similar to NY and RI) requiring remote merchants or sellers to collect sales tax on sales to in-state purchasers based on the affiliate's nexus connection to North Carolina.
  5. Expands the sales tax base of digital property.
  6. Increases the alcohol excise and tobacco products tax rates.
  7. Changes in North Carolina's conformity with the Internal Revenue Code (impacts deductions for real property taxes, motor vehicle sales taxes, deferral of cancellation of indebtedness income (COD), corporate deductions of original issue discount on high-yield discount obligations, and bonus depreciation).

Click on the following link to access SB 202 (pages 218 thru 238 discusses the tax changes):http://www.ncga.state.nc.us/sessions/2009/budget/2009/S202-CCSMAxf-3.pdf

If you have any questions, please contact me at leveragesalt@earthlink.net.

This blog

Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States.  He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect."  For more info, visit his website: www.leveragestateandlocaltax.com

You can reach Brian at strahle@leveragesalt.com.

Connect with Brian on LinkedIn. Follow Brian on Twitter. Join the Leverage | SALT LinkedIn Group, connect and contribute with your colleagues!  

Because state and local taxes are deceptively simple and endlessly complicated.

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