North Carolina 2025-2026 Regular Session

North Carolina Senate Bill S595 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1	1		GENERAL ASSEMBLY OF NORTH CAROLINA
2	2		SESSION 2025
3		-	S 1
4		-	SENATE BILL 595
	3	+	S D
	4	+	SENATE BILL DRS45301-SVxf-3C
	5	+
5	6
6	7
7	8		Short Title: Rev Laws Tech Chngs/BBA Chngs/P2P Tax Parity. (Public)
8	9		Sponsors: Senators McInnis and Craven (Primary Sponsors).
9		-	Referred to: ~~Rules and Operations of the Senate~~
10		-	~~March 26, 2025~~
11		-	~~S595 -v-1~~
	10	+	Referred to:
	11	+
	12	+	DRS45301 -SVxf-3C
12	13		A BILL TO BE ENTITLED 1
13	14		AN ACT TO MAKE VARIOUS TECHNICAL, CLARIFYING, AND ADMINISTRATIVE 2
14	15		CHANGES TO THE REVENUE LAWS ; TO CONFORM TO THE FEDERAL SYSTEM 3
15	16		FOR AUDITING PARTNERSHIPS BY IMPOSING TAX AT THE PARTNERSHIP 4
16	17		LEVEL FOR FEDERAL CHANGES AND BY AUTHORIZING REFUNDS FOR 5
17	18		FEDERAL CHANGES; AND TO PROVIDE TAX PARITY FOR SHORT -TERM CAR 6
18	19		RENTALS BY EXPANDING ALTERNATE HIGHWAY USE TAX TO INCLUDE 7
19	20		PEER-TO-PEER RENTALS. 8
20	21		The General Assembly of North Carolina enacts: 9
21	22		10
22	23		PART I. PERSONAL INCOME TAX CHANGES 11
23	24		SECTION 1.1.(a) G.S. 105-153.5 reads as rewritten: 12
24	25		"§ 105-153.5. Modifications to adjusted gross income. 13
25	26		… 14
26	27		(b) Other Deductions. – In calculating North Carolina taxable income, a taxpayer may 15
27	28		deduct from the taxpayer's adjusted gross income any of the following items that are included in 16
28	29		the taxpayer's adjusted gross income: 17
29	30		… 18
30	31		(17) The amount by which the aggregate amount of losses or deductions of an S 19
31	32		Corporation taken into account by a shareholder under G.S. 105-131.1(b) do 20
32	33		not exceed the combined adjusted bases, determined in accordance with 21
33	34		G.S. 105-131.3, of the shareholder in the stock and indebtedness of the S 22
34	35		Corporation. 23
35	36		(c) Additions. – In calculating North Carolina taxable income, a taxpayer must add to the 24
36	37		taxpayer's adjusted gross income any of the following items that are not included in the taxpayer's 25
37	38		adjusted gross income: 26
38	39		… 27
39	40		(8) The amount by which the aggregate amount of losses or deductions of an S 28
40	41		Corporation taken into account by a shareholder under G.S. 105-131.1(b) 29
41	42		exceed the combined adjusted bases, determined in accordance with 30
42	43		G.S. 105-131.3, of the shareholder in the stock and indebtedness of the S 31
43	44		Corporation. 32
44	45		…." 33
45	46		SECTION 1.1.(b) This section is effective for taxable years beginning on or after 34
46	47		January 1, 2025. 35
47		-	SECTION 1.2.(a) G.S. 105-153.5A reads as rewritten: 36 General Assembly Of North Carolina Session 2025
48		-	Page 2 Senate Bill 595-First Edition
	48	+	SECTION 1.2.(a) G.S. 105-153.5A reads as rewritten: 36
	49	+	FILED SENATE
	50	+	Mar 25, 2025
	51	+	S.B. 595
	52	+	PRINCIPAL CLERK General Assembly Of North Carolina Session 2025
	53	+	Page 2 DRS45301-SVxf-3C
49	54		"§ 105-153.5A. Net operating loss provisions. 1
50	55		… 2
51	56		(g) Limitation. – The provisions of this section apply only to individuals, estates, and 3
52	57		trusts." 4
53	58		SECTION 1.2.(b) G.S. 105-153.5A(a) reads as rewritten: 5
54	59		"(a) State Net Operating Loss. – A taxpayer's State net operating loss for a taxable year is 6
55	60		the amount by which business deductions for the year exceed gross income for the year as 7
56	61		determined under the Code adjusted as provided in G.S. 105-153.5 and G.S. 105-153.6. The 8
57	62		amount of a taxpayer's State net operating loss must also be determined in accordance with the 9
58	63		following modifications: 10
59	64		(1) No State net operating loss deduction shall be allowed. 11
60	65		(2) The amount deductible on account of losses from sales or exchanges of capital 12
61	66		assets shall not exceed the amount includable on account of gains from sales 13
62	67		or exchanges of capital assets. 14
63	68		(3) The exclusion provided by Code section 1202 shall not be allowed. 15
64	69		(4) No deduction shall be allowed under G.S. 105-153.5(a1) for the child 16
65	70		deduction. 17
66	71		(5) The deductions which are not attributable to a taxpayer's trade or business 18
67	72		shall be allowed only to the extent of the amount of the gross income not 19
68	73		derived from such trade or business. 20
69	74		(6) Any deduction under Code section 199A shall not be allowed. 21
70	75		(7) The amount of the taxpayer's excess business loss, as defined under the 22
71	76		provisions of section 461(l) of the Code, shall be fully allowed as a State net 23
72	77		operating loss." 24
73	78		SECTION 1.2.(c) Subsection (a) of this section is effective when the Part becomes 25
74	79		law and applies retroactively to taxable years beginning on or after January 1, 2022. Subsection 26
75	80		(b) of this section is effective for taxable years beginning on or after January 1, 2025. The 27
76	81		remainder of this section is effective when the Part becomes law. 28
77	82		SECTION 1.3.(a) G.S. 105-160.2 reads as rewritten: 29
78	83		"§ 105-160.2. Imposition of tax. 30
79	84		(a) Scope. – The tax imposed by this Part applies to the taxable income of estates and 31
80	85		trusts as determined under the provisions of the Code except as otherwise provided in this Part. 32
81	86		The taxable income of an estate or trust is the same as taxable income for such an estate or trust 33
82	87		under the provisions of the Code, adjusted as provided in G.S. 105-153.5 and G.S. 105-153.6, 34
83	88		except that the adjustments provided in G.S. 105-153.5 and G.S. 105-153.6 are apportioned 35
84	89		between the estate or trust and the beneficiaries based on the distributions made during the 36
85	90		taxable year. G.S. 105-153.6. 37
86	91		(b) Tax Base. – The tax is computed on the amount of the taxable income of the estate or 38
87	92		trust that is for the benefit of a resident of this State, or for the benefit of a nonresident to the 39
88	93		extent that the income (i) is derived from North Carolina sources and is attributable to the 40
89	94		ownership of any interest in real or tangible personal property in this State or (ii) is derived from 41
90	95		a business, trade, profession, or occupation carried on in this State. For purposes of the preceding 42
91	96		sentence, taxable income and gross income is computed subject to the adjustments provided in 43
92	97		G.S. 105-153.5 and G.S. 105-153.6. G.S. 105-153.6 and is apportioned and allocated to this State 44
93	98		under G.S. 105-130.4. 45
94	99		(c) Tax Rate. – The tax on the amount computed above is at the rate levied in 46
95	100		G.S. 105-153.7. The fiduciary responsible for administering the estate or trust shall pay the tax 47
96	101		computed under the provisions of this Part. 48
97	102		(d) Adjustments. – For the purposes of this section, the adjustments provided in 49
98	103		G.S. 105-153.5 and G.S. 105-153.6 are apportioned between the estate or trust and the 50
99	104		beneficiaries based on the distributions made during the taxable year." 51 General Assembly Of North Carolina Session 2025
100		-	~~Senate Bill 595-First Edition~~ Page 3
	105	+	DRS45301-SVxf-3C Page 3
101	106		SECTION 1.3.(b) This section is effective for taxable years beginning on or after 1
102	107		January 1, 2025. 2
103	108		SECTION 1.4. G.S. 105-153.3(15) reads as rewritten: 3
104	109		"(15) Resident. – Either of the individuals listed below. A resident who removes 4
105	110		from the State during a taxable year is considered a resident until the resident 5
106	111		has both established a definite domicile elsewhere and abandoned any 6
107	112		domicile in this State. The fact of marriage does not raise any presumption as 7
108	113		to domicile or residence. A resident individual is either of the following: 8
109	114		a. An individual who is domiciled in this State at any time during the 9
110	115		taxable year or who resides in this State during the taxable year for 10
111	116		other than a temporary or transitory purpose. In the absence of 11
112	117		convincing proof to the contrary, an individual who is present within 12
113	118		the State for more than 183 days during the taxable year is presumed 13
114	119		to be a resident, but the 14
115	120		b. An individual who maintains a place of abode within the State and 15
116	121		spends more than 183 days, including partial days, of the taxable year 16
117	122		within the State. The absence of an individual from the State for more 17
118	123		than 183 days raises no presumption that the individual is not a 18
119	124		resident. A resident who removes from the State during a taxable year 19
120	125		is considered a resident until he has both established a definite 20
121	126		domicile elsewhere and abandoned any domicile in this State. The fact 21
122	127		of marriage does not raise any presumption as to domicile or 22
123	128		residence." 23
124	129		SECTION 1.5. G.S. 105-163.6 reads as rewritten: 24
125	130		"§ 105-163.6. When employer must file returns and pay withheld taxes. 25
126	131		… 26
127	132		(c) Monthly. – An employer who withholds an average of at least two hundred fifty 27
128	133		dollars ($250.00) but less than two thousand dollars ($2,000) of State income taxes from wages 28
129	134		each month must file a return and pay the withheld taxes on a monthly basis. A return for the 29
130	135		months of January through November is due by the 15th day of the month following the end of 30
131	136		the month covered by the return. A return for the month of December is due the following January 31
132	137		31. 32
133	138		(d) Semiweekly. – An employer who withholds an average of at least two thousand 33
134	139		dollars ($2,000) of State income taxes from wages each month shall must file a return by the date 34
135	140		set under the Code for filing a return for federal employment taxes attributable to the same wages 35
136	141		and shall on a quarterly basis. A quarterly return covers a calendar quarter and is due by the last 36
137	142		day of the month following the end of the quarter. The employer also must pay the withheld State 37
138	143		income taxes by the date set under the Code for depositing or paying federal employment taxes 38
139	144		attributable to the same wages. The date set by the Code for depositing or paying federal 39
140	145		employment taxes shall be determined without regard to § 6302(g) of the Code. 40
141	146		An extension of time granted to file a return for federal employment taxes attributable to 41
142	147		wages is an automatic extension of time for filing a return for State income taxes withheld from 42
143	148		the same wages, and an extension of time granted to pay federal employment taxes attributable 43
144	149		to wages is an automatic extension of time for paying State income taxes withheld from the same 44
145	150		wages. An employer who pays withheld State income taxes under this subsection is not subject 45
146	151		to interest on or penalties for a shortfall in the amount due if the employer would not be subject 46
147	152		to a failure-to-deposit penalty had the shortfall occurred in a deposit of federal employment taxes 47
148	153		attributable to the same wages and the employer pays the shortfall by the date the employer would 48
149	154		have to deposit a shortfall in the federal employment taxes.forth below: 49
150	155		(1) If an employer's payday falls on a Wednesday, Thursday, or Friday, the 50
151	156		withheld taxes must be paid on or before the following Wednesday. 51 General Assembly Of North Carolina Session 2025
152		-	Page 4 ~~Senate Bill 595-First Edition~~
	157	+	Page 4 DRS45301-SVxf-3C
153	158		(2) If an employer's payday falls on a Saturday, Sunday, Monday, or Tuesday, the 1
154	159		withheld taxes must be paid on or before the following Friday. 2
155	160		(3) If any of the three weekdays following the close of a semiweekly period is a 3
156	161		legal holiday, the employer has an additional day for each day that is a legal 4
157	162		holiday by which to pay the withheld taxes. 5
158	163		… 6
159	164		(f) The Secretary may close a taxpayer's withholding account if the taxpayer files no 7
160	165		withholding returns or files returns showing no withholding of State income taxes for a period of 8
161	166		18 months." 9
162	167		SECTION 1.6. Except as otherwise provided, this Part is effective when this act 10
163	168		becomes law. 11
164	169		12
165	170		PART II. CONFORM TO FEDERAL SYSTEM FOR AUDITING PARTNERSHIPS 13
166	171		SECTION 2.(a) Part 2 of Article 4 of Chapter 105 of the General Statutes is amended 14
167	172		by adding a new section to read: 15
168	173		"§ 105-154.2. Federal partnership adjustments. 16
169	174		(a) Definitions. – The following definitions apply in this Part: 17
170	175		(1) Administrative adjustment request. – An administrative adjustment request 18
171	176		filed by a partnership under section 6227 of the Code. 19
172	177		(2) Audited partnership. – A partnership subject to a partnership level audit 20
173	178		resulting in a federal partnership adjustment. 21
174	179		(3) Corporate partner. – A partner that is subject to tax under Part 1 of this Article. 22
175	180		(4) Direct partner. – A partner that holds a direct interest in a partnership subject 23
176	181		to a federal partnership adjustment. 24
177	182		(5) Exempt partner. – A partner that is not subject to State income tax under this 25
178	183		Article that holds a direct interest in a partnership subject to a federal 26
179	184		partnership adjustment. 27
180	185		(6) Federal partnership adjustment. – A change or correction arising from a 28
181	186		partnership level audit or an administrative adjustment request that affects the 29
182	187		calculation of a taxpayer's State tax. 30
183	188		(7) Federal partnership representative. – The person the partnership designates for 31
184	189		the taxable year as the partnership's representative, or the person the Internal 32
185	190		Revenue Service has appointed to act as the federal partnership representative, 33
186	191		pursuant to section 6223(a) of the Code. 34
187	192		(8) Final federal partnership adjustment. – A federal partnership adjustment that 35
188	193		is final. A federal partnership adjustment is final when the federal partnership 36
189	194		adjustment is not subject to administrative or judicial review. If the federal 37
190	195		partnership adjustment results from filing an administrative adjustment 38
191	196		request, the federal partnership adjustment is final when the administrative 39
192	197		adjustment request is filed. Additionally, a federal partnership adjustment 40
193	198		relating to a partnership level audit is deemed final in the following 41
194	199		circumstances: 42
195	200		a. The taxpayer has received a partnership level audit from the Internal 43
196	201		Revenue Service for the tax period and the taxpayer does not timely 44
197	202		file an administrative appeal with the Internal Revenue Service. 45
198	203		b. The taxpayer consented to any of the partnership level audit findings 46
199	204		for the tax period and through a final decision or other written 47
200	205		agreement with the Internal Revenue Service all rights of appeal have 48
201	206		been waived or exhausted. 49
202	207		(9) Indirect partner. – A beneficiary of an estate or trust or an owner in a 50
203	208		partnership or pass-through entity, where the estate, partnership, pass-through 51 General Assembly Of North Carolina Session 2025
204		-	~~Senate Bill 595-First Edition~~ Page 5
	209	+	DRS45301-SVxf-3C Page 5
205	210		entity, or trust holds, either itself or through another indirect partner, a direct 1
206	211		interest, in a partnership or pass-through entity subject to a final federal 2
207	212		partnership adjustment. 3
208	213		(10) Partnership level audit. – An audit of a partnership by the Internal Revenue 4
209	214		Service pursuant to Subchapter C of Title 26, Subtitle F, Chapter 63 of the 5
210	215		Code, as enacted by the Bipartisan Budget Act of 2015, Public Law 114-74, 6
211	216		which results in federal partnership adjustments. 7
212	217		(11) Reviewed year. – The taxable year of a partnership that is subject to a 8
213	218		partnership level audit from which federal partnership adjustments arise. 9
214	219		(12) State partnership representative. – The federal partnership representative 10
215	220		unless the partnership designates another person as its State partnership 11
216	221		representative. The Secretary is authorized to establish procedures for 12
217	222		designating a person, other than the federal partnership representative, to be a 13
218	223		State partnership representative. 14
219	224		(13) Tiered partner. – An estate, partnership, S Corporation, or trust that is a partner 15
220	225		in a partnership subject to a federal partnership adjustment. 16
221	226		(b) General Rule. – Except in the case of a final federal partnership adjustment that is 17
222	227		required to be reported to the Secretary using the procedures in subsection (c) of this section, a 18
223	228		partner must report and pay any State income tax due in accordance with the provisions of 19
224	229		G.S. 105-130.20 or G.S. 105-159. 20
225	230		(c) Reporting a Final Federal Partnership Adjustment. – Except for the distributive share 21
226	231		of adjustments that have been reported as required by subsection (b) of this section and an audited 22
227	232		partnership that has made a timely election under subsection (d) of this section, a partnership and 23
228	233		a partner must report a final federal partnership adjustment as follows: 24
229	234		(1) No later than 90 days after the final federal partnership adjustment, a 25
230	235		partnership doing business in this State must do both of the following: 26
231	236		a. File an income tax return reflecting the partnership's final federal 27
232	237		partnership adjustments, as modified by G.S. 105-153.5 and 28
233	238		G.S. 105-153.6, and any other information required by the Secretary, 29
234	239		and pay the additional amount due under G.S. 105-154(d) and 30
235	240		G.S. 105-154.1. 31
236	241		b. Notify each of its direct partners of the direct partner's distributive 32
237	242		share of the final federal partnership adjustments, including any 33
238	243		information necessary for the direct partner to properly file a State 34
239	244		income tax return. The information must be in the form prescribed by 35
240	245		the Secretary. 36
241	246		(2) No later than six months after the final federal partnership adjustment, each 37
242	247		direct partner subject to tax under this Article must file a State income tax 38
243	248		return reporting the direct partner's distributive share of the adjustments 39
244	249		reported to the direct partner under sub-subdivision b. of subdivision (1) of 40
245	250		this subsection, as modified by G.S. 105-153.5 and G.S. 105-153.6, and any 41
246	251		other information required by the Secretary, and pay any additional amount of 42
247	252		tax due as if the final federal partnership adjustments had been properly 43
248	253		reported. 44
249	254		(d) Election for Partnership to Pay; Exceptions. – Except as otherwise provided in 45
250	255		subdivision (2) of this subsection, an audited partnership may elect to report a final federal 46
251	256		partnership adjustment arising from a partnership level audit in the manner prescribed by the 47
252	257		Secretary. An election made under this subsection is irrevocable and cannot be made if the 48
253	258		required income tax return is not filed within the period required by this subsection. The 49
254	259		following provisions apply to an audited partnership that makes an election under this subsection: 50 General Assembly Of North Carolina Session 2025
255		-	Page 6 ~~Senate Bill 595-First Edition~~
	260	+	Page 6 DRS45301-SVxf-3C
256	261		(1) Reporting and payment of tax. – The reporting and payment requirements are 1
257	262		as follows: 2
258	263		a. No later than six months after the final federal partnership adjustment, 3
259	264		the audited partnership must file an income tax return reflecting the 4
260	265		partnership's final federal partnership adjustment, as modified by 5
261	266		G.S. 105-153.5 and G.S. 105-153.6, and provide any other 6
262	267		information required by the Secretary. 7
263	268		b. No later than six months after the final federal partnership adjustment, 8
264	269		the audited partnership must pay the amount determined under this 9
265	270		subdivision. If properly reported and paid by the audited partnership, 10
266	271		the amount shall be treated as paid in lieu of taxes owed by the direct 11
267	272		and indirect partners, to the extent applicable, on the same final federal 12
268	273		adjustment. The direct partners or indirect partners may not take a 13
269	274		deduction or credit for this amount on the State income tax return or 14
270	275		claim a refund of the amount paid on the State income tax return. The 15
271	276		amount in lieu of taxes is calculated as follows: 16
272	277		1. Exclude from the final federal adjustment the distributive share 17
273	278		of all adjustments reported to an exempt partner not subject to 18
274	279		tax under this Article. 19
275	280		2. For the total distributive shares of the final federal adjustment, 20
276	281		as modified by G.S. 105-153.5 and G.S. 105-153.6, reported to 21
277	282		direct corporate partners subject to tax under this Article, 22
278	283		apportion and allocate the adjustments as provided under 23
279	284		G.S. 105-130.4 and multiply the resulting amount by the tax 24
280	285		rate under G.S. 105-130.3. 25
281	286		3. For the total distributive shares of the final federal adjustment, 26
282	287		as modified by G.S. 105-153.5 and G.S. 105-153.6, reported to 27
283	288		nonresident individual direct partners and estate and trust 28
284	289		direct partners subject to tax under this Article, apportion and 29
285	290		allocate such adjustments as provided under G.S. 105-130.4 30
286	291		and multiply the resulting amount by the tax rate under 31
287	292		G.S. 105-153.7. 32
288	293		4. For the total distributive shares of the final federal adjustment, 33
289	294		as modified by G.S. 105-153.5 and G.S. 105-153.6, reported to 34
290	295		resident direct partners subject to tax under this Article, 35
291	296		multiply that amount by the tax rate under G.S. 105-153.7. For 36
292	297		purposes of this sub-sub-subdivision, an audited partnership 37
293	298		may deduct from each resident direct partner's distributive 38
294	299		share the amount of the resident direct partner's share of 39
295	300		distributive income not attributable to the State from the 40
296	301		partnership to the extent the resident direct partner's share of 41
297	302		distributive income not attributable to the State was included 42
298	303		in the partnership's taxable income in another state or the 43
299	304		District of Columbia and was subject to an entity-level tax 44
300	305		levied on the aggregate distributive share of the partnership's 45
301	306		income allocable to one or more of its partners. A partnership 46
302	307		is taxable in another state or the District of Columbia if the 47
303	308		partnership's business activity in that state or the District of 48
304	309		Columbia subjects the partnership to a net income tax or a tax 49
305	310		measured by net income. 50 General Assembly Of North Carolina Session 2025
306		-	~~Senate Bill 595-First Edition~~ Page 7
	311	+	DRS45301-SVxf-3C Page 7
307	312		5. Add the amounts determined in sub-sub-subdivisions 1. 1
308	313		through 4. of this sub-subdivision. 2
309	314		(2) Exceptions. – A partnership may not elect to pay tax under this subsection if 3
310	315		any of the following apply: 4
311	316		a. The partnership made the election to be a taxed partnership under 5
312	317		G.S. 105-154.1(a) for the reviewed year. 6
313	318		b. The partnership's final federal partnership adjustment resulted from an 7
314	319		administrative adjustment request. 8
315	320		c. The partnership was not required to file an information return under 9
316	321		the provisions of G.S. 105-154(c) for the reviewed year because the 10
317	322		partnership was not doing business in this State for the reviewed year. 11
318	323		(e) Collection of Tax for Failure to Pay. – If an audited partnership makes an election 12
319	324		under subsection (d) of this section but does not pay the amount due, the Department may collect 13
320	325		the tax from the audited partnership pursuant to G.S. 105-241.22(1). The Secretary must issue a 14
321	326		notice of collection for the amount of the tax debt to the audited partnership. If the tax debt is not 15
322	327		paid to the Secretary within 60 days of the date the notice of collection is mailed to the audited 16
323	328		partnership, the Secretary may assess the partners of the audited partnership for the partners' 17
324	329		distributive share of the tax debt by sending the partners a notice of proposed assessment in 18
325	330		accordance with G.S. 105-241.9. For purposes of this subsection, the term "tax debt" has the 19
326	331		same meaning as defined in G.S. 105-243.1(a). 20
327	332		(f) Tiered Partners. – The direct and indirect partners of an audited partnership that are 21
328	333		tiered partners, and all of the owners or beneficiaries of those tiered partners that are subject to 22
329	334		tax under this Article, are subject to the reporting and payment requirements of subsection (c) of 23
330	335		this section, and the tiered partners are entitled to make the election provided in subsection (d) 24
331	336		of this section. The tiered partners or their owners must make required reports and payments no 25
332	337		later than 90 days after the time for filing and furnishing statements to tiered partners and their 26
333	338		owners or beneficiaries as established under section 6226 of the Code and the regulations 27
334	339		thereunder. The Secretary is authorized to establish procedures and interim time periods for the 28
335	340		reports and payments required by tiered partners and their owners or beneficiaries and for making 29
336	341		the election under this subsection. 30
337	342		(g) Failure of Audited Partnership or Tiered Partner to Report or Pay. – Nothing in this 31
338	343		section prevents the Secretary from proposing an assessment against a direct partner or indirect 32
339	344		partner pursuant to G.S. 105-241.9 for tax due, if a partnership or tiered partner fails to timely 33
340	345		make any report or payment required by this section for any reason. 34
341	346		(h) State Partnership Representative. – The partnership's direct partners and indirect 35
342	347		partners are bound by the actions of the State partnership representative. In addition, with respect 36
343	348		to any action required or permitted to be taken by a partnership under this section, the State 37
344	349		partnership representative has the sole authority to: 38
345	350		(1) Act on behalf of the partnership. 39
346	351		(2) Bring a contested case hearing in accordance with G.S. 105-241.15. 40
347	352		(3) Request a judicial review in accordance with G.S. 105-241.16. 41
348	353		(i) Assessments of Additional State Tax Arising from a Final Federal Partnership 42
349	354		Adjustment. – The Secretary must assess additional State tax arising from a final federal 43
350	355		partnership adjustment in accordance with G.S. 105-241.9." 44
351	356		SECTION 2.(b) G.S. 105-228.90(b) reads as rewritten: 45
352	357		"(b) Definitions. – The following definitions apply in this Article: 46
353	358		… 47
354	359		(15) Federal determination. – A change or correction arising from an audit by the 48
355	360		Commissioner of Internal Revenue or an agreement of the U.S. competent 49
356	361		authority, and the change or correction has become final. final, but does not 50
357	362		include a final federal partnership adjustment as defined in G.S. 105-154.2(a). 51 General Assembly Of North Carolina Session 2025
358		-	Page 8 ~~Senate Bill 595-First Edition~~
	363	+	Page 8 DRS45301-SVxf-3C
359	364		A federal determination is final when the determination is not subject to 1
360	365		administrative or judicial review. Additionally, audit findings made by the 2
361	366		Internal Revenue Service are deemed final in the following circumstances: 3
362	367		a. The taxpayer has received audit findings from the Internal Revenue 4
363	368		Service for the tax period and the taxpayer does not timely file an 5
364	369		administrative appeal with the Internal Revenue Service. 6
365	370		b. The taxpayer consented to any of the audit findings for the tax period 7
366	371		through a form or other written agreement with the Internal Revenue 8
367	372		Service. 9
368	373		(16) Final federal partnership adjustment. – As defined in G.S. 105-154.2(a). 10
369	374		…." 11
370	375		SECTION 2.(c) G.S. 105-153.5 reads as rewritten: 12
371	376		"§ 105-153.5. Modifications to adjusted gross income. 13
372	377		… 14
373	378		(c2) Decoupling Adjustments. – In calculating North Carolina taxable income, a taxpayer 15
374	379		must make the following adjustments to the taxpayer's adjusted gross income: 16
375	380		… 17
376	381		(24) A taxpayer must add the amount by which the taxpayer's distributive share of 18
377	382		partnership income, subject to the adjustments provided in this section and 19
378	383		G.S. 105-153.6, is increased as a result of a final federal partnership 20
379	384		adjustment, as defined in G.S. 105-154.2(a), reported to this State under 21
380	385		G.S. 105-154.2(c)(2). 22
381	386		(25) A taxpayer may deduct the amount by which the taxpayer's distributive share 23
382	387		of partnership income, as modified by this section and G.S. 105-153.6, is 24
383	388		decreased as a result of a final federal partnership adjustment, as defined in 25
384	389		G.S. 105-154.2(a), reported to this State under G.S. 105-154.2(c)(2). 26
385	390		…." 27
386	391		SECTION 2.(d) G.S. 105-130.5 reads as rewritten: 28
387	392		"§ 105-130.5. Adjustments to federal taxable income in determining State net income. 29
388	393		(a) The following additions to federal taxable income shall be made in determining State 30
389	394		net income: 31
390	395		… 32
391	396		(33) The amount by which the taxpayer's distributive share of partnership income, 33
392	397		subject to the adjustments provided in this section and G.S. 105-130.5B, is 34
393	398		increased as a result of a final federal partnership adjustment, as defined in 35
394	399		G.S. 105-154.2(a), reported to this State under G.S. 105-154.2(c)(2). 36
395	400		(b) The following deductions from federal taxable income shall be made in determining 37
396	401		State net income: 38
397	402		… 39
398	403		(33) The amount by which the taxpayer's distributive share of partnership income, 40
399	404		subject to the adjustments provided in this section and G.S. 105-130.5B, is 41
400	405		decreased as a result of a final federal partnership adjustment, as defined in 42
401	406		G.S. 105-154.2(a), reported to this State under G.S. 105-154.2(c)(2). 43
402	407		…." 44
403	408		SECTION 2.(e) G.S. 105-241.6 reads as rewritten: 45
404	409		"§ 105-241.6. Statute of limitations for refunds. 46
405	410		… 47
406	411		(b) Exceptions. – The exceptions to the general statute of limitations for obtaining a 48
407	412		refund of an overpayment are as follows: 49
408	413		… 50 General Assembly Of North Carolina Session 2025
409		-	~~Senate Bill 595-First Edition~~ Page 9
	414	+	DRS45301-SVxf-3C Page 9
410	415		(7) Final Federal Partnership Adjustment. – If a taxpayer files a return reflecting 1
411	416		a final federal partnership adjustment and the return is filed within the time 2
412	417		required by this Subchapter, the period for requesting a refund is one year after 3
413	418		the return reflecting the final federal partnership adjustment is filed or three 4
414	419		years after the original return was filed or due to be filed, whichever is later." 5
415	420		SECTION 2.(f) G.S. 105-241.8 reads as rewritten: 6
416	421		"§ 105-241.8. Statute of limitations for assessments. 7
417	422		(a) General. – The general statute of limitations for proposing an assessment applies 8
418	423		unless a different period applies under subsection (b) of this section. The general statute of 9
419	424		limitations for proposing an assessment is the later of the following: 10
420	425		(1) Three years after the due date of the return. 11
421	426		(2) Three years after the taxpayer filed the return. 12
422	427		(b) Exceptions. – The exceptions to the general statute of limitations for proposing an 13
423	428		assessment are as follows: 14
424	429		… 15
425	430		(6) Final federal partnership adjustment. – If a taxpayer files a return reflecting a 16
426	431		final federal partnership adjustment and the return is filed within the time 17
427	432		required by this Subchapter, the period for proposing an assessment of any tax 18
428	433		due is one year after the return is filed or three years after the original return 19
429	434		was filed or due to be filed, whichever is later. If there is a final federal 20
430	435		partnership adjustment and the taxpayer does not file the return within the 21
431	436		required time, the period for proposing an assessment of any tax due is six 22
432	437		years after the date the Secretary received the final report of the final federal 23
433	438		partnership adjustment." 24
434	439		SECTION 2.(g) This Part is effective for taxable years beginning on or after January 25
435	440		1, 2025, and applies to federal partnership adjustments that become final on or after that date. 26
436	441		27
437	442		PART III. SALES TAX CHANGES 28
438	443		SECTION 3.1.(a) G.S. 105-164.8(b) reads as rewritten: 29
439	444		"(b) Remote Sales. – A retailer who makes a remote sale is engaged in business in this 30
440	445		State and is subject to the tax levied under this Article if at least one of the following conditions 31
441	446		is met: 32
442	447		… 33
443	448		(9) The retailer makes gross sales in excess of one hundred thousand dollars 34
444	449		($100,000) from remote sales sourced to this State, including sales as a 35
445	450		marketplace seller, for the previous or the current calendar year. A retailer that 36
446	451		solely meets this condition, or both this condition and the condition in 37
447	452		subdivision (10) of this subsection, is engaged in business on the first day of 38
448	453		the first calendar month occurring at least 60 days after the retailer's gross 39
449	454		sales exceed the threshold. 40
450	455		(10) The retailer is a marketplace facilitator that makes gross sales in excess of one 41
451	456		hundred thousand dollars ($100,000), including all marketplace-facilitated 42
452	457		sales for all marketplace sellers, from sales sourced to this State for the 43
453	458		previous or the current calendar year. A retailer that solely meets this 44
454	459		condition, or both this condition and the condition in subdivision (9) of this 45
455	460		subsection, is engaged in business on the first day of the first calendar month 46
456	461		occurring at least 60 days after the retailer's gross sales exceed the threshold." 47
457	462		SECTION 3.1.(b) This section is effective when it becomes law and applies to 48
458	463		retailers that exceed the threshold on or after that date. 49
459	464		SECTION 3.2. G.S. 105-164.3(259) reads as rewritten: 50 General Assembly Of North Carolina Session 2025
460		-	Page 10 ~~Senate Bill 595-First Edition~~
	465	+	Page 10 DRS45301-SVxf-3C
461	466		"(259) Streamlined Agreement. – The Streamlined Sales and Use Tax Agreement as 1
462	467		amended as of November 7, 2023.October 9, 2024." 2
463	468		SECTION 3.3.(a) G.S. 105-187.90(9) reads as rewritten: 3
464	469		"(9) Shared for-hire ground transport Shared-ride service. – A for-hire ground 4
465	470		transport service for which an individual has been matched with another 5
466	471		individual by a for-hire ground transport service provider." 6
467	472		SECTION 3.3.(b) G.S. 105-187.95 reads as rewritten: 7
468	473		"§ 105-187.95. Use of tax proceeds. 8
469	474		Each quarter, the The Secretary shall credit the net tax proceeds of the taxes collected under 9
470	475		this Article to the Highway Fund. The Secretary may retain the cost of administering this Article 10
471	476		as reimbursement to the Department." 11
472	477		SECTION 3.3.(c) This section becomes effective July 1, 2025. 12
473	478		SECTION 3.4. Except as otherwise provided, this Part is effective when this act 13
474	479		becomes law. 14
475	480		15
476	481		PART IV. EXCISE TAX CHANGES 16
477	482		SECTION 4.1. G.S. 105-113.39A(a2) reads as rewritten: 17
478	483		"(a2) Vapor Products License. – A wholesale dealer or a retail dealer must obtain a vapor 18
479	484		products license for all of the following locations: 19
480	485		(1) Each location where a wholesale dealer makes vapor products. 20
481	486		(2) Each location where a wholesale dealer or a retail dealer receives or stores 21
482	487		non-tax-paid vapor products. 22
483	488		(3) Each location from where a retail dealer that is a delivery seller or a remote 23
484	489		seller receives or stores non-tax-paid vapor products for delivery sales if the 24
485	490		location is a location other than the location described in subdivision (2) of 25
486	491		this subsection." 26
487	492		SECTION 4.2. G.S. 105-113.83A(a) reads as rewritten: 27
488	493		"(a) Registration Required. – A person who holds a wine shipper permit issued under 28
489	494		G.S. 18B-1001.1 or one or more of the following ABC permits issued under Article 11 of Chapter 29
490	495		18B of the General Statutes must register with the Secretary: 30
491	496		(1) Unfortified winery. 31
492	497		(2) Fortified winery. 32
493	498		(3) Brewery. 33
494	499		(4) Distillery. 34
495	500		(5) Wine importer. 35
496	501		(6) Wine wholesaler. 36
497	502		(7) Malt beverages importer. 37
498	503		(8) Malt beverages wholesaler. 38
499	504		(9) Nonresident malt beverage vendor. 39
500	505		(10) Nonresident wine vendor. 40
501	506		(11) Wine Producer. 41
502	507		(12) Nonresident spirituous liquor vendor." 42
503	508		SECTION 4.3.(a) G.S. 105-449.42 reads as rewritten: 43
504	509		"§ 105-449.42. Payment of tax. 44
505	510		The tax levied by this Article is due when a quarterly return is due under G.S. 105-449.45. 45
506	511		The amount of tax due is calculated on the amount of motor fuel or alternative fuel used by the 46
507	512		motor carrier in its operations within this State during the quarter covered by the return. If a 47
508	513		motor carrier is exempt from filing a return under G.S. 105-449.45(b)(2), the tax levied by this 48
509	514		Article is due when the tax becomes collectible under G.S. 105-241.22.by the last day of the 49
510	515		month following the quarter in which the motor fuel or alternative fuel was used by the motor 50
511	516		carrier." 51 General Assembly Of North Carolina Session 2025
512		-	~~Senate Bill 595-First Edition~~ Page 11
	517	+	DRS45301-SVxf-3C Page 11
513	518		SECTION 4.3.(b) This section becomes effective July 1, 2025, and applies to taxes 1
514	519		due on or after that date. 2
515	520		SECTION 4.4.(a) G.S. 105-449.60 reads as rewritten: 3
516	521		"§ 105-449.60. Definitions. 4
517	522		The following definitions apply in this Article: 5
518	523		… 6
519	524		(43a) Renewable diesel. – A motor fuel chemically equivalent to petroleum diesel 7
520	525		that is manufactured from organic feedstocks using a hydrogenation process. 8
521	526		Renewable diesel meets ASTM D975 specifications for diesel fuel. 9
522	527		…." 10
523	528		SECTION 4.4.(b) G.S. 105-449.60(12) reads as rewritten: 11
524	529		"(12) Diesel fuel. – Any liquid, other than gasoline, that is suitable for use as a fuel 12
525	530		in a diesel-powered highway vehicle. The term includes biodiesel, fuel oil, 13
526	531		heating oil, high-sulfur dyed diesel fuel, and kerosene. kerosene, and 14
527	532		renewable diesel. The term does not include jet fuel." 15
528	533		SECTION 4.5.(a) G.S. 105-449.60(46) reads as rewritten: 16
529	534		"(46) Supplier. – Any of the following: 17
530	535		a. A position holder or a person who receives motor fuel pursuant to a 18
531	536		two-party exchange. 19
532	537		b. A fuel alcohol provider. 20
533	538		c. A biodiesel provider. 21
534	539		d. Repealed by Session Laws 2017-39, s. 12, effective June 21, 2017. 22
535	540		e. A purchaser of tax-paid motor fuel who introduces the respective 23
536	541		tax-paid motor fuel into the terminal transfer system at a location other 24
537	542		than an IRS-registered terminal. 25
538	543		f. A person who owns tax-paid motor fuel at the time it is placed in the 26
539	544		terminal transfer system at a location other than an IRS-registered 27
540	545		terminal." 28
541	546		SECTION 4.5.(b) G.S. 105-449.97(e) reads as rewritten: 29
542	547		"(e) Credit for Motor Fuel in Terminal. Terminal Transfer System. – When filing a return, 30
543	548		a licensed supplier who is the position holder may take a credit for tax-paid motor fuel in the 31
544	549		terminal system.transfer system if any of the following apply: 32
545	550		(1) The supplier is a position holder. 33
546	551		(2) The supplier is the original purchaser of tax-paid motor fuel that is placed in 34
547	552		the terminal transfer system at a location other than an IRS-registered 35
548	553		terminal. 36
549	554		(3) The supplier owns tax-paid motor fuel at the time it is placed in the terminal 37
550	555		transfer system at a location other than an IRS-registered terminal." 38
551	556		SECTION 4.5.(c) This section is effective July 1, 2025. 39
552	557		SECTION 4.6.(a) G.S. 105-449.69 reads as rewritten: 40
553	558		"§ 105-449.69. How to apply for a license. 41
554	559		… 42
555	560		(e) Export Activity. – An applicant for a license as an exporter or as a distributor must 43
556	561		list on the application each state to which the applicant intends to export motor fuel received in 44
557	562		this State by means of a transfer that is outside the terminal transfer system and, if required by a 45
558	563		state listed, must be licensed or registered for motor fuel tax purposes in that state. If a state listed 46
559	564		requires the applicant to be licensed or registered, the applicant must give the applicant's license 47
560	565		or registration number in that state. If the Secretary determines that an exporter is no longer 48
561	566		operating in this State, and the exporter has failed to comply with G.S. 105-449.75, the Secretary 49
562	567		may cancel the exporter license and send notice of the cancellation in accordance with 50
563	568		G.S. 105-449.76(b1)." 51 General Assembly Of North Carolina Session 2025
564		-	Page 12 ~~Senate Bill 595-First Edition~~
	569	+	Page 12 DRS45301-SVxf-3C
565	570		SECTION 4.6.(b) G.S. 105-449.76(a) reads as rewritten: 1
566	571		"(a) Cancellation. – The Secretary may cancel a license issued under this Article upon the 2
567	572		written request of the licensee. licensee or as permitted under G.S. 105-449.69(e). The licensee's 3
568	573		request must include a proposed effective date of cancellation and must return the license to the 4
569	574		Secretary on or before the proposed effective date. If the licensee's request does not include a 5
570	575		proposed effective date of cancellation, the license is cancelled 15 days after the Department 6
571	576		receives the written request. If the license is unable to be returned, the licensee must include a 7
572	577		written statement of the reasons, satisfactory to the Secretary, why the license cannot be returned. 8
573	578		The Secretary shall notify the licensee when the license is cancelled." 9
574	579		SECTION 4.7. G.S. 105-449.87(a)(3) reads as rewritten: 10
575	580		"(3) Motor fuel that is used to operate a highway vehicle after an application for a 11
576	581		refund of tax paid on the motor fuel is made or allowed under G.S. 12
577	582		105-449.107(a) G.S. 105-449.106(d) on the basis that the motor fuel was used 13
578	583		for an off-highway purpose." 14
579	584		SECTION 4.8. G.S. 105-449.139 reads as rewritten: 15
580	585		"§ 105-449.139. Miscellaneous provisions. 16
581	586		(a) Records. – A person required to be licensed under this Article must keep a record of 17
582	587		all documents used to determine the information provided in a return filed under this Article. The 18
583	588		records must be kept for the applicable period of statute of limitations as set forth under Article 19
584	589		9 of this Chapter. If the records apply to a transaction not required to be reported in a return, the 20
585	590		records must be kept for three years from the date of the transaction. The Secretary or a person 21
586	591		designated by the Secretary shall have the right at any reasonable time to inspect the records. 22
587	592		(b) Violations. – The offenses listed in subdivisions (1) through (9) of G.S. 105-449.120 23
588	593		apply to this Article. In applying those offenses to this Article, references to "this Article" are to 24
589	594		be construed as references to Article 36D and references to "motor fuel" are to be construed as 25
590	595		references to alternative fuel. 26
591	596		(c) Lists. – The Secretary must make available a list of licensed alternative fuel providers 27
592	597		to each licensed bulk end-user and licensed retailer. The Secretary must also make available a 28
593	598		list of licensed bulk end-users and licensed retailers to each licensed alternative fuel provider. A 29
594	599		list must state the name, account number, and business address of each licensee on the list. The 30
595	600		Secretary must update the lists required under this section annually. 31
596	601		(d) Inspection. – The Secretary, or the Secretary's designee, shall have the right at any 32
597	602		reasonable time to inspect the records subject to audit under this section and may do any of the 33
598	603		following to determine tax liability under this Article: 34
599	604		(1) Audit a person who is required to have or elects to have a license under this 35
600	605		Article. 36
601	606		(2) Audit a retailer, bulk-end user, or a provider that is not licensed under this 37
602	607		Article. 38
603	608		(3) Examine a tank or other equipment used to make, store, or transport 39
604	609		alternative fuel." 40
605	610		SECTION 4.9. G.S. 150B-2(3) reads as rewritten: 41
606	611		"(3) License. – Any certificate, permit, or other evidence, by whatever name 42
607	612		called, of a right or privilege to engage in any activity, except licenses issued 43
608	613		under Chapter 20 and Subchapter I and Subchapter V of Chapter 105 of the 44
609	614		General Statutes, occupational licenses, and certifications of electronic poll 45
610	615		books, ballot duplication systems, or voting systems under G.S. 163-165.7." 46
611	616		SECTION 4.10. G.S. 18C-901(7) reads as rewritten: 47
612	617		"(7) Gross wagering revenue. – The total of amounts received by an interactive 48
613	618		sports wagering operator from sports wagers as authorized under this Article 49
614	619		less the amounts paid as winnings before any deductions for expenses, fees, 50
615	620		or taxes. Gross wagering revenue includes the cash value of any bonuses or 51 General Assembly Of North Carolina Session 2025
616		-	~~Senate Bill 595-First Edition~~ Page 13
	621	+	DRS45301-SVxf-3C Page 13
617	622		promotional credits when returned to an interactive sports wagering operator 1
618	623		in the form of a deposit or sports wager." 2
619	624		SECTION 4.11. Except as otherwise provided, this Part is effective when this act 3
620	625		becomes law. 4
621	626		5
622	627		PART V. ADMINISTRATIVE CHANGES 6
623	628		SECTION 5.1. G.S. 105-228.90 reads as rewritten: 7
624	629		"§ 105-228.90. Scope and definitions. 8
625	630		(a) Scope. – This Article applies to all of the following: 9
626	631		… 10
627	632		(3) The primary forest product assessment levied under Article 81 84 of Chapter 11
628	633		106 of the General Statutes. 12
629	634		… 13
630	635		(b) Definitions. – The following definitions apply in this Article: 14
631	636		… 15
632	637		(7) Code. – The Internal Revenue Code as enacted as of January 1, 2023, January 16
633	638		1, 2025, including any provisions enacted as of that date that become effective 17
634	639		either before or after that date. 18
635	640		… 19
636	641		(23) Person. – An individual, a fiduciary, a firm, an association, a partnership, a 20
637	642		limited liability company, a corporation, a unit of government, or another 21
638	643		group acting as a unit. The term includes an officer or employee of a 22
639	644		corporation, a member, a manager, or an employee of a limited liability 23
640	645		company, and a member or employee of a partnership who, as officer, 24
641	646		employee, member, or manager, is under a duty to perform an act in meeting 25
642	647		the requirements of Subchapter I, V, or VIII of this Chapter, of G.S. 55-16-22, 26
643	648		of Article 81 84 of Chapter 106 of the General Statutes, or of Article 3 of 27
644	649		Chapter 119 of the General Statutes. 28
645	650		… 29
646	651		(27) Tax. – A tax levied under Subchapter I, V, or VIII of this Chapter, the primary 30
647	652		forest product assessment levied under Article 81 84 of Chapter 106 of the 31
648	653		General Statutes, or an inspection tax levied under Article 3 of Chapter 119 of 32
649	654		the General Statutes. Unless the context clearly requires otherwise, the term 33
650	655		"tax" includes penalties and interest as well as the principal amount. 34
651	656		(29) Taxpayer. – A person subject to the tax or reporting requirements of 35
652	657		Subchapter I, V, or VIII of this Chapter, of Article 81 84 of Chapter 106 of 36
653	658		the General Statutes, or of Article 3 of Chapter 119 of the General Statutes. 37
654	659		…." 38
655	660		SECTION 5.2. G.S. 105-236(a) reads as rewritten: 39
656	661		"(a) Penalties. – The following civil penalties and criminal offenses apply: 40
657	662		… 41
658	663		(1b) Making Payment in Wrong Form. – For making a payment of tax in a form 42
659	664		other than the form required by the Secretary pursuant to G.S. 105-241(a), the 43
660	665		Secretary shall assess a penalty equal to five percent (5%) of the amount of 44
661	666		the tax, subject to a minimum of one dollar ($1.00) and a maximum of one 45
662	667		thousand dollars ($1,000). This penalty may be waived by the Secretary in 46
663	668		accordance with G.S. 105-237. 47
664	669		… 48
665	670		(10a) Filing a Frivolous Return. – If a taxpayer files a frivolous return under Part 2 49
666	671		of Article 4 of this Chapter, the Secretary shall assess a penalty in the amount 50 General Assembly Of North Carolina Session 2025
667		-	Page 14 ~~Senate Bill 595-First Edition~~
	672	+	Page 14 DRS45301-SVxf-3C
668	673		of up to five hundred dollars ($500.00). two thousand dollars ($2,000). A 1
669	674		frivolous return is a return that meets both of the following requirements: 2
670	675		a. It fails to provide sufficient information to permit a determination that 3
671	676		the return is correct or contains information which positively indicates 4
672	677		the return is incorrect, and 5
673	678		b. It evidences an intention to delay, impede or negate the revenue laws 6
674	679		of this State or purports to adopt a position that is lacking in 7
675	680		seriousness. 8
676	681		…." 9
677	682		SECTION 5.3. G.S. 105-249.2 reads as rewritten: 10
678	683		"§ 105-249.2. Due date extended and penalties waived Relief for certain military personnel 11
679	684		or persons affected by a presidentially declared disaster. 12
680	685		(a) Combat. – The Secretary may not assess interest or a penalty against a taxpayer for 13
681	686		any period that is disregarded under section 7508 of the Code in determining the taxpayer's 14
682	687		liability for a federal tax. A taxpayer is granted an extension of time to file a return or take another 15
683	688		action concerning a State tax for any period during which the Secretary may not assess interest 16
684	689		or a penalty under this section. 17
685	690		(b) Disaster. – The penalties in G.S. 105-236(a)(2), (3), (4), and (10)c. may not be 18
686	691		assessed for any period in which the time for filing a federal return or report or for paying a 19
687	692		federal tax is extended disregarded under section 7508A of the Code because of a presidentially 20
688	693		declared disaster. The extension of time granted period of time disregarded by the Internal 21
689	694		Revenue Service under section 7508A of the Code only applies to the corresponding State tax 22
690	695		return or payment. For State returns and payments without a corresponding federal return and 23
691	696		payment, the extension granted period of time disregarded for individual income tax returns and 24
692	697		payments by the Internal Revenue Service under section 7508A of the Code applies. For the 25
693	698		purpose of this section, "presidentially declared disaster" has the same meaning as in section 26
694	699		1033(h)(3) of the Code." 27
695	700		SECTION 5.4. Except as otherwise provided, this Part is effective when this act 28
696	701		becomes law. 29
697	702		30
698	703		PART VI. PROPERTY TAX CHANGES 31
699	704		SECTION 6.(a) G.S. 105-278.2 reads as rewritten: 32
700	705		"§ 105-278.2. Burial property. 33
701	706		(a) Commercial Property. – Real property set apart for human burial purposes that is 34
702	707		owned and held for purposes of (i) sale or rental or (ii) sale of burial rights therein is exempt from 35
703	708		taxation. A single application is required under G.S. 105-282.1 for property exempt under this 36
704	709		subsection. 37
705	710		(b) Other Property. – Real property set apart for human burial purposes not owned and 38
706	711		held for a purpose listed in subsection (a) of this section is exempt from taxation. No application 39
707	712		is required under G.S. 105-282.1 for property exempt under this subsection. A local government 40
708	713		cannot deny the exemption provided under this subsection to a taxpayer that lacks a survey or 41
709	714		plat detailing the exempt property. 42
710	715		(c) Terms. – For purposes of this section, the term "real property" includes land, tombs, 43
711	716		vaults, monuments, and mausoleums, and the term "burial" includes entombment." 44
712	717		SECTION 6.(b) Except as otherwise provided, this Part is effective when this act 45
713	718		becomes law. 46
714	719		47
715	720		PART VII. PROVIDE TAX PARITY FOR SHORT -TERM CAR RENTALS TO 48
716	721		INCLUDE PEER-TO-PEER RENTALS 49
717	722		SECTION 7.1.(a) G.S. 105-187.1(a) reads as rewritten: 50
718	723		"(a) The following definitions and the definitions in G.S. 105-164.3 apply to this Article: 51 General Assembly Of North Carolina Session 2025
719		-	~~Senate Bill 595-First Edition~~ Page 15
	724	+	DRS45301-SVxf-3C Page 15
720	725		… 1
721	726		(3b) Peer-to-peer vehicle sharing provider. – As defined in G.S. 20-280.15. 2
722	727		… 3
723	728		(6) Retailer. – A retailer as defined in G.S. 105-164.3 who is engaged in the 4
724	729		business of selling, leasing, renting, offering short-term leases or rentals, 5
725	730		long-term leases or rentals, or offering vehicle subscriptions for motor 6
726	731		vehicles. 7
727	732		(7) Short-term lease or rental. – A lease or rental of a motor vehicle or motor 8
728	733		vehicles, vehicles by a person, including a vehicle sharing service, service or 9
729	734		a peer-to-peer vehicle sharing provider, that is not a long-term lease or rental 10
730	735		or a vehicle subscription. 11
731	736		…." 12
732	737		SECTION 7.1.(b) G.S. 105-187.3(a) reads as rewritten: 13
733	738		"(a) Tax Base. – The Except as otherwise provided in G.S. 105-187.5, the tax imposed by 14
734	739		this Article is applied to the sum of the retail value of a motor vehicle for which a certificate of 15
735	740		title is issued and any fee regulated by G.S. 20-101.1. The tax does not apply to the sales price 16
736	741		of a service contract, provided the charge is separately stated on the bill of sale or other similar 17
737	742		document given to the purchaser at the time of the sale." 18
738	743		SECTION 7.1.(c) G.S. 105-187.4(a) reads as rewritten: 19
739	744		"(a) Method. – The Except as otherwise provided in G.S. 105-187.5, the tax imposed by 20
740	745		this Article must be paid to the Commissioner when applying for a certificate of title for a motor 21
741	746		vehicle. The Commissioner may not issue a certificate of title for a vehicle until the tax imposed 22
742	747		by this Article has been paid. The tax may be paid in cash or by check." 23
743	748		SECTION 7.1.(d) G.S. 105-187.5 reads as rewritten: 24
744	749		"§ 105-187.5. Alternate tax for Tax on a limited possession commitment. 25
745	750		(a) Applicability. – A retailer listed in this section shall pay a tax on the gross receipts of 26
746	751		a limited possession commitment in accordance with this section. The tax is for the privilege of 27
747	752		using the highways of this State and is imposed on a retailer but is to be added to a limited 28
748	753		possession commitment and paid by the person who enters into a limited possession commitment 29
749	754		with the retailer. The retailers are: 30
750	755		(1) A retailer that purchases a motor vehicle for use as a limited possession 31
751	756		commitment and makes an election under this section. 32
752	757		(2) A peer-to-peer vehicle sharing provider. 33
753	758		(a1) Election. – A retailer that has purchased a motor vehicle for a limited possession 34
754	759		commitment may elect not to pay to pay the tax imposed by this section instead of the tax imposed 35
755	760		by this Article at the rate set in G.S. 105-187.3 when applying for a certificate of title for a motor 36
756	761		vehicle purchased by the retailer for a limited possession commitment. A retailer who makes this 37
757	762		election shall pay a tax on the gross receipts of the limited possession commitment of the vehicle. 38
758	763		title. To make the election, the retailer shall complete a form provided by the Division providing 39
759	764		the information needed to collect the alternate tax based on gross receipts. Once made, an election 40
760	765		is irrevocable. The Division shall notify the Secretary of Revenue of a retailer who makes the 41
761	766		election under this subsection. 42
762	767		(a2) Gross Receipts. – Gross receipts do not include the amount of any allowance given 43
763	768		for a motor vehicle taken in trade as a partial payment on the limited possession commitment. 44
764	769		The portion of a limited possession commitment billing or payment that represents any amount 45
765	770		applicable to the sales price of a service contract as defined in G.S. 105-164.3 should not be 46
766	771		included in the gross receipts subject to the tax imposed by this Article. section. The charge must 47
767	772		be separately stated on documentation given to the purchaser at the time the limited possession 48
768	773		commitment goes into effect, or on the monthly billing statement or other documentation given 49
769	774		to the purchaser. When a limited possession commitment is sold to another retailer, the seller of 50
770	775		the limited possession commitment should provide to the purchaser of the limited possession 51 General Assembly Of North Carolina Session 2025
771		-	Page 16 ~~Senate Bill 595-First Edition~~
	776	+	Page 16 DRS45301-SVxf-3C
772	777		commitment the documentation showing that the service contract and applicable sales taxes were 1
773	778		separately stated at the time the limited possession commitment went into effect effect, and the 2
774	779		new retailer must retain the information to support an allocation for tax computed on the gross 3
775	780		receipts subject to highway use tax. Like the tax imposed by G.S. 105-187.3, this alternate tax is 4
776	781		a tax on the privilege of using the highways of this State. The tax is imposed on a retailer, but is 5
777	782		to be added to the limited possession commitment of a motor vehicle and thereby be paid by the 6
778	783		person who enters into a limited possession commitment with a retailer. 7
779	784		(b) Rate. – The applicable tax rates on the gross receipts from a limited possession 8
780	785		commitment are as listed in this subsection. Gross receipts does not include the amount of any 9
781	786		allowance given for a motor vehicle taken in trade as a partial payment on the limited possession 10
782	787		commitment. The maximum tax in G.S. 105-187.3(a1) on certain motor vehicles applies to a 11
783	788		continuous limited possession commitment of such a motor vehicle to the same person. The 12
784	789		applicable tax rates are as follows: 13
785	790		Type of Limited Possession Commitment Tax Rate 14
786	791		Short-term lease or rental 8% 15
787	792		Vehicle subscription 5% 16
788	793		Long-term lease or rental 3% 17
789	794		(c) Method. – A retailer who elects to pay tax on the gross receipts of the limited 18
790	795		possession commitment of a motor vehicle shall make this election when applying for a 19
791	796		certificate of title for the vehicle. To make the election, the retailer shall complete a form provided 20
792	797		by the Division giving information needed to collect the alternate tax based on gross receipts. 21
793	798		Once made, an election is irrevocable. 22
794	799		(d) Administration. – The Division shall notify the Secretary of Revenue of a retailer who 23
795	800		makes the election under this section. A retailer who makes this election pays the tax under this 24
796	801		section shall report and remit to the Secretary the tax on the gross receipts of the limited 25
797	802		possession commitment of the motor vehicle. The Secretary shall administer the tax imposed by 26
798	803		this section on gross receipts in the same manner as the tax levied under G.S. 105-164.4(a)(2). 27
799	804		The administrative provisions and powers of the Secretary that apply to the tax levied under 28
800	805		G.S. 105-164.4(a)(2) apply to the tax imposed by this section. In addition, the Division may 29
801	806		request the Secretary to audit a retailer who elects to pay tax on gross receipts under this section. 30
802	807		When the Secretary conducts an audit at the request of the Division, the Division shall reimburse 31
803	808		the Secretary for the cost of the audit, as determined by the Secretary. In conducting an audit of 32
804	809		a retailer under this section, the Secretary may audit any sales of motor vehicles made by the 33
805	810		retailer." 34
806	811		SECTION 7.2.(a) G.S. 153A-156 reads as rewritten: 35
807	812		"§ 153A-156. Gross receipts tax on short-term leases or rentals. 36
808	813		(a) As a substitute for and in replacement of the ad valorem tax, which is excluded by 37
809	814		G.S. 105-275(42), a A county may levy a gross receipts tax on the gross receipts from the 38
810	815		short-term lease or rental of vehicles at retail to the general public. The tax rate shall not exceed 39
811	816		one and one-half percent (1.5%) of the gross receipts from such the short-term leases or rentals. 40
812	817		(b) If a county enacts the substitute and replacement a gross receipts tax pursuant to this 41
813	818		section, any an entity required to collect the tax shall include a provision in each retail short-term 42
814	819		lease or rental agreement noting that the percentage amount enacted by the county of the total 43
815	820		lease or rental price, excluding highway use tax, is being charged as a tax on gross receipts. For 44
816	821		purposes of this section, the transaction giving rise to the tax shall be deemed to have occurred 45
817	822		occurs at the location of the entity from which where the customer takes delivery of the vehicle. 46
818	823		The tax shall be collected at the time of lease or rental and placed in a segregated account until 47
819	824		remitted to the county. 48
820	825		… 49
821	826		(e) The following definitions in G.S. 105-187.1 apply in this section:section. 50
822	827		(1) Short-term lease or rental. – Defined in G.S. 105-187.1. 51 General Assembly Of North Carolina Session 2025
823		-	~~Senate Bill 595-First Edition~~ Page 17
	828	+	DRS45301-SVxf-3C Page 17
824	829		(2) Vehicle. – Any of the following: 1
825	830		a. A motor vehicle of the passenger type, including a passenger van, 2
826	831		minivan, or sport utility vehicle. 3
827	832		b. A motor vehicle of the cargo type, including cargo van, pickup truck, 4
828	833		or truck with a gross vehicle weight of 26,000 pounds or less used 5
829	834		predominantly in the transportation of property for other than 6
830	835		commercial freight and that does not require the operator to possess a 7
831	836		commercial drivers license. 8
832	837		c. A trailer or semitrailer with a gross vehicle weight of 6,000 pounds or 9
833	838		less. 10
834	839		…." 11
835	840		SECTION 7.2.(b) G.S. 160A-215.1 reads as rewritten: 12
836	841		"§ 160A-215.1. Gross receipts tax on short-term leases or rentals. 13
837	842		(a) As a substitute for and in replacement of the ad valorem tax, which is excluded by 14
838	843		G.S. 105-275(42), a A city may levy a gross receipts tax on the gross receipts from the short-term 15
839	844		lease or rental of vehicles at retail to the general public. The tax rate shall not exceed one and 16
840	845		one-half percent (1.5%) of the gross receipts from such the short-term leases or rentals. 17
841	846		(b) If a city enacts the substitute and replacement a gross receipts tax pursuant to this 18
842	847		section, any an entity required to collect the tax shall include a provision in each retail short-term 19
843	848		lease or rental agreement noting that the percentage amount enacted by the city of the total lease 20
844	849		or rental price, excluding highway use tax, is being charged as a tax on gross receipts. For 21
845	850		purposes of this section, the transaction giving rise to the tax shall be deemed to have occurred 22
846	851		occurs at the location of the entity from which where the customer takes delivery of the vehicle. 23
847	852		The tax shall be collected at the time of lease or rental and placed in a segregated account until 24
848	853		remitted to the city. 25
849	854		… 26
850	855		(e) The following definitions in G.S. 105-187.1 apply in this section:section. 27
851	856		(1) Short-term lease or rental. – Defined in G.S. 105-187.1. 28
852	857		(2) Vehicle. – Any of the following: 29
853	858		a. A motor vehicle of the passenger type, including a passenger van, 30
854	859		minivan, or sport utility vehicle. 31
855	860		b. A motor vehicle of the cargo type, including cargo van, pickup truck, 32
856	861		or truck with a gross vehicle weight rating of 26,000 pounds or less 33
857	862		used predominantly in the transportation of property for other than 34
858	863		commercial freight and that does not require the operator to posses a 35
859	864		commercial drivers license. 36
860	865		c. A trailer or semitrailer with a gross vehicle weight of 6,000 pounds or 37
861	866		less. 38
862	867		…." 39
863	868		SECTION 7.2.(c) G.S. 105-550 reads as rewritten: 40
864	869		"§ 105-550. Definitions. 41
865	870		The definitions in G.S. 105-164.3 G.S. 105-164.3, G.S. 105-187.1, and the following 42
866	871		definitions apply in this Article: 43
867	872		(1) Authority. – A regional public transportation authority or a regional 44
868	873		transportation authority created pursuant to Article 26 or Article 27 of Chapter 45
869	874		160A of the General Statutes. 46
870	875		(2) Long-term lease or rental. – Defined in G.S. 105-187.1. 47
871	876		(3) Motorcycle. – Defined in G.S. 20-4.01. 48
872	877		(4) Repealed by Session Laws 1998-98, s. 33, effective August 14, 1998. 49
873	878		(5) Public transportation system. – Any combination of real and personal property 50
874	879		established for purposes of public transportation. The systems may include 51 General Assembly Of North Carolina Session 2025
875		-	Page 18 ~~Senate Bill 595-First Edition~~
	880	+	Page 18 DRS45301-SVxf-3C
876	881		one or more of the following: structures, improvements, buildings, equipment, 1
877	882		vehicle parking or passenger transfer facilities, railroads and railroad 2
878	883		rights-of-way, rights-of-way, bus services, shared-ride services, 3
879	884		high-occupancy vehicle facilities, car-pool and vanpool programs, voucher 4
880	885		programs, telecommunications and information systems, integrated fare 5
881	886		systems, bus lanes, and busways. The term does not include, however, streets, 6
882	887		roads, or highways except to the extent they are dedicated to public 7
883	888		transportation vehicles or to the extent they are necessary for access to vehicle 8
884	889		parking or passenger transfer facilities. 9
885	890		(6) Short-term lease or rental. – Defined in G.S. 105-187.1. 10
886	891		(7) U-drive-it vehicle. – Defined in G.S. 20-4.01." 11
887	892		SECTION 7.2.(d) G.S. 105-551 reads as rewritten: 12
888	893		"§ 105-551. Tax on gross receipts authorized. 13
889	894		(a) Tax. – The board of trustees of an Authority may levy a privilege tax on a retailer 14
890	895		who is engaged in the business of leasing or renting U-drive-it vehicles or motorcycles described 15
891	896		in this subsection based on the gross receipts derived by the retailer from the short-term lease or 16
892	897		rental of these vehicles. The tax rate must be a percentage and may not exceed five percent (5%). 17
893	898		A tax levied under this section applies to short-term leases or rentals made by a retailer whose 18
894	899		place of business or inventory is located within the territorial jurisdiction of the Authority. This 19
895	900		tax is in addition to all other taxes. The retailers subject to this section are: 20
896	901		(1) A retailer engaged in the business of leasing or renting U-drive-it vehicles or 21
897	902		motorcycles and whose place of business or inventory is located within the 22
898	903		territorial jurisdiction of the Authority. 23
899	904		(2) A peer-to-peer vehicle sharing provider if the customer takes delivery of the 24
900	905		vehicle within the territorial jurisdiction of the Authority. 25
901	906		…." 26
902	907		SECTION 7.2.(e) G.S. 105-552 reads as rewritten: 27
903	908		"§ 105-552. Collection and administration of gross receipts tax. 28
904	909		… 29
905	910		(b) Collection. – A tax levied by an Authority under this Article shall be collected by the 30
906	911		Authority but shall otherwise be administered in the same manner as the optional gross receipts 31
907	912		tax levied by under G.S. 105-187.5. Like the optional gross receipts tax, a tax levied under this 32
908	913		Article is to be added to the lease or rental price of a U-drive-it vehicle or motorcycle the vehicle 33
909	914		and thereby be paid by the person to whom it is leased or rented. 34
910	915		A tax levied under this Article applies regardless of whether the a retailer who leases or rents 35
911	916		the U-drive-it vehicle or motorcycle has the option of paying the gross receipts tax under 36
912	917		G.S. 105-187.5 has elected to pay the optional gross receipts tax on the lease or rental receipts 37
913	918		from the vehicle. A tax levied under this Article must be paid to the Authority that levied the tax 38
914	919		by the date an optional the gross receipts tax levied under G.S. 105-187.5 is payable or would be 39
915	920		payable to the Secretary of Revenue under G.S. 105-187.5 if the retailer who leases or rents the 40
916	921		U-drive-it vehicle or motorcycle had elected to pay the optional gross receipts tax. 41
917	922		(c) Penalties and Remedies. – The penalties and remedies that apply to local sales and 42
918	923		use taxes levied under Subchapter VIII of this Chapter apply to a tax levied under this Article. 43
919	924		The board of trustees of an Authority may exercise any power the Secretary of Revenue or a 44
920	925		board of county commissioners may exercise in collecting local sales and use taxes." 45
921	926		SECTION 7.3.(a) G.S. 20-280.15 reads as rewritten: 46
922	927		"§ 20-280.15. Definitions. 47
923	928		The following definitions apply in this Article: 48
924	929		(1) Airport operator. – As defined in G.S. 20-280.1. 49 General Assembly Of North Carolina Session 2025
925		-	~~Senate Bill 595-First Edition~~ Page 19
	930	+	DRS45301-SVxf-3C Page 19
926	931		(2) Peer-to-peer vehicle sharing. – The authorized use of a shared vehicle by an 1
927	932		individual other than the shared vehicle owner through a peer-to-peer vehicle 2
928	933		sharing program. 3
929	934		(3) Peer-to-peer vehicle sharing program. – A business platform that connects 4
930	935		shared registered vehicle owners that have not made an election under 5
931	936		G.S. 105-187.5 with drivers to enable the sharing of vehicles for financial 6
932	937		consideration. 7
933	938		(4) Shared vehicle. – A vehicle that is available for sharing through a peer-to-peer 8
934	939		vehicle sharing program. 9
935	940		(5) Shared vehicle owner. – The registered owner of a shared vehicle that is made 10
936	941		available for sharing through a peer-to-peer vehicle sharing program. 11
937	942		(6) Vehicle Peer-to-peer vehicle sharing provider. – The A person or entity that 12
938	943		operates, facilitates, or administers the provision of personal vehicle sharing 13
939	944		through a peer-to-peer vehicle sharing program." 14
940	945		SECTION 7.3.(b) G.S. 20-280.17 reads as rewritten: 15
941	946		"§ 20-280.17. Airport operators. 16
942	947		An airport operator may (i) charge peer-to-peer vehicle sharing programs providers a 17
943	948		reasonable fee for the use of the airport's facility, (ii) require an identifying decal be displayed 18
944	949		on all shared vehicles that operate on airport property, (iii) require the purchase and use of 19
945	950		equipment or establish other appropriate mechanisms for monitoring and auditing compliance, 20
946	951		including having a peer-to-peer vehicle sharing program provider provide data for purposes of 21
947	952		monitoring and auditing compliance, and (iv) designate a location where shared vehicles may 22
948	953		stage on the airport operator's facility." 23
949	954		SECTION 7.4. This Part becomes effective October 1, 2025, and applies to gross 24
950	955		receipts derived from rentals or leases billed on or after that date. 25
951	956		26
952	957		PART VIII. EFFECTIVE DATE 27
953	958		SECTION 8. Except as otherwise provided, this act is effective when it becomes 28
954	959		law. 29