GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 595
Short Title: Rev Laws Tech Chngs/BBA Chngs/P2P Tax Parity. (Public)
Sponsors: Senators McInnis and Craven (Primary Sponsors).
Referred to: Rules and Operations of the Senate
March 26, 2025
*S595 -v-1*
A BILL TO BE ENTITLED 1
AN ACT TO MAKE VARIO US TECHNICAL, CLARIFYING, AND ADMINISTRA TIVE 2
CHANGES TO THE REVEN UE LAWS; TO CONFORM TO THE FEDERAL SYSTEM 3
FOR AUDITING PARTNER SHIPS BY IMPOSING TAX AT THE PARTNERSHIP 4
LEVEL FOR FEDERAL CH ANGES AND BY AUTHORI ZING REFUNDS FOR 5
FEDERAL CHANGES; AND TO PROVIDE TAX PARITY FOR SHORT-TERM CAR 6
RENTALS BY EXPANDING ALTERNATE HIGHWAY U SE TAX TO INCLUDE 7
PEER-TO-PEER RENTALS. 8
The General Assembly of North Carolina enacts: 9
10
PART I. PERSONAL INCOME TAX CHANGES 11
SECTION 1.1.(a) G.S. 105-153.5 reads as rewritten: 12
"§ 105-153.5. Modifications to adjusted gross income. 13
… 14
(b) Other Deductions. – In calculating North Carolina taxable income, a taxpayer may 15
deduct from the taxpayer's adjusted gross income any of the following items that are included in 16
the taxpayer's adjusted gross income: 17
… 18
(17) The amount by which the aggregate amount of losses or deductions of an S 19
Corporation taken into account by a shareholder under G.S. 105-131.1(b) do 20
not exceed the combined adjusted bases, determined in accordance with 21
G.S. 105-131.3, of the shareholder in the stock and indebtedness of the S 22
Corporation. 23
(c) Additions. – In calculating North Carolina taxable income, a taxpayer must add to the 24
taxpayer's adjusted gross income any of the following items that are not included in the taxpayer's 25
adjusted gross income: 26
… 27
(8) The amount by which the aggregate amount of losses or deductions of an S 28
Corporation taken into account by a shareholder under G.S. 105-131.1(b) 29
exceed the combined adjusted bases, determined in accordance with 30
G.S. 105-131.3, of the shareholder in the stock and indebtedness of the S 31
Corporation. 32
…." 33
SECTION 1.1.(b) This section is effective for taxable years beginning on or after 34
January 1, 2025. 35
SECTION 1.2.(a) G.S. 105-153.5A reads as rewritten: 36 General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 595-First Edition
"§ 105-153.5A. Net operating loss provisions. 1
… 2
(g) Limitation. – The provisions of this section apply only to individuals, estates, and 3
trusts." 4
SECTION 1.2.(b) G.S. 105-153.5A(a) reads as rewritten: 5
"(a) State Net Operating Loss. – A taxpayer's State net operating loss for a taxable year is 6
the amount by which business deductions for the year exceed gross income for the year as 7
determined under the Code adjusted as provided in G.S. 105-153.5 and G.S. 105-153.6. The 8
amount of a taxpayer's State net operating loss must also be determined in accordance with the 9
following modifications: 10
(1) No State net operating loss deduction shall be allowed. 11
(2) The amount deductible on account of losses from sales or exchanges of capital 12
assets shall not exceed the amount includable on account of gains from sales 13
or exchanges of capital assets. 14
(3) The exclusion provided by Code section 1202 shall not be allowed. 15
(4) No deduction shall be allowed under G.S. 105-153.5(a1) for the child 16
deduction. 17
(5) The deductions which are not attributable to a taxpayer's trade or business 18
shall be allowed only to the extent of the amount of the gross income not 19
derived from such trade or business. 20
(6) Any deduction under Code section 199A shall not be allowed. 21
(7) The amount of the taxpayer's excess business loss, as defined under the 22
provisions of section 461(l) of the Code, shall be fully allowed as a State net 23
operating loss." 24
SECTION 1.2.(c) Subsection (a) of this section is effective when the Part becomes 25
law and applies retroactively to taxable years beginning on or after January 1, 2022. Subsection 26
(b) of this section is effective for taxable years beginning on or after January 1, 2025. The 27
remainder of this section is effective when the Part becomes law. 28
SECTION 1.3.(a) G.S. 105-160.2 reads as rewritten: 29
"§ 105-160.2. Imposition of tax. 30
(a) Scope. – The tax imposed by this Part applies to the taxable income of estates and 31
trusts as determined under the provisions of the Code except as otherwise provided in this Part. 32
The taxable income of an estate or trust is the same as taxable income for such an estate or trust 33
under the provisions of the Code, adjusted as provided in G.S. 105-153.5 and G.S. 105-153.6, 34
except that the adjustments provided in G.S. 105-153.5 and G.S. 105-153.6 are apportioned 35
between the estate or trust and the beneficiaries based on the distributions made during the 36
taxable year. G.S. 105-153.6. 37
(b) Tax Base. – The tax is computed on the amount of the taxable income of the estate or 38
trust that is for the benefit of a resident of this State, or for the benefit of a nonresident to the 39
extent that the income (i) is derived from North Carolina sources and is attributable to the 40
ownership of any interest in real or tangible personal property in this State or (ii) is derived from 41
a business, trade, profession, or occupation carried on in this State. For purposes of the preceding 42
sentence, taxable income and gross income is computed subject to the adjustments provided in 43
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
under G.S. 105-130.4. 45
(c) Tax Rate. – The tax on the amount computed above is at the rate levied in 46
G.S. 105-153.7. The fiduciary responsible for administering the estate or trust shall pay the tax 47
computed under the provisions of this Part. 48
(d) Adjustments. – For the purposes of this section, the adjustments provided in 49
G.S. 105-153.5 and G.S. 105-153.6 are apportioned between the estate or trust and the 50
beneficiaries based on the distributions made during the taxable year." 51 General Assembly Of North Carolina Session 2025
Senate Bill 595-First Edition Page 3
SECTION 1.3.(b) This section is effective for taxable years beginning on or after 1
January 1, 2025. 2
SECTION 1.4. G.S. 105-153.3(15) reads as rewritten: 3
"(15) Resident. – Either of the individuals listed below. A resident who removes 4
from the State during a taxable year is considered a resident until the resident 5
has both established a definite domicile elsewhere and abandoned any 6
domicile in this State. The fact of marriage does not raise any presumption as 7
to domicile or residence. A resident individual is either of the following: 8
a. An individual who is domiciled in this State at any time during the 9
taxable year or who resides in this State during the taxable year for 10
other than a temporary or transitory purpose. In the absence of 11
convincing proof to the contrary, an individual who is present within 12
the State for more than 183 days during the taxable year is presumed 13
to be a resident, but the 14
b. An individual who maintains a place of abode within the State and 15
spends more than 183 days, including partial days, of the taxable year 16
within the State. The absence of an individual from the State for more 17
than 183 days raises no presumption that the individual is not a 18
resident. A resident who removes from the State during a taxable year 19
is considered a resident until he has both established a definite 20
domicile elsewhere and abandoned any domicile in this State. The fact 21
of marriage does not raise any presumption as to domicile or 22
residence." 23
SECTION 1.5. G.S. 105-163.6 reads as rewritten: 24
"§ 105-163.6. When employer must file returns and pay withheld taxes. 25
… 26
(c) Monthly. – An employer who withholds an average of at least two hundred fifty 27
dollars ($250.00) but less than two thousand dollars ($2,000) of State income taxes from wages 28
each month must file a return and pay the withheld taxes on a monthly basis. A return for the 29
months of January through November is due by the 15th day of the month following the end of 30
the month covered by the return. A return for the month of December is due the following January 31
31. 32
(d) Semiweekly. – An employer who withholds an average of at least two thousand 33
dollars ($2,000) of State income taxes from wages each month shall must file a return by the date 34
set under the Code for filing a return for federal employment taxes attributable to the same wages 35
and shall on a quarterly basis. A quarterly return covers a calendar quarter and is due by the last 36
day of the month following the end of the quarter. The employer also must pay the withheld State 37
income taxes by the date set under the Code for depositing or paying federal employment taxes 38
attributable to the same wages. The date set by the Code for depositing or paying federal 39
employment taxes shall be determined without regard to § 6302(g) of the Code. 40
An extension of time granted to file a return for federal employment taxes attributable to 41
wages is an automatic extension of time for filing a return for State income taxes withheld from 42
the same wages, and an extension of time granted to pay federal employment taxes attributable 43
to wages is an automatic extension of time for paying State income taxes withheld from the same 44
wages. An employer who pays withheld State income taxes under this subsection is not subject 45
to interest on or penalties for a shortfall in the amount due if the employer would not be subject 46
to a failure-to-deposit penalty had the shortfall occurred in a deposit of federal employment taxes 47
attributable to the same wages and the employer pays the shortfall by the date the employer would 48
have to deposit a shortfall in the federal employment taxes.forth below: 49
(1) If an employer's payday falls on a Wednesday, Thursday, or Friday, the 50
withheld taxes must be paid on or before the following Wednesday. 51 General Assembly Of North Carolina Session 2025
Page 4 Senate Bill 595-First Edition
(2) If an employer's payday falls on a Saturday, Sunday, Monday, or Tuesday, the 1
withheld taxes must be paid on or before the following Friday. 2
(3) If any of the three weekdays following the close of a semiweekly period is a 3
legal holiday, the employer has an additional day for each day that is a legal 4
holiday by which to pay the withheld taxes. 5
… 6
(f) The Secretary may close a taxpayer's withholding account if the taxpayer files no 7
withholding returns or files returns showing no withholding of State income taxes for a period of 8
18 months." 9
SECTION 1.6. Except as otherwise provided, this Part is effective when this act 10
becomes law. 11
12
PART II. CONFORM TO FEDERAL SYSTEM FOR AUDITING PARTNERSHIPS 13
SECTION 2.(a) Part 2 of Article 4 of Chapter 105 of the General Statutes is amended 14
by adding a new section to read: 15
"§ 105-154.2. Federal partnership adjustments. 16
(a) Definitions. – The following definitions apply in this Part: 17
(1) Administrative adjustment request. – An administrative adjustment request 18
filed by a partnership under section 6227 of the Code. 19
(2) Audited partnership. – A partnership subject to a partnership level audit 20
resulting in a federal partnership adjustment. 21
(3) Corporate partner. – A partner that is subject to tax under Part 1 of this Article. 22
(4) Direct partner. – A partner that holds a direct interest in a partnership subject 23
to a federal partnership adjustment. 24
(5) Exempt partner. – A partner that is not subject to State income tax under this 25
Article that holds a direct interest in a partnership subject to a federal 26
partnership adjustment. 27
(6) Federal partnership adjustment. – A change or correction arising from a 28
partnership level audit or an administrative adjustment request that affects the 29
calculation of a taxpayer's State tax. 30
(7) Federal partnership representative. – The person the partnership designates for 31
the taxable year as the partnership's representative, or the person the Internal 32
Revenue Service has appointed to act as the federal partnership representative, 33
pursuant to section 6223(a) of the Code. 34
(8) Final federal partnership adjustment. – A federal partnership adjustment that 35
is final. A federal partnership adjustment is final when the federal partnership 36
adjustment is not subject to administrative or judicial review. If the federal 37
partnership adjustment results from filing an administrative adjustment 38
request, the federal partnership adjustment is final when the administrative 39
adjustment request is filed. Additionally, a federal partnership adjustment 40
relating to a partnership level audit is deemed final in the following 41
circumstances: 42
a. The taxpayer has received a partnership level audit from the Internal 43
Revenue Service for the tax period and the taxpayer does not timely 44
file an administrative appeal with the Internal Revenue Service. 45
b. The taxpayer consented to any of the partnership level audit findings 46
for the tax period and through a final decision or other written 47
agreement with the Internal Revenue Service all rights of appeal have 48
been waived or exhausted. 49
(9) Indirect partner. – A beneficiary of an estate or trust or an owner in a 50
partnership or pass-through entity, where the estate, partnership, pass-through 51 General Assembly Of North Carolina Session 2025
Senate Bill 595-First Edition Page 5
entity, or trust holds, either itself or through another indirect partner, a direct 1
interest, in a partnership or pass-through entity subject to a final federal 2
partnership adjustment. 3
(10) Partnership level audit. – An audit of a partnership by the Internal Revenue 4
Service pursuant to Subchapter C of Title 26, Subtitle F, Chapter 63 of the 5
Code, as enacted by the Bipartisan Budget Act of 2015, Public Law 114-74, 6
which results in federal partnership adjustments. 7
(11) Reviewed year. – The taxable year of a partnership that is subject to a 8
partnership level audit from which federal partnership adjustments arise. 9
(12) State partnership representative. – The federal partnership representative 10
unless the partnership designates another person as its State partnership 11
representative. The Secretary is authorized to establish procedures for 12
designating a person, other than the federal partnership representative, to be a 13
State partnership representative. 14
(13) Tiered partner. – An estate, partnership, S Corporation, or trust that is a partner 15
in a partnership subject to a federal partnership adjustment. 16
(b) General Rule. – Except in the case of a final federal partnership adjustment that is 17
required to be reported to the Secretary using the procedures in subsection (c) of this section, a 18
partner must report and pay any State income tax due in accordance with the provisions of 19
G.S. 105-130.20 or G.S. 105-159. 20
(c) Reporting a Final Federal Partnership Adjustment. – Except for the distributive share 21
of adjustments that have been reported as required by subsection (b) of this section and an audited 22
partnership that has made a timely election under subsection (d) of this section, a partnership and 23
a partner must report a final federal partnership adjustment as follows: 24
(1) No later than 90 days after the final federal partnership adjustment, a 25
partnership doing business in this State must do both of the following: 26
a. File an income tax return reflecting the partnership's final federal 27
partnership adjustments, as modified by G.S. 105-153.5 and 28
G.S. 105-153.6, and any other information required by the Secretary, 29
and pay the additional amount due under G.S. 105-154(d) and 30
G.S. 105-154.1. 31
b. Notify each of its direct partners of the direct partner's distributive 32
share of the final federal partnership adjustments, including any 33
information necessary for the direct partner to properly file a State 34
income tax return. The information must be in the form prescribed by 35
the Secretary. 36
(2) No later than six months after the final federal partnership adjustment, each 37
direct partner subject to tax under this Article must file a State income tax 38
return reporting the direct partner's distributive share of the adjustments 39
reported to the direct partner under sub-subdivision b. of subdivision (1) of 40
this subsection, as modified by G.S. 105-153.5 and G.S. 105-153.6, and any 41
other information required by the Secretary, and pay any additional amount of 42
tax due as if the final federal partnership adjustments had been properly 43
reported. 44
(d) Election for Partnership to Pay; Exceptions. – Except as otherwise provided in 45
subdivision (2) of this subsection, an audited partnership may elect to report a final federal 46
partnership adjustment arising from a partnership level audit in the manner prescribed by the 47
Secretary. An election made under this subsection is irrevocable and cannot be made if the 48
required income tax return is not filed within the period required by this subsection. The 49
following provisions apply to an audited partnership that makes an election under this subsection: 50 General Assembly Of North Carolina Session 2025
Page 6 Senate Bill 595-First Edition
(1) Reporting and payment of tax. – The reporting and payment requirements are 1
as follows: 2
a. No later than six months after the final federal partnership adjustment, 3
the audited partnership must file an income tax return reflecting the 4
partnership's final federal partnership adjustment, as modified by 5
G.S. 105-153.5 and G.S. 105-153.6, and provide any other 6
information required by the Secretary. 7
b. No later than six months after the final federal partnership adjustment, 8
the audited partnership must pay the amount determined under this 9
subdivision. If properly reported and paid by the audited partnership, 10
the amount shall be treated as paid in lieu of taxes owed by the direct 11
and indirect partners, to the extent applicable, on the same final federal 12
adjustment. The direct partners or indirect partners may not take a 13
deduction or credit for this amount on the State income tax return or 14
claim a refund of the amount paid on the State income tax return. The 15
amount in lieu of taxes is calculated as follows: 16
1. Exclude from the final federal adjustment the distributive share 17
of all adjustments reported to an exempt partner not subject to 18
tax under this Article. 19
2. For the total distributive shares of the final federal adjustment, 20
as modified by G.S. 105-153.5 and G.S. 105-153.6, reported to 21
direct corporate partners subject to tax under this Article, 22
apportion and allocate the adjustments as provided under 23
G.S. 105-130.4 and multiply the resulting amount by the tax 24
rate under G.S. 105-130.3. 25
3. For the total distributive shares of the final federal adjustment, 26
as modified by G.S. 105-153.5 and G.S. 105-153.6, reported to 27
nonresident individual direct partners and estate and trust 28
direct partners subject to tax under this Article, apportion and 29
allocate such adjustments as provided under G.S. 105-130.4 30
and multiply the resulting amount by the tax rate under 31
G.S. 105-153.7. 32
4. For the total distributive shares of the final federal adjustment, 33
as modified by G.S. 105-153.5 and G.S. 105-153.6, reported to 34
resident direct partners subject to tax under this Article, 35
multiply that amount by the tax rate under G.S. 105-153.7. For 36
purposes of this sub-sub-subdivision, an audited partnership 37
may deduct from each resident direct partner's distributive 38
share the amount of the resident direct partner's share of 39
distributive income not attributable to the State from the 40
partnership to the extent the resident direct partner's share of 41
distributive income not attributable to the State was included 42
in the partnership's taxable income in another state or the 43
District of Columbia and was subject to an entity-level tax 44
levied on the aggregate distributive share of the partnership's 45
income allocable to one or more of its partners. A partnership 46
is taxable in another state or the District of Columbia if the 47
partnership's business activity in that state or the District of 48
Columbia subjects the partnership to a net income tax or a tax 49
measured by net income. 50 General Assembly Of North Carolina Session 2025
Senate Bill 595-First Edition Page 7
5. Add the amounts determined in sub-sub-subdivisions 1. 1
through 4. of this sub-subdivision. 2
(2) Exceptions. – A partnership may not elect to pay tax under this subsection if 3
any of the following apply: 4
a. The partnership made the election to be a taxed partnership under 5
G.S. 105-154.1(a) for the reviewed year. 6
b. The partnership's final federal partnership adjustment resulted from an 7
administrative adjustment request. 8
c. The partnership was not required to file an information return under 9
the provisions of G.S. 105-154(c) for the reviewed year because the 10
partnership was not doing business in this State for the reviewed year. 11
(e) Collection of Tax for Failure to Pay. – If an audited partnership makes an election 12
under subsection (d) of this section but does not pay the amount due, the Department may collect 13
the tax from the audited partnership pursuant to G.S. 105-241.22(1). The Secretary must issue a 14
notice of collection for the amount of the tax debt to the audited partnership. If the tax debt is not 15
paid to the Secretary within 60 days of the date the notice of collection is mailed to the audited 16
partnership, the Secretary may assess the partners of the audited partnership for the partners' 17
distributive share of the tax debt by sending the partners a notice of proposed assessment in 18
accordance with G.S. 105-241.9. For purposes of this subsection, the term "tax debt" has the 19
same meaning as defined in G.S. 105-243.1(a). 20
(f) Tiered Partners. – The direct and indirect partners of an audited partnership that are 21
tiered partners, and all of the owners or beneficiaries of those tiered partners that are subject to 22
tax under this Article, are subject to the reporting and payment requirements of subsection (c) of 23
this section, and the tiered partners are entitled to make the election provided in subsection (d) 24
of this section. The tiered partners or their owners must make required reports and payments no 25
later than 90 days after the time for filing and furnishing statements to tiered partners and their 26
owners or beneficiaries as established under section 6226 of the Code and the regulations 27
thereunder. The Secretary is authorized to establish procedures and interim time periods for the 28
reports and payments required by tiered partners and their owners or beneficiaries and for making 29
the election under this subsection. 30
(g) Failure of Audited Partnership or Tiered Partner to Report or Pay. – Nothing in this 31
section prevents the Secretary from proposing an assessment against a direct partner or indirect 32
partner pursuant to G.S. 105-241.9 for tax due, if a partnership or tiered partner fails to timely 33
make any report or payment required by this section for any reason. 34
(h) State Partnership Representative. – The partnership's direct partners and indirect 35
partners are bound by the actions of the State partnership representative. In addition, with respect 36
to any action required or permitted to be taken by a partnership under this section, the State 37
partnership representative has the sole authority to: 38
(1) Act on behalf of the partnership. 39
(2) Bring a contested case hearing in accordance with G.S. 105-241.15. 40
(3) Request a judicial review in accordance with G.S. 105-241.16. 41
(i) Assessments of Additional State Tax Arising from a Final Federal Partnership 42
Adjustment. – The Secretary must assess additional State tax arising from a final federal 43
partnership adjustment in accordance with G.S. 105-241.9." 44
SECTION 2.(b) G.S. 105-228.90(b) reads as rewritten: 45
"(b) Definitions. – The following definitions apply in this Article: 46
… 47
(15) Federal determination. – A change or correction arising from an audit by the 48
Commissioner of Internal Revenue or an agreement of the U.S. competent 49
authority, and the change or correction has become final. final, but does not 50
include a final federal partnership adjustment as defined in G.S. 105-154.2(a). 51 General Assembly Of North Carolina Session 2025
Page 8 Senate Bill 595-First Edition
A federal determination is final when the determination is not subject to 1
administrative or judicial review. Additionally, audit findings made by the 2
Internal Revenue Service are deemed final in the following circumstances: 3
a. The taxpayer has received audit findings from the Internal Revenue 4
Service for the tax period and the taxpayer does not timely file an 5
administrative appeal with the Internal Revenue Service. 6
b. The taxpayer consented to any of the audit findings for the tax period 7
through a form or other written agreement with the Internal Revenue 8
Service. 9
(16) Final federal partnership adjustment. – As defined in G.S. 105-154.2(a). 10
…." 11
SECTION 2.(c) G.S. 105-153.5 reads as rewritten: 12
"§ 105-153.5. Modifications to adjusted gross income. 13
… 14
(c2) Decoupling Adjustments. – In calculating North Carolina taxable income, a taxpayer 15
must make the following adjustments to the taxpayer's adjusted gross income: 16
… 17
(24) A taxpayer must add the amount by which the taxpayer's distributive share of 18
partnership income, subject to the adjustments provided in this section and 19
G.S. 105-153.6, is increased as a result of a final federal partnership 20
adjustment, as defined in G.S. 105-154.2(a), reported to this State under 21
G.S. 105-154.2(c)(2). 22
(25) A taxpayer may deduct the amount by which the taxpayer's distributive share 23
of partnership income, as modified by this section and G.S. 105-153.6, is 24
decreased as a result of a final federal partnership adjustment, as defined in 25
G.S. 105-154.2(a), reported to this State under G.S. 105-154.2(c)(2). 26
…." 27
SECTION 2.(d) G.S. 105-130.5 reads as rewritten: 28
"§ 105-130.5. Adjustments to federal taxable income in determining State net income. 29
(a) The following additions to federal taxable income shall be made in determining State 30
net income: 31
… 32
(33) The amount by which the taxpayer's distributive share of partnership income, 33
subject to the adjustments provided in this section and G.S. 105-130.5B, is 34
increased as a result of a final federal partnership adjustment, as defined in 35
G.S. 105-154.2(a), reported to this State under G.S. 105-154.2(c)(2). 36
(b) The following deductions from federal taxable income shall be made in determining 37
State net income: 38
… 39
(33) The amount by which the taxpayer's distributive share of partnership income, 40
subject to the adjustments provided in this section and G.S. 105-130.5B, is 41
decreased as a result of a final federal partnership adjustment, as defined in 42
G.S. 105-154.2(a), reported to this State under G.S. 105-154.2(c)(2). 43
…." 44
SECTION 2.(e) G.S. 105-241.6 reads as rewritten: 45
"§ 105-241.6. Statute of limitations for refunds. 46
… 47
(b) Exceptions. – The exceptions to the general statute of limitations for obtaining a 48
refund of an overpayment are as follows: 49
… 50 General Assembly Of North Carolina Session 2025
Senate Bill 595-First Edition Page 9
(7) Final Federal Partnership Adjustment. – If a taxpayer files a return reflecting 1
a final federal partnership adjustment and the return is filed within the time 2
required by this Subchapter, the period for requesting a refund is one year after 3
the return reflecting the final federal partnership adjustment is filed or three 4
years after the original return was filed or due to be filed, whichever is later." 5
SECTION 2.(f) G.S. 105-241.8 reads as rewritten: 6
"§ 105-241.8. Statute of limitations for assessments. 7
(a) General. – The general statute of limitations for proposing an assessment applies 8
unless a different period applies under subsection (b) of this section. The general statute of 9
limitations for proposing an assessment is the later of the following: 10
(1) Three years after the due date of the return. 11
(2) Three years after the taxpayer filed the return. 12
(b) Exceptions. – The exceptions to the general statute of limitations for proposing an 13
assessment are as follows: 14
… 15
(6) Final federal partnership adjustment. – If a taxpayer files a return reflecting a 16
final federal partnership adjustment and the return is filed within the time 17
required by this Subchapter, the period for proposing an assessment of any tax 18
due is one year after the return is filed or three years after the original return 19
was filed or due to be filed, whichever is later. If there is a final federal 20
partnership adjustment and the taxpayer does not file the return within the 21
required time, the period for proposing an assessment of any tax due is six 22
years after the date the Secretary received the final report of the final federal 23
partnership adjustment." 24
SECTION 2.(g) This Part is effective for taxable years beginning on or after January 25
1, 2025, and applies to federal partnership adjustments that become final on or after that date. 26
27
PART III. SALES TAX CHANGES 28
SECTION 3.1.(a) G.S. 105-164.8(b) reads as rewritten: 29
"(b) Remote Sales. – A retailer who makes a remote sale is engaged in business in this 30
State and is subject to the tax levied under this Article if at least one of the following conditions 31
is met: 32
… 33
(9) The retailer makes gross sales in excess of one hundred thousand dollars 34
($100,000) from remote sales sourced to this State, including sales as a 35
marketplace seller, for the previous or the current calendar year. A retailer that 36
solely meets this condition, or both this condition and the condition in 37
subdivision (10) of this subsection, is engaged in business on the first day of 38
the first calendar month occurring at least 60 days after the retailer's gross 39
sales exceed the threshold. 40
(10) The retailer is a marketplace facilitator that makes gross sales in excess of one 41
hundred thousand dollars ($100,000), including all marketplace-facilitated 42
sales for all marketplace sellers, from sales sourced to this State for the 43
previous or the current calendar year. A retailer that solely meets this 44
condition, or both this condition and the condition in subdivision (9) of this 45
subsection, is engaged in business on the first day of the first calendar month 46
occurring at least 60 days after the retailer's gross sales exceed the threshold." 47
SECTION 3.1.(b) This section is effective when it becomes law and applies to 48
retailers that exceed the threshold on or after that date. 49
SECTION 3.2. G.S. 105-164.3(259) reads as rewritten: 50 General Assembly Of North Carolina Session 2025
Page 10 Senate Bill 595-First Edition
"(259) Streamlined Agreement. – The Streamlined Sales and Use Tax Agreement as 1
amended as of November 7, 2023.October 9, 2024." 2
SECTION 3.3.(a) G.S. 105-187.90(9) reads as rewritten: 3
"(9) Shared for-hire ground transport Shared-ride service. – A for-hire ground 4
transport service for which an individual has been matched with another 5
individual by a for-hire ground transport service provider." 6
SECTION 3.3.(b) G.S. 105-187.95 reads as rewritten: 7
"§ 105-187.95. Use of tax proceeds. 8
Each quarter, the The Secretary shall credit the net tax proceeds of the taxes collected under 9
this Article to the Highway Fund. The Secretary may retain the cost of administering this Article 10
as reimbursement to the Department." 11
SECTION 3.3.(c) This section becomes effective July 1, 2025. 12
SECTION 3.4. Except as otherwise provided, this Part is effective when this act 13
becomes law. 14
15
PART IV. EXCISE TAX CHANGES 16
SECTION 4.1. G.S. 105-113.39A(a2) reads as rewritten: 17
"(a2) Vapor Products License. – A wholesale dealer or a retail dealer must obtain a vapor 18
products license for all of the following locations: 19
(1) Each location where a wholesale dealer makes vapor products. 20
(2) Each location where a wholesale dealer or a retail dealer receives or stores 21
non-tax-paid vapor products. 22
(3) Each location from where a retail dealer that is a delivery seller or a remote 23
seller receives or stores non-tax-paid vapor products for delivery sales if the 24
location is a location other than the location described in subdivision (2) of 25
this subsection." 26
SECTION 4.2. G.S. 105-113.83A(a) reads as rewritten: 27
"(a) Registration Required. – A person who holds a wine shipper permit issued under 28
G.S. 18B-1001.1 or one or more of the following ABC permits issued under Article 11 of Chapter 29
18B of the General Statutes must register with the Secretary: 30
(1) Unfortified winery. 31
(2) Fortified winery. 32
(3) Brewery. 33
(4) Distillery. 34
(5) Wine importer. 35
(6) Wine wholesaler. 36
(7) Malt beverages importer. 37
(8) Malt beverages wholesaler. 38
(9) Nonresident malt beverage vendor. 39
(10) Nonresident wine vendor. 40
(11) Wine Producer. 41
(12) Nonresident spirituous liquor vendor." 42
SECTION 4.3.(a) G.S. 105-449.42 reads as rewritten: 43
"§ 105-449.42. Payment of tax. 44
The tax levied by this Article is due when a quarterly return is due under G.S. 105-449.45. 45
The amount of tax due is calculated on the amount of motor fuel or alternative fuel used by the 46
motor carrier in its operations within this State during the quarter covered by the return. If a 47
motor carrier is exempt from filing a return under G.S. 105-449.45(b)(2), the tax levied by this 48
Article is due when the tax becomes collectible under G.S. 105-241.22.by the last day of the 49
month following the quarter in which the motor fuel or alternative fuel was used by the motor 50
carrier." 51 General Assembly Of North Carolina Session 2025
Senate Bill 595-First Edition Page 11
SECTION 4.3.(b) This section becomes effective July 1, 2025, and applies to taxes 1
due on or after that date. 2
SECTION 4.4.(a) G.S. 105-449.60 reads as rewritten: 3
"§ 105-449.60. Definitions. 4
The following definitions apply in this Article: 5
… 6
(43a) Renewable diesel. – A motor fuel chemically equivalent to petroleum diesel 7
that is manufactured from organic feedstocks using a hydrogenation process. 8
Renewable diesel meets ASTM D975 specifications for diesel fuel. 9
…." 10
SECTION 4.4.(b) G.S. 105-449.60(12) reads as rewritten: 11
"(12) Diesel fuel. – Any liquid, other than gasoline, that is suitable for use as a fuel 12
in a diesel-powered highway vehicle. The term includes biodiesel, fuel oil, 13
heating oil, high-sulfur dyed diesel fuel, and kerosene. kerosene, and 14
renewable diesel. The term does not include jet fuel." 15
SECTION 4.5.(a) G.S. 105-449.60(46) reads as rewritten: 16
"(46) Supplier. – Any of the following: 17
a. A position holder or a person who receives motor fuel pursuant to a 18
two-party exchange. 19
b. A fuel alcohol provider. 20
c. A biodiesel provider. 21
d. Repealed by Session Laws 2017-39, s. 12, effective June 21, 2017. 22
e. A purchaser of tax-paid motor fuel who introduces the respective 23
tax-paid motor fuel into the terminal transfer system at a location other 24
than an IRS-registered terminal. 25
f. A person who owns tax-paid motor fuel at the time it is placed in the 26
terminal transfer system at a location other than an IRS-registered 27
terminal." 28
SECTION 4.5.(b) G.S. 105-449.97(e) reads as rewritten: 29
"(e) Credit for Motor Fuel in Terminal. Terminal Transfer System. – When filing a return, 30
a licensed supplier who is the position holder may take a credit for tax-paid motor fuel in the 31
terminal system.transfer system if any of the following apply: 32
(1) The supplier is a position holder. 33
(2) The supplier is the original purchaser of tax-paid motor fuel that is placed in 34
the terminal transfer system at a location other than an IRS-registered 35
terminal. 36
(3) The supplier owns tax-paid motor fuel at the time it is placed in the terminal 37
transfer system at a location other than an IRS-registered terminal." 38
SECTION 4.5.(c) This section is effective July 1, 2025. 39
SECTION 4.6.(a) G.S. 105-449.69 reads as rewritten: 40
"§ 105-449.69. How to apply for a license. 41
… 42
(e) Export Activity. – An applicant for a license as an exporter or as a distributor must 43
list on the application each state to which the applicant intends to export motor fuel received in 44
this State by means of a transfer that is outside the terminal transfer system and, if required by a 45
state listed, must be licensed or registered for motor fuel tax purposes in that state. If a state listed 46
requires the applicant to be licensed or registered, the applicant must give the applicant's license 47
or registration number in that state. If the Secretary determines that an exporter is no longer 48
operating in this State, and the exporter has failed to comply with G.S. 105-449.75, the Secretary 49
may cancel the exporter license and send notice of the cancellation in accordance with 50
G.S. 105-449.76(b1)." 51 General Assembly Of North Carolina Session 2025
Page 12 Senate Bill 595-First Edition
SECTION 4.6.(b) G.S. 105-449.76(a) reads as rewritten: 1
"(a) Cancellation. – The Secretary may cancel a license issued under this Article upon the 2
written request of the licensee. licensee or as permitted under G.S. 105-449.69(e). The licensee's 3
request must include a proposed effective date of cancellation and must return the license to the 4
Secretary on or before the proposed effective date. If the licensee's request does not include a 5
proposed effective date of cancellation, the license is cancelled 15 days after the Department 6
receives the written request. If the license is unable to be returned, the licensee must include a 7
written statement of the reasons, satisfactory to the Secretary, why the license cannot be returned. 8
The Secretary shall notify the licensee when the license is cancelled." 9
SECTION 4.7. G.S. 105-449.87(a)(3) reads as rewritten: 10
"(3) Motor fuel that is used to operate a highway vehicle after an application for a 11
refund of tax paid on the motor fuel is made or allowed under G.S. 12
105-449.107(a) G.S. 105-449.106(d) on the basis that the motor fuel was used 13
for an off-highway purpose." 14
SECTION 4.8. G.S. 105-449.139 reads as rewritten: 15
"§ 105-449.139. Miscellaneous provisions. 16
(a) Records. – A person required to be licensed under this Article must keep a record of 17
all documents used to determine the information provided in a return filed under this Article. The 18
records must be kept for the applicable period of statute of limitations as set forth under Article 19
9 of this Chapter. If the records apply to a transaction not required to be reported in a return, the 20
records must be kept for three years from the date of the transaction. The Secretary or a person 21
designated by the Secretary shall have the right at any reasonable time to inspect the records. 22
(b) Violations. – The offenses listed in subdivisions (1) through (9) of G.S. 105-449.120 23
apply to this Article. In applying those offenses to this Article, references to "this Article" are to 24
be construed as references to Article 36D and references to "motor fuel" are to be construed as 25
references to alternative fuel. 26
(c) Lists. – The Secretary must make available a list of licensed alternative fuel providers 27
to each licensed bulk end-user and licensed retailer. The Secretary must also make available a 28
list of licensed bulk end-users and licensed retailers to each licensed alternative fuel provider. A 29
list must state the name, account number, and business address of each licensee on the list. The 30
Secretary must update the lists required under this section annually. 31
(d) Inspection. – The Secretary, or the Secretary's designee, shall have the right at any 32
reasonable time to inspect the records subject to audit under this section and may do any of the 33
following to determine tax liability under this Article: 34
(1) Audit a person who is required to have or elects to have a license under this 35
Article. 36
(2) Audit a retailer, bulk-end user, or a provider that is not licensed under this 37
Article. 38
(3) Examine a tank or other equipment used to make, store, or transport 39
alternative fuel." 40
SECTION 4.9. G.S. 150B-2(3) reads as rewritten: 41
"(3) License. – Any certificate, permit, or other evidence, by whatever name 42
called, of a right or privilege to engage in any activity, except licenses issued 43
under Chapter 20 and Subchapter I and Subchapter V of Chapter 105 of the 44
General Statutes, occupational licenses, and certifications of electronic poll 45
books, ballot duplication systems, or voting systems under G.S. 163-165.7." 46
SECTION 4.10. G.S. 18C-901(7) reads as rewritten: 47
"(7) Gross wagering revenue. – The total of amounts received by an interactive 48
sports wagering operator from sports wagers as authorized under this Article 49
less the amounts paid as winnings before any deductions for expenses, fees, 50
or taxes. Gross wagering revenue includes the cash value of any bonuses or 51 General Assembly Of North Carolina Session 2025
Senate Bill 595-First Edition Page 13
promotional credits when returned to an interactive sports wagering operator 1
in the form of a deposit or sports wager." 2
SECTION 4.11. Except as otherwise provided, this Part is effective when this act 3
becomes law. 4
5
PART V. ADMINISTRATIVE CHANGES 6
SECTION 5.1. G.S. 105-228.90 reads as rewritten: 7
"§ 105-228.90. Scope and definitions. 8
(a) Scope. – This Article applies to all of the following: 9
… 10
(3) The primary forest product assessment levied under Article 81 84 of Chapter 11
106 of the General Statutes. 12
… 13
(b) Definitions. – The following definitions apply in this Article: 14
… 15
(7) Code. – The Internal Revenue Code as enacted as of January 1, 2023, January 16
1, 2025, including any provisions enacted as of that date that become effective 17
either before or after that date. 18
… 19
(23) Person. – An individual, a fiduciary, a firm, an association, a partnership, a 20
limited liability company, a corporation, a unit of government, or another 21
group acting as a unit. The term includes an officer or employee of a 22
corporation, a member, a manager, or an employee of a limited liability 23
company, and a member or employee of a partnership who, as officer, 24
employee, member, or manager, is under a duty to perform an act in meeting 25
the requirements of Subchapter I, V, or VIII of this Chapter, of G.S. 55-16-22, 26
of Article 81 84 of Chapter 106 of the General Statutes, or of Article 3 of 27
Chapter 119 of the General Statutes. 28
… 29
(27) Tax. – A tax levied under Subchapter I, V, or VIII of this Chapter, the primary 30
forest product assessment levied under Article 81 84 of Chapter 106 of the 31
General Statutes, or an inspection tax levied under Article 3 of Chapter 119 of 32
the General Statutes. Unless the context clearly requires otherwise, the term 33
"tax" includes penalties and interest as well as the principal amount. 34
(29) Taxpayer. – A person subject to the tax or reporting requirements of 35
Subchapter I, V, or VIII of this Chapter, of Article 81 84 of Chapter 106 of 36
the General Statutes, or of Article 3 of Chapter 119 of the General Statutes. 37
…." 38
SECTION 5.2. G.S. 105-236(a) reads as rewritten: 39
"(a) Penalties. – The following civil penalties and criminal offenses apply: 40
… 41
(1b) Making Payment in Wrong Form. – For making a payment of tax in a form 42
other than the form required by the Secretary pursuant to G.S. 105-241(a), the 43
Secretary shall assess a penalty equal to five percent (5%) of the amount of 44
the tax, subject to a minimum of one dollar ($1.00) and a maximum of one 45
thousand dollars ($1,000). This penalty may be waived by the Secretary in 46
accordance with G.S. 105-237. 47
… 48
(10a) Filing a Frivolous Return. – If a taxpayer files a frivolous return under Part 2 49
of Article 4 of this Chapter, the Secretary shall assess a penalty in the amount 50 General Assembly Of North Carolina Session 2025
Page 14 Senate Bill 595-First Edition
of up to five hundred dollars ($500.00). two thousand dollars ($2,000). A 1
frivolous return is a return that meets both of the following requirements: 2
a. It fails to provide sufficient information to permit a determination that 3
the return is correct or contains information which positively indicates 4
the return is incorrect, and 5
b. It evidences an intention to delay, impede or negate the revenue laws 6
of this State or purports to adopt a position that is lacking in 7
seriousness. 8
…." 9
SECTION 5.3. G.S. 105-249.2 reads as rewritten: 10
"§ 105-249.2. Due date extended and penalties waived Relief for certain military personnel 11
or persons affected by a presidentially declared disaster. 12
(a) Combat. – The Secretary may not assess interest or a penalty against a taxpayer for 13
any period that is disregarded under section 7508 of the Code in determining the taxpayer's 14
liability for a federal tax. A taxpayer is granted an extension of time to file a return or take another 15
action concerning a State tax for any period during which the Secretary may not assess interest 16
or a penalty under this section. 17
(b) Disaster. – The penalties in G.S. 105-236(a)(2), (3), (4), and (10)c. may not be 18
assessed for any period in which the time for filing a federal return or report or for paying a 19
federal tax is extended disregarded under section 7508A of the Code because of a presidentially 20
declared disaster. The extension of time granted period of time disregarded by the Internal 21
Revenue Service under section 7508A of the Code only applies to the corresponding State tax 22
return or payment. For State returns and payments without a corresponding federal return and 23
payment, the extension granted period of time disregarded for individual income tax returns and 24
payments by the Internal Revenue Service under section 7508A of the Code applies. For the 25
purpose of this section, "presidentially declared disaster" has the same meaning as in section 26
1033(h)(3) of the Code." 27
SECTION 5.4. Except as otherwise provided, this Part is effective when this act 28
becomes law. 29
30
PART VI. PROPERTY TAX CHANGES 31
SECTION 6.(a) G.S. 105-278.2 reads as rewritten: 32
"§ 105-278.2. Burial property. 33
(a) Commercial Property. – Real property set apart for human burial purposes that is 34
owned and held for purposes of (i) sale or rental or (ii) sale of burial rights therein is exempt from 35
taxation. A single application is required under G.S. 105-282.1 for property exempt under this 36
subsection. 37
(b) Other Property. – Real property set apart for human burial purposes not owned and 38
held for a purpose listed in subsection (a) of this section is exempt from taxation. No application 39
is required under G.S. 105-282.1 for property exempt under this subsection. A local government 40
cannot deny the exemption provided under this subsection to a taxpayer that lacks a survey or 41
plat detailing the exempt property. 42
(c) Terms. – For purposes of this section, the term "real property" includes land, tombs, 43
vaults, monuments, and mausoleums, and the term "burial" includes entombment." 44
SECTION 6.(b) Except as otherwise provided, this Part is effective when this act 45
becomes law. 46
47
PART VII. PROVIDE TAX PA RITY FOR SHORT -TERM CAR RENTALS TO 48
INCLUDE PEER-TO-PEER RENTALS 49
SECTION 7.1.(a) G.S. 105-187.1(a) reads as rewritten: 50
"(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
Senate Bill 595-First Edition Page 15
… 1
(3b) Peer-to-peer vehicle sharing provider. – As defined in G.S. 20-280.15. 2
… 3
(6) Retailer. – A retailer as defined in G.S. 105-164.3 who is engaged in the 4
business of selling, leasing, renting, offering short-term leases or rentals, 5
long-term leases or rentals, or offering vehicle subscriptions for motor 6
vehicles. 7
(7) Short-term lease or rental. – A lease or rental of a motor vehicle or motor 8
vehicles, vehicles by a person, including a vehicle sharing service, service or 9
a peer-to-peer vehicle sharing provider, that is not a long-term lease or rental 10
or a vehicle subscription. 11
…." 12
SECTION 7.1.(b) G.S. 105-187.3(a) reads as rewritten: 13
"(a) Tax Base. – The Except as otherwise provided in G.S. 105-187.5, the tax imposed by 14
this Article is applied to the sum of the retail value of a motor vehicle for which a certificate of 15
title is issued and any fee regulated by G.S. 20-101.1. The tax does not apply to the sales price 16
of a service contract, provided the charge is separately stated on the bill of sale or other similar 17
document given to the purchaser at the time of the sale." 18
SECTION 7.1.(c) G.S. 105-187.4(a) reads as rewritten: 19
"(a) Method. – The Except as otherwise provided in G.S. 105-187.5, the tax imposed by 20
this Article must be paid to the Commissioner when applying for a certificate of title for a motor 21
vehicle. The Commissioner may not issue a certificate of title for a vehicle until the tax imposed 22
by this Article has been paid. The tax may be paid in cash or by check." 23
SECTION 7.1.(d) G.S. 105-187.5 reads as rewritten: 24
"§ 105-187.5. Alternate tax for Tax on a limited possession commitment. 25
(a) Applicability. – A retailer listed in this section shall pay a tax on the gross receipts of 26
a limited possession commitment in accordance with this section. The tax is for the privilege of 27
using the highways of this State and is imposed on a retailer but is to be added to a limited 28
possession commitment and paid by the person who enters into a limited possession commitment 29
with the retailer. The retailers are: 30
(1) A retailer that purchases a motor vehicle for use as a limited possession 31
commitment and makes an election under this section. 32
(2) A peer-to-peer vehicle sharing provider. 33
(a1) Election. – A retailer that has purchased a motor vehicle for a limited possession 34
commitment may elect not to pay to pay the tax imposed by this section instead of the tax imposed 35
by this Article at the rate set in G.S. 105-187.3 when applying for a certificate of title for a motor 36
vehicle purchased by the retailer for a limited possession commitment. A retailer who makes this 37
election shall pay a tax on the gross receipts of the limited possession commitment of the vehicle. 38
title. To make the election, the retailer shall complete a form provided by the Division providing 39
the information needed to collect the alternate tax based on gross receipts. Once made, an election 40
is irrevocable. The Division shall notify the Secretary of Revenue of a retailer who makes the 41
election under this subsection. 42
(a2) Gross Receipts. – Gross receipts do not include the amount of any allowance given 43
for a motor vehicle taken in trade as a partial payment on the limited possession commitment. 44
The portion of a limited possession commitment billing or payment that represents any amount 45
applicable to the sales price of a service contract as defined in G.S. 105-164.3 should not be 46
included in the gross receipts subject to the tax imposed by this Article. section. The charge must 47
be separately stated on documentation given to the purchaser at the time the limited possession 48
commitment goes into effect, or on the monthly billing statement or other documentation given 49
to the purchaser. When a limited possession commitment is sold to another retailer, the seller of 50
the limited possession commitment should provide to the purchaser of the limited possession 51 General Assembly Of North Carolina Session 2025
Page 16 Senate Bill 595-First Edition
commitment the documentation showing that the service contract and applicable sales taxes were 1
separately stated at the time the limited possession commitment went into effect effect, and the 2
new retailer must retain the information to support an allocation for tax computed on the gross 3
receipts subject to highway use tax. Like the tax imposed by G.S. 105-187.3, this alternate tax is 4
a tax on the privilege of using the highways of this State. The tax is imposed on a retailer, but is 5
to be added to the limited possession commitment of a motor vehicle and thereby be paid by the 6
person who enters into a limited possession commitment with a retailer. 7
(b) Rate. – The applicable tax rates on the gross receipts from a limited possession 8
commitment are as listed in this subsection. Gross receipts does not include the amount of any 9
allowance given for a motor vehicle taken in trade as a partial payment on the limited possession 10
commitment. The maximum tax in G.S. 105-187.3(a1) on certain motor vehicles applies to a 11
continuous limited possession commitment of such a motor vehicle to the same person. The 12
applicable tax rates are as follows: 13
Type of Limited Possession Commitment Tax Rate 14
Short-term lease or rental 8% 15
Vehicle subscription 5% 16
Long-term lease or rental 3% 17
(c) Method. – A retailer who elects to pay tax on the gross receipts of the limited 18
possession commitment of a motor vehicle shall make this election when applying for a 19
certificate of title for the vehicle. To make the election, the retailer shall complete a form provided 20
by the Division giving information needed to collect the alternate tax based on gross receipts. 21
Once made, an election is irrevocable. 22
(d) Administration. – The Division shall notify the Secretary of Revenue of a retailer who 23
makes the election under this section. A retailer who makes this election pays the tax under this 24
section shall report and remit to the Secretary the tax on the gross receipts of the limited 25
possession commitment of the motor vehicle. The Secretary shall administer the tax imposed by 26
this section on gross receipts in the same manner as the tax levied under G.S. 105-164.4(a)(2). 27
The administrative provisions and powers of the Secretary that apply to the tax levied under 28
G.S. 105-164.4(a)(2) apply to the tax imposed by this section. In addition, the Division may 29
request the Secretary to audit a retailer who elects to pay tax on gross receipts under this section. 30
When the Secretary conducts an audit at the request of the Division, the Division shall reimburse 31
the Secretary for the cost of the audit, as determined by the Secretary. In conducting an audit of 32
a retailer under this section, the Secretary may audit any sales of motor vehicles made by the 33
retailer." 34
SECTION 7.2.(a) G.S. 153A-156 reads as rewritten: 35
"§ 153A-156. Gross receipts tax on short-term leases or rentals. 36
(a) As a substitute for and in replacement of the ad valorem tax, which is excluded by 37
G.S. 105-275(42), a A county may levy a gross receipts tax on the gross receipts from the 38
short-term lease or rental of vehicles at retail to the general public. The tax rate shall not exceed 39
one and one-half percent (1.5%) of the gross receipts from such the short-term leases or rentals. 40
(b) If a county enacts the substitute and replacement a gross receipts tax pursuant to this 41
section, any an entity required to collect the tax shall include a provision in each retail short-term 42
lease or rental agreement noting that the percentage amount enacted by the county of the total 43
lease or rental price, excluding highway use tax, is being charged as a tax on gross receipts. For 44
purposes of this section, the transaction giving rise to the tax shall be deemed to have occurred 45
occurs at the location of the entity from which where the customer takes delivery of the vehicle. 46
The tax shall be collected at the time of lease or rental and placed in a segregated account until 47
remitted to the county. 48
… 49
(e) The following definitions in G.S. 105-187.1 apply in this section:section. 50
(1) Short-term lease or rental. – Defined in G.S. 105-187.1. 51 General Assembly Of North Carolina Session 2025
Senate Bill 595-First Edition Page 17
(2) Vehicle. – Any of the following: 1
a. A motor vehicle of the passenger type, including a passenger van, 2
minivan, or sport utility vehicle. 3
b. A motor vehicle of the cargo type, including cargo van, pickup truck, 4
or truck with a gross vehicle weight of 26,000 pounds or less used 5
predominantly in the transportation of property for other than 6
commercial freight and that does not require the operator to possess a 7
commercial drivers license. 8
c. A trailer or semitrailer with a gross vehicle weight of 6,000 pounds or 9
less. 10
…." 11
SECTION 7.2.(b) G.S. 160A-215.1 reads as rewritten: 12
"§ 160A-215.1. Gross receipts tax on short-term leases or rentals. 13
(a) As a substitute for and in replacement of the ad valorem tax, which is excluded by 14
G.S. 105-275(42), a A city may levy a gross receipts tax on the gross receipts from the short-term 15
lease or rental of vehicles at retail to the general public. The tax rate shall not exceed one and 16
one-half percent (1.5%) of the gross receipts from such the short-term leases or rentals. 17
(b) If a city enacts the substitute and replacement a gross receipts tax pursuant to this 18
section, any an entity required to collect the tax shall include a provision in each retail short-term 19
lease or rental agreement noting that the percentage amount enacted by the city of the total lease 20
or rental price, excluding highway use tax, is being charged as a tax on gross receipts. For 21
purposes of this section, the transaction giving rise to the tax shall be deemed to have occurred 22
occurs at the location of the entity from which where the customer takes delivery of the vehicle. 23
The tax shall be collected at the time of lease or rental and placed in a segregated account until 24
remitted to the city. 25
… 26
(e) The following definitions in G.S. 105-187.1 apply in this section:section. 27
(1) Short-term lease or rental. – Defined in G.S. 105-187.1. 28
(2) Vehicle. – Any of the following: 29
a. A motor vehicle of the passenger type, including a passenger van, 30
minivan, or sport utility vehicle. 31
b. A motor vehicle of the cargo type, including cargo van, pickup truck, 32
or truck with a gross vehicle weight rating of 26,000 pounds or less 33
used predominantly in the transportation of property for other than 34
commercial freight and that does not require the operator to posses a 35
commercial drivers license. 36
c. A trailer or semitrailer with a gross vehicle weight of 6,000 pounds or 37
less. 38
…." 39
SECTION 7.2.(c) G.S. 105-550 reads as rewritten: 40
"§ 105-550. Definitions. 41
The definitions in G.S. 105-164.3 G.S. 105-164.3, G.S. 105-187.1, and the following 42
definitions apply in this Article: 43
(1) Authority. – A regional public transportation authority or a regional 44
transportation authority created pursuant to Article 26 or Article 27 of Chapter 45
160A of the General Statutes. 46
(2) Long-term lease or rental. – Defined in G.S. 105-187.1. 47
(3) Motorcycle. – Defined in G.S. 20-4.01. 48
(4) Repealed by Session Laws 1998-98, s. 33, effective August 14, 1998. 49
(5) Public transportation system. – Any combination of real and personal property 50
established for purposes of public transportation. The systems may include 51 General Assembly Of North Carolina Session 2025
Page 18 Senate Bill 595-First Edition
one or more of the following: structures, improvements, buildings, equipment, 1
vehicle parking or passenger transfer facilities, railroads and railroad 2
rights-of-way, rights-of-way, bus services, shared-ride services, 3
high-occupancy vehicle facilities, car-pool and vanpool programs, voucher 4
programs, telecommunications and information systems, integrated fare 5
systems, bus lanes, and busways. The term does not include, however, streets, 6
roads, or highways except to the extent they are dedicated to public 7
transportation vehicles or to the extent they are necessary for access to vehicle 8
parking or passenger transfer facilities. 9
(6) Short-term lease or rental. – Defined in G.S. 105-187.1. 10
(7) U-drive-it vehicle. – Defined in G.S. 20-4.01." 11
SECTION 7.2.(d) G.S. 105-551 reads as rewritten: 12
"§ 105-551. Tax on gross receipts authorized. 13
(a) Tax. – The board of trustees of an Authority may levy a privilege tax on a retailer 14
who is engaged in the business of leasing or renting U-drive-it vehicles or motorcycles described 15
in this subsection based on the gross receipts derived by the retailer from the short-term lease or 16
rental of these vehicles. The tax rate must be a percentage and may not exceed five percent (5%). 17
A tax levied under this section applies to short-term leases or rentals made by a retailer whose 18
place of business or inventory is located within the territorial jurisdiction of the Authority. This 19
tax is in addition to all other taxes. The retailers subject to this section are: 20
(1) A retailer engaged in the business of leasing or renting U-drive-it vehicles or 21
motorcycles and whose place of business or inventory is located within the 22
territorial jurisdiction of the Authority. 23
(2) A peer-to-peer vehicle sharing provider if the customer takes delivery of the 24
vehicle within the territorial jurisdiction of the Authority. 25
…." 26
SECTION 7.2.(e) G.S. 105-552 reads as rewritten: 27
"§ 105-552. Collection and administration of gross receipts tax. 28
… 29
(b) Collection. – A tax levied by an Authority under this Article shall be collected by the 30
Authority but shall otherwise be administered in the same manner as the optional gross receipts 31
tax levied by under G.S. 105-187.5. Like the optional gross receipts tax, a tax levied under this 32
Article is to be added to the lease or rental price of a U-drive-it vehicle or motorcycle the vehicle 33
and thereby be paid by the person to whom it is leased or rented. 34
A tax levied under this Article applies regardless of whether the a retailer who leases or rents 35
the U-drive-it vehicle or motorcycle has the option of paying the gross receipts tax under 36
G.S. 105-187.5 has elected to pay the optional gross receipts tax on the lease or rental receipts 37
from the vehicle. A tax levied under this Article must be paid to the Authority that levied the tax 38
by the date an optional the gross receipts tax levied under G.S. 105-187.5 is payable or would be 39
payable to the Secretary of Revenue under G.S. 105-187.5 if the retailer who leases or rents the 40
U-drive-it vehicle or motorcycle had elected to pay the optional gross receipts tax. 41
(c) Penalties and Remedies. – The penalties and remedies that apply to local sales and 42
use taxes levied under Subchapter VIII of this Chapter apply to a tax levied under this Article. 43
The board of trustees of an Authority may exercise any power the Secretary of Revenue or a 44
board of county commissioners may exercise in collecting local sales and use taxes." 45
SECTION 7.3.(a) G.S. 20-280.15 reads as rewritten: 46
"§ 20-280.15. Definitions. 47
The following definitions apply in this Article: 48
(1) Airport operator. – As defined in G.S. 20-280.1. 49 General Assembly Of North Carolina Session 2025
Senate Bill 595-First Edition Page 19
(2) Peer-to-peer vehicle sharing. – The authorized use of a shared vehicle by an 1
individual other than the shared vehicle owner through a peer-to-peer vehicle 2
sharing program. 3
(3) Peer-to-peer vehicle sharing program. – A business platform that connects 4
shared registered vehicle owners that have not made an election under 5
G.S. 105-187.5 with drivers to enable the sharing of vehicles for financial 6
consideration. 7
(4) Shared vehicle. – A vehicle that is available for sharing through a peer-to-peer 8
vehicle sharing program. 9
(5) Shared vehicle owner. – The registered owner of a shared vehicle that is made 10
available for sharing through a peer-to-peer vehicle sharing program. 11
(6) Vehicle Peer-to-peer vehicle sharing provider. – The A person or entity that 12
operates, facilitates, or administers the provision of personal vehicle sharing 13
through a peer-to-peer vehicle sharing program." 14
SECTION 7.3.(b) G.S. 20-280.17 reads as rewritten: 15
"§ 20-280.17. Airport operators. 16
An airport operator may (i) charge peer-to-peer vehicle sharing programs providers a 17
reasonable fee for the use of the airport's facility, (ii) require an identifying decal be displayed 18
on all shared vehicles that operate on airport property, (iii) require the purchase and use of 19
equipment or establish other appropriate mechanisms for monitoring and auditing compliance, 20
including having a peer-to-peer vehicle sharing program provider provide data for purposes of 21
monitoring and auditing compliance, and (iv) designate a location where shared vehicles may 22
stage on the airport operator's facility." 23
SECTION 7.4. This Part becomes effective October 1, 2025, and applies to gross 24
receipts derived from rentals or leases billed on or after that date. 25
26
PART VIII. EFFECTIVE DATE 27
SECTION 8. Except as otherwise provided, this act is effective when it becomes 28
law. 29