S523 - Rev. Laws Clarifying & Administrative Changes. (SL 2019-169)

Overview: S.L. 2019-169 makes technical, clarifying, and administrative changes to the State's Revenue Laws, most of which were recommended by the Department of Revenue, including:

With respect to sales tax,

• Broadens the scope of the sales tax on digital property by eliminating the requirement that an item have a taxable, tangible corollary in order to be taxable.
• Clarifies that counties must wait at least one year from the date of the last preceding election before holding another special election on the issue of levying the quarter-cent local option sales tax.
• Clarifies the taxation of repair, maintenance, and installation services provided by property managers pursuant to a property management contract.
• Creates a new category of limited service car washes and exempts them from sales tax.
• Exempts the sales of equipment, including attachments and repair parts, used in cutting, shaping, polishing and finishing slabs of natural and engineered stone sold to a company primarily engaged in the business of made-to-order countertops, walls, or tubs.
• Exempts certain incontinence supplies when those supplies are paid for by the State’s Medicaid program.

With respect to the tobacco excise tax,

• Requires tobacco product licensees to renew their excise tax license every three years at no cost. Currently, these licenses are not required to be renewed after the initial issuance.
• Regulates the Internet sale of tobacco products, except for cigars. Many of the requirements are already required under federal law with respect to cigarettes and smokeless tobacco products.

With respect to collection and other administrative matters,

• Imposes the collection assistance fee after 60 days. Currently, the fee is imposed after 90 days.
• Makes three groups of informational returns subject to penalties for failure to file and failure to file in the correct format: Article 2A Tobacco Products Tax; Article 2C Alcoholic Beverage License and Excise Taxes; and Article 4 Income Tax (includes informational returns from payers and partnerships).
• Broadens the innocent spouse relief provision to mirror the federal law and provide relief for both underpayments and understatements of tax.
• Restores the venue for criminal tax law violations to the office of the Secretary in Raleigh, which was the law prior to December 1, 2018.

S.L. 2019-169 became effective July 26, 2019; however, many sections have separate effective dates as detailed in the bill analysis.