HB 279 — COVID-19 Related Tax Changes/Unemployment Insurance Technical Correction.

Notwithstanding G.S.

105-241.21(b), interest shall not accrue from April 15, 2021, through May 17, 2021, on an underpayment of tax imposed on an individual income tax return due April 15, 2021.

SECTION 1.2.(b) Refund Request.

– For individual income tax, the statute of limitations for obtaining a refund is extended to May 17, 2021, for refund claims for which the statute of limitations to seek a refund expires on or after April 15, 2021, and before May 17, 2021.

PART II.

UI TECHNICAL CHANGE SECTION 2.1.

The introductory language of Section 3 of S.L.

2021-5 reads as rewritten:

*H279-v-2* General Assembly Of North Carolina Session 2021 "SECTION 3.

96-14(b)105-153.5(b) G.S.reads as rewritten:

96-14.2(b)"(b) readsOther asDeductions. rewritten:" PART III.

EFFECTIVE– DATEIn SECTIONcalculating 3.1.North Carolina taxable income, a taxpayer may deduct from the taxpayer's adjusted gross income any of the following items that are included in the taxpayer's adjusted gross income:

… Page 2 House Bill 279-First Edition General Assembly Of North Carolina Session 2021 (14)(15) Theamount grantedtothetaxpayerduringthetaxableyearundertheExtra Credit grant program.

This subdivision expires for taxable years beginning on or after January 1, 2021.2022." SECTION 3.2.

G.S.

105-153.5(c2) reads as rewritten:

"(c2) Decoupling Adjustments.

– In calculating North Carolina taxable income, a taxpayer must make the following adjustments to the taxpayer's adjusted gross income:

… (17) For taxable years 2019 and 2020, a taxpayer must add an amount equal to the amount by which the taxpayer's interest expense deduction under section 163(j) of the Code exceeds the interest expense deduction that would have been allowed under the Internal Revenue Code as enacted as of January 1, 2020.

An add-back under this subdivision is not required to the extent the amount was required to be added back under another provision of this subsection.

The purpose of this subdivision is to decouple from the modification of limitation on business interest allowed under section 2306 of the CARES Act.

… (21) A taxpayer who made an addition under subdivision (17) of this subsection may deduct twenty percent (20%) of the addition in each of the taxable years 2021 through 2025." SECTION 3.3.

G.S.

105-153.9(a)(2) reads as rewritten:

"(2) Thefraction ofthegrossincome,as modifiedas providedin G.S.

105-134.6A, G.S.

105-153.5, G.S.

105-153.5 and G.S.

105-153.6, that is subject to income tax in another state or country shall be ascertained, and the North Carolina net income tax before credit under this section shall be multiplied bythat fraction.

The credit allowed is either the product thus calculated or the income tax actually paid the other state or country, whichever is smaller." SECTION 3.4.

G.S.

105-163.7(b) reads as rewritten:

"(b) Informational Return to Secretary.

– Every employer shall annually file an informational return with the Secretary that contains the information given on each of the employer's written statements to an employee.

The Secretary may require additional information to be included on the informational return, provided the Secretary has given a minimum of 90 days' notice of the additional information required.

The informational return is due on or before January 31 of the succeeding year and must be filed in an electronic format as prescribed by the Secretary.

If Secretary and is due on or before January 31 of the succeeding year or, if the employer terminates its business or permanently ceases paying wages during before the close of the calendar year, the informational return must be filed within 30 days of the last payment of remuneration.

on or before the last day of the month following the end of the calendar quarter in which the employer terminates its business, but no later than January 31 of the succeeding year.

The informational return required by this subsection is in lieu of the report required by G.S.

105-154." SECTION 3.5.

G.S.

105-163.8 is amended by adding a new subsection to read:

"(c) If a withholding agent fails to file a return and pay the tax due under this Article or files a grossly incorrect or false or fraudulent return, the Secretary must estimate the tax due and assess the withholding agent based on the estimate." SECTION 3.6.

G.S.

105-241.6(b)(5) reads as rewritten:

"(5) Contingent Event.

– The period to request a refund of an overpayment may be extended once as provided in this subdivision:

… b.

Other Event.

– If a taxpayer contends that an event has occurred that prevents the taxpayer from filing an accurate and definite request for House Bill 279-First Edition Page 3 General Assembly Of North Carolina Session 2021 a refund of an overpayment within the period under this section, the period to request a refund of an overpayment is six months after the event concludes.

Prior to the expiration of the statute of limitations under this section, the taxpayer may must submit a written request to the Secretary seeking an extension of the statute of limitations.

The taxpayer must file a written request to the Secretary prior to expiration of the statute of limitations under this section.

The request must establish by clear, convincing proof that the event is beyond the taxpayer's control and prevents the taxpayer from timely filing an accurate and definite request for a refund of an overpayment.

The Secretary's decision on the request is final and is not subject to administrative or judicial review." SECTION 3.7.

G.S.

105-252.1 reads as rewritten:

"§ 105-252.1.

Use of a TTIN.

A TTIN may not be used on any return, statement, or other document required to be filed with or furnished to the Department unless specifically authorized in this Chapter.by the Secretary." PART IV.

CORPORATE INCOME TAX CHANGES SECTION 4.1.(a) G.S.

105-83(d) reads as rewritten:

"(d) This section does not apply to the following:

(1) corporations liable for the tax levied under G.S.

105-102.3 or to savings Banks.

For purposes of this subdivision, the term "bank" has the same meaning as defined in G.S.

105-130.7B(b).

(2) Savings and loan associations." SECTION 4.1.(b) This section is effective when it becomes law and applies retroactively for taxable years beginning on or after July 1, 2016.

SECTION 4.2.(a) G.S.

105-130.5(a)(31) reads as rewritten:

"(a) The following additions to federal taxable income shall be made in determining State net income:

… (31) For taxable years 2019 and 2020, a taxpayer must add an amount equal to the amount by which the taxpayer's interest expense deduction under section 163(j) of the Code exceeds the interest expense deduction that would have been allowed under the Internal Revenue Code as enacted as of January 1, 2020, as calculated on a separate entity basis.

An add-back under this subdivision is not required to the extent the amount was required to be added back under another provision of this subsection.

The purpose of this subdivision is to decouple from the modification of limitation on business interest allowed under section 2306 of the CARES Act." SECTION 4.2.(b) G.S.

105-130.5(b) is amended by adding a new subdivision to read:

"(b) The following deductions from federal taxable income shall be made in determining State net income:

… (33) A taxpayer who made an addition under subdivision (a)(31) of this section may deduct twenty percent (20%) of the addition in each of the taxable years 2021 through 2025." SECTION 4.3.

G.S.

105-130.5A reads as rewritten:

"§ 105-130.5A.

Secretary's authority to adjust net income or require a combined return.

… Page 4 House Bill 279-First Edition General Assembly Of North Carolina Session 2021 (b) Adjust Net Income.

– If upon review of the information provided, the Secretary finds as a fact that the corporation's intercompany transactions lack economic substance or are not at fair market value, the Secretarymayredetermine the State net income of thecorporation properly attributable to its business carried on in the State under this section by (i) adding back, eliminating, or otherwise adjusting intercompany transactions to accurately compute the corporation's State net income properly attributable to its business carried on in the State, or, if such adjustments are not adequate under the circumstances to redetermine State net income, (ii) requiring the corporation to file a return that reflects the net income on a combined basis of all members of its affiliated group with intercompany transactions that are conducting a unitary business.

The Secretary shall consider and be authorized to use any reasonable method proposed by the corporation for redetermining its State net income attributable to its business carried on in the State.

In determining whether the corporation's intercompany transactions lack economic substanceorarenot atfairmarketvalue,theSecretaryshallconsidereachtaxableyearseparately.

(c) Voluntary Redetermination.

– In addition to the authority granted under subsection (b) of this section, if the Secretary has reason to believe that any corporation's State net income properlyattributable to its business carriedon in this Stateis not accuratelyreportedon aseparate return required by this Part because of intercompany transactions, without making a finding that those transactions lack economic substance or are not at fair market value, the Secretary and the corporation may jointly determine and agree to an alternative filing a combined return methodology that accurately reports State net income.

The Subject to the provisions of this section and G.S.

105-130.7A, the Secretary is authorized to allow any reasonable method for redetermining the corporation's State net income attributable to its business carried on in this State.

A combined return is not allowed to achieve tax benefits when the Secretary finds that intercompany transactions do not distort income properly attributable to this State or could otherwise be corrected by this section without a combined return.

(d) Combined Return.

– If the Secretaryfinds as a fact that a combined return is required, the Secretary may, upon written notice to the corporation, require the corporation to submit the combined return, and the corporation shall submit the combined return within 90 days of the date ofthenotice.

The submission bythecorporationof thecombined return required bythe Secretary shall not be deemed to be a return or construed as an agreement by the corporation that an assessment based on the combined return is correct or that additional tax is due bythe Secretary's deadline for submitting the combined return.

The Secretary or the corporation may propose a combination of fewer than all members of the unitary group, group that have intercompany transactions, and the Secretary shall be authorized to consider whether such proposed combination is a reasonable means of redetermining State net income;

provided, however, the Secretary shall not require a combination of fewer than all members of the unitary group that have intercompany transactions without the consent of the corporation.

… (l) Penalties.

– If a combined return required by this section is not timely submitted by a corporation, then the corporation is subject to the penalties provided in G.S.

105-236(a)(3).

Penalties shall not be imposed on an assessment under this section except as expresslyauthorized in this section and in G.S.

105-236(a)(5)f.G.S.

105-236(a)(5).

…." SECTION 4.4.(a) G.S.

105-130.7B(b)(4) reads as rewritten:

"(4) Qualified interest expense.

– The amount of net interest expense paid or accrued to a related member in a taxable year with the amount limited to the taxpayer's proportionate share of interest paid or accrued to a person who is not a related member during the same taxable year.

This limitation does not apply to interest paid or accrued to a related member if one or more of the following applies:

… House Bill 279-First Edition Page 5 General Assembly Of North Carolina Session 2021 e.

The proportionate amount of interest paid or accrued to a related member that has already been disallowed by the application of section 163(j) of the Code." SECTION 4.4.(b) This section is effective when it becomes law and applies retroactively for taxable years beginning on or after January 1, 2018.

SECTION 4.5.

G.S.

105-130.8A(c) reads as rewritten:

"(c) Mergers and Acquisitions.

– The Secretary must apply the standards contained in regulations adopted under sections 381 and 382 of the Code in determining the extent to which alosssurvivesamergeroran acquisition.FormergersandacquisitionsoccurringpriortoJanuary 1, 2015, the Secretarymust applythe standards under G.S.

105-130.8 for taxable years beginning before January 1, 2015, and the standards of this section for taxable years beginning on or after January 1, 2015." SECTION 4.6.

G.S.

105-251(a) reads as rewritten:

"(a) Scope of Information.

– A taxpayer must give information to the Secretary when the Secretary requests the information.

The Secretary may request a taxpayer to provide only the following kinds of information on a return, a report, or otherwise:

(1) Information that identifies the taxpayer.

(2) Information needed to determine the liability of the taxpayer for a tax.

(3) Information needed to determine whether an item is subject to a tax.

(4) Information that enables the Secretary to collect a tax.

(5) Financial or tax documentation required to determine the appropriate adjustment under G.S.

105-130.5A.

If such information is not timelyprovided as required under G.S.

105-130.5A(a), the Secretary may propose any adjustment allowable under Part 1 of Article 4 of this Chapter.

(5)(6) Other information the law requires a taxpayer to provide or the Secretary needs to perform a duty a law requires the Secretary to perform." PART V.

SALES AND USE TAX CHANGES SECTION 5.1.(a) G.S.

105-164.13E(a)(7) reads as rewritten:

"(7) Any of the following animals:

a.

Baby chicks and poults.Fowl.

b.

Livestock." SECTION 5.1.(b) This section is effective retroactively to July 1, 2020, and applies to purchases made on or after that date.

SECTION 5.2.

G.S.

105-259(b) reads as rewritten:

"(b) Disclosure Prohibited.

– An officer, an employee, or an agent of the State who has access to tax information in the course of service to or employment by the State may not disclose the information to any other person except as provided in this subsection.

Standards used or to be used for the selection of returns for examination and data used or to be used for determining the standards may not be disclosed for any purpose.

All other tax information may be disclosed only if the disclosure is made for one of the following purposes:

… (5b) To furnish to the finance officials of a city a list of the utility taxable gross receipts and piped natural gas tax revenues attributable to the city under G.S.

105-116.1 and G.S.

105-187.44 or under former G.S.

105-116 and G.S.

105-120.

…." PART VI.

EXCISE TAX HEARINGS CHANGES SECTION 6.1.

G.S.

105-113.4B reads as rewritten:

"§ 105-113.4B.

Cancellation or revocation of license.

Page 6 House Bill 279-First Edition General Assembly Of North Carolina Session 2021 … (a1) Revocation.

Summary Revocation and Procedure.

– The Secretary may summarily revoke a license issued under this Article when the Secretary finds determines that the licensee is incurring liability for the tax imposed under this Article after failing to pay a tax when due under this Article.

The Secretary must send a revoked licensee a notice of the revocation and a notice of hearing.

The hearing must be held within 10 days after the date of the notice of revocation unless the revoked licensee requests, before the day of the hearing, that the hearing be rescheduled.

Upon receipt of a timely request, the Secretary must reschedule the hearing and provide at least 10 days' notice of the rescheduled hearing.

The revocation is not stayed pending the hearing decision.

A notice of hearing under this subsection must be in writing and indicate the date, time, and place of the hearing.

A hearing must be conducted as prescribed by the Secretary.

The Secretary must issue a final decision and notify the revoked licensee in writing within 10 days of the hearing.

The final decision must state the basis for the decision.

The statement of the basis of a revocation does not limit the Department from changing the basis.

(a2) In addition, the Non-Summary Revocation.

– The Secretary may revoke the license of a licensee that commits one or more of the following acts after holding a hearing on whether the license should be revoked:affording the licensee an opportunity to have a hearing as provided in subsections (a3) through (b2) of this section:

(1) Fails to obtain a license in a timely manner or for all places of business as required by this Article.

(2) Willfully fails to file a return required by this Article.

(3) Willfully fails to pay a tax when due under this Article.

(4) Makes a false statement in an application or return required under this Article.

(5) Fails to keep records as required by this Article.

(6) Refuses to allow the Secretary or a representative of the Secretary to examine the person's books, accounts, and records concerning tobacco product.

(7) Fails to disclose the correct amount of tobacco product taxable in this State.

(8) Fails to file a replacement bond or an additional bond if required by the Secretary under this Article.

(9) Violates G.S.

14-401.18.

(10) Fails to meet or maintain the requirements set out in G.S.

105-113.4A(b).

(a3) Notice of Proposed Revocation.

– The Secretarymust provide a licensee with a notice of proposed revocation that includes all of the following information:

(1) The basis for the proposed revocation.

The statement of the basis for the proposed revocation does not limit the Department from changing the basis.

(2) The effective date of the revocation, which must be one of the following:

a.

Forty-five days from the date of the notice of proposed revocation if the licensee does not file a timely request for hearing.

b.

The tenth day after the date an adverse final decision is issued if the adverse final decision is mailed.

c.

The date an adverse final decision is delivered if the adverse final decision is delivered in person.

(3) The circumstances, if any, under which the Secretary will not revoke the license.

(4) An explanation of how the licensee may contest the proposed revocation.

(a4) Request for Hearing and Decision.

– A licensee may contest a proposed revocation by filing a written hearing request within 45 days of the date the notice of proposed revocation was mailed, if the notice was delivered by mail, or delivered to the licensee, if the notice was delivered in person.

A hearing request is considered filed as provided under G.S.

105-241.11(b).

If the licensee does not file a timely hearing request, the license is revoked as provided in the House Bill 279-First Edition Page 7 General Assembly Of North Carolina Session 2021 noticeofproposed revocation, and therevocationis final andnot subject to furtheradministrative or judicial review.

(b) Hearing Procedure.

– The Secretary must send a person whose license is summarily revoked a notice of the revocation and must give the person an opportunity to have a hearing on the revocation within 10 days after the revocation.

The Secretary must give a person whose license may be revoked after a hearing at least 10 days' written notice licensee who filed a timely hearing request in accordance with subsection (a4) of this section at least 20 days' written notice of the date, time, and place of the hearing.

A notice of a summarylicense revocation and a notice of hearing must be sent by certified mail to the last known address of the licensee.

If the person whose license may be revoked fails to attend the noticed hearing, the license revocation is effective 15 days after the noticed hearing.hearing, unless the Department and the licensee agree to a shorter period.

A hearing must be conducted as prescribed by the Secretary.

The Secretary must issue a final decision and notify the licensee in writing within 60 days of the hearing.

The Department and the licensee may extend this time by mutual agreement.

Failure to issue a final decision within the required time does not affect the validity of the decision.

The final decision must state the basis for the decision and, if the final decision includes revocation of the license, the effective date of the revocation in accordance with subdivision (2) of subsection (a3) of this section.

The statement of the basis of a revocation does not limit the Department from changing the basis.

(b1) Delivery of Notice.

– The Secretary must deliver a notice in accordance with G.S.

105-241.20(b).

In lieu of providing notice by United States mail, the Secretary may give notice by email or other electronic means if the licensee has consented to receiving notices via electronic means.

(b2) Return of Credentials.

– If a license is revoked, the revoked licensee must return to the Secretary, within 10 days of the issuance of the final decision, all licenses previously issued.

If a license is unable to be returned, the revoked licensee must include a written statement of the reasons, satisfactory to the Secretary, why the license cannot be returned.

(c) Release of Bond.

– When the Secretary cancels or revokes a license and the licensee has paid all taxes and penalties due under this Article, the Secretary must take one of the following actions concerning a bond or an irrevocable letter of credit filed by the licensee:

(1) Return an irrevocable letter of credit to the licensee.

(2) Return a bond to the licensee or notify the person liable on the bond and the licensee that the person is released from liability on the bond." SECTION 6.2.

Article 36B of Chapter 105 of the General Statutes is amended by adding the following new section:

"§ 105-449.47B.

Revocation of license.

(a) Revocation.

– The Secretary may revoke a license or a decal when a motor carrier fails to comply with this Article or Article 36C or 36D of this Subchapter after affording the motor carrier an opportunity to have a hearing as provided in this section.

(b) Notice of Proposed Revocation.

– The Secretarymust provide a licensee with a notice of proposed revocation that includes all of the following information:

(1) The basis for the proposed revocation.

The statement of the basis for the proposed revocation does not limit the Department from changing the basis.

(2) The effective date of the revocation, which must be one of the following:

a.

Forty-five days from the date of the notice of proposed revocation if the licensee does not file a timely request for hearing.

b.

The tenth day after the date an adverse final decision is issued if the adverse final decision is mailed.

c.

The date an adverse final decision is delivered if the adverse final decision is delivered in person.

Page 8 House Bill 279-First Edition General Assembly Of North Carolina Session 2021 (3) The circumstances, if any, under which the Secretary will not revoke the license.

(4) An explanation of how the licensee may contest the proposed revocation.

(c) Request for Hearing and Decision.

– A licensee may contest a proposed revocation by filing a written hearing request within 45 days of the date the notice of proposed revocation was mailed, if the notice was delivered by mail, or delivered to the licensee, if the notice was delivered in person.

A hearing request is considered filed as provided under G.S.

105-241.11(b).

If the licensee does not file a timely hearing request, the license is revoked as provided in the noticeofproposed revocation, and therevocationis final andnot subject to furtheradministrative or judicial review.

(d) Hearing Procedure.

– The Secretary must give a licensee who filed a timely hearing request in accordance with subsection (c) of this section at least 20 days' written notice of the date, time, and place of the hearing, unless the Department and the licensee agree to a shorter period.

A hearing must be conducted as prescribed by the Secretary.

The Secretary must issue a final decision and notify the licensee in writing within 60 days of the hearing.

The Department and the licensee may extend this time limit bymutual agreement.

Failure to issue a final decision within the required time does not affect the validity of the decision.

The final decision must state the basis for the decision and, if the final decision includes revocation of a license or a decal, the effective date of the revocation in accordance with subdivision (b)(2) of this section.

The statement of the basis of the revocation does not limit the Department from changing the basis.

(e) Delivery of Notice.

– The Secretary must deliver a notice in accordance with G.S.

105-241.20(b).

In lieu of providing notice by United States mail, the Secretary may give notice by email or other electronic means if the licensee has consented to receiving notices via electronic means.

(f) Return of Credentials.

– If the license is revoked, the former licensee shall return to the Secretary, within 10 days of the issuance of the final decision, all licenses and decals previously issued.

If the licenses or decals are not returned, the credentials are subject to seizure or removal from the motor vehicle or defacement.

If a license or decal is unable to be returned, the licensee must include a written statement of the reasons, satisfactory to the Secretary, why the license or decal cannot be returned." SECTION 6.3.

G.S.

105-449.76 reads as rewritten:

"§ 105-449.76.

Cancellation or revocation of license.

(a) Cancellation.

– The Secretary may cancel a license issued under this Article upon the written request of the licensee.

The licensee's request must include a proposed effective date of cancellation and must return the license to the Secretaryon or before the proposed effective date.

If the licensee's request does not include a proposed effective date of cancellation, the license is cancelled 15 days after the Department receives the written request.

If the license is unable to be returned, the licensee must include a written statement of the reasons, satisfactory to the Secretary, why the license cannot be returned.

The Secretary shall notify the licensee when the license is cancelled.

(a1) Revocation.

Summary Revocation and Procedure.

– The Secretary may summarily revoke a license issued under this Article when the Secretary finds determines that the licensee is incurring liability for the tax imposed under this Article after failing to pay a tax when due under this Article.

The Secretary must send a revoked licensee a notice of the revocation and a notice of hearing.

The hearing must be held within 10 days after the date of the notice of revocation unless the revoked licensee requests, before the day of the hearing, that the hearing be rescheduled.

Upon receipt of a timely request, the Secretary must reschedule the hearing and provide at least 10 days' notice of the rescheduled hearing.

The revocation is not stayed pending the hearing decision.

A notice of hearing under this subsection must be in writing and indicate the date, time, and place of the hearing.

A hearing must be conducted as prescribed by the Secretary.

The Secretary must issue a final decision and notify the revoked licensee in writing House Bill 279-First Edition Page 9 General Assembly Of North Carolina Session 2021 within 10 days of the hearing.

The final decision must state the basis for the decision.

The statement of the basis of a revocation does not limit the Department from changing the basis.

(a2) In addition, the Non-Summary Revocation.

– The Secretary may revoke the license of a licensee that commits one or more of the acts listed in G.S.

105-449.120 after holding a hearing on whether the license should be revoked.affording the licensee an opportunity to have a hearing as provided in subsections (a3) through (b2) of this section.

(a3) Notice of Proposed Revocation.

– The Secretarymust provide a licensee with a notice of proposed revocation that includes all of the following information:

(1) The basis for the proposed revocation.

The statement of the basis for the proposed revocation does not limit the Department from changing the basis.

(2) The effective date of the revocation, which must be one of the following:

a.

Forty-five days from the date of the notice of proposed revocation if the licensee does not file a timely request for hearing.

b.

The tenth day after the date an adverse final decision is issued if the adverse final decision is mailed.

c.

The date an adverse final decision is delivered if the adverse final decision is delivered in person.

(3) The circumstances, if any, under which the Secretary will not revoke the license.

(4) An explanation of how the licensee may contest the proposed revocation.

(a4) Request for Hearing and Decision.

– A licensee may contest a proposed revocation by filing a written hearing request within 45 days of the date the notice of proposed revocation was mailed, if the notice was delivered by mail, or delivered to the licensee, if the notice was delivered in person.

A hearing request is considered filed as provided under G.S.

105-241.11(b).

If the licensee does not file a timely hearing request, the license is revoked as provided in the noticeofproposed revocation, and therevocationis final and not subject to furtheradministrative or judicial review.

(b) Hearing Procedure.

– The Secretary must send a person whose license is summarily revoked a notice of the revocation and must give the person an opportunity to have a hearing on the revocation within 10 days after the revocation.

The Secretary must give a person whose license may be revoked after a hearing at least 10 give a licensee who filed a timely hearing request in accordance with subsection (a4) of this section at least 20 days' written notice of the date, time, and place of the hearing.

A notice of a summary license revocation and a notice of hearing must be sent by certified mail to the last known address of the licensee.

If the person whose license may be revoked fails to attend the noticed hearing, the license revocation is effective 15 days after the noticed hearing.hearing, unless the Department and the licensee agree to a shorter period.

A hearing must be conducted as prescribed by the Secretary.

The Secretary must issue a final decision and notify the licensee in writing within 60 days of the hearing.

The Department and the licensee may extend this time by mutual agreement.

Failure to issue a final decision within the required time does not affect the validity of the decision.

The final decision must state the basis for the decision and, if the final decision includes revocation of the license, the effective date of the revocation in accordance with subdivision (2) of subsection (a3) of this section.

The statement of the basis of a revocation does not limit the Department from changing the basis.

(b1) Delivery of Notice.

– The Secretary must deliver a notice in accordance with G.S.

105-241.20(b).

In lieu of providing notice by United States mail, the Secretary may give notice by email or other electronic means if the licensee has consented to receiving notices via electronic means.

(b2) Return of Credentials.

– If the license is revoked, the former licensee shall return to the Secretary, within 10 days of the issuance of the final decision, all licenses and decals previouslyissued.

Ifalicense ordecal is unableto bereturned, thelicensee must includeawritten Page 10 House Bill 279-First Edition General Assembly Of North Carolina Session 2021 statement of the reasons, satisfactory to the Secretary, why the license or decal cannot be returned.

(c) Release of Bond.

– When the Secretary cancels or revokes a license and the licensee has paid all taxes and penalties due under this Article, the Secretary must take one of the following actions concerning a bond or an irrevocable letter of credit filed by the licensee:

(1) Return an irrevocable letter of credit to the licensee.

(2) Return a bond to the licensee or notify the person liable on the bond and the licensee that the person is released from liability on the bond." SECTION 6.4.

G.S.

119-19 reads as rewritten:

"§ 119-19.

Authority of Secretary to cancel or revoke a license.

(a) Reasons.

Cancellation.

– The Secretaryof Revenue maycancel a license issued under this Article upon the written request of the licensee.

The licensee's request must include a proposed effective date of the cancellation and must return the license to the Secretary on or before the proposed effective date.

If the licensee's request does not include a proposed effective date of cancellation, the license is cancelled 15 days after the Department receives the written request.

If the license is unable to be returned, the licensee must include a written statement of the reason, satisfactory to the Secretary, why the license cannot be returned.

The Secretary must notify the licensee when the license is cancelled.

(a1) Summary Revocation and Procedure.

– The Secretary may summarily revoke a license issued under this Article or under Article 36C or 36D of Chapter 105 of the General Statutes this Chapter when the Secretary finds determines that the licensee is incurring liability for the tax imposed by this Article after failing to pay a tax when due under this Article.

The Secretary must send a revoked licensee a notice of the revocation and a notice of hearing.

The hearing must be held within 10 days after the date of the notice of revocation unless the revoked licensee requests, before the day of the hearing, that the hearing be rescheduled.

Upon receipt of a timely request, the Secretary must reschedule the hearing and provide at least 10 days' notice of the rescheduled hearing.

The revocation is not stayed pending the hearing decision.

A notice of hearing under this subsection must be in writing and indicate the date, time, and place of the hearing.

A hearing must be conducted as prescribed by the Secretary.

The Secretary must issue a final decision and notifythe revoked licensee in writing within 10 days of the hearing.

The final decision must state the basis for the decision.

The statement of the basis of a revocation does not limit the Department from changing the basis.

(a2) Non-SummaryRevocation.

– The Secretarymayrevoke the license of a licensee who files a false report under this Article or fails to file a report required under this Article after holding a hearing on whether the license should be revoked.Article after affording the licensee an opportunity to have a hearing as provided in subsections (a3) through (b2) of this section.

(a3) Notice of Proposed Revocation.

– The Secretarymust provide a licensee with a notice of proposed revocation that includes all of the following information:

(1) The basis for the proposed revocation.

The statement of the basis for the proposed revocation does not limit the Department from changing the basis.

(2) The effective date of the revocation, which must be one of the following:

a.

Forty-five days from the date of the notice of proposed revocation if the licensee does not file a timely request for hearing.

b.

The tenth day after the date an adverse final decision is issued if the adverse final decision is mailed.

c.

The date an adverse final decision is delivered if the adverse final decision is delivered in person.

(3) The circumstances, if any, under which the Secretary will not revoke the license.

(4) An explanation of how the licensee may contest the proposed revocation.

House Bill 279-First Edition Page 11 General Assembly Of North Carolina Session 2021 (a4) Request for Hearing and Decision.

– A licensee may contest a proposed revocation by filing a written hearing request within 45 days of the date the notice of proposed revocation was mailed, if the notice was delivered by mail, or delivered to the licensee, if the notice was delivered in person.

A hearing request is considered filed as provided under G.S.

105-241.11(b).

If the licensee does not file a timely hearing request, the license is revoked as provided in the noticeofproposed revocation, and therevocationis final andnot subject to furtheradministrative or judicial review.

(b) Hearing Procedure.

– The Secretary must send a person whose license is summarily revoked a notice of the revocation and must give the person an opportunity to have a hearing on the revocation within 10 days after the revocation.

The Secretary must give a person whose license may be revoked after a hearing give a licensee who filed a timely hearing request in accordance with subsection (a4) of this section at least 10 20 days' written notice of the date, time, and place of the hearing.

A notice of a summary license revocation and a notice of hearing must be sent by certified mail to the last known address of the licensee.hearing, unless the Department and the licensee agree to a shorter period.

A hearing must be conducted as prescribed by the Secretary.

The Secretary must issue a final decision and notify the licensee in writing within 60 days of the hearing.

The Department and the licensee may extend this time by mutual agreement.

Failure to issue a final decision within the required time does not affect the validity of the decision.

The final decision must state the basis for the decision and, if the final decision includes revocation of the license, the effective date of the revocation in accordance with subdivision (2) of subsection (a3) of this section.

The statement of the basis of a revocation does not limit the Department from changing the basis.

(b1) Delivery of Notice.

– The Secretary must deliver a notice in accordance with G.S.

105-241.20(b).

In lieu of providing notice by United States mail, the Secretary may give notice by email or other electronic means if the licensee has consented to receiving notices via electronic means.

(b2) Return of Credentials.

– If the license is revoked, the former licensee shall return to the Secretary, within 10 days of the issuance of the final decision, all licenses previously issued.

If a license is unable to be returned, the licensee must include a written statement of the reasons, satisfactory to the Secretary, why the license cannot be returned.

(c) Release of Bond.

– When the Secretary cancels or revokes a license and the licensee has paid all taxes and penalties due under this Article, the Secretary must either return to the licensee the bond filed by the licensee or notify the person liable on the bond and the licensee that the person is released from liability on the bond." SECTION6.5.

This Partbecomes effectiveJanuary1,2022, and applies to summary revocations and non-summary revocations initiated by the Department on or after that date.

PART VII.

OTHER EXCISE TAX CHANGES SECTION 7.1.

G.S.

105-113.8 is recodified as G.S.

105-113.4H.

SECTION 7.2.(a) G.S.

105-113.11 is recodified as G.S.

105-113.4I.

SECTION 7.2.(b) G.S.

105-113.4I, as recodified by subsection (a) of this section, reads as rewritten:

"§ 105-113.4I.

Licenses required.

After the effective date of this Article, no A person shall may not engage in business as a distributordistributor,wholesaledealer,orretaildealerinthisState,without havingfirstobtained from the Secretary the appropriate license for that purpose as prescribed herein.

Any in this Article.

A license required by this Article shall be is in addition to any and all other licenses which that may be required by law." SECTION 7.3.(a) G.S.

105-113.29 is recodified as G.S.

105-113.4J.

SECTION 7.3.(b) G.S.

105-113.4J, as recodified by subsection (a) of this section, reads as rewritten:

Page 12 House Bill 279-First Edition General Assembly Of North Carolina Session 2021 "§ 105-113.4J.

Unlicensed place of business.

It is unlawful for a person to maintain a place of business within this State required by this Article to be licensed to engage in the business of selling, offering for sale, or possessing with the intent to sell cigarettes or other tobacco products without first obtaining the licenses.all licenses required by this Article." SECTION 7.4.

G.S.

105-113.33 is recodified as G.S.

105-113.4K.

SECTION 7.5.

G.S.

105-113.18(2) reads as rewritten:

"(2) Use Tax Report.

– Every other A person who is not a licensed distributor and has acquired non-tax-paid cigarettes for sale, use, or consumption consumption, subject to the tax imposed by this Part shall, must, within 96 hours after receipt of the cigarettes, file a report in the form prescribed by the Secretary showing the amount of cigarettes so received and any other information required by the Secretary.

The report shall must be accompanied by payment of the full amount of the tax." SECTION 7.6.

G.S.

105-113.35(d) reads as rewritten:

"(d) Manufacturer's Option.

– A manufacturer who is not a retail dealer and who ships tobacco products other than cigarettes to either a wholesale dealer or retail dealer licensed under this Part may apply to the Secretary to be relieved of paying the tax imposed by this section on the tobacco products.

A manufacturer who is not a retail dealer and who ships vapor products to either a wholesale dealer or retail dealer licensed under this Part may apply to the Secretary to be relieved of paying the tax imposed by this section on the vapor products shipped to either a wholesale dealer or retail dealer.

Once granted permission, a manufacturer may choose not to pay the tax until otherwise notified by the Secretary but is not relieved from filing a report as requiredbythisPart.Toberelievedofpaymentofthetaximposedbythissection,amanufacturer must comply with the requirements set by the Secretary.

Permission granted under this subsection to a manufacturer to be relieved of paying the tax imposed by this section applies to an integrated wholesale dealer with whom the manufacturer is an affiliate.

A manufacturer must notify the Secretary of any integrated wholesale dealer with whom it is an affiliate when the manufacturer applies to the Secretary for permission to be relieved of paying the tax and when an integrated wholesale dealer becomes an affiliate of the manufacturer after the Secretary has given the manufacturer permission to be relieved of paying the tax.

If a person is both a manufacturer of cigarettes and a wholesale dealer of tobacco products other than cigarettes and the person is granted permission under G.S.

105-113.10 to be relieved of paying the cigarette excise tax, the permission applies to the tax imposed by this section on tobacco products otherthancigarettes.

Acigarette manufacturerwhobecomes awholesaledealer after receiving permission to be relieved of the cigarette excise tax must notify the Secretary of the permission received under G.S.

105-113.10 when applying for a license as a wholesale dealer." SECTION 7.7.

G.S.

105-113.37 reads as rewritten:

"§ 105-113.37.

Payment of tax.

(a) Monthly Report.

– Taxes levied by this Article Part are payable by a licensed wholesale dealer or licensed retail dealer when a report is required to be filed.

A report is due on a monthly basis.

A monthly report covers tobacco products products, other than cigarettes, sold, shipped, delivered, or otherwise disposed of in this State occurring in a calendar month and is due within 20 days after the end of the month covered by the report.

A report shall must be filed on a form provided by the Secretary and shall must contain the information required by the Secretary.

(a1) Use Tax Report.

– A person who is not a licensed wholesale dealer or licensed retail dealer and has acquired non-tax-paid tobacco products, other than cigarettes, for sale, use, or consumption, subject to the tax imposed by this Part must, within 96 hours after receipt of the House Bill 279-First Edition Page 13 General Assembly Of North Carolina Session 2021 tobacco products, file a report in the form prescribed by the Secretary showing the amount of tobacco products received and any other information required by the Secretary.

The report must be accompanied by payment of the full amount of the tax.

…." SECTION 7.8.

G.S.

105-113.83 reads as rewritten:

"§ 105-113.83.

Payment of excise taxes.

… (b) Malt Beverage and Wine.

– The excise taxes onmalt beverages and wine levied under G.S.

105-113.80(a) and (b), respectively, are payable to the Secretary by the resident wholesaler or importer who first handles the beverages in this State.

The excise taxes levied under G.S.

105-113.80(b) on wine shipped directly to consumers in this State pursuant to G.S.

18B-1001.1 must be paid by the wine shipper permittee.

The taxes on malt beverages and wine are payable only once on the same beverages.

Unless otherwise provided, the tax is due on or before the 15th day of the month following the month in which the beverage is first sold or otherwise disposed of in this State by the wholesaler or importer.

When excise taxes are paid on wine or malt beverages, the wholesaler or importer must submit to the Secretary verified reports on forms provided by the Secretary detailing sales records for the month for which the taxes are paid.

The report must indicate the amount of excise tax due, contain the information required by the Secretary, and indicate separately any transactions to which the excise tax does not apply.

A wine shipper permittee shall submit verified reports once a year on forms provided by the Secretary detailing sales records for the year the taxes are paid.

The verified report is due on or before the fifteenth day of the first month of the following calendar year.

(b1) Brewery and Winery Option.

– A brewery or winery may be relieved of paying the tax levied under G.S.

105-113.80(a) and (b) if all of the following apply:

(1) Thebreweryorwineryholdsapermitissuedunder G.S.