On May 4, 2020, North Carolina Gov. Roy Cooper signed two bills into law granting COVID-19 relief. The measures, Senate Bill 704 and House Bill 1043, had passed both houses of the legislature unanimously. The measures make changes to North Carolina tax law and provide a variety of loans to businesses in the state.
The various changes between the bills include:
- A waiver of interest for all individual income tax, corporate income and franchise tax, partnership, trust and estate filing and payments due April 15, 2020, provided the payments are made by July 15, 2020. This waiver of interest also applies to the underpayment of individual and corporate estimated income taxes due between those dates. This waiver of interest does not apply to any other taxes
- An extension of the statute of limitations for income and franchise tax refund claims until July 15, 2020. This extension applies to refund claims that would expire on or after April 15, 2020
- An extension of other time sensitive filings due on or after April 1, 2020 until July 15, 2020. These filings include requests for North Carolina Department of Revenue review, petitions for a contested case hearing at the Office of Administrative Hearings, and petitions for judicial review
- A tax credit for unemployment insurance payments made on or before April 30, 2020
- A grant of discretion to state agencies, including the department, to relax regulatory enforcement, delay or modify collection of interest, fines, fees and late payments. This provision is retroactively effective March 20, 2020 and expires Aug. 1, 2020
- Appropriation of $125,000,000 in funds for Small Business loans. The law provides grants to lenders who then provide loans to qualifying small business. The loans are limited to $50,000 per business. Repayment begins six months after the closing of the loan. Interest rates are 4% during the first six months and 5.5% thereafter
Takeaways
All individuals and businesses subject to tax in North Carolina should be aware of the temporary interest and statute of limitation changes enacted as a result of the COVID-19 pandemic. The extension of the limitations period for refund claims is particularly important as taxpayers look closer at previous return positions in the hope of generating cash flow. The small business loan program could provide badly needed cash infusions for qualifying businesses. Companies should consult with their North Carolina tax advisors for more information about the state’s COVID-19 response.
Other state considerations for the COVID-19 pandemic can be found in RSM’s State tax planning in response to economic distress. For more information on the coronavirus, please see RSM’s Coronavirus Resource Center which includes related and frequently updated developments.
