Well if you live in Mecklenburg County, the bad news is your property taxes are going up. The good news is not by much. The Mecklenburg County Commission approved the increase when they adopted the Fiscal Year 2013 – 2014 budget on Wednesday (6-19-13). The current property tax rate will increase by 2.35% to $0.8157 per $100 of valuation. So, if your home has an assessed value of $200K, you’ll pay around $47 more per year– or a little less than $4 per month. CLICK HERE for more information.
The North Carolina Tax Reform Bill is being discussed in the Senate today (6/18/13). CLICK HERE to get up-to-date information on the status of the bill.
There are four primary plans in play. Two from the Senate and two from the House. Bills from each part of legislature include:
Senate: SB 363, SB 677, SB 394
House: HB 642, HB 961, HB 985, HB 998
While all other bills have yet to move past their respective chambers, House Bill 998, “Tax Simplification and Reduction Act”, passed the house receiving a 75-37 final vote on June 10, 2013. The bill is now moving through the Senate, having passed its 2nd reading 30-17. The Senate is scheduled to discuss the bill today, Tuesday June 18, 2013. Upon passage of the bill in the Senate, the bill is returned to the House for their vote and approval on Senate changes.
House Bill 998 (Fourth Edition) – According to the language in the bill, its main purpose is, “To simplify the North Carolina tax structure and to reduce individual and business tax rates”.
Highlights of the current version of the bill include:
PERSONAL INCOME TAX
Effective for 2014 unless otherwise indicated:
Eliminates the $50,000 business income deduction, effective for the 2013 tax year
Establishes a $15,000 zero bracket for married filing jointly taxpayers ($12,000 for head of household and $7,500 for single and married filing separately)
Establishes a flat 5.40% tax rate on Federal Adjusted Gross Income
Lowers rate to a flat 5.25% tax rate beginning January 1st 2015
Eliminates the NC standard and itemized deductions
Eliminates the personal exemption
Eliminates deduction for severance wages
Eliminates deduction for benefits received under Title II of the Social Security Act
Eliminates deduction for other retirement benefits
Eliminates deduction for contributions to the Parental Savings Trust Fund of the State Education Assistance Authority
Eliminates deduction for educator expenses
Repeals tax credit for child care and certain employment‑related expenses
Repeals tax credit for certain real property donations
Repeals tax credit for the disabled
Repeals tax credit for non-itemizer charitable contributions
Repeals tax credit for partial refund for tax paid on certain federal retirement benefits
Repeals tax credit for education expenses
CORPORATE INCOME TAX
Corporate income tax rate reduced from 6.9% to 6% in 2014, to 4% in 2015, to 2% in 2016, and eliminates the tax in 2017.
Repeals tax credit for certain real property donations
FRANCHISE – Under the proposed bill the franchise tax will be eliminated and replaced with the new privilege tax.
Effective for taxes and fees due in 2015:
Eliminates annual report fees for all business types
Eliminates franchise tax on S-corps, LLCs and other limited liability protected entities
PRIVLIEGE TAX (new tax): For the privilege of doing business for the income year in which the tax is due.
S-corps, LLCs and similar types of unincorporated entities with limited liability protection:
The privilege tax is due on the 15th day of the 4th month after the close of the income year.
Tax is $400 for tax due in 2015, $600 for tax due in 2016, $750 for tax due in 2017 and after.
Reduces the franchise tax rate on C corporations from $1.50/1,000 to $1.20/1,000 for tax due in 2015, to $.90/1,000 for tax due in 2016, and to $.60/1,000 for tax due in 2017.
It increases the minimum franchise tax on C corporations from $35 to $500 for tax due in 2015, to $1,000 for tax due in 2016, and to $2,000 for tax due in 2017.
It eliminates the franchise tax on C corporations for tax otherwise due in 2018.
It imposes privilege tax on C corporations effective for tax due in 2018.
The privilege tax amount for C corporations is $5,000.
Summary schedule of corporate taxes paid in from 2014 to 2018:
TAX PAID IN:
C-Corp Franchise Rate
C-Corp Minimum Fee (2018 priv. tax)
SALES AND USE TAX
Electricity subjected to the combined general sales tax rate, 7%; July 1, 2014
Piped natural gas taxed at the combined general sales tax rate, 7%; July 1, 2014
Preserves the municipal distribution of franchise taxes and piped natural gas taxes; July 1, 2014
Sales tax exemptions within G.S. 105-164.13 repealed on October 1, 2013:
Nutritional supplements sold by chiropractors (13c),
Newspapers (28), and
Vending machines (30) and (50).
Sales tax exemptions within G.S. 105-164.13 repealed on July 1, 2014:
Meals sold to students in dining halls operated by educational institutions (27)
Bread sold at a bakery thrift store (27a)
Back-to-school sales tax holiday (-164.13C)
Energy star sales tax holiday (-164.13D)
Entertainment – Changes as of October 1, 2013:
Repeals the 3% gross receipts tax on live entertainment, October 1, 2013
Repeals the 1% gross receipts tax on movies, October 1, 2013
Imposes a sales tax on admission charges to live entertainment, movies and attractions
Exempts the following events from sales tax as of October 1, 2013:
Events held at elementary and secondary schools,
Nonprofit fund-raising events and Youth (under 20) athletic contests sponsored by a nonprofit.
Sales tax refunds – Eligibility as of July 1, 2014:
Repeal sales tax refund for local governments
Caps the sales tax refund for nonprofit entities as follows:
2014 – State = $7.5m; Local = $2.25m
2015 – State = $5.0 m; Local = $1.5m
2016 – State = $5.0 m; Local = $1.5m
2017 and thereafter – State = $100k; Local = $30k July 1, 2014
Changes the refund time period from 3 years to 1 year.
Repeals the local sales tax on food, 2% repeal November 1, 2014,
Authorizes counties to levy a sales tax on food at the full local rate ranging from 2% to 2.75%.
Eliminates the wholesaler’s discount on cigarettes and other tobacco products effective July 1, 2014.
ESTATE TAX – effectively eliminates the tax as of January 1, 2013.
The June 30 deadline to file a Report of Foreign Bank and Financial Accounts is quickly approaching. Compliance is critical as civil penalties for failure to file are quite expensive. CLICK HERE to learn more or call Sharf Pera & Co., PLLC: 704-372-1167.