GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2005
SESSION LAW 2006-95
SENATE BILL 1283
AN ACT to clarify the treatment of deferred tax assets in the computation of the franchise tax capital base and to increase the administrative efficiency of the university of north carolina by exempting it from laws governing consultant services, allowing the board of governors to delegate more authority to the president of the UNIVERSITY of North carolina, and changing its reporting dates.
The General Assembly of North Carolina enacts:
PART I. FRANCHISE TAX BASE CALCULATION
SECTION 1.1. G.S. 105-122(b) reads as rewritten:
"(b) Determination of
Capital Base. - Every such A corporation taxed under this
section shall determine the total amount of its issued and outstanding capital
stock, surplus surplus, and undivided profits; no reservation
or allocation profits. No reservation or allocation from surplus or
undivided profits shall be is allowed other than for except
as provided below:
(1) Definite definite
and accrued legal liabilities, except as herein provided;liabilities.
(2) taxes Taxes
accrued, dividends declared declared, and reserves for
depreciation of tangible assets as permitted for income tax purposes shall
be treated as deductible liabilities. There shall also be treated as a
deductible liability reserves for the entire cost purposes.
(3) When including deferred tax liabilities, a corporation may reduce the amount included in its base by netting against that amount deferred tax assets. The reduction may not decrease deferred tax liabilities below zero (0).
(4) Reserves for the cost of any air-cleaning device or sewage or waste treatment plant, including waste lagoons, and pollution abatement equipment purchased or constructed and installed which reduces the amount of air or water pollution resulting from the emission of air contaminants or the discharge of sewage and industrial wastes or other polluting materials or substances into the outdoor atmosphere or streams, lakes, or rivers, upon condition that the corporation claiming such deductible liability shall furnish to the Secretary a certificate from the Department of Environment and Natural Resources or from a local air pollution control program for air-cleaning devices located in an area where the Environmental Management Commission has certified a local air pollution control program pursuant to G.S. 143-215.112 certifying that the Environmental Management Commission or local air pollution control program has found as a fact that the air-cleaning device, waste treatment plant or pollution abatement equipment purchased or constructed and installed as above described has actually been constructed and installed and that such plant or equipment complies with the requirements of the Environmental Management Commission or local air pollution control program with respect to such devices, plants or equipment, that such device, plant or equipment is being effectively operated in accordance with the terms and conditions set forth in the permit, certificate of approval, or other document of approval issued by the Environmental Management Commission or local air pollution control program and that the primary purpose thereof is to reduce air or water pollution resulting from the emission of air contaminants or the discharge of sewage and waste and not merely incidental to other purposes and functions.
(5) The Reserves
for the cost of purchasing and installing equipment or constructing
facilities for the purpose of recycling or resource recovering of or from solid
waste or for the purpose of reducing the volume of hazardous waste generated
shall be treated as deductible for the purposes of this section upon condition
that the corporation claiming such deductible liability shall furnish to the
Secretary a certificate from the Department of Environment and Natural
Resources certifying that the Department of Environment and Natural Resources
has found as a fact that the equipment or facility has actually been purchased,
installed or constructed, that it is in conformance with all rules and
regulations of the Department of Environment and Natural Resources, and the
recycling or resource recovering is the primary purpose of the facility or
equipment.
(6) The Reserves
for the cost of constructing facilities of any private or public utility
built for the purpose of providing sewer service to residential and outlying
areas shall be treated as deductible for the purposes of this section; the
deductible liability allowed by this section shall apply only with respect to
such pollution abatement plants or equipment constructed or installed on or
after January 1, 1955.
(7) Treasury
stock shall not be considered in computing the capital stock, surplus and
undivided profits as the basis for franchise tax, but shall be excluded
proportionately from said capital stock, surplus and undivided profits as the
case may be upon the basis and to the extent of the cost thereof. The
cost of treasury stock.
(8) In the case of an international banking facility, the capital base shall be reduced by the excess of the amount as of the end of the taxable year of all assets of an international banking facility which are employed outside the United States over liabilities of the international banking facility owed to foreign persons. For purposes of such reduction, foreign persons shall have the same meaning as defined in G.S. 105-130.5(b)(13)d.
Every corporation doing business in this State which is a
parent, subsidiary, or affiliate of another corporation shall add to its
capital stock, surplus surplus, and undivided profits all
indebtedness owed to a parent, subsidiary subsidiary, or
affiliated corporation as a part of its capital used in its business and as a
part of the base for franchise tax under this section. The term
"indebtedness" as used in this paragraph includes all loans, credits,
goods, supplies, or other capital of whatsoever nature furnished by a parent,
subsidiary, or affiliated corporation, other than indebtedness endorsed,
guaranteed, or otherwise supported by one of these corporations. The terms
"parent," "subsidiary," and "affiliate" as used
in this paragraph shall have the meaning specified in G.S. 105-130.6. If
any part of the capital of the creditor corporation is capital borrowed from a
source other than a parent, subsidiary subsidiary, or affiliate,
the debtor corporation, which is required under this paragraph subsection
to include in its tax base the amount of debt by reason of being a parent,
subsidiary, or affiliate of the said creditor corporation, may deduct
from the debt thus included a proportionate part determined on the basis
of the ratio of such the borrowed capital as above specified of
the creditor corporation to the total assets of the said creditor
corporation. If Further, in case the creditor corporation as
above specified is also taxable under the provisions of this section, such
the creditor corporation shall be is allowed to deduct
from the total of its capital, surplus surplus, and undivided
profits the amount of any debt owed to it by a parent, subsidiary or affiliated
corporation to the extent that such the debt has been included in
the tax base of said the parent, subsidiary subsidiary,
or affiliated debtor corporation reporting for taxation under the provisions
of this section.
The following definitions apply in this subsection:
(1) Affiliate. - The same meaning as specified in G.S. 105-130.6.
(2) Indebtedness. - All loans, credits, goods, supplies, or other capital of whatsoever nature furnished by a parent, subsidiary, or affiliated corporation, other than indebtedness endorsed, guaranteed, or otherwise supported by one of these corporations.
(3) Parent. - The same meaning as specified in G.S. 105-130.6.
(4) Subsidiary. - The same meaning as specified in G.S. 105-130.6."
SECTION 1.2. This part becomes effective for taxable years beginning on or after January 1, 2007.
PART II. UNIVERSITY EFFICIENCY MEASURES
SECTION 2.1. G.S. 143-64.24 reads as rewritten:
"§ 143-64.24. Applicability of Article.
This Article shall not apply to the following agencies:
(1) The General
Assembly, special Assembly.
(2) Special study
commissions, the commissions.
(3) The Research
Triangle Institute, or the Institute.
(4) The Institute
of Government, nor shall it apply to attorneys Government.
(5) Attorneys employed
by the North Carolina Department of Justice, or physiciansJustice.
(6) Physicians
or doctors performing contractual services for any State agency. This
Article shall not apply to Independent
(7) Independent Review Organizations selected by the Commissioner of Insurance pursuant to G.S. 58-50-85.
(8) The University of North Carolina. The Board of Governors of the University of North Carolina must adopt policies and procedures governing contracts to obtain the services of a consultant by the constituent institutions of the University of North Carolina."
SECTION 2.2. G.S. 116-11(13) reads as rewritten:
"§ 116-11. Powers and duties generally.
The powers and duties of the Board of Governors shall include the following:
…
(13) The Board may delegate any part of its authority over the affairs of any institution to the board of trustees or, through the President, to the chancellor of the institution in any case where such delegation appears necessary or prudent to enable the institution to function in a proper and expeditious manner. The Board may delegate any part of its authority over the affairs of The University of North Carolina to the President in any case where such delegation appears necessary or prudent to enable The University of North Carolina to function in a proper and expeditious manner. Any delegation of authority may be rescinded by the Board at any time in whole or in part."
SECTION 2.3. G.S. 116-209.35(f) reads as rewritten:
"(f) The Board of
Governors of The University of North Carolina shall report to the Joint
Legislative Education Oversight Committee by March 1 December 1 each
year regarding the Fund and scholarships awarded from the Fund."
SECTION 2.4. G.S. 116-209.36(g) reads as rewritten:
"(g) The State Education
Assistance Authority shall report to the Joint Legislative Education Oversight
Committee by March 1 December 1 each year regarding the Fund and
scholarship loans awarded from the Fund."
SECTION 2.5. G.S. 116-209.38(f) reads as rewritten:
"(f) The Board of
Governors of The University of North Carolina shall report to the Joint Legislative
Education Oversight Committee by March 1 December 1 each year
regarding the Fund and scholarship loans awarded from the Fund."
SECTION 2.6. This part is effective when it becomes law.
PART III. EFFECTIVE DATE
SECTION 3. This act is effective when it becomes law.
In the General Assembly read three times and ratified this the 30th day of June, 2006.
s/ Beverly E. Perdue
President of the Senate
s/ Richard T. Morgan
Speaker Pro Tempore of the House of Representatives
s/ Michael F. Easley
Governor
Approved 8:41 p.m. this 10th day of July, 2006