GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2011

H                                                                                                                                                   2

HOUSE BILL 751

Committee Substitute Favorable 6/14/11

Short Title:        Expand Excise Tax on Mill Machinery.	(Public)
Sponsors:
Referred to:

April 7, 2011

A BILL TO BE ENTITLED

AN ACT to expand the application of the one percent, eighty dollar excise tax on certain machinery and equipment to specialized equipment used at a port facility and to machinery used at a large manufacturing and distribution facility.

The General Assembly of North Carolina enacts:

SECTION 1.  G.S. 105-187.51B reads as rewritten:

"§ 105-187.51B.  Tax imposed on certain recyclers, research and development companies, and industrial machinery refurbishing companies.companies, and companies located at ports facilities.

(a)        Tax. - A privilege tax is imposed on the following:

(1)        A major recycling facility that purchases any of the following tangible personal property for use in connection with the facility:

a.         Cranes, structural steel crane support systems, and foundations related to the cranes and support systems.

b.         Port and dock facilities.

c.         Rail equipment.

d.         Material handling equipment.

(2)        A research and development company in the physical, engineering, and life sciences that is included in industry 54171 of NAICS and that purchases equipment or an attachment or repair part for equipment that meets all of the following requirements:

a.         Is capitalized by the company for tax purposes under the Code.

b.         Is used by the company in the research and development of tangible personal property.

c.         Would be considered mill machinery or mill machinery parts or accessories under G.S. 105-187.51 if it were purchased by a manufacturing industry or plant and used in the research and development of tangible personal property manufactured by the industry or plant.

(3)        A software publishing company that is included in the industry group 5112 of NAICS and that purchases equipment or an attachment or repair part for equipment that meets all of the following requirements:

a.         Is capitalized by the company for tax purposes under the Code.

b.         Is used by the company in the research and development of tangible personal property.

c.         Would be considered mill machinery under G.S. 105-187.51 if it were purchased by a manufacturing industry or plant and used in the research and development of tangible personal property manufactured by the industry or plant.

(4)        An industrial machinery refurbishing company that is included in industry group 811310 of NAICS and that purchases equipment or an attachment or repair part for equipment that meets all of the following requirements:

a.         Is capitalized by the company for tax purposes under the Code.

b.         Is used by the company in repairing or refurbishing tangible personal property.

c.         Would be considered mill machinery under G.S. 105-187.51 if it were purchased by a manufacturing industry or plant and used by the industry or plant to manufacture tangible personal property.

(5) A company located at a ports facility for waterborne commerce that purchases specialized equipment to be used at the facility to unload or process bulk cargo to make it suitable for delivery to and use by manufacturing facilities.

(b)        Rate. - The tax is one percent (1%) of the sales price of the equipment or other tangible personal property. The maximum tax is eighty dollars ($80.00) per article."

SECTION 2.  Article 5F of Chapter 105 of the General Statutes is amended by adding a new section to read:

"§ 105-187.51D. Tax imposed on machinery at large manufacturing and distribution facility.

(a) Definition. - For the purposes of this section, a 'large manufacturing and distribution facility' is a facility used primarily for manufacturing or assembling products and distributing finished products for which the Secretary of Commerce makes a certification that an investment of private funds of at least one hundred twenty-five million dollars ($125,000,000) has been or will be made in real and tangible personal property for the facility within five years after the date on which the first property investment is made and that the facility will achieve an employment level of at least 1,130 within two years after the date the facility is placed into service and maintain that minimum level of employment throughout its operation.

(b) Tax. - A privilege tax is imposed on a large manufacturing and distribution facility that purchases mill machinery, distribution machinery, or parts or accessories for mill machinery or distribution machinery for storage, use, or consumption in this State. The tax is one percent (1%) of the sales price of the machinery, part, or accessory purchased. The maximum tax is eighty dollars ($80.00) per article. As used in this section, the term 'accessories' does not include electricity.

(c) Forfeiture. - If the required level of investment or employment to qualify as large manufacturing and distribution facility is not timely made, achieved, or maintained, then the rate provided under this section is forfeited. A taxpayer that forfeits a rate under this section is liable for all past sales and use taxes avoided as a result of the forfeiture, computed at the applicable State and local rates from the date the taxes would otherwise have been due, plus interest at the rate established under G.S. 105-241.21. Interest is computed from the date the sales or use tax would otherwise have been due. A credit is allowed against the State sales or use tax owed as a result of the forfeiture provisions of this subsection for privilege taxes paid pursuant to this section. For purposes of applying this credit, the fact that payment of the privilege tax occurred in a period outside the statute of limitations provided under G.S. 105-241.6 is not considered. The credit reduces the amount forfeited, and interest applies only to the reduced amount. The past taxes and interest are due 30 days after the date of forfeiture. A taxpayer that fails to pay the past taxes and interest by the due date is subject to the provisions of G.S. 105-236.

(d) Sunset. - This section expires for sales occurring on or after July 1, 2018."

SECTION 3.  This act becomes effective July 1, 2013, and applies to purchases made on or after that date.