11.04.2011 Revenue Laws Study Committee Considers Changes to Forced Combination Legislation
The committee heard extended presentations by Jonathan Tart of the Fiscal Research Division, Canaan Huie, general counsel for the Department of Revenue, and Todd Lard of the Council on State Taxation on the recent history of forced combination and the issues that the committee is addressing.
Canaan Huie gave an extended presentation on how the Department interprets the new G.S. 105-130.5A and provided a forecast of the directive that the Department is drafting to provide guidance on how it applies the current law, which is applicable to all open tax years beginning prior to January 1, 2012, as well as guidance on how it will implement the new legislation and its effect on existing combined filing settlement agreements. He speculated that the directive would be published by the end of next week.
Mr. Huie also addressed the issue of royalties from intangible property under the new legislation. The Department had speculated in June that a provision in the new legislation which preserved a taxpayer’s royalty reporting options under G.S. 105-130.7A would cost the state $32 million. He provided a brief explanation for the figure, as well as the potential lost revenue from making G.S. 105-130.5A applicable to open tax periods, which he suggested could be as high as $133 million in refunds plus $226 million in lost revenues from pending assessments.
Attached is a copy of Mr. Huie’s presentation.
The committee will consider these matters further at its December 7 meeting and will hear from the Department of Revenue again after the publication of the directive addressing the new legislation.
For more information about this topic, please contact the authors or any member of the Williams Mullen State & Local Tax Team.