Today the Revenue Laws Study Committee recommended a bill draft for introduction in the 2014 Legislative Session that would change the way North Carolina determines tax liability for multistate corporations with a North Carolina nexus.
When determining state tax liability, multistate corporations consider what percentage of the corporation's sales are in a state; what percentage of a corporation's workforce is in a state; and what percentage of a corporation's property is in a state. Under current law the sales factor is doubled-weighted in North Carolina. The proposed bill would increase that to a four-times-weighted sales factor.
During the committee, the draft bill was rolled into a larger omnibus bill against the objections of several House Members who want the measure considered on its own merits rather than as part of a larger package; they are concerned about the fiscal impact to the State. Senator Rucho countered that the economy has improved and unemployment is down in large part to legislative actions in the past three years. He believes it's imperative to continue to improve the business climate in North Carolina with this apportionment change this session.
We expect the bill to be introduced this week and taken up by committee quickly.