Raleigh, N.C. — The Senate Finance Committee started its 2016 work year by passing a trio of clean-up bills on Tuesday, one aimed at curbing employers trying to escape paying higher unemployment taxes and two others making what appear to be relatively minor tax changes:
Senate Bill 725: Unemployment Technical Changes: This bill is aimed at cracking down on employers who try to escape responsibility for paying higher state unemployment taxes by reincorporating their company. A firm might have to pay higher unemployment tax if it lays off workers. This makes it clear that a new company with the same ownership and management will pay the same state unemployment tax rate as the old company.
Senate Bill 726: IRC Update: North Carolina's tax code is tied into the federal tax code. So, when the federal government makes changes, the state has to decide whether to stick with – or, in tax speak, "conform to" – those changes or "uncouple" from the federal tax code. This year's IRC Update bill looks a lot like last year's. It allows teachers to keep a $250 credit for buying teaching supplies. However, the bill will not allow North Carolinians to exclude the amount of principal on a first mortgage that is forgiven from their income taxes. That means someone who gets part of their mortgage forgiven will have to count that as income, something that could drive up their taxes.
Senate Bill 279: Various Changes to Revenue Laws: This is a hodgepodge of items, most of which have passed both the House and the Senate in 2015 but didn't make it into law. Most of the provisions appear to be technical in nature, affecting few taxpayers or changing how paperwork gets filed. The one substantial new provision makes changes in how much of a deduction a business can take when it borrows from a related corporate entity. Tax staffers said that they were unsure how that measure would work out, saying it could either reap $5 million in extra revenue for the state or cost the state $5 million a year, depending on which companies end up affected.