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Each legislative session presents both challenges and opportunities for the business community. This year was no different, and while we were pleased to claim a number of victories on your behalf, there was one policy we weren’t able to defeat.

HB 975/SB 715 was billed as a series of “technical corrections” to state tax law, as requested by the NC Department of Revenue. However, the policies within the legislation were far from technical corrections.

One of our biggest concerns with this law can be found in Section 2.1, which changes the definition of partnerships under the franchise tax. We believe this change will have significant impacts on North Carolina companies formed as partnerships that elect to be taxed as corporations, thus expanding the franchise tax and possibly raising taxes on a number of NC businesses. While HB 975/SB 715 did not pass, this language was included in the final budget in Section 38.2.(1) G.S. 105-114(b)(2). The changes are scheduled to go into effect on January 1, 2019.

As our government affairs team charts a path forward to address this anti-growth policy, we need to hear from you. Will your business be affected by the new definition of partnerships under the franchise tax?