NC Republican, Democratic leaders back more tax relief due to coronavirus
North Carolinians and businesses worried about paying their taxes this spring will get more relief with the latest changes by the state Department of Revenue.
Plus state lawmakers from both parties, including the governor, agree that they support passing a new law to waive interest on late tax payments.
Secretary of Revenue Ronald G. Penny announced Tuesday that the state is expanding tax relief as part of Gov. Roy Cooper’s response to the COVID-19 pandemic. There were about 1,500 cases of COVID-19 in North Carolina as of Tuesday.
The state already followed the Internal Revenue Service’s lead in extending deadlines for both filing and payments for income taxes from April 15 to July 15.
There will be no penalties for late filing or payment of North Carolina sales and use and withholding taxes through July 15. Already announced by the state are no penalties for late filings and payments of individuals, corporations, partnerships, trusts and estates.
“These measures will come as welcome tax relief for individuals and businesses across North Carolina,” Penny said in a news release. “We are providing the maximum flexibility under existing state law.”
There will be no penalties for failure to obtain a license, failure to file a return or failure to pay a tax that is due from March 15 through July 15.
Other tax penalties will be waived if paid by July 15 for withholding tax, sales and use tax, scrap tire disposal tax, white goods disposal tax, motor vehicle lease and subscription tax, solid waste disposal tax, 911 Service Charge for Prepaid Telecommunications Service, dry-cleaning solvent tax, primary forest products tax and freight car line companies. For a full list, taxpayers should go to ncdor.gov.
While the late fees will be waived, taxpayers could still end up paying interest unless state lawmakers take action.
State law to waive interest
Waiving interest from tax due dates can’t be changed by the Revenue Department because of state law. So the General Assembly would have to pass a bill, which the governor would have to sign, to make that happen. The current interest rate on late payments is 5% a year.
On Tuesday evening, state leaders from both political parties said they want to add the interest waiver to tax relief plans.
“One of the biggest questions we are getting on economic issues is whether families and businesses will be responsible for paying interest on their income taxes now that the filing deadline is delayed,” said Cooper, state Senate Democratic leader Dan Blue, Senate leader Phil Berger, House Speaker Tim Moore, and House Democratic leader Darren Jackson in a joint statement. Berger and Moore are Republicans, while Cooper.
“Today, we can announce our shared support for retroactively waiving the accrual of those interest payments to provide further tax relief for North Carolinians amid the COVID-19 crisis, an important step to offer certainty and recovery assistance for millions of our state’s residents,” they said.
The legislature is due to reconvene in Raleigh on April 28 for its short session. The House Special Committee on COVID-19 has already started meeting remotely with multiple working groups to address issues related to COVID-19, including taxes.
During a meeting Tuesday afternoon, House committee members learned about what could become a cash flow problem for the state with delays in tax revenue coming in from the state and federal level. Delayed revenue would have to be shifted from the current fiscal year to the next one, which starts July 1.
Rep. Pricey Harrison, a Greensboro Democrat, wanted to know how much money will be delayed coming to the state, but the legislature’s fiscal research division doesn’t know yet.
This story was originally published March 31, 2020 at 4:22 PM with the headline "NC Republican, Democratic leaders back more tax relief due to coronavirus."
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