North Carolina Competes Bill Signed into Law

03 Nov, 2015, 17:39 ET from Ryan, LLC

DALLAS, Nov. 3, 2015 /PRNewswire/ -- North Carolina Governor Pat McCrory signed House Bill 117 into law on September 30, 2015. The North Carolina Competes bill enhances the state's economic development toolkit. 

Key highlights of the bill include:

Job Development Investment Grants (JDIG)

Grants are awarded to new and expanding businesses and are based on job creation and investment commitment.  Funds are disbursed annually to approved companies based on a percentage of withholding taxes paid by new employees. Modifications to the program include: 

  • JDIG funding will increase from $15 million to $20 million each year, and the program will be extended for three years, allowing JDIG commitments through January 1, 2019. 
  • If there is a "high-yield" recruitment project, the funding cap will increase to $35 million. A high-yield project is defined as one that invests at least $550 million and creates at least 1,750 jobs.
  • Job creation requirements will increase from 20 jobs to 50 jobs for Tier 3 areas.
  • The award calculation changes from a flat 10 to 75% of the personal income tax withholdings generated by the eligible positions to a tiered maximum percentage of withholdings (80% of withholdings for Tier 1 projects and 75% for all other tiers). 

One North Carolina Fund (One NC)

One NC is a discretionary fund used by the state to provide funding to local communities to secure company recruitment, expansion, and retention commitments. 

  • The local match requirement of the One NC Fund will be modified to a tiered requirement. The new tier structure will be:
    • Three state dollars ($3.00) for one local dollar ($1.00) for Tier 1;
    • Two state dollars ($2.00) for one local dollar ($1.00) for Tier 2; and
    • One state dollar ($1.00) for one local dollar ($1.00) match for Tier 3.

Datacenter Infrastructure Act

Datacenters may be eligible for a sales tax exemption on electricity and certain business property that is located and used at a datacenter. To be eligible, the datacenter must be engaged primarily in software publishing or Internet activity and be comprised of structures located on contiguous parcels of land that are commonly owned by the operator of the facility. The facility must also be located in a Tier 1 or Tier 2 area and confirm that at least $250 million in private funds will be used for the project.

  • The new bill creates a similar exemption with different requirements:
    • Broader eligibility to co-location and wholesale datacenters
    • Wage and health insurance requirements
    • Confirmation of at least $75 million in private funds will be used for the project

Sales Tax Refund Expiration – Aviation

An interstate passenger air carrier with a hub in a state is allowed a sales tax refund of state and local sales tax paid on fuel in excess of $2.5 million.

  • The sales tax refund will expire for fuel purchases made on or after January 1, 2016.

Sales Tax Exemption – Aviation

To address the sales tax refund expiration set for January 1, 2016, air carriers and air couriers will be exempt from jet fuel sales tax.

  • Exemption will apply from January 1, 2016 to January 1, 2020. 

Please click here for additional information on the bill.

About Ryan
Ryan is an award-winning global tax services firm, with the largest indirect and property tax practices in North America and the seventh largest corporate tax practice in the United States. With global headquarters in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, tax compliance, and strategic planning. Ryan is a three-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan's multi-disciplinary team of more than 2,100 professionals and associates serves over 12,000 clients in more than 40 countries, including many of the world's most prominent Global 5000 companies. More information about Ryan can be found at ryan.com.

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