Recent North Carolina Legislation: Waiver of Interest on Certain Income Tax Payments

Recent North Carolina Legislation: Waiver of Interest on Certain Income Tax Payments

briefing by Jill Clark, CPA

On May 4, 2020, North Carolina Governor Roy Cooper signed legislation into law that provides a variety of relief efforts aimed at supporting North Carolinians during the COVID-19 crisis.  This law provides taxpayers with the much-anticipated retroactive relief from being charged interest on certain income tax payments that were not made by their original due date.

Over the past several weeks, the North Carolina Department of Revenue (NCDOR) has provided significant relief to taxpayers by extending many tax deadlines beyond their original due date.  However, while they were able to grant these extensions and waive any associated penalties for payments made beyond their original due date; under the existing North Carolina laws, the NCDOR was not able to waive the related interest that taxpayers would be liable for on the “late” payments.

The legislation enacted on May 4, 2020, provides a statutory change in the law allowing the NCDOR to now waive these interest charges for many taxpayers.  Specifically, payments that were originally due on or after April 15, 2020 through July 15, 2020 related to tax imposed on a franchise, corporate income or individual income tax return, including a partnership and estate and trust tax return, will now be granted relief from the interest accrual through July 15, 2020.  This relief also applies to individual and corporate estimated income tax payments due before July 15, 2020.  Therefore, individual and calendar year-end corporate taxpayers may delay the payment of their 1st & 2nd quarter 2020 estimated income tax payments until July 15, 2020 without being liable for the associated interest/underpayment penalty.

In addition, the newly enacted legislation provides for the extension of time for the following time-sensitive items:

  1. certain taxpayers whose statute of limitations for claiming a refund expires on or after April 15, 2020 through July 15, 2020 will now have until July 15, 2020 to make those refund claims,
  2. taxpayers that had certain actions that were required to be taken between April 1, 2020 and July 15, 2020 are now also extended to July 15, 2020 including making certain requests for a Departmental review, filing certain petitions for a contested case hearing as well as filing certain petitions for judicial review.

We will continue to monitor any additional guidance released related to the enactment of this law and provide updates to this page as needed.  If you have any questions, please do not hesitate to reach out to your trusted BRC advisor.

Jill Clark-4987

Jill W. Clark Director of Tax Quality Assurance, CPA

NC License #30742