March 31, 2020
In a notice released by the North Carolina Department of Revenue (Department) on March 31, 2020, penalty relief was significantly broadened due to the impact of the coronavirus.
The Department will not assess penalties for failure to obtain a license, failure to file a return, or failure to pay a tax that is due on March 15, 2020 through July 15, 2020, if the corresponding license is obtained, return is filed, or tax is paid on or before July 15, 2020. The relief from these penalties applies to the following types of tax:
- Income and Franchise tax;
- 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;
- Freight Car Line Companies; and
- Various Taxes Administered by the Excise Tax Division
Relief is automatically granted with no need to request a penalty waiver. If a taxpayer is assessed a penalty for one of these taxes, the taxpayer should contact the Department.
Note that some penalties associated with these taxes can be substantial. If businesses take advantage of the opportunity to postpone remittance of these obligations, it is critical that they not lose track of them and make plans to pay them by July 15, unless further relief is granted. Also, keep in mind that certain taxes such as withholding taxes and sales tax, are considered “trust funds” and should not be used by the company. By law, use of those funds can result in civil penalties and criminal liability.
As we previously reported, by law the Department is unable to waive any interest incurred on past due obligations, except in the limited case of interest on taxes imposed prior to or during bankruptcy declaration. Currently, the annual interest rate is set at 5%.
To read other JPS Covid-related articles, click here.
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Johnson Price Sprinkle PA is a 60+ year old accounting firm providing small to middle market businesses with tax, business consulting, audit, and technology solution services. With offices in Asheville, Boone, and Marion, NC, our CPAs and JPS team strive to provide personal service alongside technical expertise resulting in our clients’ long-term financial success. We also invest time and energy in our community, taking pride in doing what we can to make Western North Carolina a better place. JPS Mission: To Be Greater by positively impacting our Clients, People, Community and Profession.