North Carolina Provides Guidance for Excise Taxpayers in Light of COVID-19

March 31, 2020

1. Which penalties will the Department of Revenue (“Department”) not assess for returns or payments due beginning March 15, 2020 through July 15, 2020?

The Department will not assess the following penalties as long as the required action associated with the penalty is completed on or before July 15, 2020:

• Failure to obtain a license under G.S. 105-236(a)(2);

• Failure to file a return under G.S. 105-236(a)(3);

• Failure to pay tax when due under G.S. 105-236(a)(4);

• The penalties regarding informational returns under G.S. 105-236(a)(10); and

• Failure to file a return under 105-449.45(d).

(collectively, “Late Action Penalties”)

2. Which excise tax forms and due dates does the relief from Late Action Penalties apply to?

The relief from Late Action Penalties applies to the following taxes administered by the Excise Tax Division:

• Privilege Tax (Chapter 105, Article 2);

• Installment Paper Dealers (Chapter 105, Article 2);

• Tobacco Products (Chapter 105, Article 2A);

• Alcohol (Chapter 105, Article 2C);

• Motor Carrier (Chapter 105, Article 36B);

• Motor Fuel (Chapter 105, Article 36C);

• Alternative Fuel (Chapter 105, Article 36D); and

• Inspection Tax (Chapter 119, Article 3).

Additional details regarding the specific excise tax forms, filing periods, and filing deadlines covered by the relief are shown in Appendix A through Appendix D.

3. What if I receive a proposed assessment of a Late Action Penalty for a return, or payment due between March 15, 2020 and July 15, 2020?

If you filed the return or paid the tax on or before July 15, 2020 and received a proposed assessment for the corresponding penalty, you should contact the Department to remove the penalty.

By phone, you may call the Department at (919) 707-7500 or toll free (877) 308-9092. This will direct you to an automatic phone menu where you can designate the tax schedule at issue, and your call will be directed accordingly.

By mail, by writing to the Department at the following address: North Carolina Department of Revenue, Customer Service, P.O. Box 1168, Raleigh, NC 27602.

4. If I do not file a return or pay the tax due from March 15, 2020 to July 15, 2020, but I file the return or pay the tax on or before July 15, 2020, do I need to provide a written request for a penalty waiver?

No. You do not need to file a written request to waive the Late Action Penalties. The Department will not assess Late Action Penalties for returns or payments due during this period if the action is completed on or before July 15, 2020. However, if you do not complete the required action on or before July 15, 2020, the Division will assess the applicable Late Action Penalties.

5. If I do not file a return or pay the tax due from March 15, 2020 to July 15, 2020, and I do not file the return or pay the tax on or before July 15, 2020, will I be assessed penalty?

The Department will assess applicable Late Action Penalties if a return or payment identified in Question and Answer Number 2 is not filed or paid on or before July 15, 2020.

You may request a penalty waiver pursuant to the Department's Penalty Waiver Policy. To apply for a waiver, you should complete Form NC-5500, Request to Waive Penalties. The form should be mailed to: N.C. Department of Revenue, Customer Service, P.O. Box 1168, Raleigh, NC 27602-1168. The Department will review these requests according to the Department's Penalty Waiver Policy.

6. Should I engage in business without a license required by Chapter 105 or Chapter 119?

No. It is unlawful to engage in business without a license. Although the Department will not assess the civil penalty for failure to obtain a license under G.S. 105-236(a)(2) from March 15, 2020 to July 15, 2020, if the license is obtained on or before July 15, 2020, persons required to be licensed under Chapter 105 or Chapter 119 who are not licensed remain subject to other penalties.

7. Will I be responsible for paying interest on Excise Tax liability if I do not pay the tax when it is due?

Yes. You will be responsible for paying interest at the applicable rate from the date the payment is due until the tax liability is paid. State law prevents the Department from waiving interest except in limited circumstances.

The interest rate is currently 5% per year for all Excise Taxes except for taxes assessed to motor carriers. This is the minimum rate set by statute.

The interest rate is currently 7% per year for taxes assessed to motor carriers. This rate is set by the International Fuel Tax Agreement.

8. What Late Action Penalties will I be assessed if I file an accurate return with a due date of May 15, 2020 on July 15, 2020, but do not pay the tax due?

You will be assessed the failure to pay penalty because you did not pay the tax due on or before July 15, 2020. You will not be assessed the failure to file penalty because you completed the action, filing the return, on July 15, 2020.

In addition, you will be charged interest from April 15, 2020 until the tax is paid in full.

9. How do I request a penalty wavier for penalties not covered in this notice?

You may request a waiver pursuant to the Department's Penalty Waiver Policy. To apply for a waiver, you should complete Form NC-5500, Request to Waive Penalties. The form should be mailed to the N.C. Department of Revenue, Customer Service, P.O. Box 1168, Raleigh, NC 27602-1168.

The Department will review these requests according to the Department's Penalty Waiver Policy.