§ 105-130.46. (This section has a delayed effective date and an expiration date - see notes) Credit for manufacturing cigarettes for exportation while increasing employment and utilizing State Ports. - North Carolina Statutes

§ 105‑130.46.  (Thissection has a delayed effective date and an expiration date – see notes) Creditfor manufacturing cigarettes for exportation while increasing employment andutilizing State Ports.

(a)        Purpose. – Thecredit authorized by this section is intended to enhance the economy of thisState by encouraging qualifying cigarette manufacturers to increase employmentin this State with the purpose of expanding this State's economy, the use ofthe North Carolina State Ports, and the use of other State goods and services,including tobacco.

(b)        Definitions. – Thefollowing definitions apply in this section:

(1)        Employment level. –The total number of full‑time jobs and part‑time jobs convertedinto full‑time equivalences. A job is included in the employment levelfor a year only if that job is located within the State for more than sixmonths of the year. A job is located in this State if more than fifty percent(50%) of the employee's duties are performed in this State.

(2)        Exportation. – Theshipment of cigarettes manufactured in the United States to a foreign countrysufficient to relieve the cigarettes in the shipment of the federal excise taxon cigarettes.

(3)        Full‑time job.– A position that requires at least 1,600 hours of work per year and is intendedto be held by one employee during the entire year.

(4)        Successor inbusiness. – A corporation that through amalgamation, merger, acquisition,consolidation, or other legal succession becomes invested with the rights andassumes the burdens of the predecessor corporation and continues the cigaretteexportation business.

(c)        Employment Level. –In order to be eligible for a full credit allowed under this section, thecorporation must maintain an employment level in this State for the taxableyear that exceeds the corporation's employment level in this State at the endof the 2004 calendar year by at least 800 full‑time jobs. In the case ofa successor in business, the corporation must maintain an employment level inthis State for the taxable year that exceeds all its predecessor corporations'combined employment levels in this State at the end of the 2004 calendar yearby at least 800 full‑time jobs.

(d)        Credit. – Acorporation that satisfies the employment level requirement under subsection(c) of this section, is engaged in the business of manufacturing cigarettes forexportation, and exports cigarettes and other tobacco products through theNorth Carolina State Ports during the taxable year is allowed a credit asprovided in this section. The amount of credit allowed under this section isequal to forty cents (40¢) per one thousand cigarettes exported. The amount ofcredit earned during the taxable year may not exceed ten million dollars($10,000,000).

(e)        Reduction ofCredit. – A corporation that has previously satisfied the qualificationrequirements of this section but that fails to satisfy the employment levelrequirement in a succeeding year may still claim a partial credit for the yearin which the employment level requirement is not satisfied. The partial creditallowed is equal to the credit that would otherwise be allowed under subsection(d) of this section multiplied by a fraction. The numerator of the fraction isthe number of full‑time jobs by which the corporation's employment levelin this State for the taxable year exceeds the corporation's employment levelin this State at the end of the 2004 calendar year. The denominator of thefraction is 800. In the case of a successor in business, the numerator of thefraction is the number of full‑time jobs by which the corporation'semployment level in this State for the taxable year exceeds all its predecessorcorporations' combined employment levels in this State at the end of the 2004calendar year.

(f)         Allocation. – Thecredit allowed by this section may be taken against the income taxes leviedunder this Part or the franchise taxes levied under Article 3 of this Chapter.When the taxpayer claims a credit under this section, the taxpayer must electthe percentage of the credit to be applied against the taxes levied under thisPart with any remaining percentage to be applied against the taxes levied underArticle 3 of this Chapter. This election is binding for the year in which it ismade and for any carryforwards. A taxpayer may elect a different allocation foreach year in which the taxpayer qualifies for a credit.

(g)        Ceiling. – Thetotal amount of credit that may be taken in a taxable year under this sectionmay not exceed the lesser of the amount of credit which may be earned for thatyear under subsection (d) of this section or fifty percent (50%) of the amountof tax against which the credit is taken for the taxable year reduced by thesum of all other credits allowable, except tax payments made by or on behalf ofthe taxpayer. This limitation applies to the cumulative amount of the creditallowed in any tax year, including carryforwards claimed by the taxpayer underthis section or G.S. 105‑130.45 for previous tax years.

(h)        Carryforward. – Anyunused portion of a credit allowed in this section may be carried forward forthe next succeeding 10 years. All carryforwards of a credit must be takenagainst the tax against which the credit was originally claimed. A successor inbusiness may take the carryforwards of a predecessor corporation as if theywere carryforwards of a credit allowed to the successor in business.

(i)         Documentation ofCredit. – A corporation that claims the credit under this section must includethe following with its tax return:

(1)        A statement of theexportation volume on which the credit is based.

(2)        A list of thecorporation's export volumes shown on its monthly reports to the Alcohol andTobacco Tax and Trade Bureau of the United States Treasury for the months inthe tax year for which the credit is claimed.

(3)        Any other informationrequired by the Department of Revenue.

(j)         No Double Credit.– A taxpayer may not claim this credit and the credit allowed under G.S. 105‑130.45for the same activity.

(k)        Reports. – Anycorporation that takes a credit under this section must submit an annual reportby May 1 of each year to the Senate Finance Committee, the House ofRepresentatives Finance Committee, the Senate Appropriations Committee, theHouse of Representatives Appropriations Committee, and the Fiscal ResearchDivision of the General Assembly. The report must state the amount of creditearned by the corporation during the previous year, the amount of creditincluding carryforwards claimed by the corporation during the previous year,and the percentage of domestic leaf content in cigarettes produced by thecorporation during the previous year. The first reports required under thissection are due by May 1, 2006. (2003‑435, 2nd Ex. Sess., s. 6.1; 2004‑170,s. 16(a).)