State & Local Tax Impacts of COVID-19 for North Carolina – 2020

Thoughtware Alert Published: Dec 11, 2020 | Updated: May 05, 2021

Information current as of December 31, 2020.

COVID-19 has changed life across the globe. Many taxing jurisdictions are taking mitigating actions to create social distance and aid taxpayers. The following is a running list of actions by jurisdiction, which generally result in additional time to file and/or pay. Further, many jurisdictions have closed their offices to in-person use by taxpayers and suspended their audit and administrative functions. This alert doesn’t cover similar waivers from local-level taxing authorities. These developments continue to quickly evolve; check with your BKD Trusted Advisor or visit our COVID-19 Resource Center for current information as needed.

Information Specific to North Carolina

  • The DOR is providing a penalty waiver applicable to tax deadlines falling between March 15 and March 31, as long as the filing or payment is made by April 15. Taxpayers seeking the extension must file a state form NC-5500 and write “COVID-19” at the top.
    • North Carolina DOR Notice, March 17, 2020.
  • The DOR will waive late tax payment penalties through July 15 for individual income, corporate income, and trust income taxpayers. Interest won’t be waived, and the due date for filing remains April 15.
    • North Carolina DOR Notice, March 19, 2020.
  • The DOR extended the state’s income tax filing deadline to July 15, which is the new federal income tax deadline.
    • North Carolina DOR Notice, March 20, 2020.
  • The North Carolina Department of Revenue (DOR) on March 31 announced an expansion of late action tax penalty relief for failure to obtain a license, file a return, or pay a tax for taxpayers affected by the COVID-19 pandemic. The DOR on March 17 announced penalty relief for certain taxpayers with returns or payments due between March 15 and March 31. The expanded relief applies from March 15 through July 15 to income, franchise, withholding, sales and use, scrap tire disposal, white goods disposal, motor vehicle lease and subscription, solid waste disposal, dry cleaning solvent and primary forest products taxes, and to various taxes administered by the Excise Tax Division. The relief also applies to freight car line companies and to 911 service charges for prepaid telecommunications services.
    • North Carolina Department of Revenue Press Release, March 31, 2020
  • North Carolina legislation waives interest from April 15, 2020, through July 15, 2020, for the underpayment of corporation income, corporation franchise, personal income, partnership income, and estate and trust income taxes for returns and estimated payments due between those dates. The state also has extended the deadlines for filing a request for a refund, tax review, or petitions for tax cases until July 15, 2020, for periods originally expiring between April 15, 2020, and before July 15, 2020.
    • North Carolina S.B. 704, Laws 2020, effective May 4, 2020.
    • North Carolina DOR Notice, May 6, 2020.
  • North Carolina has decoupled from CARES Act changes related to the treatment of net operating losses, loan forgiveness, and charitable giving. The state will still align its tax code with a lower federal threshold for medical expense deductions.
    • North Carolina H.B. 1080, Laws 2020, effective June 30, 2020.
    • Also see North Carolina DOR Notice, July 20, 2020.
  • North Carolina revised guidance explaining the decoupling of the state law from certain federal tax provisions in the Further Consolidated Appropriations Act and the CARES Act for individual income and corporate income tax purposes. The state requires a taxpayer to add back federal bonus depreciation, and QIP bonus depreciation shouldn’t be included in the calculation of a taxpayer’s excess business loss to the extent the QIP bonus depreciation resulted in an addition to the taxpayer’s adjusted gross income. 
    • North Carolina DOR Important Notice, October 1, 2020.

For more information, reach out to your BKD Trusted Advisor or use the Contact Us form below.

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