TOWN, COUNTY, AND STATE TAX INFORMATION

North Carolina Taxes 2007

North Carolina Legislative Update (9/07)

Each legislative session brings about small changes in the legislation that can effect your future and/or existing clients. We have provided a brief, high-level overview of the key legislative changes that may impact the economic development community. Click here for detailed changes.

Corporate Income Tax
• Flat rate of 6.9% of net income allocable to the state.

Sales & Use Tax
• 4.5% statewide with a local rate of 2.5% or 3% on transactions (combined 7% tax is not applicable to raw materials, containers, labels, packaging and shipping materials).

Franchise Tax
• $1.50 per $1,000 and is applied to the greatest base determined as set forth in the law.

Inventory Tax
• North Carolina does not impose an inventory tax.

Property Tax
• North Carolina does not impose a state property tax.
• Iredell County - .445 per $100
• Mooresville - .55 per $100

Electricity
• 1.8%; On July 1, 2008 the rate will decrease to 1.4%. Beginning July 1, 2009 the rate will decrease to 0.8%, and on July 1, 2010 a full exemption on sales and use tax for fuel and electricity sold to a manufacturer for use in connection with the operation of a manufacturing facility.

Natural Gas
• 2.83%

Telephone Service
• 3% local
• 6% intrastate
• $50,000 cap applies for call center operations

Unemployment Insurance Rate
• Average tax rate of $200.40
• Employers rate 0.00% to 6.84%
• Taxable base $17,800

NORTH CAROLINA TAX CREDITS

Worker Training Tax Credit
• $500 per job ($1,000 within State Development Zone plus Tier designation
• Company must be eligible for Jobs Tax Credit or Investment Tax Credit
• Minimum 5 or more workers that will receive training
• On the job training wages not eligible
• Must meet wage requirements

R & D Tax Credit
• A credit equal to a percentage of those qualified NC R&D expenses (small business 3%; other - 1%-3% - depending upon investment level.)
• Company that has NC university research expenses is allowed a 15% tax credit
• May be used to offset up to 50% of state income tax or franchise tax after all other credits are applied
• Carry forwards up to 15 years

NC Port Users Tax Credit
• Companies that utilize the NC ports in Wilmington or Morehead City can become eligible for significant tax credits.

North Carolina Industrial Revenue Bonds
• Maximum $20 million per project, $40 million per company

Business Energy Improvement Program
• Low interest rates for energy conservation measures
• Loans ranging from $100,000 to $500,000

Industrial Development Bond
• Grants or loans for job creation in Tier 1, 2, or 3 counties
• Maximum amount of $5,000 per job or $500,000 per project

Road Access Funds
• State will provide assistance on the construction of access roads to a site
• Improvements to existing road infrastructure that are required due to the scope of the project area also available
• Road improvements must have approval of local officials

NORTH CAROLINA INFRASTRUCTURE ASSISTANCE

Rail Spur Extension Assistance
• Extensions or renovations of existing rail spurs may be possible through state funding
• Local governments may provide other improvements that reduce rail costs, such as the relocation of streets
• State's portion of assistance cannot exceed 50% of the total project cost
• Approval of funds based on new jobs created, capital investment of project, amount of rail use and general impact of project on community and state

Industrial Extension Service
• Services include training, lean manufacturing assistance, energy savings analysis, environmental / health / safety analysis, etc.

NORTH CAROLINA INCENTIVES

Job Creation Tax Credit
• Credit amount per job dependent on Tier designation for County.
• Credits in four equal installments over four years.

Tax Credit per Job Creation
• $750 - Tier 3

Investment Tax Credit
• 3.5% on all Machinery and Equipment over $2 million threshold invested in Tier 3

LOCAL INCENTIVES PROGRAMS

Industrial Development Incentive Program (IDIP) – Iredell County

The County of Iredell, in cooperation with Harmony, Love Valley, Mooresville, Davidson, Statesville or Troutman, may provide various financial incentives for companies seeking to locate or expand a business into Iredell County. This incentive program is designed to stimulate development by offsetting up-front costs associated with an industry location or expansion.

The scope of the incentive package will be based on the following criteria: Capital investment of at least $3 million; creation of quality jobs with pay higher than the county’s average wages; and environmental cleanliness.

County funds may be used in a manner consistent with GS 158-7.1

The parameters defining the level of the contribution will be as follows:

1. An amount equal to .372% of the capital investment may be used for incentive payments for a period of five years;

2. If a company’s investment exceeds $30 million in additional taxable base, the Board of Commissioners may authorize the extension of the years of eligibility to six years; and

3. A further component of that calculation will be based on the quality of the jobs created. The schedule below allocates percentage of participation for each level:

The following procedure will be used by industry in requesting industrial development incentive awards:

1. Must receive a favorable recommendation from the Greater Statesville Development Corporation or the Mooresville-South Iredell Chamber of Commerce;
2. Must be willing to appear before the public at a hearing for the purpose of receiving input on the proposed incentive;
3. Must receive favorable vote from the Board of Commissioners following the public hearing;
4. Must be willing to enter into a formal agreement with the County to stipulate the commitment of the industry to the county; and
5. Must be willing to reimburse the County if at any time a court of last appeal determines that incentive payments are in violation of the constitution or the law.

Industrial Development Incentive Grant Policy - Mooresville

G.S. 158-7.1(a) provides that each city in North Carolina is authorized to make appropriations for the purposes of aiding and encouraging the location of manufacturing enterprises, making industrial surveys and locating industrial and commercial plants in or near such city; encouraging the building of railroads or other purposes which, in the discretion of the governing body of the city, will increase the population, taxable property, agricultural industries and business prospects of any city. These appropriations may be funded by the levy of property taxes pursuant to G.S. 160A-109(b)(17a) and by the allocation of other revenues whose use is not otherwise restricted by law.

The Commissioners of the Town of Mooresville believe that granting Industrial Development Incentive (IDI) grants will encourage the location and expansion of manufacturing and commercial plants in or near the Town of Mooresville, and will increase the population, taxable property, industrial and business prospects for the Town. The Town of Mooresville therefore adopted the IDI Grant Policy

In determining whether an IDI grant will be made and, if so, the amount thereof, the following criteria, and such other criteria as the Town may deem appropriate in each individual case, will be used in making the determination:

· The type of facility.
· The effect on the environment.
· The size of the project based upon investment in site development, plant facilities and infrastructures.
· The number of and type of jobs created.
· The relationship between job development and total investment.
· Potential for future expansion and increased employment.
· Site-specific issues that impact upon local infrastructure responsibilities.

Site-specific initiatives that may be pursued to stimulate other development in areas the Town may deem of significant benefit to the community.

The grants may be made in kind or in cash:

1) If the grant is made in cash, it may be made in a lump sum or in annual installments, depending on the Town’s budgetary condition.
2) If the grant is made in annual installments, the industry shall meet the following requirements:
(a) The industry must be in continuous operation for a period of at least one calendar year prior to the Town’s making the annual installment.
(b) The industry must employ a certain number of employees who are paid wages equivalent to or above the average wages paid in Iredell County as reported by the Employment Security Commission.

All ad valorem taxes and other public obligations must be current.

Other Matters

1. Annual installment payments of grant may not be transferred or otherwise conveyed to another party without the specific consent of the Town.
2. The terms of IDI grant will be embodied in a formal agreement between the industry and the Town
3. If the industry is not located within the Town limits of Mooresville, this agreement may provide that the property location shall be annexed into the Town.

This industrial development Incentive Grant policy replaces any previously enacted policy guidelines.