New Certainty for Interstate Business Enterprises: The New NC Combined Reporting Law

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A few weeks ago, NC Governor Perdue signed HB 619, a bill designed to reduce the acknowledged unfairness in NC’s enforcement of its corporate income tax laws against multistate business enterprises.

An interstate business using multiple business entities under common ownership (collectively, an “enterprise”) often has some of its companies which have a taxable connection (or “nexus”) with a given taxing state (like NC), and others which do not. Often, the “nexus” companies will engage in affiliate transactions with the “non-nexus” companies.

For more than a decade, business enterprises have been complaining about NC’s enforcement of its discretionary authority to force “combined reporting.” Some of these complaints have been addressed by the enactment of HB 619.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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