North Carolina General Assembly Ratifies Appropriations Act of 2018

Smith Anderson

Smith Anderson

On June 1, 2018, the General Assembly ratified and sent to the Governor the Appropriations Act of 2018 (the Act). The Act includes numerous changes to North Carolina’s tax laws. Earlier versions of the Act were the subject of Alerts dated April 17, May 15 and May 18.  This Alert provides a discussion of all of the more significant tax provisions of the Act. The Act will not, however, become law until the Governor signs the legislation or allows it to become law without his signature or the Governor’s veto of the legislation is overridden.

Except as otherwise noted, the changes described below will be effective as of the date of enactment.

Provisions covered in this Alert: 

Internal Revenue Code Conformity

Personal Income Tax Changes

Franchise Tax Changes

Apportionment Changes

Captive Insurance Company Tax Changes

Tax Credit Changes

Sales and Use Tax Changes

Other Tax Changes

Procedural and Administrative Changes

Internal Revenue Code Conformity

Each year, the General Assembly updates the reference to the Internal Revenue Code (the “Code”) found in G.S. §105-228.90(b)(1b) to incorporate some or all of the changes made to the Code during the preceding year. The Act updates the Code reference from January 1, 2017 to February 9, 2018.[1] This means that North Carolina will generally conform to the Code amendments included in the Tax Cuts and Jobs Act (the “TCJA”) and the Bipartisan Budget Act of 2018 (the “BBA”).

Because of the structure of the North Carolina tax law, conforming to these federal changes has relatively little impact on the calculation of individual North Carolina income tax liability. Specifically, North Carolina taxable income is based on federal adjusted gross income, the calculation of which is largely unaffected by the recent federal legislation. North Carolina also has its own standard and itemized deductions and personal exemptions and is not affected by changes to their federal counterparts. In addition, for both individual and corporate taxpayers, North Carolina decouples from federal bonus depreciation and expensing rules. 

However, updating the Code reference means North Carolina will conform to the following federal changes, among others: 

  • Small Business Accounting Method Provisions. The TCJA provisions permitting taxpayers with average annual gross receipts not in excess of $25 million to use the cash method of accounting, not to keep inventories, not to comply with the uniform capitalization rules and not to use the percentage of completion method of accounting for small construction contracts.
  • Interest Expense Limitation. The TCJA provisions limiting the deduction of net interest expense to 30% of adjusted taxable income. Note that conforming to this limitation means North Carolina will have two interest expense limitations: the new TCJA limitation effected through conformity and the existing North Carolina restriction on the deduction of net interest paid to a related party.[2] In addition, conforming to the new federal interest expense limitation ignores the fact that this federal limitation is linked to the federal 100% bonus depreciation rules to which North Carolina does not conform.
  • NOLs. The TCJA provisions limiting the use of NOLs to 80% of taxable income.
  • Like Kind Exchanges. The TCJA provisions restricting like kind exchanges to exchanges of real property.
  • Dividends Received Deductions. The TCJA provisions reducing the dividends received deduction. Note also that North Carolina will conform to the new participation exemption for the foreign source income of controlled foreign corporation subsidiaries, which is implemented through a new dividends received deduction. 
  • Contributions to Capital. The TCJA provisions eliminating the gross income exclusion for contributions to the capital of a corporation by government entities and civic groups not acting in a shareholder capacity. Conforming to this provision means that North Carolina will reduce the value of its own incentive grants to corporations by subjecting such grants to state as well as federal tax.
  • 529 Plans.The TCJA provisions expanding Code §529 to permit distributions from qualified tuition programs to fund elementary and secondary tuition. For years before 2014, North Carolina permitted taxpayers to deduct contributions to the state’s 529 plan but required those deductions to be added back to income in any year in which withdrawals from the plan were used for nonqualified purposes. The Act clarifies that no add-back will be triggered if previously deducted amounts are withdrawn and used for elementary and secondary education tuition. The Act also provides that no add-back will be required if amounts are withdrawn and rolled over into an ABLE account for individuals with disabilities.[3] These changes are effective for taxable years beginning on or after January 1, 2018.[4]

The Act decouples from several changes included in TCJA and BBA. 

  • Qualified Opportunity Zones.The TCJA permits individual and corporate taxpayers to defer, and in some cases permanently exclude, gain from the sale of property that is reinvested in an investment vehicle that invests in designated low-income communities known as Qualified Opportunity Zones. Each state may nominate communities for Qualified Opportunity Zone designation by the Secretary of the Treasury. The Act decouples from this provision by requiring such gains to be added back in the calculation of North Carolina taxable income.[5] The General Assembly may create a similar incentive for investment in low-income areas limited to low-income communities in North Carolina, but the Act does not include such a provision. 
  • Repatriation Tax.The TCJA causes a deemed repatriation of earnings held by controlled foreign corporations as an additional income inclusion under Subpart F of the Code (specifically, under Code §951). Because North Carolina exempts income inclusions under §951 from the calculation of state net income, North Carolina will not conform to this deemed inclusion. The TCJA also includes a deduction to lower the effective tax rate on the repatriated earnings. The Act expressly requires an add-back of this deduction.[6]
  •  Under the Code, as amended by the TCJA, certain U.S. shareholders of controlled foreign corporations must include in income their shares of the foreign corporation’s “global intangible low-taxed income” (“GILTI”). In addition, the U.S. shareholder is entitled to a deduction to reduce the effective federal tax rate on the GILTI income inclusions. GILTI essentially requires U.S. shareholders of controlled foreign corporations to pay a minimum tax on the foreign corporation’s income in excess of a hypothetical return on tangible assets. The Act permits corporate taxpayers to exclude GILTI income inclusions net of the related deduction in computing state net income.[7]
  • FDII.The TCJA also provides a deduction for corporations designed to lower the effective tax rate on income derived from sales of domestically produced services and intangibles into foreign markets (“foreign derived intangible income” or “FDII”). The Act expressly requires an add-back of the federal FDII deduction.[8] Conforming to the federal FDII deduction would have helped make North Carolina a more attractive location for technology companies making sales of services and intangibles into foreign markets, especially since the TCJA should encourage the relocation of activities generating such income to the United States.
  • Unrelated Business Taxable Income. The TCJA requires tax exempt organizations to increase their unrelated business taxable income by any amount paid or incurred by the exempt organization for qualified transportation fringe benefits, qualified parking or on-site athletic facilities. The Act decouples from this federal change as it relates to parking facilities. Specifically, for North Carolina purposes, unrelated business taxable income will not include any amount paid or incurred for a parking facility that otherwise would be taxable under the new federal law.[9] This provision is effective for taxable years beginning on or after January 1, 2018.[10]
  • Other Decoupled Provisions.The BBA extended temporary Code provisions permitting income from the forgiveness of debt on primary residences to be excluded from federal gross income and permitting the deduction of mortgage insurance and certain qualified tuition and related expenses. North Carolina has historically decoupled from these provisions, and the Act continues this policy by decoupling from the extensions.[11]

Personal Income Tax Changes

Deduction for Disaster Relief Payments. The Act provides new individual and corporate income tax deductions for amounts received by the taxpayer during the year from the State Emergency Response and Disaster Relief Reserve Fund for hurricane relief or assistance. The deductible amount does not include any amount received by the taxpayer in payment for goods or services.[12] Although certain disaster relief payments are currently excludible for federal and North Carolina income tax purposes, these exclusions do not cover amounts received to replace lost income, as opposed to lost property.[13]

Trooper Training Loan Forgiveness. The Act provides a new individual income tax deduction for amounts forgiven pursuant to the Trooper Training Reimbursement Program, a new program designed to provide forgivable loans to help prospective State Troopers cover the costs of their training tuition.[14]

Exclusion for PESA Accounts. Under current law, beginning in 2018, a taxpayer may deduct the amount deposited during the year in a personal education saving account established under North Carolina’s Personal Education Savings Account Program to hold scholarship funds awarded by the State Education Assistance Authority.[15] The law establishing these accounts included a provision excluding such awards from income, thus creating an unintended double benefit.[16] The Act repeals the exclusion provision, effective for taxable years beginning on or after January 1, 2018.[17]

Franchise Tax Changes

Electing Partnerships. Under current law, an LLC that elects to be classified as a corporation for tax purposes is subject to the franchise tax. The Act extends this rule to partnerships that elect corporate classification.[18]

Net Worth Tax Base. Under current law, the net worth base is generally calculated under GAAP. Taxpayers that do not keep GAAP books must calculate the net worth tax base in accordance with the accounting method the taxpayer uses for federal tax purposes. The Act makes two changes with respect to these non-GAAP taxpayers. First, the Act eliminates the vague requirement of current law that the accounting method used for federal tax purposes must fairly reflect the corporation’s net worth for purposes of the franchise tax. Second, the Act provides that a non-GAAP taxpayer must value assets subject to depreciation, depletion or amortization in accordance with the depreciation, depletion or amortization method used for federal income tax purposes.[19]

These franchise tax changes are effective January 1, 2019 and apply to the calculation of the franchise tax reported on the 2018 and later corporate income tax returns.[20]

Apportionment Changes

Beginning this year, North Carolina corporate income tax is calculated using single sales factor apportionment.  In connection with this change, the General Assembly previously considered - but did not adopt - market-based sourcing for income from services and intangibles. The Act revises the statutory sourcing rules for these types of income.[21]

Income from Services. Under current law, income from services is sourced under an “income-producing activities test.” The Act provides a statutory definition of this test similar to the definition now found in the Technical Bulletins issued by the Department of Revenue (the “Department”). Specifically, the Act defines an income-producing activity as an activity “directly performed by the taxpayer or its agents for the ultimate purpose of generating the sale of the service.” The Act further provides that “Receipts from income-producing activities performed within and without this State are attributed to this State in proportion to the income-producing activities performed in this State to total income-producing activities performed everywhere that generate the sale of service.” The purpose of the amendment appears to be to give equal weight to all income-producing activities so that receipts are apportioned to North Carolina based on the quantum, rather than the value or importance, of the activities performed here.

The Act also clarifies that receipts from incidental services sold as part of, or in connection with, a sale of tangible personal property in North Carolina are sourced to North Carolina, regardless of where those services are performed.

Income from Intangibles. The existing statutory language for sourcing income from intangibles is an unhelpful tautology. The statute provides that such income is sourced to North Carolina if such income “is received from sources within this State.” The Department’s Technical Bulletins provide more concrete rules based on the nature of the intangible. For instance, trademark royalties are sourced to North Carolina to the extent the trademarks are used in the state, while copyright royalties are sourced to North Carolina to the extent the printing or publication originates here, and royalties from patents and similar intellectual property are sourced to North Carolina to the extent the intellectual property is used in production functions carried out in the state. Interest and dividends, on the other hand, are sourced based on the commercial domicile of the payor. The Act revises the statutory language to source all intangible income based on where the intangible is used.

This language appears to codify the existing administrative rules for sourcing trademark, copyright and patent (and other IP) royalties and does not appear intended to work any substantive change in the law. 

The impact of the amendment on the sourcing of interest and dividends and other financial intangibles is less clear. We understand that neither the General Assembly nor the Department intended any change in how receipts from these or other intangibles are sourced. We therefore believe that intangibles producing these types of receipts must be considered to be “used” at the commercial domicile of the payor. 

Captive Insurance Company Tax Changes

The Act clarifies that a captive insurance company that is licensed and taxed by another state is not subject to the North Carolina corporate income, franchise, captive insurance, gross premiums or local privilege taxes or to the insurance regulatory charge, notwithstanding that such a company may insure a risk located in North Carolina.[22] This change is consistent with the practice of all other states, which do not tax foreign captives.

Tax Credit Changes

North Carolina’s former tax credits for rehabilitating historic structures expired at the end of 2014 (new credits for restoring historic properties became effective in 2016). Specifically, the old credits expired with respect to rehabilitation expenditures incurred on or after January 1, 2015. The Act provides additional clarity regarding the effective date of this sunset provision. Under the Act, if a taxpayer incurred rehabilitation expenditures before January 1, 2015, the credits will expire if the property is not placed in service by January 1, 2023.[23]

Similarly, the Act provides that for purposes of the new credit, which expires for expenditures incurred on or after January 1, 2020, the Act provides that the credits will expire if the property is not placed in service by January 1, 2028.[24]

Sales and Use Tax Changes

The Act makes numerous changes to the sales tax law, many of which are stylistic or clarifying. Among the more noteworthy changes are the following: 

Renewals of Service Contracts on Prewritten Software. The Act provides that gross receipts from the renewal of a service contract for prewritten software may generally be sourced to the address where the purchaser received the prewritten software, absent knowledge that location of the software has changed.[25]

Admission Charges. The Act adds a list of activities that are not subject to the sales tax on admission charges. This change is intended merely to clarify the law with respect to certain activities the Department already views as exempt from the tax.[26]

Property Management Contracts. The Act adds a new sales tax exemption for receipts from the sale of a property management contract, defined as a written contract to provide specified management services related to real property used for business, commercial, educational or income-producing purposes.[27] This exemption will become effective January 1, 2020.[28] The effect of the exemption, when it becomes effective, would be to exempt repair, maintenance and installation services performed by a property management company from tax. The revenue laws Study Committee is directed to study this new exemption and recommend to the 2019 General Assembly any changes needed to make the law “concise, intelligible, easy to administer and equitable.”[29]

Prescription Drugs. The Act clarifies the sales tax exemption for prescription drugs by providing that the exemption does not cover pet food even if the manufacturer requires the food to be sold on prescription. The Act also provides that the exemption for over-the-counter drugs sold on prescription does not apply to purchases of over-the-counter drugs by hospitals or other medical facilities for the treatment of patients.[30]

Worthless Accounts. The Act provides that, for purposes of the sales tax exemption for worthless accounts, a worthless account is defined by reference to the definition of “bad debt” under Code §166. The Act also provides that the amount of the exemption does not include interest or finance charges, the sales tax charged on the sale price, uncollectible amounts on property that remains in the seller’s possession, repossessed property or collection expenses.[31]

Sales Tax Exemption for Membership Charges. Under current law, the sales tax on admissions does not apply to the portion of a membership charge that is allowed as a federal charitable deduction. Under prior federal law, a taxpayer was allowed a charitable deduction for 80% of a payment to an institution of higher education that entitled the taxpayer to purchase tickets to athletic events at the institution’s athletic stadium. The TCJA eliminated this deduction. As a result, 100% of membership charges paid to university athletic booster clubs would be subject to the sales tax on admissions if the taxpayer were entitled to purchase tickets as a result of the payment. The Act specifically exempts such membership charges from the sales tax regardless of whether they were deductible for federal purposes.[32]

Qualifying Farmers. The Act provides that various items such as vaccines, insecticides, defoliants and plant growth regulators, which are currently exempt only if purchased by a qualifying farmer, are also exempt if purchased by someone other than a qualifying farmer to fulfill a service for a qualifying farmer. The purchaser must provide an exemption certificate to the retailer. [33] This change is effective retroactively to July 1, 2014. A person who paid tax on a purchase that was made nontaxable by this retroactive provision may apply for a refund as long as the application is made by October 1, 2018.[34]

Bed and Breakfast Meals. The Act requires that lunch and dinner meals, served at the option of guests staying at a bed and breakfast home or inn, be charged separately on the guest’s bill rather than being included in the room rate.[35] This provision is effective July 1, 2018 and applies to gross receipts derived from the rental of an accommodation that a consumer occupies on or after that date. A retailer who makes a good faith effort to comply with the law but who nevertheless undercollects tax for the period from January 1 through July1, 2018 due to this change in the law is not liable for the undercollection.[36]

Other Tax Changes

Insurance Regulatory Charge. Insurance companies other than captives are subject to an annual charge to fund the costs of the Department of Insurance and other insurance-related regulatory bodies. The rate of the annual charge is set each year by the General Assembly. The Act sets the rate for the 2019 calendar year at 6.5%, the same as the current rate.[37]

Privilege Taxes. The 2017 General Assembly passed a measure that required massage and body therapists to obtain state privilege licenses and pay an annual privilege tax of $50, effective July 1, 2018.[38] This provision failed to become law due to a procedural error. The Act reenacts this provision.[39]

Tobacco Products Tax. The Act provides a reduction in the tobacco product tax rate for a modified risk tobacco product, defined as a tobacco product, such as a smokeless cigarette, sold or distributed for use in reducing the harm or the risk of tobacco-related disease. The rate reduction is equal to 50% for products that have received a risk modification order from the FDA and 25% for products that have received an exposure modification order from the FDA. The Act includes substantiation requirements and forfeiture provisions.[40]

Procedural and Administrative Changes

Automatic Extensions. Under current law, a North Carolina return may be extended only by filing a special North Carolina extension request. The Act provides that a person granted an extension to file “a federal income tax return, including a return of partnership income” is granted an automatic North Carolina extension to file the corresponding state return. The person must certify that a federal extension was granted when the person files its state return.[41] This change is effective for taxable years beginning on or after January 1, 2019.[42]

Forms NC-3. North Carolina employers are required to file an annual wage withholding reconciliation form with the Department on Form NC-3 by January 31 of each year. Before 2016, the due date of this form had been tied to the due date of the equivalent federal form rather than to a specific date. For federal purposes, an employer that goes out of business is required to file the federal reconciliation report with the IRS within 30 days from the last day the taxpayer has payroll. An unintended consequence of decoupling from the federal due date was the loss of this 30-day “going out of business” provision. The Act restores this rule.[43]

Penalty for Failure to File Information Return. The current penalty for failure to file a certain information return with the Department is $50 per day. The Act places a $1,000 maximum on this penalty.[44]

Electronic Filing of Returns. The Act makes several changes regarding the electronic filing of returns. First, the Act adds a $200 per return penalty for failure to file certain information returns, principally Form NC-3, in electronic form.[45] Second, the Act directs the Secretary to prescribe when a return, report, payment or other document that is filed electronically is considered to be timely filed.[46]  Finally, the Act (i) requires the Department to offer electronic filing of returns if it is cost-effective to do so and the Department has established electronic filing procedures, (ii) directs the Department to prescribe the form of electronically filing each return that is required or permitted to be filed electronically and how the preparer or taxpayer is to sign an electronically filed return, (iii) authorizes the Secretary to waive the electronic filing requirement for any return upon a showing of good cause, and (iv) requires the Department to publish on its website by December 1 of each year a list of returns required or permitted to be filed electronically during the next calendar year.[47]

Individual Income Tax Filing Threshold. Under current law an individual is required to file a North Carolina income tax return only if he or she is required to file a federal return. An individual is required to file a federal tax return if his or her gross income exceeds the federal standard deduction amount. The federal standard deduction is now higher than the North Carolina standard deduction. As a result, taxpayers with income below the federal standard deduction amount may owe North Carolina income tax. The Act therefore decouples the state filing obligation from the federal filing obligation.[48]

Federal Changes. Under current law, if a taxpayer's North Carolina tax liability is affected by a federal correction or other federal determination, the taxpayer must file an amended state return within six months of the federal correction or “final determination by the federal government.” The Act adds a definition of a federal “final determination” to mean “a change or correction of the amount of federal tax due arising from an audit by the Commissioner of Internal Revenue.”[49]

The Act also requires a taxpayer who voluntarily files an amended federal return to file an amended state return within six months of filing the amended federal return. The Department then has until the later of one year after the filing of the amended state return or three years after the filing of the original state return to propose an assessment. If the taxpayer fails to timely file an amended state return, the Department may propose an assessment within three years of the filing of the amended federal return.[50]

These changes are effective for federal amended returns filed on or after the date of enactment.[51]

Franchisor Information Returns. The original version of the Act would have required franchisors with at least one North Carolina franchisee to electronically file an annual informational return containing information to be prescribed by the Department. This change was requested by the Department to assist in the review of cash intensive businesses. This provision was not included in the final version of the Act. Franchisor reporting is still under consideration, but the issue was considered inappropriate for the legislature’s short session.

Sales Taxes on Prepaid Inventory. Recent changes in the sales tax law applicable to repair, maintenance and installation (“RMI”) services created the possibility that a taxpayer who had paid sales tax on the purchase of an item and then used the item in performing a taxable RMI service would have to collect a second tax on the item when it was transferred to the RMI customer. A temporary fix enacted last year allowed the taxpayer to offset the tax due on the RMI service by the amount of tax paid on the purchase of the item in question. This temporary fix is scheduled to expire on July 1 of this year. The Act effectively makes this fix permanent. It also provides that, if the amount of the offset exceeded the tax due for the period in which the offset was claimed, the excess is not eligible to be refunded but may be rolled forward and claimed in subsequent periods.[52]

Sales Tax Filing Extensions. Under current law, the Department may extend the time for filing a sales tax return for up to 30 days. The Act removes the 30-day limitation. This change was prompted by the need to extend the time beyond the 30-day period for taxpayers who were affected by Hurricane Matthew.[53]

Sales Tax Compromises. The Department is authorized to compromise a taxpayer’s liability for sales tax assessments for failure to properly collect and pay sales taxes on admissions, service contracts, prepaid meal plans or aviation gasoline and jet fuel as long as the taxpayer made a good faith effort to comply with the law. Under current law, this provision expires for assessments issued after July 1, 2020. The Act provides that the compromise authority covers any tax period ending before that date regardless of when the assessment is made.[54]

Sales Tax Enforcement Grace Period. Current law prohibits the Department from assessing sales or use taxes on certain transactions covered by the expansion of the sales tax base as long as the taxpayer made a good faith effort to comply with the new law. The grace period covers filing periods beginning on or after March 1, 2016 and ending before January 1, 2018. The Act extends this grace period for an additional year and expands the list of transactions covered.[55]

Property Tax Exemptions. Taxpayers claiming property tax exemptions must file an annual exemption application unless the statute specifically provides that no application or only a single application is required. The Act provides that several recently enacted exemptions qualify for a single rather than annual application. These exemptions are for real property occupied by charter schools, certain energy mineral interests, property located on lands held in trust by the United States for the Eastern Band of Cherokee Indians and mobile classrooms or modular units.[56]

Property Tax Extensions. Under current law, when the last day for taking any action with respect to property taxes falls on a Saturday, Sunday or holiday, the time limit for taking the action is extended to the next business day. The Act extends this next-day rule to situations where the last day for taking an action falls on a day when a disaster declaration is in effect, the tax office is closed and the taxpayer certifies that the Postal Service did not provide service to the taxpayer’s address.[57] This provision is effective for taxes imposed for taxable years beginning on or after July 1, 2018.[58]

Revenue Suspensions. The Act clarifies that, if a corporation or LLC is suspended by the Secretary of State for failing to timely file a tax return or pay a tax, the suspension does not relieve the entity of tax compliance obligations (or the tax liabilities of responsible persons) during the period of suspension.[59]

ABC Permit Holders. The Act requires specified ABC permit holders (including wineries, wine producers, wine importers and wine wholesalers; breweries; distilleries; malt beverage importers and malt beverage wholesalers) to register with the Department and to notify the Department when they discontinue business.[60] This change becomes effective October 1, 2018, and permittees must register before December 1, 2018.[61]


[1] Act §38.1.(a).

[2] G.S. §105-130.5(a)(25).

[3] Act §§38.1.(h) and (i); G.S.§§105-153.5(c)(7) and 116-209.25.

[4] Act §38.1.(j).

[5] Act §§38.1.(b) and (c); G.S. §§105-130.5(a)(26) and (27), 105-130.5(b)(29), 105-153.5(c2)(5), (6) and (7).

[6] Act §38.1.(b); G.S. §§105-130.5(a)(29) and 105-130.5(b)(3b).

[7] Act §38.1.(b); G.S. §105-130.5(a)(28).

[8] Act §38.1.(b); G.S. §105-130.5(a)(28).

[9] Act §38.2.(i); G.S. §105-130.11(b).

[10] Act §38.2.(j).

[11] Act §38.1.(c); G.S. §§105-153.5(a)(2)b and 105-153.5(c2)(1) and (2).

[12] Act §§5.6(j) and (k); G.S. §§105-130.5(b) and 105-153.5(b).

[13] Code §139.

[14] Act §35.25.(g); G.S. §105-153.5(b)(13).

[15] G.S. §105-153.5(b)(12).

[16] G.S. §115C-595(c).

[17] Act §§38.10.(m) and (s).

[18] Act §38.2.(a); G.S. §105-114(b)(2).

[19] Act §38.2.(b); G.S. §105-122(b).

[20] Act §38.2.(j).

[21] Act §38.2.(c); G.S. §105-130.4(l).

[22] Act §§38.2.(e), (f) and (g); G.S. §§105-228.3, 105-228.4A and 105-228.5(g).

[23] Act §38.10.(j); G.S. §105-129.39.

[24] Act §38.10.(k); G.S. §105-129.110.

[25] Act §38.5.(d); G.S. §105-164.4B(i).

[26] Act §38.5.(e); G.S. §105-164.4G(e).

[27] Act §§38.5.(x) and (y); G.S. §§105-164.3(30b) and 105-164.13(61a).

[28] Act §38.5.(aa).

[29] Act §38.5.(z).

[30] Act §38.5.(j); G.S. §105-164.13(13).

[31] Act §38.5.(j); G.S. §105-164.13(15).

[32] Act §38.5.(u); G.S. §105-164.4G(f).

[33] Act §38.5.(k); G.S. §105-164.13E.

[34] Act §38.5.(aa).

[35] Act §38.10.(g); G.S. §130A-247.

[36] Act §38.10.(s).

[37] Act §22.2.

[38] S.L. 2017-151, §4.

[39] Act §38.2.(h); G.S. §105-41(a)(2).

[40] Act §38.7.(a); G.S. §105-113.4E.

[41] Act §38.4.(a); G.S. §105-263.

[42] Act §38.4.(b).

[43] Act §38.10.(n); G.S. §105-163.7(b).

[44] Act §38.10.(p); G.S. §105-236(a)(10).

[45] Act §38.10.(p); G.S. §105-236(a)(10).

[46] Act §38.10.(q); G.S.§105-263(c).

[47] Act §38.10.(r); G.S. §105-241A.

[48] Act §38.1.(g); G.S. §105-153.8(a).

[49] Act §38.3; G.S. §§105-130.20, 105-159, 105-160.8 and 105-163.6A.

[50] Act §38.3.(e); G.S. §105-241.8(b).

[51] Act §38.3.(h).

[52] Act §§38.5.(h) and (i); G.S. §§105-164.11B and 105-164.11(b).

[53] Act §38.5.(n); G.S. §105-164.19.

[54] Act §38.10.(c); G.S. §105-237.1(a)(6).

[55] Act §38.5.(q); G.S. §105-244.3.

[56] Act §38.10.(d); G.S. §105-282.1(a)(2)b.

[57] Act §38.9.(a); G.S. §105-395.1.

[58] Act §38.9.(b).

[59] Act §§38.10.(a) and (b); G.S. §§105-230(b) and 105-242.2(a)(1).

[60] Act §38.6.(c); G.S. §105-113.83A

[61] Act §38.6.(m).


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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Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

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This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.