June 1, 2012
Bill would further cripple N.C. Department of Revenue
Not satisfied with having essentially legalized tax evasion by profitable multi-state corporations last year, Republicans in our out-of-control state legislature are moving during the General Assembly’s so-called “short session” now underway to further cripple the ability of the Department of Revenue to rein in corporate tax cheats.
Per the News & Observer:
The state Department of Revenue would surrender some of its ability to collect income taxes from corporations, under a bill the Senate Finance Committee approved Wednesday.
Currently, the state can force multi-state corporations to calculate how much they owe in taxes by combining all of their revenue in this state and elsewhere. It’s a way to deal with corporations that dodge their tax bill by shifting money into tax shelters, such as income tax-free states like Delaware.
Last year the General Assembly voted to give corporations a way to defend those tax structures if there was a “reasonable business purpose” to them.
This new legislation would prevent the Department of Revenue from interpreting the law on forced combinations by issuing directives. Instead, it would have to develop formal rules that could then be challenged and taken to an administrative law judge to determine.
When profitable multi-state corporations weasel out of paying North Carolina taxes on North Carolina profits, they put law-abiding, tax-paying businesses in North Carolina at a significant disadvantage – and the people of North Carolina lose an important source of revenue to fund public education, improve infrastructure, and protect consumers and the environment.
In fact, the Department of Revenue used its enforcement powers in 2009 to recoup over $400 million from corporate tax cheats – not an insignificant sum of money when our state faces an ongoing revenue crisis.
If you think basic tax fairness begins with profitable multi-state corporations paying their taxes, this latest action by radical Republicans on Jones Street to make being a corporate tax cheat easier than ever should give you pause about allowing them to retain their majorities come November.