A BILL TO BE ENTITLED
AN ACT to remove the Cap on the sales tax applicable to sales of certain machinery; to raise the sales tax rate applicable to sales of certain Machinery; and to create an earned income tax credit.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 105‑164.4(a)(1d) reads as rewritten:
"(a)	A privilege tax is imposed on a retailer at the following percentage rates of the retailer's net taxable sales or gross receipts, as appropriate. The general rate of tax is four and one‑half percent (4 1/2%).
…
(1d)	The rate of two percent (2%) applies to the sales price of the articles listed in G.S. 105‑164.4A. As used in G.S. 105‑164.4A and G.S. 105‑187.51, the term "accessories" does not include electricity.
a.	through k. Recodified as § 105‑164.4A by Session Laws 1999‑360, s. 3(a), effective August 4, 1999."
SECTION 2.  Part 2 of Article 4 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-151.29.  Earned income tax credit.
(a)	Credit. – An individual who claims for the taxable year an earned income tax credit under section 32 of the Code is allowed a credit against the tax imposed by this Part equal to ten percent (10%) of the amount of credit the individual qualified for under section 32 of the Code. A nonresident or part-year resident who claims the credit allowed by this section must reduce the amount of the credit by multiplying it by the fraction calculated under G.S. 105-134.5(b) or (c), as appropriate.
(b)	Credit Refundable. – If the credit allowed by this section exceeds the amount of tax imposed by this Part for the taxable year reduced by the sum of all credits allowable, the Secretary must refund the excess to the taxpayer. The refundable excess is governed by the provisions governing a refund of an overpayment by the taxpayer of the tax imposed in this Part. Section 3507 of the Code, Advance Payment of Earned Income Credit, does not apply to the credit allowed by this section. In computing the amount of tax against which multiple credits are allowed, nonrefundable credits are subtracted before refundable credits."
SECTION 3.  It is the intent of the General Assembly that the Department of Revenue make diligent efforts to notify taxpayers eligible for the State‑earned income tax credit and provide information to the eligible taxpayers on how to obtain the credit.
SECTION 4.  Section 1 becomes effective July 1, 2002, and applies to sales made on or after that date. Section 1 is repealed effective for sales made on or after July 1, 2005. Section 2 is effective for taxable years beginning on or after January 1, 2002.  The remainder of this act is effective when it becomes law.