A BILL TO BE ENTITLED
AN ACT to provide a tax credit for certain milk producers.
The General Assembly of North Carolina enacts:
SECTION 1.  Chapter 105 of the General Statutes is amended by adding a new Article to read:
"Article 3M.
"Milk Producer Tax Credits.
"§ 105‑129.115.  Definitions; credit for producing milk.
(a)	Definitions. – The following definitions apply in this Article:
(1)	Announced production price. – Defined in G.S. 106‑814.
(2) – (5)	Reserved.
(6)	Qualifying milk. – Grade "A" milk, as defined in G.S. 106‑266.30.
(b)	Credit. – A taxpayer engaged in the production of qualifying milk in this State for wholesale and for shipment on a weekly or more frequent basis is allowed a credit for each calendar year quarter in which the uniform price published by the United States Department of Agriculture in Federal Order Number 5 is less than the announced production price. The credit for the taxable year is equal to the product of the number of quarters for the calendar year (i) for which the credit is allowed and (ii) during the entirety of which the taxpayer was engaged in the production and shipment of qualifying milk multiplied by the following applicable quarterly tax credit amount:
Annual Pounds of Qualifying Milk Produced	Quarterly Credit Amount
500,000 to 2,500,000	$8,750
More than 2,500,000 up to 7,500,000	12,500
More than 7,500,000	15,000
"§ 105‑129.116.  Tax election; credit refundable.
(a)	Tax Election. – The credit provided in this Article is allowed against the franchise tax levied in Article 3 of this Chapter and the income taxes levied in Article 4 of this Chapter. The taxpayer may take the credits allowed by this Article against only one of the taxes against which it is allowed. The taxpayer must elect the tax against which a credit will be claimed when filing the return on which it is claimed. This election is binding.
(b)	Credit Refundable. – If the credit allowed by this section exceeds the amount of tax against which the credit is claimed 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 computing the amount of tax against which multiple credits are allowed, nonrefundable credits are subtracted before refundable credits.
"§ 105‑129.117.  Substantiation.
To claim a credit allowed by this Article, the taxpayer must provide any information required by the Secretary of Revenue. Every taxpayer claiming a credit under this Article must maintain and make available for inspection by the Secretary of Revenue any records the Secretary considers necessary to determine and verify the amount of the credit to which the taxpayer is entitled. The burden of proving eligibility for a credit and the amount of the credit rests upon the taxpayer, and no credit may be allowed to a taxpayer that fails to maintain adequate records or to make them available for inspection.
"§ 105‑129.118.  Reports.
The Department must include in the economic incentives report required by G.S. 105‑256 the following information itemized by credit and by taxpayer:
(1)	The number of taxpayers that took the credits allowed in this Article.
(2)	The volume of milk produced with respect to which credits were taken.
(3)	The total cost to the General Fund of the credits taken.
"§ 105‑129.119.  Sunset.
This Article is repealed effective for milk produced on or after January 1, 2025."
SECTION 2.  The Revenue Laws Study Committee shall biennially review the credit authorized by Section 1 of this act to determine if the economic benefit provided by the credit outweighs the cost of the tax expenditure.
SECTION 3.  G.S. 106‑814 is amended by adding a new subsection to read:
"(h)	By July 1, and quarterly thereafter, the Board of Agriculture shall promulgate the announced production price for milk for the State that takes into consideration, at a minimum, (i) the average price of milk in the top five states where milk is imported to this State, (ii) the average transportation cost of importing milk from those states, and (iii) the cost of production in this State."
SECTION 4.  Section 3 of this act is effective when it becomes law. The remainder of this act is effective for taxable years beginning on or after January 1, 2020.