A BILL TO BE ENTITLED
AN ACT to facilitate rapid response to state declared disasters by exempting certain businesses and employees from registration and tax laws during the disaster response period.
The General Assembly of North Carolina enacts:
SECTION 1.  Part 8 of Article 166A of the General Statutes is amended by adding a new section to read:
"§ 166A‑19.70A.  Tax and business relief for critical infrastructure businesses and employees during a disaster response period.
(a)	Purpose. – The State finds that it is appropriate to exempt from certain State laws businesses and employees who come from out‑of‑state to provide temporary resources and personnel to assist in disaster‑related work related to critical infrastructure in response to a disaster declaration.
(b)	Definitions. – In addition to the definitions in G.S. 166A‑19.3, the following definitions apply in this section:
(1)	Critical infrastructure. – Property and equipment owned or used by a critical infrastructure company for utility or communications transmission services to the public in the State. Examples of critical infrastructure include communications networks, electric generation, transmission and distribution systems, natural gas transmission and distribution systems, water pipelines, and related support facilities. Related support facilities may include buildings, offices, lines, poles, pipes, structures, and equipment.
(2)	Critical infrastructure company. – One of the following:
a.	A registered public communications provider.
b.	A registered public utility.
(3)	Disaster‑related work. – Repairing, renovating, installing, building, or performing services on critical infrastructure that has been damaged, impaired, or destroyed as a result of a disaster or emergency in an area covered by the disaster declaration.
(4)	Disaster response period. – A period that begins ten days prior to the first day of a disaster declaration and extends for 60 days following the expiration of the disaster declaration.
(5)	Out‑of‑state business. – A person that, except with regard to the performance of disaster‑related work, meets all of conditions of this subdivision. The term may include an affiliate or subsidiary of a critical infrastructure company. The conditions are as follows:
a.	Has no physical presence in the State.
b.	Does not conduct business operations in this State.
c.	Is not registered with any State agency to conduct business in the State.
d.	Has not been required to file any tax returns with the State for three years prior to the disaster response period, other than those arising from the performance of disaster‑related work during a tax year prior to the enactment of this section.
(6)	Out‑of‑state employee. – A nonresident who is an employee of an out‑of‑state business entitled to relief under subsection (c) of this section or a nonresident employee of a critical infrastructure company temporarily in the State to perform disaster‑related work during the disaster response period. The term does not include a nonresident who otherwise works in this State.
(7)	Registered public communications provider. – A person registered to conduct business in this State prior to the disaster declaration that provides the transmission to the public of one or more of the following:
a.	Broadband.
b.	Mobile telecommunications.
c.	Telecommunications.
d.	Wireless internet access
(8)	Registered public utility. – A person registered to conduct business in this State prior to the disaster declaration that is subject to control of one or more of the following entities:
a.	North Carolina Utilities Commission.
b.	Federal Communications Commission.
c.	Federal Energy Regulatory Commission.
(c)	State Relief for Out‑of‑State Business. – An out‑of‑state business performing disaster‑related work in this State during a disaster response period at the request of a critical infrastructure company is not considered to be conducting business in this State, and as such is exempt from the following statutory requirements:
(1)	Franchise tax, as provided under G.S. 105‑125.
(2)	Income tax, as provided under G.S. 105‑130.11.
(3)	S‑corporation income tax, as provided under G.S. 105‑131.7.
(4)	Information returns, as provided under G.S. 105‑154(a).
(5)	Unemployment tax, as provided under G.S. 96‑9.2.
(6)	Workers' compensation, as provided under G.S. 97‑13.
(7)	Registration with the Secretary of State to transact business in this State, as provided under G.S. 55‑1‑51.
(d)	State Relief for Out‑of‑State Employee. – An out‑of‑state employee is not required to pay State income tax, or file an income tax return, on earnings received for disaster‑related work performed during a disaster response period, as provided in G.S. 105‑153.4(f) and G.S. 105‑153.8(a)(2). The employer of an out‑of‑state employee is not required to withhold income tax from the wages of the employee, as provided in G.S. 105‑163.2(f).
(e)	Notification. – A critical infrastructure company that requests an out‑of‑state business to perform disaster‑related work in this State during the disaster response period must notify the State Emergency Response Team within (30) business days of the out‑of‑state business's entry into the State of the business's presence in the State. The notification must include the contact information of the critical infrastructure company that requested the presence of the out‑of‑state business as well as the following information about the out‑of‑state business: name, state of domicile, principal business address, federal tax identification number, date of entry, and any other information required by the State Emergency Response Team. The State Emergency Response Team must disseminate the information to the appropriate State agencies. Failure of the critical infrastructure company to provide this information in a timely manner does not invalidate the relief provided by this section so long as the company provides it to the appropriate State agency upon request.
(f)	Limitation. – The exemptions from the State laws provided by this section cease to apply when the disaster response period expires. An out‑of‑state business or out‑of‑state employee that remains in the State after the disaster response period expires must abide by all State and local registration, license, and filing requirements that apply to any other out‑of‑state business and out‑of‑state employee doing business in this State."
SECTION 2.(a)  Article 1 of Chapter 55 of the General Statutes is amended by adding a new section to read:
"§ 55‑1‑51.  Exemption for disaster relief.
(a)	Critical Infrastructure. – In accordance with the policy established in G.S. 166A‑19.70A, an out‑of‑state business performing disaster‑related work in this State during a disaster response period at the request of a critical infrastructure company is not required to obtain a certificate of authority from the Secretary of State as otherwise required under G.S. 55‑15‑01.
(b)	Motor Fuel. – A person issued a temporary license by the Department of Revenue under G.S. 105‑449.69A to import, export, distribute, or transport motor fuel in this State in response to a disaster declaration is not required to obtain a certificate of authority from the Secretary of State to transact business in this State for the duration of the temporary license."
SECTION 2.(b)  G.S. 96‑9.2(a) reads as rewritten:
"(a)	Required Contribution. – An employer is required to make a contribution in each calendar year to the Unemployment Insurance Fund in an amount equal to the applicable percentage of the taxable wages the employer pays its employees during the year for services performed in this State. An employer may not deduct the contributions due in whole or in part from the remuneration of the individuals employed. Taxable wages are determined in accordance with G.S. 96‑9.3. The applicable percentage for an employer is considered the employer's contribution rate and determined in accordance with this section.
In accordance with the policy established in G.S. 166A‑19.70A, an out‑of‑state business performing disaster‑related work in this State during a disaster response period at the request of a critical infrastructure company is exempt from the provisions of this Chapter. The definitions, provisions, and limitations in G.S. 166A‑19.70A apply in this section."
SECTION 2.(c)  G.S. 97‑13 is amended by adding a new subsection to read:
"§ 97‑13.  Exceptions from provisions of Article.
(e)	Disaster Relief. – In accordance with the policy established in G.S. 166A‑19.70A, an out‑of‑state business performing disaster‑related work in this State during a disaster response period at the request of a critical infrastructure company is exempt from the provisions of this Chapter. The definitions, provisions, and limitations in G.S. 166A‑19.70A apply in this subsection."
SECTION 2.(d)  G.S. 105‑125(a) is amended by adding a new subdivision to read:
"§ 105‑125.  Exempt corporations.
(a)	Exemptions. – The following corporations are exempt from the taxes levied by this Article. Upon request of the Secretary, an exempt corporation must establish its claim for exemption in writing:
…
(9)	In accordance with the policy established in G.S. 166A‑19.70A, an out‑of‑state business performing disaster‑related work in this State during a disaster response period at the request of a critical infrastructure company is exempt from the provisions of this Article. The definitions, provisions, and limitations in G.S. 166A‑19.70A apply in this subdivision."
SECTION 2.(e)  G.S. 105‑130.11(a) is amended by adding a new subdivision to read:
"(a)	Exempt Organizations. – Except as provided in subsections (b) and (c), the following organizations and any organization that is exempt from federal income tax under the Code are exempt from the tax imposed under this Part.
…
(12)	In accordance with the policy established in G.S. 166A‑19.70A, an out‑of‑state business performing disaster‑related work in this State during a disaster response period at the request of a critical infrastructure company is exempt from the provisions of this Part. The definitions, provisions, and limitations in G.S. 166A‑19.70A apply in this subdivision."
SECTION 2.(f)  G.S. 105‑131.7(a) reads as rewritten:
"(a)	An S Corporation incorporated or doing business in the State shall file with the Department an annual return, on a form prescribed by the Secretary, on or before the due date prescribed for the filing of C Corporation returns in G.S. 105‑130.17. The return shall show the name, address, and social security or federal identification number of each shareholder, income attributable to the State and the income not attributable to the State with respect to each shareholder as defined in G.S. 105‑131(b)(4) and (5), and such other information as the Secretary may require.
In accordance with the policy established in G.S. 166A‑19.70A, an S Corporation that is an out‑of‑state business performing disaster‑related work in this State during a disaster response period at the request of a critical infrastructure company is not required to file an annual return for income derived for the work performed during this period. The definitions, provisions, and limitations in G.S. 166A‑19.70A apply to this subsection."
SECTION 2.(g)  G.S. 105‑153.4 is amended by adding a new subsection to read:
"§ 105‑153.4.  North Carolina taxable income defined.
…
(f)	Disaster Relief Tax Exclusion. – In accordance with the policy established in G.S. 166A‑19.70A, an out‑of‑state business and an out‑of‑state employee performing disaster‑related work in this State during a disaster response period at the request of a critical infrastructure company is not considered to be conducting business in this State for the work performed during this period. The definitions, provisions, and limitations in G.S. 166A‑19.70A apply to this subsection. Accordingly, North Carolina taxable income, for purposes of this Part, does not include the following:
(1)	Nonresident employee. – The earnings paid to an out‑of‑state employee.
(2)	S Corporations shareholders. – A shareholder's pro rata share of S Corporation income if the income is attributable to work performed by the S Corporation as an out‑of‑state business performing disaster‑related work in this State during a disaster response period at the request of a critical infrastructure company.
(3)	Partners and members of unincorporated business. – The amount of a partner's or member's distributive share of the total net income of the business of a partnership or another unincorporated business if the income is attributable to work performed by an out‑of‑state business performing disaster‑related work in this State during a disaster response period at the request of a critical infrastructure company."
SECTION 2.(h)  G.S. 105‑153.8(a)(2) reads as rewritten:
"§ 105‑153.8.  Income tax returns.
(a)	Who Must File. – The following individuals must file with the Secretary an income tax return under affirmation:
…
(2)	Every nonresident individual who (i) has gross income under the Code that exceeds the applicable standard deduction amount provided in G.S. 105‑153.5(a)(1) and (ii) receives 
	during the taxable year gross income that is derived from North Carolina sources and is attributable to the ownership of any interest in real or tangible personal property in this State, is derived from a business, trade, profession, or occupation carried on in this State, or is derived from gambling activities in this State. This subdivision does not apply to a nonresident individual who is not subject to withholding under G.S. 105‑163.2(f).
	
…."
SECTION 2.(i)  G.S. 105‑154(c) reads as rewritten:
"(c)	Information Returns of Partnerships. – A partnership doing business in this State and required to file a return under the Code shall file an information return with the Secretary. A partnership that the Secretary believes to be doing business in this State and to be required to file a return under the Code shall file an information return when requested to do so by the Secretary. The information return shall contain all information required by the Secretary. It shall state specifically the items of the partnership's gross income, the deductions allowed under the Code, each partner's distributive share of the partnership's income, and the adjustments required by this Part. A partner's distributive share of partnership net income includes any guaranteed payments made to the partner. The information return shall also include the name and address of each person who would be entitled to share in the partnership's net income, if distributable, and the amount each person's distributive share would be. The information return shall be signed by one of the partners under affirmation in the form required by the Secretary.
A partnership that files an information return under this subsection shall furnish to each person who would be entitled to share in the partnership's net income, if distributable, any information necessary for that person to properly file a State income tax return. The information shall be in the form prescribed by the Secretary and must be furnished on or before the due date of the information return.
In accordance with the policy established in G.S. 166A‑19.70A, a partnership that is an out‑of‑state business performing disaster‑related work in this State during a disaster response period at the request of a critical infrastructure company is not required to file an information return for income derived for the work performed during this period. The definitions, provisions, and limitations in G.S. 166A‑19.70A apply to this subsection."
SECTION 2.(j)  G.S. 105‑163.2 reads as rewritten:
"§ 105‑163.2.  Employers must withhold taxes.
(a)	Withholding Required. – Except as provided in subsection (f) of this section, an employer shall deduct and withhold from the wages of each employee the State income taxes payable by the employee on the wages. For each payroll period, the employer shall withhold from the employee's wages an amount that would approximate the employee's income tax liability under Article 4 of this Chapter if the employer withheld the same amount from the employee's wages for each similar payroll period in a calendar year. In calculating an employee's anticipated income tax liability, the employer shall allow for the additions that employee is required to make under Article 4 of this Chapter and the deductions, and credits to which the employee is entitled under Article 4 of this Chapter. The amount of State income taxes withheld by an employer is held in trust for the Secretary.
…
(f)	Nonresident Disaster Relief Employees. – In accordance with the policy established in G.S. 166A‑19.70A, an employer is not required to withhold from the wages of its out‑of‑state employees the State income taxes that may otherwise apply for disaster‑related work performed in this State during a disaster response period. The definitions, provisions, and limitations in G.S. 166A‑19.70A apply in this subsection."
SECTION 3.  G.S. 105‑130.5(a) is amended by adding a new subdivision to read:
"(a)	The following additions to federal taxable income shall be made in determining State net income:
…
(30)	Payments made to a related party that is not subject to tax under this Chapter in accordance with the policy established in G.S. 166A‑19.70A, to the extent the payments are deducted in determining federal taxable income. For purposes of this subdivision, the term "related entity" has the same meaning as in G.S. 105‑130.7A(b)(4)."
SECTION 4.  Part 2 of Article 36B of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑449.69A.  Temporary license during disaster response period.
(a)	Temporary License. – The Secretary may grant a temporary license to an applicant to import, export, distribute, or transport motor fuel in this State in response to a disaster declaration. The term "disaster declaration" has the same meaning as defined in G.S. 166A‑19.3. The temporary license expires upon the expiration of the disaster declaration. A temporary license issued under this section may not be renewed or a new temporary license granted if the licensee failed to file the required returns or make payments of the required taxes.
(b)	Requirements. – To obtain a temporary license, a person must file an application with the Secretary on a form prescribed by the Secretary within seven calendar days from the date of the disaster declaration. An application must include all of the following information:
(1)	The legal name of the business and the trade name, if applicable, under which the person will transact business within the State.
(2)	The federal identification number of the business or, if such number is unavailable, the social security number of the owner.
(3)	The location, with a street number address, of the principal office or place of business and the location where records will be made available for inspection.
(4)	Any other information required by the Secretary.
(c)	Exceptions. – The Secretary may issue a temporary license under this section as an importer, exporter, distributor, or transporter without requiring the applicant to file with the Secretary a bond or an irrevocable letter of credit, as otherwise required by G.S. 105‑449.72, and without requiring the applicant to be authorized to transact business in this State with the Secretary of State."
SECTION 5.  This act is effective when it becomes law and applies to taxable years beginning on or after January 1, 2019.