Update: SB 580 was signed by the Governor on September 15, 2011.
Proposed North Carolina legislation would allow the North Carolina Secretary of Revenue and a taxpayer to enter into an agreement to use an alternative filing method where the secretary believes that a taxpayer’s income is not accurately reported on a separate return because of intercompany transactions.
The agreement may be entered into without the need for the secretary to show that the intercompany transactions lack economic substance or are not at fair market value. The taxpayer must agree or in fact desire the combination for the agreement provisions to apply. The provision authorizes "any reasonable method for redetermining net income attributable to business carried on" in North Carolina.
The legislation would also amend the effective date of certain provisions of H.B. 619 (S.L. 2011-390), the combined reporting statute enacted in June 2011. Specifically, the amendment would make the repeal date of the current combination statute mirror the enactment date of the new combination statute. That is, the current combination statute would be repealed effective for taxable years beginning on or after January 1, 2012, rather than as of January 1, 2012. [S.B. 580, passed the third and final reading in House and Senate, 9/14/11, and is expected to be signed by the Governor]