North Carolina - Due process not offended by forced combination and substantial understatement penalty upheld

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The North Carolina Court of Appeals found that the state's forced combined filing of a taxpayer with its affiliate did not violate due process because the taxpayer was provided with sufficient notice that the Department changed its interpretation of how it would implement forced combination. Additionally, North Carolina was not constitutionally precluded from imposing the state's 25% understatement penalty because the taxpayer was given adequate notice of the potential for combined reporting. [Delhaize America, Inc. v. Lay, N.C. Ct. of App., No. COA11-868 (8/21/12)]



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