NORTH CAROLINA GENERAL ASSEMBLY
1979 SESSION

CHAPTER 801
SENATE BILL 904

AN ACT TO PROVIDE TAX RELIEF FOR THE CITIZENS OF NORTH CAROLINA.

Whereas, the citizens of North Carolina have suffered and are suffering, due to inflation, a dramatic decrease in the purchasing power of the dollar; and
Whereas, the State income tax personal exemptions have not been raised since 1921 and the inheritance tax has not been substantially amended since 1913; and
Whereas, the effect of inflation on the State taxes increases the tax burden of North Carolina citizens each year; and
Whereas, this increased tax burden as a result of inflation offsets the increases in the wages and salaries that are necessary to keep up with the increase in consumer prices; Now, therefore,

The General Assembly of North Carolina enacts:

Section 1.  This act shall be known as the "Revenue Act of 1979".
Sec. 2.  G.S. 7A‑311(a)(1) is rewritten to read as follows:
"(1)(a)	Effective July 1, 1979, for every civil action filed on or after that date, for each item of civil process, including summons, subpoenas, notices, motions, orders, units and pleadings served, three dollars ($3.00). When two or more items of civil process are served simultaneously on one party, only one three-dollar ($3.00) fee shall be charged. Effective July 1, 1981, for every civil action filed on or after that date, for each item of civil process, including summons, subpoenas, notices, motions, orders, writs and pleadings served, four dollars ($4.00). When two or more items of civil process are served simultaneously on one party, only one four-dollar ($4.00) fee shall be charged.
(b)	When an item of civil process is served on two or more persons or organizations, a separate service charge shall be made for each person or organization. If the process is served, or attempted to be served, by a city policeman, the fee shall be remitted to the city rather than the county. If the process is served, or attempted to be served by the sheriff, the fee shall be remitted to the county. This subsection shall not apply to service of summons to jurors."
Sec. 3.  G.S. 15A-1343 is amended to add a new subsection (e) to read as follows:
"(e)	Supervision fee. When any person is placed upon supervised probation, the court may require, as a condition of probation, that such person pay, during his probationary period, a monthly supervision fee of ten dollars ($10.00) to the clerk of superior court designated by the court. The probation officer shall not be required to collect the supervision fee. Any clerk of superior court receiving such a fee shall transmit this money to the State of North Carolina to be deposited in the General Fund. In no event shall a person placed upon supervised probation be required to pay more than one monthly supervision fee."
Sec. 4.  G.S. 18A-15(3)c.2. is amended to strike the words "alcoholic beverages" from lines 1, 4 and 7 of that sub-subdivision and insert in lieu thereof the words "spirituous liquors".
Sec. 5.  The first sentence of G.S. 20-7(g) is rewritten to read as follows:
"(g)	Every chauffeur's license issued under this section shall automatically expire on the birthday of the licensee on the fourth year following the year of issuance and chauffeurs shall renew their licenses every four years after an examination which may include road tests, oral and in the case of literate applicants, written tests, and tests of vision as the Division may require: Provided, that the Commissioner may, in proper cases, waive the examination required by this subsection: Provided, further, that no chauffeur's license issued hereunder shall expire in less than six months from the date of issuance."
Sec. 6.  G.S. 20-7(i) is amended to replace the words and numbers "five dollars ($5.00)" with "ten dollars ($10.00)".
Sec. 7.  G.S. 20-42(b) is amended to strike the words and figure "one dollar ($1.00)" appearing in lines 3 and 4 and insert in lieu thereof the words and figure "two dollars ($2.00)".
Sec. 8.  G.S. 20-74 is amended to strike the words and figure "two dollars ($2.00)" appearing in line 6 and insert in lieu thereof the words and figure "three dollars ($3.00)".
Sec. 9.  G.S. 20-84 is amended to strike the words and figure "one dollar ($1.00)" whenever same appears therein and insert in lieu thereof the words and figure "three dollars and fifty cents ($3.50)".
Sec. 10.  G.S. 20-84.1 is amended to strike the words and figure "one dollar ($1.00)" appearing in line 12 and insert in lieu thereof the words and figure "three dollars and fifty cents ($3.50)".
Sec. 11.  G.S. 20-85 is amended to strike the first word in line 1, the word "There", and to insert in lieu thereof the following: "Except as provided in G.S. 20-68, there"; to strike the figure "$2.00" appearing in subsections (1) and (3), and insert in lieu thereof the figure "$3.50"; to strike the figure "$2.00" appearing in subsection (2), and insert the figure "$5.00"; and to strike the figure ".50" appearing in subsection (6), and insert the figure "$2.00".
Sec. 12.  G.S. 20-94 is amended to strike the words and figure "one-half of one percent (1/2 of 1%)" appearing in lines 7 and 8 and insert the words and figure "one percent (1%)".
Sec. 13.  G.S. 28A-21-2(a) is amended to insert the following two sentences between the first and second sentences of that subsection:
"If the total value of the decedent's property subject to inheritance or estate tax, both real and personal, including the value of transfers over which the decedent retained any interest as described in G.S. 105-2(3), as well as the taxable value of any gifts made within three years prior to the date of death of the decedent, as also required by G.S. 105-2(3), is less than twenty thousand dollars ($20,000) and all of the beneficiaries belong to the class (A) as defined in G.S. 105-4(a), then the personal representative or collector shall certify in the final account filed with the Clerk of Superior Court that no inheritance tax return was required to be filed with the Department of Revenue pursuant to G.S. 105-23. Such certification shall list the amount and value of all of the decedent's property, and with respect to real estate, its particular location within or outside the State, including any property transferred by the decedent over which he had retained any interest as described in G.S. 105-2(3), or any property transferred within three years prior to the date of the decedent's death, and after being filed and accepted by the Clerk of Superior Court shall be prima facie evidence that such property is free of any State inheritance or State estate tax liability."
Sec. 14.  The third sentence of the first paragraph of G.S. 54-1(b) (which reads: "The corporation organized under the provisions of this Chapter shall be taxed as a business corporation organized under the provisions of Chapter 55.") is repealed.
Sec. 15.  Article 2A of Chapter 54 of the General Statutes is amended to add a new section to read as follows:
"§ 54-18.6.  Shares and deposits defined. — Such shares as mentioned in Article 2 of this Chapter, and such deposits as mentioned in Article 2A of this Chapter, shall be those funds, the custody of which is transferred to a savings and loan association in this State by its shareholders or depositors, which are withdrawable upon the demand of the owner of such shares or deposits, subject only to the agreed upon notice of intention to withdraw."
Sec. 16.  G.S. 105-2(9) is rewritten to read as follows:
"(9)	Whenever any person or corporation comes into possession or enjoyment of any real or personal property, including bonds of the United States and bonds of a state or subdivision or agency thereof, at or after the death of an individual and by reason of said individual's having entered into a contract or other arrangement with the United States, a state or any person or corporation to pay, transfer or deliver said real or personal property, including bonds of the United States and bonds of a state, to the person or corporation receiving the same, whether said person or corporation is named in the contract or other arrangement or not: Provided, that no tax shall be due or collected on that portion of the real or personal property received under the conditions outlined herein which the person or corporation receiving the same purchased or otherwise acquired by funds or property of the person or corporation receiving the same, or had acquired by a completed inter vivos gift.
Nothing in subdivision (9) shall apply to the proceeds of life insurance policies."
Sec. 17.  G.S. 105-3(4) is rewritten to read as follows:
"(4)	The proceeds of all life insurance policies payable to beneficiaries named in subdivisions (1), (2) and (3) of this section. And also proceeds of all policies of insurance and the proceeds of all adjusted service certificates that have been or may be paid by the United States government, or that have been or may be paid on account of policies required to be carried by the United States government or any agency thereof, to the estate, beneficiary, or beneficiaries of any person who has served in the armed forces of the United States or in the merchant marine during the First or Second World War or any subsequent military engagement; and proceeds, not exceeding the sum of twenty thousand dollars ($20,000), of all policies of insurance paid to the estate, beneficiary or beneficiaries of any person whose death was caused by enemy action during the Second World War or any subsequent military engagement; and proceeds, not exceeding the sum of twenty thousand dollars ($20,000), of all policies of insurance paid to the estate, beneficiary or beneficiaries of any person whose death was caused by enemy action during the Second World War or any subsequent military engagement involving the United States. This provision will be operative only when satisfactory proof that the death was caused by enemy action is filed by the executor, administrator, or beneficiary with the Secretary of Revenue."
Sec. 18.  The first sentence of G.S. 105-3(5) is rewritten to read as follows:
"(5)	The value of an annuity or other payment (other than a lump sum distribution described in Section 402(e)(4) of the United States Internal Revenue Code, determined without regard to the next to the last sentence of Section 402(e)(4)(A) of such Code) receivable by any beneficiary (other than the executor) under (a) an employees' trust (or under a contract or insurance policy purchased by an employees' trust) forming part of a pension, stock bonus, or profit-sharing plan, which at the time of the decedent's separation from employment (whether by death or otherwise), or at the time of termination of the plan if earlier, met the requirements of Section 401(a) of the United States Internal Revenue Code; or (b) a retirement annuity contract purchased by an employer (and not by an employees' trust) pursuant to a plan, which at the time of decedent's separation from employment (by death or otherwise), or at the time of termination of the plan if earlier, met the requirements of Section 403(a) or 403(b) of such Code."
Sec. 19.  G.S. 105-3(7) is rewritten to read as follows:
"(7)	The total value of proceeds of an annuity or other payment receivable by any beneficiary (other than the executor) under a military family protection, or survivor benefit, plan, or other comparable plan, pursuant to Chapter 73 of Title 10 of the United States Code."
Sec. 20.  G.S. 105-4(a) is amended on line 11 by striking the words "above exemption".
Sec. 21.  G.S. 105-4(b) is rewritten to read as follows:
"(b)	(1)	The surviving spouse of a decedent shall be allowed a credit of three thousand one hundred fifty dollars ($3,150) against the taxes imposed under this Article. Notwithstanding any other provisions of this Article, the credit allowed by this subdivision shall not exceed the amount of the tax imposed by this Article.
(2)	If there is no surviving spouse or to the extent that a surviving spouse has not used all of the credit allowed under subdivision (1) of this subsection, the remainder of the credit shall be allowed on a pro rata basis according to tax liability to each child under 18 years of age and each child 18 years of age or older, who is mentally incapacitated, or by reason of physical disability is unable to support himself, is unmarried and residing with the decedent in his home at the time of the decedent's death, or who is then institutionalized on account of such mental incapacity or physical disability. Notwithstanding any other provisions of this Article, the credit allowed by this subdivision shall not exceed the amount of the tax imposed by this Article.
(3)	To the extent that minor children and physically and mentally disabled children have not used all of the credit allowed under subdivision (2) of this subsection, the remainder of the credit shall be allowed on a pro rata basis according to tax liability to each of the other Class A beneficiaries, except lineal ancestors of the decedent. Notwithstanding any other provisions of this Article, the credit allowed by this subdivision shall not exceed the amount of the tax imposed by this Article."
Sec. 22.  G.S. 105-14 is rewritten to read as follows:
"§ 105-14.  Recurring taxes. — (a) Where property transferred has been taxed under the provisions of this Article, each transferee (regardless of class) receiving such property on account of any other transfer by reason of a death occurring within five years of the date of death of the former decedent, shall be allowed a tax credit based on the amount of tax paid on the prior transfer of said property as hereinafter provided. The tax credit allowed shall be a proportion of the tax paid on the prior transfer and shall be computed as follows:
(1)	If the said death occurs within one year of the former decedent's death, then a tax credit equal to one hundred percent (100%) of the amount of tax paid on the prior transfer shall be allowed.
(2)	If the said death occurs within two years of the former decedent's death, then a tax credit equal to eighty percent (80%) of the amount of tax paid on the prior transfer shall be allowed.
(3)	If the said death occurs within three years of the former decedent's death, then a tax credit equal to sixty percent (60%) of the amount of tax paid on the prior transfer shall be allowed.
(4)	If the said death occurs within four years of the former decedent's death, then a tax credit equal to forty percent (40%) of the amount of tax paid on the prior transfer shall be allowed.
(5)	If the said death occurs within five years of the former decedent's death, then a tax credit equal to twenty percent (20%) of the amount of tax paid on the prior transfer shall be allowed.
(6)	No tax credit shall be allowed if said death occurs after five years have elapsed from the time of the former decedent's death.
(b)	The tax paid on the property in G.S. 105-14(a) shall be a fraction of the total tax paid on the prior transfer on account of all property received by the prior transferee. The numerator of this fraction shall be the former taxable value of the property being presently tranferred. The denominator of this fraction shall be the former total taxable value of all the property received by the prior transferee on the prior transfer.
(c)	For the purposes of this section, the personal representative shall conclusively presume that the property involved in the prior transfer or its equivalent value is a part of the present decedent's estate. The personal representative shall identify the property or its equivalent value and its taxable value in the prior transfer in a manner prescribed by the Secretary of Revenue."
Sec. 23.  The second sentence of G.S. 105-22 which begins with the word "The" and ends with the word "decedent" is rewritten to read as follows:
"The clerk shall make no report of a death where (1) the estate of a decedent is less than twenty thousand dollars ($20,000) in gross value, including the value of transfers over which the decedent retained any interest as described in G.S. 105-2(3), as well as the value of any gifts made within three years prior to the date of death of the decedent, as also required by G.S. 105-2(3), and (2) all the beneficiaries belong to the class (A) as defined in G.S. 105‑4(a)."
Sec. 24.  G.S. 105-23 is amended to:
(a)	delete all of the seventh sentence thereof, beginning with the word "Every" and ending with the word "decedent" and substitute therefor the following:
"Every executor or administrator may make a tentative settlement of the inheritance tax with the Secretary of Revenue, based on the inventory supported by oath or affirmation provided in this section."; and
(b)	add at the end of said section a new paragraph to read as follows:
"Notwithstanding any other provision of this section, no executor, administrator or other personal representative shall be required to file a return hereunder when (1) an estate shall have a gross value of less than twenty thousand dollars ($20,000), including any property transferred by the decedent over which he had retained any interest as described in G.S. 105‑2(3), as well as any property transferred within three years prior to the date of the decedent's death, and (2) all of the beneficiaries belong to the class (A) as defined in G.S. 105‑4(a)."
Sec. 25.  The table of rates contained in G.S. 105-37(a) is rewritten to read as follows:
"Population	Seating Capacity	Seating Capacity	Seating Capacity
	of	up to			of			over
Cities or Towns	600 Seats	600 to 1200 Seats	1200 Seats
Less than 1,500	$ 62.50	$ 75.00	$    100.00
	1,500 and less
than 3,000	100.00	125.00	150.00
3,000 and less
than 5,000	125.00	150.00	200.00
5,000 and less
than 10,000	175.00	200.00	300.00
10,000 and less
than 15,000	200.00	300.00	400.00
15,000 and less
than 25,000	250.00	400.00	500.00
25,000 and less
than 40,000	300.00	500.00	750.00
40,000 or over	350.00	700.00	1,200.00".
Sec. 26.  Subsections (b) and (c) of G.S. 105-37 are repealed.
Sec. 27.  Subsection (f) of G.S. 105-37 is amended by rewriting the last sentence of that subsection to read as follows:
"On a business described in subsections (d) or (e) of this section, cities and towns may levy a license tax not in excess of one half of the tax authorized by the schedule set forth in this subsection."
Sec. 28.  G.S. 105-113.83(2) is rewritten to read as follows:
"(2)	For an 'off-premises' license, twenty dollars ($20.00)."
Sec. 29.  G.S. 105-113.84 is rewritten to read as follows:
"§ 105-113.84.  Annual retail malt beverage State license. — Every person who intends to engage in the business of retail sales of malt beverages shall also apply for and procure an annual State license from the Secretary of Revenue. Twenty dollars ($20.00) shall be charged for the license for each location at which such business shall be engaged in."
Sec. 30.  G.S. 105-113.86 is amended to:
(a)	rewrite the first paragraph of subsection (o) to read as follows:
"In addition to the license taxes herein levied, a tax is levied upon the sale of unfortified wine at the rate of twenty-one cents (21ȼ) per liter. Provided, however, that the tax upon the sale of unfortified wine manufactured in North Carolina and composed principally of fruits or berries grown in North Carolina shall be taxed at the rate of one and one-fourth cents (1 l/4ȼ) per liter."
(b)	replace the words "one-half" in line 3 of subsection (p) with "sixty-two percent (62%)".
(c)	add between the words "thereof" and "shall" in line 4 of subsection (p) the following:
", and from the taxes collected annually under G.S. 105-113.95 an amount equivalent to twenty-two percent (22%) thereof".
Sec. 31.  G.S. 105-113.95 is rewritten to read as follows:
"§ 105-113.95.  Tax on fortified wines. — In addition to all other taxes levied in this Article, there is levied a tax upon the sale of fortified wines of twenty-four cents (24ȼ) per liter. Provided, however, that the tax upon the sale of fortified wine manufactured in North Carolina and composed principally of fruits or berries grown in North Carolina shall be taxed at the rate of one and one-fourth cents (1 1/4ȼ) per liter."
Sec. 32.  G.S. 105-130.5 is amended to add a new subdivision at the end of subsection (b) to read as follows:
"(11)	Reasonable expenses, in excess of deductions allowed for federal income tax purposes, paid for reforestation and cultivation of commercially grown trees; provided, that this deduction shall be allowed only to those corporations in which the real owners of all the shares of such corporation are natural persons actively engaged in the commercial growing of trees, or the spouse, siblings, or parents of such persons. Provided further, that in no case shall a corporation be allowed a deduction for the same reforestation or cultivation expenditure more than once."
Sec. 33.  G.S. 105-130.7 is amended:
(a)	to renumber present subsections (4), (5) and (6) to be subsections (5), (6) and (7) respectively;
(b)	to add a new subsection (4), immediately following subsection (3), to read as follows:
"(4)	Dividends received on shares of capital stock owned in a stock-owned savings and loan association taxed under Article 8D of this Chapter shall be deductible.";
(c)	to substitute the number (4) for the number (3) in line 1 of renumbered subsection (5) (formerly subsection (4));
(d)	to substitute the number (4) for the number (3) in line 13 of renumbered subsection (6) (formerly subsection (5)); and
(e)	to substitute the number (4) for the number (3) in line 3 of renumbered subsection (7) (formerly subsection (6)).
Sec. 34.  Division I of Article 4, Chapter 105 of the General Statutes, is amended to add a new section, G.S. 105-130.25, to read as follows:
"§ 105-130.25.  Credit against corporate income tax for construction of cogenerating power plants. — Any corporation, except a public utility as defined in G.S. 62-3(23), which constructs a cogenerating power plant in North Carolina shall be allowed a tax credit against the tax imposed by this division equal to ten percent (10%) of the costs required to purchase and install the electrical or mechanical power generation equipment of that plant; provided, that in order to secure the credit allowed by this section, the taxpayer must own or control such power plant at the time of construction, and payment in part or in whole for such construction and equipment must be made by the taxpayer during the tax year for which the credit is claimed; and the amount of credit allowed for any one income year shall be limited to ten percent (10%) of such costs paid during the year, and the credit allowed by this section shall not exceed the amount of the tax imposed by this division for the taxable year reduced by the sum of all credits allowable under this division, except for payments of tax made by or on behalf of the taxpayer. For purposes of this section, a cogenerating power plant is a power plant which sequentially produces electrical or mechanical power and useful thermal energy from the same primary energy source. The tax credit provided for in this section is not allowed to a corporation which constructs a cogenerating power plant whose combustion equipment uses residual oil, middle distillate oil, gasoline, natural gas or liquid propane gas (LPG) as a primary fuel."
Sec. 35.  Division I of Article 4, Chapter 105 of the General Statutes, is amended to add a new section, G.S. 105-130.26, to read as follows:
"§ 105-130.26.  Credit against corporate income tax for conversion of industrial boiler to wood fuel. — Any corporation which modifies or replaces an oil or gas-fired boiler or kiln used in the manufacturing process of a manufacturing business located in this State with one which is capable of burning wood shall be allowed as a credit against the tax imposed by this division, an amount equal to fifteen percent (15%) of the installation and equipment cost of such conversion; provided, that in order to secure the credit allowed by this section, the taxpayer must own or control the business in which such boiler or kiln is used at time of such conversion and payment in part or in whole for such installation and equipment must be made by the taxpayer during the tax year for which the credit is claimed; and the amount of credit allowed for any one income year shall be limited to fifteen percent (15%) of such costs paid during the year; and the credit allowed by this section shall not exceed the amount of the tax imposed by this division for the taxable year reduced by the sum of all credits allowable under this division, except for payments of tax made by or on behalf of the taxpayer."
Sec. 36.  The third sentence of G.S. 105-135(8) is rewritten to read as follows:
"A 'closely related dependent' for purposes of this subdivision shall be an individual for whom exemption is allowable under G.S. 105-149(a)(5)a."
Sec. 37.  G.S. 105441(b) is amended to add at the end a new subdivision, to be numbered (21) and to read as follows:
"(21)	Any amount, not exceeding one thousand five hundred dollars ($1,500), paid to an individual as compensation for the performance of duties as a member of the North Carolina organized militia, the National Guard as defined in G.S. 127A-3."
Sec. 38.  G.S. 105-141(b) is amended to add the following new subdivision:
"(22)	a.	General rule. At the election of the taxpayer, gross income does not include gain from the sale or exchange of property if with respect to a sale or exchange of a residence on or after January 1, 1979,
1.	the taxpayer has attained the age of 55 before the date of such sale or exchange, and
2.	during the five-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as his principal residence for periods aggregating three years or more.
b.	Limitation.
1.	The amount of the gain excluded from gross income under sub-subdivision a. shall not exceed one hundred thousand dollars ($100,000) (not to exceed fifty thousand dollars ($50,000) to each spouse with respect to property held by a husband and wife as tenants by the entirety or held as joint tenants with right of survivorship).
2.	Sub-subdivision a. shall not apply to any sale or exchange by the taxpayer if an election by the taxpayer or his spouse under sub- subdivision a. with respect to any other sale or exchange is in effect.
c.	Election. An election under sub-subdivision a. may be made or revoked at any time before the expiration of the period for making a claim for credit or refund of the tax imposed by this Article for the taxable year in which the sale or exchange occurred, and shall be made or revoked in such manner as the Secretary of Revenue shall prescribe. In the case of a taxpayer who is married, an election under sub-subdivision a. or a revocation thereof may be made only if his spouse joins in such election or revocation.
d.	Special rules.
1.	For purposes of this subdivision, if
I.	property is held by a husband and wife as tenants by the entirety or held as joint tenants with right of survivorship,
II.	such husband and wife make a joint return under Section 6013 of the Internal Revenue Code for the taxable year of the sale or exchange, and
III.	one spouse satisfies the age, holding, and use requirements of sub- subdivision a. with respect to such property, then both husband and wife shall be treated as satisfying the age, holding, and use requirements of sub-subdivision a. with respect to such property.
2.	For purposes of this subdivision, if property is held by a husband and wife as tenants by the entirety or held as joint tenants with right of survivorship, they shall be treated as one person for purpose of determining a gain under this subdivision. After such gain has been determined, one half the gain shall be attributed as income to each spouse. In order to enjoy the benefits of the election with respect to entirety property or property held as joint tenants with right of survivorship, the husband and wife shall file a combined return.
3.	For purposes of this subdivision, in the case of an unmarried individual whose spouse is deceased on the date of the sale or exchange of property, if
I.	the deceased spouse (during the five-year period ending on the date of the sale or exchange) satisfied the holding and use requirements of sub-subdivision a. 2. with respect to the property, and
II.	no election by the deceased spouse under sub-subdivision a. is in effect with respect to a prior sale or exchange, then such individual shall be treated as satisfying the holding and use requirements of sub‑subdivision a. with respect to the property.
4.	For purposes of this subdivision, if the taxpayer holds stock as a tenant- stockholder (as defined in Section 216 of the Internal Revenue Code) in a cooperative corporation (as defined in that section), then
I.	the holding requirements of sub-subdivision a. shall be applied to the holding of the stock, and
II.	the use requirements of sub-subdivision a. shall be applied to the house or apartment which the taxpayer was entitled to occupy as such stockholder.
5.	For purposes of this subdivision, the destruction, theft, seizure, requisition, or condemnation of property shall be treated as the sale of the property.
6.	In the case of property only a portion of which, during the five-year period ending on the date of the sale or exchange, has been owned and used by the taxpayer as his principal residence for periods aggregating three years or more, this subdivision shall apply with respect to so much of the gain from the sale or exchange of such property as is determined, under regulations prescribed by the Secretary of Revenue, to be attributable to the portion of the property so owned and used by the taxpayer.
7.	In the case of any sale or exchange, for purposes of this subdivision;
I.	the determination of whether an individual is married shall be made as of the date of the sale or exchange, and
II.	an individual legally separated from his spouse under a decree of divorce or of separate maintenance shall not be considered as married.
8.	In applying G.S. 105-144.1 (relating to involuntary conversions) and G.S. 105-144.2 (relating to sale or exchange of residence), the amount realized from the sale or exchange of property shall be treated as being the amount determined without regard to this subdivision, reduced by the amount of gain not included in gross income pursuant to an election under this subdivision.
9.	If the basis of property sold or exchanged is determined (in whole or in part) under subsection (b) of G.S. 105-144.1 (relating to the basis of property acquired through involuntary conversion), then the holding and use by the taxpayer of the converted property shall be treated as holding and use by the taxpayer of the property sold or exchanged."
Sec. 39.  G.S. 105-141(b) is amended to add a new subdivision (23) to read as follows:
"(23)	The portion of payments received from governmental programs listed under Section 126 of the Internal Revenue Code which are excludable from gross income for federal income tax purposes. No deduction or credit allowable under any other provision of this division shall be allowed for any expenditure made with the use of such payments or for any property acquired with such payments (to the extent that the basis is allocable to the use of such payments). No adjustment to basis shall be made for property acquired through the use of such payments, to the extent that such adjustment would reflect the amount of such payment."
Sec. 40.  Division II of Article 4 of Chapter 105 of the General Statutes is amended to add a new section to read as follows:
"§ 105-144.5.  Special proration provision for sale of timber products. — Any individual who meets the landowner qualification requirements for receiving forestry incentive payments under Section 4(c) of the Federal Cooperative Forestry Assistance Act of 1978 (16 U.S.C. 2103) may elect to report the gross income from the sale of timber products from his individually owned forestland as defined in G.S. 105-277.2(2) and (4), as follows: one-third of the gross income shall be reported in the year in which the income is realized and the remaining two-thirds of the gross income shall be reported in thirds in the two taxable years succeeding the year in which the income is realized. If a timely election is made to report a gain from the sale of timber products on the basis prescribed in this section, the election shall be binding on the taxpayer, and he may not after the date prescribed by law for filing his return change to another method of reporting the gain, and in like manner if a timely election is made to report the income on other than the basis prescribed in this section, the election shall likewise be binding on the taxpayer."
Sec. 41.  G.S. 105-147 is amended to add a new subparagraph to subdivision (1) to read as follows:
"f.	As to taxpayers engaged in the commercial growing of trees, reasonable expenses paid for reforestation and cultivation, including site preparation, natural and artificial forestation, noncommercial removal of residual stands for silvicultural purposes, and cultivation of established young growth of desirable trees. Such expenses may, at the taxpayer's option, be amortized based on a period of 60 months. No deduction shall be allowable under this subdivision for amounts deducted under other provisions of this Division. The deduction provided under this subdivision shall be reduced by amounts received for incentive payments excludable from income under this Division. No adjustment to the basis of property shall be made for expenses deducted under this subdivision. The election under this subdivision for any taxable year shall be made within the time prescribed by law (including extensions thereof) for filing the return for the taxable year. The election shall be made in such manner as the Secretary of Revenue may prescribe, and such election may not be revoked."
Sec. 42.  G.S. 105-147(7) is amended to insert a new sentence immediately following the sixth sentence of said subsection to read as follows:
"Dividends received on shares of capital stock owned in a stock-owned savings and loan association taxed under Article 8D of this Chapter shall be deductible."
Sec. 43.  G.S. 105-147(11)b.2. is rewritten to read as follows:
"2.	The term 'qualifying spouse' means a spouse who has not claimed a two thousand two hundred dollar ($2,200) personal exemption."
Sec. 44.  The first paragraph of G.S. 105-147(22) is rewritten to read as follows:
"(22)	Individual income taxpayers whose income is reportable to the State for income tax purposes, may, at their option, under such rules and regulations as the Secretary of Revenue may prescribe, elect to claim a standard deduction equal to ten percent (10%) of their adjusted gross income or five hundred fifty dollars ($550.00) whichever is lesser, in lieu of all deductions other than those incurred in the deriving of the income and other than personal exemptions and dependency deductions provided that where both spouses have income taxable in this State and one spouse elects to take credit for the standard deduction provided herein, the other spouse must also take such standard deduction. For the purpose of this subdivision, the phrase 'adjusted gross income' shall mean adjusted gross income as defined in G.S. 105‑141.3 of this division.
Sec. 45.  G.S. 105-147(26)a. is rewritten to read as follows:
"a.	In the case of an individual who maintains a household which includes as a member one or more qualifying individuals, there shall be allowed as a miscellaneous deduction an amount for employment related expenses as defined in subdivision b2 not to exceed four thousand dollars ($4,000) during any one taxable year.
	In the case of such expenses for services outside the taxpayer's household incurred for the care of a qualifying individual described in b11 below, the amount allowed during any one taxable year shall not exceed two thousand dollars ($2,000) per qualifying individual, subject, however, to the four thousand dollar ($4,000) limitation set out above."
Sec. 46.  G.S. 105-147(26)c. is repealed.
Sec. 47.  G.S. 105-147 is amended to add a new subdivision (27) to read as follows: 
"(27)(a)	There shall be allowed as a deduction any political contribution or newsletter fund contribution, payment of which is made by a taxpayer within the taxable year.
(b)	The deduction under subsection (a) above shall not exceed twenty-five dollars ($25.00), and shall be allowed only if such contribution is verified in such manner as the secretary shall prescribe by administrative rule or regulation.
(c)	Definitions. For the purposes of this subsection (27):
(1)	The term 'political contribution means any contribution or gift of money to
(A)	an individual who is a candidate for nomination or election to any federal, State, or local elective public office in any primary, general, or special election, for use by that individual to further his candidacy for nomination or election to such office;
(B)	any committee, association, or organization (whether or not incorporated) organized and operated exclusively for the purpose of influencing, or attempting to influence, the nomination or election of one or more individuals who are candidates for nomination or election to any federal, State, or local elective public office, for use by such committee, association, or organization to further the candidacy of such individual or individuals for nomination or election to such office;
(C)	the national committee of a national political party;
(D)	the State committee of a national political party as designated by the national committee of such party; or
(E)	a local committee of a national political party as designated by the State committee of such party designated under subparagraph (D).
(2)	The term 'candidate' means, with respect to any federal, State, or local elective public office, an individual who
(A)	publicly announces before the close of the calendar year following the calendar year in which the contribution or gift is made that he is a candidate for nomination or election to such office; and
(B)	meets the qualifications prescribed by law to hold such office.
(3)	The term 'national political party' means
(A)	in the case of contributions made during a taxable year of the taxpayer in which the electors of President and Vice-President are chosen, a political party presenting candidates or electors for such offices on the official election ballot of 10 or more states, or
(B)	in the case of contributions made during any other taxable year of the taxpayer, a political party which met the qualifications described in subparagraph (A) in the last preceding election of a president and vice-president.
(4)	The term 'State' means the State of North Carolina; and the term 'local' means one or more political subdivisions (or parts thereof) of the State.
(5)	The term 'newsletter fund contribution' means a contribution or gift of money to a fund established and maintained by an individual who holds, has been elected to, or is a candidate for nomination or election to, any federal, State, or local elective public office for use by such individual exclusively for the preparation and circulation of a newsletter."
Sec. 48.  G.S. 105-149(a)(1) is rewritten to read as follows:"(1) In the case of a single individual who is not a head of household as defined in G.S. 105-135(8), a personal exemption of one thousand one hundred dollars ($1,100). In the case of a single individual who is a head of household, as defined in G.S. 105‑135(8), a personal exemption of two thousand two hundred dollars ($2,200)."
Sec. 49.  G.S. 105-149(a)(2) is rewritten to read as follows:
"(2)	In the case of a married couple living together, two thousand two hundred dollar ($2,200) exemption to the spouse having the larger adjusted gross income and one thousand one hundred dollar ($1,100) exemption to the other spouse; provided that the spouse having the larger income may by agreement with the other spouse allow that spouse to claim the two thousand two hundred dollar ($2,200) exemption in which case the spouse having the larger adjusted gross income must file a return and claim only the one thousand one hundred dollar ($1,100) exemption."
Sec. 50.  G.S. 105-149(a)(2a) is rewritten to read as follows: "(2a) In the case of an individual who qualifies as 'head of household' as defined in subdivision (8) of G.S. 105-135, two thousand two hundred dollars ($2,200), but the 'head of household' exemption shall not be allowable to a married individual living with his or her spouse except as provided in subsection (c)(2) of this section. The 'head of household' exemption shall be in lieu of and not in addition to the exemptions established in subdivisions (1), (2), (4), (6) and (7) of subsection (a). Only one 'head of household' exemption shall be allowable with respect to any one household, as the term 'household' is defined in subdivision (8) of G.S. 105-135, and no individual shall be entitled to more than one 'head of household' exemption."
Sec. 51.  G.S. 105- 149(a)(3) is rewritten to read as follows: "(3) In the case of a married couple living together, the spouse who does not claim the two thousand two hundred dollar ($2,200) exemption as provided in (a)(2), one thousand one hundred dollars ($1,100)."
Sec. 52.  G.S. 105-149(a)(4) is rewritten to read as follows: "(4) In the case of a widow or widower having minor child or children, natural or adopted, two thousand two hundred dollars ($2,200)."
Sec. 53.  The first paragraph of G.S. 105-149(a)(5) is rewritten to read as follows:
"(5)	For taxable years, beginning on or between January 1, 1980, and December 31, 1980, seven hundred dollars ($700.00) for each dependent (as defined below) whose gross income for the calendar year in which the taxable year of the taxpayer begins is less than one thousand dollars ($1,000), or who is a child of the taxpayer either under 19 years of age or a student regularly enrolled for full-time study in a school, college, or other institution of learning. For taxable years beginning on and after January 1, 1981, eight hundred dollars ($800.00) for each dependent (as defined below) whose gross income for the calendar year in which the taxable year of the taxpayer begins is less than one thousand dollars ($1,000), or who is a child of the taxpayer either under 19 years of age or a student regularly enrolled for full‑time study in a school, college, or other institution of learning. For the purpose of the preceding sentence, the term 'child' means an individual who is a son or daughter (natural or adopted), or a stepson or stepdaughter of the taxpayer."
Sec. 54.  The second paragraph of G.S. 105-149(a)(5) is rewritten to read as follows:
"An additional exemption of six hundred sixty dollars ($660.00) for a dependent (as defined in this subdivision) who is a full-time student at an accredited college or university or other institution of higher learning under such rules or regulations as may be prescribed by the Secretary of Revenue. For the purposes of this paragraph, the words 'full-time student' shall mean a dependent enrolled in full-time study on the last day of the income year or enrolled for full-time study for a period of at least five months (whether or not consecutive) during the income year."
Sec. 55.  The second paragraph of G.S. 105-149(a)(5)c. is rewritten to read as follows:
"The exemption provided in this subdivision for children of taxpayers shall be allowed only to the person claiming the two thousand two hundred dollar ($2,200) exemption provided in subdivision (2) of this subsection except, however, that where husband and wife are divorced and have children of their marriage for which they would otherwise be entitled to an exemption hereunder, the parent furnishing the chief support of his (or her) child during the income year shall be entitled to said exemption, irrespective of whether said parent has custody of said child or children or is head of the household during said year."
Sec. 56.  The second paragraph of G.S. 105-149(a)(5)d. is rewritten to read as follows:
"Nothing in this subdivision shall be construed to allow one spouse to claim an exemption for the other spouse under this subdivision."
Sec. 57.  G.S. 105-149(a)(7) is rewritten to read as follows: "(7) In the case of a divorced person having the sole custody of a minor child or children and receiving no alimony for the support of himself or herself, nor support for a child, or children, two thousand two hundred dollars ($2,200)."
Sec. 58.  G.S. 105-149(a)(8) is rewritten to read as follows: "(8) In the case of any person who is blind, such person shall be entitled to an additional exemption of one thousand one hundred dollars ($1,100) in addition to all other exemptions allowed by law. Provided, such person shall submit to the Department of Revenue a certificate from a physician, an optometrist or from the Department of Human Resources certifying that such condition exists."
Sec. 59.  The first sentence of G.S. 105-149(a)(8a) is rewritten to read as follows:
"In the case of hemophiliacs meeting the criteria herein contained, such persons shall be entitled to an additional exemption of one thousand one hundred dollars ($1,100) in addition to all other exemptions provided by law."
Sec. 60.  The second paragraph of G.S. 105-149(a)(8a) is rewritten to read as follows:
"An additional exemption of one thousand one hundred dollars ($1,100) is allowed in addition to all other exemptions provided by law, for each dependent (as defined in subdivision (a)(5) above), who is a hemophiliac meeting the criteria set out in the above paragraph. The Division of Health Services of the Department of Human Resources is directed to develop said certificate and inform physicians and county health departments of its availability."
Sec. 61.  The first sentence of G.S. 105-149(a)(8b) is rewritten to read as follows:
"(8b)	In the case of any person who is deaf, such person shall be entitled to an additional exemption of one thousand one hundred dollars ($1,100) in addition to all other exemptions provided by law."
Sec. 62.  The first sentence of G.S. 105-149(a)(8c) is rewritten to read as follows:
"(8c)	In the case of persons suffering from chronic irreversible renal disease, whose condition requires that they utilize dialysis in connection with the amelioration of that condition, such persons shall be entitled to an additional exemption of one thousand one hundred dollars ($1,100) in addition to all other exemptions provided by law."
Sec. 63.  The second paragraph of G.S. 105-149(a)(8c) is rewritten to read as follows:
"An additional exemption of one thousand one hundred dollars ($1,100) is allowed in addition to all other exemptions provided by law, for each dependent (as defined in subdivision (a) above) who suffers from chronic irreversible renal disease and who meets the criteria set out in the above paragraph. The Division of Health Services of the Department of Human Resources is directed to develop said certificate and inform physicians and county health departments of its availability."
Sec. 64.  G.S. 105-149(a) is amended to add immediately following subdivision (8c) a new subdivision to read as follows:
"(8d)	For taxable years, beginning on or between January 1, 1979, and December 31, 1979, in the case of an individual who is paraplegic or who is disabled to the point that he must use a wheelchair to move about and to function effectively or who is a double-leg amputee above the knee, such individual shall be entitled to an exemption of one thousand dollars ($1,000) in addition to all other exemptions allowed by this section. For taxable years, beginning on and after January 1, 1980, that same individual shall be entitled to an exemption of one thousand one hundred dollars ($1,100) in addition to all other exemptions allowed by this section. Such individual shall submit to the Department of Revenue a certificate from a physician certifying that such condition exists."
Sec. 65.  G.S. 105-149(a)(9) is rewritten to read as follows:
"(9)	In the case of an individual who has reached the age of 65 years on or before the last day of the taxable year, an exemption of one thousand one hundred dollars ($1,100) in addition to all other exemptions allowed by this section."
Sec. 66.  The first paragraph of G.S. 105-149(a)(10) is rewritten to read as follows:
"(10)	In the case of each severely retarded person over half of whose support for the taxable year has been provided by a parent or guardian, there shall be allowed an exemption of two thousand two hundred dollars ($2,200) in addition to all other exemptions allowed by this subsection. For the purposes of this subdivision, 'severely retarded' shall mean a person whose intelligence quotient falls below 40."
Sec. 67.  Division II of Article 4, Chapter 105 of the General Statutes, is amended to add a new section, G.S. 105-151.4, to read as follows:
"§ 105-151.4.  Credit against personal income tax for construction of cogenerating power plants. — Any person, except a public utility as defined in G.S. 62-3(23), who constructs a cogenerating power plant in North Carolina shall be allowed a tax credit against the tax imposed by this division equal to ten percent (10%) of the costs required to purchase and install the electrical or mechanical power generation equipment of that plant; provided, that in order to secure the credit allowed by this section, the taxpayer must own or control such power plant at the time of construction, and payment in part or in whole for such construction and equipment must be made by the taxpayer during the tax year for which the credit is claimed; and the amount of credit allowed for any one income year shall be limited to ten percent (10%) of such costs paid during the year, and the credit allowed by this section shall not exceed the amount of the tax imposed by this division for the taxable year reduced by the sum of all credits allowable under this division, except for payments of tax made by or on behalf of the taxpayer. For purposes of this section, a cogenerating power plant is a power plant which sequentially produces electrical or mechanical power and useful thermal energy from the same primary energy source. The tax credit provided for in this section is not allowed to a person who constructs a cogenerating power plant whose combustion equipment uses residual oil, middle distillate oil, gasoline, natural gas or liquid propane gas (LPG) as a primary fuel."
Sec. 68.  Division II of Article 4, Chapter 105 of the General Statutes, is amended to add a new section, G.S. 105-151.5, to read as follows:
"§ 105-151.5.  Credit against personal income tax for conversion of industrial boiler to wood fuel. — Any person who modifies or replaces an oil or gas-fired boiler or kiln used in the manufacturing process of a manufacturing business located in this State with one which is capable of burning wood shall be allowed as a credit against the tax imposed by this division, an amount equal to fifteen percent (15%) of the installation and equipment cost of such conversion; provided, that in order to secure the credit allowed by this section, the taxpayer must own or control the business in which such boiler or kiln is used at time of such conversion and payment in part or in whole for such installation and equipment must be made by the taxpayer during the tax year for which the credit is claimed; and the amount of credit allowed for any one income year shall be limited to fifteen percent (15%) of such costs paid during the year; and the credit allowed by this section shall not exceed the amount of the tax imposed by this division for the taxable year reduced by the sum of all credits allowable under this division, except for payments of tax made by or on behalf of the taxpayer."
Sec. 69.  G.S. 105-159.1(c) is amended to delete the phrase, "three hundred thousand dollars ($300,000)", and insert in lieu thereof the phrase, "four hundred thousand dollars ($400,000)".
Sec. 70.  G.S. 105-163.1(3) is rewritten to read as follows:
"'Dependent' means a dependent with respect to whom an income tax exemption is allowed under the provisions of G.S. 105-149(a)(5)."
Sec. 71.  G.S. 105-163.1 6(c) is amended to delete the period in line 6 and add the following:
"and except that there shall be no refund to the taxpayer of any sum set-off under the provisions of Chapter 105A, the Set-off Debt Collection Act."
Sec. 72.  G.S. 105-164.3(16) is amended to add a new subsection e. to read as follows:
"e.	'Sales price' shall not include amounts charged as deposits on automotive, industrial, marine and farm replacement parts which are returnable to vendors for rebuilding or remanufacturing and which amounts are refundable or creditable to vendees, whether or not such deposits are separately charged. This subsection shall not be construed to include tires and batteries."
Sec. 73.  G.S. 105-164.4(1) is amended to add three new subdivisions to read as follows:
"n.	Sales to farmers of commercially manufactured portable swine equipment or facilities and accessories thereto.
o.	Sales to farmers of grain or soybean storage facilities and accessories thereto, whether or not dryers are attached, and all similar apparatus and accessories thereto for the storage of grain or soybeans.
p.	Sales to farmers for installing on the farm of: all bulk feed handling equipment which has been designed and constructed, to be used for raising, feeding and the production of swine and poultry products; and further including all cages used in the production of swine and poultry products."
Sec. 74.  G.S. 105-164.13 is amended to add a new subdivision (32a) to read as follows:
"(32a)	Sales of items by a nonprofit civic, charitable, educational, scientific or literary organization when the net proceeds of the sales will be given or contributed to the State of North Carolina or to one or more of its agencies or instrumentalities, or to one or more nonprofit charitable organizations, one of whose purposes is to serve as a conduit through which such net proceeds will flow to the State or to one or more of its agencies or instrumentalities."
Sec. 75.  G.S. 105-164.13 is amended to add a new subdivision (32b) to read as follows:
"(32b)	Sales by a nonprofit civic, charitable, educational, scientific or literary organization continuously chartered or incorporated within North Carolina for at least five years when such sales are conducted only upon an annual basis for the purpose of raising funds for its activities, and when the proceeds thereof are actually used for such purposes. Provided, however that no such sale shall be exempted if not actually consummated within 60 days of the first solicitation of any sale made during said organization's annual sales period."
Sec. 76.  Division III of Article 5 of Chapter 105 is amended to add a new section to read as follows:
"§ 105-164. 13A.  Service charge on prearranged group meals at approved facilities. — (a) The service charge imposed on prearranged group meals at approved facilities shall be specifically exempted from the tax imposed by this Article.
(b)	A 'service charge' is a prearranged charge, not to exceed fifteen percent (15%), agreed to by the contracting parties, which represents labor charges for serving meals to be provided.
(c)	'Prearranged group meals' are meals for four or more people, for which the price has been agreed upon in advance.
(d)	'Approved facilities' are restaurants, hotels, motels, cafeterias, and civic centers."
Sec. 76.1.  Chapter 47 of the 1979 Session Laws of the General Assembly is repealed.
Sec. 77.  G.S. 105-164.14(c) is rewritten to read as follows:
"(c)	Upon receipt of timely applications for refund, the Secretary of Revenue shall make refunds annually to all governmental entities, as hereinafter defined, of sales and use tax paid under this Article by said governmental entities on direct purchases of tangible personal property. Sales and use tax liability indirectly incurred by such governmental entities on building materials, supplies, fixtures and equipment which shall become a part of or annexed to any building or structure being erected, altered or repaired which is owned or leased by such governmental entities shall be construed as sales or use tax liability incurred on direct purchases by such governmental entities, and such entities may obtain refunds of such taxes indirectly paid. The refund provisions contained in this subsection shall not apply to any governmental entities not specifically named herein. In order to receive the refund herein provided for, governmental entities shall file a written request for said refund within six months of the close of the fiscal year of the governmental entities seeking said refund, and such request for refund shall be substantiated by such records, receipts and information as the Secretary may require. No refunds shall be made on applications not filed within the time allowed by this section and in such manner as the Secretary may otherwise require. The term 'governmental entities', for the purposes of this subsection, shall mean all counties, incorporated cities and towns, sanitary districts, metropolitan sewerage districts and metropolitan water districts in this State."
Sec. 78.  Notwithstanding any provision of law to the contrary, any metropolitan water district may, within six months after the effective date of this section, make timely application for refund of sales and use taxes paid under this Article within a period of three years next preceding the effective date of this section. Such taxes shall be only those which are refundable under the provisions of G.S. 105-164. 14(c) and refunds made pursuant to applications filed after the time herein specified shall be subject to the penalties provided for in G.S. 105-164.14(d).
Sec. 79.  G.S. 105-164.14(c) is amended to insert the phrase:
"water and sewer authorities created and existing under the provisions of Chapter 162A of the General Statutes,"
immediately after the phrase "incorporated cities and towns," and immediately before the phrase "sanitary districts" in each place at which those words occur in said section.
Sec. 80.  G.S. 105164.14(c) is amended to insert after the phrase "sanitary districts", each time it appears in that subsection, the following:
", regional councils of governments created pursuant to G.S. 160A-470".
Sec. 81.  G.S. 105‑164.14(c) is amended to insert after the phrase "sanitary districts", each time it appears in that subsection, the following:
", area mental health boards (other than single-county boards) established pursuant to Article 2F of Chapter 122 of the General Statutes".
Sec. 82.  G.S. 105-164.14(c) is amended to insert after the phrase "sanitary districts", each time it appears in that subsection, the following:
", regional planning and economic development commissions created pursuant to G.S. 158‑14, regional economic development commissions created pursuant to G.S. 158-8, regional planning commissions created pursuant to G.S. 153A-391".
Sec. 83.  G.S. 105-164.16 is amended to delete "five dollars ($5.00)" and substitute in lieu thereof "twenty-five dollars ($25.00)".
Sec. 84.  G.S. 105-199, as the same appears in Chapter 1220 of the 1977 Session Laws of the General Assembly is amended as follows:
(a)	In the first sentence of the first paragraph, to delete the following: "and stock‑owned savings and loan association in this State,".
(b)	In the first sentence of the second paragraph, to delete the following: "and every stock-owned savings and loan association".
(c)	In the first sentence of the third paragraph, to delete the following: "and of every such stock-owned savings and loan association in this State".
(d)	Also, in the first sentence of the third paragraph, to delete the following: "and by the stock-owned savings and loan association in this State".
(e)	In the second sentence of the third paragraph, to delete in both places in the sentence, the following: "or stock-owned savings and loan association".
(f)	In the third sentence of the third paragraph, to delete the following: "or stock‑owned savings and loan association".
(g)	In the fourth sentence of the third paragraph, to delete the following: "and the stock-owned savings and loan association".
(h)	In the first sentence of the fourth paragraph, to delete in both places in the sentence, the following: "or stock-owned savings and loan association".
(i)	In the third sentence of the fourth paragraph, to delete the following: "and North Carolina stock-owned savings and loan associations".
Sec. 85.  The last line of the second paragraph of G.S. 105-199 is amended to delete the phrase "three hundred dollars ($300.00)" and substitute the phrase "one thousand dollars ($1,000)".
Sec. 86.  G.S. 105-212 is amended to insert the following new paragraph at the end of the first paragraph:
"Funds on deposit in savings and loan associations in this State, which associations pay taxes under Article 8D of this Chapter, shall not be subject to taxation under this Article."
Sec. 87.  Subsection (d) of Section 4 of Chapter 179 of the 1979 Session Laws of the North Carolina General Assembly is amended to delete the phrase "or stock-owned savings and loan association".
Sec. 88.  G.S. 105-228.23 is rewritten to read as follows:
"§ 105-228.23.  Share and deposit tax. — (a) There is imposed on every savings and loan association affected by this Article, as determined by G.S. 105-228.22, for the privilege of conducting business in this State, a tax of seven and one-half cents ($.075) on each one hundred dollars ($100.00) of the liability of a nondeposit mutual association on its shares, or of a deposit mutual association, other mutual association, or stock-owned association on its deposits. For the purposes of this Article, the liability mentioned in the immediately preceding sentence shall mean the dollar amount which an association is obligated to pay to the owners of shares or deposits held by the association.
(b)	The amount of such tax shall be computed on the basis of shares or deposits in the association on December 31 of the preceding year."
Sec. 89.  G.S. 105-228.24 is rewritten to read as follows:
"§ 105-228.24.  Excise tax. — In addition to the taxes levied under G.S. 105-228.23, every savings and loan association shall pay annually an excise tax in the amount of seven and one half percent (7.5%) of the net taxable income, as herein defined, of such corporation during the income year. For purposes of this Article, 'net taxable income' shall mean net income as the same is defined for purposes of the income tax levied against corporations as provided in Article 4 of Subchapter I of Chapter 105 of the General Statutes less all dividends or interest paid or accrued by an association during the income year on all of its shares or deposits. 'Dividends or interest' shall mean the amounts paid to, or credited to the accounts of those who hold shares or deposits in such association, if such amounts paid or credited are withdrawable upon demand subject only to the agreed upon notice of intention to withdraw. The words 'income year' shall mean the calendar year or fiscal year upon the basis of which the net taxable income is computed under this Article."
Sec. 90.  G.S. 105-266 is amended to delete the period in line 8, substitute a semicolon therefor, and thereafter add the following:
"except that there shall be no refund to the taxpayer of any sum set-off under the provisions of Chapter 105A, the Set-off Debt Collection Act."
Sec. 91.  G.S. 105-266.1(a) is amended to delete the period in line 11, substitute a colon therefor, and thereafter add the following:
"except that there shall be no refund to the taxpayer of any sum set-off under the provisions of Chapter 105A, the Set-off Debt Collection Act."
Sec. 92.  Article 36 of Subchapter V, Chapter 105 of the General Statutes entitled "Gasoline Tax", is amended to add a new section, G.S. 105-446.5, to read as follows:
"§ 105-446.5.  Refund of taxes paid on motor fuels used by concrete mixing vehicles. — (a) Any person, association, firm, or corporation, who shall purchase motor fuels, as defined in this Article, for the purpose of use, and the same is actually used to load a concrete mixing vehicle, to maintain and transport the concrete mixture until ready for unloading, and to complete the unloading process as distinguished from propelling such vehicle, shall be reimbursed at the rate of thirty-three and one-third percent (33 1/3%) of eight cents (8¢) per gallon of the tax levied under this Article on all motor fuels used in the operation of the truck and concrete mixer upon the following conditions and in the following manner:
(1)	On or before April 15, 1981, and on or before April 15 of succeeding years, application for reimbursement for each immediately preceding calendar year shall be filed with the Secretary of Revenue. Such application shall be made upon such forms as the Secretary of Revenue shall prescribe. In all applications for reimbursement, the applicant shall be required to state whether or not such applicant has filed a North Carolina income tax return with the Secretary of Revenue, and all such applications shall be sworn before an officer authorized to administer oaths; provided, however, that said application shall show on its face that the purchase price of the motor fuel therein referred to has been paid by the applicant or that the payment of such purchase price has been secured to the seller's satisfaction. Refunds made pursuant to applications filed after April 15 of the year following the year in which the tax was paid shall be subject to the following late filing penalties: applications filed within 30 days after such date, twenty-five percent (25%); applications filed after 30 days but within six months, fifty percent (50%); but refunds applied for after six months following such date shall be barred.
(2)	The Secretary of Revenue shall have authority to issue rules and regulations as to how claims shall be filed and the information that shall be submitted with said claims and the records required to support said claims.
(3)	If, upon the filing of such application, the Secretary of Revenue shall be satisfied that the same is made in good faith and the motor fuels upon which such tax refund is requested have been or are to be used exclusively for purposes set forth in the application and for purposes other than the propulsion of a motor vehicle upon the public highways, he shall issue to such applicant a warrant upon the State Treasurer for the tax refund.
(4)	If the Secretary of Revenue shall be satisfied that the applicant for any refund authorized by this section has collected or sought to collect any refund of tax or taxes on fuels used for the purpose of propelling a concrete mixer on the highways as distinguished from mixing concrete, he shall issue to such applicant notice to show cause why such application should not be disallowed, which notice shall state a time and place of hearing upon said notice. If, upon such hearing, the secretary shall find as a fact that such applicant has collected or sought to collect any refund on fuels which have been used to propel a vehicle on the highways, he shall disallow the application in its entirety and the applicant shall be required to pay all tax or taxes which have been refunded to him on said application.
(5)	Any applicant for a refund may seek administrative review or appeal from the decision of the Secretary of Revenue under the provisions of G.S. 105‑241.2, G.S. 105-241.3, and G.S. 105-241.4.
(6)	The Secretary of Revenue shall authorize and direct, if at any time in his opinion there is reason to doubt the accuracy of the facts set forth in any application for tax refund, refer the matter to any agent of the Department of Revenue, and such person so designated shall make a careful investigation of all the facts and circumstances relating to said application in the use of the motor fuels therein referred to, and shall have a right to have access to the books and records of any retailer or distributor of motor fuel products for the purpose of obtaining the necessary information concerning such matters, and shall make due report thereof to the Secretary of Revenue.
(7)	If any court of last resort shall hold that the provisions for refund herein set out shall render the levying and collecting of the tax hereinbefore provided invalid, it is the intention of the General Assembly that such provisions for refund shall be annulled and the tax shall be levied without any provisions for such refund and that this Article shall be so construed.
(b)	Any person making a false application or affidavit for the purpose of securing a refund to which he is not entitled under the provisions of this section shall be guilty of a misdemeanor and upon conviction thereof shall be fined not exceeding five hundred dollars ($500.00) or imprisoned not exceeding two years, in the discretion of the court."
Sec. 93.  G.S. 105-449.24 is rewritten to read as follows:
"§ 105-449.24. Exemptions, rebates and refunds. — The provisions of G.S. 105-439, G.S. 105-446.1, G.S. 105-446.3, G.S. 105-446.5 and G.S. 105-449 relating to exemption from, and rebates and refunds of tax levied on gasoline shall also apply to the taxes levied by this Article on special fuels."
Sec. 94.  The General Statutes are amended to insert therein immediately following Chapter 105 of the General Statutes a new Chapter 105A entitled "Set-Off Debt Collection Act" to read as follows:
"CHAPTER 105A.
"SET-OFF DEBT COLLECTION ACT.
"Article 1.
"§ 105A-1.  Purposes. — The purpose of this Article is to establish as policy that all claimant agencies and the Department of Revenue shall cooperate in identifying debtors who owe money to the State through its various claimant agencies and who qualify for refunds from the Department of Revenue. It is also the intent of this Article that procedures be established for setting off against any such refund the sum of any debt owed to the State. Furthermore, it is the legislative intent that this Article be liberally construed so as to effectuate these purposes as far as legally and practically possible.
"§ 105A-2.  Definitions. — As used in this Article:
(1)	'Claimant agency' means and includes:
a.	The State Education Assistance Authority as enabled by Article 23 of Chapter 116 of the General Statutes;
b.	The North Carolina Department of Human Resources when in the exercise of its authority to collect health profession student loans made pursuant to G.S. 131-121;
c.	The North Carolina Department of Human Resources when in the performance of its duties under the Medical Assistance Program enabled by Chapter 108, Article 2, Part 5, and any county operating the same Program at the local level, when and only to the extent such a county is in the performance of Medical Assistance Program collection functions;
d.	The North Carolina Department of Human Resources when in the performance of its duties under the Child Support Enforcement Program (as enabled by Chapter 110, Article 9) to obtain indemnification for the State for past public assistance paid and any county operating the same Program at the local level, when and only to the extent such a county is engaged in the performance of those same program duties;
e.	The University of North Carolina, including its constituent institutions as specified by G.S. 116-2(4);
f.	The North Carolina Memorial Hospital in the conduct of its financial affairs and operations pursuant to G.S. 116-37;
g.	The Board of Governors of The University of North Carolina and the State Board of Education through the College Scholarship Loan Committee when in the performance of its duties of administering the Scholarship Loan Fund for Prospective College Teachers enabled by Chapter 116, Article 5;
h.	The Office of the North Carolina Attorney General on behalf of any State agency when the claim has been reduced to a judgment;
i.	The State Board of Education through community colleges, technical institutes, and industrial education centers as enabled by Chapter 115D in the conduct of their financial affairs and operations;
j.	Broughton Hospital, Cherry Hospital, Dorothea Dix Hospital, John Umstead Hospital, Caswell School at Kinston, Murdoch School, O'Berry School, Western Carolina Center, Black Mountain Alcoholic Rehabilitation Center, Butner Alcoholic Rehabilitation Center, Walter B. Jones Alcoholic Rehabilitation Center, School for the Deaf at Morganton, North Carolina Sanatorium at McCain, Western Carolina Sanatorium at Black Mountain, Eastern North Carolina Sanatorium at Wilson, and Gravely Sanatorium at Chapel Hill under Chapter 143, Article 7; Governor Morehead School under Chapter 115, Article 40; Central North Carolina School for the Deaf under Chapter 115, Article 41; Wright School for Treatment and Education of Emotionally Disturbed Children under Chapter 122, Article 12 A; the Lenox Baker Children's Hospital under Chapter 131, Article 14; and these same institutions by any other names by which they may be known in the future;
k.	The North Carolina Department of Revenue; and
l.	The Administrative Office of the Courts.
(2)	'Debtor' means any individual owing money to or having a delinquent account with any claimant agency which obligation has not been adjudicated satisfied by court order, set aside by court order, or discharged in bankruptcy.
(3)	'Debt' means any liquidated sum due and owing any claimant agency which has accrued through contract, subrogation, tort, operation of law, or any other legal theory regardless of whether there is an outstanding judgment for that sum.
(4)	'Department' means the North Carolina Department of Revenue.
(5)	'Refund' means any individual's North Carolina income tax refund.
(6)	'Net proceeds collected' means gross proceeds collected through final set-off against a debtor's refund minus any collection assistance fee charged by the Department.
"§ 105A-3.  Remedy additional; mandatory usage; obtaining identifying information. — (a) The collection remedy under this Article is in addition to and not in substitution for any other remedy available by law.
(b)	All claimant agencies shall submit, for collection under the procedure established by this Article, all debts which they are owed, except in cases where said agencies are advised by the Attorney General not to submit a claim because the validity of the debt is legitimately in dispute, because an alternative means of collection is pending and believed to be adequate, or because such a collection attempt would result in a loss of federal funds.
(c)	All claimant agencies shall whenever possible obtain the full name, social security number, address, and any other identifying information required by rules promulgated by the Department pursuant to the authority of G.S. 105A-16 from any person for whom the agencies provide any service or transact any business and who the claimant agencies can foresee may become a debtor under the terms of this Article.
"§ 105A-4.  Minimum sum collectible. — A claimant agency shall not be allowed to effect final set-off and collect debts through use of the remedy established under this Article unless both the debt and the refund, if any, are at least fifty dollars ($50.00).
"§ 105A-5.  Collection of sums due claimant agencies through set-off. — Subject to the limitations contained in this Article, the Department of Revenue shall upon request render assistance in the collection of any delinquent account or debt owing to any claimant agency. This assistance shall be provided by setting off any refunds due the debtor from the Department by the sum certified by claimant agency as due and owing.
"§ 105A-6.  Procedure for set-off — (a) A claimant agency seeking to attempt collection of a debt through set-off shall notify in writing the Department and supply information necessary to identify the debtor whose refund is sought to be set-off. Notification to the Department and the furnishing of identifying information must occur on or before a date specified by the Department in the year preceding the calendar year during which the refund would be paid. Additionally, subject to the notification deadline specified above, the notification shall be effective only to initiate set-off for claims against refunds that would be made in the calendar year subsequent to the year in which notification is made to the Department.
(b)	The Department, upon receipt of notification, shall determine whether the debtor to the claimant agency is entitled to a refund of at least fifty dollars ($50.00) from the Department. Upon determination by the Department that a debtor specified by a claimant agency qualifies for such a refund, the Department shall notify in writing the claimant agency that a refund is pending, specify its sum, and indicate the debtor's address as listed on the tax return.
(c)	Unless stayed by court order, the Department shall, upon certification as hereinafter provided in this Article, set-off the certified debt against the refund to which the debtor would otherwise be entitled.
"§ 105A-7.  Notification of intention to set-off and right to hearing. — (a) The claimant agency, upon receipt of notification from the Department that a debtor is entitled to a refund, shall within 10 days send a written notification to the debtor and a copy of same to the Department of its assertion of rights to the refund or any part thereof. Such notification shall inform the debtor of the claimant agency's intention to direct the Department to apply the refund or any portion thereof against the debt certified as due and owing. For the Department to be obligated to continue holding refunds until receipt of certification of the debt, if any, pursuant to G.S. 105A-10, the copy of the notification to the debtor by the claimant agency of its intention to set-off must be received by the Department within 15 days of the date of the Department's mailing to the respective claimant agency the notification of the debtor's entitlement to a refund.
(b)	The contents of the written notification to the debtor (and the Department's copy) of the set-off claim shall clearly set forth the basis for the claim to the refund, the intention to apply the refund against the debt to the claimant agency, the debtor's opportunity to give written notice of intent to contest the validity of the claim before the claimant agency within 30 days of the date of the mailing of the notice, the mailing address to which the application for a hearing must be sent, and the fact that failure to apply for a hearing in writing within the 30‑day period will be deemed a waiver of the opportunity to contest the claim causing final set-off by default.
(c)	The written application by the debtor for a hearing shall be effective upon mailing the application postage pre-paid and properly addressed to the claimant agency.
"§ 105A-8.  Hearing procedure. — (a) If a claimant agency receives written application of the debtor's intention to contest at hearing the claim upon which the intended set-off is based, it shall grant a hearing according to procedures established under Chapter 150A, the Administrative Procedure Act, to determine whether the claim is valid. Additionally, it shall be determined at the hearing whether the claimed sum asserted as due and owing is correct, and if not, an adjustment to the claim shall be made.
(b)	Pending final determination at hearing of the validity of the debt asserted by the claimant agency, no action shall be taken in furtherance of collection through the set-off procedure allowed under this Article.
(c)	No issues may be considered at the hearing which have been previously litigated.
"§ 105A-9.  Appeals from hearings. — Appeals from action taken at hearings allowed under this Article shall be in accordance with the provisions of Chapter 150A, the Administrative Procedure Act, except that the place of initial judicial review shall be the superior court for the county in which the debtor resides.
"§ 105 A-10.  Certification of debt by claimant agency; finalization of set-off. — (a) Upon final determination through hearing provided by G.S. 105A-8 of the debt due and owing the claimant agency or upon the debtor's default for failure to comply with G.S. 105A-7 mandating timely request for review of the asserted basis for set-off, the claimant agency shall within 20 days certify the debt to the Department and in default thereof, the Department shall no longer be obligated to hold the refund for set-off.
(b)	Upon receipt by the Department of a certified debt from the claimant agency, the Department shall finalize the set-off by transferring the net proceeds collected for credit or payment in accordance with the provisions of G.S. 105A-14 and by refunding any remaining balance to the debtor as if set-off had not occurred.
"§ 105A-11. Notice of final set-off. — Upon the finalization of set-off under the provisions of this Article, the Department shall notify the debtor in writing of the action taken along with an accounting of the action taken on any refund. If there is an outstanding balance after set‑off, the notice under this section shall accompany the balance when disbursed.
"§ 105A-12.  Priorities in claims to set-off — Priority in multiple claims to refunds allowed to be set-off under the provisions of this Article shall be in the order in time which a claimant agency has filed a written notice with the Department of its intention to effect collection through set-off under this Article. Notwithstanding the priority set forth above according to time of filing, the Department has priority over all other claimant agencies for collection by set-off whenever it is a competing agency for a refund.
"§ 105A-13.  Disposition of proceeds collected; collection assistance fees. — (a) Upon effecting final set-offs, the Department shall periodically write checks to the respective claimant agencies for the net proceeds collected on their behalf.
(b)	From the gross proceeds collected by the Department of Revenue through set-off, the Department shall retain fifteen percent (15%), which amount shall be charged to the respective claimant agency as a collection assistance fee. The Department shall devote the funds so retained to the following uses and purposes: (1) for the purpose of effectuating the provisions of the income tax refund Set-off Debt Collection Act, the sum of one hundred fifteen thousand dollars ($115,000) in the fiscal year 1979-80, and the sum of one hundred sixty thousand dollars ($160,000) in the fiscal year 1980-81; and (2) for the purpose of preparing, printing, publishing and mailing to taxpayers revised income withholding tax tables required to be revised as a result of the Revenue Act of 1979, the sum of one hundred one thousand dollars ($101,000) in the fiscal year 1979-80, and the sum of one hundred eight thousand dollars ($108,000) in the fiscal year 1980-81. Any balance remaining unexpended from the total collection assistance fees at the close of each fiscal year shall be deposited into the State Treasury for credit to the General Fund. In order to fund the cost of the set-off program and of printing, publishing and mailing said tax tables, before receipt of any collection assistance fees, the Department of Revenue is authorized to borrow from the Contingency and Emergency Fund up to two hundred sixteen thousand dollars ($216,000) in fiscal year 1979-80, and up to two hundred sixty-eight thousand dollars ($268,000) in fiscal year 1980-81, to be repaid from collection assistance fees as they are received.
For years after fiscal year 1980-81, the Department shall calculate its actual cost of collection as a percentage of the immediately preceding year's collections under the Set-off Debt Collection Act, and that percentage shall be its collection assistance fee for the then‑current fiscal year.
"§ 105A-14.  Accounting to the claimant agency; credit to debtor's obligation. — (a) Simultaneously with the transmittal of a check for net proceeds collected to a claimant agency, the Department shall provide the agency with an accounting of the set-offs finalized for which payment is being made. The accounting shall, whenever possible, include the full names of the debtors, the debtors' social security numbers, the gross proceeds collected per individual set‑off, the net proceeds collected per set-off, and the collection assistance fee charged per set‑off.
(b)	Upon receipt by a claimant agency of a check representing net proceeds collected on a claimant agency's behalf by the Department and an accounting of the proceeds as specified under this section, the claimant agency shall credit the debtor's obligation with the gross proceeds collected.
"§ 105A-15.  Confidentiality exemption; nondisclosure. — (a) Notwithstanding G.S. 105‑259 or any other provision of law prohibiting disclosure by the Department of the contents of taxpayer records or information and notwithstanding any confidentiality statute of any claimant agency, all information exchanged among the Department, claimant agency, and the debtor necessary to accomplish and effectuate the intent of this Article is lawful.
(b)	The information obtained by a claimant agency from the Department in accordance with the exemption allowed by subsection (a) shall only be used by a claimant agency in the pursuit of its debt collection duties and practices and any person employed by, or formerly employed by, a claimant agency who discloses any such information for any other purpose, except as otherwise allowed by G.S. 105-259, shall be penalized in accordance with the terms of that statute.
"§ 105A-16.  Rules and regulations. — The Secretary of Revenue is authorized to prescribe forms and make all rules which he deems necessary in order to effectuate the intent of this Article."
Sec. 95.  G.S. 121-5(d) is amended to add after the last sentence the words: "The Department may answer written inquiries for nonresidents of North Carolina and for such service charge a search and handling fee not to exceed five dollars ($5.00), the receipts from which fee shall be used to defray the cost of providing such service."
Sec. 96.  Sections 1, 76.1, 78, and 95 are effective upon ratification.
Sec. 97.  Section 74 is effective upon ratification and shall apply to sales made on and after January 1, 1974.
Sec. 98.  Section 18 is effective with respect to the estates of decedents dying on and after July 1, 1977.
Sec. 98.1.  Section 77 shall become effective June 30, 1979.
Sec. 99.  Sections 2, 5, 6, 7, 8, 9, 10, 11, 12, 19, 22, 25, 26, 27, 72, 73, 76, 79, 80, 81, 82 and 83 shall become effective July 1, 1979.
Sec. 100.  Sections 13, 16, 17, 20, 21, 23, and 24 shall become effective July 1, 1979, with respect to the estates of decedents dying on and after that date.
Sec. 101.  Sections 4, 30, and 31 shall become effective October 1, 1979.
Sec. 102.  Sections 15, 32, 33, 34, 35, 37, 38, 40, 41, 42, 45, 46, 47, 64, 67, 68, 69, 84, 85, 86, 87, and 89 shall become effective with respect to taxable years beginning on and after January 1, 1979.
Sec. 103.  Section 75 is effective upon ratification and shall apply to sales made on and after July 1, 1979.
Sec. 104.  Section 39 shall become effective September 30, 1979, with respect to grants made after that date under the programs referred to in that section.
Sec. 105.  With respect to the franchise taxes levied upon corporations pursuant to Article 3, Subchapter I, Chapter 105 of the General Statutes, Section 14 of this act shall become effective January 1, 1980. For all other purposes, Section 14 is effective for taxable years beginning after December 31, 1978.
Sec. 106.  Sections 71, 90, 91, and 94 shall become effective July 1, 1979, and shall apply to refunds due after January 1, 1980.
Sec. 107.  Sections 88, 92, and 93 shall become effective January 1, 1980.
Sec. 108.  Section 3 shall become effective January 1, 1980, and shall apply to any person placed upon probation on and after that date.
Sec. 109.  Sections 36, 43, 44, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 65, 66, and 70 shall become effective with respect to taxable years beginning on and after January 1, 1980.
Sec. 110.  Sections 28 and 29 shall become effective May 1, 1980.
Sec. 111.  Sections 96, 97, 98, 98.1, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, and 110 are effective upon ratification.
In the General Assembly read three times and ratified, this the 6th day of June, 1979.