reglab/statecodes huggingface dataset:
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0200 - GENERAL PRINCIPLES OF APPLICATION › Section 05G .0201 - ASSIGNMENT OF RECEIPTS FROM SALES OF OTHER THAN TANGIBLE PERSONAL PROPERTY

Current through Register Vol. 39, No. 2, July 15, 2024
A taxpayer's assignment of receipts from sales other than of
													 tangible personal property shall comply with the following:
(1) A
											  taxpayer shall apply the rules set forth in this Subchapter based on objective criteria and shall consider
											  all sources of information reasonably available to the taxpayer at the time of its tax filing including the
											  taxpayer's books and records kept in the regular course of business. A taxpayer shall determine its method of
											  assigning receipts in good faith, and apply it consistently with respect to similar transactions. A taxpayer
											  shall retain contemporaneous records that explain the determination and application of its method of
											  assigning its receipts, including its underlying assumptions, and shall provide those records to the
											  Secretary upon request, as provided in Article 9 of G.S. 105.
(2)
											  This Subchapter provides assignment rules that apply sequentially in a hierarchy. For each sale to which a
											  hierarchical rule applies, a taxpayer shall make a reasonable effort to apply the primary rule applicable to
											  the sale before seeking to apply the next rule in the hierarchy and shall continue to do so with each
											  succeeding rule in the hierarchy.
(3) A taxpayer's method of
											  assigning its receipts shall reflect an attempt to obtain the most accurate assignment of receipts consistent
											  with the rules set forth in this Subchapter, rather than an attempt to lower the taxpayer's tax
											  liability.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0300 - RULES OF REASONABLE APPROXIMATION › Section 05G .0301 - IN GENERAL

Current through Register Vol. 39, No. 2, July 15, 2024
The rules of this Subchapter set forth the process of reasonable
													 approximation that apply if the state or states of assignment cannot be determined. In some instances, the
													 reasonable approximation shall be made in accordance with specific rules of approximation prescribed in this
													 Subchapter. In other cases, the applicable rules in this Subchapter permit a taxpayer to reasonably
													 approximate the state or states of assignment to obtain a result similar to those made using a specific rule
													 of approximation.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0300 - RULES OF REASONABLE APPROXIMATION › Section 05G .0302 - APPROXIMATION BASED UPON KNOWN SALES

Current through Register Vol. 39, No. 2, July 15, 2024
When, by applying the rules set forth in Sections .0900 through
													 .1000 of this Subchapter, a taxpayer can ascertain the state or states of assignment of a substantial portion
													 of its receipts from sales of substantially similar services and the taxpayer reasonably believes that the
													 geographic distribution of the remainder of its sales tracks that of the assigned receipts, the taxpayer
													 shall include the receipts from those sales in its sales factor in the same proportion as its assigned
													 receipts. This Rule applies in the context of licenses and sales of intangible property where the substance
													 of the transaction resembles a sale of goods or services.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0300 - RULES OF REASONABLE APPROXIMATION › Section 05G .0303 - RELATED ENTITY TRANSACTIONS

Current through Register Vol. 39, No. 2, July 15, 2024
Where a taxpayer has receipts subject to this Subchapter from
													 transactions with a related entity customer, information that the customer has regarding the sourcing of
													 receipts from these transactions shall be imputed to the taxpayer.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0400 - EXCLUSION OF RECEIPTS FROM THE SALES FACTOR › Section 05G .0401 - ALLOCATED GROSS RECEIPTS

Current through Register Vol. 39, No. 2, July 15, 2024
The sales factor includes only gross receipts of the taxpayer that
													 are not allocated under G.S.
													 105-130.4, and are received from transactions and activity in the regular
													 course of the taxpayer's trade or business. Receipts addressed in
													 G.S.
													 105-130.4(a)(7) shall be excluded.
Authority
													 G.S.
													 105-130.4;
													 105-130.4(a)(7); S.L. 2016-5; S.L.
													 2016-94;
Eff. January 1, 2020 (See S.L. 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0400 - EXCLUSION OF RECEIPTS FROM THE SALES FACTOR › Section 05G .0402 - UNASSIGNABLE GROSS RECEIPTS

Current through Register Vol. 39, No. 2, July 15, 2024
When a taxpayer is unable to ascertain the state or states where
													 receipts of a sale are to be assigned pursuant to the rules set forth in this Subchapter using a reasonable
													 amount of effort undertaken in good faith, the receipts shall be excluded from the denominator of the
													 taxpayer's sales factor pursuant to this Subchapter.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0500 - CHANGES IN METHODOLOGY › Section 05G .0501 - ALTERNATIVE APPORTIONMENT

Current through Register Vol. 39, No. 2, July 15, 2024
Nothing in this Subchapter limits the application of
													 G.S.
													 105-122(c1)(2) or
													 G.S.
													 105-130.4(t1). If the application of this Subchapter
													 results in the assignment of receipts to the taxpayer's sales factor that the taxpayer believes does not
													 fairly represent the extent of the taxpayer's business activity in North Carolina, the taxpayer may request
													 the use of a different method for assigning those receipts.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0500 - CHANGES IN METHODOLOGY › Section 05G .0502 - ORIGINAL RETURNS

Current through Register Vol. 39, No. 2, July 15, 2024
When a taxpayer files an original return for a taxable year where it
													 properly assigns its receipts using a method of assignment, including a method of reasonable approximation,
													 in accordance with the rules in this Subchapter, the application of such method of assignment shall be deemed
													 to be a correct determination by the taxpayer of the state or states of assignment to which the method is
													 properly applied. In those cases, neither the Secretary nor the taxpayer may modify the taxpayer's
													 methodology as applied for assigning those receipts for the taxable year, through the form of an audit
													 adjustment, amended return, or abatement application. However, the Secretary and the taxpayer may each
													 subsequently correct factual errors or calculation errors with respect to the taxpayer's application of its
													 filing methodology.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0500 - CHANGES IN METHODOLOGY › Section 05G .0503 - SECRETARY'S AUTHORITY TO ADJUST A TAXPAYER'S RETURN

Current through Register Vol. 39, No. 2, July 15, 2024
The Secretary's ability to review and adjust a taxpayer's assignment
													 of receipts on a return to assign receipts consistent with the rules of this Subchapter, includes each of the
													 following potential actions:
(1) when a taxpayer fails to properly
											  assign receipts from a sale in accordance with the rules set forth in this Subchapter, including the failure
											  to apply a hierarchy of rules consistent with the principles of Rule .0201(2) of this Subchapter, the
											  Secretary shall adjust the assignment of the receipts in accordance with the applicable rules in this
											  Subchapter;
(2) when a taxpayer uses a method of approximation to
											  assign its receipts and the Secretary determines that the method of approximation employed by the taxpayer is
											  not reasonable, the Secretary shall either substitute a method of approximation that the Secretary determines
											  is appropriate, as provided in Article 9 of G.S. 105, or exclude the receipts from the taxpayer's numerator
											  and denominator;
(3) when the Secretary determines that a
											  taxpayer's method of approximation has not been applied in a consistent manner with respect to similar
											  transactions or year to year, the Secretary may require that the taxpayer apply its method of approximation
											  in a consistent manner;
(4) when a taxpayer excludes receipts
											  from the denominator of its sales factor on the basis that the assignment of the receipts cannot be
											  reasonably approximated, the Secretary may determine that the exclusion of those receipts is not appropriate,
											  and may instead substitute a method of approximation that the Secretary determines is appropriate, as
											  provided in Article 9 of G.S. 105;
(5) when a taxpayer fails to
											  retain contemporaneous records that explain the determination and application of its method of assigning its
											  receipts, including its underlying assumptions, or fails to provide those records to the Secretary upon
											  request, the Secretary shall treat the taxpayer's assignment of receipts as unsubstantiated, and shall adjust
											  the assignment of the receipts in a manner consistent with the applicable rules in this Subchapter;
											  or
(6) when the Secretary concludes that a customer's billing
											  address was selected by the taxpayer for tax avoidance purposes, the Secretary shall adjust the assignment of
											  receipts from sales to that customer in a manner consistent with the applicable rules in this
											  Subchapter.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0500 - CHANGES IN METHODOLOGY › Section 05G .0504 - TAXPAYER AUTHORITY TO CHANGE A METHOD OF ASSIGNMENT ON A PROSPECTIVE BASIS

Current through Register Vol. 39, No. 2, July 15, 2024
A taxpayer that seeks to change its method of assigning its receipts
													 shall disclose, in the original return filed for the year of the change, the fact that the taxpayer has made
													 the change. If a taxpayer fails to disclose the change, the Secretary may disregard the taxpayer's change and
													 substitute an assignment method that the Secretary determines is appropriate, as provided in Article 9 of
													 G.S. 105.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0500 - CHANGES IN METHODOLOGY › Section 05G .0505 - SECRETARY AUTHORITY TO CHANGE A METHOD OF ASSIGNMENT ON A PROSPECTIVE BASIS

Current through Register Vol. 39, No. 2, July 15, 2024
The Secretary may direct a taxpayer to change its method of
													 assigning its receipts in tax returns that have not yet been filed, including changing the taxpayer's method
													 of approximation, if upon reviewing the taxpayer's filing methodology applied in a prior tax year, the
													 Secretary determines that the change reflects a more accurate assignment of the taxpayer's receipts within
													 the meaning of this Subchapter, and determines that the change can be reasonably adopted by the taxpayer. The
													 Secretary shall provide the taxpayer with a written explanation of the reason for making the change. When a
													 taxpayer fails to comply with the Secretary's direction on future returns, the Secretary shall deem the
													 taxpayer's method of assigning its receipts on those returns to be unreasonable, and shall substitute an
													 assignment method that the Secretary determines is reasonable.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0600 - FURTHER GUIDANCE › Section 05G .0601 - EXAMPLES

Current through Register Vol. 39, No. 2, July 15, 2024
(a) The Secretary shall
											  publish on the Department's website examples demonstrating the application of rules set forth in this
											  Subchapter. The document shall be available at
www.ncdor.gov
.
(b) The Secretary may issue further public written statements with respect
											  to the rules set forth in this Subchapter. These statements may include guidance with respect to:
(1) what constitutes a reasonable method of approximation within the
											  meaning of the rules, and
(2) the circumstances when a filing
											  change for a taxpayer's method of reasonable approximation will be deemed appropriate.
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0700 - SALE OF A SERVICE › Section 05G .0701 - IN GENERAL

Current through Register Vol. 39, No. 2, July 15, 2024
(a) The receipts from a sale of a service shall
											  be in North Carolina to the extent that the service is delivered to a location in North Carolina. The term
											  "delivered to a location" refers to the location of the taxpayer's market for the service, which may not be
											  the location of the taxpayer's employees or property.
(b) The
											  rules to determine the location of the delivery of a service in the context of several specific types of
											  service transactions are set forth in Sections .0700 through .1000 of this Subchapter.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0800 - SALE OF IN-PERSON SERVICES › Section 05G .0801 - IN GENERAL

Current through Register Vol. 39, No. 2, July 15, 2024
(a) Except as otherwise provided in this Section,
											  "in-person services" are services that are physically provided in person by the taxpayer, where the customer
											  or the customer's real or tangible property upon which the services are performed is in the same location as
											  the service provider at the time the services are performed. This Section includes situations where the
											  services are provided on behalf of the taxpayer by a third-party contractor.
(b) Examples of in-person services include:
(1) warranty and repair services;
(2) cleaning services;
(3)
											  plumbing services;
(4) carpentry;
(5) construction contractor services;
(6) pest control;
(7) landscape
											  services;
(8) medical and dental services, including medical
											  testing, x-rays, and mental health care and treatment;
(9) child
											  care;
(10) hair cutting and salon services;
(11) live entertainment and athletic performances; and
(12) in-person training or lessons.
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0800 - SALE OF IN-PERSON SERVICES › Section 05G .0802 - ASSIGNMENT OF RECEIPTS FROM SALE OF IN-PERSON SERVICES

Current through Register Vol. 39, No. 2, July 15, 2024
Receipts from a sale of in-person services shall be assigned to
													 North Carolina to the extent the customer received the service in North Carolina. The taxpayer shall
													 determine the location where a service is received as follows:
(1)
											  if the service is performed with respect to the body of an individual customer in North Carolina, such as
											  hair cutting or x-ray services, or in the physical presence of the customer in North Carolina, such as live
											  entertainment or athletic performances, the service is received in North Carolina;
(2) if the service is performed with respect to the customer's real estate
											  in North Carolina or if the service is performed with respect to the customer's tangible personal property at
											  the customer's residence or in the customer's possession in North Carolina, the service is received in North
											  Carolina; or
(3) if the service is performed with respect to the
											  customer's tangible personal property and the tangible personal property is to be shipped or delivered to the
											  customer, whether the service is performed within or outside North Carolina, the service is received in North
											  Carolina if the property is shipped or delivered to the customer in North Carolina.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0800 - SALE OF IN-PERSON SERVICES › Section 05G .0803 - REASONABLE APPROXIMATION

Current through Register Vol. 39, No. 2, July 15, 2024
When the taxpayer cannot determine the state or states where a
													 service was received pursuant to Rule .0802 of this Section, but the taxpayer has information regarding the
													 location of receipt from which the taxpayer can reasonably approximate the state or states where the service
													 is received, the taxpayer shall reasonably approximate such state or states.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0900 - SERVICES DELIVERED TO A CUSTOMER OR ON BEHALF OF THE CUSTOMER, OR DELIVERED ELECTRONICALLY THROUGH THE CUSTOMER › Section 05G .0901 - IN GENERAL

Current through Register Vol. 39, No. 2, July 15, 2024
(a) If the service provided by the taxpayer is
											  not an in-person service as defined in Rule .0801 of this Subchapter or a professional service as defined in
											  Rule .1001 of this Subchapter, and the service is delivered to or on behalf of the customer, or delivered
											  electronically through the customer, the receipts from a sale are in North Carolina to the extent that the
											  service is delivered in North Carolina.
(b) For purposes of this
											  Section, a service:
(1) "delivered to a customer" is a service where the
											  customer and not a third party is the recipient of the service;
(2) "delivered on behalf of a customer" is one where a customer contracts
											  for a service but one or more third parties, rather than the customer, is the recipient of the service. This
											  includes fulfillment services, or the direct or indirect delivery of advertising to the customer's intended
											  audience; and
(3) "delivered electronically through a customer"
											  is a service that is delivered electronically to a customer for purposes of resale and subsequent electronic
											  delivery in substantially identical form to an end user or other third-party recipient.
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0900 - SERVICES DELIVERED TO A CUSTOMER OR ON BEHALF OF THE CUSTOMER, OR DELIVERED ELECTRONICALLY THROUGH THE CUSTOMER › Section 05G .0902 - ASSIGNMENT OF RECEIPTS FROM SALES OF SERVICES DELIVERED TO THE CUSTOMER OR ON BEHALF OF THE CUSTOMER, OR DELIVERED ELECTRONICALLY THROUGH THE CUSTOMER

Current through Register Vol. 39, No. 2, July 15, 2024
(a) The assignment of receipts to a
											  state or states when a sale of a service is delivered to the customer or on behalf of the customer, or
											  delivered electronically through the customer, shall depend upon the method of delivery of the service and
											  the nature of the customer. Separate rules of assignment shall apply to services delivered by physical means
											  and services delivered by electronic transmission. For purposes of this Section, a service delivered by an
											  electronic transmission is not a delivery by a physical means.
(b) If a rule of assignment set forth in this Section depends upon whether
											  the customer is an individual or a business customer, and the taxpayer acting in good faith cannot reasonably
											  determine whether the customer is an individual or a business customer, the taxpayer shall treat the customer
											  as a business customer.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0900 - SERVICES DELIVERED TO A CUSTOMER OR ON BEHALF OF THE CUSTOMER, OR DELIVERED ELECTRONICALLY THROUGH THE CUSTOMER › Section 05G .0903 - DELIVERY TO OR ON BEHALF OF A CUSTOMER BY PHYSICAL MEANS, WHETHER TO AN INDIVIDUAL OR BUSINESS CUSTOMER

Current through Register Vol. 39, No. 2, July 15, 2024
(a) Services delivered to a customer or on behalf of a customer through a
											  physical means include:
(1) product delivery services where property is
											  delivered to the customer or to a third party on behalf of the customer;
(2) delivery of brochures, fliers, or other direct mail services;
(3) delivery of advertising or advertising-related services to the
											  customer's intended audience in the form of a physical medium; and
(4) sale of custom software, such as where software is developed for a
											  specific customer in a case where the transaction is properly treated as a service transaction for purposes
											  of corporate taxation where the taxpayer installs the custom software at the customer's site.
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .0900 - SERVICES DELIVERED TO A CUSTOMER OR ON BEHALF OF THE CUSTOMER, OR DELIVERED ELECTRONICALLY THROUGH THE CUSTOMER › Section 05G .0904 - DELIVERY TO CUSTOMER BY ELECTRONIC TRANSMISSION

Current through Register Vol. 39, No. 2, July 15, 2024
(a) Services delivered by electronic
											  transmission include services that are transmitted through the means of wire, lines, cable, fiber optics,
											  electronic signals, satellite transmission, audio or radio waves, or other similar means, whether or not the
											  service provider owns, leases, or otherwise controls the transmission equipment.
(b) When a service is delivered by electronic transmission to a customer,
											  the following rules apply:
(1) Services Delivered By Electronic Transmission
											  to an Individual Customer.
(A) Rule of Determination. When a service is
											  delivered to an individual customer by electronic transmission, the service is delivered in North Carolina to
											  the extent that the taxpayer's customer received the service in North Carolina. If the taxpayer is able to
											  determine the state or states where the service is received, it shall assign the receipts from that sale to
											  that state or states.
(B) Rules of Reasonable Approximation. If
											  the taxpayer is unable to determine the state or states where the customer received the service, but has
											  sufficient information regarding the place of receipt to reasonably approximate the state or states where the
											  service is received, it shall reasonably approximate the state or states. If a taxpayer does not have
											  sufficient information to determine or reasonably approximate the state or states where the service is
											  received, it shall reasonably approximate the state or states using the customer's billing address.
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .1000 - PROFESSIONAL SERVICES › Section 05G .1001 - IN GENERAL

Current through Register Vol. 39, No. 2, July 15, 2024
(a) Except as otherwise provided in this
											  Subchapter, "professional services" are services that require specialized knowledge and may require a
											  professional certification, license, or degree. These services include the performance of technical services
											  that require the application of specialized knowledge.
(b)
											  Professional services include:
(1) management services:
(2) bank and financial services;
(3) financial custodial services;
(4) investment and brokerage services;
(5) fiduciary services;
(6) tax
											  preparation;
(7) payroll and accounting services;
(8) lending services;
(9)
											  credit card services, including credit card processing services;
(10) data processing services;
(11) legal services;
(12)
											  consulting services;
(13) video production services;
(14) graphic and other design services;
(15) engineering services; and
(16) architectural services.
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .1000 - PROFESSIONAL SERVICES › Section 05G .1002 - OVERLAP WITH OTHER CATEGORIES OF SERVICES

Current through Register Vol. 39, No. 2, July 15, 2024
(a) Certain services that fall within the
											  definition of "professional services" set forth in this Section shall be treated as "in-person services"
											  within the meaning of Section .0800 of this Subchapter, and shall be assigned under the rules of that
											  Section. Specifically, professional services that are physically provided in person by the taxpayer such as
											  carpentry, certain medical and dental services, or child care services when the customer or the customer's
											  real or tangible property upon which the services are provided is in the same location as the service
											  provider at the time the services are performed are "in-person services" and shall be assigned as such,
											  notwithstanding that they may also be considered to be "professional services."
(b) Professional services where the service is of an intellectual or
											  intangible nature, such as legal, accounting, financial, and consulting services, shall be assigned as
											  professional services under the rules of this Section, notwithstanding the fact that these services may
											  involve some amount of in-person contact.
(c) Professional
											  services may include the transmission of documents or other communications by mail or by electronic means. In
											  these cases, the assignment rules that apply are those set forth in this Section, and not those set forth in
											  Section .0900 of this Subchapter, pertaining to services delivered to a customer or through or on behalf of a
											  customer.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94.
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .1000 - PROFESSIONAL SERVICES › Section 05G .1003 - ASSIGNMENT OF RECEIPTS

Current through Register Vol. 39, No. 2, July 15, 2024
The location of delivery of professional services shall not be
													 determined by a general rule of determination, but shall be reasonably approximated. The assignment of
													 receipts from a sale of a professional service depends on whether the customer is an individual or a business
													 customer. When the taxpayer, acting in good faith, cannot reasonably determine whether the customer is an
													 individual or a business customer, the taxpayer shall treat the customer as a business customer. For purposes
													 of assigning the receipts from a sale of a professional service, a taxpayer's customer is the person that
													 contracts for the service, irrespective of whether another person pays for or also benefits from the
													 taxpayer's services.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .1000 - PROFESSIONAL SERVICES › Section 05G .1004 - PROFESSIONAL SERVICES OTHER THAN ARCHITECTURAL OR ENGINEERING SERVICES

Current through Register Vol. 39, No. 2, July 15, 2024
Receipts from sales of professional services other than those
													 services described in Rules .1005 - .1006 of this Section, shall be assigned as follows:
(1) Professional Services Delivered to Individual Customers. Except as
											  otherwise provided in Section .1000 of this Subchapter, in any instance where the service provided is a
											  professional service and the taxpayer's customer is an individual customer, the state or states where the
											  service is delivered shall be reasonably approximated as set forth in this Rule. The taxpayer shall assign
											  the receipts from a sale to the customer's state of primary residence, or, if the taxpayer cannot reasonably
											  identify the customer's state of primary residence, to the state of the customer's billing address. However,
											  when the taxpayer derives more than five percent of its receipts from sales of all services from an
											  individual customer, the taxpayer shall identify the customer's state of primary residence and assign the
											  receipts from the service or services provided to that customer to that state.
(2) Professional Services Delivered to Business Customers. When the
											  taxpayer provides a professional service to a business customer, the state or states where the service is
											  delivered shall be reasonably approximated as set forth in this Rule. Unless the taxpayer uses the safe
											  harbor set forth in Item (3) of this Rule, the taxpayer shall assign the receipts from the sale as follows:
(a) by assigning the receipts to the state where the contract of sale is
											  principally managed by the customer;
(b) if the place of customer
											  management is not reasonably determinable, to the customer's place of order; and
(c) if the customer place of order is not reasonably determinable, to the
											  customer's billing address.
When the taxpayer derives more than five percent of its receipts
													 from sales of all services from a customer, the taxpayer is required to identify the state where the contract
													 of sale is principally managed by the customer.
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .1000 - PROFESSIONAL SERVICES › Section 05G .1005 - ARCHITECTURAL OR ENGINEERING SERVICES WITH RESPECT TO REAL OR TANGIBLE PERSONAL PROPERTY

Current through Register Vol. 39, No. 2, July 15, 2024
(a) Architectural and engineering services with
											  respect to real or tangible personal property shall be professional services within the meaning of this
											  Section. The receipts from a sale of an architectural service shall be assigned to a state or states to the
											  extent that the services are with respect to real estate improvements located, or expected to be located, in
											  the state or states. The receipts from a sale of an engineering service shall be assigned to a state or
											  states to the extent that the services are with respect to tangible or real property located in the state or
											  states, including real estate improvements located in, or expected to be located in, the state or
											  states.
(b) This Rule shall apply whether or not the customer is
											  an individual or business customer. In any instance in which architectural or engineering services are not
											  described in this Rule, the receipts from a sale of these services shall be assigned under Rule .1004 of this
											  Section.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .1000 - PROFESSIONAL SERVICES › Section 05G .1006 - RELATED ENTITY TRANSACTIONS

Current through Register Vol. 39, No. 2, July 15, 2024
When the professional service is sold to a related entity, rather
													 than applying the rule for professional services delivered to business customers in Rule .1004(2) of this
													 Section, the state or states where the service is assigned is the place of receipt by the related entity as
													 reasonably approximated using the following hierarchy:
(1) if the
											  service primarily relates to specific operations or activities of a related entity conducted in one or more
											  locations, then to the state or states where those operations or activities are conducted in proportion to
											  the related entity's payroll at the locations to which the service relates in the state or states;
											  or
(2) if the service does not primarily relate to specific
											  operations or activities of a related entity conducted in particular locations, but instead relates to the
											  operations of the related entity generally, then to the state or states where the related entity has
											  employees, in proportion to the related entity's payroll in those states. The taxpayer may use the safe
											  harbor provided by Rule .1004(3) of this Section.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .1100 - LICENSE OR LEASE OF INTANGIBLE PROPERTY › Section 05G .1101 - IN GENERAL

Current through Register Vol. 39, No. 2, July 15, 2024
(a) The receipts from the license of intangible
											  property shall be assigned to North Carolina to the extent the intangible is used in North Carolina. The term
											  "use" shall refer to the location of the taxpayer's market for the use of the intangible property that is
											  being licensed and shall not refer to the location of the property or payroll of the taxpayer. This Section
											  sets forth the rules to determine the location of the use of intangible property for several specific types
											  of licensing transactions.
(b) A license of intangible property
											  that conveys all substantial rights in that property shall be treated as a sale of intangible property for
											  purposes of these rules. For purposes of Sections .1100 and .1200, a sale or exchange of intangible property
											  shall be treated as a license of that property where the receipts from the sale or exchange derive from
											  payments that are contingent on the productivity, use, or disposition of the property.
(c) Intangible property licensed as part of the sale or lease of tangible
											  property shall be treated under these rules as the sale or lease of tangible property.
(d) Nothing in this Section shall be construed to allow or require
											  inclusion of sales in the sales factor that are not included in the definition of "sales" pursuant to
											  G.S.
											  105-130.4, or that are excluded from the numerator and the denominator of
											  the sales factor pursuant to G.S.
											  105-130.4(l)(6). To the extent that the transfer of either
											  a security or business "goodwill" or similar intangible value, including "going concern value" or "workforce
											  in place," is characterized as a license or lease of intangible property, receipts from such transaction
											  shall be excluded from the numerator and the denominator of the taxpayer's sales factor.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .1100 - LICENSE OR LEASE OF INTANGIBLE PROPERTY › Section 05G .1102 - LICENSE OF A MARKETING INTANGIBLE

Current through Register Vol. 39, No. 2, July 15, 2024
(a) If a license is granted for the right to use
											  intangible property in connection with the sale, lease, license, or other marketing of goods, services, or
											  other items, such as a marketing intangible, to a consumer, the royalties or other licensing fees paid by the
											  licensee for that marketing intangible shall be assigned to North Carolina to the extent that those fees are
											  attributable to the sale or other provision of goods, services, or other items purchased or otherwise
											  acquired by consumers in North Carolina.
(b) License of a
											  marketing intangible includes the following when it is intended to promote consumer sales:
(1) the license of a service mark, trademark, or trade name;
(2) copyrights;
(3) the license
											  of a film, television or multimedia production or event for commercial distribution; and
(4) a franchise agreement.
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .1100 - LICENSE OR LEASE OF INTANGIBLE PROPERTY › Section 05G .1103 - LICENSE OF A PRODUCTION INTANGIBLE

Current through Register Vol. 39, No. 2, July 15, 2024
(a) Where a license is granted for the right to
											  use intangible property, other than in connection with the sale, lease, license, or other marketing of goods,
											  services, or other items, and the license will be used in a production capacity (a "production intangible"),
											  the licensing fees paid by the licensee for that right shall be assigned to North Carolina to the extent that
											  the use for which the fees are paid takes place in North Carolina.
(b) License of a production intangible includes the license of a patent, a
											  copyright, or trade secrets to be used in a manufacturing process, where the value of the intangible lies
											  predominately in its use in that process.
(c) Where the actual
											  use of intangible property pursuant to a license of a production intangible takes place in part in North
											  Carolina, the entire use shall be in this State except to the extent that the taxpayer is able to demonstrate
											  that the actual location of a portion of the use takes place outside North Carolina.
(d) When a license of a production intangible to a related entity, the
											  taxpayer shall assign the receipts to where the intangible property is actually used. When a license of a
											  production intangible to a party other than a related entity where the location of actual use is unknown, the
											  use of the intangible property takes place in the state of the licensee's commercial domicile when a
											  business, or the licensee's state of primary residence when an individual.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .1100 - LICENSE OR LEASE OF INTANGIBLE PROPERTY › Section 05G .1104 - LICENSE OF A MIXED INTANGIBLE

Current through Register Vol. 39, No. 2, July 15, 2024
Where a license of intangible property includes both a license of a
													 marketing intangible and a license of a production intangible (a "mixed intangible") and the fees to be paid
													 in each instance are separately and reasonably stated in the licensing contract, the Secretary shall accept
													 that separate statement for purposes of these Rules. If a license of intangible property includes both a
													 license of a marketing intangible and a license of a production intangible and the fees to be paid in each
													 instance are not separately and reasonably stated in the contract, the licensing fees were paid entirely for
													 the license of the marketing intangible, except to the extent that the taxpayer can reasonably establish
													 otherwise.
Authority
													 G.S.
													 105-130.4; S.L. 2016-94;
Eff. January 1, 2020 (See S.L.
													 2019-246, s. 3).
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .1100 - LICENSE OR LEASE OF INTANGIBLE PROPERTY › Section 05G .1105 - LICENSE OF INTANGIBLE PROPERTY WHEN SUBSTANCE OF THE TRANSACTION RESEMBLES A SALE OF GOODS OR SERVICES

Current through Register Vol. 39, No. 2, July 15, 2024
(a) When the license of intangible property resembles the sale of an
											  electronically-delivered good or service, rather than the license of a marketing intangible or production
											  intangible, the receipts shall be assigned by applying Rules .0904 and .0905 of this Subchapter. Transactions
											  to be assigned under this Rule include the license of:
(1) database
											  access;
(2) access to information;
(3) digital goods; and
(4)
											  certain software, where the transaction is not the license of pre-written software treated as the sale of
											  tangible personal property.
North Carolina Administrative Code › Title 17 - REVENUE › Chapter 05 - CORPORATE FRANCHISE, INCOME, AND INSURANCE TAXES › Subchapter G - MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME › Section .1300 - SPECIAL RULES › Section 05G .1301 - SOFTWARE TRANSACTIONS

Current through Register Vol. 39, No. 2, July 15, 2024
(a) A license or sale of pre-written software for
											  purposes other than commercial reproduction, or other exploitation of the intellectual property rights,
											  transferred on a tangible medium shall be treated as the sale of tangible personal property, rather than as
											  either the license or sale of intangible property or the performance of a service. In these cases, the
											  receipts shall be in North Carolina as determined under the rules for the sale of tangible personal property
											  set forth under G.S.
											  105-130.4 and the rules of this Subchapter.
(b) In all other cases, the receipts from a license or sale of software
											  shall be assigned to North Carolina as determined otherwise under this Subchapter. This determination shall
											  be based on the facts, and:
(1) the development and sale of custom software
											  as set forth in Section .0900 of this Subchapter;
(2) the license
											  of a marketing intangible, as set forth in Rule .1102 of this Subchapter;
(3) the license of a production intangible, as set forth in Rule .1103 of
											  this Subchapter;
(4) the license of intangible property where the
											  substance of the transaction resembles a sale of goods or services, as set forth in Rule .1105 of this
											  Subchapter; or
(5) as a sale of intangible property, as set forth
											  in Rule .1201 of this Subchapter.