Advocacy Successes

2022 - RETIRED CPA STATUS TASK FORCE CONVENES

The State Board of CPA Examiners and NCACPA formed a joint task force to study the possibility of resurrecting a retired status classification for North Carolina CPA licensees. A rulemaking proposal is expected to move forward in 2023. 

November 2022

2022 - GENERAL ELECTION SUCCESS FOR NC CPA PAC-BACKED CANDIDATES

The NC CPA PAC contributed to 57 candidates in the 2022 general election, and 96% won their race. The bipartisan group included 21 Senate candidates and 36 House candidates.  

November 2022

2022 - NCACPA MEETS WITH NCDOR LEADERS

For the first time since the COVID-19 pandemic began, the NCACPA Tax Resource Group resumed its annual in-person meeting with senior leadership of the NCDOR, including Secretary of Revenue Ronald Penny. As part of this meeting, NCACPA presented the Department with a list of questions solicited from the association membership on a wide-ranging set of tax topics.

November 2022

2022 - STATE ISSUES PHASE 2 OF BUSINESS RECOVERY GRANTS

NCACPA’s lobbying in March for expanded access to the state’s Business Recovery Grant program benefitted roughly 70% of Phase 2 grant recipients. According to NCDOR testimony to a legislative oversight committee, approximately 2,100 NC businesses received grants totaling $123 million for which they would have otherwise been ineligible were it not for NCACPA’s advocacy. 

October 2022

2022 - NCACPA ASKS STATE LAWMAKERS TO DESIGNATE ACCOUNTING AS STEM

In a presentation to the House Select Committee on Advancing Women in STEM, NCACPA called on legislators to designate Accounting as part of the state’s STEM curriculum under the field of Technology. The proposal also recommended offering high-quality accounting classes through grade 12 and additional resources for students who are underrepresented in the accounting profession. The association further recommended that the state support the AICPA Accounting Program for Building the Profession course in high schools and encourage higher education institutions to accept the course for college credit. 

October 2022

2022 - IRS PROVIDES PENALTY RELIEF FOR LATE FILERS

The IRS announced it would provide penalty relief to most individual and business taxpayers who filed their tax returns late in 2019 or 2020 due to the COVID pandemic. NCACPA, along with the AICPA and other state societies, had repeatedly pressed the IRS and Congress to provide penalty relief for these taxpayers. The IRS also announced automatic refunds of $1.2 billion in penalties to nearly 1.6 million taxpayers who already paid late fees.  

August 2022

2022 - NCACPA URGES DHS TO ADD ACCOUNTING TO STEM DEGREE LIST

NCACPA joined the AICPA, 46 other state societies, and ten additional organizations in a letter to the Department of Homeland Security nominating six accounting-related instructional programs to be added to the Science, Technology, Engineering and Math (STEM) Designated Degree list for the DHS Student and Exchange Visitor Program. 

August 2022

2022 - NCACPA ADVOCACY LEADS TO IRS STATEMENT ON ERRONEOUS CP-14 NOTICES 

Thanks in part to federal advocacy initiated by NCACPA, the IRS released a statement on July 27 regarding erroneous CP-14 notices issued in June. NCACPA reached out to the state’s congressional delegation after several members expressed concern on Connect detailing their client’s experience with the notices. A bipartisan group of delegation members elevated these concerns to the IRS and called for action. 

July 2022

2022 - NCACPA HOSTS FIRST-EVER IRS PROBLEM-SOLVING DAY

NCACPA partnered with the IRS Taxpayer Advocate Service on a pilot project to help CPAs resolve erroneous CP–14 notices received by their clients. Staff from the Local Taxpayer Advocate offices in Greensboro and Charlotte reviewed and resolved these notices and other client concerns in a series of virtual meetings with CPAs. 

July 2022

2022 - LATE TAX PAYMENT PENALTY CUT IN HALF

In 2021, NCACPA secured passage of a law to replace the state’s flat 10% late tax payment penalty with a 2% per month graduated penalty beginning on July 1, 2022. Because of problems with its antiquated computer system, NCDOR was unable to implement the graduated penalty by the deadline. NCACPA convinced lawmakers to reduce the 10% penalty to 5% and push the implementation date for the graduated penalty until July 2024. 

June 2022

2022 - NC CPA PAC HELPS CANDIDATES TO PRIMARY ELECTION VICTORY

A bipartisan group of 29 House and Senate candidates backed by the NC CPA Political Action Committee won their primary election on May 17.  

May 2022

2022 - JOINT EDUCATION TASK FORCE FORMED

In preparation for the upcoming changes to the CPA Exam, NCACPA and the State Board of CPA Examiners formed a Joint Accounting Education Task Force. The group included accounting educators from a variety of universities and community colleges throughout the state, and they held meetings to study and discuss CPA Evolution and other issues impacting the education of future CPAs. 

May 2022

2022 - NCACPA EXPRESSES CONCERNS AND RECOMMENDATIONS ABOUT NC’S PASS-THROUGH ENTITY TAX LAW

In a letter to the chairs of the Senate and House Finance Committees, NCACPA expressed its concerns regarding the 2021 law allowing certain pass-through entities to elect to pay state income tax at the entity level. The letter outlined several recommendations to address these concerns, leading to meetings with lawmakers and the NCDOR. NCACPA later formed a task force to create a legislative proposal for introduction at the General Assembly in 2023. 

May 2022

2022 - STATE TAX DEDUCTION FOR EMPLOYEE RETENTION CREDIT

Because the federal Employee Retention Credit was applied against federal employment taxes and not federal income tax, provisions in state law prevented NC businesses from deducting wages associated with the ERC. NCACPA argued that the law denied the taxpayer a full deduction for an ordinary and necessary business expense without giving the taxpayer—as the federal government did—an alternative tax benefit. Lawmakers agreed and amended the law to allow employers to deduct wages associated with the ERC in calculating their state income tax. 

March 2022

2022 - EQUITABLE TAX TREATMENT FOR PANDEMIC GRANT RECIPIENTS

When state legislators created the Extra Credit Grant and the Business Recovery Grant pandemic relief programs, they made the grants tax-free. NCACPA learned that recipients of certain other pandemic relief programs were being taxed on their grants, and the association successfully lobbied lawmakers to correct the inequity. Because of NCACPA’s advocacy, funds awarded to historically underutilized businesses through the RETOOLNC program and grantees of the Mortgage, Utility, and Rent Relief program were made exempt from state income tax, retroactive to January 1, 2020. 

March 2022

2022 - BROADENED ELIGIBILITY FOR BUSINESS RECOVERY GRANTS

For the initial round of the Business Recovery Grant program, businesses had to demonstrate a decline in gross receipts using only Form E-500 or Form 1065. This limitation rendered thousands of businesses that do not collect sales tax and are structured as an S Corporation, C Corporation, single-member LLC, or sole proprietorship as ineligible to apply. Prior to the launch of Phase 2 of the program, NCACPA secured passage of a law that expanded the list of tax forms that a business can use to demonstrate a decline in gross receipts to include Form 1120, 1120-S, 1040 Schedule C, or 1040 Schedule F. 

March 2022

2022 - FILING DEADLINE EXTENDED FOR FARMERS & FISHERS

CPAs with farming and fishing clients were concerned that the delayed start of the state tax season would mean their clients wouldn’t be able to meet the March 1 state tax deadline. At the urging of NCACPA, state lawmakers unanimously approved legislation to extend the March 1 state tax deadline for farmers and fishermen until April 15.  

February 2022

2022 - NCACPA ADVOCATES FOR BUSINESSES AND PRACTITIONERS ON SCHEDULES K-2, K-3 

NCACPA joined the AICPA and other state CPA societies to urge the IRS to delay implementation of requirements for Schedules K-2 and K-3 until 2023. The coalition further argued for the suspension of penalty assessments against certain domestic Partnerships or S Corporations for failing to file or failing to timely provide Schedules K-2 and K-3 for the 2021 tax year.  

February 2022

2022 - SUSPENSION OF COLLECTION ACTIVITIES RELATED TO PPP ADDBACK

Thanks to lobbying by NCACPA, the NC Department of Revenue (NCDOR) agreed to temporarily suspend all collection activities related to the addback of expenses associated with forgiven Paycheck Protection Program loans, pending the receipt and examination of a 2020 amended NC return. 

January 2022

2022 - HOUSE DELEGATION BACKS REQUEST URGING TAXPAYER RELIEF AND REDUCTION OF IRS BACKLOG

At the request of NCACPA, all members of North Carolina’s delegation to the U.S. House of Representatives signed a bipartisan letter calling for immediate action by the IRS to provide taxpayer relief and reduce the agency’s processing backlog. The IRS responded by announcing it would suspend certain automated notices and related actions. 

January 2022

2021 - SIMPLIFIED DOCUMENTATION FOR AMENDED RETURNS

In response to lobbying by NCACPA, the NCDOR published guidance that dramatically reduced the workload for tax professionals. The guidance stated that amended Schedule K-1s would not be required as documentation for amended returns of taxpayers impacted by retroactive PPP expense deductibility provisions in the 2021 Appropriations Act.  

December 2021 

2021 - STATE ENACTS NCACPA POLICY PRIORITIES

Following months of negotiations, Governor Roy Cooper signed into law a compromise budget bill that included several policy priorities championed by NCACPA. The 2021 Appropriations Act (Session Law 2021-180) replaced the state’s flat 10% late tax payment penalty with a graduated penalty of 2% per month up to an aggregate cap of 10%. The Act also corrected an unintended consequence of decoupling from Section 163(j) provisions in the federal CARES Act and included more than $1 million in funding for financial literacy education. 

November 2021 

2021 - SWIFT RESOLUTION FOR ERRONEOUS TAX NOTICES

After a Connect post highlighted the possibility that the Department of Revenue was erroneously issuing notices assessing a penalty for late filing, NCACPA reached out to the NCDOR about the issue. The NCDOR soon identified the technology glitch causing the erroneous notices and took steps internally to ensure that additional returns were not impacted. 

September 2021 

2021 - ADVOCATING FOR ACCOUNTING AS A STEM FIELD

In a letter to members of North Carolina’s U.S. House delegation, NCACPA urged support of H.R. 3855, the Accounting STEM Pursuit Act. The bill would recognize accounting in the Science, Technology, Engineering, and Math (STEM) curriculum under the technology field. The bill would also allow for federal funding to be used to strengthen accounting education in K-12 schools, particularly by providing high-quality accounting programs and courses for students who are members of groups underrepresented in the accounting profession. As a result of our advocacy, Representatives Deborah Ross (D-NC-02) and Kathy Manning (D-NC-06) signed on as cosponsors. 

August 2021 

2021 - NCACPA CHAMPIONS FUNDING FOR FINANCIAL LITERACY

In a letter to state lawmakers, NCACPA called for full funding of financial literacy instructor training in the state budget. NCACPA led the effort in 2019 to pass a law mandating the Economics and Personal Finance course for high school students, but a breakdown in budget negotiations that year meant that no state funds went to professional development for teachers of the course. The General Assembly would later approve an appropriation of more than $1 million for this purpose in the 2021 Appropriations Act. 

June 2021 

2021 - NEW LAW OPENS DOOR TO TEACHING OPPORTUNITIES FOR ACCOUNTANTS

SB 582 (Session Law 2021-48) allows accountants and other professionals to contract with local boards of education to teach high school courses in their area of specialized knowledge or work experience. When the bill was debated, bill sponsor Senator Jim Burgin (R-Harnett) specifically mentioned the importance of making it easier for accountants to teach courses on financial literacy, economics, or mathematics. Burgin said his bill is a way for professionals to redefine the “second half” of their lives while giving something back to their communities. 

June 2021 

2021 - INCOME TAX INTEREST WAIVER BECOMES LAW

A top legislative priority for NCACPA was signed into law by Governor Roy Cooper on April 27. Under HB 279 (Session Law 2021-16), North Carolina waived the interest that would have accrued on the underpayment of individual income taxes between April 15, 2021, and the extended filing deadline of May 17, 2021. The measure passed with bipartisan, unanimous support in the House and Senate. 

April 2021 

2021 - CONGRESSIONAL DELEGATION UNANIMOUSLY SUPPORTS FILING DEADLINE EXTENSION

Hundreds of members used the NCACPA Advocacy Center to email federal lawmakers asking that the tax filing deadline be extended to June 15, 2021. In response, the North Carolina congressional delegation unanimously signed a letter to the IRS and Treasury Department in support of our request. Although the IRS extended the deadline to May 17 instead of June 15, NCACPA appreciated the delegation’s bipartisan solidarity with the accounting profession.  

March 2021 

2021 - SIMPLIFIED EXTRA CREDIT GRANT PROCESS

After a tax software glitch prevented certain taxpayers from automatically receiving the $335 Extra Credit Grant in 2020, NCACPA worked with lawmakers and regulators on a solution that allowed practitioners to easily apply for the grant on behalf of their qualifying clients while avoiding time-consuming and costly preparation of amended returns. The bill received unanimous support in the General Assembly and became Session Law 2021-1. NCACPA later partnered with the NCDOR to create a user-friendly and accessible bulk upload process for tax professionals. 

February 2021

2021 - URGING FEDERAL GUIDANCE ON PPP & ERTC INTERPLAY

NCACPA worked with Senator Richard Burr (R-NC) to help ensure that businesses could fully participate in the Paycheck Protection Program (PPP) and claim the Employee Retention Tax Credit (ERTC). Following our meeting with his legislative staff, Senator Burr co-signed a letter with Senator Maggie Hassan (D-NH) to encourage federal regulators to issue guidance making it clear that businesses can use PPP and ERTC assistance to keep workers on the payroll, so long as employers do not “double-dip” by receiving PPP forgiveness and claiming the ERTC for the same wages paid to employees. The following month, the IRS issued such guidance in Notice 2021-20. 

February 2021

2021 - SECURING GUIDANCE CLARIFYING PPP ADDBACK TIMING

In response to a request from NCACPA, the NCDOR issued revised guidance to clarify when taxpayers should add back expenses paid using the proceeds of a forgiven PPP loan. The timing of the addback of expenses has been the subject of questions and concerns raised by NCACPA members on our Connect platform, especially after Congress passed legislation in December 2020 ensuring that such expenses would be deductible at the federal level. 

February 2021

2020 - PPP LOAN FORGIVENESS/EXPENSE DEDUCTIBILITY

NCACPA joined with AICPA and other state CPA societies to successfully lobby Congress to ensure tax deductibility for business expenses associated with forgiven Paycheck Protection Program (“PPP”) loans. The IRS had previously declared such deductions would be disallowed.

H.R. 133 (Public Law 116-120) clarifies that deductions are allowed for otherwise deductible expenses paid with the proceeds of a PPP loan that is forgiven, and that the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness.

The legislation contained numerous other provisions important to the profession, including $284 million to fund Second Draw PPP loans and a streamlined process for loan forgiveness.

Deductibility will also apply to eligible expenses associated with Second Draw PPP loans. The list of eligible expenses was broadened to include personal protective equipment; certain supplier costs; costs related to property damage not covered by insurance and caused by public disturbances that occurred in 2020; and expenditures for software, cloud computing, and other human resources and accounting needs.

More than 640 NCACPA members combined with 409 of their clients to send emails to Congress in support of PPP expense deductibility.

December 2020

2020 - COVID-19 Relief

NCACPA led and championed many COVID-19 relief measures at both the state and federal level. On the state level, we were pleased the NC Department of Revenue honored our request on behalf of taxpayers and the state of North Carolina to extend the filing and payment deadline to July 15. Additionally, NCACPA fought for accounting to be listed as an essential business service in light of stay-at-home orders throughout North Carolina.

On the federal level, NCACPA worked with Senator Burr and Senator Tillis on critical clarifications and improvements needed with small business loans in light of COVID-19, as well as to secure their assistance in pressuring the Treasury Department and the IRS to provide targeted penalty relief for late filings and payments resulting from delays due to the pandemic.

April 2020

2019 - Senate Bill 557—Various Finance Law Changes

Historically, the North Carolina Department of Revenue has been unable to track or maintain a record of valid POAs filed by taxpayers, causing the Department to often communicate with taxpayers directly, instead of their representatives. This has led to advocates not receiving important documents. The Association worked diligently with the legislature and Department to support updating internal systems and processes in order to resolve the issue. On November 8, 2019, the North Carolina General Assembly passed Senate Bill 557, which included a provision stipulating the Department of Revenue report to the Joint Legislative Oversight Committee on General Government on its progress in updating its electronic tax systems to store and recognize POA registrations by January 31, 2020.

Additionally, NCACPA championed the adoption of market-based sourcing for multi-state taxpayers in allocating income tax on services and intangibles, which is necessary to allow North Carolina to remain competitive in attracting infrastructure and employer investments in the state. On November 8, 2019, the NC General Assembly enacted market-based sourcing for apportioning the corporate income tax and the franchise tax net worth base, effective for taxable years beginning on or after January 1, 2020. Under the new market-based sourcing rules, receipts from intangibles will be sourced based on where the intangible is used. Special market-based sourcing rules are provided for broadcasters, banks, natural gas pipeline companies, and electric power companies.

November 2019

2018 - Veto of the New State Budget

On June 12, 2018, both chambers of the North Carolina General Assembly voted to override Governor Cooper’s veto of the new state budget, allowing it to become law. Included in the budget was a state extension proposal NCACPA worked diligently on over the past several months. The provision requires any taxpayer granted an extension of time for filing a federal income tax return be granted an automatic extension of time to file the corresponding state income tax return and franchise tax return. This becomes effective for taxable years beginning on or after January 2019.

This success for taxpayers and practitioners could not have been achieved without the help of a number of NCACPA members who contacted their representatives to advocate for this issue.

June 2018

2017 - Senate Bill 628–Various Changes to Revenue Laws

NCACPA was highly involved in the drafting of this legislation, which made numerous technical changes to the North Carolina tax code. NCACPA’s Tax Modernization Task Force made recommendations to lawmakers clarifying recent changes to the sales tax laws related to RMI services, and provided language found in this bill.

In meetings with legislators, NCACPA also brought attention to an issue with GS 105-122(d) regarding how a corporation’s franchise tax base was calculated. The Association pointed out that indebtedness related to real estate no longer reduced the taxable base for franchise tax purposes, and that this drastically increased the tax for many North Carolina corporations. This was an unintended change in 2015 that was corrected in this legislation.

Additionally, a provision proposed by NCACPA was included, directing the NC Department of Revenue to conduct a feasibility and cost study of allowing the “pass-through of a federal extension of time for filing a federal income tax return to serve as an application for a State extension of time for filing corporate franchise and other income tax returns.” The DoR completed this study in January of 2018, and the Association is still ardently working with the Department and lawmakers to eliminate the state extension form requirement.

August 2017

2016 - Senate Bill 114 – Annual Report Modernization

The Association worked with the NC Secretary of State, bill sponsors, and committee members to eliminate the option of filing corporate annual reports with the NC Department of Revenue, a great success especially for CPAs working in or for nonprofits.

September 2016

2016 - Commscope Credit Union v. Butler & Burke LLP

The North Carolina Supreme Court’s decision stated that independent auditors do not owe a fiduciary responsibility to their audit clients, as a matter of either law or fact, a reversal of the NC Court of Appeals’ former ruling. NCACPA worked on this case for nearly two years, intervening with an amicus brief arguing for reversal in early 2015. This safeguarding of auditor independence was a great win for the profession.

September 2016

2016 - Senate Bill 726 – IRC Update

Following provisions in the federal Protecting Americans From Tax Hikes (PATH) Act of 2015, NCACPA urged lawmakers in the NC General Assembly to make conformity determinations so taxpayers and businesses could be alleviated of much uncertainty. The IRC Update Bill was passed in May of 2016, which, importantly, decoupled on a permanent basis two provisions made permanent at the federal level under the PATH Act—enhanced Section 179 expensing, and tax-free distribution from IRAs to public charities. Section 179 was of extra significance, as legislative leaders were previously inclined to leave the state deduction limit at $25,000 and the investment limit at $200,000.

June 2016

2015 - Senate Bill 20 – IRC Update/Motor Fuel Tax Law Changes

This bill addressed the critically important and time-sensitive issue of tax conformity resulting from the passage of the Tax Increase Prevention Act (TIPA) of 2014. TIPA was enacted after the NC General Assembly had adjourned, so the 50 provisions extended in the federal Act had not yet been addressed by NC lawmakers, creating uncertainty and challenge for both taxpayers and tax advisors working on 2014 tax returns. NCACPA worked with the General Assembly for several months to address these provisions on a state level, resulting in the passage of Senate Bill 20.

April 2015