NC Updates IRC Conformity, Decouples from CARES Act Provisions, and Enacts Franchise and Sales & Use Tax Changes

On June 30, 2020, North Carolina Gov. Roy Cooper signed into law House Bill 1080 (HB 1080) which updates the Internal Revenue Code (IRC) conformity date to May 1, 2020. The change is effective for tax year 2020 for calendar year taxpayers. Even though the conformity date is subsequent to the enactment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act which became law on March 27, 2020, HB 1080 specifically decouples from various CARES Act relief provisions.

As a result of decoupling, North Carolina taxpayers must adjust Federal Taxable Income (FTI) or Federal Adjusted Gross Income (FAGI) for all tax periods impacted by the applicable CARES Act provisions. Detailed below are some of the specific CARES Act provisions which the state decouples from. Also discussed are some specific franchise tax changes as well as sales tax changes which are part of HB 1080.

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