Tax News

CCH (cch.taxgroup.com) reports:

North Carolina taxpayers are reminded that previously enacted legislation mandates that effective October 1, 2007, a taxpayer who is consistently liable for at least $10,000 a month in state and local sales and use taxes must make a monthly prepayment of the next month's tax liability. Such prepayments are due on the date a monthly return is due. As a consequence, beginning with the return for the month of October 2007, a taxpayer currently paying on a semimonthly basis is required to include a prepayment for the next period when filing the monthly return and remitting the tax due.
The prepayment must equal at least 65% of any of the following: (1) the amount of tax due for the current month; (2) the amount of tax due for the same month in the preceding year; or (3) the average monthly amount of tax due in the preceding calendar year. A taxpayer is not subject to interest or penalties for the underpayment of a prepayment if one of the above three calculation methods is used. Also, a taxpayer is not required to use the same method for calculating the amount of the prepayment each month.
During the month of October 2007, a taxpayer currently paying on a semimonthly basis must transition to this new prepayment procedure. There will be no semimonthly payment covering the period from October 1 through the 15th that would have been due on October 25, and there will be no semimonthly payment covering the period from October 16 through the 31st that would have been due on November 10. The October 2007 return and payment that is due November 20 must include all of October's liability plus the prepayment for November. For the November return that is due December 20, the prepayment shown on last month's return (October) will be deducted and a prepayment for the next period (December) will be included.
For those taxpayers who pay online via the Department's Web site at http://www.dornc.com/, the E-500 Sales and Use Online Filing and Payments system requires two separate payments: one payment for the current period and one payment for the prepayment for the next period. Both payments may be made with one login to the E-File system.
For those taxpayers who pay electronically by ACH Credit or ACH Debit (Touchtone, Voice, or PC Software), two payment transactions are required: one payment for the current period and a separate payment for the prepayment for the next period. For example, an October return due on November 20 will have a November prepayment. The prepayment will require a payment transaction denoting the November period. The balance from the October return will require another payment transaction denoting the October period.
CCH Tax Research NetWork subscribers may view the important notice in its entirety.
Important Notice, North Carolina Department of Revenue, September 7, 2007.