North Carolina senators have recently introduced a bill that aims to repeal the antiquated privilege license tax imposed on certain professionals who require a state license.
This tax not only adds an unnecessary financial burden on real estate agents but also complicates the compliance process. In this article, we will discuss the implications of the bill for North Carolina real estate agents and other professionals, as well as the potential benefits of the bill's passage.
The Privilege License Tax: An Overview
The privilege license tax is a yearly tax imposed on a select group of professionals who require a state license to operate. While the tax revenue from this source is minimal, the tax affects a variety of occupations, including real estate agents, physicians, and more. In FY 2021, the real estate sector contributed the largest share to the privilege license tax, amounting to 39% of the $6.6 million total.
The Current Situation: A Burden on Workers and the Department of Revenue
Although the annual fee for the privilege license tax is relatively small, the process of compliance is convoluted and time-consuming. Currently, the tax cannot be paid online or by phone, forcing individuals and businesses to use traditional mail to submit their payments. This outdated method not only places an unnecessary burden on workers but also increases the workload for the North Carolina Department of Revenue (DOR), which must manage compliance and monitoring.
The Proposed Bill: Aiming for Fairness and Efficiency
The bill introduced in the North Carolina Senate seeks to eliminate the privilege license tax for various occupations, excluding installment paper dealers. By doing so, it aims to reduce the financial burden on professionals such as real estate agents, who currently contribute the largest share of the tax revenue. Furthermore, the bill would streamline the compliance process, making it more efficient for both workers and the DOR.
The Next Steps: What to Expect
The bill to repeal the privilege license tax has been introduced in the North Carolina Senate and will now go through a legislative process before it becomes law. This process includes several stages:
Committee hearings: The bill will be assigned to a committee, where it will be reviewed and discussed. Committee members may propose amendments, and the bill could be revised before it proceeds to the next stage.
Senate floor vote: If the bill passes the committee stage, it will be brought to the Senate floor for a vote. Senators will have the opportunity to debate the bill and potentially propose further amendments before casting their votes.
House of Representatives: If the bill is passed by the Senate, it will then be sent to the North Carolina House of Representatives. The House will also review the bill, hold committee hearings, and potentially propose amendments before voting on the legislation.
Governor's approval: If the bill is passed by both chambers of the General Assembly, it will be sent to the Governor for their signature. The Governor may choose to sign the bill into law or veto it. If the Governor vetoes the bill, the General Assembly can attempt to override the veto with a three-fifths majority vote in both chambers.
As the bill progresses through these stages, it is crucial for North Carolina real estate agents and other professionals affected by the privilege license tax to stay informed and engage with their representatives to voice their support or concerns.
A Step Towards a Pro-Growth Tax Reform
North Carolina has been a model for pro-growth tax reform, consistently enabling residents to retain more of their hard-earned income. The introduction of the bill to repeal the privilege license tax is yet another step in this direction. By eliminating this tax, the state can foster a fairer and more efficient environment for real estate agents and other professionals who currently shoulder the burden of this outdated tax system.
Do you think the state should get rid of the privilege license tax? Leave a comment below or discuss with a colleague in an upcoming CE Class!
Haupt, Brian. "NC Senate Introduces Bill to Repeal the Privilege License Tax." John Locke Foundation, 2023.
North Carolina General Assembly. "Senate Bill 1112: Repeal Privilege License Tax." Session 2023.