Sales Tax Slice: States Respond to Hurricane Matthew with Tax Relief


It’s hurricane season. Most probably, it is only a matter of time before Otto, the next Atlantic hurricane after Nicole, hits. In the meantime, many Atlantic and Gulf Coast communities are just beginning to recover from Matthew, a hurricane which devastated Haiti when it first made landfall as a Category 4 and then went on to damage parts of the southeast U.S.

At least two states are offering some sort of tax relief for those affected by Matthew. For affected taxpayers, North Carolina will waive penalties and extend until March 15, 2017, the deadline for filing individual and business tax returns otherwise due between Oct. 4, 2016, and March 15, 2017. Affected taxpayers include those who reside or have a business located in a federally designated disaster county and those whose necessary tax records are located in such a county. Currently, there are 23 counties in North Carolina that have been declared “disaster counties.” 

For its part, South Carolina is similarly extending until March 15, the deadline for affected taxpayers in 20 of its counties to file returns. In addition, the state exempts from its use, unemployment and other tax filing requirements businesses that enter the state solely to perform eligible emergency-related work during the disaster response period. The National Conference of State Legislatures first proposed a model statute creating this exemption in 2011. South Carolina is currently one of 25 states that have enacted exemptions based on this model statute. (Two of these, Oregon and Delaware, do not impose use tax.)  

Eligible emergency-related work includes work related to the following infrastructure affected by Matthew: 

  • communications networks;
  • electric generation, transmissions and distribution systems;
  • water pipelines;
  • public roads and bridges; and
  • related facilities.   

For example, an out-of-state contractor entering South Carolina to repair telephone lines damaged by Matthew will not be subject to use tax on items brought into the state to perform the repairs. Contractors entering North Carolina will have no such luck, as the state has yet to adopt the National Conference of State Legislatures’ model statute. 

Will North Carolina be next to adopt the National Conference of State Legislatures’ model statute? Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn

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