2015 NC tax season delay ahead

Will the 2015 NC tax season delay be as long as it was in 2013? I hope not, waiting until March 13th to complete corporate returns due March 15th is not a recipe for a smooth filing season. Nor is waiting until March 13th for your individual refund to begin processing.

Some background

NC has a fixed date of conformity with the Internal Revenue Code (IRC). This means that NC’s tax law references the IRC as of a particular date and does not automatically adopt later changes. Congress finally passed the 2014 tax extenders law in December and the President signed it into law. You can see my prior post for details on the tax extenders but essentially Congress renewed a slew of tax deductions and credits that expired at the end of 2013. Many, but not all of the tax provisions Congress renewed retroactively could impact NC taxes.

Reason for the NC delay

The NC General Assembly does not plan to convene until January 28, 2015. With committee meetings, repeated votes in each chamber, and then waiting on the Governor, at a minimum, it will take at least a week to get some certainty from the General Assembly. Which provisions will they adopt, which will they modify, and which will they reject?

Back in early 2013 we faced a similar dilemma. The governor did not sign the conforming legislation until March 13, 2013. This essentially shortened the tax season to a little more than one month for many. Most individual taxpayers will not have to worry about the delay because they will not be taking advantage of the late Congressional tax law changes.

Who is most likely to have to wait:

• Teachers claiming the deduction for classroom supplies.
• Taxpayers excluding debt cancellation income on their principal residence.
• Taxpayers claiming the exclusion of an IRA distribution directly to a charity. Based on what happened for 2013 taxpayers can expect NC to allow the exclusion but they should be able to claim the charitable deduction – subject to other rules. Add it back to income and then subtract it out, silly laws are not limited to the feds.
• The deduction for qualified tuition and fees. I would not hold my breath on NC bringing this deduction back as NC did not allow it in 2013 when Congress did.
• The deduction for mortgage insurance premiums. Again, I expect NC not to allow this deduction as NC did not allow it for 2013 when Congress did allow it.
• Businesses claiming Section 179 deductions for tangible business property totaling over $25,000. NC did not adopt this provision for 2013 but they did create a way to claim the deduction over several years. We will have to wait to see what NC does with the excess Section 179. Deduct the excess all in 2014 or spread it out?
• Businesses claiming bonus depreciation. NC has not allowed this deduction in the past but does allow taxpayers to claim the federal bonus depreciation over several years. Expect something similar or exactly the same for 2014.