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November 2011
Help from the Department of Revenue
By Gary Smith

     As you may have heard, borrowing from the government by not paying your taxes is a bad idea. The owners of a business or other people responsible for paying the taxes can be held personally liable for those unpaid taxes.

     North Carolina has started a program to help these businesses and business owners. The Small Business Taxpayer Recovery Program offers benefits to businesses that voluntarily choose to pay their taxes.

     Businesses under the program have the opportunity, if they complete the program, to have all penalties against them waived. Also, if the business is accepted into the program and complies with the program, no tax liens will be filed or collection actions will be taken by the state against the business.

     Under the program, taxes must be paid by June 30, 2013. This encourages businesses to enter the program quicker in order to have longer payment terms. Routine terms for the payment of taxes are six months.

     Businesses accepted into the program also receive free business counseling from either the Small Business and Technology Development Center or the NC Small Business Center Network. Both of these centers have locations throughout North Carolina. The business must have at least one counseling session to comply with the program.

     In order to use the program, you must have no more than 200 employees. The taxes covered by the program are “trust fund” taxes (money that you have taken from another person to pay to the state like employee tax withholdings and sales and use tax). Also, some income taxes may be paid under the same terms (without penalties being waived). The program is operated by the North Carolina Department of Revenue.


Forgiveness for College Loans

     If you are a North Carolina resident and go to postsecondary school in North Carolina, you may have a way to have some of your loans forgiven in exchange for your services. North Carolina has recently established the Forgivable Education Loans for Service Program. This program is to help students who choose to enter a “high need” profession where the state has identified a shortage of employees. Unfortunately, the program is just getting started. Details on the program should be coming in the next few months.


Commercial Real Estate Brokers Get a Lien

     Commercial real estate brokers now have an ability to place liens for compensation due from commercial real estate transactions. The broker must have a written agreement for the broker’s services with the owner or owner’s authorized representative.

     The lien is available if the broker has performed the agreement, the agreement clearly sets forth the broker’s duties, and the agreement sets forth the conditions for when compensation is due and the amount of the compensation. Only the broker named in the agreement can claim the lien, and the lien is only against the real estate subject to the agreement.

     A lien can be filed once the broker performs services. The deadlines for filing the lien depend on when amounts are due to be paid and the type of transaction involved (sale or lease of property). The broker must generally bring a suit to enforce the lien within 18 months of the lien. Brokers need to be aware of when the lien can be filed as the timing varies based on when the compensation is due and when the transactions giving rise to the compensation occur.

     Be aware that other obligations come with this benefit. A broker will not be able to sue a client for the broker’s services unless the contract is in writing and signed by the client.


Transferring Bank Accounts on Death to Non-Owners

     You may be familiar with “joint accounts with right of survivorship” where ownership of a bank account automatically transfers to one of the account owners when the other owner dies. A new North Carolina law stretches the ability to transfer bank accounts on death to non-owners.

     Under the law, individuals may create a “payable on death” bank account. Such account may have multiple individual beneficiaries. However, with multiple individual beneficiaries, any one of the beneficiaries may withdraw the entire account. If an entity is made the beneficiary of the account, only one beneficiary may be named.

     These type accounts are not restricted or governed by will at the death of the owner. The owner’s direction to the bank as to the beneficiary controls who gets the account.

     While this type of account should not be used as a substitute for a will, it does allow a person who has not made a will to be able to control where part of his or her assets may go at death. It also allows those people with a will to change beneficiaries of assets in the bank without having to revise their wills.



E-Verify for North Carolina

     E-Verify is an online service for determining the ability of your employees to work in the United States. North Carolina has required all counties and municipalities to use E-Verify in their hiring as of October 1, 2011. Employers with 500 or more employees are required to start using E-Verify October 1, 2012. Employers with 100 or more employees are required to start using E-Verify on January 1, 2013. Employers with 25 or more employees are required to start using E-Verify on July 1, 2013.

     Keep in mind that South Carolina already requires E-Verify for employers with South Carolina employees.

     Content contributed by Wishart, Norris, Henninger & Pittman, P.A., which partners with owners of closely-held businesses to provide comprehensive legal services in all areas of business, tax, estate planning, succession planning, purchases and sales of businesses, real estate, family law, and litigation. For more information, contact Gary Smith at 704-364-0010, follow on Twitter @glawnews, or visit


Gary Smith is an attorney at Wishart, Norris, Henninger, P.A.
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