SB 153 (Edition 3)

GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2017

S 3

SENATE BILL 153

Finance Committee Substitute Adopted 6/27/17

House Committee Substitute Favorable 6/15/18

Short Title: Military Retiree State Income Tax Relief.		(Public)
Sponsors:
Referred to:

March 2, 2017

A BILL TO BE ENTITLED

AN ACT to provide income tax relief for retired members of the armed forceS OF THE UNITED STATES and other various changes.

The General Assembly of North Carolina enacts:

PART I. PROVIDE INCOME TAX RELIEF FOR RETIRED MEMBERS OF THE ARMED FORCES OF THE UNITED STATES

SECTION 1.(a) G.S. 105‑153.5(b) reads as rewritten:

"(b) Other Deductions. – In calculating North Carolina taxable income, a taxpayer may deduct from the taxpayer's adjusted gross income any of the following items that are included in the taxpayer's adjusted gross income:

…

(5) The amount received during the taxable year from one or more State, local, or federal government retirement plans to the extent the amount is exempt from tax under this Part pursuant to a court order in settlement of any of the ~~following cases:~~cases listed in this subdivision. Amounts deducted under this subdivision may not also be deducted under subdivision (5a) of this subsection.

a. Bailey v. State, 92 CVS 10221, 94 CVS 6904, 95 CVS 6625, 95 CVS 8230.

b. Emory v. State, 98 CVS 0738.

c. Patton v. State, 95 CVS 04346.

(5a) The amount received during the taxable year from the United States government as retirement pay for a retired member of the Armed Forces of the United States or as survivorship benefits for survivors of active duty or retired members of the Armed Forces of the United States. Amounts deducted under this subdivision may not also be deducted under subdivision (5) of this subsection.

.…"

SECTION 1.(b) This section is effective for taxable years beginning on or after January 1, 2018.

PART II. AN ACT to create a special separation allowance for state and local FIREFIGHTERS AND RESCUE SQUAD WORKERS

SECTION 2.(a) Chapter 143 of the General Statutes is amended by adding a new Article to read:

"Article 12I.

"Special Separation Allowances for State and Local Firefighters and Rescue Squad Workers.

"§ 143‑166.90. Special separation allowances for State firefighters and rescue squad workers.

(a) The following definitions apply in this section:

(1) "Creditable service" means the service for which credit is allowed under the retirement system of which the firefighter or rescue squad worker is a member, provided that at least fifty percent (50%) of the service is as a firefighter or rescue squad worker.

(2) "Firefighter" shall mean a full‑time paid employee of any State department, agency, or institution actively serving in a position with assigned primary duties and responsibilities for the prevention, detection, and suppression of fire.

(3) "Rescue squad worker" shall mean a full‑time paid employee of any State department, agency, or institution who meets the definition of "emergency medical services personnel" under G.S. 131E‑155.

(b) Every firefighter or rescue squad worker who qualifies under this section shall receive, beginning in the month in which the firefighter or rescue squad worker retires on a basic service retirement under the provisions of G.S. 135‑5(a), an annual separation allowance equal to eighty‑five hundredths percent (0.85%) of the annual equivalent of the base rate of compensation most recently applicable to the firefighter or rescue squad worker for each year of creditable service. The allowance shall be paid in equal installments on the payroll frequency used by the employer. To qualify for the allowance, the firefighter or rescue squad worker shall meet all of the following criteria:

(1) The firefighter or rescue squad worker has either (i) completed 30 or more years of creditable service or (ii) attained 60 years of age and completed 25 or more years of creditable service.

(2) The firefighter or rescue squad worker has not attained 62 years of age.

(3) The firefighter or rescue squad worker has completed at least five years of continuous service, rendered on or after July 1, 2017, as a firefighter or rescue squad worker immediately preceding a service retirement. Any break in the continuous service required by this subdivision because of disability retirement or disability salary continuation benefits shall not adversely affect a firefighter's or rescue squad worker's qualification to receive the allowance, provided the firefighter or rescue squad worker returns to service within 45 days after the disability benefits cease and is otherwise qualified to receive the allowance.

(c) Payment to a retired firefighter or rescue squad worker under the provisions of this section shall cease upon the earlier of the following:

(1) The death of the firefighter or rescue squad worker.

(2) The last day of the month in which the firefighter or rescue squad worker attains 62 years of age.

(3) The first day of reemployment by any State department, agency, or institution, except that this subdivision does not apply to a firefighter or rescue squad worker returning to State employment in a position exempt from the North Carolina Human Resources Act in an agency other than the agency from which that firefighter or rescue squad worker retired.

(d) This section does not affect the benefits to which an individual may be entitled from State, local, federal, or private retirement systems. The benefits payable under this section shall not be subject to any increases in salary or retirement allowances that may be authorized by the General Assembly for employees of the State or retired employees of the State.

(e) The head of each State department, agency, or institution shall determine the eligibility of employees for the benefits provided under this section.

(f) The Director of the Budget may authorize the transfer of funds within the budgets of each State department, agency, or institution necessary to carry out the purposes of this section. These funds shall be taken from those appropriated to the department, agency, or institution for salaries and related fringe benefits.

(g) The head of each State department, agency, or institution shall make the payments set forth in subsection (b) of this section to those persons certified under subsection (e) of this section from funds available in subsection (f) of this section.

"§ 143‑166.92. Special separation allowances for local firefighters and rescue squad workers.

(a) The following definitions apply in this section:

(2) "Firefighter" means a person (i) who is a full‑time paid employee of an employer that participates in the Local Governmental Employees' Retirement System, or an equivalent locally sponsored retirement plan, and maintains a fire department certified by the North Carolina Department of Insurance or a County Fire Marshal's Office and (ii) who is actively serving in a position with assigned primary duties and responsibilities for the prevention, detection, and suppression of fire.

(3) "Rescue squad worker" means a person (i) who is a full‑time paid employee of an employer that participates in the Local Governmental Employees' Retirement System and maintains a rescue squad or emergency medical services team certified by the North Carolina Department of Insurance or the Department of Health and Human Services and (ii) who is actively serving in a position with assigned primary duties and responsibilities for the alleviation of human suffering and assistance to persons who are in difficulty, who are injured, or who become suddenly ill, by providing proper and efficient care or emergency medical services.

(b) Every firefighter or rescue squad worker who qualifies under this section shall receive an annual separation allowance beginning in the month in which the firefighter or rescue squad worker retires on a basic service retirement under the provisions of G.S. 128‑27(a) or a locally sponsored retirement plan. The annual separation allowance shall be equal to eighty‑five hundredths percent (0.85%) of the annual equivalent of the base rate of compensation most recently applicable to the firefighter or rescue squad worker for each year of creditable service. The allowance shall be paid in equal installments on the payroll frequency used by the employer. To qualify for the allowance, the firefighter or rescue squad worker shall meet all of the following criteria:

(1) The firefighter or rescue squad worker has either (i) completed 30 or more years of creditable service or (ii) attained 60 years of age and completed 25 or more years of creditable service.

(2) The firefighter or rescue squad worker has not attained 62 years of age.

(c) Payment to a retired firefighter or rescue squad worker under the provisions of this section shall cease upon the earlier of the following:

(1) The death of the firefighter or rescue squad worker.

(2) The last day of the month in which the firefighter or rescue squad worker attains 62 years of age.

(3) The first day of reemployment by a local government employer in any capacity.

Notwithstanding the provisions of subdivision (3) of this subsection, a local government employer may employ retired firefighters and rescue squad workers in a public safety position in a capacity not requiring participation in the Local Governmental Employees' Retirement System or an equivalent locally sponsored retirement plan, and doing so shall not cause payment to cease to those firefighters and rescue squad workers under the provisions of this section.

(d) This section does not affect the benefits to which an individual may be entitled from State, local, federal, or private retirement systems. The benefits payable under this section shall not be subject to any increases in salary or retirement allowances that may be authorized by local government employers or for retired employees of local governments.

(e) The governing body of each local employer shall determine the eligibility of employees for the benefits provided under this section.

(f) The governing body of each local employer shall make the payments set forth in subsection (b) of this section to those persons certified under subsection (e) of this section from funds available."

SECTION 2.(b) This section is effective when it becomes law and applies to firefighters and rescue squad workers retiring on or after July 1, 2022, with at least five years of continuous service that was rendered on or after July 1, 2017.

PART III. increase the disabled veteran property tax homestead exclusion, to reimburse Local governments for their resulting revenue loss, and to provide a property tax homestead exclusion for the surviving spouse of qualifying emergency personnel

SECTION 3.(a) G.S. 105‑277.1C reads as rewritten:

"§ 105‑277.1C. Disabled veteran property tax homestead exclusion.

(a) Classification. – A permanent residence owned and occupied by a qualifying owner is designated a special class of property under Article V, Section 2(2) of the North Carolina Constitution and is taxable in accordance with this section. The first ~~forty‑five thousand dollars ($45,000)~~ one hundred thousand dollars ($100,000) of appraised value of the residence is excluded from taxation. A qualifying owner who receives an exclusion under this section may not receive other property tax relief.

(b) Definitions. – The following definitions apply in this section:

…

(2a) Hold harmless amount. – The assessed value over forty‑five thousand dollars ($45,000) of a property excluded from taxation under subsection (a) of this section, multiplied by the applicable local tax rate.

…

(8) Total hold harmless amount. – The sum of the following:

a. The hold harmless amount for all property excluded from taxation under subsection (a) of this section in the county.

b. The hold harmless amount for all property excluded from taxation under subsection (a) of this section in the cities located in the county.

…

(g) Reimbursement. – On or before September 1 of each year, each county tax collector shall notify the Secretary of Revenue, in a manner prescribed by the Secretary, of the county's total hold harmless amount. A county that fails to notify the Secretary of Revenue of its total hold harmless amount by the due date is barred from receiving a reimbursement under this subsection for that taxable year. On or before December 31 of each year, the Secretary of Revenue shall distribute to each county its respective total hold harmless amount.

Any funds received by a county that are attributable to a city within the county must be distributed to that respective city. Any funds received by a county or city because the county or city was collecting taxes for another unit of government or special district must be credited to the funds of that other unit or district in accordance with regulations issued by the Local Government Commission.

In order to pay for the reimbursement under this section and the cost to the Department of Revenue of administering the reimbursement, the Secretary of Revenue shall draw from collections received under Part 2 of Article 4 of this Chapter an amount equal to the reimbursement and the cost of administration."

SECTION 3.(b) Article 12 of Subchapter II of Chapter 105 of the General Statutes is amended by adding a new section to read:

"§ 105‑277.1E. Surviving spouse property tax homestead exclusion.

(a) Classification. – A permanent residence owned and occupied by a qualifying owner is designated a special class of property under Section 2(2) of Article V of the North Carolina Constitution and is taxable in accordance with this section. The appraised value of the residence is excluded from taxation. A qualifying owner who receives an exclusion under this section may not receive other property tax relief.

(b) Definitions. – The following definitions apply in this section:

(1) Emergency personnel officer. – Firefighting, search and rescue, or emergency medical services personnel, a firefighter of the North Carolina Forest Service as defined in G.S. 106‑955, or any employee of any duly accredited State or local government agency possessing authority to enforce the criminal laws of the State who (i) is actively serving in a position with assigned primary duties and responsibilities for prevention and detection of crime or the general enforcement of the criminal laws of the State and (ii) possesses the power of arrest by virtue of an oath administered under the authority of the State.

(2) Permanent residence. – Defined in G.S. 105‑277.1.

(3) Property tax relief. – Defined in G.S. 105‑277.1.

(4) Qualifying owner. – An owner, as defined in G.S. 105‑277.1, who is a North Carolina resident and is the surviving spouse who has not remarried of an emergency personnel officer who was killed in the line of duty.

(c) Temporary Absence. – An owner does not lose the benefit of this exclusion because of a temporary absence from his or her permanent residence for reasons of health or because of an extended absence while confined to a rest home or nursing home, so long as the residence is unoccupied or occupied by a dependent of the owner, other than a spouse.

(d) Other Multiple Owners. – This subsection applies to co‑owners who are not husband and wife. Each co‑owner of a permanent residence must apply separately for the exclusion allowed under this section.

When one or more co‑owners of a permanent residence qualify for the exclusion allowed under this section and none of the co‑owners qualifies for the exclusion allowed under G.S. 105‑277.1, each co‑owner is entitled to the full amount of the exclusion allowed under this section. The exclusion allowed to one co‑owner may not exceed the co‑owner's proportionate share of the valuation of the property, and the amount of the exclusion allowed to all the co‑owners may not exceed the exclusion allowed under this section.

When one or more co‑owners of a permanent residence qualify for the exclusion allowed under this section and one or more of the co‑owners qualify for the exclusion allowed under G.S. 105‑277.1, each co‑owner who qualifies for the exclusion allowed under this section is entitled to the full amount of the exclusion. The exclusion allowed to one co‑owner may not exceed the co‑owner's proportionate share of the valuation of the property, and the amount of the exclusion allowed to all the co‑owners may not exceed the greater of the exclusion allowed under this section and the exclusion allowed under G.S. 105‑277.1.

(e) Application. – An application for the exclusion allowed under this section should be filed during the regular listing period but may be filed and must be accepted at any time up to and through June 1 preceding the tax year for which the exclusion is claimed. Persons may apply for this property tax relief by entering the appropriate information on a form made available by the assessor under G.S. 105‑282.1."

SECTION 3.(c) G.S. 105‑282.1(a) reads as rewritten:

"(a) Application. – Every owner of property claiming exemption or exclusion from property taxes under the provisions of this Subchapter has the burden of establishing that the property is entitled to it. If the property for which the exemption or exclusion is claimed is appraised by the Department of Revenue, the application shall be filed with the Department. Otherwise, the application shall be filed with the assessor of the county in which the property is situated. An application must contain a complete and accurate statement of the facts that entitle the property to the exemption or exclusion and must indicate the municipality, if any, in which the property is located. Each application filed with the Department of Revenue or an assessor shall be submitted on a form approved by the Department. Application forms shall be made available by the assessor and the Department, as appropriate.

Except as provided below, an owner claiming an exemption or exclusion from property taxes must file an application for the exemption or exclusion annually during the listing period.

…

(2) Single application required. – An owner of one or more of the following properties eligible for a property tax benefit must file an application for the benefit to receive it. Once the application has been approved, the owner does not need to file an application in subsequent years unless new or additional property is acquired or improvements are added or removed, necessitating a change in the valuation of the property, or there is a change in the use of the property or the qualifications or eligibility of the taxpayer necessitating a review of the benefit.

a. Property exempted from taxation under G.S. 105‑278.3, 105‑278.4, 105‑278.5, 105‑278.6, 105‑278.7, or 105‑278.8.

b. Special classes of property excluded from taxation under G.S. 105‑275(3), (7), (8), (12), (17), (18), (19), (20), (21), (31e), (35), (36), (38), (39), (41), or (45) or under G.S. 105‑277.1E or G.S. 131A‑21.

c. Special classes of property classified for taxation at a reduced valuation under G.S. 105‑277(h), 105‑277.1, 105‑277.1C, 105‑277.10, 105‑277.13, 105‑277.14, 105‑277.15, 105‑277.17, or 105‑278.

…."

SECTION 3.(d) This section is effective for taxes imposed for taxable years beginning on or after July 1, 2019.

PART IV. PROPERTY MANAGEMENT CONTRACTS

SECTION 4.(a) G.S. 105‑164.3(30b), as enacted by S.L. 2018‑5, reads as rewritten:

"§ 105‑164.3. Definitions.

The following definitions apply in this Article:

…

(30b) Property management contract. – A written contract to manage one or more of the activities listed in this subdivision that are related to real property used for business, educational, commercial, residential, vacation, or income‑producing ~~purposes.~~purposes on behalf of the property owner. The activity may include the lease or rental of the property on behalf of the ~~owner, other than the lease or rental of an accommodation taxable under G.S. 105‑164.4(a)(3).~~owner. The term does not include a contract for repair, maintenance, and installation services for real property. The activities that may be performed under a property management contract are as follows:

a. Hiring and supervising employees for the property.

b. Providing a person to manage the property.

c. Receiving and applying revenues received from tenants of the property.

d. Arranging for services from third parties in order to comply with the landlord's obligations under a lease or rental agreement or to comply with facility‑related needs of the property's occupants. The activity may include supplemental repair, maintenance, and installation services to complement taxable services provided by third‑party vendors if no additional fee is imposed under the contract for that supplemental service.

e. Incurring and paying expenses derived from the operation of the real property.

f. Handling administrative affairs for the real property."

SECTION 4.(b) G.S. 105‑164.13(61a), as amended by S.L. 2018‑5, reads as rewritten:

"§ 105‑164.13. Retail sales and use tax.

The sale at retail and the use, storage, or consumption in this State of the following tangible personal property, digital property, and services are specifically exempted from the tax imposed by this Article:

…

(61a) The sales price of or the gross receipts derived from the repair, maintenance, and installation services and service contracts listed in this subdivision are exempt from tax. Except as otherwise provided in this subdivision, property and services used to fulfill either a repair, maintenance, or installation service or a service contract exempt from tax under this subdivision are taxable. The list of repair, maintenance, and installation services and service contracts exempt from tax under this subdivision is as follows:

…

r. A property management contract. This exemption also applies to the purchase or use of property or services to comply with the landlord's obligations under a lease or rental agreement or to comply with facility‑related needs of the property's occupants, and it applies to supplemental repair, maintenance, and installation services to complement taxable services provided by third‑party vendors if no additional fee is imposed under the contract for that supplemental services. This exemption does not apply to any of the following:

1. Sales and use taxes authorized under G.S. 105‑164.4F(b) and imposed pursuant to G.S. 105‑164.4F(b) and (e).

2. Local option occupancy taxes authorized and imposed under G.S. 160A‑215(g) and G.S. 153A‑155(g).

3. Local sales and use taxes authorized by Subchapter VII of this Chapter."

SECTION 4.(c) Section 38.5(aa) of S.L. 2018‑5 reads as rewritten:

"SECTION 38.5.(aa) Except as otherwise provided, this section is effective when it becomes law.

Subsection (a) of this section is effective retroactively to January 1, 2017. If the amendment to G.S. 105‑164.3(20b), as enacted by subsection (a) of this section, increases sales and use tax liability, then it is effective when this section becomes law.

Subsection (g) of this section is effective retroactively to January 1, 2017, and applies to sales and purchases made on or after that date.

Subsection (k) of this section is effective retroactively to July 1, 2014. A person who paid sales and use tax for a return period ending prior to the date this section becomes law on an item exempt from sales and use tax pursuant to G.S. 105‑164.13E, as amended by subsection (k) of this section, may apply to the Department of Revenue for a refund of any excess tax paid to the extent the refund is the result of the change in the law enacted by subsection (k) of this section. A request for a refund must be made on or before October 1, 2018. Notwithstanding G.S. 105‑241.6, a request for a refund received after this date is barred and the provisions of G.S. 105‑164.11 do not apply.

Subsections (x) and (y) of this section become effective ~~January 1, 2020.~~January 1, 2017."

SECTION 4.(d) This section is effective when it becomes law.

PART V. EXEMPT BURIAL PROPERTY FROM PROPERTY TAXES

SECTION 5.(a) G.S. 105‑278.2 reads as rewritten:

"§ 105‑278.2. Burial property.

…

(b) Taxable real property set apart for human burial purposes is hereby designated a special class of property under authority of Article V, Section 2(2) of the North Carolina Constitution, and it shall be assessed for taxation taking into consideration the following:

~~(1)~~ ~~The effect on its value by division and development into burial plots;~~

~~(2)~~ ~~Whether it is irrevocably dedicated for human burial purposes by plat recorded with the Register of Deeds in the county in which the land is located; and~~

~~(3)~~ ~~Whether the owner is prohibited or restricted by law or otherwise from selling, mortgaging, leasing or encumbering the same.~~

Real property set apart for burial purposes owned and held for purposes of (i) sale or rental or (ii) sale of burial rights therein is exempted from taxation. A single application is required under G.S. 105‑282.1 for property exempt under this subsection.

If the property set apart for burial purposes under this subsection no longer qualifies as burial property, the tax exemption is forfeited. Property set apart for burial purposes under this subsection no longer qualifies when that property is sold, conveyed, leased, encumbered, or disposed of. The taxpayer must notify the Department within 14 days of the forfeiture. A taxpayer that forfeits the tax exemption under this subsection is liable for all past taxes avoided on the forfeited property plus interest at the rate established under G.S. 105‑241.21, computed from the date the taxes would have been due if the exemption had not been allowed. The past taxes and interest are due 30 days after the date the exemption is forfeited; a taxpayer that fails to pay the past taxes and interest by the due date is subject to the penalties provided in G.S. 105‑236.

(c) For purposes of this section, the term ~~"real property" includes land, tombs, vaults, monuments, and mausoleums, and the term~~ "burial" includes ~~entombment.~~entombment and the term "real property" includes any of the following on the burial property:

(1) Land.

(2) Tombs, vaults, monuments, or mausoleums.

(3) Buildings, structures, improvements, or permanent fixtures."

SECTION 5.(b) G.S. 105‑282.1(a) reads as rewritten:

Except as provided below, an owner claiming an exemption or exclusion from property taxes must file an application for the exemption or exclusion annually during the listing period.

(1) No application required. – Owners of the following exempt or excluded property do not need to file an application for the exemption or exclusion to be entitled to receive it:

a. Property exempt from taxation under G.S. 105‑278.1 or ~~G.S. 105‑278.2.~~G.S. 105‑278.2(a).

…

a. Property exempted from taxation under G.S. 105‑278.2(b), 105‑278.3, 105‑278.4, 105‑278.5, 105‑278.6, 105‑278.7, or 105‑278.8.

…."

SECTION 5.(c) This section is effective for taxes imposed for taxable years beginning on or after July 1, 2019.

PART VI. clarifying language for Charter Schools

SECTION 6. G.S. 115C‑218.45 reads as rewritten:

"§ 115C‑218.45. Admission requirements.

…

(f) The charter school may give enrollment priority to any of the following:

(1) Siblings of currently enrolled students who were admitted to the charter ~~school in a previous year.~~ school. For the purposes of this section, the term "siblings" includes any of the following who reside in the same household: half siblings, stepsiblings, and children residing in a family foster home.

…."

PART VII. TAXATION OF CRANES

SECTION 7.(a) G.S. 105‑164.13(5m) reads as rewritten:

"(5m) (Effective July 1, 2018) Sales of a crane, or an attachment or repair part for a crane, that meets the requirements of sub‑subdivisions a. and b. of this subdivision, and sales of equipment, or an attachment or repair part for equipment, that meets all of the following requirements:

a. Is sold to a company that is engaged in the fabrication of metal work and that has annual gross receipts, including the gross receipts of all related persons, as defined in G.S. 105‑163.010, from the fabrication of metal work of at least eight million dollars ($8,000,000).

b. Is capitalized by the company for tax purposes under the Code.

c. Is used by the company at the establishment in the fabrication or manufacture of metal products or used by the company to create equipment for the fabrication or manufacture of metal products."

SECTION 7.(b) This section becomes effective July 1, 2018, and applies to purchases made on or after that date.

PART VIII. WORKER CLASSIFICATION FOR DIGITAL PLATFORMS

SECTION 8.(a) G.S. 95‑25.2 reads as rewritten:

"§ 95‑25.2. Definitions.

In this Article, unless the context otherwise requires:

…

(19) "Marketplace contractor" means a person that enters into an agreement with a marketplace platform to use the platform's online‑enabled application, software, Web site, or system to receive service requests from third parties and does not perform any of the service requests at or from a physical business location operated by the marketplace platform.

(20) "Marketplace platform" means a person that operates an online‑enabled application, software, Web site, or system that facilitates the provision of services by marketplace contractors to individuals or entities seeking such services and accepts service requests from the public only through its online‑enabled application, software, Web site, or system."

SECTION 8.(b) G.S. 95‑25.14(a) reads as rewritten:

"§ 95‑25.14. Exemptions.

(a) The provisions of G.S. 95‑25.3 (Minimum Wage), G.S. 95‑25.4 (Overtime), and G.S. 95‑25.5 (Youth Employment), and the provisions of G.S. 95‑25.15(b) (Record Keeping) as they relate to these exemptions, do not apply to:

…

(9) Any marketplace contractor where an employer‑employee relationship is deemed not to exist pursuant to G.S. 95‑25.24B(a)."

SECTION 8.(c) Article 2A of Chapter 95 of the General Statutes is amended by adding a new section to read:

"§ 95‑25.24B. Marketplace contractor status.

(a) A marketplace contractor shall not be deemed to be an employee of a marketplace platform if the marketplace contractor enters into a written contract with the marketplace platform that provides for all of the following:

(1) The marketplace contractor shall be an independent contractor with respect to the marketplace platform.

(2) The marketplace platform shall not unilaterally prescribe specific hours during which the marketplace contractor must be available to accept service requests from third‑party individuals or entities submitted through the marketplace platform's online‑enabled application, software, Web site, or system.

(3) The marketplace platform shall not prohibit the marketplace contractor from using any online‑enabled application, software, Web site, or system offered by other marketplace platforms.

(4) The marketplace platform shall not restrict the contractor from engaging in any other occupation or business.

(5) The marketplace contractor shall bear all or substantially all of the contractor's own expenses that are incurred by the contractor in performing the services.

(6) The marketplace platform shall not provide on‑site supervision during the performance of the services by the marketplace contractor.

(7) The marketplace contractor shall not require the contractor to use specific materials, supplies, or equipment in performing the services.

(8) The marketplace contractor is obligated to pay federal and State income tax on any moneys earned pursuant to the contract relationship.

(b) Nothing in this section shall be construed to prohibit a marketplace platform from establishing that an employer‑employee relationship does not exist with a marketplace contractor pursuant to any other provision of law if the conditions of subsection (a) of this section are not met.

(c) Subsection (a) of this section shall not apply to a marketplace contractor where the services performed by the marketplace contractor are performed at or from a physical business location operated by the marketplace platform or when the services performed consist of transporting freight, sealed and closed envelopes, boxes, parcels, or other sealed and closed containers for compensation.

(d) Nothing in this section shall be construed to affect the assessment, collection, or reporting of sales or income tax from a marketplace contractor or marketplace platform."

SECTION 8.(e) G.S. 97‑13 reads as rewritten:

"§ 97‑13. Exceptions from provisions of Article.

…

(e) Marketplace Contractors. – This Article shall not apply to marketplace contractors where an employer‑employee relationship is deemed not to exist pursuant to G.S. 95‑25.24B(a)."

SECTION 8.(f) This section becomes effective July 1, 2018.

SECTION 9. Except as otherwise provided, this act is effective when it becomes law.