THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Tuesday, April 18, 1995 TAG: 9504180306
SECTION: LOCAL PAGE: B3 EDITION: NORTH CAROLINA
SOURCE: ASSOCIATED PRESS
LENGTH: Medium: 51 lines
While state lawmakers planned to vote Monday on repealing North Carolina's intangibles tax, the U.S. Supreme Court said it would hear a corporation's argument that the tax places an unconstitutional burden on interstate commerce.
The Supreme Court agreed Monday to decide on a challenge to the tax by the Fulton Corp., a small holding company based in Salisbury, N.C. At issue is whether states can charge a property tax on residents' stock in out-of-state corporations while exempting in-state corporate stock.
North Carolina charges its residents a personal property tax on ``intangible'' property, including corporate stock. The tax is 25 cents on every $100 of the stock's fair market value.
The state grants a full exemption for stock in corporations that operate entirely in North Carolina. Stock in interstate corporations is exempted for the share of business they conduct in North Carolina.
The state House scheduled a vote Monday night on a bill that would repeal the intangibles tax. That bill has already passed the Senate.
The Fulton Corp. challenged the intangibles tax in state court in 1991 after paying its 1990 bill under protest.
A state judge upheld the tax. But the North Carolina appeals court ruled that it discriminated against interstate commerce because shareholders of out-of-state corporations were required to pay more taxes than shareholders in North Carolina corporations.
The North Carolina Supreme Court last December reversed the appeals court decision and upheld the tax. The state's highest court said the tax was valid because it served as a ``compensating tax'' to the corporate income tax imposed on North Carolina corporations.
On Monday, the U.S. Supreme Court decided to hear the case.
``Obviously we're delighted,'' said Jack Cummings, a Raleigh attorney representing the Fulton Corp. ``They don't take many cases. It indicates that the matter is of some general importance, and that is good.''
The Fulton corporation owned stock in six other corporations, including five that operated entirely out-of-state and another that conducted just over half of its business out-of-state.
``The amount of tax at issue for the year that was sued on was in the neighborhood of $11,000,'' Cummings said. ``That was just one year's tax.''
KEYWORDS: SUPREME COURT by CNB