Revenue officials target corporate tax cheats

State officials want to change the way businesses file taxes in an effort to raise more money and cut down on cheating.

Greg Radford, director of the Corporate, Excise and Insurance Tax Division of the state Department of Revenue, told a legislative committee Monday that large corporations with the means to create subsidiaries often have an easy time lowering their tax burden in North Carolina.

The state's tax law makes it tougher for the state to tax subsidiaries or related companies as a single business enterprise. The state can require a business to file a tax return for all of its related companies if officials determine the company is hiding its profit.

But the law is unclear and has led to lawsuits between the state and large corporations over how that authority is applied. Well-intentioned businesses are often in the dark about how the Revenue Department reacts to tax filings, said Bill Nelson, a corporate tax lawyer who spoke to the committee.

Nelson said the Revenue Department has the power to force businesses to file tax returns whichever way would generate more money for the state. And the state's decisions are difficult to appeal.

Changing the law to require a company to file one return on behalf of all of its subsidiaries could put more money in state coffers, although it is difficult to estimate how much, experts told the committee.

Rep. Paul Luebke, a Durham Democrat and chairman of the committee, said a bill that would clarify the state's business tax law may appear in the 2009 session. The change could help avoid complex lawsuits and generate enough new money that the state could lower the business tax rate from 6.9 percent to 6 percent.

"That would be good for small business," Luebke said.

Financial experience in demand

Andy Willis is a finance guy, not a lawyer.

That makes Gov.-elect Beverly Perdue's newly appointed legislative liaison something of an anomaly in recent gubernatorial history.

But Willis, who has a master's degree in public administration from UNC-Chapel Hill and worked as a legislative budget analyst for years, said Perdue told him his experience was more in demand right now.

"She said, 'I think we need you to concentrate on fiscal policy, and that's one reason why I've gone after you,'" he told Dome.

With the state facing a recession-related drop in tax revenue, Willis said, he will spend most of his time this year working on the state budget, just as he did as a lobbyist for the University of North Carolina system.

"It's not going to be pleasant," he said. "We're going to have to find the balance, and there will be [spending] reductions."

Longtime GOP activist dies

Robert Rector, a longtime Republican activist who presided over North Carolina's 2004 Electoral College, has died.

Rector, 63, a political science and history professor at Louisburg College, was active in the state GOP for 30 years. He presided over the Electoral College in 2004 when it cast its ballots for President Bush's second term.

Rector created the N.C. County Chairman's Association and traveled across the state training activists and candidates. He is a member of the N.C. GOP Hall of Fame.

"Through his mentorship of younger Republicans, he was able to pass along the wisdom and tools for a new generation of committed conservatives," state GOP Chairwoman Linda Daves said.

Revenue secretary to retire

Reginald Hinton will not return in the next administration.

The Department of Revenue secretary told his staff last week that he will retire at the end of the year.

"After much deliberation, I have decided to retire from the Department, effective January 1, 2009, and have informed Governor-Elect Perdue's transition representative of my decision," he wrote in an e-mail. "Because of my deep affection for all employees in this agency, I wanted you to hear of my decision directly from me."