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Sales and Use Tax in North Carolina

North Carolina first adopted a general state sales tax in 1933, which is currently at 4.75%. There are also county sales taxes and special district sales taxes, which range between 0% and 2.75%. Therefore, the total sales tax in North Carolina can go up to 7.5 %.

How to Pay Your Sales Tax in North Carolina

Sales and Use Tax Nexus in North Carolina

The sales tax in North Carolina is destination-based. Sellers must pay a sales tax irrespective of their location, as long as the buyer resides in North Carolina. The sales tax becomes a use tax when the seller is located outside North Carolina. Moreover, according to Senate Bill 56, a remote seller is “engaged in the business” in North Carolina if, in the current or previous year, their gross sales exceed $100,000 or they have had more than 200 transactions within the state. The seller then collects, files, and remits the sales taxes to the state. The seller must collect the sales tax at the point of sale. In addition, if the seller fails to do that, the state can penalize them, and they may have to pay interest on the sales tax due.

Getting Registered for Sales and Use Tax 

A person or business entity selling physical and digital products to customers in North Carolina is required to register with the North Carolina Department of Revenue (NCDOR) and obtain a certificate of registration. This also applies to anyone running a renting or leasing business in North Carolina.

Tax on Shipping, Transportation, or Delivery Services

If the transaction made is taxable, then the freight delivery or other transportation service charges applied by the retailer are taxable. The buyer pays a sales tax on the entire amount they incurred to receive the product.

Tax-Exempt Goods and Customers

Items that are sales tax exempted include prescribed medicine, groceries, food stamps, and gasoline. Other buyers exempted from sales tax are government agencies, non-profit organizations, and merchants purchasing goods for resale. Sellers are required to keep records of sales tax exemptions and resale certificates in North Carolina. In that regard, a seller is responsible for uncollected sales or use tax if they fail to validate tax exempted transactions.

Sales Tax Filing Frequency in NC

The volume of gross sales a seller makes in the current or previous tax period determines their filing frequency. Sellers can file sales and use tax online by visiting NCDOR and entering the transaction data. Sellers are required to file their taxes online if gross sales for the current or previous month exceed $20,000. Moreover, they should file taxes monthly, pay sales and use taxes by or on the 20th of each month, and include a prepayment tax for the next month. If the gross sales are between $100 and $20,000 consistently, it is important to file returns monthly and remit taxes on the 20th of each month for all the taxes due on the preceding calendar month. For sales that are consistently below $100 each month, it is essential to file quarterly and remit the taxes on the 20th of the month for taxes due for the preceding calendar quarter.

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