North Carolina Department of Revenue: Sales and Use Tax
Tax laws and rules are often changing, and these changes often impact our businesses and economies significantly. Therefore, if you’re a business owner, a tax professional, or just a curious taxpayer, it’s crucial to understand the fiscal intricacies in your region.
But sometimes, tax law is difficult for the common person. That’s why businesses hire tax attorneys like Cumberland Law Group to handle their business legal aspects.
Additionally, tax laws vary in different regions and states. Therefore, it’s important to understand the laws specific to your region. This post talks about sales and use tax in North Carolina.Â
If you need help from an experienced tax attorney, get in touch with Cumberland Law Group.
Understanding Sales and Use Tax in North Carolina
Sales tax and use tax are taxes imposed on the sale of goods and services. However, there’s a thin line that distinguishes the two taxes.
Sales tax is imposed on the sale of tangible personal property, while use tax is imposed on the use of the property within a state. Both taxes are, however, subject to particular exclusions and exemptions from certain types of purchases, including medicine, food, and certain equipment.
North Carolina audits businesses for sales and use tax. When acquiring goods from out-of-state for use in North Carolina without paying North Carolina sales tax, you must remit the corresponding use tax to the state.
Additionally, if you inadvertently pay sales tax to another state instead of fulfilling your tax obligation in North Carolina, the state may impose back taxes and penalties, potentially leading to your business paying the tax twice.
Therefore, it’s crucial to understand and comply with North Carolina sales and use tax laws to prevent such situations.
Who should register for sales and use tax?
The North Carolina Department of Revenue (NCDOR) requires every individual, business, or facilitator engaged in business in North Carolina to register for sales and use tax.
To register, you must be engaged in one or more of the following activities:
- Selling and providing taxable services
- Selling tangible personal property at retail
- Selling certain digital property, including digital audio work, photographs, and publications
- Renting or leasing tangible personal property in North Carolina
- Providing rentals for accommodations
- Operating a laundry, dry cleaner, or other similar business
- Selling taxable service contracts
- Making marketplace-facilitated sales
- Charging admission to an entertainment activity
- Selling certain digital property, tangible personal property, or providing a taxable service at a specialty market or other event
Registration can be done online or by mail. Upon successful registration, you’ll receive a Certificate of Registration.
If your business buys certain digital property, taxable tangible personal property, or services for use, or storage of consumption in North Carolina where the correct amount of sales tax has not been paid, you must file and remit the use tax due.
Your business must register to file and remit use tax unless:
- It’s already registered to file and pay sales tax and is already registered to remit use tax
- It has paid its vendors all North Carolina sales and use taxes due on its purchases
Individuals should report and remit the use tax due on their North Carolina Consumer Use Tax Return, individual income tax return, or boat and aircraft use tax return.
How to register for sales and use tax in North Carolina
There are two ways to register for sales and use tax: online and by mail. For online registration, the North Carolina Department of Revenue has an online business registration system that allows you to register for a North Carolina tax account ID number electronically.
According to the department, online registration is the most efficient and accurate. And most likely, you’ll receive your account ID number instantly. The department has strict safety measures in place to protect your data. Secure socket layer (SSL) with at least 128-bit encryption ensures the safety of the site and your data.
Note: Some private, third-party websites claim to offer this service for a fee. However, the Department of Revenue in North Carolina knows this and has clarified that there’s no fee to apply for a sales and use tax certificate of registration in North Carolina. Also, the department does not contract this service to third parties.
When are Sales and Use Taxes Due?
When registering for sales tax, you’ll be assigned a filing frequency. This often depends on the amount of sales tax you collect from buyers in the state.
Generally, you’ll be required to file and remit sales and use taxes monthly or quarterly.
If your total tax liability is at least $100 per month or consistently less than $20000 monthly, you must file monthly on or before the 20th of each month. If your total monthly tax liability is less than $100, you are required to file a quarterly return following the approval of the secretary.
Getting Help from a tax attorney in North Carolina
Generally, the North Carolina Department of Revenue, through their website, has all the information about sales and use tax. However, some of the information might contain legal jargon that requires interpretation from a tax attorney.
Cumberland Law Group offers personalized tax solutions for individuals and businesses in Raleigh and Charlotte, North Carolina. We have experienced tax attorneys trained to settle your tax liability, stop wage garnishments, and offer IRS audit help and criminal tax defense, among other tax solutions.
Don’t know the exact service you need from us? We offer a free tax consultation to walk you through the options available.
Need Help?
As a taxpayer, whether individual or business, it’s crucial to understand and comply with relevant sales and use tax laws in your region. This will help you avoid back taxes and penalties stemming from non-compliance.
You should consult the North Carolina Department of Revenue or a tax professional like Cumberland Law Group for specific guidance on your situation. Remember, tax laws and regulations can be complex and subject to change.
Need help? Contact Cumberland Law Group today.