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Learn the fundamentals of sales tax
Do you need to collect sales tax in North Carolina?
You’ll need to collect sales tax in North Carolina if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.
Do you have physical nexus in North Carolina?
North Carolina considers a seller to have physical nexus if you have any of the following in the state:
- An office or place of business
- Employees, independent contractors, agents, or other representatives
- “Any place of distribution, sales or sample room, warehouse or storage place, or other place of business” that you maintain, use or occupy either directly or indirectly, temporarily or permanently
You can click here to read exactly what the North Carolina Department of Revenue has to say about what constitutes sales tax nexus in North Carolina.
Do you have economic nexus in North Carolina?
Effective November 1, 2018, North Carolina considers vendors who make more than $100,000 in sales annually in the state or more than 200 transactions in the state in the previous or current calendar year to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state. You can read North Carolina’s economic nexus guidance for sellers here.
Is what you’re selling taxable?
Services in North Carolina are generally not taxable, with important exceptions. If the service you provide includes creating or manufacturing a product, you may have to deal with the sales tax on products. Some counties also consider a limited number of services (such as laundry and dry cleaning) taxable. Further, on March 1, 2016, some repair, maintenance and installation services became taxable. You can find out more about taxability of services here.
Tangible products are taxable in North Carolina, with a few exceptions. These exceptions include certain groceries, prescription medicine and medical devices, and machinery and chemicals used in research and development.
Is SaaS taxable in North Carolina?
SaaS is non-taxable in North Carolina. (Source)
What is use tax?
In North Carolina, you must pay use tax if you purchased, leased or rented items inside or outside the state for storage, use, or consumption in the state and did not pay the applicable sales and use tax at the time of purchase. The North Carolina Department of Revenue has a useful guide to use tax available here.
How to get a sales tax permit in North Carolina
Electronically: Create and account with North Carolina business services and register here.
By mail: Submit form to NC-BR to N. C. Department of Revenue, Post Office Box 25000, Raleigh, N. C. 27640. Out-of-state businesses will need to submit by mail.
You’ll need this information to register for a sales tax permit inNorth Carolina:
- Your Social Security Number (SSN) or Federal Employer Identification Number (FEIN), and North Carolina Secretary of State Number (SOS), if applicable
- Your business name, address, phone number
- Partner or Responsible Person, if applicable (name, title, SSN, address)
- Details about your business (begin date, type of business, etc.)
You can see the North Carolina Department of Revenue’s business registration checklist for more info.
It is free to apply for a sales tax permit in North Carolina. Other business registration fees may apply.
Collecting Sales Tax
North Carolina is a destination-based sales tax state. So if you live in North Carolina, you collect sales tax at the rate of your buyer’s location.
You can look up North Carolina’s local sales tax rates with TaxJar’s Sales Tax Calculator, including those for counties such as Durham, Buncombe and Cabarrus.
No matter if you are based in North Carolina or not based there but have sales tax nexus there, charge sales tax at the rate of your buyer’s ship to location.
The North Carolina state sales tax rate (and use tax rate) is 4.75%.
Should you collect sales tax on shipping charges in North Carolina?
North Carolina considers shipping charges to be taxable.
Read a full explanation of sales tax on shipping in North Carolina here.
When are Returns Due?
When you file and pay North Carolina sales tax depends on two things: your assigned filing frequency and your state’s due dates.
How often will you file sales tax returns in North Carolina?
States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.
In North Carolina, you will generally be required to file and remit sales tax either monthly or quarterly.
North Carolina sales tax returns are generally due the 20th or the final day of the month following the reporting period. If the North Carolina filing due date falls on a weekend or holiday, sales tax is due the next business day.
Important to note: Some very high-volume North Carolina filers may be assigned to make monthly prepayments. Read more about North Carolina Monthly Prepayments here.
Filing Sales Tax
When it comes time to file sales tax in North Carolina you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
How to Calculate How Much Sales Tax You Owe in North Carolina
Calculating how much sales tax you should remit to the state of North Carolina is easy with TaxJar’s North Carolina sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your North Carolina sales tax return will be waiting for you in TaxJar. All you have to do is login.
How to File and Pay Sales Tax in North Carolina
You have three options for filing and paying your North Carolina sales tax:
- File online – File online at the North Carolina Department of Revenue. You can remit your payment through their online system.
- File by mail – You can use form E-500 and file and pay through the mail, but North Carolina encourages all sellers to pay online.
- AutoFile – Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations or filling out complex sales tax returns.