North Carolina Sales Tax Guide for Businesses
- Sales Tax Rate
- Local Taxes
- Department of Revenue
- Tax Line
We wrote this guide for online sellers who want to know if they even have to bother with sales tax in North Carolina, and if so, how best to tackle the sales tax situation in the Tar Heel State
After reading this, you’ll know:
- Do you or don’t you need to collect North Carolina sales tax?
- Which customers do you collect from?
- How much do you collect?
- What do you do with all the sales tax you’ve collected?
- Way more than you probably ever wanted to know about North Carolina sales tax!
Do you have sales tax nexus in North Carolina?
Good news! You only have to begin thinking about North Carolina sales tax if you have sales tax nexus in North Carolina.
“Sales tax nexus” is just a fancy way of saying “significant presence” in a state.
North Carolina considers a seller to have sales tax nexus in the state 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 (North Carolina’s taxing authority) has to say about what constitutes sales tax nexus in North Carolina.
Do you have sales tax nexus in North Carolina if you sell on FBA?
If you sell on Amazon FBA, you may have sales tax nexus in North Carolina. Storing physical products in a state can create sales tax nexus, and Amazon recently announced that they would be opening a North Carolina Amazon Fulfillment Center in the future.
Follow these steps when the North Carolina Fulfillment Center opens. To determine whether or not you have items stored in an FBA warehouse in North Carolina, you can do one of two things:
- Login to Amazon Seller Central and pull your inventory report
- Use a paid service like WhereStock.com
Is what you’re selling even taxable?
You’ve probably read this far because you realized you have sales tax nexus in North Carolina. Your next step is to determine if what you’re selling is even taxable.
Services in North Carolina are generally not taxable, with important exceptions. So if you’re a freelance writer or a plumber, you’re in luck and you don’t have to worry about sales tax. But watch out – 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, starting March 1, 2016, some repair, maintenance and installation services will be 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.
So if you sell toys, then charge sales tax to your North Carolina customers.
But if you’re a graphic designer, don’t charge sales tax to your North Carolina customers.
If you have sales tax nexus in North Carolina and your products are taxable, your next step is to register for a sales tax permit.
How to Register for a Sales Tax Permit in North Carolina
Sellers with sales tax nexus in North Carolina must apply for an North Carolina sales tax permit.
Don’t skip this step! Many states consider it unlawful to collect sales tax in their name without a permit. Go here for more on how to register for a sales tax permit in North Carolina.
How to Collect Sales Tax in North Carolina
So you’ve determined that you have sales tax nexus in North Carolina and what you’re selling is taxable. And you’re all set and registered for your North Carolina sales tax permit.
The next step is to determine how much sales tax to collect.
North Carolina is an destination-based sales tax state. So if you live in North Carolina, you collect sales tax at the rate of your buyer’s location.
Example: You live and run your business in Winston-Salem, NC, in the 27101 zip code, where the total combined tax rate is 6.75%. But you sell to someone in Chapel Hill in the 27514 zip code where the tax rate is 7.5%. You would charge your buyer the tax rate at their ship to location, and not the tax rate at your home location.
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.
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 North Carolina Sales Tax Returns Due?
North Carolina sales tax returns are always due the 20th of the month following the reporting period. You’ll be assigned a sales tax filing frequency when you apply for your North Carolina sales tax permit.
To break it down:
2016 North Carolina Monthly Sales Tax Filing Due Dates
Taxpayers whose total tax liability is consistently less than $20,000.00 per month and at least $100.00 per month shall file monthly on or before the 20th day of each month for all taxes due for the preceding calendar month. The taxes due shall be remitted with the monthly return. Your sales tax returns are due at the end of the month following the taxable month. For example, your April sales tax return would be due May 20th. (Source)
|Taxable Period||Due Date|
|January||February 22, 2016*|
|February||March 21, 2016*|
|March||April 20, 2016|
|April||May 20, 2016|
|May||June 20, 2016|
|June||July 20, 2016|
|July||August 22, 2016*|
|August||September 20, 2016|
|September||October 20, 2016|
|October||November 21, 2016*|
|November||December 20, 2016|
|December||January 20, 2017|
2016 North Carolina Quarterly Sales Tax Filing Due Dates
“When a taxpayer’s total monthly tax liability is consistently less than $100.00, the taxpayer shall file a quarterly return with the approval of the Secretary. The returns with remittance of tax are due on or before the last day of January, April, July, and October for the preceding three-month period.” (Source)
|Taxable Period||Due Date|
|Q1 (Jan - Mar)||May 2, 2016*|
|Q2 (Apr - Jun)||August 1, 2016*|
|Q3 (Jul - Sep)||October 31, 2016|
|Q4 (Oct - Dec)||January 31, 2017|
* indicates a due date pushed back due to a weekend or holiday
Click here for more about North Carolina sales tax filing due dates in 2016.
How to File Sales Tax in North Carolina
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
We’ll walk you through these steps.
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.
Other Facts You Should Know about North Carolina Sales Tax Filing
There are a few more things you should know about sales tax in North Carolina:
- Late Filing Penalty - If tax due, a failure to file penalty of 5% per month or fraction thereof with a maximum of 25% will be imposed
- Late Payment Penalty - If tax due, a failure to pay penalty of 10% will be due. Interest is due on the amount of tax due from the date the tax was due until paid.
Other penalties for fraud or serial offenses include higher penalties and even criminal charges.
North Carolina requires that any seller with a sales tax permit file a sales tax return on your due date even if you don’t have any sales tax to report or pay. From the North Carolina Department of Revenue:
“A retailer who does not make any sales during a reporting period must file a return for that period and indicate 0.00 on the ‘Total Due’ line. Similarly, a business that does not make any taxable purchases during a reporting period must file a return for that period and indicate 0.00 on the “Total Due” line.”
While there is no penalty for failing to file a zero return if no tax is due, your sales tax permit could be revoked after 18 months.
Click here for a list of other states that require zero sales tax returns.
And that’s it. You’ve mastered North Carolina sales tax filing! Now that sales tax is out of the way, you can get back to what you do best – running your business.
North Carolina Sales Tax Resources
For more about North Carolina sales tax, check out the North Carolina section of the TaxJar blog.