Sales and Use Tax Frequently Asked Questions
Sales and Use Tax Categories:
How can I obtain a sales and use tax number?
To obtain a sales and use tax account number you must submit a completed Business Registration Application, Form NC-BR. The form can be submitted electronically for immediate issuance of an account number, or it can be mailed to: N. C. Department of Revenue, Post Office Box 25000, Raleigh, N. C. 27640. You may obtain the Form NC-BR online, by mail, or by contacting the Taxpayer Assistance and Collection Center at 1-877-252-3052 (toll free). After your application is processed, you will be mailed information concerning your Sales and Use Tax Account ID and pre-printed forms on which to report your sales and use tax and submit with your payment. The Department will also mail a Certificate of Registration that is required to be displayed at your place of business.
How long does it take to get a sales tax number?
Most applicants registering electronically will receive their account number instantly. Others will receive their account number within ten business days. If the registration is not filed electronically, it may take up to four weeks. Sales tax numbers cannot be obtained over the telephone.
How do I obtain sales and use tax forms?
Preprinted forms are automatically forwarded upon issuance of a new Account ID and replacement forms are issued annually to registered taxpayers unless a taxpayer is filing online. A Sales and Use Tax Return, Form E-500, can be obtained online or ordered by mail. Forms can also be obtained by contacting the Taxpayer Assistance and Collection Center at 1-877-252-3052 (toll free).
Is there a fee charged to obtain a sales tax number?
There is no fee charged for a Certificate of Registration.
Do I have to re-register for a new number if I move?
No. Business Address Correction, Form
NC-AC, included with
the coupon book of return forms should be completed and submitted.
How can I file sales and use tax returns?
You may file online or by mailing in the tax returns. If payment is made by Electronic Funds Transfer (EFT), a paper return is still required to be submitted to complete the filing. Monthly with prepayment filers are required to file their returns online.
When are quarterly and monthly sales and use tax returns due?
Quarterly returns are due on or before the last day of January, April, July, and October for the preceding three-month period. Monthly returns are due on or before the 20th of the month following the end of the month.
How do I file if I have not received my tax number or forms?
You should file using a blank sales and use tax return with the notation “Number Applied For” and include remittance of the tax due. Form E-500 can be obtained online or ordered by mail. Forms can also be obtained by contacting the Taxpayer Assistance and Collection Center at 1-877-252-3052 (toll free).
How do I file a return if I have misplaced my coupon booklet?
You may file online or obtain a blank Form E-500. Do not use old forms or a different tax period coupon to file a return. Using incorrect forms will create errors and delays in the processing of returns. You may order replacement forms by contacting the Taxpayer Assistance and Collection Center at 1-877-252-3052 (toll free).
How do I file a return if my business makes no sales or purchases?
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.
Where do I send my tax return?
North Carolina Department of Revenue
Post Office Box 25000
Raleigh, North Carolina 27640-0700
Can I file my sales and use tax return and pay the tax online?
You may file sales and use tax returns and pay through Electronic Services or call the E-Services Help line at 1-877-308-9103 (toll free) or 919-733-1674 between the hours of 8:00 am to 5:00 pm Monday through Friday. The E-File system offers the convenience of filing returns and paying tax 24 hours a day, 7 days a week.
How do I determine my filing frequency and due dates?
Your preprinted sales and use tax returns issued by the Department will indicate your filing frequency based on your response to the question on the Registration Application, Form NC-BR, regarding the amount of sales tax expected per month.
If you answered that your tax liability is consistently more than $100 but less than $20,000 per month, you should file a return monthly and pay taxes on or before the 20th day of each month for all taxes due for the preceding calendar month.
If you answered that your tax liability is consistently less than $100 per month, you should file a return quarterly and pay taxes due on or before the last day of the month for all taxes due for the preceding calendar quarter.
If you answered that your tax liability is at least $20,000 a month, you should file a return monthly and pay taxes on or before the 20th day of each month for all taxes due for the preceding calendar month and include a prepayment for the next month’s tax liability.
The prepayment must equal at least 65% of any of the following:
(1) the amount of tax due for the current month,
(2) the amount of tax due for the same month in the preceding year, or
(3) the average monthly amount of tax due in the preceding calendar year.
Penalties or interest will not be due on an underpayment of a prepayment if one of these three calculation methods is used.
When is the sales and use tax return due if the due date falls on a Saturday, Sunday, or a holiday?
The return is due the business day following the Saturday, Sunday, or a holiday.
What is the North Carolina sales and use tax rate?
Retail sales of tangible personal property not subject to a reduced rate of tax are subject to the 4.75% general State rate of sales or use tax. The 4.75% general State rate of tax also applies to the rental of accommodations, service contracts to maintain or repair tangible personal property, admission charges to an entertainment activity, to charges for cleaning, pressing, hat blocking, and laundering of linens and apparels and to certain digital property. The lease or rental of tangible personal property is subject to the applicable percentage rate and the maximum tax, if any that applies to a sale of the property that is leased or rented. Items subject to the general rate are also subject to the 2% (2.25% in Alexander, Anson, Ashe, Buncombe, Cabarrus, Catawba, Cumberland, Davidson, Duplin, Durham, Edgecombe, Greene, Halifax, Harnett, Haywood, Hertford, Lee, Martin, Montgomery, New Hanover, Onslow, Orange, Pitt, Randolph, Robeson, Rowan, Sampson, Surry, and Wilkes Counties) local sales and use tax rate. Mecklenburg County has an additional 0.50% Transit County tax for public transportation in addition to the 2% local sales and use tax rate. Durham and Orange Counties have an additional 0.50% Transit County tax for public transportation in addition to the 2.25% local sales and use tax rate.
The total rate of tax in seventy counties is 6.75% (7% in Alexander, Anson, Ashe, Buncombe, Cabarrus, Catawba, Cumberland, Davidson, Duplin, Edgecombe, Greene, Halifax, Harnett, Haywood, Hertford, Lee, Martin, Montgomery, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry and Wilkes Counties, 7.25% in Mecklenburg County, and 7.5% in Durham and Orange Counties).
Are wholesale merchants required to file a return?
A person who engages exclusively in the business of making wholesale sales is not required to file a return but is required to obtain a certificate of registration before the person engages in business in the State except as noted below. A person who, on two or more occasions within a twelve-month period, either makes taxable sales to users, consumers, or non-registered merchants or makes purchases subject to use tax is not engaged exclusively in the business of making wholesale sales and must begin filing sales and use tax returns. A wholesale merchant who is not required to file a sales and use tax return and who, on only one occasion within a twelve-month period, either makes taxable sales to users, consumers, or non-registered merchants or makes purchases subject to use tax must file a return for that month only and pay the tax due within 20 days after the end of the month in which the sale or purchase was made. A wholesale merchant is required to maintain records that include a bill of sale for each customer that contains the name and address of the purchaser, the date of the purchase, the item purchased, and the price at which the wholesale merchant sold the item. A wholesale merchant must obtain a certificate of exemption or the required data elements to substantiate that it is a wholesale sale to a customer. Failure of a wholesale merchant to keep these records for the sale of an item subjects the wholesale merchant to liability for tax at the rate that applies to the retail sale of the item.
If I have a seasonal business, can I file just for those months that I operate?
A retailer who engages in business for six or fewer months in each year may register as a seasonal filer and indicate the months in which the retailer engages in business. A retailer who is registered as a seasonal filer is not required to file a return for an off-season reporting period in which the retailer did not engage in business.
If I am presently registered as a proprietorship or partnership, what do I need to do if I incorporate?
The corporation must apply for a new Account ID.
If I purchase an existing business, may I use the sales tax number of the previous owner?
No. A new owner must obtain his own Account ID.
How do I cancel or inactivate a tax number?
Complete and submit the Out-of-Business Notification, Form NC-BN, included with your coupon book of report forms.
Can a certificate of registration be cancelled for inactivity?
Yes. A certificate of registration issued to a retailer who makes taxable sales becomes void if, for a period of 18 months, the retailer files no returns or files returns showing no sales. Annually, the Department reviews sales and use tax accounts and cancels the sales and use tax registration numbers of those accounts that have filed returns showing no sales for the past 18 months. If your account is cancelled for this purpose, you will be notified by mail and given an opportunity to reactivate your account.
Do flea market vendors need to obtain a Certificate of Registration?
Yes. Flea market vendors must obtain a Certificate of Registration and it must be posted at their location.
Are any services taxable?
Generally services are exempt from sales or use tax, but admission charges to an entertainment activity and laundry and dry cleaning services are taxable at the total 6.75% in seventy-two counties (7% in Alexander, Anson, Ashe, Buncombe, Cabarrus, Catawba, Cumberland, Davidson, Duplin, Edgecombe, Greene, Halifax, Harnett, Haywood, Hertford, Lee, Martin, Montgomery, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry and Wilkes Counties, 7.25% in Mecklenburg County, and 7.5% in Durham and Orange Counties) State and local tax rates. Telecommunications service and ancillary service, and video programming are taxable at the combined 7% general tax rate in all counties.
Are lottery ticket sales taxable?
No. Lottery ticket sales are not subject to sales or use tax; however, these sales should be included on Sales and Use Tax Return, Form E-500, Line 1, North Carolina Gross Receipts, along with other sales made during the reporting period. Lottery ticket sales should also be included on Line 3, Receipts Exempt From State Tax.
Is there a penalty if my return is late and no tax is owed?
No. Penalty and interest is not due but the return must be filed.
Is there a penalty for late filing of tax returns?
Yes. If tax is due, both a failure to file penalty of 5% per month or fraction thereof with a maximum of 25% and 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 it is paid.
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