Consumer Use Tax Payable on Income Tax Return
North Carolina use tax is due by individuals and businesses on tangible personal property and certain digital property purchased, leased or rented inside or outside this State for storage, use, or consumption in North Carolina. Use tax is due on taxable services sourced to North Carolina. Individuals and businesses must pay use tax to the Department when retailers or facilitators do not collect tax on taxable transactions.
Retailers or facilitators that are not "engaged in business" in this State are not required to collect North Carolina's tax. Some out-of-state retailers or facilitators voluntarily collect North Carolina tax as a convenience to their customers. Retailers or facilitators that are not "engaged in business" may include mail-order companies, television shopping networks, and firms selling over the internet.
Items subject to sales and use tax include but are not limited to the following:
- Computers and other electronic equipment,
- Prewritten software including electronic downloads of software,
- Books, books on tape, and digital books delivered or accessed electronically,
- Audio compact discs, tapes, and records,
- Digital music delivered or accessed electronically,
- Magazines and newspapers including those delivered or accessed electronically,
- Clothing, appliances, furniture, home furnishings, sporting goods, and jewelry,
- Movies delivered or accessed electronically,
- Sales or recharges of prepaid telephone calling cards and phones,
- Service contracts to maintain or repair tangible personal property or a motor vehicle,
- Admission tickets to an entertainment activity purchased outside the State where admission to the activity may be gained in the State.
- An individual required to file Form D-400, North Carolina Individual Income Tax Return, must report the use tax liability on non-business purchases of taxable items, other than a boat, an aircraft, and food subject to the reduced rate of tax, on the income tax return.
- An individual not required to file Form D-400, North Carolina Individual Income Tax Return, must report the use tax liability on taxable purchases other than a boat or an aircraft, on Form E-554, Consumer Use Tax Return.
- Any individual who purchases food subject to the reduced rate of tax must report the 2% tax on Form E-554, Consumer Use Tax Return.
- An individual who purchases a boat or an aircraft must report the tax on Form E-555, Boat and Aircraft Use Tax Return.
- A business must report use tax on Form E-500, Sales and Use Tax Return. If the business is not registered to remit sales and use tax, it must register with the Department to remit the use tax by completing Form NC-BR, Business Registration Application for Income Tax Withholding, Sales and Use Tax, and Machinery and Equipment Tax.
- Frequently Asked Questions About Use Tax
- Form E-554, Consumer Use Tax Return
- Form E-555, Boat and Aircraft Use Tax Return
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