North Carolina Changes How Tax Applies to Repair, Maintenance, and Installation Services

Wednesday, December 28th, 2016

 
 
Close-up of computer cables.
Share
Link
North Carolina
Services

Effective January 1, 2017, North Carolina taxes repair, maintenance, and installation services regardless of who performs them. The state will exempt some services and will not tax construction jobs that fit the definition of "real property contracts."

In March of 2016, North Carolina began to tax repair, maintenance, and installation services. At that time, tax applied to these services when they were performed by businesses that made a majority of their revenue from retail sales. Beginning January 1, 2017, the state will tax these services regardless of who performs them.

"Repair, maintenance, and installation" include many different services. Generally, tax will apply to any service that involves fixing things, cleaning things, putting things into position, or keeping things from breaking. However, the new law exempts some services, including the following:

  • Cleaning real property
  • Altering or repairing clothing
  • Pest control
  • Towing vehicles
  • Landscaping
  • Services performed on parking lots, roads, and driveways
  • Services performed on items that were purchased exempt from North Carolina sales tax

In addition, the tax does not apply to construction jobs that qualify as real property contracts. "Real property contracts" are new construction or remodeling jobs that involve permanently attaching things to real property. Services that are not taxable because they qualify as real property contracts include these:

  • Construction that requires a permit under the state building code
  • Installing underground utilities
  • Installing multiple items of capital equipment that cannot be removed without causing damage
  • Installing roofing, septic tanks, plumbing, electrical, commercial refrigeration, irrigation, sprinkler systems, or other similar systems
  • Installing heating or air conditioning units or systems

Note that a single installation service does not qualify as a real property contract. For this reason, a single installation service is generally taxable.

http://www.dornc.com/practitioner/sales/directives/SD-16-3.pdf

‚Äčhttp://www.dornc.com/practitioner/sales/directives/SD-16-4.pdf


About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at www.ttrus.com or call 866.578.8193.

Maryland Sales Tax Holiday for Energy Efficient...

Friday, February 16th, 2018 -The Maryland sales tax holiday for energy efficient appliances runs from Saturday, February 17, 2018, at 12:01...

Dental Prostheses Exempt in Michigan

Wednesday, February 14th, 2018 -The Michigan Department of Treasury recently released a publication describing the retroactive exemption for d...

Taxability of Amusement Devices and Video Games in...

Monday, February 12th, 2018 -The Wisconsin Department of Revenue has released guidance addressing the taxability of video games and amuseme...

Video Streaming Subscriptions Taxable in Texas

Friday, February 9th, 2018 -The Texas Comptroller of Public Accounts recently ruled that video streaming and add-on services are taxable a...

Moratorium on Medical Devise Excise Tax Extended Two More...

Wednesday, February 7th, 2018 -The United States Congress extended the moratorium on the Medical Device Excise Tax (MDET) for another two yea...

2018 Colorado Sales Tax Rounding Change

Monday, February 5th, 2018 -The Colorado Department of Revenue has released guidance explaining new rounding rules for sales tax returns f...