Sales Tax Assessment Grace Period in North Carolina

Friday, August 18th, 2017

 
 
Raleigh, North Carolina, downtown as viewed from the Capitol Building grounds.
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North Carolina
General

North Carolina recently passed a law creating a grace period for under-collected sales tax in certain situations. During the grace period, the Department of Revenue (DOR) will not assess tax if certain conditions are met. The grace period is limited to tax due for filing periods beginning March 1, 2016 and ending on December 31, 2017.

To qualify for the grace period, one or more of the following conditions must apply:

  1. A retailer did not collect tax on separately stated installation charges that were part of the sales price of tangible personal property or digital goods.
  2. A person did not properly classify themselves as a retailer from March 1, 2016 to December 31, 2016, and the person did not charge tax on all retail transactions. Instead, it incorrectly treated some transactions as real property contracts.
  3. A person treated a transaction as a real property contract instead of properly treating it as a retail transaction.
  4. A person did not collect tax on the sales price of a service contract for motor vehicle parts from March 1, 2016 to December 31, 2016, and the contract was sold by a motor vehicle dealer, service agreement company, or a dealer of behalf of a service agreement company.
  5. A person did not collect tax on a service contract for tangible personal property affixed to real property.
  6. A person did not collect tax from January 1, 2017 to December 31, 2017 on a service contract for a pool, fish tank, or similar water feature.
  7. A person did not collect tax from January 1, 2017 to December 31, 2017 on a home warranty that covers real property.
  8. A person did not collect tax on the portion of a mixed contract for repair, maintenance, and installation services that exceeds 10% of the total contract amount.
  9. A person incorrectly treated a remodeling contract as a real property contract instead of treating it as the sale of repair, maintenance, or installation services before January 1, 2018.

To qualify for the grace period, the taxpayer cannot have received specific written advice from the DOR for any of the transactions allowed under the grace period for the laws in effect during the period.

Additionally, the grace period does not apply to an assessment for (1) tax collected but not remitted, (2) tax not collected on an amount included in the sales price (excluding separately stated installation charges as listed above), and use tax on purchases used to fulfill contracts.

https://www.ttrus.com/SalesTaxGracePeriodNC


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.

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