North Carolina Issues Economic Nexus Threshold Guidance

North Carolina will require remote sellers meeting economic thresholds to collect sales and use tax. The department provides guidance in the wake of the decision in Wayfair v. South Dakota.

Economic Nexus

A remote seller is required to register and North Carolina sales and use tax if, in the previous or current calendar year the remote seller has:

  • gross sales in excess of $100,000 sourced to North Carolina; or
  • 200 or more separate transactions sourced to North Carolina.

This provision is effective November 1, 2018, or 60 days after a remote seller meets the threshold, whichever is later.

Prospective Remote Seller Liability

The department will apply the Court’s ruling in the Wayfair decision on a prospective basis for unregistered remote sellers that do not have a physical presence in North Carolina.

This prospective treatment does not apply if a person has a physical presence or other legal obligation to collect sales and use tax.

Voluntary Collection and Remittance

Remote sellers may voluntarily begin collecting and remitting sales and use tax any time prior to November 1, 2018. A remote seller that does not meet the threshold may voluntarily register with the department to collect sales and use tax. Retailers and remote sellers that currently collect and remit North Carolina sales and use tax should continue to do so.

State Law Regarding Remote Sales Subject to Tax

A “remote seller” is a seller that does not have an in-state physical presence, does not have any other legal requirement to register, but sells products for delivery into North Carolina.

State law provides, in part, that a retailer who makes a remote sale is engaged in business in North Carolina and is subject to sales and use tax if the retailer:

  • purposefully or systematically exploits the North Carolina market; or
  • consents, expressly or by implication, to the imposition of the tax.

Exploiting the market can be done through any media-assisted, media-facilitated, or media-solicited means. Examples include computer-assisted shopping, direct mail advertising, distribution of catalogs,  television, radio or other electronic media, telephone solicitation, magazine or newspaper advertisements, or other media.

Evidence that a retailer engaged in the activity described above is prima facie evidence that the retailer consents to the imposition of the sales and use tax.

Retailer Registration in North Carolina

Remote sellers who want to comply with the laws of North Carolina as well as many other states, can register with the Streamlined Sales Tax Registration System at http://www.sstregister.org/.

Remote sellers who wish to register only with North Carolina may do so by:

There is no fee to apply for a certificate of registration in North Carolina.

Directive No. SD-18-6, North Carolina Department of Revenue, August 7, 2018, ¶202-801

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CCHTaxGroup

All stories by: CCHTaxGroup