North Carolina - The North Carolina Department of Revenue issued a directive requiring certain sellers not physically located in North Carolina to collect and remit sales tax on sales sourced to North Carolina.
The North Carolina Department of Revenue issued a directive requiring certain sellers not physically located in North Carolina to collect and remit sales tax on sales sourced to North Carolina. The NCDOR will enforce the North Carolina statute concerning remote sales with regard to remote sellers having gross sales sourced to the state in excess of $100,000 or having 200 or more separate transactions sourced to the state in the previous or current calendar year.
Threshold: Sales exceeding $100,000 or 200 transactions in the previous or current calendar year
Effective Date: November 1, 2018
Subject: Sales and Use Tax Collections on Remote Sales
Tax: Sales and Use Tax
Law: N.C. Gen. Stat. § 105-164.8
Issued By: Sales and Use Tax Division
Date: August 7, 2018
This directive is issued under the authority granted the Secretary of Revenue pursuant to N.C.
Gen. Stat. § 105-264 to interpret North Carolina sales and use tax law.
South Dakota v. Wayfair
On June 21, 2018, the United States Supreme Court announced its decision in South Dakota v.
Wayfair, Inc., et al., 585 U. S. ___ (2018), that overruled Quill Corp. v. North Dakota, 504 U. S.
298 (1992), and National Bellas Hess, Inc. v. Department of Revenue of Illinois, 386 U. S. 753
(1967). The Court found physical presence is not necessary to create substantial nexus between
a remote seller and a taxing state. Accordingly, the North Carolina Department of Revenue
(“Department”) will enforce N.C. Gen. Stat. § 105-164.8(b) regarding remote sales and require
remote sellers to collect and remit the applicable sales and use tax on taxable retail sales sourced
to North Carolina pursuant to N.C. Gen. Stat. § 105-164.4B. A remote seller is a seller that does
not have a physical presence in North Carolina and does not have any other legal requirement to
register in North Carolina for sales and use tax purposes, but that sells products for delivery into
Remote Sales Subject to Tax
N.C. Gen. Stat. § 105-164.8(b) provides, in part, “[a] retailer who makes a remote sale is engaged
in business in this State and is subject to [sales and use] tax levied under . . . Article [5 of Chapter
105 of the North Carolina General Statutes] if at least one of the following conditions is met:
. . .
(5) The retailer, by purposefully or systematically exploiting the market provided by this State
by any media-assisted, media-facilitated, or media-solicited means, including direct mail
advertising, distribution of catalogs, computer-assisted shopping, television, radio or other
electronic media, telephone solicitation, magazine or newspaper advertisements, or other media,
creates nexus with this State.
. . .
(7) The retailer consents, expressly or by implication, to the imposition of the tax imposed by
. . . Article [5 of Chapter 105 of the North Carolina General Statutes]. For purposes of this
subdivision, evidence that a retailer engaged in the activity described in subdivision (5) is prima
North Carolina Department of Revenue
Sales and Use Tax Division Page 2 of 3 SD-18-6
facie evidence that the retailer consents to the imposition of the [sales and use] tax imposed by .
. . Article [5 of Chapter 105 of the North Carolina General Statutes].”
N.C. Gen. Stat. § 105-164.8(c) provides “[a] retailer who is required to collect the [sales and use]
tax imposed by . . . Article [5 of Chapter 105 of the North Carolina General Statutes] must collect
a local use tax on a transaction if a local sales tax does not apply to the transaction. The sourcing
principles in G.S. 105-164.4B determine whether a local sales tax or a local use tax applies to the
transaction. A ‘local use tax’ is a tax imposed under Chapter 1096 of the 1967 Session Laws or
by Subchapter VIII of . . . Chapter [105 of the North Carolina General Statutes], and a local use
tax is a use tax imposed under that act or Subchapter.”
“Engaged in business”
is defined, in part, as “[m]aking a remote sale, if one of the conditions
listed in G.S. 105-164.8(b) is met.”
is defined as “[a] sale of tangible personal property or digital property ordered by
mail, by telephone, via the Internet, or by another similar method, to a purchaser who is in this
State at the time the order is remitted, from a retailer who receives the order in another state and
delivers the property or causes it to be delivered to a person in this State. It is presumed that a
resident of this State who remits an order was in this State at the time the order was remitted.”
is defined, in part, as a “person engaged in business of making a remote sale if one
of the conditions listed in G.S. 105-164.8(b) is met.”