North Carolina sales tax is 4.75 percent, and municipalities can add up to 2.75 percent in local taxes for a combined average rate of 7 percent. In addition, the state also collects a personal income tax of 4.75 percent. Online sellers are required to pay North Carolina sales tax if they have nexus in the state. Nexus can be physical or economic. Physical nexus is the presence of a business in a state, while economic nexus is passing a threshold for total revenue or number of transactions in a state. The nexus threshold for North Carolina is $100,000 in annual sales or 200 separate sales transactions, whichever comes first. If you have nexus, you must register for a sales tax account and pay quarterly and annually. Penalties for noncompliance are stiff.
North Carolina is a destination-based sales tax collection state, so you must collect taxes based on the buyer is location. You can use a sales tax calculator to determine the right rates for each location. You must also collect sales tax on shipping charges. This is especially important for online retailers. In addition, North Carolina considers certain services taxable, including professional services such as lawyers and architects.
Retailers who do not collect sales tax must pay use tax to the Department of Revenue. Local governments may also be liable for use tax if they buy products taxable in other states but not in North Carolina and do not pay the local rate.
North Carolina Sales Tax Registration
To register a business in North Carolina, you can visit the North Carolina Department of Revenue’s website. Depending on your business type, you may need to submit additional information or documents. You can file online or by mail.
Once registered, the state will assign you a filing frequency. This is usually based on the size or sales volume of your business. Larger businesses are asked to file more frequently than smaller ones.
North Carolina Sales Tax Due Dates
Generally, North Carolina Sales Tax returns are due the 20th of the month following the reporting period. If this date falls on a weekend or holiday, the return is due the next business day. In addition, some businesses may be required to make monthly prepayments in addition to filing a return each month.