For Immediate Release
March 1, 2016

North Carolina – The new North Carolina budget - Effective March 1, 2016, retail sales and use tax is imposed.

North Carolina – The new North Carolina budget - Effective March 1, 2016, retail sales and use tax is imposed.

North Carolina – The new North Carolina budget - Effective March 1, 2016, retail sales and use tax is imposed.

North Carolina (March 2016)

The new North Carolina budget, signed into law by Governor Pat McCrory on September 18, 2015, lowers income tax rates for both individuals and businesses and expands retail sales tax to repair, maintenance and installation services. In addition, the legislation distributes more sales tax revenue to the state’s most rural areas, which typically have few businesses and therefore little sales tax revenue.

 

Tax more services

Effective March 1, 2016, retail sales and use tax is imposed on the following:

  • “Repair, maintenance, and installation services provided for an item for which a service contract on the item is exempt from tax under G.S. 105-164.41.
  • Repair, maintenance, and installation services purchased for resale.
  • An item or repair, maintenance, and installation services used to maintain or repair tangible personal property or a motor vehicle pursuant to a service contract taxable under this Article if the purchaser of the contract is not charged for the item.”

Repair, maintenance, and installation services are defined in the new budget as follows:

  • “To keep or attempt to keep tangible personal property or a motor vehicle in working order to avoid breakdown and prevent repairs.
  • To calibrate, restore, or attempt to calibrate or restore tangible personal property or a motor vehicle to proper working order or good condition. This activity may include replacing or putting together what is torn or broken.
  • To troubleshoot, identify, or attempt to identify the source of a problem for the purpose of determining what is needed to restore tangible personal property or a motor vehicle to property working order or good condition.
  • To install or apply tangible personal property except tangible personal property installed or applied by a real property contractor pursuant to a real property contract.”

North Carolina Sales and Use Tax Act. Article 5.

 

If you would like additional information on this topic or have any questions, please contact taxdesk@thesaltgroup.com.

 

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