The North Carolina Department of Revenue recently issued a new directive regarding economic nexus and the collection of sales tax. The DOR’s directive stated that effective November 1, 2018, businesses making annual sales in excess of $100,000 or 200 transactions originating in the state of North Carolina will be required to collect sales tax regardless of whether they have a physical presence in the state. This action was as a result of the recent Supreme Court decision in South Dakota v Wayfair which opened the door for states to collect sales tax from businesses that do not have a physical presence in that particular state.
This directive will particularly impact our clients who are based outside of North Carolina but have sales within the state. This North Carolina directive should not impact our North Carolina based clients as they should have already been collecting tax on NC based sales. However, other states are expected to follow the South Dakota model and begin collecting sales tax on out of state businesses with sales or transactions in excess of the above mentioned numbers.
According to the NCDOR, The annual $100,000 sales and 200 transaction thresholds will be considered on a calendar year. If a taxpayer exceeds these thresholds during the previous or current year, then sales tax must be collected. If the threshold is exceeded for the first time during a current year, the taxpayer will have 60 days to begin collecting tax from the time the threshold is exceeded.
Please contact our office if you have concerns about how this directive will affect your business.