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Category: North Carolina

North Carolina Use Tax

North Carolina use tax is due by individuals and businesses on purchases, leases, and rentals of tangible personal property and certain digital property purchased, leased or rented inside or outside North Carolina for storage, use, or consumption. Use tax is due on taxable services sourced to North Carolina. Individuals and businesses must pay use tax when retailers do not collect tax on taxable transactions.

 

Out-of-state retailers that are not "engaged in business" in this State are not required to collect North Carolina's tax. However, some out-of-state retailers voluntarily collect North Carolina tax as a convenience to their customers. Out-of-state retailers include mail-order companies, television shopping networks, firms selling over the Internet, and other retailers.

 

Items subject to sales and use tax include but are not limited to the following:

 

  • • Tangible personal property including, but not limited to:
    ○ Computers and other electronic equipment;
    ○ Home furnishings;
    ○ Clothing;
    ○ Jewelry;
    ○ Sporting goods;
    ○ Audio compact discs (CDs), tapes, and records;
    ○ ATVs (All Terrain Vehicles).

 

 

  • • Digital property, which includes the following when delivered or accessed electronically:
    ○ An audio work. Examples include, but are not limited to, ringtones, digital music, readings of books or other written materials, speeches, and other sound recordings.
    ○ An audio visual work. Examples include, but are not limited to, movies, motion pictures, musical videos, news and entertainment programs, and live events.
    ○ A book, magazine, newspaper, newsletter, report, or another publication.
    ○ A photograph or a greeting card.
    • Pre-written software including electronic downloads of software.
    • Purchases of or recharges of prepaid telephone calling cards and phones.
    • Certain service contracts.
    • Admission tickets to an entertainment activity purchased outside the State where admission to the             activity may be gained in the State.

 

The use tax is calculated and due at the same rate as the sales tax. For January 1, 2016 through September 30, 2016, the rate was 7.5% in Durham and Orange Counties, 7.25% in Mecklenburg County, 7% in Alexander, Anson, Ashe, Buncombe, Cabarrus, Catawba, Cumberland, Davidson, Duplin, Edgecombe, Greene, Halifax, Harnett, Haywood, Hertford, Lee, Martin, Montgomery, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry and Wilkes Counties, and 6.75% in all other counties.

 

For October 1, 2016 through December 31, 2016, the rate was 7.5% in Durham and Orange Counties, 7.25% in Mecklenburg County, 7% in Alexander, Anson, Ashe, Buncombe, Cabarrus, Catawba, Cherokee, Cumberland, Davidson, Duplin, Edgecombe, Greene, Halifax, Harnett, Haywood, Hertford, Jackson, Lee, Martin, Montgomery, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry and Wilkes Counties, and 6.75% in all other counties.

 

If you paid another state’s sales or use tax that was legally due on out-of-state purchases, that amount may be credited against the North Carolina use tax due. Credit is allowed for another state’s sales tax legally and properly paid against the 4.75% general rate of North Carolina sales tax due. Separate credit is allowed for another state’s local tax legally and properly paid against the North Carolina local and transit sales and use tax due. You may not claim a credit for sales tax or value-added tax paid to another country. You should report use tax on purchases of food subject to the reduced rate of tax on Form E-554 and use tax on purchases of boats and aircraft on Form E-555. Businesses should report and remit sales and use tax on Form E-500.

 

 

 

For additional information please see worksheets and tables in Form D-400 instructions.