Sales Tax Law Changes
I suspect that you’re aware of these sales tax law changes, but want to mention them just to be sure.
Effective January 1, NC will start charging sales tax on repair, maintenance and installation services. The new rules affect when you pay, and when you charge, sales tax. Many businesses will now pay sales tax on labor for the first time. For new construction, if you’re not the general contractor, you will need to get an Affidavit of Capital Improvement. If you don’t get the affidavit, NC can charge you tax even though you didn’t charge it to your customer and it wouldn’t otherwise be due. If you are the general contractor, you’ll need to give the Affidavits to your subs.
Landscaping, painting and a few other businesses are specifically exempt. But if you do other repair, maintenance or installation work, that will be subject to these rules.
Where you do not have to charge your customer sales tax (ie new construction), you pay sales tax on the purchase of job materials. Where you do charge your customer sales tax (ie repair, maintenance and installation), you may provide vendors your Certificate of Exemption and buy related job materials without sales tax.
If you can show that you entered into a binding contract before January 1, that job will be treated under the old rules.
Attached is the NC Department of Revenue Directive, in case it is helpful for you.
This is just a quick summary overview. The rules are more detailed and complex. Please call if you need additional information or help with it.
I hope you have a fabulous holiday season!