Sales tax updates in North Carolina

Newly enacted laws in North Carolina could impact sales tax collection requirements for remote sellers, airlines, and professional motorsports teams.

Each state has its own definition for “gross sales,” “retail sales,” and other terms. In some states, for example, retail sales include some or all exempt transactions, while in others, they don’t. It’s one of the many fun quirks people who work with sales tax need to consider — along with the fact that these definitions are subject to change.

Previously, North Carolina defined “gross sales” as “the sum total of the sales price of all sales of items,” with “items” defined as “tangible personal property, certain digital property, or a service, unless the context requires otherwise.”

The new definition of “gross sales” is “the sum total of the sales price of all sales of tangible personal property, digital property, and services.”

This could impact the sales tax collection requirements of remote retailers that make sales into the state. Under North Carolina’s economic nexus law, an out-of-state seller must collect and remit North Carolina sales tax if the seller has more than $100,000 in gross sales or at least 200 separate transactions in the state in the previous or current calendar year.

Two existing sales tax exemptions that were set to expire on January 1, 2020, have been extended.

The exemption for sales of aviation gasoline and jet fuel to an interstate air business for use in a commercial aircraft, including a passenger aircraft, will remain in effect until January 1, 2024.

Likewise, a sales tax exemption for professional motorsports teams will now expire January 1, 2024.

Sales tax laws and rules are constantly tweaked for a wide variety of reasons. This is one of the reasons sales tax compliance is so challenging. Fortunately, it’s possible to automate sales tax compliance.