North Carolina — Sales & Use Tax

North Carolina imposes a privilege tax on retailers engaged in business in the state at a rate of 4.75% on net taxable sales or gross receipts. The sales tax applies to retail sales of tangible personal property, certain digital property, and specified services including repair, maintenance, and installation services. A complementary use tax applies at the same rate to items purchased, leased, or rented inside or outside North Carolina for storage, use, or consumption in the state when sales tax has not been paid. Both taxes are codified in Article 5 of Chapter 105 of the North Carolina General Statutes, known as the "North Carolina Sales and Use Tax Act." Local sales and use taxes ranging from 2% to 2.75% are imposed in addition to the state rate.

Source: N.C. Gen. Stat. § 105-164.4, N.C. Gen. Stat. § 105-164.6

A remote seller is engaged in business in North Carolina and must collect sales and use tax if the seller makes gross sales exceeding $100,000 from remote sales sourced to the state, including sales as a marketplace seller, in the previous or current calendar year. A marketplace facilitator meets the threshold if its gross sales, including all marketplace-facilitated sales for all marketplace sellers, exceed $100,000 from sales sourced to North Carolina in the previous or current calendar year. Effective July 1, 2024, North Carolina repealed the prior 200-transaction threshold, leaving only the $100,000 sales threshold.

Source: N.C. Gen. Stat. § 105-164.8(b)(9), (10)

Before engaging in business as a retailer, wholesale merchant, or marketplace facilitator liable for tax, a person must obtain a certificate of registration from the North Carolina Department of Revenue. A person with multiple businesses needs only one certificate per legal entity covering all operations statewide. Registration is available online through the NCDOR business registration portal at no charge, and there is no registration fee.

Source: N.C. Gen. Stat. § 105-164.29

The Secretary of Revenue assigns each taxpayer a filing frequency based on the amount of State and local sales and use tax liability. Taxpayers consistently liable for less than $100 per month file quarterly, with returns due by the last day of January, April, July, and October for the preceding three-month period. Taxpayers consistently liable for at least $100 but less than $20,000 per month file monthly, with returns due by the 20th day of the month following the calendar month covered by the return. Taxpayers consistently liable for at least $20,000 per month must make a monthly prepayment of at least 65% of the next month's tax liability, due on the 20th when the monthly return is filed.

Source: N.C. Gen. Stat. § 105-164.16

A marketplace facilitator that is engaged in business in North Carolina is considered the retailer of each marketplace-facilitated sale it makes on behalf of a marketplace seller and must collect and remit sales and use tax on all such sales. The obligation applies regardless of whether the underlying marketplace seller has a physical presence in the state, is required to be registered to collect sales tax, or would have been required to collect tax had the sale not been made through the marketplace. This collection duty took effect February 1, 2020, following enactment of Senate Bill 557 in November 2019.

Marketplace facilitator definition. North Carolina defines a marketplace facilitator as a person that, directly or indirectly (including through affiliates), does both of the following: (1) lists or otherwise makes available for sale a marketplace seller's items through a marketplace owned or operated by the marketplace facilitator, and (2) either collects the sales price or purchase price of a marketplace seller's items or otherwise processes payment, or makes payment processing services available to purchasers for the sale of the marketplace seller's items. Examples include online marketplaces, boat brokers, and certain online or in-person auctioneers and consignors. The definition excludes accommodation facilitators, admission facilitators, and service contract facilitators, which are governed by separate statutes (N.C. Gen. Stat. §§ 105-164.4F, 105-164.4G, and 105-164.4I, respectively).

Compliance requirements. A marketplace facilitator subject to the collection obligation must comply with the same requirements and procedures as all other retailers registered or required to be registered to collect and remit sales and use tax in North Carolina. This includes registration under N.C. Gen. Stat. § 105-164.29, filing returns at the assigned frequency, and meeting the economic nexus threshold of $100,000 in gross sales sourced to North Carolina in the previous or current calendar year (including all marketplace-facilitated sales for all marketplace sellers). The threshold was modified effective July 1, 2024, when the legislature repealed the prior 200-transaction alternative test, leaving only the $100,000 gross-sales threshold.

Marketplace seller relief. A marketplace seller is not required to collect and remit sales tax on sales made through a marketplace facilitator that is itself collecting and remitting the tax. Agreements between marketplace facilitators and marketplace sellers may address fulfillment of Article 5 requirements, but no such agreement may require a marketplace seller to collect and remit sales and use tax on marketplace-facilitated sales—collection liability rests with the facilitator. However, a marketplace seller that also makes direct sales (outside the marketplace) must separately register and collect tax on those direct sales if the seller meets the economic nexus threshold for its own direct sales.

Liability relief and grace period. The statute provides limited liability relief to a marketplace facilitator if the facilitator can demonstrate that it received incorrect information from the marketplace seller or did not receive specific written advice from the Secretary for the transaction at issue, and if the facilitator and the marketplace seller are not affiliates and the facilitator is not also the marketplace seller for that transaction. If the facilitator qualifies for relief, the marketplace seller remains liable for the tax, provided the seller is engaged in business in the state. The Department imposed a grace period for assessments covering filing periods from February 1, 2020, through September 30, 2020, with exceptions for taxpayers who received specific written advice from the Secretary or took a position contrary to published guidance.

Monthly reporting to marketplace sellers. N.C. Gen. Stat. § 105-164.4J(c) requires a marketplace facilitator to provide or make available to each marketplace seller a report showing the gross sales and number of transactions sourced to North Carolina on the seller's behalf. This report must be provided within ten days after the end of each calendar month. The purpose is to enable marketplace sellers to track whether they meet the economic nexus threshold for their direct sales or combined marketplace-and-direct sales.

Source: N.C. Gen. Stat. § 105-164.4J Source: NCDOR Marketplace Facilitators and Marketplace Sellers

North Carolina exempts from sales and use tax items purchased for resale under N.C. Gen. Stat. § 105-164.13(61b). To claim this exemption, the purchaser must provide the seller with a certificate of exemption containing required data elements, which may be submitted on paper or electronically pursuant to N.C. Gen. Stat. § 105-164.28(a). The statute does not specify a particular form, but requires the following information: (1) the purchaser's name; (2) the purchaser's address; (3) the purchaser's certificate of registration number, which must be either a North Carolina certificate of registration number, another state's sales and use tax registration number, or a Streamlined Sales Tax ID; (4) the reason for the exemption; (5) the type of business; and (6) if submitted by paper (including fax), the purchaser's signature and date signed. Electronic submissions do not require a signature.

Blanket certificates. A purchaser who regularly buys items for resale may issue a blanket certificate covering all qualifying purchases from a particular seller, rather than providing a separate certificate for each transaction. A blanket certificate of exemption remains valid without renewal so long as a recurring business relationship exists between the buyer and seller. Under N.C. Gen. Stat. § 105-164.28(e), a recurring business relationship exists when a period of no more than 12 months elapses between sales transactions. The Secretary may not require a seller to renew a blanket certificate or update exemption certificate information or data elements when a recurring business relationship is present. If more than 12 months pass with no purchases, the blanket certificate lapses and the purchaser must provide a new certificate.

Seller relief from liability. A seller who accepts a certificate of exemption meeting the statutory requirements is relieved of liability for uncollected sales tax on that transaction pursuant to N.C. Gen. Stat. § 105-164.28(b). The seller is not required to verify that the certificate of registration number provided by a purchaser is correct. If the Secretary determines that a certificate or the required data elements obtained by the seller are incomplete, the Secretary may request substantiation from the seller. If the seller, within 120 days after a substantiation request, obtains a fully completed exemption certificate from the purchaser taken in good faith or obtains other information to establish that the transaction was not subject to tax, the seller is not liable for the tax. The relief from liability does not apply to a seller who fraudulently fails to collect the tax or solicits purchasers to participate in the unlawful claim of an exemption.

Recordkeeping. Sellers must retain in their records the certificates or electronic information submitted by the purchaser, and records that identify the item purchased, the sales price, and the purchaser. A seller's failure to keep records that establish a sale is exempt from sales and use tax subjects the seller to liability for the tax at the rates applicable to the retail sale of the item. Purchasers must retain in their records the certificates or electronic information submitted to sellers and an invoice or other statement of the purchase price of any items purchased.

Purchaser liability and penalties. A purchaser who does not resell an item purchased under a certificate of exemption is liable for any tax subsequently determined to be due on the sale under N.C. Gen. Stat. § 105-164.28(d). Misuse of an exemption certificate—furnishing exemption information to a seller to make a taxable purchase without paying sales tax—subjects the purchaser to a penalty of $250 per transaction under N.C. Gen. Stat. § 105-236(a)(5a). The penalty applies to each seller identified by the Department from which the person made a taxable purchase using the exemption certificate. Misuse of an exemption certificate is also grounds for the Secretary to revoke a person's certificate of registration for sales and use taxes under implementing regulation 17 NCAC 07B .0106(c).

Source: N.C. Gen. Stat. § 105-164.13 Source: N.C. Gen. Stat. § 105-164.28 Source: N.C. Gen. Stat. § 105-236