North Carolina’s Sales Tax on Online Purchases: Legal Considerations

North Carolina has seen a significant rise in online shopping, especially following the global pandemic. With this increase in e-commerce, it's crucial for consumers and businesses alike to understand North Carolina's sales tax laws regarding online purchases. This article delves into the essential legal considerations surrounding sales tax in North Carolina to ensure compliance and informed shopping.

One of the key legal aspects of sales tax on online purchases in North Carolina is the obligation of online retailers to collect sales tax on transactions. As of 2019, legislation has been enacted requiring out-of-state sellers with a substantial economic presence in North Carolina to register and collect sales tax. This is in line with the South Dakota v. Wayfair, Inc. case, which empowered states to impose sales tax on remote sellers.

The threshold for economic presence is defined by both the total sales into the state and the number of transactions. Specifically, if a remote seller has sales exceeding $100,000 or engages in 200 or more separate transactions in North Carolina within the previous calendar year, they are required to collect and remit sales tax on sales made to customers in the state.

For consumers, understanding the implications of this law is vital. When purchasing from a seller who is obliged to collect sales tax, the tax will be automatically applied at checkout. However, if a consumer purchases from a vendor who is not required to collect North Carolina sales tax, they may still be liable for use tax on their purchase. Use tax is intended to complement sales tax and is typically paid by consumers on goods purchased out-of-state where no sales tax was collected.

Moreover, the rate of sales tax in North Carolina is comprised of both state and local rates. As of 2023, the state sales tax rate is 4.75%, but local counties can impose additional taxes, leading to a total sales tax rate that canReach up to 7.5% or more, depending on the county.

Another important consideration is the types of items that are subject to sales tax. Generally, tangible personal property is taxable, whereas services may be exempt unless specifically stated otherwise. North Carolina also provides a list of exempt goods, including certain food items and healthcare-related products, which may not incur sales tax even when purchased online.

It’s essential for consumers to retain documentation of their online purchases, especially in case of any discrepancies regarding tax collection. Businesses must also ensure they are compliant with the tax laws, potentially consulting with tax professionals to navigate the complexities of multi-state tax obligations.

In summary, understanding North Carolina’s sales tax on online purchases is critical for both consumers and businesses. With changes to laws and the evolving landscape of online shopping, staying informed about these legal considerations is essential to ensure compliance and make informed purchasing decisions.