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Effective for tax years beginning January 1, 1999 (calendar
year 1999 returns) the NC individual income tax returns will
include a line for the payment of use tax on out of state
purchases of personal property. This includes
purchases made through mail order, the internet, and other
vendors who do not collect NC Sales tax. The tax is
generally 7% of purchases including shipping and handling.
NC has had a Use tax since before the internet was invented
so it is not a violation of federal law for NC to collect
Use tax on purchases made via the internet. The actual
State of NC Statute is reproduced below.
As you can see the Statute implies that the Legislature
expects many North Carolinians to owe at least some Use tax.
The Income Tax Form instructions include a formula for
computing the Use tax for purchases of less than $1,000.
Purchases of $1,000 or more must have the Use tax computed
and added to the formula amount in the instructions.
The Department of Revenue has answers to frequently
asked questions on their web site.
GENERAL STATUTES OF NORTH CAROLINA, 1943, CHAPTER 105
TAXATION, SUBCHAPTER I LEVY OF TAXES, ARTICLE 9, Remedies.
Sec. 105-269.14. Payment of use tax with individual
income tax.--
(a)
Requirement.--An individual who owes use tax that is payable
on an annual basis pursuant to G.S. 105-164.16(d) and who is
required to file an individual income tax return under Part
2 of Article 4 of this Chapter must pay the use tax with the
individual income tax return for the taxable year. The
Secretary must provide appropriate space and information on
the individual income tax form and instructions. The
information must include the following:
(1) An
explanation of an individual's obligation to pay use tax on
items purchased from mail order, Internet, or other sellers
that do not collect State and local sales and use taxes on
the items.
(2) A method to
help an individual determine the amount of use tax the
individual owes. The method must list categories of items,
such as personal computers and clothing, that are commonly
sold by mail order or Internet and must include a table that
gives the average amounts of use tax payable by taxpayers in
various income ranges.
(b)
Distribution.--The Secretary must distribute one-third of
the net use tax proceeds collected under this section to
counties and cities in proportion to their total
distributions under Articles 39, 40, and 42 of this Chapter
and Chapter 1096 of the 1967 Session Laws for the most
recent period for which data is available. The provisions of
G.S. 105-472, 105-486, and 105-501 do not apply to tax
proceeds distributed under this section.
(As added by Ch.
341 (H.B. 1433), Laws 1999, effective for taxable years
beginning on or after January 1, 1999.)
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