Effective November 1, 2018, many remote sellers making sales to NC & SC based customers will be required to collect applicable sales taxes. These changes are in response to a recent US Supreme Court decision allowing states to collect sales tax from out-of-state vendors with significant in-state sales activity.
In North Carolina, a seller will be required to collect sales tax if the seller has exceeded $100,000 in annual sales to NC-based customers or, if the seller has more than 200 customer transactions in the state. In South Carolina, remote sellers exceeding $100,000 in annual sales to SC-based customers will have an obligation to collect sales tax. South Carolina has no threshold for customer transactions. Keep in mind that if your business has employees, fixed assets, or inventory in these states you’ve had an obligation to collect sales tax prior to these changes.
North & South Carolina are not the only states enforcing sales tax collection on remote sellers. There are over 30 states already taking advantage of this recent US Supreme Court decision to require out-of-state sellers to collect their tax. Several more will likely pass legislation to expand their sales tax reach in the coming months. Also, remember that the items subject to tax vary by state. This means that items not subject to sales tax in your home state may be taxable in other states where you now have a nexus requirement. This is especially true in the areas of software and certain services.
You can read more about these guidelines in NC Sales Tax Directive #18-6 and SC Revenue Ruling #18-14.
We at GreerWalker would welcome the opportunity to discuss these changing rules with you and help you determine their application to your business.
Please contact Jason Pritchard if you have any questions.