NC Business Sales Tax Question (income, businesses, price)

[dabiz]

Hi all,

I have a Tech Support business here on the coast that I just started up about 8 months ago.

So let's say a customer has a computer part go bad. They give me a call and I find that the part has to be ordered online. I order the part online and don't get charged any sales tax on the purchase. I invoice the customer for the same price that I paid for the part (since I am in no way, shape, or form a reseller) and the service time. At tax time, who pays the sales tax for the part? If it's the customer, how do I notify them that sales taxes need to be paid on the part? Just add a note to the invoice?

Thank You for your time

[kelsie]

I am not sure if this will answer your question, however, I self-published a cookbook 3 yrs. ago. At that time I applied for my tax id # with the State of NC. I pay quarterly taxes on the books that are sold in NC. The NC sales tax is contained in the price of my cookbook. I would suggest that you call the State Tax office and ask them, they are very helpful. Also, you Accountant should know the answer. Good luck in your business.

[mm34b]

North Carolina has a use tax on purchases made outside the State for use in North Carolina. Residents are responsible for paying the use tax on purchases for which no North Carolina sales or use tax has been charged.

The use tax applies to transactions that would be subject to sales tax if the purchase were made in North Carolina. The use tax rate is the same as the sales tax rate that would apply to the purchase if it were made in North Carolina.

In the past, individuals who purchased consumer items had to complete Form E-554, Consumer Use Tax Return, to report and pay their use tax on these items. Beginning with the 1999 tax year, individuals who are required to file an Individual Income Tax Return must report and pay the use tax on those returns. Individuals who are not required to file an Individual Income Tax Return should continue to report and pay the use tax on Form E-554. Businesses must register and file Form E-500, Sales and Use Tax Return, to report and remit use tax due on items purchased for use in their business.

[dabiz]

Thank You for all of your help. That Use Tax makes sense, but to me it seems like the customer needing the item would pay the use tax since I am not using the part that I bought for my business. It would be the same as me telling them exactly where to buy the part and letting them buy it. I'm just providing a service by doing that whole process for them. So do I need to worry about the use tax for their stuff? If so, I would lose money on every item I buy for a client.

[mm34b]

Originally Posted by dabiz

Thank You for all of your help. That Use Tax makes sense, but to me it seems like the customer needing the item would pay the use tax since I am not using the part that I bought for my business. It would be the same as me telling them exactly where to buy the part and letting them buy it. I'm just providing a service by doing that whole process for them. So do I need to worry about the use tax for their stuff? If so, I would lose money on every item I buy for a client.

I'm confused, why do you believe your out-of-state business would pay the NC sale/use tax? It's the NC customer's problem, not yours or are you saying your business is located on the NC Coast. Might be my mistake. I was thinking you were in California.

[dabiz]

HAH! I'm right here on the North Carolina coast. The only reason that I'm worried is because I had an "accountant" tell me that I needed to tack a sales tax charge onto the client invoice for all of the items that I buy online for clients. That would make me a reseller, correct?

I think he just confused me more than anything. Like you said, I think it's on the customer to pay the use tax for items they need for their business.

Sorry to confuse you. Thanks again for your time and help.

[mm34b]

Originally Posted by dabiz

HAH! I'm right here on the North Carolina coast. The only reason that I'm worried is because I had an "accountant" tell me that I needed to tack a sales tax charge onto the client invoice for all of the items that I buy online for clients. That would make me a reseller, correct?

I think he just confused me more than anything. Like you said, I think it's on the customer to pay the use tax for items they need for their business.

Sorry to confuse you. Thanks again for your time and help.

Got it now.

Yeah, if your NC company makes business related purchases, the company would be liable for any taxes due. Pass the cost of the item, taxes, handling & shipping on to the NC consumer.