Summary: North Carolina has repealed the transaction threshold requirements for remote sellers, effective July 1, 2024. This change simplifies the economic nexus rules, making compliance easier for remote sellers.
What Changes Were Made To North Carolina's Economic Nexus Threshold?
Effective July 1, 2024, North Carolina has repealed the transaction threshold for remote sellers, as stipulated in Session Law 2024-28.
How North Carolina's Economic Nexus Threshold Works
Previously, North Carolina required remote sellers to register and remit sales and use tax if they exceeded certain thresholds based on both the number of transactions and the gross sales amount.
The new law eliminates the transaction threshold. Now, remote sellers only need to consider the sales threshold.
The updated rule states that a remote seller is required to register and remit sales tax if their gross sales to North Carolina residents exceed $100,000 in the current or previous calendar year.
For more information on each state's economic neus thresholds, check out our state-by-state guide here.
Impact of North Carolina's Updated Economic Nexus Threshold
- Simplified Compliance: Remote sellers only need to track their gross sales to determine tax obligations, removing the dual requirement involving transaction counts.
- Possible Deregistration: Remote sellers who registered solely because they exceeded the transaction threshold in the past can now cancel their registration if their gross sales do not exceed $100,000.
- To cancel registration: A remote seller must file Form NC-BN, Out-of-Business Notification, on the North Carolina Department of Revenue website.
- Constant Monitoring: Sellers must continue to keep track of their sales totals to North Carolina to ensure they re-register if they surpass the $100,000 threshold in the future.
- Continued Tax Collection: Until cancellation, remote sellers must continue to collect, file, and remit sales taxes. Those canceling must ensure their cancellation date is appropriately listed on the form.
Examples of How to Apply North Carolina's Economic Nexus Threshold
- Pencil Shop: A California-based remote seller with $10,000 in gross sales and 350 transactions last year. As of July 1, 2024, they have $5,000 in gross sales for the current year. They may cancel their registration since they don't meet the $100,000 threshold.
- Book Seller: Based in Iowa, registered this year after 200 transactions but only $5,000 in sales. They can also cancel their registration.
- Movie Group: A Michigan-based seller with $105,000 in gross sales last year and $75,000 this year. They must continue their registration and tax remittances because they exceeded the $100,000 threshold last year.
- Computer Corp: A Georgia-based seller canceled its registration on July 31, 2024, after having $75,000 in sales. They must re-register if their gross sales exceed $100,000 during 2024.
Do You Need Help with Managing Sales Tax?
TaxValet's Fractional Sales Tax Department service is here to take sales tax entirely off your plate. We monitor changes to laws like this to keep you compliant, and only paying sales tax where you need to. Consider scheduling a quick initial call with us to learn more.