North Carolina – Service Contracts Are Taxable

SALT Report 3500 – “Effective October 1, 2014, N.C. Gen. Stat. § 105-164.4(a)(11), as amended, imposes a privilege tax at the 4.75% general State and applicable local and transit rates of sales and use tax on a retailer to the sales price of or the gross receipts derived from a service contract sold at retail. Additionally, a service contract sold at retail on or after October 1, 2014 is taxed in accordance with N.C. Gen. Stat. §105-164.4I.  See Directive SD-13-5, Service Contracts, for additional information regarding the application of sales and use tax to the retail sale of a service contract sold on or after January 1, 2014 and prior to October 1, 2014.”

For Further Information:

NC DOR Important Notice: Service Contracts