Changes To North Carolina Sales Tax Rate

Please be advised that effective Tuesday, September 1, 2009 the sales tax in North Carolina increases by 1%. In most counties the new rate will be 7.75% (with some counties increasing to 8 or 8.25%).

As you know, the combined rate is comprised of a state tax component and a county tax component. The 1% increase is all applied to the state rate making it 5.5%.

Special instructions for completing your September tax coupon: If you are a monthly sales tax filer you must use the following procedure for revising the amount of taxable sales to report on the form in order to arrive at the correct amount of tax to remit. This formula applies only to the state portion of the form, not the county portion.

Multiply the amount of taxable sales by 5.5% to arrive at the state portion of the tax.

Divide the result by .045 to arrive at a revised taxable sales amount.

Use this revised sales amount for the state tax line.

Use the actual sales amount for the county tax line.

Example:
Taxable sales in September = $ 10,000.00

Tax collected in September = $ 775.00

$ 10,000 times 5.5% = $ 550.00 divided by .045 = $ 12,222.22

State tax line on coupon $ 12,222.22 x 4.5% = $ 550.00

County tax line on coupon $ 10,000.00 x 2.25% = $ 225.00

If you are a quarterly tax filer follow the instructions provided by the state for separating the sales for July & August from the sales for September. The state will be mailing you a bulletin explaining the procedure but it may also be found online at:

http://www.dor.state.nc.us/taxes/sales/rate_increase2009.html

Once there, click on the first link titled “Important Notice: Sales and Use Tax Rate Change” and follow the instructions in Section II.

Additional changes to NC Sales Tax law are scheduled to take place in October of this year but they have not yet been finalized. Among the changes are a minor increase to the state rate and an identical decrease to the county rate (the same thing they did last year). The state is also defining additional items and services which will now be subject to sales tax.

If you have questions about the new sales tax rules, or any other tax matters, please send us an email or call us at 919-383-5826.