Marketplace facilitators will be required to collect and remit sales tax in North Carolina beginning February 1, 2020. The state estimates that this new sales tax collection will generate approximately $200 million in additional revenue during the next fiscal year.
New Sales Tax Nexus Law Explained
This law means that remote sellers who make sales into North Carolina using a marketplace facilitator platform will not be required to collect and remit sales tax for those sales. That responsibility now lies with the marketplace facilitators, as of February 1, 2020. However, remote sellers still need to remit sales tax for any transactions completed outside of marketplace facilitators, if the sellers reach the economic thresholds enforced by North Carolina, or if the sellers have physical nexus.
Marketplace facilitators also will be required to provide marketplace sellers with monthly reports showing the gross sales and the total number of transactions completed by the facilitators on behalf of their sellers and sourced to North Carolina. These reports must to sent out within 10 days after the end of each calendar month.
More Clarification Needed
North Carolina is still working out a few details regarding the new law. The state hopes to have clarification on the following issues by early 2020:
- Does a remote seller's marketplace sales count toward reaching the economic nexus thresholds set by the state?
- Does a remote seller have to register with the state if his/her only sales into North Carolina are via a marketplace?
State's Current Sales Tax Nexus Requirements
North Carolina already enforces physical nexus and economic nexus requirements on remote sellers. The economic nexus thresholds are $100,000 in gross sales or 200 total transactions during the previous or current calendar year. Remote sellers must register with the state and begin collecting and remitting sales tax within 60 days after meeting one of these thresholds.
These marketplace facilitator requirements were part of North Carolina's Senate Bill 557 (S.B. 557) which Gov. Roy Cooper signed November 8, 2020.
Visit the Cherry Bekaert website for more information about economic nexus and marketplace facilitator requirements.
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