North Carolina has a tax surprise for you



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By Casey Turton
Editor, Carolina Men

image shows man shopping online

Didn’t pay tax when you bought online? You need to read this article

Thought you got a deal when you bought online in 2012 and didn’t pay any sales taxes? Think again because a new North Carolina law requires you to report unpaid sales taxes and pay the tax.

“Wow, what a great deal, you saved over $80 in sales tax by ordering your new computer system from computerscheap.com.  They even threw in free shipping.  This system is practically a steal.  We have all said this to ourselves when we ordered supplies and equipment or even that new sweater for your spouse, but not so fast.  The North Carolina Department of Revenue still expects you to pay this tax as if you bought these items from your local retailer.  The NC DOR calls it use tax.  Every individual and every business is expected to pay this,” explains Jeff Moore, owner of Moore Business Solutions in Greenville.

Moore adds, “If you own a business you pay this tax when you pay your regular sales tax.  On the NC E-500 Sales and Use Tax form (that’s right it’s even in the name) it’s the first column you come to, you know the one you have skipped all these years.”

“For the individual it is a line on the NC D-400 tax return.  The NC DOR is serious about this; you will know this if you ever have a Sales Tax Audit, Moore, a tax professional and business consultant, warns.

There’s a lot of lost revenue at stake here, particularly in tough economic times when North Carolina struggles to balance its budget.
 “Research indicates that NC could lose as much as $214 million in revenue this year from online purchase where neither sales nor use tax is collected.”  The problem has always been that businesses are not required to register and pay sales tax in any state they don’t have a physical store or distribution center.  A group of states is working on a system that will allow sales tax to be collected in every state and then be paid to every other state.  However, until this is implemented it is up to each of us to handle these ourselves,” Moore said. 

The North Carolina Department of Revenue explains on its website:

The tax owed is called a “use tax” and is due when you purchase products online or from a catalog and the vendor does not charge the sales tax.  North Carolina law requires shoppers to pay the use tax directly to NCDOR. Use tax is due on the total purchase price of products including freight and delivery charges.

Shoppers are encouraged to keep track of their untaxed catalog or electronic purchases and pay the use tax when they file their individual income tax return in 2013 for tax year 2012.
“We want to make sure taxpayers are aware of this requirement and help them properly report consumer use tax on their tax returns in April,” Secretary of Revenue David Hoyle said.
More information about use tax can be found on the department’s website or those with questions may contact the Taxpayer Assistance Division at   1-877-252-3052.

Or, you can contact Jeff Moore at 252-355-1099 for help with this little-known tax issue.

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