During a recent Sales Tax Rate Update webinar given by ONESOURCE Indirect Tax the following question was submitted by an attendee. Our tax experts have submitted their response below.
Is the new NC service tax n/a if the service is to production = mill equipment?
North Carolina imposes a tax on sales of tangible personal property and selected services. N.C. Gen. Stat. § 105-164.4. Applicable to sales made on or after January 1, 2014, the general rate of tax applies to the sales price of a service contract. (N.C. Gen. Stat. §105-164.4(a)(11).) Effective January 1, 2014, a “service contract” means a warranty agreement, a maintenance agreement, a repair contract, or a similar agreement or contract by which the seller agrees to maintain or repair tangible personal property. (N.C. Gen. Stat. §105-164.3(38b)). A single repair transaction between a retailer and a purchaser for tangible personal property that is not completed pursuant to a “service contract” sold to a purchaser is not a service contract. North Carolina Department of Revenue has issued a Directive with detailed information of the changes. Please refer to it for further explanation.