2024 Sales and Use Tax Law Changes

The 2024 General Assembly amended the definition of one defined term. The change and effective date are as follows:

Streamlined Agreement: The definition of the term was amended to update the date and is now defined as “[t]he Streamlined Sales and Use Tax Agreement as amended as of November 7, 2023."

(Effective July 1, 2024; HB 228, s. 2.2., S.L. 2024-28.)

Note: The Revisor of Statutes was authorized to renumber the subdivisions of G.S. 105-164.3 to ensure that the subdivisions are listed in alphabetical order and in a manner that reduces the current use of alphanumeric designations, to make conforming changes, and to reserve sufficient space to accommodate future additions to the statutory section.

The 2024 General Assembly amended this statute to identify the time period for a person to receive an affidavit of capital improvement.

(a1) – Substantiation: The subdivision now provides, in part, the following: “. . . A person who receives an affidavit of capital improvement from another person within 90 days of the sale or within 120 days of a substantiation request by the Secretary, absent fraud or other egregious activities, is not liable for any additional tax on the gross receipts from the transaction if it is determined that the transaction is not a capital improvement. . . ." [Emphasis added.]

(Effective July 1, 2024; HB 228, s. 3.1., S.L. 2024-28.)

The 2024 General Assembly amended this section to repeal the transaction based economic nexus thresholds for remote sellers.

(b) – Remote Sales: The subdivision now provides, in part, the following: “A retailer who makes a remote sale is engaged in business in this state and is subject to the tax levied under this Article if at least one of the following conditions is met:
. . .
(9) The retailer makes gross sales in excess of one hundred thousand dollars ($100,000) from remote sales sourced to this state, including sales as a marketplace seller, for the previous or the current calendar year.

(10) The retailer is a marketplace facilitator that makes gross sales in excess of one hundred thousand dollars ($100,000), including all marketplace-facilitated sales for all marketplace sellers, from sales sourced to this state for the previous or the current calendar year.” [Emphasis added.]

(Effective July 1, 2024; HB 228, s. 2.1.(a), S.L. 2024-28.)

Note: A person who holds a certificate of registration with the Department as of June 30, 2024, and is solely engaged in business in the state because the person exceeds the transaction threshold established in G.S. 105-164.8(b)(9)b. or G.S. 105-164.8(b)(10)b. may close the person's certificate of registration in accordance with procedures established by the Secretary. The person must collect tax, file returns, and remit tax for periods ending prior to the later of (i) July 1, 2024, or (ii) the date the person cancels his or her certificate of registration.

The 2024 General Assembly amended this section to implement a maximum use tax on certain sales of Qualifying Spirituous Liquor.

(a4) – Qualifying Spirituous Liquor: This subdivision now provides the following: “A person who purchases qualifying spirituous liquor may apply to the Secretary for a direct pay permit for the purchase of qualifying spirituous liquor. A direct pay permit issued under this subsection authorizes its holder to purchase qualifying spirituous liquor without paying tax to the seller and authorizes the seller to not collect any tax on the qualifying spirituous liquor from the permit holder. A person who purchases qualifying spirituous liquor under a direct pay permit must file a return and pay the tax due to the Secretary in accordance with G.S. 105-164.16. A direct pay permit issued for qualifying spirituous liquor does not apply to any purchase other than the purchase of qualifying spirituous liquor. The maximum use tax on qualifying spirituous liquor is one thousand dollars ($1,000). For purposes of this subsection, ‘qualifying spirituous liquor’ is a single container of spirituous liquor, as defined in G.S. 18B-101, the purchase price of which is equal to or greater than fifty thousand dollars ($50,000).

In lieu of selling under a direct pay permit pursuant to this subsection, a seller may voluntarily elect to collect and remit the maximum tax on qualifying spiritous liquor on behalf of the purchaser. Where the seller elects to collect and remit the maximum tax, an invoice given to the purchaser bearing the proper amount of tax on a retail transaction extinguishes the purchaser's liability for the tax on the transaction."

(Effective January 1, 2025, and applies to purchases occurring on or after that date.; SB 527, s. 23.(c), S.L. 2024-41.)

The 2024 General Assembly amended this section to change the frequency of the Sales and Use Tax transfer to the Highway Fund and Highway Trust Fund.

(b)Transportation Needs: This subdivision now provides, in part, the following: “The Secretary must, on a monthly basis, transfer to the Funds listed below a percentage of the net proceeds of the tax collected under this Article at the state's general rate of tax set in G.S. 105-164.4(a).” [Emphasis added.]

(Effective July 1, 2024; HB 198, s. 18.(a), S.L. 2024-15.)

The 2024 General Assembly amended this section to impose a civil penalty for the misuse of an affidavit of capital improvement by a purchaser.

(a) Penalties: The subdivision now provides, in part, the following: “The following civil penalties and criminal offenses apply:
. . .
(5a) Misuse of Exemption Certificate or Affidavit of Capital Improvement. – For misuse of an exemption certificate or affidavit of capital improvement by a purchaser, the Secretary shall assess a penalty equal to two hundred fifty dollars ($250). . . An affidavit of capital improvement substantiates that a contract, or a portion of work to be performed to fulfill a contract, is to be taxed for sales and use tax purposes as a real property contract.” [Emphasis added.]

(Effective July 1, 2024; HB 228, s. 2.4., S.L. 2024-28.)

The 2024 General Assembly amended this section to provide a new exception to the general statute of limitations following certain refund claims.

(5) Sales and Use Tax Customer Refund: This subdivision now provides: “If a purchaser receives a refund from a seller of sales and use tax paid to the seller, the period for proposing an assessment against the customer of any tax refunded is three years after the date of the refund.”

(Effective July 1, 2024, and applies to assessments not barred by the statute of limitations prior to that date; HB 228, s. 2.3.(a), S.L. 2024-28.)