2019 Sales and Use Tax Law Changes

The Revisor of Statutes is 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. All definitions in G.S. 105-164.3 are renumbered.

The 2018 and 2019 General Assembly added new defined terms and amended multiple definitions for existing defined terms. Definitions already within G.S. 105-164.3 that were only renumbered are not included below. New definitions, amended definitions, and definitions from other sections of the statutes are defined below.

The definitions included in Senate Bill 557, Session Law 2019-246, that are not yet included by the Revisor of Statutes in G.S. 105-164.3, are marked with an asterisk (*) and included in alphabetical order within the other definitions included below and numbered as ( ) since the actual number assigned is not yet known. The changes and their effective dates are as follows:

Accommodation – (*). The definition of the term was previously codified as G.S. 105- 164.4F(a)(1) and continues to be defined as “[a] hotel room, a motel room, a residence, a cottage, or a similar lodging facility for occupancy by an individual.”

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(d), S.L. 2019-246.)

Accommodation Facilitator – (*). The definition of the term is added and defined as “[a] person that contracts, either directly or indirectly, with a provider of an accommodation to perform, either directly or indirectly, one or more of the activities listed in this subdivision. The term includes a real estate broker as defined in G.S. 93A-2. The activities are:
a. Market the accommodation and accept payment or collect credit card or other payment information for the rental of the accommodation. 
b. List the accommodation for rental on a forum, platform, or other application for a fee or other consideration.”

The “accommodation facilitator” definition is intended to replace the definition of the terms “facilitator” in G.S. 105-164.4F(a)(2) and “rental agent” in G.S. 105-164.4F(a)(3) that are repealed.

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(d), S.L. 2019-246.)

Admission Charge – (*). The definition of the term was previously codified as G.S. 105-164.4G(a)(1) and continues to be defined as “[g]ross receipts derived for the right to attend an entertainment activity. The term includes a charge for a single ticket, a multi-occasion ticket, a seasonal pass, and an annual pass; a membership fee that provides for admission; a cover charge; a surcharge; a convenience fee, a processing fee, a facility charge, a facilitation fee, or similar charge; or any other charges included in gross receipts derived from admission.”

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(h), S.L. 2019-246.)

Admission Facilitator – (*). The definition of the term is added and defined as “[a] person who accepts payment of an admission charge to an entertainment activity and who is not the operator of the venue where the entertainment activity occurs.”

The “admission facilitator” definition is intended to replace the definition of the term “facilitator” in G.S. 105-164.4G(a)(4) that is repealed.

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(h), S.L. 2019-246.)

Advertising and Promotional Direct Mail – (1). The definition of the term is amended by replacing the term “product” with the term “item,” as defined in G.S. 105- 164.3(91). The definition of the term is amended and provides “[p]rinted material that meets the definition of ‘direct mail’ and the primary purpose of which is to attract public attention to an item, person, business, or organization, or to attempt to sell, popularize, or secure financial support for an item, person, business, or organization.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Affiliate – (*). The definition of the term is added and provides that the term is “[d]efined in G.S. 105-130.2.”

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(m), S.L. 2019-246.)

Amenity – (*). The definition of the term was previously codified as G.S. 105- 164.4G(a)(2) and continues to be defined as “[a] feature that increases the value or attractiveness of an entertainment activity that allows a person access to items that are not subject to tax under . . . Article [5 of Chapter 105 of the North Carolina General Statutes] and that are not available with the purchase of admission to the same event without the feature. The term includes parking privileges, special entrances, access to areas other than general admission, mascot visits, and merchandise discounts. The term does not include any charge for food, prepared food, and alcoholic beverages subject to tax under . . . Article [5 of Chapter 105 of the North Carolina General Statutes].”

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(h), S.L. 2019-246.)

Bundled Transaction – (13). The definition of the term is amended to update language to conform to the Streamlined Sales and Use Tax Agreement and to replace the term “product” or “products” with the term “item” as defined in G.S. 105-164.3(91) or “items.” The definition of the term is amended and provides “[a] retail sale of two or more distinct and identifiable items, at least one of which is taxable and one of which is nontaxable, for one nonitemized price. The term does not apply to real property or services to real property. Items are not sold for one nonitemized price if an invoice or another sales document made available to the purchaser separately identifies the price of each item. A bundled transaction does not include the retail sale of any of the following:
a. An item and any packaging that accompanies the item and is exempt under G.S. 105-164.13(23). 
b. A sale of two or more items whose combined price varies, or is negotiable, depending on the items the purchaser selects. 
c. A sale of an item accompanied by a transfer of another item with no additional consideration. 
d. An item and the delivery or installation of the item. 
e. An item and any service necessary to complete the sale.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Capital Improvement – (21). The definition of the term is amended and provides that a capital improvement includes “[o]ne or more of the following: . . .
c. Installation of a transmission, distribution, or other network asset on land owned by a service provider or on a right-of-way or easement in favor of a service provider, notwithstanding that any separately stated charges billed to a customer for repair, maintenance, and installation services or a contribution in aid of construction are included in the gross receipts derived from services subject to the combined general rate under G.S. 105-164.4. For purposes of this sub-subdivision, the term ‘service provider’ means a person, including a governmental entity, who provides any of the services listed in this sub-subdivision, and the term ‘governmental entity’ means a State agency, the federal government, or a governmental entity listed in G.S. 105-164.14(c). The services are:

1. Telecommunications service or ancillary service.
2. Video programming. 
3. Electricity or piped natural gas. 
4. Water or sewer service.

. . .” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.4.(b), S.L. 2019-169.)

Capital Improvement – (21). The definition of the term is amended and provides that a capital improvement includes “[o]ne or more of the following: “ . . .
k. [a]n addition or alteration to real property that is permanently affixed or installed to real property and is not an activity listed in subdivision (191) of this section as repair, maintenance, and installation services. [Emphasis added.]
. . .”

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(m), S.L. 2019-246.)

Certain Digital Property – (23). The definition of the term is added and defined as “[a]n item listed in this subdivision that is delivered or accessed electronically is not considered tangible personal property and would be taxable under . . . Article [5 of Chapter 105 of the North Carolina General Statutes] if sold in a tangible medium. The term does not include an information service. The items are:

a. An audio work. 
b. An audiovisual work. 
c. A book, magazine, a newspaper, a newsletter, a report, or another publication. 
d. A photograph or a greeting card.”

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Certain Digital Property – (23). The definition of the term is amended and provides “[a]n item listed in this subdivision that is delivered or accessed electronically and that is not considered tangible personal property. The term does not include an information service. The items are:

a. An audio work. 
b. An audiovisual work. 
c. A book, magazine, a newspaper, a newsletter, a report, or another publication. 
d. A photograph or a greeting card.” [Emphasis added.]

This amendment removes the requirement that certain digital property have a taxable, tangible corollary.

(Effective October 1, 2019, and applies to sales occurring on or after that date; SB 523, s. 3.1.(b), S.L 2019-169.)

Consumer – (33). The definition of the term is amended and provides “[a] person who stores, uses, or otherwise consumes in this State an item purchased or received from a retailer or supplier either within or without this State.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Delivery Charges – (39). The definition of the term is amended and provides “[c]harges imposed by the retailer for preparation and delivery of an item to a location designated by the consumer.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Diaper – (43). The definition of the term is added and defined as “[a]n absorbent garment worn by humans who are incapable of, or have difficulty, controlling their bladder or bowel movements.”

(Effective October 1, 2019, and applies to sales occurring on or after that date; SB 523, s. 3.13.(a), S.L. 2019-169.)

Engaged in Business – (65). The definition of the term is amended and provides “[a]ny of the following:
“a. Maintaining, occupying, or using permanently or temporarily, directly or indirectly, or through a subsidiary or agent, by whatever name called, any office, place of distribution, sales or sample room, warehouse or storage place, or other place of business in this State, or permanently or temporarily, directly or through a subsidiary, having any representative, agent, sales representative, or solicitor operating in this State. The fact that any corporate retailer, agent, or subsidiary engaged in business in this State may not be legally domesticated or qualified to do business in this State is immaterial. 
b. Maintaining in this State, either permanently or temporarily, directly or through a subsidiary, tangible personal property or certain digital property for the purpose of lease or rental.
. . .” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Engaged in Business – (65). The definition of the term is further amended and defined as “[a]ny of the following:
“a. Maintaining, occupying, or using permanently or temporarily, directly or indirectly, or through a subsidiary or agent, by whatever name called, any office, place of distribution, sales or sample room, warehouse or storage place, or other place of business in this State, or permanently or temporarily, directly or through a subsidiary, having any representative, agent, sales representative, marketplace facilitator subject to the requirements of G.S. 105-164.4J, or solicitor operating or transacting business by mobile phone application or other applications in this State. The fact that any corporate retailer, agent, or subsidiary engaged in business in this State may not be legally domesticated or qualified to do business in this State is immaterial.
…
e. Making marketplace-facilitated sales subject to the requirements of G.S. 105- 164.4J.” [Emphasis added.]

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(m), S.L. 2019-246.)

Entertainment Activity – (*). The definition of the term was previously codified as G.S. 105-164.4G(a)(3) and continues to be defined as “[a]n activity listed in this subdivision:
a. A live performance or other live event of any kind, the purpose of which is for entertainment. 
b. A movie, motion picture, or film. 
c. A museum, a cultural site, a garden, an exhibit, a show, or a similar attraction. 
d. A guided tour at any of the activities listed in sub-subdivision c. of this subdivision.”

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(h), S.L. 2019-246.)

Facilitator – (*). The definition of the term is added and defined as “[a]n accommodation facilitator, an admission facilitator, or a service contract facilitator.”

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(m), S.L. 2019-246.

Gross Sales – (73). The definition of the term is amended and provides “[t]he sum total of the sales price of all sales of items.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Gross Sales – (73). The definition of the term is further amended and defined as “[t]he sum total of the sales price of all sales of tangible personal property, digital property, and services.”

(Effective November 1, 2019; HB 399, s. 8.1.(b), S.L. 2019-237; definition duplicated in SB 557, s.8., S.L. 2019-246.)

Incontinence Underpad – (79). The definition of the term is added and defined as “[a]n absorbent product, not worn on the body, designed to protect furniture or other tangible personal property from soiling or damage due to human incontinence.”

(Effective October 1, 2019, and applies to sales occurring on or after that date; SB 523, s. 3.13.(a), S.L. 2019-169.)

Item – (91). The definition of the term is added and defined as “[t]angible personal property, certain digital property, or a service, unless the context requires otherwise.”

Item, as defined, has been replaced throughout Article 5 of Chapter 105 of the North Carolina General Statutes as appropriate.

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Item – (91.) The definition of the term is further amended and defined as “[t]angible personal property, digital property, or a service, unless the context requires otherwise.”

Item, as defined, has been replaced throughout Article 5 of Chapter 105 of the North Carolina General Statutes as appropriate.

(Effective November 1, 2019; HB 399, s. 8.1.(b), S.L. 2019-237.)

Landscaping – (95). The definition of the term is amended and provides “[a] service that modifies the living elements of an area of land. Examples include the installation of trees, shrubs, or flowers on land; tree trimming; mowing; and the application of seed, mulch, pine straw, or fertilizer to an area of land. The term does not include services to trees, shrubs, flowers, or similar tangible personal property in pots or in buildings.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Marketplace – (*). The definition of the term is added and defined as “[a] physical or electronic place, forum, platform, application, or other method by which a marketplace seller sells or offers to sell items, the delivery of or first use of which is sourced to this State.”

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(a), S.L. 2019-246.)

Marketplace-Facilitated Sale – (*). The definition of the term is added and defined as “[t]he sale of an item by a marketplace facilitator on behalf of a marketplace seller that occurs through a marketplace.”

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(a), S.L. 2019-246.)

Marketplace Facilitator – (*). The definition of the term is added and defined as “[a] person that, directly or indirectly and whether through one or more affiliates, does both of the following:

a. Lists or otherwise makes available for sale a marketplace seller's items through a marketplace owned or operated by the marketplace facilitator. 
b. Does one or more of the following:

1. Collects the sales price or purchase price of a marketplace seller's items or otherwise processes payment. 
2. Makes payment processing services available to purchasers for the sale of a marketplace seller's items.”

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(a), S.L. 2019-246.)

Marketplace Seller – (*). The definition of the term is added and defined as “[a] person that sells or offers to sell items through a marketplace regardless of any of the following:
a. Whether the person has a physical presence in this State. 
b. Whether the person is registered as a retailer in this State. 
c. Whether the person would have been required to collect and remit sales and use tax had the sales not been made through a marketplace.
d. Whether the person would not have been required to collect and remit sales and use tax had the sales not been made through a marketplace.”

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(a), S.L. 2019-246.)

Nonresident Retail or Wholesale Merchant – (127). The definition of the term is amended and provides “[a] person who does not have a place of business in this State, is registered for sales and use tax purposes in a taxing jurisdiction outside the State, and is engaged in the business of acquiring, by purchase, consignment, or otherwise, tangible personal property or certain digital property and selling the property outside the State or in the business of providing a service.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Property Management Contract – (157). The definition of the term is added and defined as “[a] written contract to manage one or more of the activities listed in this subdivision that are related to real property used for business, educational, commercial, or income-producing purposes. The activity may include the lease or rental of the property on behalf of the owner, other than the lease or rental of an accommodation taxable under G.S. 105-164.4(a)(3). The term does not include a contract for repair, maintenance, and installation services for real property. The activities that may be performed under a property management contract are as follows:

a. Hiring and supervising employees for the property. 
b. Providing a person to manage the property. 
c. Receiving and applying revenues received from tenants of the property. 
d. Arranging for services from third parties in order to comply with the landlord's obligations under a lease or rental agreement or to comply with facility-related needs of the property's occupants. The activity may include supplemental repair, maintenance, and installation services to complement taxable services provided by third-party vendors if no additional fee is imposed under the contract for that supplemental service.
e. Incurring and paying expenses derived from the operation of the real property. 
f. Handling administrative affairs for the real property.”

(Effective January 1, 2020; S.B. 99, s. 38.5.(x), S.L. 2018-5.)

Property Management Contract – (157). The definition of the term is repealed effective July 26, 2019 prior to the effective date of January 1, 2020. A new definition of the term is subsequently added and is defined as “[a] written contract obligating a person to provide five or more real property management services.”

(Effective July 26, 2019; SB 523, s. 3.9.(a) and (b), S.L. 2019-169; Effective July 26, 2019, SB 523, s. 3.9.(c), S.L. 2019-169. The provisions of G.S. 105-164.15A apply to the implementation of this change as if it is a decrease in the tax rate; SB 557, s. 7.(a), S.L. 2019- 246. Originally, the effective date referenced the date a real property management contract was entered into, however, this provision was eliminated in subsequent legislation; SB 557, s. 7.(a), S.L. 2019-246.)

Prosthetic Device – (159). The definition of the term is amended and provides “[a] replacement, corrective, or supporting device worn on or in the body that meets one of the conditions of this subdivision. The term includes repair and replacement parts for the device. The conditions are as follows:

a. Artificially replaces a missing portion of the body. 
b. Prevents or corrects a physical deformity or malfunction. 
c. Supports a weak or deformed portion of the body.” [Emphasis added.]

(Effective July 26, 2019; HB 264, s. 9.(b), S.L. 2019-177.)

Real Property Management Services – (177). The term is added and defined as “[a]ny of the following activities:

a. Hiring and supervising employees for the real property. 
b. Providing a person to manage the real property. 
c. Receiving and applying revenues received from property owners or tenants of the real property. 
d. Providing repair, maintenance, and installation services to comply with obligations of a homeowners' association or a landlord under a lease, rental, or management agreement. 
e. Arranging for a third party to provide repair, maintenance, and installation services. 
f. Incurring and paying expenses for the management, repair, and maintenance of the real property. 
g. Handling administrative affairs for the real property.”

(Effective July 26, 2019, SB 523, s. 3.9.(c), S.L. 2019-169. The provisions of G.S. 105- 164.15A apply to the implementation of this change as if it is a decrease in the tax rate; SB 557, s. 7.(a), S.L. 2019-246. Originally, the effective date referenced the date a real property management contract was entered into, however, this provision was eliminated in subsequent legislation; SB 557, s. 7.(a), S.L. 2019-246.)

Real Property Manager – (179). The term is added and defined as “[a] person that provides real property management services pursuant to a property management contract.”

(Effective July 26, 2019, SB 523, s. 3.9.(c), S.L. 2019-169. The provisions of G.S. 105- 164.15A apply to the implementation of this change as if it is a decrease in the tax rate; SB 557, s. 7.(a), S.L. 2019-246. Originally, the effective date referenced the date a real property management contract was entered into, however, this provision was eliminated in subsequent legislation; SB 557, s. 7.(a), S.L. 2019-246.)

Remote Sale – (187). The definition of the term is amended and provides “[a] sale of an item ordered by mail, telephone, Internet, mobile phone application, or another method by a retailer who receives the order in another state and delivers the item or makes it accessible to a person in this State or causes the item to be delivered or made accessible to a person in this State or performs a service sourced to this State. It is presumed that a resident of this State who makes an order was in this State at the time the order was made. [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169; definition duplicated in SB 557, s. 4.(m), S.L. 2019-246.)

Repair, Maintenance, and Installation Services – (191). The definition of the term is amended to include the defined term “certain digital property.” The definition as amended is “[t]he term includes the activities listed in this subdivision and applies to tangible personal property, motor vehicles, certain digital property, and real property. The term does not include a service used to fulfill a real property contract taxed in accordance with G.S. 105-164.4H. The included activities are:
. . .
d. To install, apply, connect, adjust, or set into position tangible personal property or certain digital property. The term includes floor refinishing and the installation of carpet, flooring, floor coverings, windows, doors, cabinets, countertops, and other installations where the item being installed may replace a similar existing item. The replacement of more than one of a like-kind item, such as replacing one or more windows, is repair, maintenance, and installation services. The term does not include an installation defined as a capital improvement under subdivision (2c)d. of this section and substantiated as a capital improvement under G.S. 105-164.4H(a1). 
e. To inspect or monitor property or install, apply, or connect tangible personal property or certain digital property on a motor vehicle or adjust a motor vehicle.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Retailer – (195). The definition of the term is amended by adding the terms “item” defined in G.S. 105-164.3(91) and “certain digital property” defined in G.S. 105- 164.3(23). The definition of the term, as amended in part, is “[a]ny of the following persons:

a. A person engaged in business of making sales at retail, offering to make sales at retail, or soliciting sales at retail of items sourced to this State. When the Secretary finds it necessary for the efficient administration of … [Article 5 of Chapter 105 of North Carolina General Statutes] to regard any sales representatives, solicitors, representatives, consignees, peddlers, or truckers as agents of the dealers, distributors, consignors, supervisors, employers, or persons under whom they operate or from whom they obtain the items sold by them regardless of whether they are making sales on their own behalf or on behalf of these dealers, distributors, consignors, supervisors, employers, or persons, the Secretary may so regard them and may regard the dealers, distributors, consignors, supervisors, employers, or persons as ‘retailers’ for the purpose of . . . Article [5 of Chapter 105 of North Carolina General Statutes]. 
b. A person, other than a real property contractor, engaged in business of delivering, erecting, installing, or applying tangible personal property or certain digital property for use in this State. . . .” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Retailer – (195). The definition of the term is amended and provides “[a]ny of the following persons:

a. A person engaged in business of making sales at retail, offering to make sales at retail, or soliciting sales at retail of items sourced to this State. When the Secretary finds it necessary for the efficient administration of . . . Article [5 of Chapter 105] to regard any sales representatives, solicitors, representatives, consignees, peddlers, or truckers as agents of the dealers, distributors, consignors, supervisors, employers, or persons under whom they operate or from whom they obtain the items sold by them regardless of whether they are making sales on their own behalf or on behalf of these dealers, distributors, consignors, supervisors, employers, or persons as “retailers” for the purpose of . . . Article [5 of Chapter 105 of the North Carolina General Statutes].
. . .
d. A person required to collect the State tax levied under . . . Article [5 of Chapter 105] or the local taxes levied under Subchapter VIII of [Chapter 105 of the North Carolina General Statutes] and under Chapter 1096 of the 1967 Session Laws. 
e. A marketplace facilitator that is subject to the requirements of G.S. 105-164.4J or a facilitator that is required to collect and remit the tax under . . . Article [5 of Chapter 105 of the North Carolina General Statutes].” [Emphasis added.]

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(m), S.L. 2019-246.)

Sale or Selling – (201). The definition of the term is amended and provides “[t]he transfer for consideration of title, license to use or consume, or possession of tangible personal property or certain digital property or the performance for consideration of a service. The transfer or performance may be conditional or in any manner or by any means. The term applies to the following:
. . .
a. A transaction in which the possession of the tangible personal property or certain digital property is transferred but the seller retains title or security for the payment of the consideration.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Sales Price – (203). The definition of the term is amended and provides “[t]he total amount or consideration for which an item is sold, leased, or rented. The consideration may be in the form of cash, credit, property, or services. The sales price must be valued in money, regardless of whether it is received in money.
a. The term includes all of the following: 1. The retailer's cost of the item sold.
. . .” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Secondary Metals Recycler – (207). The definition of the term is amended and provides “[a] person that gathers and obtains ferrous metals, nonferrous metals, and products that have served their original economic purpose and that converts them by processes, including sorting, cutting, classifying, cleaning, baling, wrapping, shredding, or shearing into a new or different product for sale consisting of prepared grades.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Service Contract – (211). The definition of the term is amended to include the term “certain digital property” as defined in G.S. 105-164.3(23). The definition of the term is amended and provides “[a] contract where the obligor under the contract agrees to maintain, monitor, inspect, repair, or provide another service included in the definition of repair, maintenance, and installation services to certain digital property, tangible personal property, or real property for a period of time or some other defined measure. The term does not include a single service included in repair, maintenance, or installation services, but does include a contract where the obligor may provide a service included in the definition of repair, maintenance, and installation services as a condition of the contract. The term includes a service contract for a pool, fish tank, or similar aquatic feature and a home warranty. Examples include a warranty agreement other than a manufacturer's warranty or dealer's warranty provided at no charge to the purchaser, an extended warranty agreement, a maintenance agreement, a repair agreement, or a similar agreement or contract.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Service Contract Facilitator – (*). The definition of the term is added and defined as “[a] person who contracts with the obligor of a service contract to market the service contract and accepts payment from the purchaser for the service contract.”

The “service contract facilitator” definition is intended to replace the definition of the term “facilitator” in G.S. 105-164.4I(e) that is repealed.

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(j), S.L. 2019-246.)

Storage – (219). The definition of the term is amended and provides “[t]he keeping or retention in this State for any purpose, except sale in the regular course of business, of tangible personal property or certain digital property for any period of time purchased from a person in business.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Streamlined Agreement – (221). The reference date to the Streamlined Agreement is updated to the most recent version. As amended, the definition of the term is “[t]he Streamlined Sales and Use Tax Agreement as amended as of December 14, 2018.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Taxing Area – (225). The definition of the term is added and defined as “[a]ny of the following specific geographic areas:

a. A street address. 
b. The area within a nine-digit zip code. 
c. The area within a five-digit zip code."

(Effective July 26, 2019; SB 523, s. 3.5.(a), S.L. 2019-169.)

Taxing District – (227). The definition of the term is added and defined as “[a] county or any other district, by or for which ad valorem taxes or sales taxes are levied, excluding the State.”

(Effective July 26, 2019; SB 523, s. 3.5.(a), S.L. 2019-169.)

Telecommunications Service – (231). The definition of the term is amended and provides “[t]he electronic transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals to a point, or between or among points. The term includes any transmission, conveyance, or routing in which a computer processing application is used to act on the form, code, or protocol of the content for purposes of the transmission, conveyance, or routing, regardless of whether it is referred to as voice-over Internet protocol or the Federal Communications Commission classifies it as enhanced or value added. The term does not include the following:
. . .
h. Certain digital property.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Use – (233). The definition of the term is amended and provides “[t]he exercise of any right, power, or dominion whatsoever over an item by the purchaser of the item. The term includes withdrawal from storage, distribution, installation, affixation to real or personal property, and exhaustion or consumption of the item by the owner or purchaser. The term does not include the sale of an item in the regular course of business.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Wholesale Merchant – (239). The definition of the term is amended and provides “[a] person engaged in the business of any of the following:
a. Making wholesale sales. 
b. Buying or manufacturing items and selling them to a registered person or nonresident retail or wholesale merchant for resale. 
c. Manufacturing, producing, processing, or blending any articles of commerce and maintaining a store, warehouse, or any other place that is separate and apart from the place of manufacture or production for the sale or distribution of the articles, other than bakery products, to another for the purpose of resale.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

Wholesale Sale – (241). The definition of the term is amended and provides “[a] sale of an item for the purpose of resale. The term includes a sale of certain digital property for reproduction into certain digital property or tangible personal property offered for sale. The term does not include a sale to a user or consumer not for resale or, in the case of certain digital property, not for reproduction and sale of the reproduced property." [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.1.(a), S.L. 2019-169.)

This subdivision is amended and provides “[t]he general rate of tax applies to the following items sold at retail:

a. The sales price of each article of tangible personal property that is not subject to tax under another subdivision in this section. A sale of a freestanding appliance is a retail sale of tangible personal property. 
b. The sales price of certain digital property. The tax applies regardless of whether the purchaser of the property has a right to use it permanently or to use it without making continued payments. 
c. The sales price of or gross receipts derived from repair, maintenance, and installation services to tangible personal property or certain digital property, regardless of whether the tangible personal property or certain digital property is taxed under another subdivision in this section or is subject to a maximum tax under another subdivision in this section. Repair, maintenance, and installation services generally include any tangible personal property or certain digital property that becomes a part of or is applied to a purchaser's property. The use tax exemption in G.S. 105-164.27A(a3) may apply to these services. Repair, maintenance, and installation services for real property are taxable under subdivision (16) of this subsection.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.2., S.L. 2019-169.)

This subdivision is amended and provides “[t]he general rate applies to the sales price of each of the following items sold at retail, including all accessories attached to the item when it is delivered to the purchaser:

a. A manufactured home. 
b. A modular home. The sale of a modular home to a modular homebuilder is considered a retail sale, no matter that the modular home may be used to fulfill a real property contract. A person who sells a modular home at retail is allowed a credit against the tax imposed by this subdivision for sales or use tax paid to another state on tangible personal property incorporated in the modular home. The retail sale of a modular home occurs when a modular home manufacturer sells a modular home to a modular homebuilder or directly to the end user of the modular home. 
c. An aircraft. The maximum tax is two thousand five hundred dollars ($2,500) per article. 
d. A qualified jet engine.”

The result of the amendment clarifies that all repair, maintenance, and installation services are taxed at the general rate in G.S. 105-164.4(a)(1) regardless of whether the underlying item is subject to a different rate of tax or to a maximum tax.

(Effective July 26, 2019; SB 523, s. 3.2., S.L. 2019-169.)

This subdivision is amended and provides “[t]he rate of three percent (3%) applies to the sales price of each boat sold at retail, including all accessories attached to the boat when it is delivered to the purchaser. The maximum tax is one thousand five hundred dollars ($1,500) per article.”

The result of the amendment clarifies that all repair, maintenance, and installation services are taxed at the general rate in G.S. 105-164.4(a)(1) regardless of whether the underlying item is subject to a different rate of tax or to a maximum tax.

(Effective July 26, 2019; SB 523, s. 3.2., S.L. 2019-169.)

This subdivision is amended to clarify that “[t]he combined general rate applies to the gross receipts derived from providing telecommunications service and ancillary service, including any separately stated charges billed to a customer for repair, maintenance, and installation services or a contribution in aid of construction. A person who provides telecommunications service or ancillary service is considered a retailer under . . . Article [5 of Chapter 105 of the North Carolina General Statutes]. These services are taxed in accordance with G.S. 105-164.4C.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.4.(a), S.L. 2019-169.)

This subdivision is amended to clarify that “[t]he combined general rate applies to the gross receipts derived from providing video programming to a subscriber in this State, including any separately stated charges billed to a customer for repair, maintenance, and installation services or a contribution in aid of construction. A cable service provider, a direct-to-home satellite service provider, and any other person engaged in the business of providing video programming is considered a retailer under . . . Article [5 of Chapter 105 of the North Carolina General Statutes].” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.4.(a), S.L. 2019-169.)

This subdivision is repealed. Refer to G.S. 105-164.4(a)(1)b. for sales tax imposed on certain digital property.

(Effective July 26, 2019; SB 523, s. 3.2., S.L. 2019-169.)

This subdivision is amended to clarify that “[t]he combined general rate applies to the gross receipts derived from sales of electricity and piped natural gas, including any separately stated charges billed to a customer for repair, maintenance, and installation services or a contribution in aid of construction.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.4.(a), S.L. 2019-169.)

This subdivision is amended and provides “[t]he general rate applies to the sales price of or the gross receipts derived from repair, maintenance, and installation services for real property and generally includes any tangible personal property or certain digital property that becomes a part of or is applied to a purchaser's property. A mixed transaction contract and a real property contract are taxed in accordance with G.S. 105-164.4H." [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.2., S.L. 2019-169.)

This subdivision is further amended and provides “[t]he general rate applies to the sales price of or the gross receipts derived from repair, maintenance, and installation services for real property and generally includes any tangible personal property or certain digital property that becomes a part of or is applied to a purchaser's property. A mixed transaction contract and a real property contract are taxed in accordance with G.S. 105-164.4H. A property management contract is taxable in accordance with G.S. 105-164.4K." [Emphasis added.]

(Effective July 26, 2019, SB 523, s. 3.9.(d), S.L. 2019-169. The provisions of G.S. 105- 164.15A apply to the implementation of this change as if it is a decrease in the tax rate; SB 557, s. 7.(a), S.L. 2019-246. Originally, the effective date referenced the date a real property management contract was entered into, however, this provision was eliminated in subsequent legislation; SB 557, s. 7.(a), S.L. 2019-246.)

The subsection G.S. 105-164.4F(a) is repealed. The definition of the term “accommodation” is codified in G.S. 105-164.3. The definition of the terms “facilitator” and “rental agent” in G.S. 105-164.4F(a) are repealed. The definition of the term “accommodation facilitator” is added in G.S. 105- 164.3.

These subsections are amended and provides the following:

“(b) Tax. – The gross receipts derived from the rental of an accommodation are taxed at the general rate set in G.S. 105-164.4. Gross receipts derived from the rental of an accommodation include the sales price of the rental of the accommodation. The sales price of the rental of an accommodation is determined as if the rental were a rental of tangible personal property. The sales price of the rental of an accommodation made by an accommodation facilitator includes any charges or fees, by whatever name called, charged by the accommodation facilitator to the purchaser of the accommodation that are necessary to complete the rental. The tax is due and payable by the retailer in accordance with G.S. 105-164.16.

(b1) Retailer. – Except as otherwise provided in subsection (c) of this section, the retailer of the rental of an accommodation is one or more of the persons listed below that collects the payment, or a portion of the payment, for the rental of the accommodation. In the event the person who collects the payment cannot be determined or is a third party that is not listed in this subsection, and subsection (c) of this section does not apply, the provider of the accommodation shall be considered the retailer of the transaction. The retailer is liable for reporting and remitting the tax due on the portion of the gross receipts derived from the rental of the accommodation that the retailer collects. The retailer may be one or more of the following:
(1) The provider of the accommodation. 
(2) An accommodation facilitator.

(c) Certain Accommodation Facilitator Transactions. – This subsection applies only to an accommodation facilitator that is operated by or on behalf of a hotel or a hotel corporation, that facilitates the rental of hotel accommodations solely for the hotel or the hotel corporation's owned or managed hotels and franchisees, and that collects payment, or a portion of the payment, for the rental of an accommodation. An accommodation facilitator subject to this subsection is not considered the retailer of the rental of the accommodation. The accommodation facilitator must send the retailer the tax due on the sales price, or the portion of the sales price, the accommodation facilitator collected no later than 10 days after the end of each calendar month. An accommodation facilitator that does not send the retailer the tax due on the sales price, or the portion of the sales price the accommodation facilitator collected, is liable for the amount of tax the accommodation facilitator fails to send. An accommodation facilitator is not liable for tax sent to a retailer but not remitted by the retailer to the Secretary. Tax payments received by a retailer from an accommodation facilitator are held in trust by the retailer for remittance to the Secretary. A retailer that receives a tax payment from an accommodation facilitator must remit the amount received to the Secretary. A retailer is not liable for tax due but not received from an accommodation facilitator.

(c1) Accommodation Facilitator Report. – An accommodation facilitator must file with the Secretary an annual report by March 31 of each year for the prior calendar year for accommodation rentals it makes. The annual report must be provided in electronic format and include the property owner's name, the property owner's mailing address, the physical location of the accommodation, and gross receipts information for the rentals. The report may only be used by the Secretary, and any person receiving the report, pursuant to G.S. 105-259, for tax compliance purposes.

(e) Exemptions. – The tax imposed by this section does not apply to the following: 
(1) A private residence, cottage, or similar accommodation that is rented for fewer than 15 days in a calendar year unless the rental of the accommodation is made by an accommodation facilitator. 
(2) An accommodation supplied to the same person for a period of 90 or more continuous days. 
(3) An accommodation arranged or provided to a person by a school, camp, or similar entity where a tuition or fee is charged to the person for enrollment in the school, camp, or similar entity." [Emphasis added.]

G.S. 105-160A-215(c) references a city occupancy tax and is amended to conform to the accommodation rental amendments.

G.S. 105-153A-155(c) references a county occupancy tax and is amended to conform to the accommodation rental amendments.

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(e), 4.(f), 4.(g), S.L. 2019-246. There is no obligation to collect the sales and use tax required by this section retroactively. If any provision of this section, or the application of any provision to a person or circumstance, is held to be invalid or unconstitutional, then the remainder of this section, and the application of the provisions to any person or circumstance, shall not be affected thereby.)

The subsection G.S. 105-164.4G(a) is repealed. The definition of the term “admission charge” is codified in G.S. 105-164.3. The definition of the term “admission facilitator” is added in G.S. 105-164.3. The definition of the term “amenity” is codified in G.S. 105-164.3. The definition of the term “entertainment activity” is codified in G.S. 105-164.3. The definition of the term “facilitator” in G.S. 105-164.4G(a) is repealed.

These subsections are amended and provides the following:

“(b) Tax. – The gross receipts derived from an admission charge to an entertainment activity are taxed at the general rate set in G.S. 105-164.4. The tax is due and payable by the retailer in accordance with G.S. 105-164.16. For purposes of the tax imposed by this section, the retailer is the applicable person listed below:
(1) The operator of the venue where the entertainment activity occurs, unless the retailer and the admission facilitator have a contract between them allowing for dual remittance, as provided in subsection (d) of this section. 
(2) The person that provides the entertainment and that receives admission charges directly from a purchaser. 
(3) A person other than a person listed in subdivision (1) or (2) of this subsection that receives gross receipts derived from an admission charge sold at retail.

(c) Admission Facilitator. – An admission facilitator must report to the retailer with whom it has a contract the admission charge a consumer pays to the admission facilitator for an entertainment activity. The admission facilitator must send the retailer the portion of the gross receipts the admission facilitator owes the retailer and the tax due on the gross receipts derived from an admission charge no later than 10 days after the end of each calendar month. An admission facilitator that does not send the retailer the tax due on the gross receipts derived from an admission charge is liable for the amount of tax the admission facilitator fails to send to the retailer. An admission facilitator is not liable for tax sent to a retailer but not remitted by the retailer to the Secretary. Tax payments received by a retailer from an admission facilitator are held in trust by the retailer for remittance to the Secretary. A retailer that receives a tax payment from an admission facilitator must remit the amount received to the Secretary. A retailer is not liable for tax due but not received from an admission facilitator. The requirements imposed by this subsection on a retailer and an admission facilitator are considered terms of the contract between the retailer and the admission facilitator.

(d) Dual Remittance. – The tax due on the gross receipts derived from an admission charge may be partially reported and remitted to the operator of the venue for remittance to the Department and partially reported and remitted by the admission facilitator directly to the Department. The portion of the tax not reported and remitted to the operator of the venue must be reported and remitted directly by the admission facilitator to the Department. An admission facilitator that elects to remit tax under the dual remittance option is required to obtain a certificate of registration in accordance with G.S. 105-164.29. An admission facilitator is subject to the provisions of Article 9 of . . . Chapter [105 of the North Carolina General Statutes.” [Emphasis added.]

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(i), S.L. 2019-246.)

These subsections are amended and provides the following:

“(a) Applicability. – A real property contractor is the consumer of the tangible personal property or certain digital property that the real property contractor purchases, installs, or applies for others to fulfill a real property contract and that becomes part of real property or used to fulfill the contract. A retailer engaged in business in the State shall collect tax on the sales price of an item sold at retail to a real property contractor unless a statutory exemption in G.S. 105- 164.13 or G.S. 105-164.13E applies. Where a real property contractor purchases tangible personal property or certain digital property for storage, use, or consumption in this State, or a service sourced to this State, and the tax due is not paid at the time of purchase, the provisions of G.S. 105-164.6 apply except as provided in subsection (b) of this section.
…
(b) Retailer-Contractor. – This section applies to a retailer-contractor as follows:
(1) Acting as a real property contractor. – A retailer-contractor acts as a real property contractor when it contracts to perform a real property contract. A retailer-contractor that purchases tangible personal property or certain digital property to be installed or applied to real property to fulfill the contract may purchase those items exempt from tax under a certificate of exemption pursuant to G.S. 105-164.28 provided the retailer-contractor also purchases inventory or services from the seller for resale. When the property is withdrawn from inventory and installed or applied to real property, use tax must be accrued and paid on the retailer-contractor's purchase price of the property. Property that the retailer-contractor withdraws from inventory for use that does not become part of real property is also subject to the tax imposed by . . . Article [5 of Chapter 105 of North Carolina General Statutes].
(2) Acting as a retailer. – A retailer-contractor is acting as a retailer when it makes a sale at retail.
…
(d) Mixed Transaction Contract. – A mixed transaction contract is taxable as follows.

(1) If the allocated sales price of the taxable repair, maintenance, and installation services included in the contract is less than or equal to twenty-five percent (25%) of the contract price, then the repair, maintenance, and installation services portion of the contract, and the items used to perform those services, are taxable as a real property contract in accordance with this section.

2. If the allocated sales price of the taxable repair, maintenance, and installation services included in the contract is greater than twenty-five percent (25%) of the contract price, then sales and use tax applies to the sales price of or the gross receipts derived from the taxable repair, maintenance, and installation services in the contract based on a reasonable allocation of revenue that is supported by the person’s business records kept in the ordinary course of business. Any purchase of tangible personal property or certain digital property to fulfill the real property contract is taxed in accordance with this section.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(d), S.L. 2019-169.)

This subsection is amended to include the defined term “service contract facilitator” and provides the following:

“(a) Tax. – The sales price of or the gross receipts derived from a service contract or the renewal of a service contract sold at retail is subject to the general rate of tax set in G.S. 105-164.4 and is sourced in accordance with the sourcing principles in G.S. 105-164.4B. The retailer of a service contract is required to collect the tax due at the time of the retail sale of the contract and is liable for payment of the tax. The tax is due and payable in accordance with G.S. 105- 164.16. The retailer of a service contract is the applicable person listed below:

(1) When a service contract is sold at retail to a purchaser by the obligor under the contract, the obligor is the retailer. 
(2) When a service contract is sold at retail to a purchaser by a service contract facilitator on behalf of the obligor under the contract, the service contract facilitator is the retailer unless the provisions of subdivision (3) of this subsection apply.
 

This section is added and provides the following:

“(a) Scope. – This section applies to a marketplace facilitator that makes sales, including all marketplace-facilitated sales for all marketplace sellers, sourced to this State for the previous or the current calendar year that meet either of the following:
(1) Gross sales in excess of one hundred thousand dollars ($100,000). 
(2) Two hundred or more separate transactions.

(b) Payment of Tax. – A marketplace facilitator that meets the threshold in subsection (a) of this section is considered the retailer of each marketplace-facilitated sale it makes and is liable for collecting and remitting the sales and use tax on all such sales. A marketplace facilitator is required to comply with the same requirements and procedures as all other retailers registered or who are required to be registered to collect and remit sales and use tax in this State. A marketplace facilitator is required to collect and remit sales tax as required by this section regardless of whether a marketplace seller for whom it makes a marketplace-facilitated sale meets any of the following conditions:
(1) Has a physical presence in this State. 
(2) Is required to be registered to collect and remit sales and use tax in this State. 
(3) Would have been required to collect and remit sales and use tax in this State had the sale not been made through a marketplace. 
(4) Would not have been required to collect and remit sales and use tax in this State had the sale not been made through a marketplace.

Report. – A marketplace facilitator must provide or make available to each marketplace seller the information listed in this subsection with respect to marketplace-facilitated sales that are made on behalf of the marketplace seller

(c) and that are sourced to this State. The information may be provided in any format and shall be provided or made available no later than 10 days after the end of each calendar month. The required information to be provided or made available to each marketplace seller is as follows:
(1) Gross sales. 
(2) The number of separate transactions.

v(d) Liability Relief. – The Department shall not assess a marketplace facilitator for failure to collect the correct amount of tax due if the marketplace facilitator can demonstrate to the Secretary's satisfaction that all of the circumstances listed in this subsection apply. This subsection does not apply with regard to a marketplace-facilitated sale for which the marketplace facilitator is the marketplace seller or if the marketplace facilitator and the marketplace seller are affiliates. If a marketplace facilitator is not assessed for tax due under this section, the marketplace seller is liable for the tax due under this section provided the marketplace seller is engaged in business in this State. The circumstances that a marketplace facilitator must demonstrate are as follows:
(1) The failure to collect the correct amount of tax was due to incorrect information given to the marketplace facilitator by the marketplace seller. 
(2) The marketplace facilitator did not receive specific written advice from the Secretary for the transaction at issue.

(e) Refund of Tax. – If a purchaser receives a refund on any portion of the sales price from a marketplace facilitator who collected and remitted the tax on the retail sale, the provisions of G.S. 105-164.11A(a) apply.

(f) Class Actions. – No class action may be brought against a marketplace facilitator in any court of this State on behalf of customers arising from or in any way related to an overpayment of sales or use tax collected on facilitated sales by a marketplace facilitator, regardless of whether that claim is characterized as a tax refund claim. Nothing in this subsection affects a customer's right to seek a refund as provided under G.S. 105-164.11.

(g) Agreements. – Nothing in this section shall be construed to interfere with the ability of a marketplace facilitator and a marketplace seller to enter into an agreement with each other regarding the fulfillment of the requirements of . . . Article [5 of Chapter 105 of the North Carolina General Statutes], except that an agreement may not require a marketplace seller to collect and remit sales and use tax on marketplace-facilitated sales.

(h) Use Tax Obligation. – Nothing in this section affects the obligation of any purchaser to remit use tax for any taxable transaction for which a marketplace facilitator does not collect and remit sales or use tax.

(i) Limitation. – This section does not apply to an accommodation facilitator, an admission facilitator, or a service contract facilitator whose collection and remittance requirements are set out in G.S. 105-164.4F, 105-164.4G, and 105- 164.4I, respectively."

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(c), S.L. 2019-246. There is no obligation to collect the sales and use tax required by this section retroactively. If any provision of this section, or the application of any provision to a person or circumstance, is held to be invalid or unconstitutional, then the remainder of this section, and the application of the provisions to any person or circumstance, shall not be affected thereby.)
 

This section is added and provides the following:

“(a) Taxability of Services under a Property Management Contract. – Repair, maintenance, and installation services taxable under . . . Article [5 of Chapter 105 of the North Carolina General Statutes] and provided by a real property manager under a property management contract are subject to sales and use tax in the following circumstances: 
(1) Repair, maintenance, installation services provided by the real property manager for an additional charge. 
(2) The real property manager arranges for a third party to provide the repair, maintenance, and installation services and the real property manager imposes an additional contract amount or charge for the arranging of these services.
(3) More than twenty-five percent (25%) of the time spent managing the real property for a billing or invoice period is attributable to repair, maintenance, and installation services taxable under . . . Article [5 of Chapter 105 of the North Carolina General Statutes] and not excluded by subsection (b) of this section. The tax applies to the sales price of or the gross receipts derived from the taxable repair, maintenance, and installation services portion of the property management contract. The real property manager must determine an allocated sales price for the repair, maintenance, and installation services portion of the property management contract based on a reasonable allocation of revenue that is supported by the person's business records kept in the ordinary course of business. The charges for the taxable repair, maintenance, and installation services must be separately stated on the invoice or similar billing document given to the customer at the time of the sale.

(b) Exclusions. – The tax imposed by . . . Article [5 of Chapter 105 of the North Carolina General Statutes] does not apply to the following repair, maintenance, and installation services if the services are provided by the real property manager pursuant to a property management contract: 
(1) To troubleshoot, identify, or attempt to identify the source of a problem for the purpose of determining what is needed to restore the real property to working order or good condition. 
(2) To inspect or monitor the real property, including the normal operation of all systems that are part of the real property.

(c) Substantiation. – Generally, repair, maintenance, and installation services are subject to tax in accordance with G.S. 105-164.4(a)(16), unless a person substantiates that the services are not taxable as real property management services provided under a property management contract in accordance with subsection (a)(3) of this section, excluded from tax in accordance with subsection (b) of this section, or not subject to tax. A real property manager may substantiate that no more than twenty-five percent (25%) of the time spent managing the real property for a billing or invoice period is attributable to repair, maintenance, and installation services taxable under . . . Article [5 of Chapter 105 of the North Carolina General Statutes] and not excluded by subsection (b) of this section. The substantiation must be based on a reasonable approximation of the real property management services provided and supported by the person's business records kept in the ordinary course of business. The substantiation must be contemporaneously provided for each billing or invoice period and maintained in the business records.

(d) Real Property Management Services. – This subsection applies when repair, maintenance, and installation services otherwise taxable under . . . Article [5 of Chapter 105 of the North Carolina General Statutes] are not subject to sales and use tax. A real property manager is the consumer of the items that the real property manager purchases, installs, applies, or otherwise uses to fulfill a property management contract. A retailer engaged in business in the State shall collect tax on the sales price of an item sold at retail to a real property manager unless a statutory exemption in G.S. 105-164.13 applies.

(e) Real Property Manager Acting as Retailer. – This subsection applies when repair, maintenance, and installation services provided by a real property manager are subject to sales and use tax under this section. A real property manager acts as a retailer and makes a sale at retail when it provides repair, maintenance, and installation services taxable under this section unless a statutory exemption in G.S. 105-164.13 applies.

(f) Grace Period. – The Department shall take no action to assess any tax due for a filing period beginning on or after January 1, 2019, and ending prior to January 1, 2021, if the retailer failed to collect sales tax on repair, maintenance, and installation services taxable under this section. This subsection does not apply if the retailer received specific written advice from the Secretary for the transactions at issue for the laws in effect for the applicable period. The limitations in G.S. 105-244.3 apply to this subsection."

(Effective July 26, 2019, SB 523, s. 3.9.(e), S.L. 2019-169. The provisions of G.S. 105- 164.15A apply to the implementation of this change as if it is a decrease in the tax rate; SB 557, s. 7.(a), S.L. 2019-246. Originally, the effective date referenced the date a real property management contract was entered into, however, this provision was eliminated in subsequent legislation; SB 557, s. 7.(a), S.L. 2019-246.)

This section is amended and provides the following:

“(a) General Principles. – The following principles apply in determining where to source the sale of an item for the seller's purpose and do not alter the application of the tax imposed under G.S. 105-164.6. Except as otherwise provided in . . . [G.S. 105-164.4B(a)], a service is sourced where the purchaser can potentially first make use of the service. These principles apply regardless of the nature of the item, except as otherwise noted in this section [G.S. 105-164.4B]:
(1) When a purchaser receives an item at a business location of the seller, the sale is sourced to that business location.
(2) When a purchaser or purchaser’s donee receives an item at a location specified by the purchaser and the location is not a business location of the seller, the sale is sourced to the location where the purchaser or the purchaser’s donee receives the item.
…
(f) Certain Digital Property. – A purchaser receives certain digital property when the purchaser takes possession of the property or makes first use of the property, whichever comes first.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(a), S.L. 2019-169.)

This subsection is amended and provides “[t]ax applies to the sales price of a bundled transaction unless one of the following applies:

(1) Fifty percent (50%) test. – All of the items in the bundle are tangible personal property, the bundle includes one or more of the exempt items listed in this subdivision, and the price of the taxable items in the bundle does not exceed fifty percent (50%) of the price of the bundle: 
a. Food exempt under G.S. 105-164.13B. 
b. A drug exempt under G.S. 105-164.13(13). 
c. Medical devices, equipment, or supplies exempt under G.S. 105- 164.13(12).

(2) Allocation. – The bundle includes a service, and the retailer determines an allocated price for each item in the bundle based on a reasonable allocation of revenue that is supported by the retailer's business records kept in the ordinary course of business. In this circumstance, tax applies to the allocated price of each taxable item in the bundle.

(3) Ten percent (10%) test. – The price of the taxable items in the bundle does not exceed ten percent (10%) of the price of the bundle, and no other subdivision in this subsection applies.
. . .” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(b), S.L. 2019-169.)

This section is amended to update the language and provides the following:

“(a) Tax. – An excise tax at the applicable rate and maximum tax, if any, set in G.S. 105-164.4 is imposed on the following items if the item is subject to tax under G.S. 105-164.4:

Tangible personal property purchased, leased, or rented inside or outside this State for storage, use, or consumption in this State. This subdivision
(1) includes tangible personal property that becomes part of a building or another structure. 
(2) Certain digital property purchased inside or outside this State for storage, use, or consumption in this State. 
(3) Services sourced to this State.

(b) Liability. – The tax imposed by this section is payable by the person who purchases, leases, or rents the items listed in subdivision (a) of [G.S. 105- 164.6]. If an item purchased becomes a part of real property in the State, the real property contractor, the retailer-contractor, the subcontractor, the lessee, and the owner are jointly and severally liable for the tax, except as provided in G.S. 105-164.4H(a1) regarding receipt of an affidavit of capital improvement. The liability of a real property contractor, a retailer-contractor, a subcontractor, a lessee, or an owner who did not purchase the item is satisfied by receipt of an affidavit from the purchaser certifying that the tax has been paid.
. . .
(f) Registration. – A person must obtain a certificate of registration in accordance with G.S. 105-164.29 under any of the following circumstances: 
(1) Before the person engages in business in this State selling or delivering items for storage, use, or consumption in this State. 
(2) If the person is a facilitator that is liable for tax under . . . Article [5 of Chapter 105 of the North Carolina General Statutes].” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(e), S.L. 2019-169.)

This subsection is amended and provides “[t]he Secretary may enter into agreements with sellers pursuant to which the seller agrees to collect and remit on behalf of its customers State and local use taxes due on items the seller sells. For the purpose of this section, a seller is a person who is engaged in the business of selling items for use in this State and who does not have sufficient nexus with this State to be required to collect use tax on the sales." [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(f), S.L. 2019-169.)

This section is amended to remove unnecessary language and provides “[t]he sales tax imposed by . . . Article [5 of the Chapter 105 of the North Carolina General Statutes] is intended to be passed on to the purchaser of a taxable item and borne by the purchaser instead of by the retailer. A retailer must collect the tax due on an item when sold at retail. The requirements of this section apply to facilitators liable for tax under . . . Article [5 of Chapter 105 of the North Carolina General Statutes]. The tax is a debt from the purchaser to the retailer until paid and is recoverable at law by the retailer in the same manner as other debts. A retailer is considered to act as a trustee on behalf of the State when it collects tax from the purchaser on a taxable sale. The tax must be stated and charged separately on the invoices or other documents of the retailer given to the purchaser at the time of the sale except for either of the following:

(1) Vending machine sales. 
(2) Where a retailer displays a statement indicating the sales price includes the tax."

(Effective July 26, 2019; SB 523, s. 3.3.(g), S.L. 2019-169.)

This subdivision is amended and provides “[t]hat the purchaser’s order or the contract of sale is made or closed by acceptance or approval outside this State, or before any tangible personal property or certain digital property that is part of the order or contract enters this State.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(h), S.L. 2019-169.)

This subdivision is amended and provides “[a] retailer who makes a remote sale is engaged in business in this State and is subject to tax levied under . . . Article [5 of Chapter 105 of the North Carolina General Statutes] if at least one of the following conditions is met:
. . .
(3) The retailer solicits or transacts business in this State by employees, independent contractors, agents, or other representatives, whether the remote sales subject to taxation by this State result from or are related in any other way to the solicitation or transaction of business. A retailer is presumed to be soliciting or transacting business by an independent contractor, agent, or other representative if the retailer enters into an agreement with a person of this State under which the person, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an Internet Web site or otherwise, to the retailer. This presumption applies only if the cumulative gross receipts from sales by the retailer to purchasers in this State who are referred to the retailer by all persons with this type of agreement with the retailer is in excess of ten thousand dollars ($10,000) during the preceding four quarterly periods. This presumption may be rebutted by proof that the person with whom the retailer has an agreement did not engage in any solicitation in the State on behalf of the seller that would satisfy the nexus requirement of the United States Constitution during the four quarterly periods in question.” [Emphasis added.]

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(b), S.L. 2019-246.)

This subdivision is added and provides “[t]he retailer, with respect to remote sales into North Carolina for the previous or current calendar year, had one or more of the following: 
a. Gross sales in excess of one hundred thousand dollars ($100,000). 
b. Two hundred or more separate transactions.”

This addition codifies SD-18-6, Sales and Use Tax Collections on Remote Sales, published by the Department on August 7, 2018, following South Dakota v. Wayfair, Inc., et al.

(Effective March 20, 2019; SB 56, s. 5.2., S.L. 2019-6.)

This subdivision is amended further and provides “[t]he retailer makes remote sales sourced to this State, including sales as a marketplace seller, for the previous or the current calendar year that meet either of the following: 
a. Gross sales in excess of one hundred thousand dollars ($100,000). 
b. Two hundred or more separate transactions.” [Emphasis added.]

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(b), S.L. 2019-246.)

This subdivision is added and provides “[t]he retailer is a marketplace facilitator that makes sales, including all marketplace-facilitated sales for all marketplace sellers, sourced to this State for the previous or the current calendar year that meet either of the following: 
a. Gross sales in excess of one hundred thousand dollars ($100,000). 
b. Two hundred or more separate transactions."

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(b), S.L. 2019-246. There is no obligation to collect the sales and use tax required by this section retroactively. If any provision of this section, or the application of any provision to a person or circumstance, is held to be invalid or unconstitutional, then the remainder of this section, and the application of the provisions to any person or circumstance, shall not be affected thereby.)

This section is amended and provides “[a] retailer who pays sales and use tax on an item that is separately stated on an invoice or similar billing document given to the retailer at the time of sale and subsequently resells the item at retail, without the item being used by the retailer, may recover the sales or use tax originally paid to a seller as provided in this section. A retailer entitled to recover tax under this section may reduce taxable receipts by the taxable amount of the purchase price of the item resold for the period in which the retail sale occurs. A recovery of tax allowed under this section is not an overpayment of tax and, where such recovery is taken, a refund of the tax originally paid may not be requested from the seller pursuant to the authority under G.S. 105-164.11. Any amount for tax recovered under this section in excess of tax due for a reporting period under . . . Article [5 of Chapter 105 of the North Carolina General Statutes] is not subject to refund. Any tax recovered under this section may be carried forward to a subsequent reporting period and taken as an adjustment to taxable receipts. The records of the retailer must clearly reflect and support the adjustment to taxable receipts for the period in which the adjustment is made." [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(i), S.L. 2019-169.)

This section is amended and provides “[i]f a retailer engaged in the business of selling prepared food or drink for immediate or on-premises consumption also gives prepared food or drink to its patrons or employees free of charge, for the purpose of . . . Article [5 of Chapter 105 of the North Carolina General Statutes], the food or drink given away is considered sold along with the food or drink sold. If a retailer gives an item of inventory to a customer free of charge on the condition that the customer purchase a similar or related item, the item given away is considered sold along with the item sold. In all other cases, items given away or used by any retailer or wholesale merchant are not considered sold, whether or not the retailer or wholesale merchant recovers its cost of the items from sales of other items." [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(j), S.L. 2019-169.)

The following exceptions were amended as noted below:

Entertainment Activity Exception – Charges for Educational Purposes. This subsection is amended and provides “[t]he tax imposed by this section does not apply to the following:
. . .
(2) Tuition, registration fees, or charges to attend instructional seminars, conferences, or workshops for educational purposes, notwithstanding that entertainment activity may be offered as an ancillary purpose of an event listed in [G.S. 105-164.4G].
. . .
(6) An amount paid for the right to participate, other than to be a spectator, in the following activities: 
a. Rock climbing, skating, skiing, snowboarding, sledding, zip lining, or other similar activities. 
b. Instruction classes related to the activities included in sub-subdivision a. of this subdivision. 
c. Riding on a carriage, boat, train, plane, horse, chairlift, or other similar rides. d. Amusement rides, including a waterslide." [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(c), S.L. 2019-169.)

The 2017, 2018, and 2019 General Assembly repealed, added, amended, and enacted clarifying changes to the exemptions from sales and use tax. The changes and their effective dates are as follows:

This section is amended and provides an exemption from sales and use tax for “[t]he sale at retail and the use, storage, or consumption in this State of the following items are specifically exempted from the tax imposed by . . . Article [5 of Chapter 105 of the North Carolina General Statutes].” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(k), S.L. 2019-169.)

Items for a farmer . . . – (2b). This subdivision is amended and provides “[i]tems for a farmer may be exempt as provided in G.S. 105-164.13E.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(k), S.L. 2019-169.)

Sales of qualifying mill machinery . . . – (5e). This subdivision is amended and provides an exemption from sales and use tax for “[s]ales of mill machinery or mill machinery parts or accessories to any of the persons listed in this subdivision. For purposes of this subdivision, the term “accessories” does not include electricity. The persons are:
a. A manufacturing industry or plant. A manufacturing industry or plant does not include (i) a delicatessen, cafe, cafeteria, restaurant, or another similar retailer that is principally engaged in the retail sale of food prepared by it or consumption on or off its premises or (ii) a production company.
. . .” [Emphasis added.]

(Effective July 1, 2018, as enacted by Section 38.8(c) of S.L. 2017-57 and amended by subsection (j) of this section; SB 56, s. 5.1., S.L. 2019-6. Effective July 26, 2019; SB 523, s. 3.3.(k), S.L. 2019-169.)

Sales to a company primarily engaged in . . . providing made-to-order countertops, walls, or tubs. – (5p). This subdivision is added and provides an exemption from sales and use tax for “[s]ales of equipment, or an attachment or repair part for equipment, which is used in cutting, shaping, polishing, and finishing rough cut slabs and blocks of natural and engineered stone and stone-like products and sold to a company primarily engaged in the business of providing made-to-order countertops, walls, or tubs."

(Effective October 1, 2019, and applies to sales made on or after that date; SB 523, s. 3.12.(a), S.L. 2019-169.)

Motor fuel . . . – (11). This subdivision is amended to update a statutory reference and provides an exemption from sales and use tax for “[a]ny of the following fuel:
a. Motor fuel, as taxed in Article 36C of . . . Chapter [105 of the North Carolina General Statutes], except motor fuel for which a refund of the per gallon excise tax is allowed under G.S. 105-449.106(c) or G.S. 105-449.107.
b. Alternative fuel taxed under Article 36D of . . . Chapter [105 of the North Carolina General Statutes], unless a refund of that tax is allowed under G.S. 105-449.107.” [Emphasis added.]

(Effective March 20, 2019; SB 56, s. 4.9., S.L. 2019-6.)

Motor fuel . . . – (11). This subdivision is further amended to add another statutory reference and provides an exemption from sales and use tax for “[a]ny of the following fuel:
a. Motor fuel, as taxed in Article 36C of . . . Chapter [105 of the North Carolina General Statutes], except motor fuel for which a refund of the per gallon excise tax is allowed under G.S. 105-449.105A, G.S. 105 449.106(c) or G.S. 105-449.107.
b. Alternative fuel taxed under Article 36D of . . . Chapter [105 of the North Carolina General Statutes], unless a refund of that tax is allowed under G.S. 105-449.107.” [Emphasis added.]
c.
(Effective July 26, 2019; SB 523, s. 3.10., S.L. 2019-169.)

Sales of aviation gasoline and jet fuel . . . – (11b). This subdivision is amended to extend the expiration date of the exemption from sales and use tax until January 1, 2024. This subdivision provides an exemption from sales and use tax for “[s]ales of aviation gasoline and jet fuel to an interstate air business for use in a commercial aircraft. For purposes of this subdivision, the term ‘commercial aircraft’ has the same meaning as defined in subdivision (45a) of . . . [G.S. 105-164.13]. This exemption also applies to aviation gasoline and jet fuel purchased for use in a commercial aircraft in interstate or foreign commerce by a person whose primary business is scheduled passenger air transportation. This subdivision expires January 1, 2024.” [Emphasis added.]

(Effective November 1, 2019; HB 399, s. 4.(a), S.L. 2019-237.)

Sales of . . . medical equipment . . . – (12). This subdivision is amended and provides an exemption from sales and use tax for “[s]ales of any of the following: 
a. Prosthetic devices for human use. 
b. Mobility enhancing equipment sold on a prescription. 
c. Durable medical equipment sold on prescription. 
d. Durable medical supplies sold on prescription. 
e. Human blood, including whole, plasma, and derivatives. f. Human tissue, eyes, DNA, or an organ.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(k), S.L. 2019-169.)

Sales of diapers or incontinence underpads on prescription . . . – (13d). This subdivision is added and provides an exemption from sales and use tax for “[s]ales of diapers or incontinence underpads on prescription by an enrolled State Medicaid/Health Choice provider for use by beneficiaries of the State Medicaid program when the provider is reimbursed by the State Medicaid program or a Medicaid managed care organization, as defined in 42 U.S.C.§ 1396b(m)."

(Effective October 1, 2019, and applies to sales occurring on or after that date; SB 523, s.3.13.(b), S.L. 2019-169.)

Sales of . . . packaging . . . – (23). This subdivision is amended and provides an exemption from sales and use tax for “[s]ales of the following packaging:
a. Wrapping paper, labels, wrapping twine, paper, cloth, plastic bags, cartons, packages and containers, cores, cones or spools, wooden boxes, baskets, coops and barrels, including paper cups, napkins and drinking straws and like articles sold to manufacturers, producers and retailers, when such materials are used for packaging, shipment or delivery of tangible personal property which is sold either at wholesale or retail and when such articles constitute a part of the sale of such tangible personal property and are delivered with it to the customer.
b. A container that is used as packaging by the owner of the container or another person to enclose tangible personal property for delivery to a purchaser of the property and is required to be returned to its owner for reuse.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(k), S.L. 2019-169.)

Sales of fuel and other tangible personal property for use or consumption by or on an ocean-going vessel . . . – (24). This subdivision is amended to remove unnecessary language and provides an exemption from sales and use for “[s]ales of fuel and other tangible personal property for use or consumption by or on ocean-going vessels which ply the high seas in interstate or foreign commerce in the transport of freight and/or passengers for hire exclusively, when delivered to an officer or agent of such vessel for the use of such vessel; provided, however, that sales of fuel and other tangible personal property made to officers, agents, members of the crew or passengers of such vessels for their personal use shall not be exempted from payment of the sales tax.”

(Effective July 26, 2019; SB 523, s. 3.3.(k), S.L. 2019-169.)

Food, prepared food, soft drinks, candy, and other tangible personal property sold not-for-profit . . . – (26b). This subdivision is amended to remove unnecessary language and provides an exemption from sales and use tax for “[f]ood, prepared food, soft drinks, candy, and other tangible personal property sold not for profit for or at an event that is sponsored by an elementary or secondary school when the net proceeds of the sales will be given or contributed to the school or to a nonprofit charitable organization, one of whose purposes is to serve as a conduit through which the net proceeds will flow to the school. For purposes of this exemption, the term ‘school’ is an entity regulated under Chapter 115C of the General Statutes.”

(Effective July 26, 2019; SB 523, s. 3.3.(k), S.L. 2019-169.)

Supplemental Nutrition Assistance Program . . . – (38). This subdivision is amended to update language. This subdivision is further amended by replacing the term “items” with the term “products” and provides an exemption from sales and use tax for “[f]ood and other products lawfully purchased under the Supplemental Nutrition Assistance Program, 7 U.S.C. § 2011, and supplemental foods lawfully purchased with a food instrument issued under the Special Supplemental Nutrition Program, 42 U.S.C. § 1786, and supplemental foods purchased for direct distribution by the Special Supplemental Nutrition Program.” [Emphasis added.]

(Effective March 20, 2019; SB 56, s. 5.3., S.L. 2019-6. Effective July 26, 2019; SB 523, s. 3.3.(k), S.L. 2019-169.)

Computer software or certain digital property that becomes . . . – (43b). This subdivision is amended to update the language to include the defined term “certain digital property” and provides an exemption from sales and use tax for “[c]omputer software or certain digital property that becomes a component part of other computer software or certain digital property that is offered for sale or of a service that is offered for sale.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(k), S.L. 2019-169.)

Repair, maintenance, and installation services . . . – (61a). This subdivision is expanded by adding the following to the exemption: “[t]he sales price of or the gross receipts derived from the repair, maintenance, and installation services and service contracts listed in this subdivision are exempt from tax. Except as otherwise provided in this subdivision, property and services used to fulfill either a repair, maintenance, or installation service or a service contract exempt from tax under this subdivision are taxable. The list of repair, maintenance, and installation services and service contracts exempt from tax under this subdivision is as follows:
. . .
m. Any of the following: 
1. A qualified aircraft. 
2. A qualified jet engine. 
3. An aircraft with a gross take-off weight of more than 2,000 pounds.”

(Effective July 1, 2019, and applies to sales made on or after that date; SB 628, s. 2.12.(a), S.L. 2017-204.)

Repair, maintenance, and installation services . . . – (61a). This subdivision is further expanded by adding the following to the exemption: “[t]he sales price of or the gross receipts derived from the repair, maintenance, and installation services and service contracts listed in this subdivision are exempt from tax. Except as otherwise provided in this subdivision, property and services used to fulfill either a repair, maintenance, or installation service or a service contract exempt from tax under this subdivision are taxable. The list of repair, maintenance, and installation services and service contracts exempt from tax under this subdivision is as follows:
. . .
r. A property management contract."

This sub-subdivision is repealed before this exemption became effective.

(Effective January 1, 2020; S.B. 99, s. 38.5.(y), S.L. 2018-5, Effective July 26, 2019; SB 523, s. 3.9.(a) and (b), S.L. 2019-169; The provisions of G.S. 105-164.15A apply to the implementation of this change as if it is a decrease in the tax rate; SB 557, s. 7.(a), S.L. 2019-246. Originally, the effective date referenced the date a real property management contract was entered into, however, this provision was eliminated in subsequent legislation; SB 557, s. 7.(a), S.L. 2019 246.)

Repair, maintenance, and installation services . . . (61a). The subdivision is further amended and provides, in part, “[t]he sales price of or the gross receipts derived from the repair, maintenance, and installation services and service contracts listed in this subdivision are exempt from tax. Except as otherwise provided in this subdivision, an item used to fulfill either repair, maintenance, and installation services or service contracts exempt from tax under this subdivision is taxable. The list of repair, maintenance, and installation services and service contracts exempt from tax under this subdivision is as follows:
a. A service and a service contract for an item exempt from tax under . . . Article [5 of Chapter 105 of the North Carolina General Statutes], except as otherwise provided in this subdivision. Items used to fulfill a service or service contract exempt under this sub-subdivision are exempt from tax under . . . Article [5 of Chapter 105 of the North Carolina General Statutes]. This exemption does not apply to water for a pool, fish tank, or similar aquatic feature or to a motor vehicle, except as provided under subdivision (62a) of this section and fees under sub-subdivision b. of this subdivision.
. . .
c. A service performed for a person by a related member.
. . .
e. A service on roads, driveways, parking lots, and sidewalks. 
f. Removal of waste, trash, debris, grease, snow, and other similar tangible personal property from property, other than a motor vehicle. The exemption applies to a household or a commercial trash collection and removal service. The exemption applies to the removal of septage from property, including motor vehicles, but does not include removal of septage from portable toilets.
. . .
i. Pest control service. For purposes of this exemption, the term "pest control service" means the application of pesticides to real property. 
j. Moving service. For purposes of this exemption, the term "moving service" means a service for hire to transport or relocate a person's existing belongings to or from any destination. 
k. Self-service car wash or vacuum.
. . .
n. Funeral-related service, including a service for the burial of remains. This exemption does not apply to the sale of tangible personal property, such as caskets, headstones, and monuments. 
o. A service performed on an animal, such as hoof shoeing and microchipping a pet. 
p. A security or similar monitoring contract for real property. The exemption provided in this subdivision does not apply to charges for repair, maintenance, and installation services to repair security, alarm, and other similar monitoring systems for real property.
. . .” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(k), S.L. 2019-169.)

Repair, maintenance, and installation services . . . (61a). The subdivision is further amended and provides, in part, “[t]he sales price of or the gross receipts derived from the repair, maintenance, and installation services and service contracts listed in this subdivision are exempt from tax. Except as otherwise provided in this subdivision, an item used to fulfill either repair, maintenance, and installation services or service contracts exempt from tax under this subdivision is taxable. The list of repair, maintenance, and installation services and service contracts exempt from tax under this subdivision is as follows:
. . .
l. Services performed on a transmission, distribution, or other network asset on land owned by a service provider or on a right-of-way or an easement in favor of a service provider. This exemption does not apply to charges billed to a customer for repair, maintenance, and installation services or a contribution in aid of construction and are included in the gross receipts derived from items subject to the combined general rate under G.S. 105-164.4. The terms ‘service provider’ and ‘governmental entity’ have the same meaning as defined in G.S. 105-164.3(2c)c.
. . .” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.4.(c), S.L. 2019-169.)

Repair, maintenance, and installation services . . . (61a). The subdivision is further amended and provides, in part, “[t]he sales price of or the gross receipts derived from the repair, maintenance, and installation services and service contracts listed in this subdivision are exempt from tax. Except as otherwise provided in this subdivision, an item used to fulfill either repair, maintenance, and installation services or service contracts exempt from tax under this subdivision is taxable. The list of repair, maintenance, and installation services and service contracts exempt from tax under this subdivision is as follows:
. . .
k. Self-service car wash or vacuum and limited-service vehicle wash. For purposes of this sub-subdivision, the following definitions apply:
1. Limited-service vehicle wash. – The cleaning of a vehicle by mechanical means where the only activities performed by an employee include one or more of the following: (i) receiving payment for the transaction, (ii) guiding the vehicle into the entrance or exit of a conveyor, (iii) applying low-pressure spray of chemicals to the vehicle prior to the cleaning of the vehicle, or (iv) placing protective tape or covers on the vehicle prior to cleaning. The term does not include any activity whereby an employee physically touches the vehicle for the purpose of cleaning or restoring the vehicle, enters or cleans any part of the interior of the vehicle, or performs an activity on the vehicle other than one of those listed in this sub-sub-subdivision.
2. Self-service vehicle wash or vacuum. – The cleaning of a vehicle by a customer without any cleaning or restoring activity performed by an employee." [Emphasis added.]

(Effective October 1, 2019, and applies to sales made on or after that date; SB 523, s. 3.11.(a), S.L. 2019-169.)

Repair, maintenance, and installation services . . . (61a). The subdivision is further amended and provides, in part, “[t]he sales price of or the gross receipts derived from the repair, maintenance, and installation services and service contracts listed in this subdivision are exempt from tax. Except as otherwise provided in this subdivision, an item used to fulfill either repair, maintenance, and installation services or service contracts exempt from tax under this subdivision is taxable. The list of repair, maintenance, and installation services and service contracts exempt from tax under this subdivision is as follows:
. . .
k. Self-service vehicle wash or vacuum and limited-service vehicle wash. For purposes of this sub-subdivision, the following definitions apply:
1. Limited-service vehicle wash. – The cleaning of a vehicle by mechanical means where the only activities performed by an employee include one or more of the following: (i) receiving payment for the transaction, (ii) guiding the vehicle into the entrance or exit of a conveyor, (iii) applying low-pressure spray of chemicals to the vehicle prior to the cleaning of the vehicle, or (iv) placing protective tape or covers on the vehicle prior to cleaning. The term does not include any activity whereby an employee physically touches the vehicle for the purpose of cleaning or restoring the vehicle, enters or cleans any part of the interior of the vehicle, or performs an activity on the vehicle other than one of those listed in this sub-sub-division.
2. Self-service vehicle wash or vacuum. – The cleaning of a vehicle by a customer without any cleaning or restoring activity performed by an employee.” [Emphasis added.]

(Effective November 1, 2019; HB 399, s. 8.1.(a), S.L. 2019-237; exemption duplicated in SB 557, s. 6., S.L. 2019-246.)

Items purchased for resale . . . – (61b). The subdivision is amended and provides an exemption for “[i]tems purchased for resale under an exemption certificate in accordance with G.S. 105-164.28 or under a direct pay certificate in accordance with G.S. 105-164.27A.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(k), S.L. 2019-169.)

An item . . . purchased or used to fulfill a service contract . . . – (62). This subdivision is amended and provides an exemption for “[a]n item, including repair, maintenance, and installation services, purchased or used to fulfill a service contract taxable under . . . Article [5 of Chapter 105 of the North Carolina General Statutes] if the purchaser of the contract is not charged for the item. This exemption does not apply to the purchase of tangible personal property or certain digital property used to fulfill a service contract for real property where the charge being covered would otherwise be subject to tax as a real property contract. For purposes of this exemption, the term ‘item’ does not include a tool, equipment, supply, or similar tangible personal property that is not deemed to be a component or repair part of the tangible personal property, real property, or certain digital property for which a service contract is sold to a purchaser.”

(Effective July 26, 2019; SB 523, s. 3.3.(k), S.L. 2019-169.)

Food and prepared food . . . provided . . . under a prepaid meal plan . . . – (63). This subdivision is amended to remove unnecessary language and provides an exemption for “[f]ood and prepared food to be provided to a person entitled to the food and prepared food under a prepaid meal plan subject to tax under G.S. 105‑164.4(a)(12). This exemption applies to packaging including wrapping paper, labels, plastic bags, cartons, packages and containers, paper cups, napkins and drinking straws, and like articles that meet all of the following requirements:
a. Used for packaging, shipment, or delivery of the food and prepared food. 
b. Constitute a part of the sale of the food and prepared food. 
c. Delivered with the food and prepared food.”

(Effective July 26, 2019; SB 523, s. 3.3.(k), S.L. 2019-169.)

Professional motorsports racing team . . . – (65). This subdivision is amended by replacing the term “other item” with the term “tangible personal property.” This subdivision expires January 1, 2020 and provides an exemption for “[s]ales of the following to a professional motorsports racing team or a related member of a team for use in competition in a sanctioned race series:
a. The sale, lease, or rental of an engine. 
b. The sales price of or gross receipts derived from a service contract on, or repair, maintenance, and installation services for, a transmission, an engine, rear‑end gears, and any tangible personal property that is purchased, leased, or rented and that is exempt from tax under this subdivision or that is allowed a sales tax refund under G.S. 105‑164.14A(a)(5). 
c. The gross receipts derived from an agreement to provide an engine to a professional motorsports racing team or related member of a team for use in competition in a sanctioned race series, where such agreement does not meet the definition of a ‘service contract’ as defined in G.S. 105‑164.3 but may meet the definition of the term ‘lease or rental’ as defined in G.S. 105‑164.3.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(k), S.L. 2019-169.)

Professional motorsports racing team . . . – (65). This subdivision is further amended and extends the expiration date of the exemption until January 1, 2024.

(Effective November 1, 2019; HB 399, s. 5.(a), S.L. 2019-237.)

Sales of an engine or a part to build or rebuild an engine . . . to a professional motorsports racing team . . . – (65a). This subdivision is amended and provides an exemption for “[a]n engine or a part to build or rebuild an engine for the purpose of providing an engine under an agreement to a professional motorsports racing team or a related member of a team for use in competition in a sanctioned race series. The subdivision expires January 1, 2024.”

(Effective November 1, 2019; HB 399, s. 5.(a), S.L. 2019-237.)

North Carolina Life and Health Insurance Guaranty Association . . . – (71). This subdivision is added and provides an exemption for “[s]ales of items to the North Carolina Life and Health Insurance Guaranty Association.”

(Effective July 26, 2019; SB 523, s. 3.3.(k), S.L. 2019-169.)

The following section and sub subdivision are amended as follows:

G.S. 105-164.13E – This section is amended and provides the following:

“(a) Exemption. – A qualifying farmer is a person who has an annual income from farming operations for the preceding taxable year of ten thousand dollars ($10,000) or more or who has an average annual income from farming operations for the three preceding taxable years of ten thousand dollars ($10,000) or more. For purposes of this section, the term ‘income from farming operations’ means sales plus any other amounts treated as gross income under the Code from farming operations. A qualifying farmer includes a dairy operator, a poultry farmer, an egg producer, and a livestock farmer, a farmer of crops, a farmer of an aquatic species, as defined in G.S. 106-758, and a person who boards horses. A qualifying farmer may apply to the Secretary for an exemption certificate number under G.S. 105-164.28A. The exemption certificate expires when a person fails to meet the income threshold for three consecutive taxable years or ceases to engage in farming operations, whichever comes first.

Except as otherwise provided in this section, the items exempt under this section must be purchased by a qualifying farmer or conditional farmer and used by the qualifying or conditional farmer primarily in farming operations. For purposes of this section, an item is used by a farmer for farming operations if it is used for the planting, cultivating, harvesting, or curing of farm crops, in the production of dairy products, eggs, or animals, or by a person who boards horses. The following tangible personal property and services that may be exempt from sales and use tax under this section are as follows:
. . .
(c1) Services for Farmer. – A qualifying item listed in subdivision (6) of subsection (a) of this section purchased to fulfill a service for a person who holds a qualifying farmer exemption certificate or a conditional farmer exemption certificate issued under G.S. 105-164.28A is exempt from sales and use tax to the same extent as if purchased directly by the person who holds the exemption certificate. A person that purchases one of the items allowed an exemption under this subsection must provide an exemption certificate to the retailer that includes the name of the qualifying farmer or conditional farmer and the exemption number issued to the qualifying farmer or conditional farmer by the Department pursuant to G.S. 105-164.28A. A person that purchases an item exempt from tax pursuant to this subsection must maintain records to substantiate that an item is used to provide a service for a person who holds a qualifying farmer exemption certificate or a conditional farmer exemption certificate.” [Emphasis added.]

(Effective March 20, 2019; SB 56, s. 5.4., S.L. 2019-6.)

G.S. 105-164.13E – This section is further amended and provides the following:

“(a) Exemption. – A qualifying farmer is a person who has an annual income from farming operations for the preceding taxable year of ten thousand dollars ($10,000) or more or who has an average annual income from farming operations for the three preceding taxable years of ten thousand dollars ($10,000) or more. For purposes of this section, the term ‘income from farming operations’ means sales plus any other amounts treated as gross income under the Code from farming operations. A qualifying farmer includes a dairy operator, a poultry farmer, an egg producer, and a livestock farmer, a farmer of crops, a farmer of an aquatic species, as defined in G.S. 106-758, and a person who boards horses. A qualifying farmer may apply to the Secretary for an exemption certificate number under G.S. 105-164.28A. The exemption certificate expires when a person fails to meet the income threshold for three consecutive taxable years or ceases to engage in farming operations, whichever comes first.

Except as otherwise provided in this section, the items exempt under this section must be purchased by a qualifying farmer or conditional farmer and used by the qualifying or conditional farmer primarily in farming operations. For purposes of this section, an item is used by a farmer for farming operations if it is used for the planting, cultivating, harvesting, or curing of farm crops, in the production of dairy products, eggs, or animals, or by a person who boards horses. The items that may be exempt from sales and use tax under this section are:
. . .
(6) Any of the following substances when purchased for use on animals or plants, as appropriate, held or produced for commercial purposes:
a. Remedies, vaccines, medications, litter materials, and feeds for animals. 
b. Rodenticides, insecticides, herbicides, fungicides, and pesticides. 
c. Defoliants for use on cotton or other crops. 
d. Plant growth inhibitors, regulators, or stimulators, including systemic and contact or other sucker control agents for tobacco and other crops. 
e. Semen.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(l), S.L. 2019-169.)

G.S. 105-164.13E(b)(3)a – This sub-subdivision is amended and provides “[d]ocuments showing that, but for the disaster, the person would have earned ten thousand dollars ($10,000) or more in gross sales for the year in which the disaster occurred.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(m), S.L. 2019-169.)

This subsection is amended and provides “[t]he effective date of a tax change for items taxable under . . . Article [5 of the North Carolina General Statutes] is administered as follows:
(1) For a taxable item that is provided and billed on a monthly or other periodic basis:
a. A new tax or a tax rate increase applies to the first billing period that is at least 30 days after enactment and that starts on or after the effective date.
b. A tax repeal or a tax rate decrease applies to bills rendered on or after the effective date.

. . .” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(o), S.L. 2019-169.)

This section is amended to update the language and provides the following:

“(a) General. – Sales and use taxes are payable when a return is due. A return is due quarterly or monthly as specified in this section. A return must be filed with the Secretary on a form prescribed by the Secretary and in the manner required by the Secretary. A return must be signed by the taxpayer or the taxpayer's agent.

A sales tax return must state the taxpayer's gross sales for the reporting period, the amount and type of sales made in the period that are exempt from tax under G.S. 105-164.13 or are elsewhere excluded from tax, the amount of tax due, and any other information required by the Secretary. A use tax return must state the purchase price of items that were purchased or received during the reporting period and are subject to tax under G.S. 105-164.6, the amount of tax due, and any other information required by the Secretary. Returns that do not contain the required information will not be accepted. When an unacceptable return is submitted, the Secretary will require a corrected return to be filed.
. . .
(d) Use Tax on Out-of-State Purchases. – Use tax payable by an individual who purchases an item, other than a boat or aircraft, outside the State for a nonbusiness purpose is due on an annual basis. For an individual who is not required to file an individual income tax return under Part 2 of Article 4 of . . . Chapter [105 of the North Carolina General Statutes], the annual reporting period ends on the last day of the calendar year and a use tax return is due by the following April 15. For an individual who is required to file an individual income tax return, the annual reporting period ends on the last day of the individual's income tax year, and the use tax must be paid on the income tax return as provided in G.S. 105-269.14.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(p), S.L. 2019-169.)

This section is amended and provides the following:
(a) “(a) Record Keeping Generally. – Retailers, wholesale merchants, facilitators, real property contractors, and consumers must keep records that establish their tax liability under . . . Article [5 of Chapter 105 of the North Carolina General Statutes]. The Secretary or a person designated by the Secretary may inspect these records at any reasonable time during the day.
(b) Retailers. – A retailer's records must include records of the retailer's gross income, gross sales, net taxable sales, all items purchased for resale, and any reports or records related to transactions with a facilitator with whom it has a contract as provided in . . . Article [5 of Chapter 105 of the North Carolina General Statutes]. Failure of a retailer to keep records that establish a sale is exempt under . . . Article [5 of Chapter 105 of the North Carolina General Statutes] subjects the retailer to liability for tax on the sale.
(c) Wholesale Merchants. – A wholesale merchant's records must include a bill of sale for each customer that contains the name and address of the purchaser, the date of the purchase, the item purchased, and the sales price of the item. A wholesale merchant must also keep records that establish a sale is exempt from tax and any reports or records related to transactions with a facilitator with whom it has a contract as provided in . . . Article [5 of Chapter 105 of the North Carolina General Statutes]. Failure of a wholesale merchant to keep records that establish a sale is exempt from tax under . . . Article [5 of Chapter 105 of the North Carolina General Statutes] subjects the wholesale merchant to liability for tax at the rate that applies to the retail sale of the item.
(d) Facilitators. – A facilitator's records must include records of the facilitator's gross income, gross sales, net taxable sales, all items purchased for resale, any reports or records related to transactions with a retailer with whom it has a contract as provided in . . . Article [5 of Chapter 105 of the North Carolina General Statutes], and any other records that establish its tax liability. Failure of a facilitator to keep records that establish a sale is exempt from tax under . . . Article [5 of Chapter 105 of the North Carolina General Statutes] subjects the facilitator to liability for tax on the sale.
(e) Real Property Contractors. – A real property contractor's records must include substantiation that a transaction is a real property contract or a mixed transaction contract pursuant to G.S. 105-164.4H(a1). Failure of a real property contractor to keep records that establish a real property contract under . . . Article [5 of Chapter 105 of the North Carolina General Statutes] subjects the real property contractor to liability for tax on the sale.
(f) Consumers. – A consumer's records must include an invoice or other statement of the purchase price of an item the consumer purchased from inside or outside the State and any sales and use tax paid thereon. Failure of the consumer to keep these records subjects the consumer to liability for tax on the purchase price of the item, as determined by the Secretary." [Emphasis added.]

(Effective February 1, 2020, and applies to sales occurring on or after that date; SB 557, s. 4.(l), S.L. 2019-246.)

This section is updated to include the defined term “certain digital property” per G.S. 105-164.3(23) and provides “[f]or the purpose of the proper administration of Article [5 of Chapter 105 of the North Carolina General Statutes] and to prevent evasion of the retail sales tax, the following presumptions apply:
. . .
(4) That certain digital property sold for delivery or access in this State is sold for storage, use, or consumption in this State.
. . .” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(q), S.L. 2019-169.)

These subsections are amended by replacing the terms “tangible personal property”, “digital property”, and “service” with the term “items”. Subsection (a3) was further amended to update a statutory reference. The amended section provides the following:
“(a) General. – A general pay permit authorizes its holder to purchase certain items without paying tax to the seller and authorizes the seller to not collect any tax on a sale to the permit holder. A general direct pay permit may not be used for purposes identified in subsections (a1), (a2), (a3), or (b) of this section. A person who purchases an item under a direct pay permit issued under this subsection is liable for use tax due on the purchase. The tax is payable when the property is placed in use or the service is received. A direct pay permit issued under this subsection does not apply to taxes imposed under G.S. 105 164.4 on sales of electricity, piped natural gas, video programming, spirituous liquor, or the gross receipts derived from rentals of accommodations.

A person who purchases an item for storage, use, or consumption in this State whose tax status cannot be determined at the time of the purchase because one of the reasons listed below may apply to the Secretary for a general direct pay permit:
(1) The place of business where the item will be stored, used, or consumed in the State is not known at the time of the purchase and a different tax consequence applies depending on where the item is used in the State.
(2) The manner in which the item will be stored, used, or consumed in the State is not known at the time of the purchase and one or more of the potential uses is taxable but others are not taxable in the State.
. . .
(a3) Boat and Aircraft. – A direct pay permit issued under this subsection authorizes its holder to purchase tangible personal property, certain digital property, or repair, maintenance, and installation services for a boat, an aircraft, or a qualified jet engine without paying tax to the seller and authorizes the seller to not collect any tax on the purchased items from the permit holder. A person who purchases the tangible personal property, certain digital property, or repair, maintenance, and installation services 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 permit holder is allowed a use tax exemption on one or more of the following: (i) the installation charges that are a part of the sales price of tangible personal property or certain digital property purchased by the permit holder for a boat, an aircraft, or a qualified jet engine, provided the installation charges are separately stated and identified as such on the invoice or other documentation given to the permit holder at the time of the sale and (ii) the sales price of or gross receipts derived from repair, maintenance, and installation services provided for a boat or an aircraft.

In lieu of purchasing under a direct pay permit pursuant to this subsection, a purchaser may elect to have the seller collect and remit the tax due on behalf of the purchaser. Where the purchaser elects for the seller to collect and remit the 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. Where a seller cannot or does not separately state installation charges that are a part of the sales price of tangible personal property or certain digital property for a boat, an aircraft, or a qualified jet engine on the invoice or other documentation given to the purchaser at the time of the sale, tax is due on the total purchase price.

The amount of the use tax exemption is the amount of the installation charges and the sales price of or gross receipts derived from the repair, maintenance, and installation services that exceed twenty-five thousand dollars ($25,000).” [Emphasis added.]

(Effective March 20, 2019; SB 56, s. 5.5., S.L. 2019-6. Effective July 26, 2019; SB 523, s. 3.3.(r), S.L. 2019-169.)

This subsection is amended to remove unnecessary language and provides “[t]he Secretary may require a person who purchases an item that is exempt from tax to obtain an exemption certificate from the Department to receive the exemption. The Department must issue a use-based exemption number to a person who qualifies for the exemption. A person who no longer qualifies for a use-based exemption number must notify the Secretary within 30 days to cancel the number.

An exemption certificate issued by the purchaser authorizes a retailer to sell an item to the holder of the certificate and not collect tax on the sale. A person who no longer qualifies for an exemption certificate must give notice to each seller that may rely on the exemption certificate on or before the next purchase. A person who purchases an item under an exemption certificate is liable for any tax due on the purchase if the Department determines that the person is not eligible for the exemption certificate or if the person purchased items that do not qualify for an exemption under the exemption certificate. The liability is relieved when the seller obtains the purchaser's name, address, type of business, reason for exemption, and exemption number in lieu of obtaining an exemption certificate."

(Effective March 20, 2019; SB 56, s. 5.6., S.L. 2019-6.)

This subsection is amended and provides “[a] seller may contract with a certified service provider to collect and remit sales and use taxes payable to the State on sales made by the seller. A certified service provider with whom a seller contracts is the agent of the seller. As the seller’s agent, the certified service provider, rather than the seller, is liable for sales and use taxes due this State on all sales transactions the certified service provider processes for the seller unless the seller misrepresents the type of items it sells or commits fraud. A seller that misrepresents the type of items it sells or commits fraud is liable for taxes not collected as a result of the misrepresentation or fraud.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(s), S.L. 2019-169.)

This section is amended and provides the following:
“(a) Boundary and Rate Databases. – The Secretary may develop databases that provide information on the boundaries of taxing districts and the tax rates applicable to those taxing districts. The databases may assign the proper tax rate and taxing district to each taxing area within the State. If more than one tax rate applies within a specific taxing area, the Secretary shall assign the lowest combined tax rate imposed within the specific taxing area. If the Secretary cannot determine the appropriate tax rate for a street address, the Secretary shall assign the lowest combined tax rate imposed within the street address's nine-digit zip code. But, if the Secretary cannot determine the appropriate tax rate for a street address's nine-digit zip code, the Secretary shall assign the lowest combined tax rate imposed within the street address's five-digit zip code.

A person who relies on the information provided in these databases is not liable for underpayments of tax attributable to erroneous information provided by the Secretary in those databases until 10 business days after the date of notification by the Secretary.

(b) Taxability Matrix. – The Secretary may develop a taxability matrix that provides information on the taxability of certain items or certain tax administration practices. A person who relies on the information provided in the taxability matrix is not liable for underpayments of tax attributable to erroneous information provided by the Secretary in the taxability matrix until 10 business days after the date of notification by the Secretary.
(c) Rate Changes. – A retailer is not liable for an underpayment of tax attributable to a rate change when the State fails to provide for at least 30 days between the enactment of the rate change and the effective date of the rate change if the conditions of this subsection are satisfied. However, if the State establishes the retailer fraudulently failed to collect tax at the new rate or solicited customers based on the immediately preceding effective rate, this liability relief does not apply. Both of the following conditions must be satisfied for liability relief:
(1) The retailer collected tax at the immediately preceding rate. 
(2) The retailer's failure to collect at the newly effective rate does not extend beyond 30 days after the date of enactment of the new rate or the effective date applicable under G.S. 105-164.15A." [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.5.(b), S.L. 2019-169.)

This subsection is amended to extend the expiration date and provides the following: 
“(b) Sunset. – This section is repealed effective July 1, 2030.” [Emphasis added.]

(Effective November 1, 2019; HB 399, s. 6.(b), S.L. 2019-237.)

This subsection is added and provides “[t]he Secretary may compromise a taxpayer’s liability for a tax that is collectible under G.S. 105-241.22 when the Secretary determines that the compromise is in the best interest of the State and makes one or more of the following findings:
. . .
(8) The assessment is for sales tax the taxpayer failed to collect or use tax the taxpayer failed to pay on repair, maintenance, and installation services provided by a real property manager under a property management contract. The Secretary must determine that the taxpayer made a good-faith effort to comply with the sales and use tax laws. Absent fraud or other egregious activities, a taxpayer that substantiated the time spent managing real property for a billing or invoice period as provided under G.S. 105-164.4K(c) will be determined to have made a good-faith effort to comply with the sales and use tax laws."

(Effective July 26, 2019, SB 523, s. 3.9.(f), S.L. 2019-169. The provisions of G.S. 105-164.15A apply to the implementation of this change as if it is a decrease in the tax rate; SB 557, s. 7.(a), S.L. 2019-246. Originally, the effective date referenced the date a real property management contract was entered into, however, this provision was eliminated in subsequent legislation; SB 557, s. 7.(a), S.L. 2019-246.)

This section is amended to update the language. The following explains the protections provided by the Act:
“(a) Grace Period. – The Department shall take no action to assess any tax due for a filing period beginning on or after March 1, 2016, and ending prior to January 1, 2019, if one or more of the conditions of this subsection apply and the retailer did not receive specific written advice from the Secretary for the transactions at issue for the laws in effect for the applicable periods. Except as otherwise provided, this subsection also applies to use tax liability imposed on a purchaser under G.S. 105-164.6. The conditions are as follows:
. . .
(8) A person failed to collect sales tax on the taxable portion of a mixed service contract that exceeds ten percent (10%) for a transaction on or after January 1, 2017, and prior to January 1, 2019. This subdivision does not prohibit the Secretary from assessing use tax on purchases used to fulfill a mixed service contract.
. . . 
(8b) A person failed to collect sales tax on the taxable portion of a bundled transaction that included a contract for two or more services, one of which was subject to tax and one of which was not subject to tax, for a transaction on or after March 1, 2016, and prior to January 1, 2017.
. . .” [Emphasis added.]

(Effective March 20, 2019; SB 56, s. 5.8., S.L. 2019-6.)

This section is further amended to update the language to include the defined term “certain digital property” and to remove unnecessary language. The following explains the protections provided by the Act.
“(a) Grace Period. – The Department shall take no action to assess any tax due for a filing period beginning on or after March 1, 2016, and ending prior to January 1, 2019, if one or more of the conditions of this subsection apply and the retailer did not receive specific written advice from the Secretary for the transactions at issue for the laws in effect for the applicable periods. Except as otherwise provided, this subsection also applies to use tax liability imposed on a purchaser under G.S. 105-164.6. The conditions are as follows:
(1) A retailer failed to charge sales tax due on separately stated installation charges that are part of the sales price of tangible personal property or certain digital property sold at retail.
. . .

(10) A person failed to collect sales tax on repair, maintenance, and installation services for tangible personal property, motor vehicles, or certain digital property.
(b) Limitations. – This section does not prohibit the following assessments.
(1) The assessment of tax collected by a person and not remitted to the Department.
(2) The assessment of tax due on an amount included in the definition of sales price where a retailer failed to charge or remit the tax, except as allowed under subsection (a) of this section.” [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.6., S.L. 2019-169)

This subsection is amended and provides the following:
“(a) Reduction – The Secretary may reduce an assessment against a taxpayer who requests relief for State and local sales and use taxes in the amount as provided in this section and waive any penalties imposed as part of the assessment when the assessment is the result of an audit of the taxpayer by the Department and all of the following apply:
(1) The taxpayer remitted to the Department during the period under audit all of the sales and use taxes it collected during that period.
(2) The taxpayer had not been informed by the Department in a prior audit to collect sales and use taxes in the circumstance that is the basis of the assessment, as reflected in the written audit comments of the prior audit.
(3) The taxpayer had not requested and received from the Department a private letter ruling advising to collect sales and use taxes in the circumstance that is the basis of the assessment.
(4) The assessment is based on the incorrect application of one or both of the following areas of the sales and use tax statutes:
a. The failure to collect sales tax on separately stated linen charges where the linens are furnished by a facilitator, rental agent, or other person and the charges are part of the gross receipts derived from the rental of the accommodation taxed in accordance with G.S. 105-164.4F.
b. The failure to pay sales or use tax to the lessor on the rental of the linens used by a facilitator, rental agent, or other person in providing the rental of an accommodation taxed in accordance with G.S. 105-164.4F where the facilitator, rental agent, or other person issued a certificate of exemption or the required data elements per G.S. 105-164.28 to the lessor." [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.7., S.L. 2019-169.)

The subsection is amended and provides the following:
“(b) Exemptions and Refunds. – The State exemptions and exclusions contained in Article 5 of Subchapter I of this Chapter, except for the exemption for food in G.S. 105-164.13B, apply to the local sales and use tax authorized to be levied and imposed under… Article [39 of Chapter 105 of the North Carolina General Statutes]. The State refund provisions contained in G.S. 105-164.14 and G.S. 105-164.14A apply to the local sales and use tax authorized to be levied and imposed under … Article [5 of Chapter 105 of the North Carolina General Statutes]. A refund of an excessive or erroneous State sales tax collection allowed under G.S. 105-164.11 and a refund of State sales tax paid on a rescinded sale or cancelled service contract under G.S. 105-164.11A apply to the local sales and use tax authorized to be levied and imposed under … Article [5 of Chapter 105 of the North Carolina General Statutes]. The aggregate annual local refund amount allowed an entity under G.S. 105-164.14(b) for the State's fiscal year may not exceed thirteen million three hundred thousand dollars ($13,300,000).

Except as provided in this subsection, a taxing county may not allow an exemption, exclusion, or refund that is not allowed under the State sales and use tax. A local school administrative unit and a joint agency created by interlocal agreement among local school administrative units pursuant to G.S. 160A-462 to jointly purchase food service-related materials, supplies, and equipment on their behalf is allowed an annual refund of sales and use taxes paid by it under … Article [39 of Chapter 105 of the North Carolina General Statutes] on direct purchases of items. Sales and use tax liability indirectly incurred by the entity as part of a real property contract for real property that is owned or leased by the entity and is a capital improvement for use by the entity is considered a sales or use tax liability incurred on direct purchases by the entity for the purpose of this subsection. The refund allowed under this subsection does not apply to purchases of electricity, telecommunications service, ancillary service, piped natural gas, video programming, or a prepaid meal plan. A request for a refund is due in the same time and manner as provided in G.S. 105-164.14(c). Refunds applied for more than three years after the due date are barred." [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(t), S.L. 2019-169.)

This section is amended and provides that “[t]he provisions of [Article 39 of Chapter 105 of the North Carolina General Statutes] shall not be applicable with respect to any items purchased for the purpose of fulfilling a real property contract for a capital improvement entered into or awarded, or entered into or awarded pursuant to any bid made, before the effective date of the tax imposed by a taxing county when, absent the provisions of this section, the items would otherwise be subject to tax under the provisions of . . . Article [39 of Chapter 105 of the North Carolina General Statutes]." [Emphasis added.]

(Effective July 26, 2019; SB 523, s. 3.3.(u), S.L. 2019-169.)

This subsection is amended and provides the following:
“(b) Vote. – The board of county commissioners may direct the county board of elections to conduct an advisory referendum on the question of whether to levy a local sales and use tax in the county as provided in . . . Article [46 of Chapter 105 of the North Carolina General Statutes]. The election shall be held in accordance with the procedures of G.S. 163A-1592, except that the election shall not be held within one year from the date of the last preceding election under this section." [Emphasis added.]

(Effective July 26, 2019, and applies to elections held on or after July 1, 2019; SB 523, s. 3.8.(a), S.L. 2019-169.)

The 2019 General Assembly amended the following definition:

Short-Term Lease or Rental – (6). This definition of the term is amended and provides “[d]efined in G.S. 105-187.1." [Emphasis added.]

(Effective October 1, 2019, and applies to vehicle subscription agreements entered into on or after that date; HB 537, s. 4., S.L. 2019-69.)