North Carolina is the 28th most extensive (53,819 sq. miles) and the 9th most populous (10,055,000 residents) state. North Carolina is known as the Tar Heel State and the Old North State. North Carolina's largest metropolitan areas, including its capital, Raleigh, and its largest city, Charlotte, are among the fastest-growing areas in the United States. North Carolina's economy has undergone a major transition over the last 50 years, going from a labor class economics based around tobacco, textiles, and furniture-making to a more skill-based economy focusing on biotechnology, engineering, energy, and finance.
North Carolina became one of the English Thirteen Colonies and with the territory of South Carolina was originally known as the Province of Carolina. The northern and southern parts of the original province separated in 1729. Originally settled by small farmers, sometimes having a few slaves, who were oriented toward subsistence agriculture, the colony lacked cities or towns. While the colonists supported the American Revolution, they were only able to muster 7800 men to join the Continental Army.
After 1800, cotton and tobacco became important export crops based upon a plantation society and slave labor. On May 20, 1861, North Carolina was the last of the Confederate states to declare secession from the Union. Around 125,000 North Carolinians served in the Confederate military. Impoverished by the Civil War, the North Carolina’s economy continued to be based around tobacco, cotton and agriculture. Towns and cities remained few in the east. A major industrial base emerged in the late 19th century in the western counties of the Piedmont, based on cotton mills. North Carolina was hard hit by the Great Depression, but President Franklin D. Roosevelt’s New Deal programs for cotton and tobacco significantly helped the farmers. While North Carolina has migrated from agriculture to so much more, it is still the largest producer of sweet potatoes in the United States.
The state also benefited from a number of ‘projects’ that began during the war and which continued through several decades. Among these you will find that North Carolina has the largest state maintained highway system in the U.S. with 77,400 miles of road. Thankfully, the state also has 1,500 large lakes (10 acres or more) and 37,000 miles of fresh water streams.
After World War II, North Carolina’s economy grew rapidly, centered around the growth of Charlotte, Raleigh, and Durham in the Piedmont. Today Raleigh, Durham, and Chapel Hill form the Research Triangle, a major area of universities and advanced scientific and technical research. The University of North Carolina Chapel Hill is the oldest state university in the U.S. High Point is known as the Furniture Capital of the World.
Did You Know?
- Several important historical “firsts” happened in North Carolina: the first English colony was founded; the first English child born in America, Virginia Dare, in Roanoke in 1587;
- Babe Ruth hit his first home run in Fayetteville;
- The Wright Brothers made the first successful powered flight by man near Kitty Hawk’
- Some of the highest points in the Eastern United States can be found in North Carolina including: Mount Mitchell in the Blue Ridge Mountains; Whitewater Falls (highest waterfall); Fontana Dam (tallest dam); Beech Mountain (highest town above sea level) and the steepest standard gauge mainline railroad (top of the Saluda Grade).
About Sales Taxes and this series:
Thanks to Avalara, the 'tax people', this article is one in a 50 part series. Yes, I said (50 parts), covering sales tax issues associated with each and every state tax jurisdiction in the United States. We will be publishing an article essentially every Tuesday, thus the series name "Sales Tax Tuesday" over the entire year of 2015. Who knows, by the end of this year there could be sufficient changes to just start the whole series over again with updated information.
Sales tax provides critical revenue for states. Other than property and income tax, sales tax is the largest source of tax revenue in the majority of the 46 states that collect it. From a government perspective, making sure every sales tax dollar is collected, through audits, fines, penalties rates and rules, is an exercise for income. It’s easy to be lured into a false sense of compliance when it comes to sales tax, this series is intended to insure that you are aware of the key sales tax facts for YOUR state.
Note: For sales tax definitions and essentials check out the opening article to this series.
North Carolina Sales Tax Facts1:
- North Carolina’s state sales tax rate is 4.75%. The tax rate can be as high as 8.25% in certain jurisdictions with the addition of county and local municipality taxes.
- The North Carolina Department of Revenue (NCDOR) works to administer the tax laws and collect the taxes due the State in an impartial, uniform and efficient manner.
- In 2014, North Carolina discontinued its tax-free shopping weekends in August and November, making it one of the only southern states not to offer sales tax holidays, the other two are Florida and West Virginia.
- North Carolina is a member of Streamlined Sales Tax (SST).
- NCDOR recently expanded the information available for use by taxpayers through Form Gen 562, County and Transit Sales and Use Tax Rates for Cities and Towns, to assist with collection of the proper local and transit rates of sales tax due on retail sales. The rates are now available by 5-digit zip code or by city/town.
- North Carolina requires use tax to be paid on products or services used within the state. The state provides a line on the state income tax return for identifying any use tax owed.
- Retail sales of tangible personal property not subject to a reduced rate of tax are subject to sales or use tax.which also applies to the rental of accommodations, service contracts to maintain or repair tangible personal property, admission charges to an entertainment activity, to charges for cleaning, pressing, hat blocking, and laundering of linens and apparels and to certain digital property. The lease or rental of tangible personal property is also subject to the tax.
- North Carolina does not charge sales tax on food sales at the state rate, however it does allow sales tax at the local rate on food items; that rate is currently 2%. In July 2104, the state repealed the sales tax tax-exemption on prepared food sold to college students at higher education institutions.
- Generally services are exempt from sales or use tax, but admission charges to an entertainment activity and laundry and dry cleaning services are taxable.
Great to Know about North Carolina
- So much for southern hospitality. In May 2014, South Carolina enacted a law to require sales tax and occupancy tax to be collected on the rental of private residences, cottages or similar accommodations.
- Oh, that’s bull. In Durham, dogs and cats are considered personal property and therefore, subject to tax. Owners must pay a $10 tax per pet for neutered or spayed animals and $75 per pet if they are not fixed.
- You can’t candy-coat it. Turns out half of North Carolina retailers were overcharging sales tax to customers on certain candy items like Kit Kat and Twix. North Carolina is one of several states that applies a higher tax rate to candy versus other food items; a key ingredient — flour — is used to make that distinction. Because these items contain flour, they are taxed at the lower rate.
Still on the books…
- Sell it on the black market: A three dollar tax must be paid on all white goods sold in North Carolina.
- You’ll fry for that. It’s a felony in North Carolina to steal more than a $1000 worth of grease.
Manual sales and use tax management is prone to error and consumes staff time in pass-through rather than revenue-generating activities. No matter how many cities, counties or sales tax jurisdictions you collect and remit tax for, nor how many oddities like (which Candy has less tax than another) Avalara provides solutions for sales tax automation, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting.
Automation of business sales tax, including integration with QuickBooks via Avalara allows businesses to be fully sales tax compliant without sacrificing productivity and without the worry of trying to figure out which 'shades of white' linens require an extra tax.
1 - State by State Sales Tax - North Carolina, Avalara - June 4, 2015