On September 18, 2015 and September 30, 2015, House Bill 97 and House Bill 117, respectively, were signed into law by North Carolina Governor, Pat McCrory. Together, these bills expand the sales tax base in North Carolina. This new expansion of the sales tax base will impact retailers who provide repair, maintenance, and installation services. Effective March 1, 2016, repair, maintenance, and installation services are set to become taxable and these services include numerous transactions such as:
- Repair of shoes, watches, clocks, jewelry, laptops, cell phones
- Conducting diagnostic tests or adjusting computer settings
- Cleaning services for watches, clocks, jewelry, copy machines, printers, or other tangible personal property, or motor vehicles
- Polishing of shoes, jewelry, or silver
- Tire recapping or retreading
- Patching or mending clothing, tires, or any type of inflatable
- Services or tune-ups for motor vehicles, lawnmowers, trimmers, edgers, leaf blowers, pressure washers, generators, chainsaws, tillers, augers, or other similar small engines, boats, aircraft, ATVs, dirt bikes, mopeds, golf carts, or bicycles
- Calibration of watches, scales, guns or scopes, medical equipment, Lasik surgery equipment, thermometers, instruments (musical or otherwise), batteries, meters, or cameras
- Removal of dents, dings, or scratches from tangible personal property or motor vehicles
- Restoration or re-upholstery of furniture or boats
- Sharpening of blades
- Troubleshooting fluid leaks or attempting to identify an unusual noise coming from a motor vehicle or other tangible personal property, whether or not the source of the leak or noise is located, determined, or resolved
- Troubleshooting prewritten computer software to determining how to restore to proper working order
- Re-stringing or re-gripping tennis rackets, golf clubs, or musical instruments
- Tuning of pianos or other musical instruments
- Installing or applying tangible personal property including clothing alterations, painting tangible personal property, embroidery, screen-printing, or window tinting for motor vehicles
As mentioned, for the above services to be taxable, they must be provided by a retailer, including but not limited to the following: Building material and supplies dealers; electronic and appliance stores; floor covering stores; hardware stores; home centers; household appliance stores; lawn and garden equipment and supplies stores; nursery, garden center, and farm supply stores; paint and wallpaper stores; and window treatment stores. It is clear from the numerous transactions listed that this change could generate large amounts of new tax revenue for North Carolina. Sovos systems are updated to account for these changes so our clients can remain compliant and process transactions normally. Authored by: Katherine Mullen, Compliance Tax Department
