by | Dec 12, 2017 | Blog, Taxes | 0 comments

State and local (SALT) are often more complex than the IRS tax law and represent one of the largest compliance burdens that a business faces. Set aside [for a moment!] the current tax plan running through congress right now and that still leaves a range of state and local that the business owner is subject to. Property , occupancy , withholding , unemployment , and often the biggest tax of all: sales . Most businesses have to deal with sales in one way or another and it can be as simple as proving you are exempt from it (increasingly rare) to collecting/paying it for each state your business generates revenue. GP is based in Charlotte, North Carolina, where the state has seen some major changes to its laws in the past year.

North Carolina offered a “grace period” to allow businesses affected by the changes to comply fully by 2018, which has ended as of January 2018. While the changes were numerous, the biggest change is the addition of the “labor tax” to NC collections. In summary, North Carolina has moved from a on “goods” to a on “goods and services”. There are still a few services that are not yet subject to sales in NC, but if your business generates revenue from “repair, maintenance, or installation” (“RMI”) services, then the changes directly apply to you.

Repair, maintenance, and installation services for tangible personal property are now subject to the statewide rate, as well as any local sales tax rates. This particularly affects the automotive repair industry, HVAC companies, and many types of contractors. What constitutes an “RMI” service is broadly defined and encompasses virtually every situation that involves labor. As an example, an oil change, an HVAC service call, and a plumbing repair are all subject to sales in NC. Whether the invoice breaks out parts/labor is no longer relevant; sales tax should be changed on the entire invoice. A $100 HVAC service call will now cost $107.25 in Mecklenburg County, $106.75 in Union County, and probably less in SC.

The most complicated change in the laws applies to contractors of every type and industry. In a very general sense, the shift in sales tax collection has changed for contractors by requiring them to pay use tax (same rate as sales tax) on material purchases. Whether the contractor should pay use tax on all of their material purchases or should be charging sales tax to their customer is dependent on a few factors, including whether the customer is another contractor or the general public. If a business sells to [both] other contractors and the general public, it can get even more difficult to determine what gets taxed and who pays it. There are also considerations for those contractors who work on “real property” and if the overall transaction is a “capital improvement”. For example, a company that builds outdoor decks would apply the sales tax differently if they are building a deck for a home builder or if they were building a deck for a homeowner.

If the items discussed above are making your head spin or you have questions about how the laws apply to your business, there is no better time to ask an expert than now. GP is the advisor that can keep your business compliant and potentially save you thousands by making sure you are compliant with law. Our firm serves the major industries affected by these changes and can keep your business on the right track for sales and use tax.

Contact Justin or Gary with any specific questions or for more information. Take our “Sales & Use Tax Quiz” here.


Are you a Retailer? Test your knowledge about NC Sales Tax! [QUIZ]

If you business sales tangible items to the public this quiz will test your knowledge of current NC sales tax law. MORE ARTICLES FROM OUR BLOG

What are S-corp distributions?

Let’s start this conversation by assuming the reader is already an S-corp shareholder. If not, get caught up on S-corps, HERE. For those on their second rodeo, S-corp distributions are often misunderstood, kind of like sharks. In the same way that a shark can only...

What the Section 199A is about in new Tax Cuts and Jobs Act tax reform

Dear Landlords & Real Estate Titans: tax reform added new tax code , which created a 20 percent tax deduction possibility for you if your rental property (a) has profits and (b) can qualify as a trade or business. As the law...

How to create the paper trail for rental real estate deductions

Taxpayer’s trying their hand at real estate investment often miss a few key points with how they approach their time spend on real estate matters. Whether your real estate investment is for appreciation (or speculation), flipping, or renting, the ability to prove what...

QBO v Xero a practical dissertation

GP is a silver partner, which does not mean that we are in second place, it just means that we are growing (and there is room for improvement). Our firm’s preference is clearly with as far as online accounting platforms and the reasons are many. Rather...

Court-Approved Way to Defeat IRS Penalties

Court-Approved Way to Defeat IRS Penalties Like you, GP CPA does not like IRS penalties. That’s why we keep you up to date on new ways you can beat the IRS at its penalty game. We have previously outlined a new and potentially powerful penalty abatement strategy that...

Technology that GP CPA is currently using

We are approaching mid-year (for those of us on a calendar year…) and enough time has passed that we can reflect back on some of the technology that GP CPA has been using and is no longer using in 2019. First up, let’s have a drink for those who are no longer with us:...

Tina Simmons
Tina Simmons
13:38 17 May 19
This team is dedicated to their clients and committed to understanding your business and sharing their knowledge to help you succeed. I love working with these folks, they take the worry and uncertainty out of accounting and taxes!read more
Bravo4 Autowerks
Bravo4 Autowerks
12:55 08 May 19
Gary and his team have been fantastic for me and my business. They respond well to all my questions, are very helpful and of course keep my financials in order. Highly more
Queen City Newborn Care
Queen City Newborn Care
15:57 02 Apr 19
I was drowning before I met Justin. He totally transformed how I run my small business and has gotten me organized in ways I didn't even know were possible. I am so grateful for his advice and suggestions! This company is worth every more
Dennis Bloomberg
Dennis Bloomberg
16:01 26 Mar 19
Unfortunately, I found GMP when my mother passed. She had a trust set up and I had no experience with one. I received excellent advice prior to filing taxes, that allow for the transfer of assets with little tax implication. The tax process was simple for me, Justin took over once he had details and cleared up all question from filing our taxes. Thank you for a job well done!read more
Natalie Knight
Natalie Knight
15:35 21 Nov 18
Prusiensky CPA is up to date on technology. They handcraft a platform that works best for your company's accounting services. We really appreciate how hands on and quick their team is when replaying to any type of correspondence. Simply put, they care and want your company to more
Ashlyn Lelej
Ashlyn Lelej
14:39 21 Nov 18
I highly recommend Justin at Prusiensky, CPA for all of your accounting and tax needs. I've been a client for over two years, and have been consistently impressed with their dedication to helping my business grow and be financially successful. His advice is invaluable. Thank you!read more
Bobby Nguyen
Bobby Nguyen
22:23 20 Nov 18
My partner and I started our very first small business last year. Justin has been a blessing to us. Being new at all of this, we didn’t understand much of how business taxes work. Justin explained and answer all of questions that we have. He took care of everything for us throughout the year and have made life so much easier for us. I couldn’t have asked for a better CPA. Highly recommended!read more
Next Reviews


What S Corporations and C Corporations should consider
Pros and Cons of 401(K) Loans & The Tax Impact of a Child’s Investment Income