State and local sales tax applies to charges for all shoe repair services in North Carolina, including labor and services, beginning March 1, 2016. The new policy is due to the enactment of S.L. 2015-241, which calls for the repeal of 17 NCAC 07B .1002.
Until March 1, 2016, state and local sales and use tax does not apply to separately stated labor and services. In the event that charges for material, labor and services are combined, shoe repair businesses are permitted to collect and remit sales tax on only 40% of combined charges for materials, labor, and services — the 40% represents a tax on the materials. That policy changes next spring, when service and labor charges will be taxed.
According to the North Carolina Department of Revenue, “A repair part or other tangible personal property historically purchased and taxed in accordance with the administrative rule in effect prior to March 1, 2016 should be purchased for the purpose of resale on or after March 1, 2016.” Additional information.
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