Do I Tax Shipping Costs in North Carolina?
- Jun 23, 2016 | Stephanie Faris
At one time, sales tax was fairly straightforward. If a person purchased an item in a store, tax was added to that item. In the past couple of decades, however, consumers have gradually migrated toward buying items online, then waiting for them to arrive in the mail. For online retailers, this means taking on the complicated task of calculating sales tax on those purchases, which often ship to customers across the country.
Things become even more complicated with shipping costs, which are taxable in some states but not others. If you’re shipping to North Carolina, below are a few things you should know.
- Unlike other states, in North Carolina, shipping charges are taxed whether retailers separate those charges on the invoice or combine them with the rest of the bill.
- If the items in a shipment are tax-exempt, shipping on those items is also tax-exempt. When a shipment contains a combination of taxable and non-taxable items, sales tax should be calculated and charged only on the taxable items.
- Out-of-state businesses with nexus in the state must charge sales tax on shipping for taxable items.
- In addition to the shipping costs charged to the customer, delivery and packaging costs are taxable in North Carolina, as well. Those include handling, crating, packing, and anything else necessary to get your item to the customer.
For businesses that regularly ship items to North Carolina customers and have nexus in the state, sales tax usually applies to shipping. If your business has a physical presence in North Carolina, it’s important to note the laws on shipping taxability and make sure you’re in compliance before you make your next sale.