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US North Carolina marketplace sales tax obligations Feb 2020

  • Jan 23, 2020 | Richard Asquith

North Carolina becomes the latest state to impose sales tax collections obligations on marketplaces. This requires marketplaces that have ‘facilitated’ sales by their third-party remote sellers to withhold the sales tax, and remit it directly to the North Carolina tax authorities.

The new measure comes into effect on 1 February 2020. There are almost 40 US states with such marketplace obligations rules in place. Hawaii, Illinois, Michigan, and Wisconsin introduced the requirement at this start of 2020.

Facilitation can apply where an online marketplace introduces sellers to consumers in the state, and assisting with payment and fulfilment in some way. But the rules vary enormously from state-to-state. A simple introduction may be enough. Also, in some states, affiliation to the seller is required.

Since the 2018 South Dakota vs Wayfair Supreme Court ruling that out-of-state and foreign sellers have to collect local sales tax, too, 43 states have adopted the so-called ‘economic nexus’ test. Although most states have an annual sales threshold of between $100,000 and $200,000 (plus set number of transactions).

In addition to own transactions, these thresholds apply to marketplaces’ by third-party sellers, and their own economic nexus.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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