North Carolina Tax News Update:

On August 7, 2009, the Governor Bev Perdue signed the state budget bill that imposes corporate and personal income surcharges, raising sales and use tax, alcohol beverage tax, cigarette and tobacco tax rates, updates IRC conformity and adopts an Amazon clause, similar to the provision currently in effect in New York, requiring out-of-state online retailers to collect tax on purchases made unless otherwise stated.

Corporate income surcharge:

The surcharge is equal to 3% of the income tax calculated on the normal rate tables.  The surcharge expires for years beginning after December 31, 2010.

Individual income surcharge:

Two levels of surcharge exist for individuals.

2% surcharge for the following:

Joint filers with Income over $100,000 up to $250,000
Head of household filers with income over $80,000 up to $200,000
Single filers with income over $60,000 up to $150,000
Marred filing separately taxpayers with income over $50,000 up to $125,000

3% surcharge for the following:
Joint filers with income over $250,000
Head of household with income over $200,000
Single filers with income over $150,000
Married filing separately with income over $125,000

The surcharge expires for years beginning after December 31, 2010.

Sales and use tax rate:
The North Carolina Department of Revenue has announced that as a result of the additional 1% state rate increase effective September 1, 2009, the combined state and county tax rate will increase to 8.25% in Mecklenburg County, 8% in Alexander, Catawba, Cumberland, Haywood, Martin, Pitt, Sampson, and Surry Counties, and 7.75% in the remaining 91 counties.  The combined general rate of tax, which applies to telecommunications service, ancillary service, video programming , and spirituous liquor other than mixed beverages, is the state's general rate plus the sum of the rates of local tax authorized for every county in the state.  Therefore, since the additional 1% has been temporarily increased, the combined general rate will increase to 8% in all counties, including Mecklenburg County, until July 1, 2011.

www.dornc.com/taxes/sales/salesrates_7-10.html

Effective October 1, 2010

Please also note the following counties adopted resolutions to levy an additional 0.25% local sales and use tax effective October 1, 2010:  New Hanover, Onslow, Wilkes

Digital property subject to sale and use tax:
Beginning January 1, 2010 sales and use tax will apply to digital property.  This will include audio work, audiovisual work, photograph or greeting cards, books, newsletters, or magazines that are received or accessed electronically, are not considered tangible personal property, and would be taxable if sold in a tangible medium.  The tax does not apply to a service that is an information service.

Information gathered from an article from  the Research Institute of America by Teresa Callahan, Esq.