The North Carolina Department of Revenue is launching today a sales tax amnesty program that forgives Internet retailers with North Carolina affiliate programs for uncollected sales tax on products and services sold online to North Carolina residents.
“This is about fairness and uniformly collecting taxes due the state from all retailers,” Kenneth R. Lay, the state’s secretary of revenue, said today in announcing the program. “Small businesses, the brick and mortar operations, are at a competitive disadvantage when they have to collect sales tax that other businesses do not.”
North Carolina already has a law on the books that requires out-of-state-based Internet retailers with in-state affiliates to collect and remit sales tax on sales to North Carolina residents. Federal law exempts retailers from sales tax collection duties in states where they have no physical presence, such as stores, warehouses or offices. But North Carolina law includes as a basis for for in-state physical presence affiliates, or third-party web sites that forward customers to an online retailer.
The program that the state announced today, the Internet Transactions Resolution Program, is inviting online retailers with in-state affiliate relationships to enter into an agreement with the state to collect and remit sales tax for a minimum of four years beginning Sept. 1. In return, the state will agree to drop participating retailers’ sales tax liabilities, including any penalties and interest, for periods prior to that date. In addition, the state will also agree not to seek unpaid franchise tax for periods prior to Sept. 1.
Participating retailers must submit an application to the program by June 30 and an agreement with the state must be signed by Aug. 31, the state says.