Over the past month, the North Carolina Department of Revenue (NCDOR) has introduced two tax motivated measures meant to help small businesses by decreasing sales/use tax, penalties & fees for overdue taxes, and by decreasing withholding and other trust taxes.
State Sales and Use Tax Rate Decrease
The first measure, a decrease in the state sales and use tax rate for purchases of tangible personal property (goods), certain digital property, and certain services, reduced rates from 5.75% to 4.75%, bringing down the overall state and local tax rates across North Carolina. For Mecklenburg, this measure brings the state and local tax rates down to 7.25%. For businesses providing telecommunications service, ancillary, services, video programming, and sales of spirituous liquor other than mixed beverages in North Carolina, the gross receipts tax has been lowered to a combined general rate of 7% for all transactions sourced to North Carolina (this includes local tax rates).
These tax rate decreases became effective on July 1, 2011. The change was the result of the expiration of a temporary 1% sales tax increase put into effect two years ago (September 1, 2009 – July 1, 2011). Though initially it would seem as this would lower North Carolina's sales tax-based revenues, North Carolina is hoping that the decrease in sales tax will translate into increased sales, with the hope of keeping revenues at least level, if not increasing.
The Small Business Taxpayer Recovery Program
The second measure the NCDOR took, along with the N.C. Small Business Commissioners Office, was to launch a program aiming to help small businesses recover from tax liabilities which might have arisen from the current downward trend of the economy. This measure will offer penalty and fee waivers, as well as payment plans to companies that have fallen behind on sales, withholding, and other trust taxes. For the NCDOR and businesses owing back taxes, this program will be a win-win – the government now has a new means to collect the taxes it so dearly needs, while the businesses can get on a payment plan and have fees and penalties waived for working out an agreement to pay their overdue taxes.
To qualify for this program, businesses must have 200 or fewer employees and must agree to use the counseling services of either the Small Business and Technology Development Center (SBTDC) – a business advisory service of the University of North Carolina System, or the NC Small Business Center Network (SBCN) – a business counseling service provided through the North Carolina Community College System. This program, which opened in July of this year, is available now and will run through June 2013. For more information on how to apply, visit the NCDOR website, visit an NCDOR service center, or call a representative at 1-877-252-3052.