Is there sales tax on labor in NC?

Answer 1

Yes and no. According to the NC Department of Revenue Sales and Use Tax Technical Bulletin 41 dated 07/01/2007,

"Sales to users or consumers of tangible personal property, including articles fabricated by the vendor, which the vendor contracts to install are subject to the sales or use tax and persons making such sales must register with the Department and collect and remit all tax due. If the vendor makes a charge for installing articles of tangible personal property which he sells, the charge for installation will not be subject to tax provided it is in addition to the sales price of the property and is stated separately on the customer's invoice and in the vendor's records. If the installation charge is not separately stated, the entire amount will be taxable."

The cited history of this law is "Authority G.S. 105-164.4; 105-164.6; 105-264;

Issued: June 1, 1996."

In construction, labor is generally part of what is termed a "performance contract."

As such, it is also taxable, provided it is not listed separately. See Technical Bulletin 31.

Labor on auto repair is also taxable unless it is listed separately. See Technical Bulletin 35. You may see a trend here.

Generally speaking, all tangible personal property and labor to install or repair that property is taxable. Only if the business lists the labor as a separate item is the labor not taxable, and there are a number of exceptions to this. You have to check the appropriate Technical Bulletin to determine the exact situation.

Answer 2

Maybe or maybe not...it depends on the law. The law makers have no idea what is taxable and what is not. So there needs be interpretation to the law. The tax money collected is to be used for something, but there is no clarity on exactly what the money can be used to support or can use it.