North Carolina issued guidance to retailers who derive gross receipts from sales of services to tint or color photographs. Effective September 1, 2018, charges for tinting or coloring a consumer’s tangible or digital photograph are subject to North Carolina sales and use tax.

Specifically, the sales price or gross receipts derived from these services are subject to the 4.75% state, applicable local (2% or 2.25%), and applicable transit (.5%) sales and use tax rates. However, photograph tint or color supplies and other tangible personal property that become a part of or applied to a purchaser’s property and is part of the sales price of repair, maintenance, and installation services should be exempt from sales and use tax. To purchase qualified tangible personal property exempt from sales and use tax, a person should issue Form E595E, Streamlined Sales and Use Tax Agreement Certificate of Exemption to the seller.

It is important to note that a person will be liable for sales and use tax at the time of purchase on any tool, equipment, supply, or similar tangible personal property that is used to tint or color a tangible or digital photograph but does not become a part of or is not applied to a customer’s property or tangible personal property sold at retail. An excise tax, at the same rate, will be applicable if the tax due is not paid at the time of purchase.

Retailers providing tinting or coloring services may be liable for sales and use tax, but equally may be eligible for refunds on certain supplies.  To register to collect and remit sales tax in North Carolina, you will need to complete and mail in the application or complete it online. To apply for a tax refund with the North Carolina Department of Revenue, fill out the Link 2 – NC – 19 Claim for Tax Refund. A qualified tax attorney can assist with the execution of the application and potential questions or concerns that may arise in the process.

Jeanette Moffa is an attorney who concentrates on state and local taxes at Moffa, Sutton, & Donnini, P.A. She is an executive council member of the American Bar Association Tax Section State and Local Tax Committee and the Florida Bar Tax Section. Ms. Moffa is an author of both the CCH’s Expert Treatise Library: Sales and Use Tax as well the ABA’s Sales and Use Tax Deskbook. In addition, her regular columns on state and local tax issues can be found in State Tax Notes and Actionline, a publication from the Florida Bar’s Real Property, Probate, and Trust Law Section. She also serves as assistant editor to the Sales and Use Tax Deskbook and Actionline. Ms. Moffa is a regular speaker at the American Bar Association Tax Section conferences, the Institute of Professionals in Taxation, the Florida Bar Tax Section, the Florida Bar Real Property, Probate, and Trust Law Section, and the FICPA. In her free time, she teaches as an adjunct professor at Broward College.

Posted in Multi-state sales and use tax, North Carolina Sales Tax