B. Installment Paper Dealers (G.S. 105-83)

1. Basis for Taxation
   Every person engaged in the business of dealing in, buying, or discounting installment paper, notes, bonds, contracts, or evidences of debt, where at the time of or in connection with the execution of said instruments, a lien is reserved or taken upon personal property located in this State to secure the payment of such obligations, is subject to the installment paper dealers tax. The primary factors in determining liability are: (a) three party transactions, (b) obligations concerning personal property and (c) liens reserved upon personal property in this State to secure payment of such obligations.
   
   Example: A motor vehicle dealer sells an automobile (personal property) and accepts a retail installment contract from the customer. A lien is reserved on the title of the vehicle. The dealer sells or assigns the retail installment contract to a third party. The purchaser of the retail installment contract from the dealer is liable for the installment paper dealers' tax.
   
   
2. Additional Tax and Reports (Sections .2903 & .2904)
   Form B-203, Installment Paper Dealer Quarterly Report, is used to remit the tax at the rate of .277 percent of the total face value of paper subject to the tax. Face value is normally the amount financed, excluding finance charges. The quarterly report, with remittance, is due no later than the twentieth day of January, April, July and October of each year.
   
   
3. Nonresident Engaged in Business (Section .2905)
   This tax is not imposed on the business of dealing in, buying and/or discounting installment paper which is engaged in exclusively in a foreign state. When any of the activity incident to such business occurs in North Carolina, the tax applies. Such activities include the promotion and solicitation of such business by employees or agents within this State, whether or not the transfer of such paper is consummated in this State.
   
   
4. Liability for Direct Loans (Section .2902)
   A person who is engaged in the business of making direct loans (two party transactions) and also purchases installment paper (three party transactions) is subject to both the tax on installment paper dealers (G.S. 105-83) and the tax on loan agencies (G.S. 105-88).