North and South Carolina Revenue Departments Join Forces

Date: 4/28/2004

The North Carolina and South Carolina revenue departments will join forces next month to confront a growing problem – payment of the sales tax for all-terrain vehicles and watercraft purchased from retailers along the border.

Both revenue agencies have found that frequently sales tax is not charged on these purchases because according to the retailer’s records, the delivery of the vehicle or boat was made to a customer in the neighboring state. State law requires that a taxpayer who buys items in a state that doesn’t charge sales tax must report and pay the use tax. A line for the use tax is included on the North Carolina individual income tax form.

Both states are taking several steps to make sure that sales tax laws regarding these transactions are properly applied, such as verifying the delivery location of the equipment to the customer. Often, customers say the dealership was the delivery location for their purchase and, in some cases, a customer’s invoice will show that tax was paid to the dealer.

North and South Carolina are members of the Southeastern Association of Tax Administrators (SEATA), an organization that allows member states to share tax information specified by tax exchange agreements and to cooperate on various efforts.

The North Carolina Department of Revenue will also focus on the misuse of state agricultural certificates, form E-599, by customers who attempt to purchase all-terrain vehicles at the sales tax rate of one percent. However, this tax rate is available only for purchases of farm machinery and does not generally include ATVs. Department of Revenue auditors have found 1,400 cases involving misuse of the certificate and recovered approximately $2 million in taxes during the current fiscal year.


(For more information about the South Carolina sales and use tax, see the S. C. Department of Revenue website at

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