North Carolina has a use tax on purchases made outside the State for use inside the State called a Consumer Use Tax. You should pay the use tax on your individual income tax return. If you owe use tax on consumer items but are not required to file an individual income tax return, you should report and pay the use tax on Form E-554, Consumer Use Tax Return..

An individual owes consumer use tax on an out-of-state purchase when the item purchased is subject to North Carolina sales tax and the retailer making the sale does not collect sales tax on the sale or the state sales tax rate imposed by the other state is less than the state sales tax rate imposed by North Carolina. Examples of items that are subject to the consumer use tax include computer and other electronic equipment, software, books, audio and video tapes, compact discs, records, clothing, appliances, furniture, sporting goods and jewelry. Out-of-state retailers include mail-order companies, television shopping networks and firms selling over the internet. When an out-of-state retailer does not collect sales tax or the tax collected is less than the state tax imposed by North Carolina, the responsibility of paying the tax falls on the purchaser. This includes items purchased in other states during "tax-free holidays". Other states share information with North Carolina on sales to North Carolina residents and the U.S. Customs Service provides information on overseas purchases.

The use tax is calculated at the same rate as the sales tax. If you paid another state's sales or use tax on out-of-state purchases, that amount can be credited against the North Carolina use tax due. If you file the Form D-400, the use tax will be shown on line 19.

Last modified on: 12/18/09 08:28:01 AM.