As a result of the recent amendments to the North Carolina Sales and Use Tax Law, owners of cottages, apartments, condominiums, etc., who rent to transients (temporary occupants) and rental agents who rent such accommodations to transients on behalf of the owners are required to collect sales tax on such rental income to be remitted to the North Carolina Department of Revenue. When the rental agent is liable for the tax, the owner is not liable.
However, owners and rental agents are not required to collect sales tax on accommodations which are (1) rented to transients less than 15 days per calendar year or (2) acquired as a permanent residence. When accommodations are supplied to the same person for a period of 90 or more continuous days, the receipts therefrom are exempt from sales tax. After the accommodations have been rented to the same person for the required period, the tax collected should be refunded to such person and the rental agent or owner who remitted the tax may claim a refund or credit for any tax remitted to the Department which has been refunded to the customer.
The three per cent State sales tax and one per cent local sales ax (where applicable) is computed based upon the gross receipts derived from the rental of such accommodations. Such funds when collected by a rental agent should be deposited and maintained in the agent~ real estate brokerage trust account pending remittance to the Department of Revenue and should be handled in accordance with all applicable provisions of Commission Rule .0107 governing the handling and accounting of trust funds.
Owners and rental agents who are subject to the new requirements must register with the Department of Revenue by filing an application for a Merchants Certificate of Registration License (Form E-504) and paying a $5.00 license fee.
Persons desiring additional information are advised to contact one of the field offices of the Department of Revenue or the Sales and Use Tax Division (919/733-3661).