SALES TAX ON SECURITY DEPOSITS

by

North Carolina Department of Revenue

Under the provisions of G.S.105-164.4(3), operators of haters, motels, tourist homes, tourist camps and similar type businesses and persons who rent private residences and cottages to transients for consideration are liable for the 3 % state and applicable local sales tax on the gross receipts derived from the rental of any room or rooms, lodgings or accommodations furnished to transients for a consideration.

The term "gross receipts" includes amounts charged by such retailers to their customers for seez~rzty deposits. The sales tax should be charged to the customer for

the room, lodging or accommodation and the seez~rzty deposit. If the security deposit or any part of the deposit is refunded to them customer, the tax charged on the amount so refunded should also be credited or refunded to the customer.

The sales tax must be remitted to the Department of Revenue on the seez~rzty deposit or any part of the deposit not refunded or credited to the customer.

For further information, contact a Department of Revenue Field Office or the Sales and Use Tax Division (919/733-3661).