The Sales and Use Tax Division of the North Carolina Department of Revenue published two directives and three notices for the various changes, expansions, and clarifications for real property contracts, RMI services, and service contracts.
Key points of the directive:
- Definitions for “real property,” “real property contract,” and “capital improvement” are enacted.
- A contract is taxed as a real property contract where the contract is for new construction, reconstruction, or remodeling with respect to a capital improvement to real property.
- Form E-589CI, Affidavit of Capital Improvement, will be required for many contracts to give notice to retailer-contractors and sub-contractors that any subcontract work should be taxed as a real property contract.
- Certain transactions by definition are capital improvements, such as “landscaping services.”
Comprehensive guidance on these new directives and notices are available here.