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Say NO! to NC Sales Tax on Software Subscriptions


I just finished settling a months-long argument with a software provider about sales tax. This provider had been charging sales tax on my subscription to one of their online products. In North Carolina, per the NC General Statutes (G.S.) 105-164.13 (section 43a), software subscriptions are exempt from sales tax. If you personally, or the company you work for, is being charged sales tax on subscription-based computer software such as Google, Microsoft, Apple, QuickBooks, or Adobe, it is likely because the software provider does not have a signed and completed state sales tax exemption form on file. Until they obtain and approve this form, and possibly others, the software provider can charge and collect sales tax on an exempt item. Furthermore, the software provider knowing the rules beforehand, will keep the taxes they collect from you until you perform their required procedures and officially inform them they should not be collecting tax. Not exactly ethical right?


Note that the provider may make this process difficult for obvious reasons but stand firm and stay on target. In my situation, after finally getting the approval I needed, the provider's customer service agent working with me offered to refund the last six months of taxes collected. I somewhat respectfully countered with a request for them to refund all of the tax they collected since the beginning of my subscription equating to an additional ten months of charges. Eventually the agent backed down and refunded the full amount.


The first step is to check your monthly invoice or statement to make sure NC sales tax isn’t being charged on your software subscriptions. If it is, contact your provider's customer service team and verify the correct forms and procedures to follow to get those amounts refunded. In all likelihood, this is the form you will need to complete: https://www.ncdor.gov/taxes-forms/sales-and-use-tax/sales-and-use-tax-forms-and-certificates/exemption-certificates/form-e-595e-streamlined-sales-and-use-tax-certificate-exemption


Curious what the other tax-exempt products and services are in NC? Check out the current NC sales and use tax bulletin located here: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.ncdor.gov/sutb-2023-finalpdf/open


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