Sales Tax Required on Repair, Maintenance, and Installation Services Effective March 1, 2016

R.W. McCollum Company, like all other repair shops our customers use, charges "labor" for all work performed in servicing our customers' equipment. On September 18, 2015, NC Governor McCrory signed the 2015 NC appropriations bill into law. Included in that bill was a change in the sales taxes rules, effective March 1, 2016, to assess a sales tax on repair, maintenance, and installation ("RMI") services to keep tangible personal property in working order. In other words, we will now be required to charge tax on labor. Since this announcement, we have been working hard to get a better understanding of their definition of "repair, maintenance, and installation services" as it pertains to our industry, so we know what forms of "labor" would be taxable. After multiple conversations with our CPA, and also with the Department of Revenue, we have determined what forms of labor will require sales tax (6.75% in Guilford County).  R.W. McCollum breaks "labor" out into six different categories, and per our conversations with the Dept of Revenue, below is what WILL be taxable, and what WILL NOT be taxable:

1) General labor (i.e. suspension work, electrical, welding, etc): TAXABLE per the definition of RMI

2) Inspectons (i.e. V, K, I, P, UC, NCDAQ, Wet Tests, Annual DOT): NOT TAXABLE because it is a Governmental required service

3) Calibrations (i.e. meter calibrations, tank calibrations): TAXABLE per the definition of RMI

4) Preventative Maintenance (i.e. PM programs set up by our customers for us to administer on a pre-defined schedule): TAXABLE because it is a voluntary service requested by our customers

5) Outside Labor (i.e. having axle checked by outside source, contracting a wrecker service to set a tank on a chassis, etc): NOT TAXABLE per page 5 of attachement below

6) Manufacturer Warranty work (i.e. changing a defective probe on a new trailer): NOT TAXABLE per page 6 of attachment below

To read the entire Directive of this new policy, please click on the link below. I have highlighted the areas that effect our business and the information above. 

If you have any questions about this new law as it pertains to service work performed at R.W. McCollum Company, do not hesitate to contact Brian Cooke at bcooke@mccollumtanks.com, or 800.632.0226. If you have concerns on how this law will effect other areas of your business, we recommend you contacting your CPA, or the Department of Revenue Sales Tax Policy Group at 919-814-1082. We thank you for your continued business!

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