Instruction For Form E-505 (Page 2 of 4) in pdf

Effective August 5, 2009

Reliance on Written Advice

G.S. 105-164.11 was amended by adding a new subsection to read: “A seller who requests specific written advice

from the Secretary and who collects and remits sales or use tax in accordance with the written advice the Secretary

gives the seller is not liable to a purchaser for any overcollected sales or use tax that was collected in accordance with

the written advice.” G.S. 105-164.11(a) governs when a seller may obtain a refund for overcollected tax.

Effective August 7, 2009

Definitions

G.S. 105-164.3(1e) is added and defines “Audio work” as “A series of musical, spoken, or other sounds, including a

ringtone.”

G.S. 105-164.3(1g) is added and defines “Audiovisual work” as “A series of related images and any sounds

accompanying the images that impart an impression of motion when shown in succession.”

G.S. 105-164.3(7a) is added and defines “Digital code” as “A code that gives a purchaser of the code a right to

receive an item by electronic delivery or electronic access. A digital code may be obtained by an electronic means or

by a tangible means. A digital code does not include a gift certificate or a gift card.”

G.S. 105-164.3(14a) is added and defines “Information service” as “A service that generates, acquires, stores,

processes, or retrieves data and information and delivers it electronically to or allows electronic access by a consumer

whose primary purpose for using the service is to obtain the processed data or information.”

G.S. 105-164.3(33c) is added and defines “Remote sale” as “A sale of tangible personal property or digital property

ordered by mail, by telephone, via the Internet, or by another similar method, to a purchaser who is in this State at the

time the order is remitted, from a retailer who receives the order in another state and delivers the property or causes it

to be delivered to a person in this State. It is presumed that a resident of this State who remits an order was in this

State at the time the order was remitted.”

G.S. 105.3(35) is amended and defines “Retailer” as “A person engaged in the business of any of the following: (a)

Making sales at retail, offering to make sales at retail, or soliciting sales at retail of tangible personal property, digital

property, or services for storage, use, or consumption in this State. When the Secretary finds it necessary for the

efficient administration of this Article to regard any sales representatives, solicitors, representatives, consignees,

peddlers, or truckers as agents of the dealers, distributors, consignors, supervisors, employers, or persons under

whom they operate or from whom they obtain the items sold by them regardless of whether they are making sales on

their own behalf or on behalf of these dealers, distributors, consignors, supervisors, employers, or persons, the

Secretary may so regard them and may regard the dealers, distributors, consignors, supervisors, employers, or

persons as „retailers‟ for the purpose of this Article. (b) Delivering, erecting, installing, or applying tangible personal

property for use in this State, regardless of whether the property is permanently affixed to real property or other

tangible personal property. (c) Making a remote sale, if one of the conditions listed in G.S. 105-164.8 (b) is met.”

G.S. 105-164.3(35c) is added and defines “Ringtone” as “A digitized sound file that is downloaded onto a device and

that may be used to alert the user of the device with respect to a communication.”

Nexus Clarification for Click Throughs

G.S. 105-164.8(b) provides that a retailer who makes a mail order sale is engaged in business in this State and is

subject to the sales and use tax if at least one of the conditions in (b)(1) through (b)(8) are met. G.S. 105-164.8(b)(3)

codifies the principle announced by the United States Supreme Court in Scripto v. Carson that a state may require tax

collection by a remote retailer that had contacts with 10 independent contractors in the state who solicited orders for

products on its behalf. G.S. 105-164.8(b)(3) requires a retailer who makes a mail order sale to collect the sales tax if:

“The retailer has representatives in this State who solicit business or transact business on behalf of the retailer,

whether the mail order sales thus subject to taxation by this State result from or are related in any way to such

solicitation or transaction of business.”

The clarifying amendments to G.S. 105-164.8(b) modernize the terminology of the statute by replacing “mail order

sales” with “remote sales.” The clarification rewrites G.S. 105-164.8(b)(3) as follows: “The retailer solicits or transacts

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Instruction For Form E-505 Page 2

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