North Carolina eliminates economic nexus transaction threshold

Effective July 1, 2024, economic nexus in North Carolina is based on sales only - not sales volume or the number of transactions in the state. Consequently, unregistered remote retailers selling into North Carolina are only required to track whether they've reached the state's $100,000 economic nexus sales threshold. Out-of-state sellers no longer need to count whether they've made 200 or more sales to North Carolina customers.

The 200-transactions economic nexus threshold was repealed by House Bill 228, signed into law on July 1, 2024.

What is the new economic nexus threshold for North Carolina?

As of July 1, 2024, the economic nexus threshold for a remote seller making sales into North Carolina is more than $100,000 in gross sales from remote sales sourced to North Carolina, including sales made through a marketplace, in the current or previous calendar year.

The economic nexus threshold for a marketplace facilitator is more than $100,000 in gross sales sourced to North Carolina in the current or previous calendar year. Marketplace facilitators must include direct sales as well as third-party sales when calculating the economic nexus sales threshold.

Remote sellers and marketplace facilitators must obtain a sales tax permit and start collecting sales tax immediately after establishing economic nexus with North Carolina.

What was the prior economic nexus threshold for North Carolina?

Between November 1, 2018, and June 30, 2024, North Carolina's economic nexus threshold for remote sellers was:

• More than $100,000 in gross sales sourced to North Carolina in the current or previous calendar year, or

• 200 or more separate transactions shipped to North Carolina in the current or previous calendar year

As a result, out-of-state sellers with no physical connection to North Carolina had to keep track of their sales and their transactions into North Carolina.

What do I do if I no longer have economic nexus with North Carolina?

If your business has less than $100,000 in gross sales in North Carolina to date in 2024, had less than $100,000 in sales in 2023, and was registered for North Carolina sales tax because you made more than 200 transactions in the state in the current or previous calendar year, you may elect to cancel your sales tax registration. Note that you must continue to collect and remit North Carolina sales tax and file returns unless and until you cancel your sales tax permit.

You're also welcome to remain registered for sales tax and to continue to collect and remit North Carolina sales and use tax voluntarily.

If your business had more than $100,000 in gross sales in 2023 or during the first half of 2024, you continue to have an obligation to collect and remit North Carolina sales tax because you exceeded the sales threshold in the current or previous calendar year. The North Carolina Department of Revenue offers several examples to illustrate the new requirements.

Retailers, think fast

The North Carolina General Assembly ratified HB 228 on June 28, 2024. Governor Roy Cooper signed the bill on July 1, 2024. It took effect the same day.

You don't necessarily need to do anything different at this time. However, if the repeal of the 200-transactions threshold in North Carolina means you no longer have economic nexus or an obligation to collect and remit sales tax for North Carolina, you'll want to carefully consider what you do moving forward. Should you remain registered? Or should you cancel your sales tax registration and resume tallying your sales into the state so you'll know if and when you create economic nexus in the future? The choice is yours.

North Carolina is the third state to eliminate its 200-transactions threshold for economic nexus this year, following in the footsteps of Indiana and Wyoming. Utah tried to do the same but was unable to make it happen in 2024. As of July 3, 2024, 13 states have repealed their transaction threshold for remote sellers.

You'll find details about economic nexus thresholds for all states in our state-by-state guide to economic nexus laws. For a better idea of where your business may have economic nexus, take the Avalara Sales Tax Risk Assessment.