17 NCAC 07B .4802          ACCRUAL BASIS

When a vendor elects to report and pay tax on the accrual basis he must keep records which disclose a separate accounting of taxable and nontaxable sales.  The vendor must pay tax on the total sales price of all taxable tangible personal property sold during the month covered by the return, whether or not such sales are cash, credit, installment or conditional sales and whether or not the vendor retains the installment and conditional sales contracts or sells or assigns them to others and without regard to any finance reserve withheld on finance paper sold or assigned to others.  Finance charges, service charges or interest from credit extended under conditional sales contracts providing for deferred payment of the purchase price are not subject to tax if such charges are separately stated on the invoices given to the customers at the time of sale and in the vendor's records of sales.  If, in reporting on the accrual basis, accounts of purchasers representing taxable sales on which the tax has been paid are found to be worthless and actually charged off for income tax purposes, the amount charged off representing taxable sales may at corresponding periods be deducted from gross sales provided the vendor maintains records disclosing separately that portion of bad accounts representing taxable sales and that portion representing nontaxable sales.  Accounts charged off as bad debts must be added to gross sales if afterwards collected.

 

History Note:        Authority G.S. 105‑164.3; 105‑164.22; 105.262;

Eff. February 1, 1976.