17 NCAC 07B .4803          CASH BASIS

(a)  When a vendor having both taxable and nontaxable sales elects to report and pay tax on the cash basis, the vendor must keep records which disclose a separate accounting of taxable and nontaxable sales and receipts on sales.  Such vendor must pay tax on the total sales price of all taxable tangible personal property sold for cash during the month covered by the return and on that portion of the sales price collected or constructively received during such month on taxable tangible personal property sold on credit, installment or other deferred payment sales contracts without any arbitrary allocation for finance charges, service charges or interest charges.  Finance charges, service charges and interest charges for credit extended under conditional sales contracts providing for deferred payment of the purchase price are not subject to the 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 and collections.  If, on conditional, installment or other deferred payment sales, the vendor sells or assigns the finance paper, he is deemed to have received the full balance of the consideration for the sale of tangible personal property and is liable for remitting tax on the total sales price of such property at the close of the month during which the paper was assigned or sold including any finance reserve withheld on the finance paper.  If such vendor sells his accounts receivable he is liable for payment of tax on the outstanding taxable balance of such accounts at the time they are sold notwithstanding that the accounts may be sold at a discount to the purchaser.

(b)  When persons filing their sales tax reports on the cash basis of accounting sell their accounts receivable, they are liable for payment of sales tax on their taxable accounts receivable balance outstanding at the time they sell such accounts.  When a corporation is formed to succeed a proprietorship or partnership and the accounts receivable are sold to the corporation, the proprietorship or partnership is liable for remitting the sales tax due on its outstanding taxable accounts receivable balance at the time the accounts are sold.


History Note:        Authority G.S. 105‑164.3; 105‑164.22; 105‑262;

Eff. February 1, 1976.