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                            Form E-500 Sales and Use Tax Return 
                                                  General Instructions 
 
 1. Use Form E-500 to report North Carolina State, local, and transit sales and use taxes except certain sales and use taxes 
    required  to  be  reported  on  Form  E-500E. Taxpayers  who  have  a  filing  frequency  of  Monthly  with  Prepayment  are 
    required to file Form E-500 via our Online Filing and Pay System via our website, ncdor.gov. 
 2. You must file a tax return for each filing period on or before the file by date.  If you do not file on time, you will receive a 
    delinquent notice and may owe penalty and interest. If you do not owe any tax for a filing period, you must file a return 
    and enter zero (0.00) on Line 21.  Do not write “No Tax Due” or any similar text on the return.  
     
    If your business is seasonal and you registered as a seasonal  business, only file returns for the seasonal filing periods indicated 
    for combined general rate sales and use tax on the  business registration form unless you have business activity  during other 
    filing periods.  If you have business activity in other filing periods, you must file returns for those periods. 
 3. Complete the Sales and Use Tax Return in its entirety. 
 4. If  you discontinue business operations or sell  your business, you must complete Form NC-BN, Out-of-Business Notification.  
    You can now complete and submit the Form NC-BN online at ncdor.gov, or you can mail the paper Form NC-BN.  If you registered 
    using the Streamlined Sales and Use Tax Registration System, you must close your registration at sstregister.org.  If you mail the 
    paper Form NC-BN, you must mail it separately from any return to the address shown on the form.  
 5. The total amount of receipts exempt from State tax should be included on Line 3.  Retail sales of taxable tangible personal 
    property, taxable services and certain digital property are subject to sales and use tax unless specifically exempt from tax by 
    statute and you maintain proper exemption documentation in your records. 
 6. Taxable items purchased to fulfill a lump-sum or unit-price real property contract entered into or awarded to a real property 
    contractor pursuant to a bid made on or after the effective date of a tax rate increase are subject to the increased tax rate. 
    Taxable items purchased on or after the effective date of the tax rate increase to fulfill a lump sum or unit-price real property 
    contract (sourced to the county in which the tax rate increase occurred) entered into prior to the effective date of the tax rate 
    increase, or entered into or awarded pursuant to a bid made before the effective date of the tax rate increase, are subject to 
    the lower tax rate. 
 7. As of October 1, 2022, the local sales and use tax rates are as follows: 
 
 Local  Transit Combined    County 
 Rate   Rate    Transit and 
                Local Rate 
 2.00%  -       2.00%       All counties not listed in this chart. 
 2.25%  -       2.25%       Alexander, Alleghany, Anson, Ashe, Bertie, Buncombe, Cabarrus, Catawba, Chatham, 
                            Cherokee, Clay, Cumberland, Davidson, Duplin, Edgecombe, Forsyth, Gaston, Graham, 
                            Greene, Halifax, Harnett, Haywood, Hertford, Jackson, Jones, Lee, Lincoln, Madison, Martin, 
                            Montgomery, Moore, New Hanover, Onslow, Pasquotank, Pitt, Randolph, Robeson, 
                            Rockingham, Rowan, Rutherford, Sampson, Stanly, Surry, Swain, and Wilkes 

 2.00%  .50%    2.50%       Mecklenburg and Wake 
 2.25%  .50%    2.75%       Durham and Orange 

 8. A retailer or facilitator required to collect county tax should do so based on the sourcing provisions in N.C. Gen. Stat. § 105- 
    164.4B. 
    The following general principles apply in determining where to source the sale of most items for the retailer or facilitator’s 
    purpose  and  do  not  alter the  application  of  the  use  tax  imposed  on  the  purchaser.  These  principles  should  be  used  to 
    determine  the  applicable  local  and  transit  rates  of  tax  due  on  a  retail  sale.  Except  as  otherwise  provided,  a  service  is 
    sourced where the purchaser can potentially first make use of the service. 
    (a) When a purchaser receives an item at a business location of the seller, the sale is sourced to that business location. 
    (b) When a purchaser or purchaser’s donee receives an item at a location specified by the purchaser and the location is not a 
        business location of the seller, the sale is sourced to the location where the purchaser or the purchaser’s donee receives the 
        item. 
    (c) When  (a)  and  (b)  of  this  section  do  not  apply,  the  sale  is  sourced  to  the  location  indicated  by  an  address  for  the 
        purchaser that is available from the business records of the seller that are maintained in the ordinary course of the 
        seller’s business when use of this address does not constitute bad faith. 
    (d) When (a), (b), and (c) of this section do not apply, the sale is sourced to the location indicated by an address for the 
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         purchaser obtained during the consummation of the sale, including the address of a purchaser’s payment instrument, if 
         no other address is available, when use of this address does not constitute bad faith. 
     (e) When (a), (b), (c), and (d) of this section do not apply, including the circumstance in which the seller is without sufficient 
         information to apply the rules, the location will be determined based on the following: 
            Address from which tangible personal property was shipped,
           Address from which the certain digital good or the computer software delivered electronically was first available for 
           transmission by the seller, or
            Address from which the service was provided. 
     The following are exceptions to the general sourcing rules:
          Florist wire sale - sourced to the business location of the florist that takes an order for the sale.
          Periodic rental payments - sourced in accordance with N.C. Gen. Stat. § 105-164.4B(b).
          Certain digital property - sourced to the location where the purchaser takes possession of the property or makes 
           first use of the property, whichever comes first.
          Admission  charge  to  an  entertainment  activity  -  sourced  to  the  location  where  admission  to  the  entertainment 
           activity may be gained by a person.  If the location where admission may be gained is not known at the time of the 
           receipt of the gross receipts for an admission charge, the general sourcing principles apply.
          Direct mail - sourced in accordance with N.C. Gen. Stat. § 105-164.4E.
          Service Contract - If the purchaser can potentially make first use of the service at the location of the sale, the sale is 
           sourced  to  the  location  of  the  sale  of  the  service  contract.  If  the  purchaser  of  the  service  contract  cannot 
           potentially make first use at the location where the service contract is sold, the sale is sourced in accordance with
           N.C. Gen. Stat. § 105-164.4B(a)(3), (4) or (5) based on the hierarchy and available address. 
          Prepaid meal plans - sourced to the location where the food or prepared food is available to be consumed by the 
           person.
          Rental of an accommodation - sourced to the location of the accommodation.
          Renewal  of  a  Service  Contract for  prewritten  software  -  Normally,  sourced  in  accordance  with  the  general 
           sourcing principals.  However, sourcing to the location where the purchaser received the underlying prewritten 
           software does not constitute bad faith provided the retailer has not receive dinformation from the purchaser that 
           indicated a change in location of the underlying software.
 
 9.  You must complete and file Form E-536 if you collect and remit tax for either: 
 
              more than one county or 
              a county other than the county in which your business is located. 
 
             You may file Form E-536 online at ncdor.gov.  If you file a paper return, you may print the form from ncdor.gov or 
             request a copy be mailed to you. 
 
 10. Payment must be made in U.S. dollars by check or money order drawn on a U.S. (domestic) bank made payable to the 
     North Carolina Department of Revenue, unless you pay online or you are required to make payments electronically.  Do not 
     mail cash, stamps, or post dated checks with your return. 
 11. Sign each return and payment, unless you are required to file and pay electronically or you elect to file and pay online. 
 
                            How to Prepare Return: Specific Line and Column Instructions 
 
    Line 1 -  NC Gross Receipts: Enter the amount of gross receipts from your business operations that are sourced to North 
           Carolina. Do not include any sales and use taxes collected.  You are not required to include gross receipts 
           from real property contracts. 
    Line 2 - Sales for Resale:Enter the total amount of sales of items sold for resale, sublease, or subrent.      Do not include 
           this amount on Line 3 or later lines. 
     
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 Line 3 - Receipts Exempt From State Tax:Enter the total amount of  sales and gross receipts exempt from State sales 
            and use tax. Do not include sales entered on Line 2.  Examples of sales exempt from sales and use tax include: 
   Direct sales to the U.S. Government; 
   Sales of certain items to a qualifying or conditional farmer 
   Sales of food sold under the Supplemental Nutrition Assistance Program (SNAP) and the Special Supplemental Nutrition 
    Program; 
   Sales  of  drugs  required  by  federal  law  to  be  dispensed  only  on  prescription  and  over-the-counter  drugs  sold  on 
    prescription, but not pet foods or feed for animals; 
   Sales of mill machinery to a manufacturing industry or plant; 
   Sales of food exempt from the State rate of tax but subject to the local 2% rate of tax; 
   Receipts that exceed the maximum taxable receipts from the sale of a boat or aircraft; 
   Fifty percent (50%) of the sales price of a modular home or manufactured home sold at retail. 
 Purchases for Use Column - Lines 4 through 7: 
 On Lines 4-7 of the “Purchases for Use” column, you should enter the total purchase price of taxable items you purchased inside or 
 outside of North Carolina for storage, use, or consumption in North Carolina from vendors on which the State rate of tax was not 
 collected by the vendors.  Do not include items you purchased for resale.  Enter the amount on the appropriate line as follows: 
 
 Line 4 -   Enter the amount from your taxable purchases of items not subject to another rate of State tax. 
 Line 5 -   Enter  the  amount  from  your  taxable  purchases  of  boats.  The  maximum  taxable  purchase  price  of  each  boat, 
            including all accessories attached at the time it was delivered to you, is $50,000. 
 Line 6 -   Enter the amount from your taxable purchases of modular homes.  The taxable amount is fifty percent (50%) of the 
            purchase price of each modular home, including all accessories attached when delivered to you. 
 Line 7 -   Enter the amount from your taxable purchases of manufactured homes.  The taxable amount is fifty percent (50%) 
            of the purchase price of each manufactured home, including all accessories attached when delivered to you. 
 
 Purchases for Use Column - Lines 8 through 10: 
 On  Lines  8-10 of the “Purchases for Use” column, you should enter the total purchase price of taxable items you purchased inside 
 or outside North Carolina for storage, use, or consumption in North Carolina from vendors on which the appropriate county rate of 
 tax  was  not  collected  by  the  vendors.  Do  not  include  purchases  of  an  aircraft,  a  manufactured  home,  a  modular  home,  or  a 
 qualified jet engine.  Enter the amount on the appropriate line as follows: 
 
 Line 8 -   Enter the amount of your purchases of food products exempt from State tax, but subject to the local 2% rate of food 
            tax.  Do not include these purchases on lines 9, 10, or 11. 
 Line 9 -   Enter the amount of your purchases for storage, use, or consumption in a county imposing a 2% local rate of tax. 
            Counties imposing a 2% local rate of tax are all counties other than those listed for Line 10. 
 Line 10 -  Enter the amount of your purchases for storage, use, or consumption in a county imposing a 2.25% local rate of 
            tax.  The counties imposing a 2.25% local rate of tax are: Alexander, Alleghany, Anson, Ashe, Bertie, Buncombe, 
            Cabarrus,  Catawba,  Chatham,  Cherokee,  Clay,  Cumberland,  Davidson,  Duplin,  Durham,  Edgecombe,  Forsyth, 
            Gaston,  Graham,  Greene,  Halifax,  Harnett,  Haywood,  Hertford,  Jackson,  Jones,  Lee,  Lincoln,  Madison,  Martin, 
            Montgomery, Moore, New Hanover, Onslow, Orange, Pasquotank, Pitt, Randolph, Robeson, Rockingham, Rowan, 
            Rutherford, Sampson, Stanly, Surry, Swain, and Wilkes. 
 
 Purchases for Use Column - Line 11: 
 Enter the total amount of your purchases that were purchased for storage, use, or consumption in a county imposing a 0.5% transit 
 tax and on which the county transit rate of tax was not collected by the vendors.  Durham, Mecklenburg, Orange, and Wake 
 currently impose a 0.5% transit rate of tax.  Generally, purchases included on Line 11 should also be included on Lines 9 or 10. 
 
 Receipts Column - Lines 4 through 7: 
 On Lines 4-7 of the “Receipts” column, you should enter the total amount of your taxable receipts, rentals, and sales, excluding 
 the amount of tax collected.  Enter the amount on the appropriate line as follows: 
  
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      Line 4 -   Enter the amount of your taxable receipts, rentals, and sales not subject to another rate of State tax. 
      Line 5 -   Enter the amount of your taxable receipts, rentals, and sales of boats.  The maximum taxable sales price of a single 
                 boat, including all accessories attached at the time it was delivered to the purchaser, is $50,000. 
      Line 6 -   Enter the amount of your taxable receipts, rentals, and sales of modular homes.  The taxable amount is fifty percent 
                 (50%) of the sales price of each modular home, including all accessories attached when delivered to the purchaser. 
 
      Line 7 -   Enter the amount of your taxable receipts, rentals, and sales of manufactured homes.  The taxable amount is fifty 
                 percent (50%) of the sales price of each manufactured home, including all accessories attached when delivered to 
                 the purchaser. 
 
 Receipts Column - Lines 8 through 10: 
 On Lines 8-10 of the “Receipts” column, enter the total amount of your taxable receipts, rentals, and sales subject to county tax, 
 excluding the amount of tax collected.  Do not include receipts from the sale of an aircraft, a manufactured home, a modular home, 
 or a qualified jet engine. Enter the amount of receipts on the appropriate line as follows: 
      Line  8  - Enter  the  total  amount  of  your  taxable  receipts,  rentals,  and  sales  of food  products  exempt  from  State  tax,  but 
                 subject to the local 2% rate of food tax.  Do not include these receipts, rentals, and sales on Lines 9, 10, or 11. 
      Line 9 -   Enter the total amount of your taxable receipts, rentals, and sales sourced to a county imposing a 2% local rate of 
                 tax.  Counties imposing a 2% local rate of tax are all counties other than those listed below for line 10. 
      Line 10 -  Enter the total amount of your taxable receipts, rentals, and sales sourced to a county imposing a 2.25% local rate 
                 of tax.  The counties imposing a 2.25% local rate of tax are: Alexander, Alleghany, Anson, Ashe, Bertie, Buncombe, 
                 Cabarrus,  Catawba,  Chatham,  Cherokee,  Clay,  Cumberland,  Davidson,  Duplin,  Durham,  Edgecombe,  Forsyth, 
                 Gaston,  Graham,  Greene,  Halifax,  Harnett,  Haywood,  Hertford,  Jackson,  Jones,  Lee,  Lincoln,  Madison,  Martin, 
                 Montgomery, Moore, New Hanover, Onslow, Orange, Pasquotank, Pitt, Randolph, Robeson, Rockingham, Rowan, 
                 Rutherford, Sampson, Stanly, Surry, Swain, and Wilkes. 
 Receipts  Column -  Line 11:     Enter the total  amount of  your  taxable receipts, rentals, and sales entered on Lines 9 and 10 that 
 are sourced to the any of the following counties:  Durham, Mecklenburg, Orange, and Wake. 
 
 Tax Column - Lines 4 through 11: 
 Calculate the tax amount for each line by adding the “Purchases for Use Amount” to the “Receipts Amount”, then multiply the sum by 
 the tax rate printed in the “Rate” column.  Enter the amount in the “Tax” column.  You can avoid calculating the tax amount by filing 
 online at ncdor.gov.  The file and pay system calculates the tax amount for you. 
      Line 4 -  Add the amount in the “Purchases for Use” column to the amount in the “Receipts” column.  Next, multiply the sum 
                 by 4.75% (.0475) and enter the amount in the “Tax” column. 
      Line 5 -  Add the amount in the “Purchases for Use” column to the amount in the “Receipts” Column.  Next, multiply the sum 
                 by 3% (.03) and enter the amount in the “Tax” column. 
      Line 6 -  Add the amount in the “Purchases for Use” column to the amount in the “Receipts” column.  Next, multiply the sum 
                 by 4.75% (.0475) and enter the amount in the “Tax” column. 
      Line 7 -  Add the amount in the “Purchases for Use” column to the amount in the “Receipts” column.  Next, multiply the sum 
                 by 4.75% (.0475) and enter the amount in the “Tax” column. 
      Line 8 -  Add the amount in the “Purchases for Use” column to the amount in the “Receipts” column.  Next, multiply the sum 
                 by 2% (.02) and enter the amount in the “Tax” column. 
      Line 9 -  Add the amount in the “Purchases for Use” column to the amount in the “Receipts” column.  Next, multiply the sum 
                 by 2% (.02) and enter the amount in the “Tax” column. 
      Line 10 -  Add the amount in the “Purchases for Use” column to the amount in the “Receipts” column.  Next, multiply the sum 
                 by 2.25% (.0225) and enter the amount in the “Tax” column. 
      Line 11 -  Add the amount in the “Purchases for Use” column to the amount in the “Receipts” column.  Next, multiply the sum 
                 by .5% (.005) and enter the amount in the “Tax” column. 
 Example: Business A enters 100.00 in the “Purchases for Use” Column of Line 4 and 900.00 in the “Receipts” column of Line 4. 
 Business A should enter 47.50 in the “Tax” column of Line 4.  (100.00+ 900.00 = 1,000; 1,000 x .0475 = 47.50.) 
      Line  12  -  0.25%  County  Transit  Rate: Do  not  use  this  line.  No  county  has  levied  this  rate  of  tax.  If  this  changes,  the 
                 Department will publish a notification. 

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 Line 13 -  Total State and County Tax: Add the amounts on Lines 4 through 12 of the “Tax” column and enter the sum. 
 Line 14 -  Excess Collections: If you collected more tax than was due from a customer on a sale, enter the total amount of 
  your excess collections. See N.C. Gen. Stat. § 105-164.11 for additional information. 
 Line 15 -  Total Tax: Add the tax amounts on Lines 13 and 14, and enter the sum. 
 Line 16 -  Penalty: Enter the sum of the penalties that apply to you. 
  If you file a return after the due date, multiply the tax amount shown on Line 15 by 5% (.05) for each month, or part of 
  a month, that the return is filed late. The maximum penalty is 25% of the total tax. 
  If you do not pay the tax when due, multiply the tax amount shown on Line 15 by 5% (.05).  The Department will 
  publish a notice if this penalty rate changes.  
 Line 17 -  Interest: If you do not pay the tax when due, compute interest on the tax amount shown on Line 15.  The interest 
  rate is currently 7% per year or .583% per month through December 31, 2023.  The interest rate for the period July 
  1, 2019 through December 31, 2022 was 5% per year or .417% per month.  Check the current and past interest 
  rates at ncdor.gov/taxes-forms/interest-rate.  
 Line 18 -  Less Prepayment for This Period: This line is for taxpayers who are consistently liable for at least $20,000 of tax 
  per month who have made a prior prepayment.  If you are required to make a prepayment, you must file and pay 
  electronically. 
 Line 19 -  Prepayment for Next Period: This line is for taxpayers who are consistently liable for at least $20,000 per month. 
  If you are required to make a prepayment, you must file and pay electronically.  Prepayment is due with the return 
  for the prior month.  The prepayment must equal at least 65% of one of the following: 
  (1)        the amount of tax due for the current month, 
  (2)        the amount of tax due for the same month in the preceding year, or 
  (3)        the average monthly amount of tax due in the preceding calendar year. 
 Line 20 -  Less any Credit: If you are allowed a credit for sales and use tax previously paid, enter the amount of tax credit 
  claimed.  You must include with your return a detailed explanation of the credit.  If you are requesting a refund of an 
  overpayment of tax, you are encouraged to file Form E-588, Business Claim for Refund State, County, and Transit 
  Sales and Use Taxes, instead of taking a credit on a sales and use tax return. 
 Line 21 -  Total Due: Enter the total  amount due  by adding Lines  15, 16, 17, and 19, and subtracting any prepayment  on 
  Line 18 and any credit amount on Line 20.  This amount is due on the due date of the return.   
  
 Signature and Verification:  You must sign and date your return.  You should also include your title and phone number in the 
  spaces provided. 
 Do not fold your return or payment. 
         Additional information about sales and use tax may be obtained from the Department’s website, ncdor.gov. 

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