The NC Department of Revenue issued an important notice stating that, effective January 1, 2015, the general 4.75% state and applicable local and transit rates of sales and use tax apply to the sales price of tangible personal property sold to a real property contractor for use by the real property contractor in erecting structures, building on, or otherwise improving, altering, or repairing any real property.

A taxpayer that operates as a retailer prior to January 1, 2015, and that makes retail sales of tangible personal property that is installed or applied to a real property and that furnishes the labor to install or apply the tangible personal property sold at retail that becomes a part of real property is required to apply the tangible personal property sold at retail that becomes a part of real property is required to adopt the new application of sales and use tax to such transactions on or after January 1, 2015.

A real property contractor is a person that contracts to perform construction, reconstruction, installation, repair, or any other service with respect to real property and to furnish tangible personal property to be installed or applied to real property
in connection with the contract and the labor to install or apply the tangible personal property that becomes part of real property.

A retailer-contractor is a person that acts as a retailer when it sells tangible personal property at retail and as a real property contractor when it performs real property contracts.