NC Department of Revenue law change

Looks like some more regulations have hit farmers and farmers markets. Thanks NC legislature for making it just a little bit harder to be a farmer.

Here are the details as I received them in an email.

From: Jake Parker
Sent: Wednesday, January 22, 2014 12:04 PM
To: Debbie Hamrick
Subject: RE: Question about Farmers Markets and Recent Tax Law Change

After reviewing the specialty market statutes and talking with a couple of individuals who helped draft the recent revisions to the law, it is my opinion that: (1) farmers market operators are now required to maintain a daily registration list of vendors regardless of whether they rent or merely provide space to vendors; and (2) farmers market vendors are required to obtain a certificate of registration from the NC Department of Revenue (NCDOR) even though all of the items they sell are exempt from sales tax (e.g., agricultural products grown on their farms).

Here’s my more detailed analysis of the issue:

N.C.G.S. § 66-255 requires specialty market operators or operators of events where space is provided to vendors to maintain a daily list of vendors that discloses, among other information, the vendors’ NCDOR registration numbers. Prior to last summer, the statute applied only to operators of specialty markets, which are defined as locations where space is rented to a vendor for the purpose of selling or offering goods for retail. See N.C.G.S. § 66-250(4) (emphasis added). Under this old language, it was arguable that farmers market operators may have been able to get around the daily registration list requirement if they did not lease market space to their vendors. However, during the 2013 long session, the legislature expanded the scope of the statute to include “operators of events where space is provided to vendors.” The purpose for this revision was to assist NCDOR in executing its sales tax compliance checks.

Based on the revised statutory language, farmers markets are certainly “events where space is provided to vendors.” As a result, farmers market operators are now required to maintain a daily registration list of vendors regardless of whether or not they rent space to vendors. The revised statute also requires farmers market operators to make their daily registration lists available upon request to law enforcement or NCDOR compliance officers.

In addition, the revised statute clarifies that farmer’s market vendors must obtain a certificate of registration from NCDOR even though they are planning to sell only tax exempt items, such as agricultural products grown on the vendors’ farm. The prior version of the statute suggested that farmers market vendors may be required to have a NCDOR registration number because it mandated that farmers market operators: (1) ask vendors to show their “valid certificate of registration . . . at the time of registration [at the market]”; and (2) ensure that vendors “keep the certificate . . . conspicuously and prominently displayed.” N.C.G.S. § 66-255. But another statute exempted certain vendors who sell “farm or nursery products” grown on their farms or who locate at farmers markets from the registration requirement. See generally N.C.G.S. § 66-256. However, in revising N.C.G.S. § 66-255, the General Assembly nullified these exemptions as they relate to the registration requirement. Consequently, farmers market vendors must now secure a certificate of registration from NCDOR if they wish to sell their products at farmers markets. According to the NCDOR website, vendors who exclusively sell tax exempt items “are required to file a return reflecting $0.00 in tax due for the filing period.” See http://www.dornc.com/taxes/sales/specialty.html#exemption (last visited Jan. 21, 2014). As a corollary, the vendor must report and remit the proper amount of sales tax to NCDOR to the extent they are selling non-exempt goods.

I hope this information is helpful. I have pasted the revised text of N.C.G.S. § 66-255 below for easy reference. As always, please let me know if you have questions.

Jake

§ 66-255. Specialty market or operator of an event registration list

A specialty market operator or operator of an event where space is provided to a vendor must maintain a daily registration list of all specialty market or other vendors selling or offering goods for sale at the specialty market or other event. The registration list must clearly and legibly show each vendor’s name, permanent address, and certificate of registration number. The specialty market operator or other event operator must require each vendor to exhibit a valid certificate of registration for visual inspection by the specialty market operator or other event operator at the time of registration, and must require each vendor to keep the certificate of registration conspicuously and prominently displayed, so as to be visible for inspection by patrons of the vendor at the places or locations at which the goods are offered for sale. Each daily registration list maintained pursuant to this section must be retained by the specialty market operator or other event operator for no less than two years and must at any time be made available upon request to any law enforcement officer or the Secretary of Revenue or the Secretary’s duly authorized agent. For purposes of the registration list, the exemptions in G.S. 66-256 do not apply.

N.C. Gen. Stat. Ann. § 66-255 (2014 West).

Jake Parker
Legislative Counsel & State Legislative Director
North Carolina Farm Bureau
PO Box 27766
Raleigh, NC 27611
(919) 987-1244 (o)
(919) 605-5603 (c)
Twitter: @jakeparkerjr

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Dan is a dad, a husband, a business owner, a pilot, a sailor, a scuba diver, a machinist, a gunsmith, a welder, a woodworker, a day laborer, a teacher, a mentor and a writer. The short form of all the previous is he's a farmer.

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