Effective January 1, 2009, North Carolina General Statutes designated heavy equipment on which a gross receipts tax may be imposed, a special class of property. The classification refers to heavy equipment that is offered at retail for short-term lease or rental and is owned or leased by a person (company) engaged in the business of leasing or renting heavy equipment to the general public.
(View North Carolina General Statutes: 105-275(42), 153A-156.1, 160A-215.2)
What does this special classification mean?
A business having heavy equipment on which a gross receipts tax may be imposed does not have to annually report said equipment for business personal property taxation. However, the business may or may not be required to charge a Heavy Equipment Gross Receipts Tax on the rental or lease of said equipment depending on their taxing jurisdiction.
How does a business qualify?
To qualify as a principal business of short-term lease or rental, more than 50% of the company's income must be derived from the rental of qualified heavy equipment. For example, if the total company receipts from all sources are $1,000,000 and the receipts from the rental of qualified heavy equipment are $450,000; a business would not qualify.
What is the definition of short-term lease or rental and what are some business examples?
Short-term lease or rental applies to a lease or rental that is made under a written agreement to lease or rent property to the same person for a period of less than 365 continuous days.
Subject business will include, but are not limited to, the following:
- Equipment Rental agencies
Equipment Sales Dealers
Any other establishment, place of business or enterprise maintaining facilities that rents heavy equipment as the principal part of their business
What is considered qualified heavy equipment?
Earthmoving, construction, or industrial equipment that is mobile, weighs at least 1,500 pounds, and meets any of the descriptions listed below. The term includes an attachment for heavy equipment, regardless of the weight of the attachment.
It is a self-propelled vehicle that is not designed to be driven on a highway
- It is industrial lift equipment, industrial material handling equipment, industrial electrical generation equipment, or a similar piece of industrial equipment.
My business qualifies to impose a heavy equipment tax. What do I need to do?
If your business meets the requirements to impose the tax and is located in the taxing jurisdiction of the City of Raleigh or the town of Apex, Cary, Garner, Knightdale, Morrisville or Zebulon, you are required to charge a Heavy Equipment Gross Receipts Tax. Currently, these are the only jurisdictions to have implemented a heavy equipment tax. Businesses that qualify to charge the Heavy Equipment Gross Receipts Tax are not required to list the equipment on their Business Property Tax Listing form for the same period as the tax is charged. However, you are required to list other remaining taxable business property such as furniture, fixtures, computers, etc.
If your business meets the requirements to impose the tax but is not located in one of the above listed jurisdictions, you cannot charge the Heavy Equipment Gross Receipts Tax but your qualified equipment will remain exempt from business personal property taxation. You are, however, required to list other remaining taxable business property such as furniture, fixtures, computers, etc.
(Note: Wake County has not adopted a resolution to implement the Heavy Equipment Gross Receipts Tax)
My business does not qualify to impose the tax. What do I need to do?
What should I do if I am required to charge the tax?
If you are required to charge the tax, you must submit an annual Heavy Equipment Gross Receipts Tax Application
with the Wake County Revenue Department for acceptance into this group. Once your application is processed and approved, you will receive preprinted tax return coupons to use for remitting the tax. Taxes are to be remitted on a quarterly basis to: Wake County Revenue Department, PO Box 2719, Raleigh NC 27602-2719
(Note: Businesses qualified to impose the tax that are not located within a taxing jurisdiction having implemented this tax, do not need to complete an annual application for the Heavy Equipment Gross Receipts Tax)
Who should I contact for additional assistance?
your questions to us or call our business auditing staff at 919-856-5400