DOR Publishes Form E-589CI, Affidavit of Capital Improvement and a Corresponding Important Notice

The N.C. Department of Revenue has published the Form E-589CI, Affidavit of Capital Improvement, and a corresponding notice. The Form E-589CI is generally required to substantiate that a contract, or a portion of work to be performed to fulfill a contract, is to be taxed for sales and use tax purposes as a real property contract with respect to a capital improvement to real property. Failure of a person to issue Form E-589CI, other than for the permitted exceptions discussed within this Important Notice, to substantiate that a transaction is for a real property contract with respect to a capital improvement subjects the transaction to tax as a retail sale of repair, maintenance, and installation services for real property in accordance with N.C. Gen. Stat. ยง 105-164.4(a)(16).