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April 2008 Meeting of Design Professionals of North Carolina
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Attention Designers and Manufacturers:
This is to update you on the critical issue facing all designers throughout NC. At an alarming number the North
Carolina Department of Revenue (NCDOR) is continuing to audit designers. This is all about sales tax on
services. This is an abuse of G. S. 105-164 (35) & (37).
The Design Professionals of North Carolina (DPNC) is having bi-weekly board meetings to address this issue
and is at work for you. The following is current information on the issue.
• Auditors are holding designers accountable for sales tax on 100% of consulting fees when any amount of
merchandise is sold to the same customer.
• Tax assessments range from $8,000.00 to $200,000.00.
• No designer has won an appeal in fighting this unfair implementation.
• Furniture is still the largest income producing industry in the state. Designers are important to the furniture
industry in North Carolina. NC cannot afford to undermine the industry in any way.
• Income tax is paid on service fees. How can they also be sales taxable? Is this not double taxation?
• Most of us are small businesses. This could run us out of business, reduce our revenues, inhibit our business
spending, reduce hiring, reduce salaries and cause potential new businesses not to open. This pervasive
uncertainty continues whether you have been audited or anticipate an audit. This results in a negative impact on
your business and the economy.
• A technical bulletin is being prepared by the NCDOR to clarify their position. This technical bulletin is their
response to the audits that have already occurred. This will still leave the interpretation in the hands of the field
auditors. The technical bulletin is not the answer.
• The only way to make a change is legislation. Sales tax on service is the responsibility of the legislature and not
the Department of Revenue.
The following are actions we have taken for designer s:
• Town hall Meetings have been held in these cities: Winston-Salem, Hickory, High Point, Asheville, Charlotte,
Boone, Greensboro
• We have reviewed and responded to NCDOR on their technical bulletin. Our response noted that the Design
Professionals of North Carolina (DPNC) is in opposition to any sales tax on service. It still leaves the issue open
to the interpretation of the local field auditors. Once the technical bulletin is issued it puts the additional burden of
a bookkeeping nightmare on designers. We know that this bulletin is not a solution for us.
• Met with the Senior Policy Advisor in the office of the Governor
• Met with the leadership of the NCDOR
• Met with and continue to meet with Legislators in various cities
• Met with the furniture manufacturers in High Point at the request of the mayor, Becky Smothers
• Received newspaper coverage and television coverage
• Received endorsements from:
- High Point Chamber of Commerce – who sent out a press release
- High Point Market Authority
• A senator has stepped forward to carry the bill and has sent it to bill writing
• Mayor Becky Smothers has sent a letter to the legislators regarding her concern for the issue
• Packets of information on the issue have gone out to the NC Legislature
• Hired a lobbyist to represent you in Raleigh for which we will need your financial support in order to continue
• Information packets will be distributed at Market
• A second mailing will be going out the Legislature
• Look for our upcoming website
The following are items we are continuing to work on and ways you can participate:
• Keep an ongoing count of designers being audited – please fill out the attached form if you have been or are
being audited. Even if you have given us your name before, we would like to have one of these forms filled out
and returned.
• Please print this document and give it out to sales representatives, carry it with you to tell others, forward it by
email to unaffiliated designers and industry members.
• Become a member of DPNC. This issue continues to move quickly. Please look for continuing updates.
For more information, please come to one of our upcoming town hall meetings or email us at
DPNC08@aol.com:
May 5 – Dare County (Mid-day) Greenville (Evening)
May 6 – New Bern/Kinston (Mid-day)
May 12 – Raleigh (Evening)
May 19 – Southern Pines/Rockingham (Mid-day) Wilmington (Evening)
May 20 – Fayetteville (Mid-day)
With your help and financial support we will have a bill introduced in this year's short session, which will open on
May 13. Please join us in our efforts. To join DPNC and/or to make a financial contribution, please contact us:
Design Professionals of North Carolina
PO Box 1902
High Point, NC 27261-1902
DPNC08@aol.com
Design Professionals of North Caroina
An Alliance of:
ASID Carolinas - American Society of Interior Designers Carolinas
HPDC - High Point Design Center
IDS - Interior Design Society
IIDA - International Interior Design Association
NKBA - National Kitchen and Bath Association
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