Sales and Use Tax Contested Tax Case Docket # 09 REV 4211* - 01/13/2011
Issue: Whether a North Carolina retailer (Taxpayer), that contracts with third-party banks to extend credit to its customers in the form of private label credit cards (PLCCs), meets the statutory provisions of N.C. Gen. Stat. § 105-164.13(15) when:
the PLCC accounts are owned by the third-party banks,
the third-party banks paid Taxpayer for the purchase price of each PLCC transaction, including the requisite sales tax and any applicable service fee, without regard to whether the customer ultimately defaulted, and
worthless PLCC accounts were charged off for federal income tax purposes by the third-party banks.