The 2016 Session, which adjourned near midnight on July 1, proved to be a productive one for NCHBA. Following on the heels of our unprecedented success in last year’s session, our focus this year was more specifically targeted. While not every priority on our agenda was enacted, we were successful with most of them. As well, NCHBA was able to defeat, stop or amend proposed legislation which was harmful to our industry.
This positive result was achieved because of the hard work and dedication of Steven Webb and Tim Minton who, along with me, make up your legislative team. We also received strong support from a broad array of pro-housing legislators who made our issues key priorities in both bodies. These legislators demonstrated that they understand the critical role that housing plays in the economy of our state and the need to keep housing as affordable as possible. We also wish to express our appreciation to Governor Pat McCrory for signing our legislation into law and for his consistent support of the same principles.
The following is a summary of NCHBA’s major session victories which includes the law’s effective date, an estimation of the positive financial impact on our industry and future homebuyers from its enactment, and the key legislators deserving of special thanks for this result.
No single piece of legislation passed by the North Carolina General Assembly this year will have a bigger impact on home builders, remodelers, and many of our associates than the sales tax fix on RMI included in HB 1030 (2016 Appropriations Act). These important tax law changes significantly modify the taxation of repair, maintenance and installation (RMI) services, which became effective on March 1 of this year. The March tax changes required subcontractors who met the definition of ‘retailer’ to charge sales tax on their labor. For a number of North Carolina subs who offer turn-key services to builders in both new construction and remodeling activities, this created confusion over what services are subject to taxation and which are not. The question often turned on who was performing the service rather than the service itself, creating an uneven playing field.
Even before the changes became effective on March 1, your NCHBA team, working closely with the NC Retail Merchants Association, began meeting with key legislators and the Finance Committee legislative staff in an effort to find a solution. NCHBA’s goal was to eliminate any sales tax on installation service labor for both new construction and remodeling activity, as well as to limit the sales tax on labor for remodeling repairs. This fix contained in HB 1030 accomplishes that goal.