There is new legislation that has farmers and tailgate markets across North Carolina very concerned. Though there is very little information on the legislation at this point, ASAP is hearing from markets that they are already losing vendors and managers because they cannot or do not want to be responsible for this new regulatory burden. N.C.G.S. § 66-255 has the potential to create an insurmountable barrier for many new markets, it threatens the national leadership that North Carolina has shown in providing outlets for farmers to direct sell their products, and it undermines the great progress the state has made in expanding access to food insecure communities.
N.C.G.S. § 66-255 will place new burdens on overextended and under-resourced farmers markets, the majority of which have only volunteer management and lack both the expertise and resources to comply with any paperwork requirements. N.C.G.S. § 66-255 will require markets to maintain a daily registration list of vendors as well as require vendors to obtain a certificate of registration from the North Carolina Department of Revenue. These new requirements will both deter new markets from opening, particularly in the least-resourced food deserts and low-income communities, as well as discourage the expansion of SNAP (EBT) at markets because of the increased management requirements.
ASAP asked our friends at the NC Farm Bureau to look at the law and provide an interpretation. The following is from Jake Parker, Legislative Counsel & State Legislative Director North Carolina Farm Bureau:
After reviewing the specialty market statutes and talking with a couple of individuals who helped draft the recent revisions to the law, it is my opinion that: (1) farmers market operators are now required to maintain a daily registration list of vendors regardless of whether they rent or merely provide space to vendors; and (2) farmers market vendors are required to obtain a certificate of registration from the NC Department of Revenue (NCDOR) even though all of the items they sell are exempt from sales tax (e.g., agricultural products grown on their farms).
More detailed analysis of the issue:
N.C.G.S. § 66-255 requires specialty market operators or operators of events where space is provided to vendors to maintain a daily list of vendors that discloses, among other information, the vendors’ NCDOR registration numbers. Prior to last summer, the statute applied only to operators of specialty markets, which are defined as locations where space is rented to a vendor for the purpose of selling or offering goods for retail. See N.C.G.S. § 66-250(4). Under this old language, it was arguable that farmers market operators may have been able to get around the daily registration list requirement if they did not lease market space to their vendors. However, during the 2013 long session, the legislature expanded the scope of the statute to include “operators of events where space is provided to vendors.” The purpose for this revision was to assist NCDOR in executing its sales tax compliance checks.
Based on the revised statutory language, farmers markets are certainly “events where space is provided to vendors.” As a result, farmers market operators are now required to maintain a daily registration list of vendors regardless of whether or not they rent space to vendors. The revised statute also requires farmers market operators to make their daily registration lists available upon request to law enforcement or NCDOR compliance officers.
In addition, the revised statute clarifies that farmer’s market vendors must obtain a certificate of registration from NCDOR even though they are planning to sell only tax exempt items, such as agricultural products grown on the vendors’ farm. The prior version of the statute suggested that farmers market vendors may be required to have a NCDOR registration number because it mandated that farmers market operators: (1) ask vendors to show their “valid certificate of registration . . . at the time of registration [at the market]”; and (2) ensure that vendors “keep the certificate . . . conspicuously and prominently displayed.” N.C.G.S. § 66-255. But another statute exempted certain vendors who sell “farm or nursery products” grown on their farms or who locate at farmers markets from the registration requirement. See generally N.C.G.S. § 66-256. However, in revising N.C.G.S. § 66-255, the General Assembly nullified these exemptions as they relate to the registration requirement. Consequently, farmers market vendors must now secure a certificate of registration from NCDOR if they wish to sell their products at farmers markets. According to the NCDOR website, vendors who exclusively sell tax exempt items “are required to file a return reflecting $0.00 in tax due for the filing period.” Click here more information. As a corollary, the vendor must report and remit the proper amount of sales tax to NCDOR to the extent they are selling non-exempt goods.
I hope this information is helpful. I have pasted the revised text of N.C.G.S. § 66-255 below for easy reference. As always, please let me know if you have questions.
Read the full text of N.C.G.S. § 66-255.
ASAP is at work to see what can be done to address this new requirement. Stay tuned to fromhere.org and ASAP’s email list and newsletters for updates on this important issue. If you are a market vendor, manager, or shopper please comment on this legislation in our comments section.
Charlie Jackson, Executive Director