Chatham County, NC – The information below was brought to my attention recently, so I thought I’d share it.
There are nearly 11,000 local sales tax jurisdictions in the United States. Many states allow these local jurisdictions to impose their own local sales tax rates in addition to the standard state rate. However, using the traditional five-digit ZIP Code will not always result in the most accurate rate being applied.
The full nine-digit ZIP Code — commonly called ZIP+4 — provides more accuracy for mail delivery than the basic five-digit format; the same is true for sales tax calculation and distribution. The more complete the address, the more accurate can the sales tax be applied to the appropriate taxing jurisdiction.
Specifically, regarding phone, online and catalog purchases, Chatham County may be losing a significant amount of tax revenue because it’s being allocated incorrectly to Chapel Hill in Orange County or to Durham in Durham County.
For example, the 27517 ZIP Code is shared by Chapel Hill and Durham. Its border runs from US 15-501 in Chapel Hill on the north to US 64 on the south and from US 15-501 on the west in Chatham County and Orange County to the Chatham-Durham County border and Jordan Lake on the east.
When people purchase goods online or on the phone or through printed catalogs, they usually list their address with only the basic ZIP Code, failing to include the four extra digits. When this happens, the tax revenue then goes to either Chapel Hill in Orange County or Durham in Durham County, not to Chatham County. However, if they include the complete nine-digit ZIP Code+4 on these orders, then the tax revenue gets applied correctly to Chatham County.
Chatham County residents should remember this every time they order something on the Internet or on the phone or out of a catalog. That way, we all here will benefit by bringing the full and appropriate tax revenues to Chatham County where they belong and can then be used to the benefit of all residents here.