Observer staff report with SamWalkerOBXnews.com

It could have been worse. While Tropical Storm Debby made its second landfall on Thursday along the South Carolina coast, Ocracoke and the Outer Banks avoided the worst of the weather on Wednesday with intermittent downpours and high wind in the 20s-mph zone and some higher gusts persisting as the outer bands of Debby’s winds whip the coast. The storm direction heading north is in the middle of North Carolina.

Hatteras-Ocracoke vehicle ferries are running today (Thursday) on an intermittent schedule but not the passenger ferry. You can call the Hatteras ferry office for updates: 252-996-6000.

The Pamlico Sound ferry routes were suspended today due to high winds. For more information regarding the Pamlico Sound ferries, Cedar island and Swan Quarter, call 800-293-3779.

As of Thursday afternoon, the roads of Ocracoke, for the most part are clear with no standing water.

While the Outer Banks and northeastern North Carolina have avoided the worst of the weather so far, more rain is possible into Friday while the rough surf and deadly rip currents could persist into the weekend.

A High Surf Advisory continues from Oregon Inlet to Ocracoke Inlet for breaking waves of 4 to 8 feet through Friday afternoon.

There is also a risk of Hatteras and Ocracoke experiencing some ocean overwash at high tide, which will be at 11:30 p.m. Thursday, and noon on Friday.

N.C. Department of Transportation has staged crews from Oregon Inlet to Ocracoke in case there is overwash that pushes sand and ocean water on to N.C. 12.

NCDOT reported some minor overwash during the 11 a.m. high tide on Thursday, but NC12 remains open and passable with some sand and water on the road.

“Sudden downpours can create several inches of water in some locations, so slow down and drive with extreme caution,” NCDOT said in an X post.

A Coastal Flood Advisory is in effect through Friday morning for Ocracoke, where water levels could rise 1 to 2 feet.

State recreational water quality officials are advising the public to avoid swimming in North Carolina coastal waters from the Wright Memorial Bridge in Kitty Hawk to the South Carolina state line that have been affected by Tropical Storm Debby.  

“The surf zone will be very rough/chaotic, and we anticipate shore break of 4 to 6 feet for all eastern North Carolina beaches (on Thursday),” said NWS Newport Meteorologist David Glenn.

A high risk of rip currents is forecast for Thursday for all North Carolina beaches, where red flags will be flying and everyone should stay out of the ocean.

Several twisters struck central and southern coastal areas and interior eastern North Carolina overnight, with one person killed when a house collapsed in Wilson County from a tornado that damaged at least nine other homes and a middle school.

Seven people have died across the southeast since Debby came ashore as a hurricane in Florida on Monday.

Flash flooding has also been reported in central North Carolina this morning, and is expected to continue through Friday as the center of the system moves through tomorrow.

Along the Outer Banks, minor rainwater flooding has been reported in areas where heavy downpours have moved through.

Standing rainwater of up to two feet deep was reported Thursday on some parts of N.C. 12 in Rodanthe, Waves and Salvo.

That water receded relatively quickly but ponding of rain water in other usual problem areas also been reported where the heaviest of showers have moved through since Tuesday.

A flood watch remains in effect for all of eastern North Carolina.

The Beaufort County Community College Small Business Center will conduct free small business classes and free one-on-one small business counseling in the Ocracoke Community Center on Thursday, Aug. 29.

Please use the links below to register for classes or select a time for your confidential one-on-one counseling session.

Jack Dugan, Small Business Center director, will also discuss the 2nd Annual Seed & Sow Contest, where winners are awarded funds to help start or grow their small business.

All classes are in-person only. The following is the schedule:

10 a.m. to noon: How to Start an LLC: Forming a limited liability company (LLC) can be a wise choice for small business owners, entrepreneurs, freelancers and independent contractors who want to obtain liability protection and certain tax advantages.

In this two-hour introductory class, you’ll learn the basics of what an LLC is, why forming an LLC may benefit you, the steps for forming an LLC in North Carolina, and some common questions and concerns.

Register here: How to Start an LLC at Ocracoke Community Center (ncsbc.net)

Noon to 2 p.m.: How to Finance Your Business: Jack Dugan will help you discover the most likely financing method for your business type and the fundamentals of business financing. You will also create a draft funding mix for your business, identify contacts for funding your business and assess your financial readiness and the next steps for financing.

Register here: How to Finance Your Business at Ocracoke Community Center (ncsbc.net)

By Connie Leinbach

Ocracoke visitors captured fig cake-baking glory on Saturday when they won the Fig Cake bake-off during the Ocracoke Fig Festival in the Berkley Barn.

A large crowd assembled inside the barn to watch the signature event unfold as the judges sampled the seven traditional, 14 innovative and three youth entries.

The cakes are numbered for the “blind” tasting and the winners’ names are revealed after the judges have chosen.

Kerstin Nygard of Durham won in the traditional category and Penny Cobb of Wilson was the runner up.

In this category, bakers must use only ingredients in the traditional recipe (found in local cookbooks): flour, sugar, oil/butter/margarine, eggs, pecans/walnuts, fig preserves, milk/buttermilk, vanilla and salt/spices. A sugar glaze or buttermilk frosting is also acceptable. A traditional Ocracoke Fig Cake Recipe also is available online at the Ocracoke Preservation Society’s webpage: www.ocracokepreservation.org.

“The judges had to fight it out to pick the winner,” Sundae Horn, event organizer, said about the quality of the cakes.

In the innovative category, in which any dessert goes as long as it contains figs, Michelle Thornell of Emerald Isle with her “Skyscraper” cake, featuring layers of traditional fig cake between layers of cheesecake, covered with cheesecake icing, topped with spiced fig candied walnuts and brown turkey figs, captured first place along with co-winner Kristi Reichard of York Springs, Pa., with her lemon honey fig preserves, toasted almond, diplomat cream decorated with fresh blue figs.

Judges rated the entries on presentation, flavors and “figginess,” Horn said. After the judging, it’s a “fig for all” in which everyone gets to taste the entries.

Amanda O’Shaughnessy and James Hall were runners up with their version of a Smith Island cake with figs and oranges, topped with a chocolate glaze.

Sheri Castle, the host of “The Key Ingredient,” an Emmy-winning cooking show from PBS North Carolina that airs across the country, was the celebrity chef and also a judge for the innovative entries.

“I was impressed by the technical level of competency and creativity,” she said about the cakes. “No two were alike.”

After visiting Chef Ricky Moore’s Salt Box restaurant where she saw that he’d been the celebrity chef at the 2022 Fig Festival, first-time bake-off contestant Rachel Moreschi of Durham decided to enter four small rosemary honey fig cakes in the shapes of skulls. It was her first time entering a baking competition after having completed the Ballymore Cooking School in Cork, Ireland.

Of the three youth entries, Noah Folliard won with his fig cake with buttercream icing with raspberries and mint.

“All three judges quickly came to a consensus,” said first-time judge Matt Jansen about the youth entries. “But we appreciated all the efforts.”

Polliard’s entry bested first-time entrant Presley Lipscomb, 11, of Holly Springs, who brought homemade fig ice cream.

Islander Debbie Leonard, who also volunteered as a cake cutter, submitted a peanut butter and jelly fig cake complete with a tiny PB&J sandwich decoration.

“Every part of it was edible,” she said.

On Friday, festival goers lined up out the barn door to taste the 35 entries for the traditional and innovative fig preserves contest, the winters of which are chosen by popular vote.

Lisa Richardson of Richmond, Va., had no problem tasting all of the entries and differentiating them.

“I love figs,” she said between bites, “and I’ve got my favorites.”

“They’re very different, even the traditional,” noted Laura McClain, who organized the tasting.

Capturing the innovative category with her jalapeno preserves was first-time entrant Angela Cox of Darlington. That was one of three preserves for this first-time entrant. 

Islander John Simpson (this year’s Fig Festival poster and T-shirt artist) was runner-up with his bourbon fig barbecue sauce.

Kathy Griffin won for best traditional preserves and islander Marlene Mathews was the runner-up.

The Ocracoke Fig Festival is presented by the nonprofit Ocracoke Preservation Society. All funds raised after expenses go to Ocracoke Preservation Society to support their mission. 

OPS Administrator Andrea Tolson noted the great turnout for the event.

“As far as fundraisers, it was a huge success for us,” she said. “We’re very appreciative of all the people that come out and the volunteers.”

Horn noted that a number of attendees were first timers along with repeat visitors.

“But almost everyone I talked to had planned their vacation around the Fig Festival and were intentional about being there even if it was the first time they came,” she said.

Entertainment included Martin Garrish & Friends, Molasses Creek, Raygun Ruby and the Ocracoke Rockers.

Next year’s festival will be Aug. 1 and 2.

By Sam Walker of SamWalkerOBXNews.com

Businesses in North Carolina that add a credit card processing fee to customer bills are reminded that they have to pay sales tax on the surcharge.

N.C. Restaurant and Lodging Association President & CEO Lynn Minges said in an email the state Department of Revenue has been conducting audits that found a number of merchants have failed to catch the oversight.

“If you currently impose a surcharge for credit card purchases, we encourage you to check your Point-of-Sale Systems to confirm that this is your current practice,” Minges said.

The NCRLA is the largest advocate of hospitality-related businesses statewide.

The sector has more than 20,000 businesses statewide, employs 9% of the state’s workforce and generates more than $34.9 billion in sales annually.

Minges noted that the email was not to be considered legal advice from the NCRLA, and that business owners should consult a licensed attorney to address specific questions.

Since the COVID-19 pandemic started, the use of cards skyrocketed to around 90% of all transactions.

Card processing companies have since raised the fees they charge merchants to as much as 3.5% per transaction.

To overcome the increase in their bottom line, merchants started passing along the fee to customers who use cards using the words “convenience fee”, “processing fees” and other terms.

At the same time, many started offering cash customers discounts that matched the amount of the fee.

A bill that had bipartisan support was introduced in the state House in February 2023 to outlaw the practice, but no action was taken on the proposal.

A bulletin issued earlier this year by the Department of Revenue details the requirements of merchants to charge sales tax on the transaction fee if they pass it on to customers.

“Surcharges made by a retailer for a retail sale, whether separately stated or not, are part of the sales price of an item subject to sales and use tax. (Examples: Fees for using a credit card, fuel surcharges, trip surcharges, service fees unless exempt under SUTB 32-18, etc.”

Minges also shared an example from a certified public accountant of an audit conducted of a restaurant for sales tax compliance for the last three years beginning in June 2021, and that the establishment had been fully reporting all sales and paid tax correctly.

“However, in June 2022 this establishment began to charge their customers a 3% fee to reimburse them for the fees on Credit Card purchases – a practice that has become common in the hospitality and retail industries,” Minges said.

“This was set up in their Point-of-Sale (POS) system by the firm hired to provide those support services,” Minges said. “That charge was set in the POS system to be free of sales tax. Commonly called in the POS system, ‘Non-Cash Adjustment’ or sometimes simply “Service Charge’.”

While the state auditor said the charge had to be taxed at the correct rate, 7% in the case of the business that was audited, their POS system was not charging it because it could not be programmed to do so correctly.

North Carolina law is very specific about how sales tax is to be applied, and that the seller is not able to deduct any of their costs from the base.

“Some states make exceptions for things like shipping,” Minges said.”

NCGS §105-164.3.(237) provides the following on sales price: 

The total amount or consideration for which an item is sold, leased, or rented. The consideration may be in the form of cash, credit, property, or services. The sales price must be valued in money, regardless of whether it is received in money.

The term includes all of the following:

• The retailer’s cost of the item sold.
• The cost of materials used, labor or service costs, interest, losses, all costs of transportation to the retailer, all taxes imposed on the retailer, and any other expense of the retailer.
• Charges by the retailer for any services necessary to complete the sale.
• Delivery charges.
• Installation charges.
• Repealed by Session Laws 2007-244, s. 1, effective October 1, 2007.
• Credit for trade-in. The amount of any credit for trade-in is not a reduction of the sales price.
• The amount of any discounts that are reimbursable by a third party and can be determined at the time of sale through any of the following: I. Presentation by the consumer of a coupon or other documentation. II. Identification of the consumer as a member of a group eligible for a discount. III. The invoice the retailer gives the consumer.

The term does not include any of the following:

• Discounts that are not reimbursable by a third party, are allowed by the retailer, and are taken by a consumer on a sale.
• Interest, financing, and carrying charges from credit extended on the sale, if the amount is separately stated on the invoice, bill of sale, or a similar document given to the consumer.
• Any taxes imposed directly on the consumer that are separately stated on the invoice, bill of sale, or similar document given to the consumer.

In her email, Minges also shared an interpretation provided by the N.C. Department of Revenue, “essentially saying that while the credit card expense is a direct result of how the customer chose to pay, it is still an expense of the business.”

“As such, it is considered part of the selling price even if it is itemized,” Minges said of the interpretation. “Further, it would be considered part of the selling price whether it is passed through at cost or marked up.”

“As part of the selling price, it will be taxed in the same manner as the underlying transaction,” Minges said. “If the product being sold is taxable, the fee is taxable, if the product being sold is nontaxable, the fee is nontaxable.

Minges said the NCRLA is meeting with colleagues at the N.C. Association of CPAs, the N.C. Retail Merchants Association, and other industry stakeholders about the interpretation, and possibly seeking action by the N.C. General Assembly.

“(They are) discussing the potential desire for a legislative clarification with the argument that this charge is simply a reimbursement by the consumer for charges incurred on their behalf by the merchant rather than a payment for goods or services,” Minges said.

“In the meantime, our guidance is to follow the interpretation from the NC Department of Revenue to avoid the potential of having to pay the tax out-of-pocket through an audit,” Minges said.