Sales and Use Tax
Explore the nuances of NC State’s sales tax obligations and the circumstances under which it is exempt.
Sales and Use Tax
Sales tax in North Carolina is considered a privilege tax on retailers’ net taxable sales or gross receipts from retail sales of tangible personal property, or the lease/rental of such property. The tax is intended to be passed on to the purchaser of the taxable item and borne by the purchaser rather than the retailer. It is the responsibility of the retailer to act as the trustee, collect the tax on transactions, and remit the tax to the state.
North Carolina State University is considered the retailer in several areas and must charge sales tax on tangible personal property when these items are sold, remitting the tax to the State when due. Departments that sell tangible personal property to non-State agencies must collect tax and remit to the North Carolina Department of Revenue using form E-500.
In 2003, North Carolina’s Legislature passed Senate Bill 100 (Session Law 2003-431) [see pg. 1,351] that exempted the University from paying sales tax on tangible personal property. This bill was enacted to promote efficiency in State Government by allowing for an exemption rather than a refund. General Statute § 105-164.13(52) states that the University is exempt as long as all of the following conditions are met:
a) The items are purchased by a State Agency for its own use.
b) The items are purchased pursuant to a valid purchase order issued by the State agency that contains the exemption number of the agency and a description of the property purchased, or the items purchased are paid for with a State-issued check, electronic deposit, credit card, procurement card, or credit account for the State agency.
c) For all purchases other than by an agency-issued purchase order, the agency must provide to or have on file with the retailer the agency’s exemption number.
Tax Exempt Company List
Some companies provide their own tax-exempt number. In order to process a tax-exempt sale, NCSU needs to provide both the University tax-exempt number, and the specific tax-exempt number of the business. The list of vendors that have their own tax-exempt number are below.
State Sales and Use Tax Exemption Certificates
NC State University has the following states’ exemptions for sales and use tax:
|STATE||State Exemption Certificate||General Purchases & Services||Lodging (Occupancy Tax)||Destination vs. Origin||Expiration Date|
|Alaska||N/A||No State Sales Tax||Taxable||No State Sales Tax||N/A|
|Delaware||N/A||No State Sales Tax||Taxable||No State Sales Tax||N/A|
|Hawaii||N/A||No State Sales Tax||Taxable||No State Sales Tax||N/A|
|Montana||N/A||No State Sales Tax||Taxable||No State Sales Tax||N/A|
|New Hampshire||N/A||No State Sales Tax||Taxable||N/A||N/A|
|New Jersey**||No Exemption||Taxable||Taxable||Destination|
|New Mexico||No Exemption||Taxable||Taxable||Destination|
|New York**||No Exemption||Taxable||Taxable||Destination|
|North Dakota||No Exemption||Taxable||Taxable||Destination|
|Oregon||N/A||No State Sales Tax||Taxable||N/A||N/A|
|Rhode Island||No Exemption||Taxable||Taxable||Destination|
|South Carolina||No Exemption||Taxable||Taxable||Destination|
|South Dakota||No Exemption||Taxable||Taxable||Destination|
|Texas||Certificate||Exempt||Taxable||Origin||No Expiration Date|
|West Virginia***||No Exemption||Taxable||Taxable||Destination|
Destination vs. Origin State:
- Origin-based states collect sales tax based on where the seller is located.
- Destination-based states collect sales tax based on where the buyer is located (the destination of the sale).
* Modified origin state where state, county, and city taxes are based on the origin, but district taxes are based on the destination.
** Does not provide tax exemptions to other states’ political subdivisions.
*** Only provides exemptions to states that reciprocate sales and use tax exemptions. North Carolina does not reciprocate.