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Policies and Procedures

Policy 705 – Sales and Use Tax Exemption

Effective
July 1, 1993
Last Updated
August 6, 2010
Responsible University Officer
Director of Systems and Operations
Responsible Unit
Systems and Operations

Policy Statement

When items are purchased for use by the University, the University is exempt from sales tax when using a valid UNC–CH purchase order bearing the exemption number and a description of the goods to be purchased. In addition, the University is exempt from sales tax when purchases are paid for with a University-issued check, electronic funds transfer, procurement card, or through a credit account of the University.

Any person authorized to make purchases on behalf of the University should confirm that the vendor has been issued the correct tax exemption number.

Reason for Policy

This policy is to ensure the University’s compliance with State of North Carolina law related to sales and use tax.

Exclusions

The eight items below are not exempt and the University must pay the following taxes on them:

1. Prepared food and beverage taxes administered by various local governments in the State.

2. Occupancy taxes.

3. Highway use taxes paid on the purchase, lease or rental of motor vehicles.

4. State sales taxes on electricity, and/or local, private, or toll telecommunications services.

5. Scrap tire disposal tax on new tires.

6. White goods disposal tax on new white goods.

7. Dry-cleaning solvent tax on dry-cleaning solvent purchased by a dry-cleaning facility.

8. Excise tax on piped natural gas.

Special Situations

None

Procedures

  • 705.1 - Notifying Vendors of the University’s Tax Exempt Status

Additional Information

Frequently Asked Questions

Q: When I travel on University business within the state, do I have to pay taxes on my room?
A: Yes. The University is liable for the tax because the University is not paying the hotel directly but reimbursing you for the expense.

Q: Does the tax on prepared food and beverage mean I must pay tax on catered meals?
A: The only tax we must pay on prepared food and beverage is a county tax required by certain counties in North Carolina. This tax is usually one to two percent. Orange County does not collect this tax.

Q: Our department typically reserves a room at a local hotel for a prospective faculty member; will we be charged tax on the room?
A: When making the room reservation be sure to mention that the University will be paying this bill. You will be charged only for the occupancy tax on the room.

Q: I purchased a book while attending a conference in Texas and tried to pay with my Purchasing Card. The clerk said the tax exemption did not apply in Texas. Is this correct?
A: Yes. Merchandise that is purchased in another state and received in that state, is subject to the sales tax laws of that state. The sales tax exemption only applies for goods or services received in North Carolina.

Q: I have an invoice from a vendor that includes state sales tax. Do I have to pay this tax?
A: No. You should submit the invoice for payment for the amount minus the tax. Disbursement Services will include a letter of explanation for the short payment with the check.

Related Data

North Carolina General Statute 105-164.29A, State Government Exemption Process
Exemptions and Exclusions, Retail Sales and Tax N.C.G.S. 105-164.13 (52)

Contacts

SUBJECT CONTACT TELEPHONE FAX E-MAIL
Tax exemption Systems & Operations 919-843-5098 919-962-2356 operations_team@unc.edu

History

Revised:
August 6, 2010
July 1, 2004
May 1, 1995