Policies and Procedures
Policy 720 – NC Sales Tax on Tangible Personal Property
June 5, 2015
June 5, 2015
The University must comply with North Carolina General Statute 105-164.4 to collect sales taxes on sales of tangible personal property. Tangible personal property is defined as “personal property that may be seen, weighed, measured, felt, or touched or is in any other manner perceptible to the senses.” Examples of tangible personal property sales include the following:
- Sales of prepared food and drink and prepaid meal plans to students, faculty, staff and visitors/guests
- Sales of textbooks and other publications
- Sales of UNC merchandise, including clothing
- Sales of surplus property (to non-state agencies)
- Sales of miscellaneous items (cookbooks, pictures, etc.)
- Rental of equipment (to non-state agencies)
- Merchandise/goods sold through auction (exceptions apply; see below)
N.C. General Statute 105-164.4(a) imposes a general tax on a retailer (including the University) of 4.75% and applicable local and transit rates. Currently, the Orange County tax rate is 2.25% and the transit tax is 0.50% for a total tax of 7.50%. Visit the N.C. Department of Revenue’s website for rates in all 100 North Carolina counties and check this link often, as rates may change.
Reason for Policy
North Carolina General Statute 105-164 Article 5, “North Carolina Sales and Use Tax Act,” requires The University of North Carolina at Chapel Hill (”University”) to collect sales taxes on all sales of tangible personal property. This applies to all University colleges, departments and units that sell tangible personal property.
A few items are exempt from the collecting of sales tax; these exemptions include:
- Gift certificates
- Prescription drugs
- Prescription glasses
An exemption from N.C. sales tax applies to auction sales in the following situations:
- The University unit conducting the auction is not engaged in selling the auctioned property on a regular basis (i.e. auctioning of furniture and equipment held for use in operations); or
- The University unit conducting the auction acts as agent for the owner of the property (e.g. estate sale of household possessions).
A. Out-of-State/County Sales
North Carolina sales tax should not be charged on sales made to customers who take delivery outside the State of North Carolina. The exception to this rule is when the seller has knowledge that an out-of-state customer intends to bring the purchased property to North Carolina for storage, use or consumption.For sales delivered to other North Carolina counties, the respective local and transit rates are to be applied. Refer to the N.C. Department of Revenue’s website for respective counties’ sales tax rates.If a University department sells items while physically present in another state (example: selling continuing education material at a medical convention), the department should contact the Controller’s Office prior to the event to determine whether the sales will be subject to sales tax. If a sales tax liability is incurred, departments should work with the Controller’s Office to ensure that all accounting and reporting requirements are met.
B. Online Sales
North Carolina sales tax including the respective county sales tax rate (based on the “ship to” address) must be charged on any online sales made to customers who take delivery inside the State of North Carolina.
Online sales to customers who do not take delivery inside the State of North Carolina are not subject to North Carolina sales tax unless the seller has knowledge that the customer intends to bring the purchased property to North Carolina for storage, use or consumption. Please contact the Controller’s Office with any questions on or related to this topic.
C. Sales to Other University Departments or State Agencies
Sales of tangible personal property to other State Agencies of the State of North Carolina are exempt from sales tax per N.C. General Statute 105-164.13(52). No sales tax is required to be charged provided all of the following conditions are met:
- The items are purchased by a State Agency.
- 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.
- 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 as well as a properly completed exemption certificate.
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