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Policies and Procedures

Procedure 720.1 – Processing NC Sales Tax on Tangible Personal Property

Effective
June 5, 2015
Last Updated
June 5, 2015
Responsible University Officer
University Controller
Responsible Unit
University Controller

Procedure Statement

North Carolina sales taxes on sales of tangible personal property are collected by a campus unit and remitted to the NC Department of Revenue (NCDOR) by University Accounting Services. North Carolina sales taxes collected are due to NCDOR as follows:

  1. On a quarterly basis and by the last day of the month following the end of the quarter if the amount collected is less than $100 in taxes per month.
  2. On a monthly basis and by the 20th of the month following the month of collection if the amount collected is greater than or equal to $100 and less than $20,000 per month.
  3. On a monthly basis and by the 20th of the month following the month of collection if the amount collected is more than $20,000 per month on a consistent basis. A prepayment for next month’s liability when filing the monthly return is also required. The prepayment must equal at least 65% of any of the following:
  • The amount of tax due for the current month,
  • The amount of tax due for the same month in the preceding year, or
  • The average monthly amount of tax due in the preceding calendar year. The average monthly amount of tax due in the preceding calendar year.

Forms and Instructions

The procedural steps to register, report and remit sales taxes for tangible personal property are as follows:

Registration

  • The campus unit completes Form 721.1.1f, Registration Application for Sales Taxes and provides the form to the Cash Manager, Accounting Services, to request an NCDOR Sales Tax Account ID.
  • Accounting Services, on behalf of the campus unit, completes and submits the online registration application, and NCDOR Form NC-BR, Business Registration Application for Income Tax Withholding, Sales and Use Tax, and Machinery and Equipment Tax.
  • NCDOR processes the Registration Application and provides the Sales Tax Account ID to the campus unit via mail.

Reporting

  • After the end of a calendar month (or quarter if applicable), the campus unit completes and submits the online NCDOR Form E-500, Sales and Use Tax Return to calculate sales taxes, currently at 7.5%. The completed online form will include the following:
  • Department name, address, and Sales Tax Account ID
  • Line 1 - Gross Receipts Total (for sales of tangible personal property)
  • Line 4 – General State Rate (total taxable receipts at current 4.75% rate)
  • Line 10 – County Rate (total receipts at current 2.25% rate)
  • Line 11 – County Transit Rate (total receipts at current 0.50% rate)
  • Line 13 – Total State and County Tax
  • Line 18 – Less Prepayment for This Period (if applicable)
  • Line 19 – Prepayment for Next Period (if applicable)
  • Line 21 – Total Due

Remittance

  • The campus unit completes the State Treasurer Payment Request Form to authorize payment of sales taxes. The completed form will include the following:
  • Vendor #: 0000031035
  • Issue Checks to: North Carolina Department of Revenue
    • PO Box 25000
    • Raleigh, NC 27640-0640
  • PS Account to be charged: Business Unit, Fund, Source, Account (479941 TAX FROM SALES), Dept. ID, etc.
  • Amount: Dollar Amount of Sales Tax to Remit
  • Explanation of Transfer: Electronic Payment to remit sales taxes on sales of tangible personal property for NCDOR Sales Tax Account ID ######### for the month ended MM/DD/YYYY (or the quarter ended MM/DD/YYYY if applicable).
  • Payment Method: Check “Core Banking”
  • Department Info and Approval: Dept. name, campus box, telephone number, name of approver and signature.
  • The campus unit emails a PDF copy of the E-500 form and a PDF copy of the State Treasurer Payment Request form to cash_management@unc.edu by the 12th of the following month for monthly submissions and by the 20th of the following month for quarterly submissions.
  • Accounting Services remits the funds to NCDOR using the State Treasurer Core Banking system.

Accounting for Sales Tax

1) Record the sale

Record the sale of items at gross amount (incl. sales tax).

Debit: CASH/AR

                       Credit: SALES (incl. sales tax)

2) Remittance of tax

Use account 479941 TAX FROM SALE to record payment of the tax.

Debit: 479941 TAX FROM SALES (Contra Revenue)

Credit: CASH

Related Data

N.C. General Statute 105-164.4

N.C. General Statute 105-164.13

History

History: