The University is NOT sales tax exempt unless the items being purchased are for resale (e.g., textbooks for resale, merchandise for resale).
The University must pay North Carolina sales tax on goods used for University business that is consumed in North Carolina. However, being a non-profit entity, the University can apply for a tax refund for certain items for which it paid NC sales tax. This is why detailed receipts are very important on the University P-Card and invoices. The amount of sales and use tax applicable for a refund is not charged to the department’s budget, but rather to a general University account.
Sales and Use tax cannot be refunded for the following items; therefore, no sales tax should be broken out and the entire amount should be expensed:
- Taxes paid on the purchase, lease, or rental of motor vehicles
- Taxes paid on airfare
- State sales tax paid on electricity, piped natural gas, local intrastate telephone services, and intrastate toll telecommunication services
- Local occupancy tax charged by the NC hotels and motels (this is a tax in addition to the regular sales tax)
- Local prepared food and beverage taxes levied in certain areas of the state (Wake and Mecklenburg County are two examples where a 1% tax is charged in addition to the regular sales tax rate); typically, this tax is charged on restaurant receipts and prepared food in some grocery stores.
- Scrap tire or white goods disposal tax
- Other State’s sales tax
- Reimbursement made to employees or other individuals for sales tax paid for items purchased on behalf of the University (but not purchased by the University).