705 - Sales and Use Tax Exemption Policy

Title

The University of North Carolina at Chapel Hill Finance Policy 705 - Policy on Sales and Use Tax Exemption

Introduction

Purpose

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

Policy

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/services 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.

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.

Exceptions

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

1. Prepared food and beverage taxes levied and administered by various local governments in the State.
2. Occupancy taxes levied and administered by various local governments and special districts in the State.
3. Highway use taxes paid on the purchase, lease or rental of motor vehicles.
4. State sales taxes levied on electricity, telecommunications services, or ancillary services (except for sales to the NC Department of Transportation).
5. Scrap tire disposal tax levied on new tires.
6. White goods disposal tax levied on new white goods.
7. Dry-cleaning solvent tax levied on dry-cleaning solvent purchased by a dry- cleaning facility.
8. Solid waste disposal tax levied on the disposal of municipal solid waste and construction debris.
9. Other states' sales and use tax paid to those states.
10. 911 service charge levied on the sale of prepaid wireless telecommunications service.

Related Requirements

External Regulations and Consequences

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

University Policies, Standards, and Procedures

• Finance Procedure 705.1 - Procedure for Notifying Vendors of the University's Tax Exempt Status

Contact Information