705 - Sales and Use Tax Exemption Policy


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



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


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.


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

University Policies, Standards, and Procedures

Contact Information

Policy Contact
Subject Contact Telephone Fax E-Mail
Tax exemption Accounts Payable and Vendor Services 919-843-5098 919-962-2356 accountspayable@unc.edu


Article ID: 131537
Thu 4/8/21 9:11 PM
Mon 1/24/22 1:14 PM
Effective Date
If the date on which this document became/becomes enforceable differs from the Origination or Last Revision, this attribute reflects the date on which it is/was enforcable.
09/15/2021 12:00 AM
Issuing Officer
Name of the document Issuing Officer. This is the individual whose organizational authority covers the policy scope and who is primarily responsible for the policy.
Issuing Officer Title
Title of the person who is primarily responsible for issuing this policy.
Director, Accounts Payable and Vendor Services
Last Review
Date on which the most recent document review was completed.
09/15/2021 12:00 AM
Last Revised
Date on which the most recent changes to this document were approved.
10/14/2019 12:00 AM
Next Review
Date on which the next document review is due.
09/15/2023 12:00 AM
Date on which the original version of this document was first made official.
07/01/1993 12:00 AM
Responsible Unit
School, Department, or other organizational unit issuing this document.
Finance and Budget