17 NCAC 07B .1602          REFUNDS TO NONPROFIT ENTITIES

(a)  Eligibility -- A nonprofit entity listed in G.S. 105-164.14(b) may file a claim for refund for sales or use tax paid by it on items purchased for its use and for sales and use tax paid indirectly by it on building materials, supplies, fixtures, and equipment that become part of a building it owns or leases and uses to conduct its nonprofit activity.  A claim for refund must be filed on a form provided by the Department.  A claim for refund applies to taxes paid during the period for which the claim for refund is filed.

(b)  Proof for Direct Purchases -- A claim for refund must be supported by documentation showing the amount of tax paid.  For items purchased by a nonprofit entity for its use, adequate documentation is an invoice or copy of an invoice that sets out the item purchased, the date of the purchase, the cost of the item, and the amount of sales or use tax paid.

(c)  Proof for Contractor Purchases -- A claim for refund for sales or use tax paid indirectly on building materials, supplies, fixtures, and equipment must be supported by adequate documentation showing the amount paid.  Adequate documentation is a certified statement from the contractor or subcontractor that purchased the items.  The statement must indicate the item purchased, the vendor from whom it was purchased, the invoice number of the purchase, the cost of the item, and the amount of sales or use tax paid.  Only items that become part of a building the nonprofit entity owns or leases and uses to conduct its nonprofit activity are eligible for a refund.  A contractor may not include in its statement items the contractor purchased and used to fulfill the contract but did not become part of the building constructed.  Examples of items that are not to be included in the contractor's statement are scaffolding, forms for concrete, fuel for the operation of machinery and equipment, tools, equipment repair parts, equipment rentals, and blueprints.

(d)  Items Not Refundable -- The refund provisions of this Rule do not apply to sales taxes incurred by employees on purchases of food, lodging, or other taxable travel expenses paid by employees and reimbursed by a nonprofit entity listed in G.S. 105-164.14(b).  These expenses are personal to the employee because the contract for food, shelter, and travel is between the employee and the provider and payment of the tax is by the employee individually and personally.  In this circumstance, a nonprofit entity has not incurred any sales tax liability and has not paid any sales tax; instead, it has chosen to reimburse a personal expense of the employee.  The refund provisions of this Rule do not apply to any of the following:

(1)           Charges for electricity and telecommunications services;

(2)           Occupancy taxes levied and administered by certain counties and cities in this State;

(3)           Prepared food and beverage taxes levied by various local governments in this State;

(4)           Highway use taxes paid on the purchase, lease, or rental of motor vehicles;

(5)           The white goods disposal tax levied on new white goods;

(6)           The scrap tire disposal tax levied on new tires; or

(7)           The dry-cleaning solvent tax levied on dry-cleaning solvent purchased by a dry cleaning facility.

 

History Note:        Authority G.S. 105-164.14; 105-262; 105-264; Article 39; Article 40; Article 42; Article 43; Article 44;

Eff. February 1, 1976;

Amended Eff. April 1, 2006; July 1, 2000; July 1, 1999; August 1, 1998; April 1, 1997;

August 1, 1996; October 1, 1993; March 1, 1993; June 1, 1992; October 1, 1991.