17 NCAC 07B .1801          SALES TO AND BY HOSPITALS AND SIMILAR INSTITUTIONS

(a)  General -- Hospitals, sanitariums, nursing homes, and rest homes are primarily engaged in rendering services and are considered the users or consumers of all tangible personal property they purchase for use in connection with these institutions.  These institutions are liable for payment of sales or use tax on their purchases of tangible personal property except as explained in this Rule.

(b) Food -- Purchases of food by hospitals, sanitariums, nursing homes, or rest homes for use in furnishing meals to patients are exempt from State tax, but not the 2% local tax, if the food could be purchased under the Food Stamp Program.  If food purchased by an institution could not be purchased under that Program, the food is subject to both State and local sales or use tax.  If, in addition to furnishing meals to patients, one of these institutions operates a cafeteria from which it makes sales of prepared meals or food to guests, visitors, employees, staff, or other persons, the institution must register with the Department of Revenue and collect and remit the tax on its sales.  If the food purchased by the institution for use in furnishing meals to patients cannot be distinguished from the food purchased for resale through the cafeteria, the institution may purchase all the food under a certificate of resale.  An institution that does this assumes liability for payment of sales or use tax on food used in furnishing meals to its patients and on sales of meals by the cafeteria.

(c) Meals to Students -- Meals and food products sold by a hospital operated by a State or private educational institution to student nurses are exempt from tax in accordance with G.S. 105-164.13(27).

(d) Purchases for Consumption -- Except as provided by Paragraph (b) of this Rule, a Certificate of Resale, Form E-590, may not be used by hospitals, sanitariums, nursing homes, or rest homes when making taxable purchases of tangible personal property for use or consumption.  The tax due on taxable purchases from North Carolina suppliers or out‑of‑state suppliers who charge North Carolina sales or use tax must be paid to the suppliers.  An institution that makes taxable purchases from an out-of-state supplier who does not collect and remit North Carolina sales or use tax must register with the department and remit monthly the tax due on the purchases.

 

History Note:        Authority G.S. 105‑164.4; 105‑164.6; 105‑262; 105-467;

Eff. February 1, 1976;

Amended Eff. July 1, 2000; May 1, 1999; August 1, 1998; October 1, 1993; October 1, 1991; July 1, 1989.