Difference between revisions of "Excise and Sales Tax"

Revision as of 17:35, 18 February 2016

Policy 509.19

1 Introduction

1.1 This policy provides guidance on the applicability of Federal excise taxes and State of North Carolina Sales and Use tax on University purchases.

2 Scope

2.1 This policy applies to all University purchases of tangible items and services.

3 Definitions

3.1 Excise Tax

Excise taxes are taxes paid when purchases are made on a specific good, such as gasoline. Excise taxes are often included in the price of the product. There are also excise taxes on activities, such as highway usage by trucks. One of the major components of the excise program is motor fuel.

3.2 Local Taxes

Sales taxes levied by a county, or municipal government, which are applied to the purchase in addition to the state general and county combined rate.

3.3 State General Rate

The combined sales tax rate for North Carolina include a state rate and a county rate. Organizations exempt from sales taxes are exempt from this combined rate, but not locally administered rates levied in addition to the state rate.

4 Policy and Procedure Statements

4.1 Exemption from Federal Excise Tax

4.1.1 Appalachian State University, being an agency of the State of North Carolina, is exempt from the Federal Excise Tax. The Purchasing Office must furnish the State of North Carolina Exemption Number under which the University is authorized to purchase tax free, to vendors of items subject to the Federal Excise Tax:

4.2 State Sales Taxes - Rates and Exemptions

4.2.1 Other than for those categories of items exempt by law, all purchases of supplies and materials are subject to the inclusion of a 4% (or other applicable rate) State and a 2% Watauga County sales tax as part of the cost. All sales taxes are figured on the total cost of taxable items included. Refer to the following section on items exempt from sales tax for more details.

4.2.2 Where items are being traded in as part of the payment, the sales tax is figured on original sales cost rather than on the net cost.

4.2.3 Include on Procurement Request - Applicable sales taxes are to be included on the procurement request when requisitioning materials and supplies.

4.3 Items Exempted From Sales Tax

1. Items purchased for resale by the University are exempted at the point of purchase. The sales tax is collected and paid at the point of sale. Procurement requests covering such items must bear the notation, "Tax Exempt - Purchase for Resale." Vendors whose major sales are to a University agency or department which is exempt from the tax must have on file an Exemption Certificate. When appropriate, the Purchasing Office will furnish the vendors with the exemption certificates.
2. Purchases of services.
3. Purchases of seed, fertilizers, insecticides, and herbicides.
4. Labor portion of charges for repairs to equipment when labor can be identified as a separate charge.
5. Repairs and alterations, such as painting, masonry work, electrical work, plumbing where the order is for the vendor to furnish both labor and material. The vendor pays the tax on the materials that are used and figures the tax in the total cost. If the University buys the materials for a repair vendor to use, then the purchase of the materials is subject to sales tax.
6. Rental of real property.

4.4 Items Taxable at Special Rates

1. Highway motor vehicles are taxed at a 2% rate with a maximum of $300.00 per vehicle.
2. Purchase of supplies or equipment which are used in the manufacture of a product, such as water and electrical power, or used in a laundry operation are taxed at a 1% rate with a maximum of $80.00 per item.

5 Additional References

6 Authority

7 Contact Information

8 Original Effective Date

9 Revision Dates