Sales and Use Tax Division
North Carolina Department of Revenue
Pat McCrory
Governor
Lyons Gray
Secretary
MEMORANDUM
Date:
June 1, 2015
To:
State Agency Chief Fiscal Officers
From:
Eric K. Wayne, Director
Sales & Use Tax Division
Subject:
State Agency Exemption Numbers and Quarterly State Agency Refund Claims
This memorandum addresses issues relating to the use of State agency exemption numbers issued by
the Department and information with regard to State agency claims for refund of local and transit sales
and use taxes required to be filed with the Department.
State Agency Exemption Numbers (Permitted and Non-Permitted Uses)
Items subject to sales and use tax under N.C. Gen. Stat. § 105-164.4, other than electricity,
telecommunications service, and ancillary service, are exempt from sales and use tax when purchased by
a State agency if the following conditions are met:
1. The items are purchased by a State agency for its own use and in accordance with N.C. Gen.
Stat. § 105-164.29A.
2. The items are purchased pursuant to a valid purchase order issued by the State agency that
contains the exemption number of the agency and a description of the property purchased, or
the items purchased are paid for with a State-issued check, electronic deposit, credit card,
procurement card, or credit account of the State agency.
3. For all purchases other than by an agency-issued purchase order, the agency must provide
to or have on file with the retailer the agency’s exemption number.
State agency exemption numbers may not be used to avoid payment of State, local, and transit sales and
use taxes by:
1. A real property contractor to purchase items for use to fulfill real property contracts entered
into with a State agency.
2. An employee of a State agency to purchase food, lodging, or other taxable items paid by the
employee from their own funds and reimbursed by the agency.
3. A person other than the State agency to which an exemption number is issued.
4. A person who enters into a contract or agreement with a State agency, to purchase tangible
personal property, digital property, or taxable services for use by the person to fulfill a
contract or agreement entered into with a State agency.
Scope of Exemption
The exemption from sales and use tax does not apply to the following taxes or service charge; therefore,
payment of the following must be made to the vendor by a State agency as applicable under law:
1. Prepared food and beverage taxes levied and administered by various local governments.
2. Occupancy taxes levied and administered by various local governments and special districts.
Post Office Box 871
Raleigh, North Carolina 27602-0871
www.dornc.com
An Equal Opportunity Employer
Page 2
June 1, 2015
3.
4.
5.
6.
7.
8.
Highway use taxes levied on the purchase, lease, or rental of motor vehicles.
State sales taxes levied on electricity, telecommunications services, or ancillary services.
Scrap tire disposal tax levied on new tires.
White goods disposal tax levied on new white goods.
Dry-cleaning solvent tax levied on dry-cleaning solvent purchased by a dry-cleaning facility.
Solid waste disposal tax levied on the disposal of municipal solid waste and construction
debris.
9. 911 service charge levied on the sale of prepaid wireless telecommunications service.
All direct sales to the North Carolina Department of Transportation (“NCDOT”) continue to be exempt
from State, local, and transit sales and use taxes. The NCDOT is not required to obtain a State agency
exemption number.
State Agency Refund Claims
Pursuant to N.C. Gen. Stat. § 105-164.14(e), “[t]he State is allowed quarterly refunds of local sales and
use taxes paid indirectly by the State agency on building materials, supplies, fixtures, and equipment that
become a part of or annexed to a building or structure that is owned or leased by the State agency and is
being erected, altered, or repaired for use by the State agency.” Within 15 days after the end of each
calendar quarter, every State agency shall file with the Secretary Form E-585E, State Agency Claim for
Refund County and Transit Sales and Use Taxes, for a refund of local sales and use taxes to which N.C.
Gen. Stat. § 105-164.14(e) applies and which were paid by the State agency during the quarter. The
refund statute provides “[t]he Secretary shall credit the local sales and use tax refunds directly to the
General Fund.”
Additionally, N.C. Gen. Stat. § 105-164.14(e) provides that “[a] person who pays local sales and use
taxes on building materials or other tangible personal property for a State building project shall give the
State agency for whose project the property was purchased a signed statement containing all of the
following information:
1.
2.
3.
4.
5.
6.
The date the property was purchased.
The type of property purchased.
The project for which the property was used.
If the property was purchased in this State, the county in which it was purchased.
If the property was not purchased in this State, the county in which the property was used.
The amount of sales and use taxes paid.
If the property was purchased in this State, the person shall attach a copy of the sales receipt to the
statement. A State agency to whom a statement is submitted shall verify the accuracy of the statement.”
A State agency who has not filed all applicable quarterly refund claims for any quarter beginning on or
after April 1, 2012 and ending prior to April 1, 2015 is requested to file such on or before June 30, 2015.
Such claims are requested to be mailed to the attention of the Sales and Use Tax Division of the North
Carolina Department of Revenue at P.O. Box 871, Raleigh, NC 27602-0871 in lieu of the mailing address
indicated on Form E-585E. Form E-585E filed by a State agency for a quarter that begins on or after
April 1, 2015 should be mailed to the address indicated on the form.
Registry of State Agency Exemption Number Holders
State agencies that were issued a State agency exemption number may be found by entering “4*” into the
search field of the Registry of Direct Pay Permits and Exemption Certificate Numbers on the
Department’s website, www.dornc.com. Pursuant to N.C. Gen. Stat. § 105-164.29A, the Secretary of
Revenue is authorized to issue a sales and use tax exemption number to a State agency that submits a
Form E-592A, Application for State Agency Exemption Number for Sales and Use Taxes.
Assistance
For additional information about the proper use of State agency exemption numbers, refer to Sales and
Use Tax Technical Bulletin Section 18 available on the Department’s website, www.dornc.com.
Questions regarding this memorandum should be directed to the Sales and Use Tax Division at
telephone number (919) 814-1082.