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State & Local Tax Library


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States
North Carolina
Explanations
Sales--Use
EXEMPTION CERTIFICATES AND PERMITS
NC: 22,230 Resale Certificates.-

State & Local Taxes

22,230 . Resale Certificates.A purchaser who is properly registered with the Department of Revenue's Sales and Use Tax Division or
in another taxing jurisdiction and who is engaged in the business of making sales at retail or wholesale
and who buys tangible personal property for resale must give to vendors as their authority for not
collecting the tax, either:

a Streamlined Sales Tax Agreement Certificate of Exemption, Form E-595E (prior to January
1, 2005, a Certificate of Resale, Form E-590), or

other written evidence adequate to support the conclusion (1) that the buyer is either
registered with the Department of Revenue or registered in another jurisdiction for sales and
use tax purposes and (2) that the property is being purchased for resale. [ N.C. Admin. Code
17 7B.0106(a) ; N.C. Gen. Stat. 105-164.28 .]

Such certificates or other written evidence must be completed in duplicate and a copy retained by both
the vendor and the vendee in their files. Absent such certificates or other adequate written evidence,
vendors selling taxable tangible personal property to wholesale and retail merchants are considered to
be making retail sales and are liable for collecting and paying the applicable tax. [ N.C. Admin. Code 17
7B.0106(a) .]
A purchaser of property for resale should issue Form E-595E to a vendor in order to exclude the sales
from sales or use tax. A purchaser's sales and use tax registration number and other information
required pursuant to N.C. Gen. Stat. 105-164.28 must be entered on the certificate. [ North Carolina
Directive No. SD-04-1, 06/01/2004 .]
Purchasers who check the "blanket certificate" box on Form E-595E do not need to provide an
exemption certificate for future purchases if they claim exemption for the same reason. In addition, if the
blanket certificate box is checked, the certificate continues in force until canceled by the purchaser.
[Form E-595E Instructions-Streamlined Sales Tax Agreement Certificate of Exemption, 24,007 .]

Renewal of information: The Secretary may not require a seller to renew a blanket certificate of
exemption or to update exemption certificate information or data elements when there is a recurring
business relationship between the buyer and seller. A recurring business relationship exists when a
period of no more than 12 months elapse between sales transactions. [ N.C. Gen. Stat.
105-164.28(e) .]
Sales to lessors or retailers for lease or rental: Sales of tangible personal property to registered lessors
or retailers exclusively for the purpose of lease or rental are wholesale sales and are not subject to tax if
completed and executed certificates of resale are furnished to the vendor. [ N.C. Admin. Code 17
7B.4403(a) .]
Proper use: Certificates of exemption being issued for purposes of resale can not be used to purchase
tangible personal property that is to be used or consumed by the purchaser. The Secretary can revoke
the license of any merchant who uses a certificate of exemption in this manner. Vendors must charge
the applicable rate of tax on sales to registered merchants when the property sold is for use by the
purchaser and not for resale. Merchants purchasing tangible personal property for resale on a regular
basis from a vendor are only required to furnish one exemption certificate or other written evidence to
the vendor for such purchases. Whenever a person buys tangible personal property for resale and the
property is not generally and ordinarily the type of property the purchaser will resell, the vendor must get
certificates of exemption or other written evidence for each purchase evidencing that the property is
being purchased for resale. A penalty is imposed for improper use of resale certificates; see 23,060 . [
N.C. Admin. Code 17 7B.0106(b) .] Health care facilities can use resale certificates in limited
circumstances; see 21,700 and 21,760 .
Sales for multiple uses: The Secretary can give a registered merchant written permission to buy property
for his or her own use with an exemption certificate and assume liability for paying the applicable tax to
the Department. Such permission can be granted when, because of the character of the merchant's
business, it would impose undue hardship on the vendor and vendee to determine the transactions on
which the vendor ordinarily would have to impose tax. The purchaser must furnish written evidence of
the assumption of liability to the purchaser's vendors, and the vendors must retain the documentation in
their files. [ N.C. Admin. Code 17 7B.0106(d) .]
Nonresident merchants: The provisions of N.C. Admin. Code 17 7B.0106 apply to sales to resident
and nonresident retail or wholesale merchants. [ N.C. Admin. Code 17 7B.0106(e) .] The term
"registered nonresident retail or wholesale merchant" means a person who does not have a place of
business in North Carolina, is registered for sales and use tax purposes in a taxing jurisdiction outside
the state, and is engaged in the business of acquiring, by purchase, consignment, or otherwise, tangible
personal property or digital property and selling the property outside the state or in the business of
providing a service. [ N.C. Gen. Stat. 105-164.3(25) ; N.C. Admin. Code 17 7B.2301(a) .]
Sales of tangible personal property to registered nonresident retail or wholesale merchants for resale are
exempt from the North Carolina sales tax, if all of the following conditions are met:

The tangible personal property is the type of property that the nonresident retail or wholesale
merchant ordinarily and customarily purchases as a part of its stock for resale. [ N.C. Admin.
Code 17 7B.2301(b)(2) .]

The nonresident retail or wholesale merchant is registered for sales and use tax purposes in
another jurisdiction and gives each wholesale merchant a Streamlined Sales and Use Tax
Agreement Certificate of Exemption, Form E-595E, certifying that the merchant is a registered
nonresident retail or wholesale merchant, and further certifying that the property purchased
from the wholesale merchant is purchased for resale at retail or wholesale in compliance with
the laws of the jurisdiction in which the merchant resides or does business. Such Form
E-595E, when completed and executed and delivered to the supplier, the resale certificate is
sufficient evidence that such nonresident retail or wholesale merchant is duly registered in
another jurisdiction and is engaged in the business of a retail or wholesale merchant buying
property at wholesale for legitimate sale in the taxing jurisdiction in which the merchant resides
or does business. [ N.C. Admin. Code 17 7B.2301(b)(3) .]

The Streamlined Sales Tax Agreement Certificates of Exemption, Form E-595E, are not required for
sales in interstate commerce. [ N.C. Admin. Code 17 7B.2302 .]
MTC multijurisdiction sales and use tax certificate: The Multistate Tax Commission (MTC) has created a
Uniform Sales and Use Tax Certificate, for use in multijurisdictional transactions, which is accepted in
several states. [Uniform Sales and Use Tax Certificate-Multijurisdiction, 24,023 .] Although the Uniform
Sales and Use Tax Certificate, which is applicable in multijurisdictional transactions and is acceptable in
several states, is not accepted by the North Carolina Department of Revenue as an exemption certificate
, it may be used as a resale certificate, subject to certain statutory or regulatory restrictions generally
imposed on resale certificates (Multistate Tax Commission News and Views, NV 99-2, 4-12-99).

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