North Carolina § 105-164 - 27A. Direct pay permit.

§ 105-164. 27A. Direct pay permit.

General. - A general direct pay permit authorizes its holder to purchase certain items without paying tax to the seller and authorizes the seller to not collect any tax on a sale to the permit holder. A general direct pay permit may not be used for purposes identified in subsections (a1), (a2), (a3), or (b) of this section. A person who purchases an item under a direct pay permit issued under this subsection is liable for use tax due on the purchase. The tax is payable when the property is placed in use or the service is received. A direct pay permit issued under this subsection does not apply to taxes imposed under G.S. 105-164.4 on sales of electricity, piped natural gas, video programming, spirituous liquor, or the gross receipts derived from rentals of accommodations. The place of business where the item will be stored, used, or consumed in the State is not known at the time of the purchase and a different tax consequence applies depending on where the item is used in the State. The manner in which the item will be stored, used, or consumed in the State is not known at the time of the purchase and one or more of the potential uses is taxable but others are not taxable in the State. Direct Mail. - A person who purchases direct mail may apply to the Secretary for a direct pay permit for the purchase of direct mail. A direct pay permit issued for direct mail does not apply to any purchase other than the purchase of direct mail. A person who purchases direct mail under a direct pay permit must file a return and pay the tax due monthly or quarterly to the Secretary. Qualified Jet Engine. - A person who purchases a qualified jet engine may apply to the Secretary for a direct pay permit for the purchase of a qualified jet engine. A direct pay permit issued for a qualified jet engine does not apply to any purchase other than the purchase of a qualified jet engine. The maximum use tax on a qualified jet engine is two thousand five hundred dollars ($2,500). A person who purchases a qualified jet engine under a direct pay permit must file a return and pay the tax due monthly to the Secretary. Boat and Aircraft. - A direct pay permit issued under this subsection authorizes its holder to purchase tangible personal property, certain digital property, or repair, maintenance, and installation services for a boat, an aircraft, or a qualified jet engine without paying tax to the seller and authorizes the seller to not collect any tax on the purchased items from the permit holder. A person who purchases the tangible personal property, certain digital property, or repair, maintenance, and installation services under a direct pay permit must file a return and pay the tax due to the Secretary in accordance with G.S. 105-164.16. A permit holder is allowed a use tax exemption on one or more of the following: (i) the installation charges that are a part of the sales price of tangible personal property or certain digital property purchased by the permit holder for a boat, an aircraft, or a qualified jet engine, provided the installation charges are separately stated and identified as such on the invoice or other documentation given to the permit holder at the time of the sale and (ii) the sales price of or gross receipts derived from repair, maintenance, and installation services provided for a boat or an aircraft. Telecommunications Service. - A direct pay permit for telecommunications service authorizes its holder to purchase telecommunications service and ancillary service without paying tax to the seller and authorizes the seller to not collect any tax on a sale to the permit holder. A person who purchases these services under a direct pay permit must file a return and pay the tax due monthly or quarterly to the Secretary. A direct pay permit issued under this subsection does not apply to any tax other than the tax on telecommunications service and ancillary service. Application. - An application for a direct pay permit must be made on a form provided by the Secretary and contain the information required by the Secretary. The Secretary may grant the application if the Secretary finds that the applicant complies with the sales and use tax laws and that the applicant's compliance burden will be greatly reduced by use of the permit. Revocation. - A direct pay permit is valid until the holder returns it to the Secretary or the Secretary revokes it. The Secretary may revoke a direct pay permit if the holder of the permit does not file a sales and use tax return on time, does not pay sales and use tax on time, or otherwise fails to comply with the sales and use tax laws. A person who purchases an item for storage, use, or consumption in this State whose tax status cannot be determined at the time of the purchase because of one of the reasons listed below may apply to the Secretary for a general direct pay permit: In lieu of purchasing under a direct pay permit pursuant to this subsection, a purchaser may elect to have the seller collect and remit the tax due on behalf of the purchaser. Where the purchaser elects for the seller to collect and remit the tax, an invoice given to the purchaser bearing the proper amount of tax on a retail transaction extinguishes the purchaser's liability for the tax on the transaction. Where a seller cannot or does not separately state installation charges that are a part of the sales price of tangible personal property or certain digital property for a boat, an aircraft, or a qualified jet engine on the invoice or other documentation given to the purchaser at the time of the sale, tax is due on the total purchase price. The amount of the use tax exemption is the amount of the installation charges and the sales price of or gross receipts derived from the repair, maintenance, and installation services that exceed twenty-five thousand dollars ($25,000). A call center that purchases telecommunications service that originates outside this State and terminates in this State may apply to the Secretary for a direct pay permit for telecommunications service and ancillary service. A call center is a business that is primarily engaged in providing support services to customers by telephone to support products or services of the business. A business is primarily engaged in providing support services by telephone if at least sixty percent (60%) of its calls are incoming. History (2000-120, s. 1; 2001-414, s. 20; 2001-430, s. 9; 2002-72, s. 18; 2003-284, s. 45.9; 2003-416, s. 16(b); 2006-33, s. 7; 2009-451, s. 27A.3(q); 2012-79, s. 2.12; 2013-414, s. 13; 2015-259, s. 4.2(e); 2016-94, s. 38.5(m); 2017-204, s. 2.11(a); 2018-5, s. 38.5(o); 2019-6, s. 5.5; 2019-169, s. 3.3(r).) Editor's Note. - Session Laws 2001-430, s. 9, amended this section in the coded bill drafting format provided by G.S. 120-20.1 . The amendment omitted some words that had been in subsection (b) in striking through that subsection. The subsection is set out in the form above at the direction of the Revisor of Statutes. Session Laws 2003-284, s. 45.1, provides: "The Streamlined Sales and Use Tax Agreement is an historic multistate agreement designed to simplify and modernize sales and use tax collection and administration. The states and businesses involved in the Streamlined Sales Tax Project recognize that a simplified and uniform system saves businesses compliance and audit costs, while also saving states administrative costs and improving voluntary compliance, which should increase state collections. To participate in the Agreement, North Carolina must amend or modify some of its sales and use tax law to conform to the simplifications and uniformity in the Agreement. This part [Part XLV of Session Laws 2003-284] makes those necessary changes." Session Laws 2003-284, s. 48.1, provides: "Parts 32 through 47 of this act do not affect the rights or liabilities of the State, a taxpayer, or another person arising under a statute amended or repealed by those parts before the effective date of its amendment or repeal; nor do they affect the right to any refund or credit of a tax that accrued under the amended or repealed statute before the effective date of its amendment or repeal." Session Laws 2003-284, s. 1.2, provides: "This act shall be known as the 'Current Operations and Capital Improvements Appropriations Act of 2003'." Session Laws 2003-284, s. 49.3, provides: "Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2003-2005 fiscal biennium, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2003-2005 fiscal biennium." Session Laws 2003-284, s. 49.5 is a severability clause. Session Laws 2015-259, s. 4.2(g), provides: "This Part becomes effective October 1, 2015, and applies to sales made on or after that date." Session Laws 2016-94, s. 38.5(q) made the amendments to this section by Session Laws 2016-94, s. 38.5(m), applicable to purchases of repair, maintenance, and installation services purchased on or after July 1, 2016. Session Laws 2016-94, s. 1.2, provides: "This act shall be known as the 'Current Operations and Capital Improvements Appropriations Act of 2016.'" Session Laws 2016-94, s. 39.7, is a severability clause. Session Laws 2017-204, s. 7.1, is a severability clause. Session Laws 2018-5, s. 1.1, provides: "This act shall be known as the 'Current Operations Appropriations Act of 2018.'" Session Laws 2018-5, s. 39.7, is a severability clause. Effect of Amendments. - Session Laws 2003-284, s. 45.9, effective July 15, 2003, inserted the second paragraph of subsection (a). Session Laws 2003-416, s. 16.(b), effective August 14, 2003, deleted "interstate" following "that purchases" in the first sentence of the last paragraph in subsection (b). Session Laws 2006-33, s. 7, effective January 1, 2007, in subsection (b), in the first paragraph added "and ancillary service" in the first and last sentences, substituted "these services" for "telecommunications service" in the second sentence; and, in the second paragraph, inserted "service and ancillary" following "telecommunications" in the first sentence. Session Laws 2009-451, s. 27A.3(q), effective August 7, 2009, rewrote subsection (a), and added subsection (a1). Session Laws 2012-79, s. 2.12, effective June 26, 2012, in the second paragraph of subsection (a), inserted "for storage, use, or consumption in this State"; in subdivisions (a)(1) and (a)(2), substituted "stored, used, or consumed" for "used"; and in the first paragraph of subsection (b), inserted "or quarterly" in the second sentence. Session Laws 2013-414, s. 13, effective August 23, 2013, substituted "on sales of electricity or the gross receipts derived from the rentals of accommodations" for "on electricity" in the last sentence of the first paragraph of subsection (a); and added the last sentence in subsection (a1). Session Laws 2015-259, s. 4.2(e), added subsection (a2). For effective date and applicability, see Editor's note. Session Laws 2016-94, s. 38.5(m), effective July 1, 2016, in subsection (a), in the first paragraph, substituted "certain tangible" for "any tangible" in the first sentence and added the present second sentence; and added subsection (a3). See editor's note for applicability. Session Laws 2017-204, s. 2.11(a), effective August 11, 2017, in subsection (a3), substituted "in accordance with G.S. 105-164.14 " for "by the end of the month following the month in which the property or services are purchased" in the second sentence of the first paragraph, and added the present second paragraph. Session Laws 2018-5, s. 38.5(o), effective June 12, 2018, in subsection (a), in the first paragraph, substituted "electricity, piped natural gas, video programming, spirituous liquor" for "electricity" in the last sentence; and in subdivisions (a)(1) and (a)(2), added "in the State" throughout. Session Laws 2019-6, s. 5.5, effective March 20, 2019, substituted "G.S. 105-164.16" for "G.S.105-164.14" in the second sentence of the first paragraph of subsection (a3). Session Laws 2019-169, s. 3.3(r), effective July 26, 2019, substituted "items" for "tangible personal property, digital property, or service" in the first sentence of the first paragraph of subsection (a); and, in subsection (a3), in the first sentence of the first paragraph, inserted "certain" and substituted "purchased items" for "item or services", substituted "tangible personal property, certain digital property, or repair, maintenance, and installation services" for "property or services" in the second sentence, and in the third sentence, inserted "certain" in item (i), and substituted "boat or an aircraft" for "boat, an aircraft, or a qualified jet engine" in item (ii), and made a minor stylistic change in the last paragraph.