Sales Tax Exemption Questions & Answers

What is the authority for Winston-Salem State University's sales tax exemption?

The sales tax exemption is the result of Senate Bill 100 passed by the 2003 Session of the General Assembly of North Carolina.

What is the scope of the sales tax exemption?

The sales tax exemption applies to North Carolina sales tax on all direct purchases of tangible items made by the University. This includes purchases made via a Purchase Order, P-Card Transaction or electronic transfer. The exemption from tax does not apply to the following taxes; these taxes must be paid to the vendor:

  • Prepared food and beverage taxes levied and administered by various local governments in the State.
  • Occupancy taxes on hotel/motel lodging
  • Highway use taxes on the purchase, lease, or rental of motor vehicles
  • State sales taxes levied on electricity or telecommunication services
  • Scrap tire disposal tax on new tires
  • White goods disposal tax on new white goods
  • Dry-cleaning solvent tax on dry-cleaning solvent purchased by a dry-cleaning facility.
  • Excise tax on piped natural gas.

What does the exemption mean to Winston-Salem State University?

The exemption means that all payments made to vendors using a University Check (written on any checking account in the name of Winston-Salem State University), a University issued P-Card, or an electronic transfer through Winston-Salem State University banks are exempt from sales tax except as discussed in question #2. Payments made to employees and other individuals for reimbursement of expenses are not exempt from sales tax.

Why are payments to employees and other individuals for reimbursement not exempt?

The State Law applies only to payments made directly to vendors by the University. Reimbursement to employees and other individuals are not direct payments to vendors.

When does the exemption go into effect?

December 31, 2007. Qualifying goods/services received on or after this date are exempt from sales tax paid directly by Winston-Salem State University.

What steps has the University taken to notify vendors that we are exempt from sales tax?

The University has taken the following steps:

  • A sales tax exemption notification letter was sent on June 11, 2004 to every vendor that has been paid by a University Accounts Payable check over the past eighteen months.
  • A statement informing the vendor of Winston-Salem State University's tax exemption and tax exempt number will be printed on all payee check stubs beginning on July 1, 2004.
  • All new Purchase Orders processed on and after May 15, 2004 have included the tax-exempt number printed on the face of the purchase order.
  • A 3D letter was sent to campus on June 4, 2004 providing instructions when placing orders for goods/services to be received after June 30, 2004.
  • New P-cards will be issued the week of June 28, 2004 with the University's sales tax exempt number on the card.
  • The Notification of the University's Sales Tax Exemption from the Department of Revenue has been posted on the University Controller's and Materials Management Web site.

How does the campus community make sure that the vendor knows we are exempt from sales tax and has our sales tax exempt number?

At the time an order is placed, the person placing the order should inform the vendor that the University is exempt from sales tax and provide them with the tax-exempt number. If necessary, a copy of the notification letter from the NC Department of Revenue can be provided to the vendor.

How will vendors paid through P-card transactions be notified of our sales tax exempt number?

Again, the person placing the order should make sure the vendor has been notified of our sales tax exemption. This is done by (1) showing the P-card to the vendor (P-card has Winston-Salem State University's tax exempt number on it), (2) indicating the tax-exempt information in the comment section of the order form if available, or (3) contacting a sales representative through the vendor's Web site messaging process or by telephone. The person placing the order should review the completed order to make sure that sales tax has not been added. If tax has been added, the person placing the order should contact the vendor's sales representative for adjustment.

If an employee purchases something for work purposes using their own funds, will that purchase be exempt from tax?

No. Purchases of taxable items by employees, which are reimbursed by WSSU, are not eligible for sales and use tax exemption.

Can the department reimburse employees for tax on items purchased by the employee for work related expenditures?

Reimbursement of tax paid by an employee for work expenditures will be at the discretion of the department.

Should Winston-Salem State University pay sales tax if it is charged on invoices for goods received?

No. Tax should not be paid on invoices for goods purchased or received. If tax is included on the invoice, the campus department should contact the vendor, provide them with a copy of our tax-exempt documentation and request a revised invoice.

What happens if Winston-Salem State University mistakenly pays sales tax on purchases made?

The University will have to resolve this with the vendor. The Department of Revenue will not refund any sales tax paid in error to a vendor.

Will there be a Budget impact because of the sales tax exemption?

Yes. The State Appropriated budget will be reduced based on an estimated savings resulting for the sales and use tax exemption.

Can departments use State or Federal funds to pay for sales tax on employee reimbursements?

Yes, if charged to the appropriate project and college approved. It is up to the College/Department to decide whether to allow reimbursements for sales tax paid. Colleges/Departments should review their methods for vendor payments including employee reimbursements to ensure that direct payments (payment by WSSU check or P-Card) are made to vendors as much as possible.

How can food/supplies be purchased from a grocery/supply store and the purchase be exempt from sales tax?

First of all, you must either use a WSSU check, P-Card, or charge account. Employee reimbursements are not exempt from sales tax. Make sure that you contact the grocery/supply store in advance to understand their procedures. Some stores require forms to be completed while others will simply need our tax-exempt number. The exemption only applies to sales tax on food purchases. Winton-Salem State University is not exempt from the prepared food and beverage taxes administered by local counties and municipalities. 

Is WSSU exempt from tax paid on the lease or rental of motor vehicles?

No. The tax paid on the lease or rental of motor vehicles is considered a highway use tax and is not subject to the exemption.

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