Frequently Asked Questions - Refund Claimants

Form E-585 (Nonprofit and Governmental Entity Claim for Refund Of State, County, and Transit Sales and Use Taxes)
Form E-536R (Schedule of County Sales and Use Taxes for Claims for Refund) (For Refund Claimants)

 

G.S. 105-164.14(c) allows annual refunds of sales and use taxes paid on direct purchases and leases of tangible personal property and services.

What Account ID should be used?

Governmental entities should use the nine digit account ID number which begins with “73” that has been assigned to each governmental entity. If a governmental entity has several departments which are accounted for independently, the entity should combine these entities and file one E-585. If an entity files multiple claims for a period, processing of the refund may be delayed. Nonprofit entities should use the nine digit account ID number which begins with “72” that has been assigned to each nonprofit entity.

What FID should be used?

The Federal Employer ID Number issued by the Internal Revenue Service should be used.

What contact person should be shown?

The contact person should be the individual that will be able to answer questions the Department of Revenue might ask. This may be the Finance Director, Treasurer or it may be any other employee with the knowledge to answer the Department’s questions or knowledge of who to ask. This individual will be the initial contact when questions arise with the E-585.

What is the Period Begin/End Date?

Refund claims for governmental entities are filed annually. For most governmental entities, the beginning of the fiscal year is July 1st and the end of the fiscal year is June 30th. Therefore, the Period Begin Date would be July 1st of the fiscal year for which the refund is being filed and the Period End Date would be June 30th of the next year. Refund claims for nonprofit entities are filed semi-annually. For most nonprofit entities, the beginning of the period would be January 1st or July 1st and the ending date of the period would be June 30th or December 31st.

National Taxonomy of Exempt Entities Number?

This is for non-profit organizations only and is not used by governmental entities. The NTEE code is issued by the Internal Revenue Service and is a classification system for non-profit organizations recognized as tax exempt under the Internal Revenue Code. For more information, please see https://www.irs.gov/charities-non-profits/exempt-organizations-business-master-file-extract-eo-bmf

Line 1 – Taxing County?

The taxing county is the county in which the refund claimant paid tax. If all purchases were made and taxes paid in only one county, that county should be entered as the taxing county.

Line 1 – Form E-536R?

Form E-536R should be completed if the refund claimant made purchases and paid tax in more than one county. To determine if tax was paid in more than one county, the claimant should carefully review G.S. 105-164.4B. If it is determined that the claimant did pay tax in more than one county and Form E-536R should be used, the claimant should identify and compile the amount of tax paid to each county and enter that amount on the form in the appropriate county. If 2% Food Tax was paid or 0.5% Transit Tax was paid, this amount will be shown on the E-536R in the appropriate space.

Line 1 – Form E-536R – Correct Counties

G.S.105-164.4B determines which county the tax is attributed as a result of the sale. (1) The tax is deemed paid in the county in which the purchaser picks up the product from the seller’s business location. An example would be if the refund claimant went to the local Lowe’s Home Improvement store to purchase a shovel. This tax would be for the county in which the Lowe’s Home Improvement store was located. (2) If the seller sends the items to the purchaser or the purchaser’s designated location, the sales tax is attributed to the location where the purchaser receives the product. An example would be if the refund claimant purchased a refrigerator that was delivered to the purchaser’s location. This tax would be collected for the county in which the delivery was made. As seen in these examples, in most situations, the sales tax will be shown by the refund claimant in the county in which the buyer takes possession of the purchased item.

Line 2 – Total Purchases?

The refund claimant should enter the total purchases of tangible personal property for which state sales tax was paid directly to the retailers during this period in the State column. The claimant should enter the total purchases of tangible personal property for which county sales tax was paid directly to the retailers during this period in the County column. The claimant should also enter the amount of purchases of food items subject to the 2% Food tax in only the County column. The difference in the amounts of State Purchase columns and County Purchase column would be the amount of purchases of food items subject to 2% Food tax.

Line 3 – Tax Amounts?

The refund claimant should enter the total State sales and use tax paid during this period directly to retailers on purchases in the State column. The claimant should enter the total County sales and use tax paid during this period directly to retailers on purchases in the County column. This would include the County tax paid for the 2% Food tax as well as the 0.5% Transit Tax. There are special instructions with Line 3 which specify which taxes should not be included on Line 3. Exceptions include tax paid for electricity, piped natural gas, telecommunications, digital properties, lease or rental of motor vehicles, local occupancy or local prepared food and beverage taxes, scrap tire disposal taxes, white goods disposal taxes, reimbursements for travel expenses, and tax paid for alcoholic beverages. Any tax paid outside of the State while traveling should not be included in the claim as this tax was not received by the Department. Effective for purchases on or after July 1, 2014, Sales tax paid on video programming or prepaid meal plans is not eligible for refund. Also, Sales & Use tax liability indirectly incurred by a nonprofit entity through reimbursement to an authorized person of the entity for the purchase of personal property and services, for use in carrying on the work of the nonprofit entity is considered a direct purchase by the entity. This change does not provide for any reimbursement for sales taxes incurred on purchases of food, lodging, or other taxable travel expenses paid by employees and reimbursed by a nonprofit entity. In addition, the aggregate annual refund amount allowed to a nonprofit entity for a fiscal year many not exceed thirty-one million seven hundred thousand dollars ($31,700,000). A local aggregate annual cap of refund for a nonprofit entity shall not exceed thirteen million three hundred thousand dollars ($13,300,000).

Line 4 – Contractors' Statements?

Refund claimants are entitled to refund of sales and use tax paid on the purchase of building materials, supplies, fixtures, and other items purchased by a contractor under contract if the materials supplies, fixtures, or other items become a part of or are annexed to any building or structure. The contractor should provide sufficient documentation to show the item purchased, vendor from whom it was purchased, the invoice number of the purchase, the cost of the item, and amount of sales tax paid. In the event the item was purchased from a county other than the county where the item is included in the building, the contractor should identify the county in which the tax was paid. Claimants are not entitled to refund of taxes paid for any item which does not become a part of the building being constructed.

Line 5 – Use Tax?

If the refund claimant has a use tax account and pays use tax directly to the Department for purchases which no sales tax was charged or paid, the claimant may request this amount on the claim form. However, if the claimant collects and pays tax to the Department on taxable sales, they may not request refund of the tax paid for these taxable sales.

Line 6 – Total Tax?

The refund claimant should add the State tax on lines 3, 4, and 5 and enter the total in the State Column. The claimant should add the County tax on lines 3, 4, and 5 and enter the total in the County Column. If the claimant has made purchases and paid county tax in more than one county and is filing Form E-536R, the total of amounts shown on the E-536R should equal the County tax shown on Line 6.

Line 7 – Total Refund Requested?

The refund claimant should add the State tax total from Line 6 and the County tax total from Line 6 and enter this amount as the TOTAL REFUND REQUESTED on Line 7. This would be the total amount of refund that the claimant would receive, if there are no additional problems with the E-585.

Line 8 – Allocation of County & Transit Tax?

The refund claimant should allocate the amount of county tax included on Line 6 in the County Column to the applicable rate. The total from each rate should equal the amount shown on Line 6 as well as the amount shown on Form E-536R, if required.

Other Questions?

If you have any questions or need additional information, please contact James Rambeau, Local Government Division – Senior Revenue Distribution Analyst at (919) 814-1118.