State Sales and Use Tax

Your PTA may operate both as a “consumer” and as a “merchant”. In either case, your PTA should be able to recoup sales tax expense by following these guidelines. Please note that laws change frequently and this document is intended for guidance only and not for legal or tax advice.

  1. Your PTA is a “consumer” when it purchases supplies or equipment that it will use or give to the school. This includes items and equipment for which PTA writes the check to the supplier: office supplies, award certificates and trophies, computer hardware and software, and playground equipment. The sales tax paid on purchases of electricity, telecommunications services, and ancillary services is not subject to refund. Refund claims are considered filed within the statute of limitations if they are filed within three years of the original due date.
  2. When your PTA purchases items for its use or to donate to the school:
    • Your PTA MUST PAY SALES TAX at the time of purchase, as would any other consumer.
    • Your PTA may apply for a sales tax refund semi-annually. The due date for a semiannual refund claim for the period January – June is October 15 of the same year and for the period July –December is April 15 of the following year.
    • Save receipts of purchases made by the PTA to the supplier or vendor. Your PTA may claim a refund of sales tax paid indirectly via reimbursements to authorized persons for purchases made on behalf of the organization.
    • File NC Form E-585, Claim for Refund of State and County Sales and Use Taxes. Please contact the State Office for the form and instructions or your may download the Form E-585 and E-536R from the NC Department of Revenue’s website at www.dornc.com or by contacting the Taxpayers Assistance Call Center at 877-252-3052. These forms are no longer automatically mailed to organizations that have applied for the refund in the past.
    • National Taxonomy of Exempt Entities Number — please enter B94
    • First time filing… Complete and mail the Sales Tax Refund Form (E-585) and attach a copy of your PTA’s bylaws proving that your PTA is a non-profit entity. Your PTA will be assigned an account number. It is imperative that you retain your account ID for future filings. Failure to include the account ID on refund claims filed will delay the processing of your refund requests.
    • The due date for a semiannual refund claim for the period January 1 through June 30 is October 15 of the same year.The due date for a semiannual refund clam for the period July through December is April 15 of the following year.
  3. Your PTA is a “merchant” when it purchases merchandise to sell in order to raise funds. Catalog sales also fall into this category. When your PTA purchases items to sell:
    • In accordance with North Carolina law, your PTA MUST HAVE A CERTIFICATE OF REGISTRATION (Form NC-BR). Please contact the State Office for the application and instructions.
    • Complete the application and mail it to the North Carolina Department of Revenue at the address shown on the application. You must also complete and include the letter below with your application. If you do not attach the letter, the Department of Revenue will assume that your PTA is delinquent in remitting sales tax and will take what it considers appropriate steps.
    • PTAs may not complete this application and submit online to the NC Department of Revenue. The license is free and does not expire.
    • The North Carolina Department of Revenue will issue to your PTA a Certificate of Registration, which assigns your PTA a sales tax registration number. File the license with your PTA’s permanent records.
    • Once your PTA has its Certificate of Registration, you must notify your fundraising suppliers so that they will not charge you sales tax when you purchase your resale merchandise. You must provide each fundraising vendor with a completed Streamlined Sales Tax Agreement Certificate of Exemption (NC Form E-595E), which includes your registration number. Prior to signing any sales contract on resale merchandise, check with the supplier first to make sure that he/she will accept a completed Streamlined Sales Tax Agreement Certificate of Exemption from your PTA. IF YOUR PTA PAYS SALES TAX ON RESALE MERCHANDISE, YOU MAY NOT CLAIM A REFUND ON THE SALES TAX PAID.
    • General Statute 105-164.13(34) designates that your PTA is exempt from collecting and remitting state and county sales tax on your sales, when the net proceeds of the sales will be given or contributed to the public schools. Retail sales made by the PTA throughout the year on a regular basis are exempt from sales tax. Sales at concession stands and school stores are exempt from sales tax if they are operated by a PTA and the PTA acquires on its own behalf the items to be sold and does not act as an agent for the school.

The North Carolina Department of Revenue does not limit the number of fundraisers that can be held each year. If dues are not sufficient to finance a PTA’s work, supplementary funds may be raised within the PTA Mission and Purpose. PTAs should begin each year with specific goals in mind before determining the dollar amount needed in a fundraising event.

Please visit http://www.dornc.com/publications/nonprofit.html for additional information on State Sales and Use Tax for Nonprofit Organizations.

Template Letter to Send with Form NC-BR

To Whom It May Concern:

Attached is the completed application Form NC-BR (Business Registration Application for Income Tax Withholding, Sales and Use Tax, and Machinery and Equipment Tax) for ___________________PTA to obtain a sales tax registration number.

General Statute 105-164.13(34) designates that PTAs are exempt from collecting and remitting state and county tax on sales when the net proceeds of the sales will be given or contributed to a public school; therefore, it is our understanding that our PTA will not need to remit the quarterly Sales and Use Tax Return to the NC Department of Revenue.

Please note that our PTA will need an active account in order to purchase items for resale in the future for our PTA. We have been told by the NC Department of Revenue that this type of registration is referred to as a “Register and Kill” account.
Thank you for your assistance in this matter.

Sincerely,

 Posted January 21, 2014

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