17 NCAC 07B .2213. SERVICE CHARGE

A service charge is exempt from sales tax under G.S. 105-164.13A only if it meets the conditions in that statute.  If a service charge does not exceed 20% of the sales price and personnel who are not directly involved in the service of food, beverages, or meals receive part of the service charge, then none of the service charge is exempt.  If a service charge exceeds 20% of the sales price and personnel who are directly involved in the service of food, beverages, or meals receive an amount equal to 20% of the sales price, the amount received by them is exempt if the service charge is separately stated as required by G.S. 105-164.13A.  In this circumstance, if the personnel who are directly involved do not receive an amount equal to 20% of the service charge, then none of the charge is exempt.  The amount of a service charge that exceeds 20% of the sales price is subject to tax.

 

History Note:        Authority G.S. 105‑164.4; 105‑164.6; 105‑164.13A; 105‑262;

Eff. January 3, 1984;

Amended Eff. July 1, 2000; October 1, 1993.