17 NCAC 07B .2602. CONTRACTORS, SUBCONTRACTORS, AND RETAILER-CONTRACTORS

(a)  Contractors are considered the consumers of tangible personal property they use in fulfilling contracts and are liable for payment of applicable statutory State and local sales or use taxes on the property.  When a contractor or a subcontractor purchases taxable tangible personal property from a supplier outside this State who collects applicable statutory State and local sales and use taxes, the contractor must remit the tax to the supplier.  When a contractor or subcontractor purchases taxable tangible personal property for use in this State from a supplier outside this State who does not collect the applicable State and local sales and use taxes, the contractor or subcontractor must remit the tax directly to the Department.

(b)  The term retailer‑contractor shall mean any person who engages in the business of selling building materials, supplies, equipment, and fixtures at retail and, in addition to such business, enters into contracts for constructing, building, erecting, altering or repairing buildings or other structures, and for the installation of equipment and fixtures to buildings and, in the performance of such contracts, consumes or uses such materials or merchandise.  When a retailer‑contractor as herein defined makes purchases of the above‑named tangible personal property, a part of which he will use in performing contracts and a part of which he will sell at retail, the retailer‑contractor shall furnish his supplier a Streamlined Sales and Use Tax Agreement Certificate of Exemption, Form E-595E.  The supplier shall keep the certificate for his records as his authority for not charging tax on the transaction.  The retailer‑contractor then becomes liable for remitting, directly to the department, tax on the sales price of any tangible personal property sold at retail, and tax on the cost price of any tangible personal property used in the performance of a contract.

(c)  Sales to contractors and subcontractors purchasing mill machinery or mill machinery parts and accessories for use by them in the performance of contracts with manufacturing industries and plants and sales to subcontractors purchasing mill machinery or mill machinery parts and accessories for use by them in the performance of contracts encompassed in such contracts with manufacturing industries and plants are exempt from sales and use tax.  Such mill machinery or mill machinery parts and accessories must be for use by a manufacturing industry or plant in the production process, as the term "production" is defined in 17 NCAC 07D .0102(a)(1), to qualify for the exemption when purchased by such contractors or subcontractors.  Contractors and subcontractors may obtain the Streamlined Sales and Use Tax Agreement Certificate of Exemption, Form E-595E, from the Taxpayer Assistance Division, North Carolina Department of Revenue, to be completed by them and furnished to their vendors in connection with such purchases as the vendors' authority to apply the exemption from sales and use tax thereto.

 

History Note:        Authority G.S. 105‑164.4; 105‑164.6; 105‑262; 105‑264; Article 39; Article 40; Article 42; Article 43; Article 44; Article 46;

Eff. February 1, 1976;

Amended Eff. October 1, 2009; August 1, 2002; October 1, 1993; June 1, 1992; October 1, 1991; February 8, 1981.