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We sell computer hardware and software to schools. Are we required to charge sales tax when a school purchases something?

Full Question: We are a NC company that sells computer hardware and software. Are we required to charge sales tax when a NC school purchases something from us?

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Answer:

Diane Yetter photoSales of taxable tangible personal property to a nonprofit entity (such as a school not operated for profit) for use or consumption by that entity are subject to sales or use tax in North Carolina. You are required to charge sales tax when a NC school purchases computer hardware from you. You are also required to charge sales tax when a NC school purchases canned (prewritten) software from you, regardless of whether it is solid in tangible form, delivered electronically, or via load and leave. In North Carolina, sales of customized software are not subject to sales tax, regardless of whether it is solid in tangible form, delivered electronically, or via load and leave. You should not charge sales tax on any purchases of customized software. The not for profit entity may be eligible to file for a semi-annual refund of the sales tax it pays on the purchase of taxable goods.

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