CCRC Exemption from Sales and Use Tax

The North Carolina General Assembly late last week approved the state’s two-year budget. Included in the legislation is an exemption from the state’s sales and use tax for:   

“Sales of items by a provider of continuing care to its residents, other than sales of alcoholic beverages. A provider of continuing care must pay sales and use tax on the purchase price of an item that is exempt from tax under this subdivision as if the provider is the user of the item. As a result, the provider of continuing care is not required to pay sales or use tax if the purchase would be exempt if purchased for use, not resale, by the provider.”   

This section becomes effective November 1, 2023, and applies to sales occurring on or after that date.   

Five important items to note:  

1. The exemption applies only to items sold by a CCRC to its residents. The exemption does not apply to items sold to an employee or non-resident. 
2. CCRCs must pay sales and use tax for any sale of alcoholic beverages. 
3. The new law goes into effect on November 1, 2023, so you should be working on any changes to your financial processes and systems so that they are in place by that time. 
4. There is nothing in this new legislation that alters the existing semiannual refund for certain 501(c)(3) and other nonprofit organizations, found in N.C.G.S. 105-164.14(b). 
5. You should consult your tax counsel for any advice. 

  NCHCFA is grateful to the North Carolina General Assembly for their efforts on this issue.