What’s better than purchasing items and then reselling them for a profit; Reselling items for a larger profit. Why would you pay taxes if you didn’t have to?
In North Carolina, non-profit entities registered for sales and use tax purposes may purchase tangible personal property for resale without paying tax to the NC vendor so long as they furnish the vendor with a Form E595E (Streamlined Sales Tax Agreement Certificate of Exemption).
There’s a lot going on in that one sentence. Let’s break it down.
- The non-profit organization must be incorporated in North Carolina. This would be done when you first filed your articles of organization and became a non-profit entity.
- The non-profit entity should register with the state of NC and can then obtain a resale certificate including their North Carolina registration number.
- The vendor has to be a North Carolina vendor. So if you purchase items to resale in your fundraiser from outside of NC, you will have to pay sales taxes.
- Your non-profit organization has to be purchasing items to resale them. In other words, you are buying items to resale in a fundraiser. You still have to pay taxes on items your non-profit will use, not resale. But, you can get this money back from the state in the form of a refund.
- A Form E595E from NC must be filled out and issued to the vendor at the time of the sale. Form E-595E – Streamlined Sales Tax Agreement Certificate of Exemption – can be downloaded from the NC Department of Revenue website.
As the goods are resold, sales tax should be calculated and remitted monthly or quarterly. This can be done online on your sales tax report. The NC Department of Revenue’s online filing and payment system allows you to electronically file Form E-500, Sales and Use Tax Return. See the following link: https://www.dor.state.nc.us/electronic/salesanduse.html
When a non-profit organization purchases items from an out-of-state vendor who charges taxes, the organization must pay the tax to the supplier.