2005 North Carolina Code - General Statutes § 105-164.3. Definitions.

§ 105‑164.3.  Definitions.

The following definitions apply in this Article:

(1)       Business. – Includes any activity engaged in by any person or caused to be engaged in by him with the object of gain, profit, benefit or advantage, either direct or indirect. The term "business" shall not be construed in this Article to include occasional and isolated sales or transactions by a person who does not hold himself out as engaged in business.

(1a)     Cable service. – The one‑way transmission to subscribers of video programming or other programming service and any subscriber interaction required to select or use the service.

(2)       Candy. – A preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces that do not require refrigeration. The term does not include any preparation that contains flour.

(3)       Clothing. – All human wearing apparel suitable for general use including coats, jackets, hats, hosiery, scarves, and shoes.

(4)       Clothing accessories or equipment. – Incidental items worn on the person or in conjunction with clothing including jewelry, cosmetics, eyewear, wallets, and watches.

(4a)     Combined general rate. – The State's general rate of tax set in G.S. 105‑164.4(a) plus the sum of the rates of the local sales and use taxes authorized by Subchapter VIII of this Chapter for every county in this State.

(4b)     Computer. – An electronic device that accepts information in digital or similar form and manipulates it for a result based on a sequence of instructions.

(4c)     Computer software. – A set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task.

(4d)     Computer supply. – An item that is considered a "school computer supply" under the Streamlined Agreement.

(5)       Consumer. – Means and includes every person storing, using or otherwise consuming in this State tangible personal property purchased or received from a retailer either within or without this State.

(5a),    (5b) Reserved for future codification purposes.

(5c)     Custom computer software. – Computer software that is not prewritten computer software. The term includes a user manual or other documentation that accompanies the sale of the software.

(5d)     Delivered electronically. – Delivered to the purchaser by means other than tangible storage media.

(6)       Delivery charges. – Charges imposed by the retailer for preparation and delivery of personal property or services to a location designated by the consumer.

(7)       Dietary supplement. – A product that is intended to supplement the diet of humans and is required to be labeled as a dietary supplement under federal law, identifiable by the "Supplement Facts" box found on the label.

(7a)     Direct mail. – Printed material delivered or distributed by the United States Postal Service or other delivery service to a mass audience or to addresses on a mailing list provided by the purchaser or at the direction of the purchaser when the cost of the items is not billed directly to the recipients. The term includes tangible personal property supplied directly or indirectly by the purchaser to the direct mail seller for inclusion in the package containing the printed material. The term does not include multiple items of printed material delivered to a single address.

(8)       Direct‑to‑home satellite service. – Programming transmitted or broadcast by satellite directly to the subscribers' premises without the use of ground equipment or distribution equipment, except equipment at the subscribers' premises or the uplink process to the satellite.

(8a)     Drug. – A compound, substance, or preparation or a component of one of these that meets any of the following descriptions and is not food, a dietary supplement, or an alcoholic beverage:

a.         Is recognized in the United States Pharmacopoeia, Homeopathic Pharmacopoeia of the United States, or National Formulary.

b.         Is intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease.

c.         Is intended to affect the structure or function of the body.

(8b)     Durable medical equipment. – Equipment that meets all of the conditions of this subdivision. The term includes repair and replacement parts for the equipment. The term does not include mobility enhancing equipment.

a.         Can withstand repeated use.

b.         Primarily and customarily used to serve a medical purpose.

c.         Generally not useful to a person in the absence of an illness or injury.

d.         Not worn in or on the body.

(8c)     Durable medical supplies. – Supplies related to use with durable medical equipment that are eligible to be covered under the Medicare or Medicaid program.

(8d)     Electronic. – Relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

(9)       Engaged in business. – Maintaining, occupying or using permanently or temporarily, directly or indirectly, or through a subsidiary or agent, by whatever name called, any office, place of distribution, sales or sample room or place, warehouse or storage place, or other place of business, for the selling or delivering of tangible personal property for storage, use or consumption in this State, or permanently or temporarily, directly or through a subsidiary, having any representative, agent, salesman, canvasser or solicitor operating in this State in such selling or delivering, and the fact that any corporate retailer, agent or subsidiary engaged in business in this State may not be legally domesticated or qualified to do business in this State is immaterial. It also means maintaining in this State, either permanently or temporarily, directly or through a subsidiary, tangible personal property for the purpose of lease or rental. It also means making a mail order sale, as defined in this section, if one of the conditions listed in G.S. 105‑164.8(b) is met. It also means the direct shipment of wine to a purchaser in this State by a wine shipper permittee under G.S. 18B‑1001.1.

(10)     Food. – Substances that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value. The substances may be in liquid, concentrated, solid, frozen, dried, or dehydrated form. The term does not include an alcoholic beverage, as defined in G.S. 105‑113.68, or a tobacco product, as defined in G.S. 105‑113.4.

(11)     Food sold through a vending machine. – Food dispensed from a machine or another mechanical device that accepts payment.

(12)     Gross sales. – The sum total of all retail sales of tangible personal property as defined herein, whether for cash or credit without allowance for cash discount and without any deduction on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or any other expenses whatsoever and without any deductions of any kind or character except as provided in this Article.

(13)     Hub. – Either of the following:

a.         An interstate air courier's hub is the interstate air courier's principal airport within the State for sorting and distributing letters and packages and from which the interstate air courier has, or expects to have upon completion of construction, no less than 150 departures a month under normal operating conditions.

b.         An interstate passenger air carrier's hub is the airport in this State that meets both of the following conditions:

1.         The air carrier has allocated to the airport under G.S. 105‑338 more than sixty percent (60%) of its aircraft value apportioned to this State.

2.         The majority of the air carrier's passengers boarding at the airport are connecting from other airports rather than originating at that airport.

(14)     In this (the) State. – Within the exterior limits of the State of North Carolina and includes all territory within such limits owned by or ceded to the United States of America.

(14c)   Interstate air business. – An interstate air courier, an interstate freight air carrier, or an interstate passenger air carrier.

(15)     Interstate air courier. – A person whose primary business is the furnishing of air delivery of individually addressed letters and packages for compensation, in interstate commerce, except by the United States Postal Service.

(15b)   Interstate freight air carrier. – A person whose primary business is scheduled freight air transportation, as defined in the North American Industry Classification System adopted by the United States Office of Management and Budget, in interstate commerce.

(16)     Interstate passenger air carrier. – A person whose primary business is scheduled passenger air transportation, as defined in the North American Industry Classification System adopted by the United States Office of Management and Budget, in interstate commerce.

(17)     Lease or rental. – A transfer of possession or control of tangible personal property for a fixed or indeterminate term for consideration. The term does not include any of the following:

a.         A transfer of possession or control of property under a security agreement or deferred payment plan that requires the transfer of title upon completion of the required payments.

b.         A transfer of possession or control of property under an agreement that requires the transfer of title upon completion of required payments and payment of an option price that does not exceed the greater of one hundred dollars ($100.00) or one percent (1%) of the total required payments.

c.         The providing of tangible personal property along with an operator for a fixed or indeterminate period of time if the operator is necessary for the equipment to perform as designed. For the purpose of this sub‑subdivision, an operator must do more than maintain, inspect, or set up the tangible personal property.

(17a)   Load and leave. – Delivery to the purchaser by use of a tangible storage media where the tangible storage media is not physically transferred to the purchaser.

(18)     Mail order sale. – A sale of tangible personal property, ordered by mail, telephone, computer link, or other similar method, to a purchaser who is in this State at the time the order is remitted, from a retailer who receives the order in another state and transports the property or causes it to be transported to a person in this State. It is presumed that a resident of this State who remits an order was in this State at the time the order was remitted.

(19)     Major recycling facility. – Defined in G.S. 105‑129.25.

(20)     Manufactured home. – A structure that is designed to be used as a dwelling and is manufactured in accordance with the specifications for manufactured homes issued by the United States Department of Housing and Urban Development.

a.,        b. Repealed by Session Laws 2003‑400, s. 13, effective January 1, 2004, and applicable to sales of modular homes on and after that date.

(21)     Mobile telecommunications service. – A radio communication service carried on between mobile stations or receivers and land stations and by mobile stations communicating among themselves and includes all of the following:

a.         Both one‑way and two‑way radio communication services.

b.         A mobile service that provides a regularly interacting group of base, mobile, portable, and associated control and relay stations for private one‑way or two‑way land mobile radio communications by eligible users over designated areas of operation.

c.         Any service for which a federal license is required in a personal communications service.

(21a)   Mobility enhancing equipment. – Equipment that meets all of the conditions of this subdivision. The term includes repair and replacement parts for the equipment. The term does not include durable medical equipment.

a.         Primarily and customarily used to provide or increase the ability of an individual to move from one place to another.

b.         Appropriate for use either in a home or motor vehicle.

c.         Not generally used by a person with normal mobility.

d.         Not normally provided on a motor vehicle by a motor vehicle manufacturer.

(21b)   Modular home. – A factory‑built structure that is designed to be used as a dwelling, is manufactured in accordance with the specifications for modular homes under the North Carolina State Residential Building Code, and bears a seal or label issued by the Department of Insurance pursuant to G.S. 143‑139.1.

(21c)   Modular homebuilder. – A person who furnishes for consideration a modular home to a purchaser that will occupy the modular home. The purchaser can be a person that will lease or rent the unit as real property.

(22)     Moped. – A vehicle that has two or three wheels, no external shifting device, and a motor that does not exceed 50 cubic centimeters piston displacement and cannot propel the vehicle at a speed greater than 30 miles per hour on a level surface.

(23)     Motor vehicle. – A vehicle that is designed primarily for use upon the highways and is either self‑propelled or propelled by a self‑propelled vehicle, but does not include:

a.         A moped.

b.         Special mobile equipment.

c.         A tow dolly that is exempt from motor vehicle title and registration requirements under G.S. 20‑51(10) or (11).

d.         A farm tractor or other implement of husbandry.

e.         A manufactured home, a mobile office, or a mobile classroom.

f.          Road construction or road maintenance machinery or equipment.

(24)     Net taxable sales. – Means and includes the gross retail sales of the business of the retailer taxed under this Article after deducting exempt sales and nontaxable sales.

(25)     Nonresident retail or wholesale merchant. – A person who does not have a place of business in this State, is engaged in the business of acquiring, by purchase, consignment, or otherwise, tangible personal property and selling the property outside the State, and is registered for sales and use tax purposes in a taxing jurisdiction outside the State.

(25a)   Over‑the‑counter drug. – A drug that can be dispensed under federal law without a prescription and is required by 21 C.F.R. § 210.66 to have a label containing a "Drug Facts" panel and a statement of its active ingredients.

(26)     Person. – The same meaning as in G.S. 105‑228.90.

(26a)   Place of primary use. – The street address representative of where the use of a customer's telecommunications service primarily occurs. The street address must be the customer's residential street address or primary business street address. For mobile telecommunications service, the street address must be within the licensed service area of the service provider. If the customer who contracted with the telecommunications provider for the telecommunications service is not the end user of the service, the end user is considered the customer for the purpose of determining the place of primary use.

(27)     Prepaid telephone calling service. – A right that meets all of the following requirements:

a.         Authorizes the exclusive purchase of telecommunications service.

b.         Must be paid for in advance.

c.         Enables the origination of calls by means of an access number, authorization code, or another similar means, regardless of whether the access number or authorization code is manually or electronically dialed.

d.         Is sold in units or dollars whose number or dollar value declines with use and is known on a continuous basis.

(28)     Prepared food. – Food that meets at least one of the conditions of this subdivision. Prepared food does not include food the retailer sliced, repackaged, or pasteurized but did not heat, mix, or sell with eating utensils.

a.         It is sold in a heated state or it is heated by the retailer.

b.         It consists of two or more foods mixed or combined by the retailer for sale as a single item. This sub‑subdivision does not include foods containing raw eggs, fish, meat, or poultry that require cooking by the consumer as recommended by the Food and Drug Administration to prevent food borne illnesses.

c.         It is sold with eating utensils provided by the retailer, such as plates, knives, forks, spoons, glasses, cups, napkins, and straws.

(29)     Prescription. – An order, formula, or recipe issued orally, in writing, electronically, or by another means of transmission by a physician, dentist, veterinarian, or another person licensed to prescribe drugs.

(29a)   Prewritten computer software. – Computer software, including prewritten upgrades, that is not designed and developed by the author or another creator to the specifications of a specific purchaser. The term includes software designed and developed by the author or another creator to the specifications of a specific purchaser when it is sold to a person other than the specific purchaser.

(30)     Production company. – A person engaged in the business of making original motion picture, television, or radio images for theatrical, commercial, advertising, or educational purposes.

(30a)   Prosthetic device. – A replacement, corrective, or supporting device worn on or in the body that meets one of the conditions of this subdivision. The term includes repair and replacement parts for the device.

a.         Artificially replaces a missing portion of the body.

b.         Prevents or corrects a physical deformity or malfunction.

c.         Supports a weak or deformed portion of the body.

(31)     Protective equipment. – Items for human wear and designed as protection of the wearer against injury or disease or as protection against damage or injury of other persons or property but not suitable for general use including breathing masks, face shields, hard hats, and tool belts.

(32)     Purchase. – Acquired for a consideration whether

a.         The acquisition was effected by a transfer of title or possession, or both, or a license to use or consume;

b.         The transfer was absolute or conditional regardless of the means by which it was effected; and

c.         The consideration is a price or rental in money or by way of exchange or barter.

It shall also include the procuring of a retailer to erect, install or apply tangible personal property for use in this State.

(33)     Purchase price. – The term has the same meaning as the term "sales price" when applied to an item subject to use tax.

(34)     Retail sale or sale at retail. – The sale, lease, or rental for any purpose other than for resale, sublease, or subrent.

(35)     Retailer. – Means and includes every person engaged in the business of making sales of tangible personal property at retail, either within or without this State, or peddling the same or soliciting or taking orders for sales, whether for immediate or future delivery, for storage, use or consumption in this State and every manufacturer, producer or contractor engaged in business in this State and selling, delivering, erecting, installing or applying tangible personal property for use in this State notwithstanding that said property may be permanently affixed to a building or realty or other tangible personal property. "Retailer" also means a person who makes a mail order sale, as defined in this section, if one of the conditions listed in G.S. 105‑164.8(b) is met. Provided, however, that when in the opinion of the Secretary it is necessary for the efficient administration of this Article to regard any salesmen, solicitors, representatives, consignees, peddlers, truckers or canvassers as agents of the dealers, distributors, consignors, supervisors, employers or persons under whom they operate or from whom they obtain the tangible personal property sold by them regardless of whether they are making sales on their own behalf or on behalf of such dealers, distributors, consignors, supervisors, employers or persons, the Secretary may so regard them and may regard the dealers, distributors, consignors, supervisors, employers or persons as "retailers" for the purpose of this Article.

(36)     Sale or selling. – The transfer of title or possession of tangible personal property, conditional or otherwise, in any manner or by any means whatsoever, for a consideration paid or to be paid.

The term includes the fabrication of tangible personal property for consumers by persons engaged in business who furnish either directly or indirectly the materials used in the fabrication work. The term also includes the furnishing or preparing for a consideration of any tangible personal property consumed on the premises of the person furnishing or preparing the property or consumed at the place at which the property is furnished or prepared. The term also includes a transaction in which the possession of the property is transferred but the seller retains title or security for the payment of the consideration.

If a retailer engaged in the business of selling prepared food and drink for immediate or on‑premises consumption also gives prepared food or drink to its patrons or employees free of charge, for the purposes of this Article the property given away is considered sold along with the property sold. If a retailer gives an item of inventory to a customer free of charge on the condition that the customer purchase similar or related property, the item given away is considered sold along with the item sold. In all other cases, property given away or used by any retailer or wholesale merchant is not considered sold, whether or not the retailer or wholesale merchant recovers its cost of the property from sales of other property.

(37)     Sales price. – The total amount or consideration for which personal property or services are sold, leased, or rented. The consideration may be in the form of cash, credit, property, or services. The sales price must be valued in money, regardless of whether it is received in money.

a.         The term includes all of the following:

1.         The retailer's cost of the property sold.

2.         The cost of materials used, labor or service costs, interest, losses, all costs of transportation to the retailer, all taxes imposed on the retailer, and any other expense of the retailer.

3.         Charges by the retailer for any services necessary to complete the sale.

4.         Delivery charges.

5.         Installation charges.

6.         The value of exempt personal property given to the consumer when taxable and exempt personal property are bundled together and sold by the retailer as a single product or piece of merchandise.

7.         Credit for trade‑in.

b.         The term does not include any of the following:

1.         Discounts, including cash, term, or coupons, that are not reimbursed by a third party, are allowed by the retailer, and are taken by a consumer on a sale.

2.         Interest, financing, and carrying charges from credit extended on the sale, if the amount is separately stated on the invoice, bill of sale, or a similar document given to the consumer.

3.         Any taxes imposed directly on the consumer that are separately stated on the invoice, bill of sale, or similar document given to the consumer.

(37a)   Satellite digital audio radio service. – A radio communication service in which audio programming is digitally transmitted by satellite to an earth‑based receiver, whether directly or via a repeater station.

(37b)   School supply. – An item that is commonly used by a student in the course of study and is considered a "school supply", a "school art supply", or "school instructional material" under the Streamlined Agreement.

(38)     Secretary. – The Secretary of the North Carolina Department of Revenue.

(39)     Repealed by Session Laws 2002‑16, s. 3, effective August 1, 2002, and applicable to taxable services reflected on bills dated after August 1, 2002.

(40)     Soft drink. – A nonalcoholic beverage that contains natural or artificial sweeteners. The term does not include beverages that contain one or more of the following:

a.         Milk or milk products.

b.         Soy, rice, or similar milk substitutes.

c.         More than fifty percent (50%) vegetable or fruit juice.

(41)     Special mobile equipment. – Any of the following:

a.         A vehicle that has a permanently attached crane, mill, well‑boring apparatus, ditch‑digging apparatus, air compressor, electric welder, feed mixer, grinder, or other similar apparatus is driven on the highway only to get to and from a nonhighway job and is not designed or used primarily for the transportation of persons or property.

b.         A vehicle that has permanently attached special equipment and is used only for parade purposes.

c.         A vehicle that is privately owned, has permanently attached fire‑fighting equipment, and is used only for fire‑fighting purposes.

d.         A vehicle that has permanently attached playground equipment and is used only for playground purposes.

(42)     Sport or recreational equipment. – Items designed for human use and worn in conjunction with an athletic or recreational activity that are not suitable for general use including ballet shoes, cleated athletic shoes, shin guards, and ski boots.

(43)     State agency. – A unit of the executive, legislative, or judicial branch of State government, such as a department, a commission, a board, a council, or The University of North Carolina. The term does not include a local board of education.

(44)     Storage. – Means and includes any keeping or retention in this State for any purpose by the purchaser thereof, except sale in the regular course of business, of tangible personal property purchased from a retailer.

(45)     Storage and Use; Exclusion. – "Storage" and "use" do not include the keeping, retaining or exercising of any right or power over tangible personal property by the purchaser thereof for the original purpose of subsequently transporting it outside the State for use by said purchaser thereafter solely outside the State and which purpose is consummated, or for the purpose of being processed, fabricated or manufactured into, attached to or incorporated into, other tangible personal property to be transported outside the State and thereafter used by the purchaser thereof solely outside the State.

(45a)   Streamlined Agreement. – The Streamlined Sales and Use Tax Agreement adopted November 12, 2002, as amended on November 19, 2003, November 16, 2004, and April 16, 2005.

(46)     Tangible personal property. – Personal property that may be seen, weighed, measured, felt, or touched or is in any other manner perceptible to the senses. The term includes electricity, water, gas, steam, and prewritten computer software.

(47)     Taxpayer. – Any person liable for taxes under this Article.

(48)     Telecommunications service. – The transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals to a point, or between or among points, by or through any electronic, radio, satellite, optical, microwave, or other medium, regardless of the protocol used for the transmission, conveyance, or routing. The term includes mobile telecommunications service and vertical services. Vertical services are switch‑based services offered in connection with a telecommunications service, such as call forwarding services, caller ID services, and three‑way calling services.

(49)     Use. – Means and includes the exercise of any right or power or dominion whatsoever over tangible personal property by a purchaser thereof and includes, but is not limited to, any withdrawal from storage, distribution, installation, affixation to real or personal property, or exhaustion or consumption of tangible personal property by the owner or purchaser thereof, but does not include the sale of tangible personal property in the regular course of business.

(50)     Use tax. – The tax imposed by Part 2 of this Article.

(51)     Wholesale merchant. – Every person who engages in the business of buying or manufacturing any tangible personal property and selling same to registered retailers, wholesalers and nonresident retail or wholesale merchants for resale. It shall also include persons making sales of tangible personal property which are defined herein as wholesale sales. For the purposes of this Article any person, firm, corporation, estate or trust engaged in the business of manufacturing, producing, processing or blending any articles of commerce and maintaining a store or stores, warehouse or warehouses, or any other place or places, separate and apart from the place of manufacture or production, for the sale or distribution of its products (other than bakery products) to other manufacturers or producers, wholesale or retail merchants, for the purpose of resale shall be deemed a "wholesale merchant."

(52)     Wholesale sale. – A sale of tangible personal property by a wholesale merchant to a manufacturer, or registered jobber or dealer, or registered wholesale or retail merchant, for the purpose of resale but does not include a sale to users or consumers not for resale. (1957, c. 1340, s. 5; 1959, c. 1259, s. 5; 1961, c. 1213, s. 1; 1967, c. 1110, s. 6; 1973, c. 476, s. 193; c. 1287, s. 8; 1975, c. 104; c. 275, s. 6; 1979, c. 48, s. 2; c. 71; c. 801, s. 72; 1983, c. 713, ss. 87, 88; 1983 (Reg. Sess., 1984), c. 1097, ss. 4, 5; 1985, c. 23; 1987, c. 27; c. 557, s. 3.1; c. 854, ss. 2, 3; 1987 (Reg. Sess., 1988), c. 1044, s. 3; c. 1096, ss. 1‑3; 1989, c. 692, s. 3.2; 1989 (Reg. Sess., 1990), c. 813, s. 13; 1991, c. 45, s. 15; c. 79, ss. 1, 3; c. 689, s. 190.1(a); 1991 (Reg. Sess., 1992), c. 949, s. 3; 1993, c. 354, s. 16; c. 484, s. 1; c. 507, s. 1; 1995 (Reg. Sess., 1996), c. 649, s. 2; 1996, 2nd Ex. Sess., c. 14, ss. 13, 14; 1997‑6, s. 7; 1997‑370, s. 1; 1997‑426, s. 4; 1998‑22, s. 4; 1998‑55, ss. 7, 13; 1998‑98, ss. 13.1(a), 106; 1999‑337, s. 28(a), (b); 1999‑360, s. 6(a)‑(c); 1999‑438, s. 4; 2000‑153, s. 4; 2000‑173, s. 9; 2001‑347, ss. 2.1‑2.7; 2001‑414, s. 14; 2001‑424, s. 34.17(b); 2001‑430, ss. 1, 2; 2001‑476, s. 18(a); 2001‑489, s. 3(a); 2002‑16, ss. 1, 2, 3; 2002‑170, s. 6; 2003‑284, s. 45.2; 2003‑400, ss. 13, 14; 2003‑402, s. 12; 2004‑124, s. 32B.3; 2004‑170, ss. 18, 19; 2005‑276, ss. 33.2, 33.3.)