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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 6921
Experience:  15years with H & R Block. Divisional leader, Instructor
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A question of reimbursement of sales tax. If a person purchases

Resolved Question:

A question of reimbursement of sales tax. If a person purchases an item or items for use at a church in NC, and then, asks for reimbursement of the item(s) including the sales tax they paid. Is the entire amount of that purchase refundable to that person? The church in question does not have a State tax-free number and I'm not aware of any claim at the end of the year for the church to claim a refund on sales tax. Thanks for your help.
Submitted: 6 months ago.
Category: Tax
Expert:  Robin D. replied 6 months ago.

Robin D. :

Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.
As far as returned merchandise for NC sales tax refunds, NC 40-4 o fthe Sales tax code says:


"If an article sold is returned and the sale is rescinded by a refund of the entire amount paid
including tax, the vendor is entitled to obtain a refund of or credit for the sales or use tax paid to
the Department by reason of the initial sale of such merchandise. The records of the taxpayer
must clearly reflect and support his claim for any such refund or credit."

Robin D. :

G.S. § 105-164.4, 105-164.6, 105-164.13, and 105-164.14 covers Sales tax for Non profit Charitable organizations.


Sales of taxable tangible personal property to nonprofit hospitals, nonprofit
educational institutions, churches, orphanages, other nonprofit charitable or religious
institutions and organizations, and homes for the aged, sick, or infirm whose property is
excluded from property tax are subject to State and local sales or use tax when such
property is purchased for use or consumption.

But refunds for returned merchandise should include the full amount paid.

Customer:

I'm asking if the person can include for reimbursement from the church the sales tax they paid for the item or items they purchased and use or gave to the church to use. The church would be reimbursing the item price and the sales tax to the individual.

Robin D. :

Is the person intending to sale the item to the church?

Robin D. :

Or are they buying something , giving it to the church, and want to get their sales tax back?

Customer:

I guess it might be viewed that way as they purchased it and the church will use it or receive it. they want their sales tax back.

Robin D. :

They cannot receive a refund of sales tax unfortunately.

Robin D. :

The sale was to them

Robin D. :

they donate the item to the church so they can use that as a donation for charitable deductions

Robin D. :

but they cannot get their refund of sales tax

Customer:

Thank you. If the church has been in this practice (ignorance works for the Roadrunner) is the church at risk IF they change they position and don't reimburse sales tax to an individual?

Robin D. :

The church is not required to reimburse sales tax. If the person purchased something and gives it to the church then the church is not required to reimburse them. If the church does then it is not a charitable gift, it is a purchase.

Robin D. :

The church is not selling this item, the person is not giving the item. If the church is using the person as a conduit to purchase then the sales tax would naturally be included in the reimbursement

Customer:

Conduit of the purchase. That wording seems to make it "okay" for the church to continue to reimburse a total amount including the sale tax paid by the individual.

Robin D. :

Yes, if this person is buying on behalf of the church and turning over the item to the church, then the church would give them the money they paid. The person doing this is not allowed to claim a charitable deduction for the item because they gave
nothing.

Robin D. :

If the church purchased the item itself the church would have had to pay the sales tax anyway

Customer:

Now, I'm satisfied that as the new treasurer of this church that I can be safe in the continuance of this practice and I will look to add wording to the reimbursement form that will clarify the reimbursement. No double dipping - they gave it; their monies were returned to them; no donation!

Robin D. :

Correct!

Robin D. :

I really enjoyed working with you – please feel free to request me again when you come back to ask another question.
You will find the request feature when you come back under your MY QUESTIONS section.

Customer:

I'm a happy camper! Thank you so much for your time this morning. I am now at ease with this activity.

Robin D. :

You are most welcome.
Your positive rating is always thanks enough.

Customer:

Good day!

Robin D. :

Best wishes

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 6921
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and other Tax Specialists are ready to help you

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