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N.C. Recycling Property Tax Exemption
North Carolina offers a tax exemption on equipment and facilities used exclusively for recycling and resource recovery. The tax program also includes special tax treatment for the corporate state income tax and the franchise tax on domestic and foreign corporations. The N.C. Division of Waste Management manages the Tax Certification Program.
N.C. Sales Tax Incentive for Manufacturing Equipment
North Carolina law allows a sales and use tax incentive related to purchasing manufacturing equipment. This tax incentive allows a one-percent privilege tax rate on equipment purchases with a maximum tax of $80.00 per article. Therefore, rather than the usual seven percent sales tax, a one percent tax on equipment is charged per article. To qualify, the business must be in North Carolina, use purchased equipment for operational use, and most importantly, fall within the definition of “manufacturer.” The N.C. Department of Revenue relies on case law to define manufacturing. In general, manufacturing can be defined as changing the form of a commodity, or creating a new and more valuable commodity.
To take advantage of this tax incentive, N.C. DOR recommends that a company apply for a ruling regarding its status as a “manufacturer.” It’s a good idea to prepare an outline of the raw materials/ feedstock used, explain the process or treatment (materials are subjected to), describe the final product and intent for the final product. The relevant sales and use tax statutes and technical bulletins can be found on N.C. DOR’s Web site under “Information for Tax Professionals.” Please contact the Sales & Use Tax Division of the N.C. DOR at (919) 733-2151 for more information about this program.
RISE Act Becomes Law
As part of the 2008 financial rescue plan, a provision that allows taxpayers to claim accelerated depreciation for qualified reuse and recycling property was signed into law Oct. 3, 2008. The law provides a special depreciation allowance equal to 50 percent for qualified reuse and recycling property.
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