105-164.12B. Tangible personal property sold below cost with conditional contract.
(a) Conditional Contract Defined. - A conditional contract is a contract in which all of the following conditions are met:
(1) A seller transfers an item of tangible personal property to a consumer on the condition that the consumer enter into an agreement to purchase services on an ongoing basis for a minimum period of at least six months.
(2) The agreement requires the consumer to pay a cancellation fee to the seller if the consumer cancels the contract for services within the minimum period.
(3) For the item transferred, the seller charges the consumer a price that, after any price reduction the seller gives the consumer, is below the purchase price the seller paid for the item. The seller's purchase price is presumed to be no greater than the price the seller paid, as shown on the seller's purchase invoice, for the same item within 12 months before the seller entered into the conditional contract.
(b) Tax. - If a seller transfers an item of tangible personal property as part of a conditional contract, a sale has occurred. The sales price of the item is presumed to be the retail price at which the item would sell in the absence of the conditional contract. Sales tax at the general rate under G.S. 105-164.4(a) is due at the time of the transfer on the following:
(1) Any part of the presumed sales price the consumer pays at that time, if the service in the contract is taxable at the combined general rate.
(2) The presumed sales price, if the service in the contract is not taxable at the combined general rate.
(3) The percentage of the presumed sales price that is equal to the percentage of the service in the contract that is not taxable at the combined general rate, if any part of the service in the contract is not taxable at the combined general rate.
(c)-(f). Repealed by Session Laws 2007-244, s. 3, effective October 1, 2007. (1996, 2nd Ex. Sess., c. 13, s. 5.1; 2001-414, ss. 16, 17; 2006-151, s. 6; 2007-244, s. 3; 2016-5, s. 3.8(a).)
Structure North Carolina General Statutes
North Carolina General Statutes
Article 5 - Sales and Use Tax.
§ 105-164.4 - Tax imposed on retailers and certain facilitators.
§ 105-164.4B - Sourcing principles.
§ 105-164.4C - Telecommunications service and ancillary service.
§ 105-164.4D - Bundled transactions.
§ 105-164.4F - Accommodation rentals.
§ 105-164.4G - Entertainment activity.
§ 105-164.4H - Real property contract.
§ 105-164.4I - Service contracts.
§ 105-164.4J - Marketplace-facilitated sales.
§ 105-164.4K - Property management contracts.
§ 105-164.6 - Complementary use tax.
§ 105-164.6A - Voluntary collection of use tax by sellers.
§ 105-164.7 - Retailer or facilitator to collect sales tax from purchaser as trustee for State.
§ 105-164.8 - Retailer's obligation to collect tax; remote sales subject to tax.
§ 105-164.9 - Advertisement to absorb tax unlawful.
§ 105-164.10 - Retail tax calculation.
§ 105-164.11 - Excessive and erroneous collections.
§ 105-164.11A - Refund of tax paid on rescinded sale or cancellation of service.
§ 105-164.11B - Recover sales tax paid.
§ 105-164.12A - Electric golf cart and battery charger considered a single article.
§ 105-164.12B - Tangible personal property sold below cost with conditional contract.
§ 105-164.12C - Items given away by merchants.
§ 105-164.13 - Retail sales and use tax.
§ 105-164.13A - Service charges on food, beverages, or prepared food.
§ 105-164.13B - Food exempt from tax.
§ 105-164.13E - Exemption for farmers.
§ 105-164.13F - Exemption for wildlife managers.
§ 105-164.14 - Certain refunds authorized.
§ 105-164.14A - Economic incentive refunds.
§ 105-164.15A - Effective date of tax changes.
§ 105-164.16 - Returns and payment of taxes.
§ 105-164.16A - Reporting option for prepaid meal plans.
§ 105-164.19 - Extension of time for making returns and payment.
§ 105-164.20 - Cash or accrual basis of reporting.
§ 105-164.26 - Presumption that sales are taxable.
§ 105-164.27A - Direct pay permit.
§ 105-164.28 - Certificate of exemption.
§ 105-164.28A - Other exemption certificates.
§ 105-164.29A - State government exemption process.
§ 105-164.29B - Information to counties and cities.
§ 105-164.30 - Secretary or agent may examine books, etc.
§ 105-164.32 - Incorrect returns; estimate.
§ 105-164.37 - Bankruptcy, receivership, etc.
§ 105-164.40 - Jeopardy assessment.
§ 105-164.42C - Authority to enter Agreement.
§ 105-164.42D - Relationship to North Carolina law.
§ 105-164.42E - Agreement requirements.
§ 105-164.42F - Cooperating sovereigns.
§ 105-164.42G - Effect of Agreement.
§ 105-164.42H - Certification of certified automated system and effect of certification.
§ 105-164.42I - Contract with certified service provider and effect of contract.
§ 105-164.42J - Performance standard for multistate seller.
§ 105-164.42K - Registration and effect of registration.
§ 105-164.42L - Liability relief for erroneous information or insufficient notice by Department.
§ 105-164.44 - Penalty and remedies of Article 9 applicable.
§ 105-164.44F - Distribution of part of telecommunications taxes to cities.
§ 105-164.44H - Transfer to State Public School Fund.
§ 105-164.44J - Supplemental PEG channel support.
§ 105-164.44K - Distribution of part of tax on electricity to cities.
§ 105-164.44L - Distribution of part of tax on piped natural gas to cities.