Important Notice – Disaster Assistance Payments
The Federal Emergency Management Agency (FEMA) and the American Red Cross
are providing disaster assistance to individuals in the Gulf Coast area affected
by Hurricane Katrina. Financial assistance may be in the form of a direct
deposit to an individual’s bank account, a check mailed to an individual,
or debit or client assistance card issued to the individual. The debit or
client assistance card is “loaded” with a specific amount of
money and may be used to purchase goods and services or to make cash withdrawals.
While direct sales to the federal government or federal agencies are not subject
to sales or use tax, the North Carolina Department of Revenue has determined
that purchases made by individuals using debit cards issued by FEMA or the
Red Cross and purchases made with funds provided by these organizations do
not constitute direct purchases by federal agencies. Therefore, unless otherwise
exempt, purchases of taxable tangible personal property and taxable services
by disaster victims or evacuees are subject to the applicable State and local
rates of sales or use tax.