Certain Machinery and Equipment
Effective January 1, 2006, a privilege tax is levied on the purchase of mill machinery or mill machinery parts or accessories by manufacturing industries or plants and contractors and subcontractors for use in the performance of a contract with a manufacturing industry or plant; and recycling equipment by a major recycling facility; and qualifying equipment or attachments or repair parts for equipment purchased by research and development companies under certain conditions.
Effective October 1, 2007, machinery or equipment to be located and used at an eligible datacenter that meets certain conditions and equipment or an attachment or repair part for equipment purchased by a software publishing company that meets certain requirements are subject to the privilege tax.
Effective July 1, 2008, equipment or an attachment or repair part for equipment purchased by an industrial machinery refurbishing company that meets certain requirements is subject to the privilege tax. The privilege tax rate of 1% with a maximum tax of $80.00 per article is imposed on the purchaser of qualifying property, and the purchaser is liable for accruing and remitting the tax to the Department of Revenue.
Effective January 1, 2011, purchases of mill machinery or mill machinery parts or accessories by a production company will no longer qualify for the 1% privilege tax. Purchases by motion picture and film companies will be subject to the general State and applicable local rates.
Effective July 1, 2013, purchases by a company located at a ports facility for waterborne commerce of specialized equipment to be used at the facility to unload or process bulk cargo to make it suitable for delivery to and use by manufacturing facilities are subject to the 1% privilege tax with a maximum tax of eighty dollars ($80.00) per article.
Effective July 1, 2013, qualifying purchases of mill machinery, distribution machinery, or parts or accessories for mill machinery (electricity is not an accessory) or distribution machinery for storage, use, or consumption in North Carolina by a qualifying large manufacturing and distribution facility are subject to the 1% privilege tax with a maximum tax of eighty dollars ($80.00) per article.
The tax is to be reported separately to the Department on the Machinery and Equipment Tax Return, Form E-500J. A taxpayer who currently files and remits sales and use tax should file and remit the machinery and equipment tax using the same filing frequency and payment method as for sales and use tax. For additional information on the privilege tax on manufacturing fuel and certain machinery and equipment, refer to Sales and Use Tax Directive SD-05-1.