GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

S	2 

SENATE BILL 1085
Finance Committee Substitute Adopted 6/20/89

Short Title:  General Fund Revenues.	(Public)
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Sponsors:
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Referred to:
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May 1, 1989

A BILL TO BE ENTITLED
AN ACT TO RAISE REVENUE FOR THE GENERAL FUND.
The General Assembly of North Carolina enacts:
Section 1.  Effective for taxable years beginning on or after January 1, 1990, G.S. 105-163.15 reads as rewritten:
"§ 105-163.15. Failure by individual to pay estimated income tax; penalty.
(a)	In the case of any underpayment of the estimated tax by an individual, there shall be added to the tax imposed under Article 4 for the taxable year an amount determined by applying the applicable annual rate established under G.S. 105-241.1(i) to the amount of the underpayment for the period of the underpayment.
(b)	For purposes of subsection (a), the amount of the underpayment shall be the excess of the required installment, over the amount, if any, of the installment paid on or before the due date for the installment.  The period of the underpayment shall run from the due date for the installment to whichever of the following dates is the earlier: (i) the fifteenth day of the fourth month following the close of the taxable year, or (ii) with respect to any portion of the underpayment, the date on which such portion is paid.  A payment of estimated tax shall be credited against unpaid required installments in the order in which such installments are required to be paid.
(c)	For purposes of this section there shall be four required installments for each taxable year with the time for payment of the installments as follows:
(1)	First installment – April 15 of taxable year;
(2)	Second installment – June 15 of taxable year;
(3)	Third installment – September 15 of taxable year; and
(4)	Fourth installment – January 15 of following taxable year.
(d)	Except as provided in subsection (e), the amount of any required installment shall be twenty-five percent (25%) of the required annual payment.  The term ‘required annual payment' means the lesser of:
(1)	Ninety percent (90%) of the tax shown on the return for the taxable year, or, if no return is filed, ninety percent (90%) of the tax for that year; or
(2)	One hundred percent (100%) of the tax shown on the return of the individual for the preceding taxable year, if the preceding taxable year was a taxable year of 12 months and the individual filed a return for that year.
(e)	In the case of any required installment, if the individual establishes that the annualized income installment is less than the amount determined under subsection (d), the amount of the required installment shall be the annualized income installment, and any reduction in a required installment resulting from the application of this subsection shall be recaptured by increasing the amount of the next required installment determined under subsection (d) by the amount of the reduction and by increasing subsequent required installments to the extent that the reduction has not previously been recaptured.
In the case of any required installment, the annualized income installment is the excess, if any, of (i)	an amount equal to the applicable percentage of the tax for the taxable year computed by placing on an annualized basis the taxable income for months in the taxable year ending before the due date for the installment, over (ii) the aggregate amount of any prior required installments for the taxable year. The taxable income shall be placed on an annualized basis under rules prescribed by the Secretary. The applicable percentages for the required installments are as follows:
(1)	First installment –twenty-two and one-half percent (22.5%);
(2)	Second installment –forty-five percent (45%);
(3)	Third installment –sixty-seven and one-half percent (67.5%); and
(4)	Fourth installment –  ninety percent (90%).
(f)	No addition to the tax shall be imposed under subsection (a) if the tax shown on the return for the taxable year reduced by the tax withheld under Article 4A is less than forty dollars ($40.00) or if the individual did not have any liability for tax under Division II of Article 4 for the preceding taxable year.
(g)	For purposes of this section, the term ‘tax' means the tax imposed by Division II of Article 4 minus the credits against the tax allowed by Article 4.  The amount of the credit allowed under Article 4A for withheld income tax for the taxable year is considered a payment of estimated tax, and an equal part of that amount is considered to have been paid on each due date of the taxable year, unless the taxpayer establishes the dates on which all amounts were actually withheld, in which case the amounts so withheld are considered payments of estimated tax on the dates on which such amounts were actually withheld.
(h)	If, on or before January 31 of the following taxable year, the taxpayer files a return for the taxable year and pays in full the amount computed on the return as payable, no addition to tax shall be imposed under subsection (a) with respect to any underpayment of the fourth required installment for the taxable year.
(i)	Notwithstanding the other provisions of this section, an individual who is a farmer or fisherman for a taxable year is required to make only one installment payment of tax for that year.  This installment is due on or before January 15 of the following taxable year but may be paid without penalty or interest on or before March 1 of that year.  The amount of the installment payment shall be the lesser of:
(1)	Sixty-six and two-thirds percent (66 2/3%) of the tax shown on the return for the taxable year, or, if no return is filed, sixty-six and two-thirds percent (66 2/3%) of the tax for that year; or
(2)	One hundred percent (100%) of the tax shown on the return of the individual for the preceding taxable year, if the preceding taxable year was a taxable year of 12 months and the individual filed a return for that year.
An individual is a farmer or fisherman for any taxable year if the individual's gross income from farming or fishing, including oyster farming, for the taxable year is at least sixty-six and two-thirds percent (66 2/3%) of the total gross income from all sources for the taxable year, or the individual's gross income from farming or fishing, including oyster farming, shown on the return of the individual for the preceding taxable year is at least sixty-six and two-thirds percent (66 2/3%) of the total gross income from all sources shown on the return.
(j)	In applying this section to a taxable year beginning on any date other than January 1, there shall be substituted, for the months specified in this section, the months that correspond thereto.  This section shall be applied to taxable years of less than 12 months in accordance with rules prescribed by the Secretary.
(k)	This section shall not apply to any estate or trust."
Sec. 2.  G.S. 105-164.3 reads as rewritten:
"§ 105-164.3.   Definitions. The following definitions apply in this Article, except when the context clearly indicates a different meaning:
(1)	‘Business' shall include any activity engaged in by any person or caused to be engaged in by him with the object of gain, profit, benefit or advantage, either direct or indirect. The term ‘business' shall not be construed in this Article to include occasional and isolated sales or transactions by a person who does not hold himself out as engaged in business.
(2)	 ” ‘Commercial motor vehicle' means a motor vehicle that is:
a.	A passenger motor vehicle and is to be used only as an ambulance or fire or rescue vehicle, or a for-hire passenger vehicle, as defined in G.S. 20-4.01;
b.	A self-propelled property hauling vehicle licensable under G.S. 20-88 whose empty weight and heaviest load to be transported is at least 5,000 pounds; or
c.	A semitrailer, as defined in G.S. 20-4.01, and is not a house trailer.
(3)	‘Consumer' shall mean and include every person storing, using or otherwise consuming in this State tangible personal property purchased or received from a retailer either within or without this State.
(4)	‘Cost price' means the actual cost of articles of tangible personal property without any deductions therefrom on account of the cost of materials used, cash discounts, labor or service costs, transportation charges or any expenses whatsoever.
(5)	‘Engaged in business' shall mean maintaining, occupying or using permanently or temporarily, directly or indirectly, or through a subsidiary or agent, by whatever name called, any office, place of distribution, sales or sample room or place, warehouse or storage place, or other place of business, for the selling or delivering of tangible personal property for storage, use or consumption in this State, or permanently or temporarily, directly or through a subsidiary, having any representative, agent, salesman, canvasser or solicitor operating in this State in such selling or delivering, and the fact that any corporate retailer, agent or subsidiary engaged in business in this State may not be legally domesticated or qualified to do business in this State shall be immaterial. It shall also mean the maintaining in this State, either permanently or temporarily, directly or through a subsidiary, tangible personal property for the purpose of lease or rental.  It shall also mean making a mail order sale, as defined in subdivision (8a) of this section, if one of the conditions listed in G.S. 105-164.8(b) is met.
(6)	‘Gross sales' means the sum total of all retail sales of tangible personal property as defined herein, whether for cash or credit without allowance for cash discount and without any deduction on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or any other expenses whatsoever and without any deductions of any kind or character except as provided in this Article.
(7)	‘In this (the) State' means within the exterior limits of the State of North Carolina and includes all territory within such limits owned by or ceded to the United States of America.
(7a)	‘Lease or rental' means the leasing or renting of tangible personal property and the possession or use thereof by the lessee or renter for a consideration without transfer of the  title of such property.
(8)	‘Mail order sale' means a sale of tangible personal property, ordered by mail, telephone, computer link, or other similar method, to a purchaser who is in this State at the time the order is remitted, from a retailer who receives the order in another state and transports the property or causes it to be transported to a person in this State.  It is presumed that a resident of this State who remits an order was in this State at the time the order was remitted.
(8a)	‘Manufactured home' means a structure that is designed to be used as a dwelling and:
a.	Is built on a permanent chassis;
b.	Is transportable in one or more sections;
c.	When transported, is at least eight feet wide or forty feet long; and
d.	When erected on a site, has at least 320 square feet.
(8b)	‘Motor vehicle' means any vehicle which is self-propelled and designed primarily for use upon the highways, any vehicle which is propelled by electric power obtained from trolley wires but not operated upon rails, and any vehicle designed to run upon the highways which is propelled by a self-propelled vehicle, but shall not include any implement of husbandry, farm tractor, road construction or maintenance machinery or equipment, special mobile equipment as defined in G.S. 20-4.01, any vehicle designed primarily for use in work off the highway, or a manufactured home.
(9)	‘Net taxable sales' shall mean and include the gross retail sales of the business of the retailer taxed under this Article after deducting exempt sales and nontaxable sales.
(10)	‘Nonresident retail or wholesale merchant' means a person who does not have a place of business in this State, is engaged in the business of acquiring, by purchase, consignment, or otherwise, tangible personal property and selling the property outside the State, and is registered for sales and use tax purposes in a taxing jurisdiction outside the State.
(11)	‘Person' includes any individual, firm, copartnership, joint venture, association, corporation, estate, trust, business trust, receiver, syndicate or other group, or combination acting as a unit, body politic, or political subdivision, whether public or private or quasi-public and the plural as well as the singular number.
(12)	‘Purchase' means acquired for a consideration whether
a.	The acquisition was effected by a transfer of title or possession, or both, or a license to use or consume;
b.	The transfer was absolute or conditional regardless of the means by which it was effected; and
c.	The consideration is a price or rental in money or by way of exchange or barter.
	It shall also include the procuring of a retailer to erect,  install or apply tangible personal property for use in this State.
(13)	‘Retail' shall mean the sale of any tangible personal property in any quantity or quantities for any use or purpose on the part of the purchaser other than for resale.
(14)	‘Retailer' means and includes every person engaged in the business of making sales of tangible personal property at retail, either within or without this State, or peddling the same or soliciting or taking orders for sales, whether for immediate or future delivery, for storage, use or consumption in this State and every manufacturer, producer or contractor engaged in business in this State and selling, delivering, erecting, installing or applying tangible personal property for use in this State notwithstanding that said property may be permanently affixed to a building or realty or other tangible personal property. ‘Retailer' also means a person who makes a mail order sale, as defined in this section, if one of the conditions listed in G.S. 105-164.8(b) is met.  Provided, however, that when in the opinion of the Secretary it is necessary for the efficient administration of this Article to regard any salesmen, solicitors, representatives, consignees, peddlers, truckers or canvassers as agents of the dealers, distributors, consignors, supervisors, employers or persons under whom they operate or from whom they obtain the tangible personal property sold by them regardless of whether they are making sales on their own behalf or on behalf of such dealers, distributors, consignors, supervisors, employers or persons, the Secretary may so regard them and may regard the dealers, distributors, consignors, supervisors, employers or persons as ‘retailers' for the purpose of this Article.
(15)	‘Sale' or ‘selling' shall mean any transfer of title or possession, or both, exchange, barter, lease, license to use or consume, or rental of tangible personal property, conditional or otherwise, in any manner or by any means whatsoever, however effected and by whatever name called, for a consideration paid or to be paid, and includes the fabrication of tangible personal property for consumers by persons engaged in business who furnish either directly or indirectly the materials used in the fabrication work, and the furnishing, preparing, or serving for a consideration of  any tangible personal property consumed on the premises of the person furnishing, preparing, or serving such tangible personal property or consumed at the place at which such property is prepared, served or sold. A transaction whereby the possession of the property is transferred but the seller  retains title or security for the payment of the price shall be deemed a sale.
(16)	Except as provided in paragraph f., ‘sales price' means the total amount for which tangible personal property is sold including charges for any services that go into the fabrication, manufacture or delivery of such tangible personal property and that are a part of the sale valued in money whether paid in money or otherwise and includes any amount for which credit is given to the purchaser by the seller without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest charged, losses or any other expenses whatsoever. Provided, however, that where a manufacturer, producer or contractor erects, installs or affixes tangible personal property upon real property pursuant to a construction or performance-type contract with or for the benefit of the owner of such real property, the sales price shall be the cost of such property to the manufacturer, producer or contractor performing the contract. Provided, further:
a.	The cost for labor or services rendered in erecting, installing or applying property sold when separately charged shall not be included as a part of the ‘sales price';
b.	Finance charges, service charges or interest from credit extended under conditional sales contracts or other conditional contracts providing for deferred payments of the purchase price shall not be considered a part of the ‘sales price' when separately charged;
c.	‘Sales price' shall not include the amount of any tax imposed by the United States upon or with respect to retail sales whether imposed upon the retailer or consumer except that any manufacturers' or importers' excise tax shall be included in the term.
d.	‘Sales price' shall not include any amounts charged as deposits on beverage containers which are returnable to vendors for reuse and which amounts are refundable or creditable to vendees, whether or not said deposits are separately charged.
e.	‘Sales price' shall not include amounts charged as deposits on automotive, industrial, marine and farm replacement parts which are returnable to vendors for rebuilding or remanufacturing and which amounts are refundable or creditable to vendees, whether or not such deposits are separately charged. This subsection shall not be construed to include tires and batteries.
f.	The sales price of tangible personal property sold through a coin-operated vending machine, other than closed-container soft drinks subject to excise tax under Article 2B of this Chapter or tobacco products, is considered to be fifty percent (50%) of the total amount for which the property is sold in the vending machine.
(16a)	‘Secretary' means the Secretary of the North Carolina Department of Revenue.
(17)	‘Storage' means and includes any keeping or retention in this State for any purpose by the purchaser thereof, except sale in the regular course of business, of tangible personal property purchased from a retailer.
(18)	‘Use' means and includes the exercise of any right or power or dominion whatsoever over tangible personal property by a purchaser thereof and includes, but is not limited to, any withdrawal from storage, installation, affixation to real or personal property, exhaustion or consumption of tangible personal property by the owner or purchaser thereof, but shall not include the sale of tangible personal property in the regular course of business.
(19)	‘Storage' and ‘Use'; Exclusion. – ‘Storage' and ‘use' do not include the keeping, retaining or exercising of any right or power over tangible personal property by the purchaser thereof for the original purpose of subsequently transporting it outside the State for use by said purchaser thereafter solely outside the State and which purpose is consummated, or for the purpose of being processed, fabricated or manufactured into, attached to or incorporated into, other tangible personal property to be transported outside the State and thereafter used by the purchaser thereof solely outside the State.
(20)	‘Tangible personal property' means and includes personal property which may be seen, weighed, measured, felt or touched or is in any other manner perceptible to the senses.  The term ‘tangible personal property' shall not include stocks, bonds, notes, insurance or other obligations or securities, nor shall it include water delivered by or through main lines or pipes either for commercial or domestic use or consumption. The term includes all ‘canned' or prewritten computer programs, either in the form of written procedures or in the form of storage media on which or in which the program is recorded, held, or existing for general or repeated sale, lease, or license to use or consume. The term does not include the design, development, writing, translation, fabrication, lease, license to use or consume, or transfer for a consideration of title or possession of a custom computer program, other than a basic operational program, either in the form of written procedures or in the form of storage media on which or in which the program is recorded, or any required documentation or manuals designed to facilitate the use of the custom computer program.
As used in this subdivision:
a.	‘Basic operational program' or ‘control program' means a computer program that is fundamental and necessary to the functioning of a computer. A basic operational program is that part of an operating system, including supervisors, monitors, executives, and control or master programs, which consists of the control program elements of that system. A control or master program, as opposed to a processing program, controls the operation of a computer by managing the allocation of all system resources, including the central processing unit, main storage, input/output devices, and processing programs. A processing program is used to develop and implement the specific applications the computer is to perform.
b.	‘Computer program' means the complete plan for the solution of a problem, such as the complete sequence of automatic data-processing equipment instructions necessary to solve a problem, and includes both systems and application programs and subdivisions, such as assemblers, compilers, routines, generators, and utility  programs.
c.	‘Custom computer program' means a computer program prepared to the special order of the customer. Custom computer programs include one of the following elements:
1.	Preparation or selection of the programs for the customer's use requires an analysis of the customer's requirements by the vendor; or
2.	The program requires adaptation by the vendor to be used in a particular make and model of computer utilizing a specified output device.
d.	‘Storage media' means punched cards, tapes, disks, diskettes, or drums.
(21)	‘Taxpayer' means any person liable for taxes under this Article.
(22)	‘Use tax' means and includes the tax imposed by Part 3 in Division II of this Article.
(23)	‘Wholesale merchant' shall mean every person who engages in the business of buying or manufacturing any tangible personal property and selling same to registered retailers, wholesalers and nonresident retail or wholesale merchants for resale. It shall also include persons making sales of tangible personal property which are defined herein as wholesale sales. For the purposes of this Article any person, firm, corporation, estate or trust engaged in the business of manufacturing, producing, processing or blending any articles of commerce and maintaining a store or stores, warehouse or warehouses, or any other place or places, separate and apart from the place of manufacture or production, for the sale or distribution of its products (other than bakery products) to other manufacturers or producers, wholesale or retail merchants, for the purpose of resale shall be deemed a ‘wholesale merchant.'
(24)	‘Wholesale sale' shall mean a sale of tangible personal property by a wholesale merchant to a manufacturer, or registered jobber or dealer, or registered wholesale or retail merchant, for the purpose of resale but does not include a sale to users or consumers not for resale.
(25)	‘Utility' means an electric power company, a gas company, or a telephone company that is subject to a privilege tax based on gross receipts under G.S. 105-116 or 105-120, a business entity that provides local, toll or private telecommunications service as defined by G.S. 105-120(a) or a municipality that sells electric power, other than a municipality whose only wholesale supplier of electric power is a federal agency and who is required by a contract with that federal agency to make payments in lieu of taxes."
Sec. 3.  G.S. 105-164.4 reads as rewritten:
"§ 105-164.4. Tax imposed on retailers.
												(a) A privilege tax is imposed on a retailer at the following percentage rates of the retailer's net taxable sales, or gross receipts from the lease or rental of tangible personal property, as appropriate:
(1)	At the rate of three percent (3%) of the sales price of each item or article of tangible personal property that is sold at retail and is not subject to tax under another subdivision in this section.
(1a)	At the rate of two percent (2%) of the sales price of each manufactured home sold at retail, including all accessories attached to the manufactured home when it is delivered to the purchaser, not to exceed three hundred dollars ($300.00).  Each section of a manufactured home that is transported separately to the site where it is to be erected is a separate article.
(1b)	At the rate of two percent (2%) of the sales price of each aircraft, boat, railway car, or locomotive sold at retail, including all accessories attached to the item when it is delivered to the purchaser.  If the item is to be used principally for the production of income or in connection with a business, the tax on the item may not exceed one thousand five hundred dollars ($1,500).  For the purpose of this subdivision, an item is to be used principally for the production of income or in connection with a business if at least eighty-five percent (85%) of its use will be for the production of income or in connection with a business.  In order to receive the benefit of the maximum tax of one thousand five hundred dollars ($1,500), the seller must obtain from the purchaser and furnish to the Secretary on a form provided by the Secretary an affidavit signed by the purchaser and containing the following: (i) the name and address of the purchaser; (ii) information identifying the item sold; (iii) a statement that at least eighty-five percent (85%) of the item's use will be for the production of income or in connection with a business; and (iv) such other information as the Secretary may require.  This affidavit must be filed with the seller's sales and use tax report for the month in which the sale is made or within 90 days after the sale is made, whichever is later.
(1c)	At the rate of three percent (3%) of the sales price of each motor vehicle sold at retail, including all accessories attached to the vehicle when it is delivered to the purchaser.  If the motor vehicle is a commercial motor vehicle, the tax under this subdivision may not exceed one thousand five hundred dollars ($1,500).
		Notwithstanding G.S. 105-164.3(16) and regardless whether the seller is a retailer, the sales price of a motor vehicle is the gross sales price of the motor vehicle less any allowance given for a motor vehicle taken in trade as part of the consideration for the purchased motor vehicle.  Further, the gross sales price of a motor vehicle sold by a seller who is not a retailer is the value of the vehicle set in a schedule of values adopted by the Commissioner of Motor Vehicles.  In adopting a schedule of values for motor vehicles, the Commissioner shall adopt a schedule whose values do not exceed the wholesale values of motor vehicles as published in a recognized automotive reference manual.
		The separate sale of a motor vehicle chassis and a motor vehicle body to be installed on the chassis, whether by the same or different retailers, is subject to the tax imposed by this subdivision on a single motor vehicle.  The tax imposed by this subdivision does not apply to the sale of a motor vehicle body that is mounted on a motor vehicle chassis that enters the State so the body can be mounted on the chassis by the manufacturer of the body.
   		   The tax imposed under this subdivision applies to all retail sales of motor vehicles regardless whether the seller is engaged in business as a retailer of motor vehicles or whether a tax on the sale of the vehicle has previously been paid under this Article.  When, as an incident to the organization of a partnership or a corporation, property is transferred by an individual to the partnership or corporation and no gain or loss arises on the transfer under section 351 or section 721 of the Code, the transfer is not a retail sale under this subdivision.
		A purchaser of a motor vehicle from a retailer shall pay the tax imposed under this subdivision to the retailer, who is liable for collecting and remitting the tax to the Secretary.  A purchaser of a motor vehicle from a person who is not a retailer is liable for payment of the tax imposed by this subdivision; the purchaser shall pay the tax to the Commissioner of Motor Vehicles when applying for a certificate of title for the vehicle.
		The Commissioner of Motor Vehicles may not issue a certificate of title for a motor vehicle sold by a seller who is not a retailer unless the tax imposed by this subdivision is paid when the purchaser of the vehicle applies for a certificate of title.  The Commissioner shall remit taxes collected under this subdivision to the Secretary.
		(1d)	At the rate of one percent (1%) of the sales price on the following items:
a.	Horses or mules by whomsoever sold.
b.	Semen to be used in the artificial insemination of animals.
c.	Sales of fuel, other than electricity or piped natural gas, to farmers to be used by them for any farm purposes other than preparing food, heating dwellings and other household purposes. The quantity of fuel purchased or used at any one time shall not in any manner be a determinative factor as to whether any sale or use of fuel is or is not subject to the one percent (1%) rate of tax imposed herein.
d.	Sales of fuel, other than electricity or piped natural gas, to manufacturing industries and manufacturing plants for use in connection with the operation of such industries and plants other than sales of fuels to be used for residential heating purposes. The quantity of fuel purchased used at any one time shall not in any manner be a determinative factor as to whether any sale or use of fuel is or is not subject to the one percent (1%) rate of tax imposed herein.
e.	Sales of fuel, other than electricity or piped natural gas, to commercial laundries or to pressing and dry-cleaning establishments for use in machinery used in the direct performance of the laundering or the pressing and  cleaning service.
f.	Sales to freezer locker plants of wrapping paper, cartons and supplies consumed directly in the operation of such plant.
		(1e)	At the rate of one percent (1%) of the sales price, subject to a maximum tax of eighty dollars ($80.00) per article, on the following items:
a.	Sales of machines and machinery, whether animal or motor drawn or operated, and parts and accessories for such machines and machinery to farmers for use by them in the planting, cultivating, harvesting or curing of farm crops, and sales of machines and machinery and parts and accessories for such machines and machinery to dairy operators, poultry farmers, egg producers, and livestock farmers for use by them in the production of dairy products, poultry, eggs or livestock, except such machines, machinery, equipment, parts, and accessories that come within the provisions of G.S. 105-164.13(4c).
   The term ‘machines and machinery' as used in this subdivision is defined as follows:
   The term shall include all vehicular implements, designed and sold for any use defined in this subdivision, which are operated, drawn or propelled by motor or animal power, but shall not include vehicular implements which are operated wholly by hand, and shall not include any motor vehicles required to be registered under Chapter 20 of the General Statutes.
   The term shall include all nonvehicular implements and mechanical devices designed and sold for any use defined in this subdivision, which have moving parts, or which require the use of any motor or animal power, fuel, or electricity in their operation but shall not include nonvehicular implements which have no moving parts and are operated wholly by hand.
   The term shall also include metal flues sold for use in curing tobacco, whether such flues are attached to handfired furnaces or used in connection with mechanical burners.
b.	Sales of mill machinery or mill machinery parts and accessories to manufacturing industries and plants, and sales to contractors and subcontractors purchasing mill machinery or mill machinery parts and accessories for use by them in the performance of contracts with manufacturing industries and plants, and sales to subcontractors purchasing mill machinery or mill machinery parts and accessories for use by them in the performance of contracts with general contractors who have contracts with manufacturing industries and plants. As used in this paragraph, the term ‘manufacturing industries and plants' does not include delicatessens, cafes, cafeterias, restaurants, and other similar retailers that are principally engaged in the retail sale of foods prepared by them for consumption on or off their premises.
c.	Sales of central office equipment and switchboard and private branch exchange equipment to telephone companies regularly engaged in providing telephone service to subscribers on a commercial basis, and sales to these companies of prewritten computer programs used in providing telephone service to their subscribers.
d.	Sales to commercial laundries or to pressing and dry cleaning establishments of machinery used in the direct performance of the laundering or the pressing and cleaning service and of parts and accessories thereto.
e.	Sales to freezer locker plants of machinery used in the direct operation of said freezer locker plant and of parts and accessories thereto.
f.	Sales of broadcasting equipment and parts and accessories thereto and towers to commercial radio and television companies which are under the regulation and supervision of the Federal Communications Commission.
g.	Sales to farmers of bulk tobacco barns and racks and all parts and accessories thereto and similar apparatus used for the curing and drying of any farm produce.
	h.	Sales to farmers of grain, feed or soybean storage facilities and accessories thereto, whether or not dryers are attached, and all similar apparatus and accessories thereto for the storage of grain, feed or soybeans.
	i.	Sales of containers to farmers or producers for use in the planting, producing, harvesting, curing, marketing, packaging, sale, or transporting or delivery of their products when such containers do not go with and become part of the sale of their products at wholesale or retail.
(2)	At the applicable percentage rate of the gross receipts derived from the lease or rental of tangible personal property by a person who is engaged in the business of leasing or renting tangible personal property, or is a retailer and leases or rents property of the type sold by the retailer.  For the lease or rental of a motor vehicle, the applicable percentage rate is eight percent (8%), except that if the motor vehicle is rented or leased to the same person for a period of more than 90 continuous days, for the period of the continuous rental or lease to that person in excess of the first 90 days, the applicable percentage rate is the rate and the maximum tax, if any, that would apply to a sale of the motor vehicle to that person.  For all other leases and rentals, the applicable percentage rate is the rate and the maximum tax, if any, that applies to a sale of the property that is leased or rented.  A person who leases or rents property shall also collect the tax imposed by this section on the separate retail sale of the property.
(3)	Operators of hotels, motels, tourist homes, tourist camps, and similar type businesses and persons who rent private residences and cottages to transients are considered retailers under this Article. There is levied upon every such retailer a tax of three percent (3%) of the gross receipts derived from the rental of any rooms, lodgings, or accommodations furnished to transients for a consideration. This tax does not apply to any private residence or cottage that is rented for less than 15 days in a calendar year or to any room, lodging, or accommodation supplied to the same person for a period of 90 or more continuous days.
		As used in this subdivision, the term ‘persons who rent to transients' means (i) owners of private residences and cottages who rent to transients and (ii) rental agents, including ‘real estate brokers' as defined in G.S. 93A-2, who rent private residences and cottages to transients on behalf of the owners. If a rental agent is liable for the tax imposed by this subdivision, the owner is not liable.
(4)	Every person, firm or corporation engaged in the business of operating a pressing club, cleaning plant, hat-blocking establishment, dry-cleaning plant, laundry (including wet or damp wash laundries and businesses known as launderettes and launderalls), or any similar business, or engaged in the business of renting clean linen or towels or wearing apparel, or any similar business, or engaged  in the business of soliciting cleaning, pressing, hat blocking, laundering or rental business for any of the aforenamed businesses, shall be considered ‘retailers' for the purposes of this Article. There is hereby levied upon every such person, firm or corporation a tax of three percent (3%) of the gross receipts derived from services rendered in  engaging in any of the occupations or businesses named in this subdivision, and every person, firm or corporation subject to the provisions of this subdivision shall register and secure a license in the manner hereinafter provided in this section, and, insofar as practicable, all other provisions of this Article shall be applicable with respect to the tax herein provided for.  The tax imposed by this subdivision does not apply to receipts derived from coin or token-operated washing machines, extractors, and dryers.  The taxes levied in this subdivision are additional privilege or license taxes for the privilege of engaging in the occupations or businesses named herein.  Any person, firm or corporation engaged in cleaning,  pressing, hat blocking, laundering for, or supplying clean linen or towels or wearing apparel to, another person, firm or corporation engaged in soliciting shall not be required to pay the three percent (3%) tax on its gross receipts derived  through such solicitor, if the soliciting person, firm or corporation has registered with the Department, secured the license hereinafter required and has paid the tax at the rate of three percent (3%) of the total gross receipts derived from business solicited.
(4a)	At the rate of three percent (3%) of the gross receipts derived by a utility from sales of electricity, piped natural gas, or local telecommunications service as defined by G.S. 105-120(a).  A person who operates a utility is considered a retailer under this Article.
(4b)	A person who sells tangible personal property at a flea market, other than his own household personal property, is considered a retailer under this Article. A tax is levied on that person at the rate of three percent (3%) of the sales price of each article sold by him at the flea market. A person who leases or rents space at a flea market may not lease or rent this space unless the retailer requesting to rent or lease the space furnishes evidence that he has obtained the license required by this Article. A person who leases or rents space at a flea market shall keep records of retailers to whom he has leased or rented space at the market. As used in this subdivision, the term ‘flea market' means a place where space is rented to a person for the purpose of selling tangible personal property.
(4c)	At the rate of six and one-half percent (6 1/2%) of the gross receipts derived from providing toll telecommunications services or private telecommunications services as defined by G.S. 105-120(a) that both originate from and terminate in the State which are not subject to the privilege tax under G.S. 105-120.  Any business entity that provides the service outlined above is considered a retailer under this Article.  This subdivision shall not apply to telephone membership corporations as described in Chapter 117 of the General Statutes.
	(b)	The tax levied in this section shall be collected from the retailer and paid by him at the time and in the manner as hereinafter provided.  Provided, however, that any person engaging or continuing in business as a retailer shall pay the tax required on the net taxable sales of such business at the rates specified when proper books are kept showing separately the gross proceeds of taxable and nontaxable sales of tangible personal property in such form as may be accurately and conveniently checked by the Secretary or his duly authorized agent. If such records are not kept separately the tax shall be paid as a retailer on the gross sales of business and the exemptions and exclusions provided by this Article shall not be allowed. The tax levied in this section is in addition to all other taxes whether levied in the form of excise, license or privilege or other taxes.
	(c) Any person who engages or continues in any business for which a privilege tax is imposed by this Article shall immediately after July 1, 1979, apply for and obtain from the Secretary upon payment of the sum of five dollars ($5.00) a license to engage in and conduct such business upon the condition that the person shall pay the tax accruing to the State under this Article; the person shall thereby be duly licensed and registered to engage in and conduct such business. Except as hereinafter provided, a license issued under this subsection shall be a continuing license until revoked for failure to comply with the provisions of this Article. However, any person who has heretofore applied for and obtained the license, if the license was in force and effect as of July 1, 1979, shall not be required to apply for and obtain a new license.
Any person who ceases to be engaged in any business for which a privilege tax is imposed by this Article, and who remains continuously out of business for a period of five years shall apply for and obtain a new license from the  Secretary upon the payment of a tax of five dollars ($5.00), and any license previously issued under this section shall be void.  The burden of proof after such period shall be upon the taxpayer to show that he did engage in such business within the period, and that no new license is required.
A retailer who sells tangible personal property at a flea market shall conspicuously display his sales tax license when making sales at the flea market."
Sec. 4.  G.S. 105-164.6 reads as rewritten:
"§ 105-164.6. Imposition of tax.
	(a)	An excise tax at the following percentage rates is imposed on the storage, use, or consumption in this State of tangible personal property purchased inside or outside the State for storage, use, or consumption in the State:
(1)	At the applicable percentage rate of the cost price of each item or article of tangible personal property that is stored, used, or consumed in this State.  The applicable percentage rate is the rate and the maximum tax, if any, that applies to a sale of the property that is stored, used, or consumed.
		The tax imposed by this subdivision on a motor vehicle applies to all owners of motor vehicles, regardless whether the owner or purchaser acquired the vehicle from a retailer of motor vehicles and regardless whether a tax has been paid under this Article on a previous sale of the motor vehicle.  The tax imposed on a motor vehicle is payable to the Commissioner of Motor Vehicles when applying for a certificate of title and shall be collected by the Commissioner in the same manner and in accordance with the same restrictions that apply to the tax imposed by G.S. 105-164.4(a) on the sale of a motor vehicle by a person who is not a retailer.
(2)	At the applicable percentage rate of the monthly lease or rental price paid, contracted, or agreed to be paid by the lessee or renter to the owner of tangible personal property that is stored, used, or consumed in this State.  The applicable percentage rate is the rate and the maximum tax, if any, that applies to a lease or rental of the property that is stored, used, or consumed.
	(b) There is hereby levied and there shall be collected from every person, firm, or corporation, an excise tax of three percent (3%) of the purchase price of all tangible personal property purchased or used which shall enter into or become a part of any building or other kind of structure in this State, including all materials, supplies, fixtures and equipment of every kind and description which shall be annexed thereto or in any manner become a part thereof.  The tax shall be levied against the purchaser of such property.  Provided, that where the purchaser is a contractor, the contractor and owner shall be jointly and severally liable for the tax, but the liability of the owner shall be deemed satisfied if before final settlement between them the contractor furnishes to the owner an affidavit certifying that the tax has been paid.  Provided further, that where the purchaser is a subcontractor, the contractor and subcontractor shall be jointly and severally liable for the tax, but the liability of the contractor shall be deemed satisfied if before final settlement between them the subcontractor furnishes to the contractor an affidavit certifying that the tax has been paid.
	
	(c) Where a retail sales tax has already been paid with respect to tangible personal property in this State by the purchaser thereof, the tax shall be credited upon the tax imposed by this Part.  Where a retail sales and use tax is due and has been paid with respect to tangible personal property in another state by the purchaser for storage, use or consumption in this State, the tax shall be credited upon the tax imposed by this Part.  If the amount of tax paid to another state is less than the amount of tax imposed by this Part, the purchaser shall pay to the Secretary an amount sufficient to make the tax paid to the other state and this State equal to the amount imposed by this Part.  The Secretary of Revenue shall require such proof of payment of tax to another state as he deems necessary.  No credit shall be given under this subsection for sales or use taxes paid in another state if that state does not grant similar credit for sales taxes paid in North Carolina.
	(d) Every person storing, using or otherwise consuming in this State tangible personal property purchased or received at retail either within or without this State shall be liable for the tax imposed by this Article and the liability shall not be extinguished until the tax has been paid to this State. Provided, however, that a receipt from a registered retailer engaged in business in this State given to the purchaser in accordance with the provisions of this Article shall be prima facie sufficient to relieve the purchaser from liability for the tax to which such receipt may refer and the liability of the purchaser shall be extinguished upon payment of the tax by any retailer from whom he has purchased the property.
	(e) Except as provided herein the tax so levied is and shall be in addition to all other taxes whether levied in the form of excise, license, privilege or other taxes.
	(f) Every retailer engaged in business in this State selling or delivering tangible personal property for storage, use or consumption in this State shall immediately after July 1, 1979, apply for and obtain from the Secretary upon the payment of the sum of five dollars ($5.00) a license to engage in and conduct such business upon the condition that such person shall pay the tax accruing to the State of North Carolina under the provisions of this Article, and he shall thereby be duly licensed and registered to engage in and conduct such business. Except as hereinafter provided, a license issued under this subsection shall be a continuing license until revoked for failure to comply with the provisions of this Article. However, any person who has heretofore applied for and obtained such license, and such license was in force and effect as of July 1, 1979, shall not be required to apply for and obtain a new license.
Any person who ceases to be engaged in any business for which a tax is imposed by this Article, and who remains continuously out of business for a period of five years shall apply for and obtain a new license from the Secretary upon the payment of a tax of five dollars ($5.00), and any license previously issued under this section shall be void.  The burden of proof after such period shall be upon the taxpayer to show that he did engage in such activity within the period, and that no new license is required.
	(g) Notwithstanding any other provisions of this Article, a use tax, at the applicable use tax rate, as hereinbefore provided, is hereby levied upon the storage or use in this State of any motor vehicles, machines, machinery, tools or other equipment brought, imported or caused to be brought into this State for use in constructing, building or repairing any building, highway, street, sidewalk, bridge, culvert, sewer or water system, drainage or dredging system, railway system, reservoir or dam, hydraulic or power plant, transmission line, tower, dock, wharf, excavation, grading or other improvement or structure, or any part thereof.  The owner or, if the property is leased the lessee of any such motor vehicle, machine, machinery, tools or other equipment shall be liable for the tax provided for in this paragraph, to be computed as set out below.  The useful life of such motor vehicles, machines, tools or other equipment shall be determined by the Secretary in accordance with the experience and practices of the building and construction trades.  The use tax shall be computed on the basis of that proportion of the original purchase price of such property as the duration of time of use in this State bears to the total useful life thereof.  The tax shall become due immediately upon such property being brought into this State, and in the absence of satisfactory evidence as to the period of use intended in this State, it shall be presumed that such property will remain in this State for the remainder of its useful life.
All provisions of this Article not directly in conflict with this subsection shall apply in this subsection.  This subsection does not apply to sales of property in this State or to the use, storage, or consumption of property when purchased for use in this State.  In these cases, the full sales or use tax shall be paid.  All provisions of this Article, including the administrative provisions, apply to the tax imposed by this subsection unless they directly conflict with this subsection. "
Sec. 5.  G.S. 105-164.13(16) reads as rewritten:
"(16)	Sales of used articles, other than motor vehicles, taken in trade, or a series of trades, as a credit or part payment on the sale of a new article. ‘New article' means the original stock in trade of the merchant, and is not limited to newly manufactured articles.  The resale of articles, other than motor vehicles, repossessed by the vendor shall likewise be exempt from gross sales taxable under this Article."
Sec. 6.  G.S. 105-164.13(40) reads as rewritten:
"(40)	Tangible personal property, other than a motor vehicle, sold to the Department of Transportation."
Sec. 7. G.S. 105-164.14 reads as rewritten:
"§ 105-164.14.  Certain refunds authorized.
(a)	Any person engaged in transporting persons or property in interstate commerce for compensation who is subject to regulation by, and to the jurisdiction of, the Interstate Commerce Commission or the United States Department of Transportation and who is required by either such federal agency to keep records according to its standard classification of accounting or, in the case of a small certificated air carrier, is required by the U.S. Department of Transportation to make reports of financial and operating statistics, may secure a refund from the Secretary of Revenue with respect to sales or use tax paid by such person on purchases or acquisitions of lubricants, repair parts and accessories in this State for motor vehicles, railroad cars, locomotives, and airplanes operated by such person, upon the conditions described below.  The Secretary of Revenue shall prescribe the periods of time, whether monthly, quarterly, semiannually or otherwise, with respect to which refunds may be claimed, and shall prescribe the time within which, following such periods, an application for refund may be made.  An applicant for refund shall furnish such information as the Secretary may require, including detailed information as to lubricants, repair parts and accessories wherever purchased, whether within or without the State, acquired during the period with respect to which a refund is sought, and the purchase price thereof, detailed information as to sales and use tax paid in this State thereon, and detailed information as to the number of miles such motor vehicles, railroad cars, locomotives, and airplanes were operated both within this State, and without this State, during such period, together with satisfactory proof thereof.  The Secretary shall thereupon compute the tax which would be due with respect to all lubricants, repair parts and accessories acquired during the refund period as though all such purchases were made in this State, but only on such proportion of the total purchase prices thereof as the total number of miles of operation of such applicants' motor vehicles, railroad cars, locomotives, and airplanes within this State bears to the total number of miles of operation of such applicants' motor vehicles, railroad cars, locomotives and airplanes within and without this State, and such amount of sales and use tax as the applicant has paid in this State during said refund period in excess of the amounts so computed shall be refunded to the applicant.
(b)	The Secretary of Revenue shall make refunds semiannually to hospitals not operated for profit (including hospitals and medical accommodations operated by an authority created under the Hospital Authorities Law, Article 2 of Chapter 131E), educational institutions not operated for profit, and churches, orphanages, and other charitable or religious institutions and organizations not operated for profit of sales and use taxes paid by them under this Article on direct purchases of tangible personal property for use in carrying on their work, except for sales and use taxes paid on:
(1)	Motor vehicles under G.S. 105-164.4(a)(1c) or (a)(2) or 105-164.6(a);
(2)	Electricity, piped natural gas, or telecommunications services under G.S. 105-164.4(a)(4a) or (4b).
Sales and use tax liability indirectly incurred by such institutions and organizations on building materials, supplies, fixtures and equipment which shall become a part of or annexed to any building or structure being erected, altered or repaired for such institutions and organizations for carrying on their nonprofit activities shall be construed as sales or use tax liability incurred on direct purchases by such institutions and organizations, and such institutions and organizations may obtain refunds of such taxes indirectly paid.  The Secretary of Revenue shall also make refunds semiannually to all other hospitals (not specifically excluded herein) of sales and use tax paid by them on medicines and drugs purchased for use in carrying out the work of such hospitals.  This subsection does not apply to organizations, corporations, and institutions that are owned and controlled by the United States, the State, or a unit of local government, except hospital facilities created under Article 2 of Chapter 131E of the General Statutes and nonprofit hospitals owned and controlled by a unit of local government that elect to receive semiannual refunds under this subsection instead of annual refunds under subsection (c).  In order to receive the refunds herein provided for, such institutions and organizations shall file a written request for refund covering the first six months of the calendar year on or before the fifteenth day of October next following the close of said period, and shall file a written request for refund covering the second six months of the calendar year on or before the fifteenth day of April next following the close of that period.  Such requests for refund shall be substantiated by such proof as the Secretary of Revenue may require, and no refund shall be made on applications not filed within the time allowed by this section and in such manner as the Secretary may require.
(c)	Upon receipt of timely applications for refund, the Secretary of Revenue shall make refunds annually to all governmental entities, as hereinafter defined, of sales and use tax paid by them under this Article on direct purchases of tangible personal property, except for sales and use tax paid on:
(1)	Motor vehicles under G.S. 105-164.4(a)(1c) or (a)(2) or 105-164.6(a);
(2)	Electricity, piped natural gas, or telecommunications services under G.S. 105-164.4(a)(4a) or (4b).
Sales and use tax liability indirectly incurred by such governmental entities on building materials, supplies, fixtures and equipment which shall become a part of or annexed to any building or structure being erected, altered or repaired which is owned or leased by such governmental entities shall be construed as sales or use tax liability incurred on direct purchases by such governmental entities, and such entities may obtain refunds of such taxes indirectly paid.  The refund provisions contained in this subsection shall not apply to any governmental entities not specifically named herein.  In order to receive the refund herein provided for, governmental entities shall file a written request for said refund within six months of the close of the fiscal year of the governmental entities seeking said refund, and such request for refund shall be substantiated by such records, receipts and information as the Secretary may require.  No refunds shall be made on applications not filed within the time allowed by this section and in such manner as the Secretary may otherwise require.  The term ‘governmental entities,' for the purposes of this subsection, shall mean all counties, incorporated cities and towns, water and sewer authorities created and existing under the provisions of Chapter 162A of the General Statutes, lake authorities created by a board of county commissioners pursuant to an act of the General Assembly, sanitary districts, regional councils of governments created pursuant to G.S. 160A-470, area mental health, mental retardation, and substance abuse authorities (other than single-county area authorities) established pursuant to Article 4 of Chapter 122C of the General Statutes, district health departments, regional planning and economic development commissions created pursuant to G.S. 158-14, regional economic development commissions created pursuant to G.S. 158-8, regional planning commissions created pursuant to G.S. 153A-391, metropolitan sewerage districts and metropolitan water districts in this State, and the North Carolina Low-Level Radioactive Waste Management Authority created pursuant to Chapter 104G of the General Statutes.
(d)	Refunds made pursuant to applications filed after the dates specified in subsections (b) and (c) above shall be subject to the following penalties for late filing: applications filed within 30 days after said dates, twenty-five percent (25%); applications filed after 30 days but within six months after said dates, fifty percent (50%).  However, refunds which are applied for after six months following said dates shall be barred."
Sec. 8.  Effective July 1, 1991, G.S. 105-164.44A reads as rewritten:
"§ 105-164.44A. Tax on motor vehicles credited to Highway Trust Fund and part of tax transferred to General Fund.
	Sales and use tax revenue collected on the sale of motor vehicles shall be deposited in the North Carolina Highway Trust Fund.  Any refunds of sales and use taxes paid on motor vehicles shall be charged against the revenue deposited in the Highway Trust Fund.  Each fiscal year, the State Treasurer shall transfer from the Highway Trust Fund to the General Fund the sum of one hundred seventy million dollars ($170,000,000) in quarterly, equal installments."
Sec. 9.  G.S. 105-467 reads as rewritten:
"§ 105-467.  Scope of sales tax.
	The sales tax which may be imposed under this Article is limited to a tax at the rate of one percent (1%) of:
(1)	The sales price of those articles of tangible personal property now subject to the three percent (3%) sales tax imposed by the State under G.S. 105-164.4(a)(1) and (4b);
(2)	The gross receipts derived from the lease or rental of tangible personal property when the property is not a motor vehicle and the lease or rental of the property is subject to the three  percent (3%) sales tax imposed by the State under G.S. 105-164.4(a)(2);
(3)	The gross receipts derived from the rental of any room or lodging furnished by any hotel, motel, inn, tourist camp or other similar accommodations now subject to the three percent (3%) sales tax imposed by the State under G.S. 105-164.4(a)(3); and
(4)	The gross receipts derived from services rendered by laundries, dry cleaners, cleaning plants and similar type businesses now subject to the three percent (3%) sales tax imposed by the State under G.S. 105-164.4(a)(4).
The sales tax authorized by this Article does not apply to sales that are taxable by the State under G.S. 105-164.4 but are not specifically included in subdivisions (1) through (4) of this section.
The exemptions and exclusions contained in G.S. 105-164.13 and the refund provisions contained in G.S. 105-164.14 shall apply with equal force and in like manner to the local sales and use tax authorized to be levied and imposed under this Article. A taxing county shall have no authority, with respect to the local sales and use tax imposed under this Article to change, alter, add to or delete any refund provisions contained in G.S. 105-164.14, or any exemptions  or exclusions contained in G.S. 105-164.13 or which are elsewhere provided for.
The local sales tax authorized to be imposed and levied under the  provisions of this Article shall apply to such retail sales, leases, rentals, rendering of services, furnishing of rooms, lodgings or accommodations and other taxable transactions which are made, furnished or rendered by retailers whose place of business is located within the taxing county. The tax imposed shall apply to the furnishing of rooms, lodging or other accommodations within the county which are rented to transients. For the purpose of this Article, the situs of a transaction is the location of the retailer's place of business."
Sec. 10.  G.S. 105-468 reads as rewritten:
"§ 105-468. Scope of use tax.
The use tax which may be imposed under this Article shall be at the rate of one percent (1%) of the cost price of each item or article of tangible personal property when it is not sold but used, consumed or stored for use or consumption in the taxing county, except that no tax shall be imposed upon tangible personal property whenthe property is a motor vehicle or the property would be taxed by the State at a rate of other than three percent (3%) if it were taxable under G.S. 105-164.6.
Every retailer engaged in business in this State and in the taxing county and required to collect the use tax levied by G.S. 105-164.6 shall also collect the one percent (1%) use tax when such property is to be used, consumed or stored in the taxing county, one percent (1%) use tax to be collected concurrently with the State's use tax; but no retailer not required to collect the use tax levied by G.S. 105-164.6 shall be required to collect the one percent (1%) use tax. The use tax contemplated by this section shall be levied against the purchaser, and the purchaser's liability for the use tax shall be extinguished only upon payment of the use tax to the retailer, where the retailer is required to collect the tax, or to the Secretary of Revenue, or to the taxing county, as appropriate, where the retailer is not required to collect the tax.
Where a local sales or use tax has been paid with respect to tangible personal property by the purchaser, either in another taxing county within the State, or in a taxing jurisdiction outside the State where the purpose of the tax is similar in purpose and intent to the tax which may be imposed pursuant to this Article, the tax paid may be credited against the tax imposed under this section by a taxing county upon the same property.  If the amount of sales or use tax so paid is less than the amount of the use tax due the taxing county under this section, the purchaser shall pay to the Secretary of Revenue or to the taxing county, as appropriate, an amount equal to the difference between the amount so paid in the other taxing county or jurisdiction and the amount due in the taxing county.  The Secretary of Revenue or the taxing county, as appropriate, may require such proof of payment in another taxing county or jurisdiction as is deemed to be necessary.  The use tax levied under this Article is not subject to credit for payment of any State sales or use tax not imposed for the benefit and use of counties and municipalities.  No credit shall be given under this section for sales or use taxes paid in a taxing jurisdiction outside this State if that taxing jurisdiction does not grant similar credit for sales taxes paid under this Article."
Sec. 11.  Section 4 of Chapter 1096 of the 1967 Session Laws, as amended, is amended as follows:
(1)	By rewriting the heading to the section to read: "Scope of Sales Tax.";
(2)	By deleting the reference "105-164.4(1)”and substituting the reference "105-164.4(a)(1) and (4b)";
(3)	By rewriting subpart (2) of the first paragraph to read:
"(2)	the gross receipts derived from the lease or rental of tangible personal property when the property is not a motor vehicle and the lease or rental of the property is subject to the three percent (3%) sales tax imposed by the State under G.S. 105-164.4(a)(2)"; 
(4)	By deleting the references "105-164.4(3)”and "105-164.4(4)”and substituting the references "105-164.4(a)(3)”and "105-164.4(a)(4)”respectively; and 
(5)	By rewriting the last sentence of the first paragraph of that section to read:
"The taxes authorized by this division do not apply to sales that are taxable by the State under G.S. 105-164.4 but are not specifically listed in this section."
Sec. 12.  Section 5 of Chapter 1096 of the 1967 Session Laws, as amended, is amended in the first sentence by deleting the phrase "when, if the property were subject to the use tax imposed by G.S. 105-164.6, such property would be taxed by the State of North Carolina at a rate less than three percent (3%)”and substituting the phrase "when the property is a motor vehicle or the property would be taxable by the State at a rate of other than three percent (3%) if it were taxable under G.S. 105-164.6".
Sec. 13.  This act does not affect the rights or liabilities of the State, a taxpayer, or another person arising under a statute amended or repealed by this act before its amendment or repeal; nor does it affect the right to any refund or credit of a tax that would otherwise have been available under the amended or repealed statute before its amendment or repeal.
Sec. 14.  Section 1 of this act is effective for taxable years beginning on or after January 1, 1990.  Section 8 of this act shall become effective July 1, 1991, and shall apply to sales made on or after that date.  The remainder of this act shall become effective August 1, 1989, and shall apply to sales made on or after that date other than a sale of a motor vehicle made pursuant to a written contract entered into on or after that date.