GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1995

H	1 

HOUSE BILL 1241

Short Title:  Bundled Transactions Sales Tax.	(Public)

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Sponsors: Representative Shubert.

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Referred to:  Finance.

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May 20, 1996

A BILL TO BE ENTITLED
AN ACT TO CLARIFY THE SALES AND USE TAX LAW THAT APPLIES TO BUNDLED TRANSACTIONS.
The General Assembly of North Carolina enacts:
Section 1.  Article 5 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-164.12B.  Bundled transactions.
(a)	Bundled Transaction Defined. – A bundled transaction is a transaction 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 service provider if the consumer cancels the contract for services within the minimum period.
(3)	For the item transferred, the seller:
a.	Does not charge the consumer;
b.	Charges the consumer a price below the cost price the seller paid for the item; or
c.	Rebates to the consumer part or all of the retail price at which the item would sell if no agreement for services were entered into.
(b)	Bundled Transaction Is a Sale; Sales Price. – If the seller transfers an item of tangible personal property as part of a bundled transaction, a sale has occurred and the sales price is presumed to be the retail price at which the item would sell if no agreement for services were entered into.  Part of this price may be paid by the consumer at the time of the transaction; the remainder of the price is considered paid as part of the price to be paid for the services contracted for.
(c)	Sales Tax if Services Also Taxed. – If the services for which the consumer was required to contract are subject to a sales tax, a gross receipts tax, or both at a combined rate equal to or greater than the combined State and local general rate of sales and use tax, then no additional sales tax is due for the item transferred beyond the sales tax paid on any payment the consumer made for the item at the time of the transfer.  However, if the consumer cancels the contract for services before the expiration of the minimum period, sales tax applies to the cancellation fee paid by the consumer.
(d)	Sales Tax if Services Not Taxed. – If the services for which the consumer was required to contract are not subject to a State sales or gross receipts tax at a rate equal to or greater than the combined State and local general rate of sales and use tax, then sales tax is due at the time of the transfer on the remainder of the sales price not paid at that time, but only to the extent the remaining sales price does not exceed that portion of the price to be paid for the services contracted for that is not subject to a State sales or gross receipts tax.
(e)	Determination of Cost Price. –  For the purpose of this section, the cost price a seller paid for an item is presumed to be no greater than the price the seller paid for the same model within 12 months before the bundled transaction, as shown on the seller's invoices."
Sec. 2.  This act becomes effective on the first day of the third month following its ratification and applies to sales made on or after that date.