A BILL TO BE ENTITLED
AN ACT allowing a sales and use tax exemption for LOCAL SCHOOL ADMINISTRATIVE UNITS and reenacting the sales and use tax refund for local school administrative units.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 105‑164.13 is amended by adding a new subdivision to read:
"§ 105‑164.13.  Retail sales and use tax.
The sale at retail and the use, storage, or consumption in this State of the following tangible personal property and services are specifically exempted from the tax imposed by this Article: 
…
(54)	Items subject to sales and use tax under G.S. 105‑164.4, other than electricity and telecommunications service, if all of the following conditions are met:
a.	The items are purchased by a local school administrative unit for its own use and in accordance with G.S. 105‑164.29B.
b.	The items are purchased pursuant to a valid purchase order issued by the local school administrative unit that contains the exemption number of the unit and a description of the property purchased or the items purchased are paid for with a check, electronic deposit, credit card, procurement card, or credit account of the local school administrative unit.
c.	For all purchases other than by a purchase order issued by the local school administrative unit, the unit must provide to or have on file with the retailer the unit's exemption number."
SECTION 2.  Part 5 of Article 5 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑164.29B.  Local school administrative unit exemption process.
(a)	Application. – To be eligible for the exemption provided in G.S. 105‑164.13(54), a local school administrative unit must obtain from the Department a sales tax exemption number. The application for exemption must be in the form required by the Secretary, be signed by the unit's finance officer, and contain any information required by the Secretary. The Secretary must assign a sales tax exemption number to a local school administrative unit that submits a proper application. 
(b)	Liability. – A local school administrative unit that does not use the items purchased with its exemption number must pay the tax that should have been paid on the items purchased, plus interest calculated from the date the tax would otherwise have been paid."
SECTION 3.  G.S. 105‑164.14(c)(2b) and (2c) are reenacted.
SECTION 4.  G.S. 105‑164.44H is repealed.
SECTION 5.  Section 7.51(c) of S.L. 2005‑276 reads as rewritten:
"SECTION 7.51.(c)  This section becomes effective July 1, 2005, and applies to sales made on or after that date."
SECTION 6.  Section 1 of this act becomes effective October 1, 2006, and applies to sales made on or after that date. Section 3 of this act becomes effective July 1, 2006, and applies to purchases made on or after that date. Section 4 of this act becomes effective July 1, 2006. The remainder of this act is effective when it becomes law.