Instructions For Form E-500 Sales And Use Tax Return Page 2
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610/15/2002
How To Prepare Return
Line 1 - North Carolina Gross Receipts: Enter the gross receipts from your business operations in
North Carolina. Do not include any taxes collected.
Line 2 - Sales for Resale: Enter the total wholesale sales of tangible personal property that your
business sold to registered merchants for the purpose of resale. Do not include this amount
on Line 3 or elsewhere on the return.
Line 3 - Receipts Exempt from State Tax: Enter the total sales exempt from State tax.
Examples of exempt sales in G.S. 105-164.13 include but are not limited to:
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Sales in interstate commerce and direct sales to the U.S. Government
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Seeds, feed, and items for the commercial production of animals or plants
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Labor on repair work and installation labor when separately stated
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Food exempt under food stamp and supplemental food programs
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Prescription drugs and medicine sold on written prescription
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Worthless accounts charged off for income tax after sales tax was paid
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Food for home consumption exempt from the State rate of tax but subject to the local
rate of tax
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Receipts above the maximum tax subject to the State 3%, 2%, or 1% rate
Line 4 - Receipts Subject to Tax: Receipts subject to tax are calculated by subtracting Lines 2 and
3 from Line 1.
Line 5 - 4.5% State Rate: The State levies a 4.5% (scheduled to decrease to 4% on July 1, 2003)
general rate of tax on the sales price of each item or article of tangible personal property that
is sold at retail and is not subject to a reduced rate of tax.
Enter under the column “Purchases for Use” the total purchase price of any taxable tangible
personal property, which was purchased for storage, use, or consumption in North Carolina
from vendors outside North Carolina on which the State rate of tax was not collected by the
vendors. Do not include tangible personal property purchased for resale.
Enter under the column “Receipts” total taxable receipts, rentals, and sales, which are
subject to the State rate of tax excluding the tax collected. The tax is calculated by adding
the “Purchases for Use” and “Receipts” and multiplying the sum by 4.5%.
Items subject to the 4.5% general rate are also subject to the 2% local sales and use tax rate
which is currently levied by all counties in North Carolina. This amount should be reported
on Line 10. Mecklenburg County has an additional .5% local sales and use tax for public
transportation which must be reported on Line 12.
Line 6 - 4% State Rate: Prior to October 16, 2001, the State levied a 4% general rate of tax on the
sales price of each item or article of tangible personal property sold at retail and not subject
to a reduced rate of tax. Receipts from lease contracts entered into prior to October 16,
2001 and purchases of construction materials used to fulfill a lump sum or unit price contract
entered into, awarded, or bid before October 16, 2001, are subject to the 4% State rate and
should be reported on this line.
Sales and Use Tax Division
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