§ 105-164.12B. Tangible personal property sold below cost with conditional service contract. - North Carolina Statutes

§ 105‑164.12B.  Tangiblepersonal property sold below cost with conditional service contract.

(a)        Conditional ServiceContract Defined. – A conditional service contract is a contract in which allof the following conditions are met:

(1)        A seller transfers anitem of tangible personal property to a consumer on the condition that theconsumer enter into an agreement to purchase services on an ongoing basis for aminimum period of at least six months.

(2)        The agreementrequires the consumer to pay a cancellation fee to the seller if the consumercancels the contract for services within the minimum period.

(3)        For the itemtransferred, the seller charges the consumer a price that, after any pricereduction the seller gives the consumer, is below the purchase price the sellerpaid for the item. The seller's purchase price is presumed to be no greaterthan the price the seller paid, as shown on the seller's purchase invoice, forthe same item within 12 months before the seller entered into the conditionalservice contract.

(b)        Tax. – If a sellertransfers an item of tangible personal property as part of a conditionalservice contract, a sale has occurred. The sales price of the item is presumedto be the retail price at which the item would sell in the absence of theconditional service contract. Sales tax is due at the time of the transfer onthe following:

(1)        Any part of thepresumed sales price the consumer pays at that time, if the service in thecontract is taxable at the combined general rate.

(2)        The presumed salesprice, if the service in the contract is not taxable at the combined generalrate.

(c)‑(f). Repealed bySession Laws 2007‑244, s. 3, effective October 1, 2007. (1996, 2nd Ex. Sess., c. 13,s. 5.1; 2001‑414, ss. 16, 17; 2006‑151, s. 6; 2007‑244, s. 3.)