§ 105-164.4D. Bundled transactions. - North Carolina Statutes

§ 105‑164.4D.  Bundledtransactions.

(a)        Tax Application. – Taxapplies to the sales price of a bundled transaction unless one of the followingapplies:

(1)        Fifty percent (50%)test. – All of the products in the bundle are tangible personal property, the bundleincludes one or more of the exempt products listed in this subdivision, and theprice of the taxable products in the bundle does not exceed fifty percent (50%)of the price of the bundle:

a.         Food exempt underG.S. 105‑164.13B.

b.         A drug exempt under G.S.105‑164.13(13).

c.         Medical devices,equipment, or supplies exempt under G.S. 105‑164.13(12).

(2)        Allocation. – Thebundle includes a service, and the retailer determines an allocated price foreach product in the bundle based on a reasonable allocation of revenue that issupported by the retailer's business records kept in the ordinary course ofbusiness. In this circumstance, tax applies to the allocated price of eachtaxable product in the bundle.

(3)        Ten percent (10%)test. – The price of the taxable products in the bundle does not exceed tenpercent (10%) of the price of the bundle, and no other subdivision in thissubsection applies.

(b)        DeterminingThreshold. – A retailer of a bundled transaction subject to this section mayuse either the retailer's cost price or the retailer's sales price to determineif the transaction meets the fifty percent (50%) test or the ten percent (10%)test set out in subdivisions (a)(1) and (a)(3) of this section. A retailer maynot use a combination of cost price and sales price to make this determination.If a bundled transaction subject to subdivision (a)(3) of this section includesa service contract, the retailer must use the full term of the contract indetermining whether the transaction meets the threshold set in the subdivision.(2006‑151,ss. 4, 5; 2007‑244, s. 2.)