Article 5F.

Manufacturing Fuel and Certain Machinery and Equipment.

§ 105‑187.50.  Definitions.

The definitions in G.S 105‑164.3 apply in this Article. In addition, the following definitions apply in this Article:

(1)       Concurrently maintainable. – Capable of having any capacity component or distribution element serviced or repaired on a planned basis without interrupting or impeding the performance of the computer equipment.

(2)       Eligible datacenter. – A facility that provides infrastructure for hosting or data processing services and satisfies each of the following conditions:

a.         The facility's power and cooling systems are created and maintained to be concurrently maintainable and include redundant capacity components and multiple distribution paths serving the computer equipment at the facility. The facility must have multiple distribution paths serving the computer equipment; however, a single distribution path may serve the computer equipment at any one time.

b.         The Secretary of Commerce has made a written determination of the following:

1.         For facilities that are located in a development tier one area at the time of application for the written determination, that at least one hundred fifty million dollars ($150,000,000) in private funds has been or will be invested in improvements to real property or installed datacenter machinery and equipment, or a combination thereof, within five years of the date on which the first qualifying improvement is made, regardless of any subsequent change in county development tier status.

2.         For facilities that are not located in a development tier one area at the time of application for the written determination, that at least three hundred million dollars ($300,000,000) in private funds has been or will be invested in improvements to real property or installed datacenter machinery and equipment, or a combination thereof, within five years of the date on which the first qualifying improvement is made, regardless of any subsequent change in county development tier status.

c.         The facility satisfies the wage standard and health insurance requirements of G.S. 105‑129.83.

(3)       Multiple distribution paths. – A series of distribution paths configured to ensure that failure on one distribution path does not interrupt or impede other distribution paths.

(4)       Redundant capacity components. – Components beyond those required to support the computer equipment. (2001‑347, s. 2.17; 2007‑323, s. 31.22(a).)

§ 105‑187.51.  Tax imposed on mill machinery.

(a)       Scope. – A privilege tax is imposed on the following persons:

(1)       A manufacturing industry or plant that purchases mill machinery or mill machinery parts or accessories for storage, use, or consumption in this State. A manufacturing industry or plant does not include a delicatessen, cafe, cafeteria, restaurant, or another similar retailer that is principally engaged in the retail sale of foods prepared by it for consumption on or off its premises.

(2)       A contractor or subcontractor that purchases mill machinery or mill machinery parts or accessories for use in the performance of a contract with a manufacturing industry or plant.

(3)       A subcontractor that purchases mill machinery or mill machinery parts or accessories for use in the performance of a contract with a general contractor that has a contract with a manufacturing industry or plant.

(b)       Rate. – The tax is one percent (1%) of the sales price of the machinery, part, or accessory purchased. The maximum tax is eighty dollars ($80.00) per article. As used in this section, the term "accessories" does not include electricity. (2001‑347, s. 2.17; 2005‑435, s. 56(a).)

§ 105‑187.51A.  (Effective until July 1, 2008 – See notes) Tax imposed on manufacturing fuel.

A privilege tax is imposed on a manufacturing industry or plant that purchases fuel to operate the industry or plant. The tax is seven‑tenths percent (0.7%) of the sales price of the fuel. The tax does not apply to electricity or piped natural gas. (2005‑276, s. 33.21; 2007‑397, s. 12.)

§ 105‑187.51A.  (Effective July 1, 2008 until July 1, 2009 – See notes) Tax imposed on manufacturing fuel.

A privilege tax is imposed on a manufacturing industry or plant that purchases fuel to operate the industry or plant. The tax is five‑tenths percent (0.5%) of the sales price of the fuel. The tax does not apply to electricity or piped natural gas.(2005‑276, s. 33.21; 2007‑397, ss. 12(a), (b).)

§ 105‑187.51A.  (Effective July 1, 2009 until July 1, 2010  – See notes) Tax imposed on manufacturing fuel.

A privilege tax is imposed on a manufacturing industry or plant that purchases fuel to operate the industry or plant. The tax is three‑tenths percent (0.3%) of the sales price of the fuel. The tax does not apply to electricity or piped natural gas.(2005‑276, s. 33.21; 2007‑397, ss. 12(a)‑(c).)

§ 105‑187.51B.  Tax imposed on certain recyclers, research and development companies, and industrial machinery refurbishing companies.

(a)       Tax. – A privilege tax is imposed on the following:

(1)       A major recycling facility that purchases any of the following tangible personal property for use in connection with the facility:

a.         Cranes, structural steel crane support systems, and foundations related to the cranes and support systems.

b.         Port and dock facilities.

c.         Rail equipment.

d.         Material handling equipment.

(2)       A research and development company in the physical, engineering, and life sciences that is included in industry 54171 of NAICS and that purchases equipment or an attachment or repair part for equipment that meets all of the following requirements:

a.         Is capitalized by the company for tax purposes under the Code.

b.         Is used by the company in the research and development of tangible personal property.

c.         Would be considered mill machinery or mill machinery parts or accessories under G.S. 105‑187.51 if it were purchased by a manufacturing industry or plant and used in the research and development of tangible personal property manufactured by the industry or plant.

(3)       A software publishing company that is included in the industry group 5112 of NAICS and that purchases equipment or an attachment or repair part for equipment that meets all of the following requirements:

a.         Is capitalized by the company for tax purposes under the Code.

b.         Is used by the company in the research and development of tangible personal property.

c.         Would be considered mill machinery under G.S. 105‑187.51 if it were purchased by a manufacturing industry or plant and used in the research and development of tangible personal property manufactured by the industry or plant.

(4)       An industrial machinery refurbishing company that is included in industry group 811310 of NAICS and that purchases equipment or an attachment or repair part for equipment that meets all of the following requirements:

a.         Is capitalized by the company for tax purposes under the Code.

b.         Is used by the company in repairing or refurbishing tangible personal property.

c.         Would be considered mill machinery under G.S. 105‑187.51 if it were purchased by a manufacturing industry or plant and used by the industry or plant to manufacture tangible personal property.

(b)       Rate. – The tax is one percent (1%) of the sales price of the equipment or other tangible personal property. The maximum tax is eighty dollars ($80.00) per article.  (2005‑276, s. 33.21; 2006‑66, s. 24.9(a); 2006‑196, s. 12; 2007‑323, s. 31.7(a); 2007‑527, s. 13(a); 2008‑107, s. 28.21(a).)

§ 105‑187.51C.  (Expiring for sales occurring on or after July 1, 2013) Tax imposed on datacenter machinery and equipment.

(a)       Tax. – A privilege tax is imposed on an eligible datacenter, other than one as defined in G.S. 105‑164.3(8e), that purchases machinery or equipment to be located and used at the datacenter that is capitalized for tax purposes under the Code and is used either:

(1)       For the provision of datacenter services, including equipment cooling systems for managing the performance of the datacenter property; hardware and software for distributed and mainframe computers and servers; data storage devices; network connectivity equipment and peripheral components and systems.

(2)       For the generation, transformation, transmission, distribution, or management of electricity, including exterior substations and other business personal property used for these purposes.

(b)       Rate. – The tax is one percent (1%) of the sales price of the eligible equipment and machinery. The maximum tax is eighty dollars ($80.00) per article.

(c)       Forfeiture. – If the required level of investment to qualify as an eligible datacenter is not timely made, then the rate provided under this section is forfeited. If the required level of investment is timely made but any eligible machinery and equipment is not located and used at an eligible datacenter, then the rate provided for that machinery and equipment under this subdivision is forfeited. A taxpayer that forfeits a rate under this subdivision is liable for all past sales and use taxes avoided as a result of the forfeiture, computed at the combined general rate from the date the taxes would otherwise have been due, plus interest at the rate established under G.S. 105‑241.1(i). If the forfeiture is triggered due to the lack of a timely investment required by this section, then interest is computed from the date the sales or use tax would otherwise have been due. For all other forfeitures, interest is computed at the combined general rate from the time as of which the machinery or equipment was put to a disqualifying use. A credit is allowed against the sales or use tax owed as a result of the forfeiture provisions of this subsection for privilege taxes paid pursuant to this section. For purposes of applying this credit, the fact that payment of the privilege tax occurred in a period outside the statute of limitations provided under G.S. 105‑266 shall not be considered. Interest shall not be computed against the amount of taxes offset by this credit. The past taxes and interest are due 30 days after the date of forfeiture. A taxpayer that fails to pay the past taxes and interest by the due date is subject to the provisions of G.S. 105‑236.

(d)       Sunset. – This section expires for sales occurring on or after July 1, 2013. (2007‑323, s. 31.22(b).)

§ 105‑187.52.  Administration.

(a)       Administration. – The privilege taxes imposed by this Article are in addition to the State use tax. Except as otherwise provided in this Article, the collection and administration of these taxes is the same as the State use tax imposed by Article 5 of this Chapter.

(b)       Credit. – A credit is allowed against the tax imposed by this Article for the amount of a sales or use tax, privilege or excise tax, or substantially equivalent tax paid to another state. The credit allowed by this subsection does not apply to tax paid to another state that does not grant a similar credit for the privilege tax paid in North Carolina.

(c)       Exemption. – State agencies are exempted from the privilege taxes imposed by this Article. (2001‑347, s. 2.17; 2005‑276, s. 33.22; 2006‑162, s. 11; 2007‑527, s. 14.)

§ 105‑187.53.  Commercial logging items.

This Article does not apply to an item that is exempt from sales and use tax under G.S. 105‑164.13(4f). (2006‑19, s. 2.)