Frequently Asked Questions Regarding North Carolina Sales Tax on Food

In late August 2013 the North Carolina State Legislature passed the North Carolina Tax Simplification and Reduction Act which removed a long-standing exemption for colleges and universities, and now requires that all food purchases made by current students be taxed at 8.25 percent (state sales tax plus Mecklenburg County taxes). School administrators state-wide lobbied against this change to no avail. The weeks following passage of the bill were spent clarifying which purchases would be affected and determining how to handle pre-paid meal plans.

Why is the sales tax rate 8.25 percent? I've heard it is different at other schools.

The state sales tax on food is 4.75 percent. Counties in North Carolina may or may not attach additional local taxes to the sales tax. Mecklenburg County, where Davidson is located, adds 3 percent for prepared foods and .50 percent as a transportation tax. We have confirmed from the Department of Revenue that the college is responsible for all state and local taxes, bringing the sales tax total to 8.25 percent.

Is this sales tax a one year occurrence or a permanent change?

The state legislature has not indicated that it is temporarily lifting this sales tax exemption, so we should expect the 8.25 percent tax to continue into future years.

What if I am on a payment plan?

Your currently established payment plan will not be sufficient to cover the additional sales tax amount.  You may either pay the additional tax in a separate payment to Davidson College, or you may adjust your payment plan to include the sales tax. If you choose to adjust your payment plan, please contact Susan Jimenez at sujimenez@davidson.edu or 704-894-2208.

What if I am currently receiving Financial Aid?

The Financial Aid Office will evaluate the current costs and awards of students currently receiving any type of aid (need-based, merit and/or athletic) to determine what (if any) adjustments need to be made to reflect this new sales tax expense. Any financial aid adjustments will appear on the February 2014 e-bill.

How will the 8.25 percent be assessed on my meal plan?

The 8.25 percent assessed on meal plans will be calculated on the price of the meal plan minus any Dining Dollars that accompany the plan. Dining Dollars are for discretionary food spending and will be taxed at the point of sale when they are actually spent. Visit the meal plans website for prices with the sales tax shown.

What about my food purchases on campus outside the meal plan?

The legislation applies to all food purchases on campus, so regardless of form of payment (cash, check, credit card, declining balance via the CatCard, or Dining Dollars attached to a meal plan) students will incur the 8.25 percent sales tax charge.

What if I am on a meal plan at my fraternity or women's eating house?

The statute reads, "Food and Prepared Food Served at Institutions of Higher Education - G.S. 105-164.13(27) which provides an exemption from sales and use tax for the sale at retail and the use, storage, or consumption in this State for food and prepared food served to students in dining rooms regularly operated by State or private educational institutions or student organizations thereof is repealed." Patterson Court social organizations are not exempt from remitting the 8.25 percent sales tax to the state. Each house will be expected to comply with tax requirements. These student organizations will communicate with their house members independently.

When and how will the sales tax appear on my bill?

Once your student selects a meal plan for the spring semester, the meal plan charge and the new sales tax charge will be added to their student account. These charges will appear on the February, 2014 e-bill.