Article 42

The NC General Assembly authorized counties to collect a half-cent sales tax under Article 42 beginning in FY 1986-87. The initial legislation mandated that counties set aside 60 percent of their share of the tax for public school capital outlay for 11 years. In 1998, the Legislature made the 60 percent share permanent.

For the purpose of additional supplemental sales tax, public school capital outlays are defined as: funds appropriated for school capital outlay; increases in county school capital reserve on funds; and funds used to make debt service payments on any school bonds issued after the date five years prior to the effective date of the sales tax.

Distribution Information

Article 42 Sales and Use Tax is distributed on a point of delivery basis. The point of delivery allocation method distributes the revenue to the county in which the taxed goods are delivered. Point of delivery is typically where the sales transaction occurs. However, larger items such as construction materials may be delivered to the purchaser’s home or where the goods are to be used. The delivery site is where the sales taxes are credited for the sales tax collection, regardless of where the retailer is.

A county must divide the proceeds among the local government units within its territory either on a per capita or ad valorem basis. Orange County currently distributes this revenue on a per capita basis.