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White Goods Tax

While working for a plumbing distributor this week I ran into an administrative nightmare. A state tax that I wasn’t familiar needed to be added to all sold products that fit the category. I’m talking boat loads of products. The tax is named, White Goods Tax. The state I’m working is North Carolina.

White goods disposal tax is collected for the disposal of white goods, which includes refrigerators, ranges, water heaters, freezers, unit air conditioners, washing machines, dishwashers, clothes dryers, and other similar domestic and commercial large appliances. The white goods disposal tax is $3.00 and is applicable to all new white goods sold by a retailer or purchased for storage, use, or consumption in North Carolina. It applies to all new white goods with or without chlorofluorocarbon refrigerants and is in addition to all other taxes.

Ok, this sounded familiar. We all have bought a new car battery and paid the disposal fee if we didn’t bring the old battery. With the old battery the retailer took possession and the disposal fee is waived. Hmm, I’m still confused. I dug a little deeper and found a smoking gun call general revenue. Most state and local sales tax revenue goes to general government expenditures because it's added to the general fund, along with money from other sources, such as licensing fees and income taxes. The money isn’t ear marked. This is what North Carolina published.

The North Carolina Caller stated the intent and purpose like this; “North Carolina counties must provide at least one site for the collection of discarded white goods and the removal of Chlorofluorocarbons (CFC’s). Cracking down on the use of CFC’s – an organic compound that was once widely used in fridges and other “white goods” that damages the ozone layer – is the stated goal and purpose of North Carolina’s White Goods Tax. In 1987, all United Nations members signed the Montreal protocol. Member states agreed to ban the use of CFCs in the following decades.

North Carolina Caller went on to say, “Simply put, North Carolina’s White Goods Tax is a tax that has outlived its original intent and should be repealed. Today, refrigerators and the other aforementioned household appliances do not contain CFC’s. New fridges will be more environmentally friendly than those that they replace, since modern fridges are energy efficient and made of better recyclable materials.”

Real property contractors are considered the consumers of the new white goods that are installed for others that become part of real property. Thus, they must pay the $3.00 White Goods Disposal Tax at the time of purchase from a North Carolina retailer or self-assess and report the tax directly to the Department of Revenue on white goods purchased outside the state and brought into the state for installation.

What isn’t clear to this blogger is how the state incurs expense for the real property contractor disposing of the old refrigerators, ranges, water heaters, freezers, unit air conditioners, washing machines, dishwashers, clothes dryers? Most municipalities charge a $10 -$25 fee for local waste station items then generate revenue through recycling these same items. No problems here, they provide a service, incur costs, and generate revenue to offset the costs and make a profit to pay for local services.

OK, I’ll buy from the internet outside of North Carolina. Retailer-contractors are liable for collecting and remitting the $3.00 tax for each new white good sold at retail. It is noteworthy that under current interpretations by the state, a retailer-contractor is not liable for the tax on white goods withdrawn from inventory to fulfill a real property contract. However, when that retailer-contractor acts as a real property contractor and purchases a white good from outside the state for use in connection with a real property contract in the state he must self-assess and report the tax. Similarly, if the retailer-contractor buys a white good from a North Carolina retailer to fulfill a real property contract, he must pay the $3.00 disposal tax to the retailer at the time of purchase. Anyone but me see the administrative nightmare?

I’m all for clean air, clean water, and protecting the environment. I’m less about taxation and the cost it places on small business. I do like state’s balancing their budgets and a small part of me loves a creative way to generate revenue. White Goods tax fits creativity!

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