AN ACT TO PROVIDE A SALES TAX EXEMPTION FOR CERTAIN NONPROFIT ENTITIES.
Repeals GS 105-164.14(b), authorizing tax refunds for certain nonprofit entities and hospital drugs.
Amends GS 105-164.13 to add a new sales tax exemption for tangible personal property, digital property, and services for use in carrying on the work of seven specified entities, so long as the entity is not owned or controlled by the State.
The exemption applies to (1) nonprofit hospitals, including hospitals and medical accommodations operated by an authority or other public hospital described in Article 2 of GS Chapter 131E; (2) organizations exempt from income tax under 501(c)(3) of the Internal Revenue Code (Code) and not classified in the National Taxonomy of Exempt Entities major group areas of Community Improvement and Capacity Building, Public and Societal Benefit, or Mutual and Membership Benefit; (3) volunteer fire departments and volunteer emergency medical services squads exempt from income tax under the Code, financially accountable to a city as defined in GS 160A-1, a county, or a group of cities and counties, or both; (4) organizations that are single member LLCs disregarded for income purposes so long as the owner of the LLC is an organization exempt from income tax under 501(c)(3) of the Code, the LLC is a nonproft entity that would be eligible for an exemption under 501(c)(3) of the Code if it were not disregarded for income tax purposes, and the LLC is not an organization that would be properly classified in the National Taxonomy of Exempt Entities major group areas of Community Improvement and Capacity Building, Public and Societal Benefit, or Mutual and Membership Benefit; (5) qualified retirement facilities whose property is excluded from property tax under GS 105-278.6A; (6) university-affiliated nonprofit organizations, including an entity exempt from taxation as a disregarded entity of the nonprofit organization, that procures, designs, constructs, or provides facilities to or for use by a constituent UNC institution; and (7) over-the-counter drugs purchased for use in carrying out the work of a hospital not listed in one of the above entities.
Specifies this exemption includes indirect sales to a nonprofit entity of digital property and tangible personal property purchased by a real property contractor that becomes a part of or permanently installed or applied to any building or structure owned or leased by the nonprofit entity and is being erected, altered, or repaired for use by the nonprofit entity for carrying on its nonprofit activities. Further specifies that a sale to fulfill a real property contract with an entity that holds an exemption certificate is exempt to the same extent as if purchased directly by the entity that holds the exemption certificate. Requires a real property contractor that purchases an item allowed an exemption to provide (1) an exemption certificate to the retailer that includes the name of the nonprofit entity holding the exemption certificate, (2) the exemption certificate number issued to that holder, and (3) the information required pursuant to GS 105-164.28.
Specifies that this exemption does not apply to (1) purchases of electricity, telecommunications service, ancillary service, piped natural gas, video programming, a prepaid meal plan, aviation gasoline and jet fuel, and spirituous liquor or (2) sales and use tax liability indirectly paid by a nonprofit entity through reimbursement to an authorized person of the entity for tax incurred by the person on an item or transaction subject to tax under Article 5 of GS Chapter 105.
Caps the aggregate annual exemption allowed to an entity under this provision for a fiscal year at $31,700,000. Directs the real property contractor who pays local sales and use taxes on property qualifying for an exemption under this provision on behalf of an entity to give the entity for whose project the property was purchased a signed statement with the date the property was purchased, the type of property purchased, the project for which the property was used, and the county in which the property was purchased in this State or used if purchased in another State. Directs the real property contractor to attach a copy of the sales or purchase receipt to the statement if the property was purchased in this State.
Enacts GS 105-164.29C, requiring a nonprofit entity to obtain a sales tax exemption number from the Department of Revenue (Department) to be eligible for the exemption provided in GS 105-164.13(52a), enacted above. Directs the Department Secretary to assign a sales tax exemption number to a nonprofit entity that submits a proper application, as specified. Requires a nonprofit entity that does not use the items purchased with its exemption number to pay the tax that would have been paid on the items purchased, plus interest from the date the tax would otherwise have been paid.
Amends GS 105-467(b), concerning exemptions and refunds for local sales and use tax. Provides that the State exemptions and exclusions contained in Article 5 of GS Chapter 105 (Sales and Use Tax) apply to the local sales and use tax authorizes to be levied and imposed under Article 39 (currently, specifies only exemptions and exclusions in GS 105-164.13 and GS 105-164.57A apply). Caps the aggregate annual local exemption amount allowed an entity under new GS 105-164.13(52a) for a fiscal year at $13,300,000 in tax.
Makes conforming changes to GS 105-467(b).
Amends GS 105-236(a)(5a) to add that the offense of misusing of an exemption certificate under this subdivision, penalized by a $250 penalty, includes improper use of a certificate of exemption issued to a nonprofit entity pursuant to GS 105-164.29C, as enacted, for direct and indirect purchases by the entity or another person.
Effective October 1, 2021, and applies to sales and purchases made on or after that date. Does not affect the rights or liabilities of the State, a taxpayer, or another person arising under a statute amended or repealed by this act before the effective date of its amendment or repeal, and does not affect the right to any refund or credit of a tax that accrued under the amended or repealed statute before the effective date of its amendment or repeal.
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