Bill Summary for S 397 (2023-2024)
|View NCGA Bill Details||2023-2024 Session|
AN ACT TO PROVIDE A SALES TAX EXEMPTION FOR CERTAIN NONPROFIT ENTITIES AND TO EXEMPT CERTAIN FUNDRAISING EVENTS BY NONPROFITS FROM SALES TAX.Intro. by Burgin.
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Repeals GS 105-164.14(b) (pertaining to certain semiannual refunds due to certain nonprofit entities).
Enacts new subdivision GS 105-164.13(52a) (pertaining to exemptions from retail sales and use taxes) as follows. Exempts the following tangible personal property, digital property, and services for use in carrying on the work of the following entities, provided the entity is not owned or controlled by the State, from the retail sales and use taxes:
- Hospitals not operated for profit, including hospitals and medical accommodations operated by an authority or other public hospital described in Article 2 of GS Chapter 131E.
- An organization that is exempt from income tax under section 501(c)(3) of the IRS Code and not classified in the National Taxonomy of Exempt Entities major group areas of (1) Community Improvement and Capacity Building, (2) Public and Societal Benefit, or (3) Mutual and Membership Benefit.
- Volunteer fire departments and volunteer emergency medical services squads that are (1) exempt from income tax under the IRS Code; (2) financially accountable to a city as defined in GS 160A-1 (pertaining to cities and towns), a county, or a group of cities and counties; or (3) both.
- An organization that is a single member LLC that is disregarded for income tax purposes and satisfies all of the following conditions: (1) the owner of the LLC is an organization that is exempt from income tax under section 501(c)(3) of the IRS Code, (2) the LLC is a nonprofit entity that would be eligible for an exemption under section 501(c)(3) of the IRS Code if it were not disregarded for income tax purposes, and (3) the LLC is not an organization that would be properly classified in any of the major group areas of the National Taxonomy of Exempt Entities listed above.
- Qualified retirement facilities whose property is excluded from property tax under State tax law on qualified retirement facilities.
- A university-affiliated nonprofit organization that procures, designs, constructs, or provides facilities to, or for use by, a constituent institution of The University of North Carolina. Specifies that for purposes of this sub-subdivision, a nonprofit organization includes an entity exempt from taxation as a disregarded entity of the nonprofit organization.
- Over-the-counter drugs purchased for use in carrying out the work of a hospital not listed above.
Specifies that the 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 that is 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. Directs 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. Sets forth certificate requirements for a real property contractor that purchases an item allowed an exemption under GS 105-164.13(52a). Directs a real property contractor who pays local sales and use taxes on property qualifying for an exemption under this subdivision on behalf of an entity must give the entity for whose project the property was purchased a signed statement containing (1) the date the property was purchased; (2) the type of property purchased; (3) the project for which the property was used; (4) if the property was purchased in this State, the county in which it was purchased; and (5) if the property was not purchased in this State, the county in which the property was used. If the property was purchased in this State, the real property contractor must attach a copy of the sales or purchase receipt to the statement.
Clarifies that the exemption set forth above 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 State tax law.
Sets an aggregate annual exemption amount allowed to an entity under this subdivision for a fiscal year at no more than $31.7 million in tax.
Enacts GS 105-164.29C detailing a process for a nonprofit entity to apply for the exemption set forth above, including tax liability for failure to use the purchased goods. Makes conforming changes to GS 105-467(b) (pertaining to exemptions and refunds) to refer to the exemption under new GS 105-164.13(52a).
Amends GS 105-236(a)(5a) (pertaining to penalties for misuse of an exemption certificate) to specify that misuse under the subdivision includes improper use of a certificate of exemption issued to a nonprofit entity for the sales and use tax exemption set forth above.
Effective October 1, 2023, and applies to sales and purchases made on or after that date.
Exempts from the entertainment activity tax set forth in GS 105-164.4G events held by a nonprofit entity exempt from tax under State law solely for fundraising purposes for the entity, notwithstanding that entertainment activity may be offered as an ancillary purpose of the event. Effective July 1, 2023, and applies to admission charges for entertainment activities held on or after that date.
Specifies that act 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, nor does it 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.