North Carolina Proposes Capping Nonprofit Sales Tax Refund

North Carolina Proposes Capping Nonprofit Sales Tax Refund

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“Tax reform should not be achieved at the expense of nonprofits, many of which struggle to meet the needs of the communities they serve. We encourage legislators to reject the proposal to create new taxes on private nonprofits,” according to a statement from the North Carolina Center for Nonprofits (NCCN), based in Raleigh, N.C.

Nonprofits in North Carolina pay state and local sales tax, but are eligible for semi-annual refunds, one of only two states that do not offer sales tax exemption vouchers (Utah is the other state). Previously the cap on refunds was a total of $46 million. David Heinen, NCCN vice president for public policy and advocacy, said this cap was more than any nonprofit ever received, making nonprofits in North Carolina effectively exempt from sales tax.

“This was intentional,” said Heinen. “Two years ago when the state legislature was doing tax reform, one of the big issues between the House and Senate plans was the house didn’t want to tax nonprofits.” The very high cap on sales tax refunds was the compromise the two branches came up with.

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The NonProfit Times
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