North Carolina 2025-2026 Regular Session

North Carolina Senate Bill S62 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1	1		GENERAL ASSEMBLY OF NORTH CAROLINA
2	2		SESSION 2025
3		-	S 1
4		-	SENATE BILL 62
	3	+	S D
	4	+	SENATE BILL DRS35020-MCf-39
	5	+
5	6
6	7
7	8		Short Title: Nonprofit Fundraising Sales Tax Exemption. (Public)
8	9		Sponsors: Senator Burgin (Primary Sponsor).
9		-	Referred to: ~~Rules and Operations of the Senate~~
10		-	~~February 10, 2025~~
11		-	~~S62-v-1~~
	10	+	Referred to:
	11	+
	12	+	DRS35020 -MCf-39
12	13		A BILL TO BE ENTITLED 1
13	14		AN ACT TO PROVIDE A SALES TAX EXEMPTION FOR CERTAIN NONPROFIT 2
14	15		ENTITIES AND TO EXEMPT CERTAIN FUNDRAISING EVENTS BY NONPROFITS 3
15	16		FROM SALES TAX. 4
16	17		The General Assembly of North Carolina enacts: 5
17	18		SECTION 1. G.S. 105-164.14(b) is repealed. 6
18	19		SECTION 2. G.S. 105-164.13 reads as rewritten: 7
19	20		"§ 105-164.13. Retail sales and use tax. 8
20	21		The sale at retail and the use, storage, or consumption in this State of the following tangible 9
21	22		personal property, digital property, and services are specifically exempted from the tax imposed 10
22	23		by this Article: 11
23	24		… 12
24	25		(52a) Tangible personal property, digital property, and services for use in carrying 13
25	26		on the work of the following entities, provided the entity is not owned or 14
26	27		controlled by the State: 15
27	28		a. Hospitals not operated for profit, including hospitals and medical 16
28	29		accommodations operated by an authority or other public hospital 17
29	30		described in Article 2 of Chapter 131E of the General Statutes. 18
30	31		b. An organization that is exempt from income tax under section 19
31	32		501(c)(3) of the Code and not classified in the National Taxonomy of 20
32	33		Exempt Entities major group areas of (i) Community Improvement 21
33	34		and Capacity Building, (ii) Public and Societal Benefit, or (iii) Mutual 22
34	35		and Membership Benefit. 23
35	36		c. Volunteer fire departments and volunteer emergency medical services 24
36	37		squads that are (i) exempt from income tax under the Code, (ii) 25
37	38		financially accountable to a city as defined in G.S. 160A-1, a county, 26
38	39		or a group of cities and counties, or (iii) both. 27
39	40		d. An organization that is a single member LLC that is disregarded for 28
40	41		income tax purposes and satisfies all of the following conditions: 29
41	42		1. The owner of the LLC is an organization that is exempt from 30
42	43		income tax under section 501(c)(3) of the Code. 31
43	44		2. The LLC is a nonprofit entity that would be eligible for an 32
44	45		exemption under section 501(c)(3) of the Code if it were not 33
45	46		disregarded for income tax purposes. 34
46	47		3. The LLC is not an organization that would be properly 35
47		-	classified in any of the major group areas of the National 36 General Assembly Of North Carolina Session 2025
48		-	Page 2 Senate Bill 62-First Edition
	48	+	classified in any of the major group areas of the National 36
	49	+	FILED SENATE
	50	+	Feb 6, 2025
	51	+	S.B. 62
	52	+	PRINCIPAL CLERK General Assembly Of North Carolina Session 2025
	53	+	Page 2 DRS35020-MCf-39
49	54		Taxonomy of Exempt Entities listed in sub-subdivision b. of 1
50	55		this subdivision. 2
51	56		e. Qualified retirement facilities whose property is excluded from 3
52	57		property tax under G.S. 105-278.6A. 4
53	58		f. A university-affiliated nonprofit organization that procures, designs, 5
54	59		constructs, or provides facilities to, or for use by, a constituent 6
55	60		institution of The University of North Carolina. For purposes of this 7
56	61		sub-subdivision, a nonprofit organization includes an entity exempt 8
57	62		from taxation as a disregarded entity of the nonprofit organization. 9
58	63		g. Over-the-counter drugs purchased for use in carrying out the work of 10
59	64		a hospital not listed in one of the sub-subdivisions of this subdivision. 11
60	65		The exemption provided in this subdivision includes indirect sales to a 12
61	66		nonprofit entity of digital property and tangible personal property purchased 13
62	67		by a real property contractor that becomes a part of or permanently installed 14
63	68		or applied to any building or structure that is owned or leased by the nonprofit 15
64	69		entity and is being erected, altered, or repaired for use by the nonprofit entity 16
65	70		for carrying on its nonprofit activities. A sale to fulfill a real property contract 17
66	71		with an entity that holds an exemption certificate is exempt to the same extent 18
67	72		as if purchased directly by the entity that holds the exemption certificate. A 19
68	73		real property contractor that purchases an item allowed an exemption under 20
69	74		this subdivision must provide (i) an exemption certificate to the retailer that 21
70	75		includes the name of the nonprofit entity holding the exemption certificate, 22
71	76		(ii) the exemption certificate number issued to that holder, and (iii) the 23
72	77		information required pursuant to G.S. 105-164.28. 24
73	78		The exemption provided in this subdivision does not apply to (i) purchases 25
74	79		of electricity, telecommunications service, ancillary service, piped natural gas, 26
75	80		video programming, a prepaid meal plan, aviation gasoline and jet fuel, and 27
76	81		spirituous liquor or (ii) sales and use tax liability indirectly paid by a nonprofit 28
77	82		entity through reimbursement to an authorized person of the entity for tax 29
78	83		incurred by the person on an item or transaction subject to tax under Article 5 30
79	84		of this Chapter. 31
80	85		The aggregate annual exemption amount allowed to an entity under this 32
81	86		subdivision for a fiscal year may not exceed thirty-one million seven hundred 33
82	87		thousand dollars ($31,700,000) in tax. A real property contractor who pays 34
83	88		local sales and use taxes on property qualifying for an exemption under this 35
84	89		subdivision on behalf of an entity shall give the entity for whose project the 36
85	90		property was purchased a signed statement containing (i) the date the property 37
86	91		was purchased, (ii) the type of property purchased, (iii) the project for which 38
87	92		the property was used, (iv) if the property was purchased in this State, the 39
88	93		county in which it was purchased, and (v) if the property was not purchased 40
89	94		in this State, the county in which the property was used. If the property was 41
90	95		purchased in this State, the real property contractor shall attach a copy of the 42
91	96		sales or purchase receipt to the statement. 43
92	97		…." 44
93	98		SECTION 3. Article 5 of Chapter 105 of the General Statutes is amended by adding 45
94	99		a new section to read: 46
95	100		"§ 105-164.29C. Nonprofit entity exemption process. 47
96	101		(a) Application. – To be eligible for the exemption provided in G.S. 105-164.13(52a), a 48
97	102		nonprofit entity must obtain from the Department a sales tax exemption number. The application 49
98	103		for exemption must be in the form required by the Secretary, be signed by a person with authority 50 General Assembly Of North Carolina Session 2025
99		-	~~Senate Bill 62-First Edition~~ Page 3
	104	+	DRS35020-MCf-39 Page 3
100	105		to bind the entity, and contain any information required by the Secretary. The Secretary must 1
101	106		assign a sales tax exemption number to a nonprofit entity that submits a proper application. 2
102	107		(b) Liability. – A nonprofit entity that does not use the items purchased with its exemption 3
103	108		number must pay the tax that should have been paid on the items purchased, plus interest 4
104	109		calculated from the date the tax would otherwise have been paid." 5
105	110		SECTION 4. G.S. 105-467(b) reads as rewritten: 6
106	111		"(b) Exemptions and Refunds. – The State exemptions and exclusions contained in Article 7
107	112		5 of Subchapter I of this Chapter, except for the exemption for food in G.S. 105-164.13B, apply 8
108	113		to the local sales and use tax authorized to be levied and imposed under this Article. The State 9
109	114		refund provisions contained in G.S. 105-164.14 and G.S. 105-164.14A apply to the local sales 10
110	115		and use tax authorized to be levied and imposed under this Article. A refund of an excessive or 11
111	116		erroneous State sales tax collection allowed under G.S. 105-164.11 and a refund of State sales 12
112	117		tax paid on a rescinded sale or cancelled service contract under G.S. 105-164.11A apply to the 13
113	118		local sales and use tax authorized to be levied and imposed under this Article. The aggregate 14
114	119		annual local refund exemption amount allowed an entity under G.S. 105-164.14(b) 15
115	120		G.S. 105-164.13(52a) for the State's fiscal year may not exceed thirteen million three hundred 16
116	121		thousand dollars ($13,300,000). 17
117	122		Except as provided in this subsection, a taxing county may not allow an exemption, exclusion, 18
118	123		or refund that is not allowed under the State sales and use tax. A local school administrative unit 19
119	124		and a joint agency created by interlocal agreement among local school administrative units 20
120	125		pursuant to G.S. 160A-462 to jointly purchase food service-related materials, supplies, and 21
121	126		equipment on their behalf is allowed an annual refund of sales and use taxes paid by it under this 22
122	127		Article on direct purchases of tangible personal property and services. Sales and use tax liability 23
123	128		indirectly incurred by the entity as part of a real property contract for real property that is owned 24
124	129		or leased by the entity and is a capital improvement for use by the entity is considered a sales or 25
125	130		use tax liability incurred on direct purchases by the entity for the purpose of this subsection. The 26
126	131		refund allowed under this subsection does not apply to purchases of electricity, 27
127	132		telecommunications service, ancillary service, piped natural gas, video programming, or a 28
128	133		prepaid meal plan. A request for a refund is due in the same time and manner as provided in 29
129	134		G.S. 105-164.14(c). Refunds applied for more than three years after the due date are barred." 30
130	135		SECTION 5. G.S. 105-236(a)(5a) reads as rewritten: 31
131	136		"(5a) Misuse of Exemption Certificate or Affidavit of Capital Improvement. – For 32
132	137		misuse of an exemption certificate or affidavit of capital improvement by a 33
133	138		purchaser, the Secretary shall assess a penalty equal to two hundred fifty 34
134	139		dollars ($250.00). An exemption certificate is a certificate issued by the 35
135	140		Secretary that authorizes a retailer to sell an item to the holder of the certificate 36
136	141		and either collect tax at a preferential rate or not collect tax on the sale. 37
137	142		Examples of an exemption certificate include a certificate of exemption, a 38
138	143		direct pay certificate, and a conditional exemption certificate. Misuse under 39
139	144		this subdivision includes improper use of a certificate of exemption issued to 40
140	145		a nonprofit entity pursuant to G.S. 105-164.29C for direct and indirect 41
141	146		purchases by the entity or another person. An affidavit of capital improvement 42
142	147		substantiates that a contract, or a portion of work to be performed to fulfill a 43
143	148		contract, is to be taxed for sales and use tax purposes as a real property 44
144	149		contract." 45
145	150		SECTION 6. G.S. 105-164.4G(e) reads as rewritten: 46
146	151		"(e) Exceptions. – The tax imposed by this section does not apply to the following: 47
147	152		… 48
148	153		(2) Tuition, registration fees, or charges to attend instructional seminars, 49
149	154		conferences, or workshops for educational purposes, notwithstanding that 50 General Assembly Of North Carolina Session 2025
150		-	Page 4 ~~Senate Bill 62-First Edition~~
	155	+	Page 4 DRS35020-MCf-39
151	156		entertainment activity may be offered as an ancillary purpose of an event listed 1
152	157		in this subdivision. 2
153	158		(2a) Events held by a nonprofit entity exempt from tax under Article 4 of this 3
154	159		Chapter solely for fundraising purposes for the entity, notwithstanding that 4
155	160		entertainment activity may be offered as an ancillary purpose of the event. 5
156	161		…." 6
157	162		SECTION 7. Sections 1 through 5 of this act become effective October 1, 2025, and 7
158	163		apply to sales and purchases made on or after that date. Section 6 of this act becomes effective 8
159	164		July 1, 2025, and applies to admission charges for entertainment activities held on or after that 9
160	165		date. The remainder of this act is effective when it becomes law. This act does not affect the 10
161	166		rights or liabilities of the State, a taxpayer, or another person arising under a statute amended or 11
162	167		repealed by this act before the effective date of its amendment or repeal, nor does it affect the 12
163	168		right to any refund or credit of a tax that accrued under the amended or repealed statute before 13
164	169		the effective date of its amendment or repeal. 14