North Carolina Nonprofits in a Fight for Continued Sales Tax Rebate

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January 13, 2015; Asheville Citizen-Times

North Carolina’s nonprofits are worried about the potential removal of the state sales tax refund they get and are planning ways to deal with the issue, according to the Asheville Citizen-Times.

“We know that even a small amount of additional cost for nonprofits would really take away from their ability to meet needs,” a spokesperson for the North Carolina Center for Nonprofits told the paper.

Nonprofits in the state pay sales taxes but are allowed to apply for a rebate capped at $45 million a year in total. But the legislature is trying to lower taxes while maintaining adequate funding, and is reported to be looking at taxing nonprofits by removing or lowering the rebate.

Organizations with large expense budgets are the most concerned. For example, losing the refund would amount to the financial equivalent of purchasing the land for two Habitat for Humanity houses in Asheville, said the group’s finance director; it usually gets around $50,000 a year from the refund.

The Citizen-Times reports that the controversial proposal was considered in the 2014 legislative session, as the state senate looked at eliminating the tax rebate or capping it at a low level. But a bipartisan effort in the State House resulted in the refund being capped at a higher level, which ended up having virtually no negative impact on the state’s charities.

But now that the cap is written into North Carolina’s tax code, nonprofit advocates are afraid that it will be easy to lower, so they are traveling around the state to make community-based nonprofits aware of the legislative threat and how it might impact fundraising.

“The reality is that a nonprofit is unlikely to get fundraising dollars to pay their taxes,” the Center spokesperson told the paper.—Larry Kaplan