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April 06, 2015

N.C. Lawmakers Consider Slashing Nonprofits' Sales-Tax Break

The North Carolina Senate is weighing legislation that would reduce the amount of sales tax nonprofits can annually recoup from the state from tens of millions of dollars to tens of thousands, The Times-News of Burlington, N.C., reports. Under current law nonprofits can be refunded up to $31.7 million a year in state sales-tax payments; Senate Bill 700 would set the cap at $70,370 and also dramatically cut refunds for local sales taxes.

The measure would primarily affect nonprofit hospitals, which Sen. Andy Wells, the bill's sponsor, said accounted for 80 percent of the $285 million in refund applications in the 2013 fiscal year. He said the bill would help local governments offset the loss of tax revenue from other sources and would not affect small charities and churches. 

North Carolina Independent Colleges and Universities, the North Carolina Hospital Association, and other nonprofit umbrella groups are also gearing up to fight the proposal. Lawmakers capped the previously unlimited refunds in 2013, but under pressure from nonprofits they set the maximum "so high it did not affect anybody," Mr. Wells said.