Tuesday, January 22, 2013

Civitas proposes taxing churches and orphanages

Churches, orphanages, and other charities currently don't have to worry about the tax man in North Carolina. They aren't charged income or corporate taxes; they can avoid sales and use taxes by claiming refunds, and certain sales by the organizations are exempt from sales tax.

However, these institutions will have to worry if the John W. Pope Civitas Institute succeeds in its proposal to raise and expand NC's sales tax.

Civitas calls for "repealing current exemptions, preferential rates, and refunds" for the sales tax. The current NC tax code allows for several refunds; the refunds and their estimated FY 2012 values are shown in the table below. The biggest refund category is for non-profit organizations, including "churches, orphanages and other charitable or religious institutions."


Sales and Use Tax Refunds in North Carolina


Category
Description (quoted from NC DOR report)
FY 2012 value



Non-profits
Refunds for sales taxes paid on purchases, other than electricity and telecommunications, for use in carrying on the work of the nonprofit and indirect purchases of building materials. The refund is only for nonprofits in the following categories: (1) hospitals, (2) educational institutions, (3) churches, orphanages and other charitable or religious institutions, (4) qualified retirement facilities, (5) volunteer fire departments and volunteer emergency medical service squads.
$228.2 million
Certain local government entities
Refunds for sales taxes paid on purchases, other than electricity and telecommunications, by certain local governmental entities and indirect purchases of building materials for use by those entities.
$85.7 million
Passenger air carriers
An interstate passenger air carrier is allowed a refund of the sales and use tax paid by it on fuel in excess of $2.5 million.
$6.0 million
Interstate carriers
An interstate carrier is allowed a refund of part of the sales and use taxes paid on the purchase in this State of railway cars and locomotives, and fuel, lubricants, repair parts, and accessories for a motor vehicle, railroad car, locomotive, or airplane the carrier operates.
$5.3 million
Professional motor racing vehicle parts
A professional motorsports racing team may receive a refund of 50% of the sales tax paid on certain tangible personal property that comprises any part of a professional motor racing vehicle, except tires, instrumentation, telemetry, consumables and paint. Expires in 2014.
$0.3 million
Major recycling facilities
The owner of a major recycling facility is allowed an annual refund of sales and use taxes paid by it on building materials, building supplies, fixtures, and equipment that became a part of the real property of the recycling facility.
$0.3 million
Businesses in low-tier areas
A taxpayer that is engaged primarily in one of the businesses listed in G.S. 105-129.83(a) in a development tier one area and that places machinery and equipment in service in that area is allowed a refund of the sales and use tax paid by it on the machinery and equipment.
$0.2 million
Railroad intermodal facilities
The owner or lessee of an eligible railroad intermodal facility is allowed an annual refund of sales and use taxes paid by it under this Article on building materials, building supplies, fixtures, and equipment that become a part of the real property of the facility.
$0.2 million
Railway cars & accessories for utilities (partial)
A utility company may receive a semiannual refund of part of the sales and use taxes it pays on the purchase in this State of railway cars and locomotives and accessories.
not available





Source: NC Department of Revenue. List excludes refunds that expired on Jan. 1, 2013.


In FY 2012, refunds allowed non-profits to avoid $228.2 million in sales and use taxes. Under the Civitas proposal, non-profits would owe this plus the higher sales tax on these same items plus sales taxes on additional items and services.

Civitas would also tax church meals and annual sales by non-profits.

Civitas' previous far-reaching searches for anti-religious affronts have led it to huff and puff about a library's refusal to put up Christmas trees, a school system that tried to change the name of Easter Eggs, and secularism generally. These affronts, however, would seem to pale in comparison with taking millions of dollars from churches on behalf of Mammon.

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