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.
