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Bill Summary · SB 62

SB 62 — Nonprofit Fundraising Sales Tax Exemption (Summary)

Status: Passed 1st Reading (bill filed)
Introduced: (per legislative file) February 2025; (user note) Aug 4, 2025
Subject areas: Charitable donations; Commerce; Nonprofit corporations; Retailing; Tax exemptions; Sales & use tax

Main purpose

SB 62 creates a targeted sales-and-use tax exemption and an administrative process for certain nonprofit organizations and related entities. It is aimed at exempting tangible personal property, digital property, and services “used in carrying on the work” of eligible nonprofits, and streamlining how those entities document and claim the exemption.

Key provisions

  • Adds new subdivision (52a) to G.S. 105‑164.13 specifying exempt purchases for eligible nonprofit entities, including:
    • Not‑for‑profit hospitals (including certain public hospital authorities);
    • Organizations exempt under Internal Revenue Code §501(c)(3) but excluded if classified in certain National Taxonomy of Exempt Entities major groups (Community Improvement & Capacity Building; Public & Societal Benefit; Mutual & Membership Benefit);
    • Volunteer fire departments and volunteer EMS squads meeting defined accountability tests;
    • Single‑member LLCs disregarded for tax purposes whose owner is a §501(c)(3) organization and that would qualify as a §501(c)(3) nonprofit;
    • Qualified retirement facilities (with property excluded under G.S. 105‑278.6A);
    • University‑affiliated nonprofit organizations that procure or provide facilities for UNC constituent institutions;
    • Over‑the‑counter drugs purchased for a qualifying hospital’s work.
  • Clarifies exemption applies to indirect purchases by real property contractors when property becomes permanently installed in buildings owned/leased by an eligible nonprofit; requires contractors to present the nonprofit’s exemption certificate to the retailer and to furnish project purchase documentation to the nonprofit.
  • Explicit exclusions: purchases of electricity, telecommunications, ancillary services, piped natural gas, video programming, prepaid meal plans, aviation gasoline/jet fuel, and spirituous liquor are not eligible for this exemption.
  • Annual caps/limits:
    • Aggregate annual state exemption amount for entities under (52a) is capped at $31,700,000 in tax (State fiscal year).
    • Aggregate annual local refund/exemption amount (for the same category) is capped at $13,300,000.
  • New administrative process (G.S. 105‑164.29C):
    • Eligible nonprofits must apply to the Department of Revenue for a sales tax exemption number (form and signature requirements).
    • If a nonprofit purchases items with an exemption number but does not use the items for eligible nonprofit purposes, the nonprofit is liable for the unpaid tax plus interest (enforcement/recapture mechanism).
  • Repeals G.S. 105‑164.14(b) (related to previous refund rules — bill replaces/refines refund/exemption approach).

Who is affected

  • Primary beneficiaries: the listed categories of nonprofit organizations (hospitals, many §501(c)(3) charities, volunteer fire/EMS, qualifying single‑member LLCs, university-affiliated nonprofits, qualified retirement facilities).
  • Secondary impacts: retailers, real property contractors (compliance, recordkeeping), county and municipal governments (local sales tax refund exposure), and the Department of Revenue (administration and issuance of exemption numbers).
  • Excluded: organizations classified in certain National Taxonomy major group areas are specifically not covered.

Fiscal and administrative impact

  • The bill limits state and local revenue exposure via the stated annual caps ($31.7M state; $13.3M local).
  • The Department of Revenue will need to administer exemption numbers and may face modest administrative workload and compliance oversight.
  • Real property contractors and retailers must adopt documentation practices (contractor statements, retention of receipts) to substantiate exemptions.

Procedural/implementation notes

  • The bill establishes an application/numbering system; compliance records (exemption numbers, contractor statements, receipts) are required to substantiate exempt purchases.
  • Misuse triggers tax plus interest liability for the nonprofit.
  • The bill’s effective date and any phased implementation are not specified in the excerpt; current procedural status is “passed first reading” and it will require further committee consideration and final enactment to take effect.

Bottom line

SB 62 narrows and formalizes sales tax relief for specific nonprofit categories, replaces prior refund mechanics with an exemption‑number system, and places annual fiscal caps on the total exemption. It reduces tax costs for qualifying nonprofit operations while creating new administrative responsibilities for the Department of Revenue, contractors, and nonprofits to document proper use.

Compiled from official sources — confirm details with the bill’s official record.

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