North Carolina SB 860: Nonprofit Fundraising Sales Tax Exemption.

Bill Text

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 860

Short Title: Nonprofit Fundraising Sales Tax Exemption. (Public)
Sponsors: Senators Burgin, Corbin, and McInnis (Primary Sponsors).
Referred to: Rules and Operations of the Senate
April 29, 2026
*S860-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO PROVIDE A SALES TAX EXEMPTION FOR CERTAIN NONPROFIT 2
ENTITIES, TO EXEMPT CERTAIN FUNDRAISING EVENTS BY NONPROFITS FROM 3
SALES TAX, TO EXEMPT DIAPERS FROM SALES TAX, AND TO MODIFY THE 4
OWNERSHIP REQUIREMENTS OF REAL AND PERSONAL PROPERTY USED FOR 5
CHARITABLE PURPOSES. 6
The General Assembly of North Carolina enacts: 7
SECTION 1. G.S. 105-164.14(b) is repealed. 8
SECTION 2. G.S. 105-164.13 reads as rewritten: 9
"§ 105-164.13. Retail sales and use tax. 10
The sale at retail and the use, storage, or consumption in this State of the following tangible 11
personal property, digital property, and services are specifically exempted from the tax imposed 12
by this Article: 13
... 14
(13d) Sales of diapers or incontinence underpads on prescription by an enrolled 15
State Medicaid provider for use by beneficiaries of the State Medicaid 16
program when the provider is reimbursed by the State Medicaid program or a 17
Medicaid managed care organization, as defined in 42 U.S.C. § 18
1396b(m).underpads. 19
... 20
(52a) Tangible personal property, digital property, and services for use in carrying 21
on the work of the following entities, provided the entity is not owned or 22
controlled by the State: 23
a. Hospitals not operated for profit, including hospitals and medical 24
accommodations operated by an authority or other public hospital 25
described in Article 2 of Chapter 131E of the General Statutes. 26
b. An organization that is exempt from income tax under section 27
501(c)(3) of the Code and not classified in the National Taxonomy of 28
Exempt Entities major group areas of (i) Community Improvement 29
and Capacity Building, (ii) Public and Societal Benefit, or (iii) Mutual 30
and Membership Benefit. 31
c. Volunteer fire departments and volunteer emergency medical services 32
squads that are (i) exempt from income tax under the Code, (ii) 33
financially accountable to a city, as defined in G.S. 160A-1, a county, 34
or a group of cities and counties, or (iii) both. 35

General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 860-First Edition
d. An organization that is a single member LLC that is disregarded for 1
income tax purposes and satisfies all of the following conditions: 2
1. The owner of the LLC is an organization that is exempt from 3
income tax under section 501(c)(3) of the Code. 4
2. The LLC is a nonprofit entity that would be eligible for an 5
exemption under section 501(c)(3) of the Code if it were not 6
disregarded for income tax purposes. 7
3. The LLC is not an organization that would be properly 8
classified in any of the major group areas of the National 9
Taxonomy of Exempt Entities listed in sub-subdivision b. of 10
this subdivision. 11
e. Qualified retirement facilities whose property is excluded from 12
property tax under G.S. 105-278.6A. 13
f. A university-affiliated nonprofit organization that procures, designs, 14
constructs, or provides facilities to, or for use by, a constituent 15
institution of The University of North Carolina. For purposes of this 16
sub-subdivision, a nonprofit organization includes an entity exempt 17
from taxation as a disregarded entity of the nonprofit organization. 18
g. Over-the-counter drugs purchased for use in carrying out the work of 19
a hospital not listed in one of the sub-subdivisions of this subdivision. 20
The exemption provided in this subdivision includes indirect sales to a 21
nonprofit entity of digital property and tangible personal property purchased 22
by a real property contractor that becomes a part of or permanently installed 23
or applied to any building or structure that is owned or leased by the nonprofit 24
entity and is being erected, altered, or repaired for use by the nonprofit entity 25
for carrying on its nonprofit activities. A sale to fulfill a real property contract 26
with an entity that holds an exemption certificate is exempt to the same extent 27
as if purchased directly by the entity that holds the exemption certificate. A 28
real property contractor that purchases an item allowed an exemption under 29
this subdivision must provide (i) an exemption certificate to the retailer that 30
includes the name of the nonprofit entity holding the exemption certificate, 31
(ii) the exemption certificate number issued to that holder, and (iii) the 32
information required pursuant to G.S. 105-164.28. 33
The exemption provided in this subdivision does not apply to (i) purchases 34
of electricity, telecommunications service, ancillary service, piped natural gas, 35
video programming, a prepaid meal plan, aviation gasoline and jet fuel, and 36
spirituous liquor or (ii) sales and use tax liability indirectly paid by a nonprofi