A BILL TO BE ENTITLED
AN ACT to cap the sales tax refunds allowed to nonprofit entities and to reinstate the sales and use tax refund for local school administrative units.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 105‑164.14(b) reads as rewritten:
"(b)	Nonprofit Entities and Hospital Drugs. – A nonprofit entity is allowed a semiannual refund of sales and use taxes paid by it under this Article on direct purchases of tangible personal property and services, other than electricity, telecommunications service, and ancillary service, for use in carrying on the work of the nonprofit entity. Sales and use tax liability indirectly incurred by a nonprofit entity on building materials, supplies, fixtures, and equipment that become a part of or annexed to any building or structure that is owned or leased by the nonprofit entity and is being erected, altered, or repaired for use by the nonprofit entity for carrying on its nonprofit activities is considered a sales or use tax liability incurred on direct purchases by the nonprofit entity. The amount of a refund allowed to a claimant under this subsection for a 12‑month period is one hundred percent (100%) of the first one million dollars ($1,000,000) requested and twenty‑five percent (25%) of the amount requested that exceeds one million dollars ($1,000,000). A request for a refund must be in writing and must include any information and documentation required by the Secretary. A request for a refund for the first six months of a calendar year is due the following October 15; a request for a refund for the second six months of a calendar year is due the following April 15.
The refunds allowed under this subsection do not apply to an entity that is owned and controlled by the United States or to an entity that is owned or controlled by the State and is not listed in this subsection. A hospital that is not listed in this subsection is allowed a semiannual refund of sales and use taxes paid by it on medicines and drugs purchased for use in carrying out its work. The following nonprofit entities are allowed a refund under this subsection:
(1)	Hospitals not operated for profit, including hospitals and medical accommodations operated by an authority or other public hospital described in Article 2 of Chapter 131E of the General Statutes.
(2)	An organization that is exempt from income tax under section 501(c)(3) of the Code, other than an organization that is properly classified in any of the following major group areas of the National Taxonomy of Exempt Entities:
a.	Community Improvement and Capacity Building.
b.	Public and Societal Benefit.
c.	Mutual and Membership Benefit.
(2a)	An organization that is exempt from income tax under the Code and is one of the following:
a.	A volunteer fire department.
b.	A volunteer emergency medical services squad.
(3)	Repealed by Session Laws 2008‑107, s. 28.22(a), effective July 1, 2008, and applicable to purchases made on or after that date.
(4)	Qualified retirement facilities whose property is excluded from property tax under G.S. 105‑278.6A.
(5)	A university affiliated nonprofit organization that procures, designs, constructs, or provides facilities to, or for use by, a constituent institution of The University of North Carolina. For purposes of this subdivision, a nonprofit organization includes an entity exempt from taxation as a disregarded entity of the nonprofit organization."
SECTION 2.1.  G.S. 105‑164.14(c)(2b) and (2c), repealed by Section 7.51(a) of S.L. 2005‑276, are reenacted.
SECTION 2.2.  G.S. 105‑164.44H is repealed.
SECTION 2.3.  G.S. 105‑467(b) reads as rewritten:
"(b)	Exemptions and Refunds. – The State exemptions and exclusions contained in G.S. 105‑164.13, the State sales and use tax holidays contained in G.S. 105‑164.13C and G.S. 105‑164.13D, and the State refund provisions contained in G.S. 105‑164.14 through G.S. 105‑164.14B apply to the local sales and use tax authorized to be levied and imposed under this Article. A taxing county may not allow an exemption, exclusion, or refund that is not allowed under the State sales and use tax. "
SECTION 3.  Section 1 of this act becomes effective July 1, 2011, and applies to sales and use taxes paid on or after that date.  The remainder of this act becomes effective July 1, 2011, and applies to purchases made on or after that date.