This fall, North Carolina voters will have the opportunity to decide whether six amendments will be made to the North Carolina Constitution. Voters will be asked to decide on constitutional amendments that would:
- Reduce the maximum state income tax rate from 10% to 7%;
The Center recently visited Washington, DC to advocate with our members of Congress on nonprofit issues. These include:
1. Protecting nonprofit nonpartisanship.
3. Universal charitable deduction.
4. 2020 U.S.Census
5. Public Service Loan Forgiveness Program
The Center has submitted comments requesting that the U.S. Department of Treasury and the Internal Revenue Service delay implementation of the changes to unrelated business income tax from the Tax Cuts and Jobs Act.
New Tax on Transportation and Parking Benefits is Problematic for Nonprofits
An under-the-radar provision in the Tax Cuts and Jobs Act that was passed and signed into law in December 2017 imposes a new tax on nonprofits that provide transportation and parking benefits to their employees. Nonprofits that provide these benefits to their employees are now required to pay unrelated business income tax (UBIT) on these expenses and must file Form 990-T with the IRS.
Now that the U.S. Senate has passed tax reform plan (see details below), House and Senate leaders are negotiating a final version of the bill that they hope to send to the President for his signature as soon as this Friday. While both the House and Senate plans include a variety of tax changes that are problematic for nonprofits (plus a few small changes that might benefit nonprofits), there is a big difference between the two plans.
This fall, Congress is in the process of rewriting the Internal Revenue Code with the dual goals of lowering individual and corporate income tax rates and simplifying our nation's tax laws. This tax overhaul has major implications for all 501(c)(3) nonprofits. Among other things, the tax reform proposals could reduce charitable giving, politicize 501(c)(3) nonprofits, eliminate financing options for nonprofits, and create new taxes on certain nonprofit activities.
Income Tax Cap Could Mean Unintended Burdens for Nonprofits
Charitable nonprofits across North Carolina are concerned that the proposed constitutional amendment to cap the state’s income tax rate at 5.5% (S.817) could have unintended consequences for nonprofits that provide essential services in every community in our state. If the 5.5% income tax cap passed as a constitutional amendment, it would likely lead to new taxes, fewer private contributions, and increased burdens on charitable nonprofits.
The N.C. General Assembly is considering a bill (H.B. 482) that would create new penalties for nonprofits and businesses that improperly classify their workers as independent contractors rather than employees. Nonprofits that misclassify their employees and fail to provide benefits such as workers’ compensation or unemployment insurance benefits could face fines ($1,000 per misclassified worker) and could be barred from state contracts for five years.