Tax Policy

Take action on tax reform

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.

Worker Misclassification and 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.

Nonprofits and tax reform

The General Assembly is in the final stages of its efforts to restructure North Carolina's tax system.  The House and Senate are considering different version of legislation (H.B. 998) to lower tax rates and simplify the state tax system. It is essential that tax reform not harm nonprofits. Specifically:

Nonprofit Tax Exemption Talking Points

Why Is Nonprofit Tax Exemption Essential for North Carolina?

1. It protects taxpayers.

  • Nonprofits provide essential services that government would have to provide otherwise. Tax exemption costs much less than the cost of government having to provide the services itself.
  • Nonprofits provide public benefits in exchange for tax exemption.
  • Organizations may choose not to locate in counties or states that do not grant tax exemption. This is a potential loss for the people and economy in those locations.

Federal Tax Reform

 

As Congress considers major tax reform in 2017, it is likely to revisit tax incentives for charitable giving. The Center recently sent a letter to all of North Carolina's members of Congress encouraging them to preserve or expand incentives for charitable giving as they contemplate tax reform this year.