North Carolina does not exempt nonprofit organizations from payment of sales and use tax on items they purchase for use. However, a nonprofit organization can file for refunds of sales and use tax paid on direct purchases of tangible personal property for use in carrying on their nonprofit work twice a year.
The NC Department of Revenue must determine if your organization is eligible for sales and use tax refunds prior to your organization filing these returns. To request eligibility, your organization should furnish the Department with the following information:
- A copy of the organization’s 501(c)(3) letter issued to the organization by the IRS,
- The Federal Employer Identification Number (EIN) issued by the IRS or a statement advising that the organization has not been assigned an EIN,
- The organization’s National Taxonomy of Exempt Entities (NTEE) code issued by the IRS,
- If the organization is incorporated, it should furnish a complete copy of its Articles of Incorporation and its Bylaws. If the organization is not incorporated, it should furnish a copy of its Bylaws, Constitution, or other organizational documents.
This information should be mailed, along with a cover letter describing the organization’s request to be eligible for sales and use tax refunds, to the following address:
North Carolina Department of Revenue
PO Box 25000
Raleigh, NC 27640-0001
If determined eligible, the Department will issue a nine-digit account ID number to include on the refund forms. Claims of refunds are filed semiannually on Form E-585 as follows:
- Claims for refund of taxes paid during the first six months of the calendar year (January 1 through June 30) should be filed by October 15 of that year.
- Claims for refund of taxes paid during the last six months of the year (July 1 through December 31) should be filed by April 15 of the following year.
- Refund claims filed more than three years after the due date will not be accepted.
- If sales tax is paid in more than one county, Form E-536R must be prepared to report total purchases and sales tax by county.
Receipts and invoices do not need to be mailed with the claim form but should be retained in your organization’s records for a period of three years beyond the date the refund claim is filed.
Taxes paid on any of the following items are nonrefundable: Electricity, piped natural gas, telecommunications and ancillary services, video programming, prepaid meal plans, the purchase, lease, or rental of motor vehicles, local occupancy or local prepared food and beverage taxes, scrap tire disposal or white goods disposal taxes, reimbursements for travel expenses, alcoholic beverages, and digital property.
Please contact the Not-for-Profit Niche team at Gilliam Bell Moser LLP for further guidance.