March 31, 2021
Note: The North Carolina Center for Nonprofits typically provides Nonprofit Policy Update each week as a benefit to its nonprofit members. However, to help all North Carolina nonprofits respond to the COVID-19 pandemic, we're temporarily providing this newsletter to non-member nonprofits.
In this issue...
NC Senate bill would exempt most 501(c)(3) nonprofits from paying sales tax
NC Senate bill would exempt nonprofit fundraising events from sales tax 
PPP loan application deadline extended through May 31
New law prevents increase in unemployment costs for some nonprofits 
NC Senate bill would modernize nonprofit remote meeting laws
Two free webinars on COVID-19 vaccinations and returning to in-person operations
Reminder: Many nonprofits eligible for Employee Retention Tax Credit
American Rescue Plan includes COBRA subsidies for nonprofits that lay off staff due to COVID-19
New state legislation would close North Carolina’s healthcare coverage gap
New state legislation could strengthen association health plans in North Carolina
NC General Assembly considers election law changes
NC Senate bill would set good precedent on nonprofit independence
NC Senate Bill Would Exempt Most 501(c)(3) Nonprofits from Paying Sales Tax
A bill (S.441) filed in the NC Senate today would exempt most North Carolina nonprofits from paying sales and use tax when they purchase goods and services. Currently, nonprofits pay sales tax on their purchases and can apply to the NC Department of Revenue for semi-annual refunds of the taxes they pay. This refund process creates unnecessary red tape and cash-flow issues for nonprofits. A point-of-sale exemption from sales tax would fix these problems. The Center appreciates Senator Don Davis (D-Pitt), Senator Jim Burgin (R-Harnett), Senator Julie Mayfield (D-Buncombe), and Senator Mike Woodard (D-Durham) for introducing this bill.
NC Senate Bill Would Exempt Nonprofit Fundraising Events from Sales Tax
A new bill (S.440) filed in the NC Senate today would exempt nonprofits from collecting and remitting sales tax on the ticket price or admission fees from most fundraising events. Under current state law, nonprofits and businesses are required to charge state sales tax on the ticket price or admission fees to entertainment and live events, then pass along the taxes they collect to the NC Department of Revenue. Because this law does not specifically address nonprofit fundraising events, many nonprofits are confused about whether they need to charge sales tax on tickets to these events – or at least the portion of ticket prices that is not tax-deductible as a charitable contribution. Adding sales tax to ticket fees often creates administrative burdens for nonprofits and reduces the amount of revenue from events that goes to nonprofits’ missions. 

To help nonprofits avoid confusion and keep more of the proceeds from their fundraising events, the Center is asking legislators to fix the law to clarify that nonprofits don’t need to charge sales tax on tickets to fundraising events. The Center appreciates Senator Don Davis (D-Pitt), Senator Jim Burgin (R-Harnett), Senator Julie Mayfield (D-Buncombe), and Senator Mike Woodard (D-Durham) for introducing this bill.
PPP Loan Application Deadline Extended through May 31
Yesterday, President Joe Biden signed into law a bill (H.R. 1799) extending the deadline for nonprofits and businesses to apply for Paycheck Protection Program (PPP) loans through May 31 and to allow the Small Business Administration (SBA) to continue to process loan applications through June 30. The deadline had been set for today.
New Law Prevents Increase in Unemployment Costs for Some Nonprofits
Yesterday, Governor Roy Cooper signed into law a bill (S.114) that prevents increases in unemployment insurance (UI) costs for nonprofits and businesses that pay state unemployment tax (SUTA). The bill keeps the base rate for SUTA at 1.9% for 2021. Without this change, the tax rate would have increased to 2.4% tomorrow. Businesses and many nonprofits pay SUTA quarterly. Their tax rate is a combination of the base rate and their experience rating, which is based on the history of UI claims by their employees. Nonprofits that elect to reimburse for UI claims rather than pay SUTA are already protected from charges from COVID-related claims thanks to an executive order from Governor Cooper and state legislation passed last spring.
NC Senate Bill Would Modernize Nonprofit Remote Meeting Laws
A new bill (S.410) introduced in the NC Senate yesterday would make it easier for nonprofits with members to conduct meetings remotely and for nonprofit board members to use email to take action by unanimous written consent. Under current law, nonprofits with members must conduct meetings in person (although this requirement has been temporarily suspended during the COVID-19 pandemic, as described below), and nonprofits need board approval (typically in a provision in the nonprofit’s bylaws) to use email or other means of electronic communication for unanimous written consent votes of boards.

The Center appreciates Senator Amy Galey (R-Alamance), Senator Jim Perry (R-Wayne), Senator Michael Lazzara (R- Onslow), and Senator Julie Mayfield (D-Buncombe) for introducing this bill, which is based on recommendations from the Center. Last week, the NC House of Representatives unanimously approved a similar bill (H.B 320). The Center is working with legislators to ensure that one of these bills becomes law this year.

Throughout the past year, Governor Roy Cooper has issued a series of executive orders giving nonprofit boards the flexibility to allow membership meetings to take place by remote communication and through remote voting during the pandemic, even if these types of remote meetings are not expressly authorized in the nonprofit’s articles of incorporation or bylaws. Governor Cooper’s most recent action – Executive Order No. 198 – extends this temporary authorization through May 10, 2021.
Two Free Webinars on COVID-19 Vaccinations and Returning to In-Person Operations
Next week, the National Council of Nonprofits is offering two free webinars to help nonprofits navigate the COVID-19 pandemic.
  • The first webinar, on Wednesday, April 7 at 3 p.m. will focus on ways that every nonprofit can play a role in helping the communities they serve get vaccinated. The webinar will feature a respected medical expert, a representative from the White House (invited), and three frontline nonprofits (including Vanessa Fields from the Southeastern Halifax Coalition in North Carolina) that are helping people in their communities overcome obstacles of trust in or access to the COVID-19 vaccine. Register today.
  • The second webinar, on Friday, April 9 at 3 p.m. will cover things that nonprofits need to know as staff and volunteers return from remote to in-person operations. The webinar will feature experts in law, volunteerism, and messaging discussing key considerations as nonprofits prepare to return to in-person operations. Register today.
Reminder: Many Nonprofits Eligible for Employee Retention Tax Credit
One of the significant changes in the COVID-19 relief bill that Congress approved in December was the extension and expansion of the Employee Retention Tax Credit (ERTC). The ERTC is a refundable tax credit (translation: nonprofits are eligible for it) that organizations can take if:
  1. They partially or fully shut down operations when pandemic restrictions went into place; or
  2. They had a decline in revenue. For 2020, nonprofits must have had a 50% drop in revenue for any quarter compared to the same quarter in the previous year. For 2021, nonprofits can access the ERTC if they had a 20% drop in revenue. 

Organizations that receive a Paycheck Protection Program (PPP) loan can now also claim ERTC as long as the credits are applied to payroll and operating expenses different from those covered by the PPP loan, and organizations can claim both through the extended December 31, 2021 deadline. Also, the ERTC is now a much larger tax credit, covering up to $7,000 per employee per quarter. The National Council of Nonprofits has an excellent analysis of the ways the ERTC could help nonprofits.
American Rescue Plan Includes COBRA Subsidies for Nonprofits that Lay Off Staff Due to COVID
The American Rescue Plan Act, which President Joe Biden signed into law earlier this month, includes a provision that helps employers – including nonprofits – that have to lay off staff due to COVID provide health insurance premiums under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). The new law provides a refundable tax credit for employers that will subsidize the full cost of COBRA health plans from April 1, 2021 through September 30, 2021. The Internal Revenue Services is required to provide guidance on this new COBRA subsidy by April 10. For more information on other key nonprofit provisions in the American Rescue Plan Act, check out the Center’s blog post.
New State Legislation Would Close North Carolina’s Healthcare Coverage Gap
New bills introduced in the Senate (S.402) yesterday and the House (H.B. 470) today would expand Medicaid coverage to North Carolinians with incomes up to 133% of the federal poverty level, as allowed under the Affordable Care Act (ACA). Medicaid expansion could provide health coverage for about 500,000 North Carolinians who are in the health coverage gap with incomes too high to receive Medicaid but too low to afford health coverage on the ACA exchange. The Center supports Medicaid expansion since it would complement the work of many nonprofits. With ever-rising health care costs, North Carolinians in the coverage gap are turning more and more to nonprofits to meet many of their basic needs, such as health care, food, housing, and childcare.
New State Legislation Could Strengthen Association Health Plans in North Carolina
The bill (S.399) introduced in the NC Senate yesterday would improve a 2019 law that allows nonprofits and businesses to pool together to form association health plans (AHPs) by requiring AHPs to offer certain essential health services such as cancer treatment and mental health services. Currently, AHPs are unavailable in North Carolina because of pending federal litigation. The Center has heard from many nonprofits that are interested in the possibility of a nonprofit AHP. However, some health care advocates are concerned that AHPs could potentially exclude certain types of “high risk” employees or could offer health plans that do not cover essential health benefits. The new Senate bill would address the latter concern.
NC General Assembly Considers Election Law Changes
Yesterday, the NC Senate Elections and Redistricting Committee considered a bill (S.326) that would make a variety of changes to North Carolina elections, including:
  • Requiring North Carolinians to request absentee ballots 14 days prior to Election Day. Currently, voters can request absentee ballots up to a week before an election.
  • Requiring absentee ballots returned by mail to be postmarked by Election Day and to be received by the county board of elections by 5 p.m. three days after Election Day. For the 2020 election, absentee ballots postmarked by Election Day were still valid if they were received within nine days after Election Day.
  • Providing funding to identify North Carolinians who do not currently have photo identifications and to help issue photo IDs to these voters. North Carolina’s photo ID requirement for voting is not currently in effect due to pending state court litigation.

The committee did not vote on the bill, although several committee members expressed concerns that the shorter period for requesting and returning absentee ballots may create barriers for North Carolinians who need to vote by mail. 

A separate (and very different) bill was introduced yesterday in the House (H.B. 446). The House bill would make several changes to election laws, including:
  • Creating a process for automatic voter registration (e.g., for new drivers and for formerly incarcerated felons) and online voter registration;
  • Expanding access to absentee ballots by sending request forms to all registered voters and by requiring just one witness to complete an absentee ballot (currently, two witnesses are required);
  • Allowing counties flexibility in their early voting hours; and
  • Making Election Day a state holiday.

If legislators make changes to election laws, it will be important for nonprofits to provide clear information to their staffs, volunteers, and the people they serve about the latest changes in the voting process in North Carolina.
NC Senate Bill Would Set Good Precedent on Nonprofit Independence
A bill (S.432) filed in the NC Senate yesterday would eliminate public records and open meeting law requirements for the Economic Development Partnership of North Carolina. This bill would set a good precedent for keeping nonprofits independent entities from state government, even if they receive state funding.
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Nonprofit Policy Update is a weekly newsletter for current members of the North Carolina Center for Nonprofits. We track state and federal policy issues that affect all 501(c)(3) nonprofits. Learn about the Center's public policy priorities. For more information, contact David Heinen, Vice President for Public Policy and Advocacy.