The Firm has a long history of forming and assisting nonprofit organizations in obtaining tax exempt status recognized by the Internal Revenue Service. As such, these entities are exempt from paying taxes on their income and contributions to these organizations are tax deductible to the donors. This tax exempt status gives these clients an advantage in raising funds and sheltering those funds from tax collectors.
Many nonprofit organizations are entitled to a semi-annual refund of sales and use taxes paid, if they meet certain guidelines. For example, in North Carolina, a nonprofit entity is allowed a semiannual refund of sales and use taxes paid by it on direct purchases of tangible personal property and services 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 Firm has been successful in obtaining a private letter ruling providing that a limited liability company affiliate owned by a non-profit organization, which in turn, is owned by a public housing authority, will be entitled to a semi-annual sales tax refund for the purchase of building materials used to construct an apartment complex, a significant savings for the project.
Because we represent several public bodies, we are required to render opinions on the tax status of land owned, leased, or sold by them on a routine basis. The tax exempt status of real property owned by most public bodies is a matter of state constitution. However, some public bodies such as public housing authorities form affiliate entities to pursue affordable housing development opportunities and the properties owned by these affiliates may also qualify for tax exempt status based upon their affiliation with the public housing authority or other statutory precedents if the project will be actually and exclusively occupied and used for charitable purposes, and the project will be owned by a nonprofit organization.