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North Carolina Nonprofit Denied Property Tax Exemption

Ruling that some commercial activities on a Western North Carolina nonprofit’s property are not used completely for charitable or educational reasons, the North Carolina Court of Appeals (“the Court”) has denied the organization a property tax exemption. Basing its decision on a strict interpretation of the term “wholly and exclusively,” the Court identified gift shop and restaurant operations, and the existence of administrative offices are considered commercial activities not suitable for property tax exemption among nonprofits.

The Court’s broad application of the “wholly and exclusively” term to all nonprofit property tax exemptions reflects concerns expressed by North Carolina nonprofits, as such organizations partake in commercial activities to balance mission-related operation expenses. Meanwhile, the North Carolina Center for Nonprofits is considering whether nonprofits should dispute the Court’s ruling.

Regardless of your nonprofit’s mission, Cherry Bekaert is dedicated to providing accounting and consulting services to your organization.

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