January 16, 2014
Nonprofits in North Carolina are growing concerned about a sales tax expansion that could eat into the revenue of ticket sales for museums, sports games and cultural events. Many of the organizations rely on the income from ticket sales for financial support, so a 7 percent bite could be costly.
"If you were giving $100 worth of tickets for a $100 contribution, then you've got to pay the tax on that or whatever amount that may be," Thalian Hall Center for the Performing Arts Executive Director Tony Rivenbark told North Carolina's NPR affiliate. "You know, we have people that give a $5,000 gift or a $10,000 annual gift, then they may get several hundred dollars worth of tickets for that. But we're going to have to pay 7 percent on that several hundred dollars worth of tickets."
Rivenbark said that he was also concerned about the indirect costs of the tax increase, such as additional bookkeeping.
Nonprofits often struggle with state taxes
Nonprofits may also find themselves taking a hit from state unemployment tax pools. While nonprofits are exempt from federal taxes related to unemployment, they are still responsible for meeting the state obligation. States make the actual payments to unemployed individuals but not all businesses are able to cover their own costs. The pooled contributions mean that even nonprofits with no unemployment turnover still pay into the state system.
While for-profit businesses have no other options than to pay the tax, nonprofits can opt out of state UI pools and become self-reimbursing employers. Under this designation, nonprofits are responsible only for the actual amount of money paid out in claims to former employees. A nonprofit with no claims would have no costs.
However, opting out of the state program can leave nonprofits open to unexpected costs if they suddenly experience a large turnover. To avoid this situation, organizations should take advantage of other options such as a UI savings programs. Saving programs through an experienced provider allow nonprofits the cost savings of opting out with less risk. Once members of the program, organizations have access to claim protection if unemployment spikes.
For information on how your organization can cost-effectively meet its unemployment insurance needs, contact First Nonprofit Companies at FNCUI@firstnonprofit.com or visit www.firstnonprofitcompanies.com.
Ready to chat? Get in touch today to request a no-obligation savings evaluation.
Working with Marshal Whittey at First Nonprofit has been a great experience. He handles our request as a priority and goes above and beyond to resolve any issues we have in a timely manner. Marshall follows through to the end and ensures our needs are met. He has been a great resource for LSC and our “go to” for any tax questions we may have. With LSC transitioning several facilities into one federal tax identification number, First Nonprofit was able to assist and provide guidance with best practices resolving claims to each entity. Additionally First Nonprofit provided knowledge (information materials) and one on one training to HRS group with best practices to handle claims state adjudicated, fraudulent claims, and appeals. And processing information in the First Nonprofit [unemployment claims] system allows for timely information can be collected.
My experience with FNP has been wonderful. Unemployment in general is quite confusing and FNP has simplified the process for us. Everyone we have reached out to or worked with has been very helpful and follows up to be sure we understand the information. I am so happy we made the switch to FNP!
First Nonprofit smoothed the unemployment perils for our organization during Covid. Without the ability to cap our UI exposure, we would not have been able to weather the storm. The program worked perfectly and we have come out of the pandemic ready to forge on. Thanks FNP!
My experience with the FNP has been fantastic. The idea of setting funds aside for the unemployment tax liability is a bedrock for nonprofit organizations like mine, namely ASHBA; what is even more advantageous is having the FNP as a custodian of those funds. 100% recommended!
I would like to comment on my experience with FNP….to date our District has saved $1,000’s of dollars by being enrolled in the First Nonprofit program. My only regret is that we did not know about this method of paying unemployment tax years ago….as I had figured about five years
ago, had we enrolled 15-20 years ago, we could have saved our small school district upwards of $500,000 in payments to IDES. Also we would have had a pretty hefty sum of money in our Reserve Account. Thankfully I attended a workshop hosted by First Nonprofit back in 2015 which got the ball rolling!
I have worked with the First Non-Profit Team for many years, and I appreciate the quick response and care that Cecilia and the team provides anytime I have questions. While there are other providers that may provide like services, First Nonprofit will always be my first choice! I appreciate you!
First Nonprofit has been easy to work with and makes the administrative process easier and smoother. We enjoy working with you.
Luckily for us, our interactions regarding any issues with staffing has been very minimal! I can say that all other interactions with regards to billing, 941 reporting, etc. have been extremely pleasant, accommodating and easy to work with. Kim Ghanayem is always prompt, professional and friendly. Thank you so much!