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Cemeteries Owned by a "Fraternal Organization"

The North Carolina Cemetery Act regulates cemeteries and the cemetery industry in North Carolina. The Cemetery Act states, “Any cemetery beneficially owned and operated by a fraternal organization or its corporate agent for at least 50 years prior to September 1, 1975, shall be exempt from the provisions of Article 9 of this Chapter.” NC Gen. Stat. § 65-47(b). However, the Cemetery Act does not define “fraternal organization,” and this lack of clarity raises questions about the types of organizations that are exempt from the Act.

The Cemetery Act was enacted in 1975. Before 1975 “fraternal organization” was only used three times in North Carolina session laws, and none of these laws defined the term. The IRS grants fraternal organizations tax-exempt status under IRC 501(c)(8) and IRC 501(c)(10). IRC 501(c)(8) is a classification for organizations with a fraternal purpose, that operate under a lodge system, and that provide for the payment of life, sick, accident, or other benefits. IRC 501(c)(10) is a classification for organizations that operate under a lodge system and devote their net earnings exclusively to religious, charitable, scientific, literary, educational, and fraternal purposes, but do not provide for the payment of life, sick, accident, or other benefits. For example, Freemasons have a 501(c)(10) status.

Some fraternal organizations, like Odd Fellows, own and operate cemeteries. Some, like Woodmen of the World, provide insurance and benefits to members. Others, like the Freemasons, have no involvement in the cemetery industry. Under the Cemetery Act, a cemetery owned and operated by a fraternal organization prior to September 1, 1925 has to comply with the regulations, but, because “fraternal organization” is not defined, does this apply to fraternities as they are described in the IRC? It is also possible and reasonable to assume that it applies to other organizations that call themselves fraternities, but that do not fit inside the parameters defined by the IRS. The North Carolina General Assembly should amend the statute to provide clarity. 

Brandon Heffinger

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