What is a Privilege License in North Carolina?
Do you need one?

UPDATE:

The North Carolina 2023-2025 state budget that went into law on October 2, 2023 included the “Repeal State Privilege Tax on Professionals” Section 42.7.(a) G.S. 105-41. This means that on July 1, 2024, most professions including Licensed Clinical Social Workers in private practice no longer need to apply for and pay for the Privilege License tax! The information below is still state law until July 1, 2024.

In the state of North Carolina, any Licensed Clinical Social Worker who goes into business for themselves (private practice) must obtain an annual “privilege” license with the state. The privilege license tax is an annual tax ($50) and is due by July 1 of each year that gives the privilege of going into business/opening a business. The privilege license (NCGS 105-41) is issued by the North Carolina Department of Revenue and not something the North Carolina Social Work Certification and Licensure Board has jurisdiction over and is separate/in addition to a PLLC.

For more information, please read the North Carolina Department of Revenue Bulletin on who is required to obtain a Privilege License: https://www.ncdor.gov/documents/privilege-license-tax-technical-bulletin

“Before a person may engage in a business, trade, or profession for which a license is required, the person must be licensed by the North Carolina Department of Revenue. A license must be displayed conspicuously at the location of the licensed business, trade, or profession. A required license should be applied for using Form B-202A, Application for State Privilege License, and the tax paid before beginning business. Licenses issued under NCGS 105-41 are personal privilege licenses and must be issued in the name of the individual. It shall be unlawful for any person, firm, or corporation without a license to operate in such business, trade, employment, or profession.”

All professions have to obtain this state license if they go into business. Licensed Clinical Social Workers file for their privilege license under the category of “art of healing”. The code number for the application is 432 and the License Description from Table on Instructions is "Art of Healing".

Privilege License Tax Forms and Instructions: https://www.ncdor.gov/taxes-forms/privilege-license-tax/privilege-license-tax-forms-and-instructions

Please read the instructions on how to fill out the form before contacting NASW-NC or NCDOR.

Additional information and clarification about the Privilege License: https://www.naswnc.org/news/568303/Privilege-License-Questions-Answered.htm

Penalties and Back Taxes

Update on 6/10/2021

NASW-NC has succeeded in advocating on behalf of the social work profession! NASW-NC has confirmed with the NCDOR that because the Department has been giving LCSWs who practice independently incorrect information about the Privilege License, the NCDOR has agreed to issue an "abatement of penalty" to any LCSW who has been practicing independently. This means all penalties for not having had the Privilege License will be waived and back taxes will not be owed. Only taxes moving forward will be owed.

Social Workers who do not need a Privilege License

• Licensed Clinical Social Workers who practice for an organization, company or contracted under another taxpayer’s business and are compensated by the company do not need to obtain the Privilege License.
• A License Clinical Social Worker practicing the professional art of healing for a fee or reward and whom is an adherent of an established church or religious organization and confines the healing practice to prayer or spiritual means (G.S. 105-41(b)) does not need to obtain the Privilege License.
• Any social worker providing social work services for a fee but not practicing clinical social work does not need to obtain the Privilege License.
• A person who is at least seventy-five (75) years old.
  

NASW-NC members can contact Lauren Zingraff with general questions. This is general guidance. NASW-NC does not provide legal or accounting advice. Please contact your business attorney or accountant for this information.