NC Income Tax - Nonresident Personal Services
The 1997 session of the General Assembly enacted legislation which requires
withholding of NC income tax at the rate of 4% on non-wage compensation paid
to nonresident individuals and businesses for personal services rendered within
NC. The withholding tax applies to a nonresident individual or business in connection
with a performance, an entertainment, an athletic event, a speech (workshop),
or the creation of a film, radio, or television program.
Withholding is only required if the contractor is paid more than $1500 during
the calendar year. No tax is required to be withheld if payments, or payments
in total, are less that $1500 – with one exception: If you expect to pay
a contractor more than $1500 during a year, you must withhold 4% from
all payments.
Contractors Exempt from 4% Withholding
• Corporations or Limited Liability Companies that have obtained a certificate
of authority from the Secretary of State.
• A partnership that has a permanent place of business in NC
• Any entity that is exempt from NC corporate income tax
• An individual who is an ordained or licensed member of the clergy
• Resident of North Carolina
A certificate of authority does not apply to individuals or partnerships. A limited liability company or foreign corporation may obtain an application for a certificate of authority by writing to the Secretary of State, Corporations Division, PO Box 29622, Raleigh, NC 27626 or
http://www.secstate.state.nc.us/
Non-Residents of the United States
Federal Income Tax - Nonresident Personal Services
Prior to a unit hiring nonresident aliens, the Office of International Affairs
must be contacted first. This office is responsible for providing guidance,
information and other materials on immigration and visa issues for INS. Foreign
individuals invited to ECU must enter the country with the appropriate visa
to ensure that ECU can make all payments for contracted services, lectures and
honorarium payments, legally and in a timely fashion.
The payee must include a (photo) copy of his/her visa to expedite matters.
The Payroll Office will review all payment requests to foreign nationals to
monitor compliance with tax regulations, to ensure proper tax withholding, and
to provide appropriate tax reporting. Paperwork and supporting documentation
will be forwarded to Accounts Payable for payment.