Income Tax Withholding Tables And Instructions For Employers Page 4
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69exempt for other tax purposes. Note: Compliance with
balance due after tax credit.
any of the provisions of North Carolina withholding by a
(b) Nonresident employees. A nonresident
nonresident employer will not be deemed to be evidence
employee is subject to North Carolina withholding on
that the nonresident is doing business in this State.
any part of his wages paid for performing services in this
State. Any relief from double withholding must be granted
3. Withholding Identification Number
by the employee’s state of residence. See section 7 for
Each new employer required to withhold North
information on withholding from nonresidents who receive
non-wage compensation for personal services performed
Carolina income tax must complete and file Form NC/BR
with the Department of Revenue. (Note: This form may
in North Carolina.
also be used to apply for a sales and use tax number and
(c) Employers operating in interstate commerce.
is included in the back of this booklet.) The Department
The Amtrack Reauthorization and Improvement Act of
will assign a withholding identification number which
1990 provides that no part of the compensation paid
should be recorded in a permanent place and used on all
to an employee of an interstate railroad subject to the
reports and correspondence concerning withholding. Do
jurisdiction of the Surface Transportation Board (STB)
not use the number of another employer from whom you
may be subject to income tax in any state except the
acquired a business or your federal identification number.
state of the employee’s residence when such employee
You should receive your new State identification number
performs regular assigned duties in more than one state.
within four weeks of filing Form NC/BR.
The Act also precludes the taxation of compensation paid
Each employer corporation is required to apply for
by an interstate motor carrier subject to the jurisdiction
a withholding identification number, and each must
of the STB or to an employee of a private motor carrier
maintain separate records. Changing a proprietorship or
performing services in two or more states except by
partnership to a corporation requires a new withholding
the state of the employee’s residence. Therefore, the
identification number and reconciliation of the old account.
compensation received by such nonresident employees
A new identification number generally is not required
for services performed in this State is not subject to North
merely to change a trade name or to show partial changes
Carolina income tax. A nonresident airline employee
of ownership in a partnership, such as adding or removing
assigned to flight duty is subject to North Carolina income
the name of one partner. Report the details and date of
tax and the withholding of income tax only if more than 50
such changes to the Department of Revenue by letter.
percent of his total flight time during the year is in North
Carolina.
Each employer should have only one withholding
identification number. Even though you have several
6. Withholding from Pensions,
operations, you may file a single report for your total
Annuities, and Deferred
payroll. If, however, you operate distinct businesses and
Compensation
maintain completely separate payrolls, you may register
each. If you register each business, you must file separate
Definitions. Unless otherwise specified below,
reports for each business, including separate annual
the definitions, provisions, and requirements of section
reconciliations at the end of the year.
3405 of the Internal Revenue Code with respect to
4. Who are Employees?
federal withholding on pensions are applicable to State
withholding on pensions.
See Federal Publication 15, Circular E, Employer’s
Pension payer –
A payer or a plan administrator with
Tax Guide, for a definition of employee.
respect to a pension payment under
5. Treatment of Residents and
section 3405 of the Code.
Nonresidents
Pension payment – A periodic payment or a nonperiodic
distribution, as those terms are
(a) Resident employees. An employee who is
defined in section 3405 of the
a resident of this State is subject to North Carolina
Code.
withholding on all of his wages, whether he works within
or outside the State; except that, to prevent double
Withholding Required. A pension payer required
withholding and to anticipate any allowable tax credit,
to withhold federal tax under section 3405 of the Code on
North Carolina withholding is not required from wages
a pension payment to a North Carolina resident must also
paid to a resident for services performed in another state
withhold State income tax from the pension payment. If a
if that state requires the employer to withhold. Withholding
payee has provided a North Carolina address to a pension
does not relieve the employee of the obligation to file a
payer, the payee is presumed to be a North Carolina
North Carolina individual income tax return and pay any
resident and the payer is required to withhold State tax
Page 4
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