IRS, NCDOR and Capital Tax FAQ’s

  • IRS FAQ's
  • NCDOR FAQ's
  • Capital Tax FAQ's
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  • 1. How do I notify the IRS my address has changed?
     

    There are several ways to tell us your new address:

    Methods to Change Your Address
    Method Action
    Tax return Use your new address on your tax return
    IRS form Use Form 8822, Change of Address or Form 8822-B,Change of Address or Responsible Party - Business
    Written statement Send us a signed written statement with your:

    • full name
    • old address
    • new address
    • social security number (or individual taxpayer identification number or employer identification number)

    Mail your statement to the address where you filed your last return

    Oral notification You can tell us in person or by telephone. We'll need to verify your identity and address. Please have ready the information we have on file for you, such as:

    • your full name
    • your address
    • your date of birth
    • your social security number (or individual taxpayer identification number or employer identification number)
    Electronic notification You can only notify us electronically if your refund check was returned to us. Use Where's My Refund?to complete your change of address online. You will need your social security number, filing status, and the amount of your refund. For more information, seeUnderstanding your CP31 Notice.

    If you filed a joint return, you should provide the information and signatures for both spouses.

    If you filed a joint return and you and your spouse have since separated, each of you should notify us of your new, separate address.

    Representatives filing a change of address for a taxpayer by form or written statement must attach a copy of their power of attorney or a Form 2848, Power of Attorney and Declaration of Representative. Unauthorized third parties cannot change a taxpayer's address.

    Any new address you provide to the U.S. Postal Service (USPS) may also update your address of record on file with us based on what the USPS retains in its National Change of Address (NCOA) database. However, even if you notify the USPS, you should still notify us directly as not all post offices forward government checks.

    If the change of address relates to an employment tax return, the IRS will issue notices of confirmation (Notices 148A and 148B) for the change to both the former and new address.

    It can take four to six weeks for a change of address request to be fully processed.

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  • 2. Is there an age limit on claiming my child as a dependent?
     

    To claim your child as your dependent, your child must meet the qualifying child test or the qualifying relative test.

    • To meet the qualifying child test, your child must be younger than you and as of the end of the calendar year, either be younger than 19 years old or be a student and younger than 24 years old, or any age if permanently and totally disabled.
    • There is no age limit on claiming your child as a dependent if the child meets the qualifying relative test.

    In addition to meeting the qualifying child or qualifying relative test, you may claim a dependency exemption for your child as long as all of the following tests are met:

    1. Dependent taxpayer test
    2. Citizen or resident test, and
    3. Joint return test
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  • 3. How much does an unmarried dependent student have to make before he or she has to file an income tax return?
     

    If you are an unmarried dependent student, you must file a tax return if your earned or unearned income exceeds certain limits. To find these limits, refer to Dependents under Who Must File, in Publication 501, Exemptions, Standard Deduction, and Filing Information.

    Even if you do not have to file, you should file a federal income tax return if you can get money back (for example, you had federal income tax withheld from your pay or you qualify for a refundable tax credit). See Who Should File in Publication 501, for more examples.

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  • 4. Can I receive a tax refund if I am currently making payments under an installment agreement or payment plan for a prior year's federal taxes?
     

    Generally, no. A condition of your installment agreement is that the IRS will automatically apply any refund due to you against taxes you owe. If your refund exceeds your total balance due on all outstanding liabilities including accruals, you will receive a refund of the amount over and above what you owe.

    • Because your refund is not applied toward your regular monthly payment, you must continue making your installment agreement payments as scheduled and in full until your liability including accruing penalty and interest is paid in full.
    • Regardless whether you are participating in an installment agreement or other payment arrangement with the IRS, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. For more information on these non-IRS refund offsets, you can call the Bureau of the Fiscal Service (BFS) at 800-304-3107 (toll-free).
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  • 5. If I claim my daughter who is a full-time college student as a dependent, can she claim her own personal exemption when she files her return?
     

    If you can claim an exemption for your daughter as a dependent on your income tax return, she cannot claim her own personal exemption on her income tax return. Your daughter should check the box on her return indicating that someone else can claim her as a dependent.

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  • 6. To qualify for head of household filing status, do I have to claim my child as a dependent?
     

    In certain circumstances, you do not have to claim your child as a dependent to qualify for head of household filing status; for example, a custodial parent may be able to claim head of household filing status even if he or she released a claim to exemption for the child.

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  • 7. What should I do if I made a mistake on my federal return that I have already filed?
     

    It depends on the type of mistake you made:

    • Many mathematical errors are caught during the processing of the tax return and corrected by the IRS, so you may not need to correct these mistakes.
    • If you did not attach a required schedule or form, the IRS will contact you and ask for the missing information.
    • If you did not claim the correct filing status or you need to change your income, deductions, or credits, you should file an amended or corrected return using Form 1040X, Amended U.S. Individual Income Tax Return.

    When filing an amended or corrected return:

    • Include copies of any forms and/or schedules that you are changing or did not include with your original return. To avoid delays, file Form 1040X only after you have filed your original return. Generally, for a credit or refund, you must file Form 1040X within 3 years (including extensions) after the date you timely filed your original return or within 2 years after the date you paid the tax, whichever is later.
    • Allow the IRS up to 16 weeks to process an amended return.
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  • 8. How do I know if I have to file quarterly individual estimated tax payments?
     

    You must make estimated tax payments for the current tax year if both of the following apply:

    • You expect to owe at least $1,000 in tax for the current tax year after subtracting your withholding and refundable credits.
    • You expect your withholding and refundable credits to be less than the smaller of:
      • 90% of the tax to be shown on your current year’s tax return, or
      • 100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

    There are special rules for:

    • Farmers and fishermen
    • Certain household employers
    • Certain higher income taxpayers
    • Nonresident aliens
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  • 9. I retired last year, and started receiving social security payments. Do I have to pay taxes on my social security benefits?
     

    Social security benefits include monthly retirement, survivor and disability benefits. They do not include supplemental security income (SSI) payments, which are not taxable. The amount of social security benefits that must be included on your income tax return and used to calculate your income tax liability depends on the total amount of your income and benefits for the taxable year.

    To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of:

    • One-half of your benefits.
    • All of your other income, including tax-exempt interest.

    The base amount for your filing status is:

    • $25,000 if you are single, head of household, or qualifying widow(er),
    • $25,000 if you are married filing separately and lived apart from your spouse for the entire year,
    • $32,000 if you are married filing jointly,
    • $0 if you are married filing separately and lived with your spouse at any time during the tax year.

    If you are married and file a joint return, you and your spouse must combine your incomes and social security benefits when figuring the taxable portion of your benefits. Even if your spouse did not receive any benefits, you must add your spouse's income to yours when figuring on a joint return if any of your benefits are taxable.

    You can figure the taxable amount of the benefits on a worksheet in the Instructions for Form 1040, Instructions for Form 1040A, or in Publication 915, Social Security and Equivalent Railroad Retirement Benefits.

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  • 10. What are the tax changes for this year?
     

    For highlights of the tax changes for the current tax year, refer to the "What's New" section of the following:

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  • 11. Tax Deductible Car Miles - IRS Standard Mileage Rates
     

    If you are using your car for qualified business, medical, or charitable purposes, you can deduct your vehicle expenses. For a vehicle you own or lease, you can deduct either the actual expenses or the standard rate per mile driven. If the car is leased and you use the standard mileage rates, you must use the standard rates for the entire life of the lease.

    Can I Deduct the Standard Mileage Rate from My Income?

    If you itemize the deductions. you can deduct these amounts from your taxable income.

    Do I Have to Use the Standard Mileage Rate?

    These mileage rates are optional and you may use the actual vehicle expenses instead of the standard mileage rate as your deduction if you kept detailed records (such as a mileage log).

    What Are the Standard Mileage Rates?

    The standard tax deductible mileage rates for 2015 (and for earlier years) are listed below:

    Current Year: 2015 Tax Year Standard Deductible Mileage Rates from Jan. 1, 2015- Dec. 31, 2015

    ATTENTION: Use the rates below for your 2015 Tax Returns, due April 18, 2016.

    The optional standard tax deductible IRS mileage rates for the use of your car, van, pickup truck, or panel truck during 2015 are:

    • 57.5 cents per mile driven for business purposes
    • 23 cents per mile driven for medical or moving purposes
    • 14 cents per mile driven in service of charitable organizations

    Additional Vehicle Use Deductions: In addition to the standard mileage rates, you may deduct the costs of tolls and parking while using your vehicle for one of the approved purposes. These are separate deductions. However, if you have claimed vehicle depreciation, you may not deduct tolls and parking fees.

    Standard Mileage Rate Restrictions: The standard mileage rates may not be used for vehicles used as equipment, or for more than four vehicles used simultaneously. You cannot use the standard mileage rates if you claim vehicle depreciation.

    2016 Tax Year Standard Deductible Mileage Rates from Jan. 1, 2016- Dec. 31, 2016

    ATTENTION: The following mileage rates are for 2016 Tax Returns. Do not use these rates for your 2015 Tax Return.

    The optional standard tax deductible IRS mileage rates for the use of your car, van, pickup truck, or panel truck during 2016 are:

    • 54 cents per mile driven for business purposes
    • 19 cents per mile driven for medical or moving purposes
    • 14 cents per mile driven in service of charitable organizations

    Additional Vehicle Use Deductions: In addition to the standard mileage rates, you may deduct the costs of tolls and parking while using your vehicle for one of the approved purposes. These are separate deductions. However, if you have claimed vehicle depreciation, you may not deduct tolls and parking fees.

    Standard Mileage Rate Restrictions: The standard mileage rates may not be used for vehicles used as equipment, or for more than four vehicles used simultaneously. You cannot use the standard mileage rates if you claim vehicle depreciation.

    Prior Year: 2014 Tax Year Standard Deductible Mileage Rates from Jan. 1, 2014- Dec.31, 2014

    ATTENTION: Use the rates below for your 2014 Tax Return, which is due April 15, 2015.

    The optional standard tax deductible IRS mileage rates for the use of your car, van, pickup truck, or panel truck during 2014 are:

    • 56 cents per mile driven for business purposes
    • 23.5 cents per mile driven for medical or moving purposes
    • 14 cents per mile driven in service of charitable organizations

    Additional Vehicle Use Deductions: In addition to the standard mileage rates, you may deduct the costs of tolls and parking while using your vehicle for one of the approved purposes. These are separate deductions. However, if you have claimed vehicle depreciation, you may not deduct tolls and parking fees.

    Standard Mileage Rate Restrictions: The standard mileage rates may not be used for vehicles used as equipment, or for more than four vehicles used simultaneously. You cannot use the standard mileage rates if you claim vehicle depreciation.

    Prior Year: 2013 Tax Year Standard Deductible Mileage Rates from Jan. 1, 2013 - Dec. 31, 2013

    ATTENTION: The following mileage rates are for 2013 Tax Returns. Do not use these rates for your 2014 Tax Return.

    The optional standard tax deductible IRS mileage rates for the use of your car, van, pickup truck, or panel truck during 2013 are:

    • 56.5 cents per mile driven for business purposes
    • 24 cents per mile driven for medical or moving purposes
    • 14 cents per mile driven in service of charitable organizations

    Additional Vehicle Use Deductions: In addition to the standard mileage rates, you may deduct the costs of tolls and parking while using your vehicle for one of the approved purposes. These are separate deductions. However, if you have claimed vehicle depreciation, you may not deduct tolls and parking fees.

    Standard Mileage Rate Restrictions: The standard mileage rates may not be used for vehicles used as equipment, or for more than four vehicles used simultaneously. You cannot use the standard mileage rates if you claim vehicle depreciation.

    Prior Year: 2012 Tax Year Standard Deductible Mileage Rates: Jan. 1, 2012 - Dec. 31, 2012

    The optional standard tax deductible IRS mileage rates for the use of your car, pickup truck, van, or panel truck during 2012 are:

    • 55.5 cents per mile driven for business purposes
    • 23 cents per mile driven for medical or moving purposes
    • 14 cents per mile driven in service of charitable organizations

    Additional Vehicle Use Deductions: In addition to the standard mileage rates, you may deduct the costs of tolls and parking while using your vehicle for one of the approved purposes. These are separate deductions. However, if you have claimed vehicle depreciation, you may not deduct tolls and parking fees.

    Standard Mileage Rate Restrictions: The standard mileage rates may not be used for vehicles used as equipment, or for more than four vehicles used simultaneously. You cannot use the standard mileage rates if you claim vehicle depreciation.

    Prior Year: 2011 Tax Year Standard Deductible Mileage Rates from Jan. 1, 2011 - June 30, 2011

    The standard deductible IRS mileage rates for the use of a car, van, pickup, or panel truck during the first half of 2011 (from January 1 to June 30) are:

    • 51 cents per mile driven for business purposes
    • 19 cents per mile driven for medical or moving purposes
    • 14 cents per mile driven in service of charitable organizations

    Prior Year: 2011 Standard Deductible Mileage Rates from July 1, 2011 - Dec. 31, 2011

    The standard tax deductible mileage rates were adjusted by the IRS for the second half of 2011 (from July 1 to December 31). These mileage rates are:

    • 55.5 cents per mile driven for business purposes
    • 23.5 cents per mile driven for medical or moving purposes
    • 14 cents per mile driven in service of charitable organizations

    Additional Deductions: You may also deduct the costs of tolls and parking while using your vehicle for business, medical, or charitable purposes, as long as you have not claimed depreciation on the vehicle.

    Standard Mileage Rate Restrictions: The standard mileage rates may not be used for hired vehicles, for vehicles used as equipment, or for more than four vehicles used simultaneously. If you are claiming deductions for vehicle depreciation, then the standard mileage rate must be reduced by the depreciation component (22 cents per mile for 2011).

    Actual Car Costs: Alternatively, you may calculate and keep records of the actual costs of operating your car instead of using the standard IRS mileage rates. Qualified actual costs include gas, oil, tires, repairs, insurance, tolls, parking and garage fees, registration fees, lease payments, and depreciation licenses.

    Prior Year: 2010 Deductible Mileage Rates: Jan. 1, 2010 - Dec. 31, 2010

    The tax deductible standard mileage rates for the use of a car, van, pickup, or panel truck in 2010 are:

    • 50 cents per mile for business miles driven
    • 16.5 cents per mile driven for medical or moving purposes
    • 14 cents per mile driven in service of charitable organizations

    Additional Deductions: You may also deduct the costs of parking and tolls while using your vehicle for one of the above purposes if you have not claimed vehicle depreciation.

    Standard Mileage Rate Restrictions: The standard mileage rates may not be used for hired vehicles or for more than four vehicles used simultaneously. If you are claiming deductions for vehicle depreciation, then the standard mileage rate must be reduced by the depreciation component (23 cents per mile for 2010).

    Actual Car Costs: The option of calculating the actual cost of using your vehicle rather than using the standard mileage rates remains.

    Prior Year: 2009 Deductible Mileage Rates: Jan. 1, 2009 - Dec. 31, 2009

    The standard mileage rates for the use of a car, van, pickup, or panel truck:

    • 55 cents per mile for business miles driven
    • 24 cents per mile driven for medical or moving purposes
    • 14 cents per mile driven in service of charitable organizations

    Standard Mileage Rate Restrictions: The business standard mileage rate may not be used for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.

    Furthermore, business standard mileage rates cannot be used for vehicles used for hire or for more than four vehicles used simultaneously.

    Prior Year: Mileage Rates: Jan. 1, 2008 - June 30, 2008

    The 2008 optional standard mileage reimbursement rate used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes will be as of Jan. 1, 2008 for the use of a car (including vans, pickups or panel trucks): 50.5 cents per mile for business miles driven; 19 cents per mile driven for medical or moving purposes; and 14 cents per mile driven in service of charitable organizations.

    The new rate for business miles compares to a rate of 48.5 cents per mile for 2007. The new rate for medical and moving purposes compares to 20 cents in 2007. The rate for miles driven in service of charitable organizations has remained the same.

    The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile; the standard rate for medical and moving purposes is based on the variable costs as determined by the same study. Runzheimer International, an independent contractor, conducted the study for the IRS. The mileage rate for charitable miles is set by law.

    A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section 179 deduction for that vehicle, for any vehicle used for hire or for more than four vehicles used simultaneously.

    Prior Year: 2008 Deductible Mileage Rates: July 1, 2008 - Dec. 31, 2008

    Mileage Rate increases to 58.5 cents per mile.

    The increased gas prices have a major impact on individuals who use their automobile for business use. The new standard business mileage reimbursement rate for July 1, 2008 - Dec. 31, 2008 is 58.5 cents. This rate is used as an option to compute deductible business related automobile costs. (If you are using your automobile for private and business use). The alternative method is tracking actual automobile costs.

    The mileage rate for automobile use for computing medical or moving automobile expenses for July 1, 2008 - Dec. 31, 2008 will increase to 27 cents/mile.

    The automobile use for charitable organizations is 14 cents/mile.

    Remember that mileage rates are not the extent of your deductible expenses for the business use of your car. Remember to include parking and tolls under deductible expenses for the business use of you car.

    What Are Deductible Business Miles?

    Deductible business use of your car does not cover normal commuting to your usual place of work. Qualified deductible business use includes:

    • Driving to a business meeting away from your usual workplace
    • Meeting clients or customers
    • Getting from your home to a temporary workplace
    • Getting from your regular workplace to a second workplace, for the same job or business

    If you use your car only for your job or business, you may deduct all of the miles driven or actual vehicle expenses. But if you also use the car for other purposes, you can only deduct the portion used for business purposes.

    Can I Deduct Miles or Expenses for Commuting to Work?

    Normal commuting from your home to your regular workplace and back is not deductible. You may deduct business mileage only if you are traveling to and from a temporary work location, from one work location to another, to meet with a client, to a conference, etc.

    What Medical Transportation Expenses Can I Deduct?

    Expenses for primary transportation to medical care facilities that qualify as medical expenses are:

    • Actual fees or fares for a taxi, bus, train, or ambulance
    • Out-of-pocket expenses for using your own car, or the standard mileage rate
    • Fees for tolls and parking

    What Actual Car or Vehicle Expenses Can I Deduct?

    Instead of using the standard mileage rates, you may use the actual costs of operating your car instead. You will need to keep accurate records. Qualified for this purpose include: gasoline, oil, tires, repairs, insurance, tolls, parking, garage fees, registration fees, lease payments, and depreciation licenses.

    Tax Planning Tip: Keep records of your deductible mileage each month with a simple journal or mileage log. You can find a downloadable mileage form in the client portal.

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  • 1. When and how do I file my North Carolina income tax return?
     

    Individual income tax returns are due April 15. However, for tax year 2015, you have until Monday, April 18, 2016 to file your return because April 15 is the Emanicpation Day holiday observed in the District of Columbia. If you file for an extension, your return is due October 15.

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  • 2. How do I know if North Carolina considers me a nonresident or part-year resident? How do I file?
     

     

    • You're a nonresident if you:
      1. live in North Carolina and earn income within the State for a temporary period of time and you are a permanent resident of another state or
      2. live outside the State, but receive income from sources in North Carolina.
    • You're a part-year resident if, during the tax year, you:
      1. moved into the State and became a resident or
      2. moved out of North Carolina and became a resident of another state.

      IMPORTANT: When completing Form D-400, part-year residents should not enter the beginning and ending dates of North Carolina residency in the boxes at the top of page 1 of the form (these dates are entered on Form D-400 Schedule S, Part D, Computation of North Carolina Taxable Income for Part-Year Residents and Nonresidents). The boxes at the top of page 1 are used only by fiscal year filers to indicate the beginning and ending dates of their tax year. Fiscal year filers do not file on a calendar year basis.

     

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  • 3. What's my filing status?
     

    Be sure to claim the same filing status on your North Carolina return that you claimed on your federal return unless you or your spouse is a nonresident and had no North Carolina taxable income for the tax year.

    For more information, see Your Filing Status

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  • 4. What is the Collection Assistance Fee?
     

    NC Gen. Stat. §105-243.1 requires the Department to assess a 20% fee against a final bill that is at least 90 days past due. The fee is designed to pass some of the costs of collecting overdue taxes along to those who become delinquent rather than using General Fund monies. It provides funds to pay for the following:

    • The fees charged by contract attorneys and collection agencies that help the Department collect tax debts.
    • Personnel at the Department that collect taxes.
    • Other costs associated with collecting delinquent taxes.
    • NC Department of Revenue infrastructure projects as approved by both the NC General Assembly and the Governor.

    How is the fee calculated?

    The fee is calculated on the total amount due including tax, penalty, and interest. The law defines tax, penalty, and interest as tax debt.

    When is the fee imposed?

    The Department imposes the fee on a tax debt that is collectible as defined by NC Gen. Stat. §105-241.22 , is at least 90 days overdue and is not the subject of an installment payment agreement. The Department sends every taxpayer a letter 30 days before the fee is imposed that warns the taxpayer of the fee and tells the taxpayer how to avoid the fee.

    What do I do to avoid the fee?

    If you received a letter warning that a 20% fee will be imposed if you do not pay your tax debt in 30 days, then you must do one of the following within 30 days of the date the letter was sent to avoid the fee:

    Does the fee apply if I am paying my taxes under a wage garnishment?

    Yes. The fee applies to the amount of your tax debt that remains unpaid as of the day the fee is imposed.

    Can I appeal the assessment of this fee?

    The collection assistance fee is a fee and not a tax and is not subject to formal review. A request for review of a tax debt must be made before the tax debt becomes final. The collection assistance fee is imposed after the tax debt is final and collectible. Click hereto learn more about the formal tax assessment review process.

    If you think you do not owe the fee, you can discuss this with a case resolution specialist and he or she will review the matter. If the Department determines that the fee was imposed in error, the Department will remove the fee. You must explain why the fee does not apply and provide documentation to support your explanation. For example, if you establish that you paid your tax debt in full before the fee was assessed, the fee does not apply and will be removed. Contact the local Collection Division Office serving your area and tell the Department personnel that you need to speak with someone about your account.

    Can I have the fee waived?

    The Department may waive the fee if the taxpayer establishes special circumstances that justify the waiver. To request a waiver, write a letter explaining why you think the Department should waive the fee. Send the letter to:

    North Carolina Department of Revenue
    Attn: Director of Collection Division
    P.O. Box 27431
    Raleigh, NC 27611

    Will the Department refer my debt to a collection agency?

    The Department may refer an account to a private collection agency or private attorney in limited circumstances. You will be notified if your account is selected for referral.

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  • 5. N.C. Corporate, Excise & Insurance Tax
     

    Do I need to apply for a corporate identification number?

    No. For corporate income and franchise tax purposes, taxpayers are identified by their Federal identification Number and the number assigned by the Secretary of State.

    What is the Department’s current position regarding Nexus in North Carolina: “Physical Presence” vs. “Economic Presence?”

    The Department’s current position concerning nexus is to administer the rule as amended November 2, 1992. Except for an amendment effective January 1, 1994, which removed ambiguous language in the first paragraph, North Carolina’s Doing Business Rule, 17 NCAC 5C .0102, has not changed since November 2, 1992. In 1992, the Department clarified the language of the original rule pertaining to income producing property in this state. The original rule dated back to February 1, 1976. Originally, subdivision .0102(5) stated simply that “the owning, renting, or operating of business or income-producing property (real or personal) in North Carolina” would be considered to be doing business in this state. The 1992 revision includes more specific examples of the types of income producing property that create nexus. Those examples include: (i) realty; (ii) tangible personal property; (iii) trademarks, tradenames, franchise rights, computer programs, copyrights, patented processes, and licenses. Additionally, subsections addressing corporations with partnership and joint venture interests in this state and motor carrier operations were incorporated into the rule. The Tax Review Board upheld the Department’s position on May 7, 2002. (See A&F Trademark, Inc. Decision number 381.)

    For apportionment purposes, does North Carolina have a “throwback” rule?

    No. For corporations permitted to apportion income, only those sales made within North Carolina are required to be included in the numerator of the sales factor. However, sales of a corporation which is not required to file an income tax return in another state are considered to be this state.

    Does North Carolina recognize a single member Limited Liability Company?

    Yes.

    Do I need a North Carolina tax-exempt number for my non-profit corporation?

    No. The Department of Revenue will issue a tax-exempt letter with proof of your federal exemption. (Read more about non-profits.)

    What is the tax rate in North Carolina?

    The corporate income tax rate is 6.9%. The franchise tax rate is $1.50 per $1,000. (Read more about franchise tax.)

    What is the basis for suspension?

    North Carolina General Statute 105-230 requires the Department of Revenue to notify the Secretary of State when a “corporation or a limited liability company fails to file any report or return or to pay any tax or fee required by the tax laws for 90 days after it is due.” It further requires the Secretary of State to “suspend the articles of incorporation, articles of organization, or certificate of authority, as appropriate, of the corporation or limited liability company.” All the powers and privileges of the corporation will cease upon the suspension.

    My corporation has been suspended by the Department of Revenue. What do I need to do in order to be reinstated?

    You must file all returns for all tax schedules and pay all tax, penalty, and interest due and pay a $25 reinstatement fee. Upon receipt, the corporation will be reinstated and the Department will notify the Secretary of State’s office.

    What should I do if I receive a Notice of Failure to File a corporate return?

    • If a return was filed, send a copy of the return, canceled check with which payment was made, and a copy of the delinquent letter to the Corporate Work Group – Central Examination, Post Office Box 871, Raleigh, NC 27602.
    • If a return was not filed, send the return and payment for the tax, penalties, and interest to North Carolina Department of Revenue, Post Office Box 25000, and Raleigh, NC 27640-0710.

    Does an inactive corporation or a corporation that has no assets have to file a return?

    A corporation that is inactive or has no assets is subject annually to a minimum franchise tax of $35.00. A return must be filed for each year in which there was no activity and a $35.00 payment must be made. Returns are required through the date of formal dissolution or withdrawal through the Office of the Secretary of State.

    If a corporation is dissolved or withdraws from doing business in this State, is a return required?

    If a corporation is dissolved or formally withdraws via the Office of the Secretary of State, no franchise tax is required with the income return filed for the year in which the application is filed or with any subsequent income returns that may be required in connection with winding up the affairs of the corporation. A final return is required by the 15th day of the fourth month after the close of business.

    What if my corporation is in bankruptcy?

    Corporations in bankruptcy are not required to pay pre-petition tax, penalty, and interest; however, returns must still be filed. Corporations in bankruptcy are required to file post-petition returns and pay the tax, penalty, and interest due.

    Where and when do I file my corporation’s annual report required by the Secretary of State?

    Taxpayers have the option of filing the North Carolina Annual Report for Business Corporations, Form CD-479, either in paper form with the Department of Revenue,http://www.dor.state.nc.us/downloads/corporate.html, or in electronic form on-line with the Secretary of State,http://www.secretary.state.nc.us/corporations/soskb/arentry.asp

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  • 6. Attachments and Garnishments
     

    An attachment and garnishment is an order requiring that money be withheld from an individual’s salaries, bank account or other intangible property. Attachments and Garnishments are frequently used to collect unpaid taxes.

    Most questions can be answered using the material from this site. If you have additional questions, contact the Department at 1-877-252-3252.

     

    More information can be found here 

     

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  • 7. Individual Income Tax Refunds
     

    How can I check the status of my refund?
    You can check the status of your refund online by using our Where’s My Refund? web service. In order to view status information, you will be prompted to enter the first social security number listed on your tax return along with the exact amount of your refund shown on line 33 of Form D-400, Individual Income Tax Return.

    You can also call our toll-free refund inquiry line at 1-877-252-4052, 24 hours a day, 7 days a week. Refund checks are written weekly. If you contact our refund inquiry line and you are advised that your check has not been written, please wait 7 days before calling the refund inquiry line again.

    My refund check has been lost, destroyed or stolen. What should I do?
    If your refund has been lost, destroyed or stolen, you must write the NC Department of Revenue to request another check. We must have your written authorization before issuing a stop payment or beginning forgery proceedings. If you filed a joint return, you and your spouse must both sign the letter. Be sure to include your current address, social security number, the tax year and a statement asking for a stop payment or for the Department to begin forgery proceedings.

    We will notify you in writing within 30 days after receiving your letter to advise you of the stop payment or forgery procedures. In the case of a stop payment, another check is usually issued between 30 to 60 days from the time the Department receives your letter; however, if your check has been cashed by someone else, forgery proceedings will take at least 120 days to be completed.

    If you receive your refund check after you have mailed your letter requesting a replacement check, do not cash the check. Instead, return the check to the NC Department of Revenue.

    Mail your written request to NC Department of Revenue, Attn: Customer Service, P O Box 1168, Raleigh, NC 27602-1168. For faster service, you may fax your request to (919) 733-5750.

    If I owe the IRS or a State agency, will I receive my NC refund?
    Before the NC Department of Revenue issues a refund, we are required to check for any outstanding debt that you may have with the agencies of NC or the IRS for which we have received notification. If any such debt is found, the amount you owe may be deducted from your refund. Examples of this type of indebtedness would be owing Child Support or owing a university for a student loan.

    State and local agencies of NC may file a claim with the NC Department of Revenue for a taxpayer’s refund.

    If all or a portion of your refund is applied against your debt with another agency, the NC Department of Revenue will send you a notice to identify the state agency receiving your refund and the telephone number of the agency. If you file a joint tax return, your spouse’s portion of the refund will not be applied to your debt. If a portion of your refund is sent to a state agency, the remainder of your refund will be mailed after the offset occurs.

    If you owe the IRS, the total refund shown on your return may be sent to their agency. If you file a joint return, there is no provision in State or Federal law that allows the NC Department of Revenue to prorate your IRS refund. If you have “innocent spouse” status or “injured spouse” status with the IRS, you will need to contact the IRS at 1-800-829-1040 for any refund that may be due.

    If you have had all or a portion of your refund withheld because of a debt and you have questions regarding the debt, you should contact the state agency or the IRS, who claimed your refund rather than the NC Department of Revenue. The Department of Revenue would not have any additional information concerning your balance with the state agency or with the IRS.

    I checked the status of my refund and I was told that all or a portion of my refund has been applied to my indebtedness with the NC Department of Revenue. I was not aware that I owe the Department. Who can I call to get more information?

    You can call toll-free at 1-877-252-3052 to get information about your balance with the Department.

    I have moved to another address since I filed my return. My refund check could have been returned to the Department as an undeliverable check. What do I need to do to get my check forwarded to my new address?

    In most cases, the US Postal Service does not forward refund checks. Please contact the Department toll-free at 1-877-252-3052 to update your address or write to: NC Department of Revenue, Attn: Customer Service, P O Box 1168, Raleigh, NC 27602-1168.

    How often are refund checks mailed?

    Refund checks are mailed weekly.

    Will I receive interest on my refund?

    You will receive interest on your refund if your refund is not issued within 45 days from the date the return was due to be filed, the date the return is filed, or the date of the overpayment, whichever is later.

    Where should I mail my return if I am due a refund?

    You should mail the return to NC Department of Revenue, P O Box R, Raleigh NC 27634-0001.

    I received a Form 1099-G from the NC Department of Revenue. What does this mean and will I receive a refund?

    If you claimed itemized deductions on your federal return and received a state refund last year, you will receive a postcard size Form 1099-G statement. This form shows the amount of the state refund that you received last year but does not mean that you will receive an additional refund. Generally, your State income tax refund must be included in your federal income for the year in which your check was received if you deducted the State income tax paid as an itemized deduction on your federal income tax return. Please click here for additional information about Form 1099-G and Form 1099-INT.

    I have checked the status of my return and I was told there is no record of my return being received. What should I do?

    You can mail a duplicate return to NC Department of Revenue, P O Box 2628, Raleigh, NC 27602, Attn: Duplicate Returns. The word “duplicate” should be written at the top of the return that you are mailing. Please allow 12 weeks for your original return to be processed before mailing a duplicate return copy to this address. The duplicate return must be an original printed form and not a photocopy. Faxed copies are not accepted.

    My refund check was mailed to my old address. I contacted the Department and I have received my check, but the check is now 6 months old. Will the bank still cash the check?

    A check from the NC Department of Revenue is valid up to 6 months after the date on the check. If a check date is older than 6 months, you should mail a letter along with the refund check to NC Department of Revenue, Attn: Customer Service, P O Box 1168, Raleigh, NC 27602-1168. Your check will be validated and re-mailed to you.

    My spouse has passed away and my tax refund check was issued in both names. How can I get this corrected?

    Since a joint return was filed, the refund check must be issued jointly. When presenting the check for payment, you may want to include a copy of the death certificate to show you as surviving spouse. You may return the check to the Department and we will include “Surviving Spouse” and “Deceased” next to the respective names on the check. Should you need to return the check, please mail to: NC Department of Revenue, Attn: Customer Service, P O Box 1168, Raleigh NC 27602-1168.

    I filed a joint tax return. Which social security number should I use when inquiring about the status of my income tax refund?

    Either social security number can be used.

    How long does it take to receive an amended refund?

    If you filed your original NC income tax return incorrectly, you should file an amended return. Note: New for tax year 2015, you no longer use a separate tax form (Form D-400X) to amend your original return. All changes will be made on Form D-400. For further information, see Page 17, instructions for Filing 2015 Amended Returns in the North Carolina Individual Income Tax Instructions (Form D-401). You should receive your amended refund within 6 months from the date filed. If it has been more than five months since you filed your amended return, please call 1-877-252-3052 for assistance. Select individual income tax then listen for the refund option to speak with an agent. Please do not call 1-877-252-4052 as instructed in the main greeting. Interest will be paid on amended refunds at the applicable rate.

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  • 8. Nonprofit and Governmental Claim for Refund
     

    Form E-585 Nonprofit and Governmental Entity Claim for Refund State, County, and Transit Sales and Use Taxes (For Nonprofit Organizations)

    e585_faq

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  • 9. Frequently Asked Questions About Powers of Attorney
     

    What is a power of attorney?

    The power of attorney grants authority to an individual to represent a taxpayer before the Department of Revenue and to receive and inspect confidential tax information. The power of attorney authorizes the representative specified to perform any and all acts the taxpayer can perform unless otherwise noted in Section 4, Acts Authorized, on the Power of Attorney, Form GEN-58.

    What is tax information?

    Tax information is any information concerning the liability for a tax. Tax information includes but is not limited to the following:

    • Information contained on a tax return, a tax report, or an application for a license for which a tax is imposed.
    • Information obtained through an audit of a taxpayer or by correspondence with a taxpayer.
    • Information on whether a taxpayer has filed a tax return or a tax report.
    • A list or other compilation of the names, addresses, social security numbers, or similar information concerning taxpayers.

    How do I execute a power of attorney?

    A power of attorney is executed by completing Form GEN-58. This form is available on the Department’s website and can be obtained by calling the Department’s Forms Line at telephone number 1-877-252-3052 (toll-free). Mail Form GEN-58 to North Carolina Department of Revenue, P.O. Box 25000, Raleigh, NC 27640-0005 or deliver to a specific Department of Revenue employee if he or she is assisting you with a specific tax matter.

    Is a separate power of attorney required for bankruptcy matters involving State taxes?

    Yes. A power of attorney for bankruptcy matters is executed by filing Form GEN-58B. This form is available on the Department’s website and can be obtained by calling the Department’s Forms Line at telephone number 1-877-252-3052 (toll-free). Mail Form GEN-58B to North Carolina Department of Revenue, Attn: Bankruptcy Unit, P.O. Box 1168, Raleigh, NC 27602-1168.

    What tax periods and types of tax can I include on the power of attorney?

    • You must designate a specific tax type or more than one tax type (individual income, withholding, sales & use, corporate & franchise, etc.). You must also designate the tax year(s) or tax period(s) covered by the power of attorney.
    • You may list any tax years or periods that have already ended as of the date you sign the power of attorney. You may include future tax periods that end no later than 3 years after the date the power of attorney is received by the Department of Revenue.

    Do I need a separate power of attorney for each type of tax?

    No. See response to question above.

    How do I revoke a power of attorney I previously filed with the Department?

    • If you want to revoke an existing power of attorney and name a new representative, file form GEN-58 naming a new representative. This automatically revokes all earlier power(s) of attorney on file with the Department.
    • If you want to revoke an existing power of attorney and do not want to name a new representative, submit a copy of the previously executed power of attorney. The copy of the power of attorney must have a current taxpayer signature and date under the original signature and date on Line 7. Write “REVOKE” across the top of the form. If you do not have a copy of the power of attorney you want to revoke, submit a statement revoking the power of attorney. The statement must indicate that the authority of the power of attorney is revoked and must be signed by the taxpayer. Also, the name and address of each recognized representative whose authority is revoked must be listed.
    • If after revoking one power of attorney you want to issue a new one, see response to question about how to execute a power of attorney.

    How long is the power of attorney in effect?

    The power of attorney is in effect until the Department receives actual notice of revocation. If you would like to revoke a power of attorney, please see the above question.

    Am I required to file Form GEN-58, or can I file federal Form 2848, Power of Attorney and Declaration of Representative, or another alternative form?

    • The Department prefers that Form GEN-58 be filed. However, federal Form 2848 or another alternative form may be filed in lieu of Form GEN-58, provided the form includes all pertinent information requested on Form GEN-58 and specifies that a taxpayer is authorizing the Department to discuss North Carolina State tax matters with the named representative(s).
    • If a durable or military power of attorney is submitted, please include the following information:
    1. Name
    2. Social Security Number(s) and/or Fed Employer ID Number
    3. Representative’s Name
    4. Type of Tax
    5. Year(s) or Period(s)
    6. Date
    7. Signature
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  • 10. Sales and Use Tax Frequently Asked Questions
     

    Registration for Sales and Use Tax Account

     How can I obtain a sales and use tax number?

    To obtain a sales and use tax account number you must submit a completed Business Registration Application, Form NC-BR. The form can be submitted electronically for immediate issuance of an account number, or it can be mailed to: N. C. Department of Revenue, Post Office Box 25000, Raleigh, N. C. 27640. You may obtain the Form NC-BRonline, by mail, or by contacting the Taxpayer Assistance and Collection Center at 1-877-252-3052 (toll free). After your application is processed, you will be mailed information concerning your Sales and Use Tax Account ID and pre-printed forms on which to report your sales and use tax and submit with your payment. The Department will also mail a Certificate of Registration that is required to be displayed at your place of business.

    How long does it take to get a sales tax number?

    Most applicants registering electronically will receive their account number instantly. Others will receive their account number within ten business days. If the registration is not filed electronically, it may take up to four weeks. Sales tax numbers cannot be obtained over the telephone.

     How do I obtain sales and use tax forms?

    Preprinted forms are automatically forwarded upon issuance of a new Account ID and replacement forms are issued annually to registered taxpayers unless a taxpayer is filing online. A Sales and Use Tax Return, Form E-500, can be obtained online or ordered by mail. Forms can also be obtained by contacting the Taxpayer Assistance and Collection Center at 1-877-252-3052 (toll free).

    Is there a fee charged to obtain a sales tax number?

    There is no fee charged for a Certificate of Registration.

    Do I have to re-register for a new number if I move?

    No. Business Address Correction, Form NC-AC, included with the coupon book of return forms should be completed and submitted.

    Filing Sales and Use Tax Returns

     How can I file sales and use tax returns?

    You may file online or by mailing in the tax returns. If payment is made by Electronic Funds Transfer (EFT), a paper return is still required to be submitted to complete the filing. Monthly with prepayment filers are required to file their returns online.

    When are quarterly and monthly sales and use tax returns due?

    Quarterly returns are due on or before the last day of January, April, July, and October for the preceding three-month period. Monthly returns are due on or before the 20th of the month following the end of the month.

    How do I file if I have not received my tax number or forms?

    You should file using a blank sales and use tax return with the notation “Number Applied For” and include remittance of the tax due. Form E-500 can be obtained online or ordered bymail. Forms can also be obtained by contacting the Taxpayer Assistance and Collection Center at 1-877-252-3052 (toll free).

    How do I file a return if I have misplaced my coupon booklet?

    You may file online or obtain a blank Form E-500. Do not use old forms or a different tax period coupon to file a return. Using incorrect forms will create errors and delays in the processing of returns. You may order replacement forms by contacting the Taxpayer Assistance and Collection Center at 1-877-252-3052 (toll free).

    How do I file a return if my business makes no sales or purchases?

    A retailer who does not make any sales during a reporting period must file a return for that period and indicate 0.00 on the “Total Due” line. Similarly, a business that does not make any taxable purchases during a reporting period must file a return for that period and indicate 0.00 on the “Total Due” line.

    Where do I send my tax return?

    North Carolina Department of Revenue
    Post Office Box 25000
    Raleigh, North Carolina 27640-0700

    Online Filing for Sales and Use Tax

    Can I file my sales and use tax return and pay the tax online?

    You may file sales and use tax returns and pay through Electronic Services or call the E-Services Help line at 1-877-308-9103 (toll free) or 919-733-1674 between the hours of 8:00 am to 5:00 pm Monday through Friday. The E-File system offers the convenience of filing returns and paying tax 24 hours a day, 7 days a week.

    Filing Frequency and Due Dates

    How do I determine my filing frequency and due dates?

    Your preprinted sales and use tax returns issued by the Department will indicate your filing frequency based on your response to the question on the Registration Application, Form NC-BR, regarding the amount of sales tax expected per month.

    If you answered that your tax liability is consistently more than $100 but less than $20,000 per month, you should file a return monthly and pay taxes on or before the 20th day of each month for all taxes due for the preceding calendar month.

    If you answered that your tax liability is consistently less than $100 per month, you should file a return quarterly and pay taxes due on or before the last day of the month for all taxes due for the preceding calendar quarter.

    If you answered that your tax liability is at least $20,000 a month, you should file a return monthly and pay taxes on or before the 20th day of each month for all taxes due for the preceding calendar month and include a prepayment for the next month’s tax liability.

    The prepayment must equal at least 65% of any of the following:
    (1) the amount of tax due for the current month,
    (2) the amount of tax due for the same month in the preceding year, or
    (3) the average monthly amount of tax due in the preceding calendar year.
    Penalties or interest will not be due on an underpayment of a prepayment if one of these three calculation methods is used.

    Payments must be made electronically either online or by Electronic Funds Transfer (EFT). Monthly with prepayment returns are required to be filed online.

     

    Business Requirements

    What is the North Carolina sales and use tax rate?

    Retail sales of tangible personal property not subject to a reduced rate of tax are subject to the 4.75% general State rate of sales or use tax. The 4.75% general State rate of tax also applies to the rental of accommodations, service contracts to maintain or repair tangible personal property, admission charges to an entertainment activity, to charges for cleaning, pressing, hat blocking, and laundering of linens and apparels and to certain digital property. The lease or rental of tangible personal property is subject to the applicable percentage rate and the maximum tax, if any that applies to a sale of the property that is leased or rented. Items subject to the general rate are also subject to the 2% (2.25% in Alexander, Anson, Ashe, Buncombe, Cabarrus, Catawba, Cumberland, Davidson, Duplin, Durham, Edgecombe, Greene, Halifax, Harnett, Haywood, Hertford, Lee, Martin, Montgomery, New Hanover, Onslow, Orange, Pitt, Randolph, Robeson, Rowan, Sampson, Surry, and Wilkes Counties) local sales and use tax rate. Mecklenburg County has an additional 0.50% Transit County tax for public transportation in addition to the 2% local sales and use tax rate. Durham and Orange Counties have an additional 0.50% Transit County tax for public transportation in addition to the 2.25% local sales and use tax rate.

    The total rate of tax in seventy counties is 6.75% (7% in Alexander, Anson, Ashe, Buncombe, Cabarrus, Catawba, Cumberland, Davidson, Duplin, Edgecombe, Greene, Halifax, Harnett, Haywood, Hertford, Lee, Martin, Montgomery, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry and Wilkes Counties, 7.25% in Mecklenburg County, and 7.5% in Durham and Orange Counties).

    Are wholesale merchants required to file a return?

    A person who engages exclusively in the business of making wholesale sales is not required to file a return but is required to obtain a certificate of registration before the person engages in business in the State except as noted below. A person who, on two or more occasions within a twelve-month period, either makes taxable sales to users, consumers, or non-registered merchants or makes purchases subject to use tax is not engaged exclusively in the business of making wholesale sales and must begin filing sales and use tax returns. A wholesale merchant who is not required to file a sales and use tax return and who, on only one occasion within a twelve-month period, either makes taxable sales to users, consumers, or non-registered merchants or makes purchases subject to use tax must file a return for that month only and pay the tax due within 20 days after the end of the month in which the sale or purchase was made. A wholesale merchant is required to maintain records that include a bill of sale for each customer that contains the name and address of the purchaser, the date of the purchase, the item purchased, and the price at which the wholesale merchant sold the item.  A wholesale merchant must obtain a certificate of exemption or the required data elements to substantiate that it is a wholesale sale to a customer.  Failure of a wholesale merchant to keep these records for the sale of an item subjects the wholesale merchant to liability for tax at the rate that applies to the retail sale of the item.

    If I have a seasonal business, can I file just for those months that I operate?

    A retailer who engages in business for six or fewer months in each year may register as a seasonal filer and indicate the months in which the retailer engages in business. A retailer who is registered as a seasonal filer is not required to file a return for an off-season reporting period in which the retailer did not engage in business.

    If I am presently registered as a proprietorship or partnership, what do I need to do if I incorporate?

    The corporation must apply for a new Account ID.

    If I purchase an existing business, may I use the sales tax number of the previous owner?

    No. A new owner must obtain his own Account ID.

    How do I cancel or inactivate a tax number?

    Complete and submit the Out-of-Business Notification, Form NC-BN, included with your coupon book of report forms.

    Can a certificate of registration be cancelled for inactivity?

    Yes. A certificate of registration issued to a retailer who makes taxable sales becomes void if, for a period of 18 months, the retailer files no returns or files returns showing no sales. Annually, the Department reviews sales and use tax accounts and cancels the sales and use tax registration numbers of those accounts that have filed returns showing no sales for the past 18 months. If your account is cancelled for this purpose, you will be notified by mail and given an opportunity to reactivate your account.

    Do flea market vendors need to obtain a Certificate of Registration?

    Yes. Flea market vendors must obtain a Certificate of Registration and it must be posted at their location.

    Are any services taxable?

    Generally services are exempt from sales or use tax, but admission charges to an entertainment activity and laundry and dry cleaning services are taxable at the total 6.75% in seventy-two counties (7% in Alexander, Anson, Ashe, Buncombe, Cabarrus, Catawba, Cumberland, Davidson, Duplin, Edgecombe, Greene, Halifax, Harnett, Haywood, Hertford, Lee, Martin, Montgomery, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry and Wilkes Counties, 7.25% in Mecklenburg County, and 7.5% in Durham and Orange Counties) State and local tax rates. Telecommunications service and ancillary service, and video programming are taxable at the combined 7% general tax rate in all counties.

    Are lottery ticket sales taxable?

    No. Lottery ticket sales are not subject to sales or use tax; however, these sales should be included on Sales and Use Tax Return, Form E-500, Line 1, North Carolina Gross Receipts, along with other sales made during the reporting period. Lottery ticket sales should also be included on Line 3, Receipts Exempt From State Tax.

     

    Penalties and Assessments

    Is there a penalty if my return is late and no tax is owed?

    No. Penalty and interest is not due but the return must be filed.

    Is there a penalty for late filing of tax returns?

    Yes. If tax is due, both a failure to file penalty of 5% per month or fraction thereof with a maximum of 25% and a failure to pay penalty of 10% will be due. Interest is due on the amount of tax due from the date the tax was due until it is paid.

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  • 11. Withholding Tax Frequently Asked Questions
     

    Registration for Withholding Account

    I am opening a business and plan to have employees.  What license(s) do I need?

    You must register for a N. C. Withholding Tax Identification Number and you may need other licenses depending on the nature of your business.  You can receive assistance with a new business start-up by visiting one of the Taxpayer Service Centers or call 1-877-252-3052 (toll free) to order a “New Business” packet through the voice mail system.  The “New Business” packet contains applications and information concerning the proper license(s) and application(s) you may need.

    How do I register for N. C. withholding tax identification number?

    You must submit a completed business registration application, Form NC-BR, Business Registration Application for Income Tax Withholding, Sales and Use Tax, and Machinery and Equipment Tax, to obtain a withholding tax identification number. You can submit Form NC-BR electronically or you can mail it to: N. C. Department of Revenue, Post Office Box 25000, Raleigh, N. C. 27640.  After your application is processed, you will be mailed information concerning your N. C. withholding tax account number and pre-printed forms on which to report and submit your payment of the tax withheld.

    How can I get an application for a North Carolina Withholding Identification Number?

    The business registration application, Form NC-BR, can be obtained online, by mail, by contacting the Taxpayer Assistance and Collection Center at 1-877-252-3052 (toll free), or by visiting one of the Taxpayer Service Centers.

    Is there a fee charged to obtain a withholding identification number?

    There is no fee for the withholding identification number.

    Can I use my Federal employer’s identification number (FID) as my N. C. withholding identification number?

    No.  You must register for a N.C. withholding identification number by completing and submitting Form NC-BR to the N. C. Department of Revenue.

    How long does it takes to get a withholding tax number?

    Most applicants registering electronically will receive their account number instantly. Others will receive their account number within ten business days. If the registration is not filed electronically, it may take up to four weeks. Withholding tax numbers cannot be obtained over the telephone.

    Filing Withholding Reports

    How can I file withholding tax reports?

    You may file and pay online or by mail.  However, you must file Form NC-5Q, North Carolina Quarterly Income Tax Return by mail.  If you have not received your coupon booklet before your first payroll, go to the Department’s withholding tax website to file using the proper return for your filing frequency. For information and instructions on filing your Annual Withholding Reconciliation, Form NC-3, see eNC3 Filing Options and Waiver Information.

    When are withholding tax reports due to be filed and paid?

    Withholding tax returns are filed on a quarterly, monthly, or semi-weekly basis depending on the average amount of tax you withhold each month.  If you need more information, refer to page 11 of the publication NC-30, North Carolina Income Tax Withholding Tables and Instructions for Employers.  If you would like a copy of this publication, it can be downloaded from the Department’s website.

    What should I do if I need to file a return before I receive my assigned state withholding identification number?

    You can go to the withholding tax forms section on the Department’s website and download the NC-5 or NC-5P depending on your filing frequency to submit your return and payment.  Since you do not have the state issued withholding account number, you must write, “Applied For” on the return.  You cannot file a return on-line if you do not have the state issued account number.  Mail your return and payment to the Department by the due date for the filing frequency of your business.

    I have misplaced my coupon booklet.  What can I do?

    You may file online, obtain a blank form under the Tax Forms and Withholding Tax Section on the website or visit one of ourTaxpayer Service CentersDo not use old forms or a different tax period coupon to file a return.  Using incorrect forms will create errors and cause delays in the processing of returns.  You may order replacement books by contacting the Taxpayer Assistance Call Center toll free at 1-877-252-3052.

    If I had no employees during the last reporting period, do I need to file a return?

    Yes. You should file a zero return and submit the return on or before the due date. See the following question for an exception for seasonal employers.

    If I have a seasonal business, may I file just for the months that I operate?

    An employer who pays employees for six or fewer months during a year may register as a seasonal filer and indicate the months the employees are paid. An employer who is registered as a seasonal filer is not required to file a return for an off-season reporting period in which employees are not paid.

    Where do I mail my N. C. withholding tax returns?

    N. C. Department of Revenue
    P. O. Box 25000
    Raleigh, N. C. 27640

    You may also file online on the Department’s website.

    Where can I get assistance in preparing my withholding tax return?

    You can contact us at Capital Tax and Financial Services (919-847-4567), or you can call toll free 1-877-252-3052 or visit one of ourTaxpayer Service Centers for assistance.

    When completing the withholding tax return, there is no place to enter cents.  How do I complete the form?

    Round off the withholding to the nearest dollar amount (for example, if the withholding was $25.49 then enter $25.00, if it is $25.50 then enter $26.00); however, write the check for the correct amount withheld (example: $25.49 or $25.60).  Do not mark through the pre-printed zeros.

    Online Filing for Withholding

    How do I use the online filing services for withholding taxes?

    You may file the NC-5 or NC-5P and pay the tax online. If you need assistance call the E-Services Help line at 1-877-308-9103 between the hours of 8:00 to 5:00 Monday through Friday. You cannot file the NC-5Q, quarterly income tax withholding return through on-line filing services. For information and instructions on filing your Annual Withholding Reconciliation, Form NC-3, seeeNC3 Filing Options and Waiver Information.

    Filing Frequency and Due Dates

    How do I determine filing frequency and due dates?

    If you withhold an average of less than $250 from employee wages each month, you should file a return and pay the withheld taxes on a quarterly basis. The withholding return and payment is due by the last day of the month following the end of the quarter.

    If you withhold an average of at least $250 but less than $2,000 from employee wages each month, you should file a return and pay the withheld taxes on a monthly basis. Monthly returns and payments are due by the 15th day of the month following the month in which the tax was withheld. However, the return and payment for the month of December are due by January 31.

    If you withhold an average of at least $2,000 or more from employee wages each month, you should file a return and pay the withheld taxes at the same time you are required to file the reports and pay the tax withheld on the same wages for federal income tax purposes.  If payroll is made on Saturday, Sunday, Monday or Tuesday, it is due the following Friday of the same week.  If payroll is made on Wednesday, Thursday, or Friday, it is due the following Wednesday.

    When is the withholding tax return due if the due date falls on a Saturday, Sunday, or a holiday?

    The return is due the first business day following the Saturday, Sunday, or a holiday.

    Can the Department of Revenue provide information directly to a payroll service provider (PSP) to verify their client’s withholding tax filing frequency?

    When a taxpayer registers for withholding tax, the Department notifies the taxpayer of its filing requirement by letter. The letter indicates the filing frequency the taxpayer was assigned at the time of registration. The Department updates withholding tax filing frequencies once a year, and usually in September sends letters to the affected taxpayers indicating their new filing requirement. The new filing frequency is based on the average amount of withholding tax the taxpayer withheld in a 12 month period that ended on June 30.

    The Department is unable to provide verification of a change to a client’s withholding tax filing frequency directly to a PSP. PSPs should contact their clients for withholding tax filing frequency information.

    Employer Requirements

    If I purchased an existing business, can I use the previous owner’s withholding identification number?

    No, you must register for a new N.C. withholding identification number by completing and submitting Form NC-BR to the N.C. Department of Revenue.

    I am presently a proprietorship (partnership).  Do I have to obtain a new withholding identification number if I incorporate?

    Yes, you must register for a new N.C. withholding identification number by completing and submitting Form NC-BR to N. C. Department of Revenue.

    If I change the trade name of my business, do I need a new withholding identification number?

    No. However, you should advise the Department in writing of the details and the date the changes were made.

    How do I know how much N. C. income tax to withhold from my employees’ wages (salary)?

    Each employee must provide you with a signed N. C. Employee’s Withholding Allowance Certificate, either Form NC-4 EZ, Form NC-4, or Form NC-4 NRA. You should use these forms along with the tax tables found in the publication, NC-30, to determine how much income tax should be withheld from each employee’s paycheck.

    Is N. C. income tax withholding required on pensions and annuities?

    Yes. The definitions, provisions, and requirements for federal withholding on pensions from section 3405 of the Internal Revenue Code are applicable to State withholding on pensions. See Individual Income Tax directive PD-00-2 on this website for State withholding requirements for pensions and annuities.

    If I have a seasonal business, may I file just for the months that I operate?

    An employer who pays employees for six or fewer months during a year may register as a seasonal filer and indicate the months the employees are paid. An employer who is registered as a seasonal filer is not required to file a return for an off-season reporting period in which employees are not paid.

    How do I cancel my N. C. withholding tax identification number?

    If you go out of business, you should complete the “Out of Business Notification”, Form NC-BN, in your pre-printed coupon booklet or download and complete Form NC-BN from the Department’s website.  Within 30 days of the last payment of wages, you should file the annual reconciliation with the departmental copies of the wage and tax statements and give the employees their copies. For information and instructions on filing your Annual Withholding Reconciliation, Form NC-3, see eNC3 Filing Options and Waiver Information.

    How do I cancel my withholding identification number if I no longer have employees?

    If you no longer have employees, you should complete the “Out of Business Notification”,Form NC-BN, in your pre-printed coupon booklet or download and complete Form NC-BN from the Department’s website.  Within 30 days of the last payment of departmental copies wages, you should file the annual reconciliation with the wage and tax statements and give the employees their copies.  For information and instructions on filing your Annual Withholding Reconciliation, Form NC-3, see eNC3 Filing Options and Waiver Information.

    As an employer can I be held personally liable for withholding taxes I fail to withhold or pay?

    Yes

    Does North Carolina use a depository system for income tax withholding like the Internal Revenue Service?

    No. Tax withheld must be paid directly to the Department of Revenue when it is due.

    An employee refuses to provide a N. C. Employee’s Withholding Allowance Certificate, either Form NC-4 EZ, Form NC-4, or Form NC-4 NRA.  What should I do?

    You must withhold as if he or she is single with no allowances.

    As an employer, am I required to determine the correctness of the withholding allowance certificates (Form NC-4 EZ, Form NC-4, or Form NC-4 NRA) furnished to me by my employees?

    No. However, if you believe that the amount of allowances claimed by an employee is greater than the amount to which the employee is entitled, you should immediately advise the Department.  If the employee claims more than 10 allowances or claims “exempt” for withholding and the wages normally exceed $200 per week, you must submit a copy of the employee’s certificate (Form NC-4 EZ, Form NC-4, or Form NC-4 NRA) to the N. C. Department of Revenue.

     

    Penalties and Assessments

    Is there a penalty for failure to pay withholding tax?

    Yes, if tax is due.  There is a 10% penalty for late payment of the tax due.  There is also a penalty of 5% per month (max 25%) for failure to file the report when due.

    My filing frequency is accelerated and I am submitting my payment late. Do I owe the failure to file penalty?

    No. However, a 10% late payment penalty is due along with interest.

    I owe withholding tax but I cannot pay the full amount.  Can I set up a payment plan?

    Yes.  Call or visit one of our Taxpayer Service Centers for assistance to establish a payment plan.

    Employee Requirements

    I am a N. C. resident, but I work in another state.  Is my employer required to withhold N. C. income tax from my wages?

    An employee who is a resident of N. C. is subject to N. C. withholding on all of his wages, whether he works in N. C. or in another state.  EXCEPTION: N. C. withholding is not required if the other state in which the employee works requires the employer to withhold income for that state.

    I am a nonresident employee of a North Carolina company.  Is my employer required to withhold N. C. income taxes from my wages?

    Yes. A nonresident employee is subject to N. C. withholding tax on any part of his wages paid for services performed in this State.

    I am trying to file a prior year’s individual income tax return but I no longer have my W-2. Can you send me a copy?

    No. The North Carolina Department of Revenue does not retain W-2s once an employer’s account is in balance. You should contact the employer who issued the W-2 for a duplicate copy.

    Employee Withholding Allowance Certificates

    The employee has completed and signed a Federal Allowance Certificate (Form W-4).  Does the employee still have to complete a N. C. Employee’s Allowance Certificates (Form NC-4 EZ, Form NC-4, or Form NC-4 NRA)?

    Yes, the Federal Form W-4 is not acceptable.

    Withholding for Personal Services Performed in N.C. by Nonresidents

    What are “personal services?”

    The term “personal services” is not defined. However, income is generally derived in two ways: selling a product or providing a service. “Personal services” compensation is any compensation paid for providing a service. For purposes of the 4% withholding, the personal services subject to withholding are limited to personal services in connection with a performance, an entertainment or athletic event, a speech, or the creation of a film, radio, or television program.

    What constitutes a “speech” for purposes of the 4% withholding?

    Any speech that amuses, entertains, or informs is subject to the withholding requirement. This includes instructors at seminars that are open to the public for an admission fee or are for continuing education.

    The definition of a nonresident entity refers to foreign limited liability companies, partnerships, and corporations. What does the term “foreign” mean?

    The term “foreign” means a limited liability company, partnership, or corporation formed under the laws of any jurisdiction other than North Carolina.

    Exceptions to Withholding

    What proof should a venue require from a nonresident limited liability company or corporation that it has obtained a Certificate of Authority from the North Carolina Secretary of State or from a nonresident partnership that it has a permanent place of business in North Carolina?

    Corporations and limited liability companies that receive a Certificate of Authority from the Secretary of State are also issued an identification number. This number is different than the business’s federal employer identification number. The payer should request that the contractor provide the identification number issued by the Secretary of State and maintain that number in its records. For partnerships, the venue should request that the partnership provide its federal identification number and its North Carolina address and maintain that information in its records.

    What evidence should a payer obtain from a contractor that claims to be tax-exempt?

    The payer should obtain from the contractor a copy of the contractor’s federal determination letter of tax exemption or a letter of tax exemption from the Department of Revenue and maintain that information in its records.

    What evidence should a payer obtain from an individual who claims to be a resident of North Carolina?

    The payer should obtain the individual’s North Carolina address and social security number and maintain that information in its records.

    Can a contractor provide an affirmation or other statement that it will satisfy its income tax filing requirement and be exempt from withholding?

    No. The only exceptions to withholding are those identified in the Exceptions to Withholdingsection of Directive PD-98-3. A contractor that qualifies for one of the exceptions to withholding is still subject to North Carolina income tax on the compensation received for services performed in North Carolina and must file the appropriate North Carolina income tax return to report the compensation.

    If a contractor qualifies for one of the exceptions from withholding, does the payer still issue a Form NC-1099PS to the contractor and to the Department of Revenue?

    No. Form NC-1099PS is only required if North Carolina tax is withheld from the compensation.

    Can a contractor provide a statement or evidence to show that the 4% withholding will be in excess of its tax liability?

    No. Any excess withholding will be refunded upon the filing of an income tax return showing an overpayment of tax.

     

    Contract Between Venue and Entertainer

    Is a reimbursement for business expenses or a business expense allowance included in compensation and subject to withholding?

    Pursuant to Treasury Regulation § 1.274-5T(h), the payment of business expenses through a reimbursement or other expense allowance arrangement is excludable from income by a contractor if the expenses are substantiated to the payer by the contractor under an accountable plan. “Business expenses” means ordinary and necessary expenses for travel, transportation, and entertainment that are deductible under Internal Revenue Code section 162. To be properly substantiated under an accountable plan, the reimbursement must be paid only if receipts are furnished to substantiate the expenses or the expenses are allowed under an acceptable per diem arrangement. Those reimbursed or direct-billed business expenses that are not taxable pursuant to the above-cited regulation because they have been properly substantiated are not subject to the 4% withholding.

    If the venue pays business expenses directly instead of reimbursing the contractor, is the amount paid subject to withholding?

    No, to the extent the expenses qualify as business expenses under Code section 162.

    Is compensation paid to contract labor working at an athletic or entertainment souvenir sales operation subject to withholding?

    Yes, if the contract laborer is a nonresident and the compensation exceeds $1,500. The definition of contractor includes compensation for personal services in connection with a performance, etc. Services performed by the contract laborer at the souvenir sales operation are in connection with the event.

    A venue signs a $10,000 contract with a performer in 2015 for a performance scheduled for 2016. The venue is required to place $2,000 in an escrow account held by the performer’s agent at the time the contract is signed. How much withholding is required in each year?

    No withholding is required in 2015 because the compensation for performing services in North Carolina was not paid during that year. Amounts held in escrow are not considered received until released from escrow. The venue must withhold $400 ($10,000 X 4%) in 2016 when the services are performed and the compensation is paid.

     

    Contract Between Venue and Promoter (Agent)

    If a venue contracts with a promoter to find an entertainer and the venue enters into a separate contract with the performer, is the compensation paid to the promoter by the venue subject to withholding?

    No, unless the promoter physically performed services in North Carolina.

    If a venue contracts with a promoter to find an entertainer and the promoter enters into a contract with the performer, is the compensation paid to the promoter by the venue subject to withholding?

    The answer depends on whether the promoter is an entity or an individual. If the promoter is an entity, tax must be withheld because the entity is deemed to be doing business in North Carolina through its agent (the entertainer). If the promoter is an individual, tax is only required to be withheld from the payment to the promoter to the extent the promoter performed services in North Carolina.

    If a venue contracts with a promoter to find an entertainer and the promoter enters into a contract with the entertainer, who is responsible to withhold tax from the compensation paid to the entertainer?

    The promoter is responsible to withhold from the compensation paid to the entertainer because the entertainer is providing a personal service for the promoter.

    Can a promoter that is responsible for withholding from the compensation paid to an entertainer contract with the venue to withhold the tax?

    The Department of Revenue has no objection to a venue satisfying a promoter’s withholding responsibility if the venue is willing to accept that responsibility. However, the promoter is the entity required by law to withhold the tax and could be pursued by the Department of Revenue for collection if the tax is not withheld or is withheld but not remitted to the Department by the venue. A contractual provision between the promoter and venue shifting the responsibility to the venue is not binding on the Department since the Department is not a party to the contract.

    A promoter rents a facility from a venue and contracts with a nonresident entertainer. The venue sells tickets to the event and deducts the rent and other fees and expenses from the gross ticket proceeds before payment to the promoter. On what amount is withholding required?

    No withholding is required from the ticket proceeds paid to the promoter because the promoter is not providing a personal service for the venue. The promoter is required to withhold from the compensation paid to the entertainer because the entertainer is providing a personal service in North Carolina for the promoter.

     

    Withholding for Services Performed in N.C. by ITIN Contractors

    Who is an ITIN Contractor?

    An ITIN contractor is an ITIN holder who performs services in North Carolina for compensation other than wages. An ITIN holder is a person whose taxpayer identification number is an Individual Taxpayer Identification Number (ITIN). An ITIN is issued by the IRS to a person who is required to have a taxpayer identification number but does not have and is not eligible to obtain a social security number.

    Can I complete federal Form 1099-MISC in lieu of state Form NC-1099-ITIN?

    Yes, provided federal Form 1099-MISC reflects the North Carolina tax withheld.

    Where can I find more information concerning withholding for services performed in N.C. by ITIN Contractors?

    Further information is available on page 8 of Publication NC-30.

    Military Spouses Residency Relief Act of 2009

    What is the Military Spouses Residency Relief Act of 2009?

    Important Tax Information Regarding Spouses of United States Military Servicemembers

    What tax years are affected by the Military Spouses Residency Relief Act of 2009?

    The Act applies to tax years beginning on or after January 1, 2009.

    Under what conditions is the income received for services performed in North Carolina by the spouse of a servicemember exempt from North Carolina income tax and withholding tax?

    Effective for tax years beginning in 2009, the income earned for services performed in North Carolina by the spouse of a servicemember who is legally domiciled in a state other than North Carolina is exempt from North Carolina income tax if (1) the servicemember is present in North Carolina solely in compliance with military orders; (2) the spouse is in North Carolina solely to be with the servicemember; and (3) the spouse is domiciled in the same state as the servicemember. All three conditions must be met to qualify for exemption.

    Is the spouse of a servicemember required to pay North Carolina income tax and have North Carolina tax withheld on income earned for services performed in North Carolina if the servicemember was stationed in a state other than North Carolina?

    Yes, because all three conditions above would not have been met.

    The spouse of a servicemember has met the conditions to qualify for the exemption. However, the servicemember has been temporarily assigned to a combat zone. Can the spouse continue to exempt all income earned for services performed in North Carolina?

    Yes, if the servicemember’s assigned duty station remains North Carolina.

    What information must a servicemember’s spouse provide to the employer to qualify for exemption from North Carolina withholding tax?

    The spouse must complete Form NC-4 EZ, Employee’s Withholding Allowance Certificate, certifying that the spouse is not subject to North Carolina withholding because the conditions for exemption have been met. The spouse certifies the state of domicile and attaches a copy of the spousal military identification card and a copy of the servicemember’s most recent leave and earnings statement to Form NC-4 EZ.

    For how long is Form NC-4 EZ effective?

    If claiming exemption from withholding, the certificate is effective for one calendar year and a new certificate must be completed and given to the employer by February 16 to maintain exempt status for the following tax year. If a new Form NC-4 EZ is not provided by February 16, the employer is required to withhold based on single status with zero allowances. If, during the year, the spouse no longer meets the requirements for exemption on line 4, the spouse must complete a new Form NC-4 EZ.

    The spouse of a servicemember has met the conditions to qualify for the exemption. However, the servicemember is transferred to another state in compliance with military orders and the spouse does not move to the other state. Do the wages of the spouse remain exempt from withholding?

    No. The spouse must complete a new Form NC-4 EZ because the spouse no longer meets the conditions to qualify for exemption from withholding. Any other income earned by the spouse for services performed in North Carolina is subject to North Carolina income tax.

    The servicemember is domiciled in another state but earns non-military income while stationed in North Carolina. Is the non-military income subject to North Carolina income tax and withholding tax?

    Yes. Income received by a servicemember from non-military employment is subject to North Carolina income tax and withholding tax. In addition, income received from North Carolina sources attributable to the ownership of any interest in real or tangible personal property in North Carolina or derived from a business, trade, profession, or occupation carried on in North Carolina, or is derived from gambling activities in North Carolina is subject to North Carolina income tax.

     

    North Carolina State Lottery Winnings

    Is State tax required to be withheld on winnings paid by the North Carolina State Lottery Commission?

    Winnings of $600 or more paid by the North Carolina State Lottery Commission are subject to State withholding at the rate of 5.75% for taxable years beginning on or after January 1, 2015.

    Miscellaneous

    What is “SUTA”?

    “SUTA” is short for State Unemployment Tax Act. All benefits and administrative costs of the unemployment insurance program are paid by employers through State Unemployment Tax Act (SUTA) and the Federal Unemployment Tax Act (FUTA) payments. No money is withheld from workers’ checks to pay for unemployment benefits. Additional information about the State Unemployment Tax Act may be found on the Employment Security Commission of NC website.

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  • 12. Frequently Asked Questions About Withholding From Nonresidents for Personal Services Performed in North Carolina
     

    I – Definitions

    What are “personal services?”

    The term “personal services” is not defined. However, income is generally derived in two ways: selling a product or providing a service. “Personal services” compensation is any compensation paid for providing a service. For purposes of the 4% withholding, the personal services subject to withholding are limited to personal services in connection with a performance, an entertainment or athletic event, a speech, or the creation of a film, radio, or television program.

    What constitutes a “speech” for purposes of the 4% withholding?

    Any speech that amuses, entertains, or informs is subject to the withholding requirement. This includes instructors at seminars that are open to the public for an admission fee or are for continuing education.

    The definition of a nonresident entity refers to foreign limited liability companies, partnerships, and corporations. What does the term “foreign” mean?

    The term “foreign” means a limited liability company, partnership, or corporation formed under the laws of any jurisdiction other than North Carolina.

    II – Exceptions to Withholding

    What proof should a venue require from a nonresident limited liability company or corporation that it has obtained a Certificate of Authority from the North Carolina Secretary of State or from a nonresident partnership that it has a permanent place of business in North Carolina?

    Corporations and limited liability companies that receive a Certificate of Authority from the Secretary of State are also issued an identification number. This number is different than the business’s federal employer identification number. The payer should request that the contractor provide the identification number issued by the Secretary of State and maintain that number in its records. For partnerships, the venue should request that the partnership provide its federal identification number and its North Carolina address and maintain that information in its records.

    What evidence should a payer obtain from a contractor that claims to be tax-exempt?

    The payer should obtain from the contractor a copy of the contractor’s federal determination letter of tax exemption or a letter of tax exemption from the Department of Revenue and maintain that information in its records.

    What evidence should a payer obtain from an individual who claims to be a resident of North Carolina?

    The payer should obtain the individual’s North Carolina address and social security number and maintain that information in its records.

    Can a contractor provide an affirmation or other statement that it will satisfy its income tax filing requirement and be exempt from withholding?

    No. The only exceptions to withholding are those identified in the Exceptions to Withholdingsection of Directive PD-98-3. A contractor that qualifies for one of the exceptions to withholding is still subject to North Carolina income tax on the compensation received for services performed in North Carolina and must file the appropriate North Carolina income tax return to report the compensation.

    If a contractor qualifies for one of the exceptions from withholding, does the payer still issue a Form NC-1099PS to the contractor and to the Department of Revenue?

    No. Form NC-1099PS is only required if North Carolina tax is withheld from the compensation.

    Can a contractor provide a statement or evidence to show that the 4% withholding will be in excess of its tax liability?

    No. Any excess withholding will be refunded upon the filing of an income tax return showing an overpayment of tax.

    III – Contract Between Venue and Entertainer

    Is a reimbursement for business expenses or a business expense allowance included in compensation and subject to withholding?

    Pursuant to Treasury Regulation § 1.274-5T(h), the payment of business expenses through a reimbursement or other expense allowance arrangement is excludable from income by a contractor if the expenses are substantiated to the payer by the contractor under an accountable plan. “Business expenses” means ordinary and necessary expenses for travel, transportation, and entertainment that are deductible under Internal Revenue Code section 162. To be properly substantiated under an accountable plan, the reimbursement must be paid only if receipts are furnished to substantiate the expenses or the expenses are allowed under an acceptable per diem arrangement. Those reimbursed or direct-billed business expenses that are not taxable pursuant to the above-cited regulation because they have been properly substantiated are not subject to the 4% withholding.
    If the venue pays business expenses directly instead of reimbursing the contractor, is the amount paid subject to withholding?

    No, to the extent the expenses qualify as business expenses under Code section 162.

    Is compensation paid to contract labor working at an athletic or entertainment souvenir sales operation subject to withholding?

    Yes, if the contract laborer is a nonresident and the compensation exceeds $1,500. The definition of contractor includes compensation for personal services in connection with a performance, etc. Services performed by the contract laborer at the souvenir sales operation are in connection with the event.

    A venue signs a $10,000 contract with a performer in 2007 for a performance scheduled for 2008. The venue is required to place $2,000 in an escrow account held by the performer’s agent at the time the contract is signed. How much withholding is required in each year?

    No withholding is required in 2007 because the compensation for performing services in North Carolina was not paid during that year. Amounts held in escrow are not considered to be received until released from escrow. The venue must withhold $400 ($10,000 X 4%) in 2008 when the services are performed and the compensation is paid.

    IV – Contract Between Venue and Promoter (Agent)

    If a venue contracts with a promoter to find an entertainer and the venue enters into a separate contract with the performer, is the compensation paid to the promoter by the venue subject to withholding?

    No, unless the promoter physically performed services in North Carolina.

    If a venue contracts with a promoter to find an entertainer and the promoter enters into a contract with the performer, is the compensation paid to the promoter by the venue subject to withholding?

    The answer depends on whether the promoter is an entity or an individual. If the promoter is an entity, tax must be withheld because the entity is deemed to be doing business in North Carolina through its agent (the entertainer). If the promoter is an individual, tax is only required to be withheld from the payment to the promoter to the extent the promoter performed services in North Carolina.

    If a venue contracts with a promoter to find an entertainer and the promoter enters into a contract with the entertainer, who is responsible to withhold tax from the compensation paid to the entertainer?

    The promoter is responsible to withhold from the compensation paid to the entertainer because the entertainer is providing a personal service for the promoter.

    Can a promoter that is responsible for withholding from the compensation paid to an entertainer contract with the venue to withhold the tax?

    The Department of Revenue has no objection to a venue satisfying a promoter’s withholding responsibility if the venue is willing to accept that responsibility. However, the promoter is the entity required by law to withhold the tax and could be pursued by the Department of Revenue for collection if the tax is not withheld or is withheld but not remitted to the Department by the venue. A contractual provision between the promoter and venue shifting the responsibility to the venue is not binding on the Department since the Department is not a party to the contract.

    A promoter rents a facility from a venue and contracts with a nonresident entertainer. The venue sells tickets to the event and deducts the rent and other fees and expenses from the gross ticket proceeds before payment to the promoter. On what amount is withholding required?

    No withholding is required from the ticket proceeds paid to the promoter because the promoter is not providing a personal service for the venue. The promoter is required to withhold from the compensation paid to the entertainer because the entertainer is providing a personal service in North Carolina for the promoter.

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  • 1. What are our hours?
     

    Our standard office hours are: Monday - Thursday 9am – 3pm

    During tax season from February 1st through April 18th our hours are: Monday - Friday 9am-5pm

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  • 2. Where are we located?
     

    We are located in the Twin Forks Office Park on the corner of Six Forks and where Lynn and Spring Forest Road meet.  You can enter from Spring Forest, Sandy Forks or Six Forks.  We are in building 5910, Suite A, which is in the back, facing Sandy Forks and Six Forks.

     

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  • 3. Do I need an appointment?
     

    Our tax professionals are generally tied up throughout the day with appointments so it's important to schedule an appointment in advance. You can contact us at 919-847-4567, choose 0 for the front desk. Or you can schedule an appointment online by clicking on our appointment scheduler.

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  • 4. What information do I need for my appointment?
     

    Please see the checklist for an itemized list of what you will need to bring for both individual and business tax prep meetings.

    Individual Tax Prep Checklist

    Individual Tax Prep Checklist

    • Your Social Security Number or Federal Tax ID number
    • Your Spouse’s Full Name and Social Security Number/ Federal Tax ID number
    • New Clients (Your previous year Tax Return)
    • Current Mailing Address and Occupation Title

    Dependents

    • Children(s) Full Name as shown on Social Security Card
    • Children(s) Social Security numbers and Date(s) of birth
    • Child care records with mailing address and Tax Payers ID
    • Other Applicable adults: Please provide their income

    Employee Income Information

    • W-2

    Self-Employment Documents

    • 1099-MISC
    • Business Assets
    • Business Miles Driven for work (yearly), Parking, Tolls and applicable vehicle expense
    • Any other expenses associated with Home Office
    • Report of all Expenses (Bank statements, credit card statements, check stubs)
    • We prefer all receipts to be added and categorized. Any expenses not reconciled will incur an additional fee depending on time spent.

    Education Information

    • 1098-T from colleges (note: Law changes that only “Amounts Paid” is credited not “Amount Billed”)
    • Any Educational expenses
    • 1098-E for student loan interest paid

    Rental Property Information

    • Income
    • Expenses (Maintenance, Repairs, Decors, Utilities, etc.)
    • Property Assets (Hud/ Closing statements)

    Retirement, Health Contributions and Contributions to Retirement Plans

    • Retirement Income
    • 5498-SA HSA contributions
    • Pension/ IRA (Form 5498)/ Annuity 1099-R
    • Social Security/ RRB Income 1099-SSA/RRB-1099

    Investments and Savings

    • Interest and dividend income (1099-INT, 1099-OID, 1099-DIV)
    • Stock sales and buys(1099-B, 1099-S, 1099-B)

    Other Income

    • Unemployment, State Refunds (1099-G)
    • Gambling Income
    • Alimony received
    • HSA and long term care (1099-SA, 1099-LTC)
    • Jury Duty document of pay
    • Other 1099

    Affordable Care Act

    • 1095-A ( This form is from the Marketplace Exchange)
    • 1095-B and 1095-C (If you had insurance through any other source)
    • Market Place exemption certificate (ECN)

    Other Credits and Deductions

    • Moving expense records (not reimbursed)
    • 1098 Mortgage interest statements
    • If Refinanced, Sold or Purchased a home provided Closing Statement/ HUD1
    • State or Local Taxes Paid (Vehicle Property Taxes, Real estate Property taxes)
    • Cash/ Checks donations to Church, Schools and other credited charitable organizations
    • Documents of non-cash donations and charity
    • Healthcare medical expenses, doctors, co-pays, dentist, prescriptions, miles driven
    • Employment related expenses (dues, uniforms, cleaning, traveling, tools, telephone)
    • Job hunting expenses
    • Energy Saving home improvements
    • Estimated tax payments

     

    Business Tax Prep Checklist

    Business Tax Checklist

    • Balance Sheets & Profit and Loss Reports

    Income

    • Gross Income
    • Business Banking Interest 1099-INT
    • Other Income

    Expenses

    • Cost of Goods Sold (Inventory & Material and Supplies)
    • Advertising, Rent, Phone, travel, Insurance, Office supplies, etc.
    • Pay and commissions to Sub-Contractors 1099-MISC or a 1096
    • Depreciation Assets (Sale or Buy records)
    • Home Office Expenses (square footage of office space and total house square footage, home insurance/rental insurance, utilities, improvements to home office)
    • Salaries and Wages to employees (W-3)
    • Estimated Tax Payments
    • Health Insurance (premiums paid)
    • Health Reimbursement program totals
    • Vehicle Expenses (mileage, maintenance

     

     

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