North Carolina GS105-163.1 and GS 105-163.3 require that income tax of 4% be withheld from non-wage compensation exceeding $1,500 during a calendar year paid to non-resident individuals or entities for personal services performed in this state. This withholding requirement applies to personal services performed in North Carolina in connection with a performance, an entertainment or athletic event, a speech, or the creation of a film, radio, or televisions program. Additionally, North Carolina requires income tax of 4% to be withheld from payments of more than $1,500 paid during a calendar year to ITIN contractors for services provided within the State.
This policy seeks to ensure compliance with all applicable state tax laws.
The college shall withhold the statutorily required amount for personal services performed by non-resident individuals and entities in North Carolina. At the end of the year, the vendor who performed the service will receive a written statement that identifies the amount of taxes withheld.
Examples of Personal Services Subject to 4% withholding
- Athletic Event
- Speeches - includes any speech that amuses, entertains, or informs, including instructors at seminars that are open to the public for an admission fee or are for continuing education.
- Creation of a film, radio or TV program
- Nonresident individual/entities: Withholding is only required if the nonresident individual or nonresident entity is paid more than $1,500 during the calendar year, and if the payment is in connection with a performance, an entertainment or athletic event, a speech or the creation of a film, radio or television program
- ITIN Contractors: Withholding is only required if the ITIN contractor is paid more than $1,500 during the calendar year. An ITIN contractor is a contractor who performs services in North Carolina for compensation other than wages and whose taxpayer identification number is an ITIN number instead of a social security number.
Vendors Exempt from the 4% withholding: Requirement Vendors Exempt from the 4% withholding
- Corporations or limited liability companies that have obtained a certificate of authority from the Secretary of State. Prior to the end of employment, the employee must provide to the college the entity's identification number issued by the Secretary of State.
- A partnership with a permanent place of business in North Carolina.
- An entity that is exempt from North Carolina corporate tax under G.S. 105-130.11. This includes any organization that is exempt from federal income tax under the Internal Revenue Code. The entity must provide documentation of its tax exemption, such as a copy of the organizations federal determination letter or a letter of tax exemption from the NC Department of Revenue.
- An individual who is an ordained or licensed member of the clergy. The college must have the individual's address and social security number for its records.
Administration of Policy
The Controller/Director of Business Services shall oversee this policy and review it at least once every two years. Changes to this policy shall be made in accordance with the college's Policy on Policies.
Last Reviewed: Summer 2010