North Carolina Administrative Code

17 NCAC 06B .3903 PART-YEAR RESIDENT An individual who moves his domicile into or out of North Carolina during the tax year, is a part-year resident. History Note: Authority G.S. 105-153.4; 105-262; Eff. June 1, 1990; Amended Eff. June 1, 1993; Pursuant to G.S. 150B-21.3A, rule i…

17 NCAC 06B .3904 TAXABLE INCOME OF NONRESIDENTS AND PART-YEAR RESIDENTS (a) Nonresidents and part-year residents shall prorate their adjusted gross income, adjusted as required under G.S. 105-153.5 and G.S. 105-153.6, to determine the portion that is subject to North Carolina ta…

17 NCAC 06B .3905 NONRESIDENT MEMBERS OF PROFESSIONAL ATHLETIC TEAMS (a) Determination of North Carolina source income. (1) To determine the portion of his or her total compensation for services rendered as a member of a professional athletic team during the taxable year that sha…

17 NCAC 06B .3906 PURCHASE OF REAL PROPERTY LOCATED IN North Carolina FROM A NONRESIDENT (a) Every individual, fiduciary, partnership, corporation, or unit of government buying real property located in North Carolina from a nonresident individual, partnership, estate, or trust sh…

17 NCAC 06B .4003 NONRESIDENT SHAREHOLDERS (a) A nonresident shareholder of an S corporation shall take into account only his or her share of the S corporation's income attributable to North Carolina in the numerator of the fraction in determining that portion of adjusted gross i…

17 NCAC 06B .4004 TAX CREDITS If part of the S corporation's income is earned within and taxed by another state, either to the individual or to the corporation, a resident shareholder is entitled to a tax credit on the individual or the estates and trusts income tax return for th…

17 NCAC 06B .4005 BASIS IN STOCK (a) Due to different tax treatment of an S corporation's income for State and federal purposes for taxable years beginning before January 1, 1989, a shareholder's basis in the stock of an S corporation for State tax purposes may be different than …

17 NCAC 06B .4006 DISTRIBUTIONS (a) A resident shareholder must take into account distributions from an S corporation in computing North Carolina taxable income to the extent the distributions are characterized as dividends or as gains pursuant to Section 1368 of the Internal Rev…

17 NCAC 06B .4007 FISCAL YEAR S CORPORATION History Note: Authority G.S. 105-131.1(b); 105-262; Eff. June 1, 1990; Repealed Eff. June 1, 1993.

17 NCAC 06B .4008 LOSSES History Note: Authority G.S. 105-131.3; 105-131.4; 105-262; Eff. February 1, 1991; Repealed Eff. June 1, 1993.

SECTION .4100 - TAXABLE STATUS OF DISTRIBUTIONS FROM REGULATED INVESTMENT COMPANIES 17 NCAC 06B .4101 GENERAL (a) Exempt interest dividends paid by a regulated investment company ("mutual fund") to a shareholder and not included in the shareholder's federal adjusted gross income …

17 NCAC 06B .4102 EXEMPT INTEREST DIVIDENDS History Note: Authority G.S. 105-153.5 (c); 105-262; Eff. June 1, 1990; Amended Eff. October 1, 1991; Repealed Eff. May 1, 2016.

17 NCAC 06B .4103 ORDINARY DIVIDENDS (a) Interest received in the form of dividends from regulated investment companies shall be deductible from an individual's adjusted gross income to the extent the distributions represent interest on direct obligations of the United States Gov…

SUBCHAPTER 6C - WITHHOLDING SECTION .0100 - WITHHOLDING INCOME TAXES 17 NCAC 06C .0101 GENERAL History Note: Authority G.S. 105-163.1 through 105-163.10; 105-163.17 to 105-163.24; 105-262; Eff. February 1, 1976; Repealed Eff. June 1, 1982.

17 NCAC 06C .0102 WITHHOLDING FROM WAGES History Note: Authority G.S. 105-163.1; 105-163.1(3); 105-163.1(4); 105-163.1(13); 105-163.2; 105-163.3; 105-163.6; 105-163.18; 105-262; Eff. February 1, 1976; Amended Eff. June 1, 1990; December 1, 1988; April 1, 1987; Repealed Eff. June …

17 NCAC 06C .0103 INCOME NOT SUBJECT TO WITHHOLDING History Note: Authority G.S. 105-154; 105-163.1(6); 105-163.11; 105-163.14; 105-163.18;105-262; Eff. February 1, 1976; Amended Eff. June 1, 1990; Repealed Eff. October 1, 1991.

17 NCAC 06C .0104 EXEMPTION CERTIFICATES History Note: Filed as a Temporary Amendment [(d) and (f)] Eff. November 16, 1981, for a period of 46 days to expire on January 1, 1982; Authority G.S. 105-163.3; 105-163.5; 105-163.18; 105-262; Eff. February 1, 1976; Amended Eff. January …

17 NCAC 06C .0107 EMPLOYEES To prevent double withholding and to anticipate any tax credits allowable to a North Carolina resident, withholding of North Carolina tax is not required from wages paid to a resident for services performed in another state if that state requires withh…

17 NCAC 06C .0108 EMPLOYEE-EMPLOYER RELATIONSHIP Everyone who performs services subject to the will and control of an employer, both as to what shall be done and how it shall be done, is an employee. An employer-employee relationship exists when the person for whom the services a…

17 NCAC 06C .0109 MINISTERS History Note: Authority G.S. 105-163.1A; 105-163.2; 105-163.18; 105-262; Eff. February 1, 1976; Amended Eff. October 1, 1991; August 1, 1986; February 21, 1979; Repealed Eff. June 1, 1993.

17 NCAC 06C .0110 COMMON CARRIERS History Note: Authority G.S. 105-163.2; 105-262; 49 U.S.C. Sec. 26; Sec. 301A; Sec. 923; Sec. 1512; Eff. February 1, 1976; Amended Eff. July 1, 1999; November 1, 1994; December 1, 1990; November 1, 1988; Repealed Eff. May 1, 2016.

17 NCAC 06C .0111 FEDERAL EMPLOYEES History Note: Authority G.S. 105-163.2; 105-163.18; 105-163.23; 105-262; Eff. February 1, 1976; Amended Eff. February 21, 1979; Repealed Eff. June 1, 1993.

17 NCAC 06C .0112 SEAMEN (a) The Vessel Worker Tax Fairness Act, 46 U.S.C. 11108 prohibits withholding of state income tax from the wages of a seaman on a vessel engaged in foreign, coastwide, intercoastal, interstate, or noncontiguous trade or an individual employed on a fishing…

17 NCAC 06C .0117 SUPPLEMENTAL WAGE PAYMENTS (a) If an employer pays supplemental wages separately (or combines them with regular wages in a single payment and specifies the amount of each), the income tax withholding method depends on whether the employer withholds income tax fr…

17 NCAC 06C .0118 SICK PAY History Note: Authority G.S. 105-163.1(4); 105-163.1(5); 105-163.1(6); 105-163.2; 105-163.18; 105-262; Eff. February 1, 1976; Repealed Eff. June 1, 1990.

17 NCAC 06C .0119 WAGE AND TAX STATEMENTS To meet the requirements of G.S. 105-163.7, an employer shall use the six-part Federal Form W-2 or any other alternate forms which have been designed for his payroll equipment if they provide the same information and the same number of co…

17 NCAC 06C .0120 RECIPROCITY OF TAX CREDITS North Carolina does not allow tax credit to nonresidents for income tax paid to another state or country; therefore, any relief from double taxation must be granted by the state of residence. North Carolina provides such relief to its …

17 NCAC 06C .0121 CREDIT FOR INCOME TAX WITHHELD History Note: Authority G.S. 105-163.10; 105-163.18; 105-262; Eff. February 1, 1976; Repealed Eff. June 1, 1982.

17 NCAC 06C .0122 FRINGE BENEFITS History Note: Authority G.S. 105-163.1(6); 105-163.2; 105-163.18; 105-262; Eff. July 1, 1986; Repealed Eff. June 1, 1990.

17 NCAC 06C .0123 EMPLOYEE'S WITHHOLDING ALLOWANCE CERTIFICATE (a) Requirement. -- Each new employee, before beginning employment, shall furnish his or her employer with a signed North Carolina Employee's Withholding Allowance Certificate, Form NC-4, Form NC-4 EZ, or Form NC-4 NR…

17 NCAC 06C .0124 ADDITIONAL WITHHOLDING ALLOWANCES (a) Deductions. -- Additional withholding allowances may be claimed by taxpayers expecting to have allowable itemized deductions exceeding the standard deduction or allowable adjustments to income. For most taxpayers, one additi…

17 NCAC 06C .0125 PENALTY History Note: Authority G.S. 105-163.5; 105-262; Eff. June 1, 1990; Repealed Eff. June 1, 1993.

17 NCAC 06C .0126 SUBMISSION OF CERTAIN WITHHOLDING ALLOWANCE CERTIFICATES (a) An employer is required to submit a copy of any withholding allowance certificate on which the employee claims more than 10 withholding allowances or claims exemption from withholding and the employee'…

SECTION .0200 - REPORTING AND PAYING TAX WITHHELD 17 NCAC 06C .0201 NEW withholding agents North Carolina does not use a deposit system for income tax withheld. Each new withholding agent who is required to withhold North Carolina income tax must complete and file with the Depart…

17 NCAC 06C .0202 REPORTS AND PAYMENTS History Note: Authority G.S. 105-163.6; 105-163.18; 105-262; Eff. February 1, 1976; Amended Eff. February 3, 1992; February 1, 1991; February 1, 1988; February 21, 1979; Repealed Eff. June 1, 1993.

17 NCAC 06C .0203 ANNUAL REPORTS (a) At the end of each calendar year, employers shall furnish wage and tax statements, Form W-2, to employees and Form NC-1099PS or NC-1099 ITIN to contractors from whom tax was withheld. Federal Form 1099-MISC may be filed in lieu of Form NC-1099…

17 NCAC 06C .0204 AMOUNTS WITHHELD ARE HELD IN TRUST FOR SECRETARY OF REVENUE (a) A withholding agent who fails to withhold or pay the amount required to be withheld is personally and individually liable for the tax, including any penalties and interest due. If a withholding agen…

SUBCHAPTER 6D - ESTIMATED TAX SECTION .0100 - FILING ESTIMATED INCOME TAX PAYMENTS 17 NCAC 06D .0101 FORMS History Note: Authority G.S. 105-163.15; 105-163.18; 105-254; 105-262; Eff. February 1, 1976; Amended Eff. February 1, 1988; August 1, 1986; Repealed Eff. June 1, 1993.

17 NCAC 06D .0102 REQUIREMENTS FOR FILING (a) A married couple may make joint payments of estimated income tax even if the couple is not living together; however, the married couple may not make joint estimated tax payments if the couple is separated under a decree of divorce or …

SECTION .0200 – Interest on UNDERPAYMENT OF ESTIMATED INCOME TAX 17 NCAC 06D .0201 GENERAL Interest may be due for underpayment of estimated income tax. The interest is computed separately for each payment period, therefore an individual may owe interest for an early period even …

17 NCAC 06D .0205 ESTIMATED TAX PAYMENTS (TAXABLE YEARS AFTER 1986) History Note: Authority G.S. 105-163.15; 105-163.18; 105-262; Eff. August 1, 1986; Repealed Eff. June 1, 1990.

17 NCAC 06D .0206 AVOIDING PENALTY History Note: Authority G.S. 105-163.15; 105-163.18; 105-262; Eff. June 1, 1990; Amended Eff. October 1, 1991; Repealed Eff. June 1, 1993.

17 NCAC 06D .0207 UNDERPAYMENTS (a) An underpayment is the excess of the required installment (or, if lower, the annualized income installment) for a payment period over the portion of the amount paid by the due date that is not applied to an underpayment for an earlier payment p…

17 NCAC 06D .0208 OVERPAYMENTS An overpayment for any period occurs when the withholding and estimated tax payments are more than the total of any underpayments for an earlier period plus the lesser of the required installment or the annualized income installment for the period. …

17 NCAC 06D .0209 DETERMINING AN UNDERPAYMENT (a) No interest attributable to the underpayment of estimated tax will be due if the estimated tax payments were made on time and the payment for each period was at least as much as either the required installment or the annualized in…

17 NCAC 06D .0210 PERIOD OF UNDERPAYMENT (a) If a payment of estimated tax is applied to an underpayment for an earlier period, but the payment is less than the underpayment, there shall be more than one period of underpayment for the earlier period. (b) The first period of under…

17 NCAC 06D .0211 FARMERS AND FISHERMEN History Note: Authority G.S. 105-163.15; 105-163.18; 105-262; Eff. June 1, 1990; Repealed Eff. June 1, 1993.

SUBCHAPTER 7B - STATE SALES AND USE TAX SECTION .0100 - GENERAL PROVISIONS 17 NCAC 07B .0101 IMPOSITION OF AND LIABILITY FOR COLLECTING AND REMITTING TAX History Note: Authority G.S. 105-164.4; 105-164.5; 105-164.6; 105-262; Eff. February 1, 1976; Amended Eff. June 1, 1992; Octob…

17 NCAC 07B .0104 REGISTRATION AND RETURNS (a) Certificate of Registration: (1) Before a person engages in business as a retailer, wholesale merchant, or facilitator liable for sales or use tax, the person shall obtain a Certificate of Registration from the Department. A Certific…

17 NCAC 07B .0105 MEASURE OF TAX DUE History Note: Authority G.S. 105-164.11; 105-262; Eff. February 1, 1976; Amended Eff. October 1, 2009; October 1, 1993; October 1, 1990; Expired Eff. June 1, 2019 pursuant to G.S. 150B-21.3A.