Subject: Withholding from Nonresidents for Personal Services
Tax: Withholding Tax
Law: G.S. 105-163.1(1) and (2) and G.S. 105-163.3
Issued By: Personal Taxes Division
Date: August 28, 2007
Effective immediately, this directive amends Directive PD-98-3 to withdraw the section entitled When Services are Performed in North Carolina because the “duty day” method described in this section does not appropriately allocate income to North Carolina within the meaning of the statutes. Therefore, a payer who pays a nonresident contractor $1500 or more for personal services performed in this State must withhold 4% on all compensation paid for those services.
The remainder of PD-98-3 is still in effect.
If you have questions about this directive, you may call the Personal Taxes Division of the North Carolina Department of Revenue at (919) 733-3565.