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“A Better Place to Be” Paying Taxes: Payroll Tax Overview for North Carolina

North CarolinaThe ins and outs of payroll tax law vary widely by state, so filing and paying payroll taxes in a timely manner can be challenging. The following payroll tax overview should give companies a better sense of specific requirements in North Carolina, assist them in filing taxes accurately, and help put employment tax managers in a better place, as North Carolina’s slogan states.

How to file and pay withholding taxes

If opening a business in North Carolina, employers must register for a withholding tax identification number with the North Carolina Department of Revenue.[1] State law requires withholding of income tax from salaries and wages of all residents and for some non-residents.[2]  This process can take up to four weeks if the form is mailed, but by registering electronically, most applicants will receive the account number immediately (although, in some instances, it could take up to 10 days to receive the account number when registering electronically).[3]

There are three different assigned deposit schedules for withholding taxes: semiweekly, monthly and quarterly. Each schedule has a different due date, so employers should be sure to pay at the correct time.[4]

Do I have to pay via EFT?

If a company files semi-weekly or remits more than $240,000 annually (or an average of $20,000 per month), it must file and pay electronically via EFT. However, businesses may also voluntarily enroll in EFT. If not paying via EFT, businesses may pay online by bank draft, by using a debit card, or by check or money order via mail.[5]

Penalties and interest for withholding taxes

The North Carolina Department of Revenue charges a late filing penalty of 5 percent of the unpaid tax for each month the tax return is late (up to a maximum of 25 percent of tax).[6] In addition, a 10 percent penalty must be made for late payments (interest accrues from the date the tax was due). There is also a 5 percent penalty (up to a maximum of $1,000) if a taxpayer is required to make tax payments electronically but remits payment in another form without proper authorization.[7]

Once the notice of collection is received by employers, immediate action is required. Payments can be made online by bank draft, credit or debit card, by mailing a check or money order, or by paying at a local service center.

Credits and refunds for withholding taxes

Credits can be requested and are allowed for quarter-to-quarter credits.[8] Refund requests are also available.[9]

How to file and pay unemployment taxes

To file unemployment taxes, each employer must submit an employer status report to receive an identification number from the North Carolina Division of Employment Security.[10] Online registration is the fastest way to obtain an unemployment tax number.

Electronic payments are not required, but North Carolina encourages all taxpayers to make voluntary electronic payments.[11] Employers with 25+ employees are required to file electronically, and if filing online, employers must also pay online. Other payment options include a check or money order by mail, an online ACH credit, or an online credit or debit card payment.[12]

Penalties and interest for unemployment taxes

The penalty for a late filing from the North Carolina Division of Employment Security is 5 percent of the amount of the tax due per month (up to a maximum of 25 percent), and the late payment penalty is 10 percent of the amount of tax due per month (along with interest accruing on unpaid taxes).[13] If not paid, a notice of intent to file tax lien is issued. If not collected, a county tax lien may be filed against the employer.[14]

Credits and returns for unemployment taxes

Credits and refund requests must be made in writing. Refund requests are also available.[15]

Other resources

For additional resources, check out The Bridge Sponsored by ADP®, a new secure social networking community sponsored by ADP® that provides a unique peer-to-peer online forum allowing employers to interact, collaborate, communication, and share experiences and knowledge about a wide range of human capital management topics. Here you can find the North Carolina tax forum, as well as further details about North Carolina documents and requirements.

 

 

The information provided in this blog post is for informational purposes only and not for the purpose of providing accounting, legal, or tax advice. The information and services ADP provides should not be deemed a substitute for the advice of any such professional.  Such information is by nature subject to revision and may not be the most current information available).

 


[1] See 2014 Income Tax Withholding Tables and Instructions for Employers, pg. 4, http://www.dornc.com/downloads/nc30.pdf

[2] See 2014 Income Tax Withholding Tables and Instructions for Employers, pg. 3, http://www.dornc.com/downloads/nc30.pdf

[3] See North Carolina Department of Revenue Withholding Tax Frequently Asked Questions: Registration for Withholding Account, http://www.dornc.com/taxes/wh_tax/faq.html#registration

[4] See 2014 Income Tax Withholding Tables and Instructions for Employers, pg. 10, http://www.dornc.com/downloads/nc30.pdf

[5] See 2014 Income Tax Withholding Tables and Instructions for Employers, pg. 11, http://www.dornc.com/downloads/nc30.pdf

[6] See 2014 Income Tax Withholding Tables and Instructions for Employers, pg. 11, http://www.dornc.com/downloads/nc30.pdf

[7] See North Carolina Department of Revenue Electronic Funds Transfer Program, pg. 8,  http://www.dor.state.nc.us/downloads/EFTinfobook.pdf

[8] See North Carolina Department of Revenue Electronic Funds Transfer Program, pg. 9,  http://www.dor.state.nc.us/downloads/EFTinfobook.pdf

[9] See North Carolina Department of Revenue Electronic Funds Transfer Program, pg. 47,  http://www.dor.state.nc.us/downloads/EFTinfobook.pdf

[10] See North Carolina Division of Employment Security Unemployment Tax Number Application, https://www.ncesc1.com/business/web604/web604main.asp

[11] See North Carolina Division of Employment Security FAQ, https://www.ncesc1.com/Business/faqs/faqEFT.asp

[12] See North Carolina – Unemployment Insurance Tax Compliance, https://thebridge.adp.com/docs/DOC-1419#elec_filing_req

 

[13]  See North Carolina – Unemployment Insurance Tax Compliance, https://thebridge.adp.com/docs/DOC-1419#elec_filing_req

[14] See North Carolina – Unemployment Insurance Tax Compliance, https://thebridge.adp.com/docs/DOC-1419#elec_filing_req

[15] See North Carolina – Unemployment Insurance Tax Compliance, https://thebridge.adp.com/docs/DOC-1419#elec_filing_req


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