Amends GS 105-163.1 to add a definition for buyer to Article 4A (Withholding; Estimated Income Tax for Individuals) of GS Chapter 105 as a person who pays compensation to a nonresident individual or nonresident entity for the purchase of real property and associated personal property in North Carolina. Makes conforming changes.
Enacts new GS 105-163.3A to require that buyers who purchase real estate and associated tangible personal property from a nonresident (1) individual or (2) entity withhold from the compensation paid to the nonresident seller the amount of state income taxes that is payable by the nonresident seller on the compensation received from the sale. Provides formulas for determining the amount of taxes to withhold, including guidelines regarding installment sales. Delineates types of sales and transfers of real property and any associated tangible personal property that are exempt from the withholding requirement.
Requires the buyer to file a return with the Secretary of Revenue and pay the withheld taxes to the Secretary on or before the 15th day of the month following the month in which the sale takes place. Specifies information to be included on the return and requires the buyer to provide the nonresident seller with a written statement of the information contained in the return. Provides that a buyer may refund to the seller amounts that were improperly withheld and specifies criteria to determine when an amount is improperly withheld by the buyer. Provides that a buyer may rely on a seller’s affidavit that states that withholding is not required under this statute because the seller is not a nonresident individual or entity. Provides that the affidavit must be made under penalty of perjury.
Effective for taxable years beginning on or after January 1, 2011.