§ 105-131.7. Returns; shareholder agreements; mandatory withholding. - North Carolina Statutes

§ 105‑131.7.  Returns;shareholder agreements; mandatory withholding.

(a)        An S Corporationincorporated or doing business in the State shall file with the Department anannual return, on a form prescribed by the Secretary, on or before the due dateprescribed for the filing of C Corporation returns in G.S. 105‑130.17.The return shall show the name, address, and social security or federalidentification number of each shareholder, income attributable to the State andthe income not attributable to the State with respect to each shareholder asdefined in G.S. 105‑131(4) and (5), and such other information as theSecretary may require.

(b)        The Departmentshall permit S Corporations to file composite returns and to make compositepayments of tax on behalf of some or all nonresident shareholders. TheDepartment may permit S Corporations to file composite returns and makecomposite payments of tax on behalf of some or all resident shareholders.

(c)        An S Corporationshall file with the Department, on a form prescribed by the Secretary, theagreement of each nonresident shareholder of the corporation (i) to file areturn and make timely payment of all taxes imposed by this State on theshareholder with respect to the income of the S Corporation, and (ii) to besubject to personal jurisdiction in this State for purposes of the collectionof any unpaid income tax, together with related interest and penalties, owed bythe nonresident shareholder. If the corporation fails to timely file anagreement required by this subsection on behalf of any of its nonresidentshareholders, then the corporation shall at the time specified in subsection(d) of this section pay to the Department on behalf of each nonresidentshareholder with respect to whom an agreement has not been timely filed anestimated amount of the tax due the State.  The estimated amount of tax due theState shall be computed at the rates levied in G.S. 105‑134.2(a)(3) onthe shareholder's pro rata share of the S Corporation's income attributable tothe State reflected on the corporation's return for the taxable period. An SCorporation may recover a payment made pursuant to the preceding sentence fromthe shareholder on whose behalf the payment was made.

(d)        The agreementsrequired to be filed pursuant to subsection (c) of this section shall be filedat the following times:

(1)        At the time theannual return is required to be filed for the first taxable period for whichthe S Corporation becomes subject to the provisions of this Part.

(2)        At the time theannual return is required to be filed for any taxable period in which thecorporation has a nonresident shareholder on whose behalf such an agreement hasnot been previously filed.

(e)        Amounts paid to theDepartment on account of the corporation's shareholders under subsections (b)and (c) constitute payments on their behalf of the income tax imposed on themunder Parts 2 and 3 of this Article for the taxable period. (1987(Reg. Sess., 1988), c. 1089, s. 1; 1989, c. 728, ss. 1.33, 1.35; 1991, c. 689,s. 301; 1998‑98, s. 7; 1999‑337, s. 24.)