To: Campus Unit Finance Leads, University Business Managers, HR Leads and Secondary Contacts
From: Walter Miller, Director of Payroll Services
I am writing to remind you of the importance and process of notifying Payroll Services when an employee works outside of North Carolina. To notify Payroll of an out-of-state employee, please submit the form “Notice of Employee Working Outside of North Carolina” to MultistateTax@unc.edu and one of our Tax Team members will process the information. The best time to submit this form is before an employee has been paid for work out of state. However, all cases should be reported as soon as they are identified to best comply with various state requirements.
Failure to notify payroll services of an out-of-state employee can have the following consequences:
- The employee is taxed for the wrong state which can force them to have to do an additional tax return after the year ends to recover those monies.
- The employee is not taxed for the correct state which can result in their needing to pay overdue taxes with possibly penalties and interest.
- The university’s employer taxes and reporting are incorrect which creates noncompliance and financial risk to the employing entity.
- Unemployment insurance wage reporting may be sent to the wrong state which creates noncompliance for the university and problems if an employee needs to claim benefits later.
- Various other risks of noncompliance can exist such as related to Workers Compensation coverage or other state employment laws.
Please note that notifying departments or contacts outside of Payroll does not mean Payroll has this information. As a reminder, the Notice form can be submitted by anyone to identify an out-of-state employee, such as an HR representative, a supervisor, or an administrative support contact, or the employee can send the form to self-identify they are working outside the state of North Carolina as well.
During this busy hiring season and always, please be sure to keep in mind the need to let Payroll know of your out-of-state employees. If you have any questions or concerns, please feel free to email MultistateTax@unc.edu and one of our Tax Team members will assist you. Thank you.