- Hiring preference: Employees living and working in-state when all other factors are equal
- As a North Carolina entity, UNC Charlotte has a responsibility to provide NC public sector jobs when possible
- Tax Office should be consulted before hiring or contracting with an out-of-state employee, or allowing a new agreement or extension of an agreement for staff teleworking or faculty duty station changes
- Applies to any employee who will be located outside of North Carolina when working for the University
- Applies to FT and PT faculty and staff; consecutive months of employment are defined in the “Faculty Duty Attestation form” or the “Staff Teleworking Agreement” (see Resources, below. Tax Office is included in the approval workflow of both forms.) Business Officers serve as the primary liaison. BOs and administrative staff are heavily relied upon to be aware of this guidance and discuss options to address department needs and requests.
- Due diligence and pre-approval dual approach
- See “Tax requirements: Out of state employees,” presented at Dean’s Council in 2018
- At this time, a workforce abroad* should be avoided if possible considering the direct and indirect costs of compliance. Employees and their departments “attest” to their awareness of the potential requirement and ability to pay expenses, if/when notified.
* If a material amount of the employee’s work time will be conducted abroad.
Out of State Tax and Employment Requirements
- To maintain a lawful out-of-state or international employee, regulatory and compliance requirements include employer registration, state tax withholding and reporting, unemployment insurance, workers’ compensation, employment and wage laws, required benefits, and foreign retirement systems. If the Tax Office does not know about these arrangements ahead of time, penalties, interest, and/or late fees may accrue.
- Pass-through costs (e.g., state-specific benefits) may apply to individual employees or their hiring departments.
Considerations Specific to a Workforce Abroad
- Paying international employees requires costly infrastructure to comply with international tax and employment laws. The fewer and more sporadic the instances, the greater the cost per employee.
- The University does not have the expertise in-house to gain or sustain depth of knowledge in ever-changing compliance areas associated with other countries.
- If the University prioritizes the need for a strategy for allowing a workforce abroad, we would need to contract with a PEO (professional employer organization). Estimated cost is approximately $20,000 per employee per country per year.**
** Per current pricing shared by UNC Chapel Hill.
- Out of State Employees: Tax Requirements
- AA-43: Faculty Duty Station Attestation
- HR Teleworking Request Form for SHRA and EHRA Non-Faculty Employees
How does this apply to faculty with accommodation who are teaching online this semester who may live in SC?
The South Carolina Department of Revenue has extended a special provision (see link here) that allows North Carolina employers to continue to withhold North Carolina taxes until December 31, 2020, if the telework arrangement is temporary due to COVID-19. However, some employees might prefer to switch their withholding to South Carolina. If you choose to switch your withholding to South Carolina, print the South Carolina Form SC W-4, South Carolina Employee’s Withholding Allowance Certificate, complete and sign it, and return it to the Payroll Department on campus (Reese Building 3rd Floor; do not email forms with Social Security numbers). Please note that this will require you to request that your withholding is changed back to North Carolina when you return to work on campus, which you will do by submitting an updated NC-4 in My UNC Charlotte and notifying the Payroll Department to stop withholding in South Carolina via an email to email@example.com. If you do not wish to change your withholding at this time, no action is required by you.
Is 50% of the time calculated based on the semester? So if a faculty teaches out of state/out of the country for 5 weeks, is that ok? Does this include an adjunct who is teaching one course online?
Current thresholds are: if more than 50% of job duties will be completed at a duty station outside the state of North Carolina and for more than 50% of consecutive weeks for a given academic term or full academic year.
Does this apply to faculty who are out of state while on paid leave? (e.g. FMLA or official Reassignment of Duties)?
Yes, if they are doing work for the University while in a different state.
What is the risk to the University?
The individual has the tax liability to pay; however, they may make a case to their department that they were not informed of the tax concern and need to report and expect the department to pay the taxes owed (this has occurred already). The risk to the University is financial in terms of back taxes owed, interest, and penalties that may be applied to the campus from the taxing entity (out of state local or state entity or international entity) due to non-compliance. This risk is tied to the dollar level and pattern of non-compliance, but regulations are becoming more closely monitored by all entities given better use of data matching and the states’ needs for tax revenue in the current environment.
So currently, under the COVID situation, can we simply ask faculty to get in touch with you since we do not know who is where really?
If they are working outside of North Carolina, yes.
If a faculty member lives in SC and is teaching online there throughout the pandemic, do they need to notify the University?
No. See answer to the first question.
How does the tax reporting apply now to faculty working remotely during this COVID period?
If you know in advance that the faculty or staff member will be conducting their job from an out of state location for more than 50% of their appointment basis then, yes, a Faculty Duty Station form should be submitted for review and to understand if the employee should be notified that there might be a potential individual tax implication for them. For example:
- If a 9-month faculty member knows they will be teaching remotely for both terms (Fall, Spring), they should submit the form.
- If a faculty member is taking FMLA for one semester, no form is needed because they will not be actively working for the University.
- If a faculty member is located internationally to work on a Reassignment of Duties (RoD) for one semester (or intermittently at 50% across the full academic year), then no form needs to be submitted for review.
- If a 12-month faculty administrator is located out of state to complete their duties for more than 6 months of time (regardless of if the time is consecutive or not), then a form should be submitted for review.
- If an adjunct faculty member is contracted to teach one semester (Fall term) and is teaching 100% remotely in terms of time and effort (no matter the number of courses assigned), then, a form should be submitted for review.
Academic Affairs Department Chairs Meeting 9/18/2020