A venue signs a $10,000 contract with a performer in 2019 for a performance scheduled for 2020. The venue is required to place $2,000 in an escrow account held by the performer’s agent at the time the contract is signed. How much withholding is required in each year?

No withholding is required in 2019 because the compensation for performing services in North Carolina was not paid during that year. Amounts held in escrow are not considered to be received until released from escrow. The venue must withhold $400 ($10,000 X 4%) in 2020 when the services are performed and the compensation is paid.

Read more:

• University Controller’s Office, 4% Withholding Q&A
• NC Department of Revenue, FAQs About Withholding From Nonresidents for Personal Services Performed in North Carolina