Beginning with the 2009 tax year, corporations subject to corporate income tax will be required to pay a surtax of 3% on the amount of North Carolina income tax due, before applying any payments or tax credits.

S corporations filing composite income tax returns on behalf of shareholders living outside of North Carolina must calculate the amount of North Carolina income due separately for each nonresident shareholder. That calculation must include the amount of individual income surtax based on the Surtax Percentage Table for individuals with a filing status of single.

For example, Company YY, a C corporation, calculates its total North Carolina income tax liability to be $14,500 before deducting any applicable payments or tax credits. YY must then multiply $14,500 times 3% ($14,500 * .03 = $435) and add the resulting amount to the “regular” income tax liability ($14,500 + $435 = $14,935) to produce the total NC income tax liability of $14,935. YY may then subtract any applied payments, estimated payments and applicable tax credits to determine whether a refund is due or additional income tax is owed.

Please note that there is no penalty/interest for underpayment of estimated tax if the underpayment is because of the surtax.