Tax Type
Withholding Taxes
Description
VIRGINIA WITHHOLDING INCOME TAX REGULATIONS
Topic
Reports
Date Issued
01-01-1984
see date
These regulations for the Virginia Withholding Income Tax are published by the authority granted the State Tax Commissioner under Virginia Code § 58-48.6 (§ 58.1-203 effective January 1, 1985) and are subject to amendment, revision and supplemental regulations as required or appropriate.
Amendments, revisions and updates to these regulations will be issued as replacement pages, each replacement page having on it the date of revision.
Each regulation section is numbered to reference the section of Title 58.1 of the Code of Virginia which it interprets. The first three digits, 630, identify these regulations, for purposes of the Virginia Register of Regulations, as regulations of the Department of Taxation. The digits following the first hyphen indicate the tax type, and the digits following the second hyphen indicate the section of Title 58.1 being interpreted. For example, the section number 630-6-460 identifies the agency (630), the withholding income tax (6), and the section of Title 58.1, Code of Virginia, which is interpreted (460).
W. H. Forst
State Tax Commissioner
Virginia Department of Taxation
P. O. Box 6-L
Richmond, Virginia 23282
EFFECTIVE DATE: January 1, 1985, with retroactive effect according to § 58-48.6 of the Code of Virginia (recodified as § 58.1-203)
EXPIRATION DATE: N/A
SUPERSEDES: All previous documents and any oral directives in conflict herewith.
REFERENCES: Code of Virginia §§ 58.1-460 through 58.1-486 are
regulated herein.
AUTHORITY: § 58-48.6, Code of Virginia, and § 58.1-203 on
and after January 1, 1985.
SCOPE: Applicable to all persons subject to withholding income tax.
SUMMARY: These are initial regulations interpreting the Virginia withholding income fax, consisting of §§ 630-6-460 through 630-6-486. These regulations set forth the requirements and procedures for withholding income tax from employees and for reporting and paying withheld taxes and the consequences of failing to comply. They also serve to bring together in one document the applicable statutory provisions and explanation and illustration thereof.
ADOPTION DATE: September 19, 1984
Regulation
Section Subject Page
630-6-460 DEFINITIONS
630-6-461 REQUIREMENT OF WITHHOLDING
630-6-462 WITHHOLDING TABLES
630-6-463 OTHER METHODS OF WITHHOLDING
630-6-464 MISCELLANEOUS PAYROLL PERIOD APPLICABLE
TO WITHHOLDING IN PAYMENT OF CERTAIN WAGES;
WITHHOLDING ON BASIS OF AVERAGES WAGES
Wages Paid With Respect to Period
Which is Not Payroll Period
Wages Paid Without Regard to Any Period
Withholding on Basis of Average Wages
630-6-465 OVERLAPPING PAY PERIODS, AND PAYMENT
Vacation Allowances
630-6-466 ADDITIONAL WITHHOLDING
630-6-467 FAILURE OF EMPLOYER TO WITHHOLD TAX;
630-6-468 FAILURE OF EMPLOYER TO PAY OVER TAX WITHHELD
630-6-470 WITHHOLDING EXEMPTION CERTIFICATES
630-6-471 FRAUDULENT WITHHOLDING EXEMPTION CERTIFICATE
630-6-473 JEOPARDY ASSESSMENTS
630-6-474 LIABILITY OF EMPLOYER FOR FAILURE TO
630-6-475 PENALTY FOR FAILURE TO WITHHOLD
630-6-476 CONTINUATION OF EMPLOYER LIABILITY UNTIL
630-6-477 EXTENSIONS
630-6-478 WITHHOLDING TAX STATEMENTS FOR EMPLOYEES;
630-6-479 REFUND TO EMPLOYER; TIME
630-6-480 WITHHELD AMOUNTS CREDITED TO INDIVIDUAL
630-6-481 WITHHELD TAXES NOT DEDUCTIBLE IN COMPUTING
630-6-482 CERTAIN NONRESIDENTS; RECIPROCITY WITH
630-6-483 WITHHOLDING STATE INCOME TAXES OF FEDERAL
630-6-484 LIABILITY OF EMPLOYER FOR PAYMENT OF TAX
630-6-485 WILLFUL FAILURE BY EMPLOYER TO MAKE RETURN,
630-6-460. DEFINITIONS. For the purpose of these regulations and unless otherwise required by the context:
"Wages" means all remuneration for services performed by an employee for his employer, including the cash value of all remuneration paid in any medium other than cash. Wages paid in any form other than money are measured by the fair value of the goods, lodging, meals or other consideration given in payment for services. "Wages' does not include remuneration paid as follows:
1. As fees to a public official.
5. For services performed by a duly ordained, commissioned, or licensed minister of a church in the exercise of the ministry or by a member of a religious order in the exercise of duties required by such order.
6. For services not in the course of the employer's trade or business, to the extent paid in any medium other than cash.
7. To, or on behalf of, an employee or his beneficiary from or to a trust described in I.R.C. § 401(a) which is exempt from tax under I.R.C. § 501(a) at the time of such payment unless such payment is made to an employee of the trust as remuneration for services rendered as such employee and not as a beneficiary of the trust. A qualified cash or deferred arrangement meeting the requirements of I.R.C. § 401(k) is deemed to be a trust described in I.R.C. § 401(a).
8. To, or on behalf of, an employee or his beneficiary under or to an annuity plan which, at the time of such payment, meets the requirements of I.R.C. § 401(a)(3), (4), (5), and (6).
9. For acting in or service as a member of the crew of a (i) motion picture feature film, (ii) television series or commercial, or (iii) promotional film filmed totally or partially in Virginia by an individual or corporation which conducts business in Virginia for fewer than 90 days of the tax year and when such film, series or commercial is processed, edited and marketed outside Virginia. Every such individual or corporation shall, immediately after the filming of such portion of the film, series or commercial filmed in Virginia, file with the Commissioner on forms furnished by the Department, a list of the names and social security account numbers of each actor or crew member who is a resident of Virginia and is compensated by such individual or corporation. The exclusion from "wages" of the remuneration set forth in sections 1 through 9 above does not exempt the recipient from income tax liability for such remuneration.
"Payroll period" means a period for which a payment of wages is ordinarily made to the employee by his employer.
Miscellaneous payroll period" means a payroll period other than a daily, weekly, biweekly, semimonthly, monthly, quarterly, semiannual, or annual payroll period.
"Employee" includes an individual, whether a resident or nonresident of Virginia, who performs or performed any service in Virginia for wages, or a resident of Virginia who performs or performed any service outside Virginia for wages. The word "employee" also includes an officer, employee, or elected official of the United States, Virginia, or any other state or any territory, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing or an officer of a corporation.
"Employer" means the Commonwealth of Virginia, or any of its political subdivisions, the United States, or any agency or instrumentality of any one or more of the foregoing, or the person, whether a resident or a nonresident of Virginia, for whom as individual performs or performed any service as an employee, except that:
1. If the person, governmental unit, or agency thereof, for whom the individual performs or performed the service does not have control of the payment of the wages for such services, the term "employer" (except as used in the definition of "wages" herein) means the person having control of the payment of such wages. For example, where wages, such as certain types of pensions or retired pay, are paid by a trust and the person for whom the services were performed has no legal control over the payment of such wages, the trust is the "employer."
2. In the case of a person paying wages on behalf of a nonresident person not engaged is trade or business within Virginia or on behalf of any governmental unit or agency thereof not located within Virginia, the term "employer" (except as used in the definition of "wages" herein) means such person. For Virginia purposes, whether the relationship of employer and employee exists is determined in accordance with the test set forth in U.S. Treasury Reg. § 31.3401(c)-1.
"Commissioner" means the Tax Commissioner.
§ 630-6-461. REQUIREMENT OF WITHHOLDING. -Every employer making payment of wages is required to deduct and withhold with respect to the wages of each employee for each payroll period the following amount (and on the assumption that an equal amount will be collected for each similar payroll period with respect to a similar amount of wages for each payroll period during an entire calendar year): An amount approximately equal to the Virginia income tax liability of such employee after allowing for the personal exemptions and standard deduction to which such employee could be entitled on the basis of his status during such payroll period and after allowing for any credit available to the employee as provided by Va. Code § 58.1-332, but without allowing for any other deductions. In determining the amount to be deducted and withheld under these regulations, the employer is permitted to compute wages to the nearest dollar.
An employer shall not be required to deduct any amount upon a payment of wages to an employee if there is in effect with respect to such payment a withholding exemption certificate, in such form and containing such other information as the Commissioner may prescribe (currently Form VA-4a), furnished by the employee to the employer, certifying that the employee: (i) incurred no liability for Virginia income tax for his preceding taxable year; and (ii) anticipates that he will incur no liability for Virginia income tax for his current taxable year.
(This is statutory language. No further interpretation is required.)
§ 630-6-462. WITHHOLDING TABLES. The amount of tax to be withheld for each individual shall be based upon tables prepared and distributed by the Commissioner.
Example: Employer A pays his employees every month. Employee Z, who is single and claimed one personal exemption on Form VA-4 filed with Employer A, earns an annual gross salary of $12,000, payable $1,000 per month. From each of Employee Z's monthly paychecks Employer A withholds Virginia income tax of $34.90, based on the monthly withholding table contained in the Employer Income Tax Withholding Instructions issued by the Department of Taxation.
§ 630-6-463. OTHER METHODS OF WITHHOLDING. The Commissioner may grant permission to employers who do not desire to use the withholding tax tables provided in accordance with Va. Regs. § 630-6-462, to determine the amount of tax to be withheld by use of a method of withholding other than withholding tax tables, provided such method will withhold from each employee substantially the same amount of tax as would be withheld by use of the withholding tax tables. Employers who desire to determine the amount of tax to be withheld by a method other than by use of the withholding tax tables shall obtain permission from the Commissioner before the beginning of a payroll period for which the employer desires to withhold the tax by such other method. .Applications to use such other method must be accompanied by evidence establishing the need for the use of such method.
The following formula has been approved for computing the amount of Virginia income tax to be withheld by employers who process their payrolls on electronic data processing equipment:
A = Annualized taxable income
T = Tax to be withheld for pay period
W = Annualized tax to be withheld
Quarterly = 4 Weekly = 52
Monthly = 12 Daily = 300
(1). A = (G)P - [$650 + (600)E]
(2). If A is: W is:
$ 3,000 $ 5,000 $ 60 + 3% $ 3,000
$ 5,000 $12,000 $120 + 5% $ 5,000
$12,000 ... $470 + 5-3/4% $12,000
(3). T = W P
John Q. Taxpayer claims his wife and three children for Virginia with-holding purposes. He had $400 in gross wages for the SEMI-MONTHLY pay period.
(1). A = (G)P - [$650 + (600)E]
(2). W = 167.50
(3). W P = T
630-6-464. MISCELLANEOUS PAYROLL PERIOD APPLICABLE TO WITHHOLDING IN PAYMENT OF CERTAIN WAGES; WITHHOLDING ON BASIS OF AVERAGE WAGES.
A. Wages paid with respect to period which is not payroll period. If wages are paid with respect to a period which is not a payroll period, the amount to be deducted and withheld shall be that applicable in the case of a miscellaneous payroll period containing a number of days, including Sundays and holidays, equal to the number of days in the period with respect to which such wages are paid.
Example: Employer B is a painter who pays Employee C when a particular job is completed. Painting Ms. R's house took six days over an eight-day period. Employee C (who claims two personal exemptions) earned $75 for each of the six days worked, or $450 for the job. For withholding purposes, Employee C is deemed to have earned $56.25 ($450 divided by eight) for each day in the eight-day period. Using the daily or miscellaneous withholding tax table, $17.76 (or $2.22 for each of the eight days) of Virginia income tax was withheld.
B. Wares paid without regard to any period. In any case in which wages are paid by an employer without regard to any payroll period or other period, the amount to be deducted and withheld shall be that applicable in the case of a miscellaneous payroll period containing a number of days equal to the number of days, including Sundays and holidays, which have elapsed since the date of the last payment of such wages by such employer during the calendar year, or the date of commencement of employment with such employer during such year, or January 1 of such year, whichever is the later.
Example: Employer D is an automobile dealer who pays Employee E a commission when he sells automobiles. Employee E received commissions on March 30, 1983 and May 17, 1983 for several cars sold in 1983. The May 17 commission was $3,000. Employee E, who has been employed since June 15, 1982, claims two personal exemptions. Employer D withheld $123.36 from the May 17 commission, computed as follows:
C. Withholding on basis of average wages. An employer may determine the amount of tax to be deducted and withheld upon a payment of wages to an employee on the basis of the employee's average estimated wages, with necessary adjustments, for any quarter.
§ 630-6-465. OVERLAPPING PAY PERIODS, AND PAYMENT BY AGENT OR FIDUCIARY.
A. Supplemental wage payments. (1) An employee's remuneration may consist of wages paid for a payroll period and supplemental wages, such as bonuses, commissions, and overtime pay, paid for the same or a different period, or without regard to a particular period. When such supplemental wages are paid (whether or not at the same time as the regular wages), the amount of the tax required to be withheld under these regulations shall be determined in accordance with this section.
(2) The supplemental wages, if paid concurrently with wages for a payroll period, shall be aggregated with the wages paid for such payroll period. If not paid concurrently, the supplemental wages shall be aggregated with the wages paid or to be paid within the same calendar year for the last preceding payroll period or for the current payroll period. The amount of tax to be withheld shall be determined as if the aggregate of the supplemental wages and the regular wages constituted a single wage payment for the regular payroll period.
Example 1: A is employed as a salesman at a monthly salary of $130 plus commissions on sales made during the month. He claims one withholding exemption. During May 1982, A earns $300 in commissions, which together with the salary of $130 is paid on June 10, 1982. Under the wage bracket method the amount of the tax required to be withheld is shown in the table applicable to a monthly payroll period. Under this table $7.42 in tax is required to be withheld from wages of $430 with one personal exemption claimed.
Example 2: B is employed at an annual salary of $12,000 which is paid semimonthly in the amount of $500 on the 15th day and on the last day of each month. He also receives a bonus and commission determined at the end of each 3-month period. The bonus and commission for the 3-month period ending on September 30, 1982, amount to $250, which is paid on October 10, 1982. B has claimed four withholding exemptions. Under the wage bracket method, the amount of tax required to be withheld on $750, which is the aggregate of the $250 bonus and the last preceding semimonthly wage payment of $500 (which was paid September 30, 1982), is shown in the table applicable to a semimonthly payroll period to be $27.29. However, since tax in the amount of $13.60 was withheld on the (September 30, 1982) semimonthly wage payment of $500, the amount to be withheld on October 10, 1982, is $13.69 ($27.29 less $13.60).
If, however, supplemental wages are paid and tax has been withheld from the employee's regular wages, the employer may determine they tax to be withheld by using a flat percentage rate of 5.75, without allowance for exemption and without reference to any regular payment of wages.
B. Vacation allowances. Amounts of so-called "vacation allowances" shall be subject to withholding as though they were regular wage payments made for the period covered by the vacation. If the-vacation allowance is paid in addition to the regular wage payment for such period, the rules applicable with respect to supplemental wage payments shall apply to such vacation allowance.
C. Payroll period-of more than one year. If wages are paid to an employee for a payroll period of more than one year, for the purpose of determining the amount of tax required to be deducted and withheld in respect of such wages the amount of the tax shall be determined as. if such payroll period constituted a miscellaneous payroll period of 365 days.
D. Payment by agent or fiduciary. If a payment of wages is made to an employee by an employer through an agent, fiduciary, or other person who also has the control, receipt, custody, or disposal of, or pays the wages payable by another employer to such employee, the amount of the tax required to be withheld on each wage payment made through such agent, fiduciary, or person shall, whether the wages are paid separately on behalf of each employer or paid in a lump sum on behalf of all such employers, be determined upon the aggregate amount of such wage payment or payments in the same manner as if such aggregate amount had been paid by one employer. Hence, the tax shall be determined upon the aggregate amount of the wage payment. In any such case, each employer shall be liable for the return and payment of a pro rata portion of the tax so determined, such portion to be determined in the ratio which the amount contributed by the particular employer bears to the aggregate of such wages.
Example: Three companies maintain a central management agency which carries on the administrative work of the several companies. The central agency organization consists of a staff of clerks, bookkeepers, stenographers, etc., who are the coon employees of the three companies. The expenses of the central agency, including wages paid to the foregoing employees, are borne by the several companies in certain agreed proportions. Company X pays 45%, Company Y pays 35% and Company Z pays 20% of such expenses. The amount of the tax required to be withheld on the wages paid to persons employed in the central agency should be determined in accordance with the provisions of this section. In such event, Company X is liable as an employer for the return and payment of 45% of the tax required to be withheld, Company Y is liable for the return and payment of 35% of the tax and Company Z is liable for the return and payment of 20% of the tax.
§ 630-6-466. ADDITIONAL WITHHOLDING. -A. In addition to the tax required to be deducted and withheld in accordance with the provisions of these regulations, the employer and employee may agree that an additional amount of Virginia income tax shall be withheld from the employee's wages. The agreement shall be in writing and shall be in such form as the employer may prescribe. The agreement shall be effective for such period as the employer and employee mutually agree upon. However, unless the agreement provides for an earlier termination, either the employer, or the employee, by furnishing a written notice to the other may terminate the agreement effective with respect to the first payment of wages made on or after the first status determination date, January 1 or July 1, which occurs at least 30 days after the date on which such notice is furnished.
B. The amount deducted and withheld pursuant to an agreement between the employer and employee shall be set forth on the Employee's Withholding Exemption Certificate (currently Form VA-4) and shall be considered as tax required to be deducted and withheld under these regulations. All provisions of law and regulations applicable with respect to the tax required to be deducted and withheld under these regulations shall be applicable with respect to any amount deducted and withheld pursuant to the agreement.
§ 630-6-467. FAILURE OF EMPLOYER TO WITHHOLD TAX; PAYMENT BY RECIPIENT OF WAGES. If an employer fails to deduct and withhold the tax under these regulations, and thereafter the income tax against which the withholding tax may be credited is paid, the employer will not be liable for the withholding tax. However, despite such payment of the withholding tax, the employer will still be liable for any penalties or additions to the tax otherwise applicable to the employer's failure to deduct and withhold.
(This is statutory language. No further interpretation is required.)
§ 630-6-468. FAILURE OF EMPLOYER TO PAY OVER TAX WITHHELD. If any employer deducts and withholds taxes from the compensation of an employee but fails to pay over the money so deducted and withheld to Virginia, such employee shall not be held liable for the payment of such taxes but shall be entitled to a credit for the moneys so deducted and withheld as if the same had been paid over by the employer as required by law. The burden of proving that such an employer deducted and lawfully withheld Virginia income tax shall rest upon the employee.
(This is statutory language. No further interpretation is required.)
630-6-469. INCLUDED AND EXCLUDED WAGES. A. If a portion of the remuneration paid by an employer to his employee for services performed during a payroll period of not more than 31 consecutive days constitutes "wages" under Va. Regs. § 630-6-460 (that is, remuneration for services from which tax is required to be withheld), and the remainder does not constitute "wages," all the remuneration paid the employee for services performed during such period shall for purposes of withholding be treated alike, that is, either all included as wages or all excluded. The time during which the employee performs services, the remuneration of which constitutes wages under Va. Regs § 630-6-460, and the time during which the employee performs services, the remuneration for which under such section does not constitute wages, determine whether all the remuneration for services performed during the payroll period shall be deemed to be included or excluded.
B. If one-half or more of the employee's time in the employ of a particular employer in a payroll period is spent in performing services the remuneration for which constitutes wages, then all the remuneration paid the employee for services performed in that payroll period shall be deemed to be wages.
C. If less than one-half of the employee's time in the employ of a particular employer in a payroll period is spent in performing services the remuneration for which constitutes wages, then none of the remuneration paid the employee for services performed in that payroll period shall be deemed to be wages.
D. The application of the provisions of subsections A, B, and C may be illustrated by the following examples:
Example 1: Employer B, who operates a store and a farm, employs A to perform services in connection with both operations. The remuneration paid A for services on the farm is remuneration for agricultural labor and is not subject to withholding, and the remuneration for services performed in the store constitutes wages and is subject to withholding. Employee A is paid on a monthly basis. During a particular month, A works 120 hours on the farm and 80 hours in the store. None of the remuneration paid by B to A for services performed during the month is deemed to be wages, because the remuneration paid for less than one-half of the services performed during the month constitutes wages. During another month, A works 75 hours on the farm and 120 hours in the store. All of the remuneration paid by B to A for services performed during the month is deemed to be wages because the remuneration paid for one-half or more of the services performed during the month constitutes wages.
Example 2: Employee C is employed as a maid by D, a physician, whose home and office are located in the same building. The remuneration paid C for services in the home is remuneration for domestic service and is not subject to withholding, and the remuneration paid for her services in the office constitutes wages and is subject to withholding. C is paid on a weekly basis. During a particular week C works 20 hours in the home and 20 hours in the office. All of the remuneration paid [by] D to C for services performed during that week is deemed to be wages, because the remuneration paid for one-half or more of the services performed during the week constitutes wages. During another week C works 22 hours in the home and 15 hours in the office. None of the remuneration paid by D to C for services performed during that week is deemed to be wages, because the remuneration paid for less than one-half of the services performed during the week constitutes wages.
E. The rules set forth is this section do not apply (1) with respect to any remuneration paid for services performed by an employee for his employer if the periods for which remuneration is paid by the employer vary to the extent that there is no period that constitutes a payroll period within the meaning of Va. Regs. § 630-6-460, or (2) with respect to any remuneration paid for services performed by as employee for his employer if the payroll period for which remuneration is paid exceeds 31 consecutive days. In any such case withholding is required with respect to that portion of such remuneration which constitutes wages.
§ 630-6-470. WITHHOLDING EXEMPTION CERTIFICATES.
A. Generally. An employee receiving wages shall be entitled to the number of exemptions for which such employee qualifies under the laws of the United States relating to federal income taxes. However, the Commissioner, upon written request, may permit additional allowances where the amount withheld according to the Virginia Income Tax Withholding Tables will result in a substantial overpayment-of the employee's income tax. See Va. Regs. § 630-6-463.
B. On commencement of employment. At the time of commencing employment, every employee shall furnish his employer with a signed withholding exemption certificate relating to the withholding exemptions which the employee claims, which in no event shall exceed the sum of exemptions to which the employee is entitled. If an employee fails to furnish a certificate, an employer is required to withhold tax as if the employee had claimed no withholding exemptions.
C. When certificate takes effect. (1) First certificate furnished. Withholding exemption certificates shall take effect as of the beginning of the first payroll period ending, or the first payment of wages made without regard to a payroll period, on or after the date on which such certificate is so furnished, provided that certificates furnished before January 1, 1983 shall be considered as furnished on that date.
(2) Furnished to take place of existing certificate. A withholding exemption certificate which takes effect under these regulations shall continue in effect with respect to the employer until another such certificate takes effect under this section. If a withholding exemption certificate is furnished to take the place of an existing certificate, the employer, at the employer's option, may continue the old certificate in force with respect to all wages paid on or before the first status determination date, January 1 or July 1, which occurs at least 30 days after the date on which such new certificate is furnished.
D. Change of status which affects next calendar year. If, on any day during the calendar year, the number of withholding exemptions to which the employee will be, or may reasonably be expected to be, entitled at the beginning of his next taxable year is less than the number of exemptions to which the employee is entitled on such day, the employee must, on or before December 1 of the year in which the change occurs, unless such change occurs in December, furnish the employer with a withholding exemption certificate reflecting the decrease in the number of the exemptions which the employee claims with respect to such next taxable year, which shall in no event exceed the sum of exemptions to which the employee will be, or may reasonably be expected to be, so entitled. If the change occurs in December, the new certificate must be furnished within 10 days after the change occurs. The number of withholding exemptions to which an employee is entitled decreases, for example, because of the death of a spouse or dependent of the employee. If, on any day during the calendar year, the number of withholding exemptions to which the employee will be, or may reasonably be expected to be, entitled at the beginning of his next taxable year is greater than the number of withholding exemptions claimed by the employee on a withholding exemption certificate is effect on such day, the employee may, on or before December 1 of the year in which such change occurs, unless such change occurs in December, furnish his employer with a new withholding exemption certificate reflecting the increase in the number of withholding exemptions. If the change occurs in December, the certificate may be furnished on or after the date of which the change occurs. Exemption certificates furnished pursuant to this subsection shall not take effect with respect to any payment of wages made in the calendar year in which the certificate is furnished.
E. Change of status which .affects present calendar year. If, on any day during the calendar year, the number of withholding exemptions to which the employee is entitled is less than the number of withholding exemptions claimed by the employee on his withholding exemption certificate then in effect, the employee shall, within 10 days after the change occurs, furnish the employer with a new withholding exemption certificate relating to the withholding exemptions which the employee then claims, which shall in no event exceed the number of exemptions to which he is entitled on such day. The number of withholding exemptions to which an employee is entitled decreases, for example, for any of the following reasons:
(1) The employee's spouse for whom the employee has been claiming a withholding exemption is divorced or legally separated, or claims his own exemption on a separate certificate.
(2) The support of a dependent for whom the employee claimed an exemption is assumed by another so that the employee no longer expects to furnish more than half the support for the year.
(3) Employee finds that a dependent for whom employee claimed an exemption no longer qualifies because he has gross income of more than $1,000.
If, on any day during the calendar year, the number of withholding exemptions to which the employee it entitled is greater than the number of withholding exemptions claimed, the employee may furnish the employer with a new withholding exemption certificate relating to the withholding exemptions which the employee then claims, which shall in no event exceed the number of exemptions to which he. is entitled on such day.
F. Employee's certificate of exemption from withholding. An employee who has in effect the withholding exemption certificate set forth in Va. Reps. § 630-6-461 (the "certificate of exemption from withholding") must revoke such exemption within 10 days from the time he anticipates incurring income tax liability for the year. To revoke such exemption, the employee must furnish his employer a signed withholding exemption certificate as set forth in Va. Reps. $ 630-6-470B above. An employee's certificate of exemption from withholding shall expire on January 1 of the next year unless, before that date, the employee shall have filed with his employer a new certificate of exemption from withholding. An employee shall not file a certificate of exemption from withholding if his joint or separate return shows tax liability before the allowance of any credit for income tax withheld.
G. Form of certificate. Withholding exemption certificates shall be in such form and contain such information as the Commissioner may prescribe.
630-6-471. FRAUDULENT WITHHOLDING EXEMPTION CERTIFICATE OR FAILURE TO SUPPLY INFORMATION. Not regulated.
630-6-472. EMPLOYER'S RETURNS AND PAYMENTS OF WITHHELD TAXES.
Employer Filing Status. Every employer required to deduct and withhold from an employee's wages under these regulations shall file a return and pay over to the Commissioner on a calendar year basis (without regard to the taxable year of the employer or employee for income tax purposes) the amount required to be withheld hereunder as follows:
1. Quarterly Filer every employer whose monthly liability is less than $100 shall file a return and pay over withheld taxes, on or before April 30 for-the-first quarter, July 31 for the second quarter, October 31 for the third quarter, and January 31 for the fourth quarter.
2. Monthly Filer every employer whose average monthly liability can reasonably be expected to be $100 or more, shall file a return and pay over withheld taxes monthly, on or before the 20th day of the following month for each month which does not close a quarterly period and, for months that close a quarter (March, June, September and December), on or before the last day of the following month.
3. Quarter-Monthly Filer every employer whose average monthly liability can reasonably be expected to be $1,000 or more, shall file a return and pay over withheld taxes as in the preceding paragraph 2. In addition, if on the 7th, 15th, 22nd or last day of any month the aggregate amount required to be withheld exceeds $500, the employer must file a form with the Commissioner within three banking days following the close of such quarter-monthly period and pay the amount so withheld. However, when a quarter-monthly payment is due within three days of the due date for the filing of the monthly returns, the payment must be made with such return. Any employer making payment under this paragraph 3 will be deemed to have met the requirements hereof if at least 90% of actual tax liability for such period is paid. When a quarter-monthly payment is due within three days of the due date for the filing of the quarterly returns, the payment may be made within up to three banking days after the due date for the quarterly returns.
Example: Employer X has a liability of $400 for the quarter-monthly period ending January 7. Because his liability does not exceed $500 no payment is required for that period. His liability for the quarter-monthly period ending January 15 is also $400. Because the accumulated liability for the two quarter-monthly periods ($800) exceeds $500, Employer X must pay $800 within three banking days of January 15.
(4) Seasonal Filer employers who operate seasonal businesses may request permission to file returns only for those months in which Virginia income tax is withheld. The request must be in writing and, for employers who qualify, the returns must be filed on or before the 20th day of the following month which does not close a quarterly period and, for months that close a quarter (March, June, September and December), on or before the last day of the following month. The returns and forms filed under this section shall be in such form and contain such information as the Commissioner may prescribe.
§ 630-6-473. JEOPARDY ASSESSMENTS.
If the Commissioner has reason to believe that the collection of moneys, required to be withheld by the employer, is in jeopardy, he may require the employer to make such return and pay to the Commissioner such amounts required to be withheld at any time the Commissioner may designate therefor after the time when such amounts should have been deducted from wages and withheld.
(This is statutory language. No further interpretation is required.)
§ 630-6-474. LIABILITY OF EMPLOYER FOR FAILURE TO WITHHOLD.
An employer shall be personally and individually liable for sums required to be withheld and paid to the Commissioner which the employer fails to withhold or pay. Any sum or sums withheld in accordance with the provisions of these regulations shall be deemed to be held in trust for the Commonwealth.
(This is statutory language. No further interpretation is required.)
§ 630-6-475. PENALTY FOR FAILURE TO WITHHOLD.
A. Any employer required under the provisions of these regulations to deduct and withhold from wages and make returns and payments of amounts withheld to the Commissioner, who fails to withhold such amounts, or to make such returns, or who fails to remit amounts collected to the Commissioner, or otherwise fails to remit to the Commissioner as required by these regulations, shall be subject to a penalty equal to 5% of the amount that should have been properly withheld and paid over to the Commissioner for each month or fraction thereof, until paid, not to exceed 25%. In no case shall the penalty be less than $10, even if no tax is due for the period for which the filing of such return was required. Interest at a rate determined in accordance with Va. Code § 58.1-15, shall accrue on the tax until paid, or until an assessment is made, after which interest shall accrue as provided in Va. Code § 58.1-15. Such penalty and interest shall be assessed by the Commissioner and shall be collected by him in the same manner as the collection of taxes may be enforced under Title 58.1, Code of Virginia.
Example: Employer W is a monthly filer and has a liability of $300 for the monthly period ending January 31, and $0 for the monthly period ending February 28. He files no returns until April 6. At that time he is liable for penalty and interest (assume an annual interest rate of 12%) as follows:
Monthly period ending January 31
(return due February 20; return filed
April 6) - $300 liability
Penalty- deemed to be 2 months late,
at 5% per month 10% X $300 = $30.00
Interest - over a 45-day period between
February 20 and April 6 1.5% X $300 = $ 4.50
$34.50
Monthly period ending February 28
(return due March 20; return filed
April 6) - $0 liability
Penalty- deemed to be 1 month late.
at 5% per month, but 5% x $0 = $0,
so $10 minimum penalty applies $10.00
Interest - applied against $0 liability 0.00
$10.00
B. Upon failure of any employer to pay over any amounts withheld or required to be withheld by the employer under these regulations, the Commissioner may make assessments and enforce the collection of such amounts, including penalties, by any legal process provided for the enforcement of the collection of taxes under Title 58.1, Code of Virginia.
§ 630-6-476. CONTINUATION OF EMPLOYER LIABILITY UNTIL NOTICE.
Once an employer has become liable to file a return of withholding, he must continue to file a return even though no tax has been withheld; until such time as he notifies the Commissioner, in writing, that he no longer has employees or that he is no longer required to file such returns. If an employer requests in writing that he be permitted to change from one filing status to another on the ground that his with-holding liability has changed in dollar amount to the requirements of a different filing status, such change shall be permitted only at the beginning of a calendar year which is after the calendar year during which the request was made.
§ 630-6-477. EXTENSIONS.
The Commissioner may grant an employer a reasonable extension of time for filing any return under these regulations whenever in the Commissioner's judgment good cause exists. Whenever under the terms of such an extension the payment of any amount or amounts of money to the Commissioner by the employer is postponed for a longer period than 10 days from the time the same would be otherwise due and payable, the employer shall be charged with interest on such amount or amounts at a rate determined in accordance with Va. Code § 58.1-15, from the time such amount or amounts were originally due and payable to the date of payment under the terms of the extension.
(This is statutory language. No further interpretation is required.)
§ 630-6-478. WITHHOLDING TAX STATEMENTS FOR EMPLOYEES; EMPLOYERS MUST FILE ANNUAL RETURNS WITH COMMISSIONER.
A. Every person required to deduct and withhold from an employee's wages under these regulations shall furnish a written statement to each such employee in respect to the remuneration paid by such person to such employee during the calendar year, on or before January 31 of the succeeding year, or if his employment is terminated before the close of such calendar year, on the day on which the last payment of remuneration is made. The statement shall be in duplicate showing the following: (1) the name, address, and state and federal identification numbers of such person; (2) the name of the employee and his social security account number; (3) the total amount of wages; (4) the total amount deducted and withheld under these regulations by such employer; (5) the calendar year for which the wages were paid; and (6) the name of the state for which the tax was withheld. An employee should report any discrepancies in the written statement to the employer. If the employer determines an error has been made, the employer shall promptly issue to the employee an amended written statement and also send a copy of the amended statement to the Department with a written explanation.
B. Every employer shall file an annual return, currently Employee’s Annual Reconciliation of Virginia Income Tax Withheld, Form VA-6, with the Commissioner, not later than January 31 of the calendar year succeeding the calendar year in which wages were withheld from employees, or if the business is terminated during the year, within 30 days after the last month in which wages were paid. Such annual return shall be accompanied by an additional copy of each of the written statements furnished each employee under subsection A of this section, including any amendments thereto, and by an adding machine tape (or some other kind of listing) showing how the total amount of Virginia income tax withheld was computed. Employers who desire permission for magnetic tape reporting should make written request to the Department.
§ 630-6-479. REFUND TO EMPLOYER; TIME LIMITATION; PROCEDURE.
A. Adjustments. 1. If employer pays more than the amount of with-holding tax actually withheld for any taxable period, an adjustment should be made on the first return filed after the overpayment is discovered and on each of the following returns for the same calendar year until full. credit for the overpayment has been taken. If an employer pays less than the amount of withholding tax actually withheld for any taxable period, an adjustment should be made on the first return filed after the underpayment is discovered. The return on which the overpayment or underpayment is reported must contain a detailed explanation of the adjustment. If the overpayment is discovered on or after filing of the annual return set forth in Va. Regs. § 630-6-478B, a refund is permitted only to the extent that the amount of such overpayment was not deducted and withheld from the employee's wages. If a discovery of an underpayment is made by the Department an assessment can be made within three years from the date on which the tax became due and payable. If no return is filed, an assessment may be made within six years from the date on which the tax became due and payable. (See also Va. Regs. § 630-1-104.)
2. If in any calendar year an employer fails to withhold tax, or withholds less than the correct amount of tax from any wage payment, the employer remains liable for the correct amount of withholding tax and may withhold the amount of underwithholding from wages paid during the current calendar year to that employee following discovery of the underwithholding. Reimbursement is a matter for settlement between employer and employee.
3. If in any calendar year the employer deducts more than the correct amount of tax from a wage payment, the employer should repay the overcollection to the employee. The employer should keep employee's written receipt showing the date and amount of the repayment. Every overcollection for which the employee does not give a receipt must be reported and paid with the annual return for the calendar year in which the employer made the overcollection. In the alternative, the employer may reduce subsequent withholding from wage payments made during the current calendar year. If the overcollection is discovered on or after filing of the annual return set forth in Va. Regs. § 630-6-478B, the overcollection must be reported on the employee's written statement required by Va. Regs. § 630-6-478A. Refund is available upon the employee's filing of his income tax return.
B. Unless written application for refund or credit is received by the Commissioner from the employer in accordance with the statute of limitations and procedures of Va. Code § 58.1-1823 and regulations promulgated thereunder, no refund or credit shall be allowed.
C. Any employer aggrieved by any action of the Commissioner under this section may proceed in court under Va. Code §§ 58.1-1825 through 58.1-1830 as though the case involved an assessment of income taxes, except that (i) the limitation shall be two years from the date the alleged overpayment was made, and (ii) the time which shall elapse from the filing of the written application with the Commissioner under subsection B to the time when the Commissioner takes final action with respect to such application shall be excluded from the computation of the period of two years.
§ 630-6-480. WITHHELD AMOUNTS CREDITED TO INDIVIDUAL TAXPAYER; WITH-HOLDING STATEMENT TO BE FILED WITH RETURN.
The amount deducted and withheld under these regulations during any calendar year from the wages of any individual shall be allowed to the recipient of the income as a credit against the individual income tax imposed for the taxable year beginning in such calendar year. If more than one taxable year begins in a calendar year, such amount shall be allowed as a credit against the tax for the last taxable year so beginning. As a prerequisite to obtaining such credit the individual taxpayer must file with his income tax return one copy of the withholding statement provided for by Va. Code § 58.1-478.
(This is statutory language. No further interpretation is required.)
§ 630-6-481. WITHHELD TAXES NOT DEDUCTIBLE IN COMPUTING TAXABLE INCOME.
The tax deducted and withheld under these regulations shall not be allowed as a deduction either to the employer or to the recipient of the income in computing Virginia taxable income.
(This is statutory language. No further interpretation is required.)
§ 630-6-482. CERTAIN NONRESIDENTS; RECIPROCITY WITH OTHER STATES.
-A. Certain Nonresidents. Any employee who lives in Kentucky, Maryland, West Virginia, or the District of Columbia, and commutes each workday from one of the above named jurisdictions to his place of employment in Virginia and derives wages for service performed in Virginia for an employer within the geographical limits of Virginia, is required to file with his Virginia employer a Certificate of Nonresidence in the Commonwealth of Virginia, Form VA-3. The Virginia employer, upon receipt of such properly executed certificate from such an individual, will not withhold any Virginia income tax from such employee's wages.
If a nonresident who has filed such certificate subsequently moves to Virginia at any time during the calendar year, or otherwise loses his status as a commuter on a daily basis from one of the above named jurisdictions to his place of employment in Virginia, he must notify his Virginia employer of such fact within 10 days after the change of status and, in such case, the Virginia employer is required to withhold the full amount of Virginia income tax from the wages of such employee beginning with the first wages paid to such employee after the employer has been notified of the. change of status of such employee.
B. Pennsylvania Agreement.
Under an agreement made pursuant to Va. Code § 58.1-342B, Virginia residents are not required to pay income tax or file a return with, nor be subject to withholding on compensation earned from sources in, Pennsylvania. Pennsylvania residents earning wages in Virginia will be similarly exempted from income tax filing, payment, and withholding requirements imposed by Virginia. Nonresidents must file a certificate of nonresidence with their employer is order to relieve them of their tax liability to the state in which they are employed.
The agreement eliminates the previous need to file two returns when a taxpayer resides in one state and works in the other. Now such individuals need only file a tax return with their state of residence. Under the terms of the agreement, Pennsylvania employers not otherwise required to withhold by law will be encouraged to withhold and remit Virginia tax from wages paid to Virginia residents. Virginia employers are likewise encouraged to withhold and remit Pennsylvania tax from wages paid to residents of that state.
The agreement applies only to earned income. It does not apply to individuals who reside in both states for a portion of the year. Such individuals will continue to be liable for tax to each state on income received while residing in the state.
§ 630-6-483. WITHHOLDING STATE INCOME TAXES OF FEDERAL EMPLOYEES BY FEDERAL AGENCIES.
Beginning January, 1983, federal civil service retirees who reside in Virginia are eligible to have Virginia income tax withheld from regular, recurring, monthly civil service annuity payments. The amount of withholding must be at least $5.00 and must be in whole dollar amounts. A retiree authorizes the amount of withholding by seceding written notice to the Virginia Department of Taxation. The amount withheld can be changed or canceled at any time by the retiree's sending written notice to the Department.
State taxes can be withheld for only one state at a time and taxes can be withheld for no more than two states in any one calendar year. To change from one state to another, the retiree must first contact the old state to cancel his old request and contact the new state to request the new state to begin withholding.
Amounts withheld under this provision are treated in the same manner as any other withholding. For example, any excess of withholding over liability for a taxable year can be refunded to a retiree only upon his filing an income tax return for such taxable year.
§ 630-6-484. LIABILITY OF EMPLOYER FOR PAYMENT OF TAX REQUIRED TO BE WITHHELD.
The employer shall be liable for the payment to the Commissioner of the amounts required to be deducted and withheld under these regulations, whether or not the employer collects such amounts from the employee. An employer who has withheld and paid such amounts to the Commissioner-is relieved-of-liability-to any-person-for the amount of any such payment, and any excess of withholding over liability for a taxable year can be refunded to an employee only upon the employee's filing an income tax return for such taxable year.
§ 630-6-485. WILLFUL FAILURE BY EMPLOYER TO MAKE RETURN, TO WITHHOLD TAX, TO PAY IT OR TO FURNISH EMPLOYEE WITH WITHHOLDING STATEMENT; PENALTY. Not regulated.
§ 630-6-486. BAD CHECKS. Not regulated.
VIRGINIA WITHHOLDING INCOME TAX REGULATIONS
VIRGINIA DEPARTMENT OF TAXATION
January 1, 1985
January 1, 1985
INTRODUCTION
These regulations for the Virginia Withholding Income Tax are published by the authority granted the State Tax Commissioner under Virginia Code § 58-48.6 (§ 58.1-203 effective January 1, 1985) and are subject to amendment, revision and supplemental regulations as required or appropriate.
Amendments, revisions and updates to these regulations will be issued as replacement pages, each replacement page having on it the date of revision.
Each regulation section is numbered to reference the section of Title 58.1 of the Code of Virginia which it interprets. The first three digits, 630, identify these regulations, for purposes of the Virginia Register of Regulations, as regulations of the Department of Taxation. The digits following the first hyphen indicate the tax type, and the digits following the second hyphen indicate the section of Title 58.1 being interpreted. For example, the section number 630-6-460 identifies the agency (630), the withholding income tax (6), and the section of Title 58.1, Code of Virginia, which is interpreted (460).
W. H. Forst
State Tax Commissioner
Virginia Department of Taxation
P. O. Box 6-L
Richmond, Virginia 23282
VIRGINIA WITHHOLDING INCOME TAX
REGULATIONS
REGULATIONS
EFFECTIVE DATE: January 1, 1985, with retroactive effect according to § 58-48.6 of the Code of Virginia (recodified as § 58.1-203)
EXPIRATION DATE: N/A
SUPERSEDES: All previous documents and any oral directives in conflict herewith.
REFERENCES: Code of Virginia §§ 58.1-460 through 58.1-486 are
regulated herein.
AUTHORITY: § 58-48.6, Code of Virginia, and § 58.1-203 on
and after January 1, 1985.
SCOPE: Applicable to all persons subject to withholding income tax.
SUMMARY: These are initial regulations interpreting the Virginia withholding income fax, consisting of §§ 630-6-460 through 630-6-486. These regulations set forth the requirements and procedures for withholding income tax from employees and for reporting and paying withheld taxes and the consequences of failing to comply. They also serve to bring together in one document the applicable statutory provisions and explanation and illustration thereof.
ADOPTION DATE: September 19, 1984
TALE OF CONTENTS
Regulation
Section Subject Page
630-6-460 DEFINITIONS
-
-
-
-
-
- Wages
Payroll Period
Miscellaneous Payroll Period
Employee
Employer
Commissioner
- Wages
-
-
-
-
630-6-461 REQUIREMENT OF WITHHOLDING
630-6-462 WITHHOLDING TABLES
630-6-463 OTHER METHODS OF WITHHOLDING
630-6-464 MISCELLANEOUS PAYROLL PERIOD APPLICABLE
TO WITHHOLDING IN PAYMENT OF CERTAIN WAGES;
WITHHOLDING ON BASIS OF AVERAGES WAGES
Wages Paid With Respect to Period
Which is Not Payroll Period
Wages Paid Without Regard to Any Period
Withholding on Basis of Average Wages
630-6-465 OVERLAPPING PAY PERIODS, AND PAYMENT
-
-
-
- BY AGENT OR FIDUCIARY
-
-
Vacation Allowances
630-6-466 ADDITIONAL WITHHOLDING
630-6-467 FAILURE OF EMPLOYER TO WITHHOLD TAX;
-
-
-
- PAYMENT BY RECIPIENT OF WAGES
-
-
630-6-468 FAILURE OF EMPLOYER TO PAY OVER TAX WITHHELD
630-6-470 WITHHOLDING EXEMPTION CERTIFICATES
-
-
-
-
-
- Generally
On Commencement of Employment
When Certificate Takes Effect
Change of Status Which Affects-
- Next Calendar Year
-
- Present Calendar Year
-
- Exemption from Withholding
-
- Generally
-
-
-
-
630-6-471 FRAUDULENT WITHHOLDING EXEMPTION CERTIFICATE
-
-
-
-
-
- OR FAILURE TO SUPPLY INFORMATION
- OR FAILURE TO SUPPLY INFORMATION
-
-
-
-
-
-
-
-
-
- TAXES
-
-
-
-
630-6-473 JEOPARDY ASSESSMENTS
630-6-474 LIABILITY OF EMPLOYER FOR FAILURE TO
-
-
-
-
-
- WITHHOLD
-
-
-
-
630-6-475 PENALTY FOR FAILURE TO WITHHOLD
630-6-476 CONTINUATION OF EMPLOYER LIABILITY UNTIL
-
-
-
-
-
- NOTICE
-
-
-
-
630-6-477 EXTENSIONS
630-6-478 WITHHOLDING TAX STATEMENTS FOR EMPLOYEES;
-
-
-
-
-
- EMPLOYERS MUST FILE ANNUAL RETURNS WITH
COMMISSIONER
- EMPLOYERS MUST FILE ANNUAL RETURNS WITH
-
-
-
-
630-6-479 REFUND TO EMPLOYER; TIME
-
-
-
-
-
- LIMITATION; PROCEDURE
-
-
-
-
630-6-480 WITHHELD AMOUNTS CREDITED TO INDIVIDUAL
-
-
-
-
-
- TAXPAYER; WITHHOLDING STATEMENT TO BE
FILED WITH RETURN
- TAXPAYER; WITHHOLDING STATEMENT TO BE
-
-
-
-
630-6-481 WITHHELD TAXES NOT DEDUCTIBLE IN COMPUTING
-
-
-
-
-
- TAXABLE INCOME
-
-
-
-
630-6-482 CERTAIN NONRESIDENTS; RECIPROCITY WITH
-
-
-
- OTHER STATES
-
-
630-6-483 WITHHOLDING STATE INCOME TAXES OF FEDERAL
-
- EMPLOYEES BY FEDERAL AGENCIES
630-6-484 LIABILITY OF EMPLOYER FOR PAYMENT OF TAX
-
- REQUIRED TO BE WITHHELD
630-6-485 WILLFUL FAILURE BY EMPLOYER TO MAKE RETURN,
-
- TO WITHHOLD TAX, TO PAY IT OR TO
FURNISH EMPLOYEE WITH WITHHOLDING
STATEMENT; PENALTY
- TO WITHHOLD TAX, TO PAY IT OR TO
630-6-460. DEFINITIONS. For the purpose of these regulations and unless otherwise required by the context:
"Wages" means all remuneration for services performed by an employee for his employer, including the cash value of all remuneration paid in any medium other than cash. Wages paid in any form other than money are measured by the fair value of the goods, lodging, meals or other consideration given in payment for services. "Wages' does not include remuneration paid as follows:
1. As fees to a public official.
-
- (i) The individual performs service not in the course of the employer's trade or business for such employer for some portion of the day on at least 24 days (whether or not consecutive) during such calendar quarter; or
- (ii) The individual was regularly employed (as determined under subparagraph
(i) above) by the employer in the performance of service not in the course of the employer's trade or business during the preceding calendar quarter.
- (i) The individual performs service not in the course of the employer's trade or business for such employer for some portion of the day on at least 24 days (whether or not consecutive) during such calendar quarter; or
5. For services performed by a duly ordained, commissioned, or licensed minister of a church in the exercise of the ministry or by a member of a religious order in the exercise of duties required by such order.
6. For services not in the course of the employer's trade or business, to the extent paid in any medium other than cash.
7. To, or on behalf of, an employee or his beneficiary from or to a trust described in I.R.C. § 401(a) which is exempt from tax under I.R.C. § 501(a) at the time of such payment unless such payment is made to an employee of the trust as remuneration for services rendered as such employee and not as a beneficiary of the trust. A qualified cash or deferred arrangement meeting the requirements of I.R.C. § 401(k) is deemed to be a trust described in I.R.C. § 401(a).
8. To, or on behalf of, an employee or his beneficiary under or to an annuity plan which, at the time of such payment, meets the requirements of I.R.C. § 401(a)(3), (4), (5), and (6).
9. For acting in or service as a member of the crew of a (i) motion picture feature film, (ii) television series or commercial, or (iii) promotional film filmed totally or partially in Virginia by an individual or corporation which conducts business in Virginia for fewer than 90 days of the tax year and when such film, series or commercial is processed, edited and marketed outside Virginia. Every such individual or corporation shall, immediately after the filming of such portion of the film, series or commercial filmed in Virginia, file with the Commissioner on forms furnished by the Department, a list of the names and social security account numbers of each actor or crew member who is a resident of Virginia and is compensated by such individual or corporation. The exclusion from "wages" of the remuneration set forth in sections 1 through 9 above does not exempt the recipient from income tax liability for such remuneration.
"Payroll period" means a period for which a payment of wages is ordinarily made to the employee by his employer.
Miscellaneous payroll period" means a payroll period other than a daily, weekly, biweekly, semimonthly, monthly, quarterly, semiannual, or annual payroll period.
"Employee" includes an individual, whether a resident or nonresident of Virginia, who performs or performed any service in Virginia for wages, or a resident of Virginia who performs or performed any service outside Virginia for wages. The word "employee" also includes an officer, employee, or elected official of the United States, Virginia, or any other state or any territory, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing or an officer of a corporation.
"Employer" means the Commonwealth of Virginia, or any of its political subdivisions, the United States, or any agency or instrumentality of any one or more of the foregoing, or the person, whether a resident or a nonresident of Virginia, for whom as individual performs or performed any service as an employee, except that:
1. If the person, governmental unit, or agency thereof, for whom the individual performs or performed the service does not have control of the payment of the wages for such services, the term "employer" (except as used in the definition of "wages" herein) means the person having control of the payment of such wages. For example, where wages, such as certain types of pensions or retired pay, are paid by a trust and the person for whom the services were performed has no legal control over the payment of such wages, the trust is the "employer."
2. In the case of a person paying wages on behalf of a nonresident person not engaged is trade or business within Virginia or on behalf of any governmental unit or agency thereof not located within Virginia, the term "employer" (except as used in the definition of "wages" herein) means such person. For Virginia purposes, whether the relationship of employer and employee exists is determined in accordance with the test set forth in U.S. Treasury Reg. § 31.3401(c)-1.
"Commissioner" means the Tax Commissioner.
§ 630-6-461. REQUIREMENT OF WITHHOLDING. -Every employer making payment of wages is required to deduct and withhold with respect to the wages of each employee for each payroll period the following amount (and on the assumption that an equal amount will be collected for each similar payroll period with respect to a similar amount of wages for each payroll period during an entire calendar year): An amount approximately equal to the Virginia income tax liability of such employee after allowing for the personal exemptions and standard deduction to which such employee could be entitled on the basis of his status during such payroll period and after allowing for any credit available to the employee as provided by Va. Code § 58.1-332, but without allowing for any other deductions. In determining the amount to be deducted and withheld under these regulations, the employer is permitted to compute wages to the nearest dollar.
An employer shall not be required to deduct any amount upon a payment of wages to an employee if there is in effect with respect to such payment a withholding exemption certificate, in such form and containing such other information as the Commissioner may prescribe (currently Form VA-4a), furnished by the employee to the employer, certifying that the employee: (i) incurred no liability for Virginia income tax for his preceding taxable year; and (ii) anticipates that he will incur no liability for Virginia income tax for his current taxable year.
(This is statutory language. No further interpretation is required.)
§ 630-6-462. WITHHOLDING TABLES. The amount of tax to be withheld for each individual shall be based upon tables prepared and distributed by the Commissioner.
Example: Employer A pays his employees every month. Employee Z, who is single and claimed one personal exemption on Form VA-4 filed with Employer A, earns an annual gross salary of $12,000, payable $1,000 per month. From each of Employee Z's monthly paychecks Employer A withholds Virginia income tax of $34.90, based on the monthly withholding table contained in the Employer Income Tax Withholding Instructions issued by the Department of Taxation.
§ 630-6-463. OTHER METHODS OF WITHHOLDING. The Commissioner may grant permission to employers who do not desire to use the withholding tax tables provided in accordance with Va. Regs. § 630-6-462, to determine the amount of tax to be withheld by use of a method of withholding other than withholding tax tables, provided such method will withhold from each employee substantially the same amount of tax as would be withheld by use of the withholding tax tables. Employers who desire to determine the amount of tax to be withheld by a method other than by use of the withholding tax tables shall obtain permission from the Commissioner before the beginning of a payroll period for which the employer desires to withhold the tax by such other method. .Applications to use such other method must be accompanied by evidence establishing the need for the use of such method.
The following formula has been approved for computing the amount of Virginia income tax to be withheld by employers who process their payrolls on electronic data processing equipment:
Legend
-
- G = Gross pay for pay period
P = Pay periods per year
- G = Gross pay for pay period
A = Annualized taxable income
T = Tax to be withheld for pay period
W = Annualized tax to be withheld
Pay Period Conversion (P)
-
- Annually = 1 Semi-Monthly = 24
Quarterly = 4 Weekly = 52
Monthly = 12 Daily = 300
Formula
(1). A = (G)P - [$650 + (600)E]
(2). If A is: W is:
-
- Not over $3,000 ……………………… 2% of A
Over …. But not of excess-
-
-
- over over:
-
-
-
- Not over $3,000 ……………………… 2% of A
$ 3,000 $ 5,000 $ 60 + 3% $ 3,000
$ 5,000 $12,000 $120 + 5% $ 5,000
$12,000 ... $470 + 5-3/4% $12,000
(3). T = W P
John Q. Taxpayer claims his wife and three children for Virginia with-holding purposes. He had $400 in gross wages for the SEMI-MONTHLY pay period.
(1). A = (G)P - [$650 + (600)E]
-
- A = (400) 24 - [650 + (600)5]
-
- A = 9,600 - (650 + 3,000)
-
- A = 9,600 - 3,650 = 5,950
(2). W = 167.50
(3). W P = T
-
- 167.50 24 = 6.98
$6.98 = T = tax to be withheld for pay period
- 167.50 24 = 6.98
630-6-464. MISCELLANEOUS PAYROLL PERIOD APPLICABLE TO WITHHOLDING IN PAYMENT OF CERTAIN WAGES; WITHHOLDING ON BASIS OF AVERAGE WAGES.
A. Wages paid with respect to period which is not payroll period. If wages are paid with respect to a period which is not a payroll period, the amount to be deducted and withheld shall be that applicable in the case of a miscellaneous payroll period containing a number of days, including Sundays and holidays, equal to the number of days in the period with respect to which such wages are paid.
Example: Employer B is a painter who pays Employee C when a particular job is completed. Painting Ms. R's house took six days over an eight-day period. Employee C (who claims two personal exemptions) earned $75 for each of the six days worked, or $450 for the job. For withholding purposes, Employee C is deemed to have earned $56.25 ($450 divided by eight) for each day in the eight-day period. Using the daily or miscellaneous withholding tax table, $17.76 (or $2.22 for each of the eight days) of Virginia income tax was withheld.
B. Wares paid without regard to any period. In any case in which wages are paid by an employer without regard to any payroll period or other period, the amount to be deducted and withheld shall be that applicable in the case of a miscellaneous payroll period containing a number of days equal to the number of days, including Sundays and holidays, which have elapsed since the date of the last payment of such wages by such employer during the calendar year, or the date of commencement of employment with such employer during such year, or January 1 of such year, whichever is the later.
Example: Employer D is an automobile dealer who pays Employee E a commission when he sells automobiles. Employee E received commissions on March 30, 1983 and May 17, 1983 for several cars sold in 1983. The May 17 commission was $3,000. Employee E, who has been employed since June 15, 1982, claims two personal exemptions. Employer D withheld $123.36 from the May 17 commission, computed as follows:
-
- (1) Average daily wage is computed by dividing total amount of wage payment ($3,000) by number of days since March 30, 1983 (48 days) [March 30, 1983 is used as the starting date because it is the later of March 30, 1983, June 15, 1982 or January 1, 1983] . . . . . . . . . . . . . . . . . . $ 62.50
-
- (2) Amount of withholding from daily or miscellaneous table on wages of
$62.50 for two exemptions ($2.57) multiplied by 48 days . . . . . . . . . . . $123.36
- (2) Amount of withholding from daily or miscellaneous table on wages of
C. Withholding on basis of average wages. An employer may determine the amount of tax to be deducted and withheld upon a payment of wages to an employee on the basis of the employee's average estimated wages, with necessary adjustments, for any quarter.
§ 630-6-465. OVERLAPPING PAY PERIODS, AND PAYMENT BY AGENT OR FIDUCIARY.
A. Supplemental wage payments. (1) An employee's remuneration may consist of wages paid for a payroll period and supplemental wages, such as bonuses, commissions, and overtime pay, paid for the same or a different period, or without regard to a particular period. When such supplemental wages are paid (whether or not at the same time as the regular wages), the amount of the tax required to be withheld under these regulations shall be determined in accordance with this section.
(2) The supplemental wages, if paid concurrently with wages for a payroll period, shall be aggregated with the wages paid for such payroll period. If not paid concurrently, the supplemental wages shall be aggregated with the wages paid or to be paid within the same calendar year for the last preceding payroll period or for the current payroll period. The amount of tax to be withheld shall be determined as if the aggregate of the supplemental wages and the regular wages constituted a single wage payment for the regular payroll period.
Example 1: A is employed as a salesman at a monthly salary of $130 plus commissions on sales made during the month. He claims one withholding exemption. During May 1982, A earns $300 in commissions, which together with the salary of $130 is paid on June 10, 1982. Under the wage bracket method the amount of the tax required to be withheld is shown in the table applicable to a monthly payroll period. Under this table $7.42 in tax is required to be withheld from wages of $430 with one personal exemption claimed.
Example 2: B is employed at an annual salary of $12,000 which is paid semimonthly in the amount of $500 on the 15th day and on the last day of each month. He also receives a bonus and commission determined at the end of each 3-month period. The bonus and commission for the 3-month period ending on September 30, 1982, amount to $250, which is paid on October 10, 1982. B has claimed four withholding exemptions. Under the wage bracket method, the amount of tax required to be withheld on $750, which is the aggregate of the $250 bonus and the last preceding semimonthly wage payment of $500 (which was paid September 30, 1982), is shown in the table applicable to a semimonthly payroll period to be $27.29. However, since tax in the amount of $13.60 was withheld on the (September 30, 1982) semimonthly wage payment of $500, the amount to be withheld on October 10, 1982, is $13.69 ($27.29 less $13.60).
If, however, supplemental wages are paid and tax has been withheld from the employee's regular wages, the employer may determine they tax to be withheld by using a flat percentage rate of 5.75, without allowance for exemption and without reference to any regular payment of wages.
B. Vacation allowances. Amounts of so-called "vacation allowances" shall be subject to withholding as though they were regular wage payments made for the period covered by the vacation. If the-vacation allowance is paid in addition to the regular wage payment for such period, the rules applicable with respect to supplemental wage payments shall apply to such vacation allowance.
C. Payroll period-of more than one year. If wages are paid to an employee for a payroll period of more than one year, for the purpose of determining the amount of tax required to be deducted and withheld in respect of such wages the amount of the tax shall be determined as. if such payroll period constituted a miscellaneous payroll period of 365 days.
D. Payment by agent or fiduciary. If a payment of wages is made to an employee by an employer through an agent, fiduciary, or other person who also has the control, receipt, custody, or disposal of, or pays the wages payable by another employer to such employee, the amount of the tax required to be withheld on each wage payment made through such agent, fiduciary, or person shall, whether the wages are paid separately on behalf of each employer or paid in a lump sum on behalf of all such employers, be determined upon the aggregate amount of such wage payment or payments in the same manner as if such aggregate amount had been paid by one employer. Hence, the tax shall be determined upon the aggregate amount of the wage payment. In any such case, each employer shall be liable for the return and payment of a pro rata portion of the tax so determined, such portion to be determined in the ratio which the amount contributed by the particular employer bears to the aggregate of such wages.
Example: Three companies maintain a central management agency which carries on the administrative work of the several companies. The central agency organization consists of a staff of clerks, bookkeepers, stenographers, etc., who are the coon employees of the three companies. The expenses of the central agency, including wages paid to the foregoing employees, are borne by the several companies in certain agreed proportions. Company X pays 45%, Company Y pays 35% and Company Z pays 20% of such expenses. The amount of the tax required to be withheld on the wages paid to persons employed in the central agency should be determined in accordance with the provisions of this section. In such event, Company X is liable as an employer for the return and payment of 45% of the tax required to be withheld, Company Y is liable for the return and payment of 35% of the tax and Company Z is liable for the return and payment of 20% of the tax.
§ 630-6-466. ADDITIONAL WITHHOLDING. -A. In addition to the tax required to be deducted and withheld in accordance with the provisions of these regulations, the employer and employee may agree that an additional amount of Virginia income tax shall be withheld from the employee's wages. The agreement shall be in writing and shall be in such form as the employer may prescribe. The agreement shall be effective for such period as the employer and employee mutually agree upon. However, unless the agreement provides for an earlier termination, either the employer, or the employee, by furnishing a written notice to the other may terminate the agreement effective with respect to the first payment of wages made on or after the first status determination date, January 1 or July 1, which occurs at least 30 days after the date on which such notice is furnished.
B. The amount deducted and withheld pursuant to an agreement between the employer and employee shall be set forth on the Employee's Withholding Exemption Certificate (currently Form VA-4) and shall be considered as tax required to be deducted and withheld under these regulations. All provisions of law and regulations applicable with respect to the tax required to be deducted and withheld under these regulations shall be applicable with respect to any amount deducted and withheld pursuant to the agreement.
§ 630-6-467. FAILURE OF EMPLOYER TO WITHHOLD TAX; PAYMENT BY RECIPIENT OF WAGES. If an employer fails to deduct and withhold the tax under these regulations, and thereafter the income tax against which the withholding tax may be credited is paid, the employer will not be liable for the withholding tax. However, despite such payment of the withholding tax, the employer will still be liable for any penalties or additions to the tax otherwise applicable to the employer's failure to deduct and withhold.
(This is statutory language. No further interpretation is required.)
§ 630-6-468. FAILURE OF EMPLOYER TO PAY OVER TAX WITHHELD. If any employer deducts and withholds taxes from the compensation of an employee but fails to pay over the money so deducted and withheld to Virginia, such employee shall not be held liable for the payment of such taxes but shall be entitled to a credit for the moneys so deducted and withheld as if the same had been paid over by the employer as required by law. The burden of proving that such an employer deducted and lawfully withheld Virginia income tax shall rest upon the employee.
(This is statutory language. No further interpretation is required.)
630-6-469. INCLUDED AND EXCLUDED WAGES. A. If a portion of the remuneration paid by an employer to his employee for services performed during a payroll period of not more than 31 consecutive days constitutes "wages" under Va. Regs. § 630-6-460 (that is, remuneration for services from which tax is required to be withheld), and the remainder does not constitute "wages," all the remuneration paid the employee for services performed during such period shall for purposes of withholding be treated alike, that is, either all included as wages or all excluded. The time during which the employee performs services, the remuneration of which constitutes wages under Va. Regs § 630-6-460, and the time during which the employee performs services, the remuneration for which under such section does not constitute wages, determine whether all the remuneration for services performed during the payroll period shall be deemed to be included or excluded.
B. If one-half or more of the employee's time in the employ of a particular employer in a payroll period is spent in performing services the remuneration for which constitutes wages, then all the remuneration paid the employee for services performed in that payroll period shall be deemed to be wages.
C. If less than one-half of the employee's time in the employ of a particular employer in a payroll period is spent in performing services the remuneration for which constitutes wages, then none of the remuneration paid the employee for services performed in that payroll period shall be deemed to be wages.
D. The application of the provisions of subsections A, B, and C may be illustrated by the following examples:
Example 1: Employer B, who operates a store and a farm, employs A to perform services in connection with both operations. The remuneration paid A for services on the farm is remuneration for agricultural labor and is not subject to withholding, and the remuneration for services performed in the store constitutes wages and is subject to withholding. Employee A is paid on a monthly basis. During a particular month, A works 120 hours on the farm and 80 hours in the store. None of the remuneration paid by B to A for services performed during the month is deemed to be wages, because the remuneration paid for less than one-half of the services performed during the month constitutes wages. During another month, A works 75 hours on the farm and 120 hours in the store. All of the remuneration paid by B to A for services performed during the month is deemed to be wages because the remuneration paid for one-half or more of the services performed during the month constitutes wages.
Example 2: Employee C is employed as a maid by D, a physician, whose home and office are located in the same building. The remuneration paid C for services in the home is remuneration for domestic service and is not subject to withholding, and the remuneration paid for her services in the office constitutes wages and is subject to withholding. C is paid on a weekly basis. During a particular week C works 20 hours in the home and 20 hours in the office. All of the remuneration paid [by] D to C for services performed during that week is deemed to be wages, because the remuneration paid for one-half or more of the services performed during the week constitutes wages. During another week C works 22 hours in the home and 15 hours in the office. None of the remuneration paid by D to C for services performed during that week is deemed to be wages, because the remuneration paid for less than one-half of the services performed during the week constitutes wages.
E. The rules set forth is this section do not apply (1) with respect to any remuneration paid for services performed by an employee for his employer if the periods for which remuneration is paid by the employer vary to the extent that there is no period that constitutes a payroll period within the meaning of Va. Regs. § 630-6-460, or (2) with respect to any remuneration paid for services performed by as employee for his employer if the payroll period for which remuneration is paid exceeds 31 consecutive days. In any such case withholding is required with respect to that portion of such remuneration which constitutes wages.
§ 630-6-470. WITHHOLDING EXEMPTION CERTIFICATES.
A. Generally. An employee receiving wages shall be entitled to the number of exemptions for which such employee qualifies under the laws of the United States relating to federal income taxes. However, the Commissioner, upon written request, may permit additional allowances where the amount withheld according to the Virginia Income Tax Withholding Tables will result in a substantial overpayment-of the employee's income tax. See Va. Regs. § 630-6-463.
B. On commencement of employment. At the time of commencing employment, every employee shall furnish his employer with a signed withholding exemption certificate relating to the withholding exemptions which the employee claims, which in no event shall exceed the sum of exemptions to which the employee is entitled. If an employee fails to furnish a certificate, an employer is required to withhold tax as if the employee had claimed no withholding exemptions.
C. When certificate takes effect. (1) First certificate furnished. Withholding exemption certificates shall take effect as of the beginning of the first payroll period ending, or the first payment of wages made without regard to a payroll period, on or after the date on which such certificate is so furnished, provided that certificates furnished before January 1, 1983 shall be considered as furnished on that date.
(2) Furnished to take place of existing certificate. A withholding exemption certificate which takes effect under these regulations shall continue in effect with respect to the employer until another such certificate takes effect under this section. If a withholding exemption certificate is furnished to take the place of an existing certificate, the employer, at the employer's option, may continue the old certificate in force with respect to all wages paid on or before the first status determination date, January 1 or July 1, which occurs at least 30 days after the date on which such new certificate is furnished.
D. Change of status which affects next calendar year. If, on any day during the calendar year, the number of withholding exemptions to which the employee will be, or may reasonably be expected to be, entitled at the beginning of his next taxable year is less than the number of exemptions to which the employee is entitled on such day, the employee must, on or before December 1 of the year in which the change occurs, unless such change occurs in December, furnish the employer with a withholding exemption certificate reflecting the decrease in the number of the exemptions which the employee claims with respect to such next taxable year, which shall in no event exceed the sum of exemptions to which the employee will be, or may reasonably be expected to be, so entitled. If the change occurs in December, the new certificate must be furnished within 10 days after the change occurs. The number of withholding exemptions to which an employee is entitled decreases, for example, because of the death of a spouse or dependent of the employee. If, on any day during the calendar year, the number of withholding exemptions to which the employee will be, or may reasonably be expected to be, entitled at the beginning of his next taxable year is greater than the number of withholding exemptions claimed by the employee on a withholding exemption certificate is effect on such day, the employee may, on or before December 1 of the year in which such change occurs, unless such change occurs in December, furnish his employer with a new withholding exemption certificate reflecting the increase in the number of withholding exemptions. If the change occurs in December, the certificate may be furnished on or after the date of which the change occurs. Exemption certificates furnished pursuant to this subsection shall not take effect with respect to any payment of wages made in the calendar year in which the certificate is furnished.
E. Change of status which .affects present calendar year. If, on any day during the calendar year, the number of withholding exemptions to which the employee is entitled is less than the number of withholding exemptions claimed by the employee on his withholding exemption certificate then in effect, the employee shall, within 10 days after the change occurs, furnish the employer with a new withholding exemption certificate relating to the withholding exemptions which the employee then claims, which shall in no event exceed the number of exemptions to which he is entitled on such day. The number of withholding exemptions to which an employee is entitled decreases, for example, for any of the following reasons:
(1) The employee's spouse for whom the employee has been claiming a withholding exemption is divorced or legally separated, or claims his own exemption on a separate certificate.
(2) The support of a dependent for whom the employee claimed an exemption is assumed by another so that the employee no longer expects to furnish more than half the support for the year.
(3) Employee finds that a dependent for whom employee claimed an exemption no longer qualifies because he has gross income of more than $1,000.
If, on any day during the calendar year, the number of withholding exemptions to which the employee it entitled is greater than the number of withholding exemptions claimed, the employee may furnish the employer with a new withholding exemption certificate relating to the withholding exemptions which the employee then claims, which shall in no event exceed the number of exemptions to which he. is entitled on such day.
F. Employee's certificate of exemption from withholding. An employee who has in effect the withholding exemption certificate set forth in Va. Reps. § 630-6-461 (the "certificate of exemption from withholding") must revoke such exemption within 10 days from the time he anticipates incurring income tax liability for the year. To revoke such exemption, the employee must furnish his employer a signed withholding exemption certificate as set forth in Va. Reps. $ 630-6-470B above. An employee's certificate of exemption from withholding shall expire on January 1 of the next year unless, before that date, the employee shall have filed with his employer a new certificate of exemption from withholding. An employee shall not file a certificate of exemption from withholding if his joint or separate return shows tax liability before the allowance of any credit for income tax withheld.
G. Form of certificate. Withholding exemption certificates shall be in such form and contain such information as the Commissioner may prescribe.
630-6-471. FRAUDULENT WITHHOLDING EXEMPTION CERTIFICATE OR FAILURE TO SUPPLY INFORMATION. Not regulated.
630-6-472. EMPLOYER'S RETURNS AND PAYMENTS OF WITHHELD TAXES.
Employer Filing Status. Every employer required to deduct and withhold from an employee's wages under these regulations shall file a return and pay over to the Commissioner on a calendar year basis (without regard to the taxable year of the employer or employee for income tax purposes) the amount required to be withheld hereunder as follows:
1. Quarterly Filer every employer whose monthly liability is less than $100 shall file a return and pay over withheld taxes, on or before April 30 for-the-first quarter, July 31 for the second quarter, October 31 for the third quarter, and January 31 for the fourth quarter.
2. Monthly Filer every employer whose average monthly liability can reasonably be expected to be $100 or more, shall file a return and pay over withheld taxes monthly, on or before the 20th day of the following month for each month which does not close a quarterly period and, for months that close a quarter (March, June, September and December), on or before the last day of the following month.
3. Quarter-Monthly Filer every employer whose average monthly liability can reasonably be expected to be $1,000 or more, shall file a return and pay over withheld taxes as in the preceding paragraph 2. In addition, if on the 7th, 15th, 22nd or last day of any month the aggregate amount required to be withheld exceeds $500, the employer must file a form with the Commissioner within three banking days following the close of such quarter-monthly period and pay the amount so withheld. However, when a quarter-monthly payment is due within three days of the due date for the filing of the monthly returns, the payment must be made with such return. Any employer making payment under this paragraph 3 will be deemed to have met the requirements hereof if at least 90% of actual tax liability for such period is paid. When a quarter-monthly payment is due within three days of the due date for the filing of the quarterly returns, the payment may be made within up to three banking days after the due date for the quarterly returns.
Example: Employer X has a liability of $400 for the quarter-monthly period ending January 7. Because his liability does not exceed $500 no payment is required for that period. His liability for the quarter-monthly period ending January 15 is also $400. Because the accumulated liability for the two quarter-monthly periods ($800) exceeds $500, Employer X must pay $800 within three banking days of January 15.
(4) Seasonal Filer employers who operate seasonal businesses may request permission to file returns only for those months in which Virginia income tax is withheld. The request must be in writing and, for employers who qualify, the returns must be filed on or before the 20th day of the following month which does not close a quarterly period and, for months that close a quarter (March, June, September and December), on or before the last day of the following month. The returns and forms filed under this section shall be in such form and contain such information as the Commissioner may prescribe.
§ 630-6-473. JEOPARDY ASSESSMENTS.
If the Commissioner has reason to believe that the collection of moneys, required to be withheld by the employer, is in jeopardy, he may require the employer to make such return and pay to the Commissioner such amounts required to be withheld at any time the Commissioner may designate therefor after the time when such amounts should have been deducted from wages and withheld.
(This is statutory language. No further interpretation is required.)
§ 630-6-474. LIABILITY OF EMPLOYER FOR FAILURE TO WITHHOLD.
An employer shall be personally and individually liable for sums required to be withheld and paid to the Commissioner which the employer fails to withhold or pay. Any sum or sums withheld in accordance with the provisions of these regulations shall be deemed to be held in trust for the Commonwealth.
(This is statutory language. No further interpretation is required.)
§ 630-6-475. PENALTY FOR FAILURE TO WITHHOLD.
A. Any employer required under the provisions of these regulations to deduct and withhold from wages and make returns and payments of amounts withheld to the Commissioner, who fails to withhold such amounts, or to make such returns, or who fails to remit amounts collected to the Commissioner, or otherwise fails to remit to the Commissioner as required by these regulations, shall be subject to a penalty equal to 5% of the amount that should have been properly withheld and paid over to the Commissioner for each month or fraction thereof, until paid, not to exceed 25%. In no case shall the penalty be less than $10, even if no tax is due for the period for which the filing of such return was required. Interest at a rate determined in accordance with Va. Code § 58.1-15, shall accrue on the tax until paid, or until an assessment is made, after which interest shall accrue as provided in Va. Code § 58.1-15. Such penalty and interest shall be assessed by the Commissioner and shall be collected by him in the same manner as the collection of taxes may be enforced under Title 58.1, Code of Virginia.
Example: Employer W is a monthly filer and has a liability of $300 for the monthly period ending January 31, and $0 for the monthly period ending February 28. He files no returns until April 6. At that time he is liable for penalty and interest (assume an annual interest rate of 12%) as follows:
Monthly period ending January 31
(return due February 20; return filed
April 6) - $300 liability
Penalty- deemed to be 2 months late,
at 5% per month 10% X $300 = $30.00
Interest - over a 45-day period between
February 20 and April 6 1.5% X $300 = $ 4.50
$34.50
Monthly period ending February 28
(return due March 20; return filed
April 6) - $0 liability
Penalty- deemed to be 1 month late.
at 5% per month, but 5% x $0 = $0,
so $10 minimum penalty applies $10.00
Interest - applied against $0 liability 0.00
$10.00
-
- Total as of April 6: $44.50
B. Upon failure of any employer to pay over any amounts withheld or required to be withheld by the employer under these regulations, the Commissioner may make assessments and enforce the collection of such amounts, including penalties, by any legal process provided for the enforcement of the collection of taxes under Title 58.1, Code of Virginia.
§ 630-6-476. CONTINUATION OF EMPLOYER LIABILITY UNTIL NOTICE.
Once an employer has become liable to file a return of withholding, he must continue to file a return even though no tax has been withheld; until such time as he notifies the Commissioner, in writing, that he no longer has employees or that he is no longer required to file such returns. If an employer requests in writing that he be permitted to change from one filing status to another on the ground that his with-holding liability has changed in dollar amount to the requirements of a different filing status, such change shall be permitted only at the beginning of a calendar year which is after the calendar year during which the request was made.
§ 630-6-477. EXTENSIONS.
The Commissioner may grant an employer a reasonable extension of time for filing any return under these regulations whenever in the Commissioner's judgment good cause exists. Whenever under the terms of such an extension the payment of any amount or amounts of money to the Commissioner by the employer is postponed for a longer period than 10 days from the time the same would be otherwise due and payable, the employer shall be charged with interest on such amount or amounts at a rate determined in accordance with Va. Code § 58.1-15, from the time such amount or amounts were originally due and payable to the date of payment under the terms of the extension.
(This is statutory language. No further interpretation is required.)
§ 630-6-478. WITHHOLDING TAX STATEMENTS FOR EMPLOYEES; EMPLOYERS MUST FILE ANNUAL RETURNS WITH COMMISSIONER.
A. Every person required to deduct and withhold from an employee's wages under these regulations shall furnish a written statement to each such employee in respect to the remuneration paid by such person to such employee during the calendar year, on or before January 31 of the succeeding year, or if his employment is terminated before the close of such calendar year, on the day on which the last payment of remuneration is made. The statement shall be in duplicate showing the following: (1) the name, address, and state and federal identification numbers of such person; (2) the name of the employee and his social security account number; (3) the total amount of wages; (4) the total amount deducted and withheld under these regulations by such employer; (5) the calendar year for which the wages were paid; and (6) the name of the state for which the tax was withheld. An employee should report any discrepancies in the written statement to the employer. If the employer determines an error has been made, the employer shall promptly issue to the employee an amended written statement and also send a copy of the amended statement to the Department with a written explanation.
B. Every employer shall file an annual return, currently Employee’s Annual Reconciliation of Virginia Income Tax Withheld, Form VA-6, with the Commissioner, not later than January 31 of the calendar year succeeding the calendar year in which wages were withheld from employees, or if the business is terminated during the year, within 30 days after the last month in which wages were paid. Such annual return shall be accompanied by an additional copy of each of the written statements furnished each employee under subsection A of this section, including any amendments thereto, and by an adding machine tape (or some other kind of listing) showing how the total amount of Virginia income tax withheld was computed. Employers who desire permission for magnetic tape reporting should make written request to the Department.
§ 630-6-479. REFUND TO EMPLOYER; TIME LIMITATION; PROCEDURE.
A. Adjustments. 1. If employer pays more than the amount of with-holding tax actually withheld for any taxable period, an adjustment should be made on the first return filed after the overpayment is discovered and on each of the following returns for the same calendar year until full. credit for the overpayment has been taken. If an employer pays less than the amount of withholding tax actually withheld for any taxable period, an adjustment should be made on the first return filed after the underpayment is discovered. The return on which the overpayment or underpayment is reported must contain a detailed explanation of the adjustment. If the overpayment is discovered on or after filing of the annual return set forth in Va. Regs. § 630-6-478B, a refund is permitted only to the extent that the amount of such overpayment was not deducted and withheld from the employee's wages. If a discovery of an underpayment is made by the Department an assessment can be made within three years from the date on which the tax became due and payable. If no return is filed, an assessment may be made within six years from the date on which the tax became due and payable. (See also Va. Regs. § 630-1-104.)
2. If in any calendar year an employer fails to withhold tax, or withholds less than the correct amount of tax from any wage payment, the employer remains liable for the correct amount of withholding tax and may withhold the amount of underwithholding from wages paid during the current calendar year to that employee following discovery of the underwithholding. Reimbursement is a matter for settlement between employer and employee.
3. If in any calendar year the employer deducts more than the correct amount of tax from a wage payment, the employer should repay the overcollection to the employee. The employer should keep employee's written receipt showing the date and amount of the repayment. Every overcollection for which the employee does not give a receipt must be reported and paid with the annual return for the calendar year in which the employer made the overcollection. In the alternative, the employer may reduce subsequent withholding from wage payments made during the current calendar year. If the overcollection is discovered on or after filing of the annual return set forth in Va. Regs. § 630-6-478B, the overcollection must be reported on the employee's written statement required by Va. Regs. § 630-6-478A. Refund is available upon the employee's filing of his income tax return.
B. Unless written application for refund or credit is received by the Commissioner from the employer in accordance with the statute of limitations and procedures of Va. Code § 58.1-1823 and regulations promulgated thereunder, no refund or credit shall be allowed.
C. Any employer aggrieved by any action of the Commissioner under this section may proceed in court under Va. Code §§ 58.1-1825 through 58.1-1830 as though the case involved an assessment of income taxes, except that (i) the limitation shall be two years from the date the alleged overpayment was made, and (ii) the time which shall elapse from the filing of the written application with the Commissioner under subsection B to the time when the Commissioner takes final action with respect to such application shall be excluded from the computation of the period of two years.
§ 630-6-480. WITHHELD AMOUNTS CREDITED TO INDIVIDUAL TAXPAYER; WITH-HOLDING STATEMENT TO BE FILED WITH RETURN.
The amount deducted and withheld under these regulations during any calendar year from the wages of any individual shall be allowed to the recipient of the income as a credit against the individual income tax imposed for the taxable year beginning in such calendar year. If more than one taxable year begins in a calendar year, such amount shall be allowed as a credit against the tax for the last taxable year so beginning. As a prerequisite to obtaining such credit the individual taxpayer must file with his income tax return one copy of the withholding statement provided for by Va. Code § 58.1-478.
(This is statutory language. No further interpretation is required.)
§ 630-6-481. WITHHELD TAXES NOT DEDUCTIBLE IN COMPUTING TAXABLE INCOME.
The tax deducted and withheld under these regulations shall not be allowed as a deduction either to the employer or to the recipient of the income in computing Virginia taxable income.
(This is statutory language. No further interpretation is required.)
§ 630-6-482. CERTAIN NONRESIDENTS; RECIPROCITY WITH OTHER STATES.
-A. Certain Nonresidents. Any employee who lives in Kentucky, Maryland, West Virginia, or the District of Columbia, and commutes each workday from one of the above named jurisdictions to his place of employment in Virginia and derives wages for service performed in Virginia for an employer within the geographical limits of Virginia, is required to file with his Virginia employer a Certificate of Nonresidence in the Commonwealth of Virginia, Form VA-3. The Virginia employer, upon receipt of such properly executed certificate from such an individual, will not withhold any Virginia income tax from such employee's wages.
If a nonresident who has filed such certificate subsequently moves to Virginia at any time during the calendar year, or otherwise loses his status as a commuter on a daily basis from one of the above named jurisdictions to his place of employment in Virginia, he must notify his Virginia employer of such fact within 10 days after the change of status and, in such case, the Virginia employer is required to withhold the full amount of Virginia income tax from the wages of such employee beginning with the first wages paid to such employee after the employer has been notified of the. change of status of such employee.
B. Pennsylvania Agreement.
Under an agreement made pursuant to Va. Code § 58.1-342B, Virginia residents are not required to pay income tax or file a return with, nor be subject to withholding on compensation earned from sources in, Pennsylvania. Pennsylvania residents earning wages in Virginia will be similarly exempted from income tax filing, payment, and withholding requirements imposed by Virginia. Nonresidents must file a certificate of nonresidence with their employer is order to relieve them of their tax liability to the state in which they are employed.
The agreement eliminates the previous need to file two returns when a taxpayer resides in one state and works in the other. Now such individuals need only file a tax return with their state of residence. Under the terms of the agreement, Pennsylvania employers not otherwise required to withhold by law will be encouraged to withhold and remit Virginia tax from wages paid to Virginia residents. Virginia employers are likewise encouraged to withhold and remit Pennsylvania tax from wages paid to residents of that state.
The agreement applies only to earned income. It does not apply to individuals who reside in both states for a portion of the year. Such individuals will continue to be liable for tax to each state on income received while residing in the state.
§ 630-6-483. WITHHOLDING STATE INCOME TAXES OF FEDERAL EMPLOYEES BY FEDERAL AGENCIES.
Beginning January, 1983, federal civil service retirees who reside in Virginia are eligible to have Virginia income tax withheld from regular, recurring, monthly civil service annuity payments. The amount of withholding must be at least $5.00 and must be in whole dollar amounts. A retiree authorizes the amount of withholding by seceding written notice to the Virginia Department of Taxation. The amount withheld can be changed or canceled at any time by the retiree's sending written notice to the Department.
State taxes can be withheld for only one state at a time and taxes can be withheld for no more than two states in any one calendar year. To change from one state to another, the retiree must first contact the old state to cancel his old request and contact the new state to request the new state to begin withholding.
Amounts withheld under this provision are treated in the same manner as any other withholding. For example, any excess of withholding over liability for a taxable year can be refunded to a retiree only upon his filing an income tax return for such taxable year.
§ 630-6-484. LIABILITY OF EMPLOYER FOR PAYMENT OF TAX REQUIRED TO BE WITHHELD.
The employer shall be liable for the payment to the Commissioner of the amounts required to be deducted and withheld under these regulations, whether or not the employer collects such amounts from the employee. An employer who has withheld and paid such amounts to the Commissioner-is relieved-of-liability-to any-person-for the amount of any such payment, and any excess of withholding over liability for a taxable year can be refunded to an employee only upon the employee's filing an income tax return for such taxable year.
§ 630-6-485. WILLFUL FAILURE BY EMPLOYER TO MAKE RETURN, TO WITHHOLD TAX, TO PAY IT OR TO FURNISH EMPLOYEE WITH WITHHOLDING STATEMENT; PENALTY. Not regulated.
§ 630-6-486. BAD CHECKS. Not regulated.
Rulings of the Tax Commissioner