Tax Type
Employer Income Tax Withholding
Description
Filing requirements
Topic
Returns/Payments/Records
Withholding of Tax
Date Issued
03-27-1987
March 27, 1987
Re: Section 58.1-1821 Application: Withholding
Dear ****************************
This will reply to your letter of January 14, 1987 in which you protest an assessment of withholding penalty against the Taxpayer for the period September and October 1986, and any other periods which may be assessed.
Facts
You indicate that the Taxpayer, a quarter-monthly filer, had withholding tax liability of less than $500 for each of September through December 1986. The Taxpayer did not file quarter-monthly returns but paid the entire tax by the regular due date of the monthly return. Penalty was assessed because 90% of the tax had not been paid by the due date of the last quarter-monthly payment.
Determination
As you noted, § 58.1-472 of the Code of Virginia, and the regulations promulgated thereunder, require an employer whose average monthly liability can reasonably be expected to be $1,000 or more (a quarter-monthly filer) to file and pay withholding taxes as would a monthly filer (that is, by the 20th day of the following month for each month which does not close a quarterly period, and by the last day of the month following March, June, September and December). In addition, if on the 7th, 15th, 22nd or last day of the month the aggregate withholding exceeds $500, the quarter-monthly filer must file and pay withholding taxes by the third banking day after the close of such quarter-monthly period. The quarter-monthly requirements are deemed to have been met if at least 90% of actual tax liability for such period is paid.
Because the Taxpayer's liability for each of September through December was less than $500, it was not required to make the quarter-monthly payments. I construe the safe harbor provision that 90% of tax be paid to apply only to the quarter-monthly payments requirement. Accordingly, so long as the Taxpayer's aggregate monthly liability was $500 or less and the Taxpayer timely filed and paid in accordance with the monthly filer requirements, no penalty should have been imposed. Therefore, the assessments will be adjusted in accordance with this letter.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner