Tax Type
Withholding Taxes
Description
EMPLOYER WITHHOLDING TAX 1991 LEGISLATIVE CHANGES
Topic
Withholding of Tax
Date Issued
10-21-1991
91-9
Legislation enacted by the 1991 General Assembly, SB 765 and HB 1734 amended Virginia withholding requirements to conform to federal withholding requirements, Effective January 1, 1992, Virginia tax conforms to the federal withholding requirements relative to:
The definition of wages [Internal Revenue Code Section 3401(a)]
Gambling winnings [IRC Section 3402]
Pensions, annuities and certain deferred Income [IRC Section 3405]
The intent of the legislation is to lessen the administrative burden on employers, The requirement for Virginia withholding on virtually every payment for which federal withholding is required will allow employers to follow one set of rules in determining whether a payment is subject to withholding.
The major impact of the new legislation is on agricultural employers and payers of pensions and annuities. Since payments to agricultural employees and recipients of pensions and annuities were previously exempt from Virginia withholding, many employers and pension plan administrators will become subject to withhold Virginia tax for the first time, A summary of the changes affecting these groups is given below.
The federal Revenue Reconciliation Act of 1989 amended lRC Section 3401 (a)(2) to require income tax withholding on payments of wages to agriculture workers, if such wages are subject to FICA tax withholding. Virginia law now conforms to the federal provisions, and Virginia income tax must be withheld on any wage payment for which federal income tax withholding is required.
Under the provisions of IRC Section 3405, federal withholding is generally required on every periodic pension or annuity payments , unless the recipient elects "no Withholding” on federal Form W-4P. Virginia law now requires withholding on such payments whenever federal withholding is required.
Conformity of Election
Payers of pensions and annuities must begin withholding Virginia income tax for all recipients who are Virginia residents and for whom they are withholding federal income tax, effective January 1, 1992. The federal election is binding for the purposes of determining whether Virginia withholding is required.
Voluntary Agreements
Under prior Virginia law, recipients of pension and annuity payments could enter into voluntary agreements with their payers to have Virginia income tax withheld. Any such agreements in effect on January 1, 1992, shall continue in force unless terminated by either the payer or the recipient. The federal election on Form W-4P will become binding at the point that a voluntary withholding agreement is terminated.
Amount of Withholding
Payers must use the appropriate Virginia withholding tables to determine the amount to be withheld from periodic pension and annuity payments. Withholding on nonperiodic payments may be computed at a flat rate of 4%. Recipients participating In voluntary agreements may specify the amount to be withheld from periodic and nonperiodic payments.
Exemption Certificate Required
Every recipient who is a Virginia resident, and every recipient receiving payments from a Virginia payer, must furnish the payer with a completed Virginia Form VA-4P, Withholding Exemption Certificate For Recipients Of Pension and Annuity Payments, If the payer does not have a form VA-4P on file, withholding must be computed as if the recipient had claimed zero exemptions.
The following classes of payments are exempt from Virginia withholding
Payments to resident and nonresident seamen, pursuant to 46 U.S.C.A., Section 11108.
Payments to certain nonresident employees under reciprocal agreements with other states.
For further information or assistance with Virginia withholding requirements, contact the Department of Taxation at (804) 367-8038, or write to:
To order Form VA-4P, registration information, or the Employer Income Tax Withholding Instructions, call (804) 367-8055. or write to:
EMPLOYER WITHHOLDING TAX
1991 LEGISLATIVE CHANGES
1991 LEGISLATIVE CHANGES
Legislation enacted by the 1991 General Assembly, SB 765 and HB 1734 amended Virginia withholding requirements to conform to federal withholding requirements, Effective January 1, 1992, Virginia tax conforms to the federal withholding requirements relative to:
The definition of wages [Internal Revenue Code Section 3401(a)]
Gambling winnings [IRC Section 3402]
Pensions, annuities and certain deferred Income [IRC Section 3405]
The intent of the legislation is to lessen the administrative burden on employers, The requirement for Virginia withholding on virtually every payment for which federal withholding is required will allow employers to follow one set of rules in determining whether a payment is subject to withholding.
The major impact of the new legislation is on agricultural employers and payers of pensions and annuities. Since payments to agricultural employees and recipients of pensions and annuities were previously exempt from Virginia withholding, many employers and pension plan administrators will become subject to withhold Virginia tax for the first time, A summary of the changes affecting these groups is given below.
Agricultural Wages
The federal Revenue Reconciliation Act of 1989 amended lRC Section 3401 (a)(2) to require income tax withholding on payments of wages to agriculture workers, if such wages are subject to FICA tax withholding. Virginia law now conforms to the federal provisions, and Virginia income tax must be withheld on any wage payment for which federal income tax withholding is required.
Pension and Annuity Payments
Under the provisions of IRC Section 3405, federal withholding is generally required on every periodic pension or annuity payments , unless the recipient elects "no Withholding” on federal Form W-4P. Virginia law now requires withholding on such payments whenever federal withholding is required.
Conformity of Election
Payers of pensions and annuities must begin withholding Virginia income tax for all recipients who are Virginia residents and for whom they are withholding federal income tax, effective January 1, 1992. The federal election is binding for the purposes of determining whether Virginia withholding is required.
Voluntary Agreements
Under prior Virginia law, recipients of pension and annuity payments could enter into voluntary agreements with their payers to have Virginia income tax withheld. Any such agreements in effect on January 1, 1992, shall continue in force unless terminated by either the payer or the recipient. The federal election on Form W-4P will become binding at the point that a voluntary withholding agreement is terminated.
Amount of Withholding
Payers must use the appropriate Virginia withholding tables to determine the amount to be withheld from periodic pension and annuity payments. Withholding on nonperiodic payments may be computed at a flat rate of 4%. Recipients participating In voluntary agreements may specify the amount to be withheld from periodic and nonperiodic payments.
Exemption Certificate Required
Every recipient who is a Virginia resident, and every recipient receiving payments from a Virginia payer, must furnish the payer with a completed Virginia Form VA-4P, Withholding Exemption Certificate For Recipients Of Pension and Annuity Payments, If the payer does not have a form VA-4P on file, withholding must be computed as if the recipient had claimed zero exemptions.
Payments Exempt From Withholding
The following classes of payments are exempt from Virginia withholding
-
- Payments of wages to actors and crew members employed in the filming of movies, television series, commercials or promotional films in the Commonwealth, by an employer which does business in the Commonwealth for less than 90 days and which edits, processes and markets the completed project outside of Virginia.
-
- Payments to nonresident employees of rail carriers, motor carriers and water carriers, pursuant to 49 U.S.C. A., Section 11504.
Payments to resident and nonresident seamen, pursuant to 46 U.S.C.A., Section 11108.
Payments to certain nonresident employees under reciprocal agreements with other states.
Where To Get Assistance
For further information or assistance with Virginia withholding requirements, contact the Department of Taxation at (804) 367-8038, or write to:
Virginia Department of Taxation
Taxpayer Assistance Section
P.0, Box 6L
Richmond, Virginia 23282-0001
Taxpayer Assistance Section
P.0, Box 6L
Richmond, Virginia 23282-0001
To order Form VA-4P, registration information, or the Employer Income Tax Withholding Instructions, call (804) 367-8055. or write to:
Virginia Department of Taxation
Forms Request Unit
P.0, Box 1317
Richmond, Virginia 23210-1317
Forms Request Unit
P.0, Box 1317
Richmond, Virginia 23210-1317
Rulings of the Tax Commissioner