Tax Type
Employer Income Tax Withholding
Description
Withholding tax tables; Request for alternative calculation
Topic
Withholding of Tax
Date Issued
01-05-1994
January 5, 1994
Re: Request for Ruling: Income Tax Withholding
Dear ****
This will reply to your letter of December 1, 1993 in which you request permission to calculate the withholding tax amount for **** (the "Taxpayer") using a method other than the withholding tables.
FACTS
The Taxpayer is an employee of a corporation located in Virginia, eleven other states, and overseas. The Taxpayer is not a domiciliary resident of Virginia and does not expect to spend more than 20 working days in Virginia (51% of the expected work days during taxable year 1994) before his retirement on March 1, 1994. Unless working, the Taxpayer does not spend any time in Virginia.
In addition to his salary, the Taxpayer will receive a long-term incentive payment in January 1994, for services performed over prior four years, and an incentive bonus for services performed during taxable year 1993. The Taxpayer spent approximately 47% of the days worked during the past four years working in Virginia.
The Taxpayer requests that he be allowed to calculate the amount of withholding tax due on salary and other compensation received during taxable year 1994 as follows:
1. Long-term incentive compensation to be received in January 1994, withheld at 47% of the top Virginia income tax rate.
2. 1993 incentive compensation to be received in January 1994, withheld at 51% of the top Virginia income tax rate.
3. Salary and perquisites received during taxable year 1994, for service performed during 1994, withheld at 51% of the top Virginia income tax rate.
RULING
Generally, the amount of taxes withheld for a person earning wages from Virginia sources is determined based upon the withholding tables. Although, in special circumstances, a taxpayer may be granted permission to use a method other than the withholding tables to calculate the amount of tax due on Virginia wages.
Based upon the authority granted to the Tax Commissioner pursuant to Va. Code §58.1-463, the department will allow the Taxpayer to calculate the withholding tax due on payments received during taxable year 1994 as requested. However, in the case of an underpayment of the withholding tax, an addition to tax will be due from the Taxpayer.
Please do not hesitate to contact the department if you have any questions concerning this ruling or otherwise.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/75490
Rulings of the Tax Commissioner