Tax Type
Employer Income Tax Withholding
Description
Change in exemptions claimed
Topic
Exemptions
Withholding of Tax
Date Issued
07-06-1995
July 6, 1995
Re: Request for Ruling: Withholding Tax
Dear********************
This will reply to a request for a ruling as to Virginia's position on changing the number of exemptions for withholding taxes via electronic means.
FACTS
Under the proposed system, an employee would file an initial paper W-4 upon employment, and make subsequent changes by paper or electronic means. Advice is now sought as to whether such capacity would be allowable for Virginia withholding tax purposes.
RULING
The department's long standing policy, as set forth in Virginia Regulation (VR) 630-6-470 (A), has been that an employee is entitled to the number of personal and dependent exemptions for which he qualifies for federal income tax purposes. Virginia law does not, however, permit employees to claim additional withholding allowances to reflect itemized deductions. If the proposed system has the ability to match the federal and Virginia personal and dependent exemptions, this requirement would be met.
The proposed system should have the ability to furnish the employee with all information necessary to make adjustments to his exemptions. Additionally, the system should notify the employee to limit the number of exemptions to that which will be claimed on the Virginia income tax return. No additional allowances are permitted to those employees who itemize deductions or claim adjustments to income.
Under VR 630-6-470 (G), the Tax Commissioner has the authority to prescribe the form and contents of an exemption certificate. Since the proposed system would first require a prescribed paper form to be furnished, any changes made by electronic means could be considered an addendum to the original. Therefore, Virginia would grant a waiver to make changes electronically provided that any rules promulgated by the Internal Revenue Service were followed.
However, it should be understood that any changes made by an employee that result in the underpayment of withholding taxes, could result in an addition to tax due from the employee.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/9873P
Rulings of the Tax Commissioner