Tax Type
Employer Income Tax Withholding
Description
Common pay agent on behalf of affiliates
Topic
Returns and Payments
Withholding of Tax
Date Issued
12-15-1995
December 15, 1995
Re: Request for Ruling: Withholding Tax
Dear*****************:
This will reply to your letter of August 24,1995, in which you request that the Department of Taxation combine two withholding agents, ************ and ******** into one common pay agent, *********** (the "Taxpayer" ).
FACTS
The Taxpayer and its affiliated corporation are currently registered to withhold Virginia income taxes. Both corporations are withholding taxes, and remitting them separately to the department. The Taxpayer proposes to eliminate one withholding agent, and remit all Virginia taxes withheld under the Taxpayer's registration as a common pay agent.
The Taxpayer has elected to be treated as a common pay agent on behalf of its affiliates for purposes of federal employment tax returns pursuant to Internal Revenue Code § 3504. As a common pay agent, the Taxpayer acts as the agent of the other parties for federal withholding and FICA taxes, and related reporting.
RULING
Based on the representations in your letter, permission is hereby granted for the Taxpayer to act as common pay agent for its employees and those of all affiliated corporations beginning January 1, 1996. It is understood that each individual corporation will separately file all withholding returns required for 1995, and their annual withholding reconciliations, Form VA-6, along with supporting Forms W-2 for 1995.
Please be aware that the Virginia Employment Commission ("VEC") does not permit common pay agent reporting. Each individual corporation must continue to file unemployment tax returns with the VEC. You may contact********* in the accounts section of the VEC at********** for additional information.
You should also be aware that the department relies on VEC unemployment tax reporting for purposes of determining the Virginia payroll apportionment factor. See Virginia Regulations (VR) 630-3-412 and 630-3-413, copies attached, for further details.
The department will issue a letter to each affiliated employer which is removed from our system confirming that they have been eliminated as a withholding entity in Virginia.
If you have any questions regarding this ruling, please contact *********at***********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10258P
Rulings of the Tax Commissioner