Purpose
To explain the procedure for the annual review of employees who claim to be exempt from Federal and/or State tax withholding.
Affected Employees
Employees claiming to be exempt from Federal and/or State tax withholding
Background
Internal Revenue Service regulations require individuals claiming Federal tax-exempt status to file a new Form W-4 by February 15 each year.
New York State Department of Taxation and Finance regulations require individuals claiming State tax-exempt status to file a new Form IT-2104-E annually.
The Forms W-4 and IT-2104-E for the current year’s exemption must be retained in the employee’s agency payroll office.
Control-D Report
NPAY738 (Employees Exempt from State and Federal Taxes) identifying employees claiming Federal and/or State tax-exempt status in each agency is available in Control-D.
Agency Actions
If an employee is identified as claiming tax-exempt from Federal withholding and does not provide a new Form W-4 by February 15, 2007, the agency must change the employee’s status to ‘Single 0’ on the Employee Tax Data Page – Federal Tax Data.
If an employee is identified as claiming tax-exempt from State withholding and does not annually provide a new IT-2104-E, the agency must change the employee’s status to ‘Single 0’ on the Employee Tax Data Page - State Tax Data.
Questions
Questions regarding this bulletin may be directed to the Payroll Deductions mailbox.