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Date:November 15, 2007
Bulletin Number: 761
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Subject

Claiming Exempt from Federal and/or State Tax Withholding

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-2104E 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 on December 3, 2007.

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, 2008, 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 Deduction mailbox.