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Date: June 17, 2016

Bulletin Number: 1489

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Subject Nonresident  Aliens (NRA) Who Have Reached Their Tax Treaty  Limits

Purpose To notify agencies of the Control-D report, NPAY741 (Aliens Who Have Reached Their Tax Treaty Limits).

Affected Employees

Nonresident aliens who have reached their tax treaty limit.

Effective Date(s)

Immediately.

OSC Actions OSC will create the Control-D report NPAY 741 weekly.

Note:   This report is available only in Reporting Tool Control-D.

Control-D Report

NPAY741 (Aliens Who Have Reached Their Tax Treaty Limits).

Agency Actions Agencies must
  • review the NPAY741 report weekly, and
  • notify affected employees that wages earned over their tax treaty limit are subject to Federal, State and local (if applicable) taxes.

Note:  PayServ will automatically start the Federal and State taxes.  In addition, if the NRA is a resident of one of the five boroughs in New York City or the City of Yonkers, local taxes are required to be withheld. 

Please follow these instructions to change the Federal, State and Local (if applicable) withholding tax pages in PayServ:

Payroll North America> Employee Pay Data USA > Tax Information > Update Employee Tax Data

On the Federal Tax Data page:

  • Under Tax Data
    1. Insert a new row
    2. Enter Effective Date
  • Under Federal Withholding Elements
    1. Special Withholding Tax Status:  Select “Non-resident Alien.
    2. Tax Marital Status:  Single
    3. Withholding Allowances:  1 (Unless employee is allowed to claim more.  See IRS Publication 519 for guidance.)
  • Under Tax Treaty/Non-Resident Data
    1. Delete the “Eligible Income Code”
    2. Change Treaty ID to “NO TREATY”
  • Under Education and Government
    1. Change Form 8233 received to “NO”
    2. Delete any date appearing in Form 8233 (Exemption From Withholding on Compensation For Independent (and Certain Dependent) Personal Services of a Non Resident Alien Individual) Effective Date and/or Form 8233 Expiration Date fields

****Note: the employee must submit a new completed and signed Form 8233 every calendar year.****

On the  the State Tax Data page:

  • Under State Information:
    1. Check “Resident” box

  • Under State Withholding Elements:
    1. Special Withholding Tax Status: Select “None”
    2. Tax Marital Status:  “Single”
    3. Withholding Allowance:  1

On the Local Tax Data page:

  • Under Local Information :
    1. Click the look up tool and select the appropriate Locality
    2. Check  “Resident” box
  • Under Local Withholding Elements
    1. Special Withholding Tax Status: Select “None”
    2. Tax Marital Status:  “Single”
    3. Local Withholding Special Allowances – enter appropriate withholding allowance

SAVE the page.

Questions Questions regarding this bulletin may be emailed to the Tax and Compliance mailbox.