Purpose

To provide agencies with instructions for the review of employees who claim exempt from Federal and/or State tax withholding for the current tax year

Affected Employees

Employees who claimed exempt from Federal and/or State tax withholding for tax year 2008

Background

In accordance with IRS Publication 15, employees who claim exempt from Federal withholding must file a new Form W-4 (Employee’s Withholding Allowance Certificate) by February 15 of each year.   Please see instructions for Form W-4 for additional information.

The New York State Department of Taxation and Finance requires a new form IT-2104-E (Certificate of Exemption from Withholding) annually from employees who claim exempt from NYS, NYC or Yonkers withholding.

The Forms W-4 and IT-2104-E for the current year’s exemption must be retained in the employee’s agency payroll office for four (4) years.

OSC Actions

OSC has created Control-D report NPAY738 (Employees Exempt from State and Federal Taxes).  The report identifies employees who claimed exempt from Federal and/or State tax withholding for the current calendar year.  

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, 2009, 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 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.

All transactions for Federal and State tax exemption must be entered by February 15, 2009.

Questions

Questions may be e-mailed to the Payroll Deductions mailbox.