N.Y. Comp. Codes R. & Regs. tit. 20 § 171.4

Current through Register Vol. 46, No. 25, June 18, 2024

Section 171.4 - Determining New York State personal income tax to be withheld

(a) General. The amount of New York State personal income tax to be deducted and withheld by an employer must be determined in accordance with one of the following withholding methods:

Method I - Wage Bracket Table Method

Method II - Exact Calculation Method

Method III - Top Income Tax Rates Method

In case of special situations, however, an employer may apply to the Commissioner of Taxation and Finance for permission to use another method. The wage bracket table method, the exact calculation method, and the top income tax rates method are set out in Appendix 10 of this Title The New York State tax tables and methods, along with forms, instructions and other guidance for withholding, payment and reporting of the New York State personal income tax are available on the Tax Department's Web site. For the rules for determining the New York State personal income tax to be withheld on supplemental wages and other rules applicable in determining the proper amount of New York State personal income tax to be withheld, see the succeeding subdivisions of this section.

(b) Supplemental wages.

(1) General. Where supplemental wages (such as bonuses, commissions, overtime pay, sales awards or tips) are paid at the same time as regular wages, the New York State personal income tax to be deducted and withheld should be determined as if the total of the supplemental and regular wages were a single wage payment for the regular payroll period. Where supplemental wages are paid at a different time, an employer may determine the New York State personal income tax to be withheld by adding the supplemental wages either to the regular wages for the current payroll period or to the regular wages for the last preceding payroll period within the same calendar year. However, if New York State personal income tax has been withheld from an employee's regular wages, an employer may withhold New York State personal income tax from the supplemental wages at a rate equal to the rate of New York State personal income tax to be withheld from the highest denominated taxable income applicable to withholding from salaries and wages (e.g., 11.70 percent for supplemental wages paid after December 31, 2021), without any allowance for withholding exemptions.

(2) Vacation allowances. Amounts of so-called vacation allowances are subject to withholding as though they were regular wage payments made for the period covered by the vacation. If the vacation allowance is paid in addition to the regular wage payment for such period, the rules applicable with respect to supplemental wage payments apply to such vacation allowance.

(c) Payroll periods. The New York State personal income tax is to be withheld on the basis of the same payroll period which is required to be used by the employer for Federal income tax purposes.

(d) Withholding exemptions.

(1) In determining the proper New York State personal income tax to be deducted and withheld from an employee's wages, an employee is entitled to the same number of withholding exemptions as the number of New York exemptions such employee is allowed pursuant to section 616 of the Tax Law plus such additional New York State withholding allowances in accordance with forms and instructions of the Department of Taxation and Finance (see form IT-2104, Employee's Withholding Allowance Certificate and Instructions). In lieu of New York State form IT-2104, an employer may accept a properly completed Federal form W-4 from an employee.

(2) If an employee has not filed a Federal form W-4, or if an employee wishes to claim withholding exemptions other than those claimed for Federal income tax withholding purposes, the employer must obtain a completed Employee's Withholding Allowance Certificate (form IT-2104) from the employee. Such employee shall be entitled to claim only those withholding exemptions allowable on a properly completed Employee's Withholding Allowance Certificate (form IT-2104).

(3) If an employer is notified by the Internal Revenue Service that a Federal form W-4 for an employee is defective, then the number of exemptions allowable for New York State personal income tax withholding purposes for that employee shall be limited to the maximum number of withholding exemptions specified by the Internal Revenue Service in the written notice received from such service, less withholding allowances based on entitlement to Federal credits, plus the number of additional New York State withholding allowances claimed on a properly completed Employee's Withholding Allowance Certificate (form IT-2104).

(4) Submission of certain Employee's Withholding Allowance Certificates (form IT-2104).

(i) General rule. An employer shall submit, in accordance with subparagraph (ii) of this paragraph, a copy of any Employee's Withholding Allowance Certificate (form IT-2104), together with a copy of any written statement received from the employee in support of the claims made on the certificate, which is received from the employee during a reporting period, except for the first submission under clause (ii)(c) of this paragraph, if the employee is employed by that employer on the last day of the reporting period and if the total number of withholding exemptions and allowances claimed on the Employee's Withholding Allowance Certificate (form IT-2104) exceeds 14.

(ii) Rules for submission.

(a) In general.

(1) For purposes of this paragraph, a reporting period is a calendar quarter (i.e., January through March, April through June, July through September, and October through December).

(2) When to submit. Copies of Employee's Withholding Allowance Certificates (forms IT-2104) required to be submitted under subparagraph (i) of this paragraph are to be submitted as follows:

Reporting period	Due date
January through March	April 30th
April through June	July 31st
July through September	October 31st
October through December	January 31st

(3) Where to submit. An employer is to submit copies of Employee's Withholding Allowance Certificates (forms IT-2104) required to be submitted under subparagraph (i) of this paragraph to the New York State Department of Taxation and Finance, Income Tax Audit Administrator - Withholding Certificate Coordinator, Building 9, W.A. Harriman Campus, Albany, NY 12227, and must include with the submission a statement showing the employer's name, address, employer identification number, and the number of copies of Employee's Withholding Allowance Certificates (forms IT-2104) being submitted.

(b) Option. At the option of the employer, copies of Employee's Withholding Allowance Certificates (forms IT-2104) required to be submitted under subparagraph (i) of this paragraph may be submitted earlier and for shorter reporting periods. In such case, the employer is to submit the copies of the Employee's Withholding Allowance Certificates (forms IT-2104) to the New York State Department of Taxation and Finance, Income Tax Audit Administrator - Withholding Certificate Coordinator, Building 9, W.A. Harriman Campus, Albany, NY 12227, and must include with the submission a statement showing the employer's name, address, employer identification number, and the number of copies of Employee's Withholding Allowance Certificates (forms IT-2104) submitted. However, a copy of an Employee's Withholding Allowance Certificate (form IT-2104) required to be submitted under subparagraph (i) of this paragraph must be submitted no later than the time prescribed by subclause (a) (2) of this subparagraph.

(c) First submission. The first submission of copies of Employee's Withholding Allowance Certificates (forms IT-2104) required to be submitted under subparagraph (i) of this paragraph shall be due July 31, 1987 and shall be applicable to certificates in effect during the first and second reporting periods of 1987.

(iii) Other Employee's Withholding Allowance Certificates (forms IT-2104). An employer is also required to submit a copy of any Employee's Withholding Allowance Certificate (form IT-2104) in effect or make the original certificate available for inspection, together with a copy of any written statement received from the employee in support of the claims made on the certificate, upon written request of the Department of Taxation and Finance. This request of the Department of Taxation and Finance may relate either to one or more named employees or to one or more reasonably segregable units of the employer.

(iv) Computation of New York State personal income tax to be withheld.

(a) Until receipt of written notice from the Department of Taxation and Finance that an Employee's Withholding Allowance Certificate (form IT-2104) which has been submitted in accordance with this paragraph is defective, that certificate shall remain in effect and the employer shall withhold on the basis of the statements made in that certificate, unless such certificate must be disregarded under the provisions of clause (f) of this subparagraph.

(b) The Department of Taxation and Finance may find that a copy of an Employee's Withholding Allowance Certificate (form IT-2104) which has been submitted contains a materially incorrect statement, or it may determine, after written request to the employee for verification of the statements on the certificate, that the certificate lacks sufficient information to determine if the certificate is correct. If the Department of Taxation and Finance so finds or determines, and notifies the employer in writing that the certificate is defective, the employer must then consider the Employee's Withholding Allowance Certificate (form IT-2104) to be defective for purposes of computing the amount of New York State personal income tax to be withheld.

(c) If the Department of Taxation and Finance notifies the employer that an Employee's Withholding Allowance Certificate (form IT-2104) is defective, the Department of Taxation and Finance will, based on its findings, advise the employer that the employee is not entitled to claim a total number of withholding exemptions and allowances in excess of a number specified by the Department of Taxation and Finance in the notice.

(d) The Department of Taxation and Finance will provide the employer with a copy for the employee of each notice it furnishes to the employer under this subparagraph, in addition to the notice furnished to the employer for such employer's own use. The Department of Taxation and Finance shall also mail a similar notice to the employee at the address of the employee as shown on the Employee's Withholding Allowance Certificate (form IT-2104) under review.

(e) The employer shall promptly furnish the employee who filed the defective Employee's Withholding Allowance Certificate (form IT-2104), if still in such employer's employ, with a copy of the written notice of the Department of Taxation and Finance with respect to the certificate and may request another Employee's Withholding Allowance Certificate (form IT-2104) from the employee. The employer must withhold amounts of New York State personal income tax from the employee on the basis of the maximum number specified in the written notice received from the Department of Taxation and Finance.

(f) If and when the employee does file a new Employee's Withholding Allowance Certificate (form IT-2104), after an earlier certificate of the employee was considered to be defective, the employer shall withhold on the basis of that new certificate (whenever filed) as currently effective only if the new certificate does not make a claim of a number of withholding exemptions, which claim is greater than the number earlier furnished by the Department of Taxation and Finance in its written notice to the employer. If the new certificate does make a claim which is greater than the number contained in the Department of Taxation and Finance's written notice to the employer, then the employer shall disregard the new Employee's Withholding Allowance Certificate (form IT-2104), shall not submit that new certificate to the Department of Taxation and Finance, and shall continue to withhold amounts of New York State personal income tax from the employee on the basis of the maximum number specified in the written notice received from the Department of Taxation and Finance.

(g) If the employee makes a claim of a number of withholding exemptions on a new Employee's Withholding Allowance Certificate (form IT-2104) that is greater than the number contained in the Department of Taxation and Finance's written notice to the employer, the employee may specify on such new certificate, or by a written statement attached to that certificate, any circumstances of the employee which have changed since the date of the Department of Taxation and Finance's earlier written notice, or any other circumstances or reasons, as justification or support for the claims made by the employee on the new Employee's Withholding Allowance Certificate (form IT-2104). The employee may then submit that new Employee's Withholding Allowance Certificate (form IT-2104) either to (1) the New York State Department of Taxation and Finance, Income Tax Audit Administrator - Withholding Certificate Coordinator, Building 9, W.A. Harriman Campus, Albany, NY 12227, or to (2) the employer, who must then submit a copy of that new certificate and the employee's written statement (if any) to the Department of Taxation and Finance. The employer shall continue to disregard that new certificate and shall continue to withhold amounts of New York State personal income tax from the employee on the basis of the maximum number specified in the written notice received from the Department of Taxation and Finance unless and until the Department of Taxation and Finance by written notice advises the employer to withhold amounts of New York State personal income tax on the basis of that new Employee's Withholding Allowance Certificate (form IT-2104) and revokes its earlier written notice.

(h) For purposes of this paragraph, the term employer includes anyone who is authorized by the employer to receive Employee's Withholding Allowance Certificates (form IT-2104), to make withholding computations, or to make payroll distributions.

(5) The provisions of this subdivision shall also be applicable in determining withholding exemptions for purposes of the City of New York personal income tax on residents of the City of New York and the City of Yonkers income tax surcharge on residents of the City of Yonkers.

(6) Penalties.

(i) Penalties that may be applicable to employers for failure to comply with the provisions of this subdivision include, but are not limited to, the penalties imposed pursuant to sections 685(g), 685(i), 1801(a) and 1806 of the Tax Law.

(ii) Penalties that may be applicable to employees for making a statement under section 671 of the Tax Law which results in a decrease in the amount of New York State personal income tax deducted and withheld or for failure to supply information with respect to the number of withholding exemptions and allowances claimed include, but are not limited to, the penalties imposed pursuant to sections 685(i), 685(s), 1801(a) and 1804(a) of the Tax Law.

(e) Withholding of additional amounts from wages pursuant to an agreement.

(1) In addition to the New York State personal income tax required to be withheld under this Part, an employer and employee may agree that an additional amount of money be withheld from the employee's wages. The agreement must be in writing and in such form as the employer prescribes. The agreement is effective for such period as the employer and employee mutually agree upon. If the agreement fails to provide a termination date, either the employer or the employee, by furnishing a written notice to the other, may terminate the agreement effective with respect to the first payment of wages made on or after the subsequent January first or July first which occurs at least 30 days after the date on which such notice is furnished.

(2) The amount deducted and withheld pursuant to such an agreement between the employer and employee will be considered as the New York State personal income tax required to be deducted and withheld under this Part, and all provisions of the Tax Law and this Subchapter applicable to such tax are applicable with respect to any amount deducted and withheld pursuant to such agreement.

(f)

(1) For determining the New York State personal income tax to be withheld on wages paid to a resident of New York State, see section 171.5 of this Part.

(2) For determining New York State personal income tax to be withheld on wages paid to a nonresident of New York State, see section 171.6 of this Part.

(3) For determining City of Yonkers income tax surcharge on residents to be withheld on wages paid to a resident of the City of Yonkers, see Part 251 of this Chapter.

(4) For determining City of Yonkers earnings tax on nonresidents to be withheld on wages subject to such tax, see Part 269 of this Chapter.

(5) For determining New York City personal income tax on residents to be withheld on wages paid to a resident of New York City, see Part 291 of this Chapter.

(6) For determining New York City earnings tax on nonresidents to be withheld on wages subject to such tax, see Part 296 of this Chapter.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 171.4

Amended New York State Register December 29, 2021/Volume XLIII, Issue 52, eff. 12/29/2021