Voluntary State Tax Withholding From Retired Pay, 55149 [2019-21968]

Agencies

• DEPARTMENT OF DEFENSE
• Office of the Secretary

[Federal Register Volume 84, Number 199 (Tuesday, October 15, 2019)]
[Notices]
[Page 55149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21968]


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DEPARTMENT OF DEFENSE

Office of the Secretary

[Docket ID: DOD-2019-OS-0012]


Voluntary State Tax Withholding From Retired Pay

AGENCY: Office of the Under Secretary of Defense (Comptroller), DoD.

ACTION: Notice.

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SUMMARY: It is the policy of the Uniformed Services to accept written 
requests from current and former members for voluntary State income tax 
withholding from monthly retired or retainer pay when the Department 
has an agreement for such withholding with the State named in the 
request. Rather than an unnecessary part in the Code of Federal 
Regulations (CFR), this notice provides administrative-type information 
to those members and States interested in applying for or engaging in 
this tax withholding arrangement.

DATES: This action is applicable on November 14, 2019.

FOR FURTHER INFORMATION CONTACT: Kellie Allison at 703-614-0410.

SUPPLEMENTARY INFORMATION: Title 32 CFR part 78, ``Voluntary State Tax 
Withholding from Retired Pay,'' set forth DoD's policies and procedures 
on the voluntary state income tax withholding from the monthly retired 
or retainer pay of a member or former member of the Uniformed Services. 
DoD published a direct final rule to remove 32 CFR part 78 elsewhere in 
this issue of the Federal Register that will become effective 30 days 
from publication unless significant adverse comment is received which 
would result in a contrary determination. Should DoD receive a 
significant adverse comment, the Department will withdraw both direct 
final rule and this notice by publishing another notice in the Federal 
Register. It was determined that part 78 was unnecessary because it 
restated current law, 10 U.S.C. 1045; set forth internal policy and 
procedures; and conveyed to the public administrative and procedural 
information that does not require rulemaking. Instead, this notice 
informs the public of pertinent administrative information concerning 
the request for state tax withholding in lieu of part 78.
    A retiree may request voluntary State income tax withholding from 
their retired or retainer pay. The withholding amount requested must be 
in a whole dollar amount and at least $10, or the state's minimum, if 
that amount is higher.
    To efficiently and accurately implement the request, it should 
include the member's full name, signature, Social Security number, the 
fixed amount withheld monthly from retired pay, the state designated to 
receive the withholding, and the member's current address. The retiree 
may submit the request by sending a completed DoD Form 2656, ``Data for 
Payment of Retired Personnel'' (only sections I and VII of the form 
need to be completed), a letter, an email, or fax to the U.S. Military 
Retired Pay office, or submit the request through the member's myPay 
account. If using myPay, the member's signature is not required. In the 
case of incompetence, the member's guardian or trustee must sign the 
request.
    Current guidance, including the addresses and other information for 
the U.S. Military Retired Pay offices can be found in the DoD Financial 
Management Regulation, Volume 7B, Chapter 26, ``State Taxes,'' that is 
available at https://comptroller.defense.gov/Portals/45/documents/fmr/current/07b/07b_26.pdf (most recently updated in July 2018).
    A State requesting an agreement for the voluntary withholding of 
State tax from the retired pay of members of the Uniformed Services 
shall address a letter to the Director, Defense Finance and Accounting 
Service, 1931 Jefferson Davis Highway, Arlington, VA 22240. The 
Department of Defense shall enter into a Standard Agreement within 120 
days of a request for agreement from the proper State official. This 
agreement shall provide that the Uniformed Services shall withhold 
State income tax from the monthly retired pay of any member who 
voluntarily requests such withholding in writing. In the Standard 
Agreement, States are allowed to terminate the Agreement within 45 days 
of any amendment, modification, supplement, or change to the procedures 
for withholding.
    States shall indicate, in writing, agreement to follow the 
provisions of the DoD FMR, Volume 7B, Chapter 26. If a State proposes 
an agreement that varies from the Standard Agreement, the State shall 
indicate, in writing, to the Director, Defense Finance and Accounting 
Service which provisions of the Standard Agreement are not acceptable 
and propose substitute provisions.
    To be effective, the letter must be signed by a State official 
authorized to bind the State under an agreement for tax withholding. 
Copies of applicable State laws that authorize employers to withhold 
State income tax and authorize the official to bind the State under an 
agreement for tax withholding shall be enclosed with the letter. The 
letter also shall indicate the title and address of the official whom 
the Uniformed Services may contact to obtain information necessary for 
implementing withholding.
    Within 120 days of the receipt of a letter from a State, the 
Director, Defense Finance and Accounting Service, or designee, will 
notify the State, in writing, that DoD has either entered into the 
Standard Agreement or that an agreement cannot be entered into with the 
State and the reasons for that determination.

    Dated: October 3, 2019.
Shelly E. Finke,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2019-21968 Filed 10-11-19; 8:45 am]
 BILLING CODE 5001-06-P