Missouri Code of State Regulations
Title 12 - DEPARTMENT OF REVENUE
Division 10 - Director of Revenue
Chapter 2 - Income Tax
Section 12 CSR 10-2.015 - Withholding of Tax

(1) Registration of Employers. Every employer required to deduct and withhold any amount of tax under section 143.191, RSMo, must register with the Missouri Department of Revenue by completing the Missouri Tax Registration Application Form 2643 or through the online business registration feature on the Missouri Department of Revenue's website. A Missouri tax identification number will be assigned. A new registration is required, and a new Missouri tax identification number will be assigned, when any change in ownership or ownership type occurs. An employer who receives a new Missouri tax identification number as a result of a change in ownership type must file a Final Report Form 5633, to close the old account. These Missouri tax identification numbers are not transferable. It is recommended that the Missouri tax identification number be included in all reports and correspondence from the employer to the Missouri Department of Revenue concerning withholding. If a business is discontinued, transferred, or sold, or if an employer closes or indefinitely ceases to pay wages, the employer must close the employer's withholding account by filing a Final Report (Form 5633). If the business of another employer is acquired, do not use the Missouri tax identification number assigned to that business; a new Missouri tax identification number must be obtained. Employer With More Than One (1) Payroll Unit-Complex Employer. If a consolidated report and remittance of the tax withheld cannot be made by the employer because of the complexity of the organization, branch offices, or divisions may be designated as withholding agents. These agents can perform the actual withholding and remitting. However, regardless of any internal arrangements which may be established by the complex employer, the legal responsibility and liability under the law still rests with the home office. If the complex employer has designated withholding agents, and the agents wish to claim the compensation deduction, only one (1) agent will be entitled to the full deduction and the remaining agents will be entitled to one-half of one percent (1/2%) deduction of income taxes withheld if the returns are filed timely.

(2) Seasonal. If an employer is only open for several months out of the year, the employer may register as a seasonal employer on Form 2643. Notwithstanding any section of this rule to the contrary, a seasonal employer is not required to file the Employer's Return of Income Taxes Withheld (Form MO-941) for the withholding tax periods that the employer indicates to the Missouri Department of Revenue it will not have employees, if the seasonal employer does not pay wages during such periods.

(3) Wages and Employees. The term wages for Missouri withholding purposes means wages as defined by section 3401(a) of the Internal Revenue Code of 1986, as amended. The term employee for Missouri withholding purposes has the same meaning as used in section 3401(a) of the Internal Revenue Code of 1986, as amended.

(4) Interstate Transportation Employees. An employer is not required to withhold Missouri income tax from the wages of an interstate transportation employee if such withholding requirement is prohibited by an applicable federal statute, or if a federal statute exempts all the wages paid by an employer to the interstate transportation employee from Missouri income tax. For example, under 49 U.S.C. Section 11502, the compensation paid by certain rail carriers to employees who perform regularly assigned duties on a railroad in more than one (1) state is subject to income tax only in the employee's state of residence.

(5) Nonresident Employees. If a nonresident employee performs all services within Missouri, tax shall be withheld from all wages paid as in the case of a resident. If a nonresident employee performs all services outside Missouri, his or her wages are not subject to Missouri withholding. If services are performed partly within and partly outside the state, the nonresident employee shall provide a completed Certificate of Nonresidence or Allocation of Withholding Tax (Form MO W-4A) to the employer, and only wages paid for services performed within Missouri are subject to Missouri withholding tax. If only a portion of an employee's wages is subject to Missouri withholding tax, then the amount of Missouri tax required to be withheld is calculated using a percent of the amount listed in the withholding tables. The calculation begins by determining the amount that would be withheld if all the wages were subject to Missouri withholding. This amount is then multiplied by a percent, which is determined by dividing the wages subject to Missouri withholding tax by the total federal wages.

(6) Resident of Missouri Employed in Another State. A Missouri resident paying income tax to another state because of employment in that state may complete and provide to the employer a Withholding Affidavit for Missouri Residents (Form MO W-4C). If the employee does not complete and provide the Form MO W-4C, the employer may withhold Missouri taxes on wages for all services performed, regardless of where performed. All wages received for services performed in another state not having a state income tax are subject to Missouri withholding. If services are performed partly within and partly outside the state, only wages paid for that portion of the services performed within Missouri are subject to Missouri withholding tax, provided that the services performed in the other state are subject to the other state's withholding provisions. If a service is partly within and partly outside Missouri and only a portion of an employee's wages is subject to Missouri withholding tax, then the amount of Missouri tax required to be withheld is calculated using a percentage of the amount listed in the withholding tables. The calculation begins by determining the amount that would be withheld if all the wages were subject to Missouri withholding. This amount is then multiplied by a percent, which is determined by dividing the wages subject to Missouri withholding tax by the total federal wages.

(7) Supplemental Wage Payments. If supplemental wages are paid, such as bonuses, commissions, a lump-sum distribution from the employer, overtime pay, back pay, including retroactive wage increases or reimbursements for nondeductible moving expenses in the same payment with regular wages, Missouri income tax shall be withheld as if the total of the supplemental and regular wages were a single wage payment for the regular payroll period. If supplemental wages are paid in a different payment from regular wages, the method of withholding income tax depends in part on whether income tax is withheld from the employee's regular wages.

(8) Tips Treated as Supplemental Wages. Employers must withhold Missouri income tax based upon total tips reported by the employee, unless the amount of tips received by the employer and remitted to the employee is greater in which case the greater amount shall be withheld. If an employee shares tips, the employer shall withhold only from the employee who actually receives the shared tips. Employers shall withhold income tax on tips using the same options indicated for withholding on supplemental wage payments.

(9) Vacation Pay. Vacation pay received by an employee is subject to withholding as though it were a regular wage payment made for the payroll periods during the vacation. If vacation pay is paid in addition to regular wages for the vacation period, the vacation pay is treated as a supplemental wage payment. An employee who is not a resident of Missouri but works in Missouri is subject to withholding on his or her vacation pay.

(10) Retirement Income. Every Missouri resident receiving retirement income or a pension from an entity in this state may elect to have an amount withheld as a payment of state income tax provided such income is taxable in this state. The recipient should determine the amount to be withheld and file Withholding Certificate for Pension or Annuity Statements (Form MO W-4P) with the administrator of his or her retirement or pension plan. The administrator of the retirement or pension plan must retain the Form MO W-4P for a minimum of three (3) years after the date the taxes to which they relate become due, or the date the taxes are paid, whichever is later.

(11) Exemption for Certain Individuals. This section applies to a Missouri nonresident performing services in Missouri or a Missouri resident. Exemption from withholding for an individual is valid only if the employee submits to the employer a completed Employee's Withholding Allowance Certificate Form MO W-4, certifying that the employee has no income tax liability from the previous year and expects none for the current year. The employee must file a Form MO W-4 annually if the employee wishes to continue to be exempt.

(12) Employee Withholding Certificate. Each employee subject to Missouri income tax is required to complete and provide to the employee's employer a Form MO W-4 that reflects the filing status on his or her income tax return. The Form MO W-4 must be used by the employer to determine the amount of Missouri income tax which must be withheld from each paycheck. If an employee has more than one (1) employer, he or she may want to withhold an additional amount on Line 2 of Form MO W-4 for his or her principal employer to ensure that the total amount withheld approximates the actual income tax liability. Failure to withhold enough from each payroll period could cause an employee to be subject to underpayment penalties. If an employee expects to have income other than his or her wages, or income from multiple jobs, he or she may request additional amounts be withheld in addition to the standard withholding calculations that are based on the standard deduction for the filing status indicated on the Form MO W-4. The additional amount should be included on Form MO W-4, Line 2. Employees who expect to receive a refund (as a result of itemized deductions, modifications, or tax credits) on their tax returns may direct the employer to only withhold the amount indicated on Form MO W-4, Line 3, in which case the employer will not use the standard calculations for withholding. If the employee does not indicate an amount to be withheld or if the amount indicated is more than is available for the payroll period, the employer will use the standard calculations. Employers are required to submit a copy of each completed Form MO W-4 or an equivalent form for each new employee to the Missouri Department of Revenue within twenty (20) calendar days of hire. "Date of hire" is defined as the date the employee reports to work or the date the employee signs the federal W-4 form, whichever is earlier. The department will in turn forward the Form MO W-4 to the Division of Child Support Enforcement.

(13) Determining Amount to be Withheld. Except as otherwise provided in this rule, an employer required to deduct and withhold tax under sections 143.191, RSMo, must withhold the amount of tax set forth for that withholding tax period in the withholding tables published by the Missouri Department of Revenue, or by using a percentage withholding formula published by the Missouri Department of Revenue. To determine income tax withholding, an employer must take into account wages paid during the withholding tax period, as well as filing status, as there are different withholding calculations or amounts for single, married, and head of household employees.

(14) Form MO-941 Reporting Requirement. Every employer withholding Missouri income tax from employee's wages is required by statute to report and remit the tax to the state of Missouri with the Employer's Return of Income Taxes Withheld (Form MO-941) or, for a quarter-monthly filer, as specified in section (16) of this rule.

(15) Annual Filing of Forms W-2, 1099-R, and MO W-3. For each year an employer is required to withhold Missouri income tax, the employer must also file with the Missouri Department of Revenue copies of all Forms W-2 and Forms 1099-R issued to employees subject to Missouri income tax, which shall be accompanied by a completed Transmittal of Tax Statements (Form MO W-3). This filing requirement applies only where the employer has paid or credited one thousand two hundred dollars ($1,200) or more to such an employee, and only if the Form W-2 or Form 1099-R is required to be filed with the United States Internal Revenue Service. The due date for this filing requirement is February 28 following the year for which the Forms W-2 or 1099-R were issued. However, for employers with two hundred and fifty (250) or more employees required to file Form(s) W-2 electronically, the due date to file the Form(s) W-2 is January 31 following the year for which the Form(s) W-2 were issued. Unless a copy of a waiver of the federal requirement to file electronically has been filed with the Missouri Department of Revenue, employers with two hundred and fifty (250) or more employees must file the Form(s) W-2 electronically. Do not include the fourth quarter or twelfth month return with the Form W-2(s)/1099-R(s) and Form MO W-3. The last annual remittance must be sent separately with Form MO-941.

(16) Time and Place for Filing Returns and Remitting Tax.

(17) Correcting Mistakes in Reporting or Withholding.

(18) Employer Compensation. For every remittance made to the director of revenue, on or before the respective due date for the payment involved, each employer (except the United States, the state of Missouri, and all agencies and political subdivisions of the state of Missouri or the United States government) may deduct and retain as compensation the following percentages of the total amount of the tax withheld and paid annually: two percent (2%) of the first five thousand dollars ($5,000) or less; one percent (1%) of the amount in excess of five thousand dollars up to ten thousand dollars ($5,000-$10,000); one-half of one percent (1/2%) of the amount collected in excess of ten thousand dollars ($10,000). The employer is not entitled to any compensation if the remittance is not made on or before the due date. Compensation for complex employers is covered in section (1).

(19) Responsible Party Liability - Corporations. Any officer, director, statutory trustee, or employee of any corporation who has direct control, supervision, or responsibility for filing returns and making payments of the Missouri withholding tax, who fails to file or make payment, may be personally assessed the unpaid tax, including interest, additions to tax and penalties pursuant to section 143.241.2, RSMo.

(20) Statements for Employees. Unless an alternative form is prescribed by the Department of Revenue, to comply with section 143.201, RSMo, two (2) copies of the "W-2 Wage and Tax Statement" published by the Internal Revenue Service must be provided to each employee to whom wages were paid and were subject to withholding whether or not tax was withheld on the payments. The employer shall show on the Form W-2 the amount of wages paid by the employer to the employee, and the amount, if any, deducted and withheld as Missouri income tax. If it becomes necessary to correct the amount of wages or, if applicable, the amount of Missouri income tax deducted and withheld, after the Form W-2 has been issued to an employee, two (2) corrected statements showing the amount of wages paid to the employees and the amount, if any, deducted and withheld as Missouri income tax must be issued to the employee and a copy mailed to the Department of Revenue. The corrected statements must be clearly marked "Corrected by Employer." In case a withholding statement is lost or destroyed, a substitute copy must be issued to the employee and must be clearly marked "Reissued by Employer." Withholding statements must be furnished to employees not later than January 31 following the calendar year covered by the statement. However, if employment terminates during the year, two (2) copies of Form W-2 must be provided to the employee within thirty (30) days of the last payment of wages, on which the employer shall show the amount of wages paid to the employee, and the amount, if any, deducted and withheld as Missouri income tax. Interrupted or intermittent employment is not considered terminated as long as there is reasonable expectation of further employment on the part of both the employer and the employee. If an employee's employment is terminated and a Form W-2 has been provided for the period worked during the year and the employee is later reemployed by the same employer during the calendar year, another withholding statement showing the amount of wages paid to the employee and the amount, if any, deducted and withheld as Missouri income tax must be provided to the employee covering only the later period of employment within the calendar year.

(21) Records to Be Kept by Employers.

(22) Interest at the statutory rate must be included on all payments of Missouri withholding tax not made on a timely basis. Interest is subject to change on an annual basis pursuant to section 32.065, RSMo.

(23) An employer's failure to file a timely return, unless due to reasonable cause and not due to willful neglect, will result in additions to tax of five percent (5%) per month or a fraction of a month not to exceed twenty-five percent (25%) pursuant to section 143.741.1, RSMo.

(24) Quarter-Monthly Underpayment Penalty. A quarter-monthly penalty of five percent (5%) will be imposed on a quarter-monthly period underpayment determined pursuant to section 143.225.6, RSMo. The penalty imposed by section 143.225.6, RSMo, applies, in lieu of all other penalties, interest, or additions to tax, only to violations of section 143.225, RSMo, in making quarter-monthly remittances. Where the quarter-monthly filer has failed to pay all or part of the withholding tax due for the month by the due date of the employer's monthly return for that month, the quarter-monthly filer is subject to addition to tax, penalties, and interest on such underpayment, pursuant to sections 143.731 and 143.751, RSMo, in the same manner as if the quarter-monthly filer were a monthly filer with regard to that month.

(25) Notwithstanding any provision of this rule to the contrary, nothing in this rule shall be interpreted or construed as incorporating by reference any rule, regulation, standard, or guideline of a federal agency.