Current through Register Vol. XLI, No. 38, September 20, 2024
71.1. General. - Every employer maintaining
an office or transacting business within West Virginia and making payment of
any wages taxable under the West Virginia Personal Income Tax Act to a resident
or nonresident individual shall deduct and withhold from such wages for each
payroll period such amount of tax as will result in withholding from the
employee's wages during each calendar year an amount substantially equivalent
to the tax reasonably estimated to be due as the result of the inclusion in the
employee's West Virginia adjusted gross income of his wages received during
such calendar year. For this purpose, the provisions of the United States
Internal Revenue Code and its applicable regulations, with respect to deducting
and withholding of federal income tax by employers from wages, including the
meaning of the various federal terms (such as "employer", "employee", "wages",
"payroll period", "withholding exemptions") shall apply for West Virginia
personal income tax purposes except as otherwise specifically provided herein
or where such federal rules and definitions are clearly inconsistent with and
inapplicable to the provisions of W. Va. Code '11-21-71.
71.1.1. Employer. - The term employer means
any person for whom an individual performs or performed any service, of
whatever nature, as the employee of such person. An employer may be an
individual, a corporation including an S corporation, a partnership, a trust,
an estate, a joint-stock company, an association, or a syndicate, group, pool,
joint venture, or other unincorporated organization, group or entity. A trust
or estate, rather than the fiduciary acting on behalf of the trust or estate,
is generally the employer.
71.1.1.1. The term
employer embraces not only individuals and organizations engaged in trade or
business, but organizations exempt from federal and State income tax; such as,
charitable organizations and educational institutions.
71.1.1.2. The term employer shall also mean
any person or organization qualifying as an employer for federal income tax
purposes and maintaining an office or transacting business within West
Virginia, whether or not a paying agency is maintained within this
State.
71.1.2. Wages. -
Any remuneration which constitutes payments which are considered wages for
federal income tax withholding purposes also constitutes wages for purposes of
West Virginia income tax withholding. Wages in respect to withholding for West
Virginia personal income tax purposes shall not, however, include either
payments made by the United States to members of the Armed Forces of the United
States, including Reserve and National Guard components for service therein or
payments made to seamen who are members of the crew on a vessel engaged in
foreign, coastwise, intercoastal, interstate or noncontiguous trade.
71.1.3. Employers Relieved From Withholding.
- A determination by the Internal Revenue Service which relieves an employer
from the requirement of withholding with respect to wages paid to an employee
shall likewise apply for West Virginia personal income tax withholding
purposes; Provided, That the employer granted such relief by the Internal
Revenue Service must notify and provide the Tax Commissioner with all
particulars pertaining to the granting of such relief by the Internal Revenue
Service including but not limited to a copy of the Internal Revenue Service
determination.
71.1.3.1. Where an employer is
required to reinstate withholding of federal income tax with respect to an
employee, such reinstatement is equally applicable for West Virginia personal
income tax withholding purposes.
71.2. Withholding Exemptions. - An employee
shall be entitled to the same number of West Virginia withholding exemptions as
the number of withholding exemptions to which he is entitled for federal income
tax withholding purposes. An employer may rely upon the number of federal
withholding exemptions claimed by the employee except where the employee claims
a higher number of West Virginia withholding exemptions.
71.2.1. In determining the proper tax to be
deducted and withheld from an employee's wages, the employer shall allow the
number of exemptions claimed by the employee on his withholding exemption
certificate. Because the number of exemptions for federal and West Virginia
income withholding purposes is generally the same, the employer may accept the
Federal Form W-4 filed by the employee, unless such employee elects to file a
West Virginia withholding exemption certificate. Once filed with the employer,
a withholding exemption certificate will remain in effect until an amended
certificate is furnished or until a new certificate is required to be filed.
71.2.1.1. An employee has the right to
request that an employer withhold an additional amount of income taxes from
wages to the extent that any amount of wages remains after all other federal,
state or local withholding taxes have been withheld. When such a request is
made, the employer must comply with the employee's request. Any employee who
desires additional withholding should make his request to his employer by
completing and presenting the appropriate West Virginia withholding exemption
certificate to his employer.
71.2.2. The "withholding exemptions", in
general, should correspond with the exemptions to be allowed the employee in
computing his income tax on his annual West Virginia Personal Income Tax
Return. An employer is not required to ascertain whether an employee has
claimed the correct number of exemptions. If, however, the employer believes
that the employee has claimed an excessive number of exemptions, said employer
should so notify the West Virginia State Tax Department.
71.2.2.1. The amount of each West Virginia
exemption shall be two thousand dollars ($2,000) except as otherwise provided
under W. Va. Code ''11-21-16 and 11-21-36.
71.3. Exception To Employer Withholding For
Certain Nonresidents.
71.3.1. As a general
rule, every employer maintaining an office or transacting business in West
Virginia and making payment of wages subject to personal income taxation by
West Virginia is required to deduct and withhold from such wages. The Tax
Commissioner, however, pursuant to W. Va. Code '11-21-71(c)
has discretionary authority to promulgate regulations dictating conditions
under which employers of certain nonresidents may be relieved of the
requirement of withholding set forth under W. Va. Code '11-21-71(a).
Where West Virginia and another taxing jurisdiction in accordance with the
provisions of W. Va. Code '11-21-40
have entered into a written reciprocal credit agreement which results in
allowing the residents of another taxing jurisdiction (nonresidents for West
Virginia income tax purposes) a credit against West Virginia personal income
tax sufficient to offset all taxes required to be withheld, the employer of
such employee is hereby relieved from the withholding requirements set forth
under the West Virginia Personal Income Tax Act.
71.3.1.1. Employers of resident individuals
of Virginia who are nonresident employees of West Virginia persons or
organizations need not withhold from wages and salaries of said individuals
even though such nonresident employees may otherwise be required to file annual
income tax returns for the taxable year with this State due to a written
reciprocal credit agreement between West Virginia and Virginia.
71.3.1.1.a. As a condition precedent to not
withholding, the employer must obtain from the nonresident employee a properly
executed West Virginia exemption certificate.
71.3.1.1.b. Employers paying wages to
nonresident employees should contact the Tax Department for information
pertaining to which taxing jurisdictions have entered into written reciprocal
credit agreements with West Virginia.
71.4. Wages Paid To A Nonresident.
71.4.1. In General. - An employer shall
deduct and withhold on all wages paid to a nonresident employee for services
performed in West Virginia except as provided under Subsection 71.3 of this
regulation. Where such services are performed entirely within West Virginia,
the employer shall withhold the tax from all wages paid to such employee.
71.4.1.1. The compensation or remuneration
paid to a nonresident employee for services rendered entirely without the State
is not considered West Virginia wages and therefore is not subject to West
Virginia withholding, whether payment is made from within or without the
State.
71.4.2. Wages Of
A Nonresident For Services Performed Partly Within And Partly Without West
Virginia.
71.4.2.1. If a nonresident employee
performs services for his employer partly within and partly without West
Virginia, the employer may require him to execute an employee's certificate of
nonresidence for the purposes indicated in this regulation.
71.4.2.2. The employer may withhold on the
basis of the apportionment shown by the nonresident employee on the above
certificate but must nevertheless make necessary adjustments during the year so
that the proper amount of tax is withheld from the employee's wages. For the
purpose of making these adjustments, the proportion of renumeration which is
paid for services rendered within West Virginia shall be determined as follows:
71.4.2.2.a. If the services are rendered by a
traveling salesman, agent or other employee whose compensation on the basis of
commissions depends directly on the volume of business transacted by him, the
amount attributable to services in West Virginia is that proportion of the
compensation received which the volume of business transacted by the employee
within the State of West Virginia bears to the volume of business transacted by
him both within and without the State of West Virginia.
71.4.2.2.b. With respect to all other
employees, the amount of wages attributable to services within West Virginia is
that proportion of the total compensation which the total number of working
days employed within West Virginia bears to the total number of working days
employed within and without West Virginia, exclusive of nonworking days, such
as Saturdays, Sundays, holidays, and days of absence because of illness,
personal injury, vacation or leave with or without pay.
71.4.2.3. The portion of wages allocable to
West Virginia may be determined by the employer on the basis of the preceding
year's experience, except that the employer shall make any necessary
adjustments during the year to insure that the required tax is withheld for the
current year. If the employee reasonably expects that the preceding year's
experience will not be applicable to the current year, he may furnish to his
employer a statement estimating the proportion of his wages allocable to West
Virginia, or the employer himself may make such estimate and may then withhold
on the basis thereof; in either case, however, the employer is required to make
the necessary adjustments during the year so that the proper amount is withheld
from the employee's salary for the current year.
71.4.2.4. Where a nonresident employee will
work only a short period of time within West Virginia and it is reasonably
expected that the total wages of such nonresident employee for services
rendered within West Virginia will not exceed his personal exemption amount,
the employer need not withhold or deduct any amount from his wages until the
aggregate amount paid to him exceeds his personal exemption amount.
71.4.2.5. An employer is required to withhold
on all wages paid to a nonresident who works partly within and partly without
West Virginia unless there is filed with him the statement referred to in
Subsection 71.4.2.3 or unless the employer maintains adequate current records
to determine accurately the amount of wages paid for services performed in West
Virginia. In this instance, merely accepting such statement does not relieve
the employer from the duty of withholding the proper amount of tax from wages
paid to an employee. The statement shall be retained by the employer and made
available for inspection by representatives of the Tax Commissioner when so
required.
71.5. Wages Paid To A Resident. - Wages paid
to a resident of West Virginia are fully subject to withholding even though
some or all of the services may have been rendered without West Virginia,
because a resident's wages are taxable under the West Virginia Personal Income
Tax Act regardless of where earned.
71.6. Determining Tax To Be Withheld.-The
West Virginia income tax to be withheld by an employer must be determined in
accordance with one of the following income tax withholding methods: the Wage
Bracket Method or the Percentage Method. For unusual circumstances, an employer
may apply to the Tax Commissioner for permission to use another method.
Information pertaining to employer withholding, including explanations on the
use of either the Wage Bracket or Percentage Method of withholding, is
available in booklet form from the Tax Department.
