W. Va. Code R. § 110-21-71

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 110-21-71 - Requirement Of Withholding Tax From Wages

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.

W. Va. Code R. § 110-21-71