CT State Withholding Update

The State of CT announced on Wednesday 8/10/11 that it recognizes the limitations of payroll processing software when calculating certain situations under the new CT payroll withholding tax regulations.

Certain payroll withholding tax calculations, including those being made to state employees within their own payroll processing system, are not being processed accurately.

Despite the payroll processing problem, Commissioner of Revenue Services Kevin Sullivan advised affected taxpayers that they can protect themselves from the risk of underpayment. Taxpayers may make estimated payments in order to assure that enough tax is paid to meet the “safe harbor” of paying in at least as much as the amount of their last annual Connecticut income tax due.

Said Commissioner Sullivan, “Taxpayers will rightfully ask whether they may be subject to interest and penalty because of underwithholding due to this problem. I want to assure taxpayers who find themselves in this situation that they will not be subject to interest or penalty on such underpaid amounts. Similarly, employers who in good faith and solely due to this problem do not correctly withhold and pay in the taxes due for their employees will not be penalized in the event of audit.”

Link to the full article from CT DOR: http://www.ct.gov/drs/cwp/view.asp?a=1436&Q=484454