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.
(A) Example: Nonresident earns $20,000
in wages, $12,000 from Missouri sources. Missouri withholding would be 60%
($12,000 รท $20,000 equals 60%) of the withholding required on $20,000.
Therefore, if $100 per month should be withheld for an individual earning
$20,000, then for this nonresident, $60 should be withheld each month (100 x
60% = $60).
(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.
(A) Example: A resident employee earns $1,500
per month and is single. The employee performs 40% of his or her services in
Kansas. The remaining 60% of the employee's services are performed in Missouri.
If the total withholding on all earnings is $40 per month, the actual
withholding for Missouri would be $24 ($40 x 60% = $24).
(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.
(A) If income tax is withheld from the
employee's regular wages, choose either one (1) of the following methods for
withholding income tax on the supplemental wages:
1. Method One. Withhold at a flat percentage
rate that is equal to the highest individual income tax rate determined under
section 143.011, RSMo, for the current
tax year of the supplemental wages; or
2. Method Two. Add the supplemental wages to
the employee's regular wages paid to the employee within the same calendar year
for the payroll period and determine the income tax to be withheld as if the
aggregate amount were one (1) payment. Subtract the tax already withheld from
the regular wage payment and withhold the remaining tax from the supplemental
wage payment.
(B) If
income tax has not been withheld from the regular wages (for example, where an
employee's standard deduction exceeds his or her wages), use Method Two
described in paragraph (7)(A)2. of this rule. Add the supplemental wages to the
regular wages paid within the same calendar year for the payroll period and
withhold income tax on the total amount as though the supplemental wages and
regular wages were one (1) payment for a regular payroll
period.
(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.
(A) Withholding Tables.
Withholding using the withholding tables prepared by the Missouri Department of
Revenue is based on wages. In determining the amount of tax to be withheld, the
employer should use the table for the correct payroll period-daily, weekly,
bi-weekly, semimonthly, and monthly periods. Any other period would be a
miscellaneous pay period. Tables show wage brackets in the two (2) left-hand
columns. The filing status is shown at the top of each of the remaining
columns.
(B) Percentage Withholding
Formula. A percentage withholding formula has been published by the director of
revenue and it may be used on electronic data processing equipment for
withholding Missouri income tax. Missouri withholding is calculated by
subtracting the annual standard deduction from the employee's annual wages and
multiplying the result by the applicable tax rate. The formula is illustrated
in the "Employer's Tax Guide (Form 4282)."
(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.
(A) The employer's name, address, and
Missouri tax identification number must appear as filed on previous returns and
the period for which the remittance is made must be indicated. To avoid the
issuance of non-filer notices, if an employer temporarily ceases to pay wages
or has no payroll for a reporting period, a return must still be filed for each
period indicating that no tax was withheld.
(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.
(A) Filing by Mail or Non-Electronic
Delivery. Paper filings must also be accompanied by a list, preferably an
adding machine tape or a computer printout, of the total amount of the Missouri
income tax withheld shown on all "Copy 1s" of Form W-2 and Form 1099-R. The
Department of Revenue will accept computer-produced magnetic tape or digital
records, including those stored in compact discs or flash drives, instead of
the paper Form W-2 or Form 1099-R. The employer must meet tape data or digital
file specifications which are included in the "Employer's Tax Guide" (Form
4282) published annually by the Department of Revenue.
(B) Electronic Filing. Electronic filing must
be completed through the webpage or online portal specified on the Missouri
Department of Revenue's website. Electronic filing of Form(s) W-2 and Form(s)
1099 must be completed in a manner consistent with the "Missouri Employer
Reporting of W-2s Instructions and Specifications Handbook" and "Missouri
Employer Reporting of 1099 Instructions and Specifications Handbook,"
respectively, which are published annually by the Missouri Department of
Revenue. A separate Form MO W-3 is not required if the Form(s) W-2 and Form(s)
1099 are electronically filed.
(16) Time and Place for Filing Returns and
Remitting Tax.
(A) All returns and remittances
must be filed with the Department of Revenue at the specific mailing address
indicated on the form, using an electronic filing and payment method provided
by the Missouri Department of Revenue, or as otherwise provided in this rule.
There are three (3) filing frequencies: monthly, quarterly, and annually, with
some monthly filers being required to make quarter-monthly payments. A newly
registered employer is initially assigned a filing frequency on the basis of
the employer's estimation of future withholdings. If the assigned filing
frequency differs from the filing requirements established by statute or rule,
it is the employer's responsibility to immediately notify the Department of
Revenue. The dates on which the returns and payments are due are as follows:
1. Quarter-Monthly. Employers required to
withhold nine thousand ($9,000) or more per month for at least two (2) months
during the preceding twelve (12) months shall remit payment to the Missouri
Department of Revenue on a quarter-monthly basis. The quarter-monthly periods
are the first seven (7) days of a calendar month; the eighth to the fifteenth
day of a calendar month; the sixteenth to the twenty-second day of a calendar
month; and the twenty-third day through the last day of a calendar month.
Notwithstanding any provision of this rule to the contrary, remittances must be
made electronically within three (3) banking days after the end of the
quarter-monthly period. Banking days shall not include Saturday, Sunday, or
legal holidays. If there is no payroll during a quarter-monthly period, no
quarter-monthly payment is necessary for that quarter-monthly period.
Quarter-monthly filers are required to pay by use of an electronic funds
payment system established by the department. If quarter-monthly filers are
unable to use the electronic funds payment system, alternative electronic
payment methods are outlined in the "Employer's Tax Guide" Form 4282. An
Employer's Return of Income Taxes Withheld (Form MO-941) reconciling the
quarter-monthly payments and detailing any underpayment of tax shall be filed
by the fifteenth day of the following month except for the third month of a
quarter in which case the Employer's Return of Income Taxes Withheld (Form
MO-941) shall be filed the last day of the succeeding month;
2. Monthly. Employers required to withhold
five hundred dollars ($500) per month for at least two (2) months during the
preceding twelve (12) months shall file on a monthly basis. Return and payment
must be made by the fifteenth day of the following month except for the third
month of a quarter in which case the return is due the last day of the
succeeding month;
3. Quarterly.
Employers not required to file and pay taxes withheld on a monthly basis who
withheld at least one hundred dollars ($100) per quarter during at least one
(1) quarter of the preceding four (4) quarters shall file on a quarterly basis.
Return and payment must be made on or before the last day of the month
following the close of the calendar quarter; and
4. Annually. Employers required to withhold
less than one hundred dollars ($100) during each of the preceding four (4)
quarters shall file on an annual basis. Return and payment must be made on or
before January 31 of the succeeding year.
(B) When the due date falls on a Saturday,
Sunday, or legal holiday in this state, the return and payment will be
considered timely if made on the next business day (section
143.851, RSMo).
(C) An employer who has been placed on a
quarter-monthly payment frequency who has not withheld nine thousand dollars
($9,000) or more in two (2) months of the prior twelve (12) months, may request
permission from the Department of Revenue to pay on a less frequent basis. An
employer that has been placed on a quarter-monthly payment frequency must pay
on a quarter-monthly basis for a minimum of twelve (12) months before obtaining
a change in payment frequency.
(17) Correcting Mistakes in Reporting or
Withholding.
(A) Overpayment and Refund. If
withholding tax has been over-reported, the employer must file an Amended
Employer's Return of Income Taxes Withheld, Form MO-941, along with supporting
documentation, such as a copy of the payroll ledger. If the employer will be
requesting a refund of the overpayment, an Employer Withholding Tax Refund
Request (Form 4854) must be attached to the Amended Employer's Return of Income
Taxes Withheld (Form MO-941). No claim for credit or refund will be allowed
after the expiration of the period of limitation prescribed in section
143.801, RSMo. Pursuant to
section 143.781.3, RSMo, a refund will only be issued to the employer if the
overpayment amount was not actually deducted and withheld from an employee's
wages by the employer. Pursuant to section
143.211, RSMo, any amount of tax
actually deducted and withheld under sections
143.011 to
143.996, RSMo, in a calendar
year is deemed paid by the employee from whom it was withheld for the
employee's income tax year beginning in that calendar year, and is not
considered paid by the employer for purposes of determining an overpayment by
the employer. To reduce the risk of overpayment claim denial and inadvertent
underpayment, before attempting to apply credit of an overpayment of Missouri
withholding tax from one period to any other period, employers should first
verify with the Missouri Department of Revenue the amount of overpayment the
employer is authorized to claim.
(B) Underpayment. If withholding tax has been
under-reported, the employer must file an Amended Employer's Return of Income
Taxes Withheld (Form MO-941) to report the corrected 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.
(A) The following records must be
retained:
1. Name, address, Social Security
number, and period of employment for all employees;
2. Amounts and dates of all wage payments
subject to the Missouri withholding tax for all employees;
3. All Form(s) W-2, Form(s) 1099-R, state
income tax withholding certificate (Form MO W-4), Certificates of Nonresidence
or Allocation of Withholding Tax (Form MO W-4A), and Withholding Affidavits for
Missouri Residents (MO W-4C), provided to or by any employee;
4. Employer's Missouri tax identification
number;
5. Record of
quarter-monthly, monthly, quarterly, and annual returns filed including dates
and amounts of payments; and
6.
Records that would assist the Missouri Department of Revenue in auditing the
employer's records.
(B)
The above listed records must be kept by the employer for at least three (3)
years after the date the taxes to which they relate become due, or the date the
taxes are paid, whichever is later. However, any employee's copies of the
Withholding Statement required by section
143.201, RSMo, which cannot be
delivered to the employee after reasonable effort is exerted must be kept by
the employer for at least four (4) years.
(C) In addition to the records listed in
paragraphs (21)(A)1.-6., all records of the allocation of working days in the
state of Missouri must be retained for all employees that, during the
withholding period, worked one (1) or more days outside of Missouri and one (1)
or more days in Missouri. This subsection (21)(C) does not require an employer
to create such records of the allocation of working days.
(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.
(A) Failure to timely pay tax requires a
five percent (5%) addition to tax pursuant to section 143.751.3, RSMo, if such
failure is due to negligence or intentional disregard of rules and regulations
(but without intent to defraud).
(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.
Notes
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