| To: | Agency Personnel/Payroll Staff |
| Subject: | Exempt Status on Form W-4 and Earned Income Credit |
| Sent Date: | 11/06/2006 |
Claiming Tax Exempt
If your agency has employees that have claimed exempt from tax withholding during calendar year 2006 the following report is available via the SCO on-line reporting application:
Sysid = AUIS44R (DSP Request Reports)
Report Number and Name = AU447172 Employees Exempt From Fed and State Taxes
Per new IRS regulations, employers are no longer required to send in W-4s for employees claiming exempt or more than 10 allowances, unless the IRS specifically requests them. Therefore, agencies are no longer required to send a copy to DSP, but rather keep the W-4 in the employee’s file. If the IRS requests a copy, DSP will contact the agency for the requested copy.
NOTE: The above report lists all employees currently having a certificate for exemption. If the employee does not file a new W-4 for calendar year 2007, the existing certificate of exemption will expire on February 15th.
In addition, if the employee fails to file a new form W-4 with your agency for 2007, you are required to change their withholding status to ‘S – Single’ and ‘000 – Withholding Allowances’.
Advanced Earned Income Credit
All advanced Earned Income Credit deductions will be automatically inactivated effective December 31, 2006.
Eligible employees, wishing to participate, must file a new W-5 form for calendar year 2007. The EIS-EIC forms are due in this office no later than December 29, 2006 to be processed for the January 12, 2007 pay date. You will be notified once the IRS makes the 2007 W-5 form available on their website.
Reminder: It is necessary to attach the W-5 form to the EIS-EIC form for processing.
Any questions concerning this memo should be directed to Leslie Mickelsen at 334-2394.
Thank you
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