| To: | All Personnel/Payroll Techs |
| Subject: | Employees claiming exempt status on W-4 forms and employees receiving advanced Earned Income Credit
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| Sent Date: | 11/07/2005 |
Claiming Tax Exempt
The State Controller’s Office has posted the list of employees who have claimed exempt status from tax withholding during calendar year 2005. If your agency has an employee who has made this claim, the report can be found via online reporting under SYS ID AUIS44R – DSP Request Reports. The report number is AU447172. Such employee’s certificate for exemption expires on February 15th unless they have filed a new W-4 for calendar year 2006.
Note: If any of these employees fail to file a new form W-4 with you for 2006, you are required by federal law to change their withholding status to 'Single' with '0' withholding allowances.
Due to new IRS regulations, employers no longer have to send in W-4s for employees claiming exempt or more than 10 allowances, unless the IRS specifically requests them. This means that agencies no longer need to send a copy of these W-4s to DSP, please keep the W-4 in the employee’s file. If the IRS requests a copy of an employee’s W-4, DSP will contact the agency to send in the requested copy. This does not remove the responsibility of the agency to change an employee’s withholding status if the employee claiming exempt fails to file a new W-4 for 2006.
Advanced Earned Income Credit
Any employees currently participating in advanced Earned Income Credit must keep in mind that we will automatically inactivate this deduction effective December 31, 2005. To reactivate, an eligible employee must file a new W-5 form for calendar year 2006 and have you attach it to a new EIS-EIC form for 2006. The EIS-EIC forms are due in this office no later than December 28, 2005 to be processed for the January 12, 2006 pay date. You will be notified once the IRS makes the 2006 W-5 form available on their website.
Any questions concerning this memo should be directed to Leslie Mickelsen at 334-2394. Thank you.
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