Connecticut Withholding Tax
EFFECTIVE DATE: Withholding begins with respect to wages paid on or after October 1, 1991.
BACKGROUND: For taxable year 1991, the total Connecticut adjusted gross income of residents and the Connecticut adjusted gross income of nonresidents that is derived from a Connecticut source will be taxed at 1.5%. (The tax rate for taxable year 1992 will be 4.5%.) Like the federal tax system, the Connecticut tax system requires employers to withhold State income tax from employees' earnings and to periodically remit withheld funds to the State.
PURPOSE: The purpose of this Special Notice is to provide employers with general information about their responsibilities for withholding Connecticut income tax. Additional detailed information about withholding will be sent to employers in September.
WHAT ARE YOUR RESPONSIBILITIES AS AN EMPLOYER?
Your responsibilities as an employer are:
To be registered for withholding tax with the Department of Revenue Services (DRS);
To obtain from each employee a completed CT-W4, Connecticut Employee Withholding Allowance Certificate;
To withhold State income tax from your employees who are working in Connecticut and remit the tax withheld with the appropriate form;
To file quarterly and annual reports of wages paid and withheld;
To provide each employee with a wage and tax statement by January 31 of each year, showing the amount of Connecticut income tax withheld for the prior year.
WHO IS AN EMPLOYER WHO MUST WITHHOLD CONNECTICUT TAX?
If you maintain an office in Connecticut or transact business within this State and are considered an employer for federal tax purposes, you are an employer who must withhold Connecticut tax.
HOW DO EMPLOYERS REGISTER FOR THE WITHHOLDING TAX?
Employers must register for withholding tax by completing Form REG-1, Application for a Tax Registration Number.
Employers who are currently registered with DRS for other State taxes are being notified of their automatic registration for withholding tax.
Employers who are not currently registered with DRS must complete and return REG-1 as soon as possible.
ANY EMPLOYER WHO IS NOT CONTACTED BY DRS BY MID-SEPTEMBER SHOULD CALL DRS FOR REGISTRATION INFORMATION.
WHAT PAYMENTS TO EMPLOYEES ARE SUBJECT TO WITHHOLDING?
Withholding applies to all wages paid to employees, both residents and nonresidents, for services performed in this State. All amounts determined to be wages for federal tax purposes and subject to federal withholding tax are also wages for Connecticut purposes.
HOW WILL AN EMPLOYER KNOW HOW MUCH TO WITHHOLD FROM THE WAGES OF EMPLOYEES?
In mid-September all registered employers will receive Circular CT, A Connecticut Employer's Tax Guide, and CT-W4, Connecticut Employee Withholding Allowance Certificate. The amount to withhold will be based on the information submitted to the employer by the employee on the CT-W4 and on the Connecticut Income Tax Withholding Tables contained in Circular CT.
HOW WILL EMPLOYERS REMIT WITHHOLDING TAX TO THE STATE?
In September, employers who are registered for withholding tax with DRS will receive an Employer's Withholding Remittance Coupon Book with detailed instructions for making payments. A coupon, Form CT-WH, must accompany each payment. Form CT-941, the quarterly reconciliation form, CT-W3, the annual reconciliation form, and Form CTC, for making corrections or ordering additional forms, will also be included in the coupon payment book.
HOW FREQUENTLY MUST PAYMENTS BE SUBMITTED?
Employers will file with the same frequency as they file withholding payments with the Internal Revenue Service. Each coupon, along with the accompanying payment, must be mailed to DRS.