Sec. 174.1. New York State employer's returns of tax withheld and payment of withheld New York State personal income taxes

Tax Law, § 674(a)(1)(3)

(a) General requirements.

Except as otherwise provided, every employer required to deduct and withhold New York State personal income tax from wages under this Article must file a New York State employer's return of tax withheld on form WT-1 and, with such employer's return, the employer must pay over to the New York State Department of Taxation and Finance the New York State personal income taxes so required to be deducted and withheld. Where the wages paid by an employer are not sufficient in amount to require the withholding of New York State personal income tax, such an employer need not file a New York State employer's return of tax withheld on form WT-1 (however, see section 174.2 of this Part and Part 2380 of this Title with regard to the requirements for filing a quarterly combined withholding and wage reporting return).

(b) Specific requirements.

(1)

(i) Where, after having made a payroll, an employer has been required to deduct and withhold, but has not paid over to the Department of Taxation and Finance, a cumulative aggregate amount of $700 or more of tax (see subparagraph [4][i] of this subdivision) during a calendar quarter, such employer shall file a New York State employer's return of tax withheld on form WT-1 and, with such employer's return pay over such cumulative aggregate amount of tax to the Department of Taxation and Finance. Where such employer was required to remit a cumulative aggregate amount of less than $15,000 in withholding tax during the calendar year which precedes the previous calendar year, the cumulative aggregate amount of tax shall be paid over on or before the fifth business day (see subparagraph [4][ii] of this subdivision) following the date of making such payroll. Where such employer was required to remit a cumulative aggregate amount that is more than or equal to $15,000 in withholding tax during the calendar year which precedes the previous calendar year, the cumulative aggregate amount of tax shall be paid over on or before the third business day following the date of making such payroll. Where a payment is required to be made or a New York State employer's return of tax withheld on form WT-1 is required to be filed at any time during a calendar quarter in accordance with the provisions of this subparagraph, any cumulative aggregate amount of tax of less than $700 which has not been paid over to the Department of Taxation and Finance after such employer has made the last payroll within such quarter shall be paid over to the Department of Taxation and Finance with the quarterly combined withholding and wage reporting return required to be filed for such quarter, on or before the last date prescribed for the filing of such quarterly combined withholding and wage reporting return (see section 174.2 of this Part). In the case of an educational organization as defined in section 2396.2(f) of this Title or a health care provider as defined in section 2396.2(j) of this Title, including an educational organization or a health care provider described in subparagraph (ii) of this paragraph, the cumulative aggregate amount of tax shall be paid over on or before the fifth business day following the date of making such payroll. Where a payment is required to be made or a New York State employer's return of tax withheld on form WT-1 is required to be filed by an educational organization or a health care provider at any time during a calendar quarter in accordance with the provisions of this subparagraph, any cumulative aggregate amount of tax of less than $700 which has not been paid over to the Department of Taxation and Finance after such an educational organization or health care provider has made the last payroll within such quarter shall be paid over to such department with the quarterly combined withholding and wage reporting return required to be filed for such quarter, on or before the last date prescribed for the filing of such quarterly combined withholding and wage reporting return (see section 174.2 of this Part).

(ii)

(a) For purposes of this subparagraph, the term new employer shall mean an employer who for the first time maintains an office or transacts business within New York State and makes payment of any wages taxable under article 22 of the Tax Law to a resident or nonresident individual.

(b) Except as otherwise provided in clause (c) of this subparagraph, a new employer to whom the provisions of subparagraph (i) of this paragraph apply shall file employer's returns of tax withheld on form WT-1 and pay over withheld taxes as follows:

(1) during each calendar quarter in the calendar year in which the new employer commences operations, and during each calendar quarter in the succeeding calendar year, the employer's return of tax withheld on form WT-1 shall be filed and the tax shall be paid over on or before the fifth business day following the date of making the applicable payroll;

(2) during the second calendar year following the year in which operations were commenced, such new employer shall continue utilizing the five business day rule unless the Department of Taxation and Finance notifies the new employer that during the year in which operations were commenced, such new employer was required to remit a cumulative aggregate amount more than or equal to $15,000 in withholding tax (determined on an annualized basis where necessary), in which case, such new employer shall file the employer's return of tax withheld on form WT-1 and pay over the tax on or before the third business day following the date of making the applicable payroll;

(3) for purposes of subclause (2) of this clause, the annualized cumulative aggregate amount of withholding taxes required to be remitted by a new employer during the year in which such new employer commenced operations shall be determined as follows:

(i) if such new employer commenced operations in the fourth calendar quarter of a year, then the cumulative aggregate amount of taxes required to be remitted during such quarter shall be multiplied by four;

(ii) if such new employer commenced operations in the third calendar quarter of a year, then the cumulative aggregate amount of taxes required to be remitted during the third and fourth calendar quarter of such year shall be added, the sum divided by two and the result multiplied by four;

(iii) if such new employer commenced operations in the second calendar quarter of a year, then the cumulative aggregate amount of taxes required to be remitted during the second, third and fourth calendar quarters of such year shall be added, the sum divided by three and the result multiplied by four.

(c) Notwithstanding the provisions of clause (b) of this subparagraph, two or more employers already maintaining offices or transacting business within New York State and making payment of wages taxable under article 22 of the Tax Law to resident or nonresident individuals, who merge or otherwise consolidate to form a new employer shall, if the provisions of subparagraph (i) of this paragraph apply, file employer's returns of tax withheld on form WT-1 and pay over withheld taxes as follows:

(1) if at least one such employer utilized the three business day rule described in subparagraph (i) of this paragraph during the calendar quarter immediately preceding the calendar quarter of the merger or consolidation, then the new employer shall likewise utilize the three business day rule until notified to the contrary by the Department of Taxation and Finance;

(2) if all such employers utilized the five business day rule described in subparagraph (i) of this paragraph during the calendar quarter immediately preceding the calendar quarter of the merger or consolidation, then the new employer shall utilize the five business day rule until notified to the contrary by the Department of Taxation and Finance.

(iii) The Department of Taxation and Finance shall annually notify, in writing, all employers described in subparagraphs (i) and (ii) of this paragraph of any changes to their three or five business day filing and remittance due date (i.e., whether the three business day rule or five business day rule will be applicable to the upcoming calendar year).

(2) Where, at the close of any calendar quarter, an employer has been required to deduct and withhold, but has not paid over to the New York State Department of Taxation and Finance, a cumulative aggregate amount of less than $700 of tax (see subparagraph [4][i] of this subdivision) during such calendar quarter, such employer shall pay over such cumulative aggregate amount of tax to the Department of Taxation and Finance with the quarterly combined withholding and wage reporting return required to be filed for such quarter, on or before the last date prescribed for the filing of such quarterly combined withholding and wage reporting return (see section 174.2 of this Part).

(3) Where an employer makes more than one payroll per week, then such employer shall determine the applicability of the rules described in paragraphs (1) and (2) of this subdivision measured as of the last payroll made within the week by such employer; provided, however, that in any week in which the end of a quarter occurs between the making of payrolls by an employer, then such employer shall determine the applicability of the rules described in paragraphs (1) and (2) of this subdivision measured as of the last payroll made within the quarter by such employer. For purposes of this paragraph, the term week shall mean the period Sunday through Saturday.

(4) For purposes of this subdivision, the following terms have these meanings:

(i) The term aggregate amount of tax deducted and withheld means the total of the New York State personal income tax under article 22 of the Tax Law, the City of New York personal income tax on residents under chapter 17 of title 11 of the Administrative Code of the City of New York, the City of New York nonresident earnings tax under chapter 19 of title 11 of the Administrative Code of the City of New York, the City of Yonkers income tax surcharge on residents under article IX of the Codes and Ordinances of the City of Yonkers, and the City of Yonkers nonresident earnings tax under article X of the Codes and Ordinances of the City of Yonkers.

(ii) The term business day means a day other than a Saturday, Sunday, or the following holidays: New Year's Day, Martin Luther King's birthday, Washington's birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day.

(5) In determining the $700 withholding threshold amount referred to in paragraphs (1) and (2) of this subdivision, the cumulative aggregate amount of tax required to be deducted and withheld from annuities, pensions, retired pay or individual retirement account payments must be combined with the cumulative aggregate amount of tax required to be deducted and withheld from wages. Accordingly, such $700 withholding threshold is determined separately with regard to the cumulative aggregate amount of tax required to be deducted and withheld from certain gambling winnings.

(6) The provisions of this subdivision can be illustrated by the following examples (assume in each example that the employer referred to is not an educational organization, a health care provider or a new employer):

Example 1:

For the first calendar quarter of a calendar year, employer C has been required to deduct and withhold a cumulative aggregate amount of $450 of tax. C is required to pay over such amount with Part A of C's quarterly combined withholding and wage reporting return due on or before April 30 of the same calendar year.

Example 2:

Assume the same facts as in Example 1. Also assume the following: due to a hiring increase at the beginning of the second calendar quarter of such calendar year, employer C has been required to deduct and withhold a cumulative aggregate amount of $1,000 of tax after making C's first payroll of the calendar quarter on April 10, and, in the calendar year preceding the previous calendar year, C was required to remit a cumulative aggregate amount of $5,000 of tax. C must file form WT-1 and pay over the $1,000 of withheld tax on or before the fifth business day after making the April 10th payroll, even though C has not yet paid over the withheld tax and filed C's quarterly combined withholding and wage reporting return for the prior quarter.

Example 3:

Assume that during the third calendar quarter of a calendar year, employer D makes its payrolls weekly, on Fridays. There are 13 Fridays in the calendar quarter. D's payrolls are constant throughout the calendar quarter, and after making each such payroll, D is required to deduct and withhold a cumulative aggregate amount of $400 of tax. In the calendar year preceding the previous calendar year, D was required to remit a cumulative aggregate amount of $16,000 of tax. D will be required to file form WT-1 and pay over the withheld tax on or before the third business day after making every second payroll in the quarter. The cumulative aggregate amount of $400 of tax required to be deducted and withheld after D's last payroll of the calendar quarter, on the last Friday of September, must be paid over with the quarterly combined withholding and wage reporting return required to be filed for such quarter, on or before October 31st of the same calendar year.

Example 4:

During the fourth calendar quarter of a calendar year, employer E makes payrolls twice weekly, on Tuesdays and Fridays. In the calendar year preceding the previous calendar year, E was required to remit a cumulative aggregate amount of $100,000 of tax. After making the first payroll of the quarter, which falls on a Friday, E is required to deduct and withhold a cumulative aggregate amount of $400 of tax. Since E has not yet exceeded the $700 threshold, E need not file form WT-1 and pay over the withheld tax. E makes the next payroll on the following Tuesday and is required to deduct and withhold a cumulative aggregate amount of $500 of tax. E still need not file form WT-1 and pay over the withheld tax since E must determine the applicability of the rules described in this section based on the last payroll made within the week. E makes the next payroll on the following Friday and is required to deduct and withhold another cumulative aggregate amount of $500 of tax. Since this is E's last payroll within the week, E determines the applicability of the rules described in this section based on this payroll. Since E has exceeded the $700 threshold, E must file form WT-1 and pay over the $1,400 of withheld tax on or before the third business day after making the last payroll in the week.

Example 5:

Assume the same facts as in Example 4. Also assume the following: for each payroll made during the rest of the fourth calendar quarter of the calendar year, except for the last payroll of the quarter which falls on a Tuesday, E is required to deduct and withhold a cumulative aggregate amount of $500 of tax; for the payroll made on the last Tuesday of the calendar quarter, E is required to deduct and withhold a cumulative aggregate amount of $650 of tax; Christmas and New Year's Day do not fall on a Tuesday or a Friday; and the end of the quarter occurs on a Thursday. E will be required to file form WT-1 and pay over the withheld tax on or before the third business day following the payroll made on each Friday of the quarter. Since for the last week of the calendar quarter, the end of the quarter occurs between E's two payrolls for that week, E must determine the applicability of the rules prescribed by this section based on E's last payroll made within the quarter, on Tuesday of that week. Thus, E will be required to pay over the $650 of withheld tax with the quarterly combined withholding and wage reporting return required to be filed for such quarter on or before February 28th of the succeeding year.

Example 6:

Employer F, a new employer within the meaning of clause (1)(ii)(a) of this subdivision, commences operations in the third calendar quarter of a year. During such quarter, F was required to remit a cumulative aggregate amount of $3,000 of tax. During the fourth calendar quarter of such year, F was required to remit a cumulative aggregate amount of $5,000 of tax. During each of such calendar quarters, as well as during all calendar quarters in the succeeding two calendar years, F exceeds the $700 withholding threshold at least once. During the two calendar quarters in the year in which F commenced operations, and during all four calendar quarters in the succeeding calendar year, F will be required to file the employer's return of tax withheld on form WT-1 and pay over withheld taxes on or before the fifth business day after making the payroll in which the $700 threshold was exceeded. However, in the second calendar year following the year which F commenced operations, F will be notified by the Department of Taxation and Finance that F must utilize the three business day rule since F was required to remit an annualized cumulative aggregate amount of $16,000 of taxes in the year of commencement of operations ($3,000 + $5,000 = $8,000; $8,000 ÷2 = $4,000; $4,000 × 4 = $16,000).

(c) New York State employer's return of tax withheld of a governmental employer.

The New York State employer's return of tax withheld (form WT-1) of a governmental employer is to be made by the officer or employee controlling the payment of wages or other officer or employee appropriately designated for that purpose.

(d) Transmittal of New York State employer's returns of tax withheld.

The New York State employer's returns of tax withheld on form WT-1 referred to in this section must be filed with the New York State Department of Taxation and Finance. No listing of employees or itemization of respective New York State personal income taxes withheld is to be attached to or accompany the New York State employer's return of tax withheld on form WT-1, however, see section 174.2 of this Part concerning the filing of the quarterly combined withholding and wage reporting return.

(e) Final New York State employer's return of tax withheld.

The last New York State employer's return of tax withheld (form WT-1) for any employer who discontinues business or permanently ceases to pay wages must be marked “Final Return”, the date of the last payroll must be furnished by the employer on such return and such return must be filed within the period referred to in paragraph (b)(1) of this section, accompanied by the remittance of the cumulative aggregate amount of tax required to be deducted and withheld. See section 174.2 of this Part concerning the filing of the final quarterly combined withholding and wage reporting return.

(f) Magnetic media.

(1) The Department of Taxation and Finance may grant authorization to file New York State employer's returns of tax withheld (form WT-1) on magnetic media. Employers must comply with the instructions and requirements of such department with respect to filing New York State employer's returns of tax withheld on magnetic media. Failure to comply with such instructions and requirements may subject an employer to penalties and/or additions to tax (see section 685 of the Tax Law).

(2) Adherence to the instructions and requirements of the Department of Taxation and Finance with respect to filing New York State employer's returns of tax withheld on magnetic media satisfies the requirements of this section and Part 153 of this Title with regard to the filing of New York State employer's returns of tax withheld.

(3) Employers or groups of employers may authorize a reporting or service agency to file employer's returns of tax withheld (form WT-1) on magnetic media on their behalf in compliance with the New York State filing requirements.