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New income tax withholding requirements by state and local governments to begin effective January 1, 2011

strongNew income tax withholding requirements by state and local governments to begin effective January 1, 2011br /span style="color:#ff0000;"Source:/span/strong The IRS January 2009 Edition of the Federal State and Local Government Newsletter [Pages 4-7]br /br /Section 3402(t) of the Internal Revenue Code requires Federal, state, and local government entities to withhold 3 percent from its payments for property or services; deposit the withholding with the IRS; and report the payments and the withholding to the IRS and to the payees. Such withholdings are required on such payments made after December 31, 2010.br /br /All state governmental entities and all political subdivisions of a state government and their subdivisions will be required to make such withholdings on all payments to persons providing property or services to the government at the time of payment and applies to payment in any form, including cash, check or credit card, in the amount of $10,000 or greater.br /br /If the governmental entity fails to withhold the tax required under section 3402(t), it becomes liable for the payment of the tax.br /br /The regulations proposed by the IRS include a number of exceptions from the withholding requirements such as:br /br /strongspan style="color:#cc0000;"*/span/strong Payments otherwise subject to withholding, such as wages.br /br /strongspan style="color:#cc0000;"*/span/strong Payments for retirement benefits, unemployment compensation, or social security.br /br /strongspan style="color:#ff0000;"* /span/strongPayments subject to backup withholding, if the required backup withholding is actually performed.br /br /span style="color:#ff0000;"strong* /strong/spanPayments for real property.br /br /span style="color:#ff0000;"strong* /strong/spanPayments to other government entities, foreign governments, tax exemptbr /organizations, or Indian tribes.br /br /strongspan style="color:#ff0000;"* /span/strongPublic assistance payments made on the basis of need or income span style="color:#ff0000;"except assistance programs based solely on age, such as Medicare, are subject to the requirements./spanbr /br /strongspan style="color:#ff0000;"*/span/strong Payments to employees in connection with service, such as retirement plan contributions, fringe benefits, and expense reimbursements under an accountable plan.br /br /The full text of the article is posted on the Internet at:br /br /a href="http://www.irs.gov/pub/irs-tege/p4090_0109.pdf"http://www.irs.gov/pub/irs-tege/p4090_0109.pdf/abr /br /The regulations proposed by the IRS are posted on the Internet at:br /br /a href="http://www.irs.gov/pub/irs-tege/2008_0104_0001_1.pdf"http://www.irs.gov/pub/irs-tege/2008_0104_0001_1.pdf/abr /br /Written or electronic comments concerning the proposed regulations, and requests for a public hearing, must be received by March 5, 2009. Send submissions to: CC:PA:LPD:PR (REG?158747?06), Room 5205, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044.

Full post as published by New York Public Personnel Law on December 19, 2008 (boomark / email).