Tax Type
Employer Income Tax Withholding
Description
Cumulative withholding method; Alternate method of withholding
Topic
Withholding of Tax
Date Issued
01-02-1990
January 2, 1990
Re: Ruling Request/Withholding Tax
Virginia Code §58.1-463 - Alternative Method
Dear*****************
This is in reply to your request for permission to withhold Virginia income tax using an alternative method. Specifically, you have requested permission to compute the amount of Virginia income tax withholding for your employees under the federal "cumulative withholding" method.
RULING
Virginia Code §58.1-462 provides that employers shall use withholding tables issued by the Department of Taxation, which approximate in the aggregate as closely as practicable, the tax liability of the employee. Under Virginia Code §58.1-463 the Tax Commissioner has the authority to allow employers to use a method of withholding other than the statutory method prescribed under Virginia Code §58.1-462. However, any alternative method allowed must "withhold from each employee substantially the same amount of tax as would be withheld by use of the withholding tax tables."
Based upon the information that you have provided, it appears that "cumulative withholding" will result in withholding an amount of tax that will approximate the aggregate tax liability of the employee. Accordingly you may compute Virginia income tax withholding using "cumulative withholding" for those employees who request it, provided that it is done in a manner consistent with Internal Revenue Service Rev. Proc. 78-8. You may begin using "cumulative withholding" for those employees that request it the first payroll period following the employee's written request for such withholding.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner