Tax Type
Withholding Taxes
Description
Withholding Virginia Income Tax from Wages Paid to Agricultural Workers
Summary
Summary
Topic
Withholding of Tax
Date Issued
03-15-1990
90-1
Withholding Virginia Income Tax from Wages Paid
to Agricultural Workers
Summary
to Agricultural Workers
Summary
Virginia law does not require a farmer-employer to withhold Virginia income tax from wages paid to workers employed on the farm to produce, harvest and transport agricultural products on the farm. A new federal law that requires federal withholding from such wages paid after 1989 does not affect the existing exemption in Virginia law.
Federal Law - Wages Paid before 1890
Prior to 1990, wages paid for agricultural labor were exempt from income tax withholding. While exempted from federal income tax withholding, these same wages may have been subject to FICA tax.
Law - Wages Paid after 1989
The federal Revenue Reconciliation Act of 1989 amended IRC §3401 (a)(2) to require employers to withhold federal income tax on wages paid to agricultural workers, if such wages are subject to FICA tax withholding. For purposes of determining who is the employer and required to withhold, the "crew leader" rules applicable to FICA tax withholding are applicable to income tax withholding.
Generally, agricultural workers are subject to FICA tax withholding if they earn at least $150 in annual cash remuneration or are covered because the employer meets the requirements of the employer FICA withholding test. The employer FICA withholding test generally subjects employee wages to FICA withholding if the employer pays more than $2,500 during the year to all employees. Employees who are hand harvest laborers, are paid on a piece rate basis, commute daily to the farm from their permanent residence, and were employed in agriculture less than 13 weeks during the prior year, are exempt from FICA tax withholding.
Virginia Law
Virginia Code §58.1-460 specifically exempts from the definition of wages subject to withholding, amounts paid:
-
- For agricultural labor where such remuneration is paid to workers employed on the farm for services rendered on the farm in the production, harvesting, and transportation of agricultural products to market for the farmer-employer;
- For agricultural labor where such remuneration is paid to workers employed on the farm for services rendered on the farm in the production, harvesting, and transportation of agricultural products to market for the farmer-employer;
Rulings of the Tax Commissioner