§ 105-163.2. Employers must withhold taxes.
§105‑163.2. Employers must withhold taxes.
(a) WithholdingRequired. An employer shall deduct and withhold from the wages of eachemployee the State income taxes payable by the employee on the wages. For eachpayroll period, the employer shall withhold from the employee's wages an amountthat would approximate the employee's income tax liability under Article 4 ofthis Chapter if the employer withheld the same amount from the employee's wagesfor each similar payroll period in a calendar year. In calculating anemployee's anticipated income tax liability, the employer shall allow for theexemptions, deductions, and credits to which the employee is entitled underArticle 4 of this Chapter. The amount of State income taxes withheld by anemployer is held in trust for the Secretary.
(b) Withholding Tables. The manner of withholding and the amount to be withheld shall be determinedin accordance with tables and rules adopted by the Secretary. The withholdingexemption allowed by these tables and rules shall, as nearly as possible,approximate the exemptions, deductions, and credits to which an employee wouldbe entitled under Article 4 of this Chapter. The Secretary shall promulgatetables for computing amounts to be withheld with respect to different rates ofwages for different payroll periods applicable to the various combinations ofexemptions to which an employee may be entitled and taking into account theappropriate standard deduction. The tables may provide for the same amount tobe withheld within reasonable salary brackets or ranges so designed as toresult in the withholding during a year of approximately the amount of anemployee's indicated income tax liability for that year. The withholding ofwages pursuant to and in accordance with these tables shall be deemed as amatter of law to constitute compliance with the provisions of subsection (a) ofthis section, notwithstanding any other provisions of this Article.
(c) Withholding if NoPayroll Period. If wages are paid with respect to a period that is not apayroll period, the amount to be deducted and withheld shall be that applicablein the case of a miscellaneous payroll period containing a number of days,excluding Sundays and holidays, equal to the number of days in the period withrespect to which such wages are paid. In any case in which wages are paid by anemployer without regard to any payroll period or other period, the amount to bededucted and withheld shall be that applicable in the case of a miscellaneouspayroll period containing a number of days equal to the number of days,excluding Sundays and holidays, which have elapsed since the date of the lastpayment of such wages by such employer during the calendar year, or the date ofcommencement of employment with such employer during such year, or January 1 ofsuch year, whichever is the later.
(d) EstimatedWithholding. The Secretary may, by rule, authorize employers to estimate thewages to be paid to an employee during a calendar quarter, calculate the amountto be withheld for each period based on the estimated wages, and, upon paymentof wages to the employee, adjust the withholding so that the amount actuallywithheld is the amount that would be required to be withheld if the employee'spayroll period were quarterly.
(e) Alternatives toTables. If the Secretary determines that use of the withholding tables wouldbe impractical, would impose an unreasonable burden on an employer, or wouldproduce substantially incorrect results, the Secretary may authorize or requirean employer to use some other method of determining the amounts to be withheldunder this Article. The alternative method authorized by the Secretary mustreasonably approximate the predicted income tax liability of the affectedemployees. In addition, with the agreement of the employer and employee, theSecretary may authorize an employer to use an alternative method that resultsin withholding of a greater amount than otherwise required under this section.
The Secretary's authorizationof an alternative method is discretionary and may be cancelled at any timewithout advance notice if the Secretary finds that the method is being abusedor is not resulting in the withholding of an amount reasonably approximatingthe predicted income tax liability of the affected employees. The Secretaryshall give an employer written notice of any cancellation and the findings uponwhich the cancellation is based. The cancellation becomes effective upon theemployer's receipt of this notice or on the third day after the notice wasmailed to the employer, whichever occurs first. If the employer requests ahearing on the cancellation within 30 days after the cancellation, theSecretary shall grant a hearing. After a hearing, the Secretary's findings areconclusive. (1959, c. 1259, s. 1; 1973, c. 476, s. 193; 1981, c.13; 1989, c. 728, s. 1.41; 1989 (Reg. Sess., 1990), c. 945, s. 7; 1997‑109,s. 2.)