04 January 2017 District of Columbia issues 2017 withholding tables — 2016 Form W-2 reminders The District of Columbia's Office of Tax and Revenue (OTR) released the 2017 Publication FR-230, Income Tax Withholding Instructions and Tables, to its website. See the Attachment for a reproduction of the annual percentage method table. Note that as of November 1, 2016, withholding booklets are no longer be mailed and will only be made available online. Effective for distributions paid on or after January 1, 2012, payers of distributions from retirement plans or accounts are required to withhold District of Columbia income tax at the highest income tax rate in effect as of the date of distribution. For 2017, the District will continue to require withholding at the highest state income tax rate of 8.95% on distributions from retirement accounts or retirement plans. a. A qualified employee plan; A copy of every Form W-2 or 1099 issued by the employer or payor to a District of Columbia resident must be submitted by January 31 of each year to the OTR. The deadline for filing calendar year 2016 Forms W-2/1099 and Form FR-900B, Employer/Payor Withholding Tax Annual Reconciliation and Report, is January 31, 2017. Employers filing 25 or more calendar year 2016 Forms W-2 continue to be required to file electronically via the OTR's via the OTC's new web portal, MyTax.DC.gov, through bulk filing or online data entry. For the 2016 Form W-2 specifications, go here. If filing 24 or fewer Forms W-2, the employer may file electronically (online data entry) or on paper forms attached to the Form FR-900B, which may be found here. As we previously reported, the OTC announced in mid-2016 that it is making changes to its income tax withholding tax filing requirements and tax returns for the 2017 filing year. The intent of these revisions is to reduce employer burden by more closely aligning with the federal Form 941 process. One important change is that all existing monthly filers will be converted to quarterly filers (existing quarterly and annual filers will remain the same). Beginning in 2017, employers that filed Form FR900M, Employer/Payer Withholding Tax Monthly Return, will not be required to file monthly withholding tax returns. Instead, they will be required to file Form FR900Q, Employer/Payer Withholding Tax Quarterly Return, due on or before the 20th day of the quarter following the quarter being reported. However, these employers will continue to be required to make monthly withholding tax payments by the current due date of the 20th of the following month. There will be an option of bulk filing the FR-900Q via the new MyTax.DC.gov reporting system beginning with the first quarter 2017 return, due on April 30, 2017. The 2016 FR-900B, Employer/Payor Withholding Tax Annual Reconciliation and Report, due January 31, 2017, will be the last reconciliation form filed. 2017 Forms FR-900A, Employer/Payor Withholding Tax — Annual Return, and FR-900P, Payment Voucher for Withholding Tax, will be accessible online and due January 31, 2018. Businesses that used an SSN to access their withholding accounts on the old OTC current reporting system, eTSC, need to register with the IRS for a Federal Employer Identification Number (FEIN) and use their FEIN on the new MyTax.DC system beginning January 1, 2017. Affected businesses should have received a notice in August 2016 asking them to obtain and report their FEIN so the account could be converted to the new system correctly. New Form FR-900NP, Annual Return for Withholding Reported on Forms 1099 and/or W-2G, will be used to report backup or income tax withholding on non-payroll payments such as pensions, annuities, and gambling winnings. In the event of an overpayment, a credit can be carried forward or a refund can be requested. Refunds will be issued by paper check once approved. For more information, go to the OTC blog.
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