California Code of Regulations › Title 22 - Social Security › Division 1 - Employment Development Department › Subdivision 1 - Director of Employment Development › Division 2.5 - WITHHOLDING TAX ON WAGES › Chapter 3 - WITHHOLDING EXEMPTIONS › Section 4340-1 - Withholding Exemption Certificates

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Federal W-4 Normally Used. On or before
					 the date on which an individual commences employment with an employer, or on
					 such other date as required by Internal Revenue Code regulations, the
					 individual shall furnish the employer with a signed withholding exemption
					 certificate relating to marital status and the number of withholding exemptions
					 claimed. An individual may claim additional withholding exemptions to the
					 extent continuing deductions or state income tax credits would result in over
					 withholding. For the requirements regarding the exemption from wage
					 withholding, see subdivision (f) below. A federal withholding exemption
					 certificate (Federal Form W-4) or Employment Development Department Form DE-4,
					 or substantially similar forms, shall be used. For the purposes of this
					 regulation references to Forms DE-4 or W-4 include forms devised by an employer
					 which are substantially similar to the DE-4 or W-4 or the combination
					 thereof.
(b) Federal Conformity.
					 The terms of the Internal Revenue Code and the regulations issued thereunder as
					 they apply to withholding exemption certificates shall also apply for state
					 withholding purposes. An employer who reports certain withholding exemption
					 certificates to the Internal Revenue Service pursuant to
					 26 CFR Section
					 31.3402-1 (in general reporting is required
					 if the employee claims more than nine exemptions or claims a status exempting
					 him or herself from withholding entirely) need not report such certificates to
					 the state. The reporting of the certificates to the Internal Revenue Service
					 shall satisfy state reporting requirements. A federal determination that a
					 withholding exemption certificate is invalid or incorrect shall also be
					 effective for state withholding purposes. Thus, if an employer is instructed by
					 the Internal Revenue Service to withhold as though an employee were a single
					 person claiming no exemptions, the employer must do likewise for state
					 withholding purposes. If the Internal Revenue Service specifies marital status
					 and the permissible number of exemptions an employee may claim, such a federal
					 determination shall also be effective for state withholding purposes.
(c) If an employee has filed a federal Form
					 W-4 for federal withholding purposes and Employment Development Department Form
					 DE-4 for state withholding purposes and both forms meet the reporting
					 requirements under 26 CFR
					 Section 31.3402-1, the reporting of the
					 federal form to the Internal Revenue Service shall satisfy the state reporting
					 requirement. In the event the W-4 is not reportable to the Internal Revenue
					 Service but the DE-4 does meet the reporting requirements of
					 26 CFR Section
					 31.3402-1, then such DE-4 shall be filed with
					 the Employment Development Department at the time and as part of the employer's
					 next Quarterly Wage Report (Form DE-6) due after receipt of said Form
					 DE-4.
(d) If the employee does not
					 agree that the federal determination is correct for state withholding purposes,
					 the employee may request a review of his or her state withholding status. Such
					 a review shall be requested in writing and directed to the Franchise Tax Board,
					 Sacramento, California 94240. The review shall be limited to whether the
					 federal determination of withholding status or number of exemptions claimed is
					 correct for state withholding purposes. The employee shall have the burden of
					 showing the federal determination is incorrect for state purposes. The
					 Franchise Tax Board shall notify the employer and employee in writing of the
					 decision on whether the federal determination as to withholding status is
					 correct for state purposes. If state withholding status differs from the
					 federal determination, the notification to the employer and employee shall
					 reflect the withholding status to which the employee is entitled and the
					 permissible number of withholding exemptions which may be claimed. The decision
					 shall be issued promptly after receipt of the request for review. The employee
					 may file a new certificate for state withholding purposes but such certificate
					 shall be subject to Internal Revenue Code regulations which concern the filing
					 of new certificates after a federal determination of proper federal withholding
					 status.
(e) The Franchise Tax Board
					 or the Employment Development Department may, by special direction in writing,
					 require an employer to submit a W-4 or DE-4 when such forms are necessary for
					 the administration of the withholding tax programs.
(f) The requirements for a complete exemption
					 from state wage withholding are the same as the federal requirements. An
					 employer shall not deduct and withhold any tax under this part upon a payment
					 of wages made to an employee if there is in effect, for federal income tax
					 purposes, with respect to the payment a withholding exemption certificate
					 furnished to the employer by the employee, pursuant to Section
					 3402(n) of the
					 Internal Revenue Code and the applicable federal regulation Section
					 26 CFR
					 31.3402(n)-1, which contains
					 statements that:
(A) The employee incurred no
					 liability for federal income tax imposed under subtitle A of the Internal
					 Revenue Code for his preceding taxable year; and
(B) The employee anticipates that he will
					 incur no liability for federal income tax imposed by subtitle A of the Internal
					 Revenue Code for his current taxable year.