Filing Season Preview

Underpayment of Estimated Income Tax

The safe-harbor provisions for the assessment of interest and penalty for the underpayment of estimated income tax payments was modified. In order to avoid the assessment of interest and penalties, a person required to make estimated income tax payments must pay tax greater than or equal to: (1) 90 percent of the tax due for the tax year; or (2) 110 percent of the tax paid for the prior taxable year (reduced for taxes paid to another state under TG §10-703). Current law allows payment equal to 100 percent of the prior year's tax liability. Applicable to all taxable years beginning after December 31, 2003 (House Bill 935, Chapter 203).

Withholding: Three-Day Rule

If a person were required to withhold $15,000 or more for the preceding calendar year, then the person is required to complete and file an income tax withholding return with the Comptroller within three business days following each payroll that causes the total accumulated tax withheld to equal or exceed $700. If a person is required to remit the tax within the three business days, the person is required to continue to file a return at least once every three months until the person gives the Comptroller written notice that the person no longer has employees or no longer is liable to file the return (House Bill 935, Chapter 203).

Income Tax Withholding

Income tax required to be withheld in wages for purposes of the withholding tables and withholding schedules will be calculated at the top marginal state tax rate, without regard to the graduated income tax rates. (House Bill 935, Chapter 203)

Monthly Income Tax Withholding Return Due Dates

Changes the due date for the March, June, September, and December returns from the last day of the next month to the 15th day of the next month (House Bill 935, Chapter 203).