Sept. 15, 2010
West Virginia Has IT Challenges Regarding Occupation Tax Withholding for Employees
By Tony Rutherford
Huntingtonnews.net Reporter
Huntington, WV (HNN) – There’s good news and bad news for State of West Virginia employees regarding the enactment of the Occupation Tax. The State Tax Department has outdated software that currently prevents them from withholding the payroll tax, but the ordinance states “an employee is responsible even if the employer does not withhold the tax.”
According to City of Huntington Finance Director Deron Runyon, the state payroll director at the State Auditor’s office “confirmed” Monday, Sept. 13, that the “state payroll software was not equipped to handle a percentage collection for a local tax.”
City Council Finance Committee Chairman Steve Williams told HNN the issue originated at MountWest, when their employees were attempting to determine the backroom mechanics of withholding the tax.
Del. Kelli Sobonya stated at Tuesday, Sept. 14, Cabell Republican rally for Spike Maynard that the State Tax Department (sic) “does not have the ability to collect the taxes from state employees (such as those who work at Marshall University) here in Huntington.” Although Del. Sobonya conjectured state employees in Huntington (such as at Marshall University) could , in her words, be “exempt” due to the software, Runyon emphasized “this is an IT issue , not a legal one.”
“That’s why this is a pilot project,” Williams stressed, underscoring “The technocrats in the city are talking to the technocrats in the state. Now, we are figuring out some of the issues we would have to deal with if something like this is implemented in other cities [in West Virginia]. That’s the purpose of a ‘pilot project.’ We’ve never done it this way before, but we do now. What are the things we have to adjust in order to do it?
However, Finance Director Runyon suggested “the state can still withhold the tax on an estimated basis in the same manner that they withhold the City Service Fee today. For example, an employee who earns $30,000 annually would estimate a yearly tax of $300 to be withheld by the state in equal payments over the course of a year. The state would provide the City yearly W-2 data for an annual reconciliation. At that point the City would reconcile and return any over payments or invoice an individual for any under payments. This would be our procedure until the state updates its payroll software.”
Despite the lack of a state local tax software module, Runyon explained the ordinance makes the employee, not the employee, responsible for payment. Still, “The City is committed to work with the state and its employees to assure that the convenience of payroll tax withholding can occur.”
By contrast, Del. Sobonya stated, “If it’s a burden for the state government to try to collect this new tax, what’s the burden on the small business? Is it going to be cumbersome for small businesses that have to collect this tax and remit it to the city?”
Runyon has an opposing viewpoint: “I do not believe that the payroll tax calculations will be a burden for most employers. Nearly every payroll package includes a local tax package. Local income/occupation taxes are very common and are available in all of West Virginia's neighboring states. The Finance Division is sending letters to all employers late this week describing the details of the occupation tax.
Editor’s Note: Del. Sobonya along with Del. Carol Miller voted against the Home Rule Pilot program on the grounds that it is unconstitutional.
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West Virginia Has IT Challenges Regarding Occupation Tax Withholding for Employees
By Tony Rutherford
Huntingtonnews.net Reporter
Huntington, WV (HNN) – There’s good news and bad news for State of West Virginia employees regarding the enactment of the Occupation Tax. The State Tax Department has outdated software that currently prevents them from withholding the payroll tax, but the ordinance states “an employee is responsible even if the employer does not withhold the tax.”
According to City of Huntington Finance Director Deron Runyon, the state payroll director at the State Auditor’s office “confirmed” Monday, Sept. 13, that the “state payroll software was not equipped to handle a percentage collection for a local tax.”
City Council Finance Committee Chairman Steve Williams told HNN the issue originated at MountWest, when their employees were attempting to determine the backroom mechanics of withholding the tax.
Del. Kelli Sobonya stated at Tuesday, Sept. 14, Cabell Republican rally for Spike Maynard that the State Tax Department (sic) “does not have the ability to collect the taxes from state employees (such as those who work at Marshall University) here in Huntington.” Although Del. Sobonya conjectured state employees in Huntington (such as at Marshall University) could , in her words, be “exempt” due to the software, Runyon emphasized “this is an IT issue , not a legal one.”
“That’s why this is a pilot project,” Williams stressed, underscoring “The technocrats in the city are talking to the technocrats in the state. Now, we are figuring out some of the issues we would have to deal with if something like this is implemented in other cities [in West Virginia]. That’s the purpose of a ‘pilot project.’ We’ve never done it this way before, but we do now. What are the things we have to adjust in order to do it?
However, Finance Director Runyon suggested “the state can still withhold the tax on an estimated basis in the same manner that they withhold the City Service Fee today. For example, an employee who earns $30,000 annually would estimate a yearly tax of $300 to be withheld by the state in equal payments over the course of a year. The state would provide the City yearly W-2 data for an annual reconciliation. At that point the City would reconcile and return any over payments or invoice an individual for any under payments. This would be our procedure until the state updates its payroll software.”
Despite the lack of a state local tax software module, Runyon explained the ordinance makes the employee, not the employee, responsible for payment. Still, “The City is committed to work with the state and its employees to assure that the convenience of payroll tax withholding can occur.”
By contrast, Del. Sobonya stated, “If it’s a burden for the state government to try to collect this new tax, what’s the burden on the small business? Is it going to be cumbersome for small businesses that have to collect this tax and remit it to the city?”
Runyon has an opposing viewpoint: “I do not believe that the payroll tax calculations will be a burden for most employers. Nearly every payroll package includes a local tax package. Local income/occupation taxes are very common and are available in all of West Virginia's neighboring states. The Finance Division is sending letters to all employers late this week describing the details of the occupation tax.
Editor’s Note: Del. Sobonya along with Del. Carol Miller voted against the Home Rule Pilot program on the grounds that it is unconstitutional.
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