103 KAR 18:070. Supplemental wages and other payments subject to withholding

Link to law: http://www.lrc.ky.gov/kar/103/018/070.htm
Published: 2015

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      103 KAR 18:070. Supplemental wages and

other payments subject to withholding.


      RELATES TO: KRS 141.010(22), 141.020,

141.310, 141.315, 341.020, 341.090, 341.395, 26 U.S.C. 3402(q)

      STATUTORY AUTHORITY: KRS 141.050(4),

141.310(8), 141.315


141.050(4) requires the Department of Revenue to promulgate administrative

regulations and prescribe the forms and reports necessary for the proper

administration of any and all provisions of KRS Chapter 141. KRS 141.310(8) authorizes

the department to promulgate an administrative regulation for withholding in

addition to those provided in KRS 141.310 and 141.315 if the employer and employee

agree to additional withholding. KRS 141.315 requires the department to

promulgate administrative regulations governing certain specified types of

payments. This administrative regulation prescribes procedures for withholding

income tax on gambling winnings, supplemental wages, vacation pay, and

unemployment benefits.


      Section 1. Definitions. (1) "Benefit

year" is defined by KRS 341.090(3).

      (2) "Benefits" is defined by

KRS 341.020(4).

      (3) "Cabinet" means the

Education and Workforce Development Cabinet.

      (4) "Department" is defined by

KRS 141.010(2).

      (5) "Fund" is defined by KRS


      (6) "Gambling winnings" means

winnings that are subject to withholding as defined by 26 U.S.C. 3402(q) of the

Internal Revenue Code.

      (7) "Supplemental wages" means

payments made to an employee by the individual’s employer in addition to

regular wages.


      Section 2. Gambling Winnings. Every

person making a payment of gambling winnings shall deduct and withhold from the

payment Kentucky income tax at the maximum tax rate provided in KRS 141.020.


      Section 3. Supplemental Wages. (1) If

supplemental wages are paid at the same time as regular wages, the tax to be

withheld shall be determined as if the aggregate of the supplemental and

regular wages were a single wage payment for the regular payroll period.

      (2) If supplemental wages are paid at a

different time, the employer shall determine the tax to be withheld by

aggregating the supplemental wages either with the regular wages for the

current payroll period or with the regular wages for the last preceding payroll

period within the same calendar year.


      Section 4. Vacation Pay. (1) If an

employee receives vacation pay for the time of a vacation absence, the vacation

pay shall be subject to withholding as though it were a regular wage payment

made for the payroll period or periods which occur during the vacation.

      (2) If vacation pay is paid in addition

to regular wages to an employee who forgoes his vacation, the payments shall be

treated as supplemental wages.


      Section 5. Unemployment Benefits. (1) An

individual filing a new claim for benefits shall:

      (a) Be notified of the requirements

established in KRS 341.395(1); and

      (b) Indicate on the Initial Claim

Application, Form 401, incorporated by reference in 787 KAR 1:090, if the

individual elects to have the state income tax imposed by KRS 141.020 deducted

and withheld from the individual’s benefits at the rate of four (4) percent.

      (2) The amounts deducted and withheld

from benefits pursuant to subsection (1) of this section shall remain in the

unemployment insurance fund until transferred to the department as a payment of

income tax in accordance with the priority order established in 787 KAR 1:320.

      (3) The cabinet shall follow all

procedures pertaining to the deducting and withholding of income tax specified

in KRS 341.395(3) or by the department. (IW-7; 1 Ky.R. 330; eff. 2-5-75; 30

Ky.R. 952; 1456; eff. 11-25-2003; 32 Ky.R. 1723; 33 Ky.R. 78; eff. 8-7-06; 37

Ky.R. Am. 409; Am 1177; eff. 12-3-2010.)