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),
NECESSITY, FUNCTION, AND CONFORMITY: KRS
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
Section 1. Definitions. (1) "Benefit
year" is defined by KRS 341.090(3).
(2) "Benefits" is defined by
(3) "Cabinet" means the
Education and Workforce Development Cabinet.
(4) "Department" is defined by
(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
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.)