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is a comprehensive document prepared by Ernst & Young LLP on a special
report that evaluates the New York income tax withholding audit procedures. It
is in efforts to help company executives in performing process to assist in
risk assessment, tax compliance, and governance. An increase in the income tax
from the audit has been reported from the assessment in successive years. During
the audit process, the examiners are informed to be keen on areas where an
employer has not complied with the set laws. Information document request (IDR)
is sent to businesses selected for income tax withholding audit where
information on workers classification, mobility tax, non-resident income tax
withholding, benefits and compensation is obtained. In New York, employers are
subjected to ensure primary attention to the following categories; multistate
non-resident withholding for regular wages, trailing compensation, income tax
withholding tables and allowance certificates, and inpatriate or expatriate
work assignments.

or interests can be levied on employers who are found not to have fully
complied. However, the individual employees will still be required to pay these
taxes when filing their individual New York tax returns. It is likely that the
individual employees may not pay tax owed and thus, the employees will bear the
burden of remitting the under withheld tax. Therefore, any employer should
perform an assessment to identify compliance gaps or risks from which they can
decide on whether to update or refresh them and implement a detailed plan to
enhance overall compliance.

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Withholding tax field audit guidelines

this case, general guidelines are given to guide the audit staff. They also
ensure consistency and uniformity in examination and withholding of tax
records. The role of the auditor is to ensure employers are in full compliance
with the tax regulations and laws. It aims at ensuring the audit staffs are
able to balance the audit process, enhance protection of New York state
revenues, as well as encouraging economic activity by non-resident employees
and employers in New York. It thus, should be implemented with care to ensure minimization
of the burdens placed on the taxpayers. According to the policies and
regulations of the withholding tax law, it is the responsibility of the
employer to withhold the personal income tax for New York City, New York State
and Yonkers as outlined in the guidelines.

guideline outlines who an employer is according to section 171.2 of the
Regulations, defines wages and indicates the taxable wages. Also, the
guidelines on requirements of withholding tax by employers are given as well as
the employer filing rules and payment requirements. Retention of records and
information statement for employee is guided and the correct forms to be filled
are stated. As indicated on the guideline, different relationships can exist
between the employer and the employee, where there can be; a statutory
employee, a statutory non-employee, an independent contractor, and a common-law
employee. The purpose of this employee classification is in determining the tax
to be withheld, which is done by two criterions; Exact Calculation Method and
Wage Bracket Table Method. Any employee requesting for exemption must fill and
file federal form W-4 of the withholding allowance certificate. Determination
of the tax withheld on wages paid to the New York State, City of New York and
the City of Yonkers non-residents and residents is guided as per their income
and location of their workplace. 

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