Payroll Bulletin No. 346

*Subject*	Claiming Exempt from Federal and State Withholding
*Purpose*	To explain the procedure for the annual review of employees who claim to be exempt from Federal and State withholding.
*Affected Employees*	Employees claiming to be exempt from tax withholding.
*Background*	Internal Revenue Service regulations require anyone claiming Federal tax-exempt status to file a new W-4 by February 15 each year. New York State Department of Taxation and Finance regulations require anyone claiming State tax-exempt status to file a new IT-2104-E, annually. The W-4's and IT-2104E's for the current year's exemption are to be retained in the employee's payroll office.
*Reveal Report*	Reveal Report, NPAY738, identifies employees in your agency claiming Federal and/or State exempt status.
*Agency Actions*	If any employees identified as claiming exempt from Federal withholding do not provide a new W-4 by February 15, 2003, change their status to 'Single 0' on the Federal Tax Data 1 Panel. If any employees identified as claiming exempt from State withholding do not annually provide a new IT-2104-E, change their Status to 'Single 1' on the State Tax Data 1 Panel.
*Questions*	Questions regarding this bulletin may be directed to the Payroll Deductions mailbox.