Purpose

The purpose of this bulletin is to inform agencies of new Control D report NTAX723 which addresses mismatches between an employee’s home address and New York City (NYC) taxation.

Affected Employees

Employees who are Active, on Paid Leave, or on Leave Without Pay and whose home address does not match their NYC taxation are affected.

Background

New York State Publication NYS-50 directs that employers must withhold New York City income tax from employees who live in one of the five counties designated to be within the City of New York:

• Bronx County (Bronx)
• Kings County (Brooklyn)
• New York County (Manhattan)
• Queens County (Queens)
• Richmond County (Staten Island)

The Office of the State Comptroller (OSC) has modified the New York City reportable program (NTAX702) to report New York City wages on the annual Form W-2s (Wage and Tax Statement) of employees who received a paycheck while their home address was in one of the five counties within New York City.  As a result, an employee’s address, not the Local Tax Data page, determines whether New York City wages will be reported on the employee’s Form W-2.  The Local Tax Data page determines whether local withholding taxes will be taken from the employee’s paychecks.

The Form IT-2104 is the New York Employee’s Withholding Allowance Certificate for New York State and Local taxation of employees.

Bulletin No. 1845 provides guidance on how to correct an employees’ home address and/or local tax data.

Effective Dates

The first date that the NTAX723 Control-D report will be available is 11/24/2020.  Thereafter, the report will be available weekly on the same schedule as the NPAY708.  The NPAY709 will be discontinued.

OSC Actions

OSC issued Bulletin No. 1845 to provide guidance to agencies on how to correct employee data when there is a mismatch between home address and local taxation.   That bulletin states that OSC will provide agencies with tools to identify employees with a mismatch between home address and local taxation.   The NTAX723 Control-D report represents the agency tool for identifying employees who require correction. 

Agency Actions

The NTAX723 Control-D report has three sections:

• Home Address not NYC but Local Tax Data is NYC Resident

• Home Address not NYC but Additional NYC Withholding
• NYC Home Address but Local Tax Data is not NYC Resident

For each section, Emplid, Name, State, Postal Code, County and Local Residency (from Local Tax Data) are listed.  In addition, for “Home Address not NYC but Additional NYC Withholding”, the additional withholding amount is also listed.  Employees who are active, on paid leave, or on leave without pay who meet the criteria will appear on the report.

The report is organized by agency code.  If an agency does not have any employees meeting the criteria of a specific section, then no page will appear for that section.  If an agency does not have any employees meeting any section’s criteria, then no report will be posted for that agency.

Agencies must review the NTAX723 Control-D report weekly and update employee addresses and/or local tax data following procedures detailed in Bulletin No. 1845.

If an agency corrects an employee’s local tax data to reflect that the employee has not lived in NYC in the current calendar year, then the agency should prepare a NYC tax refund template and email to Tax and Compliance.  The deadline for submission for 2020 is December 7, 2020.

Questions

Questions regarding this bulletin may be directed to the Tax and Compliance mailbox.