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Back  RFI # 906: 835 PLB IRS Withholding

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Submitter

Jan Klimper

Description

We need the ability to differentiate between Federal and State IRS Withholdings in the PLB03-1 for the following new CA mandate:

California mandate ~ 7% CA backup withholding tax.

The State of California passed a law on 07/30/2009 requiring that a 7% backup withholding be withheld on payments subject to 1099 reporting. The California backup withholding will conform to the existing Federal backup withholding regulations. This change is effective 01/01/2010.

Backup withholding regulations require the payer to withhold on payments where the payee has failed to provide a valid tax id that agrees with the records of the IRS or SSA.

How can we differentiate between Federal Tax Withholding and State Tax Withholding in the PLB segment of the ERA?

Submitter Assigned Keywords

835 PLB IRS Federal State

Response

The PLB segment contains six iterations of the Adjustment Composite and Monetary Amount. Each Adjustment Composite consists of two parts, an Adjustment Reason and a Reference Identifier. For Tax Withholding, the Adjustment Reason is IR (Internal Revenue Service Withholding). The Reference Identifier can be used to differentiate between the Federal Withholding and the State Withholding.

Recommendation

Use the word "Federal" in the Reference Identifier to indicate a Federal IRS withholding and the state name (i.e. - "California") or the state name and word 'state' to indicate a state IRS withholding.
Submission 11/12/2009
Status Date 1/7/2010
Status F - Final
Primary References
Document 004010X91A1
SectionPLB
Page165
Set IDPLB