Frequently Asked Questions

States, cities, or counties who do not have an existing agreement with the Secretary and wish to enter into an agreement shall indicate in a letter its consent to be bound by the provisions of Subpart C of 31 CFR Part 215.

Where does a state, city or county send their letter to request an agreement with Treasury?

Assistant Commissioner, Payment Management, Bureau of the Fiscal Service, Department of the Treasury, 401 14th Street, SW., Room 427, Washington, DC 20227.

When a state, city or county sends a request to Treasury, whom should the letter be signed by:

The letter shall be signed by an officer authorized to bind contractually the state, city, or county. Copies of all applicable state laws, city or county ordinances and implementing regulations, instructions, and forms must be included with the letter. The letter shall also indicate the title and address of the official whom federal agencies may contact to obtain forms and other information necessary to implement withholdings.

What documents should be included with the letter of request?

A state, city or county must include copies of all applicable state laws, city or county ordinances and implementing regulations, instructions, and forms.
The letter shall also indicate the title and address of the official whom federal agencies may contact to obtain forms and other information necessary to implement withholding.
A state, city or county must include a list of federal agencies, addresses and phone numbers who will be affected.

When will a state, city or county receive a response from Treasury regarding their request?

That a Withholding Agreement has been entered into as of the date of the Secretary’s letter, or
That a Withholding Agreement cannot be entered into with the state, city, or county and the reason for that determination.

If Treasury enters into an agreement with a state, city, or county, when should the tax begin to be withheld?

The withholding of the State, city or county income or employment tax shall commence within 90 days after the effective date of the agreement.

What are the requirements for voluntary withholding?

Grant employers generally the authority to withhold sums from employees pay if any employee voluntarily elects to have such sums withheld, AND
Grant authority to withhold generally with respect to the pay of employees who are state residents
Withholding applies prospectively (i.e., does not apply to delinquent taxes owed by employee)
State statute cannot impose more burdensome requirements on the USA than on other employers and cannot subject the USA or its employees to penalty/liability because of the program.

Last modified 03/18/22

State and Local Tax Withholding

A program of the Bureau of the Fiscal Service