Ohio Department of Taxation Employer Withholding Taxes

Voluntary Disclosure of Employer Withholding Tax Liabilities

In seeking to increase the level and ease of compliance with Ohio's tax laws, The Ohio Department of Taxation offers a voluntary disclosure program.  This program is designed for employers who have income tax withholding liabilities and wish to resolve them.  By voluntarily disclosing the liabilities, employers can avoid penalties for failure to file timely and for failure to pay timely.  Any employer is eligible for the program if the employer enters into and executes an employer withholding tax agreement prior to our contacting the employer about withholding taxes, income taxes, pass-through entity taxes, and/or corporate franchise taxes.

If you would like to enter into an agreement, you or your representative should send a letter setting forth the amount of taxes which should have been remitted for all periods for which taxes are due.  The letter need not identify the employer's name before the voluntary disclosure agreement is prepared.  However, an identifier should be used to distinguish between different clients a representative may have.

Send this letter to the following address:

Ohio Department of Taxation
Business Tax Division
Attn: Robert Davidson, Assistant Administrator
4485 Northland Ridge Blvd.
Columbus, Ohio 43229

Upon our receipt of this letter, we shall prepare an employer withholding tax agreement in duplicate and send it to you for you or your representative to sign.  Within the time period specified in the agreement, you should sign both originals of the agreement and send both originals to the address shown above, along with the completed employer withholding tax forms and payment of the tax due and interest (see an example of our interest computation in "Other Information", below).  Please make your check payable to the: Ohio Treasurer of State.  We shall then sign one of the agreements and return it to you. 

General terms of the Employer Withholding Tax Voluntary Disclosure Agreement (subject to certain limitations):

• The employer must file employer withholding tax returns forms IT-501 and IT-941 for all periods and pay the tax due plus interest.  The tax commissioner will waive all penalties.
• The tax commissioner may audit the employer withholding tax returns filed by the employer for the periods covered by the agreement.
• The tax commissioner will review the employer withholding account to verify that all withholding tax returns have been filed pursuant to the voluntary disclosure agreement.  For those periods outside of the agreement for which the tax commissioner determines that the employer has, in fact, withheld (but has not remitted to the State of Ohio) Ohio income tax from employee compensation, the tax commissioner will pursue the filing of those withholding tax returns and the payment of all related tax due, plus applicable interest and penalty.                 

Other Information:

Ohio employer withholding forms and instructions are available here.

(select the Search our Forms Database option, then select Employer Withholding Tax from the drop-down menu at Tax Forms Search).

Interest is computed on the tax due for each period as follows:

# of days    365 or 366

X

Interest rate

X

Tax due

=

Interest due

 

Interest rates:

 

Calendar   Year	Interest rate:
2001	9%
2002	7%
2003	6%
2004	4%
2005	5%
2006	6%
2007	8%
2008	8%
2009	5%
2010	4%

 

Example:  Interest on $500 of Ohio tax due withheld during May 2006 would be computed as follows (the tax was due on 6/15/06 and assume payment is made on 10/19/09):

 

May 2006	6/15/06	to	12/31/06	199/365	x	6% x $500	=	$   16.00
	1/1/07	to	12/31/07	365/365	x	8% x $500	=	$   40.00
	1/1/08	to	12/31/08	366/366	x	8% x $500	=	$   40.00
	1/1/09	to	10/19/09	292/365	x	5% x $500	=	$   20.00
Total Interest	------------------------------------------------------>							$  116.00 ====