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 employer withholding tax agreement prior to any contact from the Ohio Department of Taxation.

If you would like to establish an agreement for employer withholding, 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 returns for the years under the agreement with payment in full for tax and interest should be included along with two copies of the signed VDA agreement.

Send the signed agreements, returns and payments to the following address:

Ohio Department of Taxation
Employment Tax Division
Voluntary Disclosure Program
4485 Northland Ridge Blvd
Columbus, OH 43229

Upon our receipt of the letter, returns, payments and VDA agreements, the division will review these documents and return a signed copy for the employer's records.

General terms of the Employer Withholding Tax Voluntary Disclosure Agreement:

  • If the employer has been previously contacted by the department, the employer is ineligible for a VDA agreement.
  • The employer must file employer withholding tax return 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 Ohio income tax from employee compensation but has not remitted payment, 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:

Voluntary Disclosure Agreement

Ohio employer withholding forms and instructions are available here.

(On the Ohio Tax Form Library page, under Business Taxes, click on the link for Employer Withholding)

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:

2016 3%
2015 3%
2014 3%
2013 3%

 

Example:  Interest on $500 of Ohio tax due withheld during May 2012 would be computed as follows (the tax was due on 6/15/12 and assume payment is made on 8/20/15):

May 2012

6/15/12

to 12/31/12 199/366 x 3% x $500 = $  8.16
 

1/1/13

to 12/31/13 366/365 x 3% x $500 =

$  15.00

 

1/1/14

to 12/31/14 365/365 x 3% x $500 =

$  15.00 

  1/1/15 to   8/20/15 232/365 3% x $500  $    9.53 

Total Interest

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$  47.69
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