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
Employment Tax Division
Voluntary Disclosure Program
4485 Northland Ridge Blvd
Columbus, OH 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 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:

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:

2003 6%
2004 4%
2005 5%
2006 6%
2007 8%
2008 8%
2009 5%
2010 4%
2011 4%
2012 3%
2013 3%
2014 3%

 

Example:  Interest on $500 of Ohio tax due withheld during May 2011 would be computed as follows (the tax was due on 6/15/11 and assume payment is made on 8/20/14):

May 2011

6/15/11

to 12/31/11 199/365 x 4% x $500 = $  10.90
 

1/1/12

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

$  15.00

 

1/1/13

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

$  15.00 

  1/1/14 to   8/20/14  232/365 3% x $500  $    9.53 

Total Interest

----------------------------------------------------> 

 

$  50.43
    ====