Connecticut General Statutes
Chapter 229 - Income Tax
Section 12-705. - Withholding of taxes from wages and other payments.

(a)(1) Each employer, as defined in section 12-707, maintaining an office or transacting business within this state and making payment of any wages taxable under this chapter to a resident or nonresident individual shall deduct and withhold from such wages for each payroll period a tax computed in such manner as to result, so far as practicable, in withholding from the employee's wages during each calendar year an amount substantially equivalent to the tax reasonably estimated to be due from the employee under this chapter with respect to the amount of such wages during the calendar year. The method of determining the amount to be withheld shall be prescribed by regulations of the Commissioner of Revenue Services adopted in accordance with chapter 54.

(2) Each payer, as defined in section 12-707, of distributions from a profit-sharing plan, a stock bonus, a deferred compensation plan, an individual retirement arrangement, an endowment or a life insurance contract, or of pension payments or annuity distributions, that (A) maintains an office or transacts business within this state, and (B) makes payment of any amounts taxable under this chapter to a resident individual, shall deduct and withhold from the taxable portion of any such distribution a tax computed in such manner as to result, so far as practicable, in withholding from the distributions paid during each calendar year an amount substantially equivalent to the tax reasonably estimated to be due from the payee, as defined in section 12-707, under this chapter with respect to such distributions during the calendar year. The method of determining the amount to be withheld from taxable payments, other than lump sum distributions, shall be determined in accordance with instructions provided by the commissioner. The amount to be withheld from a lump sum distribution shall be equal to the taxable portion of the distribution multiplied by the highest marginal rate, except that no withholding shall be required if (i) any portion of the lump sum distribution was previously subject to tax, or (ii) the lump sum distribution is a rollover that is effected as a direct trustee-to-trustee transfer or as a direct rollover in the form of a check made payable to another qualified account. For purposes of this section, “lump sum distribution” means a payment from a payer to a resident payee of such resident payee's entire account balance, exclusive of any other tax withholding and any administrative charges and fees.
(3) In no event shall the requirements of this subsection result in nonpayment of any distribution to a resident individual. For the calendar year ending December 31, 2018, no taxpayer shall be assessed interest by the commissioner pursuant to section 12-722 solely on the basis of a payer's failure to comply with the provisions of this subsection.
(b) The commissioner may, if such action is deemed necessary for the protection of the revenue and under such regulations as the commissioner may adopt in accordance with the provisions of chapter 54, require persons other than employers and payers (1) to deduct and withhold taxes from payments made by such persons to residents of this state, nonresidents and part-year residents, (2) to file a withholding return as prescribed by the commissioner, and (3) to pay over to the commissioner, or to a depositary designated by the commissioner, the taxes so required to be deducted and withheld, in accordance with a schedule established in such regulations.
(c) The commissioner may adopt regulations providing for withholding from (1) remuneration for services performed by an employee for his or her employer that does not constitute wages, (2) wages paid to an employee by an employer not maintaining an office or transacting business within this state, or (3) any other type of payment with respect to which the commissioner finds that withholding would be appropriate under the provisions of this chapter if the employer and the employee, or, in the case of any other type of payment, the person making and the person receiving such payment, agree to such withholding. Such agreement shall be made in such form and manner as the commissioner may prescribe by regulations adopted in accordance with the provisions of chapter 54. For purposes of this chapter, remuneration, wages or other payments with respect to which such an agreement is made shall be regarded as if they were wages paid to an employee by an employer maintaining an office or transacting business within this state to the extent that such remuneration or wages are paid or other payments are made during the period for which the agreement is in effect.
(June Sp. Sess. P.A. 91-3, S. 56, 168; May Sp. Sess. P.A. 92-5, S. 6, 37; P.A. 17-147, S. 6; P.A. 18-26, S. 7.)
History: June Sp. Sess. P.A. 91-3, S. 56, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made various technical and minor changes, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; P.A. 17-147 amended Subsec. (a) by designating existing provisions re employer deduction and withholding from wages as Subdiv. (1) and adding Subdiv. (2) re deduction and withholding of tax by payer of pension or annuity distributions, and made technical and conforming changes, effective January 1, 2018; P.A. 18-26 amended Subsec. (a) by substantially revising provisions re withholding in Subdiv. (2), including replacing “the same as the method used by employers with respect to the payment of wages” with “determined in accordance with instructions provided by the commissioner” re method of determining amount to be withheld, and adding “or as a direct rollover in the form of a check made payable to another qualified account” in clause (ii), and adding Subdiv. (3) re prohibition on nonpayment of distribution by payer and on assessment of interest by commissioner, effective May 29, 2018.

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