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PrompTax: Required Participation for Withholding Tax Payments

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You may have recently received a notice in the mail from the New York State Department of Taxation & Finance titled “Notification of Required Participation,” stating that you are now required to participate in the NYS PrompTax withholding tax program. The PrompTax program is an electronic filing and payment program used for remitting payroll tax withholding (including metropolitan commuter transportation mobility tax) as well as sales, motor fuel and petroleum business taxes. NYS is requiring mandatory participation in this program for businesses who meet the enrollment criteria.

WHO IS REQUIRED TO ENROLL?
If your aggregate tax withheld on Form NYS-45 (“Quarterly Combined Withholding, Wage Reporting and Unemployment Insurance Returns”) was $100,000 or more for the 2016 tax year, you will be required to participate in the PrompTax program for your withholding payments. If your sales and compensating use tax liability for the period June 1 2015 – May 31 2016 is more than $500,000, you would also meet the mandatory participation requirement.

If you meet either of these criteria, you should have received a notice via mail notifying you of the mandatory participation requirement. All required participants must enroll within 20 days of the notice date and must begin making tax payments through the program within 60 days of the notice date. Some companies are being chosen as early participants to enroll and beginning paying through the program. Please be aware that inclusion in this program is also mandated for those businesses who remit either sales tax on motor fuels or petroleum business taxes and their tax liability for the period from June 1, 2015 thru May 31, 2016 exceeded $5 million.

OTHER REQUIREMENTS
Even if your business uses a payroll company to report its withholding taxes, you must still register for the PrompTax program with New York State. If this is the case, you will be able to list the payroll company as a secondary contact. If you wish to allow New York State to discuss your account information with the payroll company, however, you will need to provide authorization via Form TR-2000 (“E-ZRep Tax Information Access and Transaction Authorization”). This would allow the payroll company to be included in the process, which would in turn help reduce the possibility of duplicate payments. For authorization of third-party discussion of more complex tax matters, a Power of Attorney form (Form POA-1) might be required.

ENROLLMENT
To enroll in PrompTax, you will need to register or log in to NYS Online Services for businesses. For additional help with enrollment, you can contact the PrompTax Customer Service Center at (518)- 457-2332. Once you’ve completed enrollment, you will receive confirmation including details of your payment options and start date as well as a six-digit access code.

FURTHER INFORMATION
If you receive a notice stating that you are a mandatory participant and you do not enroll, the NYS Tax Department could impose a $5,000 penalty plus $500 for each additional month that you fail to enroll by the assigned date. If you believe you were selected for mandatory enrollment in PrompTax in error you should contact the PrompTax Customer Service Center immediately. If you believe you might meet the mandatory enrollment requirement criteria but have not received any notice, contact your tax advisor or the New York State Department of Taxation and Finance directly to ask about voluntary enrollment.

For questions about whether you fit the enrollment criteria, or for information about our services, please contact us at info@fffcpas.com or (212) 245-5900.

NYS Dept. of Taxation Info:

  • Click here for Online Services information
  • Click here for PrompTax information
  • Click here for general NYS Dept. of Taxation & Finance information
  • PrompTax Customer Service Number: (518) 457-2332