The governor of Washington has signed legislation delaying the collection of the employee-paid payroll tax (also called employee contributions or premiums) to fund the state's long-term care (LTC) insurance plan until July 1, 2023 [H.B. 1732, L. 2022]. Additional legislation includes amendments to the LTC insurance program [H.B. 1733, L. 2022].
Employers were required to withhold the payroll tax from employees beginning January 1, 2022, but the governor instructed employers to delay doing so while legislation was pending. Some employers made the decision to begin withholding the tax on January 1, since the original law remained in effect.
Employers Must Refund Payroll Tax Already Collected
Employers are advised to stop withholding the payroll tax from employee earnings. For employers that did begin withholding the tax on January 1, employees should be reimbursed within 120 days of the date the tax was collected. Employers should continue to maintain copies of exemption approval letters from employees who already provided them. Employers will begin withholding 0.58% of a covered employee’s wages on July 1, 2023.
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Lia Coniglio, Esq., is Managing Editor of PayState Update and Senior Manager of State Payroll Information Resources for the APA.