Survey on Rounding on State Tax Returns (Based on Results of Outside Survey)
December 2004
| State | Does your state PERMIT dropping cents from certain tax returns? | Does your state REQUIRE dropping cents from certain tax returns? | What tax returns do you currently permit/require whole dollar reporting? | Does your state allow whole dollar reporting on tax withholding tables? |
|---|---|---|---|---|
| Alaska | Yes | Corporate, Motor Fuel, Excise | N/A - No individual income tax | |
| Arizona | Yes | Individual, and Corporate Income tax | We have no tables since our withholding is a percentage of the actual federal withholding, but we do not prohibit it | |
| Arkansas | Yes | Individual, corporate income & Sales and Use Tax | No | |
| California - Franchise Tax Board (Income Tax) | Yes | Individual | No | |
| California - Equalization Tax Board (Property Tax) | Yes - all property statements and related forms | Yes - Tangible Property List | Permit - all property statements and related forms; Require - Tangible Property List | N/A |
| California - Equalization Tax Board (Sales & Use, Special) | Yes | All returns used by the Sales and Use Tax Department | N/A | |
| Connecticut | Yes | All taxes except sales & use and withholding | No | |
| Delaware | Yes | Yes | Required: Individual and Business; Optional: Withholding | Withholding Tables are calculated to the penny |
| District of Columbia | Yes | All individual & business returns; Monthly/annual sales & Use returns and Annual property return are dollars/cents (due to legislative oversight | No - received large numbers of complaints when tried | |
| Idaho | Yes | We permit on all Idaho tax returns. We have only Implemented on individual and business income tax forms to date | Yes | |
| Illinois | Yes - permitted for income tax since 1984 | Yes - required for sales tax | Sales (mandate); Permit (individual) | Yes |
| Indiana | Yes | Individual, corporate, trust, estate, sales/use, withholding, food and beverage, county innkeepers | No | |
| Iowa | Yes - Individual & Corporate Income Tax | Yes - Required for sales and withholding tax | Currently, individual and corporation; 2005 for sales and withholding (currently permitted) | Yes |
| Kansas | Yes | Individual and corporate income tax; privilege tax; rounding not allowed on sales & excise tax (trust fund tax) | No | |
| Kentucky | Yes (Withholding, Sales and Corporate) | Yes - Income | Individual Income Taxes only | No |
| Louisiana | Yes | Individual and corporate income, corporation franchise, sales/use, hazardous waste, dealer's motor fuels, gift, oilfield restoration fees, withholding | The tax tables are not rounded to whole dollars; tax returns remitting the withholding tax require rounding | |
| Maine | Yes | Yes - required on certain scanned returns (Business, Withholding & Information) | All tax returns - individual, corporate, sales, excise, etc. | No |
| Maryland (electronic) | Yes - all financial fields on E-filed personal returns are rounded to the nearest whole dollar amount | All electronic - personal/individual | Left Blank | |
| Maryland (paper) | Yes | All | Yes | |
| Massachusetts | Yes (income, fiduciary, grantors/owners share of a grantor type trust | Yes (Corporate & Bank, Insurance Forms) | Permit (income, fiduciary, grantors/owners share of a grantor trust) Require (corporate, bank, insurance forms) | No |
| Minnesota | Yes | Encourage TP's to use rounded numbers; Required rounding on individual income tax (M-1) and property tax (M-1PR). Sales and Use taxes and withholding are required to round as they are required to be e-filed | Amounts are rounded in the withholding tables; ask employers to round but they don't always comply with the request | |
| Mississippi | Yes- we require dropping cents on all of the major taxes | Almost all - our major taxes are income and sales | Yes - the amounts in our tables are whole dollar amounts | |
| Missouri | Yes | Individual, corporate, franchise, withholding & fuel; no to Sales, Cigarettes/OTP | Yes | |
| Montana | Yes | Individual income and other tax returns | Yes | |
| Nevada | No | No - Computer system not able to handle rounding; also would need to amend law; | ||
| New Hampshire | Yes | 1987 - interest & dividend tax, business profit tax; 1998 - meals and rentals | No income tax so no withholding table | |
| New Jersey | Yes | All tax returns | Published with dollars and cents but rounding is permitted | |
| New Mexico | Yes | Personal Income tax, Corporate income tax, & pass through entity form | No | |
| New York | Yes | All returns | No | |
| North Carolina | Yes | Individual income, corporate, withholding required; sales tax not rounded | Yes | |
| North Dakota | Yes | Income and tax amounts for corporate income tax, individual income tax and withholding tax | Yes; publish withholding tables in whole dollars; Our "percentage of wages method" tax rate tables are published with cents but employers are allowed to round | |
| Oklahoma | Yes | Corporate and individual income tax returns; rounding on all tax forms | Yes | |
| Oregon | Yes | All income tax, corporation and fiduciary (Oregon does not have a sales tax) | Tax Withholding tables show only whole dollar amounts | |
| Pennsylvania | Yes (Individual Income Tax) | Yes (Corporation Tax) | Individual & Corporate | PA is a flat tax state and no tables are required; employers are not permitted to round when remitting tax withheld |
| Rhode Island | Yes | Individual and all Business Taxes | No | |
| Texas | No; Sales tax rule (3.286) prohibits rounding | |||
| Utah | Yes - Permit on Sales and Corporation Income Tax | Yes - Require on Income & Fiduciary Tax | Individual, sales & use (online only), corporate, partnership and fiduciary | No. Withholding tax return allows for cents to be reported |
| Vermont | Yes | Individual and Corporate | Yes | |
| Virginia | Yes | Permit on all returns; Required on individual filings (returns, estimated payments, extension payments etc. | Yes - all our withholding tables round all amounts to the nearest dollar except our daily payroll table | |
| Washington | Yes | We do not have an income tax | NA | |
| West Virginia | Yes | Permitted since 1986 on income tax. Required since 1-1-01 on personal income tax, consumer sales and service returns; direct pay permit, corporation income tax, business franchise tax, use tax, & withholding returns | Yes |
RESULTS OF WHOLE DOLLAR REPORTING SURVEY WITH STATE TAXING AGENCIES (v.2)
As of December 9, 2004, 37 states and the District of Columbia responded to the IRS survey. That represents a 75% response rate.
The following states do not have income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two of these states responded either as a “negative” or provided information about other types of taxes they have (i.e. sales, corporation, etc.)
Of the states who responded to the survey, 66% (25) either require all (15) or part (10) of their taxes to be rounded.
29% (11) permit taxes do be rounded but do not require it.
5% (2) do not require or permit taxes to be rounded (Texas & Nevada).
55% (21) had no difficulty with the public in adjusting to whole dollar reporting. 16% (6) reported “very little” difficulty with the public in adjusting to whole dollar reporting. 13% (5) did report difficulty with the public in adjusting to whole dollar reporting. 11% (4) either had no information, the change was too new to measure, or other changes were made at the same time rounding was implemented. 2 states (5%) reported no rounding efforts have begun.
47% (18) reported cost savings. 26% (10) reported no cost savings. 18% (7) reported no information available and 3% (1) reported “too new to measure”. It should be noted that very few who reported cost savings had quantifiable results. 2 states (5%) reported no rounding efforts have begun. (Adds to 99% due to “rounding”).
Several states reported resistance to rounding on trust fund taxes from taxpayers and payroll service providers.
Verbatim survey responses are captured in an accompanying EXCEL spreadsheet. There are some responses that were edited due to length. All responses are on file with Patricia.A.Hammond@irs.gov and can be furnished upon request.
