95-026
Responses
July 5, 1995 and July 6, 1995
Request
Mr. R.H. Hansen, Chairman
Utah State Tax Commission
Heber M. Wells Building
160 East Third South
Salt Lake City, Utah 84134
Dear Mr. Hansen:
For use in the XXXXX PAYROLL MANAGEMENT GUIDE, we would
appreciate your help with the following matter. Your state, and several others, have enacted laws allowing
medical savings accounts to be set up to pay for medical expenses of employees
and their dependents. Amounts
contributed to these accounts are often exempt form state income tax or they
may be allowed as a deduction for state income tax purposes. There is no federal law on medical savings
accounts.
Are contributions to these accounts subject to state income tax withholding
in your state?
Thank you in advance for your help with this matter.
Very truly yours,
XXXXX
XXXXX
Re: Request For Advisory Opinion
- No. 95-026DJ
Dear XXXXX
You requested an advisory opinion as to wether amounts contributed to
medical savings accounts are subject to Utah state income tax withholding.
Our research indicates as follows:
Amounts contributed to medical savings accounts are subject to Utah
state income tax withholding.
Utah code Ann. Sec. 59-10-402(1): states “Requirement of withholding,
“Each employer making payment of wages shall deduct and withhold from wages an
amount to be determined by a commission rule which will, as closely as
possible, pay the income tax imposed by this chapter.”
Amounts contributed to Medical Savings Accounts would be subject to
Utah state withholding requirements.
Individual account holders would have to file a tax return to claim the
deduction and receive any credits or refunds arising due to contributing to any
Medical Savings Accounts.
This opinion is based upon the facts presented in your letter. Obviously, if there are deviations from
these facts, this opinion may be negated.
If you do not agree with this determination, you may appeal to the Tax
Commission for a formal hearing. The
results of that hearing would constitute a declaratory judgment and would be
appealable to the Utah State Supreme Court.
A Notice of Appeal Rights and a copy of the Utah Taxpayer Bill of Rights
are attached.
Respectfully,
Alice Shearer
Commissioner
RE: Advisory Opinion - Applicability of
Withholding Requirements to Medical Savings Account
Dear
XXXXX,
You
requested an advisory opinion as to whether amounts contributed to medical
savings accounts are subject to Utah State income tax withholding. Our research indicates as follows:
Section
59-10-402(1) of the Utah Code requires employers to withhold from wages an
amount which will, as closely as possible, pay the income tax imposed. Contributions to medical savings accounts
are subject to these withholding requirements.
However, an individual account holder may file a return to claim the
deduction and receive any credits or refunds arising from these contributions.
This
opinion is based on the facts presented.
If there are deviations from these facts, the opinion may be negated.
If
you do not agree with this determination, you may appeal to the Tax Commission
for a formal hearing. The results of
that hearing would constitute a declaratory judgment and be appealable to the
Utah State Supreme Court. A Notice of
Appeal Rights and a copy of the Utah Taxpayer Bill of Rights are attached.
For
the Commission,
Alice
Shearer
Commissioner