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Division of Taxation

Withholdings for Foreign Jurisdictions

Office of Wage and Hour Compliance
Withholding of Income Tax for Foreign Jurisdictions
Adopted New Rule: N.J.A.C. 12:55-2.5

Proposed: June 1, 1998 at 30 N.J.R. 1892(a).
Adopted: July 13, 1998 by Mel Gelade, Commissioner, Department of Labor.
Filed: July 13, 1998 as R. 1998 d. 404, without change.
Authority: N.J.S.A. 34:11-1 et seq., specifically 34:11- 4.4.
Effective Date: August 3, 1998.
Expiration Date: November 6, 2001.

Summary of Hearing Officer's Report and Agency Responses:
A public hearing on the proposed new rule was held on June 25, 1998 at the Department of Labor, John Fitch Plaza, Trenton, New Jersey. Deirdre Webster Cobb, Regulatory Officer, was available to preside at the hearing and to receive testimony. However, no one appeared to give testimony on the proposed new rule. As a result, the hearing office recommended that the rules be adopted without change. The public hearing record may be reviewed by contacting Deirdre Webster Cobb, Regulatory Officer, Office of the Regulatory Services, Office of the Commissioner, Department of Labor, P.O. Box 110, Trenton, New Jersey, 08625-0110.

Summary of Public Comments and Agency Responses:
No comments were received.

Federal Standards Statement
There are no Federal standards or requirements which govern the adopted new rule. As a result, the new rule does not contain any standards or requirements which exceed standards or requirements imposed by Federal law. The adopted new rule is promulgated under authority given to the Commissioner of Labor under provisions of the Wage Payment Law codified at N.J.S.A. 34:11-4.4(b). Therefore, an explanation or analysis of the proposed new rule pursuant to Executive order No. 27(1994) is not required.

Full Text of the adoption follows:

12:55-2.5 Withholding of income tax for foreign jurisdictions

(a) For purposes of this section, a foreign jurisdiction means a sister state or any municipality or other subdivision of a sister state which imposes a tax on the income or wages of nonresidents employed in New Jersey.

(b) Each New Jersey employer who employs nonresidents may, for each pay period, deduct and withhold and amount, computed in accordance with (d) below, from the salary or wages of an employee whose salary or wages are subject to the income or wage tax of a foreign jurisdiction, for the purpose of crediting such amount on account of the income or wage tax due or to become due from the employee to the foreign jurisdiction.

(c) An employer shall not deduct and withhold an employee's salary or wages under (b) above unless it had obtained the expressed written authorization of the employee.

(d) The amount of the employee's salary or wages deducted and withheld shall be computed in such a manner as to result in withholding from the employee's salary or wages, during each calendar year, an amount substantially equivalent to the tax reasonably estimated to be or become due from such employee to the foreign jurisdiction as taxes upon his or her salary or wages received from the employer during the calendar year.

(e) The employer shall hold the amounts deducted and withheld in a trust fund for payment to the foreign jurisdiction.

(f) The employer shall furnish to the foreign jurisdiction a statement of the name, place of residence, amount of salary or wages earned by, and amount of salary or wages so deducted or withheld from the employee.

(g) Nothing is this section shall eliminate, reduce or replace and employer's wage reporting and recordkeeping requirements under N.J.S.A. 34:11-1 et seq. And N.J.A.C. 12:56-4.1, or an employer's gross income tax withholding requirements under N.J.S.A. 54A:7-1 et seq. and N.J.A.C. 18:35-1.10 for an employee who authorizes the employer to withhold the income wage tax of a foreign jurisdiction.

Last Updated: Friday, 02/07/20