Survey on Rounding on State Tax Returns
(Based on Results of Outside Survey)

December 2004

STATE Does your state require or permit 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?
permit require
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.