The bill amends the Income Tax Act of 1967 to update tax withholding requirements for pension, annuity, and other income payments. It introduces a new withholding rate of 3% for taxable disbursements from retirement plans and clarifies that withholding is not necessary for distributions not expected to be included in the recipient's gross income. Additionally, the bill specifies that withholding calculations should be based on taxable disbursements after accounting for personal and dependency exemptions. It also revises provisions related to flow-through entities, adjusting withholding thresholds and requirements for reporting and remitting withheld taxes, while clarifying the responsibilities of employers and other entities regarding tax withholding.

Moreover, the bill changes references from "part" to "chapter" in relevant sections concerning tax withholding and reporting. It emphasizes that all provisions related to tax administration, collection, and enforcement apply to individuals required to withhold taxes. The bill also allows the department to mandate different intervals for tax returns and payments if there are reasonable grounds to believe withheld taxes will not be paid. It outlines employer responsibilities for tax withholding and reporting, including electronic filing requirements for larger employers and the need for accurate reporting of withheld amounts. The enactment of this bill is contingent upon the passage of Senate Bill No. 425.

Statutes affected:
Senate Introduced Bill: 206.703