Background: Washington state passed the Long-Term Care Services and Supports act in 2019. This bill quickly became known as the “LTC payroll tax law” as it requires WA workers to pay a tax of 0.58% on W-2 payroll amounts to fund LTC benefit payments. Employers do not pay the tax; it is funded by the employees via a payroll tax.
The payroll tax was originally effective January 1, 2022. However, after the WA governor announced the postponement of the tax, WA legislators quickly moved to enact legislation which formally delayed the long-term care tax until July 2023.
What should an employer do if the tax was already collected from an employee’s paycheck? The legislation requires an employer to refund premiums collected within 120 days of the collection date.
The WA LTC payroll tax has been delayed to July 2023 giving time for legislators to review the bill in its current form and perhaps pass companion legislation to improve upon a few problem areas.
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