Withholding for Farmworkers

Beginning in 1990 agricultural employers must begin to withhold income tax from cash wages paid to farmworkers, and the Internal Revenue Service has sent a notice to employers explaining how to comply with the new law.

The new withholding rules for farmworkers -- required as part of the Omnibus Budget Reconciliation Act of 1989, recently passed by Congress -- apply to all cash wages paid after 1989 that are subject to social security taxes.

The IRS sent Notice 907 to over 400,000 agricultural employers along with the December mailout of Form 943, "Employer's Annual Tax Return for Agricultural Employees." The notice explains that agricultural employers should ask each farmworker to submit a completed Form W-4, "Employee's Withholding Allowance Certificate," so the employer can determine how much to withhold each payday.

The IRS said that many farmworkers will also need Form SS-5, "Application for a Social Security Number Card," to get a social security number. Form SS-5 is available from Social Security Administration offices.

The IRS explained that if a farmer hires a crew leader as an independent contractor to provide farmworkers, the workers are considered employees of the crew leader for purposes of withholding. Farmers and crew leaders should get Circular E, "Employer's Tax Guide," so they can determine the correct amount of income tax to withhold.

The IRS said that employers can call the IRS forms order number, 1-800-424-3676, to order Forms W-4 and Circular E. The IRS is also sending supplies of these materials to state extension service agents, who will distribute them locally.

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