Connecticut General Statutes Title 12. Taxation § 12-705. Withholding of taxes from wages and other payments

(a) (1) Each employer, as defined in section 12-707, maintaining an office or transacting business within this state and making payment of any wages taxable under this chapter to a resident or nonresident individual shall deduct and withhold from such wages for each payroll period a tax computed in such manner as to result, so far as practicable, in withholding from the employee's wages during each calendar year an amount substantially equivalent to the tax reasonably estimated to be due from the employee under this chapter with respect to the amount of such wages during the calendar year.  The method of determining the amount to be withheld shall be prescribed by regulations of the Commissioner of Revenue Services adopted in accordance with chapter 54.   1

(2) Each payer, as defined in section 12-707, of distributions from a profit-sharing plan, a stock bonus, a deferred compensation plan, an individual retirement arrangement, an endowment or a life insurance contract, or of pension payments or annuity distributions, that (A) maintains an office or transacts business within this state, and (B) makes payment of any amounts taxable under this chapter to a resident individual, shall deduct and withhold from the taxable portion of any such distribution a tax computed in such manner as to result, so far as practicable, in withholding from the distributions paid during each calendar year an amount substantially equivalent to the tax reasonably estimated to be due from the payee, as defined in section 12-707, under this chapter with respect to such distributions during the calendar year.  The method of determining the amount to be withheld from taxable payments, other than lump sum distributions, shall be determined in accordance with instructions provided by the commissioner.  The amount to be withheld from a lump sum distribution shall be equal to the taxable portion of the distribution multiplied by the highest marginal rate, except that no withholding shall be required if (i) any portion of the lump sum distribution was previously subject to tax, or (ii) the lump sum distribution is a rollover that is effected as a direct trustee-to-trustee transfer or as a direct rollover in the form of a check made payable to another qualified account.  For purposes of this section, “lump sum distribution” means a payment from a payer to a resident payee of such resident payee's entire account balance, exclusive of any other tax withholding and any administrative charges and fees.

(3) In no event shall the requirements of this subsection result in nonpayment of any distribution to a resident individual.  For the calendar year ending December 31, 2018, no taxpayer shall be assessed interest by the commissioner pursuant to section 12-722 solely on the basis of a payer's failure to comply with the provisions of this subsection.