When must a Kansas employer file the annual withholding tax return (Form KW-3), and how are the KW-5 deposit reports completed?

Plain-English summary

This Departmental Memorandum sets out the filing rules for Kansas withholding tax — specifically when an employer must file Form KW-3, the Kansas Employer's Annual Withholding Tax Return, and how to complete the KW-5 deposit reports used to remit tax during the year.

The core rule: "Every employer, currently registered, must file a Kansas Employer's Annual withholding Tax Return (Form KW-3) by the last day of February of the year following the taxable year." The KW-3 is filed together with the Wage and Tax Statements (Form K-2 or W-2).

The memo covers two mid-year situations:

• An employer who begins withholding during a calendar year "must file for that portion of the year in which wages were paid or Kansas income tax withheld."
• An employer who discontinues withholding during a calendar year "must file the form KW-3 within 30 days after payment of wages cease."

The rest of the memo gives specific instructions for the KW-5 deposit report (the coupon used to remit withholding during the year). Period-covered dates and due dates are preprinted on each coupon; a substitute form is available if the correct preprinted coupon can't be used; and the final report for a business is marked by checking the "Business Discontinued" box. The line instructions are: Line 1 state tax withheld; Line 2 credit applied (current-year overpayments, with a letter of explanation; prior-year overpayments require a Department-issued credit memo); Line 3 net amount; Line 4 penalty; and Line 5 total remittance, made payable to "Kansas Withholding Tax." The memo stresses that "[e]mployers must file a timely deposit report even if no tax withheld during the period covered," and that adjustments from prior periods are included in the current deposit and reconciled on the annual KW-3.

What this means for you

Employers with Kansas employees

File your KW-3 annual reconciliation return by the last day of February following the tax year, along with your W-2s (or K-2s). File your KW-5 deposit reports on time throughout the year — even for a period in which you withheld nothing — and use the correct preprinted coupon (or a marked substitute) for each due date.

Employers starting or stopping withholding mid-year

If you start withholding during the year, file a KW-3 covering the part of the year you paid wages or withheld Kansas tax. If you stop withholding (for example, you close the business or have no more employees), file your KW-3 within 30 days after wages cease and mark the "Business Discontinued" box on your final KW-5.

Payroll providers and accountants

Watch the two triggers most likely to be missed: the 30-day final-return deadline when withholding stops, and the requirement to file a deposit report even when no tax was withheld for the period. Prior-year overpayments cannot simply be netted — they require a Department-issued credit memo attached to each report that uses the credit.

Common questions

Q: When is the Kansas KW-3 annual withholding return due?
A: By the last day of February of the year following the taxable year, filed together with the Wage and Tax Statements (Form K-2 or W-2).

Q: What if I stop withholding partway through the year?
A: File the KW-3 within 30 days after payment of wages ceases.

Q: Do I have to file a KW-5 deposit report for a period when I withheld nothing?
A: Yes. The memo states that employers must file a timely deposit report even if no tax was withheld during the period covered.

Q: How do I apply an overpayment on a KW-5?
A: Enter a current-year overpayment on Line 2 and attach a letter of explanation. For a prior-year overpayment, the Department verifies it and issues a credit memo that must accompany each report using the credit.

Citations and references

• Form KW-3 — the Kansas Employer's Annual Withholding Tax Return, due the last day of February following the tax year and filed with the Wage and Tax Statements (Form K-2 or W-2).
• Form KW-5 — the withholding deposit report (coupon) used to remit Kansas withholding during the year; period-covered and due dates are preprinted, and the memo gives the Line 1–5 instructions.
• The memo does not cite a specific Kansas statute (K.S.A.) or regulation; it is administrative filing guidance, so statutes_cited is left empty.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: MEMO-WithholdingTaxKW-3

Original ruling text

Memorandum

Body:

WITHHOLDING TAX
KW-3

Every employer, currently registered, must file a Kansas Employer's Annual withholding Tax Return (Form KW-3) by the last day of February of the year following the taxable year. The form KW-3 is filed with the Wage and Tax Statements (Form K-2 or W-2). An employer who begins withholding during a calendar year must file for that portion of the year in which wages were paid or Kansas income tax withheld. An employer who discontinues withholding during a calendar year, must file the form KW-3 within 30 days after payment of wages cease.

The form is provided to the taxpayer (along with the KW-5's) in the coupon book.

New for 1992

SPECIFIC INSTRUCTIONS - KW-5 DEPOSIT REPORT

Period covered and due dates are preprinted on each deposit report. Use the correct deposit report for each die date. If you are unable to use the correct preprinted deposit report, use a substitute form located directly after the preprinted deposit reports and print in the period covered. If this is the final report deposit which will be due for the business, check the "Business Discontinued" box on the KW-5 and write the period covered.

LINE INSTRUCTIONS

Line 1- State Tax withheld: Enter on line 1 the amount which has been withheld for this period. Employers must file a timely deposit report even if no tax withheld during the period covered.

Line 2- Credit Applied: Enter on line 2 any overpayment that has occurred in the current year and attach a letter of explanation. If the overpayment occurred in prior years the Department will verify and issue a credit memo that must accompany each report using the credit.

Line 3- Net Amount: Subtract line 2 form line 1 and enter the result on line 3.

Line 4- Penalty: Enter on line 4 any penalty due on this deposit report. See the general instructions for application of the appropriate penalty rate.

Line 5- Total Remittance: Add lines 3 and 4 and enter the total on line 5. Sign the deposit report and make remittance payable to "Kansas Withholding ' Tax." Mail, using address label from back of booklet to : Withholding Tax, Kansas Department of Revenue, Topeka, KS 66625-0001.
Be sure to sign and date the deposit report and provide your title and telephone number.

NOTE: Adjustments of liabilities from prior periods should be included in the deposit of the current period. These adjustments will reconcile on the annual return (KW-3) when it is filed.

Date Composed: 10/07/1997 Date Modified: 10/09/2001

Table 1

Table 2