Last week, the New York State Department of Taxation issued a so-called N-Notice about Paid Family Leave (PFL) which was directed to New York’s employers.

In consultation with the IRS, the New York Tax Department advises employers that:
• Benefits paid to employees will be taxable non-wage income that must be included in
federal gross income;
• Taxes will not automatically be withheld from benefits, but employees can request
voluntary tax withholding;
• Premiums should be deducted from employees’ after-tax wages;
• Employers must report employee contributions on Form W-2 using Box 14 which is for State
disability insurance taxes withheld; and
• Benefits paid to an employee should be reported by the State Insurance Fund on Form 1099-G and by all other payers (including self-insured employers) on Form 1099-MISC.

As expected, the State Tax Department reminded employers that its publication is only advisory and that employers have a continuing obligation to work with their own consultants and tax advisors in order to comply with the law.

This advisory from the Tax Department reminds us that PFL’s reach is wide and it’s up to each employer to ensure that its policies and procedures adhere to the law, which becomes effective January 1, 2018.