(a) The amount to be deducted and withheld under this division shall be prescribed pursuant to § 18663 of the Revenue and Taxation Code when a payment of wages is made to an employee by an employer in any of the following cases:

(1) With respect to a payroll period or other period, any part of which is included in a payroll period or other period with respect to which wages are also paid to the employee by the employer.

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(2) Without regard to any payroll period or other period, but on or prior to the expiration of a payroll period or other period with respect to which wages are also paid to the employee by the employer.

(3) With respect to a period beginning in one and ending in another calendar year.

(4) Through an agent, fiduciary, or other person who also has the control, receipt, custody, or disposal of, or pays, the wages payable by another employer to the employee.

(b) For purposes of this section, an employee’s remuneration may consist of wages paid for a payroll period and supplemental wages.

Supplemental wages include, but are not limited to, bonus payments, overtime payments, commissions, sales awards, back pay including retroactive wage increases, and reimbursements for nondeductible moving expenses that are paid for the same or different period, or without regard to a particular period.

(c) When any supplemental wages are paid subsequent to the payment of regular wages, the employer may determine the personal income tax to be withheld from supplemental wages paid by (1) using a flat percentage rate pursuant to subdivision (b) of § 18663 of the Revenue and Taxation Code without allowance for exemptions and credits and without reference to any regular payment of wages, or (2) adding the supplemental wages to the regular wages paid the employee and computing the personal income tax to be withheld on the whole amount (the computed tax minus the tax withheld from the regular wages shall be withheld from the supplemental wages). Where supplemental wages are paid at the same time as regular wages, the personal income tax to be withheld shall be computed on the total of the supplemental and regular wages and shall be determined as if the total of the supplemental wages and the regular wages constituted a single wage payment for the regular payroll period.

(d) For stock options and bonus payments that constitute wages paid on or after January 1, 2002, the employer may determine the personal income tax to be withheld from the stock options and bonus payments paid by either (1) using a flat percentage rate pursuant to subdivision (c) of § 18663 of the Revenue and Taxation Code, without allowance for exemptions and credits and without reference to any regular payment of wages, or (2) adding the stock options and bonus payments to the regular wages paid the employee and computing the personal income tax to be withheld on the whole amount (the computed tax minus the tax withheld from the regular wages shall be withheld from the stock options and bonus payments). Where the stock options and bonus payments are paid at the same time as regular wages, the personal income tax to be withheld shall be computed on the total of the stock options and bonus payments and regular wages, and shall be determined as if the total of the stock options and bonus payments and the regular wages constituted a single wage payment for the regular payroll period.

(Amended by Stats. 2002, Ch. 488, Sec. 13. Effective September 12, 2002.)