Which statement about withholding programs is accurate?

• A. They collect tax at source, increasing timely revenue.
• B. They reduce the need for payroll records.
• C. They apply only to corporations.
• D. They eliminate the need to file annual tax returns.

Answer: (A)

Withholding at the source collects taxes as income is earned, ensuring revenue comes in promptly and making it easier for the government to manage cash flow. That’s why this statement is accurate: taxes are taken before the income reaches the taxpayer, helping secure timely revenue.

The other statements don’t fit. Withholding relies on payroll records to determine how much to withhold, so it does not reduce the need for payroll records; accurate payroll data is essential. Withholding isn’t limited to corporations; many individuals and various types of payments are subject to withholding. And withholding does not eliminate the need to file annual tax returns; taxpayers still file yearly returns to reconcile what was withheld with their actual tax liability.