on the public mailing list wtr-s, Robert Randall discussed the new IRS policy on W-4 forms that I mentioned .

He thinks it’s too early to sound the alarms: “I suspect this entire article is just a re-casting of long-existing tax law and IRS regulations, reported in a different lingo than what we are used to seeing.”

The threatened fines are the already existing $500 civil penalty for filing a W-4 claiming excessive allowances. The IRS’ ability to assess this penalty has been there all along; the question is whether or not this represents a change in the likelihood that they will actually assess it. Or is this just another tax season… scare story of the type which the media runs every year to assist with IRS compliance efforts?…

The so-called “lock-in letter” is also not new. The IRS has always had the right to direct one’s employer to withhold at a higher rate once it has decided that your W-4 is inaccurate or inadequate. And NWTRCC has always informed people of that.…

Even the part about employer liability for the taxes is not new.… Once an employer has knowledge that a W-4 is claiming allowances not permitted under IRS rules, the employer who fails to act on that knowledge is liable for civil and criminal penalties, and, I’m almost certain, that liability includes the unwithheld tax amounts. This is why we’ve always counseled wtr’s not to tell their employers why they are filing a new W-4.


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