Sending Form W-4 to IRS
As an employer I have several employees claiming exempt on their W-4. Do I need to fax these W-4s to the IRS?
You're thinking of the old rules.
Generally, an employee may claim exemption from federal income tax withholding
because he or she had no income tax liability last year and expects none this
year. A Form W-4 claiming exemption from withholding is valid for only one calendar
year. To continue to be exempt from withholding in the next year, an employee
must give you a new Form W-4 by Feb. 15 of that year.
15, Circular E states that:
"The IRS may
also require you to submit copies of Form W-4 to the IRS as directed by a revenue
procedure or notice published in the Internal Revenue Bulletin."
15A, Employers Supplemental Guide states that:
"Employers no longer have to routinely send
copies of Forms W-4 claiming more than 10 allowances and certain
'exempt' Forms W-4 to the IRS."
reason for the change is explained in Treasury Decision 9196 in April 2005:
"The Treasury Department and the IRS want to relieve employers
of the burden of submitting copies of certain questionable Forms W-4 and want
to more effectively address withholding noncompliance by using information already
provided to the IRS. Under the temporary regulations, employers are no longer
required to submit a copy of any Form W-4 on which an employee claims more than
10 withholding exemptions. In addition, under the temporary regulations, employers
are no longer required to submit a copy of any Form W-4 on which an employee claims
complete exemption from withholding for the taxable year if the employer reasonably
expects, when the Form W-4 is received, that the employee's wages from that employer
will usually be $200 or more per week. Instead, an employer must submit a copy
of any currently effective withholding exemption certificate only if directed
to do so in a written notice to the employer from the IRS or if directed to do
so under any published guidance."
line is the IRS is either tired of looking at these W-4s or it wants to relieve
you of the burden. You choose.
To ask a question on Tax
Talk, go to the "Ask the Experts"
page, and select "taxes" as the topic.