(c) a statement that the worker is withheld and applicable to federal income tax (see point d) (3) (i) of page 301.6361-1 of this chapter (procedural settlement) and (d) If the worker wishes the agreement to expire on a given day, the date of termination of the contract. The treatment of potential tax protesters in your business may – dare we say so? Taxation. You may be tempted to avoid the problem completely by not withholding income tax from your salary, but this is unwise. The IRS asks employers to withhold federal income tax on employees` paychecks7 If income tax is not withheld, employees are subject to a penalty equal to unpaid tax8.8 Employers who do not properly tax their employees are also held liable for the same tax penalty to which the worker is subject. Employers who have not deliberately withheld the necessary taxes could be fined up to $10,000, up to five years in prison or a combination of the two.9 Given the potential serious consequences, consent to the tax opponent`s will is impractical and risky for any business. c) Other payments. The Secretary can provide guidance by publishing in the Internal Income Bulletin (IRB) (which will be available under www.IRS.gov) outlining other payments for which withholding would be appropriate under a voluntary withholding agreement, and authorize payers to consent, at the recipient`s request, to withholding income tax on these payments. The requirements for the form and duration of voluntary detention agreements approved in accordance with paragraph (c) will be specified in the guidelines for certain types of payments. Simply not providing a W-4 is not the only method that a tax protester can try to avoid income tax. Bulletin E identifies several ways to identify an invalid W-4 form. The most obvious indicator of an invalid W-4 is the information that the employee openly admits is false. For example, workers may tell you that they object to the use of a Social Security number and that they place a false social security number on line 2 of form W-4. In this case, the IRS again requires employers to deprive employees as if they were single without withholding pay.
Mike Fowler, the payroll manager at BMW Manufacturing, the South Carolina automaker, said that before paying premiums a year, nearly half of the 4,700 employees file new withholding forms so that no tax is deducted this week. Next week, he said, they will stop their reluctance. As the I.R.S. bonuses are declared, workers can only use the extra money until April 15, but the cost of processing more than 2,000 additional W-4s is considerable, Fowler said. (iii) No application for withholding tax under Section 3402 (p) (3) (A) is considered an agreement between the employer and the worker until the employer accepts the application by ensuring that the amounts for which the application was made are withheld.