Employee No Longer Employed with Company Letter

							Withholding Compliance Program

          William Warner
          Senior Tax Analyst
          Wage and Investment Compliance




                        Internal Revenue Service
Withholding Compliance Program


• Tax year 2004 program began in
  October 2005.

• Approximately 120,000 cases out of
  230 million Forms W-2 filed.



                      Internal Revenue Service
     Contact Information

• Program is centralized in Lowell,
  Mass.
  – Toll-free number for employees and
    employers is: 1-866-791-0289.
  – FAX number is: 1-978-474-1326.



                      Internal Revenue Service
  Employer Responsibilities

• Accept all VALID Forms W-4

• Furnish copy of proposed lock-in letter to
  employee immediately upon receipt.

• If no further guidance is received from the
  IRS, impose withholding at the status and
  allowances (single/zero) specified in the
  letter 60 days after the date on the original
  letter.

                             Internal Revenue Service
  Employer Responsibilities

• Maintain withholding at the IRS specified
  status and allowances until further notice.

• “Penalty”: If employer fails to honor
  lock-in as required, the employer is liable
  for the amount of tax that should have
  been withheld.


                            Internal Revenue Service
 Employer Responsibilities

• When an employer receives a lock-in letter
  for a former employee, a signed note on
  the company letterhead stating that the
  employee is no longer employed by the
  business should be mailed or FAXED to
  the Lowell office.




                           Internal Revenue Service
       Employer Concerns

• Waiting 60 days after notification before
  locking in employee.

• System changes to prevent locked in
  employee from increasing allowances
  on-line.

• “Suspicious” Forms W-4


                            Internal Revenue Service
 How can you help your employees?


• Remind your employees –

 The notice they received tells them to contact IRS,
 if they want to change the withholding status &
 allowances from single/zero.

 The employee needs to have the following
 information available when they call or write:




                               Internal Revenue Service
Joint filers must have the same information
          available for both spouses


• Form W-4 and worksheets.
• Most current pay stub for each job.
• Number of allowances claimed on current
  Forms W-4.
• The social security numbers and dates of
  birth for any children and proof of any
  deductions they want to use to claim
  additional withholding allowances.

                          Internal Revenue Service
Withholding Compliance Program


Look at www.irs.gov for:

• Temporary regulations – TD 9196
  Internal Revenue Bulletin 2005-19.

• Withholding Compliance Questions
  and Answers.

                       Internal Revenue Service