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Financial Planning / Tax Strategies
|Subject: Re: Deliberately under withholding||Date: 12/28/2000 1:25 AM|
|Author: Skwire||Number: 43531 of 122087|
The W-4 is signed under penalty of perjury, and a fraudulent W-4 is subject to a separate $500 penalty, which the IRS can and does impose.
If an employee claims more than a certain number of withholding allowances (I can never remember whether it's 10 or 15--it's in Publication 15), the employer must send a copy of the W-4 to the IRS. The IRS can require the employee to substantiate the number of allowances claimed and can require the employer to withhold at the single rate with zero allowances if it's not satisfied with the employee's response.
I think there was a discussion about this issue a while back (probably many such discussions). Two points come to mind about this issue:
1) If I recall correctly, the statement made under penalty of perjury is that you are "entitled" to the number of allowances claimed. One question (raised in the earlier discussions) is whether you are "entitled" to only withhold enough to be in the safe harbor or not.
2) An additional layer of ambiguity may be added if you instruct your employer to withhold a set amount rather than adjust your allowances. Arguably you do not violate the statement that you have not claimed more allowances that you are entitled to since you have not claimed any allowances.
I am not encouraging anyone to do this, and my recollection of the earlier discussion(s) is that neither approach was viewed as the better interpretation of the statement in question. However, it might be enough to avoid a perjury charge.
Phil, are you aware of any specific guidance on these points?
Thanks in advance
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