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You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > Filing exempt on W-4
Expert: John Kirk, CPA
Date: 9/30/2008
Subject: Filing exempt on W-4
Question
I do the payroll for a small company and I have employees who insist on switching back and forth from exempt on their W-4's. Should I be reporting these individuals to the IRS? I am considering telling them that they cannot change their W-4 during the year starting in 2009.
Answer
Under Reg. 31.3402(f)(2)-1(c) an employee who claimed "no liability" must file a new W-4 within 10 days from the time he anticipates that he will have no liability in the current year. This would prevent anyone who claimed exempt to switch back to exempt after switching once. There are also civil and criminal penalties for providing employers with false information (see code sections 6682 and 7205)
If you hand these employees copies of the above sited code section, that may put an end to the switching.
John Kirk, CPA
www.johnkirkcpa.com
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