Tax Law (Questions About Taxes)/Under 26 CFR 31. 3402


QUESTION: Under 26 CFR 31. 3402 Voluntary Withholding agreements states in part;.An employee and his employer may enter into an agreement for withholding of income tax. Of the same section under 2. It states in part; The agreement may be terminated either by the employee or the employer by furnishing a signed written notice to the other. My Question is, If I gibe my employer a signed written notice to terminate and they continue to withhold, demanding I sign a w-4c, instead of the written notice as per the CFR, are they liable?


Thanks for your question.

I am not familiar with Form W-4c, and it is not listed as an IRS form.  However, to change your withholding, you must submit a new W-4 to your employer.  Until you do this, he is required to continue prior withholding.

There is little likelihood that he would be liable, as you would have yo show that you suffered damages, not just inconvience.

Hope this shops.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: We'll I'm not trying to change my withholding. I'm just trying to terminated it. Now the issue is that most employers are required to go by the w-4. So if I complete a w-4 indicating exempt, they have to go by that. They cannot force me to indicate any withholding rate on the W-4, but with a termination letter it ends it. I think whoever handles payroll is misinterpreting the regulation in believing that my letter request has to include a new w4. So the question is If I do not want them to withhold, as terminating the agreement which cancels out the original W-4, why would I sign another W-4 form?

You must complete a new W-4.  This is according to Federal regulations.

Line 7 of the W-4 has a place for you to enter exempt.  If you are claiming exemption from withholding you must file a W-4 and indicate "Exempt" on line 7.

If you are exempt, complete only lines 1, 2, 3, 4, and 7 and sign the form to validate it. Your exemption for 2014 expires February 17, 2015. So you must renew your exemption annually.

If your employer has reason to believe that you are not exempt, your employer may ignore the amended W-4.

Hope this clears it up.

John Stancil, CPA

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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