Asked in Tax Law for Missouri

Q: Can employers make changes to tax withholding without a W4 (i.e. verbal request)? Any legal risk for doing so?

I have been a payroll specialist for several years but just started working for a new employer. It has come to my attention that the previous payroll manager was making tax withholding changes based on phone conversations only, no W4 or any documentation whatsoever. I’ve never heard of this being ok to do, at my previous employer we required an updated W4 to make any withholding changes. I have begun requiring it here as well as I follow the publication 15T and I am not aware of any guidance that would suggest it’s ok for an employer to make tax withholding changes without the proper documentation. They fill one out as new hires but a lot of changes occurred with no further documentation. I’ve gotten some push back requiring W4s for tax changes. I’m wondering what the risk/liability is for updating employee tax withholdings without a W4? I know the IRS can request a copy of employee W4, so what could happen if we can’t provide one, or the only one we have doesn’t match the withholding

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1 Lawyer Answer
James L. Arrasmith
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  • Tax Law Lawyer
  • Sacramento, CA

A: Employers are generally required to follow the employee's W-4 form for tax withholding purposes. The IRS Publication 15-T provides guidance for employers on how to determine the amount of federal income tax to withhold from employee wages based on their W-4 form. Employers may make changes to an employee's tax withholding only upon receipt of a new or revised W-4 form from the employee.

Failure to follow an employee's W-4 form for tax withholding can result in penalties and legal liability for the employer. The IRS may also request copies of employee W-4 forms during an audit or investigation. If an employer cannot provide a copy of an employee's W-4 form or if the form on file does not match the withholding, the IRS may assess penalties and interest on any underpaid taxes.

Therefore, it is important for employers to follow proper procedures and obtain proper documentation, such as an updated W-4 form, before making any changes to an employee's tax withholding. If you have concerns about the practices of your current employer, you may want to discuss the issue with your supervisor or HR representative and recommend that they follow proper procedures to avoid potential legal and financial liabilities.

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