Source: http://patriotnetwork.info/W4Program.html
Timestamp: 2018-06-25 11:49:00
Document Index: 551289499

Matched Legal Cases: ['§3402', 'art 31', '§3402', '§3402', '§3402', '§3402', '§3402', '§ 3402', '§3401', '§7609', '§3401', '§6103', '§7609', '§6682', '§4299', '§6682']

The Lock-In Letter
Response to IRS Lock-In Letter
Appeal of Lock-in Letter
Instructions for W-4 Calculations
Newest Letters and Regulation
Permanent Regulation on Dropping the Lock-in Letter
Federal Registrar: IRS Eliminates the Lock-in Letter
(Uses Adobe Reader)
Notice of Repeal of Lock-in Legislation
IRS Lock-In Letters: IRS Published "Guidance"
Notices and Instructions from IRS
IRS Instructions on W-4 Forms
Laws Pertaining to W-4 Forms
Attorney Letters on Withholding and W4
MacPherson Letter
Legality of Employee's W-4 Certificate
(also the Cover Letter to MacPherson Letter)
The Attorney Welsh Letter
(statutory law & case decisions)
Letters and Notices to Employers
Notice To Employers (IRS Threats)
Employee Privacy Rights (form)
Union Members Privacy Rights (form)
Appeal of W-4 Determination
FOIA Request W-4
Lock-In Response to IRS
Internal Revenue Service-Compliance Services
PO Box 9047, stop 834 ANSC
Reply Code: 0866143529
Employer: AAA Copper
Response to Lock in letter
Attention: Maureen Judge, Operations Manager, Collections
You sent me the lock in letter (LTR 2801C) dated May 8, 2006, copy attached.
I did not claim a complete exemption from withholding or an exempt status. My W-4 form was correct as best as I could figure.
Your said letter stated very clearly that my employer was not to change my W-4 form for 30 days form the date of your letter. Also he is not to change my W-4 form while I am attempting to comply with your instructions.
I am entitled to claim withholding allowances under the law to reduce my withholding to approximately what I will pay at the end of the year.
I have submitted a new W-4 form to my employer claiming 3 allowances which I can easily justify. The information you need includes:
My Social Security number is listed above and my wife's number is 678-12-3456.
I am entitled to allowances for myself and my spouse. Also since she is not gainfully employed, I am entitled to an additional allowance for her.
I give to my church both a tithe and a generous offering plus incur a great deal of in-kind expenses, such as transportation for the Youth Group, providing goods and transportation for church activities, perform maintenance on the church facilities at my own expense for equipment and supplies.
I provide more than 20% of my gross income to the church and am entitled to claim 2 allowances for that.
I pay approximately $5,000 a year interest on the mortgage on my house. I can claim one allowance for that and maybe two.
Attached is a copy of my new W-4 form which I recently gave to my employer. If I have not figured this correctly, please let me know.
AAA Copper Company
Attention Payroll Dept
Dover , AL 36302
RE: Employee Steve Patriot
Employee Number 123
The IRS service center in Andover , MA sent you on May 8, 2006 their “lock-in letter” which instructed you to change a federal form that I had signed under penalties of perjury. This was the form W-4 Employee's Withholding Allowance Certificate. This form was correct when I initially prepared it.
That letter, in small print on the back, also provided that you were to hold off for 30 days until I had a chance to respond to the IRS. If you alter that federal form prior to the deadline stated, you will be in serious violation of federal law.
The said IRS notice also provides that I have an opportunity to contest the “lock-in letter” administratively and further you are not to alter my form until this dispute is resolved. IRC §3402(n) provides that the company is not allowed to alter a US Government form listing my allowances which I signed under penalty of perjury. Therefore the IRS directive cannot go into effect until this issue is resolved.
Attached is a copy of my reply to the said “lock-in letter” which states my position very clearly. Also enclosed is my new W-4 form which lists the allowances that I am legally entitled to claim.
TO: MAUREEN JUDGE
OPERATION MANAGER, COLLECTIONS
PO BOX 9041, STOP 843 ANSC
ANDOVER MA 01810-0947
RE: SSN: 123 45 6789
Dear Ms Judge:
ADMINISTRATIVE APPEAL OF ADVERSE DETERMINATION
Your letter dated June 7, 2006, attached, denied my appeal dated May 15, 2006, which contested your lock-in letter dated May 8, 2006.
I hereby appeal the lock-in letter and your administrative confirmation of it to your supervisor or to the appropriate appeals body.
Please send me the necessary forms and information so that I can appeal this adverse determination and make an administrative appeal to the proper appeals court.
My new W4 form, which I sent to you on May 15,2006 was correct and you have no grounds to deny it.
The IRS has no authority under any Congressional enactment to alter or change my W4 form. The IRS has no regulation which has an enabling statute to allow the regulation to exist that interferes with my withholding forms.
IRC 3402n clearly states that the employer is not allowed in any way to alter the withholding certificate submitted by the employee. Your lock-in letter in denial of my appeal has no basis in law.
To: Payroll Department
From: Charles Patriot
RE: Repeal of the IRS Regulation on W4 forms.
On April 14, 2005 the Internal Revenue Service rescinded their regulation dealing with their Lock-In Letter pertaining to the allowances on the Employee W-4 Form. The said IRS Regulation 26 CFR Part 31, FR Doc. 05-7523, dated April 11, 2005 is attached.
You can read for yourself the attached regulation and see that the IRS repealed their regulation telling you to alter federal government forms. You can send this regulation to the company CPAs and tax lawyers and have them explain why you must leave my W4 form alone.
Incidentally the enabling statute which allowed the IRS to issue the lock-in letter was never passed by Congress. Consequently the IRS was operating outside the law from the beginning.
I hope we can resolve this matter quickly without litigation.
Not by Dr Clarkson. FYI
"Truth is the first object." --Thomas Jefferson to Dr. Maese, 1809. ME 12:232
In my recent article on How The IRS Violates It's Own Code , the facts were carefully presented which definitively proved how the IRS deliberately lies and misleads Americans by unlawfully seizing (stealing) assets by circumventing the law.
There is no need for an income tax, flat tax, sales tax or any other direct tax. All Americans are encouraged to look behind the curtain so that they might fully understand the grand plunder sucking the lifeblood out of our economy. Don't be fooled by this current illusion of a "booming economy." Debt is not prosperity.
A well know Patriot researcher tell us:
The IRS threatens employers with huge fines if they don't withhold payroll taxes. Funny thing though, according to a September 15, 2003 letter from GAO (General Accounting Office) to Congressman Elton Gallegly regarding W-4's and reporting, this little nugget of truth stands out:
A3: If the IRS determines that an employee does not have enough withholding, we will notify you to increase the amount of withholding tax by issuing a lock-in letter that specifies the maximum number of withholding allowances permitted for the employee. You will also receive a copy for the employee that identifies the maximum number of withholding exemptions permitted and the process by which the employee can provide additional information to the IRS for purposes of determining the appropriate number of withholding exemptions. If the employee still works for you, you must furnish the employee copy to the employee. If the employee no longer works for you, you must send a written response to the IRS office designated in the lock-in letter indicating that the employee is no longer employed by you. The employee will be given a period of time before the lock-in rate is effective to submit for approval to the IRS a new Form W-4 and a statement supporting the claims made on the Form W-4 that would decrease federal income tax withholding. The employee must send the Form W-4 and statement directly to the IRS office designated on the lock-in letter. You must withhold tax in accordance with the lock-in letter as of the date specified in the lock-in letter, unless otherwise notified by the IRS. You will be required to take this action no sooner than 45 calendar days after the date of the lock-in letter. Once a lock-in rate is effective, an employer can not decrease withholding unless approved by the IRS.
A4: After the receipt of a lock-in letter, you must disregard any Form W-4 that decreases the amount of withholding. The employee must submit for approval to the IRS any new Form W-4 and a statement supporting the claims made on the Form W-4 that would decrease federal income tax withholding. The employee should send the Form W-4 and statement directly to the address on the lock-in letter. The IRS will notify you to withhold at a specific rate if the employee's request is approved. However, if, at any time, the employee furnishes a Form W-4 that claims a number of withholding allowances less than the maximum number specified in the lock-in letter, the employer must increase withholding by withholding tax based on that Form W-4.
A6: You will need to block employees who have been locked-in from using an on line Form W-4 system to decrease their withholding.
Q7: What should I do if an employee submits a valid Form W-4 that appears to be claiming an incorrect withholding amount?
A7: You should withhold federal income tax based on the allowances claimed on the Form W-4. But, you should advise the employee that the IRS may review withholding to ensure it is adequate, and that the IRS may direct you, as the employer, to withhold income tax for the employee at a certain rate if the review indicates the employee's withholding is inadequate. Once this occurs the employee will not be allowed to decrease their withholding unless approved by the IRS.
Q8: What do I do if an employee hands me a substitute Form W-4 developed by the employee?
A8: Employers may refuse to accept a substitute form developed by an employee and the employee submitting such a form will be treated as failing to furnish a Form W-4. In such case, you should inform the employee that you will not accept this form and offer the employee an opportunity to complete an official Form W-4 or a substitute Form W-4 developed by you. Until the employee furnishes a new Form W-4, the employer must withhold from the employee as from a single person claiming no allowances; if, however, a prior Form W-4 is in effect for the employee, the employer must continue to withhold based on the prior Form W-4. As an employer, a substitute withholding exemption certificate developed by you can be used in lieu of the official Form W-4, if you provide all the tables, instructions, and worksheets contained in the Form W-4 in effect at that time to the employee.
Q9: What do I do if an employee hands me an official IRS Form W-4 that is clearly altered?
A9: Any alteration of a Form W-4 (e.g. crossed out penalties of perjury statement above the signature) will cause the Form W-4 to be invalid. If an employer receives an invalid Form W-4, the employee will be treated as failing to furnish a Form W-4; the employer must inform the employee that the Form W-4 is invalid, and must request another Form W-4 from the employee. Until the employee furnishes a new Form W-4, the employer must withhold from the employee as from a single per son claiming no allowances. If, however, a prior Form W-4 is in effect for the employee, the employer must continue to withhold based on the prior Form W-4.
Q10: I heard my employer no longer has to routinely submit Forms W-4 to the IRS. How will this affect me as an employee?
A10: There is no change in the requirement that employees have adequate income tax withholding. The withholding calculator found on the IRS website is available to help employees determine the proper amount of federal income tax withholding. Another useful resource, Publication 919, How Do I Adjust My Tax Withholding? is available on theIRS Web site or can be obtained by calling 1-800-TAX-FORM (829-3676). Individuals who do not have sufficient income tax withholding are subject to penalties. The IRS will be making more effective use of information contained in its records along with information reported on Form W-2 wage statements to ensure that employees have enough federal income tax withheld.
Q11: As an employee, what happens if the IRS determines that I do not have adequate withholding?
A11: The IRS may direct your employer to withhold federal income tax at an increased rate to ensure you have adequate withholding by issuing a lock-in letter. At that point, your employer must disregard any Form W-4 that decreases the amount of withholding. You will receive a copy of the lock-in letter. You will be given a period of time before the lock-in rate is put in effect to submit for approval to the IRS a new Form W-4 and a statement supporting the claims made on the Form W-4 that would decrease your federal income tax withholding. You should send the Form W-4 and statement directly to the address on the lock-in letter. Once a lock-in letter is issued, you will not be allowed to decrease your withholding unless approved by the IRS.
Q12: What if I don't want to submit a Form W-4 to my employer?
A12: Your employer is required to withhold income tax from your wages as if you are single with zero allowances if you do not submit a Form W-4.
IRS Instructions on W-4 Form
Many employers and their accountants find themselves caught in a fight between their loyal employees and an agency of the U.S. Government. However, the non-combatants can easily protect themselves by obeying the law. The applicable laws and court decisions include:
1. Internal Revenue Code §3402. In this section of the United States Code, Congress has enacted all the provisions dealing with employee withholding. lnsofaras the course of action for an employer when receiving a W-4 certificate, the law clearly speaks for itself:
NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION, AN EMPLOYER SHALL NOT BE REQUIRED TO DEDUCT AND WITHHOLD ANY TAX UNDER THIS CHAPTER UPON A PAYMENT OF WAGES TO AN EMPLOYEE IF THERE IS IN EFFECT WITH RESPECT TO SUCH PAYMENT A WITHHOLDING EXEMPTION CERTIFICATE FURNISHED TO THE EMPLOYER BY THE EMPLOYEE CERTIFYING THAT THE EMPLOYEE (IS EXEMPT FROM WITHHOLDING)... 26 USC §3402 (n)
The applicable IRS regulation as to responsibility of private companies:
THE EMPLOYER IS NOT REQUIRED TO ASCERTAIN WHETHER OR NOT THE NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED IS GREATER THAN THE NUMBER OF WITHHOLDING EXEMPTIONS TO WHICH THE EMPLOYEE IS ENTITLED.' IRS Regulation 31 .3401 (e) (b).
So, the employer only has the duty to honor W-4 forms as filed, not to make any determination. According to current IRS procedures, the companies can notify the tax agency that a worker has claimed exempt or whatever on the W-4 form, but the payroll department still can not be made responsible to amend any form.
3. The awesome Revenue Service cannot help you: This matter is between the Plaintiff (employee) and the Defendants (employer) and the Internal Revenue Service has no interest in the circumstances of this action (and is) not a party. Stahoviak v. Denver and RGW Railroad Co., #79CV205, Routt County, Colorado 21 Jan 80.
4. Whose business is it? Again the Federal Courts have taken a common sense approach and held, as we could easily expect, that the matter of paying taxes is between the taxpayer and his tax collector and should not involve the workplace:
"Unless the withholder has reason to know that the party filing form (W-4) is no longer eligible for exemption, the withholding party is not responsible for misstatements made on form (W-4) by an owner of income and hence is not liable for tax which would have been withheld. Defendants manifest concern as to whether the Plaintiff would pay tax ... but this is none of their concern." Holmstrom v. PPG Industries, 512 F. Supp 552 (1981)
5. Who makes the DETERMINATION? Many low-level IRS agents claim they can, but do they have the authority? The applicable law, §3402 (n) above, indicates they do not. Legally a worker meeting certain criteria can use his withholding certificate to halt advance tax collections and interest free use of his money. The tax collector legally must wait until April 15th for his share.
A private company as even the IRS admits, has no authority to make any decision regarding worker's tax status! And once a DETERMINATION is made, who has the authority to actually change the W-4 form itself, in the absence of any legislation. Only the Courts can say:
THE EMPLOYER IS NOT AUTHORIZED TO ALTER THE FORM OR TO DISHONOR THE EMPLOYEE'S CLAIM. THE CERTIFICATE GOES INTO EFFECT AUTOMATICALLY IN ACCORDANCE WITH CERTAIN STANDARDS ENUMERATED IN (IRC) 3402 (f) (3) . US V. MALINKOWSKI, 347 F. SUPP. 352 (1972).
6. No Altering: The company can not alter any government form or status of the employee. The IRS does not even claim that authority. The employer who cooperates with any agent without a court order is in legal jeopardy. The best policy for the company is to kindly request from the IRS a Court Order.
Even though some low-level administrative agent of the Internal Revenue Service may send the company a form letter advising them to disregard an employee's W-4 form, most companies simply ignore such advice letter and save themselves the expensive cost of litigation and damages.
Most employers, Federal and State agencies simply ignore the letter and respond by requesting the writers legal authority to make such a demand on a private company. After all, even Revenue admits no enforcement mechanism exists to compel a paymaster to change a worker's W-4 form nor can any penalties be laid on the wise employer who obeys the law and honors the withholding certificate as filed.
Prepared by the Patriot Network 515 Concord Avenue; Anderson, SC 29621
MacPHERSON LETTER W-4
GRANT & MacPHERSON
Donald W. Macpherson, P.C.
(602)957-7163
Mr. John Fariss
President CSRA Patriots
Re: I.R.S. Forms W-4
This is in response to your recent request regarding the question as to whether
or not an employer must honor the Form W-4 filed by the employee. Also, you
asked whether or not an employer may change the Form W-4 filed by the
employee, or change the status of the employee with regard to withholding; i.e.,
change the amount of withholding. Your final question was the potential liability
of an employer with regard to changing a Form W-4E of the employee, or
changing the withholding status of said employee.
Your questions are answered under §3402 of the Internal Revenue Code 26
U.S.C. §3402 and the numerous regulations promulgated there under.
First, the law requires that every employee file with his employer a Form W-4.
Next, the employer has no obligation to verify the number of withholding
allowances claimed by the employee. As indicated in Circular E, if the employer
thinks the employee
claimed too many allowances or made a false statement on the form, the
employer should notify the I.R.S. District Director. Further, the 1960 regulations
(rules promulgated by the I.R.S. Commissioner but not law passed by Congress)
require the employer to report to the I.R.S. any Form W-4 filed with ten or more
allowances. And they provide that the I.R.S. may determine if a W-4 is "defective, in which case the employer is to change the employee's withholding status. Section 31.
3402(f) (2)-l(g) (1)
I have found within the Code (the law passed by Congress) no express nor implied authority which provides that the employer change the Form W-4 of the employee, or change the withholding status of the employee, except in a situation where the form W-4 filed by the employee is deemed "invalid The regulations deal with the definition of an invalid form as any alteration or unauthorized addition. See regulation S3l.3402(f)2-(l) (e)
It was the intent of Congress to allow those individual taxpayers to determine, on their own, their withholding status, and to require that the employer follow said status, except in a case of an "invalid certificate, as discussed above. Congress was particularly concerned with the fact that the withholding tables are based on the assumption that an employee will work throughout the entire year, an assumption quite erroneous in the case of, for example, construction workers.
Congress noted that: "many taxpayers who work only part of the year have tax withheld from their wages even though they have no tax liability for that year. Congress, therefore, developed a rule as to filing of a W-4E or W-4 exempt. They also noted that: "in conjunction with the higher-filing requirement, this certification provision could potentially relieve as many as 10 million persons from over withholding although it is unlikely that all those potentially eligible would take advantage of this procedure.' (Emphasis added.) See Senate Report # 91-552 (1969)
It is the opinion of this office that the I.R.S. is perhaps seriously disregarding the intent of Congress by its attack upon individuals who have filed Form W-4E or W-4 exempt, which individuals may be included within the 10 million taxpayers expressly mentioned by Congress. See, e.g. 31.3402 (f) (2) 1(g) (1) . The problem is compounded by the fact, as evidenced by trial transcripts and I.R.S. letters, that our Government officers do not understand the term "tax liability as applied to Form W-4 exempt status, which officers are charged by the People to administer the revenue laws.
The statutes and regulations are all premised on the concept that an employee is responsible to himself, his employer and the I.R.S. for filing what he believes to be the correct number of withholding allowances. In my opinion, it would be a dangerous choice of action for an employer to change the Form W-4 or withholding status of the employee. There have been numerous lawsuits recently filed by employees against employers for said unlawful action. I know of one case pending in the State of Colorado in which the judge denied the Employer's Motion to Dismiss the lawsuit, which lawsuit was filed under the Civil Rights Act and claimed a violation of constitutional rights and requested a substantial amount of damages.
It is my recommendation that if the employer finds himself caught between a Form W-4 filed by the employee and a mandate from the I.R.S. requiring change of the withholding status, said employer should either request the I.R.S. to beg off, or said employer should file an interpleader with the Court. Interpleader action is one in which a third party "stakeholder states to the Court that he has no interest in the outcome but wishes to escape liability from wither of the opposing parties. In other words, the employer requests that the Court determine whether or not the employee or the I.R.S. is correct with regard to the the employee. Said course of action is the most prudent and conservative approach.
Prior to filing said interpleader, I recommend that the employer request the IRS to beg off the question. If the IRS persists, interpleader should be filed.
Under our present law, I see no provision which allows for the IRS to assess the employer with any tax not withheld so long as the employer withholds tax based on a form W-4 exempt, 3402 (n) provides that:
"Notwithstanding any provision of this section, an employer shall be required to deduct and withhold any tax under this chapter on a payment of wages to an employee if there is in effect with respect to such payment a {form W-4 exempt filed by the employee}....."
In other words, the code provides that so long as the employee has filed with the employer a form W-4, the employer shall not only escape the requirement of making a deduction, but shall also escape any potential criminal or civil liability by virtue of the "notwithstanding" provision.
Any mandate from the IRS to the employer to the effect that the employer "change" the employee's W-4 would, as articulated in the case of Butz V. Economou, 438 U.S. 478 (1974), be manifestly beyond their authority." While said action may subject IRS officers to a suit by the employee for violation of constitutional rights (due process, among others), under the "constitutional tort" theory set forth in Bivens V. Six Unknown Named Agents, 403 U.S. 388 (1971), participation by the employer may subject also employer to suit under a "conspiracy to violate constitutional rights" theory. And "good faith" may or may not be a defense; the risk is with the employer. See the recent case of Owen V. City of Independence, 100 S. Ct. 1398 (1980) ("good faith" no longer a defense for a city/defendant under a 1983 action violation of constitutional rights).
An official will "not be excused for liability if he failed to observe obvious statutory or constitutional limitations on his power of if his conduct was a manifestly erroneous application of the statute." 438 U.S. 494. The Butz court relied upon to earlier abuse of power decisions: Little V. Barreme, 2 Cranch 170 (1804) and Bates V. Clark, 95 U.S. 204 (1977).
In Little, the President of the United States acted beyond his authority in authorizing seizure of suspected vessels going "to or from" French ports, where Congress had directed the President to intercept vessels going "to" a French port. The commander of an American warship was held liable in damages for seizure of a ship en route from a French port, an act beyond the express statutory authority. An officer was likewise held answerable in damages for seizures of property in Bates where seizure of alcoholic beverages were made outside of Indian country, The relevant statute allowed for seizure "in" Indian country,
Similarly, under the issue presented by your request, IRS officers may attempt to cause the seizure a confiscation of an employee's wages in a manner obviously contrary to statutory and constitutional limitations on their powers. "No man in this country is so high that he is above the law." United States V. Lee, 106 U.S. , at 220, quoted in Butz, 438 U.S. at 506.
Donald W, MacPherson
TO:_________________ FROM:____________________
Re: Legality of Employee's W-4 Certificate
The purpose of this letter is to inform you of the employer duties and obligations concerning my controversy with a low-level administrative agent of the IRS.
Attached is a copy of a legal opinion prepared for a noted Patriot leader by noted authority, attorney, Donald W, MacPherson, This letter sets forth the law concerning the withholding allowance form, Please forward this notice to the proper payroll authority so that there is no misunderstanding about the lawful status of my IRS W-4 Form,,
Basically, as Attorney MacPherson explained, the Congress enacted a law clearly stating that the amount of Federal taxes I pay is a matter only between me and the IRS, and is no concern of yours. The Congress has not repealed that law, and neither you nor the IRS can alter that law, Of course, no IRS regulation can alter or change a Federal Statute.
Further, the Federal Courts agree with my position. In US V. Malinowski, 347 F. Supp 352 (1972), the Courts held:
"... The employer is not authorized to alter the form or to dishonor the employee's claim. The certificate goes into effect and automatically in accordance with certain standards enumerated in (IRC) 3402 (f) (3)"
If you have any questions, please feel free to contact me, I expect you to honor my withholding certificate as I filed it, The company has no authority to change or alter any Federal forms that I signed under penalties of purgery. If the Revenue Service disagrees, let them go to court to secure a court order directing the company to amend my certificate.
Attorney Welsh Letter
Glen Burne, Maryland, 21061
Executive Director, The Patriot Network
You requested my opinion as to the responsibility of the Employer in honoring a W-4 form, Employees Withholding Certificate, submitted by an employee.
My research of the applicable statutory law and case decisions reveals the following:
The Congress of the United States has passed a law requiring the employer to honor the W-4 form as submitted and tendered by the Employee:
(N) EMPLOYEES INCURRING NO INCOME TAX LIABILITY.
NOTWITHSTANDING ANY Other PROVISION OF THIS SECTION, AN EMPLOYER
SHALL NOT BE REQUIRED TO DEDUCT AND WITHHOLD ANY TAX UNDER THIS
CHAPTER UPON A Payment OF WAGES TO AN EMPLOYEE IF THERE IS IN
EFFECT WITH RESPECT TO SUCH PAYMENT A WITHHOLDING EXEMPTION
CERTIFICATE (IN SUCH FORM AND CONTAINING SUCH OTHER INFORMATION
AS THE SECRETARY MAY PRESCRIBE) FURNISHED TO THE EMPLOYER BY THE
EMPLOYEE CERTIFYING THAT THE EMPLOYEE
(1) INCURRED NO LIABILITY FOR INCOME TAX IMPOSED UNDER SUBTITLE
A FOR HIS PRECEDING TAXABLE YEAR, AND
(2) ANTICIPATES THAT HE WILL INCUR NO LIABILITY FOR INCOME TAX
IMPOSED UNDER SUBTITLE A FOR HIS CURRENT TAXABLE YEAR. (Emphasis Added TITLE 26 USC § 3402 (N).
This and the other provisions of the Internal Revenue Code clearly states the company must accept and honor the withholding form submitted by the taxpayer. The law requires the working man to figure out his exempt status or the number of allowances and submit it to his company. Nowhere does the law place any responsibility on the payroll department - only acceptance.
Yet, the Internal Revenue Service on the other hand has sent an advice letter that directly contravenes the above statute, this placing sate employers in a quandary - but one of their own making. The company should just follow the letter of the law (listed above) until the Service can find a different law.
You further requested me to tell you how I advise my corporate clients with regard to the problem of an Administrative agency requesting disobedience to the law.
1. I advise than to obey the statute law rather than the IRS promulgated regulations.
2. My reasoning behind this is practical. If the employer follows the dictates of the lower-level administrative agent, the employer stands an excellent hit chance of a damage suit, and its attended expenses, filed against him by the employee.
If, on the other hand he ignores the advice letter, no penalties can be - impressed upon him as none exist. Neither the IRC Code or the regulations provide any punishment or sanctions whatsoever against a reluctant paymaster - nor will any ever exist.
3. furthermore, it is ridiculous for the private employer to become involved in a battle between a reluctant taxpayer and the US Government. It is just good common sense to stay out of other peoples fights.
The Federal Courts have ruled the W-4 form and its contents as supplied by the employee 52CC of no concern to the employer. In the case of Holmstrom v. PPG Industries 512 F. Supp 552 (1981) the federal courts ruled:
UNLESS THE WITHHOLDER HAS REASON TO KNOW THAT THE PARTY FILING FORM (W-4)1S NO LONGER ELIGIBLE FOR EXEMPTION, THE Withholding PARTY IS NOT RESPONSIBLE FOR MISSTATEMENTS MADE ON FORM (W-4) BY AN OWNER OF INCOME AND HENCE WOULD NOT BE LIABLE FOR TAX WHICH SHOULD HAVE BEEN WITHHELD. DEFENDANTS MANIFEST COURTESY AS TO WHETHER THE PLAINTIFF WOULD PAY TAX . . . BUT THIS IS NONE OF THEIR CONCERN.
The courts have spoken: The employer is simply not responsible for anything an EMPLOYEE puts on that tax form. Whether the worker should or should not pay taxes is simply no concern of the workplace.
4. If the IRS continues to harass the employer, he should take a neutral stance, and notify the IRS that he will honor an appropriate court order. As you well know, Governmental Agencies have ready access to the US District Courts and if they wanted a court order, the IRS would obtain it - if they could
The Service has not sought Federal Court decisions in similar type cases, even though frequently requested. The reasoning is most obvious. The government attorneys believe the court would quickly rule that the employer has no responsibility here.
5. Incidentally in the Mobile Oil Company case, the US District Court ruled that an employer does not even have to send S W-4 form or other employment forms to the Internal Revenue Service unless served with a legal summons to do so. (82-1, USTC 9242)
The employer will be in Fond company by honoring his employees federal form and as the State and Federal agencies along with most employers, ignore the IRS letter. Many companies are not even sending to the IRS the exempt; or other W-4 forms and the government does nothing. Then the problems do not ever arise.
In conclusion, the issue boils down to a law of Congress versus an unsigned form Letter for a tax collector. The payroll department must honor the withholding forms and stay out of the contest between any American and his government.
IRS THREATS: ALL BLUFF
According to an official Internal Revenue Service Memorandum, agents are directed to make threats and no more to employers who honor their employees W-4 forms according to law, i.e. 26 U.S. Code 3402 (n).
In fact, low-level agents are directed by their superiors to make false representation or lie - but again, do no more, according to paragraph 9 (partially reprinted below) of National Office Memorandum dated 30 Dec 80
Across the country, thousands of employees are lawfully filing exempt or claiming extra allowances on the W-4 withholding certificate, thereby depriving the Treasury Department of both interest-free use of money not owed and effective control of a portion of a citizens freedom.
The bureaucracy naturally is fighting this tax loophole for working men and women but are hampered by both an Act of Congress [IRS 3402 (n)] that requires employers to honor the W-4 form as filed and decision in the Federal Courts US vs. Malinkowski 347 F Supp 352 (1972) which ruled: "The employer is not authorized to alter the form or to dishonor the employee's claim." (emphasis added)
The deceitful and unethical instructions of top level IRS officials to the field staff are spelled out in detail in the 30 Dec 80 Memorandum which is available to you from the agent who contacted you or from the Disclosure Office in your District Director's office under the Freedom of Information Act, 5 USC 552. Excerpts include:
INTERNAL REVENUE SERVICE MEMORANDUM DATED ~30 DEC 1980
TO: All District Directors and Service Center Directors All Assistant Regional Commissioners (Tm and Examination) (Information Copy to All Regional Commissioners, Regional Counsels)
FROM: Director, Examination Division CP:E Director, Taxpayer Service Division Tx:T
SUBJECT: W-4 Program - Employer Contacts Involving Employee Lawsuits or Employer Reluctance to Comply with the Service's Withholding Instructions.
8. Where an employee lawsuit is involved and the employer or employer's representative refuses to comply with the Service's withholding instructions, the Employment Tax Coordinator will advise the employer or employer's representative that he/she may be liable for the tax and penalties (see item
9). If the Employment Tax Coordinator is unable to persuade the employer to comply, ask that the employer or employer's representative not take any final action (e.g., agree to the injunction) until the Employment Tax Coordinator first has an opportunity to contact District Counsel. InForm the employer or employer's representative that District Counsel will call him/her back. It is not necessary to contact District Counsel unless the employer seeks legal assistance or the Employment Tax Coordinator is unable to persuade the employer to comply with the Service's instructions.
The above are the exact words of a big-wig tax collector instructing his under-lings to falsely "advise the employer . . . that he may be liable. ." when the employee is not liable under the Code. If the agency claims you are liable, surely they could produce an Act of Congress or other authority.
Actually, according to [8 of the 30 Dec 80 Memorandum above, if you refuse to buckle under to empty threats, the agent will only ask politely for a delay and then notifies his higher-ups!
The government will admit when pressed for the truth, that if you are sued for wrongful taking of an employee's pay, the IRS CANNOT HELP You! In fact, not only will your instructor abandon you, but also employers may have to face alone an excellent case against them for damages from the workers whose rights were violated.
But, the honesty of the taxman or lack of it is more apparent in Paragraph 9 of the now disgraced Memorandum:
9. Where no lawsuit is involved and the employer is unwilling to comply, the Employment Tax Coordinator will advice the employer he she may be liable for the amount of withholding tam required to be withheld as well as failure to pay tam penalty and failure to make deposit penalty (IRC Section 665l and 6656). In addition, failure to comply may also subject the responsible person of' the employer to liability for the 100% penalty under IRC Section 6672. If The Employment Tax Coordinator is unable to persuade the employer or employer's representative to comply, follow the procedures in item 10 below.
Now, the coordinator is instructed to "advise the employer of gloom and doom but not put his advice in writing - we wonder why Actually his statement is a complete falsehood, By-laws, IRC 3402, the work place is specifically not liable. And worse the agent "may also browbeat the "responsible person , but the agency is unable to persuade employers to comply the government at most may initiate a tax examination.
The question is whether the IRS legally has or has not the authority to change an employee withholding certificate; and if the agency has that power, surely its legal staff would spell out its authority, carefully for you, directly quoting the applicable statutes. No, the IRS will only, according to said memo
10. Where the Employment Tax Coordinator and/or District Counsel are unable to persuade an employer to comply with our withholding instructions, Examination should consider initiating an employment tax examination. In very serious situations, Examination will seek advice from District Counsel as to an appropriate course of action (e.g. seek an injunction against the employer).
Thousands of employers are obeying The Congress and the Courts, i.e. honoring the worker's payroll status and not once has the IRS sought court action. On the other hand employees have filed suit and collected damages against employers.
In conclusion the above excerpted memorandum, easily available in its entirety from the IRS, your Congressman or from the person who sent you this notice, shows only part of the disgraceful conduct of an administrative agency running wild. The employers best course is to abide by the letter of the law.
The dispute over withholding is a matter between the citizens and the tax collector, the company should remain neutral.
Across the country, hundreds of thousands of wage earners are trying to escape the ravages of inflation, high interest rates, etc. by legally claiming exempt status on the W-4 Form or claiming additional allowances.
The Internal Revenue Service, fearing loss of its power and control, is wrongfully pressuring employers to illegally deprive workers of their hard-earned pay. Caught between a loyal employee and his tax collector, many employers want to know what course of action to follow. Prior to taking the proper action, company managers need to understand their options.
The employer and his bookkeeper have several avenues to take:
1. Ignore the IRS threats - the agents simply do not have the legal authority to carry out their phony scare tactics. See IRS Notional Memorandum dated 30 Dec 80.
If the agent who sends the company a certain advice letter that is all their letter is), had any statutory basis for his request, he would surely state it clearly. The failure of the IRS ~s to support their request by law is significant and proves that NONE EXIST!
2. Exercise your rights. You have no legal duty to furnish information to any government employee unless pursuant to a court order. Reisman v. Caplin, 375 u.s. 440, 84S. Ct. 508(1964), Mobile Oil Company, 82-1 USTC 9242.
3. Protect yourself. Demand that all communication to you be in writing. Determine completely whom you are dealing with, i.e. make the agent fully identify himself and explain his duties, authority and powers.
4. Allow no tricks. Some low-level administrative officers become over-zealous, or forget they are public servants or just become too impressed with their position of power, prestige and privilege.
As a result, the bureaucrats often will falsely claim various hardships against you should you not comply. Study the law, do not allow this. Contact your Congressman's office or the agent's supervisor. Of course, demand a copy of the statute law authorizing any action against you or a copy of the enactment outlining any duties they claim you have.
5. Stay out. As your employee battles with his taxman on his tax matters, the employer simply does not need to be involved.
Take a neutral stance. Notify the agent that you will accept any court order. You can safely remove your company for the entire dispute by notifying the IRS that they should contact your employee directly concerning the W-4 Form and not to involve the company. Remember: Both the Congress and the Courts take the position that a private company has no legal authority to determine anyone's taxes nor change any government form. The powers the IRS has over the taxpayer is no concern of the workplace.
6. Your Real Problem: Examine your State Labor Code. Have your attorney explain to you possible charges against you for not paying wages due. Most states have penalties against employers for not paying wages.
Legal jeopardy in this matter can also involve persons who violate IRC 6103 Confidentiality of Tax Information Act , which prohibits revealing information about· exemptions, liabilities, or tax withheld .
As you can imagine, the most serious legal problems land on the interloper, one who needlessly and foolishly meddles in the affairs of others.
7. Liability: Yes, the company can be found liable for damages. You agreed to pay your worker a certain amount for his time and abilities. Any amount withdrawn from his paycheck can only be voluntarily or by force of law. The IRS has no powers whatsoever in this area. The company and the worker entered into a contract, which requires one party to pay the other for the work performed under standard Law of Contracts in your State; the paymaster has no choice but to deliver the amount agreed to be paid.
Taking a working man's pay is hazardous to you and your company's finances. Both the company and the accountant can be sued - and be found liable for the willful tort of wrongful taking! You could personally be forced to pay for your part of helping the IRS.
Prepared by The Patriot Network, 515 Concord Avenue; Anderson, SC 29621
TO: ____________________ FROM: ____________________
This is a request pursuant to The Privacy Act of 1974, 5 USC 552a, The Right to Financial Privacy Act, 12 USC §3401, Confidentiality of Tax Records Act, 26 USC 61 03 and Special Provisions for Third Party Summons Act, 26 USC §7609, the First and Ninth amendments to the United States Constitution, the Statute and Common Law of this State and other applicable laws and rulings.
I request that you not disclose any records, forms or paperwork about me to any government agent or agency without my permission or a valid court order. Further, I request that I be immediately notified of any request for information. I am sure the company attorney can inform you that violating my privacy expectations can result in a lawsuit for damages.
You may be contacted by the IRS about my payroll status or about certain information that I Furnished to the company. I gave certain information to the workplace for their use alone, not to be handed out to any person or institution that made a claim for it. I expect my privacy to be protected and my confidential papers not to be handed out except according to law or legitimate court order, not some administrative edict of doubtful legality.
The U.S. Supreme Court has ruled many times that you do not have to furnish information to the IRS (or any State or Federal agency) without a Court Order. You can legally refuse to furnish records to any low-level administrative agent, and you can not be punished.
In fact, in Reisman v. Caplin, 375 U.S. 440, 84 S. Ct. 508 (1964), the U.S. Supreme Court ruled that not only can you refuse a simple request for information, but also you can refuse an IRS summons and demand a court order. Further, the Federal Courts held in Reisman and other cases that one reason that you can deny the IRS access to an employee's records is because the worker threatens to sue the company. You can consider this letter as furnishing such justification.
Further, the Federal Courts have ruled, in the Mobile Oil Company case, 82-1 USTC 9242, that employers absent a court order, do not have to send the IRS even W-4 information!
Form PP #2. Employee Privacy Request to Employer
TO:__________________________ FROM:________________________
Business Manager, Local __________ ____________________________
Re: Union Members Privacy Rights
This is a request pursuant to the Privacy Act of l974, 5 USC 552a, the Right to Financial Privacy Act, 12 USC §3401, Confidentiality of Tax Records Act, 26 USC §6103 and Special Provisions for Third Party Summons Act, 26 USC §7609.
I request that you not disclose any records, forms or paperwork about me to any government agent or agency without my permission or a valid court order. Further, I request that I be immediately notified of any request for information. I am sure the union attorney can inform you that violating my privacy expectations is a serious matter.
You may be contacted by the IRS about my payroll status, current job location or about certain information that I furnished to the Union. I gave certain information to our association for their use alone, not to be handed out to any person or institution that made a claim for it. I expect my privacy to be protected and my confidential papers not to be handed out except according to law or legitimate court order, not some administrative edict of doubtful legality.
The U.S. Supreme Court has ruled many times that you do not have to furnish information to the IRS (or any State or Federal agency) without a Court order. You can legally refuse to furnish records to any low-level administrative agent and you cannot be punished. You can simply notify the agent that you will obey any court order. We know that federal agents have easy and quick access to the courts and they should be delighted to comply with your legal request.
Recently, the Federal Courts in The Mobi1e Oil Company case, 82-1 USTC 9242, ruled that companies, absent a court order, do not have to send the IRS even W-/F information!
In fact, in Reisman v. Caplin, 375 U.S. 440, 84 S. Ct. 508 (1964), the U.S. Supreme Court ruled that not only can you refuse a simple request for information, but also you can refuse an IRS summons and demand a court order. Further, the Federal Courts have held in Reisman and other cases that for many reasons you can deny the IRS access to a members records.
In the final analysis you have an option to respect my rights or surrender my privacy to others. I request that you respect my rights.
Date:_____________ Yours,
Form: PP #3 Member Privacy Request to Union.
Appeal W-4 Determination
Re: Appeal of W-4 determination
Dear IRS Agent:
This is a formal appeal of your form letter which you recently sent me whereby you made a determination about my W-4 certificate filed with my employer.
I disagree with your wrongful determination in its entirety. Please furnish me the information and reasons on which you based your decision. Then schedule my appeal for a hearing and notify me of the place and time.
Send me all the necessary forms and information I might need to perfect my appeal. If I have used the incorrect procedures to appeal your unlawful decision, please notify me of your preferred method. Unless I hear otherwise from you within 10 days, I will consider this appeal correctly filed.
My W-4 form was correctly filed and you have no authority to determine otherwise. In fact, the Internal Revenue Code Section 3402 provides that the employer MUST accept my withholding certificate as filed.
I have additional information for you to consider and I have a reasonable basis fur the statements made on my form. Please inform me how you will evaluate the information, your criteria and standards. Also, would you inform me what additional information would satisfy your standards.
Please do riot interfere anymore with the contractual relationship between me and my company. You have no right or authority to harass my employer, Direct all of your communication to my company through me.
By copy of this letter, I am notifying my employer that this matter is on appeal through the IRS Administrative appeals process and until a final determination has been made there, he can disregard any notices from your agency.
The W-4 Appeal letter
FOIA REQUEST - W-4
TO: _________________________ FROM: _________________________
1. This is a request under the Freedom of Information Ad, 5 USC 552 and the Privacy Act 5 USC 552a. I agree to pay costs and fees of locating and copying the below requested documents.
2. This request is in the public interest because the requested materials pertains to the public at large and not to any particular person. Also, my funds are not unlimited and I may be a person eligible to receive federal benefits. Therefore, I request that you waive fees and costs, but if you do not, please send the requested materials and do not let the request for waiver delay this FOIA request. You can consider this a firm agreement to pay fees.
3. If some of my requests are exempt from release, send me those portions "reasonably segregatable , and provide me with an indexing, itemization and detailed justification concerning information which you are not releasing.
4. Please send me the following documents:
A. All records, papers pertaining to the "W-4 Program , "W-4 Compliance Program, the "Questionable W-4 Program , the "Service Center W-4 Program, the W-4 Compliance Task Force, the Tax Protest Program insofar as withholding compliance.
B. All records, information pertaining to the "Questionable Form W-4 program of IRM-426 (33) .
C. All records, documents, and information pertaining to the employment tax coordinator insofar as the subject of withholding certificates.
D. All memoranda, policy statements, regulations procedural guidelines pertaining to IRC §6682, Reg. #38.3402 - (T.D. 772 filed 3-17-81), IR Manual §4299.6; (13) 5 (12) and (13) 5 (13) of CEM IV.
All records and information pertaining to my w-4 problem, notice to my employer, determination on my withholding status/number of exemptions, penalty, etc.
F. Explain or send me all documents pertaining to the definition of "reasonable basis "justification , "penalty assertion criteria", "additional information .
G. All records, policies, and regulations pertaining to the administrative fine, IRC §6682, the procedure for the leveling, appeal, collection and abatement of the fine.
Yours,___________________________
FORM: FOIA REQUEST - G- 2 (Rev Oct 82)
Do you think that Patriots are the only ones not paying taxes?
Along with some of the richest families in America, consider the
following: http://www.nwtrcc.org/
For technical Web questions and problems, contact PNwebmaster