What is My Responsibility as an Employer for Accuracy of Employee Withholding Information?

Document created by 1050210 on Oct 30, 2014
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Published Date: 02/24/2014


Pat; Rountree

By Pat Rountree


Employers sometimes question the accuracy of what employees enter on their withholding forms (based on other information such as number of dependents on insurance, etc.), but are reluctant to get into personal issues. Their main concern is what legal responsibility they have if they withhold based on incorrect information entered by the employee.


Following is guidance from the NC Department of Revenue and IRS regarding employer responsibilities for employees’ forms.


As an employer, am I required to determine the correctness of the withholding allowance certificates (Form NC-4 EZ or Form NC-4) furnished to me by my employees?


No. However, if you believe that the amount of allowances claimed by an employee is greater than the amount to which the employee is entitled, you should immediately advise the NC Department of Revenue. If the employee claims more than 10 allowances or claims “exempt” for withholding and the wages normally exceed $200 per week, you must submit a copy of the employee’s certificate (Form NC-4 EZ or Form NC-4) to the NC Department of Revenue. (Source: http://j.mp/nc4-4)


Invalid Forms W-4


Any unauthorized change or addition to Form W-4 makes it invalid. This includes taking out any language by which the employee certifies the form is correct. A Form W-4 is also invalid if, by the date an employee gives it to you, he or she indicates in any way it is false. An employee who submits a false Form W-4 may be subject to a $500 penalty. You may treat a Form W-4 as invalid if the employee wrote “exempt” on line 7 and also entered a number on line 5 or an amount on line 6.


When you get an invalid Form W-4, do not use it to figure federal income tax withholding. Tell the employee it is invalid and ask for another one. If the employee does not give you a valid one, withhold taxes as if the employee was single and claiming no withholding allowances. However, if you have an earlier Form W-4 for this worker that is valid, withhold as you did before. (Source: IRS Publication 15 (Circular E) 2014, Employers Tax Guide – www.irs.gov)