SSN Policy Manual

Policy Manual

(f) Withholding exemptions

(2) Exemption certificates (A) On commencement of employment on or before the date of the commencement of employment with an employer, the employee shall furnish the employer with a signed withholding exemption certificate relating to the number of withholding exemptions which he claims, which shall in no event exceed the number to which he is entitled. This requirement is implemented in regulation at 26 CFR $3 1.3402(f)(2)-1: 26 CFR §31.3402(f)(2)-1Withholding exemption certificates. (a) On commencement of employment. On or before the date on which an individual commences employment with an employer, the individual shall furnish the employer with a signed withholding exemption certificate relatingto his marital status and the number of withholding exemptions which he claims, which number shall in no event exceed the number to which he is entitled, or, if the statements described in Sec. 31.3402(n)-1 are true with respect to an individual, he may furnish his employer with a signed withholding exemption certificate which contains such statements. For form and contents of such certificates, see Sec. 31.3402(f)(5)-1. The employer is required to request a withholding exemption certificate from each employee, but if the employee fails to furnish such certificate, such employee shall be considered as a single person claiming no withholding exemptions. Now that we have outlined the basic Internal Revenue Service requirement, let's look a little closer at what is being stated: Notice that 26 USC $3402(a)(1) defines the application of this section by stating: "Except as otherwise provided in this section . . .." Notice that 26 CFR $3 1.3402(f)(2)-1 states that "The employer is required to request a withholding exemption certificate from each employee, but if the employee fails to furnish such certificate . . .." * The phrase "if the employee fails to furnish such certificate," means that an employee may decline to provide the Form W-4. (Note that it also states: "such employee shall be considered as a single person claiming no withholding exemptions. " - we '11 discuss this shortly.) Understand that if the Form W-4, Employee's Withholding Allowance Certzjicate were absolutely required from each employee - if it were, without exception an absolute legally required mandate .. . then why is the employer required to ask for it and why must the employee furnish it. If it were clearly required the law would simply direct the employer to do the withholding . . . without exceptions. This argument usually continues with the assertion that the regulation also provides that "such employee shall be considered as a single person claiming no withholding exemptions." But the counter to this assertion is to clarify what is written here. The phrase "shall be considered as" does not authorize the actual withholding of money, it simply tells the employer how to think about this person. The authorization for withholding comes only with a properly completed and signed Form W-4 agreement.