5.19.11  Withholding Compliance Program

Manual Transmittal

September 08, 2014

Purpose

(1) This transmits revised IRM 5.19.11, Liability Collection, Withholding Compliance Program,

Material Changes

(1) IPU changes that posted to SERP since the last revision are documented with date and IPU number assigned when posted to SERP.

(2) IPU 12U1890 issued 11-29-2012 Exhibit 5.19.11-1, Exhibit 5.19.11-2, Exhibit 5.19.11-12 - Updated fax numbers

(3) IPU 12U1904 issued 12-05-2012 IRM 5.19.11.10.14(1) - Updated Identity Theft Procedures

(4) IPU 12U1904 issued 12-05-2012 IRM 5.19.11.6.1.1(2)c - Updated referral criteria for taxpayers in bankruptcy

(5) IPU 12U1904 issued 12-05-2012 IRM 5.19.11.6.1.1(2)e, IRM 5.19.11.6.1.2(3), IRM 5.19.11.6.2.2(4)c - Updated referral procedures

(6) IPU 12U1956 issued 12-18-2012 IRM 5.19.11.3.1, IRM 5.19.11.3.7(2)a, IRM 5.19.11.3.7.1, IRM 5.19.11.10.1(5) - Revisions for telephone transfers

(7) IPU 13U0911 issued 06-11-2013 IRM 5.19.11.6.2.3(1) - Updated Form 9045 retention criteria

(8) IPU 13U0911 issued 06-11-2013 IRM 5.19.11.6.1.2(1) and (4) - Updated completing Form 9045 procedures

(9) IPU 13U0911 issued 06-11-2013 IRM 5.19.11.10.14(1) and (7) - updated ID theft procedures

(10) IPU 13U0911 issued 06-11-2013 Exhibit 5.19.11-1 Changed phone number on Letter 2800C, WHC Lock-in Letter (To Employer)

(11) IPU 13U0911 issued 06-11-2013 Exhibit 5.19.11-3 Changed phone number on Letter 2808C, WHC Modified Lock-in (To Employer)

(12) IPU 13U0911 issued 06-11-2013 Exhibit 5.19.11-6 Changed phone number on Letter 2809C, WHC Release of Lock-in (To Employer)

(13) IPU 13U0911 issued 06-11-2013 Exhibit 5.19.11-12 Changed phone number on Letter 4243C, Withholding Compliance Additional Information Request

(14) IPU 13U1096 issued 06-17-2013 IRM 5.19.11.2.1(3) - Changed all references for $50,000 to $27,225

(15) IPU 13U1096 issued 06-17-2013 Exhibit 5.19.11-1 thru 5.19.11-12 - Linked all correspondex letters to SERP and removed old versions

(16) IPU 13U1463 issued 09-16-2013 IRM 5.19.11.3.2 - Clarified paragraph

(17) IPU 13U1463 issued 09-16-2013 IRM 5.19.11.3.2.4 - Added IAT requirements

(18) IPU 13U1463 issued 09-16-2013 IRM 5.19.11.3.8 - Added information on RO assignment exceptions

(19) IPU 13U1463 issued 09-16-2013 IRM 5.19.11.5.3.3 - Clarified Working Responses Section

(20) IPU 13U1463 issued 09-16-2013 IRM 5.19.11.10.5 -Changed Heading

(21) IPU 13U1614 issued 11-05-2013 IRM 5.19.11.7 (6) - Added Frivolous argument reference

(22) IPU 13U1614 issued 11-05-2013 IRM 5.19.11.10.5 - Changed Heading, updated frivolous communication instructions

(23) IPU 13U1657 issued 11-18-2013 IRM 5.19.11.2.1(5) - WHC case creation timeframe changed

(24) IPU 13U1657 issued 11-18-2013 IRM 5.19.11.2.2(1) - added Austin Compliance Services where WHC is worked

(25) IPU 13U1657 issued 11-18-2013 IRM 5.19.11.5(9) - added additional conditions requiring special handling

(26) IPU 13U1657 issued 11-18-2013 IRM 5.19.11.5(10) - corrected typo

(27) IPU 13U1657 issued 11-18-2013 IRM 5.19.11.5.2(3) - clarified -O freeze instructions

(28) IPU 13U1657 issued 11-18-2013 IRM 5.19.11.5.3.3 - removed a bullet from Working Responses section

(29) IPU 13U1657 issued 11-18-2013 IRM 5.19.11.7.3 - deleted two bullets from Release of Lock-in section

(30) IPU 13U1657 issued 11-18-2013 IRM 5.19.11.7.3.2 - Removed OUO designation

(31) IPU 13U1657 issued 11-18-2013 IRM 5.19.11.10.4.3(2) - rearranged order of alpha list

(32) IPU 13U1657 issued 11-18-2013 IRM 5.19.11.10.13 - Clarified 3rd Party Sick Pay procedures

(33) IPU 14U0152 issued 01-22-2014 IRM 5.19.11.3.1(1) - Removed link to Telephone Transfer Guide (TTG)

(34) IPU 14U0152 issued 01-22-2014 IRM 5.19.11.3.1(8) - Added new paragraph with table for WHC transfers

(35) IPU 14U0152 issued 01-22-2014 IRM 5.19.11.3.7.1(1) & (2) - Added new table for WHC transfers

(36) Revisions and removal of sections has changed TRIDOCS so prior IPU updates may no longer match.

(37) Editorial changes throughout

  • Removal of Background section

  • Removal of all letter Exhibits

  • Removal of WHC Referrals

(38) The following topics are incorporated into this IRM:

5.19.11.2.1 Complete rewrite
5.19.11.2.3 Added new letter 2805C (spousal consent)
5.19.11.3.1
  • Editorial changes

  • Updated links

  • Added procedures for Tax law questions and appropriate call routing

5.19.11.3.6 Changes and removal of TAS and IPSU procedures
5.19.11.6 Removal of TRIDOCS and Referral procedures
5.19.11.7
  • Editorial Changes

  • Updated links

  • Added new procedures for spousal consent

  • Action 61 now Policy Statement P-21-3

5.19.11.7.1 Added letter 2805C (spousal consent letter) and spousal consent procedures.
5.19.11.7.1.2.1 Added letter 2805C and spousal consent procedures
5.19.11.2.3 Added letter 2805C (spousal consent letter)
5.19.11.10.17 New section added for Tribal income

Effect on Other Documents

This IRM supersedes IRM 5.19.11 dated May 7, 2012. The following IRM Procedural Updates (IPU's), issued between 11-29-2012 through 11-18-2013, have been incorporated into this IRM: 12U1890, 12U1904, 13U0911, 13U1096, 13U1463, 13U1614 and 13U1657.

Audience

Wage and Investment (W&I) and Small Business/Self-Employed (SB/SE) employees in Compliance and Customer Account Services (CAS). Large Business and International (LB&I) and Tax Exempt and Government Entities (TE/GE) employees working withholding compliance issues.

Effective Date

(09-08-2014)

Rennea L. Ward
Director, Collection Inventory and Work Planning
Small Business/Self Employed

5.19.11.1  (11-01-2008)
Withholding Compliance Program

  1. The mission of the Withholding Compliance program (WHC) is to ensure taxpayers who have serious under-withholding problems are brought into compliance with federal income tax withholding requirements. The program uses Form W-2, Wage and Tax Statement, information to identify taxpayers with insufficient withholding.

  2. The goal is to correct withholding to ensure that taxpayers have enough income tax withheld to meet their withholding tax obligations.

5.19.11.1.1  (03-15-2012)
Authority Under the Internal Revenue Code (IRC) and Regulations

  1. Internal Revenue Code (IRC) Section 3402 and IRC Section 3403 provide the legal authority for the withholding of federal income tax from wages and other forms of income. IRC Section 3402 specifies the general form and content of withholding allowance certificates and outlines the basis for claiming withholding allowances or exemption from withholding.

  2. Regulations in 26 CFR Part 31, Employment Taxes and Collection of Income Tax at Source, provide guidance for implementation of IRC Section 3402.

  3. Section 31.3402(f)(2)–1(a) requires each employee to furnish his or her employer with a signed withholding exemption certificate on or before starting employment. The maximum number of withholding allowances to which an employee is entitled depends upon the following:

    • Marital status

    • Filing status

    • Number of dependents

    • Number of allowances claimed by a spouse (if any) on a Form W-4

    • Estimated itemized deductions, tax credits, and certain other deductions from income

  4. The requirement for employers to routinely submit copies of questionable Form W-4 , Employee's Withholding Allowance Certificate to the IRS has been eliminated. Regulations, as set forth in Section 31.3402(f)(2)–1(g), require employers to submit copies of any currently effective withholding exemption certificates only if directed to do so in a written notice to the employer or if directed to do so under any published guidance.

  5. An employer must honor a valid withholding allowance certificate furnished by an employee until the Service provides the employer with written notice to disregard it (a lock-in letter). The IRS may issue such a notice after it determines that an employee's withholding claim is unjustified based on IRS records without first obtaining a copy of the Form W-4 from the employer.

    1. The employer is required to withhold at the status and number of allowances specified in our notice. However, if the status and allowances claimed on the employee's current Form W-4 or a new Form W-4 will result in MORE income tax withholding than at the status and allowances specified in our notice, the employer must honor the Form W-4.

    2. If an employee disagrees with our determination, he or she must contact the Withholding Compliance Unit and provide information supporting a change to the status and allowances specified in our notice.

  6. Section 31.3402(m)–1 of the Employment Tax Regulations specifies items used to compute withholding allowances. Estimated amounts of deductions, losses, and credits used to compute withholding allowances may not be more than:

    1. The amount claimed on the prior year tax return (or, if not yet filed, the tax return for the preceding taxable year) which the employee reasonably expects to show on the current year tax return, plus

    2. Additional amounts that are demonstrably attributable to identifiable events.

  7. An employee may claim exempt from withholding by furnishing the employer with a valid exempt Form W-4 certifying that he/she:

    1. Had no tax liability for the preceding taxable year, and

    2. Expects no tax liability for the current taxable year.

  8. Exempt W-4 forms , generally expire on February 15th of the year after they were furnished by the employee. If an employee fails to furnish a new W–4, the employer is required to withhold as if no valid W–4 was in effect, "single" status with "zero" withholding 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. Refer to Publication 15, (Circular E), Employer's Tax Guide, for additional guidance.

  9. IRC Section 6682 and the related tax regulations allow the assessment of a $500 civil penalty on an individual for furnishing a false W–4 if:

    1. The statement made on the Form W-4 results in less income tax withheld than would have been withheld if the Form W-4 had been correctly completed, and

    2. There was no reasonable basis for such a statement at the time that the statement was made.

  10. IRC Section 3403 makes an employer liable for tax imposed under IRC Section 3402 and the related tax regulations:

    1. The employer is liable for the appropriate amount of withholding whether or not it is actually deducted from the employee’s pay. This liability includes tax computed according to the withholding instructions we give the employer in a lock-in letter.

    2. Assessments under IRC Section 3403 are made by Employment tax examiners in the Technical Support function and by Revenue Agents in Examination.

5.19.11.2  (05-01-2006)
Overview of Withholding Compliance Processing

  1. This IRM section explains the Withholding Compliance process.

5.19.11.2.1  (09-08-2014)
Withholding Compliance Case Creation Using Forms W–2, Wage and Tax Statement

  1. Employers are required to give Form W-2, Wage and Tax Statement, to their employees by January 31st of the year following the year in which the wages were paid. A copy of Form W-2 must also be filed with the Social Security Administration (SSA) by the last day of February of the following year (March 31st if filed electronically). W-2 records filed with the SSA are subsequently transmitted to the IRS and loaded into the Information Returns Master File (IRMF).

  2. Application of the WHC business rules results in three potential outcomes:

    • Outcome 1: No tax compliance problem is indicated. A WHC case is not created.

    • Outcome 2: Withholding compliance problem was identified; lock-in letter systemically issued. Taxpayer has 60 days to respond to the letter before the case proceeds to the next step

    • Outcome 3: Withholding compliance problem was identified; manual review required prior to the lock-in letter issuance.

  3. WHC cases are created in June. Each calendar year, ECC will update all tax year dates to correspond to the current calendar year.

  4. W-2 forms received from SSA after the initial case creation are considered "Additional Forms W-2" (AW2) and are processed by WHC at the end of each calendar year following the year in which the wages were paid.

  5. The Enterprise Computing Center (ECC) puts the Form W-2 record into a unique format for WHC. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  6. The Form W-2 records are then sorted by Social Security Number (SSN) and Name Control.

  7. Additional business rules are applied to filter records to:

    1. Determine whether the SSN is valid or invalid.

    2. Match SSN's against Master File (MF). If a record is found in the valid or invalid segments of MF, proceed with the compliance check. If there is no record on MF, select regardless of compliance check.

    3. Current year return was filed and not full paid.

    4. Current year return was not filed. Prior year return was not filed or was filed with a balance due.

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  8. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  9. Taxpayers in the following statuses are excluded:

    • Combat Zone

    • Killed in Terrorist Action (KITA)

    • Offer in Compromise (OIC)

    • Bankruptcy

    • Date of Death (DOD) is less than 24 months

5.19.11.2.2  (09-08-2014)
Campus Case Processing Overview

  1. WHC cases will be worked by the Withholding Compliance Unit at the Andover & Austin Compliance Campuses.

  2. Organization Function Program (OFP) codes have been established for WHC.

  3. The following 97X transaction codes (TC) have been designated to identify actions on WHC cases:

    TC 97X Action Code Manual/Systemic Description
    971 146 Manual/Systemic
    • Lock-in Letter issued

    972 146 Manual/Systemic
    • Lock-in released

    • Lock-in issued in error

    971 147 Systemic
    • Outcome 3 case; listing generated

    971 148 Manual
    • Lock-in rate modified

    • Lock-in rate reviewed with no change

    971/972 149 Manual/Systemic
    • Reserved

  4. Taxpayers with unreversed TC 971 AC 146 transactions are identified by the following IMF entity indicator codes:

    • CC ENMOD screen: WHCCI>1

    • CC IMFOLE screen: WHC

    Note:

    The entity indicator will be set on Outcome 3, referrals and other manually input cases, when the TC 971 AC 146 transaction posts.

  5. TC 971 AC 147 will be used to generate listings of Outcome 3 cases to the site to be worked. The transaction shows the reason code for Outcome 3 selection.

  6. TC 971 AC 146 will post to Master File to identify Outcome 2 cases where a lock-in letter has been systemically issued. The transaction will appear on the year in which the taxpayer was locked in and will provide the following information:

    • TC 971 transaction date

    • Employer Identification Number (EIN) of taxpayer's employer(s)

    • Lock-in status and the number of allowances

  7. Subsequent transactions will be posted to the year in which the taxpayer was locked in.

  8. WHC case inventory will come from three sources:

    • Taxpayer correspondence and telephone calls

    • Listings containing Outcome 3 cases requiring manual review

  9. Cases will be batched through Account Management Services (AMS) and assigned to a tax examiner. AMS will open an IDRS control base using the year in which the lock-in letter was issued.

  10. Tax examiners will

    • Make lock-in determinations and issue lock-in letters

    • Reconsider previous lock-in determinations based on information supplied by the taxpayer

    • Assess and abate Form W-4 civil penalties

    • Address the entire taxpayer account including all balance due and/or unfiled return issues

    • Update IDRS, Withholding Compliance System (WHCS) and AMS as applicable

5.19.11.2.3  (09-08-2014)
WHC Letters and References

  1. WHC outgoing correspondence consists of the Correspondex generated letters shown below. Current versions of the letters are available on Servicewide Electronic Research Project (SERP) using the Forms/Letters/Pubs tab.

    • Letter 2800C, WHC Lock-in Letter to Employer. WHC Lock-in Letter (To Employer).

    • Letter 2801C, WHC Lock-in Letter to Employee. WHC Lock-in Letter (To Employee).

    • Letter 2802C, WHC Compliance Letter (Self Correct Notice).

    • Letter 2804C, Civil Penalty Abatement Denied .Form W-4 Penalty Abatement Denied (To Employee).

    • Letter 2805C, WHC Lock-in Letter to Employee (Spousal Consent letter).

    • Letter 2808C, WHC Modified Lock-in to Employer. WHC Modified Lock-in (To Employer).

    • Form 2809C, WHC Release of Lock-in (Tp Employer). WHC Release of Lock-in (To Employer).

    • Letter 2910C, WHC No Change (To Employee). WHC No Change (To Employee).

    • Letter 2811C, WHC Penalty Abatement Accepted (To Employee). Form W-4 Penalty Abatement Accepted (To Employee).

    • Letter 2812C, WHC Redetermination Acceptance.. WHC Modified Lock-in (To Employee).

    • Letter 2813C, WHC Release of Lock-In (to Employee).. WHC Release of Lock-in (To Employee).

    • Letter 3042C, Regulatory Authority Information Letter. Information on the Legal Authority for the IRS Withholding Compliance Program (To Employee).

    • Letter 4074C, WHC - Reply to Employer Inability to Change Automated W-4 System. WHC - Reply to Employer Inability to Change Automated W-4 System.

    • Letter 4243C, Withholding Compliance Additional Information Request. Withholding Compliance Additional Information Request.

  2. The following forms and publications and notices are also used:

    • Pub 17, Your Federal Income Tax (For Individuals)

    • Pub 5, Your Appeal Rights and How To Prepare A Protest If You Don't Agree

    • Pub 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad

    • Pub 505, Tax Withholding and Estimated Tax

    • Pub 514, Foreign Tax Credit For Individuals

    • Pub 515Withholding of Tax on Nonresident Aliens and Foreign Entities

    • Pub 2105, Why Do I Have to Pay Taxes?

    • Pub 15 (Circular E), Employer's Tax Guide

    • Pub 972, Child Tax Credit

    • Pub 1915, Understanding Your IRS Individual Taxpayer Identification Number (ITIN)

    • Withholding Pay Period Calculator

    • Form W-4, Employee's Withholding Allowance Certificate

5.19.11.3  (05-01-2006)
General Case Processing

  1. This section contains procedures for working withholding compliance cases.

5.19.11.3.1  (09-08-2014)
Telephone Contact Procedures

  1. In order to deliver quality customer service, take all appropriate actions to correct withholding, address any balance due account(s) and/or solicit unfiled returns while the taxpayer is on the telephone.

    Note:

    If you determine that the taxpayer has obtained the WHC unit toll-free number erroneously and does not have a withholding issue, determine the taxpayer's specific issue and transfer the call following the table in paragraph 9 below .

  2. When you identify the topic of the call:

    1. Advise the caller that you are transferring his/her call to the area that handles the question (identify the specific area).

    2. Transfer to a specific line by pressing "inside line" key

    3. Then, press #,

    4. Then, dial the appropriate five digit extension,

    5. Then, press the enter key,

    6. Then, press the transfer key

  3. If translation is needed for non-English speaking taxpayers, offer the taxpayer Over-the-Phone Interpreter Service (OPI).

  4. The following steps should be taken on all calls:

    • Greet the taxpayer - Be sure to provide your name and identification number at the beginning of the call. For additional information, see IRM 21.1.1.7, Communication Skills.

    • When you receive a call from a taxpayer regarding his/her tax account information, you are under no obligation to determine if the taxpayer is using an unsecured platform such as a cell phone. However, if you become aware that the taxpayer is using a cell phone (e.g., the taxpayer states he/she is calling from a cell phone, etc.), you may advise the taxpayer of the disclosure risk of using the cell phone to discuss his/her account information.

    • To contact IRS, hearing impaired callers may choose to use the Federal Relay Service (FRS), a state relay service or any other relay service, or any third party assistant (friend or family). For further instructions concerning Hearing Impaired Calls refer to IRM 21.2.1.59, Deaf/Hard of Hearing (DHOH) Callers and TTY/TDD Equipment and IRM 21.3.8.5.1.2 , Hearing Impaired Customers and TDD Equipment

    • When contacted by an employer ask the caller for the name and Social Security Number (SSN) of the taxpayer to which the call relates, then document the taxpayer case as appropriate. If the employer calls for verification of a modification, provide the employer with the modified withholding status and allowances, only. Do not discuss Form W-4 calculations or case selection criteria.

    • If an employer calls with a "general" question regarding WHC or the lock-in letter, document AMS under the EIN.

    • Disclosure verification must occur before assisting taxpayer on account related calls. Follow procedures in IRM 21.1.3.2.3, Required Taxpayer Authentication. If talking to the taxpayer's representative follow procedures in IRM 21.1.3.3, Third Party (POA/TIA/F706) Authentication then see IRM 5.19.11.3.4, CAF/POA Requirements.

    • Verification of the taxpayer’s phone number on ENMOD is required on all account related calls in which disclosure verification has occurred. When necessary, update this information.

      Note:

      If ENMOD or IDRS is currently unavailable, follow-up action will be performed when systems become available.

    • Check Case Status - Check SUMRY and/or CC IMFOLI for any filing and/or payment delinquencies. See IRM 5.19.11.7, Responses and Redeterminations, for delinquent return procedures. See IRM 5.19.11.3.7, Installment Agreement (IA) Taxpayers, for installment agreement procedures.

  5. Key points for every call:

    • Maintain a professional and courteous tone.

    • Control direction of the call, keep focused on resolution of taxpayer’s issues.

    • Give accurate and complete assistance.

    • Place the taxpayer on hold when needed to perform research or complete case actions. Use the hold feature, not the mute feature.

      Note:

      Advise the taxpayer of the reason for the delay (e.g., additional research needed, etc.), ask for permission to place the taxpayer on hold and wait for a response. Thank him or her for holding.

    • Take all appropriate steps to address any delinquencies while the taxpayer is on the telephone.

    • Confirm to the taxpayer all the actions taken before closing the call..

  6. When working balance due accounts, follow procedures in IRM 5.19.11.3.7.1, WHC Initiated Installment Agreements. When working return delinquency accounts, follow procedures in IRM 5.19.11.7, Responses and Redeterminations. Document AMS with actions taken.

  7. If all case actions cannot be completed (i.e. breaks, lunch, tour of duty), insert case on AMS as correspondence and complete actions as soon as possible after your scheduled phone time.

  8. If the Taxpayer has a tax law question, verify the type of tax law before transferring the call as described in 9 below. Accounts Management will continue to answer tax law inquiries on a limited number of topics. These topics include:

    • Tax Exempt Government Entities (TEGE)

    • Special Services: Military or Civilian Combat; Federally Declared Disaster

    • Affordable Care Act (ACS)

    • International Tax Law (oversees calls only)

    For all other tax law questions state: “I’m sorry, but we do not provide live assistance on this topic. For assistance, you can go to:

    • www.irs.gov - Select the Help & Resources’ tab on the irs.gov home page. Options are listed on the left side of the page

    • Interactive Tax Assistant- Enter "ITA" into the Search feature

    • IRS Tax Map- Enter "IRS Tax Map" into the Search feature for more detailed information

    • Tele Tax: 1-800-829-4477 for information on a variety of tax topics - If they don’t have internet access. After the selection of the language preference, press 2 to enter the Tele-Tax topics, then press 123 and follow the prompts to find the right Tele-tax topic. Also, suggest that many commercial software packages also provide answers to tax questions or seek help from a tax professional.

    Close the Call.

    Exception:

    If the caller does not want to be referred to the website: Transfer the call to: Out-of-scope automated message listed under #92194 (English) and #92195 (Spanish). If unable to transfer to #92194 or #92195 use #92001.

  9. All WHC issues should be addressed before transferring. The assistor should inform the taxpayer they are being transferred and advise caller of what topic to request after the transfer. The assistor should document AMS history with the reason for the transfer.

    When Issue is Function Use the following to resolve the call
    Balance Due (non Status 22) Accounts Management Toll Free Lines (AM)
    Hours of Operation are 7:00 a.m. to 7:00 p.m. local time. If outside of the hours of Operation, advise taxpayer of AM hours and call the appropriate AM toll free number 1–800–829–1040.
    #92010 English
    #92011 Spanish
    Account issues (Refunds and any account issues that do not pertain to the WHC case) #92020 English
    #92021 Spanish
    Balance Due (IDRS Status 22) ACS #92080 WI English
    #92071 WI Spanish
    #92085 SB English
    #92076 SB Spanish
    Open TC 420 or -L Freeze Exam Hours of Operation are
    (WI) 8:00 a.m. to 8:00 p.m. local time.
    (SBSE) 7:00 a.m. to 7:00 p.m. local time
    IRM 21.5.10–2
    Accounts with an Open AUR account AUR Hours of Operation are 7:00 am to 8:00 p.m. local time. If outside of the hours of Operation, advise taxpayer of AUR hours and to call the appropriate AUR toll free number
    (W&I) 1–800–829–3009 (SBSE) 1–800–829–8310
    IRM 21.3.14.58
    FERDI accounts
    • "Federal Employee" in the Alerts box of the Account Summary Screen

    • ACSWEB - "FE" in the Alerts section

    • IDRS CC ENMOD screen - "FED-EMP>F"

    • CFOL CC IMFOLE screen - "FEDEMPLOY/RETIREE"

    ACS (Status 22) FERDI Issues IRM 5.19.18.2 #92082
    English/Spanish
    Out-of-scope automated message Intentionally Left Blank #92194 (English)
    #92195 (Spanish)

    Note:

    If unable to transfer to #92194 or #92195, use #92001.

5.19.11.3.2  (09-16-2013)
Case Research

  1. In order to make proper case decisions, research and utilize the systems shown below.

5.19.11.3.2.1  (02-09-2011)
WHCS

  1. WHCS provides information on the taxpayer, his/her employers, lock-in and/or other WHC letters issued, transaction dates, and lock-in rate, if applicable.

  2. See the WHCS User Guide for instructions on adding or updating taxpayer records.

5.19.11.3.2.2  (05-12-2010)
AMS

  1. WHC case actions are documented in the AMS history. WHC histories can be identified by the literal "WHC" .

5.19.11.3.2.3  (12-04-2009)
IDRS

  1. The TC 971 transactions are shown on IDRS.

  2. Case information can be verified through various command codes, including, but not limited to IRPTR, RTVUE, IMFOL, NAMES, and ENMOD.

5.19.11.3.2.4  (09-16-2013)
IAT

  1. IAT is mandatory for Withholding Compliance. IAT tools simplify processing by assisting the user with IDRS research and input. The tools also reduce the chance of errors and improve productivity. When an action must be taken and an IAT tool is available, Campus Compliance employees with access to IAT tools are required to complete the action using the IAT tool. See IRM 5.19.1.1.7 ,Mandated IAT Tools, for a list of mandated IAT tools.

    Note:

    If an IAT tool is not functioning properly or it is determined not to be appropriate due to a specific situation, the case should be worked using IDRS. For more information on each tool as well as job aid for each tool, see IAT Website

5.19.11.3.3  (12-31-2010)
Case Documentation

  1. Complete and accurate case documentation promotes quality and consistency in working WHC cases.

  2. Document each taxpayer contact and/or action taken on the case in AMS history.

  3. AMS history should contain enough information so that any person subsequently reading the history can easily determine what decisions were made, why those decisions were made, what actions were taken, and what further actions are required to resolve the case.

  4. Complete documentation includes, but is not limited to the following:

    • A listing of verification documents or information requested from the taxpayer and/or employer

    • Taxpayer deadlines and follow-up dates

    • Telephone numbers provided in taxpayer contact

    • Address source, if other than ENMOD

    • Letters issued to the taxpayer and/or employer with EIN

    • Letters not issued to the taxpayer and/or employer with EIN

    • TC 971/972 AC 146/148 codes with appropriate disposition codes

    • Line by line summary of Form W-4 Worksheet calculations supporting any change in the lock-in rate

    • The specific reason for release of a lock-in letter

  5. Add or update case information to WHCS as appropriate. See the WHCS User Guide for instructions. Update IDRS and AMS as appropriate.

5.19.11.3.4  (09-08-2014)
CAF/POA Requirements

  1. Accountants, attorneys, enrolled agents, or other persons acting as representatives through whom a taxpayer requests assistance from the Service, must have a valid Power of Attorney (POA). For Centralized Authorization File (CAF) purposes, representative must submit a Form 2848, Power of Attorney and Declaration of Representative. Taxpayers may also authorize the release of their tax information to representatives and others through the use of a Form 8821, Tax Information Authorization. We refer to powers of attorney as "POAs" and tax information authorizations as "TIAs" .

    Reminder:

    Form 8821, Tax Information Authorization does not authorize discussion of collection issues.

  2. Any form used in lieu of these two forms should contain the following information:

    1. Name, and mailing address of the taxpayer,

    2. Identification number of the taxpayer ( e.g., Social Security Number, Individual Taxpayer Identification Number (ITIN), Employer Identification Number),

    3. Name and mailing address of the representative(s)/appointee(s) ,

    4. The type of tax involved, the federal tax form number, the specific year(s)/period(s) involved (in estate matters the decedent's date of death), and specific tax matter or actions to be performed,

    5. The taxpayer's signature(s),

    6. In the case of a Form 2848, Power of Attorney and Declaration of Representative a completed Declaration of Representative (Part 2).

    Note:

    Item 2(f) above DOES NOT APPLY TO TIAs.

  3. The tax year listed on the POA or TIA must match the year in which you are working the withholding issue.

    Example:

    We issued Letters 2800C/2801C on a TY 2009 case in October, 2011. The POA or TIA form should contain the following information: Form 1040, Income Tax, for Calendar Year 2011.
    In the above example, if the letters were issued in January, 2012, the form should contain the following information: Form 1040, Income Tax, for Calendar Year 2012.

  4. If the POA or TIA form only includes the current year, you cannot discuss any other years. Ask the taxpayer's representative to submit a new form to cover the years to be discussed. Use general information to explain the Withholding Compliance program.

  5. If you are speaking to the taxpayer's representative by telephone, research IDRS using CC CFINK to determine if the POA or TIA is already on file. If the POA or TIA is on file, verify that it includes the correct tax period. If it does not include the correct tax period, or there is no record on CC CFINK, advise the taxpayer's representative to submit a new or updated signed form.

  6. If correspondence is received from a third party and there is no record on CC CFINK, or no Form 2848 or Form 8821 attached, use Letter 0135C to advise the third party that we do not have a POA form on file. Use paragraphs E or F, and H, as part of your response.

  7. If the Form 2848 is attached to the taxpayer's correspondence, compare the information on the form with the information found on CFINK to verify it is for the same tax period. If no information present on CFINK and the form is acceptable, photocopy the form, attach the copy to the correspondence, and then fax the original to the POA functional processing area as specified on Form 2848, instructions for processing.

  8. If authorization as in (2) above is not attached, before replying to a person other than the taxpayer who states he/she has a POA or TIA for the taxpayer, research the CAF using CC CFINK. Ensure that we have his/her POA or TIA on file before sending any information. If there is no POA or TIA, send the information directly to the taxpayer. Notify the taxpayer using Letter 4243C that a third party inquiry was received from (name), we have no record of a POA or TIA, and without a POA or TIA we are not permitted to furnish information to a third party.

5.19.11.3.5  (05-12-2010)
Invalid Form W-4

  1. DO NOT initiate a lock-in letter, reconsider or modify any previously issued lock-in letter, or process any referral based on an invalid Form W-4.

  2. Any alteration of, or unauthorized addition to a Form W-4 makes it invalid.

  3. Invalid W-4 forms can be recognized by

    • Deletion of the language of the jurat. For example: crossed out penalty of perjury statement above the signature

    • Defacement of the certificate

    • Any writing on the Form W-4 other than the entries requested

  4. An employer who receives an invalid Form W-4 from an employee must take the following actions:

    1. Inform the employee that the Form W-4 is invalid

    2. Request another Form W-4 from that employee

    3. Until the employee furnishes a new Form W-4, withhold tax from the employee's wages at marital status single, with zero (0) allowances

    4. 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

  5. If an invalid Form W-4 is submitted with a referral, reject the referral. Notify the originator to advise the employer to follow the procedures outlined in (4) above.

  6. If the taxpayer submits an invalid Form W-4 in response to a lock-in letter, or with a request for reconsideration of a previously issued lock-in letter, issue Letter 4243C to advise the taxpayer that the Form W-4 is invalid and ask for a new one. DO NOT process any request for reconsideration based on an invalid Form W-4.

5.19.11.3.6  (09-08-2014)
Referrals to Taxpayer Advocate Service

  1. Refer taxpayers to the Taxpayer Advocate Service (TAS) (see IRM Part 13, Taxpayer Advocate Service) when the contact meets TAS criteria (see IRM 13.1.7.2, TAS Case Criteria) and you can’t resolve the taxpayer’s issue the same day. Refer to IRM 13.1.7.4, Same-Day Resolution by Operations.

5.19.11.3.7  (09-08-2014)
Installment Agreement (IA) Taxpayers

  1. Check case status on SUMRY. If status is 60, the taxpayer has an approved installment agreement. Work according to general processing procedures unless the taxpayer raises a concern about their ability to meet established IA payments.

  2. If the taxpayer raises this concern, use the Withholding Per Pay Period calculator to determine the taxpayer's new estimated take-home pay amount. Advise the taxpayer of the new estimated take-home pay amount and ask them how much they can continue to pay based on this amount.

5.19.11.3.7.1  (01-22-2014)
WHC Initiated Installment Agreements

  1. If the taxpayer has a balance due account please use the table in paragraph 2 below:

  2. All WHC issues should be addressed before transferring. The assistor should inform the taxpayer they are being transferred and advise caller of what topic to request after the transfer. Document AMS history with the reason for the transfer.

    When Issue is Function Use the following to resolve the call
    Tax Law (Default Screener) - Inform Taxpayer of the topic/issue they need to have addressed when transferred Accounts Management Toll Free Lines (AM)
    Hours of Operation are 7:00 a.m. to 7:00 p.m. local time. If outside of the hours of Operation, advise taxpayer of AM hours and call the appropriate AM toll free number 1–800–829–1040.
    #92001
    Balance Due (non Status 22) #92010 English
    #92011 Spanish
    Account issues (Refunds and any account issues that do not pertain to the WHC case) #92020 English
    #92021 Spanish
    Balance Due (IDRS Status 22) ACS #92080 WI English
    #92071 WI Spanish
    #92085 SB English
    #92076 SB Spanish
    Open TC 420 or -L Freeze Exam Hours of Operation are
    (WI) 8:00 a.m. to 8:00 p.m. local time.
    (SBSE) 7:00 a.m. to 7:00 p.m. local time
    IRM 21.5.10–2
    Accounts with an Open AUR account AUR Hours of Operation are 7:00 a.m. to 8:00 p.m. local time. If outside of the hours of Operation, advise taxpayer of AUR hours and to call the appropriate AUR toll free number
    (W&I) 1–800–829–3009 (SBSE) 1–800–829–8310
    IRM 21.3.14.58
    FERDI accounts
    • "Federal Employee" in the Alerts box of the Account Summary Screen

    • ACSWEB - "FE" in the Alerts section

    • IDRS CC ENMOD screen - "FED-EMP>F"

    • CFOL CC IMFOLE screen - "FEDEMPLOY/RETIREE"

    ACS (Status 22) FERDI Issues IRM 5.19.18.2 #92082
    English/Spanish

5.19.11.3.8  (09-16-2013)
Cases Assigned to Collection Field function

  1. When working a WHC case with at least one balance due module in status 26 and/or a Taxpayer Delinquency Investigation (TDI) assigned to Collection Field function (CFf) you must contact the Revenue Officer (RO) assigned the case.

    1. Research the RO by TSIGN/ZIP/STATE on SERP to identify the assigned RO.

      Exception:

      There are 2 exceptions where a Status 26 is not assigned to an RO or group. MMIA with an assignment code of “35XX6XXX or ASFR where the last 4 digits of the assignment code is "8000" . Do not refer these cases to an RO.

    2. Before taking any further action on the case, advise the field employee of WHC case actions taken to date. Coordinate any additional WHC case actions with the employee.

  2. If the RO directs you to release the lock-in(s) take the following actions:

    1. Document the employee's name, employee number, and telephone number in the AMS history along with the actions requested and taken.

    2. Update WHCS.

    3. Resolve the case as directed.

  3. If the RO agrees that the lock-in(s) should remain in place and the RO can provide additional information to assist in the resolution of the WHC case, document AMS history with the employee's name and employee number and any additional information provided. Proceed to resolve the WHC case.

  4. If the RO does not respond to your initial contact attempt within one week, make a second call. Each attempted contact must be documented on AMS. AMS will update the status code on IDRS. Use CC ACTON to update the IDRS Control Base and History Information with the appropriate activity.

    • If you are still unable to reach the RO, leave a message requesting a return call within two days.

    • Advise them that you will proceed with general WHC case processing if they do not respond.

    • Document these actions in AMS.

  5. When working a WHC telephone call where the taxpayer account meets the conditions in (1) above, take the following actions:

    1. While the taxpayer is on the telephone, secure and document in AMS all necessary information to resolve the WHC case.

    2. Advise the taxpayer that you will coordinate with the assigned RO to resolve their case and they will be notified by mail of withholding case resolution.

    3. Follow procedures in (1) through (4) above.

5.19.11.3.9  (03-15-2012)
Lock-In Letters

  1. Letter 2800C and Letter 2801C, mailed to the employer and the taxpayer, respectively, are commonly known as the "lock-in letters" . Letter 2800C instructs the employer to disregard Form W-4 submitted by the taxpayer and withhold at the marital status and the number of allowances determined by the Service. Letter 2801C advises the taxpayer that the employer has been instructed to disregard Form W-4 submitted by the taxpayer and withhold at the rate specified in Letter 2800C, unless the Form W-4 results in more tax withheld than the lock-in letter.

  2. Mail Letter 2801C to the taxpayer's last known address as defined by Treas. Reg. Sec. 301.6212-2. As a general rule, the last known address is the address that appears on the taxpayer's most recently filed tax return or as updated by the National Change of Address (NCOA) database. For further guidance regarding the definition of the last known address see Rev. Proc. 2010-16, 2010-19 IRB.

    1. If the taxpayer's name and social security number (SSN) do not match, always use the Master File address (including reverse validity) belonging to the case SSN.

    2. If the last known address can not be determined (there is no entity on Master File), the Service may use the address on the most current Form W-2 for mailing the lock-in letter to the taxpayer. If each Form W-2 shows a different address, use the address on the one showing the most wages. DO NOT update the taxpayer's address of record on Master File, but add the address information to the AMS history and to WHCS.

  3. Letter 2800C and Letter 2801C are mailed at the same time.

    • Letter 2801C instructs the taxpayer to respond to us within 30 days if the taxpayer wishes to request a modification.

    • Letter 2800C instructs the employer to lock-in the employee starting with the first pay period ending on or after 60 days from the date of the letter. This ensures that the taxpayer has ample time to respond to the proposed lock-in.

5.19.11.4  (05-19-2010)
Outcome 2 Cases

  1. These cases meet lock-in criteria. Cases are systemically loaded into WHCS. They are designated as Outcome 2 on the WHCS Taxpayer Summary screen and WHCCI>1 on ENMOD. The TC 971 AC 146 appears on the tax year that the letter is issued.

  2. Letter 2800C and Letter 2801C are systemically issued.

  3. See IRM 5.19.11.7., Responses and Redeterminations, for guidance in working telephone and/or paper responses to the letters.

5.19.11.5  (09-08-2014)
Outcome 3 Case Processing

  1. These cases meet lock-in criteria but fall into categories which require manual review by tax examiners before issuing Letter 2800C and Letter 2801C, commonly known as lock-in letters.

  2. Outcome 3 cases will be issued on a weekly listing. The listing will contain the following literals identifying the category type:

    • CID - IRM 5.19.11.5.1, Criminal Investigation Cases (CID)

    • DIS - IRM 5.19.11.5.2, Disaster Relief Cases (DIS)

    • SSN - IRM 5.19.11.5.3, SSN Issues (SSN)

    • IRS - IRM 5.19.11.5.4, IRS Employees (IRS)

    • ADD - IRM 5.19.11.5.5, Incomplete or Foreign Address (ADD)

    • AW2 - IRM 5.19.11.5.6, Additional Forms W-2 (AW2)

  3. Thoroughly research the account as the preceding Outcome 3 category types are not mutually exclusive.

  4. When working the listing, only research and work those employers shown on the listing.

    1. Research WHCS and IDRS to eliminate those employers who were issued lock-in letters in the past twelve (12) months.

    2. To determine whether a lock-in was previously issued, look for an unreversed TC 971 AC 146, cross-referenced to that employer, within this period.

    3. For those employers eliminated, update WHCS with TC 972 AC 146 and disposition code "ERR" and document AMS.

    4. Do not update IDRS.

  5. Multiple taxpayers using the same SSN when filing their tax returns are classified as "mixed entity" or "scrambled SSN" cases.

    • A mixed entity case is created when two or more taxpayers complete a tax return with the same TIN.

    • The case becomes a scrambled SSN case when the true owner of the SSN cannot be identified.

    Caution:

    Do not take any action on cases with an open control base to the Scrambled SSN unit. Document AMS. Update WHCS with TC 972 AC 146 and disposition code "SSN" and close the case.

  6. If a lock-in letter to an employer was issued more than twelve months ago take the following actions:

    1. If your research shows that the lock-in rate has been modified within the past six months, as evidenced by a TC 971 AC 148, cross-referenced to that employer, do not issue another lock-in letter. Update WHCS with TC 972 AC 146 and disposition code "ERR" and document AMS. Do not update IDRS.

    2. If your research shows that the lock-in rate has not been modified within the past six months and the taxpayer does not meet the special handling criteria in (10) below, issue another lock-in letter at the single and zero rate. Add or update case information to WHCS as appropriate. See the WHCS User Guide for instructions. Update IDRS and AMS as appropriate.

  7. In some instances, W-2 forms are issued on one-time payments to taxpayers (e.g. proceeds from class action settlements). Eliminate this employer. Update WHCS with TC 972 AC 146 and disposition code "ERR" and document AMS. Do not update IDRS.

    Note:

    A single payment received on an annual basis does not meet this criteria.

  8. If there is no evidence of a prior lock-in on WHCS or IDRS and the taxpayer has filed and full paid the most recent tax year due at the time you review the case, do not issue lock-in letter(s). Document the AMS history and update all employers on WHCS with TC 972 AC 146 and disposition code "CPL" . Do not update IDRS.

  9. Issue lock-in letters to all remaining employers on the Outcome 3 listing.

    Exception:

    See list below:

    If ... Then ...
    Taxpayer is a statutory employee See IRM 5.19.11.10.12, Statutory Employees
    Taxpayer is a Household employee See IRM 5.19.11.10.6, Household Employees
    Taxpayer is a 3rd party sick pay employee See IRM 5.19.11.10.13, Third Party Sick Pay
    The Form W-2 was issued by an organization listed in Exhibit 5.19.11-13, International organizations Exempt from Federal Withholding Requirements Update WHCS with TC 972 AC 146 and disposition code "NSW" and document AMS. Do not update IDRS.

    Reminder:

    When issuing the lock-in letter, always post the 971 transaction to the current calendar year.

  10. In addition, while working Outcome 3 cases, tax examiners must keep alert for those cases requiring special handling for issuance of lock-in letter. They are

    • Bankruptcy

    • Offer in compromise

    • Potentially dangerous taxpayers (PDT)

    • Cautious Upon Contact (CAU)

    • Combat Zone (-C freeze)

    • Criminal Investigation (-Z freeze)

    • Disaster (-O freeze)

    These cases and others are generally identified by freeze codes or other indicators on IDRS. See IRM 5.19.11.10, Special Situations.

  11. All decisions NOT to issue a lock-in letter, except as specified in (3) through (10) above, require managerial approval. The basis for the decision must be fully documented in AMS.

5.19.11.5.1  (12-31-2010)
Criminal Investigation Cases (CID)

  1. These cases are identified by the literal "CID" on the Outcome 3 listing.

  2. Verify on IMFOLI and/or ENMOD that the open CI indicators "-Z" or "Z-" are present. If one is present:

    • Print the IMFOLI or ENMOD screen

    • Highlight the applicable indicator

    • Route to the lead

  3. The lead will follow local guidelines for contacting the appropriate CI function.

    • If CI fails to respond to lead, close case as TC 972/146, ERR.

    • If the indicator is not present, follow general processing procedures.

5.19.11.5.2  (11-18-2013)
Disaster Relief Cases (DIS)

  1. These cases are identified by the literal "DIS" on the Outcome 3 listing.

  2. Check IMFOLI for the "-O" freeze code. If one is present, take the following actions:

    1. Check IMFOLE for the most recent TC 971 AC 086 and 087.

    2. Look for the disaster ending date, identified by the literal "DIS-END-DT:" mmddyyyy.

    3. If the current date is beyond the disaster ending date, then the disaster relief period has ended. Follow general case processing procedures.

    4. If the disaster relief period has not ended, do not issue lock-in letters. Update WHCS with TC 972 AC 146 and disposition code “ERR”. Document AMS. Do not update IDRS.

  3. If the taxpayer self-identifies and qualifies for an "-O" freeze but no "-O" freeze is present, verify that the taxpayer’s zip code is among those of the affected areas during the disaster period. See IRM 25.16.1.6.2, -O Freeze, for instructions on calling the toll free line.

  4. The "-S" freeze is the disaster Indicator for taxpayers in a minor disaster area. This freeze does not stop WHC processing.

5.19.11.5.3  (12-04-2009)
SSN Issues (SSN)

  1. These cases are identified by the literal "SSN" on the Outcome 3 listing.

  2. This category includes taxpayers with

    1. More than twenty Form W-2 records associated with an SSN's in a given tax year

    2. Missing SSN's

    3. SSN and name mismatches

5.19.11.5.3.1  (09-08-2014)
Missing SSNs

  1. If the SSN is missing or is all zeros, research using CC NAMES to find a valid Taxpayer Identification Number (TIN).

    1. If you find a valid TIN, check whether the taxpayer is in compliance with filing and payment requirements for the most recent tax year due at the time you review the case. If so, do not issue lock-in letters. Close the case on WHCS using TC 972 AC 146 with Disposition Code "CPL" (taxpayer is in compliance). Update AMS with the TIN that the taxpayer files under and the actions taken

    2. If you do not find a valid TIN, or you find a valid TIN, but the taxpayer is not in compliance with filing and payment requirements for the most recent tax year due, work the case according to general procedures using the Form W-2 SSN.

    Note:

    Add the valid TIN to the Other TIN field on the WHCS Taxpayer Detail screen.

5.19.11.5.3.2  (09-08-2014)
SSN and Name Mismatches

  1. A WHC mismatch is defined as those instances where the taxpayer's name on the Form W-2, Wage and Tax Statement, does not match the name associated with that SSN on Master File.

    Reminder:

    Research IDRS for reverse validity of the SSN. If the TC 971 AC 147 is found on the reverse validity, document AMS on both valid and reverse validity sides.

  2. Work only the name on the Outcome 3 listing.

  3. Issue lock-in letters to all employers on the listing unless

    1. A lock-in letter was issued more than twelve months ago and your research shows that the lock-in rate has been modified within the past six months, as evidenced by a TC 971 AC 148, cross-referenced to that employer, do not issue another lock-in letter. IRM 5.19.11.5, Outcome 3 Case Processing

    2. the taxpayer is a statutory employee, household employee, or receives 3rd party sick pay. For more information see IRM 5.19.11.5(9), Outcome 3 Case Processing Or

    3. The Form W-2 was issued by an organization listed in Exhibit 5.19.11-1, International Organizations Exempt from Federal Withholding Requirements. IRM 5.19.11.10.15, Taxpayers Employed by International Organizations.

    4. They payment on Form W-2 is a one-time payment to the taxpayer. IRM 5.19.11.5(7), Outcome 3 Case Processing.

    5. A lock-in letter was issued within the past twelve months. See IRM 5.19.11.5(4), Outcome 3 case processing.

  4. Issue Letter 2801C to the name on the listing using the Master File address. If there is no account on Master File, use the address shown on the most current W-2 forms. If each Form W-2 shows a different address, use the address on the Form W-2 showing the most wages.

  5. Input the appropriate transaction code to IDRS using the SSN on the listing. If there is no account on Master File do not input TC 971.

  6. Document AMS with the name from the listing to which the WHC letters were issued as well as all actions taken. Update WHCS.

5.19.11.5.3.3  (09-08-2014)
Working Responses

  1. If the taxpayer has filed under a different TIN (such as an ITIN, Temporary TIN, other SSN) verify that the wages/income shown on the W-2 form(s) were reported. If the wages were reported follow procedures in the table below:

    If Then
    The taxpayer has filed and paid the most current return due Release the lock-in.
    • Issue Letter 2809C and Letter 2813C

    • Input TC 972 AC 146 with TC 972 Disposition Code "CPL"

    • Update AMS with the TIN the taxpayer files under and the actions taken.

    Reminder:

    Advise the taxpayer that if future W-2 forms and TINS do not match, they may be locked in again.

    If the taxpayer has filed the most current return due but has a balance due
    • Follow general procedures

    • Compute allowances and

    • Issue modification letters as appropriate

    Reminder:

    Advise the taxpayer that if future W-2 forms and TINS do not match, they may be locked in again.

  2. If the taxpayer has not filed:

    1. Advise them that all income must be reported on a tax return.

    2. Refer them to the Social Security Administration (SSA) for help in getting an SSN.

      Note:

      Any employee who is legally eligible to work in the United States and does not have a social security number can get one by completing Form SS-5 , Application for a Social Security Card, and submitting the necessary documentation. The taxpayer can get this form at SSA offices, by calling 1-800-772-1213, or from the SSA website at www.socialsecurity.gov. If the taxpayer is not eligible to obtain an SSN, refer the taxpayer to the IRS toll-free number or www.irs.gov for information about getting an ITIN. See Pub 1915, Understanding Your IRS Individual Taxpayer Identification Number (ITIN) for additional information

      .

    3. Set deadline for filing.

    4. Follow general procedures to compute allowances and issue modification letters as appropriate.

  3. If taxpayer has obtained both a valid SSN and an ITIN,

    • Encourage the taxpayer to contact the ITIN Unit to have the valid SSN credited for returns filed under the ITIN.

    • Explain and encourage the taxpayer to report all wages and file all future returns using the valid SSN.

5.19.11.5.4  (09-08-2014)
IRS Employees (IRS)

  1. An "IRS" literal can appear on Outcome 2, Outcome 3 and phone calls.

  2. If you do not know the IRS employee, work the cases using general procedures. Complete Form 11377, Taxpayer Data Access, and give to your manager.

  3. If you know the IRS employee, give the case to your lead for someone else to work.

5.19.11.5.5  (03-15-2012)
Incomplete or Foreign Address (ADD)

  1. These cases are identified by the literal "ADD" on the Outcome 3 listing.

  2. The following case types are included in this category:

    • Incomplete taxpayer address or missing Master File entity

    • Incomplete employer address or missing Master File entity after Payer Master File (PMF) research

    • Foreign address

    • Army Post Office (APO) and Fleet Post Office (FPO) addresses

  3. Take the following actions for incomplete employer address cases:

    1. Conduct research using available internal sources such as CFOL CC BMFOLE, CC PMFOL and CC NAMEE. If unsuccessful, eliminate that employer. Update WHCS with TC 972 AC 146 and disposition code “ERR”.

    2. Once you have found a good address, follow general procedures.

  4. Conduct research using available internal sources such as CFOL CC IMFOLE and CC NAMES for incomplete taxpayer address cases.

  5. When requesting a Correspondex letter addressed to a taxpayer with foreign address, make sure that the address is formatted correctly. If necessary, enter the Foreign Address indicator (#) and then format the City, State, & Zip field as needed in order to properly address the letter.

  6. Provide overseas taxpayers with the WHC local telephone number, (978) 474-1622, instead of the toll-free number.

5.19.11.5.6  (05-28-2010)
Additional Forms W-2 (AW2)

  1. Additional Forms W-2 (AW2) received from SSA after initial case creation are processed by ECC at the end of each calendar year. Processing results in one of the following:

    • A new WHC case is created on a taxpayer who did not meet lock-in criteria during the initial case creation

    • The AW2 must be added to the WHCS taxpayer record of a case created during the preceding case creation

    • The AW2 is dropped

  2. AW2 records for current year Outcomes 2 and 3 cases that have not yet been sent to Detroit Computing Center (DCC) and input to WHCS are added systemically. An annual listing is generated for cases that have already been added to WHCS by DCC.

  3. The AW2 records on the listing require manual input to WHCS. Each record on the listing contains the following data elements:

    1. Outcome type

    2. Taxpayer TIN

    3. Taxpayer name

    4. Employer name and address

    5. Employer EIN

  4. For each AW2 on the listing, research the case on WHCS and take the following actions:

    1. If there is no case on WHCS for this taxpayer, add the case using SOURCE "W2" and OUTCOME 3/REF CODE "AW2 " . Follow general processing procedures, issuing lock-in letters to the new employers as appropriate.

    2. If there is a SOURCE "W2" case on WHCS and the tax year of the AW2 matches the tax year on the TAXPAYER SUMMARY screen, add the AW2 to that case. Follow general processing procedures, issuing lock-in letters to the new employers as appropriate.

    3. If there is a case on WHCS for a tax year earlier than the tax year of the AW2, treat the AW2 as a new case, add the case to WHCS and follow general case processing procedures.

      Note:

      If the WHCS case is a referral opened within the last twelve months, take no action on the AW2.

5.19.11.6  (09-08-2014)
Referrals and Special Projects

  1. Withholding Compliance (WHC) will no longer work referral cases sent after July 11, 2014. All cases received after that will be destroyed.

5.19.11.7  (09-08-2014)
Responses and Redeterminations

  1. Responses may result from taxpayers' correspondence or telephone contacts as a result of the systemic issuance of lock-in letters on Outcome 2 cases or the manual issuance of lock-in letters on Outcome 3 cases and referrals.

  2. Responses and redeterminations are worked the same way and resolved in one of the following three ways:

    • Modify lock-in by changing the marital status and/or number of withholding allowances previously specified

      Note:

      You need to obtain spousal consent before changing the number of the taxpayer's allowances if the taxpayer is married.

    • No change

    • Release of lock-in (Release the lock-in for both the taxpayer and the taxpayer's spouse if the spouse was added to the program as a result of a modification to the taxpayer's lock-in letter.)

    Note:

    In some instances taxpayers may call in repeatedly. AMS documentation must be accurate and complete so the next tax examiner answering the call can understand the decisions made and information previously shared with the taxpayer. Do not consider a redetermination unless there is new information supporting a change. Make sure all information is documented according to IRM 5.19.11.3.3, Case Documentation

  3. In some instances a Taxpayer or Employer will call and ask us to fax the letter immediately, inform them that the letter has no signature but can be faxed. Tell them we will fax the letter and also send the IDRS letter by mail with the correct signature.

  4. Do not use a Quick Note if there is an appropriate C letter available.

  5. A taxpayer may request a copy of a 280X letter because they never received the original. Explain that we can't send the original letter and we will issue a new letter but the dates will be different. Document AMS that a new letter was sent because they did not receive the original.

    Note:

    If the employer is calling for a copy, determine if the lock in has occurred and they just lost the original for their records. If they have not received the original and they are inquiring because the employee notified them, send them a new lock-in letter and ensure appropriate time frames are followed.

  6. When the taxpayer responds that they no longer work for all of the employers listed who were issued lock-in letters, instruct the taxpayer to submit a correct and valid Form W-4 to their new employer, offer to assist the taxpayer with the Form . Document AMS.

  7. Work responses promptly since the employer has been instructed to adjust the taxpayer's withholding starting with the first pay period ending on or after 60 days from the date of the lock-in letter.

  8. When correspondence is received and contact cannot be made within 30 days from the earliest IRS received date, initiate an interim response using Correspondex Letter 2645C in accordance with Policy Statement P-21-3. For more information see IRM 21.3.3.4.2, Policy Statement P-21-3 (formerly P-6-12) Procedures.

  9. An interim response must

    • Be initiated within 30 days of the earliest IRS received date

    • Specify the date when the final determination will be mailed

    • Provide the taxpayer with WHC contact information

    Note:

    AMS will not be issuing interim letters on WHC cases.

  10. Look for indicators of fraud and/or frivolous arguments. See IRM 25.1.2.2 , Fraud Development Procedures and IRM 5.19.11.10.5, Frivolous Communications, for further information.

    Note:

    If a potential fraud referral exists, DO NOT solicit the return. DO NOT modify or release the Withholding Compliance lock-in on the account. Complete a fraud indicator check sheet. Forward the check sheet to the Collection Function Fraud Coordinator (CFFC).

  11. If the taxpayer questions the legal authority supporting the Withholding Compliance program, send Letter 3042C. See IRM 5.19.11.10.5., Frivolous Correspondence for more information.

  12. When working requests for redetermination from a taxpayer who filed jointly on the most recently due return and both the taxpayer and the taxpayer’s spouse work, compute the number of allowances using one worksheet to determine if the lock-in should be modified. You must get consent from the taxpayer’s spouse (x-ref spouse) before you lock-in the x-ref spouse and before you modify the taxpayer’s allowances:

    1. If you are unable to acquire verbal consent send Letter 2805C to the spouse for written consent and modify the TP to M000. Follow normal procedures in IRM 5.19.11.7.1.1, Information Required to Modify Lock-In.

    2. If the x-ref spouse provides verbal or written consent, add the spouse to WHCS as a separate case and follow the instructions under IRM 5.19.11.7.1.1, Information Required to Modify Lock-In. Include cross-reference SSN on both records.

    3. Document AMS history with a cross-reference to the other spouse's account.

  13. If an employer responds that a taxpayer no longer works there, document AMS and close the case.

    Note:

    Do not update IDRS or WHCS. All "no longer works here information sheets" from previous revisions of Letter 2800, will be destroyed with no further action.

  14. If the employer says that he or she has no record of the taxpayer ever working there,

    • Call the employer to verify to whom the Form W-2 was issued.

    • Make "two" attempts to call the employer.

    • If unable to contact the employer, close the case.

    • If you determine that the taxpayer is still employed advise the employer to honor the lock-in letter.

    • Document AMS.

  15. If you determine that Letter 2800C was issued using an incorrect name, add the taxpayer to WHCS. Add the new case using the correct name by using Source Code "MM" .

    If ... Then ...
    If the taxpayer meets minimum wage requirements
    • Reissue the lock-in letter using the name provided by the employer or the name from the Form W-2.

    • Update the new record on WHCS with the letter information.

    • Update AMS.

    • Input TC 972 AC 146 with Disposition Code "SSN" to the existing WHCS employer record.

    • Do not update IDRS.

    If the taxpayer does not meet minimum wage requirements for lock-in letter issuance
    • Input TC 972 AC 146 with Disposition Code "SSN" to the existing WHCS employer record and IDRS.

    • Input TC 972 AC 146 with Disposition Code "LEM" to WHCS on the new case.

  16. In some instances you may need additional information from the taxpayer to make a case determination. Make at least two attempts to contact the taxpayer by telephone at different times of the day/evening before writing to the taxpayer. Each attempt to contact must be documented on AMS.

  17. If you are unable to contact the taxpayer by telephone, send Letter 4243C listing the information required to resolve the case. Document AMS with requested information.

    Reminder:

    Issue an interim response for written responses from the taxpayer on or about the 23rd day if you can't resolve the case within 30 days.

  18. Non-Owner of the SSN communicates with the IRS and claims the lock-In-letter is incorrect.

    1. If the individual calling is "inappropriately" using another taxpayer's social security number for purposes of employment and a Lock-In letter was issued on the "borrowed" social security number, do not disclose any of the SSN owners information.

    2. The non-owner of the SSN will not be released or modified.

    3. Refer them to the SSA for help in getting an SSN. Any employee who is legally eligible to work in the US and does not have a SSN can get one by completing Form SS-5, Application for a Social Security Card, and submit the necessary documentation. The taxpayer can get this form at SSA office, from the SSA website at www.socialsecurity.gov, or by calling 1-800-772-1213 .

    Note:

    For further guidance on ID Theft information refer to IRM 10.5.3, Identity Protection Program.

  19. If the taxpayer has filed under a different TIN (such as an ITIN, Temporary TIN, other SSN) verify that the wages shown on the W-2 form(s) were reported. If the wages were reported, follow procedures in the table below:

    If Then
    The taxpayer has a valid SSN to work and has filed and paid the most current return due under a valid ITIN Release the lock-in
    • Issue Letter 2809C and Letter 2813C

    • Input TC 972 AC 146 with TC 972 Disposition Code "CPL"

    • Update the WHCS Taxpayer Detail screen with the TIN the taxpayer files under

    • Update AMS on both TIN's that the taxpayer files under and the actions taken

    Note:

    Advise the taxpayer that if future W-2 forms and TIN's do not match, they may be locked in again.

    If the taxpayer has filed the most current return due but has a balance due
    • Follow general procedures

    • Compute allowances

    • Issue modification letters as appropriate

    Note:

    Advise the taxpayer that if future Forms W-2 and TINS do not match, they may be locked in again.

    The non-owner of the SSN filed a return under ITIN
    • The individual calling is inappropriately using another taxpayer's SSN for purposes of employment and a Lock-In letter was issued on the borrowed SSN, do not disclose any of the SSN owner information.

    • The non owner of the SSN will not be released or modified.

      Note:

      Refer them to the SSA for help in getting an SSN. Any employee who is legally eligible to work in the US and does not have a SSN can get one by completing Form SS-5, Application for a Social Security Card, and submit the necessary documentation. The taxpayer can get this form at SSA office, from the SSA website at www.socialsecurity.gov, or by calling 1-800-772-1213.

    • For further guidance on ID Theft information refer to IRM 10.5.3, Identity Protection Program.

  20. If the taxpayer has not filed

    1. Advise the taxpayer that all income must be reported on a tax return.

    2. Refer them to the Social Security Administration (SSA) for help in getting an SSN.

      Note:

      Any employee who is legally eligible to work in the United States and does not have a social security number can get one by completing Form SS-5, Application for a Social Security Card, and submitting the necessary documentation. The taxpayer can get this form at SSA offices, by calling 1-800-772-1213, or from the SSA website at www.socialsecurity.gov. If the taxpayer is not eligible to obtain an SSN, refer the taxpayer to the IRS toll-free number or www.irs.gov for information about getting an ITIN. See Pub 1915 , Understanding Your IRS Individual Taxpayer Identification Number (ITIN) for additional information.

    3. Set deadline for filing.

    4. Follow general procedures to compute allowances and issue modification letters as appropriate.

  21. When speaking to the taxpayer, use SUMRY and IMFOLI to determine if there are delinquent returns and/or balances due.

    1. For delinquent returns, instruct the taxpayer to file and set a deadline of 30 days.

    2. Advise the taxpayer that failure to file by the deadline could result in substitute for return processing, referral to Examination, or summons. Enter deadline date in AMS history.

    3. See IRM 5.19.11.3.7., Installment Agreement (IA) Taxpayers for installment agreement requests and revisions procedures.

  22. "-S" freeze is a disaster Indicator for taxpayers in a minor disaster area. This freeze does not stop WHC processing. If the taxpayer self-identifies and qualifies for the "-S" freeze, verify that the taxpayer’s zip code is among those of the affected areas during the disaster period. See IRS Disaster Assistance Program for affected zip codes. See IRM 25.16.1.6.1, -S Freeze for instructions on manually setting the "-S" freeze.

  23. If the taxpayer calls after modification has been processed and says that the employer will not honor the Form W-4 submitted by the taxpayer that results in MORE income tax withholding than was specified in the modification letter, send Letter 4074C to the employer.

  24. Correspondence or telephone calls received from IRS employees can be worked by any WHC employee if they don't know the IRS employee. See IRM 5.19.11.5.4., IRS Employees (IRS)

5.19.11.7.1  (09-08-2014)
Modify Lock-in

  1. Taxpayers may call in or send the Service additional information and request that we reconsider our proposed or previous lock-in determination.

  2. Look for special situations. Research IDRS for freeze codes associated with Outcome 3 cases. Follow instructions contained therein.

  3. In many instances the taxpayer's correspondence will contain a new Form W-4 and completed worksheet.

    1. Review the Form W-4 and worksheet for accuracy. DO NOT take any action based on an invalid Form W-4. See IRM 5.19.11.3.5, Invalid Form W-4 for more information.

    2. If the taxpayer did not submit a Form W-4 worksheet, prepare one based on current taxpayer information confirmed by taxpayer communication and/or your research. Use judgement in determining credibility and the need for verification. Follow guidelines in See IRM 5.19.11.7.1.2., Calculating Withholding Allowances, for calculating withholding allowances.

    Reminder:

    Base the withholding allowance calculation on the taxpayer's current situation.

    Example:

    If the taxpayer's most recently filed return showed itemized deductions of $50,000 confirm with the taxpayer that they project the same amount for the current year before using this amount for the withholding calculation.

  4. If the taxpayer calls, complete the worksheet while the taxpayer is on the telephone. Try to resolve the entire case by phone. Oral testimony is acceptable. Use judgement in determining credibility and the need for verification.

  5. If the taxpayer response states that they furnished a new Form W-4 to their employer, work the response as a redetermination.

  6. When verification is required on Personal Allowances worksheet items, attempt to validate the information from internal sources before contacting the taxpayer.

  7. When verification is required on Deductions and Adjustments worksheet items or Converting Credits to Withholding Allowances worksheet, allow only those amounts that can verified on the most recent return due, including RTVUE/TRDBV for returns in processing; or the immediate prior year return when the most recent return due is not available.

    Reminder:

    An Automated Substitute for Return (ASFR) return is not considered to be a return for verification purposes.

  8. When working correspondence, check the most recent IRPTR and WHCS to identify all current employers. When talking to the taxpayer on the telephone ask them for the names and addresses of all current employers.

    1. If not already listed, add these employers to WHCS and document the AMS history.

    2. If the taxpayer indicate they no longer work for an employer listed on the most current IRPTR, document AMS history.

  9. See IRM 5.19.11.7, Responses and Redeterminations, for procedures regarding modifying the lock-in if the taxpayer is married and wants to change the number of allowances.

5.19.11.7.1.1  (09-08-2014)
Information Required to Modify Lock-in

  1. If the taxpayer has not filed the most recent return due or the information they provide does not match return or internal source information, the taxpayer must provide documentation, as applicable, to support the request for modification. See the table below for required documentation:

    If the taxpayer and then request
    Is married and previously filed "Single" status Intentionally left blank X-ref spouse's SSN and current year filing status. You will need spousal consent to add the x-ref spouse in order to modify the allowances to the maximum amount. If unable to get verbal consent on the phone send Letter 2805C for written consent and modify TP to "M000" .
    Can supply SSN(s) of all dependent(s) he or she wants us to consider when computing his or her withholding allowances The SSN(s) can be verified through internal sources No further action is necessary
    Has not supplied the SSN(s) of any dependent(s) he or she wants us to consider when computing his or her withholding allowances We are unable to verify SSN(s) and dependent status through internal sources Copies of birth certificate(s) and social security card(s)
  2. The following deductions and adjustments must be verified by the most recent return due, including RTVUE/TRDBV for returns in processing; or the immediate prior year return when the most recent return due is not available:

    • Child or dependent care expenses

    • Schedule A deductions (including home mortgage interest, charitable contributions, real estate, state and local taxes, medical and miscellaneous expenses)

    • Adjustments which decrease adjusted gross income such as alimony payments, student loan interest and Individual Retirement Account (IRA) contributions

  3. If the correspondence is insufficient to complete the worksheet, contact the taxpayer by telephone to secure the missing information.

  4. If you are unable to talk to the taxpayer and resolve the issue, send Letter 4243C requesting the required information.

    Reminder:

    Give the taxpayer a two week deadline to respond.

  5. Document AMS with the deadline set and specific information requested to complete the redetermination. When the taxpayer responds, any tax examiner can then complete the case.

5.19.11.7.1.2  (09-08-2014)
Calculating Withholding Allowances

  1. The Form W-4 worksheet and, if required, the worksheets and tables in Publication 505, Tax Withholding and Estimated Tax, will be used to figure the correct status and number of withholding allowances for the taxpayer.

  2. Secure the information necessary to complete the worksheets from the taxpayer or their authorized representative.

    If ... Then ...
    Working correspondence and the information submitted by the taxpayer is insufficient to figure the correct number of withholding allowances
    • Contact the taxpayer or their authorized representative by telephone to obtain the additional information.

    • Make at least two attempts to reach the taxpayer by telephone at different times of day before initiating correspondence.

    You are speaking to the taxpayer
    • Complete the worksheet at that time.

    • It is not necessary for the taxpayer to submit the form in writing.

    The taxpayer is current in filing
    • Compare the taxpayer's information regarding marital status, dependents, income, deductions and credits to the last return filed.

    • Research using CC RTVUE and CC IRPTR.

    • Discuss and resolve any significant discrepancies with the taxpayer.

    • Document the explanation in the history.

    The taxpayer is a nonfiler Explain to them that submission of the tax return will provide sufficient verification.

    Note:

    Ask the taxpayer to file the original return(s) according to the instructions on the Form 1040, U.S. Individual Income Tax Return or any notices he/she has received and fax or mail the Withholding Compliance Unit a copy.

  3. When appropriate, written verification should be requested . Examples are listed below but are not all inclusive.

    1. Current income has decreased more than 20% from the preceding year.

      Example:

      According to IRPTR, the taxpayer had wages of $75,000 last year. The taxpayer tells you his wages have decreased to $55,000. Request a recent pay stub from the taxpayer to verify.

    2. Schedule A expenses have increased more than 20% from the preceding year.

      Example:

      The taxpayer tells you that his mortgage interest expense is currently $18,000 per year. According to IRPTR, the taxpayer paid $10,000 in the preceding year. Request verification ( e.g. A current copy of their bill showing interest and multiply by 12) of the mortgage interest amount.

    3. Changes in filing status and/or number of dependents.

      Example:

      The taxpayer currently claims a different filing status and/or number of dependents from the preceding year. Verify the filing status of secondary spouse, if applicable. Ask the taxpayer for the SSN's and birth dates of dependents.

      Reminder:

      Child tax credits can only be claimed for dependents under age 17.

  4. APO/FPO addresses may indicate that the taxpayer is either in the military or works for the federal government. If the taxpayer is in the military or works for the federal government, they do not qualify for the foreign earned income or foreign housing exclusion (reported on Form 2555, Foreign Earned Income). If the taxpayer has an APO/FPO address, you must determine if they are in the military or working for the federal government through research or contact.

    1. If you determine that the taxpayer is not in the military or working for the federal government, the Form 2555 can be used for calculating withholding allowances.

    2. If you determine that the taxpayer is in the military or working for the federal government, Form 2555 should not be considered in calculating withholding allowances.

    Note:

    For joint filers, one spouse may qualify while the other does not. The qualifying spouse may complete a separate Form 2555. Disregard any erroneously filed Forms 2555 attached to the return when calculating the number of allowances.

    Example:

    Taxpayer A has an APO address. Research and contact confirms his employer is neither military nor federal government. Taxpayer filed Form 2555 which can be used to calculate appropriate withholding allowances based on current situation.

  5. After calculating the correct number of allowances, inform the taxpayer that we will send their employer(s) a letter revising the marital status and number of allowances previously specified in Letter 2800C.

  6. If the taxpayer requests fewer allowances than what was calculated to be the correct number, advise the taxpayer to submit Form W-4 claiming the requested number of allowances to his employer.

    1. Advise the taxpayer that our letters instruct the employer to honor the Form W-4 ,
      if the withholding rate,
      withholding allowances,
      any additional amount claimed on the employee's current Form W-4 ,
      or a new Form W-4
      will result in MORE income tax withheld than at the withholding rate and withholding allowances specified in the letter.

    2. Offer to send the employer Letter 4074C.

5.19.11.7.1.2.1  (09-08-2014)
Calculating Allowances for Married Taxpayers or Taxpayers with More Than One Job

  1. You must complete the Two-Earner/MultipleJobs Worksheet on the back of the Form W-4 if

    1. The taxpayer filed the most recently due return jointly and both spouses work, or

    2. The taxpayer has more than one job, and

    3. The combined earnings from all jobs exceed the amounts listed on line H of Form W-4.

    4. Verbal or written consent (Letter 2805C ) is necessary to lock-in the taxpayer's spouse (x-ref spouse).

  2. This worksheet will reduce the number of allowances the taxpayers are otherwise entitled to, in order to avoid having too little tax withheld. The IRS recommends that all the allowances be claimed for the highest paid job and zero allowances be claimed for the other jobs. However, the taxpayers may split the allowances any way they want.

    1. If no verbal or written consent is received from the x-ref spouse, advise the taxpayer that until the x-ref spouse provides the required consent, the taxpayer’s lock-in will be modified to Married with zero allowances.

    2. If consent is given by the x-ref spouse, but the taxpayer cannot provide a complete and accurate name of the x-ref spouse’s employer to enable the tax examiner to find an EIN, advise the taxpayer that until the taxpayer provides the required information, the taxpayer’s lock-in will be modified to Married with zero allowances.

    3. AMS documentation should include
      the basis for the Form W-4 calculation,
      the specific information
      and/or all documentation requested from the taxpayer.

    Note:

    Do not compute lines 4 through 9 on the Two-Earner/Multiple Jobs Worksheet since the IRS may not require additional withholding above the amount withheld using the marital status and number of allowances specified in the lock-in letter. However, advise the taxpayers that they may elect to have additional withholding by completing a new Form W-4, Employee’s Withholding Allowance Certificate and giving it to their employer.

  3. Either the taxpayer or spouse may provide the information necessary to calculate the allowances once the x-ref spouse has given consent. Under IRC Section 6103(h)(4) you may make disclosures regarding withholding exemptions of a spouse to the other spouse.

  4. After calculating the correct number of allowances, inform the taxpayer that we will send their employer(s) a letter revising the marital status and number of allowances previously specified in Letter 2800C.

    1. Issue Letter 2808C to the employer(s) and Letter 2812C to the taxpayer.

    2. Input TC 971 AC 148 with the modified lock-in rate and cross-reference the employer EIN.

    3. Notate your actions on AMS and update WHCS.

    Note:

    If the taxpayer requests fewer allowances than what was calculated to be the correct number, advise the taxpayer that the employer(s) letters instruct them that if the withholding rate, withholding allowances, and any additional amount claimed on the employee's current Form W-4 or a new Form W-4 will result in MORE income tax withheld than at the withholding rate and withholding allowances specified in the letter, they must honor it. Offer to send the employer the Letter 4074C.

  5. Send Letter 2801C to the x-ref spouse and Letter 2800C to the x-ref spouse's employer(s) to lock in their withholding as previously determined. Input TC 971 AC 146 with the lock-in rate and cross-reference the employer EIN. Notate your actions on AMS and update WHCS.

    Note:

    Regulations provide that the earliest the lock-in letter may be effective is 45 calendar days after the date of the letter. Letter 2800C requires that the employer(s) wait 60 days before adjusting the employee's withholding to the marital status and number of allowances specified in Letter 2800C .

5.19.11.7.1.2.2  (09-08-2014)
Common Law Marriage

  1. The taxpayer may claim that they are common law married. In order to have a valid common law marriage, the taxpayer and common law spouse must

    • Live together for a significant period of time

    • Hold themselves out as a married couple

    • Intend to be married

  2. Not all states permit and/or recognize common law marriage. In order to be common law married, the taxpayers must live in a state where common law marriage is recognized or in the state where the common law marriage began. See IRM 25.15.7.5.6 , Invalid Joint Election for a list of states where common law marriage is recognized.

  3. If the taxpayer meets all three conditions in (1) above and lives in a state that recognizes common law marriage, ask the taxpayer to provide at least two of the following types of documentation to substantiate a claim of common law marriage.

    • Deeds showing title to property held jointly by both parties to the common law marriage

    • Bank statements and voided checks showing joint ownership of the accounts

    • Insurance policies naming the other party as beneficiary

    • Birth certificates naming the taxpayer and the common law spouse as parents of their children

    • Employment records listing the common law spouse as an immediate family member

    • School records listing the names of both common law spouses as parents

    • Joint credit card accounts

    • Loan documents, mortgages, and promissory notes evidencing joint financial obligations

    • Mail addressed to the taxpayer and common law spouse as "Mr. and Mrs."

    • Any documents showing that one spouse has assumed the surname of the other spouse

    Note:

    Verbal or written consent (Letter 2805C ) is necessary to lock-in the taxpayer's spouse (x-ref spouse/common law x-ref spouse).

  4. If the taxpayer meets the above criteria, treat the taxpayer as married when calculating allowances. See IRM 5.19.11.7.1.2.1., Calculating Allowances for Married Taxpayers or Taxpayers with More Than One Job for married taxpayer procedures.

  5. If the taxpayer does not meet the above criteria, treat them as single when calculating their allowances.

5.19.11.7.1.3  (02-09-2011)
Procedures for QW-4 Program Cases

  1. When contacted by the taxpayer add the case to WHCS.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for instructions on handling these cases.

  3. Cases where lock-in letters were issued by the QW-4 program will not have a TC 971 AC 146/147 transaction on Master File.
    You must input a TC 971 AC 146 to IDRS, using the current date on the current year, before inputting a modification or release transaction.
    It is not necessary to input the TC 971 AC 146 to WHCS, only the subsequent TC 97X AC 14X.

  4. When modifying a QW-4 lock-in, input TC 971 AC 148 with posting delay (1) on the current year to WHCS and IDRS.

  5. Update AMS history.


More Internal Revenue Manual