IRS Wage Levy - Incorrect Amount of Exemption Claims Lead to IRS or State Scrutiny

June 8, 2012 - PRLog -- The IRS or state departments of revenue has a little known tax collection weapon that many Taxpayer's are not aware of, the dreaded "Lock-in" letter.

The program can order an employer what an employee can withhold from their paycheck for Federal Income Tax purposes without any input from the employee and without a court order.

Under the Withholding Compliance Program, the IRS can issue a "lock-in" letter specifying what the withholding rate is for an employee regardless of the employee's completed W-4.

The employer is then required to do the following:

Notify employee within 10 days of notice
Implement new withholding amount within 45 days
Notify the IRS, via fax, if employee is no longer employed with your company
Continue to implement "Lock-in" on a newly gained employees
Employer must withhold monies for the amount of "0" allowances

Once the lock in rate is effective, even If the employee disagrees with his or her employer's actions, the decision no longer rests with the employer, all changes need to be approved by the IRS.

For those employers whom choose not to comply will be held liable for the additional tax that should have been withheld from the employee.

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