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status is unlawful2 because such change is a collection action
taken without issuing the required notice under section 6330(a).
Petitioner attached to the petition Internal Revenue Service
(IRS) Letter 2801(CG) (Employee Copy),3 dated September 13, 2005,
which states:
Why Are We Writing to You?
We are writing to you because, based on the information
we have, the amount of income tax withheld from your
paycheck will not adequately cover your income tax
liability as required by Internal Revenue Code (IRC)
Section 3402.
2 Employers are required under the Internal Revenue Code to
withhold taxes from employees’ earnings. Secs. 3401 and 3402.
Furthermore, under sec. 31.3402(f)(2)-1T(g)(2), Temporary
Employment Tax Regs., 70 Fed. Reg. 19696 (Apr. 14, 2005), the
Commissioner may review withholding certificates to determine if
the certificates are truthful and valid. The Commissioner has
authority under the regulation: “to review withholding
certificates for compliance with the internal revenue laws and to
declare invalid those certificates found not to be in
compliance.” Stonecipher v. Bray, 653 F.2d 398, 402-403 (9th
Cir. 1981) (interpreting prior version of regulations, but the
premise remains valid); see sec. 31.3402(f)(2)-1T(g)(2),
Temporary Employment Tax Regs., supra. If a person fails to
submit a valid withholding form, the regulations require that
“the employer shall withhold from the employee as from a single
person claiming no exemptions.” Sec. 31.3402(f)(2)-1(e),
Employment Tax Regs. Sec. 31.3402(f)(2)-1T(g)(2), Temporary
Employment Tax Regs., supra, provides procedures whereby the IRS
may implement a reduction in the number of withholding exemptions
permitted to an employee. Sec. 31.3402(f)(2)-1T(g)(2)(vi),
Temporary Employment Tax Regs., supra, provides procedures for an
employee to administratively change his or her withholding.
There is no evidence that petitioner followed these procedures.
3 In other situations, the Commissioner has issued IRS
Letter 2800C which is substantially similar to, and is issued for
the same reason as, IRS Letter 2801(CG).
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Last modified: November 10, 2007