John Ballard - Page 3




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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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