Is a payroll deduction agreement mandatory?

[Patriotdiscussions]

I have heard that it is not?

Also having a problem finding statute that makes filing a w2/w4 mandatory as well.

Any help on these two?

[JamesVincent]

Explain exactly what it is that you are talking about and exactly why it is that you need to find a statute.

[Patriotdiscussions]

Sorry I will go slower.

Is

A

Payroll

Deduction

Agreement

Mandatory?

I'm thinking it must be but I have heard that it is not, which would be strange.

Does anyone know where to find out?

And would it be a w4 or is the agreement some other form?

[NYGman]

I have heard that it is not?

Also having a problem finding statute that makes filing a w2/w4 mandatory as well.

Any help on these two?

I'll bite....

If you are an independent contractor, you are correct, you would not need to complete a W4 and would net get a W2, as you are working for yourself you would get a 1099 at the end of the year, reflecting the amount you were paid. This would make you responsible for all required tax remittances, including estimated tax payments throughout the year, Social Security tax, and Medicare.

You can work for a company and be an independent contractor or you could be an employee. There are tests that can be used to determine which you are. So yes, as as independent contractor, there would be no payroll deduction, no W2/W4, and no taxes withheld at time of payment. But you would have an obligation to pay all of these directly to the IRS.

If you are asking if there is any form of employment that is not subject to withholding and Social security tax (Outside of the Parsonage exception, or an exempt recipient who has legitimately no income tax liability in the prior year) then the answer is no. You will owe tax on your income, if you earn income and it is not a negligible amount.

[Patriotdiscussions]

Thanks for the reply, I already found the info on form 2159 so I guess my only question is where can I find the code for making a w4 mandatory of an employee?

[arayder]

Sorry I will go slower. .

Please spare us the insults, PD.

It's the same thing time after time with you. . . searching though the web for ways you might avoid the law and society's convention.

Whether it's Obama care, the federal government, state auto registration, mortgages or now payroll deduction you play the haughty scholar and come around asking why you have to follow the law.

Then you insult anybody and everybody who asks you what the blazes you are talking about.

Look, I am sorry your ole daddy beat you so much when you didn't do what you were told and thus gave you a problem with authority figures. But it ain't my problem. It's your problem.

[NYGman]

I must be a glutton, but I will bite again...

The employer is required to report your income on form W2 with your name and social security number. If you do not provide a SSN, then they can't employ you, so then it doesn't matter if you give them a form or not, you wont be working there. Assuming you used your SS Card as part of your authorization to work paperwork, and the employee has your name and SSN, then for a new employee that does not give their employee a completed Form W-4, then the employee will just withhold tax as if they are single, with no withholding allowances.

So I guess you can fail to fill in a W4 correctly, or give your employer one, but this will not prevent the employer withholding, and at the default rate, they are probably over withholding, so you will loose out. Have fun with that. Better to compute your exemptions, and have them withhold the absolute minimum allowable amounts. Be forewarned, using very large numbers will result in them challenging your W4, and will require proof, just in case you were thinking of filing with 99 Exemptions.

[Patriotdiscussions]

Ok so no statute making a w4 mandatory then?

[arayder]

Still trying to work the angles, eh PD?

What next?

Are you going to ask why you being a "state citizen" is there anything in the IRS code that requires you to fill out a W-4?

-------------

I.R.C. section 3402(f)(2)(A):

“On or before the date of the commencement of employment with an employer, the employee shall furnish the employer with a signed withholding exemption certificate relating to the number of withholding exemptions which he claims, which shall in no event exceed the number to which he is entitled.”

Treas. Reg. section 31.3402(f)(5)-1(a):

"Form W-4 is the form prescribed for the withholding exemption certificate required to be filed under section 3402(f)(2)"

[NYGman]

Ok so no statute making a w4 mandatory then?

Whats the point, you will be withheld on if you don't provide one, and you will be withheld less if you properly document with a W4.

The question on whether the w4 is mandatory is irrelevant to the question of withholding on payroll. If you don't want to give your employer a W4, you will still be withheld. You will still be reported. You will also probably aggravate your employers HR department, and as an employee, you have agreed, by the nature of accepting employment, to provide certain documents, whether there is a legal requirement to do so, is irrelevant, and your employer may just decide to terminate you for not providing the required documents. That is after withholding at the maximum rates for both state and Federal withholding.

So in the end, the requirement to provide a W4 isn't relevant. If HR require it to document your withholding status, you are going to have to comply. If you don't then they may withhold at maximum, or may just terminate you. Large employers do not want to deal with these issues, and expect compliance with their requests. They don't care what you believe, or what basis in law you think you have. They are required to withhold, and want your W4 to know if you are entitled to a lower withholding rate.

[wserra]

where can I find the code for making a w4 mandatory of an employee?

Withholding is mandatory in the case of an employee:

Except as otherwise provided in this section, every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with tables or computational procedures prescribed by the Secretary.

A W4 is not mandatory. However, if an employee does not provide one, the employer must withhold at the highest rate - single, no exemptions.

It's not that hard, except for people who try to make it hard.

[arayder]

I have heard that it is not?

Also having a problem finding statute that makes filing a w2/w4 mandatory as well.

Any help on these two?

Payroll deduction is not a matter of "agreement", so your question that started the thread was nothing more than your usual disingenuous game playing!

[Famspear]

I have heard that it is not?

Also having a problem finding statute that makes filing a w2/w4 mandatory as well.

Any help on these two?

Payroll deduction is not a matter of "agreement", so your question that started the thread was nothing more than your usual disingenuous game playing!

One disadvantage that burdens folks like PD is that they come here not understanding that the regulars here have seen all this a thousand times. People like PD read this stuff on the internet, discover Quatloos, and then come here to test their new-found "knowledge."

One typical 'Dooster theory about federal tax withholding is that it is, in essence, some sort of "agreement" or "contract" from which the hapless 'Dooster can withdraw simply by refusing to sign a W-4 form, or by somehow revoking his W-4 form.

In a broad, non-technical sense, there is a sort of tacit agreement between employer and employee that the employer will withhold taxes according to the instructions provided by the employee on Form W-4. But the employer's undertaking under that "agreement" is not the essence of the employer's obligation.

The employer's obligation to withhold federal income tax is found in Chapter 24 of the Internal Revenue Code (sections 3401 through 3406). In particular, see sections 3402 and 3403.

The employer's obligation to withhold FICA tax (Social Security tax withholding and Medicare tax withholding) is found in the Federal Insurance Contributions Act, codified as Chapter 21 of the Internal Revenue Code (sections 3101 through 3128). In particular, see sections 3101 and 3102.

As should be obvious, the employee's failure to sign and deliver a Form W-4 to the employer does not negate the employer's tax withholding obligations under these statutes.

[Famspear]

...A W4 is not mandatory. However, if an employee does not provide one, the employer must withhold at the highest rate - single, no exemptions.

I believe that in general the employee is required by statute and regs to provide an "exemption certificate" in the form of a signed Form W-4 "[o]n or before the date of the commencement of employment with an employer....." Internal Revenue Code section 3402(f)(2)(A).

The statute itself contains the term "withholding exemptions." Form W-4 uses the term "withholding allowances," but I believe these two terms refer to the same thing.

Section 3402(f)(5) provides:

Withholding exemption certificates shall be in such form and contain such information as the Secretary [of the Treasury or his delegate] may by regulations prescribe.

The Treasury Regulation under section 3402(f)(2) specifically prescribing Form W-4, "Employee's Withholding Allowance Certificate," is found at 26 C.F.R. section 31.3402(f)(5)-1.

Willful failure to provide a signed Form W-4 "on or before the date of the commencement of employment" in conformity with section 3402(f)(2) and the related regulations might be, technically, a misdemeanor under Internal Revenue Code section 7203, as a willful failure to "supply any information [ . . .] at the time or times required by law or regulations [ . . . .]".

[Famspear]

I don't remember seeing any case where someone was actually prosecuted for willful failure to timely provide a Form W-4. Generally, it's willfully providing false W-4 forms that gets the tax denier in trouble.

[LPC]

It's arguable that for an employee to fail to provide a Social Security number to an employer is punishable by a $50 fine. See the Tax Protestor FAQ for details.

But a Form W-4 is not an "agreement" and, as WSerra points out above, the employer is still required to withhold taxes whether or not an employee provides a Form W-4.

Getting to what is probably the heart of the matter, refusing to provide a Form W-4 does not make you magically exempt from tax:

“Drefke argues that taxes are debts which can only be imposed voluntarily when individuals contract with the government for services and that those who choose to enter such contracts do so by signing 1040 and W-4 forms. By refusing to sign those forms, Drefke argues that he is ‘immune’ from the Internal Revenue Service’s jurisdiction as a ‘nontaxpayer.’

“This is an imaginative argument, but totally without arguable merit. 26 U.S.C. § 1 imposes upon ‘every’ individual a certain rate of income tax depending on their amount of taxable income. 26 U.S.C. § 6012 states that unmarried individuals having a gross income in excess of $4,300, and married individuals entitled to make joint returns having a gross income in excess of $5,400 ‘shall’ file tax returns for the taxable year. Considering Drefke’s gross income for 1979 and 1980, he was clearly required to file tax returns for those years.

“26 U.S.C. § 6151 states that when a tax return is required to be filed, the person so required ‘shall’ pay such taxes to the internal revenue officer with whom the return is filed at the fixed time and place. The sections of the Internal Revenue Code imposed a duty on Drefke to file tax returns and pay the appropriate rate of income tax, a duty which he chose to ignore.”

United States v. Drefke, 707 F.2d 978, 981 (8th Cir. 1983), cert. den., sub nom., Jameson v. United States, 464 U.S. 942 (1983).

The 10th Circuit Court of Appeals has also upheld the dismissal of a suit alleging a violation of civil rights when the plaintiff was fired by her employer, State Stores, after refusing to provide a signed Form W-4 with her Social Security number.

“Moreover, State Stores is not only authorized, but also legally bound to withhold and pay federal income taxes to the Internal Revenue Service. See United States v. Lee, 455 U.S. 252, 261 (1982) (upholding the constitutionality and uniform application of the Social Security Act, which requires employers to withhold social security taxes from employees’ wages, even when such withholding conflicts with an employer’s or employee’s religious or other beliefs); Payne v. Dixie Elec. Co., 330 S.E.2d 749, 750 (Ga. App. 1985) (“an employer is not only authorized but required to withhold federal income taxes from his employees’ pay”); Wilhelm v. United States, 84-1 USTC 1700, *3 (E.D. Tex. 1983) (same). Thus, State Stores’ compliance with its legal obligation to withhold taxes from its employees is not a violation of Edwards’ civil rights.”

Edwards v. Stringer, 2004 TNT 34-10, No. 03-2207 (10th Cir. 2/12/2004), (unpublished).

[Famspear]

To bring this full circle, PD started this thread with the question: "Is a payroll deduction agreement mandatory?"

I suspect that what he meant was: "Is the employee required by law to enter a payroll deduction agreement?".

The answer to that question is no, but that answer does not imply the result for which the tax deniers yearn so desperately. The result which they so intensely desire is that they can legally avoid federal income tax liability simply by refusing to provide a W-4 form, which they mistakenly believe to be nothing more than a "payroll deduction agreement" with the employer.

In actuality, the existence of a "payroll deduction agreement" is neither mandatory nor material to the worker's federal income tax liability. The worker who receives compensation incurs federal income tax liability -- regardless of the existence or non-existence of such an "agreement."

Similarly, the employer's legal obligation to withhold federal tax is not dependent on the existence or non-existence of a "payroll deduction agreement." That obligation arises by law when the employer provides compensation to the worker -- regardless of whether the worker has provided the employer with a "payroll deduction agreement" or a "Form W-4" or a moldy, thirty-three-year-old fruitcake.

[Jeffrey]

To add my two cents.

I've seen ruminations in the SovSphere about people managing to convince their employers to stop deducting taxes from their payroll but I've never seen actual proof. And based on personal experience, (namely my neighbor being jailed for failing to withold in his business), there's no way in hell that your employer would risk jail time just to indulge your bullshit. Although, there's plenty of tax evasion going on around so this would only work if you're working for an employer that's already dodging taxes.

[operabuff]

Also, if you fail to pay sufficient tax during the year either through withholding (as employee) or estimated taxes (independent contractor) you will be subject to a penalty for failure to pay estimated tax. IRC Section 6654.

[rogfulton]

I may have mentioned this in another thread here on Quatloos but feel it's apt again.

Many years ago (before I was aware of Quatloos), I was a paid preparer for one of the national chains. One filing season, a new customer brought his documents to my desk to have his 1040 prepared. I noticed the reported withholding was substantially lower than I would have expected so I asked if he had submitted a new W-4 to his employer at some point during the year. He told me his roommate had told him to check the exempt box on his W-4 so he would get all of his pay, which he did and turned in some time during the previous March.

I could tell he was sincere in his trust of the roommate and not what I have come to understand is a true beleiver. He didn't even get mad when I gave him the bad news that he owed over $3,000 and no amount of massaging the numbers could get it below that amount. I explained to him his roommate did not know what he was talking about, prepared a new W-4 for him to provide his employer and provided him with his 1040-V and payment instructions. I never saw him again so I don't know how things turned out for him, but I often wonder.