W4 Withholding Issues

Employer not required to obtain worker status determination before withholding taxes

Nino v. Ford Motor Company, DC MI, 102 AFTR 2d ¶2008-5215, Dkt. No. 07-13545, 8/8/08

A federal district court has dismissed an employee’s pro se (“for self”; non-attorney) complaint that he should not have had withholding deducted until his employer obtained a worker status determination from the IRS.

The employee had been claiming to be exempt on his Form W-4 when the IRS instructed his employer to disregard the W-4 and begin withholding from him as if he were a single person with no deductions. The employee argued that his employer was “statutorily required to secure a determination of Worker Status for Purpose of Income Tax Withholding” before it could begin the tax withholding process. The employee’s sole support for this premise was the existence of Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.

The court dismissed the complaint, based on the Form SS-8 instructions, which note that completion of the form is not mandatory. Page 5 of the instructions state that “neither employers nor workers are required to request a status determination, but if you choose to do so, you must provide the information requested on this form.” The court pointed out that withholding federal income tax and making payments to the IRS are mandatory duties for employers under IRC §3102(a) and IRC §3402(a).

The court also noted that when a plaintiff “is challenging federal income tax withholding, his exclusive remedy for a tax refund is an action against the United States.” The plaintiff who was the subject of this ruling chose to sue his employer, rather than the United States. He therefore would not have been entitled to any relief even if his argument had been valid.

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