News & Resources

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IRS Issues Proposed Rules for Federal Tax Withholding

BY: Jyme Mariani, Esq. | 02/13/20

The IRS issued proposed regulations to update the federal income tax withholding rules and reflect changes made by the Tax Cuts and Jobs Act (TCJA) and other legislation [85 F.R. 8344, 2-13-20].

The proposed regulations are designed to accommodate the redesigned 2020 Form W-4, Employee’s Withholding Certificate, and the related tables and procedures in Publication 15-T, Federal Income Tax Withholding Methods.

New Form Not Required for Employees Hired Prior to 2020

The proposed regulations and related guidance do not require employees to furnish a new Form W-4 solely because of the form’s redesign. Employees who have a Form W-4 on file with their employer from years prior to 2020 generally will continue to have their withholding determined based on that form.

Employees Who Do Not Furnish a Form W-4

The proposed regulations also explain how employers should treat employees who fail to furnish Forms W-4. Starting in 2020, employers must treat new employees who fail to furnish a properly completed Form W-4 as single and withhold using the standard deduction and no other adjustments. Before 2020, employers were required to withhold as if the employee was single and claiming zero allowances.

In addition, the proposed regulations provide rules on when employees must furnish a new Form W-4 for changed circumstances, update regulations for IRS lock-in letters, and eliminate the combined income tax and FICA tax withholding tables.

To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!


Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Payroll Information Resources for the APA.