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Employers are generally not required to report the information that employees claim on their Form W-4 to the IRS. However, there are specific exceptions to this general rule. According to the IRS FAQ, employers are not required to report any information that employees claim on their Form W-4 to the IRS. This is further supported by Publication 15 (2024), which states that employers are not required to report the information that employees claim on their Form W-4 to the IRS.
Nevertheless, there are circumstances under which employers must submit certain Forms W-4 to the IRS. Specifically, Treasury Decision 8706 and Rev. Proc. 99-47 require employers to submit copies of Forms W-4 in the following cases:
These forms are generally submitted quarterly along with the employer's Form 941, Employer's Quarterly Federal Tax Return. Employers may also be directed by the IRS through written notice or future published guidance to send certain Forms W-4 to the IRS.
In summary, while the default position is that employers are not required to report Form W-4 information to the IRS, they must do so in specific cases involving high numbers of withholding exemptions or claims of exemption from withholding.
Sources:
§ 3402. Income tax collected at source
Publication 15 (2024)
Publication 4268 (8/2022)
T.D. 8706
Rev. Proc. 99-47
Publication 51 (2023)
