Press 1 to End Tax Protesting
Company policies can crush protestors. The tax code requires you to reject a W-4 as invalid if anyone indicates to you, either orally or in writing, that information in it is false. That's a pretty broad statement. Aggressive company policies can fill this gap.
Take a typical encounter with a tax protestor. An employee files a W-4 on which he claims tax exempt status. Along with his form, he proudly gives you his tax protestor manifesto - hundreds of single-spaced, typed pages explaining why income taxes are illegal. Can you consider this an indication that the information in this W-4 is false? Since you know that income taxes are, in fact, legal, you can. But create a company policy that says so.
Or how about an employee who files a W-4 claiming tax exempt status and 99 allowances? This form, too, can be considered invalid. Why: It's simply not logical to claim tax exempt status and 99 allowances. You must also consider invalid W-4s on which employees write a specific dollar amount or percentage they want withheld. Why: Except for additional withholding, the form just doesn't give employees that choice.
Finally, there's the employee who amends her W-4 to claim tax exempt status, but for next week only. Adopting a company policy that uses the latest date for implementing amended forms will allow you to disregard this tax evasion strategy entirely. When is it: The latest date on which you must put an amended W-4 into effect is the start of the first pay period ending on or after the 30th day from the date you're given the new form. Will this employee want to wait at least 30 days for one week in tax evasion heaven? It's not likely.
SLATED FOR THE CIRCULAR FILE: Keeping one step ahead of new tax protestor shenanigans is good policy. Watch out for two bogus but official-looking and sounding forms, along with two equally phony notices: Form W-4T, Voluntary Withholding Agreement, Termination or Withdrawal From W-4 Agreement; and Form SSN, Citizen's Assertion of Legal Right to Withhold Disclosure of SSN. If you see them, toss them.