If the IRS indicates an employee's W-4 is invalid, what action must the employer take?

• A. Employers have no obligation to change exemptions unless notified by the employee through a new form W-4
• B. All future Forms W-4 must be sent to the IRS as long as the employee is being paid
• C. Withhold on the basis of the information provided by the IRS
• D. The employer should send notice at the end of the quarter, requesting that the employee contact the IRS to clear up the problem

Answer: (C)

The key idea is that payroll withholding must follow authoritative guidance when a W-4 isn’t usable. If the IRS says an employee’s W-4 is invalid, you aren’t to rely on the employee’s claimed allowances. Instead, you withhold based on the instructions the IRS provides in its notice. This ensures your federal tax withholding is compliant and based on official guidance, not on an unusable form. You’d continue withholding according to those IRS instructions until the employee submits a valid W-4.

Other approaches don’t fit because they either ignore the IRS notice, introduce unrelated steps (like quarterly notices), or rely on the employee’s invalid information.