Have a Tax Question? Ask a Tax Expert
When you provide W4 form to your employer - you actually inform your payroll person what amounts to withhold for income taxes.
Your employer most likely received 2800C Letter that is sent because the IRS believes that you as an employee may have filed an incorrect Form W-4, Employee's Withholding Allowance Certificate.
If the IRS determines that any employee doesn’t have enough withholding, they send a lock-in letter that specifies the maximum number of withholding allowances permitted for the employee. Your employer must withhold tax as indicated in the lock-in letter by the date specified unless we notify you otherwise. This date is 60 days after the date of the lock-in letter. Once a lock-in rate is effective, an employer can’t decrease withholding unless the IRS approves it.
Once you are issued a lock-in letter, you will be given a telephone number to call the IRS for a modification. You will have 60 days to call the IRS.
A toll-free number and address for the unit handling this program is provided in the lock-in letter.
After that date, your employer must withhold income tax from your wages at a single rate with zero allowances.
Unfortunately - the IRS authorized to issue such lock-in letter.
Each allowance on W4 form means $4000 in additional deductions above your standard deduction.
If you claimed 99 allowances - that actually means - you are expecting to claim $4,000,000 in deductions.That would be very unusual - but if you can justify your claim - the IRS will withhold the lock-in letter.
Please remember that you have 60 days to discuss your issue with the IRS.
If you would not be able to negotiate - you will claim a credit for all withheld taxed on your tax return - and that amount will be credited toward your total tax liability.
The money withheld are not stolen and are not "lost" - that amount will be credited toward your total tax liability.
If withholding is more than your tax liability as you will calculated on your tax return - you will claim a a refund for over-payment.
Whatever you will be able to claim as deductions on your tax return will work.
The issue is not with that - but that the IRS believes you that you as an employee may have filed an incorrect Form W4. If you think you filed it correctly - you may simply contact the IRS and provide your reasoning.
You still have 60 days befor the lock-in letter will be in effect.
The lock-in letter allows 60 days.
If that action takes effect immediately - that means - you already received (or should receive a lock in letter ) previously and 60 day period was already run out.