I recently received the following letter on official IRS watermarked letterhead. If you would like a photocopy, email me with your postal location.
AUG 21 1996
Mr. Luke Stevens
Dear Mr. Stevens:
This is in response to your inquiry dated July 8, 1996, requesting a ruling on an employer's responsibility when an employee refuses to provide a Social Security Number. Your letter was referred to this office since it concerns the collection of Federal taxes.
An employer must file a Form W-2, Wage and Tax Statement, for each employee with the Internal Revenue Service (Service). If a W-2 is filed with the Taxpayer Identification Number (TIN) omitted, because the employee failed to give the employer the TIN on Form W-4, Employee's Withholding Allowance Certificate, the Service will abate the penalty assessed if the employer acted in a Responsible Manner. For your information I have enclosed the procedures for Reasonable Cause Criteria under Internal Revenue Code (IRC) Section 6724 as it applies to penalties assessed under IRC Section 6721. See page 63 for specific requrirements that apply to Taxpayer's Identification Number (TIN).
I have also enclosed a Form W-4, Employee's Withholding Allowance Certificate, which advises the employee that if they fail to complete the form, IRC Section 6109 3402(f) and Regulation 6109 requires the employer to treat them as a single person who claims no withholding allowance. The employee may request a refund for the withholding by filing a Form 1040, U. S. Individual Income Tax Return.
Thank you for giving me the opportunity to clarify the Service's position in this matter. If I can be of further assistance, please let me know.
Collection Field Operations