It is the employee’s responsibility to complete a W-4 for the employer. The employer or any third party that processes the payroll is required to use W-4’s on file for withholding. If the employee fails to submit a completed and signed W-4, the employer is required to withhold at the higher single rate with zero allowances. There are no exceptions. If an employee’s marital status or number of allowances changes, a new W-4 is required before the employer can change the withholding. The employer may be fined $50 for each instance for failure to correctly withhold. Employers who willfully fail to comply may also be subject to criminal penalties. This form is available at www.irs.gov.
If the employee submits a false W-4 the employee may be subject to a $500 penalty.
The employee may also face criminal penalties starting at $1,000 up to $100,000 and/or jail.
For more information on this subject see Circular E.