Letter 2800C – Withholding Compliance

Needs Attention: Incorrect Employee Withholding

What It Means:

IRS sends Letter 2800C to employers when it determines that an employee is not withholding enough from their paycheck. Letter 2800C is known as a “lock-in letter” and outlines the maximum withholding allowances allowed for the employee.

Next Steps:

Read your Letter 2800C carefully and make the necessary updates to withholding by the date specified – typically 60 days after the lock-in letter was sent.

If the employee no longer works for you:

No changes are needed. If the employee returns to within a year, you should update their withholding per your Letter 2800C.

If you receive a revised W-4 from the employee:

Do not make any changes without IRS approval. Requests to increase withholding allowances must be sent to the IRS by the employee. If approved, you’ll be notified by the IRS. You may, however, make changes that decrease the withholding allowances.

If you allow employees to make changes to their W-4 online:

You must block them from decreasing their withholding amount.

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