What withholding rate should be applied when an employee fails to submit a W-4?

When an employee does not submit a W-4 form, the IRS guidelines specify that employers must default to withholding taxes as if the employee is single and claiming no allowances. This means that the withholding rate will be set at the higher tax rate, which is usually associated with the single filing status.

By applying the single status with zero allowances, the employer ensures they withhold enough federal income tax from the employee's paycheck to avoid under-withholding, which could lead to a tax bill when the employee files their tax return. This approach provides a safeguard against potential tax liabilities for both the employee and the employer, promoting compliance with tax obligations.

Additionally, defaulting to this withholding status is part of the IRS regulations designed to prevent underpayment of taxes, as employees who do not provide a W-4 are viewed as lacking the necessary information to claim allowances that might reduce their tax liability.