(1)A penalty is assessable against an employee who files an erroneous withholding statement claiming:
(a)More than 10 withholding exemptions for federal or state income tax withholding; or
(b)Exemption from withholding and the employee’s income is expected to exceed $200 per week for both federal and state purposes; or
(c)Exemption from withholding for state purposes but not for federal purposes; and
(d)As of the time the statement was made there was no reasonable basis for the statement.
(2)The penalty shall not be assessed against employes who have a reasonable basis for the erroneous statement. “Reasonable basis” includes but is not limited to the following situations:
(a)An employee in good faith files an erroneous W-4 for the first time;
(b)The employee computed the number of withholding allowances in accordance with the instructions on the Form W-4, but due to unforeseen events, the number of allowances claimed is incorrect;
(c)The erroneous W-4 was filed because the employee relied upon the advice of an individual who is qualified to practice law or public accounting in this state or an individual who is licensed by the State Board of Tax Practitioners and the employee supplied the individual with complete information connected with the advice given.
(3)The penalty shall be assessed against an employee filing an erroneous W-4 for the first time in reliance on a frivolous position or with the apparent intent to delay or impede the administration of the income tax laws of this state (or the federal government).
(4)As used in this section, a “frivolous position” includes, but is not limited to:
(a)Reference to a spurious constitutional argument;
(b)Reliance on a “gold standard” or “war tax” deduction;
(c)An argument that wages or salaries are not includable in taxable income;
(d)An argument that the Sixteenth Amendment to the United States Constitution was not properly adopted; or
(e)An argument that “unenfranchised, sovereign, free men or natural persons” are not subject to the tax laws.
Rule 150-316-0284 — Penalty,