2802C “Lock-In” Letters being Issued by the IRS

NSTPInternal Revenue Service (IRS)

2802C Lock-In Letters being issued by the IRS

2802C “Lock-In” Letters Being Issued by the IRS

The 2802C Letter, often referred to as the “lock-in” letter, has been a topic in tax blogs recently. 

What is a 2802C Letter? (from the IRS website)

This letter is a self-correcting letter. The goal is to have you, as the taxpayer, self-correct. The Tax Withholding Estimator located on this site is an effective tool to help you determine your correct withholding amount. You don’t need to take any action with the IRS. Simply fill out another W-4 with the correct withholding and give to your employer.

If you are seeing more of these in your practice, here are some anecdotal references that may help you understand why.

“It’s actually called a "lock-in” letter. It’s a letter that the IRS sends to employers to tell them to disregard the employees W4 and adjust that employees withholding (i.e. single 0). They do this so that the employee hopefully gets a refund so the IRS can offset that refund.”

“On a recent call with PPS I was told that lock-in letters would be going out soon as a new enforcement for taxpayers that owe for more than 3 years. I was told “soft letters” would go out first, encouraging taxpayers to fix it themselves and then there would be stronger letters sent to their employers with mandatory withholding to the maximum amount. I have yet to have a client receive it, but I [only] had this conversation with PPS about a month ago”

“I see lock-in letters every so often. It’s almost always people who have been playing games with their withholdings for years. This was probably a long time coming.”

A sample of the letter as well as the letter to rescind the requirement can be accessed here.