WASHINGTON — Treasury Secretary James A. Baker III said today he has asked the Internal Revenue Service to revise the new W-4 tax withholding form, which has drawn complaints from Congress and taxpayers over its complexity.
But in the meantime, Baker said, taxpayers "better keep filling out the current form."
"I'm in the fortunate position of being able to say that when the W-4 came through for approval, I was on vacation," Baker said in testimony to the House Budget Committee.
"I have asked that there be a review," Baker said. "We're going to take another look at the W-4 and see if we can't come up with a better form."
Every person who works for an employer is required to file a new W-4 form by Oct. 1, chiefly because of the major changes in taxation brought about by the tax law that took effect Jan 1.
Taxpayers who wait until late in the year to complete the form could face penalties if they discover that not nearly enough tax has been withheld.
Twice as Big as Old
With instructions, the new form runs four pages, double the size of the old. The form itself basically is the same seven lines as in the past.
The number of exemptions claimed on previous W-4s may not necessarily be correct for 1987, as the new tax law reduces or eliminates several deductions, cuts tax rates and increases personal exemptions.
On 1987 income, each allowance claimed exempts $1,900 a year, or $36.53 a week, from withholding.
Last week, Sen. Lloyd Bentsen (D-Tex.) chairman of the Senate Finance Committee, said the form should be withdrawn and simplified.
"Although I recognize that the IRS was working under a mandate from Congress to devise a more accurate form, our goals will not be realized if workers are unable to decipher the form because of its complexity," Bentsen wrote.