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The Internal Revenue Service (IRS) issued new rules for 2006 for withholding on wages of nonresident employees. The goal of the new rules is to provide withholding wages that more closely approximates your income tax liability. The new rules accomplish this with new Form W-4 rules and special payroll computations for withholding on wages.

If you have previously submitted a Form W-4 to Payroll, which may include an additional withholding amount, your prior Form W-4 will remain effective. You should submit a new Form W-4 at least by the effective date of the new payroll calculations.

This information along with an example of the new Form W-4 and IRS Notice 2005-76 announcing these new rules will be posted on the Corporate Tax web site at www.finance.upenn.edu/comptroller/tax/.

If you have any questions or concerns, please  contact Mary Ann Piccolo at (215) 898-8967 or via email mpiccolo@pobox.upenn.edu.

—Corporate Tax Office

  Almanac, Vol. 52, No. 15, December 13, 2005

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