Business Notes TAXES

Even the Internal Revenue Service sometimes admits mistakes. Bowing to public indignation over the maddeningly complex W-4 form it introduced in November, the IRS last week unveiled a simpler version. The bewildering four pages of questions and instructions in the original have been reduced to two. Further minor changes are being discussed with the Office of Management and Budget, and the new form, called W-4A, is expected to be made final this week. Said IRS Commissioner Lawrence Gibbs: "We misjudged the willingness and capacity of many taxpayers to handle the additional complexity."

The W-4, which employers use to determine how much tax should be withheld from paychecks, had to be revised this year because of the tax-reform law that took effect in January. Since the legislation disallowed many deductions, some households may have to have more tax withheld. Taxpayers can choose to fill out either the W-4 or the shorter W-4A, though 40% to 50% of employees have already completed the long form. Gibbs had a warning for taxpayers who intend to use W-4A: because it is less precise, many of them might have more money withheld than is necessary and have to file for a refund. For millions of Americans, that may be a small enough price to pay to escape the tribulation of dealing with a four-page W-4.