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IRS Says Assume Tax Cuts Expire While Watching Congress

The Internal Revenue Service told employers to withhold taxes from paychecks assuming that lapsing tax cuts would expire as scheduled and said it would issue updated tables if Congress passes an extension.

Employers should implement the higher withholding by Feb. 15, the IRS said in a statement issued 12 minutes before midnight on Dec. 31.

The Senate is expected to vote within hours on a deal between the White House and the chamber’s Republicans that would revive the expired George W. Bush-era tax cuts for annual income of individuals under $400,000 and married couples under $450,000.

The House could vote on the agreement as early as today, meaning that many workers would see no effect from the IRS ruling.

The IRS guidance also notes the expiration of a two- percentage-point cut in the payroll tax, which will affect the first paychecks of 2013. An extension of that cut isn’t part of the deal reached late yesterday by the White House and Senate Republicans.

To contact the reporter on this story: Richard Rubin in Washington at

To contact the editor responsible for this story: Jodi Schneider at

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