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The Internal Revenue Service and Treasury Department issuedproposed regulations Tuesday that update thefederal income tax withholding rules to reflect changes made by theTax Cuts and Jobs Act and other legislation.

The proposed regs are intended to accommodate theredesigned Form W-4, to be used starting in 2020, and the relatedtables and computational procedures in Publication 15-T, Federal Income Tax WithholdingMethods, the IRS explained.

The plan provide rules on when employees must furnish a new FormW-4 for changed circumstances, update the regulations for the"lock-in letter program" and eliminate thecombined income tax and FICA (Social Security and Medicare) taxwithholding tables.

The proposed regs and related guidance do not require employeesto furnish a new Form W-4 solely because of the redesign, and theypermit employees to use the new IRS Tax WithholdingEstimator to help them accurately fill out Form W-4.

Taxpayers may still use the worksheets in the instructions toForm W-4 and in Publication 505, Tax Withholding andEstimated Tax, to assist them in filling out the formcorrectly.

The proposed regulations provide flexibility in how employeeswho fail to furnish Forms W-4 should be treated.

"Starting in 2020, employers must treat new employees who failto furnish a properly completed Form W-4 as single and withholdusing the standard deduction and no other adjustments," the planexplains. "Before 2020, employers in this situation were requiredto withhold as if the employee was single and claiming zeroallowances."

According to the IRS, employees who have a Form W-4 on file withtheir employer from years prior to 2020 generally will continue tohave their withholding determined based on that form.

To assist with computation of income tax withholding, theredesigned Form W-4 no longer uses an employee's marital status andwithholding allowances, which were tied to the value of thepersonal exemption.

Due to the sweeping tax overhaul enacted in 2017, employees canno longer claim personal exemptions. Instead, income taxwithholding using the redesigned Form W-4 will generally be basedon the employee's expected filing status and standard deduction forthe year.

In addition, employees can choose to have itemized deductions,the child tax credit and other tax benefits reflected in theirwithholding for the year.