<prompt> Human: I intentionally set my federal income tax withholdings to 0. Does the IRS really charge a fee if you choose to pay lump sum at the end of each year? Could anyone please direct me to the relevant documentation on this? Thanks  <response>: If you intentionally did that, you could also be liable for additional penalties. PenaltiesYou may have to pay a penalty of 500 if both of the following apply.You make statements or claim withholding allowances on your Form W-4 that reduce the amount of tax withheld.You have no reasonable basis for those statements or allowances at the time you prepare your Form W-4. There is also a criminal penalty for willfully supplying false or fraudulent information on your Form W-4 or for willfully failing to supply information that would increase the amount withheld. The penalty upon conviction can be either a fine of up to 1,000 or imprisonment for up to 1 year, or both.These penalties will apply if you deliberately and knowingly falsify your Form W-4 in an attempt to reduce or eliminate the proper withholding of taxes. A simple error or an honest mistake will not result in one of these penalties. For example, a person who has tried to figure the number of withholding allowances correctly, but claims seven when the proper number is six, will not be charged a Form W-4 penalty. However, see chapter 4 for information on the penalty for underpaying your tax. 