Business Notes Internal Revenue

When President Reagan signed the Tax Reform Act last month he pronounced it "fair and simpler for most Americans." Fair, perhaps, but not simpler. The IRS last week ended such wishful thinking by unveiling a new, longer and more complicated Form W-4. After the forms go out to employers next month, 100 million working Americans will have to sit down with three pages of instructions and a worksheet to calculate how many exemptions to claim for their 1987 income tax withholding. The purpose of the voluminous instructions for the new W-4, IRS Commissioner Lawrence Gibbs says, is to help ensure that "people's withholding will be reasonably close to the actual amount of tax owed." At present, overwithholding by many taxpayers results in $70 billion worth of refunds annually, and underwithholding for others generates $440 million in penalties.