Yes, the employer is required to withhold income taxes. Chapter 9 of Publication 15, Circular E, Employer's Tax Guide, states that if an employee does not give you a completed Form W-4 (PDF), Employee's Withholding Allowance Certificate, withhold tax as if he or she is single, with no withholding allowances.

The employer is also required to withhold social security and Medicare taxes.

References:

• Tax Topic 753, Form W-4 - Employee's Withholding Allowance Certificate

No, this requirement has been eliminated. In the past, employers had to routinely send the IRS any Form W-4 (PDF), Employee's Withholding Allowance Certificate, claiming more than 10 allowances or claiming complete exemption from withholding if $200 or more in weekly wages was expected. However, Forms W-4 are still subject to review. Employers may be directed (in a written notice or in future published guidance) to send certain Forms W-4 to the IRS. The IRS also will be reviewing employee withholding compliance and you may be required to withhold income tax at a higher rate if notified to do so by the IRS.

References:

• Publication 15, Circular E, Employer's Tax Guide
• Form W-4 (PDF), Employee's Withholding Allowance Certificate
• Tax Topic 753, Form W-4 - employee's withholding allowance certificate