KELLY GRAY of Hamburg, N.J., got a stern warning from the Internal Revenue Service the other day. Falsely asking for a tax exemption, the agency said, risked imposition of a $1,500 fine and up to a year in prison.

It was, in fact, the first letter the young lady ever had received. Kelly, now six months old, got into trouble by landing a job modeling Pampers diapers and being paid $365. To comply with the law, her mother asked for a Social Security number for Kelly. But when the number didn't arrive, her mother entered her own number on the W-4 withholding tax form.That caused the computer governing such matters to frown and spit out the stern warning. If her mother had waited for Kelly's own number or indicated that the child was tax-exempt, an IRS spokesperson said, all would have been well. Adults as well as children may earn up to $3,560 without filing a tax return.

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