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  1. #1
    Join Date
    Sep 2010
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    1

    Default Are Employees or Employers Responsible for Unpaid Taxes

    I am in: CALIFORNIA. My former employer NEVER reported my bonus checks or unused/used vacation pay during my entire 5 years of employment. NOR DID I RECEIVE ANY PAYSTUBS. I called IRS twice to ask who would be expected to pay these taxes. The first person told me I WAS NOT LIABLE, the business/employer would have to pay owed taxes. The second person I spoke with told me that I WOULD HAVE TO PAY taxes on anything my employer did not report. So, which answer is correct? Am I responsible or is my former employer responsible???
    Thank you.

  2. #2
    Join Date
    Sep 2005
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    Behind a Desk
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    98,846

    Default Re: Are Employees or Employers Responsible for Unpaid Taxes

    You put the money into your pocket. If you didn't pay your income and payroll taxes, you're obligated to pay your income and payroll taxes. If your employer didn't pay its matching taxes, it's obligated to pay its matching taxes.

  3. #3
    Join Date
    Feb 2010
    Location
    CT & IL
    Posts
    5,273

    Default Re: Are Employees or Employers Responsible for Unpaid Taxes

    The IRS told you not to pay? Write that person a letter & have him send you a reply. Never heard of such an instance. Good luck with those "people".

  4. #4
    Join Date
    Dec 2007
    Posts
    2,357

    Default Re: Are Employees or Employers Responsible for Unpaid Taxes

    Now, theoretically, if you don't pay the income taxes due, the IRS could go after the employer for failure to withhold.

    Why was this not a problem when your bonuses were not taxed when you got them?

  5. #5
    Join Date
    May 2008
    Posts
    582

    Default Re: Are Employees or Employers Responsible for Unpaid Taxes

    There are employers that withhold income for payroll taxes, and issue w-2's to employees that claim that the taxes were taken out. Then the employer falls on hard times and doesn't deposit those funds to the IRS.

    The employee files a tax return and shows that the employer took out the taxes and gets credit for paying --- but in reality the money was never paid. Maybe the employee winds up getting a tax refund.

    Its not clear if these bonuses or extra income were reported on your tax return.

  6. #6
    Join Date
    Dec 2007
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    2,357

    Default Re: Are Employees or Employers Responsible for Unpaid Taxes

    Quote Quoting miss1939
    View Post
    My former employer NEVER reported my bonus checks or unused/used vacation pay during my entire 5 years of employment.
    My question is, however, how do you know that if you never got pay stubs (which you were required to receive, btw)? How do you you know you were paid correctly and if your W-2 was correct or incorrect without them?

  7. #7
    Join Date
    Jul 2007
    Location
    Florida
    Posts
    2,344

    Default Re: Are Employees or Employers Responsible for Unpaid Taxes

    1. You are required to report your income whether you receive a W-2 or not. The IRS provides form 4852 "Substitute W-2" for this purpose.

    2. Employers are required to withhold social security and medicare taxes, and depending on your W-4 specifications, perhaps income tax as well. The amount you received from the employer should be net of these amounts. I have taken the position with the IRS that the amount paid to the employee was net of taxes and that the tax money was still in the employer's bank account. The IRS will, under the right circumstances, accept this argument and go after the employer to collect the taxes.

    3. To take such a position you would need to use bank deposit records, a log book of actual receipts from your employer, or other documentation that would support how much they actually paid you.

  8. #8
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Are Employees or Employers Responsible for Unpaid Taxes

    Quote Quoting Bubba Jimmy
    View Post
    1. You are required to report your income whether you receive a W-2 or not. The IRS provides form 4852 "Substitute W-2" for this purpose.

    2. Employers are required to withhold social security and medicare taxes, and depending on your W-4 specifications, perhaps income tax as well. The amount you received from the employer should be net of these amounts. I have taken the position with the IRS that the amount paid to the employee was net of taxes and that the tax money was still in the employer's bank account. The IRS will, under the right circumstances, accept this argument and go after the employer to collect the taxes.

    3. To take such a position you would need to use bank deposit records, a log book of actual receipts from your employer, or other documentation that would support how much they actually paid you.
    I am going to disagree with this answer a little bit.

    If I am understanding the OP correctly, his employer is handling his regular pay correctly, but not necessarily handling his bonus pay and unused vacation pay correctly.

    First, he really needs to add things up to make sure that the bonus pay and unused vacation pay isn't getting included in his W2, even though the employer doesn't appear to be withholding taxes at the time he receives the money.

    Then, since he apparently already has a W2 from the company, showing his withholdings, then form 8919 is the more appropriate way to handle the rest of the money.

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