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Employer withheld "taxes" but did not pay them

posted 11 months ago in Legal
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    1.
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    cbee    July 26, 2010  

    The drama continues! 

    I have to keep this vague, but "someone" got hired for a local small business and the agreed amount was XX dollars an hour.

    The employeer said their were no taxes withheld because he did not have to report this employee as long as the hours /amount paid stayed below $600 every two weeks.

    Today, (this is the 4th day on the job) the employee was paid by check only X amount per hour.  The employeer said, "I withheld what would have been withheld for taxes from your hourly pay."

    !!!!

    What to do?!

    Thank you in advance! 

     
    2.
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    julies1949      

    Does your state government have a branch for Employment Standards?

    That is where I would direct any queries.

    Sounds like he is trying to pull a fast one to me.

     
    3.
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    cbee    July 26, 2010  

    I know it is not legal, I just do not know what to do.  Maybe a simple email:

    "You need to either pay me the amount we agreed upon, or I need to fill out a W4."

     
    4.
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    Buzzing bee
    EvaBostonTerrier    July 3, 2010  

    So is this supposed to be an "under the table" job?  Because I think if you earn more than like $400 a year, you have to file income taxes... (but I'm not a legal expert, I just thought I saw something like that when I did my taxes).

     
    5.
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    cbee    July 26, 2010  

    @EvaBostonTerrier:  Right.  He made it sound like it was "under the table"- not ideal, but the person needed the job however part-time.  The employer is pocketing the taxes instead of reporting them- it is just a big mess- while taking it out of the employee's pay.  I just can't decide if the person should be working for this illegal situation where they are the one getting screwed.  :/

     
    6.
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    Buzzing bee
    EvaBostonTerrier    July 3, 2010  

    Oh, I get it.  So here's my take on it.... this is putting him in a position of power over the employee.  For example, could he later decide to submit documentation that the person was an "independent contractor" thus the employee would have to pay taxes (even though he pocketed the money)?  It sounds like an uncomfortable situation for the employee to be in.  I don't know that I would want to continue working there.  It may be hard to get an outside organization involved because it's under the table (or I would suspect...)

    Maybe other bees with more experience in this area will chime in.

     
    7.
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    malisa0607    May 6, 2012   Denver, wedding in Las Vegas

    i don't know how the employer was able to withhold the correct amount of taxes if you didn't complete a W-4. 

    On the paystub, does it list the amount for federal, state, fica, oasdi, medicare?

    the rate for oasdi (or social security) should be 4.2% of your earnings (this was temporarily reduced from 6.2%)

    the rate for medicare should be 1.45% of your earnings. 

    The employer's share is 6.2% oasdi and 1.45% medicare.

    is the employer paying you as an independent contractor instead of an employee?  there's issues with this too but i don't have enough info to give you any advice.

    here's an irs link on what you can do http://www.irs.gov/compliance/enforcement/article/0,,id=106704,00.html

     

     
    8.
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    cbee    July 26, 2010  

    The Employee is paid hourly as an employee, not an Independent Contractor.

    I agree, this is a bad situation for the employee- I think the employee should refuse the situation because it is not legal.  It could cause them a lot of problems later.

     

     
    9.
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    cbee    July 26, 2010  

    Ok, I consulted my attorney.  He said never work under the table. 

    So, the employee asked to fill out a W4 on Monday, and I guess we'll see what happens next...

     
    10.
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    amnystik    April 9, 2011   Texas

    My dad was is a situation like this... I would tell the employee to leave if at all possible.

    Dad's employer "took out taxes" and was just going to pay them in when time... BUT DIDN'T So my Dad was stuck having to come up with $$ to pay his taxes AND was out the money that he should've gotten through the year.

    It was a mess.... =/

     
    11.
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    cbee    July 26, 2010  

    @amnystik:  Exactly.  My attorney said don't do it.  Always report everything.  I am glad to be learning this now, when only one week was put in (4 days).  What a hassle for your Dad!

     

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