Stubborn Employer

Today TaxMama hears from Gary from the Internet has this problem, “My former employer who refuses to correct my W2 for 2005—the withholding for FICA and Medicare are not at the correct percentages. They made a change in the 403b and had to adjust the taxable wages for FICA and Medicare wages.
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Since I was no longer there, they could not get the additional tax from me. Do I have any recourse to have them correct taxes sent into the IRS for my FICA/Medicare record?”

Dear Gary,

Under Internal Revenue Code Section 3402, your employer is responsible for collecting, and paying to the government, the correct amount of taxes and withholding. If they made the error, it’s up to them to correct it properly. [IRC 3402 – https://www.fourmilab.ch/ustax/www/t26-C-24-3402.html ]

If you are sure that they have under-withheld, you have three choices, as I see it.

1) Write out a specific summary of the error, including the calculation showing how much they’ve shorted your FICA and Medicare accounts.
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Send a request, by certified mail, asking your employer to make the
proper corrections within a specified time period, say 2 weeks. I don’t care if they’ve already turned you down verbally, do THIS before taking the next step.

If they turn you down, or ignore you?

2) Call IRS and see if they can help. Have a copy of the letter with the specific summary of the error, including the calculation showing how much they’ve shorted your FICA and Medicare accounts. Be prepared
to fax it to whoever takes your call.

3) Contact the Social Security Administration and let them know about the error. Again, be prepared to fax the letter.
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If none of this helps?

There’s just one last thing you can do, that will bring you quick results.

File a claim in small claims court.

a) Have someone run a computation of the error AND how much that amount would have earned for you in terms of Social Security benefits.

b) Use that total amount, or the maximum filing limit, whichever is lower, as the amount on your small claims form – plus the cost of whatever it takes to have a professional run this calculation.

[Note: It would take to long to give you the details of how I would present my case in the audio podcast, so I’ve put the suggestions in writing. You can read them and comment on the at your leisure.}

When you come to court, bring 3 copies of five things:

1) The original written communication from the company telling you about the error.

2) A written listing of all the times you contacted the company (date, time, who you spoke to) and a BRIEF summary of each call. That way you won’t have to bore the judge with a long story. Simply say, “I’ve made repeated attempts to contact them and resolve the issue, here’s the log of the calls.” And turn it over to
bailiff.

3) A copy of the certified letter you sent them, AND copies of the certified receipt and green USPS signature card.

4) A copy of the computation of the amount of their error. This is just in case the judge will limit his award to that amount only.

5) A copy of the computation of your lost benefits. You may not actually get this – but it’s a good try. And you certainly won’t get it if you don’t ask for it.

There is a chance that the Small Claims Court judge will dismiss the case, saying that you’ve brought the complaint to the wrong arena. The Court may say the matter is a labor issue and doesn’t fall under this Court’s jurisdiction. In that case, see if you can get the reason for the dismissal in writing – and file your complaint with your state’s Labor Board.
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This is a last resort, rather than a first resort, since the Labor Boards tend to be waaay over-worked and behind on their case loads.

And remember, you’ll find answers to questions about employment taxes and all kinds of tax issues, free. Where? Where else? At TaxMama.com

[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting news about the IRS Exam. Please click on the subscribe link and join us.
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  • Ask TaxMama :: Where taxes are fun and answers are free
  • IRC 3402 :: Employer’s Responsibility for Payroll Taxes

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