State Payroll Taxes

[S T]

Okay for 4 years, I have an employee in California - receives a W-2 form - and now the last 4 years receives a print out for payroll checks.

Printout for payroll checks does not match the W-2 form (usually state amounts - not Federal amounts)

This is now the 4th year and when we file in the employee's tax return, Calif comes back and says they can not identify the payroll SIT withholding (probably not the Disability withholding either) and will not issue a refund check on State as filed on the Tax Return.

What we have determined is that this Employer is not filing the California Quarter reports nor is the employer paying the California Deductions from the Employees payroll and we have to continually each year file additional documentation in to obtain the employee's State tax refund. (Based on documentation that Employee has)

Question - how to handle - (with State) I have already submitted all documentation on behalf of employee - but somehow need to get this Employer into compliance - I offered submitting a "Medium High" level of letter to the Employee to provide to his Employer - regarding non payment of Employee deductions ( as in Theft) - somehow this Employer escapes too much in the way of scrutiny regarding this issue -- One would think the Calif EDD - would just shut the doors- employer is so non-compliant with filings and payments on Employee/Employer Taxes. There have been notices from Federal, so I would assume Employer is in compliance with Federal payroll reporting. It is only the State Employer Compliance.

Does anyone have experience with Employers not being compliant with Employee withholdings and can offer any suggestions

It is all my goodwill with the Taxpayer - to achieve the end result of his "refund" and no way that I can charge the Taxpayer for his Employer"s disreagrd of the payroll tax requiremets.

Frustrated

Sandy

Frustrating for the Employee - being lied to all the time by Employer and frustrating for me having to do extra work to obtain the Employee's tax refund that he is owed.

[JohnH]

In some ways this situation is similar to the dilemma faced by independent contractors who want to keep their jobs when the employer is in the wrong, but the pay is still good. Do I take an 8% hit or do i move on, possibly settlling for a job making 25% less? H-m-m, how do I decide?

If I were the employee, I'd at least claim enough exemptions for CA to reduce my refund to zero, or maybe even a small balance due. After 4 years of this, it seems that he would get the hint. He could always put the difference in w/h in a savings account and then withdraw his "refund" at tax filing time. Heck, he might even decide to leave some of it in the account (I do like to dream, don't I?)

Maybe his job is good enough that the smarter course of action is to hang on until the state closes the employer down or else the employer figures out how to pay up. (good jobs are in short supply, I hear). Anyhow, whatever he does to try and sic the state on the employer may simply hasten the day when he no longer has a job - either thanks to the state taking aggressive action, retaliatory response by the employer, or a little bit of both.

From what I've seen, state and federal are pretty lenient with employers who slip behind but can demonstrate they can pay up plus stay current. At 4-5 years out, though, the employer may be crossing into "shut em down" territory, especially if the state is already working with him and he's still a chronic abuser of the system. From what you've said, I'm guessing he's filing reports ion time, but underreporting. That's big-time trouble when the authorities finally get it figured out.

Difficult situation for sure but the cure may be less desirable than the disease, especially since he does have a way to partially manage it going forward.

[S T]

Employee

Thanks JohnH, for your thoughts, the employee is close to retirement - could be a year, might be 2 years.

The odd issue on this, is my taxpayer, says other employees have received their Calif SIT refund - but of course my taxpayer for 4 years running has the same problem - so I can not isolate. And my taxpayer has worked for the Employer for a lot of years - and already knows that the Employer has been in some sort of conflict with Fed or State Tax Issues.

I also prepare payroll and process payroll taxes for some of my small business clients, and believe me I receive notices from California EDD if something is not right, so I just don't understand how this employer is immune from some sort of enforcement and penalties from the State.

At any rate - good idea about the employee changing his withholding for State so less is withheld - so I am going to suggest that to the Taxpayer (if the Employer will make the change accordingly - Employer can't even get the current rates right - let alone issue a paystub or a year end statement and have it match the W-2 form)

Thanks for your thoughts which I will pass on to the employee/my taxpayer,

Sandy