unpaid taxes-theft?

Question

I have been working at a hair salon for five years. My boss has slowly let things go downhill. As of july she told us we are responsible for our own taxes. Fine I set aside money every week for that , well I have since found out from an old owner that my current boss hasn't paid our taxes for the first half of the year before the change was made. It was deducted each week from our paychecks, but apparently never sent in and I was told she will not have the means of paying us back, My boss doesn't know that I am aware of this, What should I do? I feel like sha stole right out of my pocket. Do I hire a lawyer call workforce commission, or what please, help.

Answer 1

What, two tax gurus? I don't know if Yahoo! is ready for that.

You are entitled to credit for income taxes that were withheld but not paid over. See the regulation cited below.

Your boss is not entitled to decide when she has to withhold and when she doesn't. What she is really trying to do is to get out of paying the employer's share of social security and Medicare, and put that burden on you. If you were an employee last year, then you are an employee this year, unless your duties have changed.

Having said that, you are responsible for any taxes that should have been withheld but weren't. You seem to have that situation under control and have acted very responsibly.

You should keep your eyes open for another job, because this boss may not be around too much longer.

You should consult a tax advisor for complete advice.

Good luck!

Answer 2

This is a sticky situation, since if you question your boss on this, you'll probably be out of a job. But it doesn't sound like things are very stable anyway, so maybe that's not a big loss.

You can call the IRS and tell them that you have reason to believe that, while taxes were deducted from your paycheck, they were never remitted to the IRS. That's a very serious offense.

Make sure you keep all your pay stubs to show what was deducted, and when you file your taxes, you can show that as paid in. You should get a W-2 for the first half of the year showing that, but if what you're hearing is true, it's hard to tell what your boss will do. If you don't get a W-2, or if you get one that doesn't show the withholding, report that to the IRS early next year if you either don't get a W-2, or get an inaccurate one.

If you can prove by pay stubs that money was withheld, you can still show it on your tax forms - the IRS will go after your boss for it, not you. They'll probably question your return though, so it'll be a hassle, but you shouldn't have to pay again.

Answer 3

You will get credit for the withheld taxes when your boss issues your W-2 in January. IRS will not penalize you because she did not deposit the taxes with them. On the other hand, the money you have been putting aside since July should be paid directly to IRS as estimated tax payments. Consult a tax professional now or look up the subject yourself on www.irs.gov. Look for Form 1040-ES and instructions. There are other issues involved here that you have no control over; so, I will not go in to those. One last tip: Keep that check stub that shows the total withholding through June; it may come in handy later.

Answer 4

one would think that when your boss withheld the money from your check that you in good faith paid your taxes. however, the irs may not see it that way. i don't know how much you make but i would not think that you are in a high tax bracket. do you get a refund every year? do you apply for the earned income credit? since we are not talking about a large amount of money the irs will not put a great deal of effort into collecting it for you. at the least your employer is guilty of misappropriation of funds (depending on if she is a corp. or not) at the most grand theft and fraud. if you don't report her to authorities you could be guilty of complicity. if you report her and it is not true you are vulnerable to a civil suit. your best bet is to talk to your boss and ask her for a copy of her quarterly payment statement. if she refuses then you will have your answer. discuss the possible solutions with her and advise her to contact the irs. the irs will not view her actions as a crime but a mistake if she brings it up to them. she may incur penalties and interest but usually no criminal charges. it your boss can not pay the money and the irs won't give you credit for the withholdings the amount misappropriated would be deductible as a financial loss due to theft. if revenge is on your mind you can contact local authorities to file charges. you may also sue her in civil court for conversion of funds. a legal term that means she took your money and converted it to her personal use. the amount we are talking about does not merit the expense of a lawyer.

Answer 5

Contact the IRS. They will send you a form to fill out and return. Hopefully you still have your check stubs. But even if you don't they will help you out.