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Employer not withholding state or federal tax Alabama

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  • Employer not withholding state or federal tax Alabama

    I work for a small company that has <10 employees. We all do the same job, with similar duties and responsibilities. I, however, am not being paid as an employee. I know I can file a Form SS-8 with the IRS and force an audit to have my status changed to Employee. Then by filing Form 8919, I will only be held liable for my portion of SS and Medicare taxes. My question is this: is it really worth it? What is the IRS going to do really? Is it worth losing the only job I can find in this city? Am I going to wind up being fired for nothing? Can/will the IRS do more than give them a little slap on the wrist? And if I file these forms with the IRS, they will fire me, but I wouldn't be able to claim unemployment because I'm certain they aren't paying it... Is there a remedy for that?

    Next question, same situation... There are at least two other employees that work at the same company and in the memo line of their checks it says, "Expenses" and there are no Fed. or State taxes being taken out. Is it possible they are trying to keep the number of employees to a minimum for insurance and liability purposes? It's obvious that they are not paying taxes on these employees or myself, and I know that we make enough to have them deducted. I've worked for less money and had less hours, yet fed. and state taxes were taken each pay period...

  • #2
    I honestly don't know. Are they withholding FICA/Medicare taxes? Assuming the answer in this is "no", theoretically................

    The IRS will fine the employer and bill them for the taxes they should have withheld, plus penalties and interest.

    They may or may not report this to the state for state income tax purposes.

    It is not out of the question that they would also do a more complete audit and find that other employees are misclassified as well.

    Could you be fired? Yes, I guess so.

    Could you receive unemployment? Actually, possibly. The state unemployment commission would also go after the employer for unemployment taxes they should have paid. And some states have a fund from which they pay UI benefits for workers who have been misclassified, but I don't know if Alabama is one of them.

    There's basically only two reasons a company will misclassify an employee; the first is they really don't know the law (which is no excuse). The second and most common by far is to save money.

    Emotionally, my answer is that if companies can't afford to treat employees in accordance with all the applicable laws, they shouldn't have employees. But I've personally never been in your situation, so it's hard for me to recommend an action. You could stick it out until you can find another job, then address it.
    Last edited by Pattymd; 10-04-2009, 04:02 AM.
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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    • #3
      Are you really an employee of alleged firm?

      Originally posted by mommy4two View Post
      I work for a small company that has <10 employees. We all do the same job, with similar duties and responsibilities. I, however, am not being paid as an employee. I know I can file a Form SS-8 with the IRS and force an audit to have my status changed to Employee. Then by filing Form 8919, I will only be held liable for my portion of SS and Medicare taxes. My question is this: is it really worth it? What is the IRS going to do really? Is it worth losing the only job I can find in this city? Am I going to wind up being fired for nothing? Can/will the IRS do more than give them a little slap on the wrist? And if I file these forms with the IRS, they will fire me, but I wouldn't be able to claim unemployment because I'm certain they aren't paying it... Is there a remedy for that?
      Were you hired as an independent contractor?
      I am not an attorney. My personal opinions are not legal advice.

      "The only thing we have to fear is fear itself." --- Franklin Roosevelt

      The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy. --- Martin Luther King Jr.

      A trap was set once upon a time; however, the designer fell in himself!!

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      • #4
        I'm assuming the poster did the research and determined that she does not meet the criteria for IC status, hired as one or not.
        I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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        • #5
          My response was for the original poster

          Originally posted by Pattymd View Post
          I'm assuming the poster did the research and determined that she does not meet the criteria for IC status, hired as one or not.
          Originally posted by mommy4two View Post
          I work for a small company that has <10 employees. We all do the same job, with similar duties and responsibilities. I, however, am not being paid as an employee. I know I can file a Form SS-8 with the IRS and force an audit to have my status changed to Employee.
          The intent of my post was a question for the original poster. Either way it goes it seems that the alleged employer is taking advantage of a valuable resource.
          Last edited by DrumMajorChange; 10-04-2009, 03:06 PM.
          I am not an attorney. My personal opinions are not legal advice.

          "The only thing we have to fear is fear itself." --- Franklin Roosevelt

          The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy. --- Martin Luther King Jr.

          A trap was set once upon a time; however, the designer fell in himself!!

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          • #6
            Thank you both so much for your responses... I AM an employee and was hired as a PT employee and have now gone FT. I meet all the eligibility requirements for employee, not IC... Patty you are correct and I have done my research... I filled out an application and even have letters from them stating that I am en employee... It wasn't really a question of whether or not I am an employee... I, and they, know that this is the case... I am more worried about the financial and lawful responsibilities that come with them misclassifying me! They are treating me as contract labor for the simple fact of saving money, which really is gross becasue their company had revenue of $1M+ last year... I agree with exactly what Patty said, they shouldn't have a business if they don't want the expenses of said business and its employees....

            Thanks again!
            Last edited by mommy4two; 10-05-2009, 09:28 AM.

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