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Employer not taking enough out for state tax California

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  • Employer not taking enough out for state tax California

    My employer under-deducted my California state tax by about $400.00. This left me with a tax liability to the state rather than the refund that I had anticipated. I was recently told that it is the employer's responsibility to properly deduct taxes owed on payroll and that I may be able to go to the state with my claim. One of the reasons this happened was my employer did not provide paystubs and I was unaware that he was not taking the full amount out. I was told that some employers try to do these sorts of scams because it decreases their tax liability which is why employers are ultimately responsible for incorrectly calculated taxes. Please advise.

  • DAW
    replied
    Originally posted by Lucy68 View Post
    Thank you again Daw, I have talked to the Labor Commissioner about the paystubs and while they agree that it is in violation they have told me that they do not enforce the penalties. They have told me that this is something I would have to pursue through small claims. Does this sound about right to you?
    It sounds possible. It does not sound "right". The relatred law is CLC 226 (see below). Yes it is possible for you to file a small claims court action or talk to an attorney about a general court action. But I am reading the section to say that CA-DLSE can act directly. Having said that, CA-DLSE does not care what I think and getting them to do anything is far, far beyond my ability. Sort of like saying that because it is possible for the federal government to have a balanced budget (true, because they have done it before), means that the federal government must always run a balance budget (clearly nonsense because they do not). CA-DLSE is not the federal government but they still are far beyond the ability of the average citizen to force to do anything.
    http://www.leginfo.ca.gov/cgi-bin/di...0&file=200-243
    Last edited by DAW; 11-30-2012, 02:35 PM.

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  • Lucy68
    replied
    Thank you again Daw, I have talked to the Labor Commissioner about the paystubs and while they agree that it is in violation they have told me that they do not enforce the penalties. They have told me that this is something I would have to pursue through small claims. Does this sound about right to you?

    I have processed what my tax liability should have been through paycheck city and he was taking so little out the only thing I can imagine is that he was using an old tax table...really old. My state tax taken out for the year on my W2 was $227.86 and it should have been no less than $542.95.

    Just to make it more interesting I have discovered that there were checks that had deduction taken that were not reported to the correct agencies so it looks like I will be contacting the Labor Commissioner again. I know this because he did write the deductions on some of the checks and the numbers just donít add up. He took more out than what is on my W2 and payroll report. What a mess.

    Your advice about employers is sound. I am very happy to report that I am no longer working for this person.

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  • DAW
    replied
    Start with the paystubs. Use the cite I gave you. That is very clear law. The employer has no legal excuse.

    Withholding is less clear. Even if the employer was failing to withhold correctly, IRS and CA are very clear that it was also your responsibility to make sure that the correct amount was being withhold. The government is very clear that both parties are responsible, that the employee is required to keep an eye on what the employer is doing and make their own deposit if necessary. The paystubs are interesting but not a legally sufficent excuse for you to not deposit the income tax liability yourself. And absent the paystubs, and absent a copy of the withholding forms, it is hard for you to prove that your version of events is correct. Not that IRS and CA will care. About the only time the employee has traction in these situations is when the paystubs show the income tax withholding and the employer failed to deposit. That and only that is 100% the employer's fault, and even then, the government will want to see paystubs and maybe even bank statements from the employee.

    I do not have enough information to say for sure, but so far, it sounds like you are working for a bad employer. Sometimes the only cure for a bad employer is to find a good employer.

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  • Lucy68
    replied
    Thank you DAW, I had claimed zero on my w4 to avoid a situation like this. After sending certified letter for records Employer states he no longer has W4, timecards etc. Even though this is within the three year requirement for records in CA.

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  • DAW
    replied
    It is the employer's responsibility to provide paystubs. See question #8 below.
    http://www.dir.ca.gov/dlse/FAQ_Paydays.htm

    Regarding withholding the correct tax, that is a little more complicated. You submit a withholding form and if the form is legally valid, the employer is supposed to follow the instructions YOU gave them on the form. It is perfectly possible for the employer to do exactly what you told them to do, and you still have taxes due at year end. Which would not be the employers fault. It would be yours for giving them bad instructions. The employers liability (if any) is a function of failing to follow the withholding rules spelled out in DE-44. I am going to give you a pointer to PayCheckCity, which is a good on line payroll calculator. If you know what the instructions (W-4 or DE-4) you gave your employer said, you can recheck your results.

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