Results 1 to 6 of 6

Thread: Employer withheld IL State tax from employee but did not remit to state Illinois

  1. #1
    Junior Member
    Join Date
    Jun 2008
    Posts
    1

    Default Employer withheld IL State tax from employee but did not remit to state Illinois

    Hi,

    What should an employee do if his employer withheld Illinois state income tax from his paychecks, and this was reflected accordingly on his W2, but the employer did not actually remit the funds to the state? The employee has since received a delinquent notice from the IL dept. of revenue (including penalty/interest due for non-payment of state tax). Does this employee have any liability/responsibility, or can he just direct the state to deal directly with his employer for payment? Would appreciate feedback. Thanks!

  2. #2
    Super Moderator
    Join Date
    Jun 2006
    Location
    California
    Posts
    12,265

    Default

    This is going to be a very soft answer because your state is not my state. If we were talking federal rules, IRS does not really care who they go after for their money. IRS goes after everyone and their laws are written in such a way to support this. I have heard of states that follow the same rule, but cannot say if IL is one of them.
    - Have you talked to the employer and if so, what did they say? It would be useful to know if this is a mistake of some kind or if the employer was deliberately playing games. The only paper that the state would ever get linking your name to tax deposits was the state's copy of the W2 at year end. They also get your name quarterly on the SUI reports but that would not include the SIT taxes listed by employee name, just the SUI wages. Also, even if the employer did make the deposits, a failure to file the correct W2 would cause the sort of error you are mentioning. Is not uncommon for the government to get the money and still issue penalty paperwork, because any unmatched deposits just get stuck in a suspense account.
    - Are you very sure that the Name/SSN on the W2 matches what you think it should be? It would be nice to also check the employer state EIN on the W2, but I am not sure how you would know what it should be. Maybe check prior years W2, assuming that year worked.
    - Past that talk to the state, and tell them the truth. No guarantees either way.
    - Speaking of IRS, is that deposit correct? FIT/FICA is generally so much more money then IL-SIT that it would be very strange for an employer to pocket IL-SIT while leaving the much larger withholding alone.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)

  3. #3
    Senior Member
    Join Date
    Mar 2007
    Posts
    124

    Default

    Quote Originally Posted by DAW View Post
    This is going to be a very soft answer because your state is not my state. If we were talking federal rules, IRS does not really care who they go after for their money. IRS goes after everyone and their laws are written in such a way to support this. I have heard of states that follow the same rule, but cannot say if IL is one of them.
    This is not accurate for the feds. The feds do not hold the employees responsible for an employer's failure to remit taxes that were withheld. As long as the employee has a W2 (and sometimes a last pay stub) showing that the taxes were withheld, its the employer who will be liable.

    - Have you talked to the employer and if so, what did they say? It would be useful to know if this is a mistake of some kind or if the employer was deliberately playing games. The only paper that the state would ever get linking your name to tax deposits was the state's copy of the W2 at year end. They also get your name quarterly on the SUI reports but that would not include the SIT taxes listed by employee name, just the SUI wages. Also, even if the employer did make the deposits, a failure to file the correct W2 would cause the sort of error you are mentioning. Is not uncommon for the government to get the money and still issue penalty paperwork, because any unmatched deposits just get stuck in a suspense account.
    - Are you very sure that the Name/SSN on the W2 matches what you think it should be? It would be nice to also check the employer state EIN on the W2, but I am not sure how you would know what it should be. Maybe check prior years W2, assuming that year worked.
    - Past that talk to the state, and tell them the truth. No guarantees either way.
    - Speaking of IRS, is that deposit correct? FIT/FICA is generally so much more money then IL-SIT that it would be very strange for an employer to pocket IL-SIT while leaving the much larger withholding alone.
    DAW did you submit an IL tax return with a W2 attached showing the withholding? If so, its a bit unusual for a state not to mirror the feds as far as this issue is concerned.

  4. #4
    Super Moderator
    Join Date
    Jun 2006
    Location
    California
    Posts
    12,265

    Default

    Quote Originally Posted by LdiJ View Post
    This is not accurate for the feds. The feds do not hold the employees responsible for an employer's failure to remit taxes that were withheld. As long as the employee has a W2 (and sometimes a last pay stub) showing that the taxes were withheld, its the employer who will be liable.
    The taxpayer can make that claim. Maybe the government will believe it. Maybe the government will not believe it. The federal tax code is written in such a way the taxpayer (employee) is responsible for their taxes no matter what the employer does. Also, we have not actually determined that IL follows federal law in this matter or that the employer has actually failed to deposit taxes.

    Regarding the "employee has a W2", you understand that the employee can just download the form from the IRS website and complete it with whatever numbers they want? Paystubs help, but paystubs can also be completed by the employee and there is nothing about such a claim that is automatic. At best an employee can just make the arguement and hope that government agrees with them.

    Quote Originally Posted by LdiJ View Post
    DAW did you submit an IL tax return with a W2 attached showing the withholding? If so, its a bit unusual for a state not to mirror the feds as far as this issue is concerned.
    LdiJ

    If you re-read the thread, you will see that the original poster is mksantos, not me. So, no, I did not file the IL W2 for mksantos.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)

  5. #5
    Junior Member
    Join Date
    Feb 2010
    Posts
    1

    Default Employer didn't pay withholding taxes

    I've been through this. I don't know about IL, but I would be surprised if they didn't follow the Fed. I do know that Iowa can and will put a lein against the employers home if all else fails. I saw this happen to someone I worked for. The employer quickly paid the taxes. IL, as I said, I don't know. Given the States present financial condition, who knows?

    On Federal, they go right down the line of whom had control to make Federal tax deposits, anyone's name on the company checking account and if incorporated, any and all officers of the corporation. There have even been cases of where a secretary normally made the deposits, her name was on the company checking account, her boss told her not to and she was liable for the taxes because that was their only avenue of recourse.

  6. #6
    Super Moderator
    Join Date
    Apr 2007
    Location
    Il.(near STL,Mo.)
    Posts
    15,009

    Default

    Barney, please do not reply to old threads - this thread is from 6-08 - thanks.
    Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

    Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

Similar Threads

  1. Reporting Pay/Min Hours Worked
    By LLayman in forum Wage & Hour Laws - Minimum Wage Laws
    Replies: 19
    Last Post: 03-21-2007, 11:44 PM
  2. GROSS INCOME
    By Dale Eastman in forum Federal and State Tax Law
    Replies: 166
    Last Post: 08-02-2005, 01:27 PM
  3. 861 Loser - Cabriac
    By Richard Macdonald in forum Federal and State Tax Law
    Replies: 13
    Last Post: 06-15-2005, 08:42 AM
  4. strategic question
    By Dane Metcalfe in forum Drugs
    Replies: 7
    Last Post: 01-25-2005, 06:24 PM
  5. FRCA (Large Post For Printing)
    By Lost-In-Translation in forum District of Columbia Family Law
    Replies: 0
    Last Post: 04-14-2004, 04:13 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •