Is it legal for an employer to withhold extra tax money from employee checks?

Question

My mom's employer failed to pay her $200 in her last paycheck. Apparently, they did this to all of their employees. They said that they were going to issue checks for the missing amount. However, on the day they said they were going to pay the missing amount, they told everyone that the $200 had been given to the IRS and could not be given back. This is extra money above & beyond the amount they usually take out for taxes.

Is this legal?

What can she do to make sure that she is credited for the amount at the end of the year?

Is there anything she can do in the mean time to get her money back?

She is on a really tight budget; how can she prevent this from happening again?

Answer 1

She should call the IRS and check.  This does not sound right at all.  If the employer made a mistake then teh employer should pay for it not the employee.  Make sure she calls someone either IRS or Legal Aid.

Answer 2

She should be looking for a different job.  This company sounds like they are about to go under.

NO it's not legal for them to just withhold extra even if they really DID send it to the IRS - and from the way they had one story, then another, I'd guess the chances of that being true are pretty low.  The might have had to pay something extra to the IRS for THEIR taxes but I'd be real surprised if they paid it as extra withholding for their employees.

She could call her state labor department and report that she wasn't paid what was due to her.  But if the people just don't have the money, that won't get the money for your mom.

Answer 3

It sounds like the company made a big mistake.  I would recommend the employee call the IRS directly to find out what's going on.  That way, if the employer is in the wrong, the employee has documented  the wrong doing right off the bat.

Answer 4

This smells funny.  Make sure that the pay stubs reflect the withholding.  

There is no reason why they couldn't withhold less in subsequent paychecks for the IRS, until she gets her $200 back.

I would consider reporting this to the IRS.

Answer 5

what you've described is theft and..........illegal

get a lawyer

Answer 6

talk to your lawyer. He should know. If he dosent, go find another one.

Answer 7

In Tax Law - an employer is responsible for 1/2 of the IRS taxes and the employee pays the remainder of the tax - it's detailed in their check stub.  

I would advise your mom to go to the employer and let them know that she is going to file a wage complaint against them unless they can give her a break down as to why these monies were sent to the IRS.  If the can't then she should go to the a local Workforce office (employment office) and ask for a wage claim document. This will be completed, returned for notarization and then turn it in to the State Workforce Commission for processing.  If they find that the employer violated Fair Standard Labor Act then they will mandate the payment of owed funds and/or sanction and fine them.  If you find that this is the case I would also call the IRS fraud line and advise them that the employer may be defrauding them as well as employees of monies.

Answer 8

Sounds like they were probably withholding wrong and took some extra to make an adjustment.   She needs to ask them to explain it to her and tell her exactly what is going on.

Answer 9

No employer is allowed to withhold wages earned by an employee. This very illegal and needs to be brought to the state wage and hourly board immediately. There will be a hearing and they will pay the wages held and the penalties associated with that. I would like to know the outcome after you report that to the labor board.

I am including the link to the U.S. Department of Labor which will direct you to your state labor board so you may file a complaint.

http://www.dol.gov/esa/whd/flsa/

Good Luck!

Answer 10

First, If the money had been paid in you mom's name, it must be  shown on her check stub. I think the company used the money to pay their own taxes or to pay money that they didn't pay IRS earlier. THAT is illegal !!!

You mom needs to contact your state's department of Labor or Industrial Relations and file a complaint. Businesses are not allowed to short change workers to pay the bills of the business.

What most likely happened was the business held tax money as a deduction from everyone's check and spent it instead of putting it in a separate account to pay IRS. When the money was required to be sent to IRS, they didn't have it so they shorted all the employees. Businesses that operate like this need to be out of business.

Answer 11

It IS possible that the payroll department screwed up everyone's paychecks, and it IS possible that they remitted the wrong amount of tax deductions to the IRS. However, if this did in fact occur, they are correct in saying that they cannot get that money back from the IRS.

At the end of the tax year, the amount of tax your mom is required to pay to the IRS will depend on her total annual income, and she will receive the overpayments back in her tax refunds. The IRS will not give the money back before then.