Legal Question in Tax Law in California

My Employer Didn't Pay My Taxes And Now the IRS is After Me

I don't know if this question goes under tax law or contract law, but here goes. For the last year of my employment (total 5 years) my employer did not withhold and pay my federal/state income taxes or social security becuase they wrongfully classified me as a contractor. When I was let go I filed a wage and wrongful termination claim. I also filed an SS-8 with the IRS to get a legal determination of my employment status.

I settled the claims with the employer and gave them the standard release of liability. After the settlement, IRS ruled I was an employee and said the employer was liable for the taxes. The employer never paid and the IRS has never gone after them for the payments. Now the IRS has hit me with a tax lien for the taxes. The employer says they don't have to pay because of the settlement even though the IRS says it is not bound by any settlement agreement.

Asked on 3/13/04, 12:27 pm

1 Answer from Attorneys

Ken Koenen Koenen & Tokunaga, P.C.

Re: My Employer Didn't Pay My Taxes And Now the IRS is After Me

If it was determined that you were an independant contractor, you would have been liable to pay the tax. If you had been an employee, the tax would have been withheld, but ultimately it is you who would have paid the tax through withholding. Did you file a tax return?

It would appear that, ultimately, you are responsible for the taxes. Your employer might be liable for penalties, or you could request that they be abated, because it was your employers duty to withhold.

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Answered on 3/13/04, 6:33 pm

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