EmployerNotTakingOutFederal&StateTaxes

My employer in California just started not taking money out of my checks for State & Federal taxes. Our employer didn't make us sign anything and didn't post any formal notification.

The employer also said that we wont get a W-2 for this pay and we will not have to file next year for these wages.

Is this legal?

No, it is not legal. The employer is required to report wages paid and the employee is required to report wages earned. Although a lot of employers do pay "under the table," it is definitely a violation of the tax law.

USC sec. 7701(a)(16) Withholding agent.
"...means any person required to deduct and withhold any tax under the provisions of sections 1441, 1442,1443, or 1461."

1441 - Withholding of tax on nonresident aliens.
1442 - Withholding of tax on foreign corporations.
1443 - Foreign tax-exempt organizations.
1461 - Liability for withheld tax.

USC Sec. 3402(a)(2) Income tax collected at source.
(1) "In general, except as otherwise provided in this section, every employer making payment of wages shall deduct and withhold...."

USC Sec. 3402(m) Employees incurring no income tax liability.
"Notwithstanding any other provicions of this section, an employer shall not be required to deduct and withhold any tax under this chapter upon a payment of wages to an employee if there is in effect with res[ect to such payment a withholding exemption certificate..."

The W-4 is a "Withholding Allowance Certificate" It is different than a "withholding exemption certificate"

Seems that by law, an employer is not required, if certain criteria are met.

They are wrong in telling you that you don't have to file. That determination is to be made by you.

Please don't listen to Crager34 on this. You could get into trouble that way.

As usual, people are being told to do things without referrance to law. Then when the law is spelled out, without advice attached (as I have done), people are told to not listen.

The law is there... read it. It makes sense and is un-deniable. I say, don't listen to people who only use "laywer" as a basis for giving advice.

Crager34, Three times I have explained to you in detail, and with citations to the Supreme Court and to the Internal Revenue Code, why you have misunderstood this area of the law. A fourth time would be a waste of time since you refuse to follow the legal reasoning.

Because your wrong. The supreme court has also stated how to interprit (sp?) the law. Basically, what the law says, is what it is.

Tell me this: Why is it that employers are supposadly required to report wages on a 1099 and/or W-2 when they are Class Five(5) tax forms? Does it stem from the filling out of a W-4? Which by the way is not a requirement. Why? BECAUSE THE LAW SAYS SO!

Need the section quoted to you about disclosing a SSN to an employer and how they are only "required" by law to ask for it? Need the section that tells you what the employer is supposed to do in a case like this?

Need a copy of a letter from the SSA stating that it is not a requirment to have a SSN, just for the purpose of working?

Of course you don't....cause you know the law.

Crager, you are confused by the facts.

Your post is correct... but misguided. The employee can file an exemption from tax form, if he/she qualifies for the exemption!!!

From your own post:
"USC Sec. 3402(m) Employees incurring no income tax liability.
"Notwithstanding any other provicions of this section, an employer shall not be required to deduct and withhold any tax under this chapter upon a payment of wages to an employee if there is in effect with respect to such payment a withholding exemption certificate...".

An example of 'exempted employee' would be someone who suffered a massive loss in a prior tax year and has sufficient 'carry-over' credits to exempt them from taxes this year... or someone who has LOTS of children and low income so that their automatic deductions exceed their tax liability.

BUT, this 'employee exemption' does NOT apply in this case (where an employer has unilaterally decided to stop taking taxes from an employees pay). It is NOT voluntary for the employer!!

Finally, we might be getting somewhere. Tell me more about this 'exempted employee' example. Specifically, the section that defines what this is.