Social Security Taxes not deducted by employer

[john81]

What is the name of your state? New Jersey

Hello, I am currently working full time (not a contractor) at a university and was just informed that payroll had neglected to withdraw FICA tax from my paycheck for almost three years. It was said to be a computer error when transferring to a new payroll system. Should the university be liable to pay back these debts because the error occurred on their end? Or will I be liable to pay the back taxes? Any advice would be greatly appreciated.

[tranquility]

The question comes up occaisionally and the answer is not entirely clear. Regulations require the employer to withhold and pay over the amounts. If they do not, the IRS can collect from them both the empoyee and employer portions per regulations and revenue ruling. However, the service can also theoreticlly collect the employee portion from you (although I've never heard of it). There is also some question as to whether, if the employer pays over the amount, you have additional income from that.

The bottom line is that, unless things have changed in the last couple of years since I looked into this, the employer is going to have to pay. They will ask you to pay your portion. If you don't, the IRS can come after you for the amount. It is unlikely there is a tort the employer can sue you to receive the money and there is no statute giving them the right. Clever lawyers may find some argument about unjust enrichment and how you should have known, but I've not heard of it. Coming up with all this money may cheese off the big wigs and they can certainly fire you--depending on your state and if you are in a union or other contractual relationship with them. Until this is settled, you will have a problem with your earned rights under social security.

[abezon]

Sounds like the university had you coded as a student with a job as part of your financial aid. No employment taxes are paid in that circumstance. The school may just let things slide & get it right from now on. Unless you really want credit for social security quarters, it may be best to just tiptoe quietly away from this sleeping dog.