Taking my money, without proper notification for a mistake they made -

[BnLJones]

What is the name of your state (only U.S. law)? Austin, Texas


I was notified 2 minutes before I clocked out of work on Wed 11/04 - that there was a change that was made causing my company to have to tax me on my Domestic partner Insurance.

They state that they paid $9540 and the amount of tax that I have to repay is $1525.40. They advised me that they were going to take this $1525.40 out of my check in equal amounts over the next 8 checks. "To ease this tax burden" they are going to give me a tax advance in the form of a credit equal to the withholding taxes. ie: $1525.40.

Now there were numbers to call at the bottom of the email if you had any questions. I called both numbers, one told me that all they know is that its because I have my partner and our child on my insurance. - I understand this part, I am trying to find out what is going to happen with the taxes on my check, the additional withholding, how this happened, what the $9540 was actually for. I need information why this change was made all of a sudden? etc. So, the second number I called advised me that they could not talk to me over the phone without my manager being present. This was strange in itself.

I woke up the next day to find my check sitting at roughly $460.00. They had included the $9540 on my check as "imputer income" so its not money that i was paid, but have to be taxed on. They also gave me the credit of $1525.40, and included the amount they state should be included as imputed income every month. An additional $476.13 something dollars, This is so that i am taxed correctly. My check was approximately $2360.00 before taxes, Now because they included two different types of imputer income, all of my normal taxes, my deductions for insurance, and took out the $200 per paycheck to "catch up on taxes" I was left with $400. out of $2360 they left me $400 and said that they were helping to ease my tax burden.

Two different people adv me that the $9540.00 was for the entire year, and one told me that it only covered Jan-Sept, then she said Jan-Oct. One person told me that the $476.13 should have been deducted from month check, the full amount, not the taxes on it. One person told me that I was paying the IRS and one told me I was paying my company. who knows the truth?

However, I did recieve an email from head of payroll, and spoke with the company that handles this issue and they both adv me that there was NO change, this was simply a mistake that the company had made - some of us were not taxed on our domestic partner insurance, due to a glitch in the system. Now, they want the money.

you see, I am getting so much conflicting information that I do not understand anymore what is going on. No one can provide me with answers to any of my questions. All i get is that you are being taxed for your domestic partner insurance. I need numbers to work with, that make some sense.

My biggest issue is that they notified me the day before they did this to me. I had no time for preparation.. no time to make sure that me and my family of FOUR had groceries and were able to pay our bills. See we go from pay check to pay check and this really put us into trouble.

Can they do this without notification? is this legal? Shouldnt they give ME the option to set up arrangements to pay back this money, why is it their decision when they are the ones who made the mistake, or "glitch" in the system.

See the company I work for is a billion dollar company, with a very reputable name. If there was a "glitch" in the system and I were their customer, (which I am) say - if someone didnt get the correct plan on their account and they were charged an extra $11,000 in data charges, we would correct that - "show you care and make it right they say". Why am I, an employee and customer, having to pay under their terms for a mistake THEY made?What is the name of your state (only U.S. law)?


Tell me what you think, I really need some advice! I have no idea what to do!

[ecmst12]

You're not paying the company. You're paying the government. Premiums for domestic partner's insurance must be paid after taxes, and the COMPANY'S portion that they pay for you is taxable income. I hope the federal government does something to fix this problem soon but thus far, this is just another right that married people have that you don't. Protest the law, your company is just following it.

[pattytx]

Originally Posted by ecmst12

Protest the law, your company is just following it.

Well, apparently finally. $9540 in imputed income sounds like the entire year's amount to date so far. Hopefully, they will do it on a pay-period basis in the future.

However, you need to talk to them about setting up an after tax deduction that can be deducted over a period of time for the retroactive taxes. Not saying what they are doing is illegal, but taking all the taxes at once is certainly unfair.

[BnLJones]

If i am paying money to the government, shouldnt I be the one to try and come to resolution on how to pay the money back? I do not feel that they gave me proper notification, considering the email came the day before I got paid. I had no time to prepare for this. I am not saying that i shouldnt pay the taxes, because I paid the taxes last year. They simply "forgot" to tax me all year long, and told me that when they were manually going through getting ready for tax time they caught the mistake. I am more than willing to pay the taxes, but is it fair that they take the money out of my check on THEIR terms? I am not looking for money what so ever, I just want to be treated fairly. This did not happen to everyone at my company, 3 out of the 4 people i know personally with domestic partner insurance did not have this happen to them. I would just like the opportunity to pay this money back over a longer period of time so that my paychecks are not $400 every two weeks...

[pattytx]

If i am paying money to the government, shouldnt I be the one to try and come to resolution on how to pay the money back?

No. The employer must show the income and deduct/pay the applicable taxes. That is their legal obligation as an employer.

I agree they should try to work with you because of the error and the length of time it continued before their half-a$$ed audit practices found it. And it doesn't mean they won't; have you asked?

It would not be that difficult for them to load the taxes that should have been deducted into the payroll records and set up a receivable for you to pay the amount over some period of time.

[jsmith416]

The imputed income has to be on your 2009 W-2 so even if they were to break it out as far as possible, you would still only have 2 months to get it taken care of. It's not like you could stretch it out over the next 6 months.

[pattytx]

Originally Posted by jsmith416

The imputed income has to be on your 2009 W-2 so even if they were to break it out as far as possible, you would still only have 2 months to get it taken care of. It's not like you could stretch it out over the next 6 months.

Actually, there IS a way to do that, and it's what I said earlier. They could report the imputed income as required and the applicable taxes as though they were deducted, then set up periodic payments (even into next year) as an after-tax deduction (for all intents and purposes, a loan). I've been in payroll for over 30 years, I'm not talking out of my hat here.

[jsmith416]

Originally Posted by pattytx

Actually, there IS a way to do that, and it's what I said earlier. They could report the imputed income as required and the applicable taxes as though they were deducted, then set up periodic payments (even into next year) as an after-tax deduction (for all intents and purposes, a loan). I've been in payroll for over 30 years, I'm not talking out of my hat here.

Let me make sure I understand.... you are suggesting that their payroll department file a W-2 that is known to be materially incorrect... i.e. shows payments or deductions for 2009 that did not actually happen in 2009?

On page 8 of the W-2 instructions it says that employers may be subject to penalties they "Include incorrect information on Form W-2" and it then goes on to state that a dollar amount is NEVER inconsequential.

Where in the W-2 instructions does it allow for anything like you are talking about? Where is the exception to the prohibition on reporting incorrect information? And what would happen if the employee terminated and never repaid the loan?

[pattytx]

The tax returns have to report what should have been withheld. The W-2's have to balance to the tax returns. In effect, the employer would be loaning the employee the money to pay the taxes they are reporting and the employee pays it back. Perfectly legal.

[jsmith416]

I think I misunderstood you. If you impute the income in current year so the W-2 and 941 match and then loan the employee money to compensate for the hardship of the reduced net pay just like you would any other payroll advance then that would be proper. What you cannot do, and what I thought you were suggesting, is report the imputed income on the 2009 W-2 but then not actually add it to gross wages until 2010.

[pattytx]

Originally Posted by jsmith416

I think I misunderstood you.

You did.