Incorrect withholdings, company was notified of their error

[taxfrustration]

What is the name of your state (only U.S. law)? WV
The company I worked for incorrectly withheld VA withholdings, after notifying them that they were withholding the wrong state, they told me "WV is not set up in our system" they'd see what they could do. Then NEVER corrected it. After providing them information from VA stating that they have an agreement with PA, MD, DC, KY & WV that I was exempt from withholding and wanted state taxes stopped, so I could pay my taxes to WV, they claimed they couldn't do that, that they would withhold WV taxes, since I worked in WV as well. They then sent me a fraudulent corrected W2 that shows WV with no employer account number. According to VA they are still holding the taxes that were paid to them for 2014.

I am working with VA to try to get the 2014 taxes returned to me, so that I can pay my WV taxes. However, I still have an issue for 2015 and am not sure how a company can get away with sending, essentially, a fraudulent corrected W2 and not withholding taxes for a state where I work and reside. How is this now my problem and how can there be no recourse to this company? I have spent HOURS upon HOURS dealing with this, between fighting with the company and also working with the 2 states to try to figure out how to correct this for me, as WV sees it that I owe them a few thousand dollars.

The company is headquarter in AZ, the local office is in VA, but I worked from home in WV, never had an office or even phone extension at that VA office.

 

[davew128]

I understand the frustration, but there's little you can do beyond what you've done. Fact is, if you're working remotely and for THEIR convenience and not yours, then they have nexus in WV and are subject to the tax laws of that state, meaning they should be withholding for you IN that state, not VA.

I don't have any bright suggestions, because truthfully you CAN'T claim the wages are VA income. Even if you did and tried to take a credit for it on the WV return, WV could rightly deny the credit claiming you were never subject to VA taxation.

 

[taxfrustration]

I understand the frustration, but there's little you can do beyond what you've done. Fact is, if you're working remotely and for THEIR convenience and not yours, then they have nexus in WV and are subject to the tax laws of that state, meaning they should be withholding for you IN that state, not VA.

I have contacted the WV Department of Tax and they said they could not force a company to remit withholding to them, that is was a company issue. How can that be? Wouldn't the state (besides the taxes from my income) want all the other fees and taxes a company has to pay when doing business in a particular state?

I don't have any bright suggestions, because truthfully you CAN'T claim the wages are VA income. Even if you did and tried to take a credit for it on the WV return, WV could rightly deny the credit claiming you were never subject to VA taxation.

The fact that after I pushed and pushed and let someone in the company's legal department know that I was not able to file my state taxes because of this, I then received a W2C that has fraudulent information on it, can't the company be held responsible for that? How can a company give an employee fraudulent information that could cause legal problems for the employee?

In addition, after speaking with WV looks like I am going to be hit with a $913.98 penalty for all of this. How am I liable for this?

 

[davew128]

I have contacted the WV Department of Tax and they said they could not force a company to remit withholding to them, that is was a company issue. How can that be? Wouldn't the state (besides the taxes from my income) want all the other fees and taxes a company has to pay when doing business in a particular state?

One would think, but until they conduct a payroll tax audit, it won't happen.

The fact that after I pushed and pushed and let someone in the company's legal department know that I was not able to file my state taxes because of this, I then received a W2C that has fraudulent information on it, can't the company be held responsible for that? How can a company give an employee fraudulent information that could cause legal problems for the employee?

They didn't give you fraudulent information...

In addition, after speaking with WV looks like I am going to be hit with a $913.98 penalty for all of this. How am I liable for this?

Because you didn't pay in the required amount of tax during the year.

 

[taxfrustration]

One would think, but until they conduct a payroll tax audit, it won't happen.

Well, I have notified the state of WV that the company was hiring and employing people within their state without being properly set up, so hopefully someone within the labor department will handle that.

They didn't give you fraudulent information...

They did give me a fraudulent W2C. The corrected 2014 W2 they sent me states that the withholdings were remitted to WV and they were in fact not. I have verified that VA has that money, not WV. I have also been in contact with the legal division of the tax department for WV and they are sending me a statement that WV never received withholdings from this company and that the W2C is incorrect. How can a company do that with no recourse?

Because you didn't pay in the required amount of tax during the year.

Taxes were being withheld from my pay and the company was notified time and time again that they were remitting to the wrong state. In addition they were told to cease withholdings so that I could have that money to pay my state taxes. The fact that they continued and supplied me with a fraudulent W2 (showing it was remitted to WV, when in fact the money was sent to VA) is why I filed an extension. So, why am I liable for the interest and penalties? Shouldn't the company that falsified a document be liable?

 

[davew128]

They did give me a fraudulent W2C. The corrected 2014 W2 they sent me states that the withholdings were remitted to WV and they were in fact not. I have verified that VA has that money, not WV. I have also been in contact with the legal division of the tax department for WV and they are sending me a statement that WV never received withholdings from this company and that the W2C is incorrect. How can a company do that with no recourse?

I don't see where its your concern. If they issued you a corrected W-2, then whether they remitted the money to WV or not is NOT your concern. If there is ever a problem, it falls on THEM not you.

Taxes were being withheld from my pay and the company was notified time and time again that they were remitting to the wrong state. In addition they were told to cease withholdings so that I could have that money to pay my state taxes. The fact that they continued and supplied me with a fraudulent W2 (showing it was remitted to WV, when in fact the money was sent to VA) is why I filed an extension. So, why am I liable for the interest and penalties? Shouldn't the company that falsified a document be liable?

Quite honestly, you're not getting this. The decision to extend without paying was yours not theirs.

 

[taxfrustration]

I don't see where its your concern. If they issued you a corrected W-2, then whether they remitted the money to WV or not is NOT your concern. If there is ever a problem, it falls on THEM not you.

You are the first person to say that it falls on THEM not me, everyone else has told me it falls on me, since there was no employer ID number on the corrected W-2.

Quite honestly, you're not getting this. The decision to extend without paying was yours not theirs.

You are not getting this.....the decision to extend was not mine, they told me they would be issuing me a new W2 and I did not get that new W2 until April 16th (and oh btw they emailed it to me, said they would put original hard copy in the mail and I STILL have not received it), so therefore I had to file an extension, in addition I did not have $4200 laying around to pay WV, especially since the money had already been taken out of my pay. If they had stop withholding like I had requested, I could have paid the money to WV myself. Since the money was not remitted to WV as the corrected W2 shows it is MY problem, because the state of WV would not allow me to use the corrected W2 that was sent to me, because it did not have a WV employer state ID number, so it appeared to be fraudulent (like I just printed the form off).

The issue at hand is the payroll person does NOT know what she is doing. She first told me I had to pay double taxes on my income to VA and WV (I have a cpa involved and she even said he didn't know what he was talking about). Then when I supplied her information from the state of VA saying I was exempt from withholdings to that state because I was a resident of WV and worked in WV. She backtracked said "oh no you aren't exempt, we have to withhold WV but I don't know how to do that" (I have all this documented in emails). Then I kept emailing her asking the status with no response, then I got their legal department involved, which was when I received the incomplete/fraudulent corrected W2. How do you file state taxes with a W2 that has no state employer ID number on it? The state would have come back to me, not have gone to the company (I've been in touch with the tax department with the state of WV and they told me, they would have come back to me).

But I spoke with the CPA we are filing an abatement, explaining that the extension was due to an employer error and therefore I should not have to pay the penalty and interest.

What I don't like about this whole thing is that 1 incompetent, lazy person can screw something up so badly and there be no recourse. It has taken me HOURS and HOURS, not to mention I first notified the company of their mistakes over 7 months ago, so it should have never gotten to this point. I will never allow a company to withhold my state taxes ever again, I will pay them quarterly myself.

 

[LdiJ]

You are the first person to say that it falls on THEM not me, everyone else has told me it falls on me, since there was no employer ID number on the corrected W-2.




You are not getting this.....the decision to extend was not mine, they told me they would be issuing me a new W2 and I did not get that new W2 until April 16th (and oh btw they emailed it to me, said they would put original hard copy in the mail and I STILL have not received it), so therefore I had to file an extension, in addition I did not have $4200 laying around to pay WV, especially since the money had already been taken out of my pay. If they had stop withholding like I had requested, I could have paid the money to WV myself. Since the money was not remitted to WV as the corrected W2 shows it is MY problem, because the state of WV would not allow me to use the corrected W2 that was sent to me, because it did not have a WV employer state ID number, so it appeared to be fraudulent (like I just printed the form off).

The issue at hand is the payroll person does NOT know what she is doing. She first told me I had to pay double taxes on my income to VA and WV (I have a cpa involved and she even said he didn't know what he was talking about). Then when I supplied her information from the state of VA saying I was exempt from withholdings to that state because I was a resident of WV and worked in WV. She backtracked said "oh no you aren't exempt, we have to withhold WV but I don't know how to do that" (I have all this documented in emails). Then I kept emailing her asking the status with no response, then I got their legal department involved, which was when I received the incomplete/fraudulent corrected W2. How do you file state taxes with a W2 that has no state employer ID number on it? The state would have come back to me, not have gone to the company (I've been in touch with the tax department with the state of WV and they told me, they would have come back to me).

But I spoke with the CPA we are filing an abatement, explaining that the extension was due to an employer error and therefore I should not have to pay the penalty and interest.

What I don't like about this whole thing is that 1 incompetent, lazy person can screw something up so badly and there be no recourse. It has taken me HOURS and HOURS, not to mention I first notified the company of their mistakes over 7 months ago, so it should have never gotten to this point. I will never allow a company to withhold my state taxes ever again, I will pay them quarterly myself.

The bolded cannot be done.

 

[taxfrustration]

The bolded cannot be done.

Yes it can....depends on what state you live in and work. If you look at a W4 form, for example the state of VA, it has a reciprocal agreement with neighboring states. So, if you live in DC, MD, WV, PA or KY and commute into VA to work (which is what I do now that I've left the screwed up company), I am exempt from state withholdings and I can remit them to WV quarterly myself.

Also, almost every state recognizes, if you had no tax liability the previous year, then you are exempt from withholding. There are many ways to have no state tax liabilities, using the alternative fuel credits and buying electric cars is the easiest way.

 

[LdiJ]

Yes it can....depends on what state you live in and work. If you look at a W4 form, for example the state of VA, it has a reciprocal agreement with neighboring states. So, if you live in DC, MD, WV, PA or KY and commute into VA to work (which is what I do now that I've left the screwed up company), I am exempt from state withholdings and I can remit them to WV quarterly myself.

Also, almost every state recognizes, if you had no tax liability the previous year, then you are exempt from withholding. There are many ways to have no state tax liabilities, using the alternative fuel credits and buying electric cars is the easiest way.

That is not how reciprocity works...but hey, go ahead and get yourself into a bind again.

Honestly, you basically caused the whole problem yourself if VA and WV are reciprocal states. You should have used a tax professional with the original W2. You would have had to file both a VA and a WV tax return, but you would not have had double liability due to the reciprocity.

 

[taxfrustration]

That is not how reciprocity works...but hey, go ahead and get yourself into a bind again.

Honestly, you basically caused the whole problem yourself if VA and WV are reciprocal states. You should have used a tax professional with the original W2. You would have had to file both a VA and a WV tax return, but you would not have had double liability due to the reciprocity.

I used a CPA.....we filed a non resident form in VA and are STILL waiting to get those funds back. But in the meantime the company issued me a corrected W2 making it look like they paid the money to WV when they had in fact NOT.

Here is the info from the back of the Virginia W4 form, that clearly states what I said above, about being exempt from Virginia withholding.

If you are not subject to Virginia withholding, check the box on this line. You are not subject to
withholding if you meet any one of the conditions listed below. Form VA-4 must be filed with your
employer for each calendar year for which you claim exemption from Virginia withholding.
(a) You had no liability for Virginia income tax last year and you do not expect to have any liability for
this year.
(b) You expect your Virginia adjusted gross income to be less than $5,000 (single), $8,000 (married,
filing a joint or combined return) or $4,000 (married, filing a separate return).
(c) You live in Kentucky or the District of Columbia and commute on a daily basis to your place of
employment in Virginia.
(d) You are a domiciliary or legal resident of Maryland, Pennsylvania or West Virginia whose only
Virginia source income is from salaries and wages and such salaries and wages are subject to
income taxation by your state of domicile.
VA DEPT OF TAXATION
2601064 REV 6/93 (back)

If I pay my taxes myself to WV, how will I get in a bind? If I had paid them myself and this company had not caused all these issues, I would not be in the mess I am in now.

 

[davew128]

I used a CPA.....we filed a non resident form in VA and are STILL waiting to get those funds back. But in the meantime the company issued me a corrected W2 making it look like they paid the money to WV when they had in fact NOT.

But there's where you are WRONG. It's NOT your responsibility to follow up with a state (or the IRS) to ensure your employer has remitted withholdings. They gave you a corrected W-2 for WV. Why you don't file now based on that is beyond me. Your EMPLOYER is the one who has to jump through hoops getting the money back from VA and to WV, but none of that is your responsibility. Your CPA got it right. You weren't subject to VA tax EVEN IF you worked there based on the reciprocity agreement. However that doesn't even come into play here.

 

[taxfrustration]

But there's where you are WRONG. It's NOT your responsibility to follow up with a state (or the IRS) to ensure your employer has remitted withholdings. They gave you a corrected W-2 for WV. Why you don't file now based on that is beyond me. Your EMPLOYER is the one who has to jump through hoops getting the money back from VA and to WV, but none of that is your responsibility. Your CPA got it right. You weren't subject to VA tax EVEN IF you worked there based on the reciprocity agreement. However that doesn't even come into play here.

According to the state of WV it is MY responsibility to make sure that taxes are remitted to them, they can not force an out of state business to remit to them, but they can force the individual that resides in their state to. The employer did NOT jump through any hoops, they did NOT get the money back from VA and remit to to WV, hence why the corrected W2 they provided was false. The company does NOT have an employer state ID, no tax account set up with the state of WV. That corrected W2 did not have enough information on it to file my state taxes.

I have now JUMPED through hoops and spent HOURS dealing with this to get the money back from VA (which I said in my first posting). The issue here, again, is that an incompetent, lazy person screwed up and then tried to cover up her screw up with yet another screw up, but nothing is going to be done about that.

Why I don't file now? I STILL don't have a W2 with enough information on it to file in WV, my CPA has reviewed it and said, we can not file with that W2. I have been in contact with the Department of Tax for the state of WV and they have provided a statement saying they received no withholdings and that the information in the W2C is false. I then will send that to the legal department at the company, so that they are aware that the payroll person provided me with a false document. Once I receive the funds from VA will pay my taxes to WV.

 

[taxfrustration]

But there's where you are WRONG. It's NOT your responsibility to follow up with a state (or the IRS) to ensure your employer has remitted withholdings. They gave you a corrected W-2 for WV. Why you don't file now based on that is beyond me. Your EMPLOYER is the one who has to jump through hoops getting the money back from VA and to WV, but none of that is your responsibility. Your CPA got it right. You weren't subject to VA tax EVEN IF you worked there based on the reciprocity agreement. However that doesn't even come into play here.

And BTW the employer told me in Dec when I first brought the mistake to her attention and asked that she correct it so that 2015 would not be this way, that she didn't know how to get the money back from VA to be able to pay WV in addition to stating the WV was not set up and there system and she wasn't sure how to get them set up.

And she went further to tell me that, taxes are the individuals responsibility NOT the employers. In fact when I brought all this to HR's attention in Feb, they told me they didn't even want to discuss it, because it was a individual issue with my taxes that I needed to take care of. What I have found from the states is the buck stops with me, even though they were withholding, I am STILL required to pay, no matter if I get the money back from VA or not, I owe WV.....all because the employer did not remit the taxes correctly.

 

[davew128]

Let me make this clear to you, because you clearly aren't getting it. If the employer withholds money from you and tells you where it went or was supposed to go, your job is done. PERIOD. Once the employer withholds the money, its on THEM to remit it to the proper place. PERIOD. That's why the employer penalties for failure to pay are so harsh. Because it shouldn't BE the employees responsibility.