Tax Type
Individual Income Tax
Description
Wages subject to withholding; Employee's reporting responsibilities.
Topic
Withholding of Tax
Date Issued
10-31-1997
October 31, 1997
Re: Request for Ruling: Individual Income Tax
Dear**************
This will reply to your letter in which you (the "Taxpayer") request a ruling on your liability when an employer fails to withhold taxes from your wages. I apologize for the delay in responding.
FACTS
The Taxpayer was employed by the employer during the 1997 taxable year. The employer agreed to pay the Taxpayer $250 per week net of taxes. The employer never withheld tax, but paid the Taxpayer her $250 per week. The Taxpayer has asked whether she will be liable for the state and federal taxes which the employer failed to collect. She also questions how she can collect unemployment since the employer failed to withhold.
DETERMINATION
Employers are personally and individually liable for withholding and paying taxes on the wages of their employees as provided in Code of Virginia §§ 58.1-474 and 58.1-484, Copies enclosed. However, Code of Virginia § 58.1-467, copy enclosed, also provides that when an employer fails to withhold tax, the department shall not collect the tax from the employer if the tax has been paid by the employee. The employer may still be liable for penalties and interest. Further, regardless that the employer failed to withhold tax, the employee is responsible for reporting the income and paying the entire tax. See Public document ("P.D.") 95-119, copy enclosed.
In the instant case, the employer has not withheld tax from the Taxpayer's weekly paycheck. Thus, the Taxpayer would be liable for taxes on her entire compensation from the employer. Your correct compensation must be reflected on your year end W-2 forms. If your W-2 forms are incorrect, you must get your employer to issue you a corrected form. If you are unable to get your employer to issue you a correct W-2 form, you must contact the Internal Revenue Service. They will assist you in preparing a form 4852. Form 4852 may be substituted for a W-2 if an employer does not issue a correct W-2 form.
The Tax Commissioner lacks the authority to issue rulings on federal income tax and state unemployment tax law. Your inquiries regarding federal and unemployment tax should be directed to the Internal Revenue Service and the Virginia Employment Commission respectively. However, your concerns regarding the employer's failure to withhold will be forwarded to the proper individuals in this department.
I trust that this ruling addresses your request. If you have any questions, please contact**** at****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12888B
Rulings of the Tax Commissioner