Essentially my wife's 2022 employer (the company sold to another corporation at end of 2022) didn't report any wages to the SSA or IRS for that year despite giving her a W2…. And having withheld money from her account as income tax withholding, FICA, etc.

As such, our joint return is still in process. Other employees during that time have contacted her saying they discovered the same thing and have had their returns rejected outright.

This is not an experience I've had before, so I don't even know where to begin.

Has anyone had this experience? Would a CPA or lawyer be the best first step?

Wow. Never heard of that.

nomad2007 said:

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Brian Earl Spilner said:

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Sounds like someone's getting fired.

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My impression so far seems to be that nearly $1mill in money withheld for taxes from these employees' salaries never reached the treasury. I would assume someone will be not only fired, but possibly charged criminally...

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Yes that is tax fraud

I thought that the companies had to pay the gov't bi-weekly, monthly, or quarterly ?

Do some large companies not pay any SS or FICA for the entire year and then pay it all at once ?

aggiez03 said:

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I thought that the companies had to pay the gov't bi-weekly, monthly, or quarterly ?

Do some large companies not pay any SS or FICA for the entire year and then pay it all at once ?

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I work for my own business with a much smaller fraction of employees than my wife's employer and I'm required to pay bi-weekly and report a 941 on wages paid quarterly….. all tied to my EIN.

The contact for the previous owner of the company is saying the taxes were paid but that the reporting must have gotten mixed up with another EIN…. Except my wife would have wages reported under her SS number regardless of if the EIN was messed up.

It's all stinking a whole lot, and I'm almost certain we won't see our refund for a long time until this is resolved, if ever.

Yuck, sorry to hear that. Whoever was over that is in a world of hurt once someone gets assigned to it.

What a mess.

I wouldn't give the IRS too much credit. If the company paid the taxes and messed up the EIN, the IRS wouldn't know. And once it was brought to their attention, it might take months for them to sort it out. And that's if you deal with agent that gives a damn.

nomad2007 said:

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aggiez03 said:

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I thought that the companies had to pay the gov't bi-weekly, monthly, or quarterly ?

Do some large companies not pay any SS or FICA for the entire year and then pay it all at once ?

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I work for my own business with a much smaller fraction of employees than my wife's employer and I'm required to pay bi-weekly and report a 941 on wages paid quarterly….. all tied to my EIN.

The contact for the previous owner of the company is saying the taxes were paid but that the reporting must have gotten mixed up with another EIN…. Except my wife would have wages reported under her SS number regardless of if the EIN was messed up.

It's all stinking a whole lot, and I'm almost certain we won't see our refund for a long time until this is resolved, if ever.

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Yeah, that doesn't pass the smell test. Should be a simple matter to find out what EIN was used on the filings. And you are correct, no matter the EIN used, her earnings should still be on file under her SSN. Maybe they didn't file the W-2s with the SSA. You mentioned the company was sold at the end of 2022. I have seen situations where companies were sold late in the year, or in January, and the seller thought the buyer did the filings and the buyer assumed the seller did.

Fightin_Aggie said:

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nomad2007 said:

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Brian Earl Spilner said:

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Sounds like someone's getting fired.

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My impression so far seems to be that nearly $1mill in money withheld for taxes from these employees' salaries never reached the treasury. I would assume someone will be not only fired, but possibly charged criminally...

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Yes that is tax fraud

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So a victimless crime

gigemhilo said:

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nomad2007 said:

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Essentially my wife's 2022 employer (the company sold to another corporation at end of 2022) didn't report any wages to the SSA or IRS for that year despite giving her a W2…. And having withheld money from her account as income tax withholding, FICA, etc.

As such, our joint return is still in process. Other employees during that time have contacted her saying they discovered the same thing and have had their returns rejected outright.

This is not an experience I've had before, so I don't even know where to begin.

Has anyone had this experience? Would a CPA or lawyer be the best first step?

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CPA here.

If your return is still in process, you are good. The IRS is basically trying to figure out what happened. They likely sent you a letter requesting a copy of the W2, correct? If so, send it. They will eventually file the return, they are just trying to get the missing pieces together at this point.

I would encourage your co-workers to file again or paper file if EFile does not work. It may take a while to get any refunds due, but at least you get the ball rolling.

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Thank you. Yes, we just received that letter today, so I'll be on that tomorrow.

Picard said:

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This is another good example of why you should always owe a little bit vs. be due a refund.

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Dumb guy question here...but why?

Wouldnt it be the same either way?

Whether she owed a grand, instead of getting a 1k back...she's still in the same boat with the IRS.

I know this isn't a great time, but I'd suggest for your wife to start looking for a new job. If they didn't pay the withholding, it may be hard for the company to come up with the money to do so plus the penalties. Getting hit by this and then losing a job would suck.

I'm sure I'm being super simplistic but it Seems like the issue should be between her company and the IRS. She did nothing wrong and she has documentation in the form of a W2 that indicates the company withheld the taxes from her pay. Nobody reasonable expects employees to double check with the IRS that they received the money.

Consulting with an Expert tax lawyer would seem like the right move.

If the company has money or assets then a class action suit against the company on behalf of employees that were wronged also seems like a possibility if they don't make fast efforts to make it right

AgLA06 said:

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I know this isn't a great time, but I'd suggest for your wife to start looking for a new job. If they didn't pay the withholding, it may be hard for the company to come up with the money to do so plus the penalties. Getting hit by this and then losing a job would suck.

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Shes in a very in demand profession so it wouldn't be an issue.

However , the company in liability for those taxes sold at the end of 2022 as an asset purchase agreement to another corporation, and the folks she works for now have been making their quarterly reports.

But it also means the corporation she worked for before may have been liquidated completely and we'll never see the refund.

Nevertheless I submitted all requested documents by the IRS and the long waiting game begins.

Came back to this thread as it perplexes me a bit. Did your wife have paystubs showing federal taxes withheld by her previous employer? That should be enough to satisfy the IRS.

The IRS has a beef with the former employer not your wife. That was my initial understanding and quick google search shows that would be the case.

https://www.mytaxdebtattorney.com/How-Does-the-IRS-Determine-Responsibility-for-Unpaid-Payroll-Taxes

"Civil penalties and interest are imposed if the employer fails to file returns or to file them timely or to pay over all or the correct amount of employment taxes. See IRC 6651(a)(1), 6656(a), (b). If the employer who owes these taxes has no assets, the IRS is unable to collect the tax or the penalties and interest from that employer. But despite this fact, the employees still get credit for the amount of income and FICA taxes withheld, even if employer pays never turned over the withheld taxes to the government. See IRC 31, 3102(a). Similarly, where an employer has withheld FICA and withholding taxes but failed to pay them to the IRS, the employee is credited with the amount withheld; and if the government does not recover this tax from the employer or employer's responsible person, the tax is lost. For this reason, the IRS may get especially aggressive in its collection efforts of payroll taxes."

fka ftc said:

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Came back to this thread as it perplexes me a bit. Did your wife have paystubs showing federal taxes withheld by her previous employer? That should be enough to satisfy the IRS.

The IRS has a beef with the former employer not your wife. That was my initial understanding and quick google search shows that would be the case.

https://www.mytaxdebtattorney.com/How-Does-the-IRS-Determine-Responsibility-for-Unpaid-Payroll-Taxes

"Civil penalties and interest are imposed if the employer fails to file returns or to file them timely or to pay over all or the correct amount of employment taxes. See IRC 6651(a)(1), 6656(a), (b). If the employer who owes these taxes has no assets, the IRS is unable to collect the tax or the penalties and interest from that employer. But despite this fact, the employees still get credit for the amount of income and FICA taxes withheld, even if employer pays never turned over the withheld taxes to the government. See IRC 31, 3102(a). Similarly, where an employer has withheld FICA and withholding taxes but failed to pay them to the IRS, the employee is credited with the amount withheld; and if the government does not recover this tax from the employer or employer's responsible person, the tax is lost. For this reason, the IRS may get especially aggressive in its collection efforts of payroll taxes."

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While correct that the IRS will go after the employer (or any of the others deemed to be a responsible person as indicated in your link) and not the employee, that doesn't mean there will not be a snag in processing the return. Particularly if the former employer did not file the W-2s with the Social Security Administration and/or the 941s with the IRS. If all the IRS has is a W-2 form with the employee's return, it will likely take awhile.

Understood and would agree on it taking a while. Unfortunate for the OP.

One would have thought acquiring company would have ensured 941s filed and taxes current before completing transaction.

Understand asset only and assume they terminated employees at old company and rehired them at new. Hopefully just a matter of someone not handling the hand off well.

fka ftc said:

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Understood and would agree on it taking a while. Unfortunate for the OP.

One would have thought acquiring company would have ensured 941s filed and taxes current before completing transaction.

Understand asset only and assume they terminated employees at old company and rehired them at new. Hopefully just a matter of someone not handling the hand off well.

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The OP had said the sale occurred late in the year, so there could have been payroll yet to be made (after the transaction but prior to December 31st), thus the 941s could not be filed prior to the completion of the transaction. But you are correct in that someone should have ensured all the paperwork was going to be filed. Inasmuch as the most (if not all) of the employees of the old company would be working for the new company, the new company should have asked for copies and proof of filing. All of it should have been (perhaps it was) part of the agreement as to who was going to do what.

I had a similar situation two different times when near December 31 one corporation bought another corporation (stock deal, not an asset deal) and the acquiring folks thought the prior owners were going to file the tax return even though they didn't have any idea of the transactions subsequent to the buy/sale, lol.

Yea she's got the W2s and stubs which Ive submitted as requested by the IRS letter I received, but there's still no record of the wages having ever been reported by the employer….. nor is there anyway to know where the money withheld for taxes ended up.

So it's just a big snag in getting the return approved.

Depending on how "quickly" the IRS responds, it may be worth having a CPA in your employ for this particular task.

Or, someone at NewCo needs to take this on as a priority project. I assume your wife is not the only one affected. NewCo has a responsibility to its new employees on this from an ethical standpoint in my opinion as it is likely the result of someone not doing something as part of the acquisition, employee transition.

Just my opinions. Best of luck.