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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Legal
Satisfied Customers: 114135
Experience:  JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law
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By mistake, my company used exemption for me from SS and medicare

Customer Question

By mistake, my company used exemption for me from SS and medicare tax for the last 4 years. Who is responsible for not paid taxes? What's the best way to handle it?
Submitted: 4 years ago.
Category: Legal
Expert:  Law Educator, Esq. replied 4 years ago.
If the company was negligent or made an error by improperly classifying you, they are liable to pay their employer contribution to make up for the contributions they should have made had you been properly classified, but I am afraid that you too would have to make your employee contribution as normal as that employee contribution is your responsibility and the employer's error in not properly classifying you does not change your responsibility it merely means the employer has to pay back their percentage.

Ultimately, when an employer does not properly withhold or deduct taxes, by law that is the employee's liability for whatever share should have been deducted from the employee normally and the employer is only liable for failure to pay taxes that are the employer's responsibility (such as unemployment taxes, their SS percentage, workers compensation etc).


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Customer: replied 4 years ago.
Your answer is too generic.
I have no funds to repay such great amount. It was not my fault that company mistakenly placed me in the position when I own so much to IRS. All my tax returns were OK. My returns were reviewed by banks for mortgages. My financial life is tuned to what I was making in the last 4 years. Now my compensation is significantly lower and, additionally, I have to repay a huge amount of money.
Expert:  Law Educator, Esq. replied 4 years ago.
I apologize that it is generic, but realize also that your question was also generic and does not have the actual facts and evidence any attorney would need to give an in depth point by point answer, nor is that the actual scope of this service.

When a company makes a mistake and does not withhold enough taxes, that liability is still on the employee tax payer, if not, the equitable principle of unjust enrichment applies. This legal principle states that when you are damaged you have a right to be put only back to the same place as you would have been in had they made the proper deductions. Had they made the proper deductions, you would have paid a percentage and they would pay a percentage for SS and their mistake would not mean you would get them to now pay your percentage as it would put you in a BETTER position than had they not made the error. If you are charged any interest or penalties for them making the mistake, then the EMPLOYER is liable for those penalties or that interest, since you would not have had to pay that if they properly deducted the taxes as they were supposed to.

If you are being assessed penalties or interest, then you can sue the employer for those. You just cannot sue the employer to make them put you in a better position than you would have been in had they deducted those taxes from your pay as they should have.

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