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LawTalk
LawTalk, Attorney
Category: Tax
Satisfied Customers: 37855
Experience:  I am a practicing attorney with more than 3 decades of experience in the legal field.
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Are penalties received from an employer per Section 201 and

Customer Question

Are penalties received from an employer per Section 201 and 227.3 income taxable?
Submitted: 1 year ago.
Category: Tax
Expert:  LawTalk replied 1 year ago.

Good morning,

I'm Doug, and I'm sorry to hear of the confusion. My goal is to provide you with excellent service today. In order to give you a clear and concise answer, I will need some additional information about the circumstances, please.

1. Just so we are on the same page, you are referring to the CA Waiting Time Penalty, yes?

Doug

Customer: replied 1 year ago.
No, the employer agreed to pay the "penalty" for failing to pay the employees final commissions earned within 72 hours of termination.
Expert:  LawTalk replied 1 year ago.

Good afternoon,

Alright, thanks. That is essentially the same thing---it is a penalty for failing to pay wages on time..

To the employee receiving the penalty, because it is not legally a gift, it does constitute income and is taxable to the recipient.

You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.

Please be so kind as to rate my service to you. That is the only way I am credited for assisting you.

I wish you and yours the best in 2016,

Doug