My former employers closed their business 12/31/2007. During 2007 my fellow employees and I received pay checks with stubs indicating proper taxes were deducted. It is now March 2008 and we (the employees) have still not received our W-2's. I have tried to contact my former employers by every means possible to no avail. I notified the Labor commission and was told my former employers never paid any employee taxes for 2007. I contacted the IRS and was sent form 4852. I now have to estimate my wages and taxes and submit them to the IRS.
If my former employers never submitted the taxes, and we, the employees are submitting estimated wages and taxes, will we the employees be penalized if the IRS never acquires the missing money from my former employer?
What penalties will my former employers face for pocketing my Social Security/Medicare, state and federal taxes?
Is this seen as a crime against me and my fellow employees for burglary since my former employers, took our money with knowing intent, and by issuing pay stubs with the pretence of submitting our taxes to the proper agencies?
Is it possible for we the employees to file suit against our former employers?
FYI: Business located in California, and employers a husband & Wife.
More than one question.. Hopes thats ok!
Thank you

morgaine300

I don't know if there's anything specific about California itself (though I don't see why it should be any different), but for federal, the employer is responsible for paying the taxes they deducted. So did they actually deduct them? Do you still have your checkstubs?

Hopefully there's a lesson for anyone reading this. Always, always, always keep all your pay check stubs!!!!

I'm not familiar with form 4852. But I just looked it up. It's merely an estimated substitute for a W-2. Since a W-2 doesn't require you to pay taxes already deducted (only anything more you would owe), there shouldn't be any difference using this form. There's isn't anything on it, or in the instructions, indicating that you are liable for any taxes deducted and not paid by the employer. Not getting a W-2 doesn't really change the concept behind it. i.e. when I was doing payroll privately at companies, if we did not pay the taxes due, it came back on us, and all penalties went to us. It had nothing to do with the employees because it had already been deducted from their checks.

You shouldn't be responsible for this. The IRS should go after the employer. As long as nothing happens with you, then this is all on the heads of the employer. They are the ones facing the penalties. And it's not a crime against you -- it's against the government agencies.

Do you know for sure they deducted this money with the intent of pocketing it? Sometimes companies don't get that the IRS always comes first and they just don't have the money to pay it when it becomes due. I've worked for companies like that. (They still get the penalities and interest; it's just a difference of whether it's fraud or not.)

drm42

Morgaine300....Thank you for your response.
I do in fact have my pay stubs to estimate my taxes from, and with the stubs, it is pretty simple to do the estimation.
My former fellow employee's went to apply for their unemployement and were told that there was no record of them working at all in 2007, and their unemployement would have to be estimated from records in 2006!
As far as fraud goes, don't employers have to file quartly taxes? I contacted the firm that handled the bookkeeping for the company, and they said the last time they did business with my employer was at the beginning of 2006 to have 2005 W-2's made up, and that was to have the W-2's done from employee records. The bookkeeper stated to me my employers did no other business throughout 2005.
Again.. Thanks for your response

morgaine300

I don't know how CA works, but here there is a quarterly report sent in that lists every employee and their pay for the quarter. So the state unemployment office has record of all this. If it was never filed, they wouldn't have record. Assuming your state has unemployment, the fellow employee may want to have the state office to check into this company. In most states this is not a deduction, but it's still a benefit that you are supposed to have.


Yeah, but it's not that unusual for it to not get filed, and it's pretty easy to claim they forgot, or the bookkeeper screwed up, or they thought the accountant took care of it, etc. The IRS would have to prove fraud. It will still result in penalties and interest, both for not filing and for the late payments. The IRS may never get their money, but they'll try.

I hope this all comes out OK. At least you have the information you need to get the correct records recorded.