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EMPLOYER TOOK OUT TAXES BUT DID NOT PAY THEM
Building Maintenance employee (my son-in-law) started 9-1-10
Did not sign a contract. Filled out a W4
Received a check bi-weekly with taxes taken out but nothing shown on check stub because they said their program did not provide that. (small company) but they did provide an excel spreadsheet showing check # - company name and all itemized deductions for each check. On 2-9-11 employer gave a 1099 (which was hand written in pencil with the wrong spelling of first name and made out for $7,900.00) and said he will probably have to cut a check for the money that was deducted because they did not send it in to Federal, FICA, State, etc. On 2-10-11 employer said he wants a meeting in the a.m. because he is either going to fire my son-in-law or the office clerk (those are the only employees) because they don't get along. They do get along. If he gets fired and does not receive the check for the taxes the employer took out - should he not claim the money on the 1099 because most likely the employer wont send it in? I think he's a tax evader.
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You are assuming something that at the time of your writing this has not happened.
I'm not 100% sure of the legality of what your son in-laws employer has done. He has deducted Federal, State and other required taxes. By so doing the issuance of a 1099 is wrong. An employer who with holds taxes must report this and pay theses taxes on a quarterly bases to the appropriate agencies. A 1099 is a miscellaneous disbursement of funds for which no taxes are with held.
I would say regardless of how the employer showed your son in-law that taxes were with held; your son in-law has proof that the employer withheld the taxes.
My advice is that regardless of the outcome of the meeting your son in-law needs to contact both the IRS and the Michigan Department of Taxation to report this. Even if the employer gives him a check for what he has withheld it will not be enough to cover the taxes due as your son-in law will as the employers portion of the taxes (matching funds) will be missing. Your son in-law will be looked at as self-employed and the earnings are taxed at a higher rate. This I know as a fact.
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