united-states employer employment tax-law
Employer forgot to take taxes out of severance; now demanding it back or legal action. Can I just settle it with IRS?
<p>I was laid off back in March due to COVID. My employer messed up and delayed our severance payments, so instead, they offered to cancel the original checks and send us all wire payments.</p>
<p>When we got the wire payment, no taxes were taken out, so the payment was the agreed-upon GROSS instead of NET. Now they are demanding we repay them for the unheld taxes (thousands of dollars), or else they'll consider legal action.</p>
<p>My accountant told me I can just settle it with the IRS when filing next year, but can my former employer really take legal action or involve collections here? Is it just a threat? Not sure why they're so concerned when it's really the government's money...</p>

<h2>No</h2>
<p>Your employer has probably already paid the tax to the IRS and, even if they haven’t, they are legally obligated to and would face penalties if they don’t. Notwithstanding, this and the fact that they are your employer is irrelevant.</p>
<p>The facts are simple: someone owes you money, they paid you too much. The legal consequences are also simple: you owe them the overpayment. And, yes, they can legitimately take action to collect.</p>
<p>If you were an ongoing employee, the employer couldn’t deduct money from your wages without your agreement or a garnishee order. Other than this, an employer is no different from any other creditor.</p>
