My employer did not take enough taxed out. Do I have any recourse? MD

UPDATED: Sep 30, 2022

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My employer did not take enough taxed out. Do I have any recourse? MD


I live in Maryland. I started at my current job in September, 2015. My employer changed from one payroll company to another in July, 2016. I realized my paycheck had decreased which caused me to look at my paystub I have direct deposit. The new payroll company was taking out an additional tax that the previous company had not. I compared paystubs from the current and the previous companies and discovered in addition to the state, federal, Medicare, and social security taxes being withheld there is a new county tax withheld as well. The previous company did not take this out of my check. However the ‘YTD’ shows an amount paid of over 700, as if I had been paying it, which is not the case. I immediately contacted the HR department of my employer who looked into it and basically said that the previous payroll company should have taken the tax but didn’t. I assume I will be responsible for paying this county tax back when I file my taxes next year. Is this legal? Do I have any type of recourse toward my employer or the previous payroll company? Also, am I at a risk of facing additional penalties for not paying properly throughout the year? Thank you for your time, and advice.

Asked on August 31, 2016 under Employment Labor Law, Maryland


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

If at the end of it all, you end up paying the proper amount of taxes, whether it was withheld weekly or paid it at the end of the year, there is no basis for recovering compensation for taxes: if you paid the correct amount, regardless of timing, there is no harm, and without harm, there is no compensation.
If you end up out of pocket any money, however, such as due to interest or penalties for not paying taxes in a timely fashion, you could sue the at-fault entity--presumably, the old payroll company, if it was there error--for the amount of money you lost due to their error.
Again, though, you can only sue for an actual loss, not merely because something was done wrong. If it all balanced out and you end up being paid what you should and paying the taxes you should, there are no grounds for a lawsuit.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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