Weird tax question of the day.
My DW works as a paid, part-time hourly employee of a large non-profit entity (hereafter known as 'the company'). She has worked there in various PT positions for 11 years. Currently averaging 25-30hrs/week. It's a good PT job because: not walmart, good pay, 401k w/ generous match, flexible schedule, no profit motive...
In August 2016 she received notice from HR that her witholding was changing to include 2% city income tax. Oh, okay, we didn't know that was a thing, since we live in an unincorporated exurb. That was the last we heard of that until this week (july 2017). She has been informed by HR that due to their mistake (forgetting to withhold for the last 11 years) that she owes 4 years of back city tax, probably $1900-2000. HR says they take complete responsibility for this mistake and therefore will pay the tax bill & penalties, then take the overdue tax out of DW paycheck for the next several months. this is a $400/semimonthly size paycheck, so getting $2000 out of it is gonna be challenging.
HR uses the phrase "we take complete responsibility", but since nobody is getting fired (11 years without withholding!) and DW is paying the tax, it seems that they do not understand what taking responsibility actually entails.
Oh, what the heck, here's the redacted internal memo:
<<It recently came to our attention that city tax was not withheld from your pay for years 2014, 2015, and part of 2016. The approximate overdue tax is $1,876. There may be a penalty added to this amount, which the company will pay.
This was our error & we take complete responsibility for this. The Company will pay the total taxes, plus any penalties & interest. The overdue tax will be deducted from your pay to repay the Company in an amount that will not cause you any financial difficulty.>>
Whaddya all think, suck it up & let the company make DW pay? This would allow her to keep working there & stashing 401k funds.
Or say,"nope, not paying 4 years of back taxes that you morons forgot to withhold. HR should pay (literally) for their mistake". Which would at best create a hostile work environment, at worst get her fired.
Or quit immediately, so they can't take the money out of her future paychecks.