I have been had
March 22, 2010 10:14 AM   Subscribe

Found out on the weekend that my employer has been deducting completely bogus amounts of tax and other deductions since last May. What can I do?

I'm in Canada. It's the CRA in question here, not the IRS. (Also Revenu Qu├ębec.)

I have been working for a small business since last May. It's been steady four days a week. I get paid monthly, and after glancing at the first pay stub I just threw all the stubs into a file folder. Turns out that was massively stupid. My tax preparer looked at them and said "Do you realize these deductions make no sense? The numbers are all over the place and not nearly enough tax has been deducted." She also said she thought what they had done was very probably illegal. (Tax was deducted, though, as well as seemingly random amounts for government pensions and other things. It's so chaotic that it's hard to see how they've benefited from not doing it properly. Frankly the salary is so low there wasn't much benefit to be had.)

I am already in arrears over earlier taxes (not from them) and cannot afford to take on an extra tax debt because of this.

At the moment my boss (the business owner) is away till next month. I am left here with his brother and the receptionist. All of them belong to the same ethnic group and speak a language I don't know. The receptionist does speak proper English but is fiercely loyal to her boss and quite transparently proud of how she will say or do devious things on his behalf.

I've met the boss's accountant and know his name and the name of his firm.

This is not a good job but at the moment I need the income. So what do I do? I can call the accountant direct and challenge him, I can speak to the receptionist and ask her what's going on, or I can wait for the boss to come back and have words with him about it.

Or I can blow the whistle with the revenue authorities.

I would add that I'm feeling betrayed and angry to some extent and it's not going to be pleasant to go to that office and make nice, knowing what I do. (Their general lack of respect for me has always been somewhat apparent, so this just serves to underline it.) But I don't want to mess things up prematurely. I need the job, for now, and if I blow the whistle there will be no difficulty in guessing who did it.

I have to go in today. What do I do next?
posted by anonymous to Work & Money (9 answers total) 1 user marked this as a favorite
Lawyer up. Find someone who deals with tax and employment related issues and let them guide you through this. If you're asking here, you don't know enough to deal with this on your own.

I hate to give this sort of answer, but sometimes it's the only right answer.
posted by chrisamiller at 10:57 AM on March 22, 2010

Come on, guys. Lawyers are expensive and time-consuming. Maybe more so than dealing with this kind of thing on one's own, but if that's true, then for goodness' sake explain why. Don't just make a cute little cheer out of "Hey you! More work and expense! Gooooooo TEEEEAM!". Argh.
posted by amtho at 11:23 AM on March 22, 2010 [2 favorites]

I meant that maybe a lawyers would be _less so_ [expensive and time-consuming] than dealing with this kind of thing on one's own.

The point is, a more elucidating answer would be much more helpful. Maybe less fun for the answerer, but oh well.
posted by amtho at 11:24 AM on March 22, 2010

Do not attribute to malice that which can be explained away by stupidity.

I work for the Canadian subsidiary of a huge company, and last year the person who was calculating my payroll effed it up somewhere around 6 paycheques in a row. She wasn't getting anything out of screwing it up, she was a contracted bookkeeper with no profit motive, she just wasn't actually very good at it.

It's entirely possible that your employer is running some kind of scam, but it's the kind of scam that will be discovered no later than April 30th of the following year, and they'd have to be awfully dumb to try it. And if they're that dumb, then they're probably dumb enough to just be screwing them up by accident.

Call the accountant and challenge himask him if he can help you understand the discrepancies.
posted by jacquilynne at 11:29 AM on March 22, 2010 [2 favorites]

Call the accountant and ask him nicely if he can help you sort it out since you're at a loss. If you approach him as a nice person it will likely all go very smoothly.
posted by stoneweaver at 11:38 AM on March 22, 2010

Don't confront anyone at your work about this just yet. You have no idea whether or not the wacky deductions were intentional.

The first thing I would do is contact your provincial labour relations board. Has your employer paid you less than they should have? If the Alberta board is any indication of how things work in the rest of the provinces, the board will make sure you get that money back with minimal effort of your part and no real confrontation with the employer.

Has the employer paid your the right amount, but underpaid the governement by deducting less in taxes than they should have? You might still want to call your labour board for any help or advice they might be able to offer, but I think you'll ultimately have to call Revenue Canada (1-800-959-8281 - the line for individual income tax inquiries). Tell them what the tax person told you, and get them to help you figure out 1) How much in taxes and other deductions *should* have been taken off (so that you can compare with how much was taken off) and 2) what will happen in your case. If the Revenue Canada agent doesn't seem to know that he/she is talking about, ask to speak with a supervisor.

I think I know the answer to #2, sadly. The government's not going to forgive the taxes you (may) owe simply because your employer calculated and deducted your taxes incorrectly. They'll just recalculate and send you a notice of your new charges.

Finally, you do not need a laywer. What silliness. Even if you could sue the employer for deducting incorrect tax amounts (which I highly doubt), there wouldn't be enough to cover the lawyer's fees.
posted by kitcat at 12:19 PM on March 22, 2010

Unless you're in Quebec, you can use the Payroll Deductions Online Calculator to figure out what the taxes and other deductions from your paychecks should have been. This way, you can figure out if you are in the hole and if so, by how much.
posted by kitcat at 12:45 PM on March 22, 2010

Have you filed your taxes? When you file, they'll eventually match up the amount you show was deducted against what was actually deducted. Call the Tax folks anonymously and ask what happens if those amounts are mismatched, and if wrong amounts were deducted.
posted by theora55 at 4:08 PM on March 22, 2010

Is there a union you could join? They probably have someone who knows exactly how to deal with this.
posted by A Thousand Baited Hooks at 12:36 AM on March 23, 2010

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