# Employer did not report income tax paid?? Now owe money!



## Bluetoe (Feb 7, 2015)

My husband got a tax refund last year. This week he got a letter stating he owed money. We think his employer did not report that my husband paid CPP, EI, and importantly, income tax. We have pay stubs to prove he did. Govt says he only paid $800 in taxes, which is the exact amount from when he was sick and received EI. Now he owes the refund back, plus pay what the govt says he owes, plus interest.He already called his former boss, who is asking his accountant. 
What are our options? Help appreciated!


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## stardancer (Apr 26, 2009)

Does the T4 slip match the year-to-date pay stub? Did he report the EI from the T4E? Gather all the T slips and check against what CRA is saying.


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## fraser (May 15, 2010)

The question to ask CRA.....

Does the T4 that he received from his employer ( the one he used to complete his tax return) MATCH the T4 that the employer filed Employee T4 reconciliation with the CRA? 

Not just the earnings, tax.cpp, etc but also the actual SIN number? 

You might also re check your husbands T4 slip to verify that the SIN on his employer issued T4 is accurate.


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## Bluetoe (Feb 7, 2015)

stardancer said:


> Does the T4 slip match the year-to-date pay stub? Did he report the EI from the T4E? Gather all the T slips and check against what CRA is saying.


Yes it matches and yes everything was reported from the T4E. CRA stated that the only income tax deducted was $800, which is the exact amount reported from the T4E.


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## Bluetoe (Feb 7, 2015)

fraser said:


> The question to ask CRA.....
> 
> Does the T4 that he received from his employer ( the one he used to complete his tax return) MATCH the T4 that the employer filed Employee T4 reconciliation with the CRA?
> 
> ...


Yes, checked, and SIN is accurate. And the figures from T4 line up.


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## OptsyEagle (Nov 29, 2009)

Then do the T4s show more then $800 of income tax paid and if not, did he pay more then $800 in income tax that year?


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## Bluetoe (Feb 7, 2015)

OptsyEagle said:


> Then do the T4s show more then $800 of income tax paid and if not, did he pay more then $800 in income tax that year?


The T4E shows tax paid of $800. The T4 shows tax paid, but CRA is saying the only tax he paid was $800.


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## OptsyEagle (Nov 29, 2009)

If the T4 shows he paid tax and CRA is not indicating that, then I would suggest he file a T1-Adjustment to correct CRA. 

I suppose it is simply a case of the person at CRA, that entered the data from CRA's copy of the T4, omitted to input the taxes paid.

This is all I can come up with from the information you have given. I assume the tax paid, that you see on the T4, is equal to the amount in dispute, plus interest. If not, then you are missing some pertinent information.

Also, if you file the T1-Adjustment, ask them to get rid of the interest charges as well, since it is their mistake.


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## Bluetoe (Feb 7, 2015)

OptsyEagle said:


> If the T4 shows he paid tax and CRA is not indicating that, then I would suggest he file a T1-Adjustment to correct CRA.
> 
> I suppose it is simply a case of the person at CRA, that entered the data from CRA's copy of the T4, omitted to input the taxes paid.
> 
> ...


Yes, the tax paid in question, is the amount showing on the T4. 
Thanks, will try the T1- Adjustment route.


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## OptsyEagle (Nov 29, 2009)

Sounds open and shut. The T1-adjustment can be electronically submitted or mailed. I think there is a place to make some comments, so remind them to credit the interest. It shouldn't take more then a few weeks. You should have no problem.


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## Homerhomer (Oct 18, 2010)

If the taxes were deducted from employee and not paid to CRA, the employer is on the hook, not the employee. I think there is more to the story or some misunderstanding/error somewhere else.


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## Eclectic12 (Oct 20, 2010)

^^^^

Assuming the tax money was not sent by the employer and/or their contracted payroll company, I'm not sure that this is different than when a tax preparer did not pay the income tax owed to the gov't but told the tax payer they had. The reports for this situation that I recall indicated that the tax payer was responsible to pay what was owed. If the tax preparer was still around, the tax payer was advised to go after them.


As for the " ... more to the story ... ", that is one possibility. 

I can easily see another possibility (i.e a CRA data keying error) as I've experienced this. 

I had CRA notify me I'd over-contributed to my RRSP - four assessed returns ago, where I "needed" to pay thousands in penalties/accrued interest. After a twenty five minute conversation with a CRA rep - the rep confirmed this was a data entry error for my pension adjustment reversal on CRA's part. In my naivete, I expected they would fix their mistake but was instead was told I had to file four T1 adjustment to fix *CRA's* error. 

The explanation was that CRA had to officially be notified that I did not want to pay penalties I did not owe. :biggrin:


Cheers


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## off.by.10 (Mar 16, 2014)

Eclectic12 said:


> Assuming the tax money was not sent by the employer and/or their contracted payroll company, I'm not sure that this is different than when a tax preparer did not pay the income tax owed to the gov't but told the tax payer they had. The reports for this situation that I recall indicated that the tax payer was responsible to pay what was owed. If the tax preparer was still around, the tax payer was advised to go after them.


This might depend on the province but I know that in Quebec the employer is on the hook for the money. They won't just go after the company but also after the administrators personally. Which makes sense as there's a lot of money involved and it would be too easy for companies in trouble to "borrow" money from the government that way. Around here, employees are pretty much never responsible for anything. So if there are pay slips which show collected taxes which add up to more than the T4, you should just get in touch with the CRA and ask how to proceed to get things sorted out with them.


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## Eclectic12 (Oct 20, 2010)

At the end of the day, I'm sure the employer and/or their payroll company would be held to account eventually ... based on the tax preparer example, I'm not sure it would be CRA knocking on their door.


To be clear, the OP is indicating that the pay slips tax amount = T4 and T4 E tax amounts but CRA has indicated they have records of taxes of only $800 paid and are requesting the rest, plus interest be paid.


A T1-Adjust with supporting documentation should keep CRA's collection department at bay, until it is sorted out. Though I have had the collection department recommend I pay upfront while the sorting out happens as "this will avoid any additional interest/penalties should the end result be that you are wrong". Knowing the minimal interest I would have been compensated ... plus that I had lots of documentation to show that I was right, I declined. The collection depart then noted I was disputing CRA's numbers so that I did not receive any followup collection calls.


Cheers


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