Tax law question

Tax law question

Postby Wolfgang622 » Tue Mar 19, 2013 3:42 pm

OK, so I am looking around on the internet but not finding an on-point answer to my question, and wondering if any of you budding young tax lawyers can help.

My employer outsources its payroll system to the Paychex company. My employer is based in Connecticut, but employs people working in Vermont, Massachusetts, New York, New Jersey, Pennsylvania, and Maryland. Some of us (myself included) live in states different from where we work (in my case, living in PA but working in NJ).

Paychex is telling my employer that they cannot exclusively withhold taxes from an employee based on the state where that employee lives. In other words, they are claiming that the laws require that, for example, they withhold something of my check to pay New Jersey state taxes (though not necessarily everything). So, even if I ask them to withhold PA and not NJ, they still have to hold something for NJ - I am now being told that a 90/10 split is the best that can be done (90% of what I owe to PA held for PA, and 10% held for NJ).

I smell #$!&@. My employer says they've double checked with internal tax folks that they employ at another location, and they confirmed that this sounds correct. I can't believe it is. I could tell them, it seems to me, not to withhold a damn thing, so why should it be so difficult to get them to withhold state taxes based on what I owe to PA rather than NJ? This becomes a minor issue every year when I have to file a non-resident NJ return and wait for my money to get back to me so I can pay PA. I'd still have to file the non-resident return, I realize, but it would be made a lot easier and less stressful if I simply had to file a piece of paper without worrying about recovering any money.

This Paychex also refuses to withhold city taxes from my check. Any possible legal justification for that, or are they just trying to save themselves administrative costs?
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Wolfgang622
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