Attorney-at-Law

WITHHOLDING OR HOLDING BACK?

In Uncategorized on 02/08/2018 at 16:00

Peter Edward Schaller & Catherine Joanne Schaller, Docket No. 7318-17, filed 2/8/17, looks like a simple unreported income story, but something jogged my memory. So while The Judge With a Heart, STJ Rob’t. N. Armen, hits P.E. for $1K in tax, maybe P. E. had something going for him that never turns up in the record.

P.E. claims he worked for the City of Sioux City, IA. The Sioux City crew didn’t withhold FICA/FUTA/ITW, nor did the Unemployment Insurance types, although P. E. claims he berated them, visited their offices, and otherwise demanded that “…Sioux City Finance Office and lowa Workforce Development Civil Service Employees shall bear full responsibility, both fiduciary and pecuniary accountiability [sic] and responsibility for their failure to do the jobs that they are getting paid to do!” Order, at p. 2.

P.E. did get a total of $10K from the City and UI, which he didn’t report.

OK, we know that if an employer withholds but doesn’t remit, the employee is off the hook, per Section 31(a). But if an employer doesn’t withhold, the employee is stuck.

But stuck for what? STJ Armen doesn’t tell us how IRS got wind of the Sioux City and UI cash, but I’ll bet it was because both of those dudes filed 1099s.

Now here’s the kicker. See my blogpost “Catch Me If You Can,” 1/4/12. The employee in that case got a check from an outfit he never worked for, in payment of wages owed him from his real employer, and got a 1099-MISC Non-Employee Compensation therefor.

Judge Cohen gave that employee the benefit of the 92.35% reduction for the SE, and the 50% of SE exclusion from AGI.

I know the Sum. Op. I blogged was a small-claimer and not precedent for anything. And it is possible that Sioux City filed a W-2 showing no withholding, whether because P. E. claimed he’d owed no tax the year before or for the year at issue, or otherwise. So without more facts, I’m just speculating.

But maybe so P. E. has a claim for SE treatment as to Sioux City.

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