Expert: Vanessa D. Powell, CPA - 10/31/2009

Question
Hi Vanessa!

My former employer (I voluntarily resigned), paid me 2 months worth of recoverable draw which totalled gross of $3000 (I'm in sales). $2000 in the first month, and $1000 in the second month. Since I did not have enough sales to exceed the $3000 draw before resigning, I now owe that draw back to the company. The company took taxes out of the $3000, paying me a net amount of $1286. I received an invoice from the company for $3000. They are telling me I owe the entire gross amount. I asked my CPA, who thinks they need to back everything out (withholding,FICA,etc), and allow me to repay the NET amount versus the gross amount. My CPA even called the HR Director to explain. She did not understand. I've asked for the HR Director to set up a conference call with their outsourced payroll provider manager, because I feel strongly that I should only have to pay for the net amount.
Similarly, they sent me an invoice for $900 for PTO overage, (I took more PTO than I had earned they tell me), but again the $900 is the GROSS amount not the net amount.
What is your expert opinion?
Thank you!
Anja  

Answer
I agree with your CPA.  They need to either pay you back all of the taxes and THEN bill you for the gross amount or the re-bill you for the net amount- for both the draw and the PTO.

If you can't get HR to get you on the phone with the PR service provider, then tell them that you'll be forced to contact your state's labor board to report the incident.  Believe me- they do NOT want that and will likely start being a little more helpful.  The problem is, they are likely (excuse the expression) too stupid to know how to fix the problem.  That's why you need to talk to the PR provider.  If anyone will know how to handle it, they will.  The problem they're facing is that they've likely already remitted the taxes they withheld to the proper agencies.  So now they'll have to go through the hassle of getting that money back- either through future PR tax return filings or through correcting what's already been done.  Regardless, that's what these PR service providers are paid to do- handle all of the company's PR needs and problems- this falls squarely in their court.

Sorry you have to deal with such a mess- unfortunately, it happens more than it should.
Best of luck!