Question Our city had an issue where the payroll deductions for a retirement plan was not deposited for at least 18 months. The responsible party had been let go prior to the discovery for an unrelated issue. The mayor and a representative of the financial institution met with employees and basically said what will it take to make this go away and cut checks from the general fund. A few of the employees did not accept the payoff but don't know how to proceed. A friend of mine is one of the employees that did take a check. I keep telling him he's in a weird tax situation with the money and that the city is obligated to do a full investigation of where the money went and should possibly seek a criminal investigation of the employee's actions and that the mayor may be guilty of something for trying to cover it up. Am i right in suggestion he call the state comptroller or is he right in taking the check? We live in Tennessee.
Answer John - I'm not clear on why your friend cannot do both - take the check and call the state comptroller. I doubt the call will result in much action, unless there is some political reason the state government would want to act against the local government.
Your friend needs to be in touch with the IRS to find out how to handle the money he received, unless he immediately put it into the retirement account. It may count as income on which taxes are owed if the money doesn't go into the retirement account.
I genuinely understand the desire to see someone brought to justice when he has done something wrong, but this is not for your friend to get involved in. Whistleblowers are usually the only people punished when misconduct is alleged.