Can employer claim/get Tax return money of employees??

qwertyisback

Registered Users (C)
See link below in "Employers Corner" forum. I found it interesting.

http://boards.immigrationportal.com/showthread.php?t=159671

Basically few IT companies TCS and Patni don't issue w2 to their employees. They file tax return by themselves for employees , so obviously employess don't get any Tax return money!!! :D :D Is this legal from IRS or company ethics point of view?? Is there anything employee can do to get tax return money??
Post your comments
 

hipka

Registered Users (C)
qwertyisback said:
See link below in "Employers Corner" forum. I found it interesting.

http://boards.immigrationportal.com/showthread.php?t=159671

Basically few IT companies TCS and Patni don't issue w2 to their employees. They file tax return by themselves for employees , so obviously employess don't get any Tax return money!!! :D :D Is this legal from IRS or company ethics point of view?? Is there anything employee can do to get tax return money??
Post your comments
Most of the employees have to file there is no question about it. People who don't may get into trouble when they apply for other immigration benefits. So the best thing is to complain to IRS that the employer is refusing to give W2's. IRS customer service is very good unlike USCIS, so feel free to call them.
 

hipka

Registered Users (C)
qwertyisback said:
See link below in "Employers Corner" forum. I found it interesting.

http://boards.immigrationportal.com/showthread.php?t=159671

Basically few IT companies TCS and Patni don't issue w2 to their employees. They file tax return by themselves for employees , so obviously employess don't get any Tax return money!!! :D :D Is this legal from IRS or company ethics point of view?? Is there anything employee can do to get tax return money??
Post your comments
Yes, someone else can file for you provided you designated them. This is perfectly legal as long they have your signatures on the 1040.
 

qwertyisback

Registered Users (C)
hipka said:
Most of the employees have to file there is no question about it. People who don't may get into trouble when they apply for other immigration benefits. So the best thing is to complain to IRS that the employer is refusing to give W2's. IRS customer service is very good unlike USCIS, so feel free to call them.

Its not my personal case, I never worked with those companies, just read on other forum and curious to know answer. Is there anybody works with TCS/Infosys/l&T/ or Indian comapnies?, share your Tax return experience. Thanx
 

hipka

Registered Users (C)
qwertyisback said:
Its not my personal case, I never worked with those companies, just read on other forum and curious to know answer. Is there anybody works with TCS/Infosys/l&T/ or Indian comapnies?, share your Tax return experience. Thanx
yeah, got it after reading the other long thread. It looks like the company is paying their taxes, so ideally the company is entitled to the refunds and not the employee. Its not clear what they are complaining about! By the way this is true only for TCS and patni , I haven't heard complaints from other companies.
 

qwertyisback

Registered Users (C)
hipka said:
yeah, got it after reading the other long thread. It looks like the company is paying their taxes, so ideally the company is entitled to the refunds and not the employee. Its not clear what they are complaining about! By the way this is true only for TCS and patni , I haven't heard complaints from other companies.

Whats the meaning of company paying taxes?? Tax is always on employee's income and taken out of of employee's paycheck on gross pay for each pay-period. Does that Tax paid don't come on employees paystub?? Is there anybody here has worked with such companies?? Please ,please come forward and share your experience.
 

sjse_77

Registered Users (C)
Tough luck.

I am in similar situation; work for one of the Tata companies. I called the IRS; ended up talking to someone in the Fraud / Criminal investigation division. The gyst - Tata is not messing with the IRS. Tata is not committing any tax fraud by keeping the refunds as it's their company policy. Hence the tax refund is a matter between the employee and the employer which can be settled in court.

Bottomline - Tata and other Indian companies have done their homework really well. 1) They ask their employees to sign documents a few hours prior to departure and we don't know what's in those documents. 2) An individual won't have the funds to take the company to court. 3) They can and do penalize an individual for falling out of the line. The prev. thread lists quite a few tactics of these companies.


It's disappointing but am sure there was a case against the Tata Consultancy Services 7 - 8 yrs back regarding wages which TCS won. I am not sure of the details. But what we can do is to unite and file lawsuits against each of the companies. TCSr's against TCS, Patni's against PCS and so on. But that's easier said than done and this will go on.


Good luck.
 
Last edited by a moderator:

sjse_77

Registered Users (C)
hipka said:
yeah, got it after reading the other long thread. It looks like the company is paying their taxes, so ideally the company is entitled to the refunds and not the employee. Its not clear what they are complaining about! By the way this is true only for TCS and patni , I haven't heard complaints from other companies.

A clarification - the company is witholding taxes at source and paying taxes to the IRS just like any other US company. That's what the Tata group means by 'paying taxes'. They pay a regular US salary; withold taxes and pay an amount which is post tax. They are paying wages in the US and they pay all taxes an employer has to - FICA etc. There's a lot of confusion due to the terminology used by the company. The net net is that the company can keep the refund without commiting any tax fraud.
 

hipka

Registered Users (C)
sjse_77 said:
A clarification - the company is witholding taxes at source and paying taxes to the IRS just like any other US company. That's what the Tata group means by 'paying taxes'. They pay a regular US salary; withold taxes and pay an amount which is post tax. They are paying wages in the US and they pay all taxes an employer has to - FICA etc. There's a lot of confusion due to the terminology used by the company. The net net is that the company can keep the refund without commiting any tax fraud.
It was my understanding that the post tax amount was equal to what was promised to you when you started the assignment. If thats not the case then there seems to be something fishy!
 

qwertyisback

Registered Users (C)
sjse_77 said:
Bottomline - Tata and other Indian companies have done their homework really well. 1) They ask their employees to sign documents a few hours prior to departure and we don't know what's in those documents.

What do you sign before departure?? Can you post that document here??It would interesting to read such contract clause which asks employees to forfeit tax return money....Please post it.
 

sjse_77

Registered Users (C)
hipka said:
It was my understanding that the post tax amount was equal to what was promised to you when you started the assignment. If thats not the case then there seems to be something fishy!

The amount is correct and it varies from city to city depending on the cost of living. The company takes advantage of various deductions (spouse, dependents etc.) during preparation of tax return from their CPA firm; including earnings from the spouse in the US! If an individual doesn't cooperate then the co. claims to have lost tax refunds and starts reclaiming those from the employee as per company policy. They afterall write the paycheck. The co. also reports a higher wages in the W2 issued by them (maybe) to come close or higher to the salary listed in the H1B application. The employee is stuck with two things - 1) paying taxes on wages not earned but reported by the employer and 2) the employer reclaiming 'lost tax refund'. It's hard for the employee to fight #1 as the IRS will believe the employer. The employee has to pay the taxes on the earnings reported in W2 and take the employer to court which consumes resources. It also spoils the relations between the employee and employer. The employer can declare the employee 'absconding' when the employee resigns and refuse to pay the 'super annuity' which is large portion of the employee's salary back in India. The super annuity gets vested over a period of time. If an individual leaves early or absconds then the company keeps the super annuity.

Btw, this business model works well - suppose a co. has 1000 individuals in the US (which the Tata's do). If they keep the tax refund from all the individuals then the amount is about 1 million dollars or more. This amount in Indian Rupees is enough to sustain part of the co.s operations in India. This is a nice strategy to keep the business afloat. Tata's have been doing this for a long time. Good for them; bad for us.
 

sjse_77

Registered Users (C)
qwertyisback said:
You work in TCS..RIGHT, then get it from your manager or co-worker.. what a big deal??

The point is Tata is not committing any tax fraud by keeping an individuals tax refund. This 'company policy' is very well documented.
 

qwertyisback

Registered Users (C)
sjse_77 said:
The point is Tata is not committing any tax fraud by keeping an individuals tax refund. This 'company policy' is very well documented.

Exactly, thats what Document I am referring. Post relevant part of that document here., so that everybody can read it and suggest some way out.
And what about some contract you signed just before departure?? Is this related to this or not??
 

sjse_77

Registered Users (C)
qwertyisback said:
Exactly, thats what Document I am referring. Post relevant part of that document here., so that everybody can read it and suggest some way out.
And what about some contract you signed just before departure?? Is this related to this or not??


Employee and his/her spouse wherever required shall file a "joint return" claiming permissible exemptions for dependants .

Employees are advised to retain copies of lease agreements, obtain receipts for all items of major expenditure such as but not limited to rent, gas and electricity, etc.

Refund of tax, as applicable, will need to be endorsed to the company.


Tax liability on the following will be to employee’s account :

a) Other income reported by the employee,

b) When employee does not inform the Company the SSN or ITIN for himself and/or accompanied spouse, child(ren) and other dependants.

c) On the employee not filing Returns as per Company guidelines.



The contract signed prior to departure was related to amount to be paid in case an employee doesn't complete the assignment (absconds)...
 

qwertyisback

Registered Users (C)
Based on sjse_77's postings, it very clear that TCS and other companies had covered their bases very nicely. So no luck. Forget about Tax return money.

Just curious, Does all Indian companies like Infosys/l&T/Satyam etc follow same/similar policy??
 
Top