In the USA, can an employer be held liable for their employee's federal income tax – specifically if the employer failed to inform employee of their responsibility to pay their own income taxes?

Let's say an employer reports a worker to the IRS as a contractor (1099), but fools the worker into thinking they are a full-time (W-2) employee. Would there be a legal case to be had in holding the employer liable for that worker's federal income tax?

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    I cannot imagine a situation in which an employee could reasonably be mistaken about the legal status of the employment after receiving the first paycheck, much less after receiving the 1099 in January. – phoog Feb 4 '17 at 19:56
  • @phoog Example: employer (a) does not actually mail the 1099 to correct address year after year, (b) employer gives employee benefits like PTO and all federal holidays as "paid days off", (c) employer expects employee to work a certain number of hours each week on-site and perform on-site regular duties in addition to other work, (d) employer gives employee a set salary every 2 weeks? – lioman Feb 4 '17 at 21:23
  • And the employee is ignorant of withholding procedures, or just doesn't notice that there's no income tax, social security tax or Medicare tax being withheld every two weeks? – phoog Feb 4 '17 at 21:47
  • Question is, who is more liable for the ignorance -- since the IRS wants their money one way or the other? – lioman Feb 4 '17 at 23:28
  • You can't fool the worker into thinking they are a full time employee. If you tell them they are a full time employee, then they are a full time employee. – gnasher729 Mar 11 '18 at 19:42

Yes, an employer who improperly classifies a person to whom they pay compensation as a contractor can be found liable by the IRS for the "employer's share" of FICA taxes (... as well as fines and other penalties: see IRS guidance).

But under current law the only way I can imagine an employer could be found liable to the employee for other taxes owed is through fraud or tort: E.g., the employer would have had to actively mislead or deceive the employee into believing it was withholding taxes or covering the employee's tax liability when in fact it was not.

U.S. employers do not have a responsibility to educate employees or contractors about personal tax compliance.


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