CA Employer issues Corrected W2 forms to Employees. Is employer responsible to reimburse employees for tax preparation fees for EE’s amended return?

UPDATED: May 20, 2009

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CA Employer issues Corrected W2 forms to Employees. Is employer responsible to reimburse employees for tax preparation fees for EE’s amended return?

Only 1 former disgruntled employee complained, but she is one that has caused legal trouble for us in the past, so I want to be prepared with the answer. So as the employer, are we legally responsible fo reimburse her for any additional tax preparation charges she incurs as a result of the corrected W2? I believe the amended return may not even be necessary, as the IRS will sometimes issue a corrected calcuation that the EE can either accept or file their own. Also some people do their own taxes – so no charges, while some spend thousands of $ on tax prep – where does the line get drawn?

Asked on May 20, 2009 under Business Law, California


MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 13 years ago | Contributor

Well, from a practical standpoint -- you messed up.  Your employee depends on your calculations to ensure you provide him or her with an accurate accounting.  Your employee shouldn't have depend on what the IRS does or doesn't do to ensure an accurate tax filing.  If it turns out it costs your employee money, I would think you would want to avoid any legal trouble and pay for these out of pocket additional expenses.

Let's take it from a legal standpoint.  Who was negligent in the incorrect W2? You or the employee? If you, you should pay.  In other words, why should the employee incur additional costs due to your error.

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