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OPINION
I. Employee's Liability for Federal Income Tax
Petitioner asks for relief from his tax liability on two
grounds. First, he requests that Carolina Acoustical be held
accountable for the tax on his wages because it improperly
characterized him as a nonemployee, thus failing to withhold any
tax from his paycheck. Second, he asks that we apply the
withheld back wages of Carolina Acoustical toward his tax
liability.
We address the improper characterization argument first. An
employer is required under section 3402(a) to withhold Federal
income tax from the wages of its employees.
Section 31(a) allows an employee to take a credit for
amounts withheld by his employer and apply it to his tax due.
The taxpayer is entitled to this credit even if the employer has
not paid the withholdings over to the Government. Sec. 1.31-
1(a), Income Tax Regs. But if the employer does not actually
withhold the tax, the employee is not entitled to a credit for
amounts which should have properly been withheld. Edwards v.
Commissioner, 39 T.C. 78, 84 (1962), affd. on this issue 323 F.2d
751 (9th Cir. 1963). The failure of an employer to withhold
income tax does not relieve the employee's obligation to pay the
tax. Church v. Commissioner, 810 F.2d 19, 20 (2d Cir. 1987).
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Last modified: May 25, 2011