Public Mediation

My Claim vs. Paychex Inc (Headquarters)

R. L. vs. Paychex Inc (Headquarters)
911 Panorama Trl S, Rochester, New York, 14625-2311, United States
Amount Involved: $3,500.00
    • Status: In Negotiation
      This claim has posted for public comment and negotiation. It will remain posted until resolved to the claimant's satisfaction. Suggest a resolution to help these parties reach a settlement.
    • View response from: Paychex Inc (Headquarters)
    • Claimant Seeks: View.
    • Claim #: 1574935
    • Amount Involved: 3,500.00
    • Filed On: Dec 27, 2016
    • Posted On: Jan 14, 2017
    • Complaint(s):
      • Problem with a service
      • Bad business practices
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Statement of Claim
Complaints Involved (2) - View
Claimant says:
"This is a continuation of an earlier complaint against Paychex. The account specialist sent me an email on August 19, 2015 indicating that taxes were being paid on both our payroll and owner draw (distribution). There was no reason for me to ask again if both taxes were included in our monthly payroll/owner draw we reported. For 1 1/2 years I thought that both taxes were being paid. Please see the attached document.

Come to find out when it was time to file our tax returns, I ended up with an IRS liability in the amount of $18,000. Paychex was not taking the taxes out for the owner draw/distribution as they were instructed to do and told me they were. We were also hit with penalties and late fees because we under reported our tax obligation.

I paid a monthly invoice for their services. I depended on their expertise and communication. Never was I told they were not taking taxes out for the owner draw/distribution. I know nothing about taxes which is why I hired them. They would send me a monthly journal and owner draw/distribution was listed along with payroll. I did not understand how to interpret the payroll report. I let the account speciaistl know that. Never once did they offer to help me decipher the numbers. Every month I would report our payroll and owner draw/distribution. If they were not paying the taxes on the owenr draw/distribution, why was it on the worksheet and why did they ask for it month after month.

Paychex touts how great their service is, but in this case, they were extremely negligent. I have reported payroll to them for our assistant since June. I have sent several emails over the past month looking for the net amount to pay our assistant with no response. I had to guess on the last 2 paychecks I gave her. If they did not want to communicate with me, they should have explained how to read the payroll reports.

The only way I will agree to resolve this matter, is a cash settlement paying our late fees and penalties in the amount of $1500 as well as refunding all the money I paid to them for their, so called, services. That amount would be approximately $2,000.

I have not yet contacted the BBB or an attorney. I will if I need to. The frustration and stress I have undergone the past few months, $3500 is nothing in comparison. We had to get a loan in order to pay our taxes to the IRS. We are very disappointed as we thought we were in good hands."
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Claimant timeline (1) - Hide
  • 12-27-2016 — Negligence and poor communication
Exhibits View
Additional Communication Between Claimant and Paychex Inc (Headquarters) Hide
  • Dec 28, 2016, () added:

  • We spoke to the CPA as requested by this client. More profit was taken than expected. There is no way for Paychex to be aware of this, we can only base tax withholdings based on payroll reported to us and using the government issued tax tables. We are not the CPA, we do not know the personal or business dealings of the clients.

    Update 1/6/17

    Paychex was clearly instructed to add an amount to cover distribution taxes. Please refer to the email attached to initial complaint. Response was that taxes for distribution were included. I reported the distribution amount for every single pay period thinking it was included based on the information I had. Even if what you’re saying is correct you had the responsibility to inform me about that regulation. You are the professionals and I know nothing about taxes. I did not find out that nothing was added for distribution until I received the tax liability for $18,000. We will have the same issue in 2016. I understand we owe the taxes but had someone communicated to us that you were not able to collect taxes for distribution, the outcome would have been much different. Shouldn't the account servicer checked with someone more experienced when I brought up the issue before giving me the incorrect information? That is the negligence which caused the late fees and penalties. If she found out she was not able to pay taxes towards distribution and decided not to disclose that information is also negligent along with the fact the lack of communication. In my profession, I could lose my license for not disclosing pertinent information.

    Monday, January 1, 2017, we went to a CPA with all our tax returns. On that day, we discovered that Paychex had given me the incorrect information on the net amount to pay our employee. She gave me a net of $459.57 when it should have been $400.75. That is the difference of $100+ each month. We will need to cover the difference for Real Lemmons Inc as well as our employee. I am now increasing my demand to $4500. Please see the attached documentation.

    I have saved all email communication between the account servicer and myself. I have enough information to take this to an attorney.

What Claimant Wants Hide
1. Recovery of Losses: Penalties and Late Fees Jan 11, 2017 $1,500.00
2. Refund: Services I paid for Jan 11, 2017 $2,000.00
Cash total : $3,500.00
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Respondent's Counteroffer Hide
The claimant's settlement terms were rejected with the following explanation:
  • I disagree with the explanation / grounds provided

    "Taxes were withheld exactly as requested based on IRS tax tables. Per robin's request I spoke to her CPA about this matter. Paychex has no way of knowing the amount of profits to be taken by a business owner. It is there obligation to make estimated tax payments on amounts they intend to take as profits. If a client would like to withhold amounts higher than shown on the IRS tax tables they would need to request it. Again, Paychex is not the CPA or tax advisor, we can only use the legal tax tables to calculate taxes based on amounts reported to us. We have no knowledge of what will be reported on personal income taxes, such as deductions or other income."

This claim will remain posted until resolved.

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  • Contributed Solution: by Bryan Morris On 04-20-2017
    View more
    Paychex appears to have caused the caused the customer loss; at a minimum should return fees More...
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