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Possible lawsuit


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Illinois

We are in the process of purchasing a new home. Closing is set up for 5/28. In the meantime, my husband was notified by his former employer that he owe's them $25,000.00 in loans.

My husband would request his over-time and they would give it to him in cash, with a note saying "enclosed you will find $500.00 which you requested". The note does not say anything about paying it back.

My husband was sent a letter by their Attorney stating the Company has retained them to collect money owed. I sent three certified letters to the Attorney back in November and December requesting documentation. I never received it. Then in February we received a certifed packet from another Attorney, with documentation. As we were going over this, my husbands signature was forged on a promissory note for $18,000. They put all the loan/overtime requests and forged my husbands name on it. On many of the "Enclosed you will find" by husband's name was forged on those as well.

We hired an Attorney, we wanted to countersue for forgergy. Our Attorney said if nothing was gained by it, it doesn't count. Well, I feel something was gained by it. They are suing us for the amount of $25,000.00. Our Attorney said if we offer them $5,000.00 for a promissory note my husband did sign which was $1,500 plus a little extra, they might accept that. The problem is we are buying a home in a few weeks and we don't have an extra $5,000.00 laying around. We asked our Attorney if he would let them know we are trying to get a personal loan for the amount. We explained to our Attorney that we won't be able to do it until after we close on our house. Which should be May 28th. Our Attny. is friends with the other Attorney and he said they are ready to file a suit anytime. Our Attorney wanted us to file Bankruptcy on this. The problem is, we filed chapter 7 in 1999. These so called loans were in 1998 and 1999. If we had known we were going to be socked with this, we would have filed on these. We had no clue that these were supposed to be loans, except for the one for $1,500.00, which was taken out to file our bankruptcy. Our Attorney said we might be able to go and re-open the BK and have these put in. My BK, Attorney said that the Judge may not allow this.

How long before this suit shows up on my husbands credit? Do we have to see the Judge first and then have a Judgment placed on us? I really want this to go to court. I want to show the judge the forgery. I just don't want to mess our chances of getting our home. Also, does the Mortgage Company somehow find out a suit is being filed, even before it shows up on our credit? We have a week and a half before we close... Hopefully.

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First of all, I am not an attorney. But I do know the difference between employee loans and wages subject to payroll taxes. You keep saying loans/overtime. Were there any payroll taxes deducted from any of these amounts?

As I'm sure you know, you have alot of seperate issues here.

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These were not loans, it was money my husband received for overtime. His former employer is now trying to make this out to be "loans", with my husbands signature forged. No taxes were paid on this overtime money. His employer liked dealing in cash. He received his 40 hours with taxes taken out. I would rather pay the IRS on taxes for this money, then give his former Employer a red cent.

[Edit by Debbie on Monday, May 19, 2003 @ 09:52 AM]

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<blockquote>Originally posted by Debbie

These were not loans, it was money my husband received for overtime. His former employer is now trying to make this out to be "loans", with my husbands signature forged. No taxes were paid on this overtime money. His employer liked dealing in cash. He received his 40 hours with taxes taken out. I would rather pay the IRS on taxes for this money, then give his former Employer a red cent.

</blockquote>

I'm not sure what you mean when you say, "No taxes were paid on this overtime money." Yet, a sentence later you say, "He received his 40 hours with taxes taken out."

The fact that wages are paid in cash is irrelavent as far the IRS or State is concerned (although they will salivate at the mere mention of cash). However, if, like you say, this was a payment for overtime and you can show that deductions (ie, federal, fica, medicare, state, local, etc.) were taken out to arrive at a net amount (the cash you received) then you may have more than you think. You may not even have to show that taxes were taken out. In employment tax issues, substance will always rule over form.

If you say that they were wages then whether taxes were taken out or paid by the employer to the IRS or if w-'s or employment tax returns were not filed is NOT your (ie the employee's) problem. Forgetting about the forgery issue for the moment, an employee is always in the driver's seat in situations like these.

I've seen many circumstances where payments were given to an employee as loans, gifts, grants or whatever you want to call them. The point is they had no taxes taken out. The employees later complained about not receiving a w-2 with these amounts included or in other cases they were laid off and tried to collect unemployment claiming these "loans" as wages. In each case, either the IRS or the state unemployment agency audited the employers and they then had to pay payroll taxes, fines, interest and penalties. Of course the employees also had to pay income taxes, interest and penalties on these amounts as well.

Sounds to me like the employer in this situation knows about this and is trying to cover with the agreement that you allegedly signed. I am just giving you my thoughts on the loans vs. wages issue. I don't know anything about the forgery issue. But if it comes down to "is it a loan or is it wages", trust me, the IRS or State unemployment will know for sure.

Of course, the other side to this is that the IRS and State are the LAST people you want involved in any dispute, but like I said, (barring any other bombs) the employee is usually in the driver's seat.

I suggest contacting a tax attorney

[Edit by cybercrusader on Monday, May 19, 2003 @ 12:09 PM]

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I think I didn't make my first post clear. When my husband started with this company back in 1996, it was understood that his 40 hours would be paid by check. Anything over 40 hours would be paid cash. So this brings us down to the (supposed) loans my husband took out from his employer. His employer would not give my husband any of his overtime until my husband requested it (this was really stupid on his part) When my husband would request his overtime money, they would have a note in the envelope that stated "Here is the $300.00 you requested". I am not concerned about the IRS or State right now. If I have to pay taxes on this money (which I will have too) then I do. My concern is, how can an employer get away with suing us for $25,000 and forging my husbands name on a promissory note. That is my main concern. Not the taxes at this point.

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Does your DH have ANY kind of proof of the overtime hours he worked ? Did he keep any kind of records for his time ?? If not, you're going to have a hard time proving in court that these were NOT loans but compensation for overtime worked.

As for the forgeries, I would think it would be relatively easy for a decent lawyer to show proof that the signatures of your DH and whoever signed those so-called 'promissory notes' are nowhere near the same.

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<blockquote>Originally posted by Debbie

My concern is, how can an employer get away with suing us for $25,000 and forging my husbands name on a promissory note. That is my main concern. Not the taxes at this point.

</blockquote>

I completely understand. I'm bringing up the IRS and State for leverage purposes, not taxes. If you claim they are overtime payments AND you threaten with bringing in the IRS and State, trust me, their tune will change QUICK.

If it was me, I'd send a letter to my employer asking them why the amounts aren't in my W-2. The next thing I would do is amend my tax returns and pay the tax on the cash.

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