Cifuentes v. Costco Wholesale Corp.
Annotate this CaseCostco withheld federal and state payroll taxes from plaintiff's award for lost wages. The trial court, under Lisec v. United States, ruled that the withholding was improper and denied Costco's motion for acknowledgment of satisfaction of the judgment. The court noted that in the 23 years since Lisec, the IRS and the vast majority of federal appellate courts have broadly interpreted the applicable Internal Revenue Code (IRC) provisions as requiring an employer to withhold payroll taxes for all "wages" arising from the employer-employee relationship, even after that relationship has terminated. Therefore, the court adopted this prevailing view and concluded that Costco properly withheld the payroll taxes. The court reversed and remanded with instructions.
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