Does an employer need an employee's consent to seek a refund of overwithheld FICA taxes due to a wage overpayment?

Author: Alice Gilman

Yes. The IRS has a detailed procedure with which an employer must comply to obtain an employee's consent for a refund of overwithheld FICA (Social Security and Medicare) taxes due to a wage overpayment. In general, the employer must first refund or reimburse the employee for his or her share of the overwithheld taxes. This requirement is waived if the employer makes a reasonable effort to repay or reimburse the employee or to secure the employee's consent, but the employer cannot locate the employee or the employee refuses to consent.

The employee may give his or her consent on paper or electronically, although an electronic consent cannot be the only option. In addition, if an employee consents electronically, he or she must take a positive action (i.e., by clicking on a Yes button). The employer cannot provide a negative consent option (e.g., if the employee does not return the electronic consent, then consent is assumed).

The employer must include specific information in the consent request, and the request form must meet additional, detailed requirements.