Harvard has managed to foul up its payroll tax reporting for the years 2009 to 2011, the student newspaper, The Crimson, reports:
Due to a mistake in the way the University reported its employees' taxable income, approximately 11,000 Harvard employees paid excess income taxes between 2009 and 2013, with the hardest hit contributing several thousands dollars more than they should have.
The misclassification of earnings occurred after Harvard changed the structure of its supplemental life insurance plan, such that the benefit should no longer have been taxable, according to a letter the Vice President for Human Resources Marilyn Hausammann sent to all affected employees on Feb. 7. Despite the change, the University did not alter the way it reported taxable income, which resulted in employees paying taxes on income that they did not receive.
Hausammann's letter stated that the total excess reported income exceeded $20 million, although individual employees were affected to different extents. In 2013, 13 percent of the 11,000 affected employees paid taxes on more than $1000 of excess income, with a "small number" paying taxes on more than $10,000 of excess income. Sixty percent of the 11,000 affected employees were taxed on $200 or less of excess income.
These tax laws are so complex that not even large, well-financed and well-intentioned institutions like Harvard can comply with them. How is some small business or mom-and-pop operation or household supposed to get this stuff right?