Wait’s Over: IRS Says Waiting Time Penalties Aren’t Wages

We’ve long known that California law does not treat Labor Code Section 203 penalties as “wages.” Earlier this year, the IRS published its view on how to treat those penalties (often referred to as “waiting time penalties” or WTPs) for purposes of federal income and employment taxes. A Chief Counsel Advice (“CCA”) memo concludes that WTPs are not wages for purposes of federal income or employment tax.

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