My husband and I live in South Carolina, and work for a state academic institution as faculty members. Last June (2011), my husband's department chair informed him that his gross income would be reduced by 20% for the coming academic year (July-June). The allowed appeal process took a couple of months, and the decision was upheld. At the same time, he increased his pre-tax retirement withholding. His take-home pay was substantially reduced, which was expected.
Today he has been informed by Payroll that he was being overpaid since July of 2011. That is, they (Payrol) had failed to reduce his gross income by the 20%. They are demanding repayment IN CASH of the overpayment within 2 weeks or it will be sent to a collections agency. No explanation as to the $ amount demanded was given, although we presume it must be the net after overpayment of taxes, etc.
My questions are:
1) Since the university was clearly remiss in not reducing the gross salary last year, are we legally obligated to repay the overpaid amount?
2) If Yes to #1: Is he (are we) obligated to repay in CASH, and must it be within the next 2 weeks? It is a large amount of money for us.
3) If Yes to #1: Is he not entitled to a full accounting of the repayment amount being demanded, with all the appropriate deductions and witholdings clearly itemized and verifiable, PRIOR TO MAKING ANY REPAYMENT?
4) If Yes to #1: Is he not entitled also entitled to a revised W4 once repayment has been made?
Please answer each question in turn. I look forward to your reply. Thank-you.