T5008 Canada ESOP cash distribution

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@Tributos wrote:

Two years later, TP receives a 4669 Statement of Payments Rec'd from the Plan Admin asking TP to acknowledge that taxes were not withheld. If TP agrees to the amount subject to withholding the Plan Admin won't require payment for those taxes.

If the 4669 is not signed by April 2024, then the Plan Admin says they require payment for those withholding taxes instead.

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The employer's and your understanding of F.4669 is not correct.  The employee will not be paying over any underwithholding to the former employer at this point, whether or not the employee agrees to provide the statement.  (As a side note, the employer is on the hook for taxes owed.)

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First, this was a full cash distribution when the TP left the company. All stock was 'converted' to cash and not rolled over into any other plan.

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Are you sure the stocks were "converted"?  At your client's request or defaulted by the former employer?  Take a look at §409(h) paragraphs (2)(B) and (3) for when distributions may be made in cash.  Since you mentioned T5008, the presumption is that the former employer's stocks are readily tradable on an established market.

Given the distribution was made in cash, it should have been taxable at marginal rates, which means your client has likely underpaid.  Thinking out loud... what basis did your client report for the "underlying" shares?

You also did not mention the age of your client at the time of termination.  It is likely your client would have been subject to the 10% early distribution penalty.

Lastly, failure of the employer or trustee to issue the necessary 1099's, etc., does not negate your client's responsibility to report his/her taxes correctly.