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<p>Unless the IRS has changed its rules, she should be able to show to the IRS that the money was withheld from her paycheck and not be liable for those taxes. This is why the IRS goes after the “responsible parties” at the employer personally for the taxes that should have been paid, but weren’t. From your description, it sounds like she was not paid anything thereafter and would obviously not owe taxes on income she was promised, but did not receive.</p>