Posted By Sirmabekian
There are employees all over the state and country who don’t mind being compensated under the table since it means they can avoid taxes, while their employers won’t have to deal with payroll tax or employee benefits. However, there are a number of reasons why paying wages under the table is a bad idea and below are some recommendations on how to report it.
The Consequences of Compensating Employees under the Table
The consequences of getting caught engaging in this practice can be severe, even for employees. If employees agree to be compensated under the table, and choose not to report their earnings to the Internal Revenue Service, they might be considered guilty by way of association. Things can get even nastier if they’re audited, because the audits will reveal that they earned more than was actually reported, making them subject to fines and possible jail time.
Even if a business gets away with this practice for a time (and the smaller ones often will), it still damages employees because being paid off the record means they will be unable to submit applications for mortgage loans, vehicles and things of that nature. Additionally, when they finally retire, they will have no social security options and will miss those retirement payouts.
The employer will face serious consequences of their own. Their business, assets or earnings could be seized, crippling their operation to the point where they may be forced to close their doors for good. If this happens, they will be forced to lay off their employees who will no longer have an income. There is also the loss of reputation and goodwill. If the laid-off former employees try to get another job with a company that follows the law, they won’t have much of an employment record. Given the time, effort, energy, capital and risk that go into launching a new business, do you really want to take this chance? While paying employees under the table may work for a while, it is not a wise long-term strategy.
How to Report Employers That Engage in This Practice
If you or someone you know is being paid beneath the table, you’ll need to file a complaint which will protect you from being accused of intentionally withholding taxes. The best way to do this is to find the nearest Wage and Hour Division office and pay them a visit. When you issue the complaint, you’ll want to include details such as your telephone number, name and address.
You’ll also need to provide information regarding the employer, such as their telephone number, address, the name of their company and the type of business they run. You’ll need to explain your job description and the types of tasks you were responsible for, along with their payment system, the amount you were compensated and how often the payment was delivered. If you feel that you were denied overtime, minimum wage, sick leave, vacation or holiday pay, you should consider speaking with an employment lawyer as they can help you take your case to court.