Tuesday was April 15. If you are working and earning money, that was the date by which you were required to file your income taxes. I have actually run into people who do not file taxes, and that has always amazed me. Some people prefer working “under the table.” That means someone is paying you cash for the work you do, but no taxes are taken out of your pay. Let’s take a look at the consequences of working under the table.
To “pay someone under the table” means that an employer pays an employee cash without making the deductions required by law. Federal, state, and local laws require employers to withhold income tax, Social Security taxes, and Medicare. Other deductions may be required as well, such as wage garnishments to pay past-due child support or other legitimate debts.
This means the business is not deducting taxes from the employee’s paycheck, and as such, the Internal Revenue Service (IRS) is unaware of the employee and their employment status. It also means that Social Security taxes, unemployment insurance, and workers’ compensation insurance premiums are not being paid.
There are many reasons employers give for paying their employees under the table. Some want to avoid the hassle and expense of running payroll every two weeks. Others claim they cannot afford payroll taxes and insurance. Regardless of the reason, paying someone under the table is illegal. Uh oh.
Many employers believe they won’t be caught, but the IRS collects roughly $4.5 billion in penalties each year for the non-payment of payroll taxes. The penalties for paying wages under the table can be far more expensive than simply paying what is owed. The IRS prosecutes these cases—many of which result in prison sentences and severe financial penalties.
Email the columnist at debbienorrell@aol.com
Click Here to View All “Lifestyles with Debbie Norrell” Articles
