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I know of the restaurant who pays some of their employees who make the most money for the first 20 hours they work in a paycheck and pays cash for the rest of the hours they work. One of the people I know works anywhere from 45 to 75 (yes, he actually works 75 hours) a week. I believe they are doing this to avoid taxes. Frankly I don't like the owners of the restaurant, and I would love to see them get into trouble. How can I go about reporting them for this, or could they even get in trouble at all? Would the employees who are getting paid like this be in trouble as well. What, if any, punishment would they incur?
08-11-2003, 01:50 AM
I must say, when I first saw your title, I thought it read "Businesses Avoiding Texas," and was about to set you straight! They just decided to open up a Toyota plant in San Antonio.
But since this has nothing to do with the OP . . .
08-11-2003, 02:06 AM
Can I say it?
Uhh ... hello? Is this thing on?
Originally posted by elmwood
Can I say it?
Uhh ... hello? Is this thing on?
Huh? What are you talking about?
08-11-2003, 05:25 AM
It's an SDMB cliche, Paco. Whenever some doofus spots a few words together that sound funny, such as "Business Avoiding Taxes," they declare it to be a good name for a rock band. The practice, I believe, was carried over from one commonly used by Mr. Dave Barry in his syndicated humor columns.
That said, How to report federal tax fraud to the IRS (http://www.irs.gov/faqs/page/0,,id%3D15893,00.html) and the Tennessee Department of Revenue (http://www.state.tn.us/revenue/) was a fraud reporting number in giant green letters over on the right side of their main page.
08-11-2003, 07:40 AM
Yes, you can get the owners in trouble. But you may also get the workers in trouble. The IRS and the state can go after the workers for income taxes (10% - 35% federal, state taxes vary) and FICA (social security and medicare - 7.65%) on the unreported cash. The IRS may also assess interest and penalties on the unreported cash. Since many people who work in restaurants are barely keeping their heads above water, they will be in deep shit when the IRS comes calling. (I am aware of the mixed metaphors in the previous sentence.)
08-11-2003, 07:45 AM
As someone who pays increasing taxes every year, I get ticked off to no end by tax cheaters. Businesses and individuals alike should pay their share. Otherwise the rest of us are carrying the no-loads.
If I knew about a situation like the OP, I'd report it.
08-11-2003, 10:39 AM
This practice is typically referred to as paying workers "under the table." It's illegal -- employers are obligated to withhold a portion of an employee's salary for federal and state income taxes as well as social security, state unemployment insurance, and medicare and remit these amounts to the state and federal governments. In addition to the funds withheld from the employee's pay for this purpose, the employer also has to pay additional amounts for social security and medicare. By paying under the table, the employer avoids all this. But it is a felony; it also increases the amount in taxes that all the rest of us have to pay. Finally, it can end up hurting the employees in the future. Their eligibility for state unemployment payments and ultimately socail security is based on the amounts that they paid into the system when they were working. If they were paid under the table they didn't contribute as much into these programs as a person working legally would have and they will therefore not be entitled to as much in benefits as they should be.
08-11-2003, 10:52 AM
I agree with the others who've said to turn them in. They're stealing from the rest of us.
Just one nitpick: what the business is doing is "evading" taxes. "Avoiding" taxes refers to taking advantage of provisions of the tax code that benefit you, and is perfectly legal. So, if I put money into municipal bonds, the dividends on which are exempt from federal taxes, instead of putting that money into corporate bonds, whose dividends are taxable, I'm avoiding taxes, and there's absolutely nothing wrong with that. If, on the other hand, I simply fail to report some of my income, I'm evading taxes, and that's illegal.
Thanks for the help guys. See the situation is that I used to work for these people and they like to cheat their employees. For instance, I would work for ten and a half hours in a row and and would get a 15 minute break after about 3 hours and would be told that I couldn't take another break until after I have already clocked out.
Another example is that rather than firing people they make it a living hell for that person so they can't draw unemployment. They do this even when business has slowed down and there's nothing wrong with the person as a worker; they simply don't need them at work. The bosses really aren't very nice.
The thing is that they are doing this (the paycheck thing) to a couple of my best friends. We told them what they are doing and I know at least one of them told them he wanted to be paid in a full paycheck. I don't know about the other one though. I know it's affecting him because he went to get a truck and didn't make enough money to get it. I have a feeling that this is because about a 2/3 of the hours that he works go unreported.
08-11-2003, 12:26 PM
But see, also, the employer who is paying cash wages is NOT getting a deduction for the cash they are paying out (as they cannot legally deduct those cash wages...) so the employer might be paying MORE taxes than they might otherwise.
Why a business owner would do this is beyond me. I just don't get it.
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