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Paying Employees Under-the-Table

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AUNTIEWHOCARES

Junior Member
What is the name of your state? North Carolina

I'm confused and please forgive my ignorance, that is why I am here. Is it illegal to pay employees under-the-table? If that particular employee owes child support isn't the employer responsible for filing tax forms and a UC2 form for the said employee. Is the employer committing a crime? Can the employer be turned in to the IRS?

Background Information: Automotive Dealer in NC, owner claims she pays all her employees under-the-table.

Any information will be greatly appreciated.

Thank you
 


Some Random Guy

Senior Member
Businesses are required to report all payments to employees on W-2s and to all contractors on 1099s.

If you have evidence that this business is doing otherwise, gather your proof and contact the IRS criminal investigation division. Ask about getting a percentage of the fees/back taxes (they will do this if your evidence is good enough to warrant an investigation).

Revenge is best when you get paid for it.
 

dp1903

Junior Member
Yes it is illegal to pay someone without reporting it as wages, if the person is an employee. Anything not specifically excluded as non-taxable income under IRS code is taxable income. The money the person is being paid is taxable income to him either as an employee or as an independent contractor. If he is an employee then the employer is liable for payroll taxes on what is being paid as well as reporting it on a W-2. If he is a contractor and receives over $600 in a year the employer is supposed to report that on a 1099.

I am an accountant and have done payroll a number of years. This is not an unusual practice. The IRS simply doesn't have the resources to enforce the law.
 

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