Paying Employees in Cash is a Problem

Attorney Peter D Aiken State and Federal Tax Defender 941-366-3506
Attorney Peter D Aiken
State and Federal
Tax Defender
941-366-3506

We have a major problem in this country with undocumented workers. On the one hand, we need them.

This is particularly true when it comes to people in the lawn maintenance business. It is next to impossible to get employees who are willing to work in the heat. Most of the jobs are filled by undocumented aliens. This presents a major problem for the employer. On the one hand, he desperately needs the workers and is willing to pay them. On the other hand, they are undocumented, have no social security numbers and no way to cash checks, even if paid by check. Our immigration system is broken…no big news there.

We need to provide a method for workers to come here. Rather than pay a “coyote” to bring them here illegally, why not just pay an entry fee to the United States, get a work visa that is renewable every two years, get a tax identification card and allow people to work and provide for their families. As it stands, our insane immigration system makes tax criminals out of American business people who desperately need the workers.

It is a real problem for the small businessman to attempt to pay an “off the books” cash payroll. Many of the banks will report them for making large regular cash withdrawals. This will prompt an audit and can lead to criminal prosecution for employment tax fraud.

It can subject the small businessman to huge civil as well as criminal penalties.

As a criminal tax lawyer all too often I encounter taxpayers who would love to comply with the law but find it impossible to do so. Some people use “payroll services” that often turn a blind eye to phony social security numbers or identification. What we need is Immigration and Tax reform. If you are under audit and have paid an off the books payroll, contact a criminal lawyer before doing anything. If you have not been audited but are concerned you might be, and have employees “off the books”, you are at risk of criminal prosecution.
Our laws put many people between a rock and a hard place when it comes to complying. Do not put off finding a solution to this problem. Do not subject yourself to Federal prison for tax fraud. The laws will eventually change, but until they do, you have to find a way to comply.

 

Is It Time for Tax Reform in America?

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How could anyone say no? With another election coming, our political hopefuls are all bragging about their tax plans.As a criminal tax lawyer and former IRS special agent, I can tell you that it is long overdue. Our tax system is in a state of dysfunction. The Internal Revenue Code is now so complex, that no one can fill out their own return without buying a computer program to decipher the myriad of rules and regulations. The time for meaningful tax reform is now. But it is not going to happen. The special interests have too strong of a lobby. The big corporations and the filthy rich get too many breaks. In America, for the last twenty years the rich have gotten richer and the poor, poorer.
An unfair tax system promotes cheating. Just like a totally unreasonable boss promotes embezzlement, an unreasonable government promotes tax evasion. The average citizen feels like he is being screwed by the IRS and feels like it justifies filing a false return, fudging on deductions or in some cases, simply not filing a tax return. Tax evasion is a symptom of a deeper underlying problem with our entire tax system. People cheat because they feel the system is not fair. Our tax system has become an income redistribution system. Most people feel the working class is taxed and the money is given to those that do not work, and at the top, the rich people pay nothing.
I personally feel that taxation is necessary. We have to have national defense. We have to have roads, flood control, education and health care. What we need is a fair tax and a simplified return. I once proposed that the tax return should be no more than two pages. On the front you declare your income, all of it, regardless of type. To that number the same tax rate is applied to everyone. Equal taxation, oh my god! On the back page you fill in how you want the money spent. You could have categories like “education”, “health care”, “national defense”, “Infrastructure” and “national emergencies”,
This would solve the other problem of how our elected officials spend the money. The budget would be real simple. The people decide how the money is spent when they file their returns, not some political hack. Most people would like to see how their money is really spent. Most people would not cheat on their income taxes or sales tax if there was meaningful reform. How about a national sales tax? How about a consumption tax? We have a screwed up system. You get taxed when you earn the money. You get taxed again is you don’t spend it and simply have it in a savings account. You get taxed again when you die and try and give it to your kids. Let’s make this simple. Tax it one time and tax it fairly.
For thirty years I have defended income tax cases in Federal Court and Sales tax cases in the State courts. The system is not fair. The best way to reduce tax evasion is to make the system fair and just. Let your elected officials know, if you can find them or reach them. It is time for a tax revolution in America. What we really have is “taxation without representation”