Honesty is the Best Policy When it Comes to Employment Taxes
Dodging unemployment taxes can look pretty tempting. Simply pay your workers in cash and Uncle Sam never needs to know, right? Well, no, not right. Aside from the ethical considerations, imagine how much fun it would be to explain yourself to a federal judge.
Before you tell yourself, "No one really does that.", consider this: the owner of a New Jersey temp agency was recently convicted of paying a million dollars in cash wages, without paying any employment taxes. He now owes $168,837 to the government and could be sentenced to up to five years in prison and assessed a $250,000 fine. Ouch. As a practical matter, he will probably not be jailed, but you can bet remorse has set in regardless.
The moral of the story is obvious: mind how you do business. Keep it ethical. Keep it legal. If it seems to be snaky, don’t do it. Even if your conscience wopn’t catch you, the IRS might.