Business owners owe $2 million in unpaid payroll taxes
10 posts across 4 communities in the last 30 days; 70% from r/tax.
“Then at the very very least they need to issue you a 1099, as required by law. If they're skimming and calling it "payroll taxes" (which they're not required to pay in most cases) then that's a business dispute. Based on the strict 8-5 schedule and no show penalty, that sounds…”
“All the roofers in my area (lower Midwest) pay their employees as contractors- in cash. I'm sure the east and west coasts are even worse. When I worked for IRS (many years ago) the Revenue Officers would make field calls to job sites and bust these people. Now ROs are…”
“You're OK so far, but be wary. Don't sign anything for him that goes to a third party, especially a tax filing or a bank signature authority card. That way, if he has a problem, it's not also yours (joint and several liability).”
Several posts discuss a situation where a business owner owes a significant amount ($2 million) in unpaid payroll taxes. Commenters express shock, concern about potential criminal charges and legal repercussions for the business owner, and lack of sympathy due to the impact on employees.
SOURCES (60)
“For the coming years, get a pin. Create it and make sure the father won’t try this crap Again [re: My girlfriends dad committed tax fraud]”
We agree, it had to be hard. Everything in cash, no loans.
Looks like he's been a bad boy and big brother is going to spank him hard
“Then at the very very least they need to issue you a 1099, as required by law. If they're skimming and calling it "payroll taxes" (which they're not required to pay in most cases) then that's a business dispute. Based on the strict 8-5 schedule and no show penalty, that sounds like they're treating you like employees but paying you like contractors to get around employee liability and taxes. Other factors that point towards employee is if they require you to use their c”
“I'm supposed to be an independent contractor, I earn money from completed work orders on cars, but I have to be here from 8-5 and am penalized if I'm not here. Same as the guys before me. I'm pretty sure they're skimming off the top and then hoping no one catches on. I've never gotten a check stub from them, at the end of the week I get a check and a copy of the work orders I did for that week.”
“I've not been with them for years, but apparently other people that have worked there have had similar experiences. Everyone I've talked to so far has never gotten any tax papers from them at the end of the year. At the end of the week, they write you a check out of the company check book that they write the same checks out of to pay for parts, there is no check stub. The only way to find the discrepancy is to compare the completed work orders to the check that they write at the end of t”
“I recently discovered that they're withholding taxes from our pay, have apparently been for years Ok, so you have been working there for years, you never receive a paystub, but you are not paid 100% of your gross earnings either - do you get any kind of tax document from them at year end? (W2 or 1099)? How have you reported this income on your personal tax returns in the past?”
“That's the thing, I don't get a regular paycheck stub showing deductions, I have completed work orders and then the discrepancy is when they write a check at the end of the week.”
“All the roofers in my area (lower Midwest) pay their employees as contractors- in cash. I'm sure the east and west coasts are even worse. When I worked for IRS (many years ago) the Revenue Officers would make field calls to job sites and bust these people. Now ROs are handcuffed- they cannot make compliance checks; seizures are almost unheard of, and compliance is a joke.”
“If it wasn't declared within the DLA and showing on the BS as an OC balance, that is 100% theft of company assets. on top of that he committed mortgage fraud .”
“40 years ago, I got 3 clients from a guy who got busted doing that kind of crap. He still has a sign outside his office. LOL”
“You're OK so far, but be wary. Don't sign anything for him that goes to a third party, especially a tax filing or a bank signature authority card. That way, if he has a problem, it's not also yours (joint and several liability).”
“I experienced this. Was hired as controller then found out he was paying people 90% off payroll to avoid payroll taxes, not issuing 1099s to those employees, all sorts of stuff like that. I told him after two weeks that I couldn’t get on board with that and that those were felonies, if caught. He got me on out quickly, with a manual check of course. I’m nit going to jail so that he can make 3 mil/yr instead of 2. Adding that I know chances he will get caught are slim to none, but if audited and”
“A lot of bad info in this thread. For the normal tax return stuff you probably won’t be held liable. However if they are also doing shady stuff with payroll taxes get out NOW. The DOL/Treasury/IRS can and will go after anyone who knowingly falsifies these returns, even if you aren’t the signer/owner. Even if you are the person who is doing the entries to help hide the fraud, there is the potential they will put liens on your property until they are paid back. The one thing the US government does”
“The amount he "diverted" was his fee. You ain't be able to use "he diverted" with the state. You may have to take him to court.”
“It's more recoverable than people think, but the order of operations matters a lot here. Lawyer first, accountant second. With 40 years of willful non-filing, there's real criminal exposure. Conversations with a tax attorney are privileged; conversations with an accountant generally aren't (unless the attorney hires the accountant under a Kovel arrangement). That's the standard way these cases are handled. IRS Voluntary Disclosure Practice. This exists for exactly this situation.”
I suspect it has to be very challenging. This is in the US.
“It’s entirely dependent on the situation. First of all tax evasion is a broad term, but if you mean doing things to pay less tax, you may never get caught. Especially with the IRS so understaffed. The larger the dollar amount, though, the more likely they’ll figure it out. But even then it may not be worth it for them to come after you. I have a relatively new client that owes almost 90k to the IRS from 8 years ago. They never did anything beyond send him notices every few months.”
“I'm a tax attorney, and my retainer for this would start at $25K and go up as he talked...”
“The irs is all over my ass if I miss like 10 dollars, and this guy hasn’t paid taxes in 40 years?!”
“I’m pretty sure this person spent every dollar as soon as they earned it. They could afford to do so because they are a tax evader. It’s the same as squatters. They didn’t put the rent money they saved into the S and P 500. Both of these kind of people are moochers on society.”
“I have a client that went to federal prison for six months for underreporting his income. I truly believe he did not intend to commit fraud. He had a very specialized consulting business and did his own taxes. He had no idea what he was doing, and claimed lots of personal expenses as deductible business expenses. Used turbotax. IRS audited him. He owed $1.4M to the Fed. He paid it. They then referred the case to the US attorney and notified the state (another $500k). At no point did he fight the”
“I used to work for the IRS. I remember them taking some guy's Porsche from the parking lot. Pay your fucking taxes people, especially payroll taxes. The IRS and the SSA work in conjunction with each other. I would love to know what is going on with OPs subject”
40 years. Hmm How is that possible? 🤔 The IRS is smarter than that.
“Yeah, all of the payroll would need to be under the table for that to be remotely feasible. If you collect Social Security/Medicare from employees and don't remit it to the government, the IRS will find out very quickly and destroy your life. Of course, if you simply don't collect any payroll taxes to begin with, it's possible they never found out about it.”
They probably thought they’d drop dead first before the IRS found them.
“Is this a joke? How does one get away with not paying payroll and general taxes for 40 years? If real, tell them to shutdown quietly and pray. edit: Is this fully cash business?”
“This sounds fake. If they have W2 employees/payroll and they haven’t been paying their employer portion they’d have been caught long before now. Unless they’ve been paying their people under the table the whole time…”
“I ran into a business owner that has not paid taxes (including payroll) for about 40 years. Should they legitimize their business at this point? Or, is the plan of going to jail when they eventually get caught a better retirement plan? What would you have said? (I literally said, you're f\*cked, but still told him to contact an accountant, and maybe a lawyer.) submitted by /u/Slpy_gry [link] [comments]”
“Of course they have the money. They didn’t pay taxes. Damn I would be rich if I didn’t pay taxes. He should go to jail.”
“I think the guy didn’t pay payroll taxes and maybe issued 1099s but did not deduct any payroll taxes. That’s my guess.”
“This. There are countless incidents where the employer 1099'd employees instead of W-2. Hard to believe someone along the line didn't chirp about that. Perhaps if it was a 100% cash business with an illegal immigrant workforce (ppl who want to be off-radar) but even then....”
“EA here. Lots of issues here: 1) The owners will face the TFRP. 2) Significant labor law violations. 3) They’ll likely be referred to a Revenue Officer both state and federal. 4) If the debt is large and they failed to file (which it sounds like they did) they’ll be referred to IRS-CI. As to resolving this, it depends on the size of the debt and whether it was done in good faith. The delinquent payroll taxes are the worst issue, as you are essentially stealing from employees by not paying. In my”
“They actually can go to jail for nonpayment of taxes. We work with forensic accountants to recreate the books for people charged with tax fraud and yes, many of them HAVE gone to jail. Additionally, if a business owes payroll taxes and did not deposit them, those taxes become the personal liability of the biz owner and the IRS is ruthless in collecting those taxes. Unpaid/owed 941 taxes cannot be eliminated by bankruptcy either. 941 taxes are the one tax the IRS will NOT forgive.”
“I thought 40 was a long time to have never paid and never received a notice or anything. They didn't get to far into the details. Maybe they are already being watched and just haven't been arrested yet. They seemed to be ok with going to jail, like that is their retirement plan.”
“I would say it's almost not possible for them to have evaded payroll taxes for 40 years, so something is very sketchy there. Their own personal taxes... depending on how things were reported, they should have gotten notices over the years, and for 40 years to have passed without a levy is unheard of. So something else is going on here.”
“Yep. That's their issue. That's between the business owner and the government. No reason to be a snitch”
“what has been happening to their employees? they have just been getting paid under the table and not filing taxes either?”
“I ran into a business owner that has not paid taxes (including payroll) for about 40 years. Should they legitimize their business at this point? Or, is the plan of going to jail when they eventually get caught a better retirement plan? What would you have said? (I literally said, you're f*cked, but still told him to contact an accountant, and maybe a lawyer.) submitted by /u/Slpy_gry [link] [comments]”
“I get what you were going for, but your comment came off more as "all small businesses cheat on their taxes," which is not true.”
“Maybe.... but if he's working "above the table", his SS contributions are being made regardless of what he does regarding income taxes. I don't think the ad is intended to get sympathy for Lou; it's intended to get the attention of other people who are delinquent and might need help fighting the IRS to try to reduce their debt.”
“Uhhh he’s screwing you over. Bad. The IRA will garnish your wages for those taxes. So you have to ask, are you ok with him stealing that money from you and you having to pay the IRS…. Or getting a lawyer involved and getting the money. Just because he’s declaring bankruptcy doesn’t mean he doesn’t have things they can take to recoup the lost money…”
“business called USANA which are supplement company This guy might have an LLC to try to pay less taxes because he loses money.”
“I mean, if she just has a Sch C in her return with nothing but expenses, then yea, that's about the easiest thing in the world for the IRS to catch.”
“Lmao yup. Easiest way to lose your business.. well maybe it never really was his to lose..”