Workplaces are often meant to be a comfortable environment, although it is often bombarded with stress and difficulties sometimes which may be connected with one’s employees or employer, it may be difficult or burdensome to address issues that concern one’s employer, like in the case where one is being paid under the table. Can I Report My Employer For Paying Me Under The Table?
If your employer is paying you under the table, since it is an illegal activity, to avoid the risk of charges of tax evasion and other issues, it is wise to report such activity to the appropriate authorities as quickly as it is noted.
What are the Reasons Employers pay Employees under the table?
There are different reasons an employer would consider paying their employees under the table, and they are usually reasons of their best interest, some of which include
- Payroll Tax Evasion/ Federal Income Tax: Payroll Tax are taxes imposed on employers, it is calculated based on the salaries paid by employers. They are used to fund Medicare and social security. Employers and employees may avoid this tax by the activities of paying under the table. Asides from evading the tax itself, it saves them the stress and time involved while filing tax papers.
- Exempting Worker’s benefits: Employers who pay under the table can in some cases choose to relinquish some workers’ benefits like overtime pay, paid leaves(sick leave or parental leave), etc thereby saving extra money for themselves, they can also choose to forego liability due to insurance.
- Unregistered Employment: this is done by employers, workers, and the self-employed, in this way, their income is not registered so, they can evade tax and other obligations.
What are the Consequences of paying or being paid under the table?
Employees’ salaries are meant to be reported, so paying or being paid under the table has its repercussions.
In the United States, the Internal Revenue Services is in charge of tax collection, if the Internal Revenue Services find out or is tipped on suspicious activities concerning tax, the following are what can be incurred by the people in question.
For employees caught working under the table, these are the consequences
- They are disqualified from receiving unemployment benefits in the case of dismissal from work, they are also exempted from workers’ compensation and treatment.
- They are unable to secure loans, mortgages, rentals, or leases, this is because they have no proof of income or employment, so they may be denied these services.
- There are charges against those who evade taxes with possible jail terms.
- Tax evaders would be demanded to pay all the tax they owe with interests and additional fines.
For Employers caught paying under the table, these are the consequences
- Either the business is Shut down, or is forced to come to a close due to the high cost of restitution.
- An employer that pays employees under the table commits a criminal offense that could attract a sentence of between 14 months and can last up to two years depending on the severity.
How do you report an Employer for paying under the table?
To avoid charges of willingly evading taxes, it is necessary to report any case of tax evasion, to do this, the employee should locate their local office of the (WHD) Wage and Hour Division, or should give a call to the Internal Revenue Services to report the activity and can choose to remain anonymous. The IRS can also be reached by preferably filling out a 3949-A form to report any tax evasion fraud from persons or businesses.
It can also happen that an employee was negligent to the activity, that is they weren’t aware they were committing fraud by working under the table, in such case, the employee should firstly make corrections by paying what they owe and then filing a report.
The following is information that may be required when sending in a complaint;
- Personal information including the name of the employee or the complaint, their telephone details, and address.
- Information on Employers: the company’s name, address, type of business, and telephone details.
- Job description and payment details: that is the employees’ job title with details of the work, the amount paid, the method of payment, and the range of time within which payment is made.
- Description of Complaint: the employee is to give details concerning dates in which their employers paid them under the table.
In addition, any documents or pictures that support a claim of tax evasion would be highly appreciated and should be sent, one can choose to withhold their name and identity, however, they will be required to leave a means through which they can be reached by the IRS, it is a confidential process, and is not disclosed to anyone.
Conclusion
Paying or working under the table is a criminal offense and attracts penalties, so if an employer is paying you under the table, it is in your very best interest to report them to the appropriate authorities because although it may look like a good situation firstly and ongoing, the consequences are rather harsh and will surely bite.
So any income made should be reported to the Internal Revenue Services, anything besides this is a suspicious activity and can attract fraud charges and jail terms.
Frequently Asked Questions
- How do I prove someone is getting paid under the table?
Usually, employees that pay under the table pay in cash, but regardless of which form of payment they choose, a statement should always follow showing tax deductions, if nothing of this sort accompanies payment, it is a sign of possible tax evasion.
- Can I sue my employer for paying me under the table?
Since it is an illegal act, an employer can be sued in court for such action.
- Who benefits more from being paid under the table?
Usually, the employers tend to earn more from the activity, as employees are at more risk alone even without being caught.