Defenses Payroll Tax Fraud
By Sanford Millar of MillarLaw A Professional Corporation On Friday, November 25, 2016
Prosecution for payroll tax fraud is a high priority for the IRS and Department of Justice. Payroll tax fraud occurs in several manners, including false worker classification as independent contractors, understatement of taxable wages through cash payments, use/acceptance of false identification to disguise illegal alien labor. The employer engaging in these forms of payroll tax avoidance/evasion is extremely vulnerable to workers filing Whistle-blower claims. But, regardless of the source of the information or audit trigger, an audit can result in severe penalties at the federal and state level. However there are defenses.
The fist line defense is to make a voluntary disclosure of the under reported payroll or misclassification. By coming forward employers may be able to avoid fraud penalties and prosecution. To come forward will require preparation of well documents amended payroll tax returns. The alternative to coming forward is to wait to get caught.