What if my boss isn't paying his payroll tax?
June 17, 2006 10:49 PM Subscribe
I don't think my boss is paying his payroll taxes... should I be concerned?
posted by risk to Law & Government (25 answers total) 2 users marked this as a favorite
Earlier this year I started work at a small company (very small; I would be its second employee). At my interview for the job the owner explained to me that his business' accounting system was screwed up so he would have to pay me straight-up cash for at least a week after I started, until the system was fully updated. He was very apologetic but said that part of the reason he needed me so bad was because of problems like this; he needed, he explained, someone who could take the load off his only other employee so that he could have the time to get all the financials taken care of. This sounded fishy to me but I was desperate for a job so I took it.
For the first eight-to-twelve weeks I worked at Company X I was paid in cash, as he had previously explained to me, though it went a lot longer than he had originally said. I needed the money desperately, though, so I pretended not to care. The thing is, he only paid me the amount I was supposed to get *after taxes*.
Allow me to ellaborate: let's say I had been hired in at $20 an hour (I wasn't; I don't want to reveal the original amount or any other specific detail like that). After doing the calculations he figured that, after taxes, my net income was actually closer to $15/hour (again, a random number, but you get the idea). So that's what he paid me... in cash.
About four weeks ago he finally began to issue me formal checks, with breakdowns of what I contributed to the Feds, the State, FICA, etc. All my worries about the shaddiness of this job went away momentarily.
But it's one thing for my pay-stub to show he's paying those taxes, and another thing for him to actually be paying those taxes. As part of my job I have access to all the bank accounts of this company, and guess what? Nothing is being paid to any kind of account, goverment agency, etc. In other words I'm 99.9% sure he's not actually paying the tax that's being "withdrawn" from my gross earnings each pay period.
And on Friday I happened to answer a phone call from his accountant. My boss wasn't in so I asked to take a message, and the account replied, "Tell him to stop avoiding me... he needs to pay me soon or there's going to be serious trouble."
Well, that was sure sobering! I took the message and left it for my boss, who crumpled it up and threw it away when he got back in.
So here's the thing: if it turns out that my boss isn't paying the taxes that my checks says he is paying, where does that leave me? Is there any chance I could get into trouble? And since I was technically hired-in at "$20/hour", but am only receiving "$15/hour", what's going on with that extra $5? The way I see it that's my money, you know? Sure it goes straight to the gov'ment right now, but I usually get a tax-return at the end of the year... if he's not paying his tax, though, I won't get anything.
Also someone suggested to me that he'll more than likely fire me in order to "cut me loose" and possibly pretend I was never an employee at all for the tax reasons. Argh.
Is there any way I can find out for sure he's not paying the tax? Should I inform the IRS if he isn't? Am I in trouble come tax season if I can't explain my income because he doesn't end up issuing any W-2's?
Sorry for the ramble; any advice is appreciated.