SteveAikens
Proud Veteran
Income tax evasion is a Federal felony.
And if "PoorUSB" recalls accurately, that dealership needs to be reported.
Crap like this really gets me steamed.
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Income tax evasion is a Federal felony.
I understand that, but he was actually paying out the money to his relatives. The only issue was they did not work for the company.
I am not certain that is illegal.
And if "PoorUSB" recalls accurately, that dealership needs to be reported.
Crap like this really gets me steamed.
Except that in the larger sense, by avoiding paying business taxes on the money he was reporting as expense, he was screwing the rest of us by avoiding paying the taxes he rightly should have been paying. Tax avoidance is great and legal. Tax evasion through shell "employees" and other misrepresentation of financial assets is not.
Tax crimes are real crimes. Ask Al Capone.
For reference: https://www.wolterskluwer.com/en/expert-insights/tax-avoidance-is-legal-tax-evasion-is-criminal
I would like to see one example of where a business owner got in trouble for what pretty much amounts to over paying your employees. Keep in mind the "employed" relative's pay was properly taxed and proper income tax with held. Again, I am not certain it is illegal to pay someone for not working!
Except that paying people that aren't working there as a way to avoid tax liability is a crime. You might be looking at this from the wrong end. The evasion scheme is that employee pay can be deducted from a businesses tax load. Paying "fake employees" is a way to evade paying taxes the business rightly owes by shuffling tax liability to employee expense for work that was never performed.
That's tax evasion and it is a crime you can go to jail for.
It's not illegal to pay someone for not working, but paying someone for not working as a way to evade taxes the business rightly owes is tax fraud.
I hope that's helpful. That's the law. We all need to pay our fair share, so I take as dim a view of tax cheats as I do people that get together for a group dinner and slide out without paying.
Paying imaginary employees is tax evasion as it is a method to move taxable income to tax deductible expense.
Look away from the employee check and how taxation is levied against a business and it's evident.